William Yeatman

CEI Senior Fellow Chris Horner last week sat down with Media Research Center TV to discuss global warming alarmism. Below is video of the interview.

On Wednesday, the Commerce Department levied tariffs from 18 percent to 240 percent on solar panels imported from China. At best, this silly policy will increase the price of electricity in America; at worst, it could be the first salvo in a harmful trade war.

Renewable energy sources like solar and wind power are expensive and unreliable, so they cannot compete with conventional energy sources in the electricity market. Instead, demand for green energy is established by Soviet-style production quotas, known as renewable energy standards. More than 30 states have enacted such standards, which force consumers to use increasing amounts of green energy.

The cheapest way to achieve these solar energy consumption mandates is to import Chinese solar panels, due to the simple fact that solar panels manufactured in China are cheaper than solar panels manufactured in America. By adding an import tax on Chinese solar panels, the Obama administration is making electricity more expensive for citizens subject to renewable energy quotas.

And that’s the best case! Invariably, trade tariffs are tit-for-tat measures. China is likely to respond in kind. This is the slippery slope to trade wars, the impact of which would be devastating to the fragile global economy.

Proponents of the import duties claim that they are necessary so that the U.S. can win a race with China to capture global market share for green energy manufacturing. This reasoning is ridiculous. As I explained above, the market for green energy is wholly a function of government favors. Unfortunately for the green energy industry, political winds are quick to change. As costs mount, politicians will rescind the government’s support, and markets will crash. It’s already happened elsewhere. Now, it’s happening here: The American wind industry claims that it will shed half its workforce if the Congress allows a single tax credit to expire.

Plainly, so-called “sustainable” energy is reliant on unsustainable government support. It should go without saying that this is a poor business model. When the renewable energy bubble bursts, the global industry leader will be the biggest loser. With that in mind, the supposed race with China for green technological supremacy is one the U.S. would be wise to forfeit.

[N.B. I made these points in an interview with Press TV, available below.]

Yesterday at Grist, David Roberts posted about a recent Christian Science Monitor article titled, “Study: EPA Regulations Squelch U.S. Coal Industry,” which he labeled “misleading dreck.” According to Roberts,

The story, from “guest blogger” Charles Kennedy, refers to a report [PDF] from the research consultancy Brattle Group. So I went and read the report. And it doesn’t say what Kennedy says it says. At all. In fact, it says something close to the opposite….

The report is an update of its brief from late 2010 on potential coal-plant retirements. The headline news: Brattle is substantially upping its projection of how many coal plants will retire, by about 25 GW. That’s huge. But it’s not happening because of EPA regulations. In fact, say the authors, the change is “primarily due to changing market conditions, not environmental rule revisions, which have trended towards more lenient requirements and schedules” (his emphasis).

Roberts is plainly confused when he writes that “it’s not happening because of EPA regulations.” The entire point of the Brattle Group’s 2010 and 2012 analyses is to forecast how the electricity market will respond to scores of billions of dollars in capital costs being imposed by the EPA on the coal industry. Thus, in a 2010 study, the Brattle Group concluded that 50 GW to 67 GW of coal-fired electricity would retire rather than install EPA-mandated retrofits, given 2010  market conditions (i.e., electricity demand and natural gas prices). And in a 2012 update of the 2010 report, the Brattle Group concluded that 59 GW to 77 GW of coal-fired electricity would retire rather than install EPA-mandated retrofits, given current market conditions (i.e., electricity demand and natural gas prices).

In each analysis, the direct impetus for the retirement of coal units is the cost of retrofits required by EPA regulations. And the cheaper the price of natural gas, the more utilities will opt to fuel switch or participate in the wholesale market, rather than pay for retrofits at their coal-fired power plants. This is why the updated 2012 Brattle Group report estimated a 25 GW increase in coal power plant retirements over the 2010 report–because gas prices are still depressed, so it is more economical for utilities to switch fuels than it is for them to comply with EPA requirements. Roberts, however, implies that utilities would choose to shutter coal power plants based on the price of natural gas alone; he fails to acknowledge that EPA regulations remain the underlying cause of the utilities’ choice to do so.

Given that the price of coal is projected to be significantly cheaper than the price of gas—as it states on page 2 of the 2012 Brattle Group report—it is likely that most, if not all, of these coal-fired power plants would continue operating, were their owners not forced to spend hundreds of millions, even billions of dollars, on EPA-mandated retrofits. To put it another way, natural gas can beat coal, but only with EPA’s help. For similar reasons, Chesapeake Energy (a natural gas company) gave $25 million to Sierra Club’s “Beyond Coal” campaign. Because a war on coal is great for gas!

Now, it would be one thing if these retrofits actually served a public health purpose. Alas, they don’t, which was the subject of a previous post. Instead, EPA is targeting the coal industry with costly, nonsensical regulations for no discernible reason other than to placate the environmentalist wing of the President’s political party. Of course, this is crummy policy making, especially in the midst of a difficult economy.

On September 21, the Cooler Heads Coalition hosted a Capitol Hill briefing on “The Costs and Benefits of Green Jobs,” featuring Diana Furchtgott-Roth, Senior Fellow at the Manhattan Institute and author of a new book, Regulating to Disaster: How Green Jobs Policies Are Damaging America’s Economy.

Video of the briefing is below.

I can understand why President Obama would deny that his administration is waging a war on coal. In the midst of difficult economic times, it would be politically risky if he told the bald truth, that his administration has launched a pincer attack on both coal production and consumption, for no discernible purpose other than to placate a political constituency.

I do not, however, understand why informed reporters (most recently, at Politico) and esteemed colleagues (Cato) mistakenly posit that the war on coal is an empty rhetorical device. The truth is so obvious; I can’t fathom how they miss it.

Consider: In 2012, the Environmental Protection Agency promulgated two regulations—the Utility MACT (final) and the Carbon Pollution Standard (proposed)—that effectively ban the construction of new coal-fired power plants. This is extraordinary. An Agency within the Presidency, without a Congressional mandate, has closed the future for an industry that provides 40 percent of the nation’s electricity. And for what? Not for any public health benefit, to be sure.

The regulatory justification for the Utility MACT is particularly risible. Its purpose is to protect a supposed population of pregnant, subsistence fisherwomen, who consume at least 225 pounds of self-caught fish from exclusively the 90th percentile most polluted fresh, inland water bodies. You can’t make this stuff up! Notably, EPA never identified a single member of this putative population. Rather, they are modeled to exist.

The EPA’s case for the Carbon Pollution Standard is subtler, but no less pointless. In the proposed rule, EPA never even tried to tether the regulation to a specific benefit accruable to the American people. This makes sense, because there are no such benefits. U.S. policy on new electricity generation (like the Carbon Pollution Standard) is an insignificant driver of global greenhouse gas emissions relative to coal-fueled Asian economic growth. In fact, the Carbon Pollution Standard rested on a discretionary authority; there was no pressing concern. EPA merely exercised an option resulting from the Agency’s endangerment power grab.

Thus, neither the Utility MACT nor the Carbon Pollution Standard engenders a “real” public health benefit. On the other hand, the rules will cause expensive energy, which is a very real cost to be borne by all of society.

For existing coal-fired power plants, EPA’s strategy is to impose three types of expensive retrofits on every existing coal-fired power plant, regardless whether or not they would serve an actual purpose. The three controls are: selective catalytic reduction for nitrogen oxides; scrubbers for sulfur dioxide; and electrostatic filters for fine particulate matter. The aforementioned Utility MACT would require scrubbers and electrostatic filters. EPA is using the Regional Haze rule to compel selective catalytic reduction systems. Regional Haze is the archetype of all-pain, no-gain regulation. It’s an aesthetic regulation, whose benefits are literally invisible.

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Yesterday, by an 8-3 vote, the San Francisco Board of Supervisors approved CleanPowerSF, a municipal energy plan that would force about half the city’s ratepayers into using electricity that was generated entirely from renewable sources, like wind and solar power.

The cost? According to the San Francisco Chronicle, the measure would increase utility bills about 23 percent*.

And I thought renewable energy was supposed to be competitive! California already has the 13^th most expensive electricity rates in the country, so this 23 percent green energy premium is on top of relatively high utility bills. [updated 10:23 AM, 9/20/2012: I completely forgot to mention that this renewable energy is 23 percent more expensive than conventional energy (in a market, California, whereby a state law forbids the consumption of coal, the most conventional electricity source) after accounting for federal, state, and municipal subsidies. Moreover, I don't know the extent to which this "100 percent" renewable power is "real" rather than an artificial construct. The grid requires a reliable flow of power, but renewable energy is intermittent, and there's no technology to store utility-scale electricity. Therefore, I presume CleanPowerSF entails a reliance on imported hydropower (the "real" source of power) while the city purchases renewable energy credits (which are basically the environmental attributes of renewable energy produced elsewhere) equal to the amount of hydropower consumed. This is necessary because Californians don't consider hydropower to be "green" due to the fact that it harms some kinds of fish. Again, this is reasoned speculation on my part--I can't imagine how CleanPowerSF would work otherwise. I'll post again when I find out.]

In addition to being expensive, CleanPowerSF is also coercive. On the basis of already-conducted public surveys that purport to have identified those neighborhoods that are willing to pay more for green energy, the city has chosen 375,000 customers who will be automatically enrolled into CleanPowerSF. That’s about half the ratepayer base. It is incumbent upon these unfortunate residents to opt out of the program. By making participation a default option, the city is trying to take advantage of humankind’s innate aversion to dealing with minutiae, and thereby compel (dupe) as many citizens as possible into using 100 percent green, expensive energy. It’s an old sales trick.

Evidently, San Francisco Mayor Ed Lee’s support for CleanPowerSF is tepid. There’s no guarantee he’ll lend his approval, which is necessary for the project to move forward. I appreciate his reservations.

As I’ve argued here, here, and here: San Francisco could have achieved its green dreams, at zero cost, by freeing the city’s electricity market from the shackles of socialism. Instead, municipal leaders have opted to trade one government granted monopoly (PG&E) for another (Shell, the sole provider of electricity for CleanPowerSF).

*The Chronicle reports that the San Francisco Public Utilities Commission estimated that lower income customers, with utility bills of $40 per month, would see an increase of $9.55. For the average monthly utility bill, which the Energy Information Administration pegs at $81 in California, the San Francisco PUC estimated that the increase would be $18.53.

Today, the Environmental Protection Agency imposed on Montana a Federal Implementation Plan under the Regional Haze Rule that will cost scores of millions of dollars, but achieve no discernible purpose.

Specifically, EPA is requiring $82 million in unnecessary capital expenditures at the Colstrip coal-fired power plant located east of Billings, Montana, in order to engender an ‘improvement’ in visibility that is imperceptible to the eye.

Don’t take my word for it! See the images directly below. They depict the visibility “benefits” wrought by EPA’s regulations. They were generated using WinHaze visibility modeling software, with inputs from EPA data.

Notably, these mandated controls are 500% more expensive than what EPA’s standing rules presume to be “cost-effective.” Given that the benefits are invisible, the severity of these Regional Haze requirements suggests that EPA’s motivations were political.

Remember, environmental special interests are a significant component of the President’s organizational base. And for them, coal is evil, because it is “dirty.” That’s why, way back in 2008, then-Senator Barack Obama told the San Francisco Chronicle editorial board that he would “bankrupt” the coal industry if elected President. Now, EPA is following through on the President’s promise. The powers of the presidency are the means by which he satisfies the environmentalists’ desired ends. To be sure, it’s an American outrage that the fate of an entire industry can thus be subjected to the capricious winds of presidential politics, but that’s a different blog post. For now, it suffices to say that this Administration is imposing billions of dollars of costs, in the midst of difficult economic times, in order to placate a political constituency, and for nothing else.

In mid-June, Sen. Lamar Alexander (R-Tenn.) led the opposition against S. J. Res. 37, legislation that would have blocked EPA’s all pain, no gain Utility Maximum Achievable Control Technology (MACT) regulation. On the floor of the Senate, he explained that the Utility MACT would prevent out-of-state pollution from hurting business in Tennessee, but this claim is false. According to EPA data, Tennessee’s compliance with Clean Air Act regulations is not adversely affected by air pollution from neighboring States. In light of the evident falsity of his avowed rationale for protecting the Utility MACT, Sen. Alexander’s true motivations for opposing S. J. Res. 37 were inexplicable.

Last week, however, the mystery of Sen. Alexander’s support for the Utility MACT appears to have been solved. The Environmental Defense Action Fund announced on Tuesday that it will spend $200,000 on television advertisements in Tennessee thanking Senator Lamar Alexander for “protecting the children.”