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No Fine If Wind Farm Kills Endangered Condors — Fish and Wildlife Service

by Marlo Lewis on May 17, 2013

in Blog, Features

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Should industrial wind facilities have to pay a $100,000 fine — as oil and gas companies do — if they kill an endangered species? Many environmental activists think so. The Fish and Wildlife Service (FWS) does not.

In a reversal of its official opinion, the FWS recently announced “it will not penalize the operator of a Southern California wind operator if its turbines kill or injure one California condor,” reports environmental journalist Chris Clarke in ReWire.

With fewer than 250 birds in the wild, the condor is one of the world’s most critically endangered animals, and industrial wind is encroaching on the bird’s range in the Tehachapi Mountains. From the article:

FWS biologist Ray Bransfield told ReWire that FWS has completed its Biological Opinion (BiOp) on condors for Google and Citicorp’s Alta East project, which would be built and operated by wind developer Terra-Gen. Occupying 2,592 acres, mostly on public lands, near the intersection of state routes 14 and 58 in Kern County, Alta East would generate a maximum of 318 megawatts of electrical power with 106 wind turbines, each with 190-foot-long blades.

FWS’s BiOp for Alta East includes an “incidental take statement” that in effect allows one “lethal take” of a California condor. “Incidental take” of a protected species is a term of art covering any kind of injury, harassment or disturbance, or even habitat damage that a project causes inadvertently. “Lethal take” is when the species in question dies.

The Bureau of Land Management (BLM) has yet to approve the project. If it does, and a single condor is killed during the 30-year operating life of the facility, the FWS would have to undertake a “formal review” of the project’s impact on condors. Recent history suggests this safeguard is unlikely to be worth much, Clarke argues:

Endangered species advocates were hoping for a “jeopardy” finding when solar developer BrightSource started finding hundreds more federally threatened desert tortoises on the site of its Ivanpah Solar Electric Generating System than were forecast in that project’s BiOp. The original BiOp and take permit allowed BrightSource to kill, harm, harass, or disturb no more than 40 tortoises. Once it was clear there were a lot more tortoises than that onsite, BLM estimated as many as 2,862 tortoises (including eggs) could be harmed by the project. Despite the 70-fold increase in potential “takes,” FWS merely required a few changes to the project’s tortoise relocation plan and issued a revised BiOp that allowed construction to proceed.

The Alta East project may “take” many more than one condor in 30 years. Condors, notes Clarke, “fly slowly, their 9-foot wingspans making them somewhat slow to maneuver. They tend to soar while watching the ground, searching for activity of other scavengers. This habit makes them vulnerable to injury from blade tips approaching from above, often at speeds exceeding 150 miles per hour.”

In addition, condors are “intensely social animals.” Where one goes to feed on carrion, others quickly assemble in “huge flocks,” as Clarke shows in photos taken just minutes apart.  [click to continue…]

EPA Doubles Down on E15 — Literally

by Marlo Lewis on May 7, 2013

in Blog, Features

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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. [click to continue…]

IMF Pushes Carbon Tax as Energy Subsidy “Reform”

by Marlo Lewis on April 11, 2013

in Blog, Features

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The International Monetary Fund (IMF) recently published a report urging the world’s governments to “reform” energy subsidies estimated at $1.9 trillion in 2011. Eliminating government policies designed to rig markets in favor of particular energy companies or industries is a worthy goal. Unfortunately, that’s not the agenda the IMF is pushing.

The IMF seeks to shame U.S. policymakers into enacting carbon and coal taxes by redefining the absence of such taxes as energy subsidies. The IMF’s rationale goes like this. Market prices do not reflect the harms (“negative externalities”) fossil fuels do to public health and the environment. Consequently, fossil fuels are under-priced and society consumes too much of them. Policymakers should enact corrective (“Pigou”) taxes to “internalize the externalities” (make polluters pay) and reduce consumption to “efficient” levels.

The IMF estimates that, by not imposing corrective taxes, the U.S. subsidizes fossil fuels to the tune of $502 billion annually, making America the world’s biggest energy subsdizer!

This is blackboard economics (the pretense of perfect information and flawless policy design and implementation) in the service of a partisan agenda.

Carbon taxers disclaim any intent to pick energy-market winners and losers, but that is in fact the core function of a carbon tax. As with cap-and-trade, the policy objective is to handicap fossil energy and, thereby, “finally make renewable energy the profitable kind of energy in America,” as President Obama put it.

Predictably, the IMF says not a word about the policy privileges widely bestowed on renewable energy (renewable electricity mandates, renewable fuel mandates, targeted tax breaks, feed-in tariffs, preferential loans, direct cash grants) or about the negative externalities associated with such subsidies (avian mortality, air and water pollution, food price inflation). 

This week at MasterResource.Org, I offer skeptical commentary on the “IMF’s Carbon Tax Shenanigans.” Here is a summary of key points (including two shrewd comments posted by Heritage Foundation economist David Kreutzer). [click to continue…]

False Alarms: Dow Chemical’s Campaign against Natural Gas Exports

by Marlo Lewis on March 22, 2013

in Blog, Features

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Last week on this blog, I explained how Dow Chemical’s chief rationale for restricting exports of liquefied natural gas (LNG) — the claim that gas used as a feed stock in domestic manufacturing adds more value to the economy than gas exported overseas — would also justify:

  • Curbing Dow’s exports of chemicals, plastics, and electronic components to help domestic manufacturers of paints, cosmetics, pharmaceuticals, cell phones, laptops, and other finished goods become more competitive in the global marketplace.
  • Empowering bureaucratic agencies to commandeer private property whenever they think the resource would add more value in the hands of some other firm or industry.

Dow CEO Andrew Liveris would no doubt cry bloody murder if Congress proposed to give Dow a dose of its own medicine and restrict the company’s exports in the “public interest.” Presumably, Mr. Liveris would also disavow any sympathy for confiscatory centralized economic planning, although that is in effect what he is advocating.

Other rationales Dow and its allies invoke to oppose “unfettered” gas exports include:

  1. “Unlimited” gas exports could dramatically reduce the domestic supply of the natural gas liquids (NGLs) on which manufacturers depend as key feed stocks.
  2. Long-term contracts to export liquefied natural gas (LNG) will “lock in” deliveries to foreign buyers, subjecting U.S. manufacturers to high risks of price shocks and supply disruptions.
  3. Approving all LNG export applications that have been submitted to the Department of Energy (DOE) could result in “half” of all U.S. gas produced being burned for the Btus in overseas power plants, pushing U.S. gas prices to Asian levels.

These are all false alarms. Let’s take them one at a time. [click to continue…]

Earth Hour Harms the Earth

by Hans Bader on March 20, 2013

in Blog

Earth Hour wastes energy and harms the planet.  Bjørn Lomborg, a Danish academic and environmental writer, recently lambasted Earth Hour, the annual tradition of turning off the lights, which falls on March 23:

In fact, Earth Hour will cause emissions to increase. As the United Kingdom’s National Grid operators have found, a small decline in electricity consumption does not translate into less energy being pumped into the grid, and therefore will not reduce emissions. Moreover, during Earth Hour, any significant drop in electricity demand will entail a reduction in CO2 emissions during the hour, but it will be offset by the surge from firing up coal or gas stations to restore electricity supplies afterwards.

And the cozy candles that many participants will light, which seem so natural and environmentally friendly, are still fossil fuels – and almost 100 times less efficient than incandescent light bulbs. Using one candle for each switched-off bulb cancels out even the theoretical CO2 reduction; using two candles means that you emit more CO2.

To some self-styled environmentalists and bureaucrats, symbolism is more important than reality.  The Environmental Protection Agency clings to ethanol mandates, imposing them despite growing evidence that they increase world hunger and mortality, and harm the environment.  As the Wall Street Journal noted, in October 2011,

the Competitive Enterprise Institute and Action Aid petitioned the EPA to review the so-called renewable fuel standard that mandates that 13.8 billion gallons of corn ethanol be blended into the gasoline supply next year. The free-market think tank and global hunger charity argued that the EPA’s technical regulations implementing the mandate did not meet “basic standards of quality” [since] EPA failed to consider multiple peer-reviewed studies documenting the link between ethanol and world hunger in its public health literature review, as required by law. That includes one paper that concludes that biofuel mandates are responsible for at least 192,000 premature deaths every year. Overall more people die from chronic hunger world-wide than malaria, tuberculosis and AIDS combined.

EPA disregarded this evidence, and denied the petition after a fourteenth-month delay.  (A request for reconsideration has been filed).

In 2008, a Washington Post editorial by two prominent environmentalists described how ethanol mandates have harmed the environment and spawned hunger across the world.   In “Ethanol’s Failed Promise,” Lester Pearson and Jonathan Lewis observed that “Turning one-fourth of our corn into fuel is affecting global food prices. U.S. food prices are rising at twice the rate of inflation, hitting the pocketbooks of lower-income Americans and people living on fixed incomes.  .  .Deadly food riots have broken out in dozens of nations in the past few months, most recently in Haiti and Egypt. World Bank President Robert Zoellick warns of a global food emergency.” [click to continue…]

A Modest Proposal on Exports: Give Dow Chemical a Dose of its own Medicine

by Marlo Lewis on March 15, 2013

in Blog, Features

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Dow Chemical CEO Andrew Liveris has been making waves of late with congressional testimony and a Wall Street Journal oped advocating restrictions on U.S. exports of liquefied natural gas (LNG).

To oppose “unfettered,” “unlimited,” or “unchecked” LNG exports — in other words, to fetter, limit, and check the freedom of gas producers to sell their own products — Dow formed a business group called America’s Energy Advantage (AEA). Other members include Alcoa, Eastman, Huntsman, and Nucor.

AEA’s rationale for restricting gas exports (to quote Liveris’s oral testimony) is that when gas is not exported but instead is used to manufacture products, it creates “eight times the value” across the entire economy. That claim derives from a Charles River Associates (CRA) study sponsored by — drum roll, please — Dow. According to CRA, using gas as a manufacturing input trounces gas exports in terms of job creation, GDP growth, and trade-deficit reduction. Therefore, AEA argues, Congress and/or the Department of Energy (DOE) should constrain LNG exports in the “public interest.” AEA also warns that higher gas prices from increased overseas demand could destroy tens of thousands of manufacturing jobs and kill the U.S. manufacturing renaissance. AEA claims it is not opposed to all LNG exports, it just wants a “balanced” approach.

Economist Craig Pirrong (a.k.a. the “Streetwise Professor“) deftly pops this rhetorical balloon:

I am adding a new entry to my list of phrases that put me on guard that someone is trying to con me: “balanced approach.”. . . . In Obamaland, “balanced approaches” mean large tax increases now, and hazy promises of spending cuts in some distant future. In Liveris’s oped, “balanced” means imposing restrictions on exports of natural gas to lower the cost of his most important input. Funny, ain’t it, that things seem to tip the way of those advocating “balanced approaches”? In other words, if it helps me, it’s fair and balanced!

The whole thing is galling. Even if Liveris were correct and gas turned into chemicals generates “eight times” the economic value of gas sold abroad, such third-party assessments should have no bearing on how companies dispose of their own property. As American Enterprise Institute scholar Mark Perry points out, AEA companies did not invest a dime to develop fracking and horizontal drilling technology, construct the wells, or hire the rig workers, yet they presume to decide what happens to the gas after it’s extracted from miles under the Earth. Not unlike the Supreme Court’s Kelo decision, AEA’s implicit premise is that central planners have the right, nay the duty, to commandeer private property whenever the resource would add more value in someone else’s hands.

But do Liveris and AEA really believe the rationale they’re pushing, or only when it cuts in their favor? Here’s an easy way to tell. Dow, Alcoa, Eastman, Huntsman, and Nucor primarily manufacture intermediate goods, not final goods. As natural gas is an input to them, so their products are inputs to still other companies. AEA-produced chemicals, plastics, electronic components, aluminum, and steel reach the consumer only after other manufacturers “add value” by turning those “feed stocks” into paints, cosmetics, fertilizers, pharmaceuticals, computers, cell phones, automobiles, and so on.

So by AEA’s logic, the government should restrict exports of chemicals, aluminum, and steel to hold down domestic prices and make U.S. manufacturers of final goods more competitive. The “public interest” demands it! I’ll bet my salary against Liveris’s that he will never, ever agree that sauce for the goose should also be sauce for the gander. [click to continue…]

EPA Cuts 2012 Cellulosic Blending Target to Zero

by Marlo Lewis on February 28, 2013

in Features

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“U.S. EPA has altered its cellulosic biofuel requirements for 2012 — from 8.65 million gallons to zero,” today’s Climatewire reports. In January, the D.C. Circuit Court of Appeals vacated EPA’s 2012 cellulosic biofuels standard. “As a result,” Climatewire explains, “obligated parties — oil companies required to show EPA that they blend biofuels in their fuel supply — won’t need to provide information on their compliance. The agency will submit refunds to companies that have submitted payments for 2012 cellulosic waiver credits.”

Who says there’s no justice in this world! For several years the EPA has fined refiners for not purchasing and blending ethanol made from switchgrass, wood chips, and other fibrous, non-edible plants. Refiners protested that there was no commercial cellulosic fuel to buy. The EPA argued that didn’t matter because the Renewable Fuel Standard (RFS) is meant to be “technology forcing.” The agency thus based each year’s cellulosic target on aspirational (rather than realistic) projections of how much cellulosic fuel would be produced. It then cheerfully collected fines for all the gallons of phantom fuel refiners did not blend.

The Court held that punishing refiners for what the ethanol industry failed to do is not “technology forcing”:

EPA applies the pressure to one industry (the refiners) [citation omitted], yet it is another (the producers of cellulosic biofuel) that enjoys the requisite expertise, plant, capital and ultimate opportunity for profit. Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry. “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.” Given this asymmetry in incentives, EPA’s projection is not “technology-forcing” in the same sense as other innovation-minded regulations that we have upheld.

Zeroing out the RFS cellulosic blending targets established by the Energy Independence and Security Act (EISA) is long overdue. [click to continue…]

Hill Briefing Shreds Renewable Fuel Standard

by Marlo Lewis on February 5, 2013

in Features

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This morning I attended a briefing on “The Renewable Fuel Standard: Pitfalls, Challenges, and the Need for Congressional Action in 2013.” Steve Ellis of Taxpayers for Common Sense moderated a panel of six experts. Although each expert spotlighted a different set of harms arising from the RFS, reflecting the core concern of his or her organization, this was a team effort, with panelists frequently affirming each other’s key points. Collectively, they made a strong case that the RFS is a “costly failure.” The briefing’s purpose was to demonstrate the need for reform rather than outline a specific reform agenda. Panelists nonetheless agreed that, at a minimum, Congress should scale back the RFS blending targets for corn ethanol.

Kristin Sundell of ActionAid explained how the RFS exacerbates world hunger, undermining U.S. foreign aid and international security objectives. The RFS diverts 15% of the world corn supply from food to fuel, putting upward pressure on food prices. A recent Tufts University study estimates that U.S. ethanol expansion during the past 6 years cost developing countries more than $5.5 billion in higher prices for corn imports. In Guatemala, the additional expense ($28 million) in 2011 effectively cancelled out all U.S. food aid and agricultural assistance for that year. Food price spikes, partly due to the RFS, were a factor in the recent turmoil in the Middle East. “Congress can’t control the weather, but they can control misguided energy policies that could cause a global food crisis,” Sundell said.

Kristin Wilcox of the American Frozen Food Institute discussed the RFS’s impact on food consumers. Corn is both the chief animal feed and an ingredient in about 75% of all frozen foods. Consequently, RFS-induced increases in corn prices drive up “the cost of producing a wide range of foods and leads to higher food bills for consumers.” In addition, when corn prices go up, so do the prices of other commodities that compete with corn such as wheat and soybeans. “Our position is very simple,” Wilcox said: “food should be used to fuel bodies, not vehicle engines.” She concluded: “Trying to change the price at the pump should not burden consumers with increased prices in the grocery check out aisle.” [click to continue…]

“We Are Taking Chemotherapy for a Cold” — Matt Ridley on Climate Policy

by Marlo Lewis on January 28, 2013

in Blog, Features

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The UK-based Global Warming Policy Foundation (GWPF) has published prize-winning author Matt Ridley’s A Lukewarmer’s Ten Tests: What It Would Take to Persuade Me that Current Climate Policy Makes Sense. 

For coercive decarbonization to make sense, Ridley argues, climate alarmists would have persuade us of ten things, none of which is plausible in light of either recent science, economic data, or moral common sense.

Such articles of alarmist faith include the propositions that the urban heat island effect has been fully purged from the surface temperature record, water vapor and cloud feedbacks will eventually amplify the modest observed warming trend since 1979, mankind will fail to adapt to climate change even though there has already been a 98% reduction in the probability of death from extreme weather since the 1920s, and today’s relatively poor generation should bear the cost of damages that may not materialize until a far wealthier future generation.

Ridley concludes that the UK’s “current energy and climate policy is probably more dangerous, both economically and ecologically, than climate change itself.”

Ridley is well aware of the argument that “even a very small probability of a very large and dangerous change in the climate justifies drastic action.” But he notes that “Pascal’s wager cuts both ways.” 

To climate alarmists, Ridley would reply that “a very small probability of a very large and dangerous effect from the adoption of large-scale renewable energy, reduced economic growth through carbon taxes or geo-engineering also justifies extreme caution.” Big picture: “At the moment, it seems highly likely that the cure is worse than the disease. We are taking chemotherapy for a cold.”

President Obama’s Inaugural Speech: New Heat on Warming?

by Marlo Lewis on January 23, 2013

in Blog, Features

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President Obama’s second inaugural speech featured climate change more prominently than did his first inaugural address. As Greenwire (subscription required) observed:

Gone was Obama’s roundabout reference to climate change through “the specter of a warming planet” from four years ago. This time, the president put the issue front and center.

Will that make any difference legislatively? Probably not. In the House, Republicans opposed to cap-and-trade, EPA regulation of greenhouse gases (GHGs), and carbon taxes are still in charge.

Is the President’s renewed emphasis on climate change just a sop to his environmentalist base? Doubtful. As a second termer, Obama has less reason politically to restrain his ‘progressive’ impulses. Several regulatory options are now in play:

  • The Department of Interior could list more species as threatened or endangered based on climate change concerns.
  • The President could finally veto the Keystone XL pipeline — a key objective of the climate alarm movement.
  • The EPA could issue GHG performance standards for existing (as distinct from new or modified) coal power plants, as well as GHG performance standards for other industrial categories (refineries, cement production facilities, steel mills, paper mills, etc.).
  • The EPA could finally act on petitions pending from the Bush administration to set GHG emission standards for marine vessels, aircraft, and non-road vehicles.
  • The EPA could finally act on a December 2009 petition by the Center for Biological Diversity and 350.Org to establish national ambient air quality standards (NAAQS) for carbon dioxide (CO2) and other GHGs.

I’ll make one prediction: If Obama does not veto the Keystone XL Pipeline after talking the talk on climate change, green groups will go ballistic (even though, Cato Institute scholar Chip Knappenberger calculates, full-throttle operation of the Keystone XL Pipeline would add an inconsequential 0.0001°C/yr to global temperatures). My colleague Myron Ebell reasonably speculates that Obama’s tough talk on climate was a signal to green groups to organize the biggest anti-Keystone protest ever.

Now let’s examine the climate change segment of Obama’s inaugural speech: [click to continue…]

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