Marlo Lewis

Those amazing Idsos who run the Center for the Study of Carbon Dioxide and Global Change review a paper recently published in AMBIO: A Journal of the Human Environment by Mulder et al. (2010), who assess the energy return on water invested (EROWI) of several renewable and non-renewable fuels.

In the paper, provocatively titled “Burning Water,” the Mulder team find that “the most water-efficient, fossil-based technologies have an EROWI one to two orders of magnitude [10 to 100 times] greater than the most water-efficient biomass technologies, implying that the development of biomass energy technologies in scale sufficient to be a significant source of energy may produce or exacerbate water shortages around the globe and be limited by the availability of fresh water.”

The Idsos note that these findings “will not be welcomed” by those who promote biofuels as a means of combating the alleged national security risks of global climate change.

We often hear, for example, that climate change will increase the risk of “water wars” by intensifying summer heat and drought. There’s not much evidence to support this alarm. About 90% of global fresh water consumption is for agriculture. As British scientist Wendy Barnaby found to her surprise when she set out to research a book about the coming “century of water wars,” nations in water-stressed regions typically do not come to blows but instead cooperate and import “virtual water” in the form of grain, leaving more water available for drinking and bathing. Even in the water-stressed, conflict-prone, Middle East, nations do not go to war over water. Nonetheless, to the extent that water stress undermines stability and peace, government policies ramping up biofuel production are likely a “cure” worse than the supposed disease.

In addition, some biofuel policies can increase food prices and world hunger, fostering instability and strife, especially if scaled up enough to make a meaningful difference in global carbon dioxide (CO2) emissions.  

Princeton researchers Stephen Pacella and Robert Socolow estimate that avoiding 1 gigaton (gt) of carbon emissions per year by 2050, by replacing gasoline with biofuels, would require 250 million hectares of high-yield energy crop planations, “an area equal to about one-sixth of the world’s current cropland.”

Let’s put this in perspective. One gigaton of carbon = 3.67 gt of CO2. Achieving the EU/UN emission stabilization target of 450 parts per million would require global CO2 emissions to decline roughly 38 gt below the baseline (business as usual) projection by 2050. In other words, the 3.67 gt reduction in CO2 that Pacala and Socolow say we can get via biofuels would achieve less than 10% of the reduction required to meet the target. Not a whole lot of environmental bang for all that land area buck. Indeed, dedicating 250 million hectares to energy crop production would likely squeeze many species out of their habitats.

Source: Stephen Eule, Scale and Scope of the Challenge to Reduce Greenhouse Gas Emissions, Institute for 21st Century Energy, U.S. Chamber of Commerce, February 2009

Note also that significant research indicates that converting grassland and forest land into biofuel plantations increases net greenhouse gas emissions over many decades by releasing the carbon stored in forests and soils. Growing biofuel on 250 million hectares of land might very well emit more CO2 than the gasoline it replaces.

The larger point, though, as Dennis Avery explains, is that the world is not well-fed now, and the demand for food and feed on farmlands is expected to more than double by 2050. Requiring biofuel production on 250 million hectares would be a recipe for disaster. Putting the equivalent of one-sixth of current cropland off limits to food production represents a much bigger decline in global agricultural productivity than is anticipated from drought in high-end global warming scenarios. 

Warmists warn that climate change is a “threat multiplier” or “instability accelerant.” However, the national security risks of climate change policy likely exceed those of climate change itself. 

For further discussion, see my CEI paper, DOD Should Consider the National Security Risks of Global Warming Policies, and economist Indur Goklany’s comprehensive study, Trapped Between the Falling Sky and the Rising Seas: The Imagined Terrors of the Impacts of Climate Change.

* When I first posted this, I failed to notice that Pacala and Socolow were measuring emission reductions in tons carbon whereas Stephen Eule was measuring reductions in tons CO2.

Betsy Moler of the U.S. Climate Action Partnership and Phil Sharp of Resources for the Future would like Republicans to think so. After all, if GOP opposition to cap-and-trade is self-contradictory, then it is unstable, hence reversible.

Few Republicans will be gulled by this line of chatter, but just to make sure, I posted a column debunking the Moler-Sharp argument on MasterResource.Org, the free-market energy blog.  

Republicans like markets (or say they do), and cap-and-trade is “market-based,” according to Moler and Sharp. In fact, cap-and-trade is politics-based. The demand for the traded commodity (the emission allowances) is entirely a creature of the cap, which is itself created not by the market but by politicians.

People posting comments on my column made astute observations, which suggest the following definition. Cap-and-trade: Government creation of a market in a commodity that everyone makes and nobody wants; from which a rent-seeking few gain windfall profits at consumers’ expense; and in which opportunities for corruption and creative accounting abound.

Senate Majority Leader Harry Reid (D-Nev.) mothballed cap-and-trade legislation when it became apparent that he could not muster the three-fifths super-majority required to end a Republican filibuster. Because coal-state Democrats don’t like cap-and-trade either, assembling the requisite 60 votes to stop a filibuster was never easy. It became more difficult after Democrats lost their 60-seat majority with the election of Republican Senator Scott Brown of Massachusetts.

Unsurprisingly, sore losers are now calling for a change in Senate rules to abolish the filibuster or lower the number of votes required for cloture.

Congressional Quarterly Online reports that the BlueGreen Alliance, a coalition of labor unions and environmental organizations hawking cap-and-trade as a font of ”green jobs,” and a group of freshmen Democratic Senators led by Tom Udall of New Mexico, are calling for a change in Senate rules.

There’s just one small problem. It takes a two-thirds (67-vote) supermajority to change Senate rules. To belabor the obvious, two-thirds is more than three-fifths. If cap-and-traders were strong enough to change the rules, they wouldn’t need to change them — they could already easily overcome GOP filibusters.

If BlueGreenies can’t see what a pickle they’re in, they should try reading Aristophanes, the master of Greek comic poetry. 

Aristophanes’ play Ecclesiazusae, “Assemblywomen” or “Congresswomen,” is a ribald satire on egalitarian excess. Although written millennia ago, it is spot-on relevant in the Age of Reid, Pelosi, and Obama. 

As the play opens, a cabal of women led by Praxagora don fake beards, sneak into the Athenian Assembly, and agitate for a law to establish the rule of women. They gain the support of enough men to pull it off, because Athenians crave change and the rule of women is the only thing they have not yet tried.

Praxagora and her cohorts claim their agenda is to end all injustice, i.e., inequality. They set up cradle-to-grave welfare and institute a regime of free love in which every man may sleep with every woman.

To ensure that not even the natural assets of youth will be allowed to create inequality, Praxagora decrees that before a young man may sleep with a beautiful young woman, he must first sleep with an ugly old hag. Conversely, before a young woman may sleep with a stud, she must gratify a geezer. 

But, as Orwell was to observe centuries later, under socialism, some are more equal than others. Praxagora, you see, is married to a flatulent dotard named Blepyrus, so she has already done her duty to the elderly. She is now free to consort with as many young bucks as she pleases. It’s kinda like cap-and-trade, in which energy-rationing profiteers reap windfalls (regulatory rents) at public expense in the name of saving the planet.

To pass the Kerry-Lieberman bill, BlueGreenies would have to sneak into the Senate, don Republican disguises, and give Tom Udall and his pals a 67 vote super-majority.

Obviously, that’s not gonna happen, not this Congress or next, because fake beards only work in comedy.

The indomitable Indur Goklany — “Goks” to his friends — has just posted a primer on extreme weather-related mortality entitled, Global Death Toll From Extreme Weather Events Declining. 

If you are one of the hapless millions who watched Al Gore’s scare-you-mentary, An Inconvenient Truth, with its ad nauseum footage of hurricanes, tornadoes, drought, and floods, you might think that carbon dioxide emissions are making the world a more dangerous place.

Goks’ primer demolishes this falsehood. It also reaches the heretical conclusion that restrictions on carbon-based energy would actually impede progress in reducing deaths and death rates related to extreme weather.

Herewith a few excerpts:

Mortality Risk Declining

Based on 2000–08 data, extreme weather events are responsible for about 0.05% of all global deaths (31,700 deaths vs. 58.8 million, annually). That is, despite the media attention to such events, extreme weather events have a minor impact on global public health.

Long term (1900–2008) data show that average annual deaths and death rates from all such events declined by 93% and 98%, respectively, since cresting in the 1920s. These declines occurred despite a vast increase in the populations at risk and more complete coverage of extreme weather events.

Deaths and death rates from droughts were responsible for the majority (58%) of all deaths due to extreme weather events from 1900–2008. They also peaked in the 1920s. Since then, they have been reduced by 99.97% and 99.99%, respectively.

For floods, responsible for another 34% of aggregate deaths, deaths and death rates have declined by 98.7%–99.6% since the 1930s.

For storms (including hurricanes, cyclones, tornadoes, typhoons), responsible for 7% of extreme weather event deaths from 1900–2008, deaths and death rates declined by 47.0%–70.4% since the 1970s. 

“Blame” Fossil Fuels for Improving Safety

First, the decline in the death toll from droughts, in particular, is that global food production has never been higher than it is today (Goklany 1998, 2007). This is largely due to improved seeds, fertilizers, pesticides, irrigation, and farm machinery. This entire suite of technologies also enabled the Green Revolution.  But fertilizers and pesticides are manufactured from fossil fuels, and energy is necessary to run irrigation pumps and machinery. Without them, the benefits of improved seeds would be for naught. And in today’s world, like it or not, energy for the most part is synonymous with fossil fuels.

Additional CO2 in the atmosphere has also contributed to higher yields and food production (IPCC 2001: 254–257, 285) because it provides carbon, the basic building block of life, and also increases the efficiency with which plants use water helping offset declines in water availability, if any.

Another factor critical to reining food prices and reducing hunger worldwide is trade within and between countries which enables food surpluses to be moved to food deficit areas (Goklany 1995, 1998).  But it takes fossil fuels to move food around in the quantities and the speed necessary for such trade to be an integral part of the global food system, as it indeed is.  Moreover, fossil fuel dependant technologies such as refrigeration, rapid transport, and plastic packaging, ensure that more of the crop that is produced is actually eaten by the consumer. That is, they increase the overall efficiency of the food production system, which helps lower food prices and contain hunger worldwide.

The second important factor is better disaster preparedness, and more rapid response and delivery of humanitarian aid when disaster strikes.  Timely preparations and response are major factors that have contributed to the reduction in death and disease that traditionally were caused by or accompanied disasters from extreme weather events (Goklany 2007b).  Their success hinges on the availability of fossil fuels to move people, food, medicine and critical humanitarian supplies before and after events strike. 

Economic development also allowed the US (and other developed countries) to offer humanitarian aid to developing countries in times of famine, drought, floods, cyclones, and other natural disasters, weather related or not. Such aid, too, would have been virtually impossible to deliver in large quantities or in a timely fashion absent fossil fuel fired transportation.

Carbon Rationing Is Counter-Productive

Currently many advocate spending trillions of dollars to reduce anthropogenic greenhouse gases, in part to forestall hypothetical future increases in mortality from global warming induced increases in extreme weather events.  Spending even a fraction of such sums on the numerous higher priority health and safety problems plaguing humanity would provide greater returns for human well-being (Goklany 2009a, 2009b).

No less important, efforts to reduce greenhouse gas emissions would slow, if not retard, economic development and/or make fossil fuels scarcer and more expensive thereby militating against the very factors that have reduced deaths and death rates from extreme weather events.

Barring the trickery of a lame duck conference committee, cap-and-trade is dead in the 111th Congress. Some blame Obama for not taking a more hands-on role. Others blame environmental groups for waging a $100 million lobbying campaign without winning a single GOP convert to the Kerry-Lieberman cap-and-trade bill. Others blame the allegedly “well-funded denial machine,” even though proponents, who include major corporations like British Petroleum, must have outspent CEI and its free-market brethren by more than 100 to 1.

Today’s Climatewire (subscription required) features interviews with Exelon Corp. VP Betsy Moler and Phil Sharp, President of Resources for the Future, who lament that Republican lawmakers, the “inventors” of “market-based” environmental policy, have turned against their own “invention.” If I catch their drift, Moler and Sharp are trying to spin GOP opposition to cap-and-trade as self-contradictory, hence as unstable, hence as reversible. As Climatewire reports, Moler is not ready to “throw in the towel” and Sharp entertains the hope that a “new kind of coalition” will emerge in the next Congress.

Now, let’s look at this notion, peddled by Moler and Sharp, that Republicans betrayed themselves and besmirched their own legacy by blocking cap-and-trade. Here’s how it’s discussed in Climatewire:

In an interview, Moler said that her deep disappointment was the rejection by Republican leaders in Congress of a market-based strategy for raising the price of carbon emissions, to speed transitions by power plants, industry and consumers to cleaner energy.

The Democrats called it “cap and trade.” Republicans labeled it “cap and tax,” and the change in one word proved lethal.

“The thing that just amazes me, confounds me, surprises me is how successfully the Republican leadership and a lot of the people who would be potentially negatively impacted have been in vilifying what have historically been market-based solutions,” Moler said.

Inventors Turn on Invention

“Cap and trade is really a Republican instrument that grew out of a lot of the Republican thought leaders as a market-sensitive, market-friendly, anti-command-and-control mechanism” to reduce sulfur- and nitrogen-based air pollution in the 1990 Clean Air Act amendments. “Now, some of the same people who invented it have turned on it as an energy tax,” she said. “It’s a huge missed opportunity. I don’t know where you go next.”

Moler’sregret is seconded by Philip Sharp, president of Resources for the Future, who, as a Democratic House member from Indiana, stood with Moler in the 1990s in the energy deregulation campaign. Sharp was a pivotal factor in Congress’ adoption of the 1990 Clean Air Act amendments and the 1992 Energy Policy Act, which opened the way for FERC’s electricity market orders four years later.

“I’m not here to say cap and trade is the only way to do this,” Sharp said in an interview. “It worked magnificently with SO2 and a couple of other instances.” Scaling it up massively to deal with economywide carbon emissions is another question. “We don’t know we can manage it as effectively,” he said.

“But what is really unfortunate in the public debate is that the current Republican leadership has overthrown one of the great Republican successes in this country [under President George H.W. Bush], to capitalize on the flexibility of the marketplace” in achieving regulatory change, Sharp said.

“I don’t think people appreciate the extraordinary challenge that represented and the difficulty of getting it done” in the 1990s, he said. Now, with the demise of that approach, Congress has invited U.S. EPA to step in on the climate front “and regulate the living [daylights] out of everything and see how well a modern economy works doing that.”

Moler and Sharp miss several key points.

First, the Title IV acid rain cap-and-trade program enacted under President George H.W. Bush is not the “magnificent” success they suppose it is. As Kenneth Green, Steven Hayward, and Kevin Hasset of the American Enterprise Institute note, prices of tradable sulfur dioxide (SO2) emission permits have been highly volatile: “SO2 trading prices have varied from a low of $70 per ton in 1996 to $1500 per ton in late 2005. SO2 allowances have a monthly volatility of 10 percent and an annual volatility of 43 percent over the last decade.”

Second, utilities participating in the SO2 emissions trading program could meet all or part of their obligations by purchasing low-sulfur coal and/or installing scrubbers, a commercially-proven emission control technology. In contrast, there is no low-carbon coal, and no commercially-proven technology to “scrub” carbon dioxide (CO2) emissions out of power plant exhaust streams.

Third, unlike sulfur, which is an impurity or contaminant in coal and oil, carbon is intrinsic to the chemistry of fossil fuels. Consequently, whereas emission control requirements for SO2 do not logically entail an unlimited agenda aiming at total abolition of the fuel, emission control requirements for CO2 do imply abolition as the ultimate objective. Such extremism is reflected in the apocalyptic rhetoric of the global warming movement, in petitions demanding that EPA establish national ambient air quality standards (NAAQS) for CO2 at 350 parts per million and for other greenhouse gases at pre-industrial levels (not even a global depression lasting several decades would be sufficient to lower CO2 concentrations to 350 ppm), and in Al Gore’s campaign to “repower America“ with “zero-carbon energy” within “ten years.” More pertinently, pull-out-the-stops, sky-is-the-limit regulation lurks in the Waxman-Markey and Kerry-Lieberman bills’ escalator clauses, which all but ensure that the explicit emission reduction target (83% below 2005 levels by 2050) would be superseded by more aggressive requirements.

Fourth, just because a “market-based” approach is more efficient, in principle, than command-and-control regulation does not in any way obligate Republicans to support Waxman-Markey or Kerry-Lieberman if those same Republicans oppose all regulatory climate policies.

Fifth, every Republican in the Senate voted for the Murkowski resolution to block EPA regulation of greenhouse gases via the Clean Air Act. So it’s silly to say that Republicans “invited U.S. EPA to step in on the climate front ‘and regulate the living [daylights] out of everything. . .’” President Obama threatened to veto both the Murkowski resolution and the much weaker Rockefeller bill, which would merely postpone EPA regulation of stationary sources of greenhouse gases for two years. It’s the Democratic leadership, not the GOP, that has “invited” EPA to make climate policy through the regulatory back door.

Finally, Republicans betray themselves (ask President George “Read My Lips; No New Taxes” Bush) when they vote for rather than against higher taxes. Because carbon is intrinsic to the chemistry of fossil fuels, a carbon cap-and-trade scheme is a virtual broad-based energy tax. The same cannot be said of the SO2 program, which was merely a virtual pollution tax. Moler and Sharp would like GOP lawmakers to believe they can win elections by becoming the Party of Energy Taxes. Fortunately, most Republicans don’t need much coaching to realize that is complete bunk.

I’m posting* three relatively obscure items by which CEI and friends killed a mischievous Trojan Horse strategy for Kyoto-style regulation variously known as credit for early action, credit for voluntary reductions, and transferable credits. The items in question are:

• Indiana Rep. David McIntosh’s legislation to block funding for an early action credit program.
• CEI’s comment to the Department of Energy explaining why it does not have legal authority to award regulatory credits for voluntary greenhouse emission reductions.
• My unsolicited testimony to the Senate Energy and Natural Resources Committee advising the Senate not to give DOE the authority it lacks.

The brainchild of Sen. Joe Lieberman, the Environmental Defense Fund, and the Pew Center on Global Climate Change, early action crediting was designed to establish the framework for a future cap-and-trade program while growing a corporate lobby of energy-rationing profiteers.

An early credit scheme works as follows. Companies “volunteering” to reduce their emissions before Congress enacts a mandatory program receive regulatory credits they can later apply to meet their obligations under a cap-and-trade scheme. This would quickly corrupt the politics of energy policy. Every “early actor” would have an incentive to lobby for a cap in order to transform his otherwise worthless credits into tradable emission permits worth millions of dollars.

In addition, early credit schemes are zero-sum rather than ‘win-win,’ and coercive rather than truly voluntary. To avoid credit inflation (bursting the cap in ‘cap-and-trade’), the supply of emission allowance in a future mandatory program must be reduced by the exact number credits awarded for ‘early action.’ This means that in the mandatory period, those who did not act early would have to pay higher prices for a smaller supply of emission allowances and/or buy ‘surplus’ credits from the early actors.

Consequently, many firms would ‘volunteer’ just to avoid being pushed to the shallow end of the credit pool under a future mandatory regime. This dynamic would further increase the number of companies motivated to lobby for mandatory reductions in order to monetize their investment in early credits.

Had Congress enacted an early action program, or had the Department of Energy succeeded in awarding early credits under its own authority, a coalition like the U.S. Climate Action Partnership would likely have formed earlier than it did and be stronger than it is today.

H.R. 2221, introduced by Rep. McIntosh in the 106th Congress, upstaged, and preempted Republican support for, H.R. 2520, New York Rep. Rick Lazio’s companion bill to Sen. Lieberman’s early action  bill (S. 547). McIntosh lined up 32 co-sponsors compared to Lazio’s 15. McIntosh also held a hearing titled Credit for Early Action: Win-Win or Kyoto through the Front Door? Credit for early action became politically radioactive with anti-Kyoto House Republicans. Without a viable House companion bill, Sen. Lieberman’s bill went nowhere.

Three years later, on Valentine’s Day 2002, President Bush naively brought early crediting back from the political graveyard by directing the Department of Energy to “give transferable credits to companies that can show real emission reductions.” DOE convened several comment periods and stakeholder meetings over the next three years to figure out how to transform the existing Voluntary Reporting of Greenhouse Gases Program, established by Sec. 1605(b) of the 1992 Energy Policy Act, into a crediting program.

Through this comment and others, CEI helped persuade DOE’s General Counsel that Sec. 1605(b) provided no authority to implement an early credit program. Dozens of rent-seekers spent hundreds of billable hours trying to game the rules of a revised 1605(b) program, only to have DOE’s GC pull the rug out from under them in the 11th hour.

Our un-invited testimony in April 2005 clarified for Senators Larry Craig (R-Idaho) and Chuck Hagel (R-Neb.) why they should withdraw S. 388, a bill that would give DOE the authority it lacked. The late John Berthoud, then President of the National Taxpayers Union, clinched the argument by confirming for Sen. Craig that blocking transferable credits was an issue of key importance to the free market coalition.

* Updated 2/23/2015; 8/16/2021

In a blistering letter published earlier in the week, the head of Texas’s environmental agency and the State’s attorney general told the U.S. Environmental Protection Agency (EPA): ”Texas has neither the authority nor the intention of interpreting, ignoring, or amending its laws in order to compel the permitting of greenhouse gas regulations.”

The letter, by Texas Commission on Environmental Quality (TCEQ) Chairman Bryan Shaw and Attorney General Gregg Abbott, comes hard on heels of EPA’s denial of 10 petitions (including one from the State of Texas) to reconsider EPA’s endangerment rule. That rule — the agency’s response to the Supreme Court’s 5-4 decision in Massachusetts v. EPA – is both trigger and precedent for potentially dramatic and far-reaching Clean Air Act restrictions on fossil energy production and use.

More pertinently, Shaw and Abbott sent their letter on August 2, 2010, the deadline EPA had set in its Final Tailoring Rule (p. 31582) for States to explain how they plan to apply Clean Air Act permitting programs to stationary sources of greenhouse gases. Instead, the Texas officials all but told EPA to go jump in the lake. 

Tailoring Absurdity

EPA adopted the Tailoring Rule to fix a problem of its own making. By adopting the endangerment rule, EPA obligated itself to establish greenhouse gas emission standards for new motor vehicles. The standards make carbon dioxide (CO2) a “regulated air pollutant,” which in turn makes any “major stationary source” of CO2 “subject to regulation” under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. 

The problem is that literally millions of  hitherto unregulated entities qualify as “major” sources of CO2 under those programs. The “major” source “applicability threshold” for PSD is a potential to emit 250 tons per year (tpy) of a regulated air pollutant. The threshold for Title V is even lower — a potential to emit 100 tpy. Whereas only large industrial facilities emit bona fide air pollutants in those quantities, millions of small entities never before subject to Clean Air Act permitting requirements — big box stores, office buildings, apartment complexes, restaurants, hospitals, schools — emit CO2 in the threshold amounts.

Applying the Clean Air Act to greenhouse gases thus produces what EPA itself describes as “absurd results.” For example, EPA and its State counterparts would have to process an estimated 41,000 PSD permits per year (up from 280) and 6.1 million Title V operating permits per year (up from 15,000). The ensuing “permit gridlock” would clog up environmental enforcement, stifle new construction, and force millions of firms to either operate illegally or close down. All on President Obama’s watch; all in the midst of a deep recession.

Rather than draw the reasonable conclusion that Congress did not intend to regulate greenhouse gases via the Clean Air Act, EPA decided that Congress must have intended for the agency to ”tailor” — that is, amend — the Act so the agency can regulate greenhouse gases without wrecking the economy. So, while the law specifies 100/250 tpy as the applicability thresholds for the permitting programs, the Tailoring Rule sets the cutoff at 100,000 tpy over the next two years and at not less than 50,000 over the next six years.

In addition, under the Tailoring Rule, modifications to an existing source won’t be considered “significant” — that is, won’t trigger the PSD process — unless the changes increase emissions by 75,000 tpy.

The Texas environmental chairman and AG aren’t buying it:

You have declared that EPA’s decision to enact automobile tailpipe emission limits for greenhouse gases pursuant to Title II of the federal Clean Air Act renders such gases immediately ”subject to regulation” for all purposes under the Act, including Title I Prevention of Significant Deterioration (PSD) pre-construction permitting program  and the Title V operating permit program. Simultaneously, however, you recognize that permitting greenhouse gases under the Act is “absurd.” . . . We agree.

They continue:

In order to avoid the absurd results of EPA’s own creation, you have developed a “tailoring rule” in which you have substituted your own judgment for Congress’s as to how deep and wide to spread the permitting burden.

And a bit later:

Instead of acknowledging that congressionally set emission limits [applicability thresholds] preclude the regulation of greenhouse gases, you instead re-write those statutorily-established limits . . . .

Problem Unsolved

Okay, now we get to the meat of the matter. PSD and Title V are mostly administered by States, not by EPA, and most State Implementation Plans (SIPs) define “major” emitting facility exactly as the Clean Air Act does. This means that even if the Tailoring Rule shields small entities from PSD and Title V regulation by EPA, it would not shield them from regulation by State agencies. EPA discussed this problem in its Proposed Tailoring Rule (p. 33542). ”Virtually all of [the EPA-approved SIPs] establish the PSD permitting threshold at the 100/250-tpy level,” EPA noted. Indeed, ”a few States have adopted lower permitting threshold levels.” In addition, “virtually all EPA-approved SIPs establish the significance level” for modifications triggering PSD “at zero” emissions in the case of previously unregulated air pollutants — not at 10,000 tpy, as EPA initially proposed, much less at 75,000 tpy, as the Final Rule stipulates.

Initially, EPA proposed to withdraw federal approval from those portions of SIPS incorporating the older thresholds and significance levels. This would mean, however, that the lower thresholds would “remain on the books under State law, and sources therefore remain subject to them as a matter of State law” (Proposed Tailoring Rule, p. 55343). In short, the regulatory nightmare would continue. For further discussion, see Peabody Energy’s comment on the Proposed Tailoring Rule.

Of course, States have the option to revise their SIPs and amend their clean air laws. But that could take years. Thus, notwithstanding EPA’s “tailoring,” small entities would find themselves “subject to regulation” under State PSD and Title V requirements on January 1, 2011, when the agency’s greenhouse gas tailpipe emission standards go into effect. As the Final Tailoring Rule observes, “Commenters stated that States would need to undertake a regulatory and/or legislative process to change the threshold in their state laws which they could not complete before the laws would otherwise require issuance of operating permits to GHG sources” (p. 31583).

Semantics Rule?

So what is EPA’s solution? Instead of changing the definition of “major stationary source,” EPA is changing the definition of “subject to regulation.” The agency, “by interpretation,” now defines “subject to regulation” as not including a “major source” of greenhouse gases unless the source has a potential to emit 100,000 tpy on a CO2-equivalent basis. EPA crows that “we find no substantive difference” between how the initially-proposed rule and how the final rule “tailors” the permitting requirements. EPA says that States similarly, “by interpretation,” can redefine “subject to regulation,” allowing them to exempt small sources from PSD and Title V without changing their SIPs or laws: 

Whether we add [higher] GHG thresholds directly to the definition of “major source” (as we proposed), or alternatively, expressly add and define the term “subject to regulation” [so that it only applies to sources emitting at least 100,000 tpy], both approaches revise the definition of “major source” to implement the Tailoring Rule. Accordingly, we adopt the later approach to facilitate state implementation of the final rule through an interpretation of existing state part 70 programs.

If you are confused as to how redefining “subject to regulation” can produce the same substantive result as redefining “major source” yet not similarly require States to change their SIPs or laws, you are not alone. It’s this attempt to turn law into a semantic game that the Texas officials refuse to play.

They write:

In the Tailoring Rule you have asked TCEQ to report to you by August 2, 2010 whether it would “interpret” the undefined phrase “subject to regulation” in TCEQ Rule 116.12 consistent with the newly promulgated definition of EPA Rule 51.166 in all its specifics and particulars. . . .In other words, you have asked Texas to agree that when it promulgated its air quality permitting program rules for pollutants “subject to regulation” in 1993, that Texas really meant to define the term “subject to regulation” as set forth in the dozens of paragraphs and sub-paragraphs of EPA Rule 51.166, first promulgated in 2010.

TCEQ Rule 116.12 was last amended in 2006. It “adopts” the Clean Air Act “by reference” — but only as the Act existed at the time of adoption. To adopt subsequent changes made by EPA, TCEQ would have to amend Rule 116.2 through a formal rulemaking process. Adopting such changes by mere act of “interpretation” would delegate more authority to EPA than the Texas Constitution allows.  

In addition, the Texas officials argue, “TCEQ is also precluded from adopting EPA’s newly-minted definition of “subject to regulation” by the “express terms of the Texas Government Code, which requires public notice of agency rulemaking.” They explain:

When the TECQ promulgated Rule 116.12 in 1993, or even when it last amended the rule in 2006, it had no intention of enacting a permitting program for greenhouse gases. Consequently, TCEQ had no reason to (nor did it) give public notice of any such intent. Obviously, Texans concerned with greenhouse gas permitting could not have known to participate and comment on the decision to require permits for pollutants “subject to regulation” in 2006, when the EPA first discovered greenhouse gases were “subject to regulation” in 2010. It should go without saying that the nearly infinite expansion of Texas’ permitting programs to include greenhouse gases with no state-level rulemaking at all would not satisfy Texas or federal law requiring notice and an opportunity to be heard.

Of course, one could say that the whole point of the Supreme Court’s decision in Massachusetts v. EPA, which pushed the agency to issue an endangerment rule, and the ensuing cascade of CO2 controls was to bypass the democratic process and confront the public with regulatory fait accompli.

Another Bite at the Apple?

It will be interesting to see how all this plays out. If Texas sticks to its guns, EPA may simply take over the Texas PSD program, in whole or in part, through a federally-imposed Federal Implementation Plan (FIP). Florida, for example, told EPA it could not make the regulatory changes in time, so EPA would just have to take over the Florida program. EPA reportedly is working on a “backstop rule” authorizing the agency to take over State permitting of greenhouse gases on a temporary basis (Environmental NewsStand, August 5, 2010, subscription required).

However, what if Texas still refuses to cooperate? Would EPA sue? Such a case might work its way up to the Supremes. The Court might then have to face the core issue it ducked in Mass. v. EPA – whether Congress intended for EPA to regulate greenhouse gases under the Clean Air Act as a whole, including PSD, Title V, and the national ambient air quality standards (NAAQS) program. The Court would have an opportunity to reconsider Mass. v. EPA in light of the absurd results to which it has led. A long shot — but a consummation devoutly to be wished.

Many have already written the obituary for the Kerry-Lieberman bill and other cap-and-trade legislation in the current Congress. In today’s Politico, however, columnist Darren Samuelsohn quotes Sen. John Kerry’s rejection of that assessment: ”No, it’s not dead because we’re going to have a lame duck session and we have weeks ahead of us.”

Re-read the first part of Kerry’s explanation. Kerry is saying that even if the Democratic leadership does not hold a vote on cap-and-trade before the November elections, fearing the wrath of the electorate, the greenhouse gang might still enact cap-and-trade after the elections, when voters could no longer hold them accountable.

How exactly would cap-and-traders pull it off? Samuelsohn summarizes the strategy as explained by an unnamed spokesman for a “major advocacy group”:

But one source from a major advocacy group said Wednesday that another option is for the Senate to pass a pared back energy measure now and then go to conference during a lame-duck session with the House-passed climate bill that includes greenhouse gas limits across multiple sectors of the economy. At that point, the source said, anything is possible.

Clever, but perhaps not clever enough. As Machievelli infamously advised princes long ago, one should not say to someone whom one wants to kill, “Give me your gun, I want to kill you with it,” but merely “Give me your gun,” for once you have the gun in hand, you can satisfy your desire.

Kerry, the unnamed advocacy group spokesman, and others have let the cat out of the bag. They are saying in effect, “Give us an energy bill, any energy bill, we want to snooker you with it to get cap-and-trade. We’ll conference any energy bill passed by the Senate with Waxman-Markey in a lame duck session, and neither you nor the American people will be able to stop us. Hah!”

Except that loose-lipped schemers are half-baked Machiavellians. The Party of No can and should have the last laugh. All Senate Rs have to do is resist the temptation to “do something.” They now have a compelling and easily explained reason to postpone further consideration of energy legislation until the next Congress. It is simply that the greenhouse gang, by its own admission, does not intend to play fair or respect the wishes of the electorate.

Rs who strongly feel the impulse to “do something” need merely wait until January 2011, when they are widely expected to hold more seats in both the House and Senate, and when Waxman-Markey will no longer be in play.

Last week, the House Energy and Commerce Committee unanimously approved H.R. 5626, Chairman Henry Waxman’s Blowout Prevention Act. Here’s the version of the bill as marked up and approved by the Committee. Here’s the earlier discussion draft on which the Energy and Environment Subcommittee held a hearing on June 30.

Like the discussion draft, the marked-up version of the bill is a Trojan Horse for restricting and, ultimately, shutting down deepwater oil production.

The most mischievous language is in the first substantive provision, Sec. (2).

Sec. (2)(a)(3) requires each applicant for a drilling permit to have an oil spill response plan ensuring “the applicant has the capacity to promptly control and stop a blowout in the event the blowout preventer and other well control measures fail” (p. 2). If the ongoing disaster in the Gulf has taught us anything, it is that once the blowout preventer and other well control measures fail, there may be no way “to promptly control and stop a blowout.” H.R. 5626 would establish a test no oil company can pass, a standard none can meet.

Nobody had the capacity to “promptly control and stop” the Macondo well blowout after the preventer and other well control measures failed — not BP, not the oil industry working as a team, not the federal and state governments working with the oil industry.

The sponsors had to know they were demanding the impossible when they drafted the bill. Consider these excerpts from a colloquy between Oversight and Investigation Subcommittee Chairman Bart Stupak (D-Mich.) and ExxonMobil CEO Rex Tillerson at the June 15 Energy and Environment Subcommittee hearing:

Stupak: “So when these things happen, these worst-case scenarios, we can’t handle them, correct?”
Tillerson: “We are not well equipped to handle them. There will be impacts as we are seeing. . . .That’s why the emphasis is always on preventing these things from occurring, because when they happen, we’re not very well equipped to deal with them.”
Stupak: “. . . so no matter which one of the oil companies here before us had the blowout, the resources are not enough to prevent what we’re seeing day after day in the gulf, not only the loss of 11 people, but we’re on, what, day 56 or 57 of oil washing up on shores. There is no other plan. There is no way to stop what’s happening until we finally cap this well, correct?”
Tillerson: “That is correct. . . . There is no response capability that will guarantee you will never have an impact. It does not exist and it will probably never exist.”

The discussion draft’s permitting requirements apply to all “high risk” wells, defined expansively as any offshore well plus any onshore well having the potential to cause serious environmental harm in the event of a blowout. The marked-up version targets “covered wells” rather than “high risk” wells, but this is largely a distinction without a difference. Covered wells include all wells located on the Outer Continental Shelf (OCS), plus any other well that, “based on criteria established by rule … could, in the event of a blowout, lead to extensive and widespread harm to public health, safety, and the environment” (pp. 41-42).

The OCS is defined (by reference to Sec. 1301 of the Submerged Lands Act) as waters lying seaward of three geographic miles from the coastline (p. 43). So H.R. 5626 would cover any deepwater well plus any shallow-water and onshore well where a blowout could lead to widespread environmental harm. Very few large wells would be exempt.

Presumably, operators could “promptly control and stop” a blowout at any onshore well and most shallow-water wells. Nonetheless, H.R. 5626 could effectively ban new wells in deep water, and deep water is the future of offshore oil and gas production. As the Department of Interior notes in its May 27 report, Increased Safety Measures for Energy Development on the Outer Continental Shelf, U.S. deepwater offshore oil production surpassed shallow water oil production in 2001, and in 2009, 80% of offshore oil production and 45% of offshore gas production “occurred in water depths in excess of 1,000 feet.” 

The bill does not clearly state how its requirements would apply to existing wells. Would an operator’s permit be revoked if he cannot demonstrate the capacity to “promptly control and stop” a blowout after the preventer and other well-control measures fail? If so, then the bill would not only block new deepwater drilling, it would also create a vehicle for shutting down existing wells. 

Sec. (2)(c) requires the operator to obtain a revised permit if he makes a “material modification” in well design, the blowout preventer, his plan to promptly stop a blowout, or his capability to begin or compete drilling of a relief well for a covered well. Apparently, then, an existing well would be subject to the new permitting requirements if it undertakes a “material modification.” In that case, however, the bill could discourage operators from making material improvements in well safety. Some might avoid or delay making safety improvements in order to avoid or delay becoming subject to an impossible standard. If I am reading these provisions correctly, H.R. 5626 could actually make offshore drilling less safe!  

Federal officials may not be able to finesse Sec. (2)(a)(3), even if they want to, because H.R. 5626 would empower “citizens” to enforce its provisions and associated regulations via litigation:

Any person having a valid legal interest which is or may be adversely affected may commence a civil action in Federal district court of appropriate jurisdiction on such person’s own behalf to compel compliance with this Act, or any regulation or order issued under this Act, or any regulation or order issued under this Act, against any person, including the United States, and any other government instrumentality or agency (to the extent permitted by the eleventh amendment to the Constitution) for any alleged violation of any provision of this Act or any regulation or order issued under this Act. [p. 28]

The discussion draft did not include the qualifier “valid legal interest.” But how difficult is it for an environmental group to demonstrate a “valid legal interest” in enforcing environmental laws and regulations? Enact the Blowout Prevention Act, and environmental groups will be able to sue any agency that fails to hold an oil company to an unattainable standard.

A few concluding thoughts. The security risks of dependence on petroleum imports are often hugely exaggerated, as the Cato Institute’s Jerry Taylor and Peter van Doren explain. Nonetheless, the sponsors of H.R. 5626 view petroleum imports with alarm. If the bill kills the future of U.S. offshore production, our dependence on Saudi Arabia and OPEC will increase. Is that what the sponsors want?

Perhaps their core premise is that oil is so evil that any restriction on oil production is good, because it will hasten the arrival of a “beyond petroleum” future. Such thinking is dangerous folly.

Although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most of humanity, including most Americans, would be poor, nasty, and short. Indeed, many of us would not even be alive.

Killing the future of offshore production would increase consumers’ pain at the pump, destroy tens of thousands of high-paying jobs, and undermine the economy of the Gulf Coast region. A “beyond petroleum” future would likely be just as distant — or even more so, because a poorer America would have fewer resources to invest in technological innovation.

Petrophobes overestimate their ability to predict and control the future. Consider these examples. 

• In 1990, the California Air Resources Board (CARB) adopted a zero emission vehicle (ZEV) mandate requiring 10% of all new cars sold in California be electric vehicles by 2003. Ten percent of the California new-car market is about 150,000 vehicles. CARB had to backpeddle several times as it became apparent that consumers were not buying these costly, limited-range vehicles. In 2008, CARB reduced the mandate to 2,500 all-electric vehicles – a rollback of about 98%.
• Congress in 2007 enacted a Renewable Fuel Standard (RFS) requiring refiners to sell 250 million gallons of cellulosic ethanol in 2011. Earlier this week, EPA announced it would reduce the 2011 target to 5 – 17 million gallons per year –  a 94-98% rollback.

It is not surprising that veteran petrophobes like Reps. Waxman and Markey (D-Mass.) drafted H.R. 5626. It is surprising that every Republican member voted for it too. Do any of them have buyer’s remorse? If not now, when?