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Sen. Lamar Alexander’s Payoff

by William Yeatman on July 9, 2012

in Blog

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In mid-June, Sen. Lamar Alexander (R-Tenn.) led the opposition against S. J. Res. 37, legislation that would have blocked EPA’s all pain, no gain Utility Maximum Achievable Control Technology (MACT) regulation. On the floor of the Senate, he explained that the Utility MACT would prevent out-of-state pollution from hurting business in Tennessee, but this claim is false. According to EPA data, Tennessee’s compliance with Clean Air Act regulations is not adversely affected by air pollution from neighboring States. In light of the evident falsity of his avowed rationale for protecting the Utility MACT, Sen. Alexander’s true motivations for opposing S. J. Res. 37 were inexplicable.

Last week, however, the mystery of Sen. Alexander’s support for the Utility MACT appears to have been solved. The Environmental Defense Action Fund announced on Tuesday that it will spend $200,000 on television advertisements in Tennessee thanking Senator Lamar Alexander for “protecting the children.”

Stop Whining about Pepco (because it’s your fault)

by William Yeatman on July 9, 2012

in Blog, Features

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Pepco has been getting a bum rap for its supposedly poor response to recent power outages. To be sure, I sympathize with anyone bereft of climate control for prolonged periods during a Mid-Atlantic summer, but this sticky situation is not the utility’s fault. If Pepco customers seek someone to blame, they should look in the mirror.

The cause of the controversial power outages was a rare “land hurricane” storm, which felled trees into power lines. Pepco’s critics claim that those trees shouldn’t have been there to begin with. In particular, they allege that Pepco for years has neglected its responsibilities to manage tree growth adjacent to its electricity distribution system. Pepco’s motive, according to the scapegoat-seekers, was to minimize costs, and thereby fatten its bottom line.

There are two big problems with this tidy narrative.

First, while it’s true that Pepco had every incentive to suppress expenditures on tree clearing, this is precisely what Maryland’s elected officials intended.

Allow me to explain. About 100 years ago, Progressive Party local politicians convinced themselves that electric utilities invariably consolidate into predatory “natural” monopolies. These progressives came to this conclusion despite the fact that electric utilities were competing furiously at the time in many municipalities. The ironic progressive solution to natural monopolies was…(wait for it)….a government-granted monopoly. In exchange for a state-certified monopoly “franchise” over a given service territory, utilities allowed state officials to set electricity rates. Thus, the electric industry for a century has operated under the thumb of the state. Not coincidentally, the electric industry hasn’t advanced technologically since the Progressive Era.

All 50 States eventually adopted this progressive arrangement. Moreover, they all adopted identical rate-setting mechanisms. Here’s how it works: For capital expenditures, like power plants or electric transformers, utilities are awarded a rate of return (i.e., a state-dictated profit), in addition to reimbursement of the original investment. For operations and maintenance (O&M) costs, however, state officials have taken a more jaundiced eye. Invariably, rate-setting for O&M costs are contentious—much more so than rate-setting procedures for capital costs. This is because O&M costs are much more ambiguous than large capital outlays, so there is more grey area over which to dispute. It’s easier for state regulators to object to O&M costs, and thereby “save” ratepayers money (and appease political masters), then it is for them to dispute capital costs.

So what does any rational utility do? It skimps on O&M costs, like tree clearing. Pepco shouldn’t be blamed for acting rationally in the face of Maryland’s backwards compensation system. To put it another way, don’t hate the player, hate the game. Or, better yet, change the game, by freeing the electricity market from the chains of socialism.

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Sixteen House GOP Freshmen Forget Principles in Support of Wind Subsidies

by Myron Ebell on July 8, 2012

in Blog

Eighteen freshmen Members of the House of Representatives sent a letter last week to House Republican leaders urging them to “take up an extension of the Production Tax Credit (PTC) for wind energy as soon as possible.”  Sixteen of the eighteen signers are Republicans. House Majority Whip Kevin McCarthy (R-Calif.) also recently announced his support for extending the wind PTC, which is set to expire at the end of the year.

The signers of the letter were: Representatives Kristi Noem (R-SD), Rick Berg (R-ND), Tim Griffin (R-Ark.), David Rivera (R-Fla.), Rick Crawford (R-Ark.), Steve Womack (R-Ark.), Chris Gibson (R-NY), Robert Dold (R- Ill.), Jim Renacci (R-Ohio), Michael Fitzpatrick (R-Penna.), Cory Gardner (R-Colo.), Charles Bass (R-NH), Scott Tipton (R-Colo.), Jon Runyan (R-NJ), John Carney (D-Del.), Ann Marie Buerkle (R-NY), David Ciciline (D-RI), and Mark Amodei (R-Nev.).

House Republicans have made a great show of voting to reduce federal spending and of attacking programs that benefit crony capitalists.  The letter, which Rep. Noem circulated for signatures, shows how quickly Members of Congress can park their avowed principles at the door when the pork-barrel spending benefits their districts or an industry that provides significant campaign contributions.

This is especially true of the eight Republican signers who are members of the Republican Study Committee, a caucus of conservative Republicans that focuses on reducing federal spending and balancing the budget.  The RSC members signing the letter are Noem, Berg, Buerkle, Crawford, Griffin, Gardner, Rivera, and Tipton.

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When Scientists Talk Like Lawyers . . .We Should Be Skeptical

by Marlo Lewis on July 6, 2012

in Features

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“I’m not saying it is global warming, but it’s what global warming would look like. It’s consistent with the kind of weather climate scientists predict will become more frequent and severe as greenhouse gas concentrations in the atmosphere increase.”

“It,” in the preceding, refers to the persistent heat wave affecting the Mid-Atlantic region and the derecho that uprooted trees, downed power lines, and deprived nearly a million households in the D.C. metro area of electricity and air conditioning. Warmists, or most of them, know they cannot actually link a particular weather event to global warming, but they’d like you to make the connection anyway.

This is standard rhetorical fare whenever extreme weather strikes somebody, somewhere on the planet. A commenter on Georgia Institute of Technology Prof. Judith Curry’s blog notes the resemblance to an old court-room trick:

Kind of like a lawyer asking a improper question and then withdrawing it, because all s/he really wanted was to put the idea in the jury’s mind.   [click to continue…]

Video: Update on Fight against EPA’s Regional Haze Power Grab

by William Yeatman on July 5, 2012

in Blog

This blog leads the league in posts about EPA’s Regional Haze power grab. In a nutshell, the Agency is usurping the States’ rightful authority to set visibility improvement policy pursuant to a Clean Air Act provision known as Regional Haze.

EPA’s actions are out-of-bounds for two reasons: (1) The legal and regulatory history of the Regional Haze rule unequivocally demonstrates that the States—and not federal regulators—are the lead decision-makers; and (2) EPA’s preferred controls cost billions more than the States’ controls, in order to achieve a visibility “improvement” that is invisible to the naked eye.

To date, EPA’s has imposed nearly $400 million annually in unjustified costs on New Mexico, Oklahoma, and North Dakota. The Agency has proposed to impose almost $120 million per year in costs beyond what Wyoming and Nebraska officials had deemed to be appropriate. Arkansas, Utah, Arizona and Minnesota are next.

I’ve written regulatory filings, studies, opeds, and blogs about EPA’s Regional Haze program, and last week I was invited to testify about it before the Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform of the House Oversight and Government Reform Committee. My written testimony can be found here or here. Below, I’ve pasted video of my opening statement.

Save The Planet By Expanding Fracking: Abolish Regulatory Barriers to Its Growth

by Hans Bader on July 3, 2012

in Blog, Politics

As Professor Glenn Reynolds notes, if you want to cut carbon emissions, you should eliminate regulatory obstacles to fracking, since fracking cuts carbon emissions far more than costly cap-and-trade regulations do.  By expanding access to clean natural gas, fracking is helping reduce both greenhouse gas emissions and air pollution. As Walter Russell Mead notes at The American Interest, “fracking is doing more to control carbon emissions than all the efforts of all the greens in the world. And by promoting American (and Chinese!) domestic energy production, it is doing more to lay the foundations of world peace than all the peace activists and disarmament campaigners in the world.” Fracking has “driven a natural gas boom in this country and dramatically cut the cost of the cleanest hydrocarbon energy source of them all,” contributing to cleaner air, not just lower greenhouse gas emissions.  It is also expected to greatly reduce our dependence on foreign energy.

As CNN notes, “U.S. carbon dioxide emissions are falling” thanks to things like fracking. “Europe, by contrast, has seen its energy-sector carbon emissions remain basically flat,” even though Europe operates under a costly “cap-and-trade scheme where emissions are capped at a certain level,” and “Europe has significantly higher taxes on energy.”  Countries like Germany have blocked fracking to produce clean energy, even as they cling to a failed cap-and-trade scheme that imposes huge costs while failing to substantially reduce greenhouse gas emissions.

Unfortunately, the Obama Administration has tightened restrictions on fracking, which is permitted under state law in many states.  But it has not been nearly as hostile to fracking as many liberal state governors and legislators, like North Carolina’s Bev Perdue.  By contrast, conservative governors and legislators have supported fracking, which has the potential to greatly reduce greenhouse gas emissions and air pollution.

Environmental Luddites oppose fracking, preferring draconian and utopian energy rationing schemes instead.  They hype non-existent or exaggerated risks associated with it, ignoring the complete lack of any evidence to date that it would harm the environment.

Environmental groups like the NRDC prefer rigid government restrictions on carbon emissions by factories, farms, and vehicles, even though such restrictions could cripple the economy.  If they can’t obtain that (through EPA regulations), then they’ll take a cap-and-trade limit on emissions.

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Rep. Jeff Flake’s Commonsense Fix for Cellulosic Biofuel Folly

by Marlo Lewis on July 2, 2012

in Blog, Features

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In his 2006 State of the Union message, President G.W. Bush famously (and falsely) declared that America is “addicted to oil.” As a solution, Bush proposed to “fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips and stalks or switch grass.” He set a “goal” to “make this new kind of ethanol [a.k.a. cellulosic] practical and competitive within six years.”

Congress heeded the call, and in late 2007 passed the Energy Independence and Security Act. EISA mandated the sale of 36 gallons of biofuel by 2022, with 21 billion gallons to come from “advanced” (lower-carbon) biofuels, of which 16 billion gallons must be cellulosic.

Well, it’s now six years later, and cellulosic ethanol is still a taxpayer-subsidized science project. EISA (p. 32) required refiners to sell 100 million gallons of cellulosic ethanol in 2010, 250 million gallons in 2011, and 500 million gallons in 2012. Reality repeatedly forced the EPA to dumb down the mandated quantities (to 6.5 million gallons in 2010, 6.0 million in 2011, and 8.65 million in 2012). Even those symbolic targets proved to be too ambitious, because, as a commercial commodity, cellulosic biofuel still does not exist.

Nonetheless, the EPA fines refiners millions of dollars for failure to sell this non-existent fuel. Arizona Rep. Jeff Flake has a commonsense solution, H.R. 6047, the Phantom Fuel Reform Act. [click to continue…]

Attorney Peter Glaser’s “Morning After” Reflections on the D.C. Circuit Court GHG Decision

by Marlo Lewis on June 27, 2012

in Blog, Features

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Despite the disappointing decision yesterday, it would be well to remember that the real damage was done in the Supreme Court’s 5-4 Massachusetts decision, where EPA was found to have authority to regulate GHGs under the CAA so long as it determined that GHGs endanger the public health and welfare. 

. . .the Massachusetts decision was a real travesty.  It is impossible to review the history of the public debate on GHG regulation in this country beginning in the 1980s, when potential climate change first came to prominence, and conclude that authority to regulate GHGs was always available, hiding in plain sight in the CAA as first enacted in 1970. The Supreme Court said in the 2001 American Trucking Associations decision, in language that is often cited, that Congress does not “hide elephants in mouseholes.”  Evidently, in the case of EPA GHG regulation, Congress did.

In the end, the most rational thing for the country to do on GHGs is for Congress to enact legislation that gets EPA out of the GHG regulatory business entirely.  — Peter Glaser

In Massachustts v. EPA, the 5-4 majority argued: (1) The Clean Air Act (CAA) defines “air pollutant” as any airborne substance whatsoever; (2) the EPA has a mandatory duty to regulate air pollutants emitted by automobiles if the associated “air pollution” “may reasonably be anticipated to endanger public health and welfare”; and (3) “welfare” effects include changes in “weather and climate.” Given these premises, the Court basically left the EPA one way to avoid regulating GHGs: Cancel its membership in the self-anointed “scientific consensus” — the climate alarm movement — that the agency had spent years promoting and leading. No chance of that happening.

For reasons discussed here and here, the lynchpin of the Massachusetts Court’s argument, premise (1), was a misreading of the CAA definition of “air pollutant.” At a minimum, respondent EPA’s opinion that carbon dioxide (CO2) is not an air pollutant was a “permissible construction” of the statute and thus should have been accorded deference under the Court’s Chevron Step 2 test. If the GHG regime EPA is building were proposed in legislation and put to a vote, Congress would reject it. Congress would surely have rejected the EPA’s GHG agenda in 1970, when it enacted the CAA and defined “air pollutant.” The terms “greenhouse gas” and “greenhouse effect” do not even occur in the CAA. Only as amended in 1990 does the CAA even obliquely address the issue of global climate change. Congress considered and rejected regulatory climate policies in the debates on the 1990 CAA Amendments. The very provisions tacitly addressing climate change — CAA Secs. 103(g) and 602(e) — admonish the EPA not to adopt “pollution control requirements” for CO2, and not to regulate substances based on their “global warming potential.”

With the case law on GHG regulation hopelessly botched by the Supreme Court, only Congress can rein in the EPA — and only if there is a change of management in the White House and the Senate in November.

Peter Glaser’s full commentary on the D.C. Circuit Court decision follows. [click to continue…]

Pickens Payoff Plan, RIP

by Brian McGraw on June 27, 2012

in Blog

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Representative John Sullivan (R-OK) lost a Republican primary last night to Jim Bridenstine, who is likely to win Sullivan’s seat in November. Sullivan was the main sponsor of the T. Boone Pickens NAT-GAS Act, which would have funneled money into subsidies for building out infrastructure for natural gas vehicles, specifically fueling stations throughout the country and providing tax credits for large truck fleets that converted to natural gas. While the past few years have seen significant anti-incumbent sentiments, one notable difference between Sullivan and Bridenstine was their stance on subsidizing natural gas:

On only one issue, energy policy, did Sullivan and Bridenstine substantially disagree. Sullivan touted his bill to promote natural gas vehicle fuels, while Bridenstine supports an alternative proposal.

“Let’s get cars, trucks and buses running on natural gas,” Sullivan said. “We have an abundance of it here in the United States. It’s cheap and abundant and … it also addresses a national security issue by lessening our dependence on foreign oil.”

Bridenstine calls Sullivan’s NatGas Act a “big-government” boondoggle because it creates a short-term subsidy to convert vehicles to natural gas.

“We ought not let Washington, D.C., control free markets with tax subsidies,” he said.

Bridenstine said he supports the Domestic Jobs, Domestic Energy, and Deficit Reduction Act, which is backed by Oklahoma’s U.S. Sens. Jim Inhofe and Tom Coburn. That measure is intended to more directly stimulate oil and gas exploration in the United States.

Neither bill, as it turns out, is expected to win approval in Congress.

Now, this was only one “town-hall” type meeting, but perhaps voters in Oklahoma are tired of crony capitalism. It will certainly make the legislation harder to pass, as Sullivan was the primary sponsor, and was on the Energy & Commerce committee.

 

EPA’s Carbon Pollution Standard — One Step Closer to Policy Disaster

by Marlo Lewis on June 25, 2012

in Features

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Today (June 25th) is the deadline for submitting comments on the EPA’s proposed Carbon Pollution Standard Rule, which will establish first-ever New Source Performance Standards (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units.

The proposed standard is 1,000 lbs of CO2 per megawatt hour (MWh). The EPA claims that 95% of all new natural gas combined cycle power plants can meet the standard — maybe, maybe not. One thing is clear — no conventional coal power plant can meet the standard. Even today’s most efficient coal power plants emit 1,800 lbs CO2/MWh on average.

A coal power plant equipped with carbon capture and storage (CCS) technology could meet the standard, but the EPA acknowledges that  CCS is prohibitive, raising the cost of generating electricity by as much as 80%.

So what the proposal is really telling the electric utility industry is this: If you want to build a new coal-fired power plant, you’ll have to build a natural gas combined cycle plant instead. Not surprising given President Obama’s longstanding ambition to “bankrupt” anyone who builds a new coal power plant.

In a comment letter submitted today on behalf of the Competitive Enterprise Institute, I recommend that the EPA withdraw the proposed regulation for the following reasons: [click to continue…]

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