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[EPA’s Clean Power Plan] has the potential to comprehensively reorder the jurisdictional relationship between the federal government and states as it relates to the regulation of public utilities and energy development. . . . .[States] will have entered a comprehensive “mother-may-I?” relationship with the EPA that has never before existed. — FERC Commissioner Tony Clark

Five Commissioners of the Federal Energy Regulatory Commission (FERC) testified today on EPA’s Clean Power Plan before the House Energy and Commerce Subcommittee on Energy and Power.

FERC’s Tony Clark

EPA’s Clean Power Plan establishes carbon dioxide (CO2) emission reduction targets for the electric power sectors of 49 states. The Plan outlines four “building block” strategies states are likely use to meet their respective targets: (1) improve the efficiency of coal power plants, (2) shift base load generation from coal to natural gas, (3) shift electric generation from fossil fuels to renewables and nuclear, and (4) reduce electricity consumption through demand-side management (DSM) programs.

In his briefing memo, Subcommittee Chairman Ed Whitfield (R-Ky.) asserts that EPA’s proposed rule “would require significant changes to the way electricity is generated, transmitted, and consumed in States across the country.” Two witnesses spoke directly to that point.

FERC Commissioner Philip D. Moeller described the fundamental change contemplated by the Clean Power Plan as a switch from “economic dispatch” to “environmental dispatch”:

For decades we have relied on the concept of “economic dispatch” of electric generation. Simply put, the power plants with the lowest operating cost are called first to generate electricity — with various reliability requirements and other factors as part of the decision, depending on the structure of various markets. By moving to what is essentially “environmental dispatch,” units will be called to generate primarily based upon the emission profile of the unit.

It is hard to imagine how giving low-carbon generation priority over low-cost generation would not increase electric rates. It is also not hard to imagine how pushing renewables higher in the “merit order of dispatch” could complicate the task of balancing loads and ensuring grid reliability.

Commissioner Tony Clark views the basic change in political terms. The Clean Power Plan replaces cooperative federalism with a hegemonic system in which EPA has final say on how states generate, transmit, and consume electricity: [click to continue…]

Yesterday, CEI published a new study by me, on EPA’s Clean Power Plan. In a nutshell, I argue that the EPA’s rule lacks an electoral mandate, contravenes congressional intent, and was crafted by special interests. In a word, the regulation is illegitimate.

Yesterday I participated on a Heritage Foundation panel on ‘Extremism at the EPA: A Discussion on Federal Overreach, Regulation Costs, and Climate Realities.’ Fellow panelists were Rep. Mike Kelly (R-Penn.) and Heritage’s David Kreutzer. The event was hosted by Heritage Fellow Nicolas Loris. I’ve reposted the video below.

Rep. Kelly started things off with a rousing speech in defense of affordable energy. Kreutzer then debunked the so-called “social cost of carbon,” the dubious statistic on which EPA relies in order to justify its climate regulations. Finally, I discussed the illegitimacy of EPA’s recently proposed Clean Air Act regulations for greenhouse gases from existing power plants, known as the Clean Power Plan. Kreutzer starts at the 44^th minute; I start at the 58^th minute. Over at the Daily Signal, Natalie Johnson wrote a story on the panel.

The top story in international climate news this week is the Margarita Declaration issued in the name of 130 ‘social’ (non-governmental) organizations participating in the July 15-18 Social Pre-COP meeting on Margarita Island, Venezuela. The groups don’t sign the document, so we don’t know which (or how many) of them actually endorse it. Basically it’s a rant demanding that ‘social’ organizations have more clout in climate treaty negotiations. Participants seek in particular to influence the UN-sponsored COP 20 negotiations in December, in Lima, Peru.

The Margarita Declaration is attracting media attention because it (1) blames the climate ‘crisis’ of the “current capitalist hegemonic system” (par. 46), and (2) rejects solutions “whereby wealthy industrialized countries and corporations ultimately seek to use climate change as a source of profit” (par. 19). The latter include such ‘green economy’ policies as carbon trading and restrictions on deforestation in developing countries.

Some commentaries have pounced on the Declaration as smoking-gun proof that climate activists are watermelons — green on the outside, red on the inside. The environmental movement has no lack of collectivist impulses. Consider the obsession with “consensus” (groupthink), the popularity of social cost of carbon analysis (a pseudo science reminiscent of Marx’s labor theory of value), the zeal for green energy mandates (Soviet-style production quota), and the relentless lobbying for political-pricing of energy (cap-and-trade, carbon taxes) to correct alleged “market failures.”

Nonetheless, there are important differences. [click to continue…]

EPA’s Clean Power Plan, its carbon “pollution” rule for existing power plants, proposes carbon dioxide (CO2) emission reduction targets that states can meet only by enacting (or tightening) three of the four main climate policies contained in H.R. 2454, the American Clean Energy and Security Act of 2009, popularly (or unpopularly) known as Waxman-Markey. Those policies are: cap-and-trade, renewable energy quota, and demand-reduction mandates.

The fourth Waxman-Markey policy, performance standards requiring new coal power plants to install carbon capture and storage (CCS) technology, is the centerpiece of EPA’s carbon “pollution” rule for new coal power plants.

Waxman-Markey narrowly passed in the House in June 2009, but once exposed as ‘cap-and-tax,’ it became a major political liability. Senate leaders tried to rebrand the proposal as “pollution limits” and “linked fee,” but that fooled no one, so eventually they pulled the plug on all companion bills. Cap-and-trade was a critical issue in the November 2010 elections. In the House, “virtually every close race was lost by a Democrat” who voted for Waxman-Markey, observes Cato Institute scientist Patrick Michaels. In contrast, “every close Senate race was won by a Democrat,” in no small part because they mothballed cap-and-trade.

In a democracy, policy is supposed to derive from statutes, which in turn are supposed to derive from elections. Cap-and-trade remains in such bad odor that neither President Obama nor other Democratic leaders campaigned for it in the 2012 election cycle. Indeed, President Obama ran to the right of Mitt Romney on energy issues, even accusing his rival of being anti-coal. Yet Obama’s EPA now acts as if it has a legislative and popular mandate to implement the old Waxman-Markey agenda.

A somewhat unique feature of American democracy is federalism. This allows each state to be a “laboratory of democracy,” empowering Americans to “vote with their feet” for and against state policy regimes they like or dislike. The Clean Power Plan would stifle such choice and competition. [click to continue…]

This week’s Platts Energy Week with Bill Loveless started with an interview with the co-chairman of the newly formed congressional refinery caucus, Rep. Pete Olson (R-TX). I’d never before heard Olson speak; he’s a peculiar monotone cadence that sounds sorta like Boomhauer from King of the Hill.

I’d like to draw attention in particular to Rep. Olson’s extremely impressive discourse on risk. About a third of the way through the interview, Host Bill Loveless referenced a couple recent refinery accidents, and questioned Rep. Olson about whether the industry should be subject to greater regulatory scrutiny.

Rep. Olson first executed some clever political jujit-su. He assured Loveless that the industry is safe, and then waxed lyrical about growing up near refineries along the Gulf Coast, even going so far as to recall how much enjoyed and appreciated as a child the refineries strewing Christmas lights during the holiday season.

The host pressed and then Rep. Olson got serious and delivered a great answer. He said, in effect, that refining entails the manipulation of volatile gases under high pressures at high temperatures and, as such, it cannot be risk-free. However—and this is his key insight—this state of risk is equally true for much of the advanced engineering on which modern society relies—from driving cars to building houses.  Humans make mistakes; ergo risk. The question then becomes: Is [further] federal regulation based on reasonable risk-management? Or is it championed by special interests for which fossil fuels are “dirty” and therefore evil, per se? Rep. Olson’s interview is posted below.

After Rep. Olson, Bill Loveless interviewed U.S. Department of State “energy envoy” Carlos Pascual. The segment was interesting insofar as it demonstrated how climate change policy is incompatible  with the art of diplomacy.

Ambassador Pascual is no doubt a brilliant mind. I suspect he learns languages as easily as I get sunburned. And whenever he discussed non-climate diplomacy, he demonstrated great agility of mind. But when he veered into environmental policy, he sounded loopy.

[click to continue…]