Skinning the Cat: When the cap-and-trade bill on carbon dioxide (CO2) emissions failed in the US Senate, President Obama famously announced that there is more than one way to skin the cat. Through the EPA, the administration is skinning the cat – live.
The EPA has proposed limits on carbon dioxide emissions from fossil fuel power plants to 1,000 pounds of CO2 per megawatt hour to take effect in 12 months. Effectively, the proposed rule prevents the future construction any coal fired power plants larger than 25 megawatts unless the plant incorporates carbon capture and storage, an unproven technology with unknown costs.
The EPA announcement speaks of carbon pollution, as if diamonds are a pollutant; or humans who contain large amounts of carbon and produce carbon dioxide are, in themselves, a pollutant.
According to the latest statistics from the Energy Information Administration, in 2011 coal produced 42 percent of the electricity generated in the US and natural gas was second with 25 percent. This represents a dramatic shift since 2005 when coal generated almost 50% and natural gas was third with 19%, just behind nuclear. This shift reflects the availability and the low price of natural gas as well as the efforts of the environmental industry to stop the construction of new coal fired plants by citing unsubstantiated public health claims as well as global warming.
Accordingly to the Wall Street Journal, on March 22 the contract futures price for natural gas in the US was $2.27 per million BTUs. For Western Europe, the Mideast, west India, Australia the price was between $10 and $15 per million BTUs. For Japan and Korea the price was above $15 per million BTUs. There is no reason to assume that the price in the US will remain so extraordinarily low. In July 2008, the price in the US hit $13 per million BTUs and some were questioning if natural gas fired power plants were economically feasible.
The current low prices in the US, was brought on by a number of circumstances the most important was the development of deep underground hydraulic fracturing (fracking) of dense shale to produce natural gas, combined with horizontal drilling of the shale seams. The newly discovered techniques have produced an economic boon, not expected by Washington’s economic planners. This was coupled with a very mild winter, and now the natural gas storage facilities are approaching maximum capacity.
Many defenders of the EPA’s action state that the low price of natural gas justifies EPA’s action of preventing a coal fired power plant being built in the future. However, there are no assurances that natural gas prices will remain low. For over a year, the low gas prices have been forcing energy companies to drill for oil or other liquids rather than natural gas. In addition, increased consumption by industry and, possibly, transportation vehicles result in rising prices. Also, the production life of the expensive wells is not yet established. Further, there is no reason to assume that the EPA will not arbitrarily announce new rules on hydraulic fracturing that will significantly drive up the cost of natural gas.
EPA’s finding that carbon dioxide endangers public health and welfare is still being litigated. Among the issues are: 1) science does not support the finding; 2) EPA failed to make an independent analysis of the science; and 3) EPA failed to consult its Science Advisory Board. In a separate review, the Inspector General of the EPA concluded the EPA failed to meet the last two criteria and did not address the first.
No doubt, the new proposed rule will be litigated. However, it demonstrates how potentially destructive the 2007 Supreme Court decision that CO2 is a pollutant that can be regulated by the EPA can become when such power is given to an aggressive, controlling agency. Please see Article # 6 and links under “EPA and other Regulators on the March.”
Australian Elections: Broken Promise on Carbon Dioxide Emissions
Last weekend the states of Queensland and Victoria held elections that went against the party of Prime Minister Julia Gillard, who broke her campaign promise that she would not institute a tax on carbon dioxide emissions. Perhaps this is a warning to politicians who take their campaign promises lightly, and seek to control energy producing industries. Please see links under “Subsidies and Mandates Forever.”
Senate Vote on Tax Subsidies: Oil and Gas
In a symbolic gesture, the Senate failed to pass a bill, strongly supported by the President, to strip oil and gas companies of any tax subsidies they may receive. Washington is obsessed with the idea the increasing costs to oil and gas companies will reduce the price of gasoline. As reported last week, the Congressional Budget Office estimates these subsidies amount to about $2.5 Billion per year. A major one is the depletion allowance which exists for all extraction industries. Companies, such as Mitchell Energy, which developed the innovative techniques of extracting oil and natural gas from dense shale no doubt, take advantage of this allowance; but, contrary to political claims, it is not available to major integrated oil companies such as Exxon-Mobil. Please see links under “The Political Games Continue.”
Corrections and Amplifications: The link to the article in Oceanus describing a newly discovered current in the Ocean Conveyer in the North Atlantic became distorted. It is:
Professor Cliff Ollier of the University of Western Australia gave two references to the existence of the Medieval Warm Period and the Little Ice Age in the Pacific. Nunn, P.D. 2007. Climate, Environment and Society in the Pacific during the Last Millennium. Elsevier, Amsterdam. This includes a specific chapter and Nunn, P.ED. 2007. The AD 1300 event in the Pacific Basin. The Geographical Review, 97, 1-23
The article, Solar Activity and Svalbard Temperatures, was linked in the December 17, 2011 TWTW not a February 2012 TWTW as previously stated. Svalbard is between about 74 to 81 deg North Latitude, well within the Arctic Circle.
April Fools Award: Many nations have an informal holiday falling on, or about, April 1, which in some nations is called April Fools’ Day. The holiday is marked by pranks and tricks played upon others. Some of these tricks may be in merriment, others may be quite serious.
In recognizing that day, Science and Environmental Policy Project (SEPP) plans give an Annual April Fools’ Award to the government official or political leader, who, in the determination of a special SEPP panel is the most deserving. The criteria are as follows:
The official has advanced, or proposes to advance, significant expansion of governmental power, regulation, or control over the public or significant sections of the general economy.
The official does so by declaring such measures are necessary to protect public health, welfare, or the environment.
The official declared that physical science supports such measures.
The physical science supporting the measures is flimsy at best, and possibly non-existent.
All readers of TWTW are invited to nominate a government official in their country as possible recipients of the award, provided that country is generally recognized as having a democratic system of government with protection of individual freedom of speech. Please send the nomination to Ken with a one to two sentence explanation why that official is most deserving. The winning nominee will be announced in TWTW at the end of April.