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Sean Hackbarth Construction of Southern Co.'s Kemper County power plant near Meridian, Mississippi.Construction of Southern Co.'s Kemper County power plant near Meridian, Mississippi. The facility will be the only U.S. commercial power plant that will capture its own carbon emissions. Photographer: Gary Tramontina/Bloomberg.


EPA’s proposed rule to regulate greenhouse gas emissions for new power plants centers around mandating carbon capture and sequestration (CCS) technology for new power plants.

Critics have pointed out that the technology used to keep carbon dioxide from floating into the atmosphere isn’t ready. For example, Charles McConnell, former assistant secretary of energy in the Obama Administration, told the House Science Committee in 2013 [emphasis mine]:

[C]ommercial [CSS] technology currently is not available to meet EPA’s proposed rule. The cost of current CO2 capture technology is much too high to be commercially viable….  [I]t is disingenuous to state that the technology is “ready.”

Who knew that a similar conclusion would come out of EPA itself? As Brian Potts points out in a Wall Street Journal op-ed, “things got weird” when an EPA regional office and a panel of administrative judges went rogue and undercut the CCS mantra coming out of EPA’s Washington, D.C. headquarters [emphasis mine]:

Shortly after the proposal was released in September, EPA administrator Gina McCarthy defended carbon capture and storage in a highly publicized interview on PBS, describing it as a "technology that we believe is available today." Then, on Nov. 25, the EPA regional office in Texas did an about-face when it decided that Exxon Mobil would not have to install the technology in its planned chemical plant (such plants emit carbon dioxide) in Harris County, because it would be prohibitively expensive.

Enter the Sierra Club, which challenged the EPA's Exxon Mobil decision on Dec. 26. Last week, three administrative law judges on the agency's Environmental Appeals Board upheld the Texas office's decision not to require CCS. Why? Because the EPA regional office found, and the judges agreed, that the "addition of CCS would increase the total capital project costs by more than 25%."

Talk about inconsistency: In its coal-plant proposal, the EPA admitted that CCS would increase the capital cost of every new coal plant built in this country by about 35%. Even with this staggering price tag, the agency still found the technology economically viable (and since then, the agency has given no indication that its position has changed). Meanwhile, an EPA regional office and its administrative judges decide that a 25% capital cost increase is prohibitively expensive.

If the words of DOE and EPA aren’t enough, take those of the White House.  To great fanfare, two weeks ago the Administration released the National Climate Assessment, which White House special advisor John Podesta described as "the most authoritative and comprehensive source of scientific information ever produced" that is "about presenting actionable science" for policy makers. Buried on page 271 of that report is a stark admission that CCS is nowhere near ready:

CCS facilities for electric power plants are currently operating at pilot scale, and a commercial scale demonstration project is under construction. Although the potential opportunities are large, many uncertainties remain, including cost, demonstration at scale, environmental impacts, and what constitutes a safe, long-term geologic repository for sequestering carbon dioxide.

A few pages later, the NCA says:

It is difficult to forecast success in this regard for technologies such as CCS that are still in early phases of development.

Maybe before the administration goes ahead and drives new coal-fired power plants into extinction, it should figure out internally whether its proposed CCS mandate is too expensive. If they're honest with what energy experts, like those at the International Energy Agency have concluded, then they’ll admit that CCS is decades away from being commercially viable.

Sean Hackbarth Obama: My Plan Makes Electricity Rates Skyrocket Video of Obama: My Plan Makes Electricity Rates Skyrocket

Thanks to Obama administration policies, it will likely cost more to keep the lights on. The Associated Press reports that partly because of increased regulations that are forcing coal-fired power plants to close:

the Energy Department predicts retail power prices will rise 4 percent on average this year, the biggest increase since 2008. By 2020, prices are expected to climb an additional 13 percent, a forecast that does not include the costs of coming environmental rules.

With EPA about to unleash a costly set of greenhouse gas regulations for existing power plants, don’t expect things to improve. Dan Byers, senior director for policy for the U.S. Chamber of Commerce’s Institute for 21st Century Energy, recently told a Wyoming audience, "We anticipate it to be unprecedented in complexity and cost."

These impending regulations follow EPA’s costly greenhouse gas emissions rules for new power plants. A Department of Energy official told the House of Representatives subcommittee earlier this year that EPA-mandated carbon capture and sequestrations (CCS) technology for new coal-fired power plants could increase wholesale electricity prices by 70% to 80%.

It appears President Obama is keeping this campaign pledge.

Since electricity is integral to our economy, these regulatory attacks on coal, a reliable energy source, will push business costs up. The AP story points to Indiana’s Rochester Metal Products that uses massive amounts of electricity to melt scrap iron:

“As Indiana’s price of electricity becomes less and less competitive, so do we,” says Doug Smith, the company’s maintenance and engineering manager.

Higher electricity costs will also hit everyone who has a smartphone in their pocket.  Having instant access to all photos, videos, and music in the cloud requires data centers running 24/7. Like factories, these too are big electricity users. According to Dr. Jonathan Koomey, they accounted for 2% of all electricity used in the United States in 2010, and their electricity use has increased by 36% from 2005 to 2010. [H/t Robert Bryce]

As Mark Mills writes, our digital economy needs reliable, affordable electricity to function:

The principle business of the tech community is anchored in bits. But all bits are electrons (or their quantum cousins, photons) and thus the Internet's monthly exabytes of data traffic consumes vast quantities of electricity. And coal remains the principle source of electricity for the U.S. and the world.

Companies such as Amazon, eBay, Facebook, Google, HP, IBM, Microsoft, Oracle, Rackspace, Salesforce, Twitter, and Yahoo, consume huge amounts of electricity from the grid, where over 85% of electricity comes from coal, natural gas, and uranium. The inescapable fact is that hydrocarbons utterly dominate the information-communications-technology (ICT) energy supply chain where coal is, on average, the biggest player supplying 40% of domestic electricity.

Americans, even those worried about greenhouse gas emissions, expect our phones, tablets, and computers to be able to do more, access more data, and do it faster. All this requires moving more bits, which means more electricity will need to be produced. Allowing EPA to effectively reject coal as a fuel source will stifle innovation, economic growth, and job creation.

In the overall energy mix, renewables (solar, wind, hydro) have their place, but fossil fuels like coal and natural gas, along with nuclear, are the most-reliable sources for baseload electricity generation. Reliable, affordable energy has powered the American economy for decades, and it’s what we’ll need for continued economic and technological progress.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Sean Hackbarth  A worker operates a drilling rig console at a natural gas well.A worker operates a drilling rig console at a natural gas well in Washington County, Pennsylvania. Photographer: Andrew Harrer/Bloomberg.

We know that the shale energy boom has been good for job creation and the economy. Now, a new study finds that shale energy development is a net plus for local governments.

Richard Newell and Daniel Raimi of Duke University’s Energy Initiative looked at the costs and benefits of shale energy development on local governments in eight states. Here’s a summary of their findings:

Our research indicates that the net impact of recent oil and gas development has generally been positive for local public finances. While costs arising from new service demands have been large in many regions, increased revenues from a variety of sources have generally outweighed them or at least kept pace, allowing local governments to maintain and in some cases expand or improve the services they provide.

Local governments have seen revenue boosts from local sales and property taxes, state-distributed severance taxes, and direct payments from energy companies. New costs for local governments has come from increased road maintenance, mostly due to the trucks moving equipment and supplies to and from drilling pads, and increased local government staffing costs.

Here is what the authors found for particular states:

Arkansas:

In north-central Arkansas, where natural gas production has grown dramatically due to development of the Fayetteville shale, county governments have generally experienced substantial net financial benefits. The leading revenue source has been from property taxes, as newly valuable mineral properties came onto the tax rolls in the five counties we examined. These counties also experienced new costs associated with road maintenance and repair, but these costs were substantially limited by agreements made between county and various natural gas companies, who helped repair many of the roads that were damaged during their operations.

Colorado:

In two regions of Colorado, the Denver-Julesberg and Piceance basins, county governments generally experienced large net fiscal benefits, with one exception. New revenues were led by property taxes, and also included severance taxes allocated from the state, as well as increased sales tax revenues for some counties. Some counties also entered into in-kind agreements with oil and gas operators, which limited costs associated with road repair. Despite these agreements, road repair remained the most prominent issue, along with substantial staff costs, primarily from the addition of new staff and rising compensation to retain existing staff.

Texas:

Texas counties and municipalities have experienced a range of new revenues and costs, and the net financial effects of recent oil and gas development have ranged from roughly neutral to a large net positive. For counties with new oil and gas production, property tax revenues have grown significantly. For municipalities, sales taxes have been the leading new revenue source, and some have seen large new revenues from leasing municipal land for oil and gas production.

Local governments have also experienced a range of new costs. For most counties, road repair has been the leading cost, and in some cases they have roughly equaled the level of new revenue from property taxes.

Pennsylvania:

The local governments we examined in the northeast and southwest regions of Pennsylvania have experienced a range of net positive financial effects as a result of Marcellus shale development.

New costs for these local governments have been limited, and are primarily related to staff. In several counties we visited, new staff were added to manage increased service demands related to law enforcement, emergency services, and to a lesser extent social services such as assistance with affordable housing. For townships, which maintain the bulk of Pennsylvania’s rural road network, costs were more limited and typically included the addition of a small number of employees to the road maintenance staff. Road repair costs have generally been small for townships, due to agreements with natural gas companies to repair township roads damaged by industry-related truck traffic.

The authors found that the biggest challenge has been in North Dakota. The authors write that while local governments have “seen their budgets swell by as much as 10-fold since 2005,” they have struggled to keep up with increased demand for services, especially road maintenance.” It’s a challenge facing one of the hottest job markets in America.

Overall, the shale energy boom is benefiting local governments and will do so in the future. An IHS study produced for the U.S. Chamber’s Institute for 21st Century Energy estimates that shale energy development will contribute over $1.3 trillion in state and local revenues by 2035.

Besides creating jobs, and generating economic growth, shale energy is benefiting state and local governments.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Sean Hackbarth Drilling for oil and gas in Texas' Eagle Ford Shale. Photographer: Eddie Seal/Bloomberg.Drilling for oil and gas in Texas' Eagle Ford Shale. Photographer: Eddie Seal/Bloomberg.


The shale energy-charting machine, Mark Perry of the American Enterprise Institute, plots out the combined oil production from three successful shale fields: the Bakken in North Dakota and Montana; the Eagle Ford Shale; and the Permian Basin both in Texas.

 Oil production Permian Basin; Eagle Ford; and Bakken.Chart: Oil production Permian Basin; Eagle Ford; and Bakken.

Perry writes:

Thanks to the revolutionary drilling technologies of hydraulic fracturing and horizontal drilling, America’s petropreneurs have unlocked oceans of shale oil in Texas and North Dakota, which is reflected in the four-fold increase in the combined oil output of the Bakken, Eagle Ford Shale and Permian Basin oil fields between 2007 and 2014.

The technology behind hydraulic fracturing doesn’t stand still. As the Wall Street Journal reports, the energy industry continues to innovate: From capturing natural gas that flares from oil wells in North Dakota to reusing more of the water used to break up the rock where oil and natural gas is trapped to developing new hydraulic fracturing fluid recipes that will require less water.

Energy companies continue to innovate to effectively tap America’s energy abundance while protecting the environment.

Sean Hackbarth California's San Onofre nuclear power plant.California's San Onofre nuclear power plant.


A 31-year-old fee on many American’s electricity bills to pay for a phantom nuclear waste facility is no more, the Associated Press reports:

The Energy Department will stop charging the fee by court order Friday. It's only a small percentage of most customers' bills, but adds up to $750 million a year. The fund now holds $37 billion.

The money was collected to build a long-term disposal site for the highly radioactive nuclear waste generated by the nation's nuclear power plants that is, by law, the federal government's responsibility.

However, because of the Obama administration, we’re nowhere near having a permanent facility:

In 2002 Congress approved Nevada's Yucca Mountain as a site for a national nuclear waste dump and $9.5 billion was withdrawn from the fund to develop the project, according to the Government Accountability Office. But the project has been criticized as inadequate and flawed and is fiercely opposed by Nevadans. President Obama, fulfilling a campaign promise, cut funding for the program, withdrew its license application, and dismantled the office that was working on it.

Last year, a federal appeals court smacked down the administration for abandoning its review of the Yucca Mountain site:

In a sharply worded opinion, the court said the [Nuclear Regulatory Commission] was "simply flouting the law" when it allowed the Obama administration to continue plans to close the proposed waste site 90 miles northwest of Las Vegas. The action goes against a federal law designating Yucca Mountain as the nation's nuclear waste repository.

"The president may not decline to follow a statutory mandate or prohibition simply because of policy objections," Judge Brett M. Kavanaugh wrote in a majority opinion, which was joined Judge A. Raymond Randolph. Chief Judge Merrick B. Garland dissented.

Last November under court order, the NRC resumed studying the Yucca Mountain site.

The Nuclear Waste Policy Act is still on the books, making Yucca Mountain the permanent site for nuclear waste. Until it's changed, we move forward by following the law.

UPDATE: Rep. John Shimkus (R-IL), House Environment and the Economy Subcommittee Chairman, told CNN:

We would like the administration to just comply with the law and keep more forward with Yucca Mountain. Then you would have a reason to collect the fee.

Video of Rep. John Shimkus appears on CNN's The Situation Room

Photographer: Jason Hicky/Flickr. Licensed under a Creative Commons Attribution 2.0 Generic license.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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