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Report Gives ‘Hard Facts’ on American Energy

In a national energy debate that lacks consensus about the best way forward, a new report seeks to create a factual platform for policy makers and the public. Recently, the Institute for Energy Research (IER) published Hard Facts: An Energy Primer, a 73-page report that defines key energy terms, presents basic facts about energy supply and demand, and clarifies commonly misunderstood information on topics such as emissions from the energy sector.

“Hard Facts is a report with great explanatory power for anyone interested in the future of energy in America, mainly because it provides a baseline of essential knowledge about where we’ve come from and where we are,” explains PACE Executive Lance Brown. “We believe that if policy makers use accurate data to decide our energy future, the choices could not be more clear.”

For example, the report points out that while coal-fired generation of electricity has increased by more than 180% since 1970, the so-called six “criteria pollutants” identified by the Environmental Protection Agency have fallen by 63%. Moreover, American GDP has increased by 204% during that time period. Taken collectively, the statistics shatter the common narrative that using America’s native fossil energy sources and creating economic growth comes at the cost of dirtier air. That notion is simply not supported by fact.

The report also creates context for American energy policy by pointing out that while CO2 emissions from the U.S. have actually fallen in the last decade, China has increased its output of CO2 by more than 167% during the same time period, becoming by far the biggest global contributor of greenhouse gases. This is likely to be news to members of the public who are often told that the U.S. is the world’s greatest climate offender.

“The environmental industry would have us believe that America must trade traditional sources of power for new ones, or else accept dirty air and water. That ‘going green’ is the only way to have both economic growth and environmental gains,” says Brown. “The irony is that the very system they rail against is the one that has been delivering on their core vision for the past forty years, all while keeping power prices affordable and energy supplies reliable.”

Click Here to Download the Full Report

Utility MACT Takes Effect

The most expensive energy regulation in the history of the United States quietly took effect on April 16^th, as the Environmental Protection Agency’s Utility MACT rule, formally known as Mercury and Air Toxics Standards began its implementation phase. The formal implementation of Utility MACT starts the clock on a three-year compliance period mandated under the Clean Air Act.

Utility MACT will affect approximately 1,400 units at almost 600 power plants nationwide, including about 1,100 coal-fired units and some 300 that use oil. These units will be required to install technology to reduce emissions of mercury and other substances.

One of the EPA’s most unpopular rules, Utility MACT last year drew a legal challenge from attorneys general of twenty-five states and one territory (Guam), who argued that the rule’s compliance timelines were too short and that the rule could significantly harm the affordability and reliability of American power. Prior to the April 16^th implementation date for Utility MACT, a number of new groups filed suit against the EPA to challenge the rule. These groups include the Utility Air Regulatory Group (UARG), Colorado’s Tri-State Generation and Transmission Association, and the American Public Power Association (APPA), according to a report by POWER Magazine.

Those affected by the rule are not the only ones upset. Late last month, a contingent of fourteen members of the House Energy & Commerce Committee sent a letter to the White House questioning the EPA’s refusal to answer the committee’s concerns over the cost of Utility MACT. Specifically, the members believe that the EPA is calculating only a fraction of the costs that the regulation poses.

“While EPA moves ahead with what could ultimately be the costliest energy regulation in American history, it is good to see that a number of groups and elected leaders continue to ask important questions about the cost and total impact of Utility MACT,” said PACE Executive Director Lance Brown.

PACE Blasts EPA Politics in Houston Chronicle

The Houston Chronicle yesterday published an opinion piece from PACE entitled “Time for the EPA to Stop Putting Politics Before Facts.” An excerpt from that piece appears below.

It’s not too often that a government agency compares its own tactics to that of the ancient Romans – especially when it comes to the practice of crucifying several residents of a village in order to gain control over its entire population. Yet that is exactly how Environmental Protection Agency Regional Administrator Al Armendariz described his agency’s strategy of targeting oil and gas producers.

Armendariz, who resigned Monday, was the head of the Dallas-based region 6 offices, which is in charge of EPA oversight in Texas and surrounding states. In a discussion two years ago with colleagues that recently surfaced, Armendariz said, “The Romans used to conquer little villages in the Mediterranean. They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they would crucify them. And then you know that town was really easy to manage for the next few years.”

Armendariz’s rhetoric is not only shocking, it clearly validates what the EPA’s critics have been saying all along about the agency’s attitude toward energy companies.

In fact, in 2009 Armendariz told his colleagues to “find people who are not compliant with the law and you hit them as hard as you can and you make examples out of them.”

It’s time for the agency to stop invoking strategies of the Roman Empire and start working on policies that are appropriate for the 21st century.

Click here to read the full piece in the Houston Chronicle.

Energy & Commerce Leaders Press Administration for Utility MACT Costs

According to a recent press release from leaders of the House Energy & Commerce Committee, the Obama Administration has yet to respond to requests for an official cost estimate for the Environmental Protection Agency’s new Utility MACT rule. Many, including PACE, have estimated the new rule to be the most expensive rule ever for the purpose of limiting emissions from the nation’s power sector.

On January 24^th of this year, fourteen members of the House Energy & Commerce led by Rep. Fred Upton (MI) sent a letter to EPA Administrator Lisa Jackson asking the agency to calculate the total cost of Utility MACT, as EPA’s initial project included “only a share of those costs assigned to three select years from costs that are amortized over 30 to 40 years.” Receiving no reply to their request, on February 22^nd, the same authors of the initial letter sent a follow-up letter to White House Chief of Staff Jacob Lew asking the president to force EPA to provide answers to their committee.

The House Energy & Commerce is not the only committee that has shown interest in the potential effects of Utility MACT. In December of 2011, House Oversight Committee Chairman Rep. Darrell Issa (CA) demanded an EPA review of the Utility MACT rule’s impact on grid reliability.

Having received no response to date from the Administration, Rep. Upton and others on his committee last week sent yet another letter on the issue, again to Mr. Lew, expressing their concern over the potential high costs of the Utility MACT rule. The letter also highlights the lack of response from EPA and the White House on the question of the rule’s true cost.

“A cost estimate is critical not only for understanding the actual cost of the Utility MACT rule, but also for understanding the cumulative impact of EPA’s full suite of recent and pending regulations affecting the electricity sector,” the letter states. “These regulations include the Cross-State Air Pollution Rule finalized last year as well as other major power sector regulations that EPA has proposed and that will directly regulate existing power plants.”

PACE Visits With Tennessee Valley Leaders

What energy challenges currently face the Tennessee Valley and how can lawmakers join in the national conversation on energy policy? Those were among the topics discussed yesterday in a presentation by PACE to members of the Tennessee Valley Caucus of the Alabama Legislature.

“Although much of our nation’s energy policy is being made by Congress and by regulatory agencies such as EPA, it is important that state lawmakers are aware and engaged in the dialogue on energy policy,” PACE Executive Lance Brown told the group. “These policies and regulations have a tremendous impact on families and businesses in the Tennessee Valley.”

PACE discussed current regulatory proposals such as Utility MACT, an EPA regulation that could affect coal-fired power plants across the nation, including those that serve north Alabama. Brown pointed out that the potential of accelerated closures of coal-fired plants caused by Utility MACT could mean that power providers in the Valley are forced to turn to other energy sources to replace the lost capacity, at a risk of higher costs to consumers. National studies have found that Utility MACT could shutter as much as 50,000 megawatts of capacity and cost as much as $300 billion nationwide.

PACE also discussed other EPA regulations such as the Cross-State Air Pollution Rule (CSAPR), Greenhouse Gas (GHG) Regulations for Utilities, and regulation of coal ash as hazardous waste. Among EPA’s proposal for regulating coal ash is to allow states the authority to determine how to best handle the substance, which is a natural byproduct of the coal combustion process. PACE supports delegating regulatory power over coal ash to the states, as the alternative – treating coal ash as hazardous waste – presents enormous logistical and financial challenges to the power sector.

Finally, PACE updated the caucus on current developments at TVA’s Watts Bar Nuclear Unit 2, which is currently under construction. When complete, the new unit will provide 1,100 megawatts of nameplate capacity to the Valley. The TVA Board is expected to meet today to discuss the status of the project, at which time PACE will report on the details.

EPA Issues New Fracking Rules

Yesterday, April 18^th, the Environmental Protection Agency (EPA) issued new regulations to govern the process of hydraulic fracturing, also known as fracking, that allows enhanced recovery of oil and natural gas. According to EPA, the rules represent the “first federal air standards for natural gas wells that are hydraulically fractured.” The official EPA rule signed by Administrator Lisa Jackson is available here.

EPA refers to the new rules as “Oil and Gas Air Pollution Standards,” as the regulations aim to reduce emissions of so-called volatile organic compounds by almost 25% across the oil and gas industry and by 95% specifically from wells that use fracking techniques. In total, EPA estimates the new rule to result in the annual reduction of 190,000 to 290,000 tons of volatile organic compounds, 12,000 to 20,000 tons of air toxics, and between 1 million and 1.7 million short tons of methane. According to analysis by the Wall Street Journal, the rules do not address drinking-water quality, an issue raised by environmentalists in connection with hydraulic fracturing.

Unlike a proposal made by the agency last July that would have forced oil and gas wells to comply with a new rule immediately, EPA’s rule phases in the new requirements, allowing wells to attain compliance by January 2015. Although groups such as the American Petroleum Institute have estimated that the additional equipment needed to comply with EPA’s emission reduction goals could cost around $180,000 per well, the added flexibility under the new rule was considered a constructive development by some in the industry.

“The industry has led efforts to reduce emissions by developing new technologies that were adopted in the rule. EPA has made some improvements in the rules that allow our companies to continue reducing emissions while producing the oil and natural gas our country needs,” said American Petroleum Institute Director of Regulatory and Scientific Affairs Howard Feldman in a written statement. “This is a large and complicated rulemaking for an industry so critical to the economy, and we need to thoroughly review the final rule to fully understand its impacts.”

In addition to cost concerns cited by the oil and gas industry, there are significant logistical concerns about meeting EPA’s emission reduction deadlines. For example, while about 25,000 natural oil and gas wells are drilled each year, the American Petroleum Institute estimates that the equipment in circulation required to comply with EPA’s new rule would only allow 3,000 to 4,000 wells to come online. Over one million wells are producing oil and natural gas in the United States, with that number expected to grow.

Green Jobs Slow to Sprout

While energy generation from renewable sources like solar and wind power has nearly doubled since 2008 and the nation has spent billions on energy efficiency and direct subsidy of power projects, evidence is mounting that the millions of so-called “green jobs” promised from such efforts has been little more than a mirage. According to a report from Andy Sullivan of Reuters, the administration’s spending on green efforts has yielded far fewer jobs than expected.

In his April 13^th piece addressing green job results, Sullivan points to the president’s recent appearance at a solar farm in Boulder City, Nevada, as an exemplar of politically attractive projects that are not exactly engines of job growth.

“Stretching row upon row into the desert, the Copper Mountain Solar Project not far from Las Vegas provided an impressive backdrop for the president. Built on public land, the facility is the largest of its kind in the United States,” writes Sullivan. “Its 1 million solar panels provide enough energy to power 17,000 homes. And it employs just 10 people.”

The federal stimulus package included $90 billion for clean energy efforts, a significant portion of which was spent on home retrofits that promote efficient energy use and on subsidies for energy ventures in the renewable sector such as the now-infamous Solyndra. Some are now starting to discover that the administration’s use of renewable energy spending as a supposed job engine was rife with problems, both economic and political, causing many to wonder if these public dollars would not have been more wisely spent in more traditional job-creating sectors.

“From my perspective it makes more sense for us to arm our clients with the basic skills, rather than saying, ‘By golly, you will do something in the green economy or you won’t work,’” said Janet Blumen, who was interviewed for Sullivan’s report. She is the head of the Foundation for an Independent Tomorrow, a Las Vegas job-training organization that has seen positions in trucking and accounting go unfilled because training money had been earmarked for green efforts.

“Four years ago on the campaign trail, the public was told that this massive public investment would create as many as five million jobs within a decade. Now the White House estimate is a little more than 200,000 jobs,” said PACE Executive Director Lance Brown. “Despite what some claim, industries like wind power are shedding jobs while the oil and gas industry is putting people to work. Hopefully Americans are paying attention.”

Green Groups Push for Coal Ash Rules

Unhappy with the speed of EPA regulation of coal combustion by-products, a number of environmental organizations late last week filed a lawsuit to force EPA to finalize regulation of coal ash. Nearly a dozen groups were party to the lawsuit, including the Sierra Club, the Southern Alliance for Clean Energy, and the Environmental Integrity Project. The lawsuit comes just days after the EPA announced plans to regulate greenhouse gas emissions from the energy sector, which some believe will prevent the construction of new coal-fired power generation.

In its lawsuit, the groups claim that EPA is violating the Resource Conservation and Recovery Act (RCRA) by not including coal ash among the substances it regulates. The organizations are demanding that EPA regulate coal ash under Subtitle C of the RCRA, the title that deals with hazardous waste. PACE supports an alternative option being explored by EPA that would regulate coal ash under Subtitle D of the RCRA, allowing states to adopt rules at their own discretion.

“It is no surprise that groups with a stated mission of shutting down our nation’s use of coal for electricity would file such a lawsuit, because they understand that coal ash regulations present huge financial and logistical burdens for utilities,” explains PACE Executive Director Lance Brown. “The problem is these organizations have no real solutions for keeping the lights on and power bills affordable.”

PACE has written extensively about coal ash regulation, citing a study published in June 2011 that found EPA’s regulatory proposals on coal ash could cause as many as 316,000 job losses and cost $110 billion over a 20-year period. PACE’s recent mini-documentary, Unplugged, also covers the heavy toll that EPA regulation of coal ash as a hazardous waste could pose, citing concerns from energy insiders.

“The public needs to understand that half of the 130 million tons of coal ash being generated each year ends up in places like our roads and our carpet. The rest is being stored safely under close supervision,” says Brown. “There is a way to handle coal ash that protects the public while not taking almost half of America’s power generation off the grid. Let’s hope the courts and policymakers have the wisdom to acknowledge that fact.”

Mississippi Conference Spurs Energy Discussion

What challenges and opportunities does Mississippi’s energy sector face in its mission to provide reliable, affordable power in the coming years? That was the topic of discussion on April 4th in Starkville at a conference co-hosted by PACE, the Mississippi Chapter of the Air & Waste Management Association and Mississippi State University’s Bagley College of Engineering. The conference was attended by students, faculty, environmental professionals, regulators with the Mississippi Department of Environmental Quality (MDEQ), and others interested in the crafting of U.S. energy policy.

Among the speakers was Chuck Barlow, Associate General Counsel for Environment at Entergy and former General Counsel for MDEQ, who spoke about regulatory challenges that are shaping the landscape of power generation. Barlow highlighted recent EPA rules that are resulting in the closure of coal-fired generation and spoke to the effect of low natural gas prices on the addition of new nuclear capacity. Glenn McCullough, Jr., former Chairman of TVA and current head of Advance Mississippi, also spoke to the need for smart U.S. energy policy that uses American ingenuity and native resources to achieve both environmental and economic goals.

“Right here in Mississippi, we are building an integrated gasification combined cycle (IGCC) plant that will use state-of-the-art technology and native lignite coal to create one of the cleanest fossil fuel projects in the world today,” said McCullough. “Not only will this plant have very low emissions, but 65% of the carbon dioxide will be captured and used in enhanced oil recovery. That is a great proposition for the people of our state.”

Also speaking was former EPA Region 4 Administrator Jimmy Palmer, Jr., who formerly served as chief of MDEQ for more than a decade. Palmer spoke about the ways that regulatory policy in the U.S. has changed in past years in terms of both substance and process. The conference also featured a viewing of the trailer of PACE’s mini-documentary, Unplugged, and a discussion by Executive Director Lance Brown of the need to insert power customers into energy policy debates.

Coal, Nuclear Key Parts of Chinese Energy Vision

In a recent presentation to China’s legislature, Chinese Premier Wen Jiabao offered a glimpse into the nation’s energy future as it grapples with growing power demands. In short, while coal will remain a staple of the Chinese electricity portfolio in the short term, the nation is aggressively adding nuclear power capacity. The trend keeps with China’s 12^th Five-Year Plan, released last year, that announced a goal of reducing the nation’s carbon intensity by 17% by 2015.

Coal remains the primary source of power production in China, representing almost 80% of all electricity produced. With power demand increasing rapidly – an increase of more than 12% in just the past year – the Chinese are building coal-fired power plants at a breakneck rate. In fact, an article last year from The Australian found that for every coal-fired shut down by China since 2008, two more have been built.

Premier Wen Jiabao’s recent report to the Chinese Legislature suggests that the nation’s confidence in coal as a reliable and affordable energy resource will not be seriously challenged in the near future. There will be upgrades to the Chinese coal-fired fleet, however, as evidenced by a report from POWER Magazine that the Chinese government has developed a “clean thermal power program” that will cost the nation’s power industry 260 billion yuan ($41.2 billion) by 2015.

The Premier’s report also included news of increased investments in nuclear power capacity, a move that has been in doubt since the Fukushima incident in Japan. According to a report from China Daily, more than 70 nuclear power reactors will be in operation in 2020, accounting for 5% of the country’s total capacity. In 2050, the total capacity of China’s nuclear power reactors will reach 400,000 MW.

“While American politicians debate over whether all of the above is the right approach to domestic energy policy, China’s long-term energy plan seems to be more of the above,” explains PACE Executive Director Lance Brown. “Their national leaders seem to recognize, as ours should, that the future we want will require not only smarter energy, but more energy.”

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