Features

Another Study Debunks RFA/Vilsack Claim Ethanol Reduced Gas Prices by $1.09/Gal

by Marlo Lewis on September 17, 2012

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A new study by the Energy Research Policy Foundation, Inc. (EPRINC) further debunks the popular talking point of USDA Secretary Tom Vilsack and the Renewable Fuel Association (RFA) that ethanol reduced gasoline prices by $0.89/gal in 2010 and $1.09/gal in 2011.

As noted previously on this site (here and here), Vilsack and the RFA tout a study by Iowa State University’s Center for Agricultural Research and Development (CARD), which concluded that if ethanol production had remained at year 2000 levels, the U.S. motor fuel supply would have been billions of gallons smaller and, thus, significantly pricier in 2010 and 2011. Subsequent studies by FarmEcon, LLC and MIT/UC Davis spotlighted CARD’s unrealistic assumption that the refining industry would not have increased gasoline production to meet consumer demand in the absence of policies mandating and subsidizing the blending and sale of increasing quantities of ethanol as motor fuel.

The EPRINC study (Ethanol’s Lost Promise: An Assessment of the Economic Consequences of the Renewable Fuel Mandate) shows, in addition, that if ethanol output had remained constant at the year 2000 level, refiners could have made up for the shortfall without importing or even refining “a single additional barrel of crude oil.” The Renewable Fuel Standard (RFS) has increased ethanol production by about 400,000 barrels per day (bbl/d) since 2000. A “remarkably small operational adjustment” in refineries’ product mix – a 1.8% increase in gasoline production — could have covered an ethanol shortfall of 400,000 bbl/d in 2011.

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Another Skewed Poll ‘Finds’ Voters Support Green Agenda

by Marlo Lewis on September 13, 2012

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An opinion survey commissioned by the Sierra Club supposedly shows that Oklahoma voters overwhelmingly favor the expansion of wind and solar power and the phase out of coal-fired power plants. An obvious implication is that Oklahoma Sen. James Inhofe, the Senate’s leading critic of the Obama administration’s anti-coal policies, is out of step with his constituents.

This is an old trick (see my post on a similar, NRDC-sponsored poll of Michigan voters in House Energy and Commerce Chairman Fred Upton’s district). When a pollster asks leading questions, he can usually elicit the answers his client is paying for.

In the Sierra Club-sponsored survey of 500 registered Oklahoma voters, 78% of those polled said they generally support expanded use of renewable energies like wind and solar power, and 62% said they would support phasing out some of the State’s coal-fired power plants.

The Sierra Club’s polling strategist waxed enthusiastic about the results, Greenwire reports:

“The results of this poll are remarkable,” Sierra Club polling strategist Grace McRae said in a statement.

“Across the nation, support for clean energy is high, but in Oklahoma, nearly 8 out of 10 voters support expanding use of clean energy resources like wind and solar. Oklahoma’s leaders and utilities should take note: Oklahomans want clean energy.”

Okay, let’s look at how the survey reaches those ”remarkable” results. [click to continue…]

EU Gropes — in Vain — for Carbon Price Sweet Spot

by Marlo Lewis on September 12, 2012

in Features

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Two stories reprinted in Climatewire today provide a funny reminder that politicians can’t set the ‘right’ price of a commodity even when the fate of the Earth supposedly hangs in the balance. 

On Tuesday, Norway decided to follow European Union (EU) policy and establish a carbon ‘compensation fund.’ The program will bribe pay some 80 energy-intensive firms $90 million not to move their operations overseas. The government contends that without such payments, the EU Emission Trading System (ETS), adopted to implement the Kyoto Protocol, will trigger (or accelerate) the flight of capital, jobs, and emissions abroad. Reuters reports:

“The purpose is to prevent the Norwegian manufacturing industry from moving their enterprises to countries with less strict climate regulations,” Prime Minister Jens Stoltenberg said.

Changes to the EU’s Emissions Trading Scheme (ETS) from next year allow member states to compensate big energy users, like aluminum or steel producers, for costs linked to carbon emissions. The plan is to prevent higher costs driving business out of Europe.

Although ETS carbon prices are high enough to make EU manufacturers uncompetitive, those prices are not high enough (according to critics) to spur technology innovation*:

“This shows some of the fundamental problems with emissions trading,” said Steffen Kalbekken, head of research at the Center for International Climate and Environmental Research in Oslo. “We are getting the worst of two worlds.

“The (carbon) prices are too low to produce the technological shift we need” to force big emitters to clean up, he said. “But they are still high enough to cause some problems for industry and international competition.”

EU carbon permit prices for December have fallen to 7.74 Euros ($9.98) per ton — lower than three of the U.S. Government’s four ‘social cost of carbon‘ estimates. The European Commission is now “pressing ahead with a plan to counter an oversupply of CO2 permits in the EU emissions trading market after a 37 percent drop in prices last year,” Bloomberg reports. The commission “is preparing a proposal to postpone sales of an as-yet unspecified number of allowances in 2013.”

Of course, if that plan goes through, and carbon permit prices rise, European countries may have to pony up even larger subsidies to keep manfacturers from moving to Asia and South America.

So are ETS carbon permit prices too low or too high? They’re high enough to spur innovative ways to get the heck out of Europe asap. [click to continue…]

Ethanol Mandate Waiver: Decks Stacked Against Petitioners

by Marlo Lewis on September 10, 2012

in Blog, Features

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The Governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina have petitioned EPA Administrator Lisa Jackson to waive the mandatory ethanol blending requirements established by the Renewable Fuel Standard (RFS). The petitioners hope thereby to lower and stabilize corn prices, which recently hit record highs as the worst drought in 50 years destroyed one-sixth of the U.S. corn crop. Corn is the principal feedstock used in ethanol production.

Arkansas Gov. Mike Bebe’s letter to Administrator Jackson concisely makes the case for regulatory relief:

Virtually all of Arkansas is suffering from severe, extreme, or exceptional drought conditions. The declining outlook for this year’s corn crop and accelerating prices for corn and other grains are having a severe economic impact on the State, particularly on our poultry and cattle sectors. While the drought may have triggered the price spike in corn, an underlying cause is the federal policy mandating ever-increasing amounts corn for fuel. Because of this policy, ethanol production now consumes approximately 40 percent of the U.S. corn crop, and the cost of corn for use in food production has increased by 193 percent since 2005 [the year before the RFS took effect]. Put simply, ethanol policies have created significantly higher corn prices, tighter supplies, and increased volatility.

Agriculture is the backbone of Arkansas’s economy, accounting for nearly one-quarter of our economic activity. Broilers, turkeys, and cattle — sectors particularly vulnerable to this corn crisis — represent nearly half of Arkansas’s farm marketing receipts. Arkansas poultry operators are trying to cope with grain cost increases and cattle familes are struggling to feed their herds.

Section 211(o)(7) of the Clean Air Act (CAA) authorizes the EPA to waive all or part of the RFS blending targets for one year if the Administrator determines, after public notice and an opportunity for public comment, that implementation of those requirements would “severely harm” the economy of a State, a region, or the United States. Only once before has a governor requested an RFS waiver. When corn prices soared in 2008, Gov. Rick Perry of Texas requested that the EPA waive 50% of the mandate for the production of corn ethanol. Perry, writing in April 2008, noted that corn prices were up 138% globally since 2005. He estimated that rising corn prices had imposed a net loss on the State’s economy of $1.17 billion in 2007 and potentially could impose a net loss of $3.59 billion in 2008. At particular risk were the family ranches that made up two-thirds of State’s 149,000 cattle producers. Bush EPA Administrator Stephen Johnson rejected Perry’s petition in August 2008.

In the EPA’s Request for Comment on the 2012 waiver petitions, the agency indicates it will use the same “analytical approach” and “legal interpretation” on the basis of which Johnson denied Perry’s request in 2008. This means the regulatory decks are stacked against the petitioners. As the EPA reads the statute, CAA Section 211(o)(7) establishes a burden of proof that is nearly impossible for petitioners to meet. No matter how high corn prices get, or how serious the associated economic harm, the EPA will have ready-made excuses not to waive the corn-ethanol blending requirements. [click to continue…]

Stern Review Not Fit to Guide U.K. Climate Policy, Report Finds

by Marlo Lewis on September 4, 2012

in Features

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The Global Warming Policy Foundation (GWPF) has just published The Failings of the Stern Review of the Economics of Climate Change. The  2006 Stern Review — named for Sir Nicholas Stern, head of the UK Government’s Economic Service under Prime Minister Tony Blair – is arguably the most pessimistic official assessment ever of the economic damages of global warming. The Stern Review famously argued that the “costs of inaction” on climate change hugely outweigh the costs of greenhouse gas mitigation, claiming that, ”If we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year now and forever.”

Influenced by the Stern Review, the UK Government adopted a set of climate policies that cost £17,000 per household, according to the GWPF report, prepared by the Rt. Hon. Peter Lilley MP. Since the UK’s total annual carbon dioxide (CO2) emissions are less than the increase in China’s CO2 emissions in a single year, the UK Government’s climate program is all pain for no gain. It is time for the UK Government to review the Stern Review, Lilley contends.

The GWPF report is 100 pages long, but there is a helpful executive summary and a hard-hitting foreword by leading climate economist Richard Toll. The following excerpts from Toll’s contribution should be sufficient to entice even the most jaded climate wonk to read the report:

The publication of the Stern Review of the Economics of Climate Change was a PR exercise that was unprecedented in economics. Sir Nicholas, now Lord Stern, was portrayed as an expert even though he had never published before on the economics of energy, environment or climate.

Honest policy analysts show results for a range of alternative discount rates. The Stern Review uses a single discount rate. It corresponds to an extreme position in the literature and it deviates from the official discount rate of HM Treasury. Nick Stern is, of course, free to use whatever discount rate he wants in his private life. Professor Sir Partha Dasgupta of Cambridge University has found that Stern should save 97.5% of his income, were Stern to follow the advice in the Stern Review. Taking such an extreme position in public policy is odd.

Most economic studies conclude that it is best to start with modest emission reduction, and accelerate the stringency of climate policy over time. For that, public policy will need to pull into the same direction over 20 or more electoral cycles. If the case for climate policy is exaggerated, the backlash will come, sooner or later. The Stern Review was a tactical masterstroke, but it will likely prove to be a strategic blunder. Its academic value is zero.

In a related post, Lilley provides a condensed summary of his report. “Stern,” he writes, ”reaches conclusions far removed from those of most environmental economists by combining statistical sophistry and verbal virtuosity. For example:” [click to continue…]

Should We Fear the Methane Time Bomb (Part Deux)?

by Marlo Lewis on August 31, 2012

in Blog, Features

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Climate alarmists have long warned that warming of the Arctic could melt frozen marine and permafrost sediments, releasing methane trapped in peat bogs and ice crystals (clathrate hydrates, see photo above). Methane is a potent greenhouse gas that packs 21 times the global warming punch as CO2 over a 100-year time span and more than 100 times the CO2-warming effect over a 20-year period.

So the fear is that methane emissions from the thawing Arctic will accelerate global warming, which in turn will melt more clathrates and methane-bearing sediments, which will produce still more warming, in a vicious circle of climate destabilization. In a previous post, I offered a skeptical perspective on this doomsday scenario.

This week the journal Nature published a study raising similar concerns about the potential for significant releases of methane from the Antarctic ice sheets. The study’s 14 authors, led by Jemma Wadham of the University of Bristol in the UK, estimate that about 21,000 petagrams (gigatons) of organic carbon (OC) are buried in sedimentary basins under the East and West Antarctic ice sheets – more than 10 times the estimated magnitude of OC stocks in northern permafrost regions. Microbial production of methane from OC (a process known as methanogenesis) is common across many cold subsurface environments, and may have been at work for millions of years beneath the Antarctic Ice Sheets.  [click to continue…]

Pickens Plan – Well and Truly Dead?

by Marlo Lewis on August 29, 2012

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At a luncheon hosted by Politico at the GOP convention in Tampa today, T. Boone Pickens said truck fleets will switch from diesel to natural gas without Congress approving the NAT GAS Act, legislation offering generous tax credits for the purchase of natural gas trucks (up to $64,000 per vehicle) and installation of natural gas fueling infrastructure. Pickens reportedly spent about $100 million over the past five years promoting his energy agenda, commonly known as the Pickens Plan.

Congress declined to pass either the NAT GAS Act or an earlier iteration of the Pickens Plan that would have required 20% of the nation’s electricity to come from wind, thus supposedly freeing up natural gas to be used to fuel both trucks and passenger cars.

Critics argued that if switching to natural gas vehicles makes commercial sense, private enterprise will bring about the transformation without Washington trying to pick energy market winners and losers. Pickens is now talking the talk. Politico‘s Darren Goode reports:

“You don’t have to have a tax credit; it’s going to happen,” he [Pickens] said. The choices to run 18-wheelers, he said, are between natural gas and diesel — and natural gas is “$2 a gallon cheaper.”

And Pickens strongly suggested that he doesn’t have any plans to try to push his plan anymore in the nation’s Capital.

“I will not go back to Washington again unless it’s for a social event,” he said.

The billionaire and former oil baron also lamented that while his plan initially promoted wind energy, that hasn’t worked out so well.

“I’ve lost my ass” to wind-energy investments, he conceded.

Heat Waves, Droughts, Floods — We Didn’t Listen!

by Marlo Lewis on August 23, 2012

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The hilarious South Park episode “Two Days Before the Day After Tomorrow” opens with Eric Cartman and Stan Marsh playing in a motor boat that Cartman falsely claims belongs to his uncle. Cartman persuades Stan to drive the boat. Not knowing how, Stan crashes the boat into the world’s largest beaver dam, flooding the town of Beaverton.

Rather than get help, Cartman and Stan decide to tell no one and pretend they were playing at Eric’s house all afternoon. The flood leads to wild speculation not only in South Park but also in the national media and the scientific community. Stan’s father Randy is a geologist. He and his colleagues determine that global warming caused the Beaverton flood. Worse, they calculate that global warming will strike worldwide “two days before the day after tomorrow.” Randy exclaims: “Oh my God — that’s today!” There is panic in the streets.

Echoing the sermon at the end of the 2004 Sci-Fi disaster film, The Day After Tomorrow, Randy laments: “Stan, I’m afraid us adults just let you children down. We didn’t take care of our earth, and now you’ve inherited our problems. We didn’t listen!” To watch Randy’s mea culpa on YouTube, click here.

We’ve been hearing a lot from Randy’s real-world counterparts of late, which is why in recent posts, I presented evidence that climate change was not the principal factor behind the 2003 European heat wave, the 2010 Russian heat wave, the 2011 Texas drought, or the ongong Midwest drought.

What about floods? Google “global warming” and “floods,” and you’ll get 7.2 million results. Given all that ‘evidence,’ you may surprised that a new scientific study finds no correlation between rising global mean carbon dioxide concentrations (GMCO2) and flooding in the U.S.

[click to continue…]

Inside the Sausage Factory: The Obama Administration’s Auto Regulations

by Marlo Lewis on August 22, 2012

in Features

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Earlier this month, the House Oversight and Government Reform Committee issued a staff report on the Obama Administration’s fuel economy/greenhouse gas (GHG) regulatory program. The report, A Dismissal of Safety, Choice, and Cost, is the product of a “multi-year Committee investigation” that includes three hearings, a transcribed interview of EPA Assistant Administrator Gina McCarthy, and a review of more than 15,000 documents obtained by the Committee from the EPA, the National Highway Traffic Safety Administration (NHTSA), the California Air Resources Board (CARB), and 15 automobile manufacturers.

Some key findings:

  • The Administration performed an end-run around the law and ran a White House-based political negotiation, led by “czars” who marginalized NHTSA, the federal agency charged in statute with setting fuel economy standards.
  • Contrary to the statutory scheme Congress created, the EPA became the lead agency in fuel economy regulation and NHTSA was sidelined. Contrary to Congress’s preemption of State laws or regulations “related to” fuel economy, CARB became a “major player” and an “aggressive participant in the process,” allowing unelected state regulators in Sacramento to set national policy outside the federal rulemaking process.
  • The Administration violated the spirit – and possibly the letter – of the Administrative Procedure Act, Presidential Records Act, and Federal Advisory Committee Act by negotiating agreements on both the Model Year (MY) 2012-2016 and MY 2017-2025 standards behind closed doors with only a select group of stakeholders.
  • The new fuel-economy/GHG standards will add thousands of dollars to the cost of new vehicles. Consumers are likely to incur net financial losses unless annual gasoline prices reach $5-$6 per gallon.
  • Compliance with the new standards will require mass reductions that will, in turn, compromise vehicle safety. EPA and CARB officials mocked and belittled safety concerns raised by NHTSA.

In a law journal article and regulatory comment letter, I also make the case that the administration’s fuel-economy agenda trashes the separation of powers and administrative procedures. But the Committee’s report provides the first, detailed behind-the-scenes chronology of Team Obama’s fuel economy machinations, confirming what other critics suspected but could not document.

Some secrets of the sausage factory, though, may never come to light: “Despite multiple requests, the Executive Office of the President refused to provide any information on its involvement in developing the fuel economy and GHG emissions standards.”

[click to continue…]

Court Vacates EPA Cross State Air Pollution Rule

by Marlo Lewis on August 21, 2012

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Today, the D.C. Circuit Court of Appeals vacated the EPA’s Cross State Air Pollution Rule (CSAPR), also known as the Transport Rule. The Rule’s purpose is to implement the Clean Air Act’s ‘good neighbor policy,’ which prohibits upwind states from contributing significantly to downwind states’ non-attainment with National Ambient Air Quality Standards (NAAQS).

The Court vacated the CSAPR because . . . (drum roll, please) . . . the EPA regulated beyond its statutory authority. Dog bites man.

From the decision, filed for the Court by Judge Brett Kavanaugh:

Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority.

Here, EPA’s Transport Rule exceeds the agency’s statutory authority in two independent respects. First, the statutory text grants EPA authority to require upwind States to reduce only their own significant contributions to a downwind State’s nonattainment. But under the Transport Rule, upwind States may be required to reduce emissions by more than their own significant contributions to a downwind State’s nonattainment. EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute. Second, the Clean Air Act affords States the initial opportunity to implement reductions required by EPA under the good neighbor provision. But here, when EPA quantified States’ good neighbor obligations, it did not allow the States the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified States’ good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act.

For each of those two independent reasons, EPA’s Transport Rule violates federal law. Therefore, the Rule must be vacated.

 

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