Judge Rules That EPA Must Account for Job Losses of Its Regulations

In a 17th October ruling, U.S. District Court Judge John Bailey sided with Murray Energy and held that the Clean Air Act requires the EPA to perform continuing evaluations of job losses due to the agency's regulations.

To date, the agency has estimated the employment impacts of its rules by using a model that assumes 1.5 jobs are created for every $1 million spent on regulatory compliance. The underlying premise of this model is that jobs created in pollution control will always outpace job losses in the regulated industry. Of course, this is a ridiculous assumption. For starters, it sheds no light on actual job losses caused by EPA rules; rather, job losses are merely assumed to be less than job gains. More broadly, EPA’s employment model fails to pass the sniff test: it is absurd to think that spending infinite resources on regulatory compliance will forever lead to job gains.

If it stands, Judge Bailey’s ruling means that the agency has a responsibility to actually tally job losses caused by its regulations (rather than relying on dubious economic modeling to wish away the actual job losses). Importantly, these analyses must occur on a sector-by-sector basis, so every industry subject to a rulemaking may compel the agency to estimate the impact of the rule on employment.

EPA has not yet decided whether it will try to appeal Judge Bailey’s ruling before the U.S. Court of Appeals for the Fourth Circuit.

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Warming is mild and manageable

Should Chris Wallace ask our presidential candidates about climate change? Absolutely, but only as part of a broader discussion of the role of fossil fuels in America’s energy future.

“Climate change” — more precisely, man-made warming — is a side effect of using fossil fuels for cheap, plentiful, reliable energy. To ask candidates to address climate change without addressing the unique benefits of fossil fuels is like asking the candidates to address vaccine side effects without addressing the unique benefits of vaccines.

The question Wallace should ask is: “Given your assessment of the benefits and risks of fossil fuels, including the effects of warming, what is the right energy policy for America?”

Energy is the industry that powers every other industry. Cheap, plentiful, reliable energy makes possible cheap, plentiful, reliable food, drinking water, sanitation, transportation and housing.

In a world where more than 1 billion people have no electricity and a much larger number live in deep “energy poverty,” only the fossil fuel industry has developed the ability to produce energy for electricity, fuel and heat on a scale of billions. The politically popular alternatives, solar and wind, are expensive “unreliables” that depend on reliable sources, mostly fossil fuels, for life support.

In America, the fossil fuel industry has been the indispensable supporter of our economy for the past decade, as the shale energy revolution has made the U.S. the world’s energy superpower. We can do much more.

But should we? To answer that, we have to reject the false alternative of “climate change believer” or “climate change denier” and become “climate thinkers” — people who think carefully about the magnitude of man-made warming and compare it with the unique benefits of fossil fuels.

Candidates who are climate thinkers will conclude that man-made warming is mild and manageable, not runaway and catastrophic. And thus they will conclude that fossil fuels should be liberated, not restricted.

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BOOK REVIEW of "Hubris: The Troubling Science, Economics and Politics of Climate Change" by Michael Hart

Review by Michael Kelly FRS FREng, Emeritus Prince Philip Professor of Technology, University of Cambridge

Let us be clear at the outset: the global climate is changing, and has always been changing. The earth has warmed by 1C over the last 150 years. That is not the issue. The issue is whether the human emissions of carbon dioxide since 1850 are heralding an imminent and certain global climate catastrophe that could be averted by engineering projects.

This is the most complete book to date that takes a critical look across the whole of the recent history of climate change as science, as input to policy, and as a driver of far-reaching societal change. My own interest in the subject starts from the totally unrealistic engineering outcomes being assumed and implied by a decarbonisation of the world economy by 2050, and even a simplistic attempt to undertake a cost-benefit analysis of the decarbonisation project as far as engineering and technology will make a difference. The scale of the investment for the unknowability of the measureable outcomes implied by ‘solving the climate change problem’ represents hubris of the grandest order.

The opportunity costs dwarf any possible outcomes. If one then goes back into the ‘post-modern science’ from which the imperative to decarbonise originates, several cans of worms are waiting. I fear that when this whole enterprise collapses, as certainly as the tulip bubble evaporated in 1637, there will be a backlash against trust in science that will herald a dark age in which scientists are routinely regarded as untrustworthy shamans. My concern is that the integrity of science is under great threat and that my own subject, engineering, will get caught in the backlash, even though engineers have been among the most vociferous critics of the projects of imminent global catastrophe caused by humans. It is the human desires for comfort, secure and variable food, health, education, mobility, communications, defence and other fruits of the industrial revolution that lead to the scale of human emissions of carbon dioxide, and only a deep and dramatic curtailment of these desires by everyone, but especially those living in the developed countries, will reduce carbon emissions in the next 30 years.

Michael Hart, who has spent the last decade working on this book, has produced a scholarly and accessible analysis of this saga. The first third of the book talks about the nature of science and current pathologies in the practice of science that would have Newton, Einstein and even Feynman spinning in their graves. There is a core of robust but uncertain science undertaken by humble and true scientists, but this is overwhelmed by second rate and rampant speculation passed off as gospel: the humble and true do not protest against the accretions, and their silence is held against them. The science of climate change is not settled insofar as it is used to inform policy, with wide and intrinsic uncertainties not noticeably narrowing over the last 25 years, and with mainstream predictions of global warming running 2-3 times faster than the real-world data over that period. How are we to trust the long term predictions if the short term ones are so much at odds with reality?

The second part of the book deals with the politicisation of the science, and especially the studies of future impacts and possible measures by way of mitigation and adaptation under the aegis of the United Nations. This is where we see evidence of serious malpractice in continuous post-hoc modification of historical data, exaggeration of claims, the collusion of the premier journals and the reports of the academies that report upper extremes as expectations by the simple expedient of  repeating the extremes without qualification, and sedulously avoiding any mention of the proven upsides of the last century of global warming. One chapter entitled ‘Baptists, Bootleggers and Opportunists’ draws some interesting comparisons of the contemporary climate change movement (for that is what it is) with the temperance movement a century ago.

The titles of the last two chapters speak for themselves: ‘Rhetoric vs Reality’ and ‘Immorality Pretending to Virtue’.

This book should leave any dispassionate reader deeply disturbed. It should be required reading for people in policy and politics who deal with these matters. No thought leader should be ignorant of the contents.

How will humanity extricate itself? One can hope that the accumulation of failed predictions over the next two decades will burst the bubble. The world academies cannot be asked to sit in judgment on the misconduct, as they will be in the dock. The UN is also hopelessly compromised. Perhaps this might be the subject of a follow-on study?

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Renewable Energy Cost Explosion: €25,000 Euros For Each German Family Of Four

The Institute for Competition Economics at the University of Dusseldorf has calculated the total cost of Germany’s Green Energy Transition. The result: By 2025, an estimated €520 billion euros will be spent. A family of four will pay more than 25,000 euros for the Energiewende.

Seldom was a German environment minister more ridiculed and mocked than Peter Altmaier (CDU): Three years ago, the current Chancellery Minister warned that the cost of the Energiewende could, if nothing were done, “cost the country around one trillion euros by the 2030.”

Major magazines and weekly newspapers from Wirtschaftswoche to Die Zeit immediately snapped that the environment minister must have got it wrong. “Don’t scare the living daylights out of people with horror figures,” Baden-Württemberg’s Prime Minister and Green Party star Winfried Kretschmann demanded.

Perhaps the time has come to rehabilitate Peter Altmaier. That’s because the Institute for Competition Economics (DICE) at the University of Dusseldorf has calculated the direct and indirect total cost of the energy transition up to 2015 and estimated the additional cost by 2025. The result shows that the one trillion Euro threshold might be reached earlier than even Altmaier had believed.

According to the institute’s calculations, the Energy Transition has already cost some €150 billion euros for the period 2000-2015. “For the years 2000 to 2025 it is estimated that some €520 billion euros (nominal, including network expansion costs) will be spent for the transformation of power generation.” Based on the 150 billion euros already spent, an additional 370 billion euros will be spent in the coming decade.

“Per capita, from newborns to the elderly, this amounts in total of more than €6300 euros, which accumulates in the period from 2000 to the end of the year 2025″, says DICE director Justus Haucap: “A family of four thus pays over €25,000 euros, directly and indirectly, for the Energiewende.” The bulk of the cost is not incurred yet, but awaits the consumer in coming years,” said Haucap:” In the next ten years it will be 18,000 euros for a family of four.”

By comparison, 40 percent of German households have net assets of less than €27,000 euros according to figures by the Deutsche Bundesbank.

The Institute carried out the calculations on behalf of the Initiative New Social Market Economy (INSM). The institute is funded by employers associations and campaigns for less government regulation and a social market economy. In the past few years the institute has called for the promotion of renewable energies to be more aligned along market principles.

The study is unlikely to be a report that panders to the client: For four years, competition economist Haucap was chairman of the Federal President German Monopolies Commission appointed by the German President and is co-editor of numerous international economics journals.

In addition, the prognosis on the future cost of renewable energy subsidies are based on data from the Öko-Instituts and therefore from an institution that, says Haucap, “is not suspected of exaggerating the costs of this energy revolution”.
Biggest cost: the Renewable Energy Levy (EEG)

According to the study, most of the direct cost of the energy transition are due to the EEG surcharge to subsidise green electricity production and the so-called cogeneration levy to subsidise combined electricity-heat (CHP) producers.

The EEG surcharge has already cost €125 billion euros by the end of last year. By 2025 this figure is expected to rise to 408 billion euros due to the rapidly growing number of renewable energy projects. Including the CHP allocation this will rise to €425 billion euros.

On top of that there are additional indirect costs of the energy transition. The DICE Institute expects the cost for expanding network transmission and distribution to be around €56 billion euros, plus costs for the offshore liability levy to protect offshore wind power, as well as the cost of feed-in management, “Re-Dispatch” and reserve capacity.

Finally, the Institute also includes low-interest loans from the KfW banking group, research expenses and the impairment of conventional power plants as well as the negative electricity prices to the overall costs. All in all, the total cost of Germany’s energy transition amounts to just over €520 billion euros of which 80% is due to the Renewable Energy Surcharge (EEG).

Assertions that the energy transition also has cost-saving effects for consumers are rejected by Haucap. Representatives of the renewable energy industry often argue that the expansion of renewables had led to falling electricity prices on the wholesale market; they also claim that thanks to renewables there are lower import costs for fuels such as coal, gas and uranium.

According Haucap, however, these price effects have already been taken into account in the calculations. The report is based on the EEG’s pure differential costs that are the direct result of wholesale prices. Therefore, one should “not deduct twice” these price-reducing effects.

The energy transition is “not only a problem for convinced social marketeers like us,” said Hubertus Pellengahr, CEO of the Initiative New Social Market Economy: “The reason has twelve digits and a currency symbol. €520 billion euros.”

The energy transition “is out of control and will remain out of control”, Pellengahr said, pointing to the continued rise in the Renewable Energy Surcharge (EEG) in coming years. “At the end of the day, this chaos is being pay for by the energy consumers.”
Extremely poor cost-benefit ratio

On Friday, the Federal Network Agency will publish the official amount of the renewable energy levy every energy consumer will have to pay next year to subsidise green energy producers. First estimates suggest an increase from 6.35 cents to 7.1 cents per kilowatt hour. “This would represent approximately a doubling of the cost in five years,” said Pellengahr.

Back in 2003 the then Federal Environment Minister Jürgen Trittin (Green Party) had assured Germans that the energy transition would cost consumers “no more than a scoop of ice cream per month free.” Since then the Renewable Energy Levy (EEG) has risen seventeen-fold.

DICE-director and study author Haucap stressed that the 520 billion euro cost was far from over-all. That’s because the sum only refers to the period up to 2025 and the only covers the electricity sector. In the meantime, “sector coupling” has become the official goal of German energy policy and thus the decarbonisation of transport, the heating sector and agriculture.

“After 2025, the energy transition won’t be cost free” Haucap said. In fact, the current policy’s cost-benefit ratio is extremely poor: Germany’s CO2 emissions today are the same as in 2009. Thus, Germany’s energy transition policy has “saved zero tons of CO2 – for a lot of money.”
More market economy in climate protection

Pellengahr and Haucap argued for a future climate policy based on market instruments. In their view, the best option would be strengthening of the EU’s emissions trading scheme. The second best option would be the introduction of a quota model along the Swedish model. Utilities would be required to deliver a certain proportion of renewable energy. This would create a price-lowering competition between different types of renewable energy.

The Federal Association of Renewable Energies (BEE) said that Haucap’s calculations of the renewable energy surcharge “is not suitable as a cost indicator for the energy transition.” Haucap’s proposed quota system would also be “significantly more expensive than the EEG.”

Meanwhile, the Federal Association of New Energy Suppliers (bne) has presented a proposal according to which the Renewable Energy Surcharge should in future be extended to the use of fossil fuels. If, in future, green energy levies would also have to be paid for the consumption of natural gas, oil, petrol and diesel, the Renewables Energy Surcharge on electricity could be almost halved. Moreover, it would offer incentives for carbon-free heaters and electric cars, enhancing the planned “sector coupling” of Germany’s energy revolution.

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Vermont Wind Project Needs Support, So Company Offers to Pay Voters

And even the NYT is perturbed

To many residents in this tiny town in southern Vermont, the last-minute offer of cash was a blatant attempt to buy their votes.

To the developer that offered the money, it was simply a sign of how attentively the company had been listening to voters’ concerns.

The company, Iberdrola Renewables, a Spanish energy developer, wants to build Vermont’s largest wind project on a private forest tract that spans Windham and the adjacent town of Grafton. The project would consist of 24 turbines, each nearly 500 feet tall, and generate 82.8 megawatts of power, enough to light 42,000 homes for a year if the wind kept blowing, though the houses could be in Connecticut or Massachusetts.

Residents of the two towns will vote Nov. 8 on whether to approve the project, which has pitted neighbor against neighbor. No one knows which way the vote will go.

That same day, residents statewide will be voting for governor. Wind development has become an issue in that race, which The Cook Political Report rates a tossup, and sentiment here could be decisive in the outcome.

Facing the possibility that voters here may reject the proposal, putting a damper on large-scale wind development in Vermont, Iberdrola last week put cash on the table for individual voters.

Windham residents at an informational meeting hosted last week by Iberdrola, an energy company that wants to put a wind farm there. Credit Nathaniel Brooks for The New York Times
Many residents called the offer an attempt at undue influence, if not an outright bribe. But after a review, the state attorney general’s office said that the offer did not appear to violate state law.

Still, the individual payments — a total of $565,000 a year to 815 registered voters in both towns, or $14.1 million over 25 years — on top of millions more to the towns, suggest how much is at stake for the company. Iberdrola has been trying to persuade voters here for more than four years to approve the project, in a state that is actively seeking clean-energy development.

Vermont’s energy goals are among the most ambitious in the country: to derive 90 percent of its power from renewable sources by 2050.

Gov. Peter Shumlin, a Democrat who is not seeking re-election after nearly six years in office, has been the state’s chief proponent of clean energy.

“There’s nothing I’m more proud of than my legacy of having helped to get Vermont off of oil and coal and moved us more aggressively than any other state in the nation to renewables,” he said.

The state has 20 times as much wind power as it had when he took office and 11 times the number of solar panels. Electricity rates in Vermont have dropped while soaring in the rest of New England.

Critics of commercial wind power consider themselves every bit as environmentally conscious as the governor. They say he is doing more harm than good by promoting developments on the state’s ridgelines, among Vermont’s most important assets, where turbines, roadways and infrastructure are destroying habitats, increasing flood risks and scarring the landscape much the way mountaintop mining has scarred West Virginia. They also complain about noise, lower property values and blighted views.

Critics are appalled that Mr. Shumlin is backing another Iberdrola project, a 15-turbine development under construction on two ridgelines in the Green Mountain National Forest that would be the first commercial wind project in a national forest.

All of this development, they say, is doing little to stave off climate change. “These handful of turbines won’t do anything to offset the documented scampering increase in the mining and use of coal in India and China,” said Frank Seawright, the chairman of the Windham Selectboard and an opponent of the project.

Mr. Shumlin counters by saying that climate change is easily the most important issue facing the planet and that everyone has a responsibility to curb it. While he says he would never favor turbines on Vermont’s most iconic mountains, naming Mansfield and Camel’s Hump, he adds that they have to go on ridgelines because that is where the wind is.

The state’s environmental groups are with him. Paul Burns, the executive director of the Vermont Public Interest Research Group, said that a vote against the wind project here “would demonstrate an unwillingness to be part of a solution to what is recognized as an incredibly serious problem.”

Vermont’s battle over wind has been brewing for years, and is playing a role in the race to succeed Mr. Shumlin. Phil Scott, the Republican nominee, who opposes further industrial wind development, faces Sue Minter, the Democratic nominee, who is backed by the wind industry and favors it. The issue was a factor in her winning the Democratic nomination.

Statewide support for wind turbines has been relatively high, but appears to have ebbed in recent years, according to polling by Castleton University, dropping to 56 percent this year from 69 percent in 2013.

Windham and Grafton generally vote Democratic, but most lawn signs here proclaim support for Mr. Scott and are paired with signs against the wind turbines.

“A lot of Democrats in this room will be voting for a Republican governor for the first time,” Sally Hoover, 72, a retired accountant in Windham, said last week as Iberdrola hosted a meeting, where residents first learned of the cash offer.

At the meeting, which drew more than 100 residents, the developer shared its new plan. It reduced the number of turbines to 24 from 28 and increased the money paid to Windham to $1 million from $715,000 a year for the 25 years. The payments would cut property taxes in half and provide $150,000 a year for charities, fire departments and educational scholarships.

The company said it would also set aside $350,000 each year for direct payments to Windham’s 311 registered voters — $1,125 apiece annually, or $28,135 over 25 years, which a voter could accept or not.

In Grafton, the company set aside $215,000 for voter payments. The town’s 504 registered voters would each receive $427 a year, or $10,665 over 25 years. (Windham would have 16 turbines and Grafton eight.)

Asked if the company was trying to buy votes, a spokesman, Paul Copleman, said that Iberdrola was merely responding to what residents had said they would need to win approval, and that the developer would abide by the result.

In an email later, he added, “Our current proposal is based on feedback from community members who are frustrated that the tax relief from the project would give a larger break to those with more expensive properties.”

Kathy Scott, 74, a retired bookkeeper and one of the Windham residents who negotiated the package, said residents, not the company, came up with the idea of payments.

She said her group saw them as a way to “level the playing field” with second-home owners, many of whose homes have high assessments and who would benefit more from the tax cuts. (Although second-home owners pay 60 percent of the town’s taxes, they cannot vote here, a sore point for them.)

Opponents were outraged at the payments, perceiving them as an attempt to buy votes, and complained to state officials.

But Michael O. Duane, senior assistant attorney general, said the payments did not violate state law. The proposal “doesn’t say that the funds go only to those people who signed a sworn statement that they had voted for it,” he said.

Still, the payment proposal has left a sour taste. As The Rutland Herald put it in an editorial on Sunday, “The naked offer of money to individual citizens may be even more corrosive to the civic life of the town than the potential environmental effects of the wind turbines.”

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