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Post image for EPA’s Renewable Fuel Standard Proposal Ignores Root Cause of Blend Wall

 

EPA today proposed Renewable Fuel Standard (RFS) biofuel blending targets for 2014, 2015, and 2016. The agency expects to complete the rulemaking by Nov. 30, which means it will be two years late finalizing the 2014 targets and one year late finalizing the 2015 targets.

The 2007 Energy Independence and Security Act (EISA), which established the RFS program in its current form, mandates that refiners, blenders, and fuel importers increase the amount of biofuel sold in the nation’s motor fuel supply from 4 billion gallons in 2006 to 36 billion gallons in 2022. However, EISA also authorizes EPA to adjust the annual targets if “there is an inadequate domestic supply,” broadly defined by the agency to include all infrastructure, market, and legal constraints “that could result in an inadequate supply of renewable fuel to the ultimate consumers.”

In Nov. 2013, EPA concluded that the 2014 RFS mandate would exceed the “blend wall” — the maximum quantity of ethanol that can be sold in a given year. The blend wall is a product of two factors: the overall size of the motor fuel market and practical constraints on how much ethanol can be blended into each gallon of motor fuel sold. Warranty and liability concerns, lack of compatible fueling infrastructure, and, most importantly, anemic consumer demand, effectively limit the standard blend to E10 — motor fuel containing up to 10% ethanol.

Based on blend-wall arithmetic, EPA in Nov. 2013 proposed to trim the overall 2014 statutory target from 18.15 billion gallons to 15.21 billion gallons — a 16% cut. That sparked a firestorm of protest from biofuel interests, and EPA has been dithering over the targets ever since – until today.

EPA’s proposal gets mixed reviews from biofuel lobbyists. On the one hand, the targets are lower than the corresponding EISA targets.

EPA RFS EISA Statutory Targets, May 29, 2015

 

 

EPA RFS Proposal May 29, 2015

 

 

On the other hand, the proposed target for 2016 will exceed the E10 blend wall by about 840 million gallons (p. 58). It is important to biofuel producers that all ethanol produced actually be sold for use as motor fuel. Otherwise, supply will exceed demand, and the ensuing glut will depress biofuel prices.

EPA assumes up to 600 million of those gallons can be sold via increased sales of E85 – motor fuel blended with up to 85% ethanol (p. 60). In a coordinated move, the USDA yesterday announced plans to spend $100 million to subsidize installation of E85 blender pumps.

My best guess is that in 2017 (or sooner) the blend wall crisis will return.

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Post image for Will EPA Scrap the Carbon Capture Mandate?

 

“EPA appears to have dropped its controversial requirement that new coal plants install partial carbon capture and sequestration (CCS) from its draft final new source performance standards (NSPS) that it recently sent to the White House for interagency review, according to one informed source,” Dawn Reeves reported last week in InsideEPA ($).

Despite repeated trust-us-we’re-the-experts assurances that partial CCS is the “adequately demonstrated” (i.e. commercially viable) “best system” for controlling carbon dioxide (CO2) emissions from new coal-fired power plants, EPA apparently realizes such claims won’t survive judicial scrutiny (as this blog has often argued). According to Reeves:

The source believes EPA decided to drop the CCS mandate in the face of growing legal concern that the technology requirement would not withstand court review, because the projects the agency had relied on to show that CCS is “adequately demonstrated” and “commercially available” are faltering.

Reeves further notes that: 

A final NSPS must be in place in order for EPA to go forward with its final existing source performance standards (ESPS) to cut greenhouse gas (GHG) emissions from the current power fleet — a rule that the agency also plans to complete this summer and one that would achieve far more emissions reductions than the NSPS, particularly because there are no new coal plants planned in the U.S.

In EPA parlance, the agency’s Carbon Pollution Standards rule for new power plants imperils its Clean Power Plan (CPP) rule for existing power plants.

What will the White House do? President Obama’s longstanding ambition is to “bankrupt” anyone who would build a new coal-fired power plant. The NSPS rule is a de-facto ban on new coal generation, because new natural gas combined cycle (NGCC) power plants are already cheaper to build than new coal-fired power plants, and CCS can more than double the cost of a new coal plant.

Nonetheless, because hardly anyone is building new coal power plants anyway, the NSPS rule’s chief function is to provide a regulatory stepping stone to establish CO2 performance standards for existing power plants.

For Obama and his environmentalist allies, the CPP must be protected at all cost. They view it as vital to the triumph of ‘progressive’ politics in two ways. First, the CPP itransformational – a strategy to impose California-style climate and energy policies on the nation as a whole. Second, the CPP makes up the biggest component of the U.S. Government’s emission reduction pledge in the COP 21 climate treaty negotiations.

Simply put, an imploding Carbon Pollution Standards rule would take the CPP down with it, which in turn would likely doom the forthcoming Paris conference to another Copenhagen-like failure.

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Post image for EU Climate Policy: Unsustainability Update

 

Back in March, this blog showcased two charts exposing the unsustainability of the European Union’s proposal, in the current round of climate treaty negotiations, to cap global carbon dioxide-equivalent (CO2e) greenhouse gas (GHG) emissions at 60% below 2010 levels by 2050. The charts were created by U.S. Chamber of Commerce VP for climate and technology Stephen Eule, based on his preliminary assessment of the scale of effort required to meet the EU 60-by-50 target.

Yesterday, Eule posted a commentary with updated versions of the charts. The first updated chart appears immediately below.

Eule 60-by-50-global May 2015

 

 

 

 

 

 

The EU proposal clearly requires a rapid reversal of the baseline emissions trajectory projected by the Organization for Economic Cooperation and Development’s (OECD) Environmental Outlook to 2050. Under current climate and energy policies, global emissions are projected to increase by 67% between 2010 and 2050. To reduce emissions 60% below 2010 levels, emissions must decline a whopping 76% below the baseline projection. Eule comments:

So reaching “60-by-50″ is not as simple as just cutting 2010 emissions by 29 gigatons, which would be a huge task in and of itself. It also means avoiding more than 30 gigatons of future emissions, some of which have already happened. This is a staggering amount, equivalent to eliminating total U.S. GHG emissions every 3.8 years between now and 2050.

What must industrial and developing countries do, respectively, to meet the 60-by-50 target? That’s the topic of Eule second updated chart.

Eule 60-by-50-country May 2015

 

 

 

 

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Post image for Tom Steyer’s Windfall Profits Tax: Recyling Junk Policy

“Billionaire environmental activist Tom Steyer said Friday that he’s considering putting an oil-extraction tax on next year’s California ballot, increasing pressure on refiners amid a surge in gasoline prices and possibly raising the stakes on his climate change crusade,” reports The Sacramento Bee. The article continues:

Steyer, standing in front of a chart illustrating the recent price rise at the gas pump, said he may link a tax proposal with the requirement that oil companies disclose more information about their supplies and prices. . . . “There’s a huge human justice issue here about whether hardworking Californians are paying way too much for gasoline and the companies are being able to manipulate it . . . and triple their profits,” Steyer told reporters at the California Democratic Party convention in Anaheim, where he plans to meet with delegates and other officials to gather input. . . . California is one of 22 oil-producing states that don’t charge an oil-extraction tax. A 10 percent excise tax would raise about $2 billion annually.

Although conspiracy theories are typically worth less than squat, I must nonetheless comment briefly on the recent rise in gas prices, because Steyer has what it takes to get Democratic pols singing from the same sheet of music.

Nationally, the price of regular gasoline has rebounded from $2.06/gal. in January to $2.72/gal. today. Before concluding that dark forces must be at work, consider a few points:

  • Gas is still a dollar cheaper than it was in May 2014.
  • Gas prices tend to rise every year after January as refineries switch over from winter to summer gas, which is more costly to produce, and as demand increases with the onset of summer driving season.
  • “[R]obust U.S. gasoline consumption and exports, and increased demand for gasoline in Europe and Asia” are factors pushing up current prices, according to the U.S. Energy Information Administration.
  • The Federal Trade Commission hasn’t said a peep lately about unlawful market manipulation.

But here’s the thesis I would submit for your consideration. Steyer is a false foe of high gas prices. His proposed excise tax would squeeze the “hardworking Californians” about whom he professes to care.

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Post image for Ethanol Industry Ad Campaign: Fuels America or Fools America?

 

As the June 1 deadline approaches for EPA to propose Renewable Fuel Standard (RFS) mandates for 2014, 2015, and 2016, biofuel lobbyists are cranking up their political and PR efforts to sway EPA’s decision. In a television and digital ad campaign launched this week, Fuels America, a coalition of biofuel interests, accuses the “oil industry” of “refusing to fulfill its obligations” under the RFS.

Fuels America also claims EPA must choose either to support “rural economies,” “permanent jobs,” and “the world’s cleanest motor fuels,” or to “reward” the oil industry, which supposedly means “more imported oil from hostile foreign regions, more pollution and spills,” “fewer American jobs,” “protecting the oil monopoly on our fuel supply,” and “even higher gas prices.”

Fools America is a much better description of what these regulatory profiteers are trying to pull off. The RFS does not benefit “rural economies,” it benefits corn farmers at the expense of beef, poultry, and hog farmers. The RFS creates “permanent” jobs only in the sense that it creates special privileges in the form of government-guaranteed market shares for biofuel companies and the corn farmers who supply them. A “monopoly” is a market with a single supplier; a commodity such as a fuel type cannot be a monopoly. Gas prices and oil imports from hostile regions are at their lowest levels in a decade, thanks chiefly to the fracking revolution and U.S. oil companies, not RFS blending requirements.

As for the RFS producing the world’s “cleanest” fuels, the program has significant environmental downsides. It expands aquatic dead zones, accelerates wetlands conversion and habitat loss, may increase smog-forming VOC emissions, and likely increases net greenhouse gas emissions. The RFS program also inflates food and fuel costs and exacerbates world hungercontributing to political instability and violence in developing countries.

Let’s delve a bit deeper into the controversy over the 2014-2016 ethanol mandates and Fools America’s campaign to influence EPA’s rulemaking.

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Post image for Is Ethanol a Green Fuel?

 

It’s common knowledge that the Renewable Fuel Standard (RFS) is a textbook study in the law of unintended consequences. The program inflates food and fuel costs, exacerbates world hunger, contributes to political instability and violence in developing countries, expands aquatic dead zones, accelerates wetlands conversion and habitat loss, likely increases net greenhouse gas emissions, and ushers in a reign of regulatory uncertainty rather than the predictable marketplace its creators intended.

And this just in: NOAA and NASA scientists find that ethanol manufacturing releases five to 30 times more volatile organic compounds (VOCs) than estimated in EPA’s 2011 National Emissions Inventory. VOCs are pollutants that form ozone-smog when they react with nitrogen oxides (NOx) in the presence of sunlight.

From a news article by Amanda Peterka in today’s E&E PM ($):

Ethanol refineries may emit more air pollution than commonly thought, according to a new study led by researchers from the National Oceanic and Atmospheric Administration.

The NOAA team, which also included scientists from NASA and academic institutions, measured the air downwind from an ethanol plant in Illinois and found emissions of total volatile organic compounds (VOC) to be five times higher than 2011 federal data.

Emissions of ethanol in the air — considered a type of VOC — were up to 30 times higher than previously thought downwind from the plant, the team said. . . .

The study has been accepted for publication in the Journal of Geophysical Research: Atmospheres. NOAA and U.S. EPA provided funding for the measurements taken by the team.

Using a small NOAA airplane outfitted with special instruments, the team measured air quality at 9, 12 and 30 kilometers downwind from the Archer Daniels Midland ethanol plant in Decatur, Ill., in June and July 2013. . . .

According to the results, measured emissions of sulfur dioxide and nitrogen oxides compared well with the EPA data. But they found that the National Emissions Inventory underestimated emissions of volatile organic compounds — gases that are a main ingredient in ground-level ozone — generated by the refining process by factors of five to 30.

 

Post image for Independent Satellite Records Agree: Little to No Global Warming over Past 18 Years

 

Roy Spencer, John Christy, and William Braswell of the University of Alabama in Huntsville (UAH) Earth System Science Center recently released Version 6 (V.6) of their global satellite temperature dataset. The scientists describe the upgrade, which took three years to complete, as “by far the most extensive revision of the procedures and computer code we have ever produced in over 25 years of global temperature monitoring.”

Compared to the previous UAH dataset (V5.6), the most important change is a reduction in the global average lower-troposphere temperature trend from +0.140°C/decade to +0.114°C/decade over the past 36 years (Dec. ’78 through Mar. ’15).

Christy V6-vs-v5_6-LT-1979-Mar2015

 

 

 

 

 

 

 

 

Figure explanation: Monthly global-average temperature anomalies for the lower troposphere from Jan. 1979 through March, 2015 for both the old and new versions of LT (top), and their difference (bottom).

The revision is noteworthy in several respects. First, as the scientists point out, the UAH dataset more closely matches the Remote Sensing Systems (RSS) dataset, a separate satellite monitoring program, which shows no net warming since Dec. 1996. In the RSS record, the length of the warming pause is now 18 years five months.

Monckton No Warming 18 years five months

 

 

 

 

 

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A big problem for EPA in trying to defend its egregious Clean Power Plan is that the rule is being promulgated in the name of fighting climate change, but it won’t actually impact the climate.

As a result, the agency has had to resort to two bits of trickery in order to justify the rule’s exorbitant costs.

The first is known as the social cost of carbon. As has been persuasively argued by my colleague Marlo Lewis, the social cost of carbon is assumption-driven garbage. (See, e.g., this).

trickEPA’s second statistical misdirection, which is the subject of this post, is to claim that the rule would save thousands of lives by reducing conventional pollutants other than carbon dioxide, primarily ozone and fine particulate matter. Today, a group of public health professionals issued a press release trumpeting a study backing the EPA’s “co-benefit” claims regarding the Clean Power Plan.

In this post, my purpose is not to rebut the statistical analysis by which these “prevented deaths” were conjured. As Bjorn Lomborg smartly pointed out in his book Cool It, we could reduce untold emissions of air pollution, and save scores of thousands of lives, simply by reducing the speed limit everywhere to five miles per hour. Just because there are “co-benefits” attendant to any given policy doesn’t mean much in a vacuum.

Of course, the Clean Power Plan was not promulgated in a vacuum. Rather, the rule exists within a regulatory structure created by the Clean Air Act. Accordingly, my purpose in this brief post is to demonstrate that these “co-benefits” are a legal/regulatory sham.

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Post image for Clean Power Plan Litigation: Thoughts on Ripeness and Standing

 

In Murray Energy Corporation v. EPA, petitioners seek an “extraordinary writ” from the D.C. Circuit Court of Appeals to prohibit further action on EPA’s “ultra vires” (unlawful) Clean Power Plan (CPP) rulemaking. They also seek judicial review of EPA’s legal opinion that §111(d) of the Clean Air Act (CAA) authorizes such regulation.

Previous posts discuss the merits of the case. To recap very briefly, petitioners contend the CPP is plainly unlawful under §111(d), the very provision supposedly authorizing it. CAA §111(d) prohibits EPA from requiring States to adopt performance standards for existing facilities in source categories already regulated under §112. Power plants have been so regulated since December 2011, when EPA finalized its Mercury Air Toxics Standards (MATS) rule. According EPA and its allies, the so-called 112 exclusion is “ambiguous,” EPA’s proposed resolution of the ambiguity is a “reasonable construction” of the statute, and under said construction the CPP is lawful.

The Court heard oral argument on April 16. Most commentary I’ve seen does not expect the Court to rule on the merits but rather to dismiss the petition on “ripeness” and “standing” grounds. Here’s why. The CPP is still a proposed rule. Typically, courts allow the notice-and-comment rulemaking process to play out, limiting review to final agency actions. In addition, demonstrating a “concrete and particularized” injury from an agency action is hard when the final form of the action is undecided and (presumably) still unknown.

On ripeness, Judges Griffith and Kavanaugh asked whether EPA Administrator McCarthy’s cheerleading for the CPP indicates the public comment process won’t change anything and is therefore a “sham.” On standing, Judge Kavanaugh asked whether actions some States are already taking to comply with the CPP help petitioners demonstrate injury, even though States and industry often engage in preparatory action before rules are finalized.

Those questions don’t get to the heart of the matter. The case is ripe because EPA’s basic position on the 112 exclusion is for all practical purposes a final agency action. EPA must conclude that §111(d) does not prohibit performance standards for existing facilities regulated under §112 or else the whole rule collapses.

In theory, of course, EPA could pull an Emily Litella, conclude petitioners are correct about the 112 exclusion, and toss the CPP into the rubbish bin. But if EPA did that, the “centerpiece” of President Obama’s entire climate policy agenda would disappear. So would the core of Obama’s emission-reduction pledge – the administration’s Intended Nationally-Determined Contribution (INDC) – in the COP 21 negotiations for a new international climate agreement. For Obama, the CPP and a new climate pact are legacy policies on a par with Obamacare. Moreover, were EPA to pull the plug on the CPP and, thus, wreck COP 21, the President’s environmentalist base would go berserk.

In short, there is no turning back. EPA is not going to change its legal position on the 112 exclusion (though it might of course modify its rationale for that position). [click to continue…]

Post image for Forgotten Document Sheds New Light on Legality of EPA Climate Rules

 

A little known document sheds new light on the now 17-year-long controversy over EPA’s Clean Air Act authority with respect to greenhouse gases. The document is a letter of January 26, 1990 from EPA Administrator William Reilly to U.S. Senators. Reilly sets forth the Bush I administration’s reasons for removing greenhouse gas (GHG) regulatory provisions from S. 1630, the Senate version of the Clean Air Act (CAA) Amendments of 1990. Judging by the fact that the Senate later agreed to drop those provisions from the 1990 CAA as enacted, Reilly’s letter would appear to be a key piece of evidence for assessing legislative intent.

Would consideration of the document have altered the Supreme Court’s landmark ruling in Massachusetts v. EPA (2007)? We will never know. What’s hard to fathom is why no party to the case cited the letter. Maybe it was already lost in the mists of time.

Reilly apprises Senators that the Bush I administration “strongly opposes” S. 1630′s “requirement for reductions in carbon dioxide (CO2) emissions from auto tailpipes” — the same basic policy petitioners in Massachusetts would later sue EPA to adopt. Noting that the S. 1630 CO2 emission standards translate into motor vehicle mileage standards, Reilly highlights three reasons for striking the provision, two of which are germane to issues debated in Massachusetts:

First, it is premature to mandate specific controls to address global warming. International studies are underway. International negotiations on a framework convention on global climate change are scheduled for this year and should be completed prior to unilateral U.S. action. 

Second, fuel-economy requirements raise important non-environmental questions that need to be carefully considered, such as feasibility, cost and competitiveness of the U.S. auto industry with foreign manufacturers.

In addition, Reilly contends, the CO2 standards and provisions to regulate ozone-depleting substances based on global warming potential do not “appear to be a particularly effective approach to such a geographically vast problem.”

In Massachusetts, States and environmental groups challenged Bush II EPA’s rejection of a petition to establish motor vehicle emission standards for CO2 and other GHGs. EPA air chief Jeff Holmstead based the agency’s decision on both statutory and policy grounds (68 FR 52922-52933). The Court dismissed the latter arguments as “policy concerns,”  “policy judgments,” and “reasoning divorced from the statutory text.” However, some of Holmstead’s policy reasons for not regulating GHGs under the CAA reprise Reilly’s reasons for keeping GHG regulatory provisions out of the CAA. Specifically, according to Holmstead:

  • Double regulation of fuel economy under both the Energy Policy Conservation Act and CAA could adversely affect U.S. auto industry competitiveness.
  • Scientific uncertainties and lack of cost-effective technologies make GHG emission standards “inappropriate at this time.”
  • Setting GHG motor vehicle standards would “result in an inefficient, piecemeal approach to addressing the climate change issue.”

Far from being “divorced” from the statutory text, similar policy concerns shaped the text of the statute that the 101st Congress passed and President G.H.W. Bush signed.

Why is this old news important? The extent of EPA’s powers with respect to GHGs is the central issue in the controversy over EPA’s Clean Power Plan (CPP). Although the CPP would be unlawful on numerous grounds even if Massachusetts spoke the gospel truth, courts with a healthy skepticism about that decision are more likely to review the CPP without fear or favor.

Previous commentary on this blog and elsewhere (hereherehere, and here) examines the Massachusetts Court’s reasoning. The remainder of today’s post summarizes that commentary. [click to continue…]