Calgary Herald by Stephen Ewart: Two pipelines, two countries: A waiting game without end
Young Republicans Sponsor Open Meeting To Hear Experts Discuss Oil Tax Reform
Report and Commentary
(We remind our readers that since accuracy of our archives is of primary concern, we solicit factual additions/corrections and will quickly make necessary changes. -dh)
Last night at Anchorage's Loussac Library, Young Republicans had assembled a VIP Panel to brief the general public on an oil tax reform issue scheduled for a vote on Alaska's upcoming primary election ballot (NGP Photo: Young Republican President Michelle Hart).
Panel members.... (Scroll down for more or click here.)
Murkowski Holds FERC's Bay at Bay
Washington, D.C.--U.S. Sen. Lisa Murkowski, (NGP Photo), yesterday voted against appointing Norman Bay to be the next chairman of the Federal Energy Regulatory Commission (FERC). Murkowski said Bay lacks the experience and the background in energy policy to lead the independent regulatory agency.
“Bay’s responses to my questions on any number of important policy issues facing FERC did not provide the level of clarity needed to win my support,” Murkowski said. “Whether it’s where he stands on recusals, the cumulative impact of the EPA’s recent environmental regulations, or FERC’s current and future course his responses were not forthcoming or worse.”
|It’s official: 1 million barrels a day. Williston Herald. North Dakota crude oil production officially surpassed the 1 million barrels per day milestone. North Dakota became the fifth state to hit the million barrel mark, according to the North Dakota Petroleum Council. Alaska, California, Louisiana and Texas have previously hit the mark.|
The Senate Energy and Natural Resources Committee on Wednesday marked up the nominations of Bay and current FERC chairwoman Cheryl LaFleur, approving Bay 13-9 and LaFleur 21-1.
Murkowski has repeatedly voiced support for LaFleur’s nomination to a second term on the commission. She has also questioned why the president would demote LaFleur, the commission’s current chairwoman with more than 20 years of experience in the utility industry, to make Bay chairman.
“I am not interested in the chairman of the FERC doing on-the-job training, particularly when we have a woman – the only woman on the commission – who has been at the helm as the acting chairwoman, and by all reports from both Democrats and Republicans alike, she’s been doing a good job. She has been fair. She has been balanced. She has the temperament that we need. She has the personal qualities of leadership that we look for. She has the experience.”
Young Republicans Sponsor Open Meeting To Hear Experts Discuss Oil Tax Reform
Report and Commentary
Last night at Anchorage's Loussac Library, Young Republicans had assembled a VIP Panel to brief the general public on an oil tax reform issue scheduled for a vote on Alaska's upcoming primary election ballot (NGP Photo: Young Republican President Michelle Hart).
Panel members included:
- Panel moderator, Andrew Halcro (NGP Photo-Middle), Anchorage Chamber of Commerce President
- Alaska State Senator Cathy Giessel (NGP Photo)
- Former Anchorage Mayor Rick Mystrom (NGP Photo-Middle-R)
- Dr. Scott Goldsmith (NGP Photo-Middle-L), University of Alaska Anchorage Professor Emeritus of Economics
- Doug Smith (NGP Photo-L), the President and CEO of Little Red Services, an oilfield support services company is a former President of the Alaska Support Industry Alliance.
Former Mayor Mystrom (NGP Photo) attracted and kept the audience's attention by first saying that he'd been following Alaskan issues for four decades and that, "this is the single most important issue I have seen in my Alaska life."
He said that if Alaskans vote to repeal their oil tax reform law (SB 21), oil production will continue declining. While oil companies have too much invested in the state to just "walk away", he said that reverting to the higher tax burden would deflect investments to other oil producing states and countries.
Mystrom quoted the President of the State-owned Alaska Gasline Development Corporation, Dan Fauske (NGP Photo), as saying that if SB 21 is repealed in August, "the Alaska gas pipeline is toast."
All of our knowledgeable sources concur with Fauske's assessment because returning to a predatory tax structure in a world awash in rising oil and gas production creates huge barriers to what is, potentially, the most expensive construction project in history (i.e. $40 - 60 billion).
Goldsmith (NGP Photo) refuted claims of some critics that the new tax reform bill is a "$2 billion giveaway" to oil companies, pointing out that the state was in deficit mode before passage of SB 21. If the long run is not taken into consideration, including enhanced employment, exploration and development arising from SB 21, one could only claim that the state is reaping $88 million less under SB 21 than under ACES.
Smith pointed out that the decision to keep or repeal Alaska's year-old oil tax reform law is one of the biggest decisions in Alaska's history, "...and we need to get it right". Using his own small business as an example, Smith said that work had dramatically increased following passage of SB 21 a year ago. He said that his company was doing more work and producing more jobs than in his company's entire history.
He said that new oil and gas field work has now risen to about twice the level (i.e. about 14 drilling rigs) than existed before passage of SB 21 (i.e. about 6 drilling rigs).
Smith also noted that due to increased Alaska North Slope work, the decline rate in oil production is at its lowest level in six years.
Senator Giessel (NGP Photo) addressed the argument of some that, "it's our oil" (NGP Photo), resulting in a mindset to tax that commodity to the hilt.
But when Alaska provides leases on oil producing tracts in return for cash bonus bids, for example, and lease holders find oil, the majority of the oil, she said, becomes "their oil" by virtue of lease agreements which only preserve about an eighth of the oil as a state royalty.
Of course, Alaska then adds to the producer's burden an income tax (in addition to federal income tax), a property tax and a production tax--the latter one of which is the subject of SB 21 tax reform.
Giessel traced the history of recent oil tax laws, pointing out that with lower taxes come a higher number of drill rigs exploring for oil. She compared the almost 30 rigs at work in Alaska today -- following tax reform -- with the dozen rigs operating in 2011.
She said that according to a recent study by the McDowell Group, the oil industry was responsible for over 110 thousand direct and indirect jobs in the state (i.e. 33% of total jobs), along with over $6.4 billion in wages (i.e. 38% of total wages) and billions in royalties and taxes.
ACES (Alaska's Clear and Equitable Share) was the production tax law created by Governor Sarah Palin (NGP photo) and a bipartisan majority of the Legislature, in late 2006. The tax increase was enormous and created hastily, in the wake of a scandal involving several legislators and an oil industry support company a decade ago.
SB 21 is the oil tax reform production tax bill at issue this summer, enacted last Spring after four years of committee hearings and debate on how to improve ACES.
Halcro pointed out that, "under ACES, it just didn't make sense for companies to expand." Expansion is the best way to produce oil, he said, not simply trimming expense. He reminded the audience that when oil companies make more money in a state dependent on oil jobs and income, everyone does better. He gave as an example, ExxonMobil, which is the single largest holding in the Alaska Permanent Fund.
Halcro also documented how the State Revenue Department overstated prospects for future oil production before the full, economic effects of ACES materialized into a disappointing and dangerous trend downward.
During a question and answer period following the presentations, Smith said in response to the hurried way ACES was created, "We can't make decisions like ACES on emotion." The crowd applauded.
Responding to a question about why ACES passed in the first place, Halcro said it was a combination of lawmakers who didn't like oil companies and lawmakers who were afraid to vote against a popular governor (i.e. Palin). He noted that Representative Ralph Samuels (NGP Photo) was a courageous exception to the rule," another comment resulting in applause.
Halcro also noted that ACES included tax and investment incentives for small companies. But after two years and many millions in incentives had been dedicated to these companies, they told the state that though they could discover new commercial reserves, they could not afford to produce them under the tax burden imposed by ACES.
Halcro added that since the passage of ACES in 2006, Alaska's spending has risen 50% but its income has dropped 30%.
Halcro pointed out that the state is home to some 6,000 non profit corporations. (i.e. This is a higher per capita density of non governmental organizations (NGOs) than anywhere in the country if not the free world.) As government grants decline, Halcro said, these NGOs become more dependent on business and individual giving. As the saying goes, he said, "when the oil industry catches a cold, everyone else sneezes.
Earlier this year we editorialized on this issue and provided these statistics, concluding that, "We continue to be surprised at how few non profit organization leaders testify to the Legislature in support of oil companies, how few write letters to the editor. Yes, Non profits are professional, profligate writers of corporate and foundation grant requests, but how many stand up to support oil company investment -- which directly and indirectly affects their own prosperity?
* * *
In another recent presentation, Dr. Goldsmith opined on various strategic alternatives for Alaska's economic future:
* * *
Additional Event Photo:
with 6-18-14 SB 21
6-6-14 Alaska D-Day Energy Speech and CBC 70th Normandy Rememberance - Pedro van Meurs On Mexican Constitutional Amendments
70th Annual Remembrance Of The Normandy Invasion: D-Day
We're now watching the Canadian Broadcast Corporation's 70th D-Day Anniversary remembrance online, here.
Earlier this morning in Alaska, we heard former Anchorage Mayor George Wuerch (NGP Photo), a Marine veteran himself, give a moving address to the Alaska Miners Association in his role as Chairman of Veterans For Energy Security (Alaska Chapter).
His speech title could, indeed, have been, "National Security Depends On Energy Security".
Wuerch reminded the audience that the attack on Pearl Harbor (Your author's parents were there) began following President's Roosevelt's decision to stop exporting fuel and steel in support of the imperialistic and expansionist Japanese government.
Access to abundant energy supplies -- supported by domestic rationing during WWII -- enabled the United States to mobilize 67 Army and 6 Marine divisions, Wuerch said, along with 2710 'Liberty Ships', while supplying Russia with 85,000 trucks, 8600 tanks and 6100 airplanes.
|Yesterday, US Senator Lisa Murkowski's office sent us her reaction to the EPA's Power Plant rule: “I am greatly concerned EPA’s rules – particularly in combination with one another – will result in a grid that is less stable and less reliable. The cumulative effect of federal regulations on baseload capacity – resources such as coal and nuclear which provide electricity on demand – must be examined and appreciated, not discounted or ignored.”|
Wuerch warned against excessive governmental regulation that could constrict energy production and threaten the country's ability to defend itself.
Examples he gave of Federal overreach are very familiar to our readers, including unlawful use of the Clean Water Act, prohibiting projects from even petitioning the government for legal permits to operate; improper use of the Endangered Species Act and the disastrous effect implementation of the EPA's carbon guidelines this week will have on the economy--particularly among the poor.
"The Keystone XL pipeline would provide secure supplies of crude oil to America's Gulf Coast refineries, helping to replace crude imports from Arab countries," Wuerch noted.
Today, we also think of another Marine veteran, community leader, our dear friend and reader, Maynard Tapp (NGP Photo).
Tapp's birthday is today, always on D-Day.
Tapp is co-owner of Hawk Consultants, LLC., and a tireless supporter of Alaska's oil and gas industry and the economic benefits it provides to all Alaskans.
As we remember D-Day, we remember all veterans like Mayor Wuerch (Thank you for your message today) and Maynard Tapp (Happy Birthday), one of the Alaska Support Industry Alliance's strongest voices in support of free enterprise and energy security on America's Last Frontier.
May their dedicated voices in support of freedom long be heard and always remembered. -dh
"Two-thirds of Americans -- and Governors of states hosting the pipeline right of way -- support the project. The Obama Administration's opposition to the Keystone Pipeline has delayed the project for over 5 years, longer than it took this country to win WWII," he said.
Wuerch talked about energy independence, saying that the US is now the world's largest natural gas producer. He said that USA Today predicts the US will be the largest crude oil exporter by 2020.
With oil accounting for reducing last year's trade deficit by over $60 billion, continued growth in oil production bodes well for a stronger balance of payments position over the next few years.
But current, political opposition to fossil energy production could reduce the potential and the optimism.
"The Administration's opposition to reasonable development of the National Petroleum Reserve - Alaska and a small sliver (the 1002 area) of the Arctic National Wildlife Refuge is producing a loss of one to nine million jobs."
"Now is the time for energy policies to further energy independence," he concluded.
Our friend, Pedro van Meurs (NGP Photo) writes us that,
"The passing of the Constitutional amendments in Mexico was a very positive development which has significant potential to induce large scale investments in the country, increase petroleum production and create significant revenues for government, business opportunities and employment over the coming decades."
He offers, "a commentary on this Constitutional amendments ... on my website. I prepared this document at the request of various parties. If you are interested in downloading this document please click here.
I hope this document is of interest to you. If you have any questions or comments feel free to contact me.
Pedro van Meurs
Van Meurs Corporation
PO Box CR-56766 # 1261
Comment: We associate a current Governing Magazine article by Liz Farmer, below, with Matt Buxton's excellent News Miner review of Alaska gas pipeline project funding.
We have long alerted readers that with government participation in the traditional, private market comes an unintended list of future consequences to be faced by not only this, but future generations of public officials who had little or nothing to do with the original public funding decisions.
Current and future citizens, in these circumstances, should be prepared to absorb the same risks taken by a private investor -- the risk of losing or wasting some or all of the investment.
If public officials present public spending proposals without fully disclosing the risk, they violate the very disclosure statements and objective, due diligence research, undertaken by prudent investors of corporations, trusts, partnerships and participants in loans, lease agreements, sales contracts, divorce settlements and other transactions.
As in all of life's business dealings, citizens approving the public use of funds to purchase or participate in private projects should hold dear the age old maxim: Caveat emptor (Let the buyer beware"). -dh
Fairbanks News Miner, by Matt Buxton. Even though the state has approved millions in funding, selected a global infrastructure development company and approved millions more for infrastructure in Fairbanks, it’s clear that getting natural gas off the North Slope is still a “massive undertaking.”
The Alaska Industrial Development and Energy Authority’s Board of Directors met in Anchorage on Wednesday to hear an update on the Interior Energy Project, with the most critical part being the progress on a natural gas processing facility on the North Slope. More here.
The temptation of the quick fiscal fix has seduced just about every lawmaker at one time or another….
What follows is Governing’s list of the most tempting financial schemes that can severely weaken a government’s fiscal future….
1. Balancing the Budget with One-Time Fixes
States and many cities have a legal obligation to balance their budgets each year. But there are all sorts of tricky maneuvers ….
2. Ignoring the Long-Term Consequences of a Deal
Few governments have a long-term financial plan and even fewer have multiyear budgets. Many don’t even require ….
3. Taking on Too Much
… development projects funded by municipal bonds.
4. Misapplying a Temporary Windfall
Every economic boom is followed by a bust, but elected officials are often tempted to spend money as if that weren’t true, using one-time surpluses ….
5. Shortchanging Pension Obligations
… chronic unwillingness by lawmakers to contribute what is necessary to keep the plans fully funded.
6. Making Unrealistic Projections About Rate of Return
…targeting a pension funding level that’s lower than what most people might consider prudent,” says Donald Fuerst….
7. Ignoring Financial Checks and Balances
…where there are many different ways to count the same revenue, weak financial controls can lead to serious dollar losses
|Globe & Mail by CP. TransCanada Corp. says it plans to build a $1.9-billion pipeline to help feed Chevron Corp. and Apache Corp.’s proposed liquefied natural gas facility near Kitimat, B.C.|
Yesterday ExxonMobil's Karen Hagedorn briefed the Fairbanks community on Point Thomson project status. Read Dermot Cole's ADN story here and see our report of Sofia Wong's Friday Point Thomson briefing in Anchorage, here. Last night, Alaska Public Media aired this audio of a recent Commonwealth North panel discussing Alaska state investment in an ANS gas pipeline/LNG project that includes Alaska producers, TransCanada and the Alaska Gasline Development Corporation. -dh
"An Important Ally: Pacific Legal Foundation"
(Don't think the fight against unreasonable environmental activism isn't alive and well in Canada, too!)
TODAY's PLF News:
1) PLF has just filed an amicus brief supporting the Lunny family, owners of the 80-year-old oyster farm, in their request for help from the U.S. Supreme Court, as they fight for survival against the feds' bullying. The case is Drakes Bay Oyster Company v. U.S. Department of the Interior. A PLF video, and PLF's brief supporting the Lunnys' petition to have the High Court take their case, may be found here.
2) PLF is opening a new DC Center for education, communication and outreach to the national media, policy-makers, and opinion leaders. Todd F. Gaziano will serve as Executive Director of the DC Center and as Senior Fellow in Constitutional Law.
We have long supported Pacific Legal Foundation (PLF) because it is one of the few not-for-profit legal giants helping the private sector defend against overreaching federal government colonialism.
To the degree that PLF is successful, is our natural resource industries world -- and, indeed, North America's entire economy -- viable and sustainable.
To the extent PLF is unsuccessful or lacks resources to succeed, to that degree will the natural resource wealth-creating capacity of our Northern hemisphere be less sustainable and face a possible, economic 'death spiral' -- especially in view of disturbing deficit spending and national debt trends.
Canada and the United States are each others' largest trading partner. Because a large portion of that relationship is the trading and movement of natural resources across America's northern border -- both ways--PLF is important to both countries! If that free trade flow is constricted by regulatory tourniquets imposed by extreme and unreasonable environmental activism and lawsuit settlements, the trade flow will diminish along with North American prosperity.
Today, US Senator Lisa Murkowski urged the Federal Energy Regulatory Commission (FERC) to move ahead with ... Dominion’s application for a license to export liquefied natural gas (LNG) from its Cove Point facility in Maryland. (We support this advocacy since Alaska will require federal support for its various oil and gas export plans as well.
A WORD OF CAUTION. TODAY, Energy Citizens says, "
"... anti-energy activists are opposing natural gas exports for ideological reasons. They are standing in the way of an export upgrade for the Cove Point Liquefied Natural Gas (LNG) facility.
Accordingly, we highly recommend that readers in both of our countries support Pacific Legal Foundation along with the other natural resource organizations we mention on these pages nearly every day.
Without them all, the days of prosperity in this part of the world become more limited with each precedent setting lawsuit settlement, with each attack on innocent individual and corporate citizens, with each new layer of uncontested regulatory abuse, with each violation of due process and the rule of law.
The Sierra Club Canada email below -- flooding the Internet TODAY -- illustrates the coordinating, grass roots efforts being undertaken by Canadian environmental activists.
We encourage NGP readers to subscribe to this email service as a way of more effectively understanding and dealing with this determined enemy of reasonable and lawful development.
(Note: we believe Canadian law must be quite lax to allow the "Sierra Club Canada Foundation" in this email to solicit a donation on the one hand and to take an active role in -- not educating -- but trying to use tax exempt donations to promote political action and opposition to regulatory conclusions.)
Maybe the law is not lax so much as no one has challenged this practice in Canada's courts. However, we do not claim expertise in the Canadian legal and regulatory systems and can only hope that more studied minds are taking appropriate action to counterbalance inappropriate political advocacies. -dh
From: Sierra Club Canada
Update on Enbridge Northern Gateway Tar Sands Pipeline
Our friends over at the World Wildlife Fund had a group of scientist (sic.) look over the Joint Panel Report on the Enbridge Northern Gateway Tar Sands Pipeline.
They concluded that the report is flawed and the federal government should not approve the pipeline. Over 100 scientists have now signed a letter to the Prime Minister urging him not to approve the pipeline.
Consider this an invitation to add your voice to the scientists, thousands of Canadians, and over 100 First Nations who oppose this pipeline!
CLICK HERE TO SEND YOUR LETTER NOW.
Thanks for taking action for the planet.
Sierra Club Canada Foundation
1510-1 Nicholas St
Ottawa, ON K1N 7B7
To unsubscribe from these mailings, click here
To opt out of all Sierra Club Canada Foundation mailings click here
Globe & Mail by Peter Tertzakian. Last week Total SA and their consortium partners shelved the $11-billion Joslyn oil sands project. Predictably, the belt-tightening announcement triggered the usual self-flagellating notions like, “Canadian oil and gas isn’t competitive,” and “The future of the oil sands is dim.” But ....
Tomorrow morning at 9 a.m. the Alaska Oil and Gas Conservation Commission will hold its monthly public meeting at 333 W. 7th Avenue in Anchorage, Alaska. Agenda will include: 1. Approval of Agenda; 2. Old Business; Approve April 2, 2014 Minutes; 3. New Business; Legacy Wells (Photo, Knifeblade #1), Commissioner Cathy Foerster (NGP Photo. See our story here; since we wrote it, Senator Lisa Murkowski succeeded in encouraging funding of a BLM cleanup. This update, therefore, should give indication of BLM's progress in removing federal hazardous wastes in the National Petroleum Reserve Alaska, where BLM rules ironically prevent industry from exploring and safely developing vast areas. -dh) 4. Opportunity for Public Comment
Alaskan and Canadian Producers And Governments Are Sure To Keep Alert To Changing Conditions In The World LNG Market (Read More)
Michael Whatley (NGP Photo), former staff director and chief counsel for the U.S. Senate Energy Public Works Clean Air and Climate Change Subcommittee, raised a warning flag that EPA regulations will disproportionately affect energy consumers in states in the Midwest and Southeast that are heavily reliant on coal to generate electricity.
Today at 10:30 a.m. EDT, Environmental Protection Agency (EPA) Administrator Gina McCarthy delivered remarks (Live Stream Here) on President Obama’s Climate Action Plan to cut carbon pollution from existing power plants.
We encourage all Americans to pay attention to this new demonstration of Federal power that will increase utility bills for millions of Americans while making electricity service less reliable and eliminating industry jobs along with the support industries, retail, transportation and government jobs depending on them.
Removing a large portion of the single major low-cost fuel source for much of America will further impede economic recovery and adversely affect national defense.
Since U.S. produced carbon emissions are a relatively small increment of the world's 'greenhouse gasses', and since current regulations already prohibit major noxious emissions, and since carbon is a major building block of life itself, the overall benefit to be achieved from such a national sacrifice is debatable. -dh
Alaska North Slope Point Thomson Gas Project Update
Commonwealth North (CWN) Members and guests on Friday heard a fact-filled update from ExxonMobil (XOM) on the company’s contributions to Alaska’s culture and economy—and learned that the company’s Point Thomson (PT) project adjacent to ANWR is ‘on schedule’.
Sofia Wong (NGP Photo), the Infrastructure and Pipeline Project manager of XOM’s Point Thomson project, stressed the ‘Alaska commitment’ throughout her presentation, including the project’s local hire success and four decades of sponsoring the world famous, annual Iditarod Race from Anchorage to Nome.
One of the highest pressure reservoirs in the world, at 10,200 pounds per square inch, PT contains about ¼ of the 35 Trillion Cubic Feet (Tcf) of ANS natural gas reserves, 8 Tcf.
In addition, the reservoir holds around 200 million barrels of valuable, liquid gas condensate, which separates from the lighter gas into liquid form at normal, atmospheric pressure.
The Initial Production System (IPS) will produce about 10 thousand barrels per day of the condensates when 200 million cubic feet per day of the highly pressured gas is de-pressurized by cycling up through one production well then re-pressurized and forced back into the reservoir via two injection wells. Over time, the production rate can increase to 70 thousand barrels per day.
The gas condensates, which remain liquid when de-pressurized, will move through a new, 22 mile pipeline to the Badami oil field, then commingle with Badami oil production for the remainder of a 60 mile journey to TAPS.
Once PT's initial infrastructure and production is operational – by the winter of 2016 -- the company will increase drilling and production of both liquid condensates and natural gas according to a range of development alternatives agreed upon with the State of Alaska, including a high pressure gas pipeline that would be part of an Alaska LNG export project.
Make no mistake, however, that the primary interest of the CWN Energy Action Coalition members focused narrowly on the Point Thomson (PT) project’s essential role in commercializing the stranded gas and gas condensate reserves.
PT reservoir commercialization can occur via some combination of projects: 1) adding liquid condensate to the throughput of the Trans Alaska Pipeline System (TAPS); 2) creating a successful Alaska LNG export project partly depending on PT gas; and, 3) making ANS gas available for in-state use.
Wong emphasized two major milestones, to date: 1) a current expenditure of half the ultimate $4 billion cost of the Arctic gas project, and 2) creating infrastructure that expands access to Arctic oil and gas reserves.
The Point Thomson project crouches on the western border of the Arctic National Wildlife Refuge (ANWR), on perhaps the most remote production pad in the world, about 60 miles east of the Prudhoe Bay oil field.
Wong said that the project’s current success owes in large part to the expertise Arctic-experienced Alaskan companies have contributed to the project. Of nearly a hundred contractors working on the project, over seventy are Alaskan companies. She said that of the project’s $2 billion cost to date, 70% has been spent in Alaska. She praised Doyon Regional Corporation’s construction of the liquids pipeline to Badami, including creation of 2,300 vertical support members that will elevate the warm liquids pipeline above the permafrost terrain. She also lauded the expertise of companies like HDR, which guided the project through its critical permitting requirements and played a key role in keeping the project on schedule. -dh
Commonwealth North Energy Action Committee Event Photos: May 30, 2014 (High Resolution Versions Here):
Here is the EPA Spin:
It's an important day. Today, at the direction of President Obama and after an unprecedented outreach effort, the U.S. Environmental Protection Agency is releasing the Clean Power Plan proposal, which for the first time cuts carbon pollution from existing power plants, the single largest source of carbon pollution in the United States. Today’s proposal will protect public health, move the United States toward a cleaner environment and fight climate change while supplying Americans with reliable and affordable power.
By leveraging cleaner energy sources and cutting energy waste, this plan will clean the air we breathe while helping slow climate change so we can leave a safe and healthy future for our kids. And we don't have to choose between a healthy economy and a healthy environment--our action will sharpen America’s competitive edge, spur innovation, and create jobs.
Here are the top four things to know about the proposed plan. The Clean Power Plan:
1) Fights climate change: Our climate is changing, and we're feeling the dangerous and costly effects today.
2) Protects public health: Power plants are the largest source of carbon pollution in the U.S. Although there are limits for other pollutants like arsenic and mercury, there are currently no national limits on carbon. Americans will see significant public health and climate benefits now and for future generations.
3) States leading with proven approaches: States and businesses have already charted a course toward cleaner, more efficient power. Our plan doesn't prescribe, it propels ongoing progress
4) Key is flexibility and putting states in the driver's seat: With EPA's flexible proposal, states choose the ways we cut carbon pollution, so we can still have affordable, reliable power to grow our economy.
Watch a video from Administrator McCarthy on the Clean Power Plan:
Power plants account for roughly one-third of all domestic greenhouse gas emissions in the United States. While there are limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides, and particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels.
With the Clean Power Plan, EPA is proposing guidelines that build on trends already underway in states and the power sector to cut carbon pollution from existing power plants, making them more efficient and less polluting. This proposal follows through on the common-sense steps laid out in President Obama’s Climate Action Plan and the June 2013 Presidential Memorandum.
Interested in more detailed information on the benefits of the rule? View the whiteboard video by Joe Goffman, EPA Associate Assistant Administrator for Climate.
By 2030, the steady and responsible steps EPA is taking will:
- Cut carbon emission from the power sector by 30 percent nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year;
- Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25 percent as a co-benefit;
- Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days—providing up to $93 billion in climate and public health benefits; and
- Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.
For more information, view the following fact sheets:
- Overview of the Clean Power Plan - Cutting Carbon Pollution from Power Plants (PDF)
- Why We Need a Cleaner, More Efficient Power Sector (PDF)
- Flexible Approach to Cutting Carbon Pollution (PDF)
- National Framework for States - Setting State Goals to Cut Carbon Pollution (PDF)
- The Role of States - States Decide How They Will Cut Carbon Pollution (PDF)
More Consumer Energy Alliance Analysis:
What Consumers Should Know about Today’s EPA Announcement:
CEA Responds to Proposed Carbon Emission Standards for Existing Electric Utility Generators
The Environmental Protection Agency (EPA) released today its long-awaited proposed “Carbon Pollution Emission Guidelines for Existing Stationary Sources for Electric Utility Generating Units.” The proposed rule is part of the Obama Administration’s Climate Change Action Plan, released nearly one year ago.
The rule would require a 25 percent reduction of CO2 emissions from the power sector by 2025 and 30 percent by 2030 compared with 2005 levels. The proposed plan outlines state-specific emission rate-based CO2 goals and guidelines for development, submission, and implementation of those plans. In her remarks to the press, Administrator McCarthy touted the plan’s flexibility for states to customize their own path to compliance.
- The Rule Will Affect How We Generate & Consume Electricity
The rule will affect what type of electricity we consume, how much we pay for it, and how much we use. However, the exact impact may not be known for a few years. The final rule will not be ready for nearly one year, after which states will have up to three years to develop implementation plans. Essentially, we may not be able to quantify the true impact for years.
However, we do know that dramatic and significant shifts in electricity generation and demand have previously resulted in price spikes for consumers. As such, consumers will need to work closely with the states to determine how to ensure affordable and reliable electricity.
- States Have the Lead (To an Extent)
Each state will be required to develop a plan for how it plans to reach its EPA-set reduction target. The EPA’s proposal includes strategies for the Best System of Emission Reduction, including: decreasing carbon emissions and/or increasing efficiency at existing coal-fired units, dispatching lower-emitting and zero-emitting generating units, including combined-cycle natural gas, nuclear and renewable energies, and instituting or expanding end-use energy efficiency programs. States are encouraged to find the proper balance amongst these four strategies, and EPA noted that a combination of all four strategies will best achieve results at a lower cost. States can meet the goal on its own or collaborate with other states on multi-state plans.
- There is Time to Revise the Rule….
The Environmental Protection Agency will soon open a six-month comment period on its proposal. State regulators, industry, and consumers will all be given the opportunity to weigh-in on the proposal and recommend revisions. The comment period will include four public hearings in Atlanta, Denver, Pittsburgh, and Washington, DC in late July.
- But Once the Rule is Final, States Cannot Revise Their Targets
Once the final emission reduction goals have been promulgated in a final rule, states will no longer have an opportunity to request that EPA adjust its goal. Although states will be given up to three years to develop their implementation plans, states will need to work with the EPA now if they determine the reduction targets are too aggressive or unworkable.
CEA’s principal concern is how this rule, the rule on new generating units, and other existing EPA power generation rules will affect the short- and long-term affordability, and reliability of electricity. Over the past year, CEA has been leading a comprehensive dialogue amongst regulators, lawmakers, consumers, and other stakeholders to better understand how utilities can continue to supply affordable, reliable energy in the face of increasing regulation. Part of this discussion has focused on the need for swift, concerted action to bring additional sources of nuclear, natural gas, renewable, and advanced coal electricity online and institute new efforts to utilize energy efficiently in order to meet our nation’s growing electricity demand.
As regulators move forward with finalizing these rules, CEA will be working with its membership, state and federal policymakers, and other stakeholders to better understand the following:
- What impacts will these EPA regulations – including both the carbon emission standards for new and existing plants – have for coal-fired generation?
- What effect will these regulations have on the cost of electricity?
- If coal-fired utilities will be forced to close prematurely, how do producers fill the gap between supply and demand with nuclear, natural gas, renewable and advanced coal electricity, as well as efforts to increase the efficiency of electricity generation and transmission?
- What role can the states play in helping to encourage the construction of new generation to fill this potential gap?
Usually amicable colleagues, Murkowski and Wyden couldn't be farther apart on this issue:
Sen. Murkowski Criticizes Latest Unilateral Obama Administration EPA Regulation
Wyden: Inaction on Climate Change is No Longer an Option
Washington, D.C. – Sen. Ron Wyden, (NGP Photo), today issued the following statement after the Environmental Protection Agency announced a proposal to reduce U.S. greenhouse gas emissions by 30 percent from 2005 levels:
"American businesses, farmers, ranchers and families are experiencing the effects of climate change in the United States today. Inaction on climate change is no longer an option, so those who would criticize EPA’s plan have a responsibility to put forward their own ideas on how to move to a low-carbon economy.
Climate change is the most important environmental challenge of our time. Without immediate action, its effects will only get worse. EPA’s proposed rule offers an opportunity to put our country on the road to lower emissions and put each state in the driver's seat to determine its own best course.”
The EPA will hold public meetings to gather input on the proposed rule and the public will have until the fall to comment on it. Read the proposed rule here.
WASHINGTON, D.C. – U.S. Sen. Lisa Murkowski (NGP Photo), R-Alaska, today criticized the Environmental Protection Agency’s (EPA) proposal to regulate greenhouse gas emissions from existing power plants as harmful to the U.S. economy.
“Despite negative economic growth last quarter, and despite far better approaches pending in Congress to promote energy efficiency and energy innovation, the president has decided to push ahead and propose a sweeping new regulation on our still-weak economy.
“For years, I have expressed concern that EPA’s unilateral regulations will come at a high cost and harm the affordability and reliability of our energy supply. Nothing I have seen today, including the general dismissal of concerns about the rule’s costs, has lessened my concerns.
“This draft rule is more than 600 pages long and paired with nearly 400 pages of regulatory analysis. As a result, it’s impossible to immediately give a full reaction to what EPA has proposed. It will take time to fully review how it would impact my home state of Alaska – which EPA seems not to have considered as it developed the rule – and the rest of our country.
“As we begin our review, however, I would encourage stakeholders to remember that this is one of many rules that EPA has issued in recent years. We still do not have an accurate accounting of the cumulative costs associated with them, but we do know that EPA has dramatically underestimated plant retirements in the very recent past.
“I am also convinced that this rule will make it even more important for the Federal Energy Regulatory Commission and the Department of Energy to step up and protect the reliability and affordability of U.S. power supplies.”
Murkowski is the top Republican on the Senate Energy and Natural Resources Committee.
Alaska's other Senator Mark Begich (NGP Photo), issued a release that neither opposed nor supported the EPA's proposed carbon rules, observing that, "...this rule exempts all of rural Alaska, but could impact a handful of Railbelt power plants,” said Begich. “My office has already asked the EPA for additional information and I will work closely with both the EPA and the State of Alaska to ensure that any final rule is flexible and protects Alaska businesses and families.”
Gina McCarthy's Remarks Today:
Remarks for Administrator McCarthy, Announcement of Clean Power Plan, Washington, DC
WASHINGTON- About a month ago, I took a trip to the Cleveland Clinic. I met a lot of great people, but one stood out—even if he needed to stand on a chair to do it. Parker Frey is 10 years old. He’s struggled with severe asthma all his life. His mom said despite his challenges, Parker’s a tough, active kid—and a stellar hockey player.
But sometimes, she says, the air is too dangerous for him to play outside. In the United States of America, no parent should ever have that worry.
That’s why EPA exists. Our job, directed by our laws, reaffirmed by our courts, is to protect public health and the environment. Climate change, fueled by carbon pollution, supercharges risks not just to our health, but to our communities, our economy, and our way of life. That’s why EPA is delivering on a vital piece of President Obama's Climate Action Plan.
I want to thank Janet McCabe, our Acting Assistant Administrator at the Office of Air and Radiation, and the entire EPA team who worked so hard to deliver this proposal. They should be very proud of their work; I know I am.
Today, EPA is proposing a Clean Power Plan that will cut carbon pollution from our power sector, by using cleaner energy sources, and cutting energy waste.
Although we limit pollutants like mercury, sulfur, and arsenic, currently, there are no limits on carbon pollution from power plants, our nation’s largest source. For the sake of our families’ health and our kids’ future, we have a moral obligation to act on climate. When we do, we’ll turn climate risk into business opportunity, we’ll spur innovation and investment, and we’ll build a world-leading clean energy economy.
The science is clear. The risks are clear. And the high costs of climate inaction keep piling up.
Rising temperatures bring more smog, more asthma, and longer allergy seasons. If your kid doesn’t use an inhaler, consider yourself a lucky parent, because 1 in 10 children in the U.S. suffers from asthma. Carbon pollution from power plants comes packaged with other dangerous pollutants like particulate matter, nitrogen oxides, and sulfur dioxide, putting our families at even more risk.
Climate inaction is costing us more money, in more places, more often. 2012 was the second most expensive year in U.S. history for natural disasters. Even the largest sectors of our economy buckle under the pressures of a changing climate, and when they give way, so do businesses that support them, and local economics that depend on them.
As our seas rise, so do insurance premiums, property taxes, and food prices. If we do nothing, in our grandkids’ lifetimes, temperatures could rise 10 degrees and seas could rise 4 feet. The S&P recently said climate change will continue to affect credit risk worldwide.
This is not just about disappearing polar bears or melting ice caps. This is about protecting our health and our homes. This is about protecting local economies and jobs.
The time to act is now. That’s why President Obama laid out a Climate Action Plan—to cut carbon pollution, build a more resilient nation, and lead the world in our global climate fight.
Today’s proposed Clean Power Plan is a critical step forward. Before we put pen to paper, we asked for your advice. Our plan was built on that advice—from states, cities, businesses, utilities, and thousands of people. Today kicks off our second phase of crucial engagement.
Shaped by public input, present trends, proven technologies, and common sense, our Plan aims to cut energy waste and leverage cleaner energy sources by doing two things: First, setting achievable, enforceable state goals to cut carbon pollution per megawatt hour of electricity generated. And second, laying out a national framework that gives states the flexibility to chart their own, customized path to meet their goals.
All told, in 2030 when states meet their goals, our proposal will result in 30 percent less carbon pollution from the power sector across the U.S. when compared with 2005 levels. That’s like cancelling out annual carbon pollution from two thirds of all cars and trucks in America. And if you add up what we’ll avoid between now and 2030—it’s more than double the carbon pollution from every power plant in America in 2012.
As a bonus, in 2030 we’ll cut pollution that causes smog and soot 25 percent more than if we didn’t have this plan in place. The first year that these standards go into effect, we’ll avoid up to 100,000 asthma attacks and 2,100 heart attacks—and those numbers go up from there.
That means lower medical bills and fewer trips to the emergency room, especially for those most vulnerable like our children, our elderly, and our infirmed. This is about environmental justice, too, because lower income families, and communities of color are hardest hit.
Now let me get into the details of our proposal.
This plan is all about flexibility. That’s what makes it ambitious, but achievable. That’s how we can keep our energy affordable and reliable. The glue that holds this plan together, and the key to making it work, is that each state’s goal is tailored to its own circumstances, and states have the flexibility to reach their goal in whatever way works best for them.
First, to craft state goals, we looked at where states are today, and we followed where they’re going. Each state is different, so each goal, and each path, can be different.
Second, the goals spring from smart and sensible opportunities that states and businesses are taking advantage of right now. From plant to plug.
Let me tell you about the kinds of opportunities I’m talking about:
We know that coal and natural gas play a significant role in a diverse national energy mix. This Plan does not change that—it recognizes the opportunity to modernize aging plants, increase efficiency, and lower pollution. That’s part of an all-of-the-above strategy that paves a more certain path for conventional fuels in a carbon constrained world.
States also have the opportunity to shift their reliance to more efficient, less polluting plants. Or, instead of low carbon sources, there’s always the opportunity to shift to “no” carbon sources like nuclear, wind, and solar. Since 2009, wind energy in America has tripled and solar has grown ten-fold. Our nuclear fleet continues to supply zero carbon baseload power. Homegrown clean energy is posting record revenues and creating jobs that can’t be shipped overseas.
Those are all opportunities at plants, but what about at the plug? Existing technologies can squeeze the most out of every electron, helping us use electricity more efficiently in our homes and businesses. More efficiency means we need less electricity to cool our refrigerators or charge our phones. For the fuel we burn, let’s get the most bang for our buck.
All of these options are not new ideas. They’re based on proven technologies, proven approaches, and are part of the ongoing story of energy progress in America. Our plan doesn’t prescribe—it propels that progress already underway.
And like I said, there’s no one-size-fits-all solution. States can pick from a portfolio of options to meet regional, state, and community needs—from ones I mentioned, or the many more I didn’t, and in any combination. It’s up to states to mix and match to get to their goal.
If states don’t want to go it alone, they can join up with a multi-state market based program, or make new ones. More players mean more flexibility and lower costs. States have flexibility not just in means and method, but in timeline, too. Under our proposal, states have to design plans now, and start reducing so they’re on a trajectory to meet their final goals in 2030. That kind of flexibility means a smooth transition to cleaner power that doesn’t leave investments behind.
The flexibility of our Clean Power Plan affords states the choices that lead them to a healthier future: Choices that level the playing field, and keep options on the table, not off. Choices that reflect where we are today, and look to seize opportunities for tomorrow. Choices that are focused on building up, not shutting down, so we can raise the common denominator for a cleaner, low carbon economy that’ll fuel growth for decades to come.
What’s special about the flexibility of our plan is that it doesn’t just give states more options—it gives entrepreneurs and investors more options, too. It’ll deliver the certainty that will unleash market forces that drive even more innovation and investment, and spur even cleaner power and all sorts of new low-carbon technologies. Our Plan pulls private investment off the shelves and into our clean energy revolution, and sends it in every direction, not just one or two. The opportunities are tremendous.
The good news is states, cities, and businesses have already blazed the trail. Our clean energy revolution is unfolding in front of us. Just in the past few weeks, I went to Salt Lake City, where the mayor and utilities are teaming up on efficiency. I went to St. Paul, where a science center is recycling energy waste, saving money and teaching kids what we adults are just learning. I’ve seen fortune 500 companies revamp strategies to lower business risk by meeting the demands of a carbon constrained future.
I want to give a shout out to all the local officials, rural co-ops, public power operators, and investor owned utilities leading on climate change: It’s clear that you act not just because it’s reasonable, but because it's the right thing to do for the people you serve. Governors and mayors of all stripes are leaning into climate action. They see it not as a partisan obstacle, but as a powerful opportunity. And we know that success breeds success. Those of us who’ve worked in state and local government have seen healthy competition push states to share ideas and expertise. That’s when everybody wins.
EPA has had a longstanding partnership with states to protect public health. We set goals, and states are in the driver’s seat to meet them. So releasing the Clean Power Plan shifts the conversation to states. If you’re a teacher, scientist, mechanic, business person—or just someone with a good idea—share your thoughts with your state leaders. Help them see how they can build a plan that will better our future.
I know people are wondering: can we cut pollution while keeping our energy affordable and reliable? We can, and we will. Critics claim your energy bills will skyrocket. They’re wrong. Any small, short-term change in electricity prices would be within normal fluctuations the power sector already deals with. And any small price increase—think about the price of a gallon of milk a month—is dwarfed by huge benefits. This is an investment in better health and a better future for our kids.
In 2030, the Clean Power Plan will deliver climate and health benefits of up to $90 billion dollars. And for soot and smog reductions alone, that means for every dollar we invest in the plan, families will see $7 dollars in health benefits. And if states are smart about taking advantage of efficiency opportunities, and I know they are, when the effects of this plan are in place in 2030, average electricity bills will be 8 percent cheaper.
This plan is a down payment on a more efficient, 21st century power system that cuts energy waste, cuts pollution, and cuts costs. It’s a proven path—a lot of states have been doing it for years. Think about it like this: we set historic fuel efficiency standards that will double the distance our cars go on a gallon of gas. That means you fill up less often, and save more money. Efficiency is a win for our planet and our pocketbooks. And given the astronomical price we pay for climate inaction, the most costly thing we can do; is to do nothing.
The critics are wrong about reliability, too. For decades, power plants have met pollution limits without risking reliability. If anything, what threatens reliability and causes blackouts is devastating extreme weather fueled by climate change. I’m tired of people pointing to the Polar Vortex as a reason not to act on climate. It’s exactly the opposite. Climate change heightens risks from extreme cold that freezes power grids, superstorms that drown power plants, and heat waves that stress power supplies. And it turns out, efficiency upgrades that slow climate change actually help cities insulate against blackouts.
Despite all that, there are still special interest skeptics who will cry the sky is falling. Who will deliberately ignore the risks, overestimate the costs, and undervalue the benefits. But the facts are clear. For over four decades, EPA has cut air pollution by 70 percent and the economy has more than tripled. All while providing the power we need to keep America strong. Climate action doesn’t dull America’s competitive edge—it sharpens it. It spurs ingenuity, innovation, and investment. In 2011, we exported almost 33 percent more cars than we did in 2009—a clear sign of a competitive industry. And our fuel efficiency standards strengthen that.
Companies like Best Buy are investing in low-carbon operations. Bank of America pays its employees to cut carbon pollution, because investors see climate risk as business opportunity. Any business will tell you eliminating waste means more money for other things, like hiring employees. Corporate climate action is not bells and whistles—it’s all hands on deck.
And even without national standards, the energy sector sees the writing on the wall. Businesses like Spectra Energy are investing billions in clean energy. And utilities like Exelon and Entergy are weaving climate considerations into business plans. All this means more jobs, not less. We’ll need thousands of American workers, in construction, transmission, and more, to make cleaner power a reality.
The bottom line is: we have never—nor will we ever—have to choose between a healthy economy and a healthy environment.
There’s a reason empty allegations from critics sound like a broken record. It’s the same tired play from the same special-interest playbook they’ve used for decades. In the ‘60s, when smog choked our cities, critics cried wolf and said EPA action would put the brakes on auto production. They were wrong. Instead, our air got cleaner, our kids got healthier—and we sold more cars. In the ‘90s, critics cried wolf and said fighting acid rain would make electricity bills go up and our lights go out. They said industry would, quote, “die a quiet death.” Wrong again. Industry is alive and well, our lights are still on, and we’ve dramatically reduced acid rain.
Time after time, when science pointed to health risks, special interests cried wolf to protect their own agenda. And time after time, we followed the science, protected the American people, and the doomsday predictions never came true. Now, climate change is calling our number. And right on cue, those same critics once will flaunt manufactured facts and scare-tactics, standing in our way of our right to breathe clean air, to keep our communities safe, and to meet our moral duty as stewards of our natural resources.
Their claims that the science-driven action that’s protected families for generations would somehow harm us flies in the face of history, and shows a lack of faith in American ingenuity and entrepreneurship.
I don’t accept that premise. We can lead this fight. We can innovate our way to a better future. It’s what America does best. Yes, our climate crisis is a global problem that demands a global solution, and there’s no Hail Mary play we can call to reverse its effects. But we can act today to advance the ball and limit the dangers of punting the problem to our kids.
It’s no accident that our proposal is a key piece of President Obama’s Climate Action Plan—and key to American leadership in our global climate fight. Although there’s still much work to do to get carbon pollution down to safe levels, I’m hopeful when I see the progress we’ve made. I’m hopeful because I see the pattern of perseverance that defines America.
From the light bulb to the locomotive; from photovoltaic cells to cellphones, America has always turned small steps into giant leaps. We’ve cured diseases, we’ve explored the stars, we’ve connected corners of the globe with the click of a mouse, because when critics say it can’t be done, we say—watch us. That’s what America is made of. We don’t settle. We lead. And that’s how we’ll confront our climate crisis.
When it comes to our Plan, we may not agree on details of how we do it, but we agree on why we do it. When our kids ask us if we did everything we could to leave them a safer, cleaner world, we want to say, yes, we did. When we think of our children—kids like Parker from Cleveland, Ohio—it’s easy to see why we’re compelled to act.
As governors and mayors, as CEOs and school teachers, and most of all, as parents, we have a moral obligation to ensure the world we leave behind is as safe, healthy, and vibrant as the one we inherited. Our Clean Power Plan is a huge step toward delivering on that promise.
Thank you very much.
Our longtime friend and reader, Richard Berkowitz is Operations Director of the Transportation Institute. This morning, he writes:
I thought you might be interested in the following article on LNG in this week's Economist:
Key points include:
- Exxon just shipped its first cargo from a $19b project in Papua New Guinea
- By 2018 over 1/3 more LNG capacity will come on stream
- By 2025 capacity could double from existing and anticipated projects
- LNG's share of world gas supply could rise from current 15-20% to as much as 30%
- The US's first plant at Sabine Pass (LA) is expected to begin shipping in 2016 and four more anticipated to start shipments for a total of as much as 75 bcm by 2018
- With delivery of 31 new tankers in 2014 there are predictions of a deep softening of the cost to ship LNG
- Global LNG demand by 2030 could be almost double that of 2012
- 50 Norwegian vessels use LNG with hundreds more being built
- Though the spot trade market has nearly doubled since 2000, there remains no single global price
- LNG demand could fall if Japan restarts its nuclear plants and due to China's gas deal with Russia; however, Europe may take up some of the slack if Russian LNG supplies are cut
- Technology is likely to cut costs and increase supply --as evidenced by GE's new liquefacation machines which are a tenth the cost of past technology
- There remains uncertainty about the expansion of a spot LNG market in the short run