Your host Richard Morrison and guest co-hosts William Yeatman and Ryan Young conspire to bring you Episode 64 of the LibertyWeek podcast. We start with the big vote on health care legislation, squeezing more energy from the ground and the warming that wasn’t there. We continue with the British expense scandal, and the Obama administration’s love for new rules and regulations.
Sierra Club
Yesterday, the U.S. Environmental Protection Agency (EPA) sent a draft proposed rule to the Office of Management and Budget (OMB) that would exempt small emitters of carbon dioxide (CO2) from Clean Air Act (CAA) pre-construction permitting requirement, Greenwire reports.
The proposed rule, as described in Greenwire, is blatantly illegal. It is a tacit admission that the Supreme Court decision in Massachusetts v. EPA set the stage for an economic disaster. It is additional evidence that Mass v. EPA was wrongly decided. It confirms CEI’s warning that the Court’s ruling imperils a core constitutional principle — the separation of powers.
In Mass. v. EPA, the Supreme Court, by a narrow 5-4 majority, decided that CO2 and other greenhouse gases (GHG) are “air pollutants” within the meaning of CAA, and gave EPA three options: (1) issue a finding that GHG-related “air pollution” “may reasonably be anticipated to endanger public health or welfare,” (2) issue a finding of no endangerment, or (3) provide a “reasonable explanation” why the agency cannot or will not exercise its discretion to make such a determination.
The Court further held that if EPA makes a finding of endangerment, then it has a duty, under CAA Sec. 202, to develop and adopt GHG emission standards for new motor vehicles.
EPA picked option (1), and last month, it sent OMB a draft proposed rule to establish GHG emission standards for new motor vehicles.
Although the Court majority asserted that an endangerment finding could not lead to “extreme measures” and would only require a cost-constrained adjustment of existing federal fuel-economy standards (see. p. 28 of the decision), in fact the endangerment finding will trigger a chain reaction throughout the CAA — a regulatory cascade potentially exceeding in cost, scope, and intrusiveness the Kyoto Protocol and many other GHG-control schemes Congress has never seen fit to pass.
For starters, establishing GHG emission standards for new motor vehicles will by definition make CO2 a CAA-regulated air pollutant. As such, CO2 would automatically be ”subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program (CAA Sec. 165). Under the CAA, any firm that plans to build a new “major” stationary source, or modify an existing major source in a way that would significantly increase emissions, must first obtain a PSD permit from EPA or a state environmental agency.
A PSD source is “major” if it is in one of 28 listed categories and has a potential to emit 100 tons per year (TPY) of an air pollutant, or if it is any other type of establishment and has a potential to emit 250 TPY (CAA Sec. 169).
And there’s the rub. Whereas only large industrial facilities have a potential to emit 250 TPY of air contaminants such as sulfur dioxide or particulate matter, an immense number and variety of entities – office buildings, hotels, big box stores, enclosed malls, small manufacturing firms, even commercial kitchens – have a potential to emit 250 TPY of CO2. A September 2008 report commissioned by the U.S. Chamber of Commerce estimates that 1.2 million buildings and facilities – most of them currently unregulated under the CAA – actually emit 250 TPY of CO2. All would be vulnerable to new PSD regulation, controls, paperwork, penalties, and litigation.
To obtain a PSD permit, firms must document their compliance with ”best available control technology” (BACT) standards. Even apart from any technology investments needed to comply with BACT, the PSD permitting process is costly and time-consuming. In a recent year, each permit on average cost $125,120 and 866 burden hours for a source to obtain, EPA estimates. No small business could operate subject to the PSD administrative burden.
The costs, uncertainties, and delays from applying PSD and BACT to CO2 would have a chilling effect on economic development and construction activity. It would turn the CAA into a gigantic Anti-Stimulus Package in a period of financial crisis and high unemployment. Definitely not something the Obama administration wants on its record in the 2010 election season.
EPA’s July 2008 Advanced Notice of Proposed Rulemaking (ANPR) outlined several administrative remedies to shield small entities from PSD requirements, all of doubtful legality. But if the Greenwire article is accurate, EPA is opting for the most brazenly illegal option of all. It proposes to revise, on its own authority, the PSD threshold from 250 TPY to 25,000 TPY.
Now friends, under the 1984 Supreme Court case of Chevron v. NRDC, EPA has considerable discretionary authority in interpreting the CAA where the statute is “silent or ambiguous with respect to the specific issue.” But there is nothing ambiguous about the number 250. No matter how you squint at the page, 250 is 100 times smaller than the threshold EPA proposes to put in its place.
According to Greenwire, Sierra Club’s David Bookbinder, a counsel for petitioners in Mass. v. EPA, “said the rule would also deflect claims from Republican lawmakers and industry groups that the Obama administration is seeking to regulate small emission sources such as doughnut shops, schools, and nursing homes.” But the Obama administration’s intent is not the issue. The issue is whether EPA, as a matter of law, must apply PSD requirements to doughnut shops, etc. once it starts regulating CO2 under Sec. 202.
Greenwire then quotes Bookbinder: “Putting this rule in place deflates a lot of political rhetoric about regulating CO2.” Well, I hope industry and the GOP are not so naive as to put their trust in an illegal rule. A rule that flouts clear statutory language of the CAA can provide no durable protection from the regulatory cascade that an endangerment finding and EPA adoption of motor vehicle GHG emission standards would unleash.
EPA’s proposed draft rule is a tacit admission of what CEI has said all along: EPA cannot regulate CO2 under the CAA without endangering the U.S. economy — unless EPA plays lawmaker, amends the Act, and violates the separation of powers. When the Supreme Court handed down the Mass. v. EPA decision, it set the stage for a constitutional crisis.
Of course, the bigger constitutional crisis stemming from Mass. v. EPA is that we could end up with an energy suppression regime far more costly than Kyoto or Waxman-Markey, yet without the people’s elected representatives ever voting on it.
For the gory details, see my blog post on MasterResource.Org and my comment (pp. 28-56) on EPA’s proposed endangerment finding.
Today’s excerpt from CEI’s film, Policy Peril: Why Global Warming Policies Are More Dangerous Than Global Warming Itself, offers a free-market perspective on Al Gore’s proclamation, at the end of An Inconvenient Truth, that global warming is “a moral issue.”
Considered in the abstract, apart from its context in movie, this is a completely unremarkable statement. Just about all public policy issues can be described as moral issues, because they directly or implicitly ask us to decide whether a proposed course of action is fair or unfair, honorable or dishonorable, good or bad.
However, when Gore says global warming is a “moral issue,” he means something more. He means that combatting global warming is the overriding moral imperative of our time. He implies that if you are decent, self-respecting person, you have no moral choice but to follow his lead and heed his call. He is trying to play a rhetorical trump card.
Gore is clever. In An Inconvenient Truth, he presents himself as an a-political Mr. Science – and then exploits the moral authority so contrived to bash the Bush Administration and other political opponents. Similarly, he presents as a moral imperative a policy agenda that — just by sheer coincidence, we’re supposed to believe – would empower him and his political allies to control the global economy. It’s all a little too convenient.
More importantly, what if the alleged imperative to decarbonize U.S. and global economy conflicts with other, arguably better-established imperatives, such as eradicating poverty? If Gore were a moral leader rather than a moralizing partisan, wouldn’t he at least acknowledge that his ”solutions” might have harmful side-effects?
To watch today’s film excerpt, click here. To watch Policy Peril from start to finish, click here. The text of today’s film clip follows. The footnotes are to additional commentary and supporting information.
Narrator: Now let’s look at the international side of climate policy. Al Gore and the European Union advocate a 50% cut in global emissions by 2050. [1] But most of the growth in global emissions between now and then will come from developing countries. [2] So those countries, too, will have to stop building coal plants. They, too, will have to limit their use of fossil fuel. [3] It would be a humanitarian disaster.
Globally, about 1.6 billion people lack access to electricity. About 2.4 billion still rely on traditional biomass–wood, crop waste, even dung–for cooking and heating. [4]
Tom Tanton (Pacific Research Institute): Look at developing countries. The thing they need most of all is commercial energy and electricity. People in developing countries spend most of their day collecting fuel. They don’t have time to go to school and get an education. It gets dark at night so there’s no studying at night, because there’s no electricity. Electricity is the essential commodity for any kind of growth and improvement in lifestyle. [5]
Narrator: A coal-fired power plant would improve the lives of those villagers in many ways. Women would be freed from backbreaking toil. People would be healthier because indoor air quality would improve. Refrigeration would make food preparation easier and safer. Electric lighting would allow people to read and study at night. The forests and the species dependent on them would be spared. [6]
Myron Ebell (Competitive Enterprise Institute): I agree with former Vice President Gore that global warming is a moral issue. I think it is preeminently a moral issue because we have a billion and a half people in the world who don’t have access to electricity, for example. The world is not energy rich, it’s energy poor. And if we’re going to put energy rationing policies on the backs of the world’s poorest people, they will have very little hope of ever achieving even a fraction of the well-being, the lifestyle that we have.
Narrator: India is an emerging industrial powerhouse. Yet even in India, energy poverty kills. India has the largest incidence of snake bites in the world. About 50,000 Indians die from snake bites each year. Doctors there have developed an anti-venom antidote. So why is the death toll so high?
Barun Mitra (Liberty Institute): The primary reason is that most Indian health centers, primarily in rural areas where the snakebites are more prevalent, have no electricity, no refrigeration, no way to store the anti-venom. The technology is there. We know how to generate electricity. The technology is there. We know how to make the anti-venom. Yet, 95% of Indians, or thereabouts, do not have access to it, because they stay in areas which cannot store anti-venom in a refrigerated environment.
Narrator: Let me state the obvious. Poverty is the number one cause of premature death and preventable disease in the world. [7] Global restrictions on fossil energy use would trap millions of people in poverty.
Al Gore and others don’t say exactly how they would stop poor countries from using coal. But some U.S. and European politicians want to impose carbon tariffs on goods from China and other developing countries that refuse to limit emissions. [8]
Iain Murray (Competitive Enterprise Institute; author The Really Inconvenient Truths): I think the question to ask here is: Can any of the potential effects of climate change be so great as to justify keeping the developing world in poverty. I think to ask that question is to answer it.
Commentary
[1] The goal of cutting global CO2 emissions 50%-85% by 2050 has become canonical for the global warming movement. Proponents of this viewpoint include the IPCC, the European Union, the G-8 (U.S., UK, France, Italy, Canada, Germany, Japan, Canada), and just about every environmental group. Supposedly, a 50%-85% cut would likely limit 21st century global warming to 2ºC (3.6ºF), which in turn would likely “avoid some of the worst effects” of climate change. All of this assumes that the climate is moderately-to-highly sensitive to increases in CO2 concentrations. Recent research contradicts that assumption.
[2] 80-90% of the increase in greenhouse gas emissions between now and 2050 is expected to come from developing countries, chiefly India, China, and SE Asia. 
Figure source: James Connaughton, Chairman, White House Council on Environmental Quality (CEQ), Energy and Climate Policy, December 2007.
Figure source: Stephen Eule, U.S. Chamber of Commerce Institute for 21st Century Energy, Scale & Scope of the Challenge of Reducing Greenhouse Gas Emissions, February 2009
[3] Global CO2 emissions are projected to increase from 24 gigatons a year in 2000 to 50.6 gigatons a year in 2050. Thus, to achieve a 50% reduction, global emissions in 2050 will have decline to 12.3 gigatons — 76% below the baseline projection.
Figure source: Stephen Eule, Scale & Scope of the Challenge, Feb. 2009
This means that even if developed countries miraculously reduce their CO2 emissions to zero, global emissions cannot be cut by 50% unless developing countries cut their emissions 62% below baseline. Their per capita CO2 emissions will have to decline to 1.7 metric tons per year — less than current per-capita CO2 emissions in Central and South America.
If developed countries reduce their emissions by “only” 84% — approximately the Waxman-Markey target for 2050 — then developing countries will have to reduce their emissions 71% below baseline. They’ll have to hold their emissions almost flat between now and 2050. Their per-capita emissions will have to decline to 1.3 metric tons per year. That’s about what per-capita emissions are today in Africa, the most energy-starved continent on the planet.
Figure source: Stephen Eule, Scope & Scale of the Challenge, February 2009
Absent spectacular breakthroughs in the cost and performance of zero-emission energy, the minimal EU/UN/Al Gore goal of a 50% reduction in global CO2 emissions by 2050 cannot be achieved without dramatically limiting developing countries’ energy consumption and economic growth.
[4] 1.6 billion people have never flipped a light switch and 2.4 billion people depend on primitive biomass for heat and light — these figures come from chapter 13 (“Energy and Poverty”) of the International Energy Agency’s World Energy Outlook 2002.
[5] That electrification is a prerequisite for continual improvement in the human condition is obvious. Nonetheless, some scholars attempt via statistical techniques to demonstrate the importance of electricity to the physical quality of life. An October 2000 study by Alan Pasternak of the Lawrence Livermore Laboratory finds a strong association between per capita electricity consumption and the United Nation’s Human Development Index (HDI), a composite measure of human welfare taking into account GDP, life expectancy, and educational attainment.
Figure source: Alan Pasternak, Global Energy Futures and Human Development: A Framework of Analysis, Lawrence Livermore Laboratory, October 2000.
Although in 1997 four countries (South Korea, Russia, Saudi Arabia, and South Africa) with per capita annual electricity consumption somewhat above 4,000 kWh had an HDI below 0.9, no country with per capita annual electricity consumption below 4,000 kWh had an HDI of 0.9 or higher. Pasternak concludes that there is a “compelling need for increased energy and electricity supplies in the developing countries,” and that, “Neither the Human Development Index nor the Gross Domestic Product of developing countries will increase without an increase in electricity use.”
[6] For this formulation, I am indebted to University of Alabama-in-Huntsville atmospheric scientist John Christy. A former African missionary, Christy has seen first-hand the hardship and perils of life in an energy-poor country. When Christy testifies before Congress, he often includes a plea not to demonize energy, because “life without energy is brutal and short.”
[7] “A large proportion of illnesses in low-income countries are entirely avoidable or treatable with existing medicines or interventions,” observes Philip Stevens, Health Director for the International Policy Network (see p. 4 of this report). Such illnesses include tuberculosis, malaria, HIV/AIDS, childhood diseases (polio, measles, tetanus), diarrhoeal diseases from poor sanitation, respiratory infections from indoor air pollution, and malnutrition such as vitamin A deficiency. These eminently preventable and treatable illnesses kill millions people — a high proportion of them children — in developing countries each year. Although vaccines or treatments are inexpensive, poor countries lack the infrastructure to make them widely available.
[8] Cap-and-trade and protectionism are joined at the hip. You might not think so, judging from the oft-repeated assurances that Kyoto-style policies will spur innovation, efficiency, and “green job” creation, making us more competitive in the “economy of the future.” Yet European politicians warn (see here, here, and here) that they will impose border taxes (carbon tariffs) on goods from countries — chiefly China but also the United States — that refuse to limit emissions.
Most “trade-exposed, energy-intensive” firms call for additional free emission allowances to “level the playing field” rather than for carbon tariffs (see here, here, and here). However, the Sierra Club argues that carbon border taxes may be needed as a “backstop,” particularly as emission caps tighten and the supply of free allowances shrinks. It is telling that some experts are making the case that carbon tariffs are legal under WTO trade rules. (Other experts, however, warn that unilateral imposition of border taxes or counterveiling duties on carbon-intensive imports would violate WTO rules, engendering a long period of trade friction and uncertainty.)
Both free allowances and carbon tariffs are also touted as a cure for “carbon leakage” — the flight of capital, jobs, and emissions to developing countries in order to escape the high energy costs stemming from carbon controls in developed countries.
But beyond concerns about unfair competition and carbon leakage, there are more basic reasons why cap-and-trade depends on protectionism. First, how do you enforce a treaty like Kyoto over the long term? It’s a typical collective action problem. Even if one assumes it is in the common interest of all nations to mitigate global warming, it is in the individual interest of each nation to bear less than its negotiated share of the burden — to reap the climate benefits (if any) of other nations’ sacrifices and employ creative accounting on behalf of one’s own industries to give them a competitive edge. If cheating isn’t credibly punished, the number of “free riders” will grow, and the system will collapse.
How will the world’s nations punish cheaters? If military force is not an option, then trade penalties — carbon tariffs — are pretty much the only remedy.
Furthermore, how do you persuade major developing countries to get on board? They repeatedly refuse to accept binding limits on their emissions. Yet, as explained above, developing countries must make heroic efforts to decarbonize their economies if the world is to cut emissions 50%-85% by 2050, as demanded by Vice President Gore, the EU, and the UN.
One option is to bribe them with massive wealth and technology transfers. But building hundreds of new nuclear power plants or hundreds of futuristic zero-emission coal power plants in China, India, Brazil, and other developing countries would cost trillions of dollars. In the midst of a global financial crisis and high unemployment, it is unlikely that U.S. and EU taxpayers will agree export more jobs to China.
If carrots are out as an inducement to decarbonize, then sticks are what’s left. It would need to be a big stick — for example, a coordinated campaign of trade sanctions by the United States, the EU, Canada, Russia, and Japan.
More than likely, though, such a campaign would fail because developing countries would retaliate with trade sanctions of their own. We would get trade war, not compliance.
Nonetheless, if the major-emitting developing countries — China, India, Brazil, and Indonesia — continue to reject binding emission limits, advocates of CO2 controls will be continually tempted to rattle the trade sabers and demand carbon tariffs. Indeed, earlier this month, 10 Democratic U.S. Senators, in a letter to President Obama, indicated they would not support a cap-and-trade bill lacking a “border adjustment mechanism” (a.k.a. carbon tariff) to create a level playing field and pressure nations like China into adopting carbon controls.
Conclusion
Yes, global warming is a moral issue, but not for the reasons Al Gore supposes. As John Christy reminds us, human life without energy is brutal and short. Yet Gore would suppress the 85% of the world’s energy that comes from fossil fuels.
But there’s more to it than that. In a recent video commentary on CO2Science.Org, Christy offers both a personal insight and an analyst’s perspective on why abundant, affordable energy is one of the great blessings of modern civilization. I’ll conclude this blog post — the last in my series of posts on Policy Peril – with the text of Christy’s remarks.
John Christy: When people talk about the moral issue of controlling carbon dioxide emissions, I say yes, that’s right, it is a moral issue. In 1900, the energy technology of the day supported 56 billion human life years. Okay. That’s 1.6 billion people times 35 years’ life expectancy. 56 billion human life years. The average person lived to 35. Now, the energy technology supports about 450 billion human life years. That is an eight-fold increase in the experience of human life, and that is a spectacular achievement.
I am a grandfather now. And when my little grandson runs up and hugs me around the knees, I am experiencing something in human life that, a hundred years ago, the average person could not, at all. So this experience of human life that’s been granted to us by energy technology is tremendous and wonderful.
Therefore, the moral issue here is that we should provide people, who do not have it, energy, so that they can experience life that is safer, that is healthier, and that is longer. That’s the moral issue.
To read previous posts in this series, click on the links below:
Today’s excerpt from CEI’s film, Policy Peril: Why Global Warming Policies Are More Dangerous Than Global Warming Itself, is on the global warming movement’s anti-coal campaign and the dangers it poses to U.S. consumers and the economy. To watch today’s clip, click here. To watch the entire film, click here.
The text of today’s excerpt follows. I provide additional commentary and links to supporting information in the footnotes.
Narrator: First and foremost, they want to ban construction of new coal-fired power plants. [1] Why? Coal is the most carbon-intensive fuel. It releases the most carbon dioxide per unit of energy produced. [2]
More importantly, emissions from new coal plants are expected to swamp, by as much as five to one, all the emission reductions that Europe, Canada, and Japan might achieve under the U.N. global warming treaty, the Kyoto Protocol. Either global warming activists kill coal, or coal will bury Kyoto. [3]
Figure Source: Myron Clayton, New coal plants bury ‘Kyoto,’ Christian Science Monitor, 23 December 2004.
Narrator: To be fair, the activists say they’ll allow new coal generation, if the power plants deploy something called CCS, carbon capture and storage technology. [5] The idea is that instead of releasing CO2 into the air, the power stations would capture it, liquefy it, and then transport it to underground storage sites. [6] There’s just one problem. No commercial coal plants today have CCS technology. [7]
I asked Mary Hutzler, formerly head of analysis at the Energy Information Administration, how long it would take just to determine whether a CCS system would be economical for utilities to build.
Mary Hutzler, former Acting Acting Administrator, Energy Information Administration: It probably requires an immense amount of research and development. People have told me 1o to 15 years alone. [8]
Narrator: Mary also told me that building a national CCS pipeline network could take another decade. Developing the regulations would also take years. [9] So the proposed moratorium is really a ban on new coal plants for 20 years or more.
What’s the risk here? New coal generation is forecast to supply two-thirds of all new electric power over the next two decades. By 2030, new coal generation is expected to provide 15% of all our electricity. [10] So banning it, could create one heck of a power deficit. Frequent blackouts and power failures–an energy crisis would not be an unlikely consequence. At a minimum, our electric bills would go way up.
Narrator: But Al Gore is not content to ban new coal plants. He now proposes to scrap all existing coal plants and natural gas power plants too. He says we must replace all carbon-based electricity with carbon-free electricity in just 10 years–by 2018. [11]
Ben Lieberman (Heritage Foundation): The idea is absolutely off the charts, unrealistic. [12]
Dr. Patrick Michaels (Cato Institute): Al Gore is proposing the literally, physically impossible. [12]
Commentary
[1] James Hansen, the NASA scientist whose congressional testimony during the hot summer of 1988 launched the global warming movement, calls coal power plants ”factories of death“ and “the single greatest threat to civilization and all life on our planet.” The “top priority of any climate policy must be to stop the building of traditional coal plants,” writes climate crusader Joe Romm. He continues: “A climate policy that does not start by achieving at least the first goal, a moratorium on coal without CCS, must be labeled a failure.” “The silver bullet [for global warming] is no more coal,” says Architecture 2030. “Kill Coal. Coal is the enemy of the human race,” declares the Sustainable Development Issues Network. My Google search shows that global warming and coal are discussed on some 4,470,000 Web sites. It’s a safe bet most of those sites share the Gorethodox sentiments quoted above.
[2] Different fossil (carbon-based) fuels emit different amounts of CO2 in relation to the energy they produce. For a variety of fuels, the U.S. Energy Information Administration compares pounds of CO2 emitted per energy output measured in British thermal units (Btu).
Fuel Pounds/Btu
Natural Gas 117
Liquefied petroleum gas 139
Gasoline 156
Coal (bituminous) 205
Coal (subituminous) 213
Coal (lignite) 215
Petroleum coke 225
Coal (anthrocite) 227
From these numbers, we can calculate the emission ratios (or relative CO2 intensity) of the fuels. For example, bituminous coal is 1.37 times more CO2-intensive than gasoline, and 1.75 more CO2-intensive than natural gas.
[3] The Christian Science Monitor chart shown above and in the film clip is based on late 2004 estimates by UDI-Platts, the U.S. Energy Information Administration (EIA), and unspecified industry sources. David Hawkins of the Natural Resources Defense Council (NRDC), in a February 2005 speech, presented a similar bottom line, based on International Energy Agency (IEA) data. He said:
The International Energy Agency (IEA) forecasts that 1400 GW of new coal plants will be built worldwide in the next 25 years alone. To put that in context, current U.S. coal capacity is about 330 GW and global capacity is 1000 GW. This enormous increase in coal capacity will lock us into a huge additional commitment to global warming unless we use technologies that reduce CO2 emissions to minimal levels; marginal efficiency improvements will not prevent this lock-in.
The lifetime emissions from just this next wave of coal investment will be about 580 billion tons of CO2. That amount is more than half the total loading of the atmosphere with CO2 from all forms of fossil fuel combustion in the past 250 years!
Build scores or hundreds of new coal plants, and the Kyoto CO2 reductions barely amount to a drop in the bucket. As has been widely reported, China is building coal power plants at the rate of one a week.
[5] A wide-ranging coalition of environmental groups called “Coal Moratorium Now“ demands that no new coal-fired power station be built unless it is equipped with carbon capture and storage. In 2008, Reps. Henry Waxman (D-CA) and Ed Markey (D-MA)–the authors of the 2009 Waxman-Markey cap-and-trade bill (H.R. 2454, the American Clean Energy and Security Act)–introduced legislation (H.R. 5575) to impose a moratorium on new coal plants lacking CCS. In March 2009, state legislators introduced a similar bill in Texas. In April 2009, the UK Government proposed regulations requiring new coal plants to install CCS on at least 400 MW of output–about 25% of the output of an average power station. In addition, the power stations would have to capture 100% of their emissions by 2025–if the applicable technology exists by then. That’s a big “if.”
[6] A wealth of both basic and technical information on CCS is available in studies by MIT, the U.S. Government Accounting Office, the Electric Power Research Institute (EPRI), the Congressional Research Service, the Department of Energy (DOE), and Glaser et al. (2008).
[7] Oil companies sometimes inject CO2 into wells to squeeze more petroleum out of them–a technique called enhanced oil recovery (OER). Sometimes people talk as if a CCS system could piggy-back on EOR projects. But, as MIT’s Future of Coal report points out, CO2 injection for EOR has “limited significance for long-term, large-scale CO2 sequestration–regulations differ, the capacity of EOR projects is inadequate for large-scale deployment, the geologic formation has been disrupted by production, and EOR projects are usually not well instrumented [monitored for CO2 leakage; p. xiii].”
The Department of Energy (DOE), citing rising costs, pulled the plug on FutureGen, a $1.5 billion government-industry partnership to build the world’s first commercial scale CCS power plant. In July 2009, however, FutureGen Alliance, Inc. announced it had reached an agreement with DOE to begin “construction of the first commercial-scale, fully integrated carbon capture and sequestration project in the country in Matton, Ill.” So there is still not even a commercial-scale demonstration project, though there may be in the next few years.
[8] MIT’s March 2007 Future of Coal report calls for large demonstration projects in 3-4 sites in different regions of the country costing “$500 million over eight years.” Better still, MIT argues, “Five large tests could be planned an executed for under $1 billion, and address the chief concerns for roughly 70% of U.S. [coal generation] capacity. Information from these projects would validate the commercial scalability of geologic carbon storage and provide a basis for regulatory, legal, and financial decisions needed to ensure safe, reliable, economic sequestration” (p. 54).
EPRI’s Bryan Hannegan estimated in March 2007 that CO2 capture (including compression, transportation, and storage) would increase the levelized cost of an Integrated Gassification Combined Cycle (IGCC) coal power plant by ”about 40-50%” (p. 5). IGCC is already more costly than the more common pulverized coal (PC) power plants. EPRI is confident that additional RD&D will lower carbon capture costs. But by how much and how soon is uncertain.
A February 2009 Stanford University study, citing a September 2008 McKinsey & Co. study and other sources, says that CCS is projected to increase the capital costs of new coal power plants by almost 50%. “On the basis of avoided emissions, the cost of CCS ranges from $30-$90/ tonne CO2, which translates into a 60-80% increase in the levelized cost of electricity ($/MWh).”
A July 2009 Harvard University study estimates that early adopters of carbon capture technology will incur a cost of $100-$150/ton of CO2 avoided (equivalent to 8-12 cents/kWh). Once the technology matures, the additional cost will fall to $35-$50/ton of CO2 avoided (equivalent to 2-5 cents/kWh), the researchers estimate. For comparison, in 2009, residential electric rates were 20.9 cents/kWh in Connecticut, 9.2 cents/kWh in Kansas, and 14.6 cents/kWh in California.
How long between early adoption and technological maturity? According to the researchers, increasing scale, learning by doing, and technological innovation “are expected to reduce abatement [CO2 capture] costs by approximately 65% by 2030, although such estimates are inevitably uncertain” (emphasis added).
In plain speak, it may take many years to sort out the economics of CCS.
[9] The scale of the network of pipelines and storage sites required to transport and bury CO2 from U.S. coal power plants is staggering. According to MIT’s Future of Coal report (p. ix):
- The United States produces about 1.5 billion tons per year of CO2 from coal-burning power plants.
- If all of this is CO2 is transported for sequestration, the quantity is equivalent to three times the weight and, under typical operating conditions, one-third the annual volume of natural gas transported by the U.S. gas pipeline system.
- If 60% of the CO2 produced from U.S. coal-based power generation were to be captured and compressed into a liquid for geologic sequestration, its volume would about equal the total U.S. oil consumption of 20 million barrels per day.
- At present the largest sequestration project is injecting one millions tons/year of carbon dioxide (CO2) from the Sleipner gas field into a saline aquifer under the North Sea.
Even if Congress approves such a system, and major environmental groups support it, NIMBY (“not in my backyard”) protests and litigation could block or delay implementation for many years. Some people just don’t like energy projects, regardless of how “green” the projects purport to be. For the gory details, check out the U.S. Chamber of Commerce’s ”Project No Project“ Web site.
[10] Two-thirds of all new generation and 15% of total U.S. electric supply–these estimates came from the Energy Information Administration’s (EIA) 2008 Annual Energy Outlook. See the figure below.
Coal’s estimated share of new generation and total generation are lower in EIA’s Annual Energy Outlook 2009. EIA forecasts that from 2007 to 2030, new coal generation will provide 64% of all new generation and 9% of total U.S. electric supply. See the figure below.
Actually, it’s remarkable that EIA still forecasts a robust increase in electric generation from coal. Coal increasingly operates in a politically hostile, litigious environment. The Sierra Club, for example, claims that its activists, lawyers, and allies, working with state and local leaders, have prevented 100 planned coal power plants from being built over the past eight years. Click here for a partial list.
For example, even in Texas, an energy-producing state, environmental activists stopped TXU Corp. from building eight of 11 planned new coal power plants, despite estimates by the Perryman Group that investment in the new plants, over five years, would add $25.8 billion to state GDP, $17.3 billion to in-state personal income, and 389,000-plus person-years of employment.
[11] I’m not making this up. The text and video of Gore’s speech calling for carbon-free electricity by 2018 are available here.
[12] According to the EIA, in 2008, renewable sources generated 356 billion kWh, of which 259.7 billion kWh, or 73%, came from conventional hydro-electric dams. Total net generation by the electric power sector was 3852 billion kWh. So renewables provided only 9% of total generation, which means that only about 2.4% came from the politically-correct renewables–wind, biomass, solar, and geothermal.
Note that non-hydro renewable sources would provide even less electricity but for a plethora of market-rigging federal and state tax breaks and subsidies and Soviet-style production quotas known as renewable portfolio standards.
Coal and natural gas provided 2654 billion kWh, or about 69% of total U.S. electric generation in 2008. Gore and his allies would undoubtedly oppose the construction of new large hydroelectric dams even if suitable sites were available. So what Gore and “We Can Solve It” are proposing to do, is replace the 69% of our electricity that comes from coal and natural gas with the non-hydro renewables that currently supply only 2.4%–all in 10 years.
This plan would fail–dismally. Our electricity rates would skyrocket, because the demand for renewable electricity, ramped up by mandates, would vastly exceed supply. No transition that big and that fast would be smooth. Service disruptions and blackouts would likely be frequent and perversive–a chronic energy crisis.
Gore’s plan would also set a world record for government waste, since hundreds of profitable coal and natural gas power plants would have to be decommissioned long before the end of their useful lives.
To read previous posts in this series, click on the links below:
- Policy Peril: Looking for antidote to An Inconvenient Truth? Your search is over.
- Policy Peril Segment 1: Heat Waves
- Policy Peril Segment 2: Air Pollution
- Policy Peril Segment 3: Hurricanes
- Policy Peril Segment 4: Sea-Level Rise
- Policy Peril Segment 5: Is the Science Debate Over?
- Policy Peril Segment 6: Cap and Trade
- Policy Peril Segment 7: Fuel Economy Standards
Maybe forever!
On April 30, Sen. John Barrasso (R-WY) placed a hold on the nomination of Regina McCarthy as Assistant Administrator of the EPA Office of Air and Radiation. “The nominee has failed to address serious concerns” about how the EPA would regulate greenhouse gases (GHGs) under the Clean Air Act, once the Agency finalizes its endangerment finding, Barrasso stated.
The endangerment finding will compel EPA to establish GHG standards for new motor vehicles. This will make carbon dioxide (CO2) a pollutant “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. An estimated 1.2 million previously unregulated buildings and facilities emit enough CO2 each year (250 tons) to qualify as “major stationary sources” under the PSD program. All would become vulnerable to new controls, monitoring, paperwork, penalties, and litigation. In 2003, the average PSD permit cost each applicant $125,120 and 866 burden hours to obtain.
Last week, Sen. Barrasso asked Ms. McCarthy how she would protect small businesses from PSD lawuits. The nominee replied that she will “request that I be informed if any such notice is filed with regard to a small source, and I will follow up with the potential litigants.” Barrasso commented: “The solution to this problem is not to have government officials go around asking litigants not to sue. That is not a solution and entirely unrealistic. I expect more.”
Short of amending the Clean Air Act, however, there may be no solution–which means Sen. Barrasso may have to keep the “hold” on for a very long time. The law clearly states that an entity must obtain a PSD permit before it builds or modifies a facility with the potential to emit 250 tons per year (TPY) of a regulated air pollutant, and all kinds of non-industrial facilities–office buildings, big box stores, apartment complexes, enclosed malls, heated warehouses, even commercial kitchens–actually emit 250 TPY of CO2.
In his press release, Barrasso cites a Wall Street Journal article stating that Kassie Siegel, Director of the Center for Biological Diversity’s Climate Law Institute, plans to sue EPA if the Agency does not apply PSD requirements to small sources. Siegel denied this in an email to Greenwire (subscription required): “The Center for Biological Diversity is not going to sue the EPA to regulate small sources of carbon dioxide, nor is anyone else.” But she cannot possibly know that no NIMBY activist somewhere will not file a PSD suit to block or delay construction of new Wal-Mart stores, strip malls, fast food restaurants, etc.
Besides, as Borrasso pointed out in a press release last Friday, in its comment on EPA’s Advanced Notice of Proposed Rulemaking, the Center for Biological Diversity lauds the PSD program as “an effective tool for reducing GHG emissions” precisely because ”it applies to a wide array of sources that will emit in excess of the applicable statutory thresholds of 250 or 100 tons per year.”
The Center further comments that, “the asserted belief of EPA officials that the statutory requirements are burdensome or not ‘efficient’ as they should be simply does not excuse the agency from following the law. The EPA has no authority to weaken the requirements of the statute simply because political appointees don’t like the law’s requirements.”
The Center files lots of lawsuits, and they just established a $17 million litigation fund to ensure that U.S. environmental statutes are “fully implemented” to reduce GHG emissions. In keeping with this, the Center’s ANPR comment argues that EPA “must” establish National Ambient Air Quality Standard (NAAQS) for CO2 of no more than 350 parts per million. Even outright de-industrialization of the United States would likely be insufficient to meet that standard. Maybe that’s why the Center has no plan to sue EPA to regulate small sources. If the Center successfully sues EPA to set NAAQS for CO2 at 350 ppm, there won’t be many businesses left to regulate.
David Bookbinder, chief climate council for the Sierra Club, similarly dismissed Borrasso’s concerns about PSD regulation of small sources. Asked what his response to Borrasso would be, Bookbinder told BNA (subscription required): “Nothing you could print.”
Yet earlier this year, the Sierra Club decided not to put a stay on Bush EPA Administrator Stephen Johnson’s interpretative rule limiting PSD to air pollutants currently subject to emission controls–a category that does not include CO2. Bookbinder acknowledged to Greenwire that if Johnson’s rule were simply overturned, EPA would have to regulate small sources of CO2. He explained: ”The Clean Air Act has language in there that is kind of all or nothing if CO2 gets regulated, and it could be unbelievably complicated and administratively nightmarish for both EPA and the states if they were to yank the Johnson memo and not have something in place that makes it clear that we’re going after only the very large sources.”
The real nightmare would be for the firms regulated, not the regulators. Like Siegel, Bookbinder presumes to speak for all potential litigants. In reality, neither Sierra Club nor Center for Biological Diversity has a monopoly on Clean Air Act litigation. The law is clear–250 tons is the threshold for regulation. And all it takes is one NIMBY activist to file the citizen suit that forces EPA to follow the law.
President Obama could quickly fix the whole problem if he wanted to. All he’d have to do is offer legislation to preclude EPA regulation of greenhouse gases under the Clean Air Act. Nearly all Republicans and many Democrats in Congress would vote for it, because it would protect our ailing economy from litigation-driven regulatory excess.
But Obama will not do this, because he wants to use the threat of EPA regulation under the Clean Air Act as a legislative hammer to beat opponents of the Waxman-Markey cap-and-tax bill into submission. This is too clever by half, however, as I argue here and here. If EPA does bring the might and fury of the Clean Air Act down upon CO2 emitters, Obama will have to take major responsibility for the increase in energy prices, the lost jobs, and the shuttered businesses.
The President might make various remarks relating to energy tonight. These are likely to center around grandiloquent claims as to the effectiveness of “green jobs” and alternative energy in saving the economy, not to mention the planet. Here are a few notes on the reality of these claims.
Green Jobs: The President will probably claim to be creating millions of “green jobs” to save the economy, fight global warming and end dependence on foreign oil together. In fact, “green jobs” have a number of problems, outlined in my Examiner piece from yesterday. To summarize:
• “Green jobs” come at the expense of traditional energy jobs. At the moment, the wind industry employs 85,000 people in all its facets (including support staff and suppliers). The coal industry employs 81,000 miners alone, and probably over 1.4 million in all, including support staff and suppliers.
• “Green jobs” are more expensive to society in general. Those 85,000 people in the wind industry contribute to the generation of just 1.3 million MegaWatt-hours of electricity, while the coal industry generates 155 million MWh, making each coal industry job seven times more productive than a wind industry job. The difference in cost is born by the rest of us.
• “Green jobs” are mostly low-paid and transitory, according to a recent report by, among others, The Sierra Club and the Teamsters union.
• A German government report found that “green jobs” are only beneficial to the economy as long as Germany remains a net exporter of green technology and power. As soon as other countries utilize their comparative advantages in manufacture and power generation, “green jobs” become a drain on an advanced economy.
• Most “green jobs” are related to the generation of electricity, which is not used to power cars yet, and so do nothing to lower our “dependence” on foreign oil (and most oil we use comes from the US and Canada in any event).
Alternative Energy: The President may repeat his promise to double the use of alternative energy, again claiming effects in terms of climate and energy independence. This claim is, in all probability, disingenuous.
• A doubling of alternative energy electricity production by 2011 would require the main alternatives – solar, wind, geothermal and biomass – together to generate 144 billion KiloWatt-hours of electricity by then. However, under the Energy Information Administration’s “business-as-usual” projections, these industries are expected to supply 150 billion KWh by then, with no additional policies needed. (Note the EIA includes hydropower and wood in its renewables calculations, for the solar/wind/geothermal/biomass figure, see here.)
• Reduction in greenhouse gases as a result of this policy is not likely to occur, as the EIA predicts a similar increase in the use of coal to generate electricity by 2011. In all probability, therefore, we will be emitting greater amounts of greenhouse gases by 2011, not less.
• A “smart grid” is probably a useful technology, but the President and the stimulus plan gold-plated it in order to boost their renewable energy rhetoric. William Tucker has a good summary of what is wrong with the President’s version of a “smart grid” here.
• If the President means that he will double the use of biofuels, this is likely to mean a significant increase in corn ethanol production, resulting in greater diversion of the corn supply into fuel production. This will likely increase already-inflated food costs (the recent price drop would have been significantly greater were it not for ethanol manufacture) and thereby increase food insecurity in a recession. Increased ethanol production is opposed by most major environmental groups as well as free-market groups. See Facts About Ethanol for more.
Earlier this week, in a letter to Sierra Club climate council David Bookbinder, EPA Administrator Lisa Jackson said the Agency would reconsider, via a notice-and-comment rulemaking, a Bush-EPA memorandum interpreting regulations that determine whether carbon dioxide (CO2) is currently subject to emission controls under the Clean Air Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. [click to continue…]
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