If the Lights Go Out

Regulators are letting EPA compromise U.S. electric reliability.

Say what you will about Obama Administration regulators, their problem has rarely been a failure to regulate. Which makes the abdication of the Federal Energy Regulatory Commission especially notable—and dangerous for the U.S. power supply.

Last week FERC convened a conference on the wave of new Environmental Protection Agency rules that are designed to force dozens of coal-fired power plants to shut down. The meeting barely fulfilled the commission's legal obligations, but despite warnings from expert after expert, including some of its own, the FERC Commissioners refuse to do anything about this looming threat to electric reliability.

The latest body to sound the EPA alarm is the North American Electric Reliability Corporation (NERC), which last Tuesday released its exhaustive annual 10-year projections. "Environmental regulations are shown to be the number one risk to reliability over the next one to five years," the report explains.

NERC's forecasts are the gold standard for the U.S. power system because they are built from the bottom up, starting with finely grained data from individual plants. NERC has been doing this work since 1967, and since 2005 it has operated under the FERC umbrella as an "electric reliability organization" similar to Finra, the securities regulator with quasi-governmental duties.

The threat is that the EPA is triggering what NERC calls "an unprecedented resource-mix change," with utilities switching to natural gas from coal. For the first time in U.S. history, net coal capacity is in decline. On top of the 38 gigawatts of generation that is already being run below normal levels or slated for early retirement, NERC predicts another 36 to 59 gigawatts will come offline by 2018, depending on the "scope and timing" of EPA demands. That could mean nearly a quarter of all coal-fired capacity.

According to the report, "the nation's power grid will be stressed in ways never before experienced" and reliability depends on building new power plants to cover the losses. But the electric industry has only three years to comply under one EPA regulation known as the utility rule that is meant to target mercury and is due to be finalized soon, while many other destructive rules are in the works.

Replacing power is not like replacing a lost cellphone. There are bottlenecks in permitting, engineering, financing and building a new plant and then tying it to the electricity network. Over this same three-year window, NERC estimates that between 576 and 677 plants will need to be temporarily shut down to install retrofits like scrubbers or baghouses.

All of this has been obvious to anyone paying attention. In its draft utility rule the EPA itself warned that "sources integral to reliable operation" may be forced to shut down, before it sanitized these concessions from the final proposal. Twenty-seven states say their regional reliability is at risk, concerns echoed by FBR Capital, Credit Suisse, Fitch, Bernstein Research and several grid operators. FERC's own Office of Electric Reliability produced an alarming study, before its work was disowned by Chairman Jon Wellinghoff, as we reported in the September 26 editorial "Inside the EPA."

Southern Co., the utility that covers states from Mississippi to Georgia, says the EPA's timeline can't be met "at any cost" and that in its region "reliability cannot be maintained without load shedding"—that is, rationing power to large industrial consumers. American Electric Power, which operates in 11 Midwest states, says that option may be a "last resort" as well. This is the kind of political overhang that harms economic growth.

Keep in mind that the EPA estimates that the benefits to society from the mercury reductions in the utility rule max out at $6.1 million, total, while imposing $11 billion in compliance costs annually. That is a crazy tradeoff even if it didn't endanger the electric grid.

The best option would be to kill the utility rule and put the EPA on probation, but second best is a longer phase-in to give utilities more time to comply. FERC could do some practical good by formally issuing a "215 finding" that the EPA utility rule endangers reliability. Or the White House budget and regulatory office could require the EPA to repropose the rule with more flexibility. Or President Obama could declare that the rule endangers national security. Or Congress could block the rule, though that would take more fortitude than Senate Democrats have shown so far.

None of this is likely to happen because it would interfere with the larger Administration priority to kill as much coal power as rapidly as possible to serve the global warming agenda. But when the brownouts and cost-spikes occur, don't blame the utilities. Blame their regulator.

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Electric car maker Aptera closes its doors

Electric car maker Aptera Motors is closing after failing to woo enough investors to bring a new sedan to market.

Aptera CEO Paul Wilbur said the Carlsbad, Calif.-based company closed its doors Friday and laid off all 30 of its employees.

The company was hoping to get a $150 million loan from the Department of Energy but needed to raise matching funds, Wilbur said. He said Aptera had trouble drumming up interest from investors, who have been spooked by the difficulties other small electric car makers have had. Palo Alto, Calif.-based Tesla Motors Inc., for example, has racked up millions of dollars in losses as it prepares to bring its electric Model S sedan to market in mid-2012.

"A lot of people on the West Coast thought they could do the industry better. But the reality that has set in is that these are capital intensive industries, and it's difficult," Wilbur told The Associated Press on Friday. "It's scared a lot of investors in the space right now. We have a million sympathizers, but when it comes to writing a big check there aren't many of those around."

Aptera was formed in 2006 and first developed a three-wheeled electric car. Last year, the company shelved that car and concentrated on building a four-door electric sedan that would get the equivalent of 190 miles per gallon of gas. By comparison, the electric Nissan Leaf is rated at 99 mpg.

Wilbur said the car was made of extremely lightweight materials, so it would be about the size of a Honda Accord but around 1,000 pounds lighter. He also estimated that it could have sold for less than $30,000. The Leaf's list price is $35,200.

Wilbur said he still hopes to develop the car, but doesn't know whether he will start a new company.

Rep. Darrell Issa, R-Calif., was among those who tried to help Aptera. Issa, who has sharply criticized the Obama administration over a $528 million federal loan to solar panel maker Solyndra, wrote a letter on behalf of Aptera last year to Energy Secretary Steven Chu. Solyndra filed for bankruptcy protection in August.

A federal loan "will greatly assist a leading developer of electric vehicles in my district," Issa wrote in a January 2010 letter to Chu.

Issa chairs the House Oversight and Government Reform Committee, which is one of several House panels investigating Solyndra and the broader loan program. Issa has said the program involves "picking winners and losers" in what he called a misguided attempt to manage the economy.

The Department of Energy said Friday that it had not given Aptera any commitment for a loan.

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Canada May Miss $6.7 Billion Carbon Offset Bill by Exiting Kyoto Protocol

Canada, the country furthest from meeting its commitment to cut carbon emissions under the Kyoto Protocol, may save as much as $6.7 billion by exiting the global climate change agreement and not paying for offset credits.

The country’s greenhouse-gas emissions are almost a third higher than 1990 levels, and it has a 6 percent CO2 reduction target for the end of 2012. If it couldn’t meet its goal, Canada would have to buy carbon credits, under the rules of the legally binding treaty.

Canada, which has the world’s third-largest proven oil reserves, would be the first of 191 signatories to the Kyoto Protocol to annul its emission-reduction obligations. While Environment Minister Peter Kent declined to confirm Nov. 28 that Canada is preparing to pull out of Kyoto, which may ease the burden for oil-sands producers and coal-burning utilities, he said the government wouldn’t make further commitments to it.

“Canada is the only country in the world saying it won’t honor Kyoto,” said Keith Stewart, an energy and climate policy analyst for Greenpeace in Toronto. Under a previous Liberal government, Canada was one of the first countries to sign Kyoto in 1998. The current Conservative government made a non-binding commitment at 2009 United Nations talks in Copenhagen to reduce emissions by 17 percent by 2020 from 2005 levels, in line with a pledge by the U.S., its biggest trading partner.

The biggest polluters in the nation of 34 million say they’ll cut emissions without a treaty. “Kyoto no longer works,” said Rick George, chief executive officer of Suncor Energy Inc. (SU), Canada’s largest oil producer. “Whatever happens with Kyoto won’t change our direction” of reducing the environmental impact of oil production, he said.

Impact From Technology

For Suncor and Canadian Natural Resources Ltd., technology improvements will have a bigger impact on Canada’s greenhouse gas output than an international climate-change treaty, said Jack Mintz, director of the school of public policy at the University of Calgary.

“Technology is the only way we’re going to make significant progress,” Mintz said in an interview. “A lot of companies are already anticipating that the federal government will look at new regulations. Kyoto hasn’t been a strong treaty.”

Canada would likely avoid penalties if it exits the treaty before the end of the year, said Matt Horne, climate change policy director at the Pembina Institute, a Canadian think-tank focused on sustainable energy. Kyoto’s first commitment period from 2008 until 2012 requires reductions only from so-called Annex I countries, the world’s wealthiest and most developed. It doesn’t include developing nations including India and China, the world’s biggest CO2 emitter.

Reputation Tarnished

“Penalties apply in the second commitment period,” said Horne. “More importantly though, Canada’s international reputation will be tarnished.”

The $6.7 billion cost of complying with Kyoto compares with an estimated C$75.9 billion ($74.8 billion) in combined budget deficits projected through the fiscal year ending March 2015. By rejecting the accord, Prime Minister Stephen Harper is putting the country’s economy at risk, Elizabeth May, leader of Canada’s Green Party, said in an interview.

“We’re condemning ourselves to rising costs from extreme weather events as well as opportunity costs like the failure to have a renewable-energy industry,” she said. “The world would be grateful for Canada to be constructive instead of the government consistently repudiating Kyoto.”

Durban Talks

Canadian delegates, including Kent, are in Durban, South Africa for United Nations climate talks. Negotiators are struggling to agree to a successor to Kyoto, which expires at the end of 2012 and is also opposed by Japan and Russia.

Negotiators from host South Africa urged Canada on Dec. 1 to reconsider its position about not entering another commitment period, highlighting the risks to the developing world with rising temperatures and sea levels.

“Our government believes that the previous Liberal government signing on to Kyoto was one of the biggest blunders they made,” Kent said Nov. 28. “Kyoto is the past, Copenhagen and Cancun are the future,” he said, referring to the 2009 Copenhagen Accord.

Canada will have likely emitted about 890 million tons of CO2 above its Kyoto target by the end of the first commitment period next year, based on annual emissions data compiled by Bloomberg. Carbon Emission Reduction credits, or CER, cost 5.62 euros ($7.55) a ton on Nov. 30, according to Bloomberg data.

No Policy

Unlike countries such as Germany, Canada has implemented no policy to reach its targets and will find it difficult to reach even the Copenhagen Accord goals, said Greenpeace’s Stewart.

Already 60 percent of the country’s electricity is generated by hydroelectric power plants, which emit fewer gases than coal or natural gas, while the government’s plan to become an energy superpower by exporting crude oil from Alberta’s oil sands means the country faces “steep” increases in emissions in the coming years, Stewart said.

Emissions of carbon from oil sands production has risen to about 6.5 percent of Canada’s total from about 1 percent in 1990, according to the Pembina Institute. That figure will likely double by 2020 as companies such as Exxon Mobil Corp., Suncor and Royal Dutch Shell Plc expand operations to refine bitumen with annual investments of C$20 billion.

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Carbon Dioxide Emissions Up Sharply, Yet Temperatures Are Flat?

The U.S. Department of Energy has just published its estimates of global carbon dioxide emissions for the year 2010, concluding emissions rose by 6% from 2009 to 2010. This constitutes the largest rise yet recorded and means global emissions are rising faster than any of the scenarios advanced by the United Nations Intergovernmental Panel on Climate Change (IPCC) in its 2007 report. Global warming activists are claiming the 2010 rise proves global warming is even worse than previously feared, but exactly the opposite is the case.

The new emissions data support the arguments of skeptics asserting carbon dioxide emissions do not impact global temperatures as much as IPCC computer models predict. In light of the 2010 data, global carbon dioxide emissions have risen by fully a third since the year 2001, yet global temperatures have not risen during the past decade. Global warming activists argue that carbon dioxide emissions are the sole or primary factor in global temperature changes, yet global temperatures show no change despite a 33% increase in global carbon dioxide emissions. The fact that global temperatures are not rising despite such a significant increase in carbon dioxide emissions provides validation of skeptical arguments, not a cause for heightened alarm.

Rising carbon dioxide emissions would indeed be a cause for strong concern if they were the sole or primary cause of global temperature changes, and if the earth were on the brink of a global warming crisis. The real-world disconnect between carbon dioxide emissions and global temperatures is one of the factors that argues strongly against such a scenario, however.

We can see just how far-fetched the claims of global warming activists are by comparing real-world emissions data and real-world temperature data versus global warming predictions. Scientist-activists at the MIT Joint Program on the Science and Policy of Global Change, for example, in 2009 produced a pie chart showing the predicted likelihood of various temperature scenarios through the end of the century. According to the pie chart, there was a better than 50% chance that under a business-as-usual scenario global temperatures would rise more than 5 degrees Celsius by the end of the century. Moreover, the chart predicted a 9% chance of temperatures rising more than 7 degrees Celsius, but less than a 1% chance of temperatures rising less than 3 degrees Celsius this century.

Let’s compare those predictions to real-world data. As the Department of Energy report on 2010 emissions shows, global carbon dioxide emissions are rising more rapidly than anticipated under a business-as-usual scenario. This means that global temperatures should be rising even faster than predicted by the scientist-activists at the Joint Program on the Science and Policy of Global Change. Yet temperatures have risen merely 0.2 to 0.3 degrees Celsius during the past third of a century, and have not risen at all during the past decade. Giving global warming activists the benefit of the doubt and assuming that the recent pause in global warming is a mere temporary condition, the earth is still on a pace for less than 1 degree of warming during the 21st century, despite the scientist-activists assigning a greater-than-99% chance of at least 3 degrees warming by century’s end.

The fact that this relatively minor warming is occurring while emissions are rising faster than expected adds more weight to the skeptical argument. Global temperatures will have to start rising very rapidly, and very soon, for alarming temperature predictions to come true. And yet with each passing year, the predicted rapid rise in temperatures never occurs.

The Department of Energy 2010 emissions data also show why it would be futile and foolhardy for our nation to enact severe carbon dioxide restrictions. While global emissions have risen by 33% during the past decade, U.S. emissions have not risen at all. Saying the United States is a major factor in the recent rise in carbon dioxide emissions is like saying the Indianapolis Colts are a major factor in each week’s rising National Football League win totals; the Colts have amassed no wins this year, and U.S. carbon dioxide emissions have not risen at all during the past decade.

Even if the United States had completely eradicated all carbon dioxide emissions going back to the year 2001, this still would not have prevented a rise in global emissions during the past decade. And with U.S. emissions already eliminated, we would be unilaterally suffering immensely negative economic and quality-of-life consequences of zero carbon dioxide emissions while other nations continued creating a record rise.

Fortunately, no such self-imposed misery is necessary because real-world observations show that rising carbon dioxide levels are having only a minor impact on global temperatures.

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EPA Wants to Regulate CO2 but Ignores Vital Information

Environmental Protection Agency Administrator Lisa P. Jackson recently announced that her agency would proceed with twice-delayed regulations targeting power plants that emit carbon dioxide and other greenhouse gases.

Mrs. Jackson’s decision ignores three vital pieces of information that should make it easy for Congress to prevent unelected bureaucrats from regulating CO2:

• The EPA inspector general’s finding that EPA did not follow federal data quality standards in preparing its “endangerment finding” regarding greenhouse gases.

• The profusion of scientific dissent.

• The massive economic costs and minimal environmental benefits.

In April 2009, the EPA issued an endangerment finding stating that the gases pose a serious threat to human health and public safety. It provided a lengthy technical support document to justify this position.

But this September, the EPA’s Office of Inspector General released its own report concluding that the agency’s document failed to follow federal guidelines for a “highly influential scientific assessment.” Specifically, the EPAhad failed to publicly report its review results. Moreover, one of the federal climate-change scientists reviewing the document was an EPA employee.

The EPA responded by arguing that the document did not qualify as “highly influential,” yet the agency offered it to justify one of the most expansive – and expensive – regulations in history. If that’s not highly influential, what is?

The inspector general’s report does not question the scientific validity of the endangerment finding. But disagreement among the scientific community regarding the magnitude of anthropogenic global warming should have been sufficient reason for the EPA not to issue the endangerment finding in the first place.

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The cold, hard facts about global warmists

COMMENT: Here are some intelligent questions to ask of anyone who tells you we're on the bridge of environmental catastrophe.

Hardly a day passes when some weather event prompts a warning about the dangers of global warming. Or another characterization of those who doubt its existence as deniers or ignorati. And this is accepted by most people with unquestioned acceptance, even though the global warmists of East Anglia have been hacked explaining how to discredit the deniers or keep them out of the media.

What do the global warmists think or know? Anything about the oscillations, their cause and effect? The interaction between the solar wind and the weather? The effectiveness of CO2 as a greenhouse gas in conjunction with varying percentages of water vapor? The cause or effect of the jet streams? And as for controlling the weather, forget it.
The perception of weather events depends on the age of the viewer. My grandmother never saw a snowflake without talking about the Blizzard of 1888. I never hear of a drought without remembering the drought in Delaware in which weekly church services prayed for rain, or a cold snap when it was so cold on the midnight shift that the steam tracers froze up.
The Wall Street Journal recently commented on orange juice futures, noting that last year's crop was impacted by the coldest December in Florida's history. The Citrus Belt is not moving northward; it is moving southward, if at all. The canola crop in western Canada was threatened this past spring by unseasonably cold weather.
Questioning the thawing of the Arctic Ocean, I emailed Prudhoe Bay asking what the shipping season is, and they said six weeks. The Hudson Bay -- alleged by the Wall Street Journal to be a future year-round outlet for grain -- elicits the response from Churchill, Canada, that the shipping season is from the end of July to the middle of November With the advent of the Internet, there is no excuse for blind acceptance of the views of so-called experts, politicians and the media.
The experts -- discussing economics, war, climate or investment -- have got to be considered logically. Otherwise, the new advantages in communication will prove to be a detriment to logic and science, instead of an advance.

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Holland slashes carbon targets, shuns wind for nuclear

We can't afford to be Groene

In a radical change of policy, the Netherlands is reducing its targets for renewable energy and slashing the subsidies for wind and solar power. It's also given the green light for the country's first new nuclear power plants for almost 40 years.

Why the change? Wind and solar subsidies are too expensive, the Financial Times Deutschland , reports [1].

Holland thus becomes the first country to abandon the EU-wide target of producing 20 per cent [2] of its domestic power from renewables. This is a remarkable turnaround from a state that took the Kyoto Agreement seriously and chivvied other EU members into adopting renewable energy strategies. The FT reports that instead of the €4bn annual subsidy, it will be slashed to €1.5bn.

Holland's only nuclear reactor, the Borssele plant, opened in 1973, and was earmarked for closure by 2003. In 2006 the plant was allowed to operate until 2034, and the following year the government abandoned its opposition to new nuclear plants.

Critics of wind turbine expansion have found it difficult to get figures to judge whether the turbines are value for money. In January, Ofgem refused [3] to disclose the output of each Feed-In Tariff (FiT) location.

The UK is expected to urge the installation of 10,000 new onshore turbines, even though some cost more in subsidies than than they produce [4], even at the generous Feed-In rates. Holland's policy U-turn means the EU renewable targets aren't set in stone - and there are more cost-effective ways of hitting the targets.

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