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At 8 AM this morning, the Obama administration unveiled its multi-pronged strategy to control methane emissions from the oil and gas sector. The plan will involve proposals from the Interior Department, the Department of Transportation, the Department of Energy, and the EPA. This post focuses on what EPA intends to do.

It is being widely reported that EPA’s regulatory mandate will be limited to new and modified sectors within the oil and gas industry, pursuant to Clean Air Act §111b (“new source performance standards”). This is seen as a major loss for environmental special interests, which had pushed for the regulation of existing sectors in the oil and gas industry, pursuant to Clean Air Act §111d (“existing source performance standards”). THIS MEDIA NARRATIVE IS INNACURATE!

In fact, EPA snuck in a de facto nation-wide regulation of methane from the oil and gas sector. Here’s how: A press release from the White House lists as the second administration action to mitigate methane emissions the following: [click to continue…]

Two Fridays ago, EPA promulgated a final regulation, pursuant to the Resource Conservation and Recovery Act (“RCRA”), that establishes first ever federal limits on the disposal of “coal combustion residuals” (i.e., byproducts of burning coal for power). Coal combustion residuals also are known as “coal ash.”

Environmentalists aren’t happy with the rule, having deemed it too lenient. In particular, they are disappointed because EPA subjected coal ash to RCRA Subpart D, rather than the draconian RCRA Subpart C. [Read all the details here; notably, the agency chose the less restrictive rule only after it endured an interagency smackdown].

Here’s NRDC’s press release on the rule:

The Environmental Protection Agency’s long-awaited rule on disposal of toxic ash from coal-burning power plants falls far short of what’s needed to protect the public and our waterways from the millions of tons of dangerous sludge that is produced annually, the Natural Resources Defense Council said today.

And here’s what Sierra Club had to say:

While EPA and the Obama Administration have taken a modest first step by introducing some protections on the disposal of coal ash, they do not go far enough to protect families from this toxic pollution.

According to the greens, then, EPA’s coal ash rule “falls far short” because it doesn’t “go far enough.”

Let’s now turn to how far the greens would go. During the White House regulatory review process, the Office of Information and Regulatory Affairs performed an informal cost-benefit analysis of Sierra Club/NRDC’s preferred regulatory option (i.e., subjecting coal ash to ultra-onerous RCRA Subpart C). Discounted at an annual rate of 3%, OIRA estimated that Subpart C regulation would “avert 0.5 cancer cases at a cost-per-life-saved of $59 billion.” (See page 10 of OIRA’s review summary). This cost-per-life saved, moreover, fails to account for the administrative burden, as the rule would increase by a factor of 65 the amount of waste subject to Subpart C’s regulatory regime. It also fails to account for the inimical impacts of such a rule on the significant coal ash recycling industry (estimated annual revenues: $5-10 billion). [click to continue…]

In a new study published in the journal Environometrics, economists Ross McKitrick and Timothy Vogelsang compare climate models and observations over a 55-year span (1958-2012). Observations are from three sets of weather balloon measurements of tropical troposphere temperatures. Those are compared with 57 runs each of 23 CMIP3 models used by the IPCC in its 2007 Fourth Assessment Report (AR4).

In a lengthy post on the Drudge Report Climate Audit, McKitrick explains that the study focuses on the tropical troposphere because “that is where most solar energy enters the climate system, where there is a high concentration of water vapour, and where the strongest feedbacks operate.” The two economists used AR4 climate models because they began the study years ago before a “library” of CMIP5 models used in the IPCC’s Fifth Assessment Report (AR5) was available. (Note: McKitrick plans to update the study using the CMIP5 library.)

The graphic below shows how model projections compare with balloon data in the lower- and mid-troposphere over the observation period.

McKitrick and Vogelsang’s paper is 20 pages long and heavy on the math. Here is the bottom line as McKitrick presents it on Drudge Climate Audit: [click to continue…]

To persuade Americans — especially conservatives and libertarians — that a carbon tax can “work” (reduce emissions) without harming the economy, some proponents tout British Columbia’s carbon tax, enacted in May 2008. How relevant is British Columbia’s (BC) experience to environmental and tax policy debates in the U.S.? Is BC’s carbon tax a model for the U.S.?

BC’s Carbon Tax Act imposes a tax on all fossil fuels based on their carbon dioxide-equivalent (CO2e) emissions. The carbon tax started at (CAD)$10/ton CO2e in July 2008 and increased each year by $5/ton until reaching $30/ton in July 2012.

BC’s carbon tax is revenue-neutral — that is, all revenues must be used to reduce other taxes. In 2012/2013, the policy was actually revenue-negative because the tax reduced motor fuel sales more than forecast, hence raised less revenue than forecast. The carbon tax generated $1,120 million in revenues while the government decreased business and personal taxes by $1,380 million, yielding a net tax reduction of $260 million.

Writing last year in The American Conservative, my friend, R Street Institute economist Andrew Moylan described BC’s carbon tax as a success story — one that U.S. policymakers should emulate:

Early returns on the policy are quite positive. A recent study found that the province’s gross domestic product growth has outpaced the rest of Canada, while its corporate income tax rate has been reduced to among the lowest anywhere in the G8 countries. Despite concerns that it might grow government, the tax has stayed revenue neutral and enjoys broad public support. Polling of business and community leaders by the Pembina Institute found 64 percent believe the tax has been a positive move.

I find this general line of argument unpersuasive for reasons both small and large. [click to continue…]

So I’m here in Las Vegas, in beautiful Mandalay Bay Hotel, at Heartland Institute’s 9th International Conference on Climate Change. This morning I gave a Power Point presentation titled “Carbon Tax: A Conservative Idea Whose Time Has Come?”

A ‘conservative’ carbon tax is so loopy that at times I half believe it must be a passing fad, a bad joke, or a piece of blackboard econometric foppery rather than a grimly-determined political agenda.

But shortly after my presentation, a colleague forwarded an email he received from MIT’s Climate CoLab. The message begins:

FRIDAY: U.S. Carbon Price Webinar with former U.S. Secretary of State George Shultz and former Members of Congress Bob Inglis and Phil Sharp. . . . The Webinar will consider “How could a national price on carbon be implemented in the United States?”

The email goes on to describe the Webinar as “an exciting opportunity” for entrants in Climate CoLab’s Carbon Price Contest “to ask questions and get feedback from advisors who will also be serving as judges.” Winners can earn up to $10K in prize money. These folks mean business, and they’re putting some donor’s money where their mouths are.

Most ‘conservative’ carbon-taxers claim they want a tax that is ‘revenue neutral’ (offsets other taxes dollar-for-dollar) and replaces EPA greenhouse gas regulations, federal fuel-economy standards, state renewable energy mandates, etc. But Washington’s big spenders have no interest in tax ‘reform’ that does not ‘enhance’ revenues, and Big Green has no desire to trade away its capture of regulatory agencies — especially not for a tax that couldn’t be used to fund green-energy programs.

A revenue-neutral, regulation-dismantling carbon tax is a pipe dream.

To view my Power Point, click here.

Utility Air Regulatory Group v. EPA, the Supreme Court global warming case decided on June 23, 2014, gave EPA a slap on the wrist and then sent the agency on its merry way to dictate national policy on climate change. As a check on EPA’s ambition, it has all the weight of a feather pillow. As a defense of the separation of powers, it is unbearably light.

Justice Antonin Scalia assembled a bare majority in favor of a face-saving political compromise. Two sharply opposed views vied for the Court’s approval:

1. The Clean Air Act (CAA or Act) authorizes EPA to regulate greenhouse gases from stationary sources through the Act’s Prevention of Significant Deterioration (PSD) preconstruction permit program and Title V operating permit program, as Justice Breyer (joined by Justices Ginsburg, Sotomayor, and Kagan) argued in dissent.
2. The CAA does not authorize PSD and Title V permitting for greenhouse gases, as Justice Alito (joined by Justice Thomas) argued in dissent.

Instead of endorsing one of those alternatives, the Court opined, 5-4, that PSD and Title V permitting do apply to greenhouse gases — but only for sources already subject to the permitting programs as “major” emitters of other (“conventional”) air pollutants.

Winner: EPA

This half-way house ruling, authored by Justice Scalia, allows both sides to claim victory. “In Utility Air Regulatory Group v. EPA, the Justices feed several major climate regulations into the wood chipper,” the Wall Street Journal crowed. “Today’s ruling upholds the heart of EPA’s program for regulating carbon pollution from large new industrial facilities under the [PSD] provisions of the Clean Air Act,” stated Rep. Henry Waxman (D-Calif.).

Alas, Rep. Waxman is correct. UARG v. EPA is a big win for the agency. As the Court states on p. 10, EPA sought to regulate carbon dioxide (CO2) from facilities accounting for 86% of U.S. stationary-source greenhouse gas emissions. The Court trimmed back EPA’s reach to facilities accounting for 83% of stationary-source emissions.

More importantly, the Court’s ruling allows EPA to impose greenhouse gas controls on many diverse sources (power plants, industrial/commercial boilers, pulp and paper mills, cement production facilities, iron and steel mills, refineries, nitric acid plants, and landfills), all in one fell swoop.

In contrast, had the Court nixxed PSD for greenhouse gases, EPA could regulate CO2 from stationary sources only one industry at a time by establishing new source performance standards (NSPS), such as its proposed carbon “pollution” rule for new fossil-fuel power plants. The expansion of EPA’s greenhouse gas regulatory program would have slowed to a crawl. Now, thanks to UARG v. EPA, the program will continue to grow at breakneck speed.

Consider that the carbon “pollution” rule has been more than three years in the making and is still not final. Litigation might put it and other planned greenhouse gas NSPS on hold for several more years.

UARG authorizes EPA to impose CO2 controls on multiple industries between now and President Obama’s departure. This will affect the politics of energy policy. After spending millions on regulatory compliance, industries subject to PSD for greenhouse gases may not want to see their investments go for naught. Worse, some may want EPA to impose CO2 controls on other industries to ‘level the playing field.’ UARG v. EPA will make it harder for future Congresses and the next president to re-limit EPA and roll back Obama’s anti-carbon agenda.

What the Court decided

In UARG, the Court came to the following conclusions: [click to continue…]

“Biofuels made from left-overs of harvested corn plants are worse than gasoline for global-warming in the short run, a study shows, challenging the Obama administration’s conclusions that they are a much cleaner oil alternative and will combat climate change,” reports the Associated Press.  “A $500,000 study paid for by the federal government and released Sunday in the peer-reviewed journal Nature Climate Change concludes that biofuels made with corn residue release 7 percent more greenhouse gases in the early years compared with conventional gasoline. . .the study says they won’t meet a standard set in a 2007 energy law to qualify as renewable fuel. The conclusions deal a blow to what are known as cellulosic biofuels, which have received more than a billion dollars in federal support but have struggled to meet volume targets mandated by law. About half of the initial market in cellulosics is expected to be derived from corn residue.”

This is disappointing, because cellulosic biofuels are far less destructive to the environment than traditional ethanol, which is a special interest boondoggle that harms the environment while enriching politically-connected companies at the expense of taxpayers, consumers, and hungry people in the Third World.

The Obama Administration has clung to ethanol mandates, backing them despite growing evidence that they increase world hunger and mortality, and harm the environment.

[click to continue…]

Walton Francis, formerly director of regulatory analysis at the Department of Health and Human Services, submitted a sharply critical comment letter to the Office of Management and Budget (OMB) on the Obama administration’s social cost of carbon (SCC) estimates.

Yes, I realize, this isn’t breaking news, but the SCC debate will be with us for years, and, as explained previously on this site, SCC analysis has become a menace to society.

SCC analysis is computer-aided sophistry. By “sophistry,” I mean what Socrates meant by it in Plato’s dialogues. Sophistry is sham wisdom raised to the level of a τέχνη (technê), the Greek word for art, craft, or trade.

The leading rap against the sophists in classical literature is that they “make the weaker argument [defeat/appear to be] the stronger.” That is, sophists use specious arguments to win in courts and public assemblies regardless of the merits of the case or issue in dispute. Turning common sense upside down, they make wrong look right and base look noble.

SCC analysis, similarly, uses sophisticated modeling to make renewable energy look like a bargain at any price and carbon energy look unaffordable no matter how cheap. OMB Circular A-4 on cost-benefit analysis admonishes agencies that “you cannot conduct a good regulatory analysis according to a formula.” SCC analysis is a license to regulate by formula. Grant the premise that carbon has a social cost, and presto, climate activists conclude that taxing and regulating away reliable, plentiful, affordable energy will make the economy more “efficient.” For further discussion, see the free market organizations’ comment letter to OMB on the social cost of carbon.

For those unfamiliar with this debate, the administration’s Interagency Working Group (IWG) has put out two technical support documents on the social cost of carbon (2010 TSD, 2013 TSD). The documents define the social cost of carbon as “an estimate of the monetized damages associated with an incremental increase in carbon dioxide [CO2] emissions in a given year.” Implicit in that definition is another one: The SCC “is the carbon tax that would be imposed by a benevolent social planner.”

The IWG’s 2013 SCC estimates stirred up controversy because they were roughly 60% higher than the 2010 estimates, yet nothing had happened either to the climate system or in climate science to warrant the revision. What did happen is the warming “pause” continued for another three years, the divergence between climate model projections and observed temperatures increased, and scientific research further discredited Al Gore’s doomsday scenarios.

With that as background, let’s review Francis’s comment letter.

[click to continue…]