Sep
28
2016

EPA Carbon Mandate Gets Day in Court

On Tuesday, opposing sides took to the U.S. Court of Appeals for the District of Columbia Circuit to argue their cases on the merits of the Environmental Protection Agency’s landmark bid to control the emission of carbon dioxide, known as the Clean Power Plan. The U.S. Supreme Court issued a stay against the plan this past February, shortly before the passing of Justice Antonin Scalia.

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The Appeals Court, the second most powerful court in the nation, for nearly seven hours on Tuesday heard arguments related to the plan, which would call for a reduction in carbon dioxide emissions from power plants by 32% from 2005 levels over the next 15 years. Sixteen lawyers represented the administration before the ten judges responsible for deciding the fate of the regulation. For their part, nearly two dozen states have joined with the power generation industry, coal mining companies, and the U.S. Chamber of Commerce to oppose the plan.

The last time the case came before the Appeals Court was in January, when the court, headed by Merrick Garland, later nominated to the Supreme Court by President Obama, refused to block the plan. According to at least one report, a final court decision on the Clean Power Plan may not come until as late as 2018. But with six of the ten judges having been named by Presidents Obama and Clinton, upholding the stay might be an uphill battle.

“This is a huge case,” remarked Judge Brett M. Kavanaugh, explaining that the new rule could “fundamentally” transform the industry. According to a report filed by CNN, Kavanaugh said the administration’s policy is “laudable” but questioned under the separation of powers whether Congress, and not the EPA, had to speak clearly on the issue of regulating carbon dioxide emissions.

Judge Thomas B. Griffith asked, “Why isn’t this debate going on in the floor of the Senate?” rather than before a panel of judges. But Judge Patricia A. Millet reiterated at one point that the Supreme Court “has already said” that the EPA has the authority to regulate in the area.

The questions raised by the judges strike at the heart of the debate over carbon dioxide regulation. Does EPA have the authority to unilaterally transform the energy industry?

The attitude of the judges toward the case appear to have been mixed. One Republican appointee, Thomas Griffith, said the new rule calls for only minor reductions in coal-fired plant emissions. Judge Kavanaugh, called the policy behind the plan “laudable,” adding, “The earth is warming, and humans are contributing.”

But according to CNN, “Kavanaugh also led the questioning of Justice Department lawyers making the case for EPA Administrator Gina McCarthy, who attended the morning session along with a phalanx of agency officials.”

“You’re setting unachievable limits in an effort to drive those (plants) out of business,” he told Justice Department lawyer Eric Hostetler. Unless Congress steps in, Kavanaugh said, “Lots of people are going to lose their jobs, lose their livelihoods.”

“We can’t tell a coal plant, ‘You have to become a solar plant,’” said Peter Keisler, a lawyer representing industry opponents. “EPA has no authority to impose a system like this one, which requires, in order to stay open, that the owner invests in other facilities.”

The appeals court has an important chance to set the record straight about the authority EPA has or doesn’t have. Let’s hope they carefully consider the merits of the case and make a conclusion that honors the law and benefits Americans.

Sep
26
2016

Low Oil Prices to Continue Through 2016

Gas prices are pretty low these days. And according to a recent assessment by a professor at the Missouri University of Science and Technology, they are likely to stay that way.

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A week ago, the average price for a gallon of regular gas was $2.214, down from last year’s mark at that time of $2.365 and 2014’s mark of $3.406. The drop in gas prices has been steep over past years. In fact, compared to September 2008, a gallon of gas today is more than $1.50 cheaper. That means more disposable income in the hands of American consumers and lower overhead for businesses that use fuel.

The reasons for this drop – and likely continued low prices – are multiple. Dr. Joseph Smith, the Wayne and Gayle Laufer Chair of Energy and Director of the Energy Research and Development Center at Missouri S&T, outlines the three main reasons for low gas prices.

The first reason is hydraulic fracturing, or fracking, which has created abundant oil supplies. Even with oil prices varying between $30 and $50 a barrel, or about half of what they once were, the domestic fracking industry has continued to thrive. The lower profit margin for oil has not significantly restrained the appetite for fracking. New technologies, too, have made fracking easier and more productive.

“The fracking industry has remade itself,” Dr. Smith says. “It’s more efficient.”

Smith’s second reason is that “the Saudis are flooding the market.” Understanding that the U.S. momentum in oil production could eat into their market share, Saudi Arabia and OPEC have attempted to suppress production by offering a cheap alternative.

“It was also clear while traveling in these countries that their political stability was closely tied to the oil markets,” Smith says. “The Saudi’s ability to produce oil at a fraction of the cost compared to the cost to produce oil in the U.S. allows them the ability to control market supply, which helps provide political stability to their country.”

Third, demand for oil is not what it used to be. Automobiles are more efficient. Construction is developing nations such as China and India have leveled off, reducing demand. Once thought to drive oil demand to unprecedented new heights, the stagnation in growth worldwide, especially in China and India, has meant lower demand for oil than once thought.

“What has happened since 2011?” Smith says. “We have not seen the significant economic growth in these countries that was expected, which means their demand for energy has not grown at the same rate as was expected. This means the demand for oil has not risen at the rate that was expected.”

Smith’s assessment is that oil prices will hover around $50 a barrel for the remainder of 2016. That is welcome news for the consuming public, which benefits greatly from lower prices at the pump.

Sep
21
2016

UK Approves Hinkley Nuclear Plant

According to a recent report from the Wall Street Journal, the British government has approved the construction of a new nuclear power plant. The plant, located at Hinkley Point in southwest England, will be the first nuclear plant built in the nation since the 1990s. Similar to the U.S., nuclear construction in Britain has slowed significantly in recent decades.

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The new plant at Hinkley Point will cost $23.8 billion and will be largely owned by Électricité de France SA, known commonly as EDF. The utility is partly owned by the French government. The Chinese are also playing a pivotal role in the plant’s construction, with China General Nuclear Power Corporation (CGN) providing about a third of the funding. For its part, CGN announced it was “delighted” with the decision to move forward on the Hinkley Point nuclear facility.

“CGN looks forward to leveraging its 30 years’ experience in nuclear construction and operation and playing an important role in meeting the U.K.’s future energy needs,” the company said.

When operational, the new Hinkley nuclear plant will supply 7% of Britain’s electricity for sixty years. It is also expected to create 26,000 jobs and apprenticeships.

Approving Hinkley wasn’t without significant obstacles. The U.K’s new Prime Minister, Theresa May, had a number of concerns about foreign investment in domestic nuclear plants. She and her government also required additional time to be satisfied with the plant’s security issues. Part of May’s approval included a requirement that the British government could become involved in any potential sale of the controlling stake in the plant. Both the operator and investors in the new nuclear plant viewed the issues raised by Prime Minister May as minor and easily remedied.

“EDF will keep a controlling stake in the project,” company officials said. “We have two thirds of the capital, there could be changes later on, but it’s not on the agenda.”

There were also reports that the French and Chinese will collaborate to receive approval for a Chinese Hualong reactor at Bradwell, near Essex. If built, the new reactor would be the first Chinese-built nuclear reactor in the Western Hemisphere.

“Britain is not really in a position to say no to China now,” explained Kerry Brown, professor of Chinese Studies and Director of the Lau China Institute at King’s College.

For policy makers in the United States, the momentum toward nuclear in Britain should be a sign that nuclear back home deserves more consideration. With tighter rules governing carbon dioxide emission, adding to America’s nuclear fleet is an important part of our energy future.