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.

Virginia Governor Bypassing Legislature to Join State-Based Climate Scheme

Virginia Gov. Ralph Northam is poised to implement a new regulation without legislative approval to join 10 other states in a climate change agreement based on restricting carbon dioxide emissions from coal-fired power plants.

But lawmakers, policy analysts, and tea party activists in Virginia who oppose what they consider costly regulations of industry are raising questions about the economic and scientific arguments underpinning the proposed rule.

They say the Virginia General Assembly should have a straight up-or-down vote on Northam’s plan, in part to ensure that any revenue the Democratic governor raises from “carbon trading” is collected and dispersed in a manner consistent with the state Constitution.

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. In addition to Virginia, New Jersey may rejoin the pact.

The public comment period for a draft version of Northam’s proposed regulation ended in April. The Virginia Department of Environmental Quality is expected to introduce a final version in November.

The seven-member Air Pollution Control Board then will be responsible for making a decision. Board members, appointed by the governor, operate independently from the Department of Environmental Quality.

Northam, a physician from the state’s Eastern Shore who previously was a state senator and lieutenant governor, took office in January after being elected governor last November.

Michael Dowd, director of the environmental agency’s Air and Renewable Energy Division, told The Daily Signal in a phone interview that the Air Pollution Control Board “has a lot of authority with respect to promulgating regulations.”

A board majority may “reject, accept, or modify” the proposed rule as it sees fit, Dowd said.

If the board decides in favor of the regulation, he said, it could go into effect by December.

The Virginia General Assembly does not go back into session until January, however. With Democrat gains in the state’s November 2017 elections,  Republicans have a 51-49 edge in the House of Delegates and a 21-19 margin in the state Senate.

Officials of states that entered the Regional Greenhouse Gas Initiative argue that greenhouse gases such as carbon dioxide are responsible for dangerous levels of climate change, also known as global warming. These 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.

New Jersey Gov. Phil Murphy, a Democrat, signed an executive order earlier this year directing his agencies to re-enter RGGI. Murphy’s Republican predecessor, Chris Christie, had withdrawn from the climate change agreement.

Participating states are required to impose a “cap and trade” arrangement. Government officials set an upper limit on carbon dioxide emissions from fossil fuel plants. But “allowances” may be traded back and forth among the companies subjected to the caps.

“Joining RGGI now is like joining a football team that’s trailing 40-3 in the 4th quarter,” Nick Loris, an energy policy analyst with The Heritage Foundation, said in an email to The Daily Signal. ‘There’s no real upside. No impact on climate. Higher electricity bills for families. Lost business opportunities.”

Questioning the Governor’s Plan

The problem with the development in Virginia is that “unelected regulators” have been granted too much authority over major policy decisions that will have significant statewide impact, Craig Rucker, executive director and co-founder of the Committee for a Constructive Tomorrow, told The Daily Signal.

“The RGGI system has been very damaging to those states that are participating,” Rucker said in a phone interview. “You see much higher electricity rates on average in those areas where RGGI is in effect, and you also see those states losing ground economically in comparison to other states that are not part of this agreement. And it should be noted that the RGGI states are not achieving anything in terms of lower global temperatures.”

The Committee for a Constructive Tomorrow, known as CFACT, is a Washington-based group that supports free market solutions in energy policy.

Virginia lawmakers should have the opportunity to weigh in on a regulatory change that could have “long-term ramifications,” Rucker said, adding:

Because the effects of these regulations are not always immediately evident and often materialize over time, I don’t think it’s healthy for our democracy to have this change implemented administratively by individuals who do not have to stand before the voters. We are talking about rising energy costs that will impact future generations and impact Virginia’s ability to compete economically with other states.

But Dowd, the state Department of Environmental Quality official, said the Northam administration disagrees with critics who say the governor is making an end-run around the General Assembly to join the multistate climate change pact.

“We’ve heard that argument and we disagree with it,” Dowd said in the interview with The Daily Signal. “Our position is, and it always has been, that the state air pollution law vests the state air board with broad authority to control air pollution, and that linking to RGGI in a carbon trade or carbon cap-and-trade program is well within the statutory, regulatory authority of the air board.”

While there will be “some expense” to energy consumers, the proposal has been carefully crafted to limit the impact, Dowd told The Daily Signal:

We have heard the concerns about [rising energy] costs and our response is that we have taken this into consideration in the economic modeling we have done, and the modeling indicates that the impact to ratepayers is relatively minimal. In fact, the impact to ratepayers should be a little over 1 percent between now and 2030. We think we have constructed a rule with the right approach and that this is the most cost-effective way to control carbon in Virginia.

In April, Northam vetoed a bill from Delegate Charles Poindexter, a Republican, that would have prohibited the governor or any state agency, including the Air Pollution Control Board, from entering into RGGI or creating any other cap-and-trade program without legislative approval.

In a press statement, Northam explained why he vetoed Poindexter’s bill.

“Climate change affects all citizens and business entities in the Commonwealth, especially those located in coastal regions,” the governor said, adding:

The Commonwealth must have all the tools available to combat climate change and protect its residents. These tools include the ability to adopt regulations, and rules and guidance that mitigate the impacts of climate change by reducing carbon pollution in the Commonwealth. The governor and state agencies should not be limited in their ability to protect the environment and in turn, the citizens of the Commonwealth.

Tea Party Activists Challenge Green Regulations

Virginia residents who oppose Northam’s plan to enter the Regional Greenhouse Gas Initiative were expected to show up in force Saturday for theVirginia Tea Party’s Fall Summit Meeting in Richmond.

Randy Randol, who analyzes energy and environmental issues for  the Virginia Tea Party, said in a phone interview that the governor already has tacitly acknowledged limits to his authority over finances, and that these limits could affect implementation of RGGI.

“As predicted, Northam has requested that he be allowed to spend permit fee collections, confirming that he lacks authority to fully implement the program,” Randol said.

Virginia Natural Resources Secretary Matthew Strickler informed a legislative commission earlier this month that Northam would ask the General Assembly “to keep and spend the proceeds of a new electricity carbon tax, rather than find a way to return it to ratepayers,” according to news reports.

Strickler estimates that under the Regional Greenhouse Gas Initiative, Virginia utilities would have to purchase carbon credits that would generate $200 million in revenue.

Under the cap-and-trade plan, companies buy carbon credits from state governments, typically during “carbon auctions” consistent with RGGI regulations. State governments collect revenue as a result.

How this money is collected, distributed, and appropriated remains an open question and a major sticking point.

The carbon credits that energy companies would be required to purchase under such a plan would generate between $175 million and $208 million for Virginia government, according to a fiscal note attached to legislation from Democratic lawmakers to authorize a cap-and-trade plan. Lawmakers defeated that plan in a party-line vote.

“The Department of Environmental Quality originally sold RGGI as a recycling program to get the money back to the consumer,” Randol said. “The RGGI fee will be a direct pass-through to every class of electricity consumer—residential, business, and industry.”

The tea party activist added:

Utilities are immune because they will pass the tax along to the consumers. What the governor is calling a fee is really tax, and there are reasons why he doesn’t want to call it tax.

The Virginia Tea Party has opposed every ration and tax and cap-and-tax scheme that has been proposed. There was, for example, a proposal to tax power plant emissions to fund flood mitigation that we strongly opposed.

This proposal to move us into RGGI would impact the poorest residents of Virginia the most.

‘Where the Money Goes’

Poindexter, the state delegate who pushed the bill requiring the General Assembly to approve any move into RGGI, told The Daily Signal in a phone interview that he opposes the governor’s plan both legally and substantively.

Although the Virginia Constitution may give the governor latitude to join RGGI, it doesn’t provide him with the authority to control the appropriation and spending of funds derived from the multistate agreement, Poindexter said.

“Where the money goes and who controls how it’s spent is still up in the air, and therein lies the problem with the governor doing this on his own,” Poindexter said. “Under the Virginia Constitution and state law, money cannot be spent without appropriation from the General Assembly. What’s happening now is an attempt to work around constitutional requirements and the requirements of state law, to allow the governor to have control of the estimated $200 million in revenue from the sale of these carbon credits.”

Poindexter, who represents Patrick County and parts of Franklin and Henry counties, also is a member of the state Commission on Energy and Environment.

As a matter of policy, Poindexter said, he views the Regional Greenhouse Gas Initiative as detrimental to Virginia’s best interests. He anticipates that it will discourage energy production from inside the state and undermine future job opportunities.

“Virginia would not be putting itself in good company by joining RGGI,” the lawmaker said. “When you look at where the electricity rates are in those states that are now in RGGI versus what we have now in Virginia, my concern is that entering into this agreement would lead to electricity rates rising to some level that is equivalent or even higher than they are in those other RGGI states.”

“Also,” Poindexter said, “my understanding is that in RGGI states, electricity generation typically moves out of those states and the power is then imported. That would not be a healthy development for our state, should we start to lose those jobs related to energy generation.”

Rucker and others at the Committee for a Constructive Tomorrow also challenged the scientific premise underpinning RGGI and similar state-level agreements. They point to updated research that shows natural forces, as opposed to human activity, are primarily responsible for climate change.

EPA’s Proposed Rule

In the run-up to Saturday’s Virginia Tea Party Summit, another question was on the mind of participants.

Since the Environmental Protection Agency under the Trump administration has proposed a rule replacing the Obama administration’s Clean Power Plan with guidelines giving states more flexibility to determine how to address greenhouse gas emissions, isn’t RGGI now superfluous?

Why not just embrace the EPA’s proposed Affordable Clean Energy Rule?

Related: EPA Moves to Scrap Obama Mandates for Power Plant Emissions

“Our concern with what the EPA has proposed is that it is not very stringent and that it’s really not going to move the ball forward in terms of regulating carbon emissions,” Dowd of the state Department of Environmental Quality said. “RGGI represents a far more stringent and more realistic approach, and I don’t think the ACE rule as proposed is strong enough to control carbon.”

But Heritage’s Loris said he views the Regional Greenhouse Gas Initiative as a losing proposition for Virginia.

“Interestingly, the United States isn’t leading the developed world in greenhouse gas reduction because of a regional cap-and-trade program,” Loris said. “The private sector’s investment in cheap, abundant, and affordable natural gas is the reason.”

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

4 Ways the New ‘Climate Change Report’ Fakes Science

If you’re like me, you’re happy the White House released the latest version of the National Climate Assessment on Black Friday. Publishing the 1,700-page report the day after Thanksgiving saved me from unwanted dinner conversations about our planet’s impending climate doom.

But if your aunt calls you up this week spouting claims of mass deaths, global food shortages, economic destruction, and national security risks resulting from climate change, here’s what you need to know about this report.

1. It wildly exaggerates economic costs.

One statistic that media outlets have seized upon is that the worst climate scenario could cost the U.S. 10 percent of its gross domestic product by 2100.  The 10 percent loss projection is more than twice the percentage that was lost during the Great Recession.

The study, funded in part by climate warrior Tom Steyer’s organization, calculates these costs on the assumption that the world will be 15 degrees Fahrenheit warmer. That temperature projection is even higher than the worst-case scenario predicted by the United Nations Intergovernmental Panel on Climate Change. In other words, it is completely unrealistic.

2. It assumes the most extreme (and least likely)climate scenario.

The scary projections in the National Climate Assessment rely on a theoretical climate trajectory that is known as Representative Concentration Pathway 8.5. In estimating impacts on climate change, climatologists use four representative such trajectories to project different greenhouse gas concentrations.

To put it plainly, Representative Concentration Pathway 8.5 assumes a combination of bad factors that are not likely to all coincide. It assumes “the fastest population growth (a doubling of Earth’s population to 12 billion), the lowest rate of technology development, slow GDP growth, a massive increase in world poverty, plus high energy use and emissions.”

Despite what the National Climate Assessment says, Representative Concentration Pathway 8.5 is not a likely scenario. It estimates nearly impossible levels of coal consumption, fails to take into account the massive increase in natural gas production from the shale revolution, and ignores technological innovations that continue to occur in nuclear and renewable technologies.

When taking a more realistic view of the future of conventional fuel use and increased greenhouse gas emissions, the doomsday scenarios vanish. Climatologist Judith Curry recently wrote, “Many ‘catastrophic’ impacts of climate change don’t really kick at the lower CO2 concentrations, and [Representative Concentration Pathway] then becomes useful as a ‘scare’ tactic.”

3. It cherry-picks science on extreme weather and misrepresents timelines and causality.

A central feature of the National Climate Assessment is that the costs of climate are here now, and they are only going to get worse. We’re going to see more hurricanes and floods. Global warming has worsened heat waves and wildfires.

But last year’s National Climate Assessment on extreme weather tells a different story. As University of Colorado Boulder professor Roger Pielke Jr. pointed out in a Twitter thread in August 2017, there were no increases in drought, no increases in frequency or magnitude of floods, no trends in frequency or intensity of hurricanes, and “low confidence for a detectable human climate change contribution in the Western United States based on existing studies.”

It’s hard to imagine all of that could be flipped on its head in a matter of a year.

Another sleight of hand in the National Climate Assessment is where certain graph timelines begin and end. For example, the framing of heat wave data from the 1960s to today makes it appear that there have been more heat wavesin recent years. Framing wildfire data from 1985 until today makes it appear as though wildfires have been increasing in number.

But going back further tells a different story on both counts, as Pielke Jr. has explained in testimony.

Moreover, correlation is not causality. Western wildfires have been particularly bad over the past decade, but it’s hard to say to what extent these are directly owing to hotter and drier temperatures. It’s even more difficult to pin down how much man-made warming is to blame.

Yet the narrative of the National Climate Assessment is that climate change is directly responsible for the increase in economic and environmental destruction of western wildfires. Dismissing the complexity of factors that contribute to a changing climate and how they affect certain areas of the country is irresponsible.

4. Energy taxes are a costly non-solution.

The National Climate Assessment stresses that this report “was created to inform policy-makers and makes no specific recommendations on how to remedy the problem.” Yet the takeaway was clear: The costs pf action (10 percent of America’s GDP) dwarf the costs of any climate policy.

The reality, however, is that policies endorsed to combat climate change would carry significant costs and would do nothing to mitigate warming, even if there were a looming catastrophe like the National Climate Association says.

Just last month, the Intergovernmental Panel on Climate Change proposed a carbon tax of between $135 and $5,500 by the year 2030. An energy tax of that magnitude would bankrupt families and businesses, and undoubtedly catapult the world into economic despair.

These policies would simply divert resources away from more valuable use, such as investing in more robust infrastructure to protect against natural disasters or investing in new technologies that make Representative Concentration Pathway 8.5 even more of an afterthought than it already should be.

The Trump administration is coming under criticism for publishing the report on Black Friday. To the extent that was a conscious strategy, it certainly isn’t a new tactic. The Obama administration had frequent Friday night document dumps in responding to congressional inquiries about Solyndra and the Department of Energy’s taxpayer-funded failures in the loan portfolio. The Environmental Protection Agency even released its Tier 3 gas regulations, which increased the price at the pump, on Good Friday.

No matter what party is in charge, the opposite party will complain about their burying the story. Regardless, the American public would be better served by enjoying the holiday season and shopping, rather than worrying about an alarmist report.

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

Trump may sign new UN dictate banning air conditioning coolants

Industry groups are ramping up efforts to have President Donald Trump send the Kigali Amendment—a change to the Montreal Protocol—to the Senate for ratification. The Amendment would phase out affordable refrigerants used in air conditioners and refrigerators for much pricier ones.

That’s good news for the patent holders of the new refrigerants and the heating and cooling industry, but bad news for you, the consumer.

The reality is the Kigali Amendment is a United Nations-imposed regulation that would take choices away from the customer while lining the pockets of special interests that have been gearing up for the change.

The 1987 Montreal Protocol was an U.N. agreement to phase out production of chlorofluorocarbons, believed harmful to the ozone layer. The Kigali Amendment is a U.N. treaty that would ban CFC’s replacement: hydrofluorocarbons (HFCs) and hydrofluoro-olefins (HFOs).

The new ban has hardly anything to do with protecting the ozone layer but instead is eliminating HFCs because of their potential impact on global warming.

Proponents of the Amendment have hailed the phase-out as a predictable path forward that will create jobs and give American manufacturers a competitive edge. They point to a study prepared for the Air-Conditioning, Heating, & Refrigeration Institute and the Alliance for Responsible Atmospheric Policy that new regulations will create 57,000 manufacturing jobs and an additional 33,000 if the U.S. ratifies Kigali.

Don’t believe the hype. Claiming that a U.N. mandate is an economic stimulus ignores the broken window fallacy.

In his essay “That Which Is Seen and That Which Is Not Seen,” French economist Frederic Bastiat outlines a scenario in which a shopkeeper breaks a window. He pays money to fix the window, creating a supposed “economic benefit” that circulates through the economy.

What is not seen, however, is what the shopkeeper could have spent that money on if the window hadn’t broken—for instance, a new pair of shoes. If the window wasn’t broken in the first place, the shopkeeper would have a window and new shoes.

Likewise, when the government subsidizes biofuels, what is not seen is that labor and capital could have been invested elsewhere in the economy, but are not. Private-sector investment that is not the result of regulations, subsidies, or mandates is the true root of economic growth and prosperity.

Another problem with the industry study is that it relies on a flawed input-output economic model.

First, there is the wrong assumption that regulation creates jobs. Sure, forcing a new refrigerant on consumers means businesses will have to comply with the new regulation. As households and businesses are forced to purchase new air-conditioning and refrigeration systems that use new alternative coolants, HFO manufacturers, equipment manufacturers, and maintenance and repair industries will all stand to benefit.

What the industry study ignores is the opportunity cost of the regulation. HFC alternatives are significantly more expensive. Even if the costs for HFOs or other alternatives fall over time with more widespread use, that’s hundreds of dollars more for a family to fix or replace an air conditioner. Alternatively, the family could have spent that money on a vacation or at the grocery store.

On the other hand, the regulation will prevent the hotel from hiring a new employee, or a restaurant from expanding its kitchen—or consumers will just bear the added costs as room rates and menu prices increase. Regulations force businesses to spend money that could have otherwise been spent elsewhere in the economy.

On net, the economic costs of the Kigali Amendment will outweigh the benefits. After all, if a newer, more energy-efficient technology were going to replace an older one, it would occur without a mandate from the U.N.

The input-output model makes the case that Kigali would produce economic gains by including “induced output,” which “represents the additional demand generated by the disposable income earned in the industry.” In other words, the those who work in the industry that would benefit from the regulation would receive higher incomes, and they’ll spend that money elsewhere, creating a positive ripple effect throughout the economy.

But again, an input-output economic analysis ignores where a family could have spent their money absent the regulation, and the ripple effect that spending would have had. If instead of paying for an exorbitantly more expensive A/C unit, the family took a vacation to Florida, the disposable incomes of the resort employees would similarly increase and they would spend their higher paychecks on a new bike and so on.

The difference is, one scenario is the market allowing for choice while the other involves an international body forcing decisions on households and businesses. One involves wealth creation, the other involves wealth erosion.

Note that even if the U.S. does not ratify the Kigali Amendment, U.S. companies will still be able to sell Kigali-compliant products to other countries that have chosen to phase out HFCs. So long as a domestic company chooses to produce HFOs or a different alternative compliant with the stipulations in Kigali, they could sell their product to any of those countries, including within the U.S.

By refusing to ratify Kigali, the Senate would ensure that Americans enjoy more choices and lower-cost options. Homeowners or businesses who need to purchase or repair an air conditioner or commercial unit will have the option of purchasing HFCs or costlier HFOs. Fixing or replacing an A/C unit or a refrigerator when it needs to be fixed will still create jobs, but it will be driven by the consumer’s actual needs—not regulatory dictate.

We’ve heard the “regulations create jobs” argument before from companies who stand to benefit from policies hatched by bureaucrats. Proponents of the energy-efficiency mandates like the incandescent light bulb ban, or excessive regulations on power plants, have similarly argued regulations will stimulate investment in these industries.

But these arguments always ignore the consumer, who will be made much worse off through higher prices and fewer choices.

The economic growth argument for Kigali is more of the same stale thinking.

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

This Bill Eases ‘Recovered’ Species Off Endangered List

It will be easier to take wildlife off the endangered and threatened lists if Congress passes a bill introduced by Rep. Andy Biggs, R-Ariz.

“The Endangered Species Act has been used as a sword instead of a shield,” Biggs told The Daily Signal in a phone interview.

His bill would streamline the process of removing a species from the endangered list if the nation’s secretary of the interior “receives an objective, measurable, and scientific study demonstrating a species has recovered,” the Arizona Republican said in a press release.

Enacted in 1973, the Endangered Species Act provides a “framework to conserve and protect endangered and threatened species and their habitats,” according to the U.S. Fish and Wildlife Service.

Biggs’ bill is one of several measures introduced last week by House Republicans aimed at updating the Endangered Species Act.

His legislation includes provisions addressing the issue of a species being “wrongfully listed,” as well as penalizing those who “intentionally submit false or fraudulent data in order to cause a species listing.”

The bill would also provide a way for the U.S. Fish and Wildlife Service to “promptly take action when a species is wrongfully listed, rather than letting the problem linger in federal bureaucracy,” according to the press release.

“This will allow us to focus resources to protect species that actually need it,” Biggs said in a written statement.

The Fish and Wildlife Service currently lists 1,459 species of wildlife considered at risk of extinction in the United States, from the red wolf to the Kemp’s ridley sea turtle to the Northern sea otter. Classifications include endangered, threatened, and experimental populations.

Biggs so far has 23 co-sponsors, predominantly from Midwestern states. No Democrat has signed on as yet.

The Trump administration has begun to push related reforms through the Interior Department. The Western Governors Association, meeting last month, advanced its own version of bipartisan reforms. Wyoming Gov. Matthew Mead, a Republican, has been a leader in the effort.

Biggs told The Daily Signal that some environmental groups want to take control of private property and economic activity in the name of defending a species, and that such groups “don’t want to delist species that have come back.”

Some colleagues on the other side of the aisle have given the “usual diatribe” about proposed reforms, Biggs said, arguing that he and other Republicans are “out for the big bucks and don’t care about animals.”

But Rep. Kurt Schrader, D-Ore., has co-sponsored certain measures in the package of bills.

Other Democrats “don’t want to give in on environmental issues at all,” Biggs said.

Kevin Mooney contributed to this report.

Report by Jeremiah Poff. Originally published at The Daily Signal.

More Power to the States Will Enhance US Energy Dominance

In the midst of a growing global economy, the world’s demand for energy is booming.

In 2017, global demand for energy grew by 2.1 percent, more than double the previous year’s rate. Oil, gas, and coal accounted for about 80 percent of global energy consumption with oil alone accounting for 32 percent of global consumption.

Producers in the United States have stepped up to meet that demand. The U.S. has been the world’s leading natural gas producer for nearly a decade. Domestic oil and gas production has increased 60 percent since 2008.

Despite America’s energy dominance and the economic benefits that accompany it, an abundance of natural resource potential in the U.S. remains untapped.

Why? A key reason is the federal government owns and manages those resources. Federal regulations and federal land ownership have rendered vast quantities of recoverable oil and natural gas onshore and offshore either inaccessible or costlier to extract.

The current leasing and permitting process has frustrated people of all political beliefs. On average, the federal processing of an application for permit to drill in the last year of the Obama administration was 257 days, while state processing has typically been 30 days or fewer.

While the Interior Department is working tirelessly to reduce permitting delays, this massive time disparity prevents market forces from working effectively. When prospective drillers have to wait many months to get approval, the prospect of drilling in a timely manner can often be implausible.

Even though many federal proposals are approved, fluctuations in the price of oil combined with a long waiting period create the type of uncertainty that often prevent prospective drillers from even attempting the process. Authorizing states to manage onshore and offshore resource production for a greater percentage of the revenue than the current system will create a new and better system that permits industry to better respond to changing market conditions.

Last week, the House Natural Resources Committee held a hearing to discuss enhancing state management of natural resources on federal lands and waters. Draft legislation introduced by the committee would empower states to have more control over the leasing, permitting, and regulations of oil and gas production.

It would also authorize a state to approve or disapprove of each lease sale offered in federal waters if the area is within the state’s administrative boundaries. The amount of royalty revenue a state would collect would depend on how many lease blocks a state approved.

State control, local governance, and private-sector participation would result in more accountable, effective management. While the federal government can simply shift the costs of mismanagement to federal taxpayers, states have powerful incentives for better management of resources on federal lands. State governments can be more accountable to the people who will directly benefit from wise management decisions or suffer from poor ones.

Opponents of the proposed legislation said this bill would give oil and gas priority over other economic interests a state may have. For instance, coastal states have stated concerns that offshore drilling would possibly hurt their tourism and fishing industries.

But states like Louisiana have proven you can have your oil and seafood, too. In 2014, the Louisiana oil industry generated $44 billion for the state economy and another $36 billion when including related infrastructure and refining activity.

In addition to energy production, seafood and tourism industries stand out as significant contributors to Louisiana’s economy. Louisiana represents 30 percent of the commercial fishing for the continental United States and are substantial producers of shrimp, oysters, crawfish, and crabs. Annually, the industry creates $2.4 billion in economic growth for Louisiana.

These industries work hand-in-hand for the economic benefit of the state.

Opponents of the draft legislation have also held inconsistent views on the principles of federalism. The proposed legislation would empower states with a choice that, under the current system, they simply do not have.

Under current law, the Department of Interior could easily make choices for all states and allow for energy exploration in federal waters, regardless of whether those states want it or not. The proposed legislation would at the very least give states a say in the decision.

As Chairman of the Natural Resources Committee Rob Bishop, R-Utah, pointed out during the hearing, Democrats seem to only want federalism in certain cases. The same Democrats who now want federalism in the case of coastal states did not want federalism in the recently reversed case of the Bears Ears Monument issue in Utah. They’ve opposed empowering states to oversee natural resource production and other land use decisions on federal lands.

Bishop noted the hypocrisy of the Democrats specifically by contrasting their rejection of the wishes of local citizens in the Utah case with their support of the wishes of citizens who opposed drilling on federal waters. Federalism seems to have been lost to the Democrats and their current stance is, at best, inconsistent.

A Washington-centric approach to management stifles creative, collaborative solutions to competing interests that could be resolved at local, state, or regional levels without the added baggage of national political battles and federal regulatory processes. While states and local communities may not always make perfect decisions, the best environmental policies are site-specific and situation-specific and emanate from liberty.

The Natural Resources Committee should be commended for introducing draft legislation that would improve the current process by engaging the appropriate stakeholders and better aligning incentives for economic development and environmental protection.

Commentary by Nicolas Loris and Bryan Cosby. Originally published at The Daily Signal.

Is Green Energy Competitive?

The declining cost of solar panels and the widespread adoption of rooftop solar in California lead to many cocktail party discussions about the competitiveness of green energy. While at first glance it may seem that solar power and other renewable energy sources are able to compete with conventional resources, a closer examination of the characteristics and costs of electricity systems demonstrates that current renewable technologies are not economically competitive.

The fixed costs of electricity systems, the capital costs of transmission and distribution systems, are large. Actual electricity tariffs do not typically recover fixed costs explicitly and separately from electricity use. Instead they recover them through use charges per kWh. If electricity pricing were more efficient, customers would pay a large fee for the use of the transmission and distribution systems disconnected from the amount of electricity they use and would be charged a separate variable fee based on actual consumption. (See this article by Ahmad Faruqui and Mariko Geronimo Aydin in the Fall 2017 issue of Regulation for a more thorough discussion of electricity pricing.) Thus, current bills do not inform consumers about how high the fixed costs of the system really are.

Understanding the significance and recovery of fixed costs is important because of the manner through which customers with solar panels on their roof are reimbursed for the power they generate.  Solar production in many states, especially California, is reimbursed at full retail rates. But when a household produces solar power and reduces the use of system-generated electricity, the system saves only the marginal costs of the power that it did not have to produce, which is usually much less than the retail rate. None of the large fixed costs are saved.

In California, because of its tiered retail rate structure, the discrepancy between the retail rate and the amount the system saves because of rooftop solar production is large. The marginal cost of power generation is about 6-10 cents per kWh, but customers are reimbursed at full retail rates (many at over 30 cents per kWh) rather than the lower marginal costs of system generation. Reimbursement at full retail rates shifts the fixed costs of the electric system from solar panel households to other users. Without the excessive payments, decentralized solar would not be competitive.

Other renewable generation sources would appear to be competitive with natural gas generation. According to estimates of the total costs of various generation technologies over their operating lifetime, large-scale centralized solar generation in the deserts of the American southwest and large-scale onshore wind generation both have costs that are competitive with new natural gas generation. (Offshore wind is much more costly. See my blog on Cape Wind, a failed plan to build a wind farm off the coast of Massachusetts.)

However, even if the lifetime average costs of wind and solar are the same as coal or natural gas, the equivalence needs to be qualified. Different electricity generation technologies are very imperfect substitutes. The marginal value of electricity varies across time because demand varies by time of day and space because of transmission constraints. For example, wind power supply is greatest during winter nights, when demand is low, and lowest during summer when demand is highest. Wind is also most plentiful far from where people live and consume electricity, meaning it incurs additional costs to transport the electricity to people. At least solar output is large during the summer afternoon peak demand period. But both solar and wind are not dispatchable. That is, their output cannot be made to vary up or down.

Until cost-competitive green energy that is dispatchable is available, renewable sources of electricity require backup conventional generation. Because the sun eventually sets, and the wind stops blowing, natural gas generation whose output can be varied (sometimes quickly) must be available as backup. The fixed and variable costs of the backup must be paid by someone. These hidden costs need to be considered in any calculation of “cost competitiveness.”

Future technological breakthroughs, such as more efficient batteries to store electricity and more cost effective dispatchable solar power sources, may make green energy a better substitute for conventional generators. But for the time being, without governments putting their thumbs on the scale, green energy is not competitive. 

Written with research assistance from David Kemp.

Article by Peter Van Doren. Originally published at Cato At Liberty.