For Sensible U.S. Energy Policy, Don’t Look to Germany

As the United States debates it own energy policies, a number of voices continue to point to other nations as models for American development. A popular reference is China, which green energy advocates tout for that nation’s robust investment in technologies such as wind and solar. More recently, though, Germany has taken China’s place as the nation du jour for its stance on solar feed-in tariffs and its imminent abandonment of nuclear power.

But does Germany deserve admiration for its energy policy? Has that nation achieved outcomes that are in the best interest of businesses and consumers?

Germany has long been known as a European leader in advancing the installation of renewable technologies such as solar PV, providing aggressive government subsidies to equip rooftops with solar panels. Advocates of U.S. solar subsidies like to point to Germany’s efforts, especially considering that solar maps of Germany aren’t particularly flattering. In fact, a look at a solar resource map of Germany makes one wonder why the nation made such a hard push for solar in the first place. They ask: If the Germans can do it, why can’t we?

The truth is that German consumers are paying dearly for their nation’s energy policies. In fact, as PACE pointed out in this blog post, they have seen their electricity prices double in the past 10 years, now having the second highest power rates in all of Europe behind only Denmark. Germans today pay an average of 32¢/kWh for electricity. This article by Grist makes the point that Germans don’t seem to mind paying this steep premium, but it’s clear that Americans are not in the mood for higher power rates. Maybe we’re just different.

In recent weeks, in the wake of the Fukushima nuclear incident, Germany has continued its march toward poor energy policy, deciding to draw down its nuclear portfolio by shuttering eight nuclear plants. What will be the result? This article makes it clear that Germany’s nuclear shutdown will mean more coal, more natural gas, and more energy imports. Energy that could have been generated within Germany’s borders, using German resources, will now be generated somewhere else. Replacing 140 terrawatt hours of generation, it seems, isn’t that easy. And it won’t be cheap.

Want more irrationalism from the Germans? The nation has a stated policy of reducing CO2 emissions by 40% by 2020, double the European goal, but is shutting down its only carbon-free source of baseload electricity. Hans-Werner Sinn, president of the Ifo Institute at the University of Munich states, “The climate goals announced by (Chancellor) Angela Merkel at the Heiligendamm Summit will not be reachable.”

To recap. It appears that Germany is going backward in meeting its emission reduction goal. The nation has made itself more – not less – energy dependent. German consumers continue to pay some of the world’s highest electricity prices. American policy makers would we wise to pay attention to those outcomes and take our nation in a different – perhaps even an opposite – direction, while there is still time.

 

Reining in Excessive Regulation

As debate over EPA regulation rages across the nation, and particularly in Washington, DC, one lawmaker has offered a surprisingly simple approach to cutting down on excessive federal regulation.

Representative Geoff Davis of Kentucky has introduced, HR 10, or The REINS Act, a law that would require that Congress take an up-or-down vote on every new major rule (more than $100 million annual economic impact) before it could be enforced on the American people and businesses.

To promote the bill, Rep. Davis has launched this website that allows groups to learn more about the bill, sign up to get email updates, and share the bill with others through social media. Among the organizations that support the bill are the U.S. Chamber of Commerce, the National Taxpayers Union, and Associated Builders and Contractors. PACE is adding its name to that list.

With a slew of EPA regulations in various stages of development – Boiler MACT, Coal Ash Regulation, Utility MACT, more stringent Ozone Standards, Greenhouse Gas regulation, just to name a few – it is clear that something needs to be done to ensure accountability in the regulatory process. The simple truth is that EPA answers to no one, while Congress ultimately answers to us.

The REINS Act is a good idea. We hope it gathers steam and offers American businesses and consumers a layer of accountability we desperately need.

 

PACE Organizes Southeastern Organizations to Send Message to EPA: Stop Utility MACT!

PACE LetterOn Friday, June 17, a diverse group of energy, business and labor representatives in Alabama, Georgia, Mississippi, and Tennessee urged Environmental Protection Agency (EPA) Administrator Lisa Jackson to indefinitely delay recently proposed Utility MACT rules in a joint letter to the administrator.

See the letter here.

The effort comes in the wake of numerous reports and assurances from energy providers that proposed Utility MACT rules, as currently written, will result in massive layoffs and plant closures across the country, particularly in the Southeast.

“Our fear is that the Southeast will be most vulnerable to the consequences of Utility MACT rules. Our region remains the last mainstay of heavy manufacturing, with hundreds of thousands of jobs and billions in economic impact that rely on the industry’s success,” said Lance Brown, PACE Executive Director. “Administrator Jackson should recognize recent emissions improvements and choose wisely when considering rules that could restrain domestic energy, endanger jobs, and saddle consumers with higher power bills.”

WSJ: “EPA’s War on Jobs”

Rarely does the mainstream media adroitly describe the current condition of American energy policy, but that’s exactly what the Wall Street Journal did today. In an editorial aptly titled “EPA’s War on Jobs,” the WSJ takes the agency to task for over-zealous regulation of mercury and other air pollutants. The rule is often referred to as Utility MACT, after the “maximum achievable control technology” requirement that hits coal-fired generation particularly hard.

Among other criticism,the WSJ points out that “even by the EPA’s lowball estimates, it is the most expensive rule in the agency’s history.” And they’re correct. Some estimates range as high as $300 billion by 2015, much higher than EPA’s admitted $11 billion price tag. And just what does that price tag buy us?

The WSJ writes, “According to the EPA’s own numbers, every dollar in direct benefits costs $1,847. The reason is that electric generation—yes, even demon coal—results in negligible quantities of air pollutants like mercury. And mercury is on the decline: In 2005, the entire U.S. coal fleet emitted 26% less than the EPA predicted.

But here’s the most important truth from the WSJ: “The real goal of the EPA’s rule is to shut down fossil fuel electric power in the name of climate change. The consensus estimate in the private sector is that the utility rule and eight others on the EPA docket will force the retirement of 60 out of the country’s current 340 gigawatts of coal-fired capacity. Reliability downgrades will hit the South and Midwest where coal energy is concentrated. American Electric Power recently announced that the rules will force it to shut down five plants in West Virginia and Ohio, a quarter of its coal fleet.“ Nail, meet hammer.

The debate over American energy policy and our nation’s regulatory climate is entering a new era, one that transitions from rhetoric into tough reality. Power producers are making plans to shut down coal-fired plants. Jobs are on the line. So are power prices. Unless lawmakers act soon, it will be time to brace for impact.

“The least Congress can do is force the EPA to delay the final utility rule to allow for more public debate, though a better option would be to junk it,” the WSJ says. We agree.

 

Democratic House Members Ask EPA to Extend Comment Period for Utility MACT

Today, in a letter to EPA Administrator Lisa Jackson, a group of 27 Democratic members of the House, led by Michigan Rep. John Dingell, asked the agency to double the comment for its proposed comment period from 60 to 120 days. The rule would impose costly new regulations on coal-fired electric generating plants. PACE and others have argued that Utility MACT could shut down a significant portion of America’s coal-fired power capacity.

“Like you, we believe constructive efforts must be made to reduce harmful emissions from our nation’s electric utilities fore the betterment of human health and the environment; this is the meritorious goal of the Clean Air Act,” wrote the coalition. “At the same time, we also must be mindful of the economic impact new regulations could have, especially with the complexity and breadth of applicability for this proposed rule being so significant.”

Joining Rep. Dingell in signing the letter were 26 other representatives, as follows: Reps. Holden (D-PA), Ross (D-AR), Barrow (D-GA), McIntyre (D-NC), Gonzalez (D-TX), Matheson (D-UT), Clarke (D-MI), Critz (D-PA), Boren (D-OK), Towns (D-NY), Michaud (D-ME), Rahall (D-WV), Bishop (D-GA), Doyle (D-PA), Sewell (D-AL), Levin (D-MI), Altmire (D-PA), Peters (D-MI), Chandler (D-KY), Kildee (D-MI), Gene Green (D-TX), Butterfield (D-NC), Kissell (D-NC), Costello (D-IL), Scott (D-GA), and Donnelly (D-IN).

With hundreds of thousands of jobs on the line and consumer costs hanging in the balance, it is vital to have members fighting to keep power bills affordable and electricity reliable. Recently, PACE applauded a number of members for supporting a bill to require EPA to consider job impacts when proposing new regulations. Clearly that is a good proposal.

PACE now applauds the members listed above for standing up for consumers and doing the right thing. Keep up the good work! Utility MACT needs more discussion and study.

EPA Air-Pollution Rules to Cost Almost $18 Billion Yearly

Last week, the U.S. Department of Labor released its monthly jobs report which found that unemployment crept back up to 9.1 percent in May, and the economy added the fewest jobs since September 2010. Meanwhile, the EPA continues to propose and implement energy standards that stand to further weaken the economy by sending more hard-working Americans to the unemployment line.

Seems counterproductive, doesn’t it? But let me put it in perspective. When testifying before an Environment and Energy subcommittee on Capitol Hill in April, EPA Assistant Administrator Mathy Stanislaus stated his agency does not take jobs into account when it issues new regulations. So, while alarming, the EPA’s actions aren’t all that surprising when jobs are apparently of no concern to them.

But jobs should be the issue of utmost importance to the EPA. The American Coalition for Clean Coal Electricity (ACCCE) released a study this week finding the EPA’s air pollution rules will not only cost utilities $17.8 billion annually and raise electricity rates 11.5 percent on average in 2016. The study also finds the rules would result in a staggering 1.44 million jobs lost by 2020! So while the EPA can’t be bothered to consider the impact regulations would have on jobs, millions of Americans will suffer the consequences.

Clean Air Transport Rules, in particular, are the EPA’s latest attempt to heap burdens on the energy industry and consumers. This rule will require significant reductions in sulfur dioxide and nitrogen oxides emissions that cross state lines. While this may seem pretty straightforward, the Clean Air Transport Rule is simply unnecessary to protect “downwind” air quality. In fact, emissions are continuing to decline in the East due to previously implemented EPA rules. Essentially, the EPA is doubling, even tripling, down on rules that are already on the books, making it more difficult for energy providers to comply. Eventually, providers will have to close their plants altogether; eliminating thousands of jobs and further chipping away at America’s ability to produce affordable and reliable power.

In January, President Obama issued an executive order asking federal agencies to identify burdensome rules that should be drastically changed or eliminated altogether. Unfortunately, the EPA seems to have ignored President Obama’s directive and has instead moved to over regulate the energy industry without allowing for sufficient public comment or research. And perhaps the EPA’s recent admission that they don’t take jobs into account is what prompted twelve members of the House of Representatives from across the nation – including Rep. Spencer Bachus from my home state of Alabama – have joined together to sponsor H.R. 1872, the Employment Protection Act of 2011, which would require the EPA to consider jobs and the economy when proposing costly new rules.

The EPA should recognize recent emissions improvements and carefully evaluate the implications when considering rules that could restrain domestic energy, endanger jobs, and saddle American families with higher electricity bills. For the millions of struggling low-income families, discussions about higher energy costs are not political rhetoric; they are tough reality.

Bill Would Require EPA to Consider Jobs

It’s no secret that the E in EPA stands for Environmental. But if some lawmakers have their way, the agency will also have to consider another E: the Economy.

HR 1872, known as the “Employment Protection Act,” was introduced recently by Shelley Moore Capito of West Virginia’s 2nd Congressional District. According to a press release from Capito’s office, the bill “would require the Environmental Protection Agency to take into account jobs and economic activity prior to issuing a regulation, policy statement, guidance, implementing any new or substantially altered program, or issuing or denying any permit.”

In other words, the EPA would have to be accountable for the effects of its regulations on jobs and the economy. With Boiler MACT rules that could hurt heavy industries, ozone standards that could force dozens of cities into non-attainment, and Utility MACT rules that could endanger both the affordability and reliability of electricity, America needs to make sure that EPA knows how to use both the gas pedal and the brakes. HR 1872 might be a tool that helps achieve just that.

The bill currently has ten co-sponsors, including Rep. Spencer Bachus (AL), Rep. Roscoe Bartlett (MD), Rep. Dan Burton (IN), Rep. Jaime Herrera Beutler (WA), Rep. Bill Johnson (OH), Rep. Walter Jones (NC), Rep. Robert Latta (OH), Rep. Thaddeus McCotter (MI), Rep. Dennis Ross (FL), and Rep. Aaron Schock (IL).

Applause to these lawmakers for standing up for jobs, consumers, and businesses. We hope that this sensible piece of legislation attracts more supporters and becomes law.

 

Nuclear Power Takes Center Stage

Earlier this week, PACE traveled to Browns Ferry Nuclear Plant near Athens, Alabama, to take part in an open meeting of the Nuclear Regulatory Commission (NRC). The meeting was standing room only and typified, in my opinion, the division of public opinion that is occurring on nuclear power issues.

While the main topic of the NRC meeting was to discuss a safety concern that arose from a faulty valve in the plant’s water flow system, a technical issue that created no actual danger, a number of anti-nuclear activists took the opportunity to blast nuclear power in general. They riddled NRC officials with questions about nuclear safety in the wake of extreme weather. They peppered regulators about storage of spent nuclear material. At least one speaker called for the shutdown of all nuclear plants….period. And all to great applause.

Knowing what this would mean for consumers and businesses, I took the opportunity to remind the NRC and those gathered that America’s energy future is likely to call for more nuclear power, not less. I also soberly reminded them that their chief example of a nation ‘getting it right,’ Germany, also has electricity that costs 32¢/kWh, and that’s before Germany chose to abandon its seven nuclear facilities. Germany’s nuclear regulators also have said recently that the shutdown of nuclear power will bring that nation’s electrical system to the brink of capacity. That doesn’t sound good for businesses like steel mills that need vast amounts of power.

The anti-nuclear crowd didn’t like these important facts. And apparently neither did the local media. The Florence Times Daily in this article quoted a number of anti-nuclear voices, including a 24-year old visiting the area from Oregon. The author chose not to include PACE’s comments, even though we represent people and businesses in the Tennessee Valley who pay for whatever decisions the NRC and TVA make on nuclear power. Even worse, this article in The Tennessean actually refers to Germany’s shut down of nuclear, but does not include any mention of the public comments PACE made specifically about the German decision. This seems like one-sided reporting. Isn’t the cost to consumers just as important as any other consideration? Why conceal that fact from readers?

Fortunately for consumers, PACE is not alone in waging the fight for sensible energy policy. Speakers like Jack Simmons of the Tennessee Valley Public Power Association (TVPPA) and Brian Avery of Nucor Steel reminded the NRC and those gathered that nuclear power is an important part of keeping electricity affordable for Valley residents and reliable for Valley businesses that provide jobs in the area. We need more people like Jack and Brian sharing their perspectives.

Also good news for consumers is this revelation yesterday from TVA that the power provider will activate a reactor at Bellefonte Nuclear Plant as early as 2018. This is consistent with a strategy developed by the Integrated Resource Plan group in which PACE participated. Maybe more important, it is a signal that nuclear power is not going anywhere anytime soon, despite the irrational and irreverent clamor of those who continue to oppose the source of a quarter of America’s electricity.

 

The EPA should recognize improvements, choose wisely when considering new rules

On March 16, 2011, the Environmental Protection Agency (EPA) announced draft rules seeking to impose strict regulations on coal-fired power plants. The rules, known as the Maximum Achievable Control Technology (or MACT) utility regulations, are some of the most expensive and controversial rules in EPA’s history.

During a recent interview on The Daily Show, of all places, EPA Administrator Lisa Jackson commented that these new emissions rules will actually create jobs since someone will have to build the required technology. This explanation falls well short of reality. It might have been a good sound bite for a television audience, but has anyone considered how these rules will affect the daily lives of Americans?

Last week, the EPA held three public hearings to discuss the rules, which would set a first-ever national standard to regulate mercury and air toxics. On Thursday, May 26, I testified at a public hearing in Atlanta, GA on behalf of the electricity consumers, businesses, and agricultural interests PACE represents.

Among the various consequences of the regulations being discussed, there none is more important than the effect on American consumers of electricity. The cost estimate of the proposed Utility MACT rule is staggering; with the EPA itself claiming the rule will come with a compliance price tag of $10.9 billion, making this regulation one of the most expensive in the agency’s history. This is twice the cost of current regulations that reduce sulfur and nitrogen oxide emissions.

In my testimony, I urged the EPA to recognize recent emissions improvements and choose wisely when considering rules that could restrain domestic energy, endanger jobs, and saddle consumers with higher power bills. Instead, it seems the EPA is committed to driving down standards, not paying sufficient attention to whether the timelines they set are realistic or reasonable. For the millions of struggling low-income families, discussions about higher energy costs are not political rhetoric; they are tough reality.

These rules will make American electricity less reliable and less affordable, and will render American businesses less competitive. It’s imperative that the EPA not implement this rule, or at the very least allow for a greater period for public comment and a longer time window for compliance.

Raquel Welch and the American Energy Debate

Earlier today, I noticed an opinion piece by Scott Bittle and Jean Johnson of Public Agenda that stated, “If we had one-tenth the determination of Andy Dufresne, the United States would have an energy policy.”

Since The Shawshank Redemption is one of my favorite movies, with Andy Dufresne serving as an unjustly accused prisoner who makes a bold and clever escape, I couldn’t resist responding with my own blog post linking the movie with American energy policy, or lack thereof. Bittle and Johnson make the case in their piece that countries such as Denmark, the U.K., and France have made wholesale changes in energy policy and the United States must make a similar shift. In their appeal to the Andy Dufresne character, they argue that our nation should summon the prisoner’s courageous and methodical approach to escape from what they deem the prison of traditional energy resources.

Although I admire the writers’ creative approach, especially their reference to The Shawshank Redemption, I couldn’t help but think of another metaphor from the movie. After surreptitiously discovering that his cell’s walls are made of soft rock, Andy begins chipping away at it each night, depositing the discarded rock in the prison yard and covering the hole with a series of posters procured from Red, a fellow inmate played by the brilliant Morgan Freeman. The final in the poster series is an image of Raquel Welch, a flimsy gloss paper barrier between Andy Dufresne and his path to freedom. All that Warden Samuel Norton need do to discover Andy’s plot would be to peel back the poster.

Consumers today also see an idyllic picture presented by some in the energy debate. With states like California passing a renewable energy standard of 33%, the Intergovernmental Panel on Climate Change saying the world can rely on 77% renewable energy by 2050, and others calling for the United States to walk away from traditional resources like coal and nuclear power, it seems that all we Americans lack is courage. But that just isn’t true.

All energy sources have trade-offs. Bittle and Jean Johnson, to their credit, do point out that Denmark’s aggressive approach to non-traditional power sources have led to Europe’s highest energy prices, at nearly 40¢/kWh, or nearly four times what we pay in the United States. California’s policies have resulted in some of the highest power prices in America, at about one and a half times the national average. This, in terms of the Shawshank Redemption, is the ugly hole that we conceal with rosy pictures of wind and solar power. Except that this hole leads not to freedom, but to the imprisonment of consumers in arbitrarily higher electricity bills. You simply cannot replace inexpensive, incredibly abundant power sources with technologies that work some of the time and not incur significantly higher consumer costs.

Fortunately, this rosy façade, like the Raquel Welch, is thin. All consumers need to do is peel back the veneer to see the high costs of this approach. See Denmark. See California. Do we really want to pay double or triple for a future we don’t have to have? There is a way forward, but it is not through renewable mandates and consumer-subsidized technologies that cannot compete on their own in the marketplace. The answer is to liberate American energy, use what we have, continue making it cleaner with reasonable timelines, allow energy sources to compete fairly for their place, and keep prices down for manufacturers and families.

The idea seems to be catching on. This past weekend, at least one elected official, Governor Paul LePage, called for a freeze of his state’s renewable energy mandate, which is now at 4%. According to the governor, his state’s power rates are 42% above the national average and the renewable standard is unnecessarily making them even higher. The state in question? That would be Maine, the site of Shawshank Prison and everyone’s favorite accountant-turned-prisoner, Andy Dufresne.