July 30 Colorado Energy Roundup: Clean Power Plan extension expected; a new Sagebrush Rebellion?

The Clean Power Plan’s timeline for compliance may see an extension, and the final rule itself may be revealed next Monday:

The final version of President Obama’s signature climate change policy is expected to extend an earlier timeline for states to significantly cut planet-warming pollution from power plants, according to people familiar with the plan.

If enacted, the climate change plan, the final version of which is expected to be unveiled as early as Monday, could stand as the most significant action ever taken by an American president to curb global warming. But some environmental groups have cautioned that a later deadline for states to comply could make it tougher for the United States to meet Mr. Obama’s climate change pledges on the world stage.

The plan consists of three major environmental regulations, which combined are intended to drastically cut emissions of greenhouse gases. The rules take aim at coal-fired power plants, the largest source of greenhouse emissions, and are intended to spur a transformation of the nation’s power sector from fossil fuels to renewable sources such as wind and solar. Under the rules, the Environmental Protection Agency would require states to draft plans to lower emissions from power plants. The agency is also expected to issue its own model of a state-level plan, to be imposed on states that refuse to draft their own plans.

The final rules would extend the timeline for states and electric utilities to comply, compared with a draft proposal put forth by the E.P.A. in June last year, according to people who are familiar with the plan but who spoke on the condition of anonymity because they were not authorized to speak publicly about it.

The Independence Institute’s backgrounder on the Clean Power Plan and its devastating effects on our energy choice and enormous costs to taxpayers and the economy in general can be found here.

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Much of the public land in the Rocky Mountain west is administered not by the states but by the federal government all the way from DC–and the debate over who should ultimately preside over these vast swathes of federal land has seen a resurgence:

Not since the Sagebrush Rebellion in 1979 has the debate over whether it’s time for federal lands to fall to states’ control gained such attention, and the anti-federal-government sentiment and talking points aren’t likely to dissipate as the West heads toward the next presidential election.

The fight stirred in 2012 when the Utah legislature passed the Transfer of Public Lands Act to demand authority over millions of acres of federal land by last New Year’s Eve. It didn’t happen.

Eight states cumulatively considered 30 bills around the issue this year. In March, Republicans in the U.S. Senate passed, without a single Democratic vote, a symbolic resolution in support of transferring or trading land to states. The resolution, though, doesn’t give Congress or any federal agency additional power to make deals.

And in the last Colorado legislative session there were three bills around the subject. Only one passed. House Bill 1225, a bipartisan bill supported by environmental groups, strengthens communities’ position in saying how local federal lands are managed.

Opponents of devolving control of public lands to the states cite the enormous costs of maintaining them, arguing states are not prepared to shoulder the added burden of hundreds of millions of dollars in annual upkeep.

For example, a single wildfire could cripple Colorado, said Governor John Hickenlooper’s advisor:

The federal government also picks up the costs for wildfires on federal lands. But just one massive wildfire in Colorado — a state that can have several in one year — could obliterate the state budget, said John Swartout, a Republican who is Hickenlooper’s top policy adviser on land, wildlife and conservation issues.

“The solution is constructive engagement,” Swartout said. “Are we always going to be happy with all the decisions? No. But we’re going to get a lot farther helping create the final solution.”

More than 1/3 of Colorado is subject to federal jurisdiction. Whether or not the debate develops into a political conflagration or peters out in favor of other issues remains to be seen, but expect energy producers and environmental activists to keep a close eye on how the narrative proceeds.

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WildEarth Guardians won’t hesitate to launch a legal battle, as a recent look at the group’s lawsuit filings shows:

Though a relatively small organization with only 26 people on staff, WildEarth Guardians’ litigious nature has established the environmental advocacy group as a dominant voice in the national debate about environmental policy.

From 2010 to present, Guardians have initiated a total of 152 cases in federal district courts and 55 in the Circuit Court of Appeals for a total of 207 cases. In 2010 alone they filed 61 claims — an average of about one per week.

However, Guardians’ pervasiveness in the courts has not gone without criticism.

In a 2012 analysis of WildEarth Guardians’ legal activity, the conservative group Americans for Prosperity claimed that Guardians has been “misusing the judicial system, exploiting poorly-written laws and taking advantage of taxpayers to pursue a narrow, litigation-driven, special interest agenda.”

For Coloradans, especially those in Craig and surrounding areas, lawsuits from the group have drawn the ire of residents and businesses for favoring costly litigation as a first-stop solution:

Lee Boughey, senior manager of corporate communications and public affairs for Tri-State, said in a statement that the courts should not be a first resort.

“Environmental policy, regulations and law should be set by state legislatures and Congress, and based on sound science, a thorough cost-benefit analysis and appropriate timeframes for implementation. These are difficult issues, and it is a far better for all stakeholders to commit to work together to develop sound regulatory policy that take these consideration into account, as opposed to running straight to the courts,” he said.

The group remains adamant, saying, the “legal system is oftentimes the last recourse of justice for interests and peoples that have been marginalized or whose issues haven’t been heard.”

In the case of Colowyo Mine, the marginalized appear to be the local residents, workers, and communities.

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A pair of energy-related ballot measures will appear in November in Boulder, including a Climate Action tax:

Boulder officials also want to ask voters to extend the portion of the utility occupation tax on energy bills that replaces Xcel Energy’s franchise fee and provides roughly $4.1 million to the city’s general fund each year. It is not the portion of the tax that funds analysis and legal efforts toward municipalization, which is not on the ballot. The municipal energy utility would also have to pay a similar amount into the general fund, but that utility may not be up and running by 2017, when the tax expires. The proposed ballot measure would extend the tax through 2022.

The Climate Action Plan tax, which funds energy-efficiency programs and solar rebates, will also appear on the ballot. That tax expires in March 2018, and city leaders believe the programs ultimately will be paid for out of utility rates. However, that won’t be possible until the utility is up and running. The proposed ballot measure would extend the tax through March 2023 so that those programs could continue regardless of progress on the municipal utility.

New EPA Regulations On Fracking

April 20, 2012 by schafer · Comments Off
Filed under: Archive, New Energy Economy 

This past Wednesday, the EPA released new regulations on hydraulic fracturing (“fracking”). Surprisingly, the 588 pages of regulations don’t amount to much. At best, they codify existing industry practices. At worst, they might cause delays and other unintended consequences.

The new regulations focus on “green completions” (“completions” refers to the whole well-stimulation process, including fracking). Immediately after a well is fracked, the mixture that flows back up to the surface includes water, sand, natural gas, and other hydrocarbons. Conventional equipment cannot handle the abrasive sand—because it erodes the metal components—so companies let the mixture flow into a plastic-lined pit until the sand concentration is low enough to use the conventional equipment. What the EPA and environmentalists don’t like about this process, is that while the well is flowing to the lined-pit, the gas is escaping into the air rather than going into a pipeline.

Green completions use special equipment that can filter out the sand before the mixture goes into the conventional equipment. This way, companies can separate out the natural gas and flow it into the pipeline from the very beginning.

Before these regulations, half of all completions were already using green completion technology, primarily as a way to capture and sell more of the gas. The percentage of green completions was also, undeniably, trending upward. So why the need for EPA regulations when companies were already making these changes on their own?

The concerns that gave rise to these new regulations were emissions of volatile organic compounds (VOCs), benzene, and methane in the initial, uncaptured flow of gas. These are natural hydrocarbons and components of natural gas, i.e. they are not chemicals additives from fracking fluids (sometimes benzene is added to fracking fluids, but most benzene emissions result from the natural gas itself).

VOCs are a concern because they are SMOG precursors. SMOG is a respiratory irritant, so it can increase incidences of asthma, and cause other problems, but only at high concentrations. SMOG was first identified in Los Angeles in the 1950s, because it was so bad that people could literally see a brownish haze set over the city. But how bad is SMOG today? From 1970 to 1990 the installation of catalytic converters in cars reduced smog-forming tailpipe emissions by 99%. Consequently, when people compare SMOG caused by oil and gas activity to that from cars—as was done recently in a an article in the Dallas Morning News—they fail to realize that cars are no longer a major source of SMOG forming emissions. So, while oil and gas development does result in SMOG levels comparable to that from urban traffic, that does not suggest dangerous levels of SMOG.

Likewise, the reductions in benzene would have a minimal effect on improving health, given the ultra-low concentrations of benzene emissions, and the short-lived nature of these emissions. (for details on benzene see Fracking: Chemicals, Cancer, and Relative Risks).

While the benefits from these new regulations are likely to be elusive—and I do not support needless regulations—I must admit that they do not look terribly destructive. As already noted, many companies have already begun to do green completions.

One concern is that there may not be enough equipment available for green completions, which could cause delays or a bidding war that would drive up the prices beyond cost-effectiveness. However, the regulations do not go into effect until 2015, which should hopefully give enough time to manufacture more equipment.

Another possible problem is related to pipeline construction. When companies develop a field, they move quickly from one well to the next, in order to make the most efficient use of their drilling and fracking equipment. Sometimes, as a result, they outrun their pipeline installation crews. The pipeline, however, must be in place to do a green completion. Otherwise, there’s nowhere to put the captured gas. What companies usually do, in this case, is complete (“frack”) the well, flowback into the plastic-lined pit (for various technical reasons, flowback needs to happen right away), and then shut the well in (close the valve) until the pipeline is installed. With these new regulations, companies will have to precisely schedule their pipeline, drilling, and fracking operations. But even with the most precise scheduling, there will inevitably be delays. The regulations will compound the cost of these delays by requiring rented equipment (costing tens of thousands of dollars per day) to sit idle while pipelines catch up.

This brings me to my final criticism, common to many regulations: The one-size-fits-all approach. If it makes economic sense for a company to do a green completion (as the EPA suggests), it will do so—but under unique circumstances, such as the occasional delay, or in cases of difficult terrain, remote areas, or unique safety considerations, companies will no longer have the freedom to make intelligent well-by-well assessments of whether or not green completions make sense in a particular circumstance.

With a nation still struggling to find its way out of a recession, and a manufacturing boom fueled by cheap natural gas, why waste our efforts on needless and potentially damaging regulations? Even if the damage turns out to be small, the number of man-hours already spent drafting, reviewing, commenting on, and reading the 588 pages of regulation were, no doubt, a waste of human resources.

Solyndra: Is an apology too much to ask?

September 21, 2011 by Amy · Comments Off
Filed under: Archive, New Energy Economy 

Please send out an APB for common decency because it’s gone, along with the $535 million in taxpayer-guaranteed money that the Obama administration wagered on the California-based solar start-up Solyndra. The high-priced, pet green project – the centerpiece of the president’s green jobs initiative – went belly up, and the F.B.I. raided the homes of top executives.

It gets worse. Turns out that Solyndra major investor George Kaiser along with other top executives and board members donated more than $87,000 to propel Barack Obama to the White House. And Kaiser et al were frequent visitors to 1600 Pennsylvania Avenue including March 2009, just one week before the Department of Energy (DOE) approved the ill-fated loan.

It gets worse. With help from the DOE, Solyndra avoided bankruptcy earlier this year, which could have saved taxpayers millions. Despite warnings from the Office of Management and Budget (OMB), the beleaguered solar company was allowed to renegotiate its loan and put taxpayers in a subordinate position.  When the liquidation is said and done, it’s likely that taxpayers won’t get much.

It’s no wonder that Pew Research Center found that 86 percent of Americans are either frustrated or angry with the federal government. Solyndra gives them 535 million more reasons.

You’d think someone would have the common decency to apologize. Don’t hold you’re your breath waiting for one. The reaction from all the players ranges from defensive to offensive, from cavalier to incredible. No responsibility. No display of remorse.

Half a billion dollars of incompetence, crony capitalism and moral corruption and taxpayers can’t get even get an apology, much less an explanation of how Solyndra burned through all that money.

The White House

In 2009 the White House fast tracked the $535 million taxpayer-guaranteed loan to Solyndra, the first “green jobs” loan under the Obama Administration’s American Recovery and Reinvestment Act (ARRA).

On May 26, 2010, President Obama made a much-publicized visit to Solyndra and boasted, “Less than a year ago, we were standing on what was an empty lot. But through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans.”

Today, the lot may not be vacant but the building is, as all 1,100 employees have been laid off.

On September 1, when the White House press corps queried Press Secretary Jay Carney about Solyndra’s bankruptcy, Carney explained “that’s just the way the that business works.”

Two weeks later, Carney suggested that Obama hadn’t been briefed about questions surrounding Solyndra. It stretches the limits of reality to believe that the White House, which was so involved in the approval, now isn’t briefing the President on the Solyndra scandal.

When asked if the president was embarrassed, Carney responded that the administration remained committed to renewable energy. That’s not an answer; it’s a platitude. If the president isn’t embarrassed, he is either not telling the truth or he has no conscience. Neither is particularly attractive.

Congressional Democrats

The reaction from some congressional Democrats who sit on the Committee on Energy and Commerce has been equally cavalier. Michigan Congressman John Dingell said, “I’m still waiting to see something that makes me concerned…”

Green zealot Ed Markey of Massachusetts claimed he’d rather be investigating oil and gas companies and voted against a subpoena to find out what happened to taxpayer money. And Colorado Congresswoman Diana DeGette’s statement tried to implicate the Bush administration.

Office of Management and Budget

The Washington Post reported recently released emails reveal that OMB worried about Solyndra’s finances and how it would impact the 2012 election:

The optics of a Solyndra default will be bad,” the Office of Management and Budget staff member wrote Jan. 31 in an e-mail to a co-worker. “If Solyndra defaults down the road, the optics will be arguably worse later than they would be today. . . . In addition, the timing will likely coincide with the 2012 campaign season heating up…

Although [political] optics are generally out of our lane, it may be worthwhile for the Director to privately make this point to the Secretary,” the staffer wrote.

The staffer wrote that allowing Solyndra to shutter its plant in January could let the Obama administration “get some credit for fiscal discipline” and save taxpayer money.

DOE

Jonathan Silver, Executive Director of the Department of Energy Loans Programs Office said in congressional testimony that he wasn’t there when the loan was approved but understood the process to be quite “exhaustive.”

Although I was not at the Department when the Solyndra loan guarantee was considered or issued, it is my understanding that the transaction went through nearly three years of rigorous and exhaustive internal and external due diligence before any taxpayer funds were put at risk.

The process was so exhaustive that the DOE’s credit committee voted against the loan two weeks before President Bush left office.

Then Silver employed the adolescent excuse of “we weren’t the only ones who liked them.”

The federal government was not alone in its assessment of Solyndra’s potential. Some of America’s most sophisticated professional investors collectively invested nearly a billion dollars in the company after conducting extensive due diligence of their own —almost all of it invested before a single dollar of taxpayer funds was provided to the company.

The mother in me wants to ask, if your friends jump off a cliff would you do that too? Of course, in this case I already know the answer.

Solar Industry

In a prepared statement about the Solyndra scandal, Solar Energy Association President and CEO Rhone Resch doesn’t even mention taxpayers’ $535 million.  He’s much more concerned with protecting his heavily subsidized industry:

The loss of any manufacturing jobs – in solar or otherwise – is disappointing, but it is important to look at an industry’s health more broadly rather than through the narrow lens of one company’s success or failure.

Today, the solar industry is one of the fastest growing industries in the United States, employing nearly 100,000 Americans at more than 5,500 companies across the supply chain in every region of the country.

What we are seeing in solar happens in every industry that is maturing and growing more competitive. You’re going to see winners emerge who find innovative ways to offer consumers the most competitively priced products.

The last twelve months have seen one of the most dramatic price drops in the history of the solar market. Already in 2011, the cost of solar PV panels has come down by 30 percent.

Competition in the solar industry is good for American consumers. It means that costs are coming down and solar is increasingly affordable for more and more Americans every day.

Everything that Resch said would be true if solar existed in a market, but it doesn’t.  The only reason prices may be falling is that government subsidizes consumers’ solar panel purchases.

That Resch uses the language of free markets to advance his taxpayer-subsidized industry is utterly offensive especially to industries that actually compete and actually provide lower prices due to that competition.

Media

The media has served as a green lap dog, and the DOE reminded reporters and media outlets of it by sending out a list of articles that provided positive spin for Solyndra including, “’Fremont’s Solyndra goes from stealth to solar star!’ exulted the San Jose Mercury News in 2008” and “the San Francisco Chronicle wrote ‘A bright idea for solar power.’”

Reacting to the DOE, NBC Bay Area News claimed to be “Looking Critically at Our Own Solyndra Coverage.” What did the news outlet find? Scouring years worth of news archives, the news outlet found (drum roll please) a story from May 26, 2010 where it quoted “a Fremont Tea Party official who thought the government should not give Solyndra a loan.”

An a second story reported that “the San Francisco Natural Herb company next door to Solyndra, suggesting Obama stop by and visit a traditional company that has been manufacturing in the “tried and true” method.”

Citing these two examples, NBC Bay Area claims “its own coverage, lands in the middle.”  Lap dog or watch dog? You be the judge.

The Professional Left

Center for American Action Fund, a far left DC based think tank, issued its own analysis of “Attacks on Solyndra” and claimed the DOE loan program “creates” jobs, the 1,100 workers at Solyndra notwithstanding. Then it downplayed the actual dollar amount while reminding “progressives” not to worry because more taxpayer money is used to cover any losses.

  • Solyndra’s $535 million guarantee represents just 1.4 percent of DOE’s total portfolio.
  • DOE has set aside $2.5 billion to cover any losses resulting from loan defaults to help protect and decrease risk to taxpayers

Solyndra Executives

Crickets.

Half a billion dollars of taxpayer money is gone, and no one involved shows a modicum of concern for those who paid the bill. Apparently an apology is just too much. Solyndra provides another 535 million reasons to distrust Big Government and its enablers.

This column appeared originally in Townhall Finance on September 17, 2011.