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OpenMarket: Energy

  • Clean Energy Incentive Program: Why It Makes EPA's Power Plant Rule Even More Unlawful

    August 25, 2015 6:24 PM

    EPA’s Clean Power Plan (CPP), which imposes carbon dioxide (CO2) emission rate targets and tonnage caps on state electric power sectors, is unlawful in at least half a dozen ways.

    To mention just one flaw, Section 111(d) of the Clean Air Act, the CPP’s putative statutory basis, authorizes EPA to regulate “particular” “stationary sources,” not the wider marketplace, networked industry, or sector of which a source happens to be a part. Yet the CPP will compel states to revise their laws and regulations on electric dispatch policy, fuel mix policy, and demand-management policy.

    EPA’s final CPP contains a key initiative not mentioned in the draft rule: the Clean Energy Incentive Program (CEIP). EPA added the CEIP to jumpstart investment in wind and solar power, assuring environmental groups and renewable energy interests the CPP won’t trigger a ‘dash to gas’ as it suppresses electric power generation from coal. In other words, the CEIP’s job is to make sure the Clean Power Plan rigs the marketplace against all fossil-fuel generation. 

    The CEIP is an early action credit program. By “early,” EPA means the CEIP authorizes states to award regulatory credits for new renewable power provided before the CPP compliance period (2022-2030). EPA will, in addition, award up to 300 million tons worth of extra credits to ‘early actors’ on a matching basis.

    You might suppose EPA would explain the legal authority for a policy change potentially affecting hundreds of companies’ bottom lines. Yet neither the final CPP, the CEIP fact sheet, nor EPA’s proposed federal implementation plan discusses the CEIP’s statutory basis.

  • Is President Obama's Energy Wish Coming True?

    August 18, 2015 8:19 AM

    In a January 17, 2008, interview with the San Francisco Chronicle, then-Senator Obama said that “electricity rates would necessarily skyrocket” under his plan to fight global warming. He also said that under his plan, “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them.” 

    His latter wish seems to becoming a reality. Bristol-based coal producer Alpha Natural filed for Chapter 11 bankruptcy protection earlier this month. It follows many other coal companies, such as Walter Energy Inc., Patriot Coal Corp., and James River Coal Co., in filing for bankruptcy.

    For fossil fuels, this may be just the beginning. The Obama administration’s Clean Power Plan is said to “accomplish little in the way of making any significant change in global emissions while simultaneously crippling the oil and gas industry and floating more ‘green energy’ plans which weren’t pulling their own weight.”  

  • Party Bias in EPA's Power Plant Rule?

    August 12, 2015 10:17 AM

    What’s the main difference between EPA’s final rule to regulate carbon dioxide (CO2) emissions from state electric-power sectors—the so-called Clean Power Plan (CPP), released August 3—and the draft rule, published in June 2014?

    “The media have focused on modest tweaks to non-binding national goals—emissions are now expected to drop 32 percent by 2030, versus 30 percent in the draft, and coal is expected to provide 27 percent of our power instead of 31 percent—but those aren’t the changes that matter,” argues Politico reporter Michael Grunwald.

    What does matter? The changes to states’ legally-binding emission-reduction targets, which have “serious political implications.” The final rule is more aggressively anti-coal than the draft rule:

    The original draft took it easiest on states with the heaviest reliance on dirty fossil fuels – states that nevertheless complained the most about Obama’s supposedly draconian plan. The final rule cracks down much harder on those states, while taking it much easier on states that are already moving toward cleaner sources of electricity.

    Check out this excellent chart compiled by my colleague Alex Guillen. North Dakota would have been required to cut emissions just 10.6 percent to comply with the draft rule, the least of any state; it will have to cut emissions 44.9 percent to comply with the final rule, the most of any state except for similarly fossil-fueled Montana and South Dakota. Coal-rich Wyoming, Kentucky, West Virginia and Indiana were also among the biggest losers in the revised plan. Meanwhile, the states that are already greening their grid – led by Washington, Oregon and New York – were the biggest winners in the final rule.

    Is there also a partisan thrust to this pattern? The title of Grunwald’s article calls the CPP a “whack at red states.” The article itself, however, does not use the terms “Red State” and “Blue State.”

    So let’s look at how the draft and final rule targets compare in states won by Mitt Romney (“Red”) and those won by President Obama (“Blue”) in the 2012 presidential election.

  • EPA's Proposed and Final "Clean Power" Plan: Which Is Worse?

    August 4, 2015 6:46 PM

    “Climate Rule Worse than We Thought,” Sen. John Barrasso (R-Wyo.) warned today in an email alert about EPA’s so-called Clean Power Plan (CPP). He explains:

    The final rule cuts coal, which today provides about 39 percent of the country’s electricity, even more than the administration proposed in June 2014. The rule also relies heavily on renewables, which only provide five percent of energy today despite significant investments. And it eliminates the move to natural gas that created thousands of jobs across the country. This all means electricity bills will go up, and jobs will be lost.

  • A Primer on Expected EPA Climate Rules

    July 31, 2015 12:41 PM

    In 2010, during the 111th Congress, Senate Majority Leader Harry Reid shelved a cap-and-trade bill because too many Democrats opposed the bill during caucus meetings. And during his 2012 reelection campaign, President Obama conspicuously dodged speaking about climate change. Despite the failure of climate policy within his own party in the Senate, and after neglecting the issue altogether in 2012, President Obama in the summer of 2013 unveiled a far-reaching executive strategy for addressing global warming, known as the Climate Action Plan.

  • Vatican Downplays Political Involvement in Climate Debate While Joining Forces with Radical Leftist Naomi Klein

    July 1, 2015 7:28 PM

    Kathryn Jean Lopez reports on NRO’s The Corner that Cardinal Peter Turkson downplayed the political intentions of Pope Francis’s encyclical, Laudato Si’, when he spoke to a “high level discussion” in New York City Tuesday night (June 30).

    According to Lopez, Turkson said that the encyclical was, “Rather than a political or doomsday document, it’s a call to better stewardship.” Moreover: “He also insisted that Pope Francis is not against business and never puts them down in it or elsewhere but challenges business and technology to always be used to help the poor.”

    Cardinal Turkson, president of the Pontifical Council for Justice and Peace and the Vatican’s point man on climate action, was apparently speaking to a group of prominent Roman Catholics, many of whom were probably concerned about what they had read about the papal encyclical. And apparently the cardinal thought that he could get away with what he said because few in the audience had read the encyclical. 

    But earlier in the day, the cardinal addressed the United Nations’ High Level Meeting on Climate Change, convened by UN Secretary-General Ban Ki-moon. To that very different audience, Cardinal Turkson had a very different message: “Overcoming poverty and reducing environmental degradation will require the human community seriously to review the dominant model of development, production, commerce and consumption…. Such a courageous review and reform will take place only if we heed ‘the call to seek other ways of understanding the economy and progress’ (quoted from paragraph 16 of the encyclical). The political dimension needs to re-establish democratic control over the economy and finance, that is, over the basic choices made by human societies.”

    Much of what Cardinal Turkson said was in the political code used by leftist international bureaucrats. If anyone doubts that Pope Francis’s Laudato Si’ is a political rant that advocates dismantling modern industrial civilization, then consider the climate conference that the Vatican is hosting this week. Cardinal Turkson invited Naomi Klein to co-chair the conference.

  • Are There Broader Implications of the Supreme Court's EPA Ruling?

    June 30, 2015 11:06 AM

    “In a 5-4 decision, the Supreme Court blocked the Environmental Protection Agency’s mercury and air toxics standards, charging that the administration failed to adequately consider the estimated $10 billion it would cost utilities to dramatically cut power plant pollution to comply with the measure,” reported The Washington Times yesterday.

    While the question has been raised about the broader implications of the court’s decision on other EPA regulations, CEI’s William Yeatman, says there is not much broad impact.

    As Reuter’s Lawrence Hurley reported:

    "’The agency must consider cost - including, most importantly, cost of compliance - before deciding whether regulation is appropriate and necessary,’ Scalia wrote.

    “The EPA says the rule, which went into effect in April, applies to about 1,400 electricity-generating units at 600 power plants. Many are already in compliance, the U.S. Energy Information Administration said.

    “The legal rationale adopted by the court is unlikely to have broader implications for other environmental regulations, including the Obama administration's Clean Power Plan that would cut carbon emissions from existing power plants, according to lawyers following the case.

    “William Yeatman, a fellow at the conservative-leaning Competitive Enterprise Institute, said the impact is ‘circumscribed’ due to the ‘narrowness and uniqueness’ of the legal provision the court was examining.”

    As Kate Sheppard points out at The Huffington Post, the lower court now has the opportunity to revisit the case, meaning the rule could still go forward even as the EPA adheres to the Supreme Court’s decision.

  • Yes, and Water Can Run Uphill!

    March 20, 2015 10:05 AM

    A recent Washington Post story by Joby Warrick says much about the credulity of the media. The story extols the great gains in wind power, noting that it “could provide more than a third of the country’s electricity by 2050 while yielding a net savings in energy costs paid by consumers.”

    Warrick, like many in the media, viewed this prediction by the Department of Energy as clear evidence of the gains by non-fossil fuel sources. Indeed, he quoted without comment the Department’s statement that there would a “net savings in energy costs paid by consumers” and later that this shift “would result in a net price increase of about 1 percent for consumers” even though “an overall savings of 2 percent.” The “savings” would include the imputed values of CO2 and other pollutant reductions. Consumers are going to pay more, but “society” will benefit—a story we’ve heard before. 

    But, although the article suggests that dramatic cost reductions in the wind power area have made this source more economically attractive, the report also “warned that consistent government policies were critical to avoiding boom and bust cycles,” and that “Congress must keep the wind-friendly tax policies in place.” So, an efficient technology option has to be subsidized to survive in the marketplace?  Does the media ever read its own stories?

    Of course, wind power can be attractive to some if it is heavily enough subsidized. But an energy alternative that’s been around since the Middle Ages and which the Department of Energy claims to be cost-competitive cannot survive without continued government subsidies? The media seems to like any energy source that requires government support.

  • There Are No “Neutral Taxes” in Politics

    February 25, 2015 10:24 AM

    Those favoring larger government are finding it harder to finance them by raising taxes. Proponents have sought to reduce opposition by claiming that they’re not really raising taxes at all—their taxes will be “neutral.” Sure, we’ll take $50 billion or so in taxes from the economy, but we’ll then put it back again in the form of tax reductions or rebates. From a macro-economic perspective, they argue, there will be no impact at all! Why bother, you might ask? 

    The prime candidate advanced by those seeking to better plan our economy is the carbon tax. We’ll tax carbon and use the revenues to offset its impact. People will use less energy but retain the same income. We’ll change prices without changing income—a highly targeted incentive package! To tax energy users is feasible, although complicated—simply tax all energy materials. But farmers have traditionally escaped gas and diesel taxes for on-farm use—will this exemption be repealed? 

    In many regions, people use natural gas, oil, and electricity (which in turn uses coal, natural gas, and some hydro and nuclear). The prices of some of these energy types is market driven, while others are regulated. The income impact on specific consumers is not easily ascertained nor is the appropriate rebate. The result is that the micro-impact of energy taxes is never neutral. Individuals in areas dependent on coal or oil will lose; individuals in areas where climate or policy has shifted to solar or other renewable energy will gain relatively. And this critique fails to note another problem: the tendency of politicians to use new tax revenues to gain support for the measure.  Since different groups have different priorities, the result is often to “spend” the new tax revenues many times over. Rebates, being complicated and having no strong political champion, are likely to receive low priority.

  • 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.

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