Category — Tanton, Tom (posts)

[Editor's Note: This post concludes a two-part series on counter-productive regulation passed in the name of addressing man-made climate change.]

In Part One yesterday, I summarized the recent research by U.C. Berkeley researcher Margaret Taylor, which found that cap-and-trade programs (CTP) impede technological innovation. Not only do they stifle future technological improvements, CTP often erase past improvements.

California’s Global Warming Solutions Act (AB32) and the Air Resources Board’s implementation of that law to date provide a sobering example of the Taylor Thesis.

California Improvements before Cap-and-Trade

California is the only state insisting on implementing economy wide cap-and-trade. The climate impact, if the programs (unrealistic) goals are achieved, are miniscule. Nonetheless, the program is to start later this year, according to the California Air Resources Board (CARB). Not acknowledged by these uber-bureaucrats, California has the third BEST carbon intensity in the U.S., according to the Congressional Research Service.

The carbon intensity of the U.S. is only a quarter of China’s and is well below the average of the world. Every ton of cement California imports from Arizona, every basket of fruit the U.S. imports from Chile, and every techno-gadget we import from Asia, in other words, result in a net increase of emissions, compared to our producing those things here at home. [Read more →]

[Editor Note: This is Part One in a two-part series by Mr. Tanton on counter-productive regulation passed in the name of addressing manmade climate change. Part II tomorrow focuses on California. ]

Cap-and-trade programs (CTP) do not provide incentives to develop innovative technologies and likely increase emissions, according to a new essay, Innovation Under Cap-and-Trade Programs, published in Proceedings of the National Academy of Sciences. Author Margaret Taylor, a researcher at Lawrence Berkeley National Laboratory, completed her study as assistant professor at the University of California-Berkeley’s Goldman School of Public Policy.

Based on actual case studies, she found that CTP have reduced incentives for research and development. “Policymakers rarely see with perfect foresight what the appropriate emissions targets are to protect the public health and environment,” said Taylor.

Emission targets might actually be set more strict, she explains, even while the mechanism (i.e. CTP) may be inefficient, or ineffective, or counterproductive. Yet policymakers also seldom set targets they don’t have evidence that industry can meet. This is where R&D that can lead to the development of innovative technologies over the longer term is essential.

The Estimation Problem

Putting aside whether the targets (i.e. emission levels) are set correctly, the question remains whether cap-and-trade is a useful mechanism. In fact, it might actually get in the way of the technology that reduces emissions and achieves other worthwhile goals like productivity enhancement and wealth creation. [Read more →]

The American Tradition Institute (ATI) and the American Tradition Partnership (ATP) have filed suit in Federal District Court in Colorado to have Colorado’s renewable energy standard (RES) declared unconstitutional. The plaintiffs find that the Colorado RES discriminates on its face against legal, safer, less costly, less polluting and more reliable in-state and out-of-state generators of electricity sold in interstate commerce, and thus violates the Commerce Clause of the U.S. Constitution.

Given 29 states with either a RES or a Renewable Portfolio Standard (RPS) of varying strength, the outcome of this case will likely have far reaching implications. The suit was filed yesterday, April 4, 2011.

Part of the suit is a “declaration” of technical aspects and the costs and benefits of how the RES is implemented; I am the author of that declaration. The other major part of the filing, as would be expected, is various legal arguments. This posting does not further describe the legal arguments but simply summarizes the content of my declaration.

RES/RPS Requirements

Renewable portfolio standards require utilities to use renewable energy or renewable energy credits (RECs) to account for a certain percentage of their retail electricity sales — or a certain amount of generating capacity — according to a specified schedule. The term “set-aside” or “carve-out” refers to a provision within an RPS that requires utilities to use a specific renewable resource (usually solar energy) to account for a certain percentage of their retail electricity sales (or a certain amount of generating capacity) according to a set schedule.

Colorado became the first U.S. state to create a renewable portfolio standard (RPS) by ballot initiative when voters approved Amendment 37 in November 2004. The original version of Colorado’s RPS required utilities serving 40,000 or more customers to generate or purchase enough renewable energy to supply 10% of their retail electric sales. In March 2007, HB 1281 increased the RPS to 15% from 2015–19 and 20% from 2020 forward, as well as  extending a separate renewable-energy requirement to electric cooperatives, among other changes. HB 1001 of 2010 expanded the RPS to 30% for 2020.

Eligible renewable-energy resources include solar-electric energy, wind energy, geothermal-electric energy, biomass facilities that burn nontoxic plants, landfill gas, animal waste, hydropower, recycled energy, and fuel cells using hydrogen derived from eligible renewables.

The PUC has issued rules to implement the RPS. The rules were amended as required by HB 1001 in August 2010. The PUC’s rules generally apply to investor-owned utilities (IOUs). Electric cooperatives and municipal utilities serving more than 40,000 customers are still bound to the separate requirement approved by the legislature. [Read more →]

A California superior court recently issued a tentative decision against the California Air Resources Board (CARB) for failing to comply with environmental law pursuant to the implementation of AB 32, California’s global warming law.

The tentative decision directs CARB to rewrite its documentation pursuant to the California Environmental Quality Act (CEQA), and to cease implementation of the AB 32 Scoping Plan until the violation is corrected. The decision is based on violations of process, not the scientific or economic substance of either the CEQA documentation or the scoping plan as critics of climate alarmism would have liked.

Reactions to the tentative finding have ranged from “no big deal” to “hallelujah.” But it is a big deal; CARB’s implementation of AB 32 hangs in the balance, at least for the time being.

Will CARB convince the trial judge to change his decision–or flaunt the order even if unchanged? Rest assured if the decision becomes final, CARB will appeal.

Will CARB admit, maybe, that mistakes were made and work to improve their own process and analyses, rather than just push the blame elsewhere?

Comments from both parties were just submitted. We will see what transpires, but it is wishing too much for a mea culpa from CARB. [Read more →]

Jon Coupal, president of the Howard Jarvis Taxpayers Association, is a co-chair of the committee supporting the California citizens’ ballot initiative, Proposition to suspend California’s Global Warming Solutions Act (AB32).

The mainstream media has perpetuated a misperception that the Proposition 23 to suspend AB 32 is the work of, and funded by, sinsiter out-of-stater parties. That’s neither a real issue (what happens in California affects everybody) nor factually correct.

I can attest to the homegrown nature, having been involved for over four years—essentially since AB32 was first passed in 2006, as have others. The funding for opposition to the initiative has gotten very little attention by MSM, a phenomenon Mr. Coupal begins to correct in his featured column, reproduced below with permission, on the popular website FlashReport.

His editorial links Enron to regulating carbon dioxide (CO2). In fact, Enron had seven profit centers tied to pricing CO2 via cap-and-trade. Enron, as the following quotations attest, was vitally interested in what became AB 32. Here is some history of Enron, climate alarmism, and CO2 regulation (prominently including cap-and-trade):

“Since 1976, Enron [and predecessor company] employees have been at the forefront of developing air credit trading policies for governments and businesses…. Enron today is the largest and most sophisticated air emissions credit and allowance trading organization in the United States. Since 1990, Enron has participated in over 80 SOx allowance transactions and has also been active in establishing policies for trading NOx in the United States and carbon [dioxide] world-wide.”

- “Enron Corp.’s Participation in Air Trading,” Enron Capital & Trade Resources, November 4, 1996 (copy in files).

“If implemented, [the Kyoto Protocol] will do more to promote Enron’s business than will almost any other regulatory initiative…. The endorsement of [CO2] emissions trading was another victory for us…. This agreement will be good for Enron stock!”

- John Palmisano (December 12, 1997) from Kyoto, Japan. Quoted in Bradley, Capitalism at Work, p. 307.

“We are a green company, but the green stands for money.”

- Jeff Skilling, CEO, Enron Corp., quoted in Capitalism at Work, p. 310.

Jon Coupal is quite Californian and quiet critical of AB32. His article is thus reprinted in full. [Read more →]

Any reader lucky enough to have a new iPhone4 knows that sometimes technology just doesn’t work out the way sellers claim. Other times they do, but not in the way that consumers want or expect.

Such is the case with a major component of the so-called “smart grid”– the smart meter. There is growing agreement among federal and state policymakers, business leaders, and other key stakeholders, that a Smart Grid is not only needed but well within reach.

But it is not. Think of the Smart Grid as the 4G network for electricity. Smart meters, are a prime example of an unnecessary and expensive change that will provide little in the way of consumer benefit. They do, of course, provide utilities and energy marketers and government with a host of new tools, which is why they’re being sold in the policy arena. That plus the fact that makers just want the consumer to pay for something that isn’t (yet) cost effective explains the extracurricular (political) push. Add to all this the government’s insistence–encouraged by intermittent renewable developers lobbying efforts and billions in “stimulus” funding–and the momentum is hard to overcome.

The energy utilities want the meters to send price signals that change as generation costs change. By charging you more during high-usage “peak” times (e.g. hot days) they hope to persuade you to shift your usage to “off-peak” evenings and weekends, as many consumers now do with long-distance phone calls, when generation costs are lower. Of course, after a few days the inconvenience of getting off the couch every hour to read the new signal and turn on or off appliances, may lead people to the conclusion that the savings are not worth the effort. It might be smarter, and more effective to install additional generation capacity that can actually perform on those hot days.  [Read more →]

Californians are attempting to reclaim the prospects of a top ten world economy from the disastrous downside of Global Warming Solutions Act (California Assembly Bill 32, or AB 32).

Leaders of the ballot measure campaign to amend the law filed over 800,000 signatures – well over the required 435,000 – to be able to vote on a proposition to delay the implementation of cap-and-trade, as well as 70+ other progeny regulations, until unemployment falls significantly.

Signatures are currently being verified by the Secretary of State, and the measure is expected to be on the November ballot.

Then versus Now

At the time the bill was originally signed in 2006, California’s unemployment rate was under five percent. According to the Bureau of Labor Statistics, statewide unemployment in April 2010 was a record high 12.6%.

The ballot measure would put AB 32 on hold until unemployment falls below 5.5% for four consecutive quarters. In other words, until the state’s devastating economic situation improves the state will not implement regulations that will increase energy costs—already among the nation’s highest—and cause additional job loss. The Initiative would not repeal the AB 32 but merely suspend it and its already adopted regulations.

Old Rationale– “Leadership” for The Children!

Flanked by “national and international dignitaries,” Gov. Schwarzenegger signed AB 32, California’s landmark global warming law, in September 2006.  He said the law is “something we owe our children and grandchildren.”

Now, with too-numerous-to-count “gates” cracking the consensus, coupled with solid analysis, such as that of Chip Knappenberger of the lack of meaningful gain from reductions of national scale, there isn’t much discussion about global climate change even being the driver behind “the global warming solutions act.”

The debate has moved, and still moves. California was to lead the global parade, with other states and countries following. Didn’t happen. The death spiral of climate alarmism confirms that California’s mandatory CO2 emission cuts are costs without climate benefits. [Read more →]

Last week whilePresident Obama was touring a factory in Charlotte, N.C., one of the workers asked the President why he didn’t use an electric limousine. According to the LA Times , the President, who had just made his customary speech extolling renewable energy and green jobs, said there’s not much he can do to wring more fuel efficiency from the armored limousines that drive him around. He had asked the Secret Service about converting to hybrid vehicles, the president said, but was told that it’s not possible.

“It’s because the cars that I’m in are like tanks,” Obama said.

But he did emphasize that he ordered a tripling of the number of hybrid vehicles in the federal government’s massive fleet. That’s our proactive president where image, not the cost to taxpayers, is what matters.

The event was also, unintentionally, a microcosm of federal policy missteps driven by the lack of concern of regulators to the myriad performance demands of the auto buying public. If the President has unique needs for performance, isn’t it possible others do as well? What about considerations that go beyond fuel economy?

Electric Vehicles (Remember the Biofuels Bust?)

Today’s favorite among the political cognoscenti are electric vehicles and hybrids cars. They are riding high, as noted by the New York Times, while tax subsidies have made them appear a realistic option. But the increased attention will undoubtedly highlight flaws of this fuel source in comparison with gasoline.

The attention being paid to the electric vehicle industry also irritates the biofuel industry, whose own overheated market was abruptly halted in 2007, with subsequent bankruptcies and a fall from grace, after nexus were drawn between biofuels and higher food prices, and between some biofuels and increased greenhouse gas emissions.

Biofuels went from hero to zero, along with billions in investments in factories and farms to produce the fuels. Yet gasoline-powered cars may trump both biofuels and electric/hybrids for decades as the least-worst option. Not only do they fit within existing infrastructure, but wider adoption of more efficient conventional cars will help to curb carbon emissions and oil dependence. Of course, the lower energy content of most biofuels also conflicts with increasingly stringent mileage standards.

Are EVs Really the Future?

So will EVs, hybrids, biofueled or improved conventional cars dominate the future? The uncertainty is striking for a $5 trillion global auto and fuel supply market where there is agreement only that the number of cars will keep increasing, perhaps doubling to two billion by 2050, driven largely by the surging Chinese and Indian middle classes.

Last week, the United States announced new fuel efficiency standards, following similar rules in Europe. Green cars took center stage at auto shows in New York, Geneva and Detroit, including all-battery cars; hybrid varieties that switch between electricity and gasoline; and small (some really, really small), more fuel-efficient conventional cars. But battery-only electric vehicles are expensive.

As reported in the Times:

Mitsubishi Motors and Nissan Motor announced prices for their battery-only electric cars, which are in production already or about to be introduced. Before government subsidies, the Mitsubishi i-MiEV will sell for about $42,000, and the Nissan Leaf for just a few dollars less. And a single charge allows for a driving range of about 160 kilometers, or 100 miles, far less than for a gasoline-powered car. American consumers typically expect to exceed 300 miles on one tankful.

The average refill time for a tankful of gasoline is about ten minutes, not the several hours needed for an EV charge. The time value of refilling is absent from most economic analysis of vehicle technology, but even a once every two weeks instead of once every three, can add to the cost of fuel. For alternative fuels, any temporary price advantage can be quickly eaten up by convenience costs. [Read more →]

Another defender of limited government (and sound science) has petitioned U.S. Environmental Protection Agency to reopen the regulatory process that led to EPA’s controversial endangerment finding, arguing that new information casts doubt on the scientific integrity of the determination. The Pacific Legal Foundation (PLF), a Sacramento, Calif.-based group that defends individuals against large, intrusive government, filed an administrative petition with EPA last week that challenges the agency’s finding on procedural grounds. The petition to the EPA is available at PLF’s web site.

According to the filing, EPA must reopen the proceedings surrounding its determination that greenhouse gases threaten public health and welfare, in light of recent controversy over e-mails released from prominent climate scientists whose work formed the very foundation of the Intergovernmental Panel on Climate Change (IPCC)’s 4th assessment on climate change (2007). The filing also demands that EPA’s Scientific Advisory Board evaluate whether the finding itself should be reconsidered. The IPCC reports were preeminent among the data used to underpin EPA’s endangerment finding.

Invalidated Science

At issue is the EPA’s finding–announced December 2009–that “greenhouse gas” emissions from automobiles [and hence from nearly every single other human activity] pose a danger to public health and welfare.

“PLF has filed this administrative petition because the integrity of the process that yielded the endangerment finding has been put in question by the revelations popularly known as ‘Climategate,’” said PLF attorney Ted Hadzi-Antich. “Thousands of emails and other documents have come to light that show the very scientists involved in arriving at the endangerment finding questioning the data that underlie the finding.”

“PLF takes no position on the scientific data itself, but as a legal watchdog for limited government and enforcing the legal and constitutional limits on regulatory agencies, we are very concerned that the regulatory process in this case may have been compromised,” added Hadzi-Antich. “Because significant revelations suggest that the scientific data that was used for the endangerment finding may be unreliable, a formal reconsideration of the process and the finding must be undertaken.”

I would note that the data from the Climate Research Unit (CRU) at East Anglia College (EAC) that was released primarily regards historical (and pre-historical) temperatures, and forms the regression base for future projections of temperature. And if the data describing the past is faulty, so are regression-based projections.

The emails also reveal attempts by climate alarmists to hide data that conflicts with their world views. The PLF petition argues that reopening the process is required by statute because the integrity of the process has been called into question by the revelations. Indeed, when reasons come to light that cast doubt on the reliability of a regulatory finding, the Clean Air Act requires reassessment by the agency’s Science Advisory Board, as part of a reassessment by the general public. [Read more →]

In the face of a changing fiscal and political environment, Congress and various states are belatedly rethinking their far-flung  efforts to restructure and regulate the nation’s energy markets. The opportunity is to change course and base their actions on facts, not emotion–and slow down and even reverse governmental largesse. The global warming scare has been cut down to size, after all, and the problems of politically dependent energies are more evident than ever.

Too many legislators and interventionists cling to basic energy myths, however. Here are five major ones.

Myth: Foreign Oil Provides Most of Our Energy

According to the U.S. Department of Energy and the Energy Information Administration, oil represents less than 40% of our energy use. A full two-thirds of that oil comes from North America, primarily Canada, not the Middle East.

A related myth is that alternative energy sources will reduce the use of petroleum. Such sources may first reduce domestic production, but they will not appreciably affect production in unstable regions.

Renewable technologies are subject to import and price security concerns as well. And the equipment for 65% of the wind installations in the U.S. in the past five years have come from foreign sources, including China. Moreoever, rare earth metal ores such as lanthanum and neodymium are vital to electric car batteries and some renewable energy are concentrated in China, for example, and Beijing favors export restrictions.

Myth: Renewables Will Replace Conventional Energy Sources

A correlated and persistent myth is that increasing wind- and solar-generated electricity will reduce our dependence on foreign oil and thus boost our energy security. Less than 1% of our electricity is generated using petroleum, so any renewable generation will have no appreciable effect on petroleum demand. [Read more →]