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OpenMarket: Energy and Environment

  • Green Exploitation of the Monarch Butterfly

    October 20, 2014 9:52 AM

    Butterflies offer powerful imagery for environmental groups looking to advance their agendas. After all, who doesn’t want to save these beautiful creatures? Surely green activists could leverage those desires to advance voluntary efforts to create butterfly habitat. But the actions of some groups indicates that they would rather exploit the butterflies to gain policy victories in Washington, even if the butterflies suffer as a result.

    Conservationists rightly point out that monarch butterflies face challenges associated with habitat loss because there are not enough of the type of plants that they need for food and reproduction. In particular, these creatures feed and reproduce among milkweed, a flower that many people consider to be nothing more than an undesirable weed. As a result, farmers, homeowners, and other property owners have removed these plants, leaving less habitat for the butterflies. 

    Part of the solution is rather simple: educate people about the value of this plant. If we can transform what people think about it, we might just get more individuals to plant it rather than pull it up. 

    A massive educational campaign pushed by environmental groups, which collectively have tens of millions of dollars at their disposal, could make the critical difference. Some groups are working this angle, but too many others would rather spend the money to lobby for more government controls on businesses and property owners.

    The green lobby’s agenda includes suing the U.S. Environmental Protection Agency to prevent approval of a new herbicide formulation because they say it will enable more destruction of milkweeds. They are also calling for the listing of the monarch butterfly under the Endangered Species Act (ESA). It may be counterintuitive, but both actions may actually undermine butterfly habitat and contribute to its demise.

  • How Will the Future View the “Temples” of Eco-Theocrats?

    October 7, 2014 9:40 AM

    While vacationing in Germany recently, I noted many beautiful and now largely untenanted churches. Elegant, majestic against the sky, they are potent symbols of a religious system no longer observed by many. They are maintained now largely as historic and cultural artifacts. I also noted, framed against the German landscape, the “temples” of today’s eco-theocrats—gigantic engineering marvels dominating almost all ridge lines, the modern version of the technologies of the 15th Century—windmills. As a technocrat, I did appreciate their aesthetic nature and can only marvel at the deep beliefs that have encouraged the German government to spend hundreds of billions on their construction and on the electrical interconnections necessary to get that power to market.  

    As a result, energy costs have gone up dramatically, threatening the competitiveness of German industry (particularly the chemical and manufacturing sectors), encouraging firms to expand in nations with more affordable energy and raising consumer energy bills. Understandably, political opposition has mounted to Chancellor Angela Merkel’s grand “Energiewende” plan for moving Germany to greater dependence on wind and solar power. The current system is non-sustainable.

  • Results of "Cash for Appliances"

    October 7, 2014 9:26 AM

    Under the American Recovery and Reinvestment Act of 2009 (commonly called "the stimulus"), a $300 million program to subsidize consumer purchases of energy-efficient appliances called the State Energy Efficient Appliance Rebate Program was established. A recent working paper from the National Bureau of Economic Research analyzes the results of the "Cash for Appliances" subsidy scheme. It turns out that "Cash for Appliances" was an incredibly inefficient energy-efficiency program. From the conclusion:

    We estimate freeriding rates of 73% to 92% across our three appliance categories. As a result, our measures of cost-effectiveness, ranging from $0.44 to $1.46 per kWh saved, are an order of magnitude greater than the $0.06 per kWh average cost-effectiveness estimated for utility-sponsored energy efficiency programs. Even after generous assumptions about accelerated replacement, the cost per kWh saved of C4A remains 4 to 16 times greater than this average in the literature.

  • Western Water and California Drought, Part 2: No Need for Malthusian Despair

    September 9, 2014 8:28 AM

    Well, some good news—it’s raining in Los Angeles.

    Western droughts combined with questionable water access policies spawn water crises that unfortunately are not unique to the American west and California in particular.

    Rather, water access issues are globally contentious. A Wall Street Journal book review on the “unhappy descent” of Turkey’s Meander River invoked common laments that: 

    In North America, so much water is taken out of the Colorado that it no longer reaches the sea. Nor does the Rio Grande. Or the River Jordan. Or China’s Yellow River.

    Access to water in times of plenty and in times of drought is a fundamental infrastructure concern worldwide. Further, the issues surrounding innovation and research in water policy are elements of broader science and manufacturing policy.

    Aggravations abound—and so do penalties. One Oregon man catching rainwater on his own property received 30 days in jail for breaking a 1925 law prohibiting personal reservoirs. But when scarcity looms and emotions run high, strange things happen.

    In addition to novelties like rainwater theft prosecution, water policy can be fundamentally perverse and distortionary: water supply systems may not cover their debts, operations and capital replacement needs, and as governmental monopolies, they sometimes “are used as cash cows to support more labor-intensive functions of local government, such as fire and police,” as G. Tracy Meehan has noted.

  • The Not-So-Free Market at Work

    August 19, 2014 3:24 PM

    In the mail, I recently received a brochure from a firm called Solar Solution LLC, claiming to be the District of Columbia’s #1 solar installer. Included was the following table showing the initial estimated cost and then, in subsequent columns, the multiple layers of subsidies one might obtain. These include the 30 percent federal tax credit, the D.C. solar grant, and the Solar Renewable Energy Credit.

    The effects are significant – a system initially estimated at $29,400 translates into an out-of-pocket cost of only $6,300. Clearly, Solar Solution is doing a brisk business with their current business plan. Given their success, they may be tempted to branch out to other services. The list of technologies that would become commercially successful with a 79 percent taxpayer discount is long indeed.

  • Red Tapeworm 2014: Are Environmental Protection Agency Regulations Declining? Don't Bet on It

    August 19, 2014 12:56 PM

    This is Part 26 of a series taking a walk through some sections of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State (2014 Edition)

    Back when the House Oversight committee in 2010 asked businesses, trade groups and think tanks which regulations they considered most burdensome, there were more than 160 responses filled with recommendations. The Environmental Protection Agency (EPA) easily dominated the regulatory burden reported by private enterprise.

    In the bar chart nearby one can see that EPA rules finalized in the Federal Register during the first term of the Obama administration rose steadily from 441 to 635 between 2009 and 2012 (a 44 percent increase). But then they suddenly dropped 19 percent to 514 in 2013.

    In the past year, EPA rules in the Unified Agenda of Federal Regulations pipeline also dropped; 20 percent, from 223 to 179. That’s the lowest level of the decade. And for the second time, the Environmental Protection Agency does not appear among the top-five rulemaking agencies as far as the Unifed Agenda count is concerned. (EPA ranks sixth with 179 rules; refer Table 5 in Ten Thousand Commandments).

    EPA also ostensibly doesn’t rank among the agencies with the most rules in the Unified Agenda impacting small business anymore; note the bar chart’s implausible 88 percent drop from 49 EPA rules impacting small business to only six in 2013.

    A falloff does not square with the level of regulatory impact driven by the EPA. Earlier editions of “Tapeworm” addressed overall rule delays and reporting delays as well as OMB memos affecting reporting policy for the Unified Agenda that reduced rule counts compared to prior years. Also only one Agenda, not the required two, appeared in 2012.

    Washington Post headline summed up: “White House Delayed Enacting Rules Ahead of 2012 Election To Avoid Controversy.”

  • Honeybee Population in Decline—Or Not?

    August 13, 2014 4:14 PM

    If you read the news about honeybee survival, it’s all very confusing. Some sources sound the alarm by pointing out that the number of honeybee hives has dropped significantly in recent decades. Others say just the opposite: There are more hives today than ever before.

    Which is it? Actually, both.  Some regions of the world have fewer hives, while globally there are more commercial hives now than there were in 1960. The key here is to understand which dataset is more important to the debate about sustaining these helpful creatures.

    The Hoover Institution’s Dr. Henry Miller notes in a Wall Street Journal op-ed: “The reality is that honeybee populations are not declining. According to U.N. Food and Agriculture Organization statistics, the world's honeybee population rose to 80 million colonies in 2011 from 50 million in 1960.” Meanwhile Jennifer Sass of the Natural Resources Defense Council responds in a letter to the editor: “The number of managed honeybee colonies in the U.S. has dropped from four million hives in 1970 to 2.5 million today, according to White House statistics.”

    Surprisingly, both of these claims are correct. Miller points to the “global” commercial honeybee-hive count, which has grown considerably. Sass points to domestic colony numbers only, which have in fact declined.

    Miller’s numbers are more relevant because if honeybee survival is really at stake, we would see declines on a global scale. Miller also points out that U.S. and European hive numbers are relatively stable, and Canadian numbers increased. Miller is certainly correct to point out that honeybees are not about to disappear.

  • House Brings Transparency to Endangered Species Act, Still Needs to Protect Property Rights

    July 30, 2014 6:27 AM

    Today the House passed H.R. 4315, the 21st Century Endangered Species Transparency Act. Unfortunately, it likely has no chance of passing in the Senate and word is out from the White House that the president would veto the bill.

  • America's Energy Advantage Dodges the Question

    July 22, 2014 2:21 PM

    America’s Energy Advantage has responded to my July 1 post criticizing its stance on the Domestic Prosperity and Global Freedom Act. That bill would liberalize liquefied natural gas (LNG) exports, while AEA opposes such exports because they would supposedly raise the raise the price of the LNG used by AEA’s members. 

    As CEI has pointed out in the past, AEA is trying to use bureaucratic obstacles to restrict what companies can do with their products—an approach antithetical to free markets

    What’s ironic is that, in its response to my post, AEA relies on a study that actually demonstrates the broad beneficial effects of exports. This study is the NERA’s Macroeconomic Impacts of LNG Exports from the United States. AEA claims that, despite being a pro-export study, the NERA study actually enforces their view, that LNG exports should be limited. According to AEA, “Once one looks beyond the surface-level conclusion “exports provide net benefits to the U.S. economy,” at winners and losers…the NERA report shows that the “losers” in this scenario are ALL other sectors of the U.S. economy and consumers, while the “winners” are producers and exporters of LNG.”

  • AEA’s Unprincipled Stand

    July 1, 2014 3:51 PM

    Last Thursday the House of Representatives passed H.R. 6, the Domestic Prosperity and Global Freedom Act with a bipartisan vote of 266-150. The bill orders the Department of Energy to make a final decision on applications to export natural gas within 30 days of the bills enactment. This would greatly speed up the process, as the DOE has allowed some applications to languish for more than 2 years without a determination being made, effectively strangling exports of natural gas.

    The bill’s passage came despite the best efforts of America’s Energy Advantage, a business advocacy group that strongly opposes the bill. In a press release the day before the bill’s passage, AEA declared “exports of this scale will raise domestic natural gas and electricity prices for every American, undermine our manufacturing competiveness and cost the nation good-paying jobs”. Its argument is as follows: if we export natural gas, that will lower the supply sold in America, which will lead to an increase in natural gas prices. That, in turn, will “hurt manufacturing competiveness”(especially among companies who are part of the AEA) by making it more expensive to produce their goods. To protect America, then, we must limit natural gas exports.

    For that reason, the AEA called the bill “harmful to the public interest of American consumers, manufacturers and the economy” in a statement following passage.

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