U.S. CHAMBER OF COMMERCE

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Sean Hackbarth A wind farm in Marshalltown, Iowa.A wind farm in Marshalltown, Iowa. Photo credit: Timothy Fadek/Bloomberg.

There’s a term computer programmers learn early on: GIGO. “Garbage In; Garbage Out.” No matter how good the code, if bad data goes in, bad results will come out.

EPA’s carbon regulations—the Clean Power Plan (CPP)—suffer from this problem, an Institute for 21st Century Energy report finds.

The agency wants the public and the courts to think that the carbon rules only deal with coal- and gas-fired power plants. That isn’t the case. The report finds that more than half (51.8%) of the CPP’s carbon emission reductions depend on renewable electricity generation.

Regardless of whether this gambit is legal (the U.S. Chamber is leading a major lawsuit against the rule and this very issue), the CPP’s design is “based on layer upon layer of shaky assumptions [and] outright errors,” the Energy Institute concludes.

EPA’s unrealistic assumptions and flat-out errors about renewable energy in the plan will be costly, adding $3.5 billion in compliance costs.

Cherry-Picking Wind Power Growth


Let’s start with how EPA cherry-picked wind power data to generate its final carbon emissions mandate on states.

EPA assumes “renewables can grow a whopping 61% more than they were projected to increase in the Proposed Rule,” states the report. This assumption relies heavily on a wind power build up in 2012.

However, 2012 was an outlier. At the end of that year, the Production Tax Credit was set to expire, causing a burst of wind mill construction.

Yet despite these highly unusual circumstances, EPA assumes that this amount of growth in wind capacity “will not only be repeated, but will be sustained for seven straight years.”

ei_epa_cpp_wind_capacity_deployment_1600px.jpg Actual and Clean Power Plan-projected wind capacity deployment, 2001-2029Actual and Clean Power Plan-projected wind capacity deployment, 2001-2029Source: Institute for 21st Century Energy.


Under EPA’s complex formulas, more realistic assumptions would translate into a less-burdensome regulation, the report finds:

If EPA had simply based its performance standards on the 2nd -highest wind deployment year between 2010 and 2014 instead of the anomalous PTC expiration year of 2012, states would be facing far less onerous—and less costly—compliance obligations.

“EPA’s treatment of wind power illustrates how a single faulty assumption can increase compliance costs by billions of dollars,” said Dan Byers, senior director of policy at the Energy Institute.

EPA’s Geothermal Mistake


Next, when EPA isn’t using faulty assumptions to stack the deck in favor of renewables, it is using faulty data.

Instead of reporting 96.5 megawatts (MW) of new geothermal generation added in 2013 as reported by the Energy Information Administration, EPA used a number it misinterpreted off an Energy Department slide.

With this mistake, EPA overestimated by a factor of four (407 megawatts vs. 96.5 megawatts) the amount of geothermal generating capacity deployed in 2013, and included it into its calculation of performance standards and state emission reduction requirements, thereby erroneously tightening state mandates even further.

Forgetting that Not All States Are the Same


Third, we have EPA ignoring the unique renewable energy capabilities in each state.

EPA Administrator McCarthy has talked a good game about states having lots of flexibility to meet carbon emission reduction targets, saying “each state’s goal is tailored to its own circumstances.”

The fact is the plan does no such thing. EPA doles out renewable energy targets based on a nationwide standard and ignores individual state’s unique geographic characteristics.

Take Tennessee for instance. Under the CPP, the Volunteer State is expected to generate 9.2 million megawatt hours (MWh) of renewable electricity, most of it from wind power. However, the National Renewable Energy Laboratory found that that state won’t be able to generate anything close to that target. EPA can’t plead ignorance since it cited the study in the proposed version of the CPP.

Tennessee isn’t alone. The Energy Institute report finds 18 states in the eastern half of the U.S. “simply do not have the wind generation potential that EPA assigns to them in their state targets.” The CPP “expects these states to shut down in-state coal and NGCC generation and replace it with imported wind generation from other states, in many cases via hundreds of miles of transmission lines that currently don’t exist and which would be extremely expensive to construct.”

EPA’s mistakes and thumb-on-the-scale calculations add up. After correcting the agency’s errors, using more reasonable assumptions, and employing a $30 per ton price for carbon credits under EPA’s preferred cap and trade compliance regime, the Energy Institute calculated that CPP compliance costs would decrease by $3.5 billion.

“EPA’s power plant regulations are flawed at their very core,” said Karen Harbert, president and CEO of the Energy Institute.

Renewable energy plays an important role in U.S. energy diversity and has a bright future, but it’s not there yet. EPA doesn’t know when in the future renewable energy can be a bigger, more reliable component.

Until then, the economy needs the inexpensive and reliable electricity fueled by coal and natural gas. EPA shouldn’t pick energy winners and losers, and it shouldn’t cook the regulatory books just so it can meet politically-derived emissions targets.

Sean Hackbarth Pipelines run toward oil storage tanks in Cushing, Okla. Pipelines run toward oil storage tanks in Cushing, Okla. Photo credit: Daniel Acker/Bloomberg.

A few months after President Barack Obama rejects an oil pipeline from Canada, the U.S. government endorses an oil pipeline in Africa.

Can you say, “Hypocrisy?”

The Wall Street Journal editorial board recently hit on a story about the U.S. Ambassador to Kenya Robert Godec allegedly pledging that the United States would help finance a pipeline connecting oilfields in northwest Kenya to the Indian Ocean coast.

“Kenya and Northeast Africa could certainly use the investment and jobs that would come from the oil project,” writes The WSJ Editorial Board. “Then again, so could the United States.”

The editorial hit a nerve, causing the U.S. embassy in Nairobi to declare that the story was inaccurate: Ambassador Godec didn’t pledge and taxpayer dollars. However, the statement included this interesting nugget [emphasis mine]:

He also expressed support for a proposal by a consortium of American companies to participate in the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor Project, which conceptually includes an oil pipeline component.

LAPSSET is a broad infrastructure project that includes an ocean port, highways, airport improvements, rail lines, and as the embassy notes, an oil pipeline.

world_bank_lapsset_map.png World Bank map of proposed East Africa oil pipelines.World Bank map of proposed East Africa oil pipelines.Proposed oil pipelines in East Africa. Source: World Bank.


Kenyan oil ministry officials estimate it has one billion barrels of oil reserves, and neighboring Uganda is “home to sub-Saharan Africa’s fourth-largest supply of crude oil, with as much as 6.5 billion barrels discovered a decade ago,” Quartz reports. This oil wealth offers plenty of economic opportunities for the region, if they can transport it.

This brings us to the hypocrisy charge.

While the U.S. government won’t pay for an African oil pipeline, it came out in support of one only a few months after President Obama said, “No,” to the Keystone XL pipeline that would transport Canadian and U.S. oil to Gulf Coast refineries. This after seven years of review and numerous environmental studies that found it wouldn’t harm the environment.

The administration’s logic is African oil pipelines: good; North American oil pipelines: bad.

In rejecting the Keystone XL permit application, the State Department claimed, “The extent to which the United States takes action and is understood to be a leader is directly correlated to the Unites States effectiveness in encouraging other countries to step up and take strong action on climate change.”

Apparently U.S. leadership on climate change is endorsing an oil pipeline on another continent.

I’m not complaining about the administration supporting the LAPSSET project. “Between now and 2050, over half of the global population growth will take place in Africa,” Lily Kuo writes at Quartz. Africa will need energy infrastructure to support its growing economies. What Ambassador Godec said simply echoed Transportation Secretary Anthony Foxx in 2015 when he said he was “very excited about  LAPSSET” and wanted American companies to help build it.

What I have a problem with is the administration’s duplicity.

“What’s with the double standard on pipelines?” asks the WSJ Editorial Board.

The answer: Politics.

Unlike the Keystone XL pipeline, anti-fossil fuel activists haven’t chained themselves to the White House fence to oppose this African pipeline. People like Bill McKibbon haven’t gone hysterical over it. Celebrities haven’t gotten arrested. And to put on my cynical hat, activists haven’t found a way to use LAPSSET to pump up donations like they have with Keystone XL. There hasn’t been a groundswell of ideological activism putting pressure on the Obama administration to oppose the African project. Which is great for Africa’s future, but bad news for the U.S.

Matt Koch at the Institute for 21st Century Energy sums it up well:

One cannot arrive at any conclusion other than that the Obama Administration has a double standard when it comes to crude oil pipeline projects. In the real world where jobs and energy security matter – and not just “perceptions” – supporting an oil pipeline in Kenya only reinforces the fact that the President’s decision to deny Keystone XL was purely political and wrong for America.

Sean Hackbarth A Caterpillar earth mover moves piles of coal outside Price, Utah.An earth mover moves piles of coal outside Price, Utah. Photo credit: George Frey/Bloomberg.

President Barack Obama’s latest attack on coal removes all doubt that on energy, “all-of-the-above” is out while “none-of-the-below” is in. 

Driving coal production to a 30-year low isn’t enough for the president. It must be locked away.

The Interior Department announced that it will immediately stop issuing coal leases on federal lands:

Interior Secretary Sally Jewell announced the temporary halt, saying it was time for a re-examination of the decades-old coal-leasing program, from health and environmental impacts to whether U.S. citizens are getting a fair return for the hundreds of millions of tons of government-owned coal that is mined and sold each year.

“Given serious concerns raised about the federal coal program, we’re taking the prudent step to hit pause on approving significant new leases,” said Jewell, who said existing coal leases would continue to go forward to assure an adequate supply for the country’s electricity needs.

Forty percent of coal mined in the U.S. comes from federal lands—most in the Western states—and is primarily used to generate electricity.

Secretary Jewell said the pause was a “prudent step.”

But there’s nothing prudent about locking up sources of abundant, inexpensive energy that will provide almost one-third of the nation’s electricity for decades to come.

Secretary Jewell also gave a spin on the news by tweeting: “Coal is a key energy source. We owe it to all Americans to get the federal coal program right for current & future generations.”

Coal is a key energy source. We owe it to all Americans to get the federal coal program right for current & future generations. SJ

— Sally Jewell (@SecretaryJewell) January 15, 2016

Let’s see if I get this right: Coal is so “key” that it’s imperative that we stop more from being mined.

This is illogical and ludicrous.

As for reviewing the leasing program, there’s no good reason to stop more coal from being mined, unless the goal is giving in to anti-energy allies’ “keep it in the ground” strategy.

Karen Harbert, president and CEO of the Institute for 21st Century Energy, eviscerated the administration’s action:

Another day, another front on the war on coal from this administration. At this point, it is obvious that the President and his administration won’t be satisfied until coal is completely eradicated from our energy mix. Their foolish crusade takes away one of America’s greatest strengths—our diverse mix of energy sources.  If the President wants electricity rates to skyrocket—as he once said he did—he’s on the right path.

“The coal supply being cut off by today’s action has been the source of the lowest cost and most reliable electricity keeping America’s lights on and people working,” said Hal Quinn, president and CEO of the National Mining Association. “The idea that future coal leasing requires a pause to evaluate environmental impacts defies credulity.”

But as with the Keystone XL pipeline fiasco, facts don’t matter when it’s about building a presidential legacy.

In his 2012 State of the Union address, President Obama said, “This country needs an all-out, all-of-the-above strategy that develops every available source of American energy.” Many doubted the sincerity of this statement at the time—and for good reason.

Since then, President Obama rejected the Keystone XL pipeline and issued new methane emission regulations that will hamper oil and natural gas development.

As for coal, his administration has issued crushing regulations like EPA’s Clean Power Plan to make coal more expensive, artificially pushing down demand for it.

The suspicion that President Obama’s talk of energy diversity was lip service culminated in this year’s State of the Union address, where “all-of-the-above” was conspicuously missing.

It’s interesting what a president says (and does) when he isn’t campaigning anymore. His mission now is about locking up abundant and inexpensive energy sources by constructing as many hurdles in front of future presidents who will understand what the value of energy diversity is to families and businesses.

In the meantime, President Obama’s crusade not only harms American jobs and the economy, it undermines the global competitive advantage such energy provides.