Sunday, August 02, 2015

Our Disastrous Energy Policy, Continued

New clean air act regulations have recently been proposed by the EPA.
President Obama will unveil on Monday a set of environmental regulations devised to sharply cut planet-warming greenhouse gas emissions from the nation’s power plants and ultimately transform America’s electricity industry. The rules are the final, tougher versions of proposed regulations that the Environmental Protection Agency announced in 2012 and 2014. If they withstand the expected legal challenges, the regulations will set in motion sweeping policy changes that could shut down hundreds of coal-fired power plants, freeze construction of new coal plants and create a boom in the production of wind and solar power and other renewable energy sources.
What is interesting is that the EPA recently had their ever-expanding mandate struck down by the Supreme court just a few short weeks ago, when their attempt to kill off coal through regulation of mercury and other pollutants was invalidated for not sufficiently weighing the cost of the proposed initiative.

This administration has consistently failed to implement a coherent energy policy because they fail to understand basic economics and the barriers caused by NIMBY behavior (mostly by their own backers). When the administration first proposed a "nuclear renaissance" I explained how it would fail and that the companies that they selected were mostly the wrong ones. This failure gives me no pleasure because in fact I am a proponent of nuclear power; what must occur is that we need to change our regulation to speed approvals and enhance the economics of these investments. The other key element of a nuclear strategy is to resolve the dismal Yucca Mountain fiasco - even by government standards, our "management" of nuclear waste has been an epic failure.

Wind power is a failure mainly because we lack the will to build a transmission infrastructure that can bring the electricity from places with high winds (like Wyoming) to other places where it is needed (the cities of California). Here is a web site that brings forward a well funded plan from billionaire Anschutz that has been dogged by ridiculous environmental barriers at every turn. If this was China that line would have been completed years ago; instead they are hundreds of millions of dollars into regulatory and environmental reviews that aren't even related to actual technical or design challenges.

The US has benefitted immensely from the fall in natural gas prices caused by entrepreneurs who figured out fracking and revolutionized the industry. This wasn't governmental research; it was done by the private sector. The success of fracking in the USA is also enabled by our property rights system - individuals have an incentive to allow drilling on their land because they can reap the rewards in terms of royalty payments; we are like Saudi Arabia except the riches don't go to oligarchs and dictators, they go to the people that own the land as well as the companies that innovate and turn that gas and oil into something useful at the pump or heating your home. We also have a well developed infrastructure for gathering and transporting natural gas that was also built by the private sector which benefited from the de-regulation of the natural gas industry back in the 1980's.

Note also that coal plants are being added all around the world and incremental US coal usage is a "drop in the bucket". The current administration is attempting to price coal out of all US markets through taxes and incentives which, in the end, will have only a minuscule impact on carbon world wide because of the massive expansion of coal power in China, India and even in Europe (which has seen a "coal renaissance" since nuclear is now often not viewed as a viable option and fracking hasn't taken ahold there).

In another bitter irony, raising the price of electricity for negligible reductions in US carbon emissions (which will be more than offset by rising carbon use elsewhere, as noted above) will have a disproportionate impact on the poor. Utility bills must be paid monthly or the power gets "turned off" - any raise will hit the poor directly in their pocketbook, forcing hard choices between food, medicine and education. The rich don't notice a few extra dollars each month in their electric bills, but the poor definitely feel the pinch.

The other disastrous impact of these policies is that it empowers companies to get "off the grid" and to generate their own power, which will push the burden of these disastrous policies ever more on the backs of consumers, especially the poor. A grid where wind and renewables play a prominent role is an unreliable grid, causing companies to spend billions on backup power that could have been avoided had we just continued our prior policies of requiring utilities and grid operators to develop plants and policies that ensure a balanced and reliable grid.

By mandating expensive "alternative" energy without resolving the roadblocks and barriers to success, the administration is doubling down on failed and inept policies. Here's what they should do, instead:

1. Find the political will to resolve the Yucca mountain storage option for nuclear waste
2. Devise a way to enable inter-state transmission lines to move power from where it is generated to where it is needed
3. Remove regulatory and legal barriers to nuclear power by pre-approving designs and offering rational incentives
4. Recognize the value of our low-cost US natural gas and classify it favorably against "renewable" offerings
5. Work to raise the quality of our power in terms of reliability and voltage, which will reduce the need for companies to invest heavily in backup systems
6. Find a way to keep costs down which will reduce the burden on the most vulnerable and also will disincentivize companies from going "off the grid" and generating their own power entirely

Sadly, none of the above will happen, especially with our current administration at the helm. They are unreasonably and illogically at war with coal, strangling nuclear, and avoiding the entire topic of transmission which is at the heart of much of our problems. We are very lucky that the plummeting price of US natural gas, which is a phenomenon of the private sector not of government, has given the USA a windfall on our energy policy that has so far at least partially made up for our idiotic policy mistakes.

Cross posted at Chicago Boyz

1 comment:

Gerry from Valpo said...

Have tried to buy a nat gas powered whole house generator but the wife refuses to go along. Weee don't neeeed one she claims. One grid meltdown on a few 90 degrees days or so may change her mind. She goes apeshit whenever the AC has a one night burp.