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U.S. House Energy Bill Debate Today

The House of Representatives starts the debate today on 38 amendments out of an original 103 submitted for H.R. 8 —North American Energy Security and Infrastructure Act of 2015 — and concludes discussion tomorrow. The 2015 energy bill would modernize energy infrastructure, build a 21st century energy and manufacturing workforce, bolster America’s energy security and diplomacy, and promote energy efficiency and government accountability.

Despite the President’s threat to veto the House bill, lawmakers from both parties have over one hundred amendments to the Energy and Commerce Committee’s broad energy bill to discuss in this week’s floor debate.

The amendments included many policy recommendations relating to energy, natural resources, infrastructure and grid security. Below are a few of the 38 amendments to be debated:

  • Rep. Joe Barton (R-Tex.) has filed an amendment to repeal the crude oil exports ban.
  • Sean Duffy (R-Wis.) is proposing to require the Secretary of Energy to collaborate with the Secretariat of Energy in Mexico and the Ministry of Natural Resources in Canada when developing guidelines to develop skills for an energy and manufacturing industry workforce.
  • Rep. Gene Green (D-Tex.) has offered an amendment that would establish a permitting process within DOE, the Federal Energy Regulatory Commission and the State Department for cross-border infrastructure projects.
  • Rep. Scott Peters (D-Calif.) has an amendment that includes energy storage as a form of energy that DOE should consider to enhance emergency preparedness for energy supply disruptions during natural disasters.
  • Rep. Trent Franks (R-Ariz.) has an amendment that secures the most critical components of America’s electrical infrastructure against the threat posed by a potentially catastrophic electromagnetic pulse.
Dec 02, 2015 | Leave a Comment | by

New NERA Study Details Economic Impact of Clean Power Plan

A new study by NERA Economic Consulting explains the economic impact from increased regulations from the federal government’s Clean Power Plan (CCP) in great detail. The CCP’s goal is to reduce carbon emissions from new and existing fossil-fueled power plants in the United States. States have the responsibility to meet the CPP goals. If they fail to come up with a carbon reduction plan or submit a plan that does not comply with CPP, the federal government steps in with their plan to meet the CPP goals. CPP goals include:

  • All compliance scenarios lead to large reductions in average CO2 emissions.
  • Reductions range from 19% to 21%.
  • By 2031, annual emissions are expected to be 36% to 37% lower than in 2005.

NERA estimates that the impact of the CPP on the energy sector, electricity rates and to the economy include:

  • Total energy sector expenditure from 2022 through 2033 increases range from $220 to $292 billion.
  • Annual average expenditures increase between $29 and $39 billion each year.
  • Average annual U.S. retail electricity rate increases range from 11%/year to 14%/year over the same time period.
  • Losses to U.S. consumers range from $64 billion to $79 billion on a present value basis over the same time period.

State-level average electricity price increases demonstrate that many states could experience significant price increases:

  • 40 states could have average retail electricity price increases of 10% or more.
  • 17 states could have average retail electricity price increases of 20% or more.
  • 10 states could have average retail electricity price increases of 30% or more.

The highest annual increase in retail rates relative to the baseline also shows that many states could experience periods of significant price increases:

  • 41 states could have “peak” retail electricity price increases of 10% or more.
  • 28 states could have “peak” retail electricity price increases of 20% or more.
  • 7 states could have “peak” retail electricity price increases of 40% or more.
Nov 18, 2015 | 2 comments | by

Let Wind and Solar Energy Subsides Expire

Wind energy is doing very well…even though renewable sources of energy are still just a fraction of energy output in the United States with significant federal and state subsides. The success that some states have had with wind energy production is encouraging other states to expand their wind energy production offshore. However, offshore wind facilities will be very expensive to build and maintain.

According to the Energy Information Administration (EIA):

  • Offshore wind is 2.6 times more expensive as onshore wind power and is 3.4 times more expensive than power produced by a natural gas combined cycle plant.
  • On a kilowatt hour basis, offshore wind power is estimated to cost 22.15 cents per kilowatt hour, while onshore wind is estimated to cost 8.66 cents per kilowatt hour and natural gas combined cycle is estimated to cost 6.56 per kilowatt hour.
  • Overnight capital costs (excludes financing charges) are 2.8 times higher for offshore wind than onshore wind power.
  • An offshore wind farm is estimated to cost $6,230 per kilowatt, while those costs for an onshore wind farm are estimated to be $2,213 per kilowatt.

Apparently, solar energy is now more affordable. If solar energy is now affordable, then the federal subsidies are no longer needed. These federal subsidies have provided wind and solar developers with as much as $24 billion from 2008 to 2014.

The biggest wind and solar tax credits have expired or will expire by 2016. Let the renewable energy sources compete in the market by letting their subsidies expire.

Nov 11, 2015 | 3 comments | by

The Bargain Mass Transit Option

SkyTran is an aerial mass transit system with small cars that magnetically glides on elevated tracks 20 to 30 feet above the ground. The cars can hold up to four people and travel at 60mph.

SkyTran has been in development over the past five years and is just beginning to run a pilot program in Tel Aviv. Compared with most mass transit options, SkyTran is a bargain for cities planning mass transit or expanding their existing systems.

For instance, the city of Dallas has a large light rail system (DART) that was recently expanded to double in size to over 90 miles of track. The $2.5 billion expansion cost $56 million per mile ($35 million per kilometer). In addition, the $7.3 million cost for each rail car that holds 209 passengers gives a cost of $35,000 per passenger.

SkyTran, however, costs only $13 million per mile ($8 million per kilometer). The small cars only cost $30,000 at a price of $7,500 per passenger.

The city of Dallas could have saved almost $2 billion in light rail mass transit expansion if SkyTran had been an available choice in mass transit.

 

Nov 04, 2015 | 5 comments | by

Clean Power Plan Opposition Grows

A coalition of 24 states and a power company are suing to stop the Obama administration’s Clean Power Plan (CPP), calling it an unlawful federal bid to control state power grids.

As part of the lawsuit, the states seek to place a hold on the Clean Power Plan’s deadlines for meeting its carbon emission goals, which supporters have described as necessary to improve air quality but foes have criticized as arbitrary and unrealistically strict.

In addition to the lawsuit by the states, pro-business groups have also joined the fight against the Clean power Plan that mandates a massive reduction in carbon emissions in the next 15 years, arguing that it will jack up energy costs and slash jobs without making a dent in greenhouse gases.

U.S. Chamber of Commerce and 14 other business groups filed a lawsuit against the Environmental Protection Agency. Their lawsuit:

  • Claims the EPA has overstepped its authority by attempting a takeover of state power plants.
  • Seeks a hold on the rule’s implementation pending the legal challenge.
  • Parallels the lawsuit filed same day by 24 states.

The Rule requires a fundamental restructuring of the power sector, compelling States, utilities and suppliers to adopt EPA’s preferred sources of power and fuel and to redesign their electricity infrastructure in the process.

A preliminary analysis of the Clean Power Plan issued in October, 2014 by the NERA economic consulting calculated that the CPP could boost retail electricity prices 12 percent to 17 percent.

The Clean Power Plan would effectively shut down coal-fired power plants, which provide inexpensive and reliable electricity but cannot reduce their emissions to the required levels using current technology.

Thousands of businesses will stop providing support services to coal-fired plants and coal mines. Many coal mines will have to reduce operations or close entirely, laying off numerous employees in the process.

Oct 28, 2015 | 1 comment | by

War on Domestic Energy Supply

Anti-energy activists are planning to attack the oil and natural gas supply in the United States through a critical strategy. They want the federal government to stop new leases for oil and natural gas development. The damage to our domestic supply and energy output could:

  • Increase oil imports and greater dependence on foreign oil. As EIA projects, the United States will continue to use oil well into the future, and more imports would increase U.S. dependency on others for its energy needs.
  • Diminish U.S. energy security. At home and abroad, less domestic energy production and increased dependency would make the U.S. less secure in the world, more vulnerable to global energy pressures.
  • Weaken the economy. Oil and natural gas are the engines of our economy, and cutting domestic development will mean job losses, lower GDP, less revenue for government and higher household costs.
Oct 28, 2015 | Leave a Comment | by

Federal Solar Energy Subsidy Expires 2016

The Solar Investment Tax Credit (ITC) is expected to expire in 2016. The solar energy industry is trying to get another extension to last until the year 2022. They believe that without this critical subsidy, then they will lose 80,000 jobs in just 2017 alone.

  • The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.
  • The multiple-year extension of the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 — a compound annual growth rate of 76 percent.

CEO of solar developer Greenwood Energy calls for reducing the ITC to 10 in 2017 and letting it expire in 2018.

As of December 2013, the United States Treasury Department had awarded more than $4.4 billion to solar projects.

Once the ITC expires, the solar energy market will level out, losing the inflated strength it has been receiving from the ITC and become more competitive within the energy market.

Sep 28, 2015 | Leave a Comment | by

Close to Lifting the U.S. Crude Oil Export Ban

Congress is planning to vote on lifting the ban on U.S. crude oil exports by the end of this month. Across the aisle, most Republicans support the end of the export ban. In fact, the Republican-controlled House is scheduled to vote on legislation that would lift the restrictions. In the Senate, Majority Leader Mitch McConnell said for the first time he supports lifting the ban.

Congress passed the ban after the 1973 Arab oil embargo, which sent gas prices soaring. Now, the “shale revolution” has stimulated tremendous domestic oil and natural gas production, thanks mainly to hydraulic fracturing and horizontal drilling methods. The Obama administration has permitted exports of some exchanges of oil with Mexico and federal policies permit exports of crude oil to Canada.

The EIA projects the U.S. will eliminate net energy imports sometime between 2020 and 2030. Rising oil prices would mean the U.S. reaches this landmark turning point sooner, but even low prices are unlikely to stop the swing from importer to exporter. The U.S. has been a net importer of energy since the 1950s.

Opponents of lifting the ban include former Secretary of State and presidential hopeful Hillary Clinton who said she would only support lifting the U.S.’s 40-year-old ban on oil exports if it was part of a broader plan that included concessions from the oil and natural gas industry. The United Steelworkers, which represent workers at several Louisiana refineries, contends that lifting the ban would jeopardize U.S. energy security and adversely affect gas prices.

The controversy over whether or not to lift the ban centers around fears that no ban could mean higher gasoline prices held by some Democrats and consumer groups. Further, environmentalists worry lifting the ban would lead to more oil & gas exploration and development. Even, President Obama opposes such legislation.

However, a recent Government Accountability Office review noted wide agreement among analysts that allowing crude exports would tend to decrease international oil prices, which is the way to depress gasoline prices. That is why analysts predict that lifting the export ban would increase U.S. crude oil prices by $2 to $8 per barrel but reduce U.S. gasoline prices by 1.5 cents to 13 cents per gallon.

Another recent report by the United States Energy Information Administration says that although unrestricted exports of U.S. crude oil would either leave global crude prices unchanged or result in a small price reduction compared to parallel cases that maintain current restrictions on crude oil exports, other factors affecting global supply and demand will largely determine whether global crude prices remain close to their current level.

Sep 21, 2015 | 1 comment | by

New Study Looks at Lifting the Crude Oil Export Ban

According to a new report out from the United States Energy Information Administration:

Recent increases in domestic crude oil production and the prospect of continued supply growth have sparked discussion on the topic of how rising domestic crude oil volumes might be absorbed, including the possibility of removing or relaxing current restrictions on U.S. crude oil exports.

Current laws and regulations allow for unlimited exports of petroleum products, but require licensing of crude oil exports.Through the first five months of 2015, crude oil exports averaged 491,000 b/d. In addition, exports of processed condensate through the first five months of 2015 are estimated to have reached an average of 84,000 b/d.

  • The discount of West Texas Intermediate (WTI) crude to North Sea Brent, the latter a key marker for waterborne light crudes, is expected to increase to more than $10/b in cases where current crude oil export policy is maintained and domestic production reaches or exceeds about 11.7 million b/d by 2025.
  • In cases where the Brent-WTI spread grows beyond $6/b–$8/b, removal of current restrictions on crude oil exports would result in higher wellhead prices for domestic producers, who would then respond with additional production.
  • Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.
  • Combined net exports of crude oil and petroleum products from the United States are generally higher in cases with higher levels of U.S. crude oil production regardless of U.S. crude oil export policies. However, crude oil export policies materially affect the mix between crude and product exports, particularly in the HOGR and HOGR/LP cases, which have high levels of domestic production.
  • Refiner margins (measured as the spread between crude input costs and wholesale product prices), which tend to increase as the Brent-WTI spread widens, would be lower without current restrictions on crude oil exports than with them in high-production cases where export restrictions lead to a widening Brent-WTI spread.

Although unrestricted exports of U.S. crude oil would either leave global crude prices unchanged or result in a small price reduction compared to parallel cases that maintain current restrictions on crude oil exports, other factors affecting global supply and demand will largely determine whether global crude prices remain close to their current level, as in the Low Oil Price case, or rise along a path closer to the Reference case trajectory.

Sep 09, 2015 | 1 comment | by

Economic Gain Increases Environmental Quality

The relationship between environmental quality and economic development has been described as an environmental Kuznets curve: Initially, economic development exacerbates environmental problems; however, as an economy grows and develops, average incomes reach a certain point beyond which environmental indicators start to improve.  Indeed, as gross domestic product per capita increases, emissions of pollutants per $1 of gross domestic product falls. This is true also of industrial emissions of carbon dioxide, which was not traditionally viewed as an air pollutant, but is now regulated by the Environmental Protection Agency.  [See the table.] This suggests that economic progress is a prerequisite for improving environmental quality generally, and specifically for meeting carbon dioxide emissions reductions goals.

Carbon Dioxide Emissions

(kilograms of CO2 per $1 gross domestic product)

 

  1990 2000 2010
China 1.9695 1.0110 0.9084
India 0.6533 0.6538 0.5338
Japan 0.3341 0.3328 0.2966
Singapore 0.6105 0.3196 0.0510
South Africa 1.1881 1.0964 0.9692
United Kingdom 0.4272 0.3169 0.2416
United States 0.5988 0.5121 0.4174

 

Note: Dollars of GDP adjusted for purchasing power parity.

Source: Millennium Development Goals Database, United Nations Statistics Division.

Special contribution by NCPA research associate Jiawen Chen. 

Aug 26, 2015 | Leave a Comment | by
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