The government aims to boost ethanol without evidence that it saves money or helps the environment

President Donald Trump has promised his supporters in Iowa that the federal government will take a step that may increase corn ethanol sales.

This plant-derived fuel, which comprises about 10 percent of the 143 billion gallons of gasoline Americans buy each year, is a kind of alcohol made from corn. The industry first emerged in 1980s with government support, after interest in making the country less reliant on imported oil surged in the 1970s. It later acquired a second purpose: lowering greenhouse gas emissions.

I have spent the last 24 years studying alternative fuels and fuel blends. Based on my research, and as a consumer, I can say that increasing the amount of ethanol blended with gasoline creates problems with older engines and potentially increases air pollution due to increased fuel evaporation while doing little to curb climate change.

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E10 and E15

Americans have been mixing ethanol and gasoline since Henry Ford touted the potential of biofuels. His Model T could run on gasoline or ethanol or a combination.

But ethanol use only took off in the 1970s following the energy crisis. Its use expanded greatly during George W. Bush’s administration, with the advent of the Renewable Fuel Standard in 2005. This federal program mandated that increasing amounts of renewable fuels be mixed with gasoline and diesel. The program has set a target for the domestic consumption of 15 billion gallons of corn ethanol since 2015.

Ford made its first flex-fuel car a century ago.

Most engines can safely run on a blend of 90 percent gasoline and 10 percent corn ethanol, the standard formulation known as E10 that is available at most American gas stations. E15 is a blend containing 15 percent ethanol. This blend is not available in every state.

And where E15 is sold, it isn’t currently available year-round.

That’s because the additional 5 percent of ethanol, combined with summer heat, would increase the tendency of blended fuels to evaporate The evaporated emissions from fuels can contribute to the formation of ozone, a major component of smog. In hotter weather, ethanol can exacerbate pollution problems in cities. Trump’s proposal would eliminate the existing summer ban on E15 sales.

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Winners and losers

Removing the ban would probably boost ethanol sales, aiding farmers who grow the corn used to make the roughly 16 billion gallons of it the U.S. produced in 2017, including exports, and the ethanol industry overall.

Because a higher percentage of ethanol means a lower percentage of petroleum, using more ethanol hurts petroleum refiners. It would also pose a logistical challenge. Ethanol cannot go into oil or gas pipelines because it absorbs excess water and impurities within pipelines. That means rail cars and tanker trucks transport all ethanol.

Although ethanol proponents say its use cuts carbon emissions, the evidence is mixed.

The government has determined that corn ethanol is much less effective than other biofuels at reducing carbon emissions, producing only 1.5 to 2.1 units of energy for every unit used to produce it. This is much less efficient than biodiesel made from soybean oil, which produces 5.5 units of renewable energy for every unit consumed in production.

The ethanol Brazilians make from sugarcane residues does a much better job of shrinking that country’s carbon footprint. Converting sugarcane wastes into ethanol produces more than 9.4 units of energy for every unit that producing this fuel consumes.

Flawed arguments

One of the original goals behind mandating ethanol blends was to reduce oil imports. While corn ethanol does directly displace gasoline consumption, other efforts to reduce oil imports have had far more impact.

The share of oil the U.S. imports has fallen in recent years, but that decline is largely due to a domestic production boom brought on by hydraulic fracturing, often called fracking, horizontal drilling and other technological advances. Increased domestic output has displaced 54.5 billion gallons of imported oil
annually – more than three times the roughly 15 billion gallons of oil per year ethanol is displacing.

Biodiesel and renewable diesel, made from vegetable oils and animal fats, are displacing another nearly 3 billion gallons of diesel derived from petroleum per year.

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A TV commercial I’ve seen during football games touted two other flawed arguments in favor of increasing corn ethanol production: that E15 will mean “cleaner air” at a “lower cost.”

The problem is that blending ethanol with other fuels lowers their energy content, slightly decreasing fuel economy. It may cost a bit less to fill up your tank but based on my calculations the decrease in miles per gallon that E15 would yield will mean it makes no difference on your wallet.

Likewise, the claim that E15 leads to cleaner air is not justifiable.

For one thing, all vehicles made since 1975 have catalytic converters that remove unburned hydrocarbons and other airborne pollutants. For another, the Energy Department has not detected any across-the-board reduction in tailpipe emissions associated with ethanol use. Instead, it has observed that using more ethanol may slightly increase the tailpipe emissions of aldehydes, which are respiratory irritants.

Old cars and chainsaws

All cars since model year 2001 can operate safely on E15, but not older cars. Vehicles manufactured before 2001 could suffer fuel system or engine damage if they’re run on E15. The government requires the labeling of all E15 fuel pumps to prevent accidental use for this reason.

A bipartisan bill is pending in Congress that would take this notification further by making the labels bigger and mandating that they warn consumers to check their owners’ manuals.

Another problem is that concentrations of ethanol in excess of 10 percent can hurt non-automotive engines, the Energy Department has found. These include, for example, the motors in lawn and garden equipment, motorcycles and speedboats.

Smaller engines lack computer controls able to adjust to operation on ethanol blends. If, say, the chain on your chainsaw engages without you intending it to, you could be in real danger. This malfunctioning can potentially cause accidents in which people lose fingers or even limbs.

Even once manufacturers redesign their weed-whacker and chainsaw engines to become compatible with higher ethanol blends, consumers who own older equipment would remain at risk of having them break down due to changes in fuel composition if E15 becomes the norm at filling stations.

People who own lawn and garden equipment and speedboats would have to go out of their way to avoid this problem by buying “pure gasoline.”

In short, year-round sales of E15 probably aren’t going to do much to reduce oil imports or trim the nation’s carbon footprint. It would take more ambitious and strategic energy policies to achieve those worthwhile goals.The Conversation

André Boehman, Professor of Mechanical Engineering; Director, W.E. Lay Automotive Laboratory, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

How to Keep the US Natural Gas Boon Going

America is becoming a major liquefied natural gas exporter. According to the latest statistics, the U.S. liquefied natural gas exports quadrupled from 0.5 billion cubic feet of gas per day in 2016 to 1.94 billion in 2017.

Of U.S. liquefied natural gas exports last year, 53 percent went to Mexico, South Korea, and China, with the largest share, 20 percent, going to Mexico.

A growing share of American liquefied natural gas exports is headed to Europe, too. Since the arrival of the first U.S. liquefied natural gas carrier in the Portuguese port of Sines in April 2016, the European Union has increased its imports of America’s liquefied natural gas from 0 to 2.8 billion cubic meters. NATO members, particularly Poland and Lithuania, have built new liquefied natural gas import terminals.

Given that the global liquefied natural gas market has become increasingly fluid and competitive, the value of U.S. liquefied natural gas exports is expected to be almost $5 billion this year. With plentiful reserves and innovative technologies that have unleashed an energy renaissance, the United States is the world’s leading natural gas producer and exporter and has a vital interest in protecting and expanding world energy trade.

In a welcome move at their July meeting in Washington, President Donald Trump and European Commission President Jean-Claude Juncker agreed to strengthen U.S.-EU strategic cooperation on energy trade, through which the EU would import more U.S. liquefied natural gas to diversify its energy supply and make it more secure.

However, U.S. law still requires prior regulatory approval for liquefied natural gas exports and constrains the timely expansion of much-needed energy infrastructure. These restrictions need to be addressed sooner rather than later so that energy companies can capitalize even further on America’s liquefied natural gas abundance and Europe’s energy demands.

The U.S. needs to make sure it does not get in its own way by keeping outdated and onerous restrictions. Regrettably, more than a dozen export facilities are awaiting permit approval from the Federal Energy Regulatory Commission. In fact, it has been three years since the commission last approved a new liquefied natural gas export terminal.

Heritage Foundation energy policy expert Nick Loris made the case for reformsuccinctly in a recent paper:

[A] burdensome environmental review process and an unnecessary public interest determination made by the Department of Energy slows the process of shipping [liquefied natural gas] to the desired destination. Both administrative and legislative reform will stimulate investment in energy in the U.S. and increase supply diversity for America’s allies, providing greater choices for consumers and creating a more mobile natural gas market. Further, empowering the states would create different and more efficient options for permitting, reducing the time frame in which [liquefied natural gas] reaches the market.

While strengthening relationships with trading partners around the world, America’s liquefied natural gas exports, supported by the timely expansion of much-needed energy infrastructure, would provide an additional boon to the economy and create more jobs.

That means, as The Economist has opined, “a cleaner world and a richer America.” The time to act on that is now.

Commentary by Anthony Kim. Originally published at The Daily Signal.

Companies blocked from using West Coast ports to export fossil fuels keep seeking workarounds

A year after Washington state denied key permits for a coal-export terminal in the port city of Longview, the Army Corps of Engineers announced it would proceed with its review – essentially ignoring the state’s decision.

This dispute pits federal authorities against local and state governments. It’s also part of a larger and long-running battle over fossil fuel shipments to foreign countries that stretches up the entire American West Coast.

We are sociologists who have studied how people respond to news about plans for big energy facilities in their communities. With President Donald Trump pushing hard for more fossil fuel production and exports, we believe it could get significantly harder for local communities to have a say in these important decisions.

Access to Asia

Oil and gas exports have dramatically increased nationwide over the past decade, ever since technological advances turned the U.S. from a top importer of these fuels to a growing exporter.

Energy companies have sought more access to West Coast ports for decades for routes to Asia and Australia. The region’s deepwater ports, railroad and pipeline networks, and proximity to some of the nation’s most productive oil, gas and coal fields make it particularly attractive for export terminals.

In some cases, exporting through the West Coast is the only economically viable option, as longer overland transportation routes would be too costly. Moreover, shorter trips by sea to reach China and other growing Asian markets cut costs.

Yet Western ports do not export as much crude oil as other American coastal areas.

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In addition, there are no facilities yet in California, Oregon or Washington for exporting liquefied natural gas, a form of the fuel that has been cooled to very low temperatures for easier storage and shipping.

This is not for lack of trying. All the numerous export terminals energy companies have proposed for liquefied natural gas up and down the West Coast have faced significant public opposition that made securing permits hard if not impossible.

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Likewise, relatively small volumes of coal are being shipped abroad from ports on the West Coast despite efforts to build new export terminals there.

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Energy dominance

With his “energy dominance” policy, Trump has emphasized expanding production and export of fossil fuels and weakening environmental regulations – including those that address climate change.

His administration is siding with energy companies and landlocked states like Wyoming and Colorado angling to ship coal, oil and natural gas mined and drilled within their borders to lucrative and growing Asian markets.

At the same time, many local and state governments on the West Coast are on board with demands made by environmental activists for renewable energy development and advocates for more local control over development.

Local supporters of fossil fuel exports point to the positive local effects these facilities can have. Labor unions, county governments, business councils and ports frequently argue that bolstering fossil fuel exports would create jobs, entice investment and increase the tax base.

Opponents argue that transporting, storing, handling and shipping fossil fuels – via railroads, pipelines and ships – endangers nearby communities and contributes to climate change.

They point to oil train derailments, the public health perils of increased diesel fumes and coal dust, and pipeline explosions and leaks. They also highlight the climate implications of shipping fossil fuels abroad that may affect the carbon footprints of other countries, where the fuel would be burned.

These people have maintained a virtual blockade against new export facilities so far. But in our study of this issue, we have found it remains unclear if the federal government will overturn or override local and state decisions to deny permits.

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Mobilization

Public opinion research indicates both support and opposition for fossil fuel export depending on fuel type. Our 2017 national survey showed that about a third of U.S. citizens sampled opposed exporting natural gas, while about half supported it and almost a fifth were undecided. Our forthcoming survey of Washington residents found similar levels of opposition to natural gas exports. We also detected higher rates of disapproval of oil and coal exports, with about half of residents opposing them.

Activists in the Pacific Northwest have established what they call a “thin green line” of resistance against any big new fossil fuel infrastructure. Their protests have contributed to state and local decisions to deny permits, as well as the passage of ordinances and resolutions limiting such development. Cities like Portland, Oregon, have banned these projects altogether.

Tribal governments have actively opposed many of these proposals, too. For example, the Lummi Nation played an essential role in stopping the Gateway Pacific coal terminal proposed for Bellingham, Washington.

Legal fights have ensued. After Washington denied the permit for the Millennium Bulk Terminals coal export proposal, six interior states and several industry groups joined the company in a lawsuit. They allege that the state’s decision violated the Constitution’s commerce clause, which grants Congress – not states – the power to regulate trade.

In some cases, the courts have determined that local bans are not allowed. In others, companies have simply withdrawn proposals, especially after sustained public protests.

Silencing local voices

The administration is pursuing multiple workarounds for expanding fossil fuel export, including a recent proposal to set up export facilities on retired military bases. Energy companies and energy-producing states are trying to capitalize on the fossil-friendly administration.

For example, senators from Texas, Colorado and Montana have encouraged Trump to use his authority under the North American Free Trade Agreement, or the deal that may replace it, to override Washington state’s denial of the coal export permit.

These moves at the federal level appear to be restricting opportunities for public participation in siting decisions, a development we find troubling.

In the case of the Jordan Cove natural gas export project in Oregon, the federal agency with permitting authority over the proposal used a new process for soliciting public comments in 2017. Instead of taking part in a hearing where those attending could hear all comments, members of the public met one-on-one with agency staff and a stenographer.

In previous research, we have shown how public hearings on energy projects are critical to the formation of active community groups, who use these opportunities to connect with like-minded individuals.

While one-on-one meetings may seem more efficient and less prone to conflict, they may also stifle important local debates on these issues. And they could potentially push activists toward more confrontational tactics because they do not feel their voices are adequately heard through official channels.

In addition, some companies have used existing permits and zoning to start handling a different fuel or expand facilities without undergoing environmental review and associated public comment processes.

Despite years of successfully blocking fossil fuel exports from the West Coast, whether the thin green line will hold is far from clear. Its resilience will partly depend on what happens with global fossil fuel markets and the success of export proposals in Canada and Mexico. Its resilience will also depend on how hard the Trump administration is willing to push and how hard the West Coast is willing to push back.The Conversation

Shawn Olson-Hazboun, Faculty, Graduate Program on the Environment, Evergreen State College and Hilary Boudet, Associate Professor of Sociology, School of Public Policy, Oregon State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

3 Residents Challenge Climate Change Rules at Delaware’s High Court

Delaware regulators have imposed costly and unlawful climate change regulations on industry in violation of legislative directives, according to three citizen activists who took their case to the state’s highest court.

But before the Delaware Supreme Court can address the substantive questions raised in the residents’ lawsuit, it first must resolve a lower court ruling that “failed to apply the correct legal test for standing,” Richard Abbott, their lawyer, said in an interview with The Daily Signal.

The Superior Court of Delaware ruled in June that residents David T. Stevenson, R. Christian Hudson, and John A. Moore did not have legal standing to challenge the state’s participation in a regional climate change agreement.

The trial court judge “applied the wrong legal standard,” their lawyer told The Daily Signal.

The three men had argued that the agreement’s regulatory restrictions on greenhouse gas emissions would raise their electricity bills. But Judge Richard Stokes decided that they failed to demonstrate this would be the case, and therefore did not have standing.

The Regional Greenhouse Gas Initiative, or RGGI, is a multistate agreement that currently includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

State government officials who have joined the initiative argue that greenhouse gases such as carbon dioxide are responsible for dangerous levels of climate change, also known as global warming.

The gases enter the atmosphere during the industrial burning of fossil fuels such as coal, natural gas, and oil. However, a growing number of scientists question theories that link human activity to significant climate change, and instead point to natural forces.

States that are parties to the agreement must impose a “cap and trade” arrangement in which government officials set an upper limit on carbon dioxide emissions from fossil fuel plants. Companies subject to the caps may trade “allowances,” however.

Delaware became part of RGGI when it entered a memorandum of understanding with other states in December 2005. The memorandum of understanding provided the framework for cap-and-trade regulations in each participating state, built around a “model rule.”

Since there will be fewer carbon dioxide permits available for electricity generators to purchase under the regulations, the three plaintiffs argue, the price of the permits will rise in response to the realities of supply and demand, and that these higher costs will be passed along to consumers.

‘Probable Injury’

At the heart of the case is the authority of Delaware’s Department of Natural Resources and Environmental Control. Gov. John Carney, a Democrat who took office in 2017, supports the initiative.

When the lawsuit initially was filed in December 2013, the agency’s regulations had not gone into effect. For Delaware residents to have standing to sue, they needed to show there was a “probable injury” and not an “actual injury,” Abbott, the plaintiffs’ attorney, said in the phone interview.

Abbott argued that the trial court judge, Stokes, should have considered only facts that were relevant when the suit was filed, instead of relying on “postfiling facts.”

The precedent in Delaware, and in other states with cases involving energy consumers who dispute government policies, says that standing must be “broadly and liberally applied,” he told The Daily Signal.

“When making this determination about standing, it’s not supposed to be a stringent straitjacket like this judge wants to make it out to be,” Abbott said, adding:

One reason for the confusion, I think, is that it took more than four years for the court to dispose of the case, and these cases are typically done in a 12- to 18-month time period.

But it’s difficult because DNREC [Department of Natural Resources and Environmental Control] filed all kind of frivolous motions at the beginning of the case, which they always do because the government gets away with filing frivolous motions without being held accountable.

The Superior Court judge identified three methods the plaintiffs could use to establish standing: produce electric bills showing rate increases that can be attributed directly to the regulations; show proof that energy companies pursued rate increases in response to the regulations; or get “expert witness testimony” establishing a connection between the regulations and increased energy costs.

“You can’t show your electricity bills went up at the beginning of a case before the regulations even took effect, and the electricity providers can’t apply for a rate increase before they’ve had an increase in costs,” Abbott said. “This is impossible. Once again, the correct test for standing is what’s happening at the time of filing.”

Challenging Changes to the Cap

In November 2013, the Department of Natural Resources and Environmental Control altered the “size and structure” of the cap on carbon dioxide emissions. The cap became substantially lower and more restrictive than what the Delaware General Assembly approved through the memorandum of understanding with other states, the three plaintiffs say in their brief to the Delaware Supreme Court.

The three residents’ brief says the memo of understanding doesn’t permit “any changes” related to caps on carbon dioxide, requiring the agreement to be “formally amended by all signatory states” before adoption of any regulations reducing the caps from 2014 through 2018.

The caps on CO2 established in the agreement “are mandatory, static, and not expressly permitted to be changed by DNREC’s unilateral regulatory action,” their brief argues.

Delaware regulators routinely file “frivolous motions” and “play the game about standing,” Abbott said, because they want to avoid answering substantive questions about their modifications to the caps on carbon emissions without the approval of elected officials.

Officials at the Department of Natural Resources and Environmental Control “know that if the case ever gets to the merits, they are dead,” Abbott said, adding:

The state legislature said you can adopt regulations that are consistent with the MOU [memorandum of understanding], but they essentially cut the cap in half. There is no question that the regulations are illegal and inconsistent with what was authorized by statute.

I’ve litigated many cases against DNREC and have won every single case because they just ignore the law. This has gone on for decades. There is an institutional problem with this agency, where they have just gotten into the habit of doing whatever they feel like.

The Daily Signal sought comment from the agency’s public affairs department, but officials had not responded by publication time.

Virginia Set to Join Climate Pact

As The Daily Signal previously reported, Virginia Gov. Ralph Northam, a Democrat, has advanced his own regulatory proposal to make his state part of the Regional Greenhouse Gas Initiative.

The Virginia proposal, which could go into effect in December, has attracted criticism from lawmakers, policy analysts, and citizen activists who say the state should not enter the climate pact without the approval of the Virginia General Assembly.

Related: Virginia Governor Set to Bypass Legislature to Join State-Based Climate Agreement

“Gov. Northam is sadly encumbering the state of Virginia with a regulatory monster that will have no impact on the climate even if you believed every claim made by Al Gore or the United Nations,” Marc Morano, a prominent climate change skeptic, told The Daily Signal in an email. “RGGI will do nothing but saddle Virginia with meaningless climate change inspired regulations on Virginia industry.”

Morano, executive editor and chief correspondent of the Climate Depot website and author of the bestseller “The Politically Incorrect Guide to Climate Change,” has been critical of state policymakers who implement climate change regulations without popular support.

“RGGI will make states like Delaware and Virginia less competitive with other states wise enough to avoid this virtue-signaling nonsense,” Morano said. “If Gov. Northam bypasses the legislature to impose these economically strangling regulations, it will prove once again that the governor lacks the support of the people and the legislature to impose this monstrosity on the state of Virginia.”

“The same is true in Delaware, where stringent regulations are imposed without legislative approval,” he said.

New Jersey also is set to join the climate pact. Gov. Philip Murphy, a Democrat, issued an executive order in January reversing a decision by his Republican predecessor, Chris Christie, to keep New Jersey out of RGGI.

California has its own cap-and-trade program covering power plants, factories, and oil refineries.

In Washington state, voters were set to vote Tuesday on a ballot question,Initiative 1631, which would impose the nation’s first tax on carbon dioxide emissions. Gov. Jay Inslee, a Democrat, long has been a proponent of the carbon tax and cap-and-trade proposals.

Report by Kevin Mooney. Originally published at The Daily Signal.

Green Energy Mandates Could Double Your Electric Bills

Business and homeowner utility costs could double in many states if environmental groups succeed in enacting draconian solar and wind power mandates in states across the country.

Yet these mandates will have almost no impact in cleaning the air or reducing greenhouse gas emissions.

In Arizona and Nevada, voters will decide on Nov. 6 whether to adopt renewable mandates requiring local utilities to buy at least 50 percent of their electric power from green energy—mostly, wind and solar power.

At least a dozen other states are set to ramp up their mandatory standards (also called “renewable portfolio standards”) in 2019. California is set to move to 60 percent legally mandated renewable energy by 2030 and 100 percent by 2045.

These mandates come with a steep price to American families and businesses. Residents in states with existing high mandates must often pay between 50 percent and 100 percent more on their electric bills than residents of states where utilities are free to rely on the market and purchase electric power from the lowest-cost sources—often coal, natural gas, or nuclear power.

Because lower-income households spend five to 10 times more as a share of their incomes on energy than do high-income households, high renewable portfolio standards are a regressive—and unduly burdensome—tax on the poor.

Ironically, these green initiatives are usually sponsored by billionaire liberal funders, such as investor Tom Steyer of California.

While the natural growth of renewable energy sources is a positive development, mandates are an economically disastrous method that crowds out the market for affordable electricity.

Today, the United States produces more than 75 percent of its electricity from natural gas, coal, and nuclear power. Less than 10 percent comes from solar and wind power.

Given the massive federal subsidies of more than $150 billion between 2009 and 2014 to the wind and solar industries, that is an amazingly small percentage.

Comparing the states with the most stringent renewable portfolio standards (25 percent or more) with the states with low ones (10 percent or less), and then with states with none, reveals a pattern.

States with high renewable portfolio standards have electric power rates that are about 27 percent per kilowatt hour more expensive than states with low ones, and about 50 percent higher than states without them.

The Heartland Institute estimates costs could total an extra $1,000 per year per household, compared with current electricity costs, at the proposed rate increase in Arizona.

This could mean tens of thousands of dollars of higher costs for a business, depending on energy usage. For manufacturers, it could mean $100,000 or more of extra costs.

Lower-income families would be most adversely affected by stricter green energy requirements. This is because poorer households typically pay about seven times more as a share of their income in energy costs than do wealthier families.

Middle-class families pay at least twice as high a share of their income in energy bills than do the rich.

One of the critical flaws of renewable energy requirements is that they almost all squeeze out two of the most dominant and cleanest forms of energy used across the country—natural gas and nuclear power.

But from an environmental and clean air standpoint, and for the purposes of reducing greenhouse gases that may be linked to climate change, this distinction makes no sense.

It appears simply to be a multibillion-dollar corporate welfare giveaway to the solar and wind industries at the expense of ratepayers.

Even coal that is burned in Arizona, Nevada, and other states is much cleanertoday than it was 20 or 30 years ago. All of this is evidenced by the dramatic improvement in air quality nationally over the past 35 years.

Only a small percentage of this clean air progress is due to renewable energy, because over most of this period, wind and solar power have been fairly inconsequential sources of U.S. energy production.

Since 1980, total emissions of the six principal air pollutants have fallen by 67 percent.

To put that in perspective: That reduction occurred amid a dramatic expansion of the U.S. economy. Gross domestic product increased by 165 percent, vehicle miles traveled increased 110 percent, the U.S. population grew by 44 percent, and energy consumption increased by 25 percent.

For these reasons, the “clean energy” initiative is best thought of as a regressive tax imposed on those who can least afford it.

Again, this “tax” could cost middle-income and lower-income American families about $1,000 more per year in utility prices. These mandates could also negatively affect business productivity and move jobs to areas with more energy choices.

Americans deserve affordable, abundant, and reliable energy. Renewable energy mandates are a “green tax” on homeowners and small businesses that can least afford it.

Commentary by Stephen Moore and Andy Vanderplas. Originally published at The Daily Signal.

Ratepayers Get Cold Shoulder as Green Energy Gets ‘Preferential Treatment’ in Delaware

Delaware residents are the victims of deceptive business practices associated with a green energy scheme resulting from elected officials’ sweetheart deal with a fuel cell company, policy analysts and academics argue.

Bloom Energy had pledged to create 900 full-time jobs in Delaware by Sept. 30, 2016, and to continue employing these workers for at least seven years.

But a filing with the U.S. Securities and Exchange Commission from Bloom Energy’s initial public offering in June shows that as of March, it had only 277 full-time employees.

“Bloom has been able to milk Delaware taxpayers and ratepayers for massive subsidies, gain preferential treatment on multiple fronts, and avoid rules that are rigorously applied to other industries,” energy researcher Paul Driessen said during an event Friday at The Heritage Foundation’s headquarters on Capitol Hill.

The Delaware General Assembly extended financial inducements to Bloom Energy through legislation in 2012, a major topic during the panel discussion at Heritage, as was what Driessen and other speakers called preferential treatment from state regulators and other government officials.

The Sunnyvale, California-based company manufactures solid oxide fuel cells that use an electrochemical reaction to transform natural gas into electricity.

Bloom Energy traces its roots to 2002, when a Silicon Valley venture firm, Kleiner Perkins Caufield and Byers, invested in the green energy company. (That firm is now known as Kleiner Perkins.)

In April 2012, Bloom Energy opened a manufacturing facility in Newark, Delaware, on a site owned by the University of Delaware that previously was occupied by a Chrysler assembly plant.

David Legates, a professor of climatology at the University of Delaware, told the Heritage audience that Bloom Energy isn’t a genuine green energy company because its fuel cells use fossil fuels and release more carbon dioxide than traditional natural gas plants.

Bloom Energy’s fuel cells also run on methane gas, which produces hazardous waste, he said.

Even so, the company qualifies for renewable energy credits under Delaware’sRenewable Energy Portfolio Standards Act, which calls on utilities to draw 25 percent of their energy from renewable sources by 2025. The company also is exempt from the state’s hazardous waste rules.

“Bloom Energy asserts that nothing on either side of the chemical equation is hazardous material, which technically is true,” Legates said. “However, no clean commercial source of methane exists. Thus, it contains many hazardous products that must be removed from the methane before it can be added to the fuel cell to avoid contamination … These compounds must be removed in sulfur canisters.”

A Sweetheart Deal

Legates’ slide presentation quoted Bloom Energy’s permit application as saying its manufacturing process “neither uses nor produces hazardous waste.”

The statement is misleading because it “ignores the presence of hazardous waste in the methane source,” he said.

But because Delaware officials accepted the company’s description of its manufacturing process, state rules governing hazardous waste aren’t applicable, he said.

In 2012 legislation amending Delaware’s Renewable Energy Portfolio Standards Act to allow fuel cells to be used as a renewable energy source, several provisions worked to the disadvantage of state residents, Legates said.

The law calls for a mandated surcharge, described as a tariff, on the bills of every Delmarva Power ratepayer that state lawmakers guaranteed to Bloom Energy for 21  years. The law also includes a clause that says Bloom Energy is entitled to all of the 21-year tariff if the law ever is repealed.

Legates described the arrangement between the state government and Bloom Energy as a sweetheart deal.

Delaware government officials charge Bloom Energy annual rent of $1 for its Newark manufacturing plant, and pledged to spend more than $16 million to upgrade the facility, he said.

“To date, Delmarva Power ratepayers have paid Bloom Energy approximately $200 million, and the total take by Bloom Energy from the state has been $300 million,” Legates said. “Moreover, the energy produced by Bloom Energy was more than three times as expensive [as traditional natural gas sources] in 2012, and now estimates place [it] as much as six times more expensive than traditional natural gas sources.”

Newark-based Delmarva Power, a subsidiary of Exelon Corp., provides electricity and natural gas to customers on portions of the Delmarva Peninsula in Delaware and Maryland.

The Daily Signal sought comment from Bloom Energy, but had not received a response by publication time.

Citizen Activist Denied Standing

John Nichols, a retired financial planner from Middletown, Delaware, who filed two lawsuits challenging Bloom Energy’s business practices and government policies that facilitate those practices, also spoke during the Heritage event.

In June 2012, Nichols sued then-Gov. Jack Markell, a Democrat, and members of the state Public Service Commission. Nichols argued that the state’s deal with Bloom Energy is unconstitutional.

In January 2013, Nichols appealed a decision by the state Coastal Zone Industrial Control Board that he didn’t have standing to challenge the permit issued to Bloom Energy by the state Department of Natural Resources and Environmental Control.

Nichols argued that the permit violated Delaware’s Coastal Zone Act, which regulates industrial activity in specific areas.

The courts ruled that he did not have standing in either his state or federal lawsuit.

“To violate both the spirit and intent of the Delaware Coastal Act took failure on a massive scale,” Nichols said during the Heritage event. “Ironically, these failures may serve a valuable public purpose.”

That’s because government agencies are responsible for  consequences to ratepayers and taxpayers that are beginning to gain attention, he said.

“The notion that all these failures are a coincidence strains credulity to the breaking point,” Nichols said. “These failures demand accountability for Delawareans, Delmarva ratepayers, taxpayers, Bloom investors, and everyone who values the beauty of the Delaware coastline.”

‘Duped Investors’

Although the state’s favoritism to Bloom Energy deserves further exposure and investigation, the company also benefits from “deep state” relationships at the national level with government and corporate figures, chemical engineer Lindsay Leveen told the Heritage audience by telephone.

Leveen, who is a consultant to corporations on energy deregulation and writes for the website Green Explored, reviewed the history of Bloom Energy and what he called its “collusion” with the internet company Google.

John Doerr, chairman of Kleiner Perkins in 1999, invested in Google and sits on the tech giant’s board. Doerr helped to organize financial support for Bloom Energy on behalf of Kleiner Perkins in 2002, Leveen said.

In July 2008, Google became Bloom Energy’s first commercial customer. Three months earlier, the American Society of Mechanical Engineers had released a report funded by the Department of Energy concluding that Bloom Energy “had by far the worst fuel cell on market,” Leveen said in his own slide presentation.

Bloom Energy installed four “Bloom Boxes”—devices used to convert natural gas to electricity—at Google headquarters, but only one of them had to operate at limited capacity for 30 days to be deemed a commercial success, Leveen said.

“The performance test at Google simply duped investors,” he said. “We also know from the S-1 [the Securities and Exchange Commission filing] that many of the Bloom Boxes failed and were decommissioned, and that Bloom took a major financial loss on the decommissioning of those boxes.”

Leveen called for executive branch agencies to investigate Bloom Energy, including the Federal Trade Commission, the Securities and Exchange Commission, and the Environmental Protection Agency.

Say the Magic Words, Answer No Questions

Despite financial setbacks, Bloom Energy remains afloat because it received government subsidies, tax breaks, and other favors from high-ranking government officials, Driessen, a senior fellow with the Washington-based Committee for a Constructive Tomorrow, said during his presentation. CFACT advocates free market solutions in energy policy.

“Bloom has been able to milk Delaware taxpayers and ratepayers for massive subsidies, gain preferential treatment on multiple fronts, and avoid rules that are rigorously applied to other industries,” Driessen said, adding:

The Delaware state legislature has allowed Bloom to operate under a unique definition of renewable energy that lets it qualify for special treatment and subsidies by claiming that its equipment could run on biofuels like methane from cows or landfills even if they never have done so, and even if they’ve always run solely on natural gas and even if they generate hazardous waste in the process.

Bloom Energy’s federal investment tax credit was eliminated in 2016, but Senate Minority Leader Chuck Schumer, D-N.Y., worked to restore the tax credit and make it retroactive to the date it ended, Driessen said. Sens. Tom Carper, D-Del., and Richard Blumenthal, D-Conn., helped Schumer revive the tax credit, he said.

Driessen cited figures showing state and federal officials have given fuel cell makers $3 billion in subsidies over the past decade, with $1.5 billion going to Bloom Energy. Even with this assistance, fuel cell companies lost $6 billion and Bloom lost $2.4 billion, he said.

“Bloom clearly appears to have made questionable statements and outright misrepresentations of material fact to legislatures, regulators, investors, and journalists,” he said, adding:

You might ask how do they get away with this? Actually, the formula for success is pretty simple. Invoke the magical, infinitely malleable terms climate change, renewable energy, sustainability, and environmental protection, and you can pretty much deceive, exaggerate, fabricate, and manipulate all you want. Few difficult questions will be raised, little transparency will be required, and no accountability demanded.

Report by Kevin Mooney. Originally published at The Daily Signal.

Time to Pull the Plug on Electric Vehicle Handouts for the Rich

Earlier this year, Congress passed an irresponsible budget bill that included handouts for electric vehicle owners and alternative fuels.

Eager to frivolously waste more taxpayer dollars, some legislators are now pushing to extend the electric vehicle tax credit and lift the cap on the number of vehicles that qualify for the credit by each manufacturer.

Doing so would reward special interests and only benefit the wealthiest Americans. Congress should instead eliminate the subsidies for electric vehicles.

Promoted as a way to wean Americans off their alleged addiction to oil, both federal and state governments have generous handouts for electric vehicles. Consumers can use up to $7,500 of other peoples’ money to buy an electric vehicle.

Add in-state and local incentives and that number can easily top $10,000. In Colorado, for instance, a buyer can use up to $12,500 in federal and state tax credits to buy an electric vehicle, not to mention enjoy other perks like subsidized charging stations, preferred parking, HOV lane access, and exemption from emissions testing.

The federal tax credit applies to the first 200,000 electric vehicles per manufacturer, and then a phaseout of the credit begins. Tesla is in the phaseout period now and General Motors Co. is close to hitting the 200,000 mark.

Both the House and Senate introduced legislation to lift the per manufacturer cap and extend the subsidy another decade. In a press release, sponsors of the Senate bill urged that “federal action is needed to ensure a competitive electric vehicle market that continues to provide the choice and ability for consumers to purchase electric vehicles.”

Competition is not built on the foundation of government dependence. If federal action is necessary to ensure competition, it is more indicative of how uncompetitive the technology is. Subsidies may increase electric vehicle purchases in the short-term, but they counterproductively stifle innovation by encouraging reliance on preferential treatment from Washington.

When subject to the marketplace, manufacturers will understand the true price point at which consumers value an electric vehicle. Without the government picking winners and losers, the companies would have properly aligned incentives to provide a better product at a competitive price.

This holds true for not only electric vehicle subsidies, but subsidies for all energy sources and technologies.

Importantly, the fuel for electric vehicles is not free. As demand for electric vehicles increases as a result of the lower up-front subsidized price, so does the demand for electricity.

New research from the National Economic Research Associates shows that American households would, in fact, be worse off both as taxpayers and electricity consumers. The study projects that between 2020 and 2035, the average U.S. household would lose about $610 in personal income if the subsidy cap is removed. Cumulatively, total personal income of all American households would decrease by more than $7 billion over the 2020-2035 time frame.

If market-driven forces drove electricity prices higher as demand for electric vehicles increased, that would be one thing. But this is a cost borne as a result of the government pulling policy levers.

The indirect costs are particularly burdensome on lower- and fixed-income families who can’t afford electric vehicles and take advantage of the subsidies. Instead, the benefits of these subsidies accrue to America’s wealthiest households, which can also afford an electric vehicle without the subsidy.

This is borne out by data. The Pacific Research Institute found that in 2014, 79 percent of electric vehicle tax credits went to households making over $100,000, while 99 percent of them went to households making at least $50,000.

For these reasons, Congress should reject all attempts to extend the federal electric vehicle tax credit, and seek to lift the per manufacturer cap. A coalition of free-market organizations, including Heritage Action for America, has already sent a letter to House Ways and Means Committee Chairman Rep. Kevin Brady, R-Texas, asking his committee to refrain from expanding the electric vehicle tax credit in any form.

Rather than picking favorites, policymakers should eliminate targeted tax credits for all transportation fuels and technologies. By eliminating the tax credit, the onus is on automotive companies to make electric vehicles competitive with gasoline-fueled cars.

By encouraging free and open competition in the electric vehicle industry, we will see companies bring innovations in their products and marketing that will make the electric vehicle market viable on its own—without the expensive, prohibitive, and stifling federal subsidies and mandates that exist today.

Commentary by Nicolas Loris. Originally published at The Daily Signal.