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In a December 11^th blog, I noted how confused was the Obama administration regarding whether low oil prices benefited Americans. On the one hand, Secretary of State John Kerry intimated to a Peruvian audience that oil “[is] not cheaper,” despite its low price, due to the climate impacts of burning fossil fuels; on the other, Treasury Secretary Jack Lew that same day told a New York audience that low oil prices are “like a tax cut to the economy” and that increased U.S. oil and gas production is a “great success story.”

Today, I’m thrilled to report that the Obama administration has definitively determined that low oil prices are indeed a benefit to the average American. Here’s the breaking news, according to Brian Hughes at the Washington Examiner:

The White House on Monday said that plummeting oil prices are “good for the U.S. economy”… “As a general matter, the impact of falling energy prices has been good for the U.S. economy,” said White House press secretary Josh Earnest, as the price of U.S. oil Monday dropped below $50 a barrel for the first time since April 2009. [click to continue…]

Yesterday, the Wall Street Journal published a letter ($) from EPA General Counsel Avi Garbow, the purpose of which is to defend the legality of the Clean Power Plan—the Obama administration’s marquee climate initiative—from a recent influential op ed ($) to the contrary by Harvard law professor Laurence Tribe. According to Mr. Garbow,

For more than 40 years, the EPA has established an enduring track record of faithfully following the laws enacted by Congress and the dictates of sound science to achieve the twin goals of protecting public health and the environment … The proposed Clean Power Plan follows that same path to create a pragmatic approach to reducing greenhouse gases, in the form of carbon-dioxide emissions, from power plants.

Mr. Garbow is wrong to claim that EPA is “faithfully following the laws.” Below, I’ve enumerated the various laws and standards of statutory interpretation violated by the rule.

• The Clean Power Plan violates the plain terms of the Clean Air Act (as conceded by EPA and NRDC);

• The Clean Power Plan violates EPA’s Clean Air Act implementing regulations and thereby runs afoul of the Administrative Procedures Act;

• The Clean Power Plan violates the boundaries of federal authority as established by the Federal Power Act;

• The Clean Power Plan violates the Supreme Court’s “Congress doesn’t hide elephants in mouse holes” doctrine of statutory interpretation;

• The Clean Power Plan violates the Constitution.* [click to continue…]

surely, this is the Koch bros’ fault

As is almost always the case, the Sunday morning political talkies omitted mention of climate change, the greatest, most terrible, apocalyptic threat of all time. All four of the major shows did, however, give extensive mention to the Keystone XL Pipeline, either during direct interviews (e.g., with Sen. John Barrasso on NBC’s Meet the Press) or in group segments (a la ABC This Week’s Powerhouse Roundtable). Of all the Keystone mentions, the most perplexing was lent by Sen. Charles Schumer, on CBS’s Face the Nation. Below, I’ve punched up a transcript of the pertinent exchange. And at the bottom of this blog, I’ve reposted video of the entire interview.

Bob Schieffer: We understand the first thing the Republicans are going to do is pass Keystone XL legislation…what do you see happening there?

Sen. Schumer: well look, our republican colleagues say that this is a jobs bill, but that’s really not true at all. By most estimates, it would create several thousand temporary construction jobs, and on 35—35!— permanent jobs. Compare that to the number of jobs created in the economy last month 300,000. So democrats are dubious of this. But we’re going to introduce amendments that will make this more of a jobs bill. We’re going to introduce an amendment to say that the steel used in the pipeline, should be made in America, to make American jobs. We’re going to introduce an amendment that says that the oil that’s used in the pipeline will have to be used in America. Imagine building a pipeline that ships Canadian oil across America to be exported to other countries. Uhhh.. from Texas..that makes no sense at all in terms of the American working people’s interests. So we’re going to say that the oil should stay here. And finally, we’re going to add an amendment to introduce clean energy jobs…[Formatting added]

This is quite interesting. According to FedEx, Schumer’s New York is the #3 exporting State in the U.S. Its top two exports, per U.S. Census Bureau data, are gold and diamonds. Pursuant to Sen. Schumer’s logic, the “American working people’s interests” would be best served if the U.S. Congress banned exports of gold and diamonds from New York, right? Why can New York benefit from exporting a raw material (gold) and a processed raw material (cut diamonds), but North Dakota shouldn’t benefit from the export of a raw material (oil) nor Texas benefit from exporting a processed raw material (refined gasoline)? Sen. Schumer’s inconsistent position makes no sense, other than to serve himself a cake for having and consuming. [click to continue…]

For reasons of self-preservation, 2015 figures to be a very busy year for regulators in the Obama presidency. Under the Congressional Review Act (CRA), Congress has 60 business days from the promulgation of a major regulation to vote on a resolution that would vacate the rule. Due to the Presidential veto, however, the Congress’s CRA prerogative is usually toothless. Indeed, the only practical window for a successful CRA challenge occurs when the 60 day time limit (for Congress to act) overlaps with a new and like-minded presidential administration. And because the Congress only conducts, on average, about 10 business days a month, the Obama administration faces a deadline of about May 2016, by which it must promulgate all of its major regulations, in order to ensure that any one them cannot be subject to a successful Congressional Review Act resolution (under his successor President). As such, the clock is ticking, and most of this administration’s regulatory action will have to be wrapped up in the upcoming year. Below, I’ve listed what we can expect for 2015.

EPA’s Carbon Pollution Standards (Due Date: Any Day Now)

On January 8, 2014, EPA proposed a Clean Air Act rule to control greenhouse gas emissions from new coal fired power plants, known as the Carbon Pollution Standards. In practice, the regulation would effectively ban the construction of new coal-fired power plants, by requiring them to use carbon capture and sequestration, a technology that is far from ready for prime time. Under the Clean Air Act, EPA has one year from proposal to finalize a rule; it is most certain that the agency will miss this deadline (i.e., January 8, 2015). Nonetheless, the regulation is definitively in the pipeline and should be issued in the upcoming days.

The rule’s statutory foundations are sketchy, as we explain in CEI comments to EPA. And here, I give the top six reasons why the regulation is illegal as proposed.

In fact, EPA is taking a big risk if it decides to stay the course, and push the limits of what it could achieve with this rule. If the rule is vacated by Article III courts, then EPA loses its legal basis for its marque climate policy (the Clean Power Plan), as my colleague Marlo Lewis explained yesterday.

EPA’s “Natural Gas Strategy” (Due Date: January)

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The integrated carbon capture and storage (ICCS) project at the Boundary Dam Power Station has scooped up its first major award, even though it has been fully operational for less than three months. — Estavan Lifestyles, Dec. 17, 2014

The economics only work at Boundary Dam in Saskatchewan for two reasons: a C$240 million government subsidy and a ready nearby customer for the carbon in Calgary-based Cenovus. . . .The CO2 is transported 66 kilometers (41 miles) to Cenovus Energy Inc. (CVE)’s oil fields where it is buried underground to coax additional crude from the reservoirs. — Bloomberg News, Dec. 4, 2014

The news items above point to one of the Clean Power Plan’s (CPP) fatal legal flaws.

The CPP requires states to adopt CO2 performance standards for existing fossil fuel power plants. As such, the CPP is unlawful if its legal prerequisite — EPA’s proposed CO2 performance standards for new power plants, the so-called Carbon Pollution Standards (CPS) rule — is unlawful.

The CPS rule proposes a performance standard of 1,100 lbs. CO2/MWh for new coal power plants. Coal power plants can meet the standard only by installing carbon capture and storage (CCS) technology. Under §111(a) of the Clean Air Act (CAA), performance standards are to reflect the “best system of emission reduction” (BSER) that has been “adequately demonstrated,” taking “cost” into account. EPA claims CCS is the adequately demonstrated BSER for new coal power plants. Applesauce!

CAA §111(a) requires that performance standards be “achievable.” The D.C. Circuit Court of Appeals interprets the term to mean achievable for the industry as a whole (National Lime Association v. EPA, 627 F. 2d 416 at 443). However, as Bloomberg points out, the Boundary Dam Power Station is the world’s only utility-scale CCS power plant in commercial operation, and the “economics only work” because of two favorable circumstances atypical for the industry as a whole: a generous subsidy and proximity to an enhanced oil recovery (EOR) operation.

With the federal deficit still near half-a-trillion dollars, Congress is not about to pony up lavish subsidies for CCS power plants, especially when natural gas combined cycle (NGCC) power plants easily meet a more stringent CO2 emission performance standard (79 FR 1486) at much less cost (EIA, Table 1, p. 6). EPA identifies only 12 states with significant EOR operations (79 FR 1474). Coal power plants not located near oil fields would not have a market for their captured CO2. Thus, on two separate counts, the proposed standard is not achievable.

CCS combined with EOR is not BSER for an even more fundamental reason, first noted by my colleague William Yeatman. On a lifecycle basis, CCS + EOR produces more CO2 emissions than a conventional coal power plant. Without EOR, CCS is too costly to qualify as “adequately demonstrated.” But with EOR, CCS cannot be a “best” system of emission reduction because it increases rather than reduces emissions.

[click to continue…]

News this week indicates the extent to which climate policy has assumed the driver’s seat of the auto industry.

In a story on market “disrupters” in yesterday’s Financial Times ($), Robert Wright highlighted Ford’s decision to use aluminum to render the body of the F-150, the sales of which comprise up to 90 percent of the company’s profits. Aluminum never before has been incorporated into a mass produced vehicle on such a scale; Ford is using it in order to make the trucks lighter, and thereby achieve greater fuel efficiency/lower greenhouse gas emissions. Reports Wright:

“It’s a huge change,” Michelle Krebs, an analyst at autotrader.com says…Ford is hoping to gain first mover advantage. It believes that General Motors and Chrysler will have to redesign their vehicles to meet new fuel efficiency[/GHG] standards—and the first manufacturer to make the transition should retain a long term lead in the market.  

Also yesterday, the Wall Street Journal’s Ulrike Dauer reported that Audi plans to invest $29 billion over the next 5 years, of which 70 percent will go technologies that would “meet CO2 limits worldwide.”

Capital allocation decisions at auto companies are made years in advance, so presumably these businesses factored projected high fuel prices into their budgeting determinations. Nonetheless, government climate change mitigation targets reportedly figured paramount. Due to government policy, moreso than consumer demand, Ford is engineering a risky re-design of its best-selling car, and Audi is spending $20 billion over the next half decade. [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…]

Regular readers know that this blog long has been a big fan of Platts Energy Week with Bill Loveless, which, sadly, no longer will be filming after tomorrow morning’s show. Indeed, on a regular basis over the last 18 months, I recapped the show’s best interview here on GlobalWarming.org within a day or two of Sunday’s airing. “Invaluable” was my modifier of choice when introducing the program. Wistfully, then, I present my personal favorite five Platts Energy Week segments:

5. Devon Energy Chairman Puts Lie to Claim That Feds Were at Heart of Fracking Breakthrough (episode 8/4/13)

In early August, 2013, Bill Loveless interviewed Larry Nichols, executive chairman of Devon Energy; the topic was the legacy of George Mitchell, the relentless entrepreneur who perfected breakthroughs in drilling technology, collectively known as fracking, that unleashed an American energy renaissance. Mitchell had died on July 26th. In the early aughts, Devon invested in Mitchell’s ideas, and together they pioneered and deployed the new technologies. The highlight of the interview is when Mr. Nichols puts the lie to the mistaken contention that federal support was the sine qua non of the fracking breakthrough.

4. Any Segment with Bobby McMahon (episodes 7/19/14, 12/7/14, 4/20/14) [click to continue…]