EPA’s greenhouse gas regulation for existing power plants, known as the Clean Power Plan, is off-putting for a number of reasons. For starters, it’s expensive and threatens electric reliability. The regulation, moreover, is an affront to federalism, insofar as it usurps the States long-held, exclusive authority to oversee retail electricity markets. Despite these drawbacks, the rule would in no way impact the climate.

That’s a parade of horribles; however, the most off-putting element of the Clean Power Plan is the nuts and bolts of the EPA’s regulatory reasoning, which, in practice, would give the agency unlimited power.

Allow me to explain. As I indicate above, the Clean Power Plan would fundamentally overhaul the power sector. It is, as such, a big deal. And yet, this hugely consequential policy was based on an “obscure” and infrequently-used provision of the Clean Air Act–§111(d). In order to engender such a big policy from such a small statutory authorization, EPA had to get creative. Whereas, in the past, EPA deployed Clean Air Act §111(d) on a source-by-source basis, EPA aggregated sources subject to the Clean Power Plan. Thus, the rule applies to the entire power sector within a States, rather than one source category (i.e., coal plants, gas plants, etc.) at a time.*

EPA’s unprecedented aggregation of sources subject to the rule is an unsettling precedent, because it suggests EPA’s power is unlimited. If EPA can group together technologies as disparate as a coal-fired boilers, gas turbines, and solar panels, then there’s no logical endpoint to the agency’s authority to aggregate sources. What’s to stop EPA from adding manufacturers? Or livestock farms? Under the precedent established by the Clean Power Plan, EPA can regulat anything and everything pursuant to 111(d), which is, again, a short and obscure provision of the statute.

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Post image for Environmentalists Spend Like Koch Brothers To Influence Senate

The mainstream media have begun to take notice that the environmental movement is spending a lot of money to elect candidates in the 4th November elections.  Chris Mooney, an environmental advocate-reporter who was recently hired to write a Washington Post blog, posted an article on 27thOctober with the headline, “Environmental Groups Are Spending an Unprecedented $85 million in the 2014 Elections.” Mooney got his figures from a 24th October memo (posted here) by five leaders of the effort: Joe Bonfiglio of the Environmental  Defense Action Fund, Sky Gallegos of NextGen Climate Action (the group funded by billionaire Tom Steyer), Heather Taylor-Miesle of the NRDC Action Fund, Daniel J. Weiss of the League of Conservation Voters, and Melissa Williams of the Sierra Club.

Greenwire (subscription required) headlined its article on the scale of environmental pressure group spending in the election, “Are Money and Power Changing the Environmental Movement?”  That may have been a newsworthy topic about twenty-five or thirty years ago.  In an excellent front-page article in the Washington Times, Valerie Richardson focuses on a much more timely angle—the fact that all this spending has done little to make climate change and other environmental concerns into major campaign issues.

Richardson writes: San Francisco billionaire Tom Steyer has spent a staggering $76 million to promote climate change as a political issue in this year’s elections, but the subject isn’t exactly firing up the electorate.  Polls show voters continue to rank climate change at the bottom of their priority lists. Even in races featuring the ‘Steyer Seven,’ the Democratic candidates selected by Mr. Steyer as the chief beneficiaries of his largesse, the issue is barely registering on the campaign trail.”

The fact that their issues aren’t resonating with voters has been noticed by the environmental pressure groups trying to maintain a Democratic majority in the Senate.  As a result, many of the ads that they are paying for are on other issues, such as abortion, all the money being spent on behalf of Republicans by the Koch brothers, and various economic issues.

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Post image for Decline in Violent Tornadoes: Blame Global Warming?

“Now, we know that no single weather event is caused solely by climate change.  Droughts and fires and floods, they go back to ancient times.  But we also know that in a world that’s warmer than it used to be, all weather events are affected by a warming planet.”President Obama, Georgetown University, June 25, 2013

Well, here’s something else that goes back to ancient times: sophistry — sham wisdom raised to an art and marketed through deceptive rhetoric.

When someone tells you that “no single weather event is caused soley by climate change” but also that “all weather events are affected by a warming planet,” what is he really saying? He implies that you should blame global warming for particular weather disasters — but that you should not ask him (or anyone else) to provide specific evidence. How convenient!

What reminded me of the President’s climate rhetoric is the lead post on today’s WattsUpWithThat. Guest blogger Paul Hornwood presents graphs based on NOAA data showing that “Violent Tornadoes Are on the Decline in the U.S.” So if it’s true that “all weather events are affected by a warming planet,” should we blame global warming for suppressing violent tornadoes? If we’re swayed by the President’s rhetoric, yes, especially since Hornwood is not reporting a “single weather event” but a multi-decadal trend.

Quick background. As Hornwood explains, reliable analysis of tornado frequency and strength starts in the 1970s. National observation practices only began to develop in the ’50s and ’60s, and many higher-rated tornados back then were ‘measured’ after the fact. In 2007, NOAA upgraded its rating system to the Enhanced Fujita (EF) scale.

Here’s the big picture:

Hornwood Tornadoes EF1-3 1970-2013

 

 

 

 

 

The data show significant year-to-year variability but also a decline in the number of tornadoes since 1970. But wait, there’s more. . .

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Post image for Kemper CCS Project: 3 Years Behind, $3.9 Billion Over Budget. How’s that for ‘adequately demonstrated’?

Southern Company announced this week that its carbon capture and storage (CCS) coal-fired power plant in Kemper, Mississippi, will cost almost three times more and take three years longer than originally planned. Initially budgeted for $2.2 billion, the project is now expected to cost $6.1 billion.

This news does not bode well for EPA’s Carbon Pollution Standards rule, which relies on a handful of subsidized projects, with Kemper as pride of the fleet, to make the case that CCS technology is “adequately demonstrated.”

The rule establishes a carbon dioxide (CO2) new source performance standard (NSPS) for new coal power plants of 1,100 lbs. CO2/MWh. As EPA admits, today’s state-of-the-art coal plants emit 1,800 lbs. CO2/MWh (79 FR 1468).

This means the standard effectively bans investment in new coal generation, a policy that would be dead on arrival if introduced as a bill in Congress.

EPA says not to worry, because new coal units can meet the standard by installing CCS technology, which the agency certifies is “adequately demonstrated,” i.e., commercially viable.

Yet Kemper, which EPA mentions 13 times in the rule, now costs 88%-107% more than an advanced pulverized coal power plant without CCS and 496% more than an advanced natural gas combined cycle (NGCC) power plant.

power plants capital costs EIA report table 1 larger

 

 

 

 

Source: EIA, Updated Capital Cost Estimates for Utility Scale Electricity Generating Plants (April 2013)

New NGCC units, moreover, easily meet the standard (1,000 lbs. CO2/MWh) EPA proposes for that type of facility (79 FR 1486). So, absent generous subsidies, utilities won’t invest in coal with CCS when they can invest in much cheaper NGCC. I’ll take that as a demonstration CCS is not “adequately demonstrated.”

Even with subsidies (Kemper received a $270 million grant from DOE), utilities following EPA down the primrose path expose their investors and ratepayers to significant financial risk. Bloomberg reports:

The increased Kemper County costs will crimp third-quarter profit by $258 million, the company said today. The project has already surged past the $2.88 billion limit that can be billed to customers under an agreement with Mississippi regulators. Today’s charge adds to $963 million shareholders have already shouldered from project cost overruns in four of the prior six quarters.

Heritage Foundation economist David Kreutzer posts a witty commentary today on Kemper’s latest cost overrun, exposing the conflict-of-interest in EPA’s “adequately demonstrated” determination with the aid of a football metaphor: [click to continue…]

Post image for EPA’s Clean Power Plan Targets for Virginia: Unlawful Six Ways

Last Friday I posted excerpts from a Richmond-Time Dispatch article on the Virginia State Corporation Counsel’s (SCC’s) blunt comments on the Clean Power Plan – EPA’s proposed rule to reduce carbon dioxide (CO2) emissions from state electric power sectors. To recap, SCC staff argue the Plan exceeds EPA’s statutory authority, raises “alarming regional reliability concerns,” and would “substantially” increase consumer electric bills.

Over the weekend, a colleague sent me the SCC comment letter. Although 57-pages long, the letter is accessible and well worth reading. The SCC has been regulating Virginia electricity markets for more than 110 years to ensure reliable service at reasonable prices. These folks know whereof they speak. Today’s post delves into the SCC staff’s argument.

First, some quick background. EPA proposes to establish, for each state, existing source performance standards (ESPS) for power-sector CO2 emissions. The statewide standards, expressed in tons CO2 per megawatt hour, translate into statewide CO2 reduction targets. Clean Air Act §111(a)(1) defines “standard of performance” 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 (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated [emphasis added].

SCC staff identify six main reasons EPA’s proposed CO2 reduction targets for Virginia are not valid performance standards.

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Post image for NRDC Left with Egg on Face as “Laughable” Lawsuit Proceeds against Proposed Clean Power Plan

On June 18, 2014, Murray Energy Corporation, an Ohio-based coal mining company, filed a novel lawsuit in the D.C. Circuit Court of Appeals seeking to overturn EPA’s proposed Clean Power Plan. When asked for a reaction, an environmental lobbyist at the Natural Resources Defense Council called the lawsuit “laughable,” and predicted that the court would dismiss the case summarily. However, on September 18, a three-judge panel, acting on its own motion, ordered EPA to file a brief in response to the suit. So, contrary to what the green lobby predicted, the case will indeed proceed. Presumably, no one at the NRDC is laughing now.

To be sure, under the Clean Air Act’s provision for judicial review (42 U.S.C. §7607(b)(1), which, in turn, is modeled on a provision of the Administrative Procedures Act), an EPA regulation cannot be challenged until it is final. The Clean Power Plan, by contrast, is only at the proposed stage of the legislative rulemaking process. This is the primary reason why the NRDC lobbyist labeled the suit “laughable”—because it is a bedrock principle of administrative law that an agency action can’t be challenged until it is final, and the Clean Power Plan isn’t final.

Yet Murray Energy didn’t base its claim on the Clean Air Act, nor on the Administrative Procedures Act. Instead, the petitioners cleverly founded their challenge on the 1789 All Writs Act, a broad and historic statute that grants Article III Courts the authority to issue “necessary and appropriate” injunctions where “gaps” in a statutory scheme pervert the ends of justice. U.S. v. Valdez-Pacheco, 237 F. 3d 1077 (9th Cir. 2001) at 1080; U.S. v. New York Telephone Co., 434 U.S. 159 (1977) at 173.

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“The idea that climate change poses an existential threat to humanity is laughable,” climate economist Prof. Richard Tol stated in the Financial Times earlier this year. I was reminded of Tol’s acerbic comment by a graphic on today’s Watts Up With That – one of those pictures worth a thousand words:

People with no or partial electricity, Pachauri, Nature 2014

 

 

 

 

For the 1.3 billion people who have no electricity, energy poverty is indeed an existential threat. For the additional 2.3 billion people facing chronic electricity shortages, frequent blackouts, and limited hours of service, energy poverty is a decisive obstacle to development.

Those 3.6 billion people need access to plentiful, reliable, affordable energy as soon as possible, and for the foreseeable future, that means carbon-based energy. Yet the pampered elites at the UN, the EU, and the White House want all countries, including India and China, where hundreds of millions still have no electricity, to make ‘politically-binding’ commitments to limit their carbon dioxide (CO2) emissions, the inescapable byproduct of carbon-energy use. [click to continue…]

Post image for “Topsy-Turvy” Clean Power Plan Could “Substantially” Raise Electric Bills — Virginia State Corporate Commission

In a comment letter filed this week, the State Corporation Commission (SCC)* cautioned that EPA’s Clean Power Plan could “substantially increase” consumer electric bills in Virginia. The Richmond-Times Dispatch reports:

Complying with the EPA’s proposed carbon emission rules would likely cost Dominion Virginia Power customers alone an extra $5.5 billion to $6 billion, the State Corporation Commission’s staff said in an unusually bluntly worded statement.
 
The EPA’s proposed regulations would “increase substantially” the bills that all 3.6 million Virginia electricity customers pay for their power, the commission staff said, and could significantly affect the reliability of electric service.

The SCC staff anticipates electricity bills would go up significantly because the federal rules would require much of today’s electricity production be replaced with costly generation and expensive programs to decrease energy use.

“Those higher costs will be reflected in the electric bills paid by customers,” said the commission’s staff, emphasizing that statement with italic type.

SCC staff also expressed concerns about electric supply reliability. Again, from the Times-Dispatch[click to continue…]

Post image for EPA’s Clean Power Plan: Huge Electric Sector Impacts, Undetectably Small Climate Benefits — Study

Hot off the presses –

A new report by NERA Economic Consulting finds that EPA’s Clean Power Plan will:

  • Be the most expensive environmental regulation ever imposed on the electric power sector. The rule will cost state power sectors between $41 billion and $73 billion per year (EPA estimates ‘only’ $8.8 billion annually), and $336 billion to $479 billion over 15 years.
  • Cause double digit electricity price rate hikes in 43 states. Electricity prices will increase by an average of 12% to 17%. Fourteen states will face price increases up to 20%.
  • Retire 45,000 megawatts (MW) of coal generation capacity (more than the electricity output of all New England states combined). That’s on top of 70,000 MW of coal-fired generation in 42 states already slated to retire due to other EPA policies and low natural gas prices.
  • Have disproportionate impacts on low- and middle-income households and seniors on fixed incomes, who already struggle with high energy costs.
  • Have no measurable effects on climate change. By 2050, the Plan would, in theory, reduce sea-level rise by 1/100th of an inch (the thickness of three sheets of paper), and reduce average global temperatures by less than 2/100ths of a degree. [click to continue…]
Post image for The Divestment Movement’s Heart of Darkness

In Real Clear Markets today, economist Ben Zycher of the American Enterprise Institute calls out the hypocrisy of the divestment movement.

The movement urges colleges, foundations, local governments, and other large investors to sell their stock in 200 coal, oil, and gas companies with the highest reported “carbon” reserves. Supposedly, this will depress the capitalization and asset value of the fossil-energy sector, hastening its demise.

Zycher skewers the hypocrisy of those pledging to divest their holdings but only over a 3-5 year period so they can sell energy stocks at the highest price, and of pledge takers whose families made their fortunes in oil or whose incomes derive from companies with fossil-fuel investments.

More importantly, Zycher exposes the misanthropic logic of the movement’s preening moralism.

Fossil energy companies exist only because other industries — manufacturing, agriculture, telecommunications, etc. — require energy to create products and services. Governments, too, are large energy consumers. So if investors have a moral imperative to bankrupt carbon-energy production, they should dump all their stocks and bonds.

Nor is that all. Companies that consume energy exist only because ordinary people want their products and services and are wealthy enough to buy them. So if bankrupting Big Carbon is a moral imperative, governments should adopt policies to make people poorer. Choking off access to affordable energy would, of course, do just that.

What’s more, since human capital formation leads to wealth creation and, thus, to carbon-fueled products and services, divestment logic demands that investors cancel their “investments in people, in particular in a third world desperate to emerge from grinding poverty.”

If I might embellish a bit, the irony cuts pretty close to home. Higher education is all about human capital formation, yet many college presidents, teachers, and students are in the divestment movement vanguard. Logically, they should demand that donors stop supporting college and university endowment funds.

Zycher’s reductio ad absurdum is worth reproducing in full: [click to continue…]