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On December 31, 2011 Congress allowed a decades-old corn ethanol subsidy to sunset. It also sunsetted an import tariff on foreign cellulosic ethanol. The dissolution of these policies has prompted some concern about impacts on gasoline prices and the future of the U.S. ethanol industry. Nearly all gasoline blended and sold in the U.S. contains at least 10% corn ethanol. USA Today is reporting that the end of the subsidy could raise gasoline prices by as much as $0.045/gallon as early as next week. In an interview on NPR, Bruce Babcock, a professor of energy economics at Iowa State University,… [more]
View InsightA federal judge has ruled to block California’s Low Carbon Fuel Standard, arguing that it “unconstitutionally discriminates against out-of-state producers and tries to regulate activities that take place entirely outside state boundaries.” The standard “impermissibly treads into the province and powers of our federal government, reaches beyond its boundaries to regulate activity wholly outside of its borders,” the judge said. [The New York Times] The standard would function by using life-cycle analysis to identify the CO2 intensity of fuels. Fuel-makers whose products have lower CO2 intensity would be rewarded with tradable credits. Those selling higher CO2 fuels would have to… [more]
View InsightBetween the Solyndra scandal, the disaster at the Fukushima I Nuclear Power Plant, the deliberation over the Keystone XL pipeline, President Obama’s aggressive new CAFE Standards, protests over lighting standards, EPA’s MACT rules, and more, 2011 proved to be a controversial year for energy and energy policy, even without major energy legislation.
View InsightOil prices are expected to average between $100 and $120/barrel in 2012. “Economists say they expect prices to remain high despite the relative weaknesses of the American and European economies because global demand for oil … is escalating and outstripping supply.” [New York Times] Due in part to consumers driving less and purchasing more fuel efficient cars, the United States economy has weathered high oil prices relatively well in 2011. Bernard Baumohl, chief global economist at the Economic Outlook Group, told the Times that “the danger is if oil starts to move toward $130 a barrel, or even higher… Then… [more]
View InsightThe New York Times has reported that Iran has threatened to block all oil shipments through the Strait of Hormuz, which serves as a transport corridor for approximately 1/5 of world oil supply. The threat is in response to U.S. sanctions on Iran that are awaiting President Obama’s signature. The sanctions, if enforced, would penalize foreign businesses for doing business with Iran’s national bank, which is responsible for collecting payment on much of the country’s energy exports. The sanctions are in response to a November IAEA report, and are intended to penalize Iran for pursuing secretly nuclear weapons in spite… [more]
View InsightEarlier this month Sean Casten published an op-ed on Grist.com arguing that “further deregulation of electricity markets is a good and necessary thing”, but that “full and total deregulation of electricity markets is probably impossible, and certainly amoral.” Casten argues that “parts of the electric system warrant full deregulation, while other parts would be better suited to fully regulated economic models.” Certain aspects of electricity markets, for example the “last mile” of transmission, impose natural barriers to new market entrants in a truly free market, he says, thereby undermining the market’s efficiency. Further, Casten argues, in truly free electric markets,… [more]
View InsightThe UN climate change summit in Durban, South Africa, wrapped earlier this month with two notable accomplishments: a pledge to create a new international treaty to replace the Kyoto Protocol in 2020, and the creation of a multi-billion dollar fund to help developing nations adapt to the effects of climate change. Some have expressed disappointment in Durban’s outcomes, and have pointed to the challenges inherent to the current UN negotiating framework. Among the challenges: asking national environmental ministers to hammer out an international framework that must go well beyond environmental concerns to be effective, and the tiered system of “developed”… [more]
View InsightThe production tax credit (PTC) for wind energy is currently set to expire December 31st, 2012. The credit is currently 2.2¢ per kWh created by wind. The average price of electricity nationwide is 11¢ per kWh. A study released recently by the American Wind Energy Association (AWEA) states that without an immediate PTC program extension, wind energy “jobs will drop by nearly half, from 78,000 in 2012 to 41,000 in 2013.” According to the report, an extension of the program through 2016 could create nearly 17,000 wind industry jobs. Denise Bode, AWEA’s CEO, has stated that “these jobs could vanish if Congress allows… [more]
View InsightSenator Tom Coburn (R-OK) has released the 2011 Wastebook, his annual “guide to some of the most wasteful and low priority government spending”. Among the report’s targets is DOE’s Weatherization Assistance Program (WAP), a program that improves the energy efficiency of low-income family homes. Among the criticisms of the program highlighted by Senator Coburn: The DOE Inspector General found in a 2010 survey that the program suffered from poor workmanship, inflated contractor and material costs, and substandard home inspections to a level that “put the entire program at risk.” WAP-funded job training programs are sometimes unable to place trainees in… [more]
View InsightOn December 21st, 2011 the EPA announced its newly proposed MACT Rules, placing stringent requirements on mercury and toxics emissions from power plants. The new rules were issued under the authority of the Clean Air Act, and are expected to heavily impact existing and new coal-fired power plants. According to AP, EPA “has estimated that 14.7 gigawatts — enough power for more than 11 million households — will be retired from the power grid in the 2014-15 period when the rules take effect.” The rules have received a great deal of criticism, ranging from the anticipated impacts on industry and employment to EPA’s “methodology… [more]
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