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Energy

Why Bad Climate Legislation Is Worse Than No Climate Legislation

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13 minute read

From Michael Schellenberger

Moderate Democratic Senators Joe Manchin & Krysten Sinema Are Right to Oppose the Clean Energy Performance Program

Progressives are angry that moderate Democratic Senator Joe Machin has reportedly opposed the inclusion of climate-related legislation in President Joe Biden’s budget “This is absolutely the most important climate policy in the package,” said Leah Stokes, a Canadian political scientist who helped write the legislation. “We fundamentally need it to meet our climate goals. That’s just the reality.”

But that’s not the reality. The “Clean Energy Performance Program” is not needed to meet climate goals, and might actually undermine them.

Consider Waxman-Markey. That’s the name of the “cap and trade” climate legislation that passed the House but failed in the Senate in 2010. It had a climate goal of reducing U.S. greenhouse gas emissions by 17 percent below 2005 levels by the year 2020. Instead, the U.S. reduced its emissions by 22 percent.

Had cap and trade legislation passed in the Senate, emissions would have declined less than 22 percent, because Waxman-Markey so heavily subsidized coal and other fossil fuels. As the Los Angeles Times reported at the time, “the Environmental Protection Agency projects that even if the emissions limits go into effect, the U.S. would use more carbon-dioxide-heavy coal in 2020 than it did in 2005.”

The same thing would likely have been true for the Clean Energy Performance Program, which lock in natural gas. Consider France. According to the Commision de Regulation de L’Energie, €29 billion (US$33) billion was used to purchase wind and solar electricity in mainland France between 2009 and 2018. But the money spent on renewables did not lead to cleaner electricity. In fact, the carbon-intensity of French electricity increased.

After years of subsidies for solar and wind, France’s 2017 emissions of 68g/CO2 per kWh was higher than any year between 2012 and 2016. The reason? Record-breaking wind and solar production did not make up for falling nuclear energy output and higher natural gas consumption. And now, the high cost of renewable electricity is showing up in French household electricity bills.

Some pro-nuclear people supported the proposed Clean Energy Performance Program. They claimed it would have saved existing nuclear plants at risk of closure. According to the U.S. Energy Information Administration, the closure of nuclear plants including Diablo Canyon in California, will result in nuclear energy in the U.S. declining by 17% by 2025. If the Program had passed, some pro-nuclear people believe, plants like Diablo Canyon could have been saved.

But the Clean Energy Performance Program would not have saved Diablo Canyon for the same reason it would not have saved Indian Point nuclear plant, which closed in New York, earlier this year: progressive Democratic politicians are forcing nuclear plants to close, and at a very high cost to ratepayers.

If the Clean Energy Performance Program had passed into law, Diablo Canyon’s owner, Pacific Gas & Electric, would simply have passed the $500 million to $1.5 billion penalty imposed by the Program onto ratepayers, along with the other billions in costs related to closing Diablo Canyon 40 years earlier than necessary. The same would have happened with Indian Point.

Where there is political support for saving nuclear plants, state legislators and governors save nuclear plants, as they did in Illinois a few weeks ago, and as they have done in Connecticut, New Jersey, and with up-state nuclear plants in New York. In other states, nuclear plants are protected from cheap natural gas by regulated electricity markets. And now, with natural gas prices rising dramatically, any nuclear plants at risk of closure for economic reasons are no longer at risk.

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What threatens the continued operation of nuclear power plants, and nuclear energy in general, is the continued subsidization of renewables, which the Clean Energy Performance Program would have put on steroids. Under the program, utilities would have received $18 for each megawatt-hour of zero-emissions energy it produces between 2023 to 2030, on top of the existing $25 per megawatt-hour subsidy for wind energy.

Under such a scenario, notes energy analyst Robert Bryce, a wind energy company “could earn $43 per megawatt-hour per year for each new megawatt-hour of wind energy it sells. That’s a staggering sum given that the wholesale price of electricity in New York last year was $33 per megawatt-hour. In Texas, the wholesale price of juice was $22 per MWh.”

Manchin is joined in his opposition to the Plan by moderate Democratic Arizona Senator, Krysten Sinema, and understandably so. The legislation would cost Arizona ratepayers nearly $120 billion in additional electricity costs, according to energy analysts Isaac Orr and Mitch Rolling of the American Experiment. “This would result in a 45 percent increase in electricity prices by 2031, compared to 2019 rates,” they note.

As troubling, the Clean Energy Performance Program would increase dependence on solar panels made in China by incarcerated Uighyr Muslims living in concentration camps and against whom the Chinese government is committing “genocide,” according to the U.S. State Department. New research shows that China made solar panels cheaper through the use of forced labor, heavy government subsidies, and some of the dirtiest coal in the world. The Program would have done nothing to shift production of solar panels back to the U.S.

Nor would the legislation have done anything to internalize the high cost of solar panel waste disposal. Most solar panels become hazardous waste, and create dust from heavy metals including lead, as soon as they are removed from rooftops. A major study published in Harvard Business Review earlier this year found that, when the high cost of managing toxic solar panel waste is eventually accounted for, the true cost of solar electricity will rise four-fold.

As troubling, the continued expansion of weather-dependent renewables will increase electricity costs and blackouts across the United States, as they did in California and Texas. Those renewables-driven blackouts were likely on Senator Manchin’s mind when he made his decision to oppose the Clean Energy Performance Plan. He certainly knows about the problems of renewables in Texas and California, since I discussed them directly with Manchin when I testified before his committee earlier this year.

A better approach would be for Congress to seek nuclear-focused legislation to expand nuclear from its current 19% of U.S. electricity to 50% by 2050. It should take as a model the British government’s announcement yesterday that it would put nuclear energy at the center of its climate plans. Global energy shortages triggered by the lack of wind in Europe have led nations to realize that any efforts to decarbonize electricity grids without creating blackouts must center nuclear power, not weather-dependent solar and wind.

Environmental Progress and I met with British lawmakers in 2019 to advocate for a greater focus on nuclear. At the time, many British energy analysts, as well as ostensibly pro-nuclear climate activists, Mark Lynas and George Monbiot, were telling the public that their nation did not need more nuclear, as Britain could simply rely more on wind energy, and natural gas. Now, electricity prices are skyrocketing and factories are closing in Britain, due to a bad year for wind.

It was a strange experience to be alone in Britain, without support from supposedly pro-nuclear Britons, in urging lawmakers to build more nuclear plants, but I was similarly alone in many other parts of the world, and got on with the task. Happily, one year later, former Extinction Rebellion spokesperson Zion Lights joined me in advocating for nuclear, and quickly forced the government to agree to a nuclear build-out.

Today, in the U.S., there is a growing grassroots movement for nuclear energy, one which saved nuclear plants, twice, in Illinois, and other states, and is gearing up to save Diablo Canyon nuclear plant in California. Doing so will require a new governor, since the current one, Gavin Newsom, made closing the plant a feature of his sales pitch to powerful environmental groups, including Sierra Club and Natural Resources Defense Fund which are, like Newsom himself, heavily funded by natural gas and renewable energy companies that stand to benefit from the Diablo’s destruction.

Leadership at the national level will need to come from Senators Manchin and Sinema. While a significant amount of electricity policy is determined by the states, the Senate can play a constructive role in maintaining the reliability, resiliency, affordability, I testified to Senator Manchin and other committee members. Senator Sinema is from Arizona, a state with the largest nuclear plant in the U.S., Palo Verde, and which is a model of how to make electricity both low in emissions, and in costs.

With the Clean Energy Performance Program now apparently dead, the Congress, led by Manchin and Sinema, should take policy action to not only keep operating the nuclear plants that have been critical to preventing power outages in recent years, but also expand them.

About Michael Shellenberger

Michael Shellenberger is a Time Magazine “Hero of the Environment,”Green Book Award winner, and the founder and president of Environmental Progress.

He is author of the best-selling new book, Apocalypse Never (Harper Collins June 30, 2020), which has received strong praise from scientists and scholars. “This may be the most important book on the environment ever written,” wrote climate scientist Tom Wigley. “Apocalypse Never is an extremely important book,” says historian Richard Rhodes, who won the Pulitzer Prize for The Making of the Atomic Bomb. “Within its lively pages, Michael Shellenberger rescues with science and lived experience a subject drowning in misunderstanding and partisanship. His message is invigorating: if you have feared for the planet’s future, take heart.”

Additional Reading:

Why Biden’s Climate Agenda Is Falling Apart

Nuclear Plant Closures And Renewables Increase Electricity Prices & Unreliability, Testifies Michael Shellenberger to U.S. Senate

China Made Solar Cheap With Coal, Subsidies, And “Slave” Labor — Not Efficiency

Why Everything They Said About Solar Was Wrong

Alberta

TC Energy shuts down Keystone pipeline system after leak in Nebraska

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CALGARY — TC Energy Corp. says it has shut down its Keystone pipeline after a leak in Nebraska.

The company says it has mobilized people and equipment in response to a confirmed release of oil into a creek, about 32 kilometres south of Steele City, Neb.

TC Energy says an emergency shutdown and response was initiated Wednesday night after a pressure drop in the system was detected.

It says the affected segment of the pipeline has been isolated and booms have been deployed to prevent the leaked oil from moving downstream.

The Keystone pipeline system stretches 4,324 kilometres and helps move Canadian and U.S. crude oil to markets around North America.

TC Energy says the system remains shutdown as its crews respond and work to contain and recover the oil.

This report by The Canadian Press was first published Dec. 8, 2022.

Companies in this story: (TSX:TRP)

The Canadian Press

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Energy

Russian oil price cap, EU ban aim to limit Kremlin war chest

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By David Mchugh in Frankfurt

FRANKFURT, Germany (AP) — Major Western measures to limit Russia’s oil profits over the war in Ukraine took effect Monday, bringing with them uncertainty about how much crude could be lost to the world and whether they will unleash the hoped-for hit to a Russian economy that has held up better than many expected under sanctions.

In the most far-reaching efforts so far to target one of Moscow’s main sources of income, the European Union is banning most Russian oil and the Group of Seven democracies has imposed a price cap of $60 per barrel on Russian exports to other countries.

The impact of both measures, however, may be blunted because the world’s No. 2 oil producer has so far been able reroute much of its European seaborne shipments to China, India and Turkey, although at steep discounts, and the price cap is near what Russian oil already cost.

As it stands, Russia will likely have enough money to not only fund its military but support key industries and social programs, said Chris Weafer, CEO and Russian economy analyst at consulting firm Macro-Advisory.

“At this price level, that outlook really doesn’t change much. But what is key is how much volume Russia would be able to sell,” he said. “And that depends not only on the willingness of Asian buyers to continue buying Russian oil, but also what is the physical ability of Russia to shift that oil.”

Western leaders are walking a fine line between trying to cut Russia’s oil income and preventing an oil shortage that would cause a price spike and worsen the inflation plaguing economiesand hurting consumers worldwide. They could later agree to lower the price cap to increase pressure on Russia, which says it will not sell to countries that observe the limit.

That could take oil off global markets and raise energy costs, including for gasoline at the pump. International benchmark Brent crude rose before falling 2.5% to $83.40 a barrel Monday.

To seriously cut Russian revenue, the cap must be lowered “quickly and progressively,” said Lauri Myllyvirta, lead analyst at the Finland-based Centre for Research on Energy and Clean Air.

Even the $60 cap, if enforced, would already push Russia to lower per-barrel tax, he said, calling it “by far the biggest step to date to cut off the fossil fuel export revenue that is funding and enabling Russia’s barbaric invasion of Ukraine.”

Russia has been living off the huge windfall from higher oil pricesearlier this year and will be more vulnerable in the next several months when that money is spent, Myllyvirta said.

Kremlin spokesman Dmitry Peskov, asked in a conference call how the oil price cap might affect the war, said, “The economy of the Russian Federation has the necessary potential to fully meet all needs and requirements within the framework of the special military operation, and such measures will not affect this.”

The U.S., EU and allied countries have hit Russia with a slew of sanctions aimed at bank and financial transactions, technology imports and regime-connected individuals. But until now, those sanctions have for the most part not directly gone after the Kremlin’s biggest moneymaker, oil and natural gas.

Europe was heavily dependent on Russian oil and natural gasbefore the war and has had to scramble to find new supplies. Previously, the EU banned imports of Russian coal, and the U.S. and the U.K. halted their limited imports of Russian oil, but those steps had a much smaller economic impact.

Even as Western customers shunned Russian oil, the higher prices driven by fears of energy shortages helped offset lost oil sales, and Russian exporters have shipped more oil to Asian countries and Turkey in a major reshuffling of global oil flows. Russia’s economy has shrunk — but not by as much as many expected at the start of the war almost 10 months ago.

One unknown is how much of the oil formerly sold to Europe can be rerouted. Analysts think many, but not all, of the roughly 1 million barrels covered by the embargo will find new homes, tightening supply and raising prices in coming months.

The Biden administration doesn’t expect that Russia’s threats to cut off countries observing the cap and slow production would “have any impact long term on global oil prices,” National Security Council spokesman John Kirby said.

He said “this cap will lock in the discount on Russian oil” and countries like China and India would be able to bargain for steep price reductions.

Indian Foreign Minister Subrahmanyam Jaishankar indicated Monday that the country would keep buying oil from Russia to prioritize its energy needs. India so far hasn’t committed to the price cap.

The cap has a grace period for oil that was loaded before Monday and arrives at its destination before Jan. 19 to minimize disruption on oil markets.

The measure bars insurers or ship owners — most of them located in the EU or U.K. — from helping move Russian oil to non-Western countries unless that oil was priced at or below the cap.

The idea is to keep Russian oil flowing while reducing the Kremlin’s income. The U.S. and Europe leaned more toward preventing a price spike than provoking financial distress in Russia.

French Finance Minister Bruno Le Maire said the cap was “worth trying,” adding that “we will make an assessment of the efficiency of the old cap at the beginning of 2023.”

Ukraine’s President Volodymyr Zelenskyy had called for a price ceiling of around $30 per barrel. That would be near Russia’s cost of production, letting Russian oil companies earn enough only to avoid capping wells that can be hard to restart. Russia needs some $60 to $70 per barrel to balance its budget.

Russia could use methods to evade the sanctions such as those employed by Iran and Venezuela, including using “dark fleet” tankers with obscure ownership and ship-to-ship transfers of oil to tankers with oil of similar quality to hide its origin. Russia or China could also organize their own insurance. Sanctions experts say that those steps will impose higher costs on Russia.

The new EU sanctions led the Italian government to take temporary control of the Russian-owned ISAB refinery in Sicily last week. The government stopped short of nationalization but put the facility, where about 20% of Italy’s oil is refined, under receivership to protect 10,000 jobs linked to the refinery and its suppliers.

___

AP reporters Raf Casert in Brussels, Aamer Madhani in Washington, Sheikh Saaliq in New Delhi and Colleen Barry in Milan contributed

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