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Matt Koch Pipes stacked

Today, President Trump announced that his Administration granted the cross border permit needed for the Keystone XL pipeline.

This decision signals that the President is serious about building needed infrastructure to help put Americans back to work and improve North American energy and economic security. After nine years of politicized processes and decision making on pipeline infrastructure by the Obama Administration, this is a welcome move forward for our entire nation.

With this major barrier removed, environmental opponents are intensifying their efforts to derail Keystone XL in Nebraska, where it still awaits state approval and a permit to begin construction. Montana and South Dakota have already awarded construction permits for the project, but Nebraska has recently begun its permit application review process and hopes to make a decision by September, 2017.

Keystone XL opponents and “keep it in the ground” activists, determined to stop this and other pipeline projects, will sue the federal government to stop Keystone XL . To stop the project in Nebraska, expect that they will utilize every tool available with a vengeance just as they have in other instances– endless lawsuits; appeals; demonstrations; and as highlighted by the U.S. Chamber’s Sean Hackbarth, utter lawlessness.

Nebraskans are quite familiar with this issue from the previous permitting efforts, and the business community is wasting no time making it clear where they stand.

Nebraska Chamber of Commerce and Industry President Barry Kennedy today said: “The Nebraska Chamber fully supports the Keystone XL project because of the benefits it will provide to Nebraska’s families and the state’s economy, as well as America’s long term energy needs. Nebraskans will always be part of the solution, not part of the problem.”

Suppliers of all types of American energy continue to face tremendous opposition by “keep it in the ground” and “not in my backyard” extremists. Nonetheless, despite being restrained by over-burdensome regulations, politically motivated delays, and uncertainty during the last eight years, the outlook for building much needed energy infrastructure is vastly improved.

This morning, President Trump said “it is a new era for American energy policy” and added “today, we begin to make things right and to do things right.” This sentiment is welcomed and long past due.

This originally appeared on the Institute for 21st Century Energy's blog.

Heath Knakmuhs ele2

Each year, the Energy Institute issues an update of our annual retail electricity price map, based upon the year-end electricity price data released by the U.S. Energy Information Administration.  The prices shown on our map best reflect what business, industry, and consumers must pay for a given unit – or kilowatt hour (kWh) – of electricity.  This year’s map, with the most complete data for calendar year 2016, appears above.

Two years ago, our map illustrated that retail electricity prices rose in all but a single state.  Last year’s map identified a slight reprieve from escalating prices in twenty states and the District of Columbia, but the remaining thirty states continued to watch their electricity bills soar.  Given the repetitive and duplicative imposition of Federal policies seeking to limit our access to affordable, reliable, and domestic energy fuels and generation resources, the upward trend for electricity prices was not surprising.

However, 2016 brought some good news.  In spite of efforts to make energy less affordable by the Obama Administration, relief came to the pocketbooks of many electricity customers in 2016, and such relief is spelled S—H—A—L—E.  That’s right, in addition to the massive job and national economic benefits resulting from the use of hydraulic fracturing to extract previously inaccessible domestic natural gas deposits, the natural gas resulting from this advanced recovery technique contributed to lower electricity prices in 2016. 

Now for the results:

Hawaii and Alaska continue to endure the highest electricity prices, primarily due to their remote geography and limited access to a diverse supply of electricity generation resources.  In a little bit of good news, Hawaii continued its downward trend from last year by shaving more than 2 cents/kWh off its 2015 retail electricity prices.

Twenty-seven states, including perennial high-cost states such as California, New York, and many in New England, experienced declines in their 2016 average retail electricity prices.  Maine was the exception, but fortunately for Mainers –their 12.84 cent/kWh retail rate remains the lowest among its high-cost neighbors.  Vermont held steady at the exact same rate experienced in 2015, giving its residents a sentimental victory over the upward trend experienced in years prior.

Don’t get me wrong; the states that continue to chase energy-limiting policies continue to be burdened by the highest electricity prices in the nation.  These anti-consumer policies, such as the Regional Greenhouse Gas Initiative and California’s AB 32, are “highlighted” by the expensive electricity prices seen in New York, California, and New England.  However, the expansion of America’s vast shale resources has at least softened the blow of these policies due to the fact that these states are highly dependent upon natural gas for a large share of their electricity generation.  With respect to the Northeast, they could further moderate their high prices if they embraced the numerous benefits available through the enhancement of their currently limited natural gas pipeline infrastructure. 

Another group of states that generally saw a decrease in rates were those that produce natural gas, such as Texas, Pennsylvania, and Oklahoma.  In fact, eight of the top ten natural gas producing states saw a decline in their average electricity price. 

On the flipside, twenty-three states witnessed an increase in their electricity bills in 2016.  Among these were many low-cost leaders, such as Iowa, Kentucky, Utah, Washington, West Virginia, and Wyoming.  These specific states are traditionally reliant upon coal for a large share of their electricity mix, with the exception of Washington State, which depends primarily upon hydroelectric resources.  These energy profiles reduced the influence that natural gas played on their 2016 prices, yet they continue to enjoy some of the lowest electricity prices in the nation thanks to the historically reliable and low-cost nature of the resources upon which they rely. 

Overall, however, the decreases outweighed the increases, resulting in a lower national average 2016 retail electricity price of 10.28 cents/kWh.  This new average represents a modest – but quite welcome – .13 cent/kWh decrease from 2015’s national average electricity price.

With a new Administration in the White House, we expect state-level policies to play a greater overall role in the electricity prices consumers pay each month.  All indications are that the federal government will reduce its recently harmful intervention in energy markets while reducing the red tape that for many recent years has stymied our ability to produce and transport low cost and reliable sources of energy.  Thanks to the extraction of shale gas on primarily state and private lands, America’s vast energy resources have stemmed the tide of an upward spiral in electricity rates.  If this Administration enhances access to shale and the many other sources of energy available on Federal lands, the next few years have the potential to continue 2016’s trend toward lower retail electricity prices.

Note:  In order to eliminate any confusion that may arise when making a direct comparison of this year’s map to the 2015 rate map, it is important to note that we utilize the U.S. Energy Information Administration’s (EIA) preliminary annual data, from the February edition of Electric Power Monthly, to develop our annual maps and rate comparisons.  The EIA’s preliminary data is then subject to modification in the subsequent months as EIA finalizes their price data.  We use EIA’s preliminary data in order to deliver timely information, but slight variances from the final figures do occur.  Please note, however, that for the purposes of comparing year-over-year trends, we have used EIA’s near-final 2015 numbers instead of the preliminary numbers used in our 2015 map to maximize the accuracy of our trend analysis.

You can see the full report here.

This originally appeared on the Institute for 21st Century Energy's blog.

Stephen Eule 222

Meeting the commitments President Obama made as part of the Paris climate agreement could cost the U.S. economy $3 trillion and the industrial sector 6.5 million jobs by 2040, according to a comprehensive new study by NERA Economic Consulting commissioned by the American Council for Capital Formation with support from our Institute for 21st Century Energy.

In support of the Paris climate change accord agreed to in December 2015, the Obama administration released its Intended Nationally Determined Contribution, or INDC, setting a goal to cut U.S. net greenhouse gas emissions 26% to 28% from the 2005 level by 2025.

We here at the Energy Institute were among the first to point out that not only was this an unrealistic goal, but that the administration didn’t have the slightest semblance of a plan to achieve it. Indeed, our “gap” analysis—later confirmed by the administration itself—concluded that current policies would only get us about halfway to the needed goal. And that was before the Supreme Court put on hold the Environmental Protection Agency’s legally dubious Clean Power Plan, which widened the gap even further.

Conspicuous by its absence in the INDC was any reference to industrial sector emissions. Nevertheless, the Obama Administration recognized that the deep and rapid cuts in U.S. emissions on the scale envisaged in the INDC could occur without reductions from energy-intensive industrial sectors. EPA’s fiscal year 2015 budget proposal, for example, noted the agency intended to begin considering new GHG regulations on the refining, pulp and paper, iron and steel, livestock, and cement sectors. InsideEPA also reported that, privately, Obama White House officials were clear that industrial sector regulations were essential to closing the Paris gap:

[S]ources familiar with the meeting say that administration officials were candid in their plans to regulate manufacturing GHGs to address an emissions "gap" between current and proposed climate rules and President Obama's INDC pledge to cut GHGs 26 to 28 percent from 2005 levels by 2025. White House and EPA spokespeople did not respond to requests for comment. The administration has not publicly stated it is developing manufacturing GHG rules . . . . . . A second source familiar with the meeting says a White House official was frank about the need for new rules to meet the emissions gap, and that those rules will focus on industrial facilities.

So how much would meeting the 26% to 28% target cost? Well, the Obama Administration’s failure to provide a clear roadmap for its INDC meant there was no basis on which to assess its cost or achievability of the 26% to 28% target. Until now.

The Energy Institute partnered with the American Council on Capital Formation to work with the well-respected firm NERA Consulting to do what the Obama Administration should have done but didn’t: model and analyze its INDC target. The resulting report released today, Impacts of Greenhouse Gas Regulations on the Industrial Sector, provides the first detailed analysis of the additional measures—including regulating industrial emissions and implementing the stayed Clean Power Plan—that would be needed to close the emissions pledge gap.

The report’s central scenario projects achieving the INDC would essentially surrender the competitive edge our industries enjoy thanks to the America’s energy revolution. Specifically, the report estimates that by 2025:

U.S. GDP would plunge by $250 billion; the economy would shed 2.7 million jobs; the industrial sector would lose 1.1 million jobs; and average household income would drop $160.

The analysis finds that the cement, iron & steel, and petroleum refining sectors would suffer the biggest losses. Under the study’s core scenario, their 2025 output declines by about 21%, 20%, and 11%, respectively. Higher energy costs also hurt domestic demand and the international competitiveness of U.S. industry, leading to emissions “leakage” and a greater share of U.S. demand for industrial products being met by imports.

In addition to the analysis of the Paris pledge out to 2025, the study examines the potential longer-term impacts of placing U.S. emissions on a trajectory to achieve the Obama Administration’s long-term emissions goal of an 80% reduction by 2050. The study found that in 2040, the last year of the model run:

GDP would be cut by nearly $3 trillion; industrial employment would fall by 6.5 million jobs; and average household income would drop $7,000.

There’s a lot more in the study, including analyses of four other policy scenarios and state-level impacts for Ohio, Pennsylvania, Michigan, and Missouri. This and other information on the study can be found here.

This originally appeared on the Institute for 21st Century Energy's blog.