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Clean Energy Markets Suffer From Political Bickering & Uncertainty

Apr 12: Bloomberg New Energy Finance (BNEF) reports that after clocking up a record in 2011, new financial investment in clean energy in first quarter of 2012 was the weakest since the depths of the financial crisis in Q1 2009. In a release BNEF indicates that clean energy investment fell sharply in the first quarter of 2012, and new financial investment was down 28% from Q4 2011 to just $27 billion; it was 22% lower than the equivalent figure in the first quarter of last year. New financial investment includes venture capital, private equity, public markets and asset finance, but excludes small-scale projects and corporate and government RD&D, on which Bloomberg New Energy Finance reports only annually. 

    The first quarter 2012 new financial investment total included $24.2 billion in asset finance of utility-scale renewable energy projects, such as wind farms and solar parks, plus $1.9 billion of venture capital and private equity investment in specialist clean energy companies. Just $601 million was raised on the public markets by quoted companies during the period.

    Michael Liebreich, chief executive of Bloomberg New Energy Finance, said, "A $27 billion quarterly figure is not a disaster, but it is the weakest since the dismal $20 billion seen in the first quarter of 2009, when the financial crisis was at its worst. The weak Q1 2012 number reflects the destabilizing uncertainty over future clean energy support in both the European Union -- driven by the financial crisis -- and the US -- driven by the expiry of stimulus programmes and the electoral cycle. There is no sign of a rapid turnaround in either of these regions in the next 12 months. Clean energy technologies, particularly solar photovoltaics and onshore wind, continue to fall in price and approach competitiveness with fossil-fuel power -- but politicians in many countries appear to be ducking the decisions that would ensure that the sector maintains its growth trajectory. We are seeing growth in some of the non-core markets around the world, but they will have a tough job replacing weakening demand in the developed world."

    In the U.S., the key support mechanism for wind -- the Production Tax Credit -- is due to expire at the end of this year unless Congress agrees to extend it [See WIMS 4/9/12]; while in Europe, governments in key countries such as Spain, Italy, Germany, Poland and the UK have announced cuts in incentives for renewable power projects, in some cases leaving investors guessing about their likely future returns.

    Looking at the different categories of investment in Q1, asset finance of $24.2 billion was 30% down from the fourth quarter and 13% below that in the first quarter of 2011. There continued to be some large renewable energy projects financed -- including the 396MW Marena Wind Portfolio in Mexico for $961 million, the 100MW KVK Chinnu solar thermal plant in India for approximately $400 million, and the 201MW Post Rock Wind farm in Kansas, US, for an estimated $376 million.

    The largest projects financed in Europe in Q1 -- in the face of a difficult market for bank lending following last autumn's euro area crisis – were the 150MW Monsson Pantelina wind farm in Romania at $317 million, and the 60.4MW SunEdison Karadzhalovo solar PV plant in Bulgaria at $248 million.

Venture capital and private equity investment held up well at $1.9 billion, just 2% below that in the fourth quarter of last year and 6% higher than the first quarter of 2011. The biggest deals were $130 million in equity raised by US electric vehicle company Fisker Automotive, a $102.6 million injection into UK-based biomass-to-power firm Tamar Energy, and an $81 million fund-raise by US PV installer SolarCity.

    Public market investment in clean energy of $601 million was down 12% from the fourth quarter, and 87% from the first quarter of 2011 -- a plunge that was not surprising, given the poor performance of sector shares in the last year. The WilderHill New Energy Global Innovation Index, or NEX, which tracks the movements of 97 clean energy shares worldwide, fell 40% in 2011 and clawed back just 7% in the first quarter of 2012 as world stock markets rebounded. The largest two public market deals in clean energy in Q1 were both initial public offerings by US companies in the biofuel sector -- Ceres, a developer of genetically-modified energy crops, raised $74.8m, and Renewable Energy Group, a maker of biodiesel, raised $68.6 million.

    Liebreich said, "The outlook for investment in the remainder of the year remains difficult. The rapidly improving cost-competitiveness of renewable energy technologies is stimulating activity, particularly in developing countries. However it is becoming harder to see the sector worldwide beating last year's record, unless the storm-clouds lift in Europe and U.S. Congress stops bickering sends some clear signals about the importance of new energy technologies. Meanwhile, continuing improvements in the sector's economics mean that companies which survive these next few years, whether on the industry's supply or demand side, will be extremely well positioned for the next growth phase."

    BNEF reports that in 2011, overall clean energy investment, including the "financial new investment" measure calculated quarterly but also annually-calculated totals for government and corporate research and development and small-scale projects such as rooftop solar, was a record $263 billion. This compares to 2010's total of $247 billion and just $54 billion back in 2004. A final figure for 2011 will be published by mid-year as part of the UN Global Trends in Renewable Investment report, which will include information on late-reporting transactions from 2011.

    Meanwhile, the Pew Environmental Group released a separate report entitled, Who's Winning the Clean Energy Race? 2011 Edition. Pew reports that Among Group of Twenty (G-20) nations, the United States reclaimed the top spot from China, which led the global clean energy race since 2009. Germany, Italy, the United Kingdom, and India were also among the nations that most successfully attracted private investments last year. 

    Phyllis Cuttino, director of Pew's Clean Energy Program said, "Clean energy investment, excluding research and development, has grown by 600 percent since 2004, on the basis of effective national policies that create market certainty. This increase was due in part to the number of countries that have implemented effective national policies to support the clean energy market. In the United States, which attracted $48 billion last year, investors took advantage of the country's stimulus programs before they expired at the end of 2011, as well as the production tax credit for electricity from renewable energy, which is to end this December." Pew reports additional key findings from the report as follows:

• Led by 42 percent growth in the United States and 15 percent in Brazil, investment in the Americas region grew by more than 21 percent to $63.1 billion, faster than any other region. 
• The clean energy sector in the Asia/Oceania region increased more than 10 percent to $75 billion. Relatively flat investment in China was mitigated by sharp gains in India, Japan, and Indonesia, which were among the fastest-growing clean energy markets in the world. 
• The clean energy sector in the European region grew by a modest 4 percent but remains the leading destination for such investment, at $99.3 billion. Significant investment growth in Italy, the United Kingdom, and Spain helped to offset declines in other European Union member states. Germany and Italy continue to lead the world in deployment of small, distributed solar photovoltaic power installations, accounting for more than 50 percent of worldwide solar capacity additions, and 38 percent of G-20 solar technology investments.
• The United States remains the leader in venture capital financing, an important measure of energy innovation, attracting $6 billion, or 70 percent of the G-20 total. Germany and China were distant followers, with $635 million and $458 million, respectively, in venture capital investments.

    Access the summary from BNEF (click here). Access a release from Pew (click here). Access the links to the complete 56-page Pew report and executive summary (click here). [#Energy/Clean, #Energy/Renewables]

 

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Oral Arguments On Cross-State Air Pollution Rule

Apr 12: The U.S. Court of Appeals for the District of Columbia Circuit is hearing oral arguments in lawsuits over U.S. EPA's Cross-State Air Pollution Rule (CSAPR). The Cross-State Air Pollution Rule reduces the sulfur dioxide and oxides of nitrogen pollution emitted from coal-fired power plants across 28 eastern states. Supporters of the rule indicate that the pollution drifts across the borders of those states, contributing to dangerous -- and sometimes lethal -- levels of particulate and smog pollution in downwind states.

    EPA issued the rule under the "Good Neighbor" protections of the Clean Air Act, which ensure that the emissions from one state's power plants do not cause harmful pollution levels in neighboring states. On December 30, 2011, in one of the last official judicial environmental actions of 2011, the D.C. Circuit issued a ruling to stay U.S. EPA's controversial Cross-State Air Pollution Rule (CSAPR) finalized on July 6, 2011, and published in the Federal Register on August 8, 2011 [See WIMS 7/7/11]. According to the 2-page Court order issued on December 30, the CSAPR, which just became effective on October 7, 2011, is now on hold pending judicial review until at least April 2012 [See WIMS 1/3/12].

    According to EPA and supporters, CSAPR would reduce power plant sulfur dioxide emissions by 73 percent and oxides of nitrogen by 54 percent from 2005 levels. These emissions and the resulting particulate pollution and ozone (more commonly known as soot and smog) impair air quality and harm public health -- both near the plants and hundreds of miles downwind. They indicate that CSAPR would provide healthier air for 240 million Americans in downwind states. EPA estimates that the Cross-State Air Pollution Rule, when fully implemented, would: Save up to 34,000 lives; Prevent 15,000 heart attacks; Prevent 400,000 asthma attacks; and Provide $120 billion to $280 billion in health benefits for the nation each year.

    Nine states (CT, DE, IL, MA, MD, NY, NC, RI, VT), the District of Columbia, five major cities (Baltimore, Bridgeport, Chicago, New York and Philadelphia), Environmental Defense Fund (EDF), the American Lung Association, the Clean Air Council, NRDC, Sierra Club, and several major power companies (Calpine, Exelon and Public Service Enterprise Group) have all intervened in support of the clean air protections. On the other side are: other power companies (AEP, Southern, GenOn, Luminant) and states including AL, FL, GA, IN, KS, LA, MI, MS, NE, OH, OK, SC, TX, VA, WI .

    Access a release from EDF (click here). Access the briefs for and against the rule posted on the EDF website and link to fact sheets and economic benefits by states (click here). Access EPA's CSAPR website for complete background and details (click here). [#Air, #CADC]

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CBD Petitions CEQ To Act On Bat-Killing White-Nose Syndrome

Apr 11: The Center for Biological Diversity (CBD) petitioned the White House Council on Environmental Quality (CEQ) to take immediate action to stem the spread of white-nose syndrome, a rapidly spreading disease which they indicate has killed nearly 7 million bats across the eastern United States and is quickly moving west. CBD urged the council to direct Federal land management agencies to take measures to prevent the further spread of the disease, which in just six years has expanded from a single cave in upstate New York to affect bats in 19 states and four Canadian provinces.

    Mollie Matteson, CBD conservation advocate said, "The loss of bats to white-nose syndrome is an unprecedented natural disaster that will have real financial consequences for many Americans. Not only do some bats species face extinction, but American farmers stand to lose an estimated $22 billion in lost insect-eating services that bats provide. This crisis is deepening by the day and it's time for the highest reaches of our government to take action." The Center's petition asks the White House to direct Federal land management agencies -- including the U.S. Forest Service, Bureau of Land Management and National Park Service, which collectively manage millions of acres across the United States -- to enact consistent regulations limiting human entry to caves on public lands in order to prevent spread of the disease to the western United States and other areas. 

    CBD indicated that those steps are needed because white-nose syndrome has been found to be caused by a newly described fungus, aptly named Geomyces destructans, that is easily carried on the shoes, clothes or gear of any person visiting contaminated caves and is very likely being spread by people. Indeed, all evidence indicates that the disease was recently and inadvertently introduced to North America by a cave visitor on both continents. Recognizing these realities, some agencies have enacted cave closures and decontamination procedures, but many have not, including most federal land management agencies in the West, where the disease has not yet spread and can still be prevented. Matteson said, "Despite the severity and rapid spread of this disease, the response from federal land managers has been inconsistent and in many cases lackluster. This crisis begs a comprehensive response that only the White House can provide."

    CBD indicates in a release that already this winter, white-nose syndrome has spread to new areas in the Southeast and Midwest, showing up for the first time in Missouri, Alabama and Delaware and in more areas in Indiana, Kentucky and Ohio. Bats also transmit the fungus, but they are not capable of migrations longer than a few hundred miles. Concern about long-distance transport of the fungus by people has prompted calls by scientists, including those with the U.S. Fish and Wildlife Service and the U.S. Geological Survey, for restrictions on all but essential access to bat caves. In 2010, the Center petitioned Federal agencies to enact comprehensive restrictions on nonessential human access to caves, but those restrictions have not been enacted in many areas.

    Nine species of bat have been found with the white-nose fungus, and of those, six species have experienced mortality, several of them at rates approaching 100 percent in affected caves. Biologists fear that several bat species, including the once-common little brown bat, may soon become extinct. Scientists do not yet have an effective treatment; the only known way to contain the spread of white-nose is to reduce the risk of human transport of the fungus by closing caves to nonessential access and requiring decontamination procedures of those still entering caves.

    Access a release from CBD and link to the petition and more information on the white-nose syndrome (click here). Access the SaveOurBats website (click here). [#Wildlife]

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Paper Describes Natural Gas "Technology Warming Potential"

Apr 9: A new scientific paper published in the Proceedings of the National Academy of Sciences (PNAS) offers an enhanced method for assessing climate impacts from natural gas development and use using a new approach called "Technology Warming Potential." Specifically, this approach reveals the inherent climatic trade-offs of different policy and investment choices involving electricity and transportation. It illustrates the importance of accounting for methane leakage across the value chain of natural gas (i.e. production, processing and delivery) when considering fuel-switching scenarios from gasoline, diesel fuel and coal to natural gas.

    A new methane leakage model released today, created by Environmental Defense Fund (EDF) and based on the science described in the PNAS paper, allows anyone to test a range of scenarios to quantify the climate benefits, or damages, of natural gas production and usage given specific methane leakage rates. Users can vary the key system attributes independently to see how they affect net radiative forcing (the primary index used to quantify the effect of greenhouse gases [GHGs] on global temperatures) from U.S. emissions over time.

    Natural gas burns cleaner than other fossil fuels when combusted, but methane leakage from production and transportation of natural gas has the potential to remove some or all of those benefits, depending on the leakage rate. Methane is the main ingredient in natural gas and a greenhouse pollutant many times more potent than carbon dioxide (CO2), the principal contributor to man-made climate change. The paper uses the best available estimates on methane emissions from U.S. EPA.  At the same time, EDF said it is working to obtain extensive empirical data on methane released to the atmosphere across the natural gas supply chain, since the climatic bottom line of fuel switching scenarios involving natural gas is very sensitive to this parameter.

    Steve Hamburg, EDF's chief scientist and coauthor of the paper said, "Measuring how much gas is lost to the atmosphere and where the leaks are occurring will help to further target leak reduction opportunities to ensure that natural gas will help mitigate climate change. Such a strategy could yield enormous environmental and health benefits."

    The PNAS paper provides illustrative calculations with EPA's current estimate of the methane leakage rate. The model allows users to plug in different variables and observe the outcome. Thus the paper does not draw hard and fast conclusions about the future implications of any kind of fuel shifting, nor does it answer the question of whether natural gas generation or natural gas-powered vehicles will be better or worse for the climate. What it does do is provide those answers in terms of the leak rates at which fuel switching produces climate benefits at all points in time. It introduces the science required to accurately identify where the challenges lie.

    Key findings of the PNAS paper, based on the best available estimates on methane emissions from the EPA, include:

• Assuming U.S. EPA's 2009 leakage rate of 2.4% (from well to city), new natural gas combined cycle power plants reduce climate impacts compared to new coal plants; this case is true as long as leakage remains under 3.2%.
• Assuming EPA's estimates for leak rates, compressed natural gas (CNG)-fueled vehicles are not a viable mitigation strategy for climate change because of methane leakage from natural gas production, delivery infrastructure and from the vehicles themselves. For light-duty CNG cars to become a viable short-term climate strategy, methane leakage would need to be kept below 1.6% of total natural gas produced (approximately half the current amount for well to wheels -- note difference from well to city).
• Methane emissions would need to be cut by more than two-thirds to immediately produce climate benefits in heavy duty natural gas-powered trucks.
• At current leakage rate estimates, converting a fleet of heavy duty diesel vehicles to natural gas would result in nearly 300 years of climate damage before any benefits were achieved.

    A number of scientific papers on the climatic implications of natural gas production and use have been published in the last year, inadvertently figuring into a growing sense of confusion due to conflicting conclusions. The PNAS paper tries to clear up some of this confusion by addressing the analytical challenge of comparing the time-dependent effects on climate of methane by using the Technology Warming Potential approach. The paper specifically illustrates this approach to compare the climate influence (i.e. changes in radiative forcing) of fuel switching scenarios involving natural gas.  

    Steven Hamburg, EDF's chief scientist and coauthor of the paper said, "Failing to reduce methane leaks has the potential to eliminate much, if not all, of the greenhouse gas advantage of natural gas over coal. If we want natural gas to be an accepted part of a strategy for achieving energy independence and moving to a clean energy future, it's critical that industry, regulators and other stakeholders work together to quantify the existing methane leakage rate and commit to reducing it to one percent or below if, as expected, the leakage is currently higher than that. One percent is the magic number."

    Access a release from EDF with links to the full text of the PNAS paper and the EDF methane leakage model (click here). [#Climate, #Energy/NatGas]

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Rep. Markey Urges Republicans To Support Renewable Energy

Apr 6: Following the release of a report by the Department of Energy that shows a renewable energy incentive program created tens of thousands of jobs, Representative Ed Markey (D-MA) challenged House Speaker John Boehner (R-OH) and other Republicans to support the development of American clean energy and end unnecessary tax subsidies for the biggest oil companies. Markey said that Speaker Boehner and his colleagues recently questioned the effectiveness of the program, and Congressional Republicans have repeatedly attacked the jobs potential from America's clean energy entrepreneurs.

 

    The report, Preliminary Analysis of the Jobs and Economic Impacts of Renewable Energy Projects Supported by the §1603 Treasury Grant Program, was conducted by the National Renewable Energy Laboratory (NREL) and analyzed the impact of the Section 1603 Renewable Energy Grant Program. According to the report, through November 10, 2011, the §1603 grant program has provided approximately $9.0 billion in funds to over 23,000 PV and large wind projects, comprising 13.5 GW of electric generating capacity. This represents roughly 50% of total non-hydropower renewable capacity additions in 2009–2011. Total investment in these projects, which includes capital investments from all private, regional, state, and federal sources (including §1603 funds), is estimated to exceed $30 billion. These PV and large wind projects account for approximately 94% of the total generation capacity of projects funded under the §1603 program and represent 92% of total payments. The estimated gross jobs, earnings, and economic output supported by the PV and large wind projects that received §1603 funds are summarized below and in Table ES-1:

• Construction- and installation-related expenditures are estimated to have supported an average of 52,000–75,000 direct and indirect jobs per year over the program's operational period (2009–20115). This represents a total of 150,000– 220,000 job-years. These expenditures are also estimated to have supported $9 billion–$14 billion in total earnings and $26 billion–$44 billion in economic output over this period. This represents an average of $3.2 billion–$4.9 billion per year in total earnings and $9 billion–$15 billion per year in output.
• Indirect jobs, or jobs in the manufacturing and associated supply-chain sectors, account for a significantly larger share of the estimated jobs (43,000–66,000 jobs per year) than those directly supporting the design, development, and construction/installation of systems (9,400 per year).
• The annual operation and maintenance (O&M) of these PV and wind systems are estimated to support between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20- to 30-year estimated life of the systems. Similar to the construction phase, the number of jobs directly supporting the O&M of the systems is significantly less than the number of jobs supporting manufacturing and associated supply chains (910 and 4,200–4,600 jobs per year, respectively).

    In his letter to Speaker John Boehner and Representatives Fred Upton (R-MI) and Cliff Stearns (R-FL), Representative Markey asked the Republicans to stop their attacks on clean energy programs, and to not raise taxes on the wind industry at the end of this year. He said, "Republicans have prevented the extension of the Production Tax Credit for wind energy, which actually supports putting electricity on the grid, creating new jobs." The energy-producing incentive is set to expire at the end of 2012.

 

    Representative Markey said, "Supporting American clean energy businesses puts power in our homes and will make America an energy and manufacturing powerhouse for decades to come. Many Republicans in Congress have been vocal supporters for continuing wasteful oil company subsidies, while at the same time pushing to raise taxes on wind energy. If that were to happen, upwards of 37,000 clean energy jobs would be eliminated around the country."

 

    Markey cited one example of "unnecessary oil company subsidies protected by Republicans" is the deduction for "geological and geophysical expenditures", which he said is the most recent tax subsidy that was given to the oil and gas industry in 2005 by a Republican Congress and President George W. Bush. Markey said, "This subsidy allows companies to deduct the costs associated with searching for oil over two years rather than seven years, which costs U.S. taxpayers $1.4 billion over 10 years."

 

    He also pointed to other subsidies for the oil and gas industry -- like the deduction for "intangible drilling costs" -- are far more costly and have been around far longer. That tax break, which was instituted back in 1916, allows oil companies to write off certain costs immediately rather than over the life of the asset, as is customary for most companies. He said, "Since 1968, it has cost U.S. taxpayer $78 billion." 

 

    Access the release from Rep. Markey and link to the complete letter and related information (click here). Access the complete NREL report (click here). [#Energy/Renewables, #Energy/OilGas]

Energy Department Update On Renewable Loans & Projects

Apr 5: In follow-up to a recent Senate Energy and Natural Resources (ENR) Committee hearing where Secretary Chu was asked how the Department of Energy (DOE) planned to move forward on providing loans and loan guarantees for the deployment of new technologies, the Department has provided an update on the status of the loan program. DOE submitted a letter to the Chairman and Ranking Member - Senators Jeff Bingaman (D-NM) and Lisa Murkowski (R-AK), respectively -- on the process for making loan guarantees under the 1703 loan program. DOE indicates:

"As you know, the §1703 loan program was adopted as part of the landmark, bipartisan Energy Policy Act of 2005 to provide loan guarantees to cutting edge clean energy projects that, because of the risks involved with newer technologies, are typically unable to obtain conventional bank financing.  Last April's budget agreement reached by U.S. House of Representatives Speaker Boehner and U.S. Senate Majority Leader Reid provided an additional $170 million in loan loss reserve funding to support §1703 loan guarantees that could not be funded under the expiring §1705 loan guarantee program that was funded by the Recovery Act.  Separately, the bipartisan agreement provided the Department with $1.5 billion in additional loan guarantee authority for projects where the loan loss reserve is funded by the project sponsor.

"The §1705 loan program included a September 30, 2011 deadline by which projects had to not only complete due diligence and close on their loans, but also start construction.  Faced with a large volume of worthy projects, but a limited number able to meet this mandate, in May 2011 the Department sent letters to more than three dozen project sponsors, informing them that they would not qualify under §1705, but could be considered in the future for loan guarantees under the §1703 program.  As the letter noted, this was not a statement of the quality or worthiness of those projects; it was simply a matter of timing.   

"Following the completion of the Independent Consultants Review by Mr. Herb Allison [See WIMS 2/13/12], the Department has worked to develop a process for considering pending applications for the §1703 funding.  Today, the Department is sending a letter to project sponsors with pending applications that could not be considered for the Recovery Act-funded §1705 program due to eligibility requirements or time constraints around the September 30, 2011 deadline for that program.  These projects are still being given the opportunity to be considered for a loan guarantee under the §1703 program. 

"The exact number of projects and the total dollar value of the loan guarantees in this §1703 pipeline will depend on the government's assessment of the risk level of the projects selected.  The Department expects to begin issuing conditional commitments over the next several months after completing a rigorous internal and external review of each application.  This evaluation will build on the extensive work that had already begun last year prior to the applications being put on hold. 

"Consistent with the findings and recommendations of the Allison review, projects selected will be subject to a robust monitoring effort to ensure that taxpayers' investments are protected.  It is important to note that the Allison review found that the Department's overall loan portfolio was strong and that expected losses would likely be less than the loan loss reserves Congress set aside for the §1705 loan program and the Advanced Technology Vehicles Manufacturing Loan Program. 

"I would also like to take this opportunity to update the Committee on the significant progress being made around the country on projects funded by the Department's loan programs.

"From solar energy to wind to biofuels and more, the global market for clean energy technologies reached $260 billion last year and is growing rapidly.  Recognizing the enormous economic opportunities ahead, countries like China, Germany, and others around the world have established programs to provide government-backed financing for innovative technologies and companies.  Such support is crucial because private lenders are often unwilling or unable to absorb the risks associated with financing truly innovative or advanced technology projects at scale until such projects have been proven in the marketplace.

"By any measure, the Energy Department's loan programs have helped the United States keep pace in the fierce global race for clean energy technologies.  Over the past three years, the loan programs have invested in some of the world's biggest, most innovative, and most ambitious clean energy projects to date, supporting a balanced portfolio of American clean energy projects that are creating tens of thousands of jobs nationwide and are expected to provide power to nearly three million U.S. households. 

"For example, NRG Solar's Agua Caliente project in Yuma County, Arizona will be the world's largest solar photovoltaic installation when it is finished later this year.  The project is more than 70 percent complete with nearly three million solar panels already installed that span more than 2,300 acres – and the project has started delivering clean, renewable energy to the power grid.  For the 600 workers on the site today, the project provides steady income, marketable skills, and the opportunity to contribute in shaping the nation's energy economy. 

"In wind energy too, the Energy Department is supporting the world's largest project.  The Caithness Shepherds Flat wind farm in eastern Oregon features 338 turbines spread across two counties.  With more than half of the turbines already installed, the project is operating and contributing clean wind power to the grid.  It is supporting thousands of jobs beyond the 1,000 construction workers on site.  The project will utilize 15 suppliers in nine states to fulfill orders for the 845 megawatt wind farm, including General Electric assembly facilities in Pensacola, Florida and Tehachapi, California.  Logistics companies, indirect suppliers, and site contractors are also playing an important role in the project.  

"Several other completed projects are generating clean power and are repaying their loans.  First Wind's Kahuku Wind project in Oahu, Hawaii, for example, has been operating since March of last year, providing clean, renewable power to 6,000 homes.  The economic benefits of the project are substantial – with wind turbines assembled in Iowa, an advanced energy storage system supplied by a Texas company, and a supply chain that extended to more than 100 businesses in 20 states.

"Solar generation projects like California Valley Solar Ranch, Antelope Valley Solar Ranch, and Abengoa Solana are reinvigorating the local construction industry and contributing to a boom for American solar companies.  New manufacturing facilities are opening across the country to support America's renewable energy sector.  In fact, according to the U.S. Solar Energy Industry Association, in 2010 and 2011, 41 new U.S. solar manufacturing facilities began operations across America, including in Arizona, Florida, Georgia, Michigan, Mississippi, Ohio, Pennsylvania, and Tennessee.  These facilities have fostered new steel manufacturing facilities, glass producers, and tool dye manufacturing facilities for solar electronics and tracking equipment.

"In part because of these cutting edge projects and the private sector investment enabled through the loan program, the United States has nearly doubled renewable energy generation since 2008, and last year U.S. solar installations grew by nearly 110 percent.

"But given how intense the global competition is -- China offered $30 billion in government-backed financing to solar companies in 2010 alone -- we cannot afford to stop moving forward. Our historic investment in clean energy is paying off, and it will come back to us many times over -- in jobs, in clean energy for our communities, and in leadership in the technologies of the 21st century."

    Access the complete letter which includes links to many of the referenced projects and letters (click here). [#Energy/Renewable]

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House Dems Urge EPA To Consider Fracking Impact Report

Apr 3: House Energy and Commerce Committee Ranking Member Henry Waxman (D-CA) and Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO) sent a letter to U.S. EPA Administrator Lisa Jackson requesting that the EPA consider a new study by the Colorado School of Public Health that reveals potential increased health threats from exposure to toxic chemicals near natural gas wells. They noted that EPA is currently finalizing new standards for natural gas operations to reduce emissions that can cause cancer and other serious health effects.

 

    In their letter, the Member indicate, ". . .we ask that you consider a new study from the Colorado School of Public Health that raises concerns about the potential public health impact of air emissions from unconventional gas drilling operations. The findings from this study, while preliminary, reinforce the importance of your forthcoming rules and the need for additional research.

 

    "Scientists at the Colorado School of Public Health examined three years of air monitoring data in Garfield County, Colorado and concluded that residents living near natural gas wells may face increased exposure to benzene, a known human carcinogen, and other toxic chemicals, such as ethylbenzene, toluene, and xylene. The researchers found higher lifetime cancer risks for people living closer to the wells. They also concluded that these nearby residents have a higher risk of experiencing neurological and respiratory health effects, such as headaches, throat and eye irritation, impaired lung capacity, dizziness, fatigue, numbness in the limbs, and tremors. The authors concluded:

"[P]reliminary results indicate that health effects resulting from air emissions during development of unconventional natural gas resources are most likely to occur in residents living nearest to the well pads and warrant further study.  Risk prevention efforts should be directed towards reducing air emission exposures for persons living and working near wells during well completions."

    The report entitled, Human Health Risk Assessment of Air Emissions from Development of Unconventional Natural Gas Resources, by Lisa M. McKenzie, Roxana Z. Witter, Lee S. Newman, and John L. Adgate, Colorado School of Public Health, was released on March 19, 2012. The report is posted on the site of Erie Rising, "a grassroots, mom (parent) powered organization, dedicated to protecting our children, our health, our environment and our community."

 

    Erie Rising, based in Erie, CO, indicates that its position on natural gas drilling and mining using hydraulic fracturing is: "We believe the onus lies squarely with the gas companies and our elected officials to prove that natural gas drilling and mining by fracturing is safe and does not pose a real or imminent threat to our children, our health or our environment. We are seeking scientific studies and other information to prove we are not at risk from this activity. We pledge that, in the absence of that proof, we will take action to keep it out of our community and away from our schools until such proof is available."

 

    Access a release and the letter from the Members (click here). Access the complete report with extensive links to referenced documents (click here). Access the Erie Rising (click here). [#Energy/Frack, #Air, #Toxics]

The Role Of Job Impact Analyses In Environmental Policy Debates

Apr 3: The Institute for Policy Integrity (IPI) at the New York University School of Law has released a report entitled, The Regulatory Red Herring: The Role of Job Impact Analyses in Environmental Policy Debates. IPI is a non-partisan think-tank

using economics and law to protect the environment, public health, and consumers. According to a release from IPI, "Estimates of jobs gained or lost due to environmental regulations require much closer scrutiny than they're given. Very often these claims are made dramatically out of context, based on economic analyses that may not have been meant to support them." These are the main findings of a report.

 

    The study discusses how cost-benefit analysis can evaluate the effect of environmental regulation on layoffs and hiring, and criticizes the tendency for jobs impact models to be used in ways that are not helpful in debates over environmental protections. The report finds that too often, model results are cited without calling adequate attention to their limitations and assumptions. Different modeling choices can lead to drastically different conclusions.

 

    Michael Livermore, IPI's executive director and lead author of the report said, "Because these models are so sensitive, their results must be communicated properly. They do not lend themselves to the kinds of sweeping rhetorical statements you often hear in the political arena. Many times, claims about jobs and regulation find their way into a faulty conventional wisdom far removed from the evidence these analyses provide."

 

    The release indicates that while environmental regulation can lead to layoffs or hiring in specific regions or sectors, in a dynamic economy like America's, the overall effect is difficult to capture. For any particular environmental regulation, these offsetting effects are ambiguous and hard to predict. To better inform policymaking, model limitations and uncertainty should be acknowledged, and the impacts of regulation on employment must then be weighed against all the other costs and benefits of a rule.

 

    Livermore said, "The effect of a regulation on jobs is important, especially in a downturned economy. But those effects are likely much smaller than you might think by tuning into the political debate. Rather than staking the utility of a policy solely on this one element, basic economic principles would call for a more holistic view of regulation."

 

    The report points out that, "In an advocacy context, job impact analyses can tell very different stories, often depending on the narrator. In one revealing example, the American Coalition for Clean Coal Electricity estimated that two EPA rules on power plant emissions would trigger a 1.4 million job loss; meanwhile, using a different model and different assumptions, the Political Economy Research Institute predicted the same two rules would generate a 1.4 million job gain."

 

    By way of background, the report notes that, "Claims that environmental regulations cause unemployment have been a staple of political discourse for decades. But as the American economy continues to struggle in the aftermath of the 2008 recession, assertions about the negative employment impacts of environmental regulations have resurfaced with increasing volume and frequency. During roughly the first twenty days the 112th U.S. House of Representatives sat in session, congressional committees scheduled at least twenty separate hearings on the purported link between regulations and the nation's job woes. From 2007 to 2011, the phrase 'job-killing regulations' underwent a 17,550% increase in usage in U.S. newspapers (from just four appearances in 2007 to over seven hundred in 2011)."

 

    According to the report, "Perhaps most importantly, analysts and policymakers must recognize that even the most sophisticated job impact analyses have only limited predictive power in our complex and dynamic economy. While research should be carried out to refine and improve these models, the degree of uncertainty associated with estimates of employment impacts should be acknowledged.

 

    "This report examines the use of job impact analysis by the federal government and advocacy groups, discussing how cost-benefit analysis can incorporate regulatory effects on layoffs and hiring, and how job impact models can be used and misused in the public policy debate. On the basis of this analysis, several recommendations are offered:

• Job impact analysis is not an alternative to, or substitute for, cost-benefit analysis. Rather, employment effects should be incorporated into cost-benefit analysis on the basis of traditional economic principles.
• The difference between short-term and long-term unemployment should be taken into account when determining the economic costs of layoffs.
• The potential for regulations to positively and negatively affect workers should be recognized.
• Economic models used to predict employment effects should be well suited to the type of regulatory effect being estimated (e.g., regional versus nationwide and multi-sector versus single industry).
• Uncertainty surrounding model predictions should be acknowledged by analysts and policymakers, and all assumptions and modeling choices should be disclosed.

    Access a release from IPI (click here). Access the complete 35-page report (click here). [#All]

EPA Releases Final Report To Congress On Black Carbon

Apr 2: U.S. EPA released its final Report to Congress on Black Carbon which has been in the making for several years. The October 2009 Interior Appropriations bill (P.L. 111-88) required EPA, in consultation with other Federal agencies, to prepare a comprehensive report to Congress on the climate effects of black carbon. Black carbon, or soot, results from incomplete combustion of organic matter such as fossil fuels and biomass. The report to Congress evaluates and synthesizes available information on sources of black carbon, impacts of black carbon on global and regional climate, and the potential utility and cost-effectiveness of mitigation options for reducing climate and public health impacts of black carbon.

    EPA's Office of Air Quality Planning and Standards (OAQPS) submitted a draft report to its Science Advisory Board Advisory, Council on Clean Air Compliance Analysis in March of 2011. EPA requested that the Council review the draft report to evaluate the report's scientific rigor and technical accuracy. The SAB completed its review in August 2011 [See WIMS 8/15/11].

 

    The final report indicates that black carbon (BC) emissions have important impacts on public health, the environment, and the Earth's climate. BC is a significant component of particle pollution, which has been linked to adverse health and environmental impacts through decades of scientific research. Recent work indicates that BC also plays an important role in climate change, although there is more uncertainty about its effects on climate than for greenhouse gases (GHG), such as carbon dioxide and methane. BC has been linked to a range of climate impacts, including increased temperatures, accelerated ice and snow melt, and disruptions to precipitation patterns. Importantly, reducing current emissions of BC may help slow the near-term rate of climate change, particularly in sensitive regions such as the Arctic. However, BC reductions cannot substitute for reductions in long-lived GHGs, which are necessary for mitigating climate change in the long run.

    Despite the rapidly expanding body of scientific literature on BC, there is a need for a more comprehensive evaluation of both the magnitude of particular global and regional climate effects due to BC and the impact of emissions mixtures from different source categories. To advance efforts to understand the role of BC in climate change, on October 29, 2009, Congress requested EPA to conduct a BC study as part of H.R. 2996: Department of the Interior, Environment, and Related Agencies Appropriations Act, 2010 (i.e. P.L. 111-88). Specifically, the legislation stated that: "Not later than 18 months after the date of enactment of this Act, the Administrator, in consultation with other Federal agencies, shall carry out and submit to Congress the results of a study on domestic and international black carbon emissions that shall include:

• "an inventory of the major sources of black carbon,
• "an assessment of the impacts of black carbon on global and regional climate,
• "an assessment of potential metrics and approaches for quantifying the climatic effects of black carbon emissions (including its radiative forcing and warming effects) and comparing those effects to the effects of carbon dioxide and other greenhouse gases,
• "an identification of the most cost-effective approaches to reduce black carbon emissions, and
• "an analysis of the climatic effects and other environmental and public health benefits of those approaches."

    To fulfill the charge, EPA conducted an intensive effort to compile, assess, and summarize available scientific information on the current and future impacts of BC, and to evaluate the effectiveness of available BC mitigation approaches and technologies for protecting climate, public health, and the environment. As requested by Congress, EPA has consulted with other Federal agencies on key elements of this report, including inventories, health and climate science, and mitigation options. The report draws from recent BC assessments, including work under the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO), the Convention on Long Range Transboundary Air Pollution (CLRTAP), and the Arctic Council. Each of the individual efforts provides important information about particular sectors, regions, or issues. The task outlined for EPA by Congress is broader and more encompassing, requiring a synthesis of currently available information about BC across numerous bodies of scientific inquiry. The results are presented in the Report to Congress on Black Carbon.

    Allen Schaeffer, Executive Director of the Diesel Technology Forum (DTF), issued a statement regarding the U.S. EPA's new Report to Congress and said, "While there may still be some debate about the role of black carbon on the earth's climate, this report assures that there is no doubt about the benefits and importance of clean diesel technology in reducing black carbon emissions in the U.S. Thanks to the switch to ultra-low sulfur diesel fuel coupled with advances in diesel engine design and emissions control technology, fine particulate emissions have been virtually eliminated from new diesel vehicles and equipment in the U.S. Today diesel engines are responsible for less than six percent of all particulate emissions in the U.S. . .

    "In the past decade, emissions from heavy-duty diesel trucks and buses have been reduced by 99 percent for nitrogen oxides (NOx) -- an ozone precursor -- and 98 percent for particulate emissions which include black carbon. Today, clean diesel technology with near zero emissions is standard equipment in nearly all off-road diesel vehicles and equipment such as construction equipment, agricultural vehicles, stationary generators, locomotives and marine vehicles. Not only are the clean diesel engines near zero emissions, they are also achieving important gains in fuel efficiency of anywhere from two to 10 percent, bringing valuable savings to owners and operators of new clean diesel engines.

    "According to the report, the U.S. currently accounts for about eight percent of the global black carbon emissions, with 52 percent of that coming from mobile sources, and 93 percent of the mobile sources attributed to diesel engines. On top of the 32 percent reduction from 1990-2005, EPA projects this percentage will decline by 86 percent by 2030 'largely due to controls on new mobile diesel engines'. As clean diesel technology continues to advance, these improvements may be even more significant.

    "This report also highlights the far greater role of other sources of black carbon in developing countries such as Asia, Latin America and Africa, where residential cooking and biomass burning are the primary sources of black carbon. It also recognizes the challenges in reducing emissions from both mobile and stationary diesel engines in these developing countries since they typically do not have ready access to cleaner low sulfur fuels that are required for most advanced emissions control technologies."   

    A number of environmental groups indicated their support for the report in a joint release. Brooke Suter of the Clean Air Task Force said, "We applaud EPA's comprehensive report, the results of which underscore the need to reduce black carbon, a major component of soot, in order to protect public health and the climate. This information makes clear the need to support measures to reduce black carbon at all levels ‐‐ from funding of the Diesel Emissions Reduction Act in Congress, to Mayors and University presidents acting on climate agreements, to organizations working on climate action plans."

 

    Erika Rosenthal, an Earthjustice attorney said, "Science tells us that we have a limited window of opportunity to reduce emissions of black carbon and other short‐lived pollutants to slow the rate of warming and melting from the Arctic to the Andes to the Sierra, as well as to have any chance at keeping global temperature rise at 2 degrees C or less. This report give the U.S. a unique opportunity to provide greater leadership to the international community by taking action to reduce emission at home –a win‐win for public health and climate." 

 

    The groups indicated that internationally, United Nations Environmental Program (UNEP), the Convention on Long‐Range Transboundary Air Pollution (CLRTAP) and the Arctic Council have concluded that black carbon pollution plays a significant role in a range of climate impacts, particularly for sensitive regions such as the Arctic and high elevation mountain ranges both in and outside of the US, including increased temperatures, accelerated ice and snow melt, and disruptions to precipitation patterns.

    Access EPA's Black Carbon website for the report highlights, executive summary and full text (click here). Access the SAB Review Council website for additional background, information and meetings on the draft report (click here). Access the release from DTF (click here). Access the DTF website for more information (click here). Access a release from the environmental groups (click here). [#Air, #Climate]

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States Question Federal Commitment To Environmental Protection

Mar 26: A release from the Environmental Council of the States (ECOS) indicates that upcoming budget cuts have state environmental agency leaders concerned about the commitment of the Federal government to environmental protection. Gathered March 19-21 at the ECOS Spring Meeting in Austin, Texas, leaders of 41 state and territorial environmental agencies discussed the likely impacts of "unliquidated obligations" (ULO, or obligated but unexpended state grant dollars), "budget sequestration," and other budget tricks likely to yield the largest reductions ever in U.S. EPA funding. 

 

    Steve Brown, ECOS Executive Director said, "The latest budget trick is to appropriate money and then rescind it before it is even distributed to the states and local governments. Even worse, Congress is considering taking back money already awarded to local governments, which will force them to break contracts with construction firms and lose jobs."

    ECOS members stressed that state grants from the nonpoint source program and clean water and drinking water State Revolving Loan Funds -- grants with the largest ULO balances -- assist all communities and are vital for improving their water quality and infrastructure. States understand the need to be diligent in spending funds but emphasized that it often takes three to five years to execute construction projects and other water quality improvements following the obligation of grant dollars.

 

    States also expressed concern about an automatic 8.8% federal budget "sequestration" (cut) slated for January 2, 2013, that could result in the lowest EPA budget in decades. Most likely to be affected: funds used to build drinking water plants and sewers. Also expected to be impacted are the budgets for protection of air and water bodies and management of hazardous waste. Brown said, "It's not just Congress -- even EPA is proposing cuts to eliminate safe beaches and radon protection." 

    In a separate session on enforcement and compliance issues with leadership of EPA's Office of Enforcement and Compliance Assurance (OECA), ECOS members touched on several issues. EPA officials shared with states their vision of Next Generation compliance, with states expressing interest in collaborating with EPA on innovative ideas related to enforcement and compliance. After hearing about OECA's plans for disinvestments in FY13, states requested similar flexibility from EPA in light of continuing budget challenges.

 

   States adopted several resolutions at the Spring Meeting, including two major policy positions on greenhouse gas (GHG) reductions. The first resolution calls on Congress and the Obama Administration to address, in cooperation with states, how best to achieve substantial GHG reductions over the next several decades. Noting the challenges of achieving significant cuts, ECOS urges Federal lawmakers and the Obama Administration to provide one or more scenarios that will produce an 80 percent reduction in GHG emissions nationally, from a 2005 baseline, in 2050 or beyond. The resolution also seeks an analysis, with a national and regional scope, of the costs and benefits associated with each scenario, as well as an analysis of the costs and benefits of a no-action alternative. A second resolution on the matter is designed to protect the states' rights in regulating GHG emissions in the face of any Federal legislative or regulatory action.

    In other resolutions, ECOS members adopted a statement recognizing that innovative approaches hold great promise for building upon environmental successes and are often necessary to address the nation's most pervasive environmental problems. States noted that innovation can supplement traditional regulatory approaches to achieve Federal and state environmental and public health goals, including those outside the purview of traditional regulatory systems, by testing new approaches and integrating stewardship and sustainability initiatives. ECOS also updated its resolution on federalism, noting, among other things, that meaningful, timely, and substantial involvement of the states, as partners with EPA, is critical to the development and implementation of environmental programs, budgets, rules, guidance, and interpretation of federal regulations. The states adopted a number of resolutions including the following:

• Concerning Environmental Enforcement Training for State and Local Environmental Regulators
• On Innovative Approaches to Protecting Human Health and the Environment
• State/EPA Commitment to the Full Implementation of the National Environmental Information Exchange Network
• On Coordination with the National Governors' Association
• On Environmental Federalism
• Endorsement of the National Mercury Switch Recovery Program Memorandum of Agreement that Reduces Mercury in the Environment and Provides Flexibility to the States
• Clarification of CERCLA Sovereign Immunity Waiver for Federal Facilities
• Mercury Reduction, Stewardship, and Retirement
• Challenges of Achieving Significant Greenhouse Gas (GHG) Emissions Reductions
• Preserving States' Rights to Regulate Greenhouse Gas Emissions
• Principles of Product Stewardship
• Supporting Work on Contaminated Site Response to Emerging Contaminants and Related Risk Communication Issues 

    Access a release from ECOS (click here). Access the Executive Director's presentation at the Spring Meeting (click here). Access links to the full text of the resolutions passed at the meeting (click here). Access the ECOS website for more information (click here). [#All]

 

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GOP Members Call On OMB To Reject EPA/USACE Water Guidance

Mar 28: Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works, joined Senators Jeff Sessions (R-AL) and Pat Roberts (R-KS), as well as Representatives John Mica (R-FL), Frank Lucas (OK), and Bob Gibbs (OH) to send a letter to Cass Sunstein Administrator of Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB) asking that the document, "Guidance on Identifying Waters Protected by the Clean Air Act," put forth by U.S. EPA and the Army Corps of Engineers (USACE) not be finalized. They said, "This guidance document seeks to give the federal government control over virtually every body of water in the United States, no matter how small."

 

    In their lengthy letter, the Members said in part, "We continue to be concerned that this so-called guidance misconstrues and manipulates the legal standards announced in the SWANCC and Rapanos Supreme Court decisions [i.e. Solid Waste Agency of Northern Cook Cty. v. Army Corps of Engineers, 531 U. S. 159 (2001); and Rapanos v. United States, 547 U. S. 715 (2006)], and will not further the goal of clarifying which waters are subject to CWA jurisdiction. We are also concerned that the Administration is seeking, through so-called guidance, to change the scope and meaning of the CWA.

 

    "If the Administration seeks statutory changes to the Clean Water Act, a proposal must be submitted to Congress for legislative action. If the Administration seeks to make regulatory changes, a notice and comment rulemaking is required, following the proper, transparent rulemaking process that is dictated by the Administrative Procedure Act. We have informed the Agencies of this, and that we expect them to formally withdraw this guidance and undertake a formal rulemaking to address the definition of "waters of the United States" in the context of the SWANCC and Rapanos decisions. However, the Agencies have repeatedly ignored our calls to not finalize the guidance. . .

 

    "Further, we remain concerned that the Agencies have not fully taken into account the full extent of the changes the guidance would make in expanding the scope of Federal jurisdiction under the CWA. . . the guidance is intended to apply to more jurisdictional interpretations, under other CWA programs, than just those covered by the Army Corps in making §404 determinations.  Specifically, the guidance also would apply to jurisdictional determinations made under §402, which governs National Pollutant Discharge Elimination System permits, §311, covering oil spills and SPCC plans, §303, dealing with water quality standards and total maximum daily loads, and §401, involving State water quality certifications. . .

 

    "Finally, it was reported recently that there is no clear path forward on when or how the Agencies will proceed with a rulemaking. . . Changes in guidance will only exacerbate the confusion and legal uncertainty that surrounds the CWA and continue to embroil the States and regulated community in unending legal challenges. The scope of those affected by the guidance document is far reaching and it is clear that sufficient review of the impacts has not been considered by the agencies.  We request that the guidance document not be finalized."

 

    Senator Inhofe said, "The Obama-EPA continues to pursue a water guidance document that sets the stage for the federal government to take over virtually every body of water in the United States from irrigation ditches to puddles of water on the road. Republicans believe that any changes to the Clean Water Act through the Administration should be done through rulemaking, which requires a transparent process that allows for a public comment period.  Instead, the Agencies appear to be skipping these required steps and relying on this guidance document to change the scope and meaning of the Clean Water Act. We will continue fighting this every step of the way." 

 

    House Agriculture Committee Chairman Lucas said, "The EPA has ignored repeated requests from Congress to abandon a guideline that creates a foundation to regulate essentially any body of water, such as a farm pond or even a ditch. Through this measure the EPA and the Army Corps of Engineers would assume broad and expanded authorities under the Clean Water Act to further regulate land use for farmers and ranchers. Similar legislative proposals have already been rejected by Congress, yet this Administration continues down a path of regulatory overreach. The vitality and health of our nation's waterways are important to all of us.  Our disagreement is how we achieve this goal."

 

    Access a release from the GOP Members including the complete letter and additional comments (click here). [#Water]

 

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51-47 Vote Will Allow Oil Subsidies To Continue

Mar 29: President Obama delivered a statement at the White House at 11:00 AM prior to a vote in the Senate on a motion to invoke cloture on S.2204; a bill to "eliminate unnecessary tax subsidies and promote renewable energy and energy conservation." The bill sponsored by Senator Robert Menendez (D-NJ), would end taxpayer-funded loopholes to the five largest, most profitable oil companies in the world (i.e. the Big 5, BP, Exxon, Shell, Chevron, and ConocoPhillips) and use those savings to extend for one year expiring energy tax provisions and reduce the deficit [See WIMS 3/27/12].

    The President said in part, "Today, members of Congress have a simple choice to make: They can stand with the big oil companies, or they can stand with the American people. Right now, the biggest oil companies are raking in record profits -- profits that go up every time folks pull up into a gas station. But on top of these record profits, oil companies are also getting billions a year -- billions a year in taxpayer subsidies -- a subsidy that they've enjoyed year after year for the last century. . .

    "It's not as if these companies can't stand on their own. Last year, the three biggest U.S. oil companies took home more than $80 billion in profits. Exxon pocketed nearly $4.7 million every hour. And when the price of oil goes up, prices at the pump go up, and so do these companies' profits. In fact, one analysis shows that every time gas goes up by a penny, these companies usually pocket another $200 million in quarterly profits. Meanwhile, these companies pay a lower tax rate than most other companies on their investments, partly because we're giving them billions in tax giveaways every year. . .

    "Instead of taxpayer giveaways to an industry that's never been more profitable, we should be using that money to double-down on investments in clean energy technologies that have never been more promising -- investments in wind power and solar power and biofuels; investments in fuel-efficient cars and trucks, and energy-efficient homes and buildings. That's the future. That's the only way we're going to break this cycle of high gas prices that happen year after year after year.  As the economy is growing, the only time you start seeing lower gas prices is when the economy is doing badly. That's not the kind of pattern that we want to be in. We want the economy doing well, and people to be able to afford their energy costs. . .

    "We're going to keep investing in clean energy like the wind power and solar power that's already lighting thousands of homes and creating thousands of jobs. We're going to keep manufacturing more cars and trucks to get more miles to the gallon so that you can fill up once every two weeks instead of every week. We're going to keep building more homes and businesses that waste less energy so that you're in charge of your own energy bills. . . Today, the American people are going to be watching Congress to see if they have that same faith."

    While the President was speaking a majority of the Senate, 51 Senators voted for the bill to end the subsidies; however, under Senate rules 60 votes were required to approve the measure. Thus, the subsidies will continue, as 43 Republicans and 4 Democrats voted against the measure. The four Democrats included Senators Begich (D-AK), Landrieu (D-LA), Nelson (D-NE), and Webb (D-VA). Two Republicans, joined the Democrats and two Independents in supporting the measure -- Senators Collins (R-ME) and Snowe (R-ME). Two Republican Senators did not vote.

    Senator Menendez issued a statement following the vote saying, "Today, we had a very simple choice to make -- stand up for hard working middle class families struggling with sky high gas prices, or stand with Big Oil executives raking in record profits with the help of taxpayer-funded handouts. With their votes, Republicans said loudly and clearly that they're on the side of Big Oil. I will keep fighting for middle class families, for fairness and against these ridiculous, needless subsidies." Sen. Menendez also delivered a lengthy floor speech prior to the vote which is available from the link below.

 

    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW), welcomed the defeat and said, "I am pleased that President Obama and the Democrats' latest proposal to raise taxes on American energy producers was rejected today. We all know that when you tax something you decrease supply and when you decrease supply prices go up. Last time they tried this, the sponsor of the bill, Senator Menendez, made the shocking admission, 'Nobody has made the claim that this bill is about reducing gas prices.' He's right, it's not about reducing gas prices, it's about attempting to deflect blame for their policies that continue to make gas prices go up.

 

    "The Republican plan is about reducing gas prices. It's about increasing supply by taking advantage of the immense resources of oil, gas and coal that our nation possesses so that American families can have affordable electricity and lower prices at the pump. That is why I offered three common sense amendments that would dramatically spur American energy production and stop the overregulation by the Obama- EPA.

 

    "During the Senate debate this week, Republicans provided a stark contrast to the Democrats' war on affordable energy.  Remember when President Obama said that under his plan of a cap-and-trade system electricity rates would 'necessarily skyrocket'? He went on to explain that this is 'because I'm capping greenhouse gases...they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.' Significantly raising taxes on oil and gas is just part of this same cap-and-trade agenda: those extra costs would be passed on to consumers in the form of higher prices at the pump. There was never any way the Senate would pass such a measure, especially at a time when gas prices are already skyrocketing.  Its defeat is a good thing for the American people."

 

    Scott Slesinger, legislative director for the Natural Resources Defense Council NRDC) said, "The spectacle of the Senate Republican leadership unabashedly preserving corporate welfare for the oil industry -- at a time of skyrocketing industry profits and soaring gas prices -- is mindboggling. Rather than continuing to subsidize the richest companies in the world, we should be supporting policies that encourage more choices for Americans beyond the oil industry's monopoly on our transportation system. We ought to be supporting the clean energy entrepreneurs and American innovators who are developing ways we can reduce our addiction to oil, decrease pollution and improve our national security -- not the giant oil conglomerates who are keeping us stuck in the past."

 

    Michael Brune, Executive Director of the Sierra Club, issued a statement saying, "Today's vote is the latest reminder of what we knew all along: big oil companies and their lackeys in Congress will do whatever it takes to squeeze every penny possible out of American families, whether it's shirking taxes or price-gouging at the gas pump. It is obscene that a handful of wealthy oil executives are demanding billions in handouts from the government while ordinary Americans pay their fair share of taxes on top of four-dollar-a-gallon gas. And, it is shameful that a minority of obstructionist Senators are doing big oil's bidding against the will of their constituents -- the majority of whom support ending unfair tax subsidies for big oil. Big oil companies and speculators who are driving up prices at the pump don't need any more of our help. We need our leaders to focus on real solutions to break our dangerous dependence on fossil fuels, and invest in clean energy solutions to ease Americans' pain at the pump and create jobs. Unfortunately, the Senate missed an opportunity today to take an important step in moving beyond oil."   

 

    Just prior to the vote, American Petroleum Institute (API)'s Chief Economist John Felmy told reporters that the proposal before the Senate [i.e. S.2204] "to raise taxes on selected oil and natural gas companies ignores what could really work to reduce gasoline prices and help our economy: create jobs and produce at home more of the oil and natural gas we know our nation will be using. He said, "A recent Gallup poll shows the nation has little confidence our government is moving in the right direction on energy. Unfortunately, the discriminatory tax proposal before the Senate today aimed at a handful of oil and natural gas companies isn't going to inspire more. The proposal -- which is expected to fail with bipartisan opposition -- is a political distraction from high gasoline prices and our nation's failed energy policies. 

 

     "Solving our energy and economic challenges requires a different approach. It requires doing something we know works: producing at home more of the oil and natural gas that our nation will need for decades to come. While the economy has been struggling, our industry has been an engine of job creation and energy production. For example, in 2011, we created 150,000 jobs, almost one in every ten of all created nationwide, according to a study by the World Economic Forum and IHS-CERA. If our companies are permitted to produce more of America's ample oil and natural gas resources, they'll create even more jobs, more government revenue for critical programs, and more energy security. It's time to stop bringing up the same bad proposals again and again and take action that actually helps address the real energy and economic problems Americans are facing." 

    Access the complete statement from the President (click here). Access the roll call vote (click here). Access legislative details for S.2204 (click here). Access the statement and floor speech from Sen. Menendez (click here). Access the statement from Sen. Inhofe (click here). Access the statement from NRDC with links to related information (click here). Access the statement from Sierra Club (click here). Access the statement from API (click here). [#Energy/OilNatGas]