Harrison Schmitt and William Happer wrote an excellent op-ed last week in the Wall Street Journal titled, “In Defense of Carbon Dioxide.” In the op-ed, Schmitt and Happer build a solid case for the benefits, as opposed to costs, occurring from an increase in the much maligned carbon dioxide.  Schmitt, who is an Adjunct Professor of Engineering at University of Wisconsin-Madison, has a distinguished reputation as an Apollo 17 astronaut and was formerly a US Senator from New Mexico. Happer is a Professor of Physics at Princeton University and was also the former director of the office of energy research at the Deparment of Energy.

According to Schmitt and Happer, rising levels of carbon dioxide in the atmosphere have not led to the dramatic temperature increases some models have anticipated. In fact, the increase in carbon dioxide has been beneficial. Schmitt and Happer explain:

The current levels of carbon dioxide in the earth’s atmosphere, approaching 400 parts per million, are low by the standards of geological and plant evolutionary history. Levels were 3,000 ppm, or more, until the Paleogene period (beginning about 65 million years ago). For most plants, and for the animals and humans that use them, more carbon dioxide, far from being a “pollutant” in need of reduction, would be a benefit. This is already widely recognized by operators of commercial greenhouses, who artificially increase the carbon dioxide levels to 1,000 ppm or more to improve the growth and quality of their plants.

Despite the strong argument both authors have made, several climate change alarmists have excoriated Schmitt and Happer.  In attempt to discredit the op-ed, these alarmists have resorted to using hackneyed arguments and insults to reaffirm their opposition to what they see as a flawed and misleading op-ed.  Gavin Schmidt called the op-ed, “idiotic”, and Phil Plait of Bad Astronomy, in a reference to the discredited “Hockey Stick Graph” claims the op-ed ignores the graph’s depiction of rising temperatures.

Contrary to the claims of these detractors, Schmitt and Happer’s op-ed is well-supported. According to numerous peer-reviewed studies, increases in carbon dioxide will lead to a “greening of the planet” as plants absorb the carbon dioxide allowing them to flourish well-beyond their current state.

Therefore, as Schmitt and Happer so ably demonstrate, it is imprudent for policymakers to continue to classify CO2 under the category of harmful “pollutants”.  By implementing such policies, we are being steered towards a disastrous outcome for our economic future.

Gina McCarthy — President Obama’s pick to succeed Lisa Jackson as EPA Administrator — is often described as a “straight shooter” and “honest broker.” As my colleague Anthony Ward and I explain in Forbes, McCarthy has a history of misleading Congress about the EPA’s greenhouse gas regulatory agenda.

Specifically, McCarthy and the Air Office over which she presides gave Congress and the electric power sector false assurances that the EPA’s greenhouse gas regulations would not require utilities planning to build new coal-fired power plants to “fuel switch” to natural gas. McCarthy also denied under oath that greenhouse gas motor vehicle standards are “related to” fuel economy standards, even though anyone with her expertise must know that the former implicitly and substantially regulate fuel economy.

McCarthy and the Air Office’s misleading statements about fuel switching discredited critics who claimed the EPA was waging a war on coal and would, if left to its own devices, ban new coal generation. The fiction that greenhouse gas emission standards are unrelated to fuel economy standards gave the EPA legal cover to gin up a regulatory nightmare for auto makers — the prospect of a market-balkanizing, state-by-state, fuel-economy ”patchwork“ – just so the White House, in hush-hush negotiations, could demand auto industry support for the administration’s motor vehicle mandates as the price for averting the dreaded patchwork. This is a complicated tale, which I will discuss in Part 2 of this series.

The bottom line is that if the EPA had not dissembled on fuel switching and not obfuscated on fuel economy, more Senators might have voted for legislative measures, sponsored by Sen. Lisa Murkowski (R-Alaska) in 2010 and Sen. James Inhofe (R-Okla.) in 2011, to rein in the agency. In addition to their well-publicized transparency concerns about the EPA under the leadership of Lisa Jackson and Gina McCarthy, Senators should also have separation of powers concerns.

Earlier this week, Sen. David Vitter (R-La.), Ranking Member of the Senate Environment & Public Works Committee, released a 123 page document containing McCarthy’s responses to hundreds of questions on a wide range of issues. In today’s post, I comment on McCarthy’s responses to Sen. Vitter’s questions about fuel switching. In Part 2 of this series, I will comment on McCarthy’s responses regarding the administration’s motor vehicle program.

The fuel switching issue is somewhat arcane, so it may be helpful if I provide a quick overview before commenting on McCarthy’s answers.

In April 2010, at an event hosted by the Johns Hopkins School of Advanced International Studies, McCarthy stated that best available control technology (BACT) standards for major greenhouse gas emitters would require only efficiency upgrades, not fuel switching from coal to gas. “We haven’t done it [fuel switching] in the past, and there’s been good reason why we haven’t done it in the past,” she reportedly said.

The Air Office’s permitting guidance for greenhouse gases, both as proposed in November 2010 and as adopted in March 2011, similarly states that the “initial list of control options for a BACT analysis does not need to include ‘clean fuel’ options that would fundamentally redefine the source.” In other words, coal power plants would not be lumped together with natural gas combined cycle (NGCC) power plants in the same industrial source category subject to the same emission standards. Accordingly, an applicant would not be required to “switch to a primary fuel type other than the type of fuel that an applicant proposes to use for its primary combustion process.”

Lest there be any confusion on this point, a Q&A document published along with the March 2011 guidance asks whether “fuel switching (coal to natural gas) should be selected as BACT for a power plant?” The document answers: “No.” It states that BACT for carbon dioxide (CO2) should “consider the most energy efficient design,” but “does not necessarily require a different type of fuel from the one proposed.”

In March 2012, however, the EPA proposed a ‘Carbon Pollution’ Rule that does exactly what McCarthy and the Air Office said the EPA would not do. The rule lumps coal power plants and NGCC plants into a single newly-minted industrial source category — “fossil fuel electric generating units.” Moreover, the rule requires fuel switching, proposing a new source performance standard (NSPS) — 1,000 lbs CO2/MWh — that nearly all new NGCC plants already meet (77 FR 22396) and exactly zero commercial coal power plants can meet.

What makes this volta face all the more unexpected is that BACT standards, which apply to individual facilities on a case-by-case basis, are generally more stringent than NSPS, which set minimum emission control standards for categories of industrial sources. In regulatory parlance, NSPS provide the ”floor” for BACT determinations. If the EPA would not use BACT to require fuel switching, then it would seem unreasonable – even paranoid – to suspect the EPA of planning to use NSPS for that purpose.

The timeline of these actions is critical. In June 2010, the Senate voted on Sen. Murkowski’s resolution (S.J.Res.26) to overturn the EPA’s Endangerment Rule, the prerequisite for all EPA global warming regulations. The resolution fell short by four votes (47-53). In April 2011, the Senate voted on Sen. Inhofe’s legislation to overturn all EPA global warming regulations except those auto companies had already made investments to comply with. The bill failed on a 50-50 tie vote. Had McCarthy and the EPA been candid about their anti-coal agenda in 2010 and 2011, more Senators might have voted for those measures.

In any case, agencies are not supposed to provide false or misleading information to influence how Members of Congress vote.

Let’s now see how McCarthy addresses these issues. Vitter’s questions are in bold type, McCarthy’s responses are indented, my comments are in blue.

BACT standards apply to individual sources on a case-by-case basis. They generally are more stringent – and by law may not be less stringent – than Clean Air Act new source performance standards (NSPS), which the EPA establishes for categories of industrial sources. In other words, NSPS are the “floor” or minimum emission control standards for BACT determinations. Is that correct?

Response: Yes. The Clean Air Act specifies that BACT for a source cannot be less stringent than an applicable NSPS. Thus, when EPA completes an NSPS for a source category, BACT determinations that follow for applicable sources would need to consider the levels of the pollutant standards and the supporting rationale of the NSPS.

Comment: The EPA’s ‘Carbon Pollution’ Rule proposes NSPS for CO2 from “fossil fuel electric generating units.” The standard is 1,000 lbs CO2/MWh. The EPA estimates that most NGCC power plants already meet that standard, whereas the most efficient commercial coal power plants emit 1,800 lbs CO2/MWh (77 FR 22417).  

If BACT does not require fuel-switching, we should have no reason to expect that NSPS would require fuel switching or “redefine the source” to impose identical CO2 control requirements on coal boilers and on gas turbines. Is that correct?

Response: EPA’s GHG Permitting Guidance (March 2011) says: “… a permitting authority retains the discretion to conduct a broader BACT analysis and to consider changes in the primary fuel in Step 1 of the analysis.” Thus, EPA never ruled out the possibility that a permitting agency could require that an applicant consider natural gas, or other cleaner fuels, when proposing a coal-fired EGU.

Comment: McCarthy omits the first word of the quoted sentence: “Ultimately.” The unexpurgated sentence reads: “Ultimately, a permitting authority retains the discretion to conduct a broader BACT analysis and to consider changes in the primary fuel in Step 1 of the analysis” (emphasis added). ”Ultimately” suggests something that might happen several years down the road, not the agency’s next move, and then only as a matter of “discretion” in individual cases, not as the industry-wide default position. The guidance document’s weasel words, which occur in only one sentence out of a 96-page text, do not obviate the fact that McCarthy and the EPA misled Congress and industry about the scope of the agency’s regulatory ambition.

[McCarthy continues:] However, it is important to note that under the proposed carbon pollution standard for new power plants, companies would not be required to build natural gas combined cycle units; they would be required to meet a standard of 1000 lbs/MWh, which can be met either through the use of natural gas or by burning coal along with carbon capture and storage [CCS].

Comment: This is a distinction without a difference. No commercial coal plants with carbon capture and storage exist, and none is being built without substantial taxpayer support. The levelized cost of new coal plants already exceeds that of new NGCC plants, and “today’s CCS technologies would add around 80% to the cost of electricity for a new pulverized coal (PC) plant, and around 35% to the cost of electricity for a new advanced gasification-based (IGCC) plant,” according to the EPA (77 FR 22415). Since building an NGCC plant is far cheaper than building a coal plant with CCS, the proposed 1,000 lbs CO2/MWh standard is a de-facto requirement to fuel switch from coal to gas. Offering an alternative no one will choose because it is prohibitively costly does not make fuel switching optional. 

[McCarthy concludes:] The agency is still actively considering a wide range of comments on this issue, and any final decision will reflect careful consideration of the issue.

Comment: In other words, the agency is still trying to figure out how to tweak the NSPS in light of detailed legal criticism so that the rule still puts the kibosh on new coal generation without being tossed out in court.

In their guidance establishing what could be considered Best Available Control Technology (BACT) for regulating GHGs in the permitting process, EPA stated that fuel-switching from coal to natural gas would not and could not be considered BACT: Since NSPS are traditionally interpreted to set the BACT “floor” for permitting purposes, how can a NSPS that eliminates the ability to construct new coal units without the implementation of commercially infeasible carbon capture and storage (CCS) be consistent with EPA’s previous guidance?

Response: As explained in responses to related questions, the statement that “EPA stated that fuel-switching from coal to natural gas would not and could not be considered BACT” is not entirely correct. While EPA did not propose that CCS represented BSER [best system of emission reduction], EPA stated in the preamble of the proposed NSPS rule that “CCS is technologically feasible for implementation at new coal-fired power plants and its core components (CO2 capture, compression, transportation and storage) have already been implemented at commercial scale.” [77 FR 22414].

Comment: This response does not address the criticism that even if one sentence of the guidance document anticipates that permitting agencies may “ultimately” exercise the “discretion” to require fuel switching in individual cases, the EPA gave no hint that next year it would require all new fossil fuel power plants to be either NGCC or non-economical coal with CCS. Note, too, that “implemented at commercial scale” is not the same as commercially viable, i.e., sustainable without taxpayer subsidies.

McCarthy does not address the convoluted weirdness of the rule. The Clean Air Act defines “performance standard” as a “standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which . . . the Administrator determines has been adequately demonstrated.” The EPA picked 1,000 lbs CO2/MWh as the standard because that is a typical emissions rate of new NGCC power plants. But NGCC is a type of power plant, not a system of emission reduction. Gas turbines have been “adequately demonstrated” only as power sources – not as emission reduction systems for coal boilers. To my knowledge, the EPA has never before selected a performance standard such that one type of facility can comply only by being something other than what it is.

Why propose something so contorted? The EPA does not anticipate any quantifiable climate or health benefits from the NSPS (77 FR 22430). The rule’s only discernible purpose is to ban construction of new coal generation. The greenhouse gas permitting guidance document concealed that purpose.

The Air Office’s PSD and Title V Permitting Guidance for Greenhouse Gases, both as proposed in November 2010 and as adopted in March 2011, similarly states that the “initial list of control options for a BACT analysis does not need to include ‘clean fuel’ options that would fundamentally redefine the source.” In other words, an applicant would not be required to “switch to a primary fuel type other than the type of fuel that an applicant proposes to use for its primary combustion process.” In addition, a Q&A document published along with March 2011 guidance asks whether “fuel switching  (coal to natural gas) should be selected as BACT for a power plant?” The document answers: “No.” It goes on to state that BACT for CO2 should “consider the most energy efficient design,” but “does not necessarily require a different type of fuel from the one proposed.” These documents suggest that the EPA will not require fuel switching in BACT determinations. Was that a reasonable conclusion for Congress and electric utilities to draw at the time?

Response: That is a reasonable interpretation, and EPA continues to believe that its BACT guidance is reasonable for the specific purposes for which the guidance is intended.

Comment: Bingo! If the conclusion that the EPA would not require fuel switching is a reasonable interpretation of the BACT guidance, then Congress and electric utilities had no reason to expect the agency to require fuel switching only one year later, much less do so via a form of regulation — NSPS — that is generally less stringent than BACT. In hindsight, the BACT guidance was the setup for a bait-and-fuel-switch.

Some Senators wonder how they can trust Gina McCarthy to be a “straight shooter” as EPA administrator given the agency’s FOIA failures, reliance on secret data in rulemakings, and use of private email accounts to conduct official business. These issues are significant but so is the agency’s trickery on greenhouse gas regulation of stationary sources.

Note also that the proposed 1,000 lb CO2/MWh performance standard is substantially similar to the NSPS proposed in section 116 the Waxman-Markey cap-and-trade bill, which would require a 50% reduction in CO2 emissions from new coal plants permitted before Jan. 2020. The Waxman-Markey legislation narrowly passed in the House but companion legislation died in the Senate. The ‘Carbon Pollution’ Rule sure looks like an attempt to end-run the legislative process and enact a policy Congress has rejected.

Looking at this from a wider angle, Senators might ponder what would have happened if Reps. Waxman and Markey, instead of introducing a cap-and-trade bill, had introduced legislation authorizing the EPA to do exactly what it is doing now — regulate greenhouse gases through the Clean Air Act as it sees fit. Such a bill almost certainly would have been dead on arrival. Under the leadership of Lisa Jackson and Gina McCarthy, the EPA has morphed into a Super Legislature, ‘enacting’ climate and fuel economy policies Congress has not approved and would reject if introduced as legislation and put to a vote. The Senate cannot confirm McCarthy as EPA Administrator without rewarding the agency’s regulatory overreach.

Nor can it do so without encouraging the agency to fool and trick Congress, as it did during the Senate debates on the the Murkowski resolution and Inhofe legislation, when statements by McCarthy and the Air Office seemingly disavowed any ambition to “bankrupt” investors in new coal power plants. Whatever their party affiliation or views on climate change, Senators should dislike being hoodwinked.

Is the Clean Air Act so badly flawed that it will cripple environmental enforcement and economic development alike unless the EPA and its state counterparts defy clear statutory provisions or, alternatively, spend $21 billion annually to employ an additional 320,000 bureaucrats?

That is a central issue in a recent lawsuit by Southeastern Legal Foundation (SLF), the Competitive Enterprise Institute (CEI), a host of lawmakers and several companies, who are petitioning the Supreme Court to review an appellate court decision upholding the EPA’s global warming regulations.

I discuss some of the legal issues today in a column on Forbes.com. My conclusion: The Court’s reading of the Clean Air Act in Massachusetts v. EPA (2007) and the EPA’s reading of the Act in regulating greenhouse gas emissions from “major” stationary sources cannot both be right — and both may be wrong!

Unless the Court is prepared to take ownership of the bizarre notion that the the Clean Air Act was wired from the start to self-destruct four decades later, it should either overturn the EPA’s regulation of stationary sources, revise its decision in Mass. v. EPA, or both.

The Soviet-style production quota for ethanol, pompously titled the Renewable Fuel Standard (RFS), is in trouble. The RFS requires more ethanol to be sold than can actually be blended into the nation’s motor fuel supply. This “blend wall” problem will get worse as RFS production quota and federal fuel economy standards ratchet up, forcing refiners to blend more and more ethanol into a shrinking motor fuel market.

Here’s the math. Total domestic U.S. motor fuel sales in 2011 stood at 134 billion gallons. Although the U.S. population is increasing, overall motor gasoline consumption is projected to decline by 14% as fuel economy standards tighten between now and 2025. Already, the 2013 blending target for “conventional” (corn-based) biofuel – 13.8 billion gallons — exceeds the 13.4 billion gallons that can be blended as E10 (a fuel mixture containing 10% ethanol).

By 2022, the RFS requires that 36 billion gallons of biofuel be sold in the domestic market, including 21 billion gallons of “advanced” (low-carbon) biofuel, of which 16 billion gallons are to be “cellulosic” (ethanol derived from non-edible plant material such as corn stover, wood chips, and prairie grasses). Because commercial-scale cellulosic plants still do not exist, the EPA repeatedly has had to dumb down the cellulosic blending targets.

Eventually, though, the EPA will have to mandate the sale of at least a few billion gallons of advanced biofuel, just to keep up the pretense that the RFS is something more than corporate welfare for corn farmers. In any event, by 2015, refiners will have to sell 15 billion gallons of corn-ethanol — roughly 1.6 billion gallons more than can be blended as E10.

A side effect of the blend wall is the recent “RINsanity” of skyrocketing biofuel credit prices. The EPA assigns a unique Renewable Identification Number (RIN) to every gallon of ethanol produced and a credit for each gallon sold as motor fuel. Refiners who cannot blend enough ethanol to meet their quota can use surplus credits accumulated during previous years or purchased from other refiners.

Because the blend wall makes the annually increasing quota more and more difficult to meet, RIN credits are suddenly in high demand. Credits that cost only 2-3 cents a gallon last year now sell for about 70 cents. Consumers ultimately pay the cost — an extra 7 cents for each gallon of E10 sold, or an additional $11.7 billion in motor fuel spending in 2013, according to commodity analysts Bill Lapp and Dave Juday. Ouch! Ethanol was supposed to reduce pain at the pump, not increase it.

The ethanol lobby offers two fixes for the blend wall. Neither is workable. The EPA thinks it has another card up its sleeve.

One option long advocated by the biofuel industry is for Congress to “incentivize” sales of E85 (motor fuel blended with up to 85% ethanol). Every gallon of ethanol sold as E85 represents up to 8.5 gallons of ethanol the refiner does not have to sell as E10. In theory, a robust market for E85 would enable refiners to meet the rest of their quota obligation within the E10 blend wall.

However, the chief obstacle to market penetration of E85 is not, as the ethanol lobby contends, the absence of political support such as flex-fuel vehicle mandates and tax breaks to install E85-capable storage tanks and blender pumps. The main barrier is simply that E85, due to its inferior energy density and poor fuel economy, is a money loser for consumers.

FuelEconomy.Gov, a Web site jointly administered by the EPA and the Department of Energy, makes this painfully clear. At today’s prices, the typical owner of a flex-fuel vehicle would spend up to $750 a year more to drive with E85 instead of regular gasoline.

The ethanol lobby’s other solution is for the EPA to approve the sale of E15 by conventional retail outlets. Approving E15 would allow refiners to increase by 50% the quantity of ethanol blended in each gallon of motor fuel sold. In October 2011, the EPA authorized the sale of E15 for newer automobiles (model years 2001 and later). But so far only a handful of retail outlets offer the fuel. As Platts explains, “Liability issues related to misfueling, the cost of outfitting a retail station to carry the fuel, and concerns raised by some auto manufacturers who won’t honor warranties if E15 is used, have dampened the market for the fuel.”

So what is the EPA’s clever new idea? Double down on E15 — literally. The EPA’s recently proposed Tier 3 Vehicle Emission and Fuel Standards Rule contains what New York Times reporter Matthew Wald calls an “audacious suggestion.” A major objective of the rule is to reduce the sulfur content of gasoline, and ethanol contains no sulfur. Under the proposed rule, automakers could “request” the EPA to certify vehicles “optimized” to run on high-octane fuels such as E30. The agency envisions a triple play, in which E30 lowers sulfur emissions, improves fuel economy, and pushes ethanol sales beyond the E10 blend wall (p. 28):

This could help manufacturers that wish to raise compression ratios to improve vehicle efficiency, as a step toward complying with the 2017 and later light-duty greenhouse gas and CAFE standards (2017 LD GHG). This in turn could help provide a market incentive to increase ethanol use beyond E10 by overcoming the disincentive of lower fuel economy associated with increasing ethanol concentrations in fuel, and enhance the environmental performance of ethanol as a transportation fuel by using it to enable more fuel efficient engines.

Ethanol contains less energy than gasoline by volume but, according to the EPA, a vehicle “optimized” to run on E30 could get better mileage than today’s vehicles. Wald explains:

Using high-octane premium-grade gas in an engine that does not require it offers no benefit. But in engines designed to squeeze the fuel-air mixture to very high pressures before igniting it with the spark plug, high-octane fuel burns predictably and can produce more horsepower. . . .Ethanol contains only about two-thirds as much energy as gasoline, gallon for gallon. But if it is burned in engines designed for high cylinder pressures, it will produce competitive horsepower.

Are E30-optimized vehicles commercially viable? The proposed Tier 3 rule provides no data on either the consumer cost of such vehicles or the fuel economy gains. Even if the lifetime fuel savings outweigh the increase in vehicle cost, that is not usually the decisive factor for most consumers, otherwise hybrid sales would be larger than 4% of the vehicle market.

One thing is clear. E30 would face an even bigger infrastructure challenge than E15 does. A March 2012 API study found that “very few” service stations would be able to sell E15 with existing equipment: “Equipment modifications could be as little as new hanging hardware (i.e., hose, nozzle, etc.) or as much as an entirely new fuel dispensing system.” More extensive modifications, such as new dispensers and a new storage tank, would likely be required to sell E30.

That’s a major expense for most service stations, which typically are small businesses with razor thin profit margins on the fuel they sell. According to the National Association of Convenience Stores (NACS):

The cost of a new fuel dispenser is approximately $20,000. An average store has four dispensers, so the cost could be as much as $80,000 to upgrade the dispensers alone. If underground equipment is also replaced, permitting and other related costs would increase expenses significantly.

In April 2012, NACS estimated that the nation’s 120,000 convenience stores would have to spend $22 billion on retrofits if they had to sell blends in the range of E30 and higher.

What would it take to mobilize that much capital? Consumer demand for E30-optimized vehicles is unlikely to surge to the point where the industry on its own would make the requisite investments. Given the debt crisis, Congress is unlikely to pony up billions in tax breaks to subsidize construction of a national E30 infrastructure.

Yet the EPA seems determined to shatter the E10 blend wall. The EPA’s “audacious suggestion” is thus most likely a beachhead for more aggressive moves down the line. Don’t be surprised if future Ethanol Protection Agency rules effectively mandate that new vehicles be designed to run on E30.

[Below is a guest post by Bill Lapp & Dave Juday]

Millions of American motorists across all income levels could be impacted this year by an indirect fuel tax that could amount to as much as $11.5 billion, all due to failures of the Renewable Fuel Standard (RFS) — the nation’s flawed biofuels mandate.

Under the RFS, which was expanded under the 2007 Energy Independence and Security Act (EISA), two broad categories of biofuels — conventional biofuel from corn, and so-called advanced biofuel from sources including Brazilian sugar ethanol and biodiesel made from vegetable oil and rendered animal fats — were to be steadily phased into the gasoline supply over 15 years.   Now, just five years into the schedule, the program is nearing its breaking point.  The barometer indicating the pressure under which the biofuels mandate operates is an arcane mini-cap-and-trade system for biofuel compliance credits known as renewable identification numbers (RINs).

Basically, the system works like this.  Each gallon of biofuel is assigned a 38-digit code known as a RIN, which effectively act as a serial number that tracks that gallon of biofuel through the supply chain, from production to the retail fuel market. RINs are detached from the biofuel once it is purchased or blended by a refiner, and eventually are turned into the US Environmental Protection Agency (EPA) by refiners to demonstrate their compliance with the RFS.   Alternatively, refiners with excess RINs can sell them on a secondary market to other refiners who are short of their compliance obligations.

Consider, conventional ethanol RINs that sold at about four cents per gallon in December — and at about one cent a year ago — rose to a high of $1.06 in March.  Currently they are about 70 cents.  Likewise, advanced ethanol and biodiesel RINs are also now trading at 75 cents and 80 cents respectively.

With a 10 percent blend of biofuels mandated by the RFS and an average cost of RINs at more than 70 cents, the implicit cost could reach more than 7 cents per gallon for every retail gallon of gasoline and diesel fuel purchased. Across the whole fuel supply, this could equate to an annual hidden tax on motorists of more than $11.5 billion. And that could grow.  As Goldman Sachs has warned, “we believe that the risk to RIN prices is skewed to the upside over the near term.”

This inflated cost of compliance has garnered the attention of Congress.   In a letter to the EPA, Senator Ron Wyden (D-Oregon), Chairman of the Energy and Natural Resources Committee, inquired about this volatility.  He wrote, “given that ethanol is an increasingly important factor in the cost and supply of motor fuel in the US, it is critical that the committee have a better understanding of the causes and effects of RIN market volatility and developments.”  The basic answer to Wyden’s inquiry is that the RFS is structurally flawed, and current RINs prices are an internal warning sign.

The conventional biofuels component of the RFS effectively mandates the blending of corn-based ethanol. For 2013, the Environmental Protection Agency (EPA), which administers the mandate, has proposed that 13.8 billion gallons of corn-based ethanol be blended into the U.S. gasoline supply, as prescribed by the RFS. By 2015, the RFS mandates that corn-based ethanol blending must rise another 1.2 billion gallons to a total of 15 billion gallons.

This is problematic as the majority of motor fuel marketed in the U.S. is effectively limited to 10 percent ethanol.  While the EPA has approved e-15 blends for certain automobiles, there are a number of practical hurdles till in place.  These include efforts to prevent mis-fueling, state level regulatory compliance, auto warranties that are voided by using fuels with more than 10 percent gasoline, the cost of installing infrastructure to handle higher blends, and the liability that goes with all these issues.

Blending 13.8 billion gallons of conventional ethanol in 2013 exceeds the 10 percent effective cap on ethanol in place under the Clean Air Act; so would blending 15 billion gallons in 2015.  That was a significant matter overlooked during the approval of RFS in 2007.  Effectively under the RFS, the fuel supply will require more corn-based ethanol than is legally allowed under the Clean Air Act, and practically allowed by the nation’s fuel infrastructure.

As the infeasibility of blending enough ethanol to meet the RFS has become more apparent in recent months, refiners’ demand for ethanol RIN credits has skyrocketed, leading to the substantial price hike.  That has been exacerbated by last year’s drought which reduced corn production and in turn ethanol production.  Less ethanol production means fewer RINs generated, and thus places an even bigger squeeze on the fuel market next year as the mandated amount of biofuels rises again.

As for the advanced biofuels component of the RFS, a major obstacle to compliance is the absence of cellulosic biofuel, one of the very fuels the EPA presumes to regulate through the policy.  Indeed, virtually zero cellulosic ethanol was produced in 2012, despite the EISA original mandate that 500 million gallons be used. In other words, Congress mandated the use of a fuel that did not exist, and still does not practically exist even six years after the passage of the law.

The EISA mandate for cellulosic ethanol this year is one billion gallons; EPA projects that 14 million gallons – or 1.4 percent of the original mandate – will be produced this year.  Even though EPA has waived the full requirement for cellulosic ethanol, they have not lowered the overall advanced category in which cellulosic is included.  Thus, the RFS creates even more demand for other advanced fuels such as biodiesel and imported Brazilian sugar ethanol, propping up their RIN values.

Under the RFS, oil refiners, fuel blenders and importers bear the regulatory burden of meeting the mandates. That burden can be summed-up as a requirement to sell a fuel that is not available in the marketplace, and a fuel with more corn-based ethanol than the system can bear.  Moreover, with RFS mandates scheduled to rise from 16.5 billion gallons of combined ethanol and biodiesel to 33 billion gallons over the next eight years, the cost to consumers could be expected to double by 2021 if the situation is not addressed.

Back in 2007, the RFS was touted as a nearly a utopian policy — it would help America achieve energy independence at virtually no cost, according to biofuel advocates.  Yet, our biofuels policy has inevitably driven us toward a series of costly unintended consequences.  Congress should reform our biofuels policy and eliminate this hidden tax on consumers before it before it grows significantly worse.

Bill Lapp is President of Advanced Economics Solutions, a commodity market risk management advisory firm in Omaha, Nebraska.  Dave Juday is the principal of The Juday Group a commodity market and policy analytical firm in Washington, D.C. 

This week National Journal’s Energy Experts Blog poses the question: “What’s holding back energy & climate policy.” So far 14 wonks have posted comments including yours truly. What I propose to do here is ‘revise and extend my remarks’ to provide a clearer, more complete explanation of Capitol Hill’s energy lethargy.

To summarize my conclusions in advance, there is no momentum building for the kind of comprehensive energy legislation Congress enacted in 2005 and 2007, or the major energy bills the House passed in 2011, because:

• We are not in a presidential election year so Republicans have less to gain from passing pro-energy legislation just to frame issues and clarify policy differences for the electorate;
• Divided government makes it virtually impossible either for congressional Republicans to halt and reverse the Obama administration’s regulatory war on fossil fuels or for Hill Democrats to pass cap-and-trade, carbon taxes, or a national clean energy standard;
• Democrats paid a political price for cap-and-trade and won’t champion carbon taxes without Republicans agreeing to commit political suicide by granting them bipartisan cover;
• The national security and climate change rationales for anti-fossil fuel policies were always weak but have become increasingly implausible thanks to North America’s resurgence as an oil and gas producing province, Climategate, and developments in climate science;
• Multiple policy failures in Europe and the U.S. have eroded public and policymaker support for ’green’ energy schemes;
• It has become increasingly evident that the Kyoto crusade was a foredoomed attempt to put policy carts before technology horses; and,
• The EPA is ’enacting’ climate policy via administrative fiat, so environmental campaigners no longer need legislation to advance their agenda.

Divided Government, Messaging Bills, Cap-and-Trade Casualties

Divided government can produce gridlock, yet the latter need not induce legislative torpor. In the 112th Congress, the House passed several energy- or climate-related bills drafted by the Energy and Commerce Committee. Those include the Energy Tax Prevention Act (H.R. 910), Farm Dust Regulation Prevention Act (H.R. 1633), North American-Made Energy Security Act (H.R. 1938), Jobs and Energy Permitting Act (H.R. 2250), Coal Residuals Reuse and Management Act (H.R. 2273), Transparency in Regulatory Analysis of Impacts on the Nation Act (H.R. 2401), Cement Sector Regulatory Relief Act (H.R. 2681), Pipeline Infrastructure and Community Protection Act (H.R. 2937), Resolving Environmental and Grid Reliability Conflicts Act (H.R. 4273), Domestic Energy and Jobs Act (H.R. 4480), American Manufacturing Competitiveness Act (H.R. 5865), Hydropower Regulatory Efficiency Act (H.R. 5892), and No More Solyndras Act (H.R. 6213). All died in the Senate.

This flurry of legislative activity can in part be explained by the political dynamics of the 2012 presidential election cycle. By holding hearings on and passing those bills, Republicans sought to frame the issues and clarify policy differences for the electorate. A central objective was to focus public attention on which party supports and which opposes creating jobs through domestic energy production. House Republicans may launch another ambitious energy offensive as we get closer to the 2014 mid-term elections and/or the 2016 presidential contest, but not likely before then.

Why though is there is no momentum on the other side of the aisle for the “comprehensive energy and climate legislation” once proudly championed by the Obama administration and environmental activists?

Starting with the most obvious reasons, 29 Democrats who voted for the Waxman-Markey cap-and-trade bill in June 2009 got pink slips from their constituents in November 2010. Key to defeating Waxman-Markey was its exposure as a stealth energy tax (“cap-n-tax”). This prompted a search for “other ways to skin the cat,” as President Obama put it, but finding other ways to fool the public was not easy.

With few options to pick from, some climate activists now advocate carbon taxes. But why should the public support an open, unvarnished energy tax when what doomed cap-and-trade was its outing as a sneaky energy tax? Cap-and-trade was in part an attempt to avoid a repeat of the political losses Democrats sustained in 1994 because of Al Gore’s Btu energy tax legislation in 1993. Most Democrats in Congress are reluctant to tax carbon unless the GOP gives them bipartisan cover, but most Republicans realize that if they cave on carbon taxes, they will demoralize and divide their base.

Even aside from partisan calculations, few members of Congress want to take responsibility for raising energy prices during a period of high unemployment and anemic economic growth.

Obsolescent Worldviews

Probing a bit deeper, we find that once-fashionable alarms about climate change and foreign oil dependence no longer have the intellectual cachet they did a few years ago. The period from 2005 through 2007 was not only a high watermark of U.S. oil import dependence, it was also a time when Al Gore’s An Inconvenient Truth, the Bali Road Map, and the IPCC’s Fourth Assessment Report (AR4) set the terms of national debate on climate change. A lot has happened since then.

Washington’s angst about oil embargoes, supply disruptions, and the link between Mideast oil and terror was always overblown, as Cato Institute scholars Jerry Taylor and Peter Van Doren explain:

• Because oil is a globally-traded commodity, the U.S. can circumvent any likely embargo by purchasing oil via third parties. Indeed, U.S. oil imports actually increased after the 1973 Arab oil embargo – from 3.2 million barrels per day in 1973 to 3.5 mbd in 1974.
• Petro-states have more to lose from catastrophic disruptions than do their customers, which is why there hasn’t been one since the Iranian Revolution.
• There is no correlation between OPEC profits and cross-border incidents of Islamic terror. The likely explanation is that terrorist attacks are low-budget operations (the 911 plotters spent less than half a million dollars) and therefore are not much affected by changes in oil prices or petro-state revenues.

In recent years, the national security rationale for regulating America ‘beyond petroleum’ has become increasingly implausible, as advances in unconventional oil and gas production transform North America into a major producing region. Imports as a share of U.S. petroleum consumption declined from 60% in 2005 to 45% in 2011. More than half of those imports came from the Western hemisphere, and Canada’s share was more than double that of Saudi Arabia. In both 2011 and 2012, petroleum products were the top U.S. exports. Some experts now view hydraulic fracturing and directional drilling as a source of U.S. geopolitical influence, arguing for example that the ‘shale revolution’ undermines Russia’s leverage over Europe.

A March 2012 Citi report concluded: “With no signs of this growth trend ending over the next decade, the growing continental surplus of hydrocarbons points to North America effectively becoming the new Middle East by the next decade; a growing hydrocarbon net exporting center.” Analyses by Citi, Wood McKenzie, and IHS Global Insight support the assessment of Manhattan Institute scholar Mark Mills that “unleashing the North American energy colossus” could create millions of new jobs by 2020 and provide hundreds of billions in cumulative new federal, state, and local tax revenues.

In short, a bright future for hydrocarbon energy now competes in the public mind with yesteryear’s gloomy forecasts of increasing oil depletion and dependency.

As for climate alarm, the Climategate emails exposed some of the world’s most prestigious climatologists as schemers using the pretense of scientific objectivity for political purposes. This blow to their credibility also tarnished the UN-sponsored climate treaty negotiations.

Also deflating the push for coercive energy transformation is the lack of any net global warming over the past 16 years. There are competing explanations, but a plausible hypothesis, based on recent studies ably summarized by Cato Institute climatologist Chip Knappenberger, is that Earth’s climate is less sensitive to greenhouse forcing than “consensus” science had assumed. What cannot be denied is that there is a disconnect between the IPCC’s best estimate of projected warming and observations over the past decade.

In addition, numerous studies (summarized here and here) undercut the credibility of scary climate change impact forecasts. A few examples:

• King et al. (2012): The rate of Antarctic ice loss is not accelerating and translates to less than one inch of sea-level rise per century.
• Weinkle et al. (2012): There is no trend in the strength or frequency of land-falling hurricanes in the world’s five main hurricane basins during the past 50-70 years.
• Chenoweth and Divine (2012): There is no trend in the strength or frequency of tropical cyclones in the main Atlantic hurricane development corridor over the past 370 years.
• Bouwer (2011): There is no trend in hurricane-related damages since 1900 once economic loss data are adjusted for changes in population, wealth, and the consumer price index.
• NOAA: There is no trend since 1950 in the frequency of strong (F3-F5) U.S. tornadoes.
• National Climate Data Center: There is no trend since 1900 in U.S. soil moisture as measured by the Palmer Drought Severity Index.
• Hirsch and Ryberg (2011): There is no trend in U.S. flood magnitudes over the past 85 years.
• Davis et al. (2003): As U.S. urban air temperatures have increased, heat-related mortality has declined.
• Goklany (2010): Global deaths and death rates related to extreme weather have declined by 93% and 98%, respectively, since the 1920s.
• Range et al. (2012): There is no evidence of carbon dioxide-related mortalities of juvenile or adult mussels “even under conditions that far exceed the worst-case scenarios for future ocean acidification.”

Skeptical blogs continually disseminate such findings to policymakers and the public.

During last year’s summer drought, NASA scientist James Hansen made a big splash with a study in Proceedings of the National Academy of Sciences and a Washington Post op-ed arguing that global warming was the cause of the four biggest hot spells of the past 10 years. However, as noted in skeptical blogs, meteorological analyses of the European heat wave of 2003, the Russian heat wave of 2010, the Texas-Oklahoma drought of 2011, and the Midwest drought of 2012 attribute those events principally to natural variability.

Policy Failures

Last week the European Parliament refused to stop the EU carbon market from crashing. This debacle, a setback to all who tout Europe as a model for U.S. climate and energy policy, was all but inevitable.

For months EU policymakers had been groping for the carbon price sweet spot. Were carbon prices too low or too high? The answer: both! Prices were criticized by environmental activists as too low to incentivize hoped-for technology innovation but criticized by industry as too high for Europe to stay competitive in the global marketplace. EU governments had to establish a “carbon compensation fund” to keep domestic manufacturers from off-shoring their operations. European manufacturers still would not support intervention to prop up falling carbon prices. So the EU Parliament decided to just let carbon prices crater, embracing in deed if not in speech the carbon policy advocated by G.W. Bush. Ha!

Fiscal realities have also forced EU governments to scale back green energy subsidies. USA Today reported last month: “European governments have now realized this growth – which saw consumers footing the bill for investors’ soaring profit margins – was out of control: The UK and Czech Republic have already cut their subsidies in half, while Italy imposed a cap on new renewable energy providers. Germany cut subsidies by up to 30% and announced a major overhaul of the program Thursday.” In this respect, too, Europe has become a model of what U.S. policymakers should avoid.

The Obama administration, predictably, has decided to double down on renewables. The President’s Budget proposes to make the controversial renewable energy production tax credit (PTC) “permanent.” That, however, is a tacit confession wind and solar will never stand on their own feet without subsidy, despite the wind industry telling us for years that it is on the verge of becoming competitive with coal and gas. With the nation $16.8 trillion in debt, the President’s $23 billion PTC initiative is likely D.O.A. in the House.

The growing list of Stimu-Losers also undermines congressional support for green venture socialism. Besides Solyndra, failed or troubled recipients of DOE loans or guarantees include Beacon Power, Evergreen Solar, Range Fuels, Amonix, A123 Systems, Nevada Geothermal Power, Abound Solar, and, recently in the news, Fisker Automotive. According to a Privco report, Fisker lost over $1.3 billion in private and taxpayer capital, spending $660,000 for each $103,000 electric vehicle it produced before firing three-quarters of its employees.

Lawmakers from both parties have even begun to reconsider and challenge the once popular Renewable Fuel Standard (RFS) program. This 15-year central plan increases consumers’ pain at the pump, expands aquatic dead zones, makes food less affordable to the world’s poorest people, plows up millions of acres of wildlife habitat, and puts at least as much carbon in the atmosphere as the gasoline it displaces. Although the RFS still has defenders in Congress, hardly anyone on the Hill today talks about beefing up the RFS with flex-fuel vehicle mandates or subsidized biofuel pipelines, blender pumps, and storage tanks.

Can’t Get There from Here

Green activists blame “oil-fueled, coal-powered” politicians for Congress’s ‘failure’ to address climate change. The real reason, however, is that nobody knows how to sustain a modern economy with wind turbines, solar panels, and biofuel.

The Breakthrough Institute developed this point in its Death of Cap-and-Trade blog posts. Because affordable energy is vital to prosperity and much of the world is energy poor, it would be economically ruinous and, thus, politically suicidal to make people abandon fossil fuels before cheaper alternative energies are available. That, however, is exactly what “comprehensive energy and climate legislation” aimed to do.

As the Breakthrough folks argue, if you’re worried about climate change, then your chief policy objective should be to make alternative energy cheaper than fossil energy. Instead, the green movement attempted to make fossil energy more costly than alternative energy, or to simply mandate the switch to alternative energy regardless of cost. Al Gore’s call in 2008 to “re-power America” with zero-carbon energy within 10 years epitomizes this folly. More “moderate” variants would only do less harm, less rapidly.

EPA Is Legislating Climate Policy

Lastly, energy is on the legislative back burner because the EPA is already enacting the green movement’s agenda via administrative action. Why risk voter ire over controversial climate legislation when it is easier to sit back and watch the EPA take the heat or implement regulations few people outside of Washington even know about?

This situation is likely to persist as long as divided government persists. Many Democrats are content to let the EPA run roughshod over the separation of powers and implement policies the people’s representatives would reject if introduced as legislation and put to a vote. Many Republicans fear to challenge the EPA, knowing how difficult it is to overcome a presidential veto and how easily efforts to reclaim Congress’s authority to determine climate policy can be villified as attacks on science and children’s health.

President Barack Obama submitted his proposed Fiscal Year 2014 budget to Congress on 10th April, 66 days after the legal deadline.  The law does not subject the President to any penalties for missing the 4th February deadline, but no previous President has submitted his proposed budget more than a few days late.  The budget proposes to increase federal spending by nearly five percent over the current fiscal year.

Subsidies for renewable energy and energy efficiency total $23 billion over ten years.  Astonishingly, the President proposes to make wind, solar, and geothermal subsidies permanent.  According to a White House fact sheet: “To provide a strong, consistent incentive to encourage investments in renewable energy technologies and to help meet our goal to double generation from wind, solar, and geothermal sources by 2020, the Budget would make permanent the tax credit for the production of renewable electricity.  The Budget makes the Production Tax Credit refundable so new, growing firms can benefit and provide renewable electricity generation.”

For decades, the leaders in the wind and solar industries have told Congress that they just need a few more years of subsidies before they become competitive with energy produced from conventional sources.  Last December, during the debate over whether to extend the wind subsidy for another year, the American Wind Energy Association came forward with a plan to phase out the subsidy over six years. The Obama Administration has concluded that wind and solar will never become competitive with coal and natural gas.

Reps. Fred Upton (R-Mich.) and Henry Waxman (D-Calif.) yesterday issued their second white paper in a series intended as a first step to reviewing the Renewable Fuel Standard (RFS). The first white paper, released March 20, 2013, addresses Blend Wall/Fuel Compatibility Issues. The second white paper, released April 18, 2013, addresses Agricultural Sector Issues. Both white papers are clearly written, carefully documented, and provide excellent overviews of their respective topics.

The second white paper poses nine questions for public comment, and requests that responses be sent to rfs@mail.house.gov by April 29.

Two of the questions deal with the EPA’s denial in 2012 of petitions from ten governors who, seeking to reduce corn prices and alleviate harm to their states’ livestock industries, asked the agency to waive (suspend) RFS blending requirements. I comment on those questions, which are enumerated in the white paper as follows:

3. Was EPA correct to deny the 2012 waiver request? Are there any lessons that can be drawn from the waiver denial?
4. Does the Clean Air Act provide EPA sufficient flexibility to adequately address any effects that the RFS may have on corn price spikes?

My comments develop the following points:

• The EPA should have granted the waiver but the agency’s strained reading of the Clean Air Act virtually guarantees that petitions will be denied regardless of the RFS’s contribution to severe economic harm.
• Congress should revise the statute to preclude the EPA’s deck-stacking interpretation and clarify that the threshold issue is whether, in the context of actual market conditions, the RFS makes a non-negligible contribution to severe harm.
• In controversies arising under regulations the EPA administers, the agency is not an impartial umpire but the primary stakeholder — the main interested party.
• By putting the EPA in charge of deciding whether or not to suspend its own rules, the current waiver provision inadvertently flouts a core principle of constitutional government: No one should be judge in his own cause.
• Congress should transfer the authority to grant or deny waiver petitions to an independent body with no organizational interest in upholding or suspending RFS requirements. In this reformed process, the EPA’s role would be limited to submitting comments like any other stakeholder.
• Although the Clean Air Act provides adequate flexibility (albeit precluded by the EPA’s skewed reading of the statute) to address RFS effects on domestic corn prices, it provides no flexibility to address RFS effects on grain prices in developing countries.
• Congress should revise the waiver provision to include adverse impacts on world hunger among the harms for which petitioners may seek relief.

The full text of my comment letter is available here.

The House Science, Space, and Technology Committee this week held a hearing on the efficiency and effectiveness of federal wind energy incentives.

The first witness, Frank Rusco, director of energy and natural resources for the Government Accountability Office, summarized his March 2013 GAO report on federal financial support for wind energy. Rusco testified that nine agencies administer 82 programs providing $4 billion in financial support to the wind industry in 2011 in the form of grants, loans, loan guarantees, and tax expenditures (targeted tax breaks). Some wind projects received support from seven initiatives, Rusco found.

Rob Gramlich, Interim CEO of the American Wind Energy Association (AWEA), disputed those numbers, arguing that of the 82 initiatives only two are wind-specific, dozens are defunct, and fewer than 1% of wind projects built in recent years took both a tax credit and a Department of Energy loan.

Gramlich, however, did not dispute Rusco’s finding that 99% of federal support went for deployment of wind energy rather than R&D (pp. 17-18), nor his assessment that ”it is unclear whether the incremental support some initiatives provided was always necessary for wind projects to be built” (p. 43).

Citing Rusco’s testimony in his opening statement, Oversight Subcommittee Chairman Paul Broun (R-Ga.) suggested that instead of subsidizing firms that would install wind turbines anyway, Congress should fund R&D to make wind energy more competitive.

A fair point but one that indicates a more fundamental problem. When government subsidizes activities that would happen anyway, the money goes to free riders. The subsidy is a clear case of government waste. When government subsidizes activities that would otherwise be unprofitable to undertake, the money may simply prop up investments that consume more wealth than they create. If so, the subsidy is a waste of economic resources.

As three MIT scholars wrote in their assessment of President Carter’s energy programs:

The experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed and if a technology is not commercially viable, no amount of government support will make it so.

Too bad the Constitution does not mandate a recitation of those words prior to every congressional debate on energy policy!

My main reason for writing this post, however, is twofold. First, if Matt Damon or anyone else in Hollywood ever wants to make a reality-based movie about a conflict between community activists and greedy energy developers, he should look no further than the testimony of Audra Parker, CEO of the Alliance to Protect Nantucket Sound. Second, anyone seeking a clear overview of the economics of wind energy, should read the testimony of Cal State Fullerton professor Robert Michaels, who testified on behalf of the Institute for Energy Research.

The Nantucket Alliance formed in 2001 in response to “multiple threats” posed by Cape Wind, an offshore wind project encompassing “130 wind turbines, each 440 feet in height, spanning an area the size of Manhattan.” Parker’s detailed testimony concludes by asking the Committee to request an independent GAO analysis of the Cape Wind project, examining the costs and benefits for consumers as well as impacts on “historic, tribal, environmental, public safety, and other public interest factors.”

Parker charges that, “Federal agencies have prioritized the interests of the developer over public safety and to the detriment of the environment.” She names names, beginning with the Coast Guard:

The USCG prioritized the financial interest of the developer over the safety of mariners and the public. The USCG initially recommended a buffer zone of 1.5 nautical miles (nm) between the proposed footprint and the main channel, but later removed it due to the economic interests of the developer.

U.S. Coast Guard emails discovered through FOIA include:

• “If 1.5 NM offset applied to Cape Wind proposal in Nantucket Sound, this would drastically reduce the size of the wind farm footprint (might well scuttle it).” (Exhibit 13)
• “If Cape Wind were to use these measures, the proposed wind farm would hold too few WTGs [wind turbine generators] to be economical.” (Exhibit 14)
• Referring to the local port Captain, “He purposely did not recommend the creation of “buffers of navigation” around the turbine array because he believes that would have caused a change in the “footprint of the project” that could unnecessarily “kill the project”. (Exhibit 15)

The protector of species too:

In another example, the U.S. Fish and Wildlife Service (USFWS) found that Cape Wind should shut down wind turbines on a temporary and seasonal basis to reduce bird kills in its draft biological opinion, but did not require such mitigation in the final opinion solely because Interior and Cape Wind rejected a shut down as too costly. USFWS stated that it “considered” temporary shut-down as a reasonable and prudent measure to minimize impacts on listed species, but that “it was determined by BOEMRE and [Cape Wind Associates] to not be reasonable and prudent.” (Exhibit 16) USFWS itself never made an independent finding of whether a temporary shut-down would be reasonable.

Also the guardians of flight safety:

Despite FAA’s safety-first mandate, it made mitigation recommendations to accommodate Cape Wind’s profitability at the expense of public safety. The proposed 25 square mile, 440 foot high Cape Wind footprint lies in the center of three busy airports in a heavily trafficked low altitude airspace. 400,000 flights per year traverse the airspace over Nantucket Sound transporting millions of passengers through an area characterized by frequent fog and quickly changing weather patterns. However, despite objections by all three local airports and even after acknowledging multiple aviation safety impacts and expressing uncertainty regarding the effectiveness of proposed mitigation options, the FAA deferred to Cape Wind’s economics and bottom line. In discussion of potential unresolved radar interference due to Cape Wind, the acting head of the FAA’s Obstruction Evaluation group stated, “Shutting them down midstream will create an undue burden on the developer and could possibly bankrupt them.” (Exhibit 17)

Why would our valiant agencies behave this way? A section of Parker’s testimony discusses ”significant coordination between the Patrick and Obama Administrations through the Department of Interior (DOI) to push Cape Wind forward and gain financial assistance for Cape Wind through the loan guarantee program.”

But all this corner-cutting will help bring down electric rates for consumers, right? Ha!

Despite a potential $4.3 billion in combined federal and state incentives, which should make electricity cheaper, Cape Wind will impose nearly $3 billion in above-market costs on ratepayers, Parker contends. For example, NSTAR has a contract to buy 27.5% of Cape Wind’s power at a starting price of 19 cents per kilowatt hour (kWh), “with a guaranteed annual increase of 3.5% over the 15 year contract life, culminating in a final year price of over 31 cents per kWh. This is an average rate of 25 cents per kWh, in contrast to current MA rates of only 7 cents per kilowatt hour.”

Turning now to the economics of wind in general, Dr. Michaels begins with the basic fact that wind power is non-dispatchable (the wind cannot be switched on or off at our command) and intermittent (wind power is often greatest when it is least valuable — at night — and least during peak hours when it would be most valuable). Ensuring electric supply reliability — balancing supply and demand across the grid from second to second — becomes increasingly difficult as more wind power is integrated into a service area. In Texas, for example, wind’s hourly contribution to electric load (demand) can decline from 25% to zero and vice versa.

The gap between wind’s rated capacity (the power it could produce at peak output) and what it actually produces is often huge. During a June 2006 hotspell in California, wind’s average contribution to meeting peak demand ”was only 256 MW, barely 10 percent of potential production had capacity been fully utilized.” For planning purposes, the Electricity Reliability Council of Texas (ERCOT) ”treats a megawatt of wind capacity as equivalent to only 8.7 percent of a megawatt of dispatchable fossil-fueled capacity.”

Wind is mandated and subsidized for a very simple reason: Otherwise it could not ‘compete.’ The “levelized cost” of wind energy (the cost per megawatt-hour of combined capital and operating expenses over the lifetime of the facility) is significantly higher than that of gas. For new units placed in service in 2017, the Energy Information Administration (EIA) estimates a $96/MWh levelized cost for wind versus a $66.1/MWh levelized cost for conventional natural gas combined cycle and a $63.1/MWh levelized cost for advanced combined cycle.

Note: The levelized cost of wind does not include the cost of fossil-fuel generation run in inefficient “spinning reserve” mode to back up wind farms when the wind stops blowing.

One factor making wind more costly is the frequent necessity to construct new long-distance transmission lines. Whereas a natural gas power plant can be built close to the community it serves, wind farms must be built where the best wind resources are, which may be hundreds of miles from the nearest load area. “Over the next five years ERCOT plans on building $8.7 billion of new high-voltage transmission, approximately $5 billion going to facilities that will be solely used to transmit wind power from central and western Texas to consuming areas.” Such costs, of course, are passed on to ratepayers.

EIA’s analysis may understate wind’s costs, Michaels suggests. Research in Denmark and the UK indicates that wind energy’s productivity declines rapidly over time:

A typical onshore wind turbine in the UK starts with a normal load factor (operating hours as a fraction of total hours) of around 25 percent. After five years the average factor is 15 percent, after ten years it is 10, and after 18 years it is 2 percent. Most cost-benefit calculations of wind units have assumed economic lifespans of 20 to 25 years and slower declines in productivity. If these figures continue to hold, a fifteen-year economic lifespan would substantially raise wind’s capital cost above its already high figure.

Even on environmental grounds, the case for wind is weak. Michaels does not discuss avian and bat mortality but rather the cost-effectiveness of wind as an air pollution control strategy. Regulations requiring the use of pollution control equipment or allowing permit trading within a declining emissions cap reduce more pollution at less cost than do policies mandating the substitution of wind for coal or gas. Citing a Bentek study, Michaels also argues that in areas where coal rather than gas provides backup generation, wind can actually increase net criteria pollutant emissions ”even after netting out the emissions reductions due to wind.”

One longstanding rationale for wind energy programs — the need to diversify away from rapidly-depleting fossil fuels – now seems rather dated:

Renewables policies were based in large part on an expectation that the end of inexpensive gas and oil was near. Instead of exhaustion, the nation now looks forward confidently to centuries of clean, inexpensive and secure energy. Instead of a “bridge fuel” to a renewable future, shale-based hydrocarbons are now the future.

As we have previously noted, the peak bloom date of DC’s cherry blossom trees has been delayed this year. While it was originally predicted to take place during March 23-26, it wasn’t until last Tuesday—April 9th—that it actually started, checking in 20 days later than last year.

Earlier peak blooms in past years have triggered a variety of global warming-related news articles. The Huffington Post characterized the cherry blossom trees as humanity-serving “global warming canaries” and the Washington Post suggested that the trees could one day be blooming in winter. However, this year’s late peak bloom date has not received the same treatment. As a matter of fact, we can’t find any examples of GW being discussed in connection with this year’s late peak bloom. (Are we the only exception?)

Well, today we can definitively announce that peak blooming actually began to plateau in 1998, much like what happened to global warming in general. After the unusually hot year of 1998 (which has been attributed to El Niño), temperatures have actually stopped rising.

Take a look at these cherry blossoms graphs below. The Y-axis measures how early peak bloom occurred; it’s constructed by subtracting the number of days between March 1 and peak bloom from 50, so a higher number on the Y-axis means an earlier peak bloom. These carefully developed graphs have been peer-reviewed by CEI general counsel Sam Kazman, but are hitherto unpublished.

Now compare the graphs to these statistics on global temperatures. If that isn’t conclusive evidence, then I don’t know what is.

Washington Post’s Jason Samenow wrote an alarmist piece last year called “D.C.’s cherry blossoms have shifted 5 days earlier: what about global warming and the future?” in which he claimed that “there is no reason to think the shift towards earlier bloom dates will not continue”.  Samenow has yet to comment on this year’s absence of an earlier peak bloom, even though his article surely begs for a follow-up. What is Samenow, a plateau denier? Where’s he getting his funding from, the Spring in February Foundation?

Whatever conclusions are to be drawn from various climate change indicators, one thing is rather obvious: GW alarmists say next to nothing when the conclusive, definitive, slam-dunk evidence runs counter to their claims.

Isn’t a 20-day delay conclusive proof that they’re wrong?

No, of course it isn’t. It’s just a single year.

But, then, so was 2012.

And that’s one of the reasons why we’re covering the cherry blossoms in the totally unbiased and authoritative manner they deserve. The second reason is that cherry blossoms are pretty and writing about them makes us happy.