Wednesday, June 29, 2022

West Virginia v. EPA could overturn 2009 carbon endangerment finding that is strangling America’s electricity grid

One more Supreme Court case to keep your eye on this session — especially since the Court now appears willing to strike down prior precedents — is the imminent ruling on West Virginia v. EPA that, if successful, would overturn federal regulations on carbon emissions by power plants.

It also stands to potentially overturn the Court’s 2007 decision, Massachusetts v. EPA, a narrow 5-4 ruling by then-Justice Anthony Kennedy that had opened the door for federal regulation in this area in the first place by stating carbon dioxide could be regulated under the terms of the Clean Air Act even though the law never contemplated doing so.

This is what enabled the 2009 carbon endangerment finding by the Environmental Protection Agency (EPA) during the Obama administration, and the EPA rules on new and existing power plants, defining carbon dioxide as a harmful pollutant under the terms of the Clean Air Act, and setting forth a framework to incentivize coal plants to either be retrofitted to be natural gas plants or else be shut down.

In terms of moving the needle, the policy was a “success” in reducing coal-based electricity. In 2007, coal-generated electricity made up 49 percent of the total U.S. grid, while natural gas was just 21 percent, according to the Energy Information Administration. In 2021, natural gas now makes up 38.3 percent of the grid, and coal is down to 21 percent.

In the meantime, we have rising demand for electricity, and yet the U.S. is not producing a single kilowatt hour (kWh) more than it was 15 years ago. Despite the U.S. population growing by 30 million to more than 331 million from 2007 to 2021, overall electricity generation in the U.S. has dropped from 4.005 trillion kWh in 2007 to 3.96 trillion kWh in 2021.

As a result, the Consumer Price Index for electricity has increased by 29 percent since 2007, according to data compiled by the Bureau of Labor Statistics.

In short, we have a self-imposed national electricity shortage, in large part caused by the Supreme Court — and they might be about to undo it.

On the other hand, the Court could always go the other way on the issue. After all, in 1983, the Supreme Court unanimously decided in Motor Vehicle Manufacturers Association v. State Farm Mutual that in rescinding a regulation under the Administrative Procedures Act, an agency must provide a reasoned analysis, “for the change beyond that which may be required when an agency does not act in the first instance.”

This leaves every rescission subject to judicial review, where you have to prove not only that rescinding the regulation in question is rational based on the statutory scheme, but prove that enacting it was irrational to begin with. That appears to be one reason why the Trump administration EPA did not go further than it did in watering down the Obama Clean Power Plan regulations.

That is how a ruling allowing carbon emissions to be regulated eventually becomes a precedent requiring carbon emissions to be regulated.

Again, it’s a situation where because of Supreme Court precedents, Congress and presidential administrations appear to be hampered from responding effectively to national crises like energy shortages. It is therefore undemocratic and ultimately prevents political questions from being answered by the elected branches the way their supposed to.

The worst possible outcome would be if the Court once again accepts the central premise that carbon dioxide is a harmful pollutant that must be addressed under the Clean Air Act. At that point, there might not be an easy way to stop something like the Green New Deal’s goals of imposing net zero carbon emissions within 10 years on the U.S. economy.

But we’ll see what happens. This could be another big one. Stay tuned.


New MPG Rule Will Exacerbate Existing Car Shortage

In April, the National Highway Traffic Safety Administration (NHTSA) announced the new Corporate Average Fuel Economy (CAFE) standards that automobile manufacturers must adhere to through 2026. Unfortunately, the new rule is likely to lead to a shortage of new gasoline-powered cars in the coming years while massively hiking the price of battery-powered electric vehicles (EV) as well as cars powered by internal combustion engines (ICE).

In 1975, CAFE standards were created by the Energy Policy Conservation Act in response to the oil embargo imposed by the Organization of Arab Petroleum Exporting Countries in 1973. CAFE imposes fines on car and truck manufacturers if they fail to achieve minimum targets for sales-weighted average fuel economy, which is expressed in miles per gallon (mpg).

NHTSA’s new rule requires a massive 40 percent increase in mpg from now to 2026. Fuel efficiency must rise 8 percent in 2024 and 2025 model year automobiles, and 10 percent in 2026 model year automobiles, to a 49-mpg car and truck fleet average. Historically, the most manufacturers have been able to increase mpg year-over-year is about 3 percent. So, surging average mpg by a whopping 10 percent is a tall order.

Adding insult to injury, the Environmental Protection Agency (EPA) has separately set carbon dioxide (CO2) emission limits on automobile fleets. By 2026, cars will have to produce an average of 132 grams of CO2 per mile (g/mile) and light trucks an average of 187 g/mile for a fleet average of 161 g/mile, a 28 percent decrease from 2022. If vehicles do not meet this standard, EPA will not certify them for sale.

The challenge with this ruling is no cars with an internal combustion engine, that is, every automobile that runs on gasoline, currently emit CO2 at this extremely low level. The lowest-emitting car is the 2022 Toyota Prius Eco at 159 g/mile. Trucks like the Ford F-150, Dodge Ram, and the Chevrolet Silverado, the three most popular automobiles in the country in terms of sales, emit 407 to 550 g/mile, depending on engine size.

Meeting these new NHTSA and EPA standards so quickly will require manufacturers to dramatically increase expenditures on research and development, which will increase the price of new ICE-powered vehicles and force manufacturers to build an extensive portfolio of EV models.

Another factor that will exacerbate this shortage is the waiver provided to California to make the Golden State exempt from Section 209 of the Clean Air Act, which prohibits any state from adopting emissions standards more stringent than the federal standard. California’s Advanced Clean Cars Program requires that 35 percent of car sales in the state must be EV sales by 2026, rising to 50 percent of all sales in 2030. What’s more, 16 states and the District of Columbia have opted in to California’s program.

NHTSA, EPA, and California are essentially pushing manufacturers to eliminate ICE-vehicle production in favor of EVs. Naturally, this will accelerate the demand for commodities required to manufacture car batteries, which will increase the cost of EVs. Ford recently announced that due to rising material costs, the Mach E EV costs $25,000 more to manufacture than the equivalent sized gasoline-powered Edge. Nationally, the average price of EVs is currently more than $15,000 higher than the cost of gasoline-powered vehicles, and the gap is widening.

Moreover, we are likely looking at a shortage of ICE-powered vehicles, as there will be few models that meet the new emissions requirements. Vehicle affordability will be made worse with rising interest rates. With a smaller volume of sales, manufacturers will be forced to increase prices on both EVs and gasoline-powered vehicles. Customers priced out of the market will keep their older, less-safe vehicles that have higher emissions and consume more fuel. Of course, the lack of new vehicles will likely intensify the shortage of used vehicles, which has led to soaring prices for used vehicles in recent months.

The law of unintended consequences almost always follows even the best-intentioned law or regulation, and that will certainly be the case here. Few people have any concept of what the total impact of these regulations will be, though we will all certainly find out soon. My advice is simple: prepare to pay a whole lot more for a new car in the coming years, if you’re able to find one.


Gas Drilling Projects Resurrected Around Europe

Besides diversification, saving energy, or pushing for renewables, some countries have opted to expand existing gas drilling sites or exploit unused reserves as the EU prepares to end its dependency on Russian gas.

While the European Commission has shared three main ways to reduce Russian energy dependency – energy savings, renewables and diversification – many countries opted for their methods, including the revival of fossil fuel projects.

Commission President Ursula von der Leyen recently warned EU member states not to backtrack on their long-term drive to cut fossil fuel use as a handful of nations turned to coal following a decision by Russia to limit their gas supplies.

Other countries decided to speed up or expand gas drilling initiatives, and some U-turned on previous decisions against drilling.

One example is the joint Dutch-German North Sea drilling operation. The project has been planned for some time now, but the German state of Lower Saxony government decided against issuing permits. The Dutch Ministry recently announced that Lower Saxony “is now making a different decision because of the war in Ukraine,” and drilling is set to begin in 2024.

Locked Reserves? Change The Law!

The push for the expansion of gas drilling activity is also happening in Italy. The country produces around 3.3 billion cubic metres of gas annually, and the government estimates there are reserves of 70-90 billion cubic metres in Italian subsoil. However, reserves are currently locked by law, and gas cannot be extracted.

In February, in response to the energy crisis and rising energy bills, Italian Prime Minister Mario Draghi’s government started reasoning on the hypothesis of doubling extraction.

The war in Ukraine has accelerated the discussion on the country’s energy strategy to exploit its resources. After Gazprom cut supplies to Italy, Ecological Transition Minister Roberto Cingolani opened up to a review of drilling activity, calling it a “mistake to have gone from 20 percent domestic gas in 2000 to 3-4 percent in 2020.”

Romania is the biggest oil producer among EU member states and also has proven offshore gas reserves. Until April, these reserves have been locked. The governing coalition, however, agreed to change the offshore law and allowed investors to exploit the reserves.

Norway has traditionally been the second most important gas supplier for the EU. After the invasion of Ukraine, Norway vowed to help the EU reduce its dependency on Russian gas.

To replace Russian gas, the Norwegian government authorised an increase in production, which was met with strong disapproval from the left-wing opposition, warning of the lock-in of investments in the fossil fuel projects.

Small Countries, Big Dreams

Plans for gas drilling projects are popping up not only in big countries with a tradition of drilling but also in smaller ones. Slovakia is one of the most gasified countries in the EU, with 5 billion cubic metres consumed annually. A few years ago, a gas deposit was discovered, which could cover about 10 percent of domestic consumption, according to estimates.

In the past, drilling has been strongly opposed by environmentalists who argued that the project was harmful and unnecessary. War has changed that, and the project is back on the table. According to investors, drilling could start in two years if everything goes as planned. Government officials have not ruled the project out.

Albania currently does not consume, produce, or import any gas. It does, however, hold reserves, and the government is pushing for gasification both in production and energy use with several extraction projects due to start as well as LNG floating terminals off the southern coast.

Not All

Despite these initiatives, not all countries chose to exploit their gas reserves. Bulgaria has an estimated 480 billion cubic metres of shale, but current legislation prevents exploitation, and the government has no plans to change the status quo.

France has a significant potential for offshore and on-shore reserves, but as in Bulgaria or Italy, the law prohibits granting new permits. With the notable exception of MP David Habib, who pleads for the reopening of gas fields in Alsace, there is no push to change the situation.


Australia unfairly demononized by Greenies

When Australians eventually reach the Pearly Gates they may, whatever their earthly sins, finally receive some redemption for their efforts to save the world from climate change. After decades of persecution for not doing enough they may at last be recognised for doing more than most.

As the rest of the world suffers collective amnesia, Australia faithfully continues its missionary work to achieve its 2030 and 2050 Paris and Glasgow emission reduction delusions.

While China lifts its annual coal output by 300 million tonnes, (two-thirds Australia’s total production), Australia imposes a virtual moratorium on new mines. State bans, together with native title and environmental opposition, have also largely stopped new coal-seam gas drilling and fracking.

No coal plants are under construction in Australia with the largest, Eraring, due to close seven years early. The existing fleet is ageing and, with the end in sight, it is suffering predictable neglect. At the start of winter, one-quarter of Australia’s coal generation was offline. Not so China. It is building 43 new coal-fired power stations. Nor in Europe, where several countries, together with Britain, are bringing retired coal plants back online and are planning new mines.

Japan, always mindful of its national interest, has stalled its withdrawal from fossil fuels.

But, to Australian critics, none of this matters. Who cares if Australians spend four to five times more per capita on renewable energy than China, the EU, Japan and the United States? Or that Australia’s fossil fuel energy mix for 2020 was 76 per cent compared to China’s 84 per cent, the EU’s, 85 per cent (which includes burning wood), Japan’s 88 per cent and America’s 84 per cent?

Confirming Australia’s pariah status, the latest Climate Change Performance rankings published by advocacy group Germanwatch, rank Australia 59th out of 63 nations on greenhouse gas emissions, renewable energy, energy use and climate policy.

The environment charity, Greenfleet, notes that ‘when it emerged that Australia contributed only 1.3 per cent of total global CO2 emissions, many people were led to believe that as a nation, we were already doing enough’. Not so it cautions. Australia’s coal exports accounted for more than a quarter of the nation’s total exports over the last decade and most of our electricity is still powered by fossil fuels. On that basis, Australia contributed about 3.6 per cent to global emissions.

Moreover, that number doesn’t include emissions from other mineral exports or consider the emissions produced as a result of those exports. By taking these into account, and Australia’s population being around 0.33 per cent of the world’s population, instead of being virtuous, Aussies are among the highest emitters on the planet.

Australian bumbling, we learn, has led to it shunning its closest neighbours’ plea for an end to the coal industry and to contributing to the climate change plight of Pacific Islands nations. This is why the Solomon Islands nation has become a virtual Chinese colony.

As new Foreign Minister, Penny Wong now acknowledges, Australia previously ‘disrespected’ the struggle of Pacific nations as they grappled with the consequences of climate change.

But, what struggle is she referring to? The reality is that in the 30 years since 1990, a period characterised by consistent satellite observation, tropical cyclone activity in the Pacific has been decreasing. Moreover, rather than facing existential threats from rising sea levels, the latest satellite imaging shows 80 per cent of Pacific Islands, are growing or stable.

Prime Minister Anthony Albanese sides with the nation’s critics and hopes some day, ‘Australia will once again be a trusted global partner on climate action’.

Is it intellectual cowardice or crass ignorance which drives Australia’s political class on its suicidal mission? It’s certainly not the science.

At least the leftist Potsdam Institute’s Professor Ottmar Edenhofer has the courage to say out loud what is becoming more obvious by the day. ‘One has to free oneself,’ he says, ‘from the illusion that international climate policy is environmental policy. Instead, climate change policy is about how we redistribute de facto the world’s wealth’.

Assuming he was talking about redistribution from the rich to the poor, the reality is, it’s going the other way. Renewable energy rent-seekers, particularly Big Wind, have colluded with climate activists to bully governments into paying them massive subsidies and to levy imposts on electricity consumers.

Energy expert, Dr Alan Moran, observes ‘government no longer publicises the extent of these, but they come to about $7 billion a year. This gives wind and solar double the price which coal receives and it is this that is driving coal out of the market’.

Until now, the average Australian has felt removed from the complexities of energy and climate change politics. For those who can afford the capital outlay, subsidised roof solar panels have provided an incentive to support renewables. For others, rising electricity prices have been philosophically absorbed, offset, in part, by rising wages and declining interest rates. Most have broadly accepted climate change propaganda and left the esoteric scientific arguments for the elite to sort out.

Russia’s actions in Ukraine have changed all that. The West’s ageing coal fleet and dependence on renewables was always an accident waiting to happen. So when supply shortages hit a world ripe for inflation courtesy of years of reckless fiscal and monetary policies, household budgets were hit hard with the poor suffering most. Many will become jobless and in winter have to choose between heating their homes or buying groceries.

Globally, Australians are among the first to experience this, but its governments stubbornly refuse to change tack. Victorian Premier Daniel Andrews believes, ‘It’s wrong to be doing anything else other than forging ahead’ and, new Energy Minister, Chris Bowen agrees. For him, nuclear power is an expensive ‘joke’. Batteries and band-aids are better and cheaper.

Still, shivering Aussies should take comfort that when their time comes, their fruitless sacrifices to save the planet may at least be acknowledged by St. Peter.




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