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POSTED AT 7:34 PM ET, 06/17/2010

Whatever works, just do it

Q: Should EPA keep pressing ahead with new greenhouse gas rules, or should it accept Congress will shape the future of any mandatory limits on carbon dioxide?"

The conventional wisdom around Washington is that it is better for Congress to legislate on climate change than for EPA to regulate. That is correct only if Congress can and does act effectively.

Certainly Congress has more ability than EPA to create a flexible, targeted program of action integrated with national energy policy. However, EPA regulation is preferable to a bill that coddles the coal industry and allows electric utilities to keep using their old, energy-wasting, pollution-spewing antiques. The Post reported last week that 71 percent of the people it surveyed support federal regulation of greenhouse gas emissions.

In 2007, the Supreme Court found that "greenhouse gases fit well within the Clean Air Act's capacious definition of air pollutant." In response, EPA Administrator Lisa Jackson last year made an "endangerment finding" - that the current and projected concentrations of greenhouse gases in the atmosphere "threaten the public health and welfare of current and future generations." She has laid out a cautious, step-by-step approach to regulate large-scale sources of carbon pollution. That can work just as well in the utility sector as the acid rain cap did in the 1990s. Taking away EPA's authority would set a dangerous precedent for environmental protection in the United States.

Nor is the importance of EPA's authority limited to greenhouse gases. Over the next three years, EPA will issue several new regulations dealing with conventional pollutants under the Clean Air Act. Those could shift a very substantial part of our generating capacity from coal to lower-carbon natural gas in conjunction with direct regulation of greenhouse gases.

The globe just recorded the warmest March, the warmest April, and the warmest May since record keeping began in 1880, according to NOAA. The period from January to May was the warmest on record. Hello! Whether Congress or EPA, the only path that is unacceptable is inaction.

BY Reid Detchon

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POSTED AT 11:05 AM ET, 06/17/2010

EPA should proceed with market-based regulations

Q: Should EPA keep pressing ahead with new greenhouse gas rules, or should it accept Congress will shape the future of any mandatory limits on carbon dioxide?

The EPA can and must proceed with new rules--but it must do so using market-based mechanisms that will not clash with possible future congressional actions. It is bound by law to proceed, but it can move wisely by laying groundwork that will come at the lowest possible costs to business and will mesh well with the legislation Congress will hopefully enact someday soon.

In 2007, the Supreme Court ruled in Massachusetts v. EPA that the agency had to either prove that greenhouse gases were not a danger to public welfare or else, if it could not, it had to regulate those pollutants. In the remaining years of the Bush tenure, his administration stalled on its response, causing legal petitions for prompt action to pile up on EPA's desk. Last year, EPA Administrator Lisa Jackson submitted the finding, based on decades of climate science, that showed the seven heat-trapping gases, including carbon dioxide, are indeed a serious problem. Now lawsuits and protestations are piling up on the other side.

The loudest of these was Senator Lisa Murkowski's resolution of disapproval of the EPA's endangerment finding. In one fell swoop the measure would have removed the agency's ability to regulate the gases--not by disapproval of EPA's policy choices, but by the more extreme act of rejecting the well-documented scientific evidence for climate change. The proposal failed, but not by enough to comfort those concerned with the effects of too much carbon in our atmosphere. With 47 Senators essentially casting their votes for climate change denial, many now wonder where the legislative action can go from here.

Last year, Policy Integrity's detailed legal analysis of the Clean Air Act looked at the options and obligations EPA faces following the Supreme Court's 2007 decision. We found there are two roads the agency can take. One option is command-and-control regulations, which will be costly, inefficient, and almost inevitably will conflict with legislation if and when Congress finally does act. Or EPA can select market-based mechanisms, like the one used successfully to combat acid rain since the 1990s, which allow businesses to cut their emissions at the lowest possible cost. As an added bonus, if Congress proceeds with its own trading plan, the EPA's market-based actions could merge seamlessly instead of getting in the way.

Policy Integrity also submitted the first legal petition filed with the Obama EPA requesting the start of greenhouse gas regulations for vehicle fuels. It's a good example of how the agency could follow the model of other successful cap-and-trade programs, already in place, to target carbon emissions without imposing major costs on industry.

EPA has a legal obligation to proceed with rules that rein in our greenhouse gas emissions. The agency's wisest course of action would be to try to anticipate what Congress will eventually do and begin to set up market-based mechanisms that will not clash with legislation in over-lapping and onerous ways.

The irony of the question of who should act first (EPA or Congress?), and the irony of much of the six-hour debate over the Murkowski resolution, is that the Senate has seen six climate and energy bills this year and has yet to act on any of them. It might very well make sense to curtail the EPA's existing authority in specific and targeted ways once new climate legislation is in place. But until a bill has been passed, the EPA should push forward.

BY Richard L. Revesz

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POSTED AT 11:08 AM ET, 06/16/2010

Energy policy is beyond EPA's mission

Q: Should EPA keep pressing ahead with new greenhouse gas rules, or should it accept Congress will shape the future of any mandatory limits on carbon dioxide?

Climate policy is energy policy and that is beyond EPA's mission and competence.

Government agencies have a hard enough time with their assigned missions without attempting to perform ones that are beyond their expertise and competence.

EPA knows, as does Congress, that the Clean Air Act was never intended to cover regulation of CO2. The Act's legislative history and the 1990 reauthorization makes that abundantly clear. The Supreme Court made a bad decision in imputing authority that explicitly was never granted. Furthermore, it did not say that EPA must regulate; only that it had the authority to do so.

The first thing that Congress should now do is to make its intent clear by legislative action, either by passing Senator Rockefeller's proposal or using the appropriations process to deny EPA funds to regulate CO2. Then, it should abandon the flawed efforts built on cap and trade. No serious and objective analysis shows cap and trade is an effective mechanism. It is one that will harm the economy, harm consumers and make traders and those who can game the system rich.

The climate change risk is a long-term challenge that will be best addressed by technology--faster deployment of current technology and incentives to speed the development of new technology. Congress should focus on actions that bring about those two objectives cost-effectively in concert with actions to promote strong economic growth.

The best and most honest action that Congress can take is a simple, straightforward carbon tax with the proceeds returned to taxpayers through the reduction in a more distorting tax like the payroll tax.

BY William O'Keefe

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POSTED AT 10:52 AM ET, 06/16/2010

It's about carbon, not Congress

Q: Should EPA keep pressing ahead with new greenhouse gas rules, or should it accept Congress will shape the future of any mandatory limits on carbon dioxide?

So the good news, I guess, is that Lisa Murkowski's resolution went down. The bad news is that in a 60-vote Senate, it's hard to imagine a climate bill, or even a mere energy bill that does something about coal-fired plants, getting through.

If I saw the Senate debate over Murkowski's effort to bar the EPA from regulating carbon happening anywhere else, I'd sigh and tell myself that these folks simply don't know much about the Senate. But this debate is happening in the Senate! It's as if they've not been paying attention to, well, themselves. And whatever faults I attributed to the United States Senate, being insufficiently interested in itself was not one of them.

But let's recap. Murkowski has based her argument on "the undisputed fact that climate policy should be written here in Congress." She is not saying that climate change isn't happening and thus there's no need to regulate carbon. She's just saying Congress should do the job.

Okay. There is currently a bill called the American Power Act. It was written by Joe Lieberman, John Kerry and Lindsey Graham. It is a comprehensive -- if imperfect -- approach to regulating carbon emissions. And it includes EPA preemption. That is to say, if it passes, the EPA will be barred from acting. And as the construction of that bill suggests, liberals like Kerry are fully willing to preempt the EPA as soon as Congress commits to a path of action.

But Murkowski isn't standing in support of that bill, or offering a package of modifications that would lead her to support that bill. She's just trying to block the EPA. As such, it's very hard to credit her argument that she's attempting to protect Congress' right to act. Congress has the right to act, and there's even a vehicle for action. Murkowski, whose support could be decisive to the passage of a climate bill, does not seem interested in getting one. Rather, she seems interested in blocking the regulation of carbon. And that, not congressional prerogative, is what this argument is about.

Entry originally published here.

BY Ezra Klein

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POSTED AT 4:56 PM ET, 06/15/2010

EPA is an expensive fallback

Q: Should EPA keep pressing ahead with new greenhouse gas rules, or should it accept Congress will shape the future of any mandatory limits on carbon dioxide?

It is important for the federal government of the U.S. to act to reduce greenhouse gas emissions. In a previous blog post, I said that the EPA route isn't going to be the best way to do it because it may well result in higher costs for the economy than is actually necessary to reduce emissions.

A comprehensive, economy-wide cap-and-trade system can deliver the required reductions at lowest overall cost to the economy. It does this by moving progressively through the abatement curve (of reduction opportunities) in an organized way, driven by the allowance trading aspect of the design. But an EPA driven approach will dive into the abatement curve at somewhat arbitrary points linked to certain technologies, leaving lower cost abatement opportunities on the table. This will ultimately cost the economy more than a cap-and-trade system.

There is also the issue of investment certainty. Even if a cap-and-trade system is slow in starting, its very existence immediately creates a carbon price driven by a known reduction target. Almost certain legal challenge to an EPA driven solution could result in significant delay in implementation, giving rise to investment uncertainty for business.

We know that a market based solution delivered through legislation is the best approach, but equally doing nothing is not a credible option. So the EPA approach is a viable but more expensive fallback. Therefore, the onus is on Congress to implement an economy-wide market based approach to addressing climate change and as part of that comprehensive package of actions ensure that the EPA stands down from its current direction and focuses instead on implementation of the energy and climate legislation.

BY David Hone

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POSTED AT 11:01 AM ET, 06/ 7/2010

Self-serving political scapegoating

Q: Could the oil spill really have far-reaching implications for America's energy future? Should it?

The oil spill is an environmental disaster. And for the last 40-some days, Gulf State residents have witnessed this continuing crisis first hand while the rest of us witnessed unending media coverage. At times like this, our nation and those directly affected by the spill need leadership, not politicization, posturing, and pandering. Unfortunately, President Obama's speech in Pittsburgh exemplified those three Ps. His rhetorical attacks levied at Republicans and his predecessor are unpresidential, not to mention nonconstructive.

As the spill continues, the White House is receiving increasing amounts of criticism. Many of these admonitions, though, are unjustified, so the President's desire to deflect it is understandable. Sound crisis management communication offers the means to achieve that. Yet, Washington's leadership appears to be employing a different approach: self-serving political scapegoating.

Attacking the petroleum industry and concocting wild accusations about special tax breaks and the like fails to bring us closer to a solution or a clear understanding of how the government is carrying out its role which is defined in law. Until we know what really caused the accident--human errors, corporate cost and corner cutting, or a rare confluence of events--it is not possible to identify the right course of corrective action. Certain activities are underway to ascertain those facts. Congress is holding hearings. Obama has just appointed a Presidential Commission to investigate the tragedy. However, the President's Pittsburgh comments suggest that he has prejudged the outcome and determined the solution is to split with oil altogether. That is a shortsighted, knee-jerk reaction.

Instead of impulsive moves and scapegoating, our country needs more accurate, objective accounts of this developing situation. As the saying goes, "knowledge is power." And America will need plenty of both to successfully tackle this disaster and then mitigate future risks. What we are witnessing with every day the spill persists is a manifestation of a phenomenon late historian and Library of Congress librarian Daniel Boorstin describes in his book, The Image: perception of an event becomes more real to the public than the event itself.

Once this crisis is resolved, we will have time enough to deal with any guilty parties. Now though, we have neither the time nor energy for a Red Queen (hanging now, trial later) philosophy. Crises can be learning experiences. So far, there is no evidence that this one is not being handled as well as humanly possible. The Federal Government has marshaled its resources, America's petroleum industry is dedicating its best minds to solve the problem, and a four-star admiral is showing real leadership as the on-scene commander. It is time to acknowledge that reality and stop cursing the darkness.

There have been over 14,000 deep water wells drilled worldwide and over 50,000 offshore wells drilled in US coastal waters. All but one safely. Until this crisis, 41 years had passed since the last production accident. Clearly, that is an impressive record. Additionally, just as the 1969 accident in Santa Barbara led to the development of blow preventives, this accident will lead to technological improvements in drilling and clean up and recovery.

And as bad as this spill is, it is an order of magnitude smaller than the worst in the world's history--Campeche in Mexico and the Persian Gulf after Kuwaiti oil fields were set on fire and blown up during the first Gulf War. Though those cases offer little consolation to those affected daily by this spill, they should provide context and the knowledge that there will be restoration and recovery.

Our nation benefits economically from the products made from oil--gasoline, diesel fuel, jet fuel and heating oil. That oil has been our dominant fuel source for so long reflects its abundance, versatility, affordability, and energy content. If alternatives were available that were as abundant and affordable, we would have turned to them already. None are on the horizon.

The Energy Information Administration long-range forecast to 2030 concludes that we will be using roughly as much oil then as we do now in spite of substantial improvements in technology. Wishful thinking and heavy handed mandates will not bring transportation alternatives to market any faster than technology can develop and the stock of cars, trucks, and buses turnover. Our ability to forecast advances in technology is too poor to bet that oil will be replaced in significant quantities any time soon. And, the government's ability to will commercial technologies into being is dismal. A failure to recognize those facts will lead to unintended consequences.

BY William O'Keefe

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POSTED AT 10:59 AM ET, 06/ 7/2010

Far-reaching implications

Q: Could the oil spill really have far-reaching implications for America's energy future? Should it?

What happened in the Gulf should affect the thinking of every American. We trusted big companies who told us they knew what they were doing when the government allowed them to drill for oil in deep water. This same type of spill happened in 1979 for Pemex, the petroleum company of Mexico with the Ixtoc oil well blowout, with the major difference being the depth of the water. Currently BP is using the same methods used 30 years ago to stem the flow of oil, which was not stopped until a relief well was drilled. Why has there been no progress in all that time in fixing problems like this? That same year all of us thought that the nuclear industry had fail-safe systems in place and well trained operators at Three Mile Island.

One of the other lessons of the current oil well disaster is that there are no simplistic solutions like "Drill, baby, drill". President Obama approved more offshore oil permits because it will take decades to wean ourselves away from so much dependence on fossil fuels and toward much less hazardous and polluting sources of energy such as solar and wind. We have made some small steps in the long journey to become energy smart and independent, but we need to pick up the pace. Of course we are concerned about jobs, especially in these times, but other jobs will be created when some are eliminated.

Until someone we trust or a fairly selected panel of experts representing all Americans concludes that we do need to take action, it will be difficult to pass a meaningful Senate energy bill to coordinate with the House version. A public debate or forum would be a wonderful place to bring out the facts that the public needs to hear and weigh before we try to decide what is best for America and the rest of the world for current and future generations. Perhaps the tragedy in the Gulf will focus attention on our responsibilities to those who will come after us.

BY Rick Edmund

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POSTED AT 10:04 PM ET, 06/ 6/2010

Another 2x4 to the head

Q: Could the oil spill really have far-reaching implications for America's energy future? Should it?

The continuing disaster in the Gulf of Mexico is yet another reminder of the risks of our current energy policy -- or lack thereof. Will the Senate stand idly by as oil devastates one of the richest ecosystems on Earth? Congress can't undo the damage that has been done, but it can accelerate the transition to alternatives - biofuels, natural gas, electricity - that can reduce the nation's utter dependence on a single fuel for transportation.

The litany is familiar but worth repeating: Oil imports cost U.S. citizens hundreds of billions of dollars a year - money, as Jim Woolsey puts it, that we borrow from the Chinese to pay the Saudis. This creates not only a security risk, but an economic vulnerability - if oil has maintained a price around $70 a barrel in the midst of a severe recession, how high will it go when the world's economies are booming again? Oil and coal are also the principal industrial sources of carbon dioxide emissions that are changing the global climate, and the world has just had the warmest April ever recorded.

So there is ample and urgent cause for Congress to act -- both to address the specific breakdowns that led to the tragedy in the Gulf and to take bold steps to provide Americans with new choices in transportation fuels. The most attractive of these is electricity -- not least because its infrastructure is already ubiquitous -- but electricity is only as clean as the power plants that produce it, so an integrated response would also emphasize renewable resources like wind and solar and incentives for switching generation from coal to gas.

If the oil spill serves to overcome the political inertia in Congress and spur some of these needed steps on energy policy, then and only then will the legacy of the Deepwater Horizon be anything other than an unmitigated catastrophe.

BY Reid Detchon

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POSTED AT 6:32 AM ET, 06/ 4/2010

Oil and energy

In Pittsburgh June 2, President Obama vowed to gather votes for the climate bill in the "coming months" and repeated his intention to roll back billions of dollars in tax breaks for big oil companies, to tap natural gas reserves as an alternative to coal and to increase reliance on nuclear power. Could the oil spill really have far-reaching implications for America's energy future? Should it?

Whatever the eventual catalyst for climate legislation in the U.S., a significant reduction in oil demand will not be the immediate outcome. In the U.S. today, nearly 80 percent of the crude oil coming into the country is consumed by transport, including its use for road making and engine lubrication. A diminishing minority is used for heat and power generation, yet these are the sectors that can respond quickly to a carbon price and begin to shift the energy balance, firstly toward natural gas as a replacement for coal and much later toward nuclear, very large scale renewables and fossil fuels with carbon capture and storage. In fact, much of the 17 percent goal that the U.S. has pledged internationally as its 2020 reduction target (vs. 2005) can be achieved by substituting coal for natural gas and utilizing the existing surplus gas powered generation capacity. While the relative pricing of coal and natural gas is actively driving this change today, a modest carbon price introduced into the power sector as part of an economy wide cap-and-trade system would ensure that the switch is sustainable.

But what about the transport sector and oil demand? The fastest path to reduction is through efficiency, which in the short term means convincing consumers to change their approach to driving and longer term their purchasing habits. The cars to deliver the reduction are available today and some shift in demand to diesel engines could further accelerate the outcome. Alternative fuels, including electricity, are coming, but their impact between now and 2020 will not dramatically shift oil demand. Even if oil demand begins to decline, U.S. dependency on foreign imports will remain for many years and may even increase if domestic production isn't maintained.

The President is right to put his authority behind the need for a climate bill, but we should be clear about the short to medium term outcome. A bill in 2010 need not be vastly complex but could still set a strong direction for the future through an economy wide cap-and-trade approach coupled with tougher efficiency standards in the transport sector.

BY David Hone

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POSTED AT 11:13 PM ET, 05/27/2010

Use gas to phase out coal

Natural gas is the forgotten resource in America's energy debate.

Long thought to be a valuable but diminishing resource for which the U.S. would increasingly have to rely on imports, natural gas is now understood to be available in greater supply than the country could use for the next half-century.

Improved drilling technologies have made it possible to release gas trapped in vast underground shale reservoirs and produce it at affordable prices.

The implications for our energy policy are twofold:

1. Coal can be replaced by cleaner-burning gas in the production of electricity at much larger scale than previously thought. The oldest, dirtiest coal plants should be shut down immediately for human health reasons alone. Switching from coal to gas cuts carbon dioxide emissions roughly in half, a major global warming benefit. There is plenty of underused gas generation available, and it is far quicker, cheaper, and easier to install a new gas turbine than any other alternative.

Gas is particularly well suited to the needs of the electric power system as the use of renewable energy increases. Because power from the sun and the wind is inherently variable, other resources must be available to meet the system's needs on a minute-to-minute basis, and gas generation is better suited to that challenge than coal or nuclear power.

2. Gas can replace oil in transportation, most beneficially through the production of power for electric vehicles or hybrids. Because electric motors are so much more efficient than the internal combustion engine, cars that run on electricity from natural gas reduce greenhouse gas emissions far more than cars than run on natural gas itself.

A rapid transition away from coal in power generation and toward a combination of natural gas and renewable energy, along with electrification of the transportation system, would have major benefits for health, the environment, and national security.

BY Reid Detchon

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POSTED AT 7:09 PM ET, 05/25/2010

The role of gas to 2020

One of the key balances in any approach to managing emissions across an economy are the respective roles of coal and natural gas. This will almost certainly be true in the U.S. as well. Today, some 2 billion MWHrs per annum of electricity is generated from coal, with just under 1 billion from natural gas. Together they make up nearly three quarters of U.S. electricity production. In the process of generating that electricity, the coal plants release about 1.6 billion tonnes of CO2 per annum and the natural gas plants some 380 million tonnes (Sources: EIA and IEA). Based on those figures, natural gas is about twice as CO2 efficient when compared to coal for electricity generation in the U.S. today.

Existing U.S. coal plants also have a very distinct age profile, with nearly a third (100 GW) operating before 1970 and the bulk built between 1970 and 1985 (Source: EIA). This may mean considerable retirement over the coming 10-15 years coinciding with the period that the US is looking to begin reducing emissions. The age profile might also mean that there is little justification retro-fitting carbon capture and storage (CCS) to many existing facilities, with CCS new builds being the preferred route.

The above sets up a scenario where older coal fired power stations retire in the relatively near future and are likely replaced by natural gas, at least in the short term as "Coal + CCS" matures and can become a large scale generating option again in the 2020's and beyond. The necessary natural gas capacity in fact already exists, given that U.S. nameplate capacity is over 400 GW (Source: EIA), but the actual average load requirement is about a third of this. Of course this capacity is important for peak load management, so it is not necessarily a given that it is simply "available". However, much has been built in recent years.

One question that remains is the availability of natural gas. Whilse coal is largely domestic, the marginal ton of natural gas is imported. But that is changing as well. More domestic natural gas production and continued positive results from "tight gas" exploration and production is shifting the supply-demand picture.

The remaining ingredient to get this all to come together is a carbon price, sufficient to justify the closure of some of the older coal fired power stations and underpin a switch to natural gas. In addition, a carbon price will drive further development of CCS which will be an important element in new coal capacity in the 2020's. What is clear, is that maximizing gas usage in power generation now should make the largest and most cost-effective contribution to meeting the US 2020 target. Gas will continue to play a role as the 2050 goal looms, with CCS for gas increasingly playing a role.

Replacing 100 GW of current coal capacity with natural gas could result in an emissions drop in the U.S. of some 400 million tons per annum -- a significant part of the job required between now and 2020.

BY David Hone

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