It’s A Free Country

Free Country 600 AEA Correct

Do the Feds Know How Big ANWR Is?

The Interior Department announced a proposal this week to designate 12.28 million acres of the Arctic National Wildlife Refuge (ANWR) as wilderness. In a White House video, President Obama claimed a wilderness designation would “make sure that this amazing wonder is preserved for future generations.” But it seems the federal government doesn’t even know the actual size of the “amazing wonder” it wants to preserve.

The Fish & Wildlife Service (FWS) lists at least three different acreage estimates for ANWR, with a range of 500,000 acres. That discrepancy is equivalent to misplacing more than 11 cities the size of Washington, D.C.[i] This begs the question: if the feds don’t know how big ANWR is, are they really its best stewards?

FWS: ANWR is 19.3 Million Acres

Consider the following screenshot in which FWS claims ANWR is 19.3 million acres. It can be found in a section of the FWS website titled “Facts & Features”:

Screen Shot 2015-01-29 at 1.29.12 PMFWS: ANWR is About 19.64 Million Acres 

Now consider this next screenshot. We found it in the first chapter of FWS’s new draft ANWR Comprehensive Conservation Plan. Here FWS claims that ANWR is not 19.3 million acres, but actually 19.64 million acres. For context, the difference between those two figures is like losing an area of land the size of New York City[ii]:

CCP ANWR Acerage

Careful readers will notice the footnote in the above screenshot. The footnote informs readers, “Acreages in this Plan are derived from many sources and may not agree with previously published values.” In other words, the people tasked with protecting ANWR don’t even agree on how big ANWR actually is.

Interior Department: ANWR is 19.8 Million Acres

The disagreement only deepens with the Department of Interior’s press release announcing the Comprehensive Conservation Plan. The press release claims that ANWR is neither 19.3 million acres nor 19.64 million acres, but actually 19.8 million acres­—or 500,000 more acres than the lowest estimate from FWS’s “Facts & Features” page:

Screen Shot 2015-01-29 at 1.40.20 PMFWS now says ANWR is 19.64 Million Acres 

FWS states in its recent planning update that “the size of the Refuge was previously published as 19.3 million acres but is listed in the Revised Plan as 19.64 million acres.” But this still begs the question: why does Interior’s press release claim ANWR is 19.8 million acres?

Oil Production Would Require Just 2,000 Acres

In 1980, Congress set aside 1.5 million acres of ANWR for future study of its energy resource potential, known as the “1002 Area.” The U.S. Geological Survey estimates that ANWR’s 1002 Area, which the administration’s proposal would put off-limits, has an expected value of 10.4 billion barrels of recoverable oil that could be produced at a rate of about one million barrels of oil per day.[iii]

Energy resources in the 1002 Area could be developed using merely 2,000 acres, or less than 0.01 percent of ANWR’s total area.[iv] Regardless of the size of ANWR, the FWS’s inability to figure out the size within 500,000 acres makes us wonder: what’s wrong with allowing energy production on a mere 2,000 acres?

AEA Energy Analyst Alex Fitzsimmons authored this post

Click here to read IER’s fact sheet on ANWR.

[i] Washington, D.C. is 43,712 acres. See http://www.census.gov/geo/maps-data/data/gazetteer.html

[ii] New York City is approximately 300,000 acres. See http://www.census.gov/geo/maps-data/data/gazetteer.html

[iii] U.S. Geological Survey, Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis (April 2001), http://pubs.usgs.gov/fs/fs-0028-01/.

[iv] Energy Information Administration, Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment, 3. Summary, http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/arctic_national_wildlife_refuge/html/summary.html. See also, Arctic Power, Top 10 Reasons to Support Development in ANWR, http://www.anwr.org/topten.htm.

New Report Calls Out EPA’s Junk Science

Energy In Depth released a new report Wednesday that questions the scientific data EPA uses to justify its proposed ozone rule—which could be the costliest regulation in U.S. history.

One interesting finding in EID’s survey of the literature is that EPA’s ozone rule could actually increase asthma-related mortality, even though the agency cites reducing asthma attacks as one of the major benefits of the rule. As EID explains:

The EPA cites “asthma attacks” as one of its key health indicators, suggesting that imposing a stricter ozone standard would reduce asthma attacks, and thereby delivering health benefits. But as noted by the Center for Regulatory Solutions — a project of the Small Business & Entrepreneurship Council — EPA’s own documents show that asthma-related mortality could increase in certain areas if ozone levels decrease.

[…]

[Dr. Michael] Honeycutt looked at EPA’s own data sets and found that, in Houston, adjusting the ozone standard to 70 ppb or 65 ppb would result in 48 or 44 more premature deaths, respectively. The reason for this counter-intuitive conclusion is anyone’s guess, ranging from flawed data analysis to an acknowledgment that less economic opportunity can worsen individuals’ health.

To read the rest of EID’s report, click here.

To read IER’s analysis of EPA’s proposed ozone rule, click here.

AEA Energy Analyst Alex Fitzsimmons authored this post.

Report: Money for Green Groups Tied to Russian Oil Interests

A forthcoming report claims that a foreign firm funding U.S. environmental groups opposed to America’s domestic energy boom is tied to a state-owned Russian oil company with a financial interest in halting U.S. energy production. As The Washington Free Beacon reports:

A shadowy Bermudan company that has funneled tens of millions of dollars to anti-fracking environmentalist groups in the United States is run by executives with deep ties to Russian oil interests and offshore money laundering schemes involving members of President Vladimir Putin’s inner circle … No one knows where that firm’s money comes from. Its only publicly documented activities have been transfers of $23 million to U.S. environmentalist groups that push policies that would hamstring surging American oil and gas production, which has hurt Russia’s energy-reliant economy.

The “shadowy Bermudan company” is called Klein Ltd. Klein funds a group called Sea Change, an environmental bundler which has donated millions of dollars to groups like Sierra Club, the Natural Resources Defense Council, and the League of Conservation Voters. Each group supports policies designed to undermine domestic oil and gas development, including bans on hydraulic fracturing.

According to the Environmental Policy Alliance, Sea Change is run by hedge-fund millionaire Nathaniel Simons and his wife, who along with Klein Ltd are Sea Change’s only donors. Mr. Simons supposedly “commutes to work across San Francisco Bay aboard a 50-foot yacht, also runs a venture capital firm that invests in companies that benefit from environmental and energy policies that Sea Change grantees promote,” as reported by the Free Beacon.

This news shouldn’t surprise anyone. The Russian government has a major financial interest in seeing America produce less energy. The U.S. is now the world’s largest combined oil and natural gas producer, recently eclipsing Russia and Saudi Arabia. Booming U.S. oil production has sent oil prices tumbling—that benefits American families in the form of lower gas prices. It also means less money for the Kremlin, which is heavily dependent on oil and natural gas revenues to fund its government.

Our energy boom also enhances our national security. We could unleash our enormous supplies of oil and natural gas to help our European allies fight back against petro-states like Russia that use energy as a geopolitical weapon. Unfortunately, the Obama administration is slow-walking liquefied natural gas (LNG) permit applications that would allow us to export natural gas to Poland, Ukraine, and other allies currently besieged by Putin and dependent on Russian gas supplies.

Fortunately, some in Congress want to force the administration to act. This week, the House is expected to pass a bill to force the Department of Energy to expedite LNG export applications. The American Energy Alliance supports the bill and issued a key-vote alert urging passage. It represents a tangible step Congress can take to counter Russian aggression against U.S. interests, which is particularly relevant given new allegations linking Russian oil interests to national environmental groups.

AEA Energy Analyst Alex Fitzsimmons authored this post.

Senate Should Tackle Wasteful Green Building Programs

Today, the Senate will vote on amendment #103 by Senator Flake, which would address duplication in the federal government concerning green building initiatives. The Senate should approve the amendment.

In 2011, a report from the nonpartisan Government Accountability Office (GAO) on duplication, overlap, and fragmentation found 94 different initiatives across 11 different federal agencies focused on fostering “green” building in the non-federal sector. GAO could not identify how much funding is spent on these initiatives because the information they received from the agencies was “incomplete and unreliable.” In addition, the vast majority of these initiatives failed to provide goals or performance measures, which make it difficult to determine if the programs are effective. Lastly, they found there was little coordination across the government concerning these initiatives.

Since the 2011 report, there is little evidence to suggest that the administration has done much of anything to remedy these issues. Congress has also ignored these issues and has failed to provide adequate oversight of the taxpayer funds used to sustain these initiatives.

The Flake amendment would provide a way to address these issues. The amendment would require federal agencies to provide a report to Congress that includes details on funds spent, clients served, the number of employees involved, and whether there are written goals guiding the initiatives. Lastly, in a separate report the agencies must provide recommendations to eliminate or consolidate programs.

Lastly, there is little doubt that the private sector could and should perform much of the work included in these federal initiatives. An obsession with “green” has swept across the federal government, resulting in massive duplication, overlap, and fragmentation of taxpayer resources. Congress should examine these efforts closely and work to eliminate wasteful, ineffective, and unnecessary programs.

Congress has a duty to be a responsible steward of taxpayer resources. The Flake amendment is but the first step toward achieving that goal.

What is the State of Wind Energy in America?

This week the American Wind Energy Association’s (AWEA) CEO Tom Kiernan published an op-ed at The Hill‘s Congress Blog titled “The State of the Wind Industry is Strong.” We noticed that Mr. Kiernan’s piece omitted several important points about the state of American wind energy, so we took it upon ourselves to make those additions for him, our edits in red.


The state of the wind lobbying industry is strong

The strength of the U.S. wind industry is attracting the notice of a mirage built on massive subsidies from the highest levels of government. In his State of the Union address, President Obama noted that the U.S. leads the world in wind generation, as well as being fleeced.

The fact that the U.S. is #1 – leading even China — comes from an analysis by EDF Renewable Energy executive Dr. James Walker, former CEO of AWEA, which is the DC-based lobbying arm of the wind industry. Wind energy is an American success story: the U.S. invented utility-scale wind farms, and by investing in them here in the U.S., we now have some of the best infrastructure with a 20-year life span—that turns out to be much less in reality—this country has ever built.

How did we become #1? Well, to be honest, wind is #1 when we say it is. Back in 2012 when we said wind was the “top source of new generation,” we were referring to installed capacity, not actual energy production (natural gas actually beat us by ten fold that year in new production). For the purposes of this article, though, we like how our production stacks up against China’s, so we’ll go with that. Trust us—we’re experts. 

America is blessed with excellent wind resources, which are only economical with taxpayer subsidies, and hard-working Americans high-powered lobbyists have made great strides in capturing and delivering more wind energy subsidies to American consumers multi-national wind conglomerates. That is why the average U.S. turbine is more productive – powering more homes than turbines in other countries – due to technological progress. We’ll never be as productive as natural gas, coal, hydroelectric, or nuclear power plants, but our wind turbines are slightly better than China’s, and that’s good enough for us.

A key, successful federal tax policy has encouraged companies to become this efficient, by only rewarding performance. And by performance we mean randomly generating electricity whenever the wind happens to blow, about 30 percent of the time on average, not when people actually need it. Unfortunately, Congress let the renewable energy Production Tax Credit expire once again at the end of 2014. By providing a long-term, stable policy, we can retain our number one status, keep well-paying jobs and invest in American communities. We realize that letting the PTC remain expired is a long-term and stable policy too, but please don’t do that. If the PTC goes away even AWEA won’t be able to fudge the numbers enough to make the wind industry look good.

There is bipartisan support for this tax incentive, as shown in the State of the Union address and the GOP rebuttal. Newly-elected Senator Joni Ernst (R-Iowa), who delivered the rebuttal, may not agree on much with President Obama. One thing they do agree on is that investing in wind power makes sense and that the Production Tax Credit is the right policy to continue growing this abundant, homegrown resource. That’s not news to people who know the PTC was actually written by an Iowa Republican, but it sounds nice. The hundreds of millions of tax dollars that get diverted to Iowa every year through the PTC probably have no bearing here either. Please ignore all of that.

If the parties come together to pass this commonsense policy, the U.S. can write the next chapter on the historical rise of wind power as it transforms from an obscure technology in 1888 to a slightly less obscure technology over a hundred years later. Very exciting. According to the U.S. Department of Energy’s forthcoming Wind Vision report, American wind power can double wind by 2020 and double again by 2030 to provide 30 percent of U.S. energy. We can do all this and save consumers money simultaneously if policymakers keep supporting federal tax incentives to attract the necessary private investment. I am literally begging you to support my industry (which is really strong, I promise) with your tax dollars. Without handouts from Congress, we are pretty much helpless.

Kiernan is CEO of the American Wind Energy Association.


(The original piece is here for reference: http://thehill.com/blogs/congress-blog/energy-environment/230248-the-state-of-the-wind-industry-is-strong)

Red Tape

Red Tape 600AEA2

LNG Reform Deserves Swift Senate Approval

Sen. Cruz is proposing an amendment to the Keystone XL bill that will require that the Department of Energy to expedite all approvals for LNG export to any World Trade Organization (WTO) country. This would be a major improvement over the status quo.

Currently the LNG export approval process is too slow and cumbersome. LNG exports require two different permits from the federal government. The Federal Energy Regulatory Commission (FERC) reviews an application for an LNG export terminal and issues construction authorization. The Department of Energy (DOE) reviews the application and issues the export license.

Last August, DOE proposed rules that limited expedited LNG export reviews to only projects which would export LNG to countries with which the U.S. has Free Trade Agreements. The problem is that the U.S. only has Free Trade Agreements with a mere 20 countries, including countries like Bahrain, Jordan, Morocco, and Oman that have little need for LNG.

Last year, Sens. Mark Udall, Begich, and Heitkamp introduced the American Job Creation and Strategic Alliances LNG Act—S. 2083. Both Sens. Udall and Begich lost their re-election bids, but Sen. Cruz is carrying on their legacy on LNG reform by offering this language as an amendment to the Keystone XL bill. As Sen. Udall said about this language last year:

Our nation’s clean-burning and job-creating natural gas has an important role to play in strengthening global security. The ongoing crisis in Ukraine shows why we need to responsibly develop our natural gas reserves and expand our ability to export this resource abroad. This common-sense bill will strengthen our economy at home and help Colorado companies and small businesses across America bolster our presence abroad.

That was true last year, and it is still true today. LNG exports will help in places like Ukraine, but it will also help our allies such as Japan who rely on large amounts of LNG. This language deserves swift action by the Senate.

NREL Survey Fatally Flawed; Past Time to Repeal RPS

More than half of U.S. states have established Renewable Portfolio Standards (RPS) requiring electric utilities to generate a certain percentage of their electricity from renewable sources. These mandates raise energy costs by forcing households and businesses to use more wind and solar energy, which are more expensive and less reliable than traditional energy sources like nuclear, natural gas, coal, and hydro.

Faced with these facts, some states are considering repealing or reforming their RPS mandates. The National Renewable Energy Laboratory (NREL) and Lawrence Berkeley Laboratory, however, are trying their best to build the case for the states to keep their RPSs with a recent survey. But as a new study from the Reason Foundation shows, the NREL and Lawrence Berkley Laboratory survey is fatally flawed.

The authors of the Reason study, Tom Tanton and Julian Morris, found that the NREL survey contains “a number of structural and conceptual problems” that “end up potentially misleading policymakers” who may be interested in repealing their state’s RPS. Some of the study’s key flaws include:

  • “The Survey is incomplete with respect to the cost of integration of intermittent and volatile generation sources. Specifically it ignores the cost of backup capacity and the lost efficiency of power plants required to balance the output of intermittent and volatile generation.”
  • “Similarly, the Survey ignores the very expensive Production Tax Credit that shunts almost half of the cost of wind installations onto taxpayers (many of whom realize zero benefit from wind installations) made even worse by special tax depreciation available only to certain renewables.”
  • “The benefit estimates also suffer from double counting. Double counting is especially prevalent with emission reductions, as those benefits (and their costs) have already been accounted for in such regulatory programs as Clean Air Act Regulations. The majority of the dollar benefits from emission reduction cited in the Survey are from reductions of carbon dioxide ‘priced’ at the EPA’s highly controversial ‘social cost of carbon.’”

The NREL survey claims that the benefits of RPS mandates generally outweigh the costs. But as Tanton and Morris explain, the survey fails to take into account the full costs of forcing more renewables on to the grid while it double counts some of the benefits. Reason concludes that the survey “should not be used to formulate or justify policy in any state or federal legislation.”

Indeed, RPS mandates make energy more expensive for American families. As the Institute for Energy Research explains in testimony submitted to the Kansas State Senate, RPSs force states to replace their most affordable, abundant energy sources (nuclear, natural gas, coal) with more expensive, unreliable sources (wind and solar).

The following chart compares the costs of installing and using various types of energy sources. As you can see, wind and solar are both significantly more expensive than nuclear, natural gas, and coal.

lcoe rps

These figures are not an academic exercise—they have real-world impacts on electricity prices. States that use the most affordable energy sources also tend to have the lowest energy prices. As the following chart illustrates, coal generates the largest share of electricity in seven out of the top 10 states with the lowest retail electricity prices. The other three states use primarily natural gas and hydro. And only three out of the 10 states with the lowest electricity rates have RPS mandates (a few set voluntary goals).

lowest res prices

Lawmakers who are considering repealing or reforming their state RPS mandates should not let the flawed NREL study give them cold feet. Renewables are more expensive and less reliable than traditional energy sources. That means any state laws mandating or subsidizing renewables tend to result in more expensive energy costs in that state. These costs will only increase as RPS mandates increase. If people want to see lower prices, getting rid of RPS mandates is a good place to start.

AEA Energy Analyst Alex Fitzsimmons authored this post

White House Threatens to Veto American Infrastructure

In his 2015 State of the Union address, President Obama emphasized the importance of infrastructure while at the same time making a not-so-subtle quip about the Keystone XL oil pipeline:

21st century businesses need 21st century infrastructure – modern ports, stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this. So let’s set our sights higher than a single oil pipeline. Let’s pass a bipartisan infrastructure plan that could create more than thirty times as many jobs per year, and make this country stronger for decades to come. [Emphasis mine]

However, the president’s disdain for improving America’s pipeline infrastructure is not unique to Keystone XL. Before his SOTU speech, the White House announced that the president planned to veto H.R. 161, The Natural Gas Pipeline Permitting Reform Act if it ever made it to his desk. This legislation, introduced by Rep. Mike Pompeo (R-KS), would “provide for the timely consideration of all licenses, permits, and approvals required under Federal law with respect to the siting, construction, expansion, or operation of any natural gas pipeline projects.” God forbid.

Essentially, the bill would speed up the process of expanding and constructing new natural gas pipelines by:

1. Requiring the Federal Energy Regulatory Commission (FERC) to approve or deny an application within 12 months.

2. Requiring the responsible agency to approve or deny a license, permit, or approval within 90 days of FERC’s approval. The agency can extend the time period by 30 days if it demonstrates that it cannot complete the process in the 90 days.

Why We Need More Pipelines

Pipelines are critical for delivering affordable and reliable energy to American families. Last winter’s polar vortex and the stress it put on the Northeast’s pipeline infrastructure demonstrated the need to expedite the permitting process and construct more natural gas pipelines. In recent years, the region has increasingly turned to natural gas as an electricity source in addition to using it as a heating source. When demand for heating spiked last winter, there simply wasn’t enough pipeline capacity to meet this demand.

As the Institute for Energy Research has explained, this lack of infrastructure sent natural gas and electricity prices through the roof last winter. On January 6, 2014 natural gas prices more than doubled in New England and nearly quadrupled in New York. Similarly, on Tuesday January 7, 2014, wholesale electricity prices in the region, which typically hover around $40 or $50 per megawatt-hour, jumped to $200 in New England and $500 to $1,000 in other parts of the region. These skyrocketing prices could have been avoided, or at least lessened, had there been enough pipeline capacity.

Conclusion

Last winter’s polar vortex clearly demonstrated the need for more natural gas pipelines. By streamlining the process, the Natural Gas Pipeline Permitting Reform Act would help the Northeast and other impacted regions avoid a similar fate during future winters. Unfortunately, President Obama’s promise to veto this commonsense infrastructure bill could leave Americans susceptible to future price spikes.

Click here to read AEA’s “Key Vote” alert for H.R. 161