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Posts from — November 2010

Government Gluttony at the American Wind Energy Association (Summers/Browner/ Klain memo indicates growing ‘wind fatigue’)

The American Wind Energy Association (AWEA) is on a mission to keep its members fat and happy as they bloat up at the public trough. The goals are simple:

1) Create a set-aside power market that pays a premium for wind energy and eliminates competition for lower-cost, more reliable fuel options;

2) Encourage policies that pave the way for wind-related transmission development at the expense of rate- and taxpayers; and

3) Make permanent the free-flow of public subsidies for renewables and shield the spigot from changing political and economic tides.

In the last two years, AWEA’s had some success. On the power market front, more than half the States have RPS programs mandating that a percentage of their electricity needs be met with renewable energy. Many states have loose enough standards to avoid the damage that otherwise would be done, but Texas, in particular, has coerced its way into windpower growth (the legacy of Enron, by the way).

Senator Bingham (D-NM) introduced a bill seeking the same non-compete set-aside for the entire country that he hopes will be acted on during the lame-duck session. (See Daren Bakst’s criticism of this proposal here.) [Read more →]

November 15, 2010   8 Comments

Fighting Climate Alarmism in 1999: What’s New?

Reprinted below is a letter-to-the-editor that I wrote to The Electricity Journal in response to an essay by Michael Shepard, “Turning the Climate Challenge into Business Opportunity” (The Electricity Journal, 1999, vol. 12, issue 10, pages 82-84).

The test of scholarship is how one’s arguments hold up over time. The state of knowledge changes as new evidence accumulates, so it is important to keep past work in the context of the year it was written (1999).

But what do we know now versus then? And how do you think this rebuttal reads 11 years later? (One data point: Robert Mendelsohn of Yale still believes in the conclusions of his work that I reference below as he communicated to me by email.)

Dear Editors:

Michael Shepard guest editorial, “Turning the Climate Challenge into Business Opportunity,” is premised on such statements as “the climate problem is real” and “the imperative [is] to stabilize the atmosphere’s loading of greenhouse gases.” Such alarmism and jawboning to get energy companies to divert resources toward carbon dioxide abatement is premature at best and counterproductive at worse.

Everyone who takes the climate change issue seriously—including the readers of Shepard’s article—should familiarize themselves with the recent work of Robert Mendelsohn, the E. W. Davis Professor in Yale’s School of Forestry and Environmental Studies. An anthology of essays by 26 specialists co-edited by Mendelsohn, including agricultural economics from 11 colleges and universities, reached a very interesting conclusion from an economic analysis of anthropogenic warming: [Read more →]

November 12, 2010   1 Comment

Road to Nowhere: Lomborg’s $250 Billion Throw for Renewables a Step Back for the ‘Skeptical Environmentalist’

At a time when energy realists need to take the high ground, corporations are bringing us low. Some of this is old fashioned rent-seeking; some greenwashing; and some just political correctness (as if California was the world).

For weeks, Siemens has been running full-page ads for wind technology. Last week Chevron and Weyerhauser, in full-page ads, agree “IT’S TIME OIL COMPANIES GET BEHIND THE DEVELOPMENT OF RENEWABLE ENERGY.

The same slush is coming from GE, AES, BP, Shell, NRG, and a legion of corporations whose fundamental commodity is fossil fuel.

Do these multinationals really believe that wind and solar will put a dent in their fossil fuel market share? Or is something else afoot? One should note that nowhere does this renewable ballyhoo from today’s energy goliaths mention a word about saving the world from the devastation of climate change wrought by the consequences of fossil fuel use, although this was the tack Ken Lay took to steer Enron’s aggressive renewables course.

Not to be outdone—and deploying Lay’s wry rhetoric of environmental concern—organizations like The Sierra Club and Greenpeace continue to assert that an immediate switch from fossil fuels to renewables, at any cost and among other actions, is imperative to bring the planet back from the brink of global warming.

Green Timing: Here Comes Lomborg

Now they are joined at some remove by Denmark’s Bjorn Lomborg, the self-styled skeptical environmentalist, who once opined, “We need to stop our obsession with global warming” and instead target problems that can be realistically solved with limited budgets in a reasonable time frame.

Could this convergent push for renewables have anything to do with the effort to adopt national renewable energy standards, which would require the country’s utilities to use approved renewables, overwhelmingly wind, for a certain percentage of the nation’s electricity supply? [Read more →]

November 11, 2010   9 Comments

California’s AB 32 Still on the Hot Seat (Prop 23 Defeat Based on Economic Fallacy)

On November 2, California voters defeated Proposition 23 by 61 to 39 percent, rejecting a suspension of of the state’s Global Warming Solutions Act, otherwise known as Assembly Bill 32 (AB32).

California in general bucked a national trend on Election Day with all but one statewide office going to the Democrats. As of this writing, the Attorney General race has the Republican Steve Cooley slightly ahead in the vote count, but no official call has been made.

Pundits and politicians are making much about the Proposition 23 vote, but what does it really say? Equally important is the national message to be taken from the proposition’s defeat.

It is not what is being portrayed by the otherwise humbled Left environmentalists.

Mainstream Hype

Fred Krupp, president of Environmental Defense Fund, said the Prop 23 defeat sends “a big signal” to the rest of the country and the world that Californians stand firmly behind the law, which would cut greenhouse gas emissions in the state to 1990 levels by 2020. “This is the largest referendum anywhere on the planet where people have directly voted on clean energy and climate policy,” Krupp said in an interview. “It’s the largest state in the country sending a clear message that they want a clean energy economy and clean energy jobs.”

The primary cheerleader for AB32, Governor Schwarzenegger, was not shy about his feelings either, calling Proposition 23′s defeat “a huge, huge victory” for California, the state’s environment, the green-tech industry and job growth. [Read more →]

November 10, 2010   7 Comments

Post-Election, Post-Cap-and-Trade: Obama Clings to an Anti-CO2 Agenda

On the day following the elections, President Obama urged policymakers not to forget about climate change. While he ideally would like to get help from the Congress in enacting legislation aimed at curtailing greenhouse gas emissions, he seems willing to let EPA do the heavy lifting in the absence of Congressional action. He is also looking to the states that the United States citizenry does not want to have done collectively.

In his post-election press conference last Wednesday, November 3, 2010, the president gave some clues about what his future aspirations are for a climate/energy policy. It was most obvious in his response to a question put to him by the Wall Street Journal’s Laura Meckler, and indicates that his Dream Green Team playbook is still alive and well.

Question:

Thank you, Mr. President. You said earlier that it was clear that Congress was rejecting the idea of a cap-and-trade program, and that you wouldn’t be able to move forward with that. Looking ahead, do you feel the same way about EPA regulating carbon emissions? Would you be open to them doing essentially the same thing through an administrative action, or is that off the table, as well?

Response:

With respect to the EPA, I think the smartest thing for us to do is to see if we can get Democrats and Republicans in a room who are serious about energy independence and are serious about keeping our air clean and our water clean and dealing with the issue of greenhouse gases—and seeing are there ways that we can make progress in the short term and invest in technologies in the long term that start giving us the tools to reduce greenhouse gases and solve this problem.

The EPA is under a court order that says greenhouse gases are a pollutant that fall under their jurisdiction. And I think one of the things that’s very important for me is not to have us ignore the science, but rather to find ways that we can solve these problems that don’t hurt the economy, that encourage the development of clean energy in this country, that, in fact, may give us opportunities to create entire new industries and create jobs that—and that put us in a competitive posture around the world.

So I think it’s too early to say whether or not we can make some progress on that front. I think we can. Cap and trade was just one way of skinning the cat; it was not the only way. It was a means, not an end. And I’m going to be looking for other means to address this problem.

And I think EPA wants help from the legislature on this. I don’t think that the desire is to somehow be protective of their powers here. I think what they want to do is make sure that the issue is being dealt with.

Clearly Obama seems hopeful that Congress will step in and do the dirty work, but the threat of using the EPA to carrying the entire load is only thinly veiled.

However, going the EPA route is not going to be any easier than going the Congressional route. [Read more →]

November 9, 2010   4 Comments

Wind Energy is Ancient (the infant industry argument for subsidies does not apply)

 The use of wind power is as old as history.”

- Erich Zimmermann, World Resources and Industries (New York: Harper & Brothers, 1951), p. 62.

The day after the election, the New York Times cutely titled an editorial, “New Energy Outfoxes Old in California.” The Houston Chronicle dutifully reprinted it.

Problem is, what the Left sees as new energy is really ancient, and what is seen as old is really new. Coal, oil, and gas are several hundred years old; renewable energies are as old as human time. Solar and wind and falling water and burning plants–renewables all–are caveman energies.

This textbook from 1838 (is this old enough for you, New York Times?) explained the problem with wind, a problem that is at the center of the debate 172 years later.

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Here are some quotations to show that wind is ancient, as energy historians have documented. [Read more →]

November 8, 2010   14 Comments

EPA’s Regs for Rigs – Fuel Economy Fetish Goes Diesel

Last week the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) issued a proposed rule to establish first-ever greenhouse gas (GHG) emission and fuel economy standards for “heavy duty” (HD) motor vehicles.

The proposed standards, which phase in during model-years 2014–2018, apply to three types of HD vehicles: (1) “combination tractors” (semi-trucks), (2) large pickups and vans, and (3) “vocational trucks” (a wide-ranging assortment of trucks and buses).  The agencies estimate that the technologies needed to comply with the proposed standards will cost $7.7 billion but that the rule will generate $27 billion or $41 billion in net benefits (depending on whether future benefits are discounted at 7% or 3%).

Here’s the curious thing that jumps out at you from the getgo. Although the ostensible objective of the rule is to reduce GHG emissions and oil imports, the overwhelming share of the claimed benefits (fuel savings for truckers) has nothing to do with either climate change or energy security. For example, based on the unverifiable assumption that each ton of carbon dioxide (CO2) emitted has a “social cost” of $22.00, the agencies attribute only $2.3 billion — about 6% — of the rule’s net benefits to its CO2 reductions and climate impact (p. 355). 

Six percent!

Sound familiar? Just as proponents of cap-and-trade tried to sell their stealth energy tax as a “green jobs” program when they couldn’t sell it as climate protection, so EPA and NHTSA now try to sell their save-the-planet-beyond-petroleum rule as a fuel-savings bonanza for owners and operators of big rigs, dump trucks, buses, vans, and pickups.  [Read more →]

November 5, 2010   7 Comments

Real Clean Coal: Japan’s Unit #2 Isogo Plant

I’m often asked: what is the cleanest coal-fired power plant in the world?  I am also asked: how “clean” is clean coal?

If emissions levels from a gas-fired combined cycle plant are the measure of “clean,” then there are emissions control technologies available today for coal-fired plants that can produce comparable emissions. To be sure, low emissions from coal-fired plants isn’t a technology problem, it’s a political problem.

Unit 2 at J-POWER’s Isogo Thermal Power Station is an exemplar for low emission coal-fired plants. The second unit at the plant entered commercial service in July 2009, so the plant has been in operation for about 18 months. The 600-MW ultrasupercritical unit 2 joins an earlier, similar plant built in 2002. Together, these two new plants replaced 1960s-vintage coal-fired plants and doubled power generation from the small project site. In addition, the new unit improves the plant’s gross thermal efficiency to about 45%, while reducing air emis­sions to those of a gas-fired combined-cycle plant.

This technology, the real deal, is available today for “repowering” existing coal plants. If the future belongs to the efficient, coal is very much still in the game. [Read more →]

November 4, 2010   6 Comments

Tom Pyle (IER) on the Election Results and Energy Policy (beware of ‘all of the above’ Republicans)

Yesterday’s election clearly demonstrates that the American people reject President Obama’s handling of the economy.  Just as the 2008 elections were interpreted as a repudiation of President Bush’s agenda (particularly with respect to foreign policy), the 2010 mid-term election shows that America does not support President Obama’s domestic priorities.

Specific to energy and the environment, one clear message from the election is that cap-and-trade, top-down, command-and-control regulations are a losing argument with the voters.  Candidates who voted for cap-and-trade, with few exceptions, ran away from that vote.  Voters understand that cap-and-trade is a national energy tax.

With respect to energy policy, the election results will likely yield a modest and marginal improvement.  While it will certainly not be the “environmental doomsday” that the national environmental lobby claims, unless the Republicans have truly changed their stripes, it will also not be the dramatic improvement that some predict or hope.

The Good
With the Republicans in charge of the House and a narrowly-controlled Democratic Senate, massive new federal programs like cap-and-trade appear to be off the table for now.   The biggest improvement we can expect is that the new Republican leadership in the House will carry out the necessary job of conducting oversight hearings and trying to rein in an out-of-control Obama Administration, whose goal from day one has been to fundamentally transform America.

Hopefully, the new Republican majority in the House will provide a counterweight to the Obama administration’s goal of making coal, oil, and natural gas more expensive and more difficult to produce domestically.  In the past, Republicans have not exactly been paragons of the free-market, so it is as important as ever to continue to hold Congress and the administration accountable whenever they move towards government intervention in energy markets.

The Not-So-Good
One doesn’t have to think back long to remember what previous Republican majorities have delivered—policies such as the ethanol mandate, subsidies for inefficient and unreliable energy sources, and moratoria on oil and gas exploration and development, just to name a few. 

In recent weeks, leading Republicans have already pushed for a federal renewable electricity mandate, a carbon tax, utility price caps, a tax on oil imports, and a newer, larger ethanol mandate.  Unfortunately, many Republicans, it seems, are willing to compromise free market principles for the sake of political expediency. [Read more →]

November 3, 2010   14 Comments

“The Future of Economic Freedom” (A corporate call to principled action)

[Editor note: In a sea of political capitalism and rent-seeking by corporations, it is refreshing to see a principled defense of capitalism from the business sector. This piece from the current issue of Discovery, the quarterly publication of Koch Industries, Inc., is reprinted here in honor of today's important elections.]

On Nov. 2, the United States will hold an important mid-term election.

At stake will be control of the U.S. Congress, 39 state governorships and thousands of other state and local offices.

High unemployment, record deficits, a sluggish economy and a swelling federal government have become flash point issues for millions of concerned Americans of every political persuasion.

For the nearly 50,000 Koch company employees in the United States, this election is an opportunity to help decide the future of economic freedom.

A Heavy Hitter

According to the International Monetary Fund, the United States accounts for about one-fourth of the world’s total output of goods and services, and one-fifth of the world’s purchasing power.

Like it or not, what’s bad for the United States – including misguided federal policies that undermine economic freedom – is usually bad for the rest of the world.

What has proven to be best for all societies is economic freedom.

Citizens on every continent enjoy more prosperity, cleaner environments, longer lives and higher literacy rates in economically free societies.

That’s why, for more than 40 years, Koch Industries has openly and consistently supported the principles of economic freedom and market-based policies.

The Challenge

Unfortunately, these values and principled point of view are now being strongly opposed by many politicians (and their media allies) who favor ever-increasing government.

Government – like fire, water, chemicals and most everything – is productive at some level and destructive at others. [Read more →]

November 2, 2010   5 Comments