US Energy Policy

Energy Policy

The incandescent lightbulb is now outlawed.[1] This fact is a perfect metaphor for “energy policy.” Should it be illegal in the United States to manufacture, sell, buy, and use a traditional incandescent light bulb? Your informed answer to that question will provide deep insight into your views on hundreds of other energy policy questions. (BTW, my answer is no, but I bet you guessed that.)

Energy is the lifeblood of our economy; it touches your life in a hundred ways each day. Yet energy policy--the set of government rules and regulations that prescribe how energy is produced, delivered, and consumed--is a complex and even a chaotic subject.

Energy was an uninteresting subject for the average person prior to the OPEC Oil Embargo in 1973. Oil prices had been stable at about $20 a barrel in real terms for nearly a century and electricity prices had declined from about 22 cents per kilowatt to about 13 cents from 1960 to 1973, even as consumption of electricity quadrupled from 1950 to 1973, as more and more homes and appliances used electricity and utilities became better at building large coal and nuclear plants.

But the OPEC Embargo changed everything about energy and energy policy. Four points will illustrate this importance.

President Jimmy Carter’s presidency (1976 to 1980) was dominated by energy issues which he characterized as the “moral equivalent of war.”
A little more than two decades later a California governor was recalled because he botched an electricity crisis in California and Arnold Schwarzenegger was elected Governor.
There is a widespread perception that the US has gone to war in the Middle East over oil issues.
The Pope of all people has recently declared war on climate change, most of which is laid at the feet of fossil energy.

Part of the complication in energy policy is that it must be addressed on many fronts; international, national, State, and local governments all have a role in stirring the pot.

Many books and articles are written on very specific aspects of energy policy but most are written for other experts. Surprisingly, few are written that cover the broad landscape of energy policy. Even fewer of these writings take a strong market-oriented perspective; the vast majority take an interventionist approach largely for environmental and oil import reasons. And none that I have found are addressed to the pro-market political activist who has a real job during the day and then tries to save the country in his or her spare time. This discussion is for that heroic citizen, The Forgotten Man.

So what’s the bottom line on energy policy?

First, we make energy policy much more difficult than it has to be. Energy is a commodity just like wheat or cars or hamburgers. Mostly, we rely on competitive markets in each of these other commodity industries to make sure that we have an adequate supply to meet the consumers’ needs at reasonable prices. But we treat energy differently. I venture to guess that there are only a few industries more affected by government intervention than energy. Why is that? Does that mean we benefit from that intervention? Is there a better way? The article explores these questions.
Second, right now energy policy is being driven by climate change. Even if one is sympathetic to some of the claims made about climate change, many stupid actions are being taken in its name that has profoundly negative effects on energy markets.
Third, oil issues get the most attention but we do not face any real danger in oil markets. Oil trades in global markets and while there may be price fluctuations (as I write, oil is about $35 a barrel, having been over $100 in the recent past), we will never face a situation where we run out of oil. Most countries with plentiful oil have built their economies on oil revenue and the recent drop in oil prices has created serious political problems for these countries. They simply can’t afford not to produce oil. But problems in oil markets can result in unnecessarily higher prices and thus we need to pay some attention to them in order to promote prosperity.
Fourth and most important, electricity faces real problems that could result in catastrophic failure of the system, thus threatening not only prosperity but human life. The major framework for electric policy was set in 1935. That framework worked fine up to the OPEC Embargo. Electricity can compete against oil and natural gas in many applications. Thus adjustments were necessary to the historical framework after the Embargo. But policymakers have only nibbled at the edges of electricity policy and have not fundamentally changed the 1935 framework. Yet little more than additional tinkering is being done to promote an electricity industry for the 21^st Century. Many special interests are pushing and pulling on the antiquated framework for personal gain but few are fundamentally committed to a complete rethinking of the role of the electric system of the future, especially given the increasing digitalization of our economy. And as noted above, unsound policies on climate change make electric issues even more difficult.

[1] This is a good place to make a point. Some pointy headed academics will disagree with even this first sentence. Technically, Congress did not “ban” incandescent bulbs in the Energy Independence and Security Act of 2007. Rather, they set a standard that most, if not all, traditional incandescent bulbs could not achieve and established a schedule for light bulbs of different wattages to meet this standard. So it is fair to say that Congress outlawed incandescent bulbs. But since the accompanying Article is a synthesis of the broad topic of “energy policy” it would needlessly clutter and complicate the text to be “technically” accurate in every instance. The size of the document would need to double and the reader would understand less of the essence of energy policy if I did not make some broad generalizations. Nonetheless, I am sure I will receive some criticism that many of my statements are not “technically correct.” I hope that making this point early in the article will allow for a better understanding of the content of the Article.

Displaying 166-180 of 206 results

Technology Forcing

5/25/21 at 03:00 AM
Edward A. Reid Jr.

“Technology forcing is a regulatory strategy that establishes currently unachievable and uneconomic performance standards to be met at some future point in time. ... Basically, technology forcing sets regulatory standards and provides incentives for achieving the standards or disincentives for not achieving them.”

The recent changes in the US INDC in response to the Paris Accords commit to elimination of CO2 emissions from electric generation by 2035 and net zero CO2 emissions from all sectors of the US economy by 2050. These commitments and the legislative and regulatory actions which must flow from them are clearly technology forcing in that they will require both uneconomic decisions and the implementation of technologies which are either unavailable or uneconomic. The US “electrify everything” approach is the extreme case of government picking winners and losers, which in the past has not been a notable government skill.

Roger Pielke, Jr. has suggested a simple method for tracking progress toward the Administration’s 2035 target for electric generation emissions. His method identifies the need to close an average of 11 coal and natural gas generating stations each month, beginning immediately. Forcing the closing of “used and useful” generators before the end of their economic life is certainly uneconomic in that it results in a dead weight loss. Closing the generators is “easy”, though it might well become legally contentious.

Replacing the fossil generating capacity with renewable generating and storage capacity would not be “easy”, nor would it be economic since it would require financial and operational incentives. These renewable incentives would also disadvantage the remaining fossil generating fleet, as has already been the case when renewable generation has been installed. Financial incentives reduce the cost of renewable power and environmental dispatch provides delivery preferences for the renewable power, reducing demand for and consumption of fossil-generated power.

Siting of power generation and transmission facilities has become a long and difficult process as the result of requirements for environmental impact statements, protracted environmental and regulatory review and lawsuits filed by affected parties attempting to prevent the installation of the generation and transmission facilities. Maintaining the schedule required to achieve net zero electric generation emissions by 2035 would require immediate action to site and permit facilities. It would also likely require federal pre-emption and massive streamlining of the approval processes.

The Administration’s commitment to source the required generation and transmission equipment from within the US would require massive increases in wind turbine and solar collector manufacturing capacity, as well as massive increases in the production of the steel for the turbine unipoles and the support structures for the solar collectors and of the cement required for the concrete used to support the unipoles and solar collector mounting structures. The energy requirements for the steel and cement production would result in increases in US CO2 emissions before the new renewable generation could begin to displace existing fossil generation.

Achieving the Administration’s commitments, if even possible, would require a level of effort reminiscent of “Rosie the Riveter”

Tags: Climate Policy, CO2 Emissions, Efficiency Standards

On-site Generation

5/18/21 at 03:00 AM
Edward A. Reid Jr.

On-site power generation was common in the mid-20th century for large power users with the need for high reliability power supply. These users included industrial plants running continuous processes, plants with large steam consumption, and institutions such as asylums, prisons and hospitals required to have on-site generation in the event of a grid outage. These on-site generation facilities were typically either coal or oil fueled, depending on geographic location and the existence of other coal or oil end uses at the site.

Many of these generating facilities were closed later in the century as grid capacity and reliability increased and the need for on-site generation became less critical and emissions regulations more damanding. On-site generation is now making a comeback, using natural gas simple cycle turbines with heat recovery systems or high efficiency natural gas combined-cycle turbines.

Hospitals and some other institutions are required to have on-site power with either high priority natural gas supply contracts or on-site propane or diesel fuel storage adequate to continue operations for some number of days.

These classes of electricity customers will face new and growing challenges as federal programs require the electric grid and its suppliers to shift to non-fossil sources of power generation, most of which (solar, wind) are intermittent and non-dispatchable. Grid reliability is expected to suffer, as has been demonstrated in California and Texas. The grid operators currently stabilize power supply with hydro, geothermal, natural gas, coal and nuclear generation. However, the fossil fuel generators would be unacceptable after 2035 under the current Administration climate plan, unless equipped with carbon capture and storage (CCS) capability or converted to biofuel operation.

Grid operators are investigating the potential of battery storage to stabilize the grid. However, the current cost of grid-scale battery storage is extremely high and the availability of the required batteries is extremely limited.

The challenges for facilities required to possess on-site generation capability, either for continuous or emergency use, are more complicated. Very few of these facilities are large enough to economically continue to use fossil generation with CCS. They could conceivably be granted waivers to continue to operate fossil-fueled generators until the net zero requirement proposed for 2050. Beyond that, their choices would be limited to biofuel generators, on-site battery storage or on-site packaged nuclear power plants.

Many small to medium sized commercial establishments and many single and multi-family residences are currently equipped with automatic standby generators, typically fueled by natural gas, propane or diesel. Biofuels would currently appear to be the only alternative for these smaller users after 2050.

Net zero would also require replacement of all fossil-fueled thermal end use equipment with electric end equipment for applications such as space and water heating, cooking and baking, laundry drying and steam generation. These new electric end uses would require larger on-site generation or electricity storage systems to meet critical needs during grid outages.

While on-site solar and wind generators are compatible with a wind and solar-powered grid, they would be unacceptable as on-site emergency generators, since they would be expected to be affected by the same weather conditions which affected the grid power generation facilities.

The brave new world of net zero would have its challenges.

Tags: Electric Power Generation, Net Zero Emissions

Highlighted Article: Cities, countries, and economies were built with derivatives from oil, not by electricity

4/22/21 at 03:00 AM

From: CFACT

By: Ronald Stein

Date: April 8, 2021

Cities, countries, and economies were built with derivatives from oil, not by electricity

"Before world leaders move too fast to consummate their climate policies, they need to be cognizant of two “aha” moments: 1) wind and solar can only generate intermittent electricity, and 2) electricity cannot manufacture the oil derivatives that are the basis of the thousands of products that have built the world’s cities, countries, and economies over the last 200 years.

Can you imagine primitive man with an abundance of wind and solar electricity and nothing to power! Imagine living with Just GREEN Electricity.

Interestingly, for more than two centuries the most important benefits to humanity from fossil fuels is the oil derivatives, that electricity CANNOT provide, and NOT the fuels that can be manufactured for the transportation and military infrastructures.

The world has had more than 200 years to develop clones or generics to replace the crude oil derivatives that are the foundation of all the products demanded by lifestyles and economies around the world. Wind and solar are not only incapable of manufacturing any such derivatives, but the manufacturing of wind and solar components are themselves 100 percent dependent on the derivatives made from crude oil.

Ever since the beginning of manufacturing and assembly of cars, trucks, airplanes, and military equipment in the early 1900’s, and the discovery of the versatility of products that could be made from petroleum derivatives, the world has had almost 200 years to develop clones or generics to replace the crude oil derivatives that account for more than 6,000 products that are the basis of lifestyles and economies of the healthier and wealthier countries around the world." ...

Cities, countries, and economies were built with derivatives from oil, not by electricity

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Highlighted Video: Texas Blackout Deception

3/25/21 at 03:00 AM

By: Clear Energy Alliance

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Highlighted Article: Cultural Motivations for Wind and Solar Renewables Deployment

12/17/20 at 03:00 AM

From: Climate Etc.

By: Andy West

Date: November 19, 2020

Cultural Motivations for Wind and Solar Renewables Deployment

“For me the question now is, now that we know that renewables can’t save the planet, are we going to keep letting them destroy it?”. – Michael Schellenberger

Introduction

"There have been many technical analyses of Wind and Solar energy, covering a raft of issues from energy density and efficiency, through subsidies and land usage, to maintenance, grid impacts, intermittency and more. The angle examined here is in no way intended to replace such necessary views, whether they lean to the pessimistic or the optimistic or anywhere in-between. Rather, a complementary view is provided regarding an aspect that such technical analyses cannot address, albeit it often features in the conclusions and questions these analyses raise at the end. Right here at Climate Etc, the first of the excellent analyses by ‘Planning Engineer’ (on his retirement revealed to be Russ Schussler, ex-VP of Transmission Planning at Georgia Transmission Corporations), laudably highlighted the limitation of technical analyses with his very first line: “Power System Planners do not have the expertise or knowledge to say whether or not the benefits of reducing carbon emissions are worth the costs. However they should be respected as experts for obtaining a better understanding of what the implications and costs of such programs are.”...

Cultural Motivations for Wind and Solar Renewables Deployment

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Guest Post: Get Ready For Nationwide Blackouts Under Biden

12/7/20 at 03:00 AM

Guest Post

From: International Climate Science Coalition (ICSC)

By: Dr. Jay Lehr and Tom Harris

The power disaster unfolding in California will soon occur across the country, if Joe Biden gets his way. The Golden State has been sweeping away the forms of energy that have provided reliable electricity for decades, under the same agenda the former Vice-President is planning for America as a whole.

Power outages are now commonplace in California. Last summer, the state suffered its first rolling blackouts in nearly 20 years. Imagine if this happened in Chicago in the middle of winter.

California’s trouble is explained by officials who now openly admit to an over-reliance on wind and solar power. The governor said there was not enough wind to keep the turbines going, while cloud cover and nightfall restricted solar power. The Los Angeles Times recognized the root of the problem:

“… gas-burning power plants that can fire up when the sun isn’t shining or the wind isn’t blowing have been shutting down in recent years, and California has largely failed to replace them …”

Consequently, the state has fallen thousands of megawatts behind its needs. Governor Gavin Newsom admitted, “we failed to predict and plan for these shortages” and took (nominal) responsibility for the rolling blackouts. Now he wants everyone to conserve power, while the state looks for new sources of energy, most likely fossil fuel-generated power from neighboring states.

All this is happening while California continues its intention to transition to 60% renewable energy by 2030 and 100% “climate-friendly energy” by 2045, as required by state law.

Indeed, in their October 6 open letter to Newsom, the heads of the California’s Energy Commission, Independent System Operator and Public Utilities Commission wrote: “We are unwavering in our commitment to meeting California’s clean energy and climate goals.”

Team Biden plans to go even further, committing to making the entire nation 100% renewable within 15 years. The United States would fall tens of millions of megawatts behind on its electricity needs.

Like the California government, the incoming Biden-Harris administration is acting entirely under the unfounded belief that climate change is a manmade calamity that can be stopped by eliminating fossil fuel use. They are clearly unaware of the Climate Change Reconsidered series of reports of the Nongovernmental International Panel on Climate Change (NIPCC).

These documents summarize thousands of studies from peer-reviewed scientific journals that either refute or cast serious doubt on the climate scare. They conclude that we are not causing a climate crisis.

Yet, in their October 6 report, Preliminary Root Cause Analysis – Mid-August 2020 Heat Storm, the same heads of California’s Energy Commission, Independent System Operator and Public Utilities Commission highlighted the “climate change-induced extreme heat storm across the western United States” as the first cause of the blackout.

In their view, apparently, shutting down coal, gas and nuclear power plants in California and in states from which California imports electricity played only minor roles.

California’s determination to shift to so-called “green” energy – which is actually anything but clean, green, renewable and sustainable – is being echoed by politicians across the nation. The result, especially in states that don’t enjoy California’s mostly benign weather, is going to be that those in the poorest neighborhoods and those on fixed incomes may be forced to choose between heating and eating.

It also means people trying to run their homes, offices, factories, hospitals and schools on intermittent, weather-dependent, much more expensive wind and solar power will have to get used to never knowing when or for how long their electricity will be on or off. Now in California; soon in the entire USA.

Coherent energy systems are designed with the understanding that portions of the system will be offline from time to time. Power companies compensate for this with reserve power at the ready. However, California has closed its margin for error in response to anti-nuclear and anti-fossil fuel sentiments and climate change concerns. Team Biden intends to do this for the entire United States.

Power outages cannot always be avoided and are more common than one may think. For example, between 2008 and 2017, Illinois had 871 outages, the tenth most by state. Texas had nearly twice as many, giving it the dubious distinction of ranking number two in the list.

But these pale in comparison to California which has the least reliable electrical power system in the nation. It leads in power outages every year. Between 2008 and 2017, it had 4,297 power outages!

The origin of the problem is partly California’s Senate Bill 1368, which in 2006 established the state’s emission standards to reduce greenhouse gases from power plants. Following that year, eleven coal-fired power plants were closed and three were converted to biomass. Only one coal-fired plant remains.

The state also reduced its normal reliance on energy from out of state coal plants.

Yielding to anti-nuclear activists, the state also closed all but one nuclear plant, Diablo Canyon. That plant generates about 18,000 Gigawatt-hours of reliable electricity every year, fully 8.6% of California’s total generation.

But Diablo Canyon will soon be closed too. Not surprisingly, during its construction and operation, anti-nuclear protests were common; nearly two thousand people were arrested for civil disobedience during a two-week period in 1981. In response, in 2016, the California Public Utilities Commission approved a Pacific Gas & Electric Joint Proposal to phase out the state’s remaining nuclear power. That means the operating licenses for Diablo Canyon’s two units will not be renewed when they expire in 2024 and 2025.

Ironically, the Commission did not approve Pacific Gas & Electric’s proposal for resources to replace the station’s output. It does not appear to matter that nuclear reactors produce no greenhouse gas emissions during operation. They are hated by the enviro-radicals who drive California’s energy policy and are steadily putting the state even further behind the 8-ball.

It gets worse. California now requires that all new homes be nearly entirely electric. It wants citizens to switch their natural gas stoves to electric, as part of their global warming initiatives. More than 30 cities have already enacted bans on gas appliances, including San Francisco. The state also hopes to eliminate all gasoline and diesel cars in favor of plug-in electric automobiles.

This means demand for reliable, affordable electricity will rise by leaps and bounds, just as supplies are steadily reduced, and partially replaced by expensive, intermittent, weather-dependent power.

Just as Mr. Biden promises for the nation as a whole, California is sacrificing reliable electrical power as part of its impossible crusade to “stop climate change.” Of course, this will have no impact on our planet’s climate, because (a) climate change is mostly natural and not driven by carbon dioxide, and (b) all those wind turbines, solar panels and backup batteries will be manufactured overseas, mostly in China, using fossil fuels and simply moving the source of ever-increasing greenhouse gas emissions.

However, it will certainly spur sales of candles, flashlights, propane heaters, and natural gas, gasoline and diesel generators.

So, welcome to America’s future under a Biden-Harris-Kerry- AOC Administration. America, the blackouts are coming.

_______________________________________________________

*Ohio-based Dr. Jay Lehr is Senior Policy Advisor to the Ottawa, Canada-based International Climate Science Coalition (ICSC). Tom Harris is Executive Director of ICSC.

Tags: Guest Post

Shifty(?) Climate Sands

10/27/20 at 03:00 AM
Edward A. Reid Jr.

The Biden/Harris position on climate change has been shifting (shifty?) as their political campaign has “progressed” toward election day. The Green New Deal is one of the key issues on which the campaign has shifted with regard to climate. The Biden campaign website states: “Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face.” Senator Harris is a co-sponsor of the Green New Deal in the Senate and has previously supported it on the campaign trail. However, Biden has now stated that he does not support the Green New Deal. Climate change is only one aspect of the Green New Deal, which deals with air travel, high speed rail, building energy efficiency and electric vehicles. Virtually all other aspects of the Green New Deal are reflected in both the 2020 Democrat Party Platform and the Biden Platform.

One of the key factors in the reduction of US CO2 emissions has been the shift from coal to natural gas for electric power generation. This shift was largely made possible by hydraulic fracturing, which has made natural gas far more available. The Biden/Harris position on fracking has changed from “ban fracking” to “ban fracking on public lands” to “not ban fracking”. Biden has also stated that there would be no more fossil fueled power plants built under his administration. Biden/Harris are committed to eliminating CO2 emissions from power generation by 2035, five years later than the Green New Deal schedule.

Biden has committed to incentivizing installation of 500,000,000 solar modules and 16,000 wind turbines. While these are large numbers, they are relatively trivial in comparison with the numbers needed to replace all existing fossil fueled power generation facilities with intermittent renewable generators and storage systems. Solar and wind currently supply approximately 12% of US electricity. However, this capacity is currently backed up by fossil fueled generation; and, in general, is dispatched first under environmental dispatch orders. Combined solar and wind generation capacity would therefore have to be increased by roughly an order of magnitude to supply approximately all of US electricity consumption, even with continuing fossil fuel backup. Eliminating the fossil fuel backup would require installation of significant additional generating capacity plus long term, high draw storage capacity sufficient to supply power for several days. This storage technology is not currently commercially available.

While a Biden/Harris administration would incentivize solar and wind installations, the majority of the investment required to install these systems would be required to be provided by private sources, such as investor owned electric utilities, other businesses and homeowners. In the process, the utilities would be forced to abandon existing, functioning fossil fueled generating capacity, at a loss of approximately $4 trillion.

The switch from fossil fueled generation to renewable generation would also strand huge quantities of coal, oil and natural gas, causing a dead weight loss of $50+ trillion, which would be borne by both private owners and the government. These costs are not considered when the Biden asserts that: “The Green New Deal will pay for itself as we move forward.”

Tags: 2020 Election, Green New Deal

Highlighted Article: Your Life Under the Green New Deal

10/8/20 at 03:00 AM

From: CFACT

By: Paul Driessen

Date: October 5, 2020

Your Life Under the Green New Deal

"During the cantankerous September 29 presidential “debate,” candidate Joe Biden proclaimed “I am the Democratic Party.” He is in charge, he insisted, and his views will be Democrat policy. Others aren’t so sure – about that, about what his views actually are, or about how far to the left he would be pushed, prodded and pressured by Kamala Harris, AOC, Bernie Sanders, Nancy Pelosi, Chuck Schumer, Antifa mobs, and coastal and blue city governing, academic and technology elites." ...

Your Life Under the Green New Deal

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Highlighted Video: Wind Waste

10/1/20 at 06:15 AM

By: Clear Energy Alliance

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Highlighted Video: Rare Earth Emergency #2

8/27/20 at 03:00 AM

By: Clear Energy Alliance

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Highlighted Article: Memo to Biden

7/30/20 at 03:00 AM

From: Master Resource

By: Robert Bradley Jr.

Date: July 20 - July 23, 2020

Memo to Biden

W. S. Jevons (1865) on Wind - Part 1
W. S. Jevons (1865) on Waterpower, Biomass. and Geothermal - Part 2
W. S. Jevons on Coal - Part 3
W. S. Jevons on Energy Efficiency - Part 4

“The first great requisite of motive power is, that it shall be wholly at our command, to be exerted when, and where, and in what degree we desire. The wind, for instance, as a direct motive power, is wholly inapplicable to a system of machine labour, for during a calm season the whole business of the country would be thrown out of gear.”

The most important book written on energy economics was the first: William Stanley Jevons’s The Coal Question (London: Macmillan and Company, 1865, rev. 1866). This classic is available in its entirety on the Internet.

Jevons’s remarkably sophisticated treatment of energy sustainability remains pertinent today. In a real sense, the Biden approach to energy was refuted by the insight of W. S. Jevons more than 150 years ago.

This four-part series will continue this week with Waterpower, Biomass, and Geothermal; Coal; and Energy Efficiency." ...

W. S. Jevons (1865) on Wind - Part 1
W. S. Jevons (1865) on Waterpower, Biomass. and Geothermal - Part 2
W. S. Jevons on Coal - Part 3
W. S. Jevons on Energy Efficiency - Part 4

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