Posts tagged “energy policy”
Last week the Renewable Fuels Association (RFA) reported that President Trump is preparing to direct the Environmental Protection Agency (EPA) to make a big change to the country’s Renewable Fuel Standard (RFS). The change is one that has been long sought by refiners, but it has been resisted by the country’s biofuel industry. Today I will attempt to explain what it all means.
Briefly, the U.S. has certain biofuel mandates in place. To track compliance, renewable identification numbers (“RINs”) are assigned to biofuels as they pass through the supply chain. Ultimately, those defined as “obligated parties” are required to submit their quota of RINs to the EPA to demonstrate compliance.
Compliance can be met by purchasing the fuel with the associated RIN, or simply purchasing the RINs (which can be separated from the associated biofuel). This means that there is a value for RINs that has the effect of offsetting some of the production cost for the biofuel producer. This system subsidizes biofuels at the expense of both the obligated parties and the final consumer. CONTINUE»
Executive Summary for Those with Short Attention Spans
For those who tend not to read much past the headline, the answer to that question is “No.” If you want to understand a bit more about the issue of falling gas prices during election seasons, read on.
The Rotating Roles of Accused and Accuser
It never fails during election season that when gasoline prices are falling, the party out of power and media members sympathetic to that party will start to make accusations and insinuations that the President is manipulating gasoline prices in order to win elections. It happened when Clinton was in office, it happened when Bush was in office, and now it’s happening while Obama is in office. The only things that change are the party that is being charged of manipulating prices, and the people who are defending or accusing that party. This year it’s Fox News doing the accusing, and MSNBC defending. CONTINUE»
A few years ago, I wrote a post about the US Environmental Protection Agency’s (EPA) attempt to mandate a non-existent fuel into existence, and then fine refiners for not buying this fuel. That post was called “Why I Don’t Ride a Unicorn to Work“, and was designed to call attention to federal biofuel mandates that weren’t grounded in reality.
But what if I call a rhinoceros a unicorn? Does that mean unicorns then exist?
This week we have a guest post from Todd “Ike” Kiefer, who argues that this is effectively what the EPA has done. By declaring that the definition of cellulosic biofuels is ambiguous, the EPA has signaled that non-cellulosic feedstocks can qualify for full cellulosic tax treatment. Mr. Kiefer explains.
Previously Mr. Kiefer wrote an article highly critical of the Navy’s efforts promote biofuels in a periodical that is sent to Congress and top military leaders. The article was entitled Energy Insecurity: The False Promise of Liquid Biofuels (discussed here). His biography can be found at the end of the article. CONTINUE»
Energy’s Brief Appearance in the State of the Union Address
Energy issues received scant mention in Tuesday’s State of the Union speech, consisting mainly of a victory lap for the President’s “all of the above” formulation and a somewhat contradictory promise to place even more federal lands off-limits to drilling. While browsing through reactions from various energy leaders and environmental groups I was intrigued by one critique of Mr. Obama’s approach from an environmental NGO, arguing that he should instead be placing the country’s bets on “best of the above” energy. They weren’t the only ones to object to the current approach.
It’s clear from their statement that Earthjustice has definite ideas about what’s best and what isn’t, but their comment merits further discussion. After all, who could argue against supporting the best energy sources? And isn’t all of the above just a sop to the status quo, in which a diverse array of energy sources dominated by fossil fuels provides the energy for the rest of the economy?
Obama and “All of the Above”
As President Obama noted Tuesday, his reference to an “‘all of the above’ energy strategy”–a debatable characterization in itself–referred to a key phrase in his 2012 address to Congress. It’s worth recalling the context, in an election year in which the Republican nominee was certain to focus on conventional energy when it was delivering US production growth in both oil and natural gas that couldn’t have been imagined just a few years earlier.
If It’s December It Must Be PTC Time, Again
With the end of the year fast approaching, the US wind power industry faces yet another scheduled expiration of federal tax credits for new wind turbines. The wind Production Tax Credit, or PTC, was due to expire at the end of 2012 but was extended for an additional year as part of last December’s “fiscal cliff” deal. There are no signs yet of a similar reprieve this year.
With the PTC and other energy-related “tax expenditures” subject to Congressional negotiations on tax reform, this might truly be its last hurrah in its current form. It is high time for this overly generous subsidy to be “sunsetted”, and if it’s replaced with a smarter policy emphasizing innovation, the outcome could be beneficial for taxpayers, the environment, and even the US wind energy industry.
Too Big To Last
In its 20-year history, minus a few year-long expirations in the past, the PTC has promoted tremendous growth in the US wind industry, from under 2,000 MW of installed wind capacity in 1992 to over 60,000 MW as of today. For most of its tenure, the PTC did exactly what it was intended to do: reward developers for generating increasing amounts of renewable electricity for the grid at a rate tied to inflation.
Below is the first of two posts by Robert Petroski and Brian Marrs about the future of nuclear energy. Petroski is a nuclear engineer, with a degree from MIT, and Marrs is a Power Markets Specialist, with a degree from Yale. They are colleagues of mine from the Atlantic Council’s “Emerging Leaders in Energy and Environmental Policy,” a Transatlantic Network of professionals in the energy field. In this post, they argue against hyperbole about nuclear power from both opponents and proponents.
Reasonable discussion about nuclear power is hard to find. Sifting through the post-Fukishima rhetoric about nuclear power is difficult whether you are an energy markets professional or even a nuclear engineer. Depending on what you read, nuclear power is either an antiquated technology far too dangerous and too costly for society, or on the verge of a technological renaissance which promises clean, safe, proliferation-free power the world round. The energy industry is no stranger to broken promises or unanticipated breakthroughs. The punditry and associated polarization surrounding nuclear power comes at a time when regulators and investors must make critical decisions about funding nuclear innovation and renewing the global nuclear fleet, particularly that in the United States, the country on which this article most focuses.
It is time to set the hyperbole aside about nuclear power – then and only then can we begin to evaluate the potential and limitations of new nuclear energy technologies. However worthy, objections about the legacy of nuclear energy should not eliminate funding and market deployment for future innovations. All energy sources come with trade-offs. None of today’s (and likely tomorrow’s) energy technologies – nuclear included – offers a panacea for the security, environmental, and economic development challenges facing the 21st century. Nuclear power will either adapt to new concerns, perceptions of risk, and market conditions, or justly become obsolete.
As regular readers of this column are aware from time to time I will host provocative perspectives on the energy industry. The failed nomination of Ron Binz to be the Chairman of the Federal Energy Regulatory Commission, which was formalized with his withdrawal from consideration on late Monday night, was unprecedented in Washington. The role of FERC has never been the subject of public of political interest – and I’d argue that few people (in Congress or otherwise can actually explain what FERC does) – so the sudden acute interest that resulted in no confirmation vote and Binz’s eventual withdrawal is well worth examining.
My friends at Operation Free (a campaign of the Truman National Security Project and Center for National Policy, is a coalition of over 5,000 veterans and national security experts advocating for securing America with clean energy) have been watching the FERC nomination process, and have expounded the view of many energy insiders that Binz’s failed confirmation represents an important and troubling development in the evolution of America’s energy industry.
Ron Binz, the once leading nominee to be the next Chairman of the Federal Energy Regulatory Commission, announced Monday evening that he had formally withdrawn his name from future consideration for the post.
To be sure, Binz is a highly qualified candidate who has spent his entire career working on energy regulatory issues, and he would have brought needed vision and leadership to a post that is critical for diversifying our energy portfolio and strengthening our national security.
Unfortunately, members of the Senate Energy and Natural Resources Committee resorted to bitter partisanship, dooming his confirmation based on a fear and misguided assumption he would encourage prioritization of renewable resources over legacy coal and oil sources of energy.
Their excuses not only illustrated a lack of understanding of FERC’s authority, but also they were inaccurate and pose a serious threat to America’s energy future.
As citizens from Ohio, Michigan, and West Virginia, we know the benefits that traditional energy sources have provided to the growth of our nation and states’ economies. While we acknowledge these sources – like coal- will continue to play an important part of our nation’s energy mix, in order to strengthen our national and economic security, it is critical that we continue to find ways to diversify our energy options and reduce our carbon emissions
Ask and Ye Shall Receive
Last week, The Economist posed the following question: “What happened to biofuels?” The biofuels in question are so-called second generation biofuels that are produced from trees, grasses, algae, — in general, feedstocks that don’t also have a use as food. The appeal is obvious to anyone concerned about the world’s dependence on petroleum, and further worried that a major shift to biofuels will cause food prices to rise. So let’s address that question.
Entrepreneurs Revive a Century-Old Idea
About a decade ago, a number of entrepreneurs began to use their political influence to convince the US government that the only things keeping the US from running our cars on advanced biofuels was lack of government support, and interference from oil companies. These advocates eventually won over enough political support that state and federal governments began to funnel large amounts of taxpayer dollars into advanced biofuel ventures. President Bush spoke of running cars on switchgrass in his 2006 State of the Union address.
The federal government sought to deal with supposed oil company intransigence with a mandate requiring gasoline blends to contain growing volumes of corn ethanol initially, but starting in 2010 advanced biofuels as well. The federal government mandated that by the year 2022 the fuel supply had to use 36 billion gallons of biofuels, with 21 billion gallons coming from advanced biofuels. CONTINUE»
Impacting Economics, Geopolitics and Markets
The U.S. is expected to spend about 8.5% of its GDP on energy in 2013. In 2008, when oil prices peaked, it was closing in on 10%. U.S. oil production provides a buffer to supply shocks — which happens frequently in the Middle East and North Africa, two key crude supply regions. In July 2013, disruptions to crude oil and liquids production were nearly 2.7 million barrels per day. Of the supply disruptions, 800,000 barrels were from non-OPEC nations and the other 1.9 million from OPEC, according to the U.S. Energy Information Administration (EIA). August is estimated at a 2.8 million shortfall.
The OPEC-related outages, which include Iran, Iraq, Libya and Nigeria, are considered to be the highest since early 2009. This has contributed to rising prices, from the year’s low of $97 in April to a high nearing $117 August 27th, after Syrian chemical weapons attacks followed on the heels of Egypt’s political turmoil. The causes of the outages in Libya were from labor disputes, while Iraq’s shortfalls originated from pipeline disruptions from violence; Iran’s woes stem partly from sanctions, and Nigerian oil challenges related generally to oil theft and infrastructure sabotage and degradation.
US Ethanol Policy Should Reflect Circumstances and Consequences
This April, two separate bills were introduced in the US House of Representatives to reform, or repeal, the federal Renewable Fuel Standard (RFS) that mandates how much ethanol and other biofuels must be blended into gasoline.
To understand why reform or repeal makes sense now, we should recall the factors that led Congress to enact this standard six years ago and consider how many of the basic assumptions underlying its design have changed since then. That requires a review of US fuel consumption and import trends, commodity prices, and the impact of the RFS on food prices. After summarizing the other points I want to focus on the last one, based on an interview I conducted with Dr. Yaneer Bar-Yam, an expert on complex systems who has developed a model that explains the behavior of food prices since the introduction of the first, less ambitious RFS in 2005.