A free-market energy blog

In the final hours of the 2012 fiscal cliff negotiations, the now 20-year old wind production tax credit (PTC) was granted a 1-year extension at the estimated cost of $12 billion. [1] This move was done behind closed doors, without debate or opportunity for amendment and no obligation of the Congress to find a way to pay for it.

With this most recent extension of the PTC, the Congress took no action to address the harmful effects [2] of the PTC on competitive wholesale energy markets.

The PTC is set to expire on December 31st. Until this long postponed day, the legislative opportunity is for the Congress to amend the flawed tax provision to relieve market distortions [3] and promote more reliable, least-cost renewable choices for taxpayers.

Market Signals That Work

Nearly two decades ago, electric energy markets in most of the U.S. were highly regulated. Wholesale electricity prices were determined based on a generator’s cost of installation plus direct production cost, and not on customer demand. Under deregulation, plant ownership shifted to independent power producers which, in turn, brought about competitive wholesale energy markets aimed at meeting consumer energy needs with the most reliable, least cost generation.

Once fully implemented, fossil-fired generators responded to market price signals. New power plants were built to meet peak demand requirements while discouraging construction of excess capacity. Competitive energy pricing dissuaded generators from building power plants long distances from load centers, thus limiting the deployment of costly transmission.

Improved management increased power plant efficiencies, operator profits and grid reliability while keeping retail prices in check. This coupled with air, water and other environmental rules led to U.S. energy resources becoming progressively cheaper, cleaner, safer, and with a smaller footprint.

The correct policy led to the best economic results for consumers. [Read more →]

The Alliance for Wise Energy Decisions (AWED) is an informal coalition of individuals and organizations interested in improving national, state, and local energy & environmental policies. Our basic position is that technical matters like these should be addressed by using real science.

Instead of a science-based approach, our energy and environmental policies are typically written by those who stand to economically or politically profit from them. As a result, anything genuinely science-based in these policies is usually inadvertent and accidental.

A key element of AWED’s efforts is public education. Towards that end, every 3 weeks we put together a newsletter to balance what is found in the mainstream media about energy and environmental matters. We appreciate MasterResource for their assistance in publishing this information.

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This is a brief summary of my Science talk.

More reports about greed energy economics:

States Turning from Renewable Mandates.

Wind Subsidies Spinning Out of Control.

Wonderful: Tales of Government Investment.

Major wind developer stating that artificial government supports are counterproductive. [Read more →]

When E. O. Wilson said “people would rather believe than know,” he perfectly summed up the state of modern environmentalism. For the fact is that the movement has been radicalized to such an extent that its policies are now characterized by senseless agendas better described as anti-science, anti-business and even anti-human; not pro-environment. [1]

Environmentalism’s gradual shift to extremism didn’t happen overnight and it didn’t happen on its own; the movement was led astray by the green lobby – the conglomerate of NGOs, advocacy organizations and political groups who use environmental motives to enact legislation favorable to their own goals. Today, the green lobby is a dominant force in the political sphere, despite few voters choosing to elect ‘green’ politicians.

Much of the green lobby’s success is directly attributable to its ability to demonize and brand opponents as heretics, even if their arguments are based on verifiable evidence or if they simply want to promote intelligent discussion. Through their ‘hearts and minds’ campaigns centered on perceived environmental injustices, the green lobby uses radical, ‘sexy’ catastrophe theories to bombard us with predictions of ecological collapse.

We are warned that there is no time for debate; that radical and swift action is necessary to avoid environmental apocalypse. Throw a celebrity in the mix and you have campaign gold – how could anyone argue against environmental experts like Brian May or Hugh Fearnley-Whittingstall? [Read more →]

“[T]he threat of environmental extremism in a vast new area provides the biggest reason to reject the treaty. The Kyoto Treaty was rejected as national policy for good reason. LOST is  Kyoto with a court attached.”

When Secretary of State John Kerry gave a speech at the Ross Sea Conservation Reception on March 19, he suggested that we should have called our planet Ocean rather than Earth. He went on to outline an international environmental agenda centered around the oceans that we can expect to be the hallmark of his time in office.

Saving the oceans will be the new rallying cry of the green movement and their political and corporate allies. We can therefore expect a new attempt soon to ratify the United Nations Convention on the Law of the Sea (LOST). This would be a disaster for America.

Background

LOST was drafted during the Cold War, and intended by the Soviet Union as a means of support for its satellite states in the developing world. The fundamental principle of LOST is socialization — or “internationalization,” comparable to nationalization of land or industries — of the world’s oceans and seas. By declaring the world’s oceans “the common heritage of mankind,” it provided a mechanism by which any development of subsea resources outside a nation’s 200 mile zone would help subsidize those regimes. [Read more →]

“‘Environmentalism is properly the ideology of controlling everything, which is called totalitarianism.’ Thankfully, it is difficult to squash human ingenuity, and industrialization will be a hard beast to slay, though it is neither impossible nor even complicated.”

While debate still swirls around climate change, recent reporting shows the debate’s hot and cold episodes cycle pretty in tune with changes in weather. Perhaps it will help to stand back and take a broad view.

Climate realists have long been aware that global average surface temperature had stopped sometime around 2000, and even a few years before. Lately alarmists had to admit it. The period with no warming is now as long as was period of warming on which fears were based—17 years according to a leaked draft of the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report (AR5)—despite continued rise of atmospheric carbon-dioxide concentration.

Observed global average temperatures (GAT) are, in fact, below IPCC’s 2007 Assessment Report’s lowest—and most confident—temperature predictions. The new view in the leaked AR5 shows a complete reversal of the AR4 view, which still touted catastrophic, anthropogenic global warming.

Prominent climate alarmists had to respond. Some, like Michael “Hockey-Stick” Mann, remain stalwart. Others, like James Hansen, first admitted the global temperature standstill was real, then, in what may have been a faux pas, said the lack of increased warming was due to an increase in global coal consumption.

IPCC Chairman Rajendra Pachauri acknowledged the “stalled” climate trend but employed the usual alarmist tactic and asked for more time to prove his predictions, thus kicking the can forty years down the road. [Read more →]

“Your right to vote is guaranteed. However, it seems voting with your feet is often more effective.”

The familiar Red State–Blue State map is a symbolic means of quickly communicating political preferences. The maps aren’t meant to be predictive of job, economic, or population trends, yet a recent think tank’s report suggests the metaphor may have broader significance.

The Manhattan Institute for Policy Research released in February America’s Growth Corridors: The Key to National Revival, which describes the future growth of our economy in terms of “growth corridors.”

The economic and population trends reported look remarkably like the iconic election night map with Blue States (my analogy, not the authors’) defined as strips along the Pacific and Northeast Atlantic coasts and along the shores of the Great Lakes. The Red States are those located along the “Third Coast” bordering the Caribbean, the Intermountain West, the Great Plains, and the Southeast Manufacturing Belt.

The report calls these four regions “America’s Growth Corridors,” representing 45% of the nation’s land mass and 30% of its population.

Diverging Directions

Conventional wisdom tells us businesses prefer regions with a sufficient labor pool, real estate, reasonable cost of living, relatively low taxes, and a regulatory climate conducive to business. Availability of low-cost energy has also jumped near the top of that list. It’s no surprise that recent data suggest employers uniformly favor the Red States over the Blue States when locating new businesses. However, that trend is indicative of a major economic shift now under way with the country, particularly with job creation and manufacturing of goods.

The energy industry has led the nation in job creation over the past decade. Oil and gas extraction jobs alone, predominately located in the Red States, have increased over 27% since early 2008, producing the highest number of jobs in that industry since late 1987. Moody’s Analytics reports that the oil and gas extraction industry created more than one million jobs since 2002, out of the 2.7 million jobs created across the entire country over the same period! [Read more →]

“As the level of scientific understanding is increasing, so too is the level of understanding that global warming probably isn’t going to be overly harmful to our health and welfare. Consider … the Gallup question ‘Do you think that global warming will pose a serious threat to you or your way of life in your lifetime?’ … Since 2008, an increasing percentage of respondents (64% in the latest poll) have answered ‘no’.”

Every so often the pollsters at Gallup gather information about Americans’ feelings about global warming. They have a new release. And while each new set of numbers is perhaps interesting on its own, the real insight comes from seeing how attitudes have changed over time. And from the historical trends, it appears that more and more Americans are becoming global lukewarmers–as they should be, given the evidence.

The percentage of American’s polled that worry “a great deal” or “a fair amount” about global warming tends to bounce around based on current events (Figure 1: click for clarity). In the past decade, for example, there was a rise in “worry” from 2006–2008 corresponding to hurricane Katrina and Gore’s push of “An Inconvenient Truth.” [Read more →]

“Nothing in the Clean Air Act says EPA needs to promulgate any of these rules. But nothing says it can’t do so. It’s largely discretionary, and this Administration is determined to ‘interpret’ the science and use its executive authority to restrict and penalize hydrocarbon use – and ‘fundamentally transform’ America.”

President Obama’s Environmental Protection Agency has already promulgated a tsunami of 1,920 regulations (Heritage Foundation: forthcoming). Many will bring few health or environmental benefits but impose high economic and unemployment costs, often to advance the Administration’s decidedly anti-hydrocarbon (aka anti-industrial-growth) agenda.

The Heritage Foundation has calculated that his EPA’s twenty “major” rulemaking decisions (costing $100 million or more annually) alone could cost the United States over $36 billion per year.

Cleaning Up Clean

The latest example involves a third layer (or tier) of rules that the agency says will clean the nation’s air and save lives, by forcing refineries to remove more sulfur and other impurities from gasoline. EPA and refiners call the proposal Tier 3 rulemaking. Tier 3 tyranny is more accurate – as the rules would cost billions of dollars but bring infinitesimal benefits, and will likely be imposed regardless.

Since 1970, America’s cars have eliminated some 99% of pollutants that once came out of tailpipes. “Today’s cars are essentially zero-emission vehicles, compared to 1970 models,” says air pollution expert Joel Schwartz, co-author of Air Quality in America. Such makes a mockery of Paul Ehrlich and John Holdren, who back in the 1960s and 1970s declared the urban smog problem unsolvable with oil-based transportation.

In addition, Schwartz notes, more recent-model cars start out cleaner and stay cleaner throughout their lives. “As a result, fleet turnover has been reducing on-road emissions by an average of about 8 to 10 percent per year.” Over time, that has brought tremendously improved air quality, and continues to do so.

Moreover, since 2004, under Tier 1 and 2 rules, refiners have reduced sulfur in gasoline from an average of 300 ppm to 30 ppm – a 90% drop, on top of previous reductions. Those benefits are likewise ongoing. Using EPA’s own computer models and standards, a recent ENVIRON International study concluded that “large benefits in ground-level ozone concentrations will have accrued by 2022 as a direct result” of Tier 1 and Tier 2 emission standards and lower gasoline sulfur levels” that are already required by regulation.

By 2022, those existing emission reduction requirements will slash volatile organic pollutants by a further 62%, carbon monoxide by another 51% and nitrous oxides 80% more – beyond reductions achieved between 1970 and 2004.

Calculable Cost; Infinitesimal Benefits

But even this is not enough for EPA, which now wants sulfur levels slashed to 10 ppm – even though the agency’s models demonstrate that Tier 3 rules, on top of these earlier and ongoing reductions, would bring essentially zero air quality or health benefits.

To achieve those zero benefits, the new Tier 3 standards would cost $10 billion in upfront capital expenditures and an additional $2.4 billion in annual compliance expenses, the American Petroleum Institute says. The sulfur rules will raise the price of gasoline by an estimated 6-9 cents a gallon, on top of new fuel tax hikes and gasoline prices that have rocketed from $1.79 to $3.68 per gallon of regular unleaded over the past four years.

These and other hikes will ripple throughout the economy, affecting commuting and shipping, the cost of goods and services, the price of travel and vacations. (White House and EPA officials claim the Tier 3 rules would only add only a penny per gallon to gasoline costs, but that is highly dubious.)

These and other hikes will ripple throughout the economy, affecting commuting and shipping, the cost of goods and services, the price of travel and vacations. (White House and EPA officials claim the Tier 3 rules would only add only a penny per gallon to gasoline costs, but that is highly dubious.)

Time-Out Needed

EPA believes the additional sulfur reductions are technologically possible. Its attitude seems to be, if it can be done, we will require it, no matter how high the cost, or how minimal the benefits.

Citizens need to tell EPA: “The huge improvements to date are enough for now. We have other crucial health, environmental, employment and economic problems to solve – which also affect human health and welfare. We don’t have the financial, human or technological resources to do it all – especially to waste billions on something where the quantifiable health benefits payback is minimal, or even zero.”

Moreover, there are better ways to reduce traffic-related urban air pollution. Improve traffic light sequencing, to speed traffic flow, save fuel, and reduce idling, emissions, driver stress and accidents, for example. That’s where our efforts should be concentrated.

Another basic problem is that EPA always assumes there is no safe threshold level for pollutants – and pollution must always and constantly be ratcheted downward, eventually to zero, regardless of cost.

This flies in the face of what any competent epidemiologist knows: the dose makes the poison. There is a point below which a chemical is not harmful. There are even chemicals which at low or trace quantities are essential to proper operation of our muscular, brain and other bodily functions – but at higher doses can be poisonous. There are also low-level chemical, radiation and pathogen exposures that actually safeguard our bodies from cancer, illness and other damage, in a process known as hormesis.

Even worse, this Tier 3 tyranny is on top of other highly suspect EPA actions. The agency has conducted illegal experiments on humans, used secret email accounts to hide collaborations with radical environmentalist groups, and implemented 54.5 mpg vehicle mileage standards that will maim and kill thousands more people every year, by forcing them into smaller, lighter, less safe cars.

EPA also expanded the ethanol mandate to promote corn-based E15 fuels (15% ethanol in gasoline). That means we must turn even more food into fuel, to replace hydrocarbons that we again have in abundance (thanks to fracking and other new technologies). But our government won’t allow us to develop, and to substitute for cellulosic ethanol that doesn’t exist (but EPA tells refiners they must use anyway). So corn farmers get rich, while consumers pay more for gasoline, meat, fish, eggs, poultry and other products.

Climate Canard

The agency is also waging war on coal, automobiles and the Keystone XL pipeline – based on assertions that carbon dioxide emissions are causing “dangerous manmade global warming.”

Even the UN’s Intergovernmental Panel on Climate Change, NASA, British Meteorological Office, and many once-alarmist scientists now acknowledge that average planetary temperatures have not budged in 16 years. Hurricanes, tornadoes, floods, droughts and sea level rise have shown no statistically significant variation from century-long averages – even as CO2 levels have “soared” to 395 ppm (0.0395% of Earth’s atmosphere).

True scientists increasingly recognize solar and other complex, interconnected natural forces as the primary drivers of Earth’s ever changing and unpredictable weather and climate.

These inconvenient truths have apparently had no effect on Administration thinking. Perhaps rising indoor CO2 emissions from larger EPA and White House staffs have “weirded” their thinking. The EPA’s yellow brick road to Eco-Utopia is not one our nation should travel. It will not take us to an economic recovery, more jobs, a cleaner environment, or improved human safety, health and welfare.

Conclusion

Nothing in the Clean Air Act says EPA needs to promulgate any of these rules. But nothing says it can’t do so. It’s largely discretionary, and this Administration is determined to “interpret” the science and use its executive authority to restrict and penalize hydrocarbon use – and “fundamentally transform” America.

EPA administrator nominee Gina McCarthy says EPA will “consider” industry and other suggestions that it revise greenhouse gas and other proposed rules. However, neither she nor the President has said they will modify or moderate any policies or proposals, or retreat from their climate change agenda.

We clearly need some science-based legislative standards, commonsense regulatory actions, and adult supervision by Congress and the courts. Unfortunately, that is not likely to be forthcoming anytime soon. Neither Republican Senators nor the House of Representatives seem to have the power or attention span to do what is necessary. Where this all will end is therefore anyone’s guess.

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Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow and author of Eco-Imperialism: Green Power – Black Death.

The government has created a market in “Renewable Energy Certificates,” also known as a “Renewable Energy Credit.” RECs are yet another way that renewable energy sources take advantage of the public’s good graces, and the propensity for some politicians to be fooled into creative ways to burden unsuspecting citizens.

As far as RECs have a public purpose, two fundamental questions are:

1) Do RECs pay for the generation of new renewable energy as claimed?

2) Do RECs offset fossil fuels as claimed?

Background

RECs are sold in two primary markets:

1) some of the states that have RPSs (Renewable Portfolio Standards) allow part of the renewable mandate to be satisfied by the utility company purchasing RECs (instead of actually buying renewable energy electricity), and

2) businesses and individuals purchase RECs for perceived public relations benefits, or to ameliorate their conscience.

The problems are that these are completely artificial “credits,” based on flawed assumptions, and often misleadingly marketed. This can be best understood by working through an example. [Read more →]

“Government interventions are problematic, so intervene only when the case is fully proven.”

- Margaret Thatcher, Statecraft: Strategies for a Changing World. New York: HarperCollins, 2002, p. 453.

“An Inconvenient Truth About Margaret Thatcher: She Was a Climate Hawk,” declares Will Oremus in Slate. In “The Iron Lady’s Strong Stance on Climate Change” (Daily Climate, reposted at Climate Progress), author Douglas Fischer notes “how seriously [Margaret Thatcher] viewed the threat of climate change and the robustness, more than 20 years ago, of climate science and United Nations body tasked with assessing state of that science.”

True, UK Prime Minister Thatcher was the first and most important international figure to champion the cause of climate alarmism. But the above authors conveniently stop their discussion with her pronouncements in the early 1990s. For possessing an open mind, and coming to see the climate propaganda machine in action, she changed her mind quickly and completely. And  the last 20 years gave her little reason to doubt her skepticism.

Early Alarmism (1988–93)

Thatcher “broke quite new political ground,” in her words, by “speaking ominously on climate change to the Royal Society (U.K. Academy of Science) in September 1988, just several months after James Hansen’s U.S. Senate testimony on the same subject. [1]

“It is possible … we have unwittingly begun a massive experiment with the system of this climate itself,” she said. [2] This would require more, not less, government “for energy production, for fuel efficiency, for reforestation,” she concluded. [3] [Read more →]