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Sean Hackbarth Light bulbPhoto credit: remography. Licensed under a Creative Commons Attribution-ShareAlike 2.0 Generic license.

Unlike the U.S.-China greenhouse gas emissions agreement full of vague intentions, EPA’s proposed carbon regulations are where the rubber meets the road. And to stretch this metaphor too thin, it could run the economy into the ditch.

The North American Electrical Reliability Corporation (NERC)—the independent organization responsible for ensuring safe and reliable grid operations—worries that EPA’s proposed carbon regulations puts power grid reliability at risk.

EPA’s plan is designed to shut down coal-fired power plants. Natural gas and to a much lesser extent, solar and wind will have to pick up the slack. NERC warns that the energy infrastructure for both isn’t in place.

First, NERC cautions that the pipelines needed to transport natural gas haven’t been built, making the power industry “increasingly vulnerable to risks from natural gas supply and transportation issues”:

While several gas pipeline construction projects are underway to address deliverability issues in the Northeast, the shift toward additional natural gas consumption, as outlined in the proposed Clean Power Plan, would create additional pipeline needs. Sufficient lead times (more than three years) will be needed to plan and build new pipelines.

The power grid will be vulnerable to extreme weather like the 2014 polar vortex, where coal power was crucial to keeping the lights on.

Second, the infrastructure isn’t in place for EPA’s push away from always-on coal-generated power to variable power from solar and wind:

To support such variable generating capacity increases, the power industry would need to invest heavily to expand transmission capacity to access more remote areas with high-quality wind resources. This further highlights the need for a resource mix with sufficient essential reliability services that support integration and reliable operation. Given the natural wind variability in remote locations, these incremental wind project resources would have relatively low capacity factors that would require substantial new transmission.

Together, NERC has stated that these pipeline and transmission constraints, combined with the rushed compliance timelines of the proposed carbon regulations, would “increase the use of controlled load shedding and potential for wide-scale, uncontrolled outages” [emphasis mine]. Echoing NERC’s concerns, FERC Commissioner Philip Moeller has called for a detailed review of reliability concerns posed by EPA’s regulations:

Just as the Commission does not have expertise in regulating air emissions, I would not expect the EPA to have expertise on the intricacies of electric markets and the reliability implications of transforming the electric generation sector. Hence I reiterate my call for a forum to publicly discuss the extent of reliability challenges under the proposal and potential solutions to these challenges

These are serious concerns from respected authorities.  Yet, EPA has refused to support undertaking a more thorough review. 

By picking energy winners and losers, EPA’s carbon regulations threaten the reliability of the power grid--all-important to an economy reliant on a consistent flow of electricity. Coal has been and can continue to be an abundant source for generating reliable amounts of electricity. It has to be part of the energy mix.

Sean Hackbarth Workers move coal out from a mine in Shanxi Province, China.Workers move coal out from a mine in Shanxi Province, China. China is the largest producer and consumer of coal in the world. Photo credit: Nelson Ching/Bloomberg.

Ignore the cheers from the White House, the State Department, Mother Jones, and elsewhere over the U.S.-China greenhouse gas agreement. It’s simply another attack on abundant American energy and the economy.

Secretary of State John Kerry detailed the deal in the New York Times: “For the first time China is announcing a peak year for its carbon emissions – around 2030 – along with a commitment to try to reach the peak earlier.” In exchange, the “United States intends to reduce net greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2025.”

Here are a few points:

1. Reason’s Ronald Bailey estimates how much the United States will have to reduce its greenhouse gas emissions under the agreement:

In 2005, the U.S. emitted the equivalent of 7.26 gigatonnes of carbon dioxide. So cutting emissions by 28 percent by 2025 implies emissions of 5.23 gigatonnes in 2025, which is about the amount that the U.S. emitted in 1992. Assuming that Chinese emissions did peak in 2030, the country could by then be emitting three times more than the U.S.

2. China’s peak emissions year will be “around" 2030? Does that mean 2031, 2035, 2040? For international commitments to be meaningful and effective, they need to be precise. To put it mildly, “around” is not very precise. 

3. This agreement is nonbinding and according to Reuters’ analysis is loaded with nebulous "intentions":

The joint announcement employs language very carefully. Throughout, the operative word is "intend" or "intention", which makes clear the statement is not meant to create any new obligations.

China's 2030 emissions target is set in terms of a date but says nothing about the level at which emissions will peak.

4. Did China really agree to something that it expects will happen anyway? Ben White in Politico’s Morning Money points to a 2012 story in The Guardian:

[B]arring any significant changes in policy, China's emissions will rise until around 2030 – when the country's urbanisation peaks, and its population growth slows – and then begins to fall.

5. Along those same lines, under the International Energy Agency’s baseline scenario (IEA-NPS) of greenhouse gas reductions, China’s emissions are projected to peak by 2030 anyway [see slide 17].

6. There’s plenty of international skepticism. A German newspaper commented on the deal, “[It’s] as if a grizzly bear and tiger discuss how the world can be more vegetarian.”

Add this all up and you have a one-sided agreement in China’s favor, as Karen Harbert, president of the U.S. Chamber's Institute for 21st Century Energy said in a statement:

If actually implemented, this agreement would give an unfair advantage to Chinese manufacturers while forcing dramatic changes to America’s energy supply that will raise prices, threaten reliability, and increase the burden on hard working American families.

Sheryll PoeCongress Passes Ex-Im Extension, Heads Home to Campaign

Congress passed a bill to keep the government funded through December 11
and reauthorized the Export-Import Bank
through June 30, 2015. The U.S. Chamber
joined 11 other U.S. business organizations urging House and Senate leaders to support the bank, whose charter was set to expire September 30, and called for long-term reauthorization.

Big Turnout at Fort Bragg Jobs Summit

The U.S. Chamber of Commerce Foundation’s Hiring Our Heroes (HOH) group headed to Fort Bragg, North Carolina—home of the 82nd Airborne—to team up with the departments of Veterans Affairs and Labor, the U.S. Army,
and other national partners for a jobs fair. HOH also unveiled its new online job fair platform, Virtual Job Scout, and its interactive employer best practices site, Employer Roadmap.

U.S. Chamber Welcomes South African President Jacob Zuma

The U.S. Chamber of Commerce’s
U.S.-South Africa Business Council hosted a forum on U.S. investment in South Africa with a keynote address by South African President Jacob Zuma. The Chamber encouraged the governments and business communities in both countries to continue to advance the U.S.-South Africa commercial and strategic partnerships.

Energy Institute Undertakes Keystone XL Pipeline Lost Opportunity Tour 

To draw attention to the sixth anniversary of TransCanada’s first application to build the Keystone XL pipeline, the U.S. Chamber’s Institute
for 21st Century Energy traveled
875 miles along the proposed pipeline route to hear how delays have impacted communities from Montana to Nebraska.

 

New Poll: Americans Oppose Retroactive Tax on Businesses

Voters strongly oppose action to retroactively tax companies that move their headquarters overseas, according to a new poll released by the U.S. Chamber’s Fair Reform for Growth campaign. The nationwide survey of likely voters, conducted by Purple Insights, also found that when it comes to changing U.S. tax law, voters do not want the president to take any action unilaterally. 

Sean Hackbarth Lesser Prairie ChickensLesser Prairie Chickens. Photo credit: Richard Crossley. Licensed under a Creative Commons license.

Unless Congress keeps a close eye on federal regulatory agencies, they run amok as we’ve seen with EPA’s proposed carbon regulations and the Waters of the United States rule.

These agencies aren’t alone.

Environmental groups, using the "Sue and Settle" tactic, get the Fish and Wildlife Service (FWS) to limit economic development through the Endangered Species Act, writes William Kovacs, senior vice president for the Environment, Technology and Regulatory Affairs at the U.S. Chamber of Commerce, on FoxNews.com:

Environmental advocates now routinely use the Act’s citizen suit provision to sue FWS.  The Service does not defend itself.  Instead, it agrees to accept the environmentalists’ demands and binds itself through a court order, thereby remaining under court supervision until it completes the agreed upon terms.  Under this process, FWS and the environmental groups have developed an entirely new way for outside groups to commandeer agency policy and prioritize their demands while excluding public involvement in the settlement.  This process has been termed “Sue and Settle.”  Under these Sue and Settle agreements, outside groups drive the policy and regulatory agendas of the agencies, rather than the agencies themselves—or Congress.

Environmentalists’ power over FWS was cemented in 2011 when FWS entered into two mega Sue and Settle agreements with advocacy groups and agreed to consider another 757 new species for listing.  These listings will give FWS such broad discretion over what is designated as critical habitat, that FWS could severely limit what activities and development can occur.   In designating critical habitat for a species, FWS has exercised broad authority to restrict the types of activities allowed within the habitat.

This threatens America’s job-creating, growth-generating shale energy boom. FWS is considering putting these three species on the endangered list:

Northern Long-Eared Bat Lesser Prairie Chicken Sage-Grouse

Because the habitats of these species overlap areas where successful shale oil and natural gas development is happening, doing so would “stymie the energy revolution now taking place." 

Like that less-expensive gas? Enjoy lower amounts of imported oil and increased energy security? Appreciate the jobs created by the shale boom? All this is threatened by a federal agency guided more by outside pressure groups than sound science. As Kovacs concludes:

It is time to create a policy making process that strikes the right balance between environmental protection and job creation.  Part of that balance means better protecting habitats in this country where infrastructure can be built and opportunities created. 

Sean Hackbarth

Coal has been a key factor for expanding electricity access to hundreds of millions of people, a new report finds. Robert Bryce, senior fellow at the Manhattan Institute’s Center for Energy Policy and the Environment, calculates that from 1990-2010, 832 million people gained access to electricity because of coal.

He writes that this trend isn’t about to slow down:

Between 2013 and 2040, the EIA expects global coal-fired capacity to expand by about 500 gigawatts, from about 1,800 gigawatts to about 2,300 gigawatts.

“Coal, which now accounts for about 40 percent of all global electricity production, will likely maintain its dominant role for decades to come,” he adds.

Here are four examples of developing countries that will continue to rely on coal as their economies grow.

China

By 2040, the EIA expects China to add another 400 gigawatts of coal-fired capacity to its generation sector. Put in perspective, the U.S. currently has about 300 megawatts of coal-fired-generation capacity. Thus, over the next 25 years, China is projected to add a new fleet of coal-fired generators that will be larger than America’s entire existing coal-fired capacity.

India

India’s coal use is expected to more than double by 2035. And within the next six years or so, India will likely surpass China as the world’s largest coal importer….  the EIA projects that India’s coal-fired capacity will increase by about 100 gigawatts by 2040.

Pakistan

The country is planning to build 15 new coal-fired power plants, with a total capacity of about 15 gigawatts. In January, the country’s prime minister, Nawaz Sharif, kicked off construction on a new 3.9-gigawatt complex of lignite-fired generators that are expected to come online in 2017.

Indonesia

Indonesia’s electricity use is expected to more than double by 2022; to meet that demand, the country is building more coal-fired power plants. One planned but still-delayed project is a $4 billion, 2-gigawatt plant slated for construction in Batang, in central Java…. In April, the Indonesian government announced plans to build a new 2- gigawatt, coal-fired power plant in Jakarta, the capital. And in mid-July 2014, the state-owned electricity firm, PT PLN, announced that it was planning to build additional coal-fired power plants, with a total capacity of 2 gigawatts, to help meet the expected growth in electricity demand.

EPA Administrator Gina McCarthy can claim that other nations will follow the United States’ lead and limit their carbon emissions. But the fact is, with the progress underway we shouldn’t expect developing nations to walk away from these gains. This makes EPA’s proposed carbon regulations pointless. “Given soaring global coal use, banning new coal-fired power plants in the U.S. will not make a significant dent in global carbon-dioxide emissions,” Bryce writes.

Instead, Bryce recommends that research go into developing and promoting technology to burn coal more efficiently.

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