White House Chronicle

News Analysis With a Sense of Humor

Regulation Can Be a Huge Goad to Innovation and Creativity

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There is a paradox of regulation clearly not known in the Trump White House. It is this: Regulation can stimulate creativity and move forward innovation.

This has been especially true of energy. Ergo, President Donald Trump’s latest move to lessen the effect of regulation on energy companies may have a converse and debilitating impact.

Consider these three examples:

When Congress required tankers to have double hulls, after the Exxon Valdez oil spill in Alaska’s Prince William Sound in 1989, the oil companies and their lobbyists wailed that it would push up the price of gas at the pump.

Happily, the government held tough and soon oil spills in from tanker punctures were almost eliminated.

The cost? Fractions of a penny per gallon, so small they cannot be easily found.

Victory to regulation, the environment and common sense. In due course, the oil companies took out advertisements to boast of their environmental sensitivity by double-hulling their tankers.

When the Environmental Protection Agency mandated a 75-percent reduction in hydrocarbon and nitrogen oxide emissions from two-stroke marine engines in 1996, with a 10-year compliance period, the boat manufacturers issued dire predictions of a slump in recreational boating and a huge loss of associated jobs.

In fact, two things happened: Two-stroke marine engines were saved with electronic fuel-injection, and four-stroke marine engines started to take over the market — the same four-stroke engines the manufacturers had said would be prohibitively expensive and too heavy for small boats.

Today, most new small boats have four-stroke engines. They are quieter, more fuel efficient, less polluting and have added to the joy of boating. The weight and economic penalty, predicted by the anti-regulation boat manufacturers, turned out to be of no account. The problems were engineered out. That is what engineers do when they are unleashed: They design to meet the standards.

Similarly fleet-average standards, so hated by the automobile industry, have led to better cars, greater efficiencies, a reduction in air pollution and oil imports. They also pushed the industry to look beyond the internal combustion engine to such developments hybrids and all-electric vehicles and new concepts, like hydrogen and compressed natural gas vehicles.

A high bar produces higher jumpers. Water restrictions have produced more efficient toilets, electric appliance ratings have reduced the consumption of electricity. Regulation is sometimes incentive by another name.

Well-thought-out regulation is constructive, mindless regulation deleterious — as when the purpose is political rather than practical. Restrictions on stem cell research and the unnecessary amount of ethanol added to gasoline come to mind.

In his energy executive order, repealing many of the Obama administration’s clean energy regulations, Trump has done no one any favors: Less challenge, less innovation, less protection of the environment, and less global leadership is a cruel gift.

Take coal mining. Trump wants to save coal mining jobs, but his executive order will cause coal production to increase, further glutting the market. There are ways of burning coal more cleanly and if the president wants to help the coal industry, he should be supporting these. He also might want to look at the disposition of coal ash and its possible uses, not bankrupt what is left of the coal industry by false generosity.

Trump’s energy executive order might have had virtue 40-plus years ago. Back in the bleak days of the 1973 Arab oil embargo, and the future shock it induced, coal was our only plentiful energy source. I was one of the authors of a study, prepared for President Richard Nixon, that highlighted coal. Hence a passion that lasted through the Carter administration to gasify coal, liquefy it and back out oil with it whenever possible.

However the national genius produced a flood of innovation, leading today’s abundance of oil and gas.

For InsideSources

The Carbon Solution Obama Won’t Take to Paris

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By Llewellyn King

The Treaty of Paris, signed in 1783 by representatives of King George III of England and the fledgling United States of America in a Paris hotel, ended the Revolutionary War.

Next month, another document will be signed in Paris: the climate agreement. It will be signed by about 200 countries, and will commit the signatories to meaningful reductions in their greenhouse gas emissions, mostly carbon. And it will be as seminal in its way as the one recognizing that the colonists of America would no longer be subject to the rule of England.

My point is not that this treaty of Paris will be perfect, or that every signatory will abide by its terms, but that it will do something that is vital, if climate change endeavors are to prevail: It will establish globally a kind of carbon ethic.

The concept of an environmental ethic started with Rachel Carson’s book “Silent Spring,” back in 1962. Since then, the world has known it should examine the environmental impact of major actions. After Paris, it will consider the carbon impact in a new way.

President Obama’s supporters will be jubilant when the signing starts in Paris. But Obama does not deserve all the praise that will come his way from Democrats and environmental organizations.

If the Obama administration were as concerned with the reduction in greenhouse gases, particularly carbon, as it says it is, it would not have given the back of its hand to nuclear power. Nuclear produces a lot of electricity and no greenhouse gases. Zero.

Yet the administration, yearning for a carbon-free future, has done nothing to address the temporary market imbalance that cheap natural gas has produced. Get this: a nuclear plant has a life of 60 years, and new ones may last 80 years. What we have now is a short-term price advantage in natural gas forcing the closure of nuclear plants, even though gas will cost more over the decades.

The administration leans heavily toward wind and solar power, understandably against coal and almost ignores nuclear. For example, nuclear does not get the support it deserves in the Environmental Protection Agency’s Clean Power Plan: its blueprint for carbon reduction. Nuclear is an also ran, not a central plank.

The nuclear project needs updating. It needs a revision of the standards for radiation protection which were enacted when nuclear science was young and radiation little understood. They need to be reevaluated and almost certainly lowered in the light of today’s science. This would help across the nuclear spectrum from power plants to medicine to how nuclear waste is handled.

The administration declares itself in love with innovation and has offered partial funding for new, small modular power plants. But it does this without regard to the dysfunctional nature of the Nuclear Regulatory Commission. This bureaucracy is so sclerotic, pusillanimous and risk averse that it has priced new reactors out of the possibility of being built in the United States. Because the NRC is a fee-collecting agency, it is estimated that to license a brand new reactor — a better, safer, cheaper reactor — would cost $1 billion and 10 years of hearings and submissions. That is a preposterous inhibitor of American invention.

If the Federal Aviation Administration acted as the NRC does, we might well be flying around in propeller aircraft, while the agency studied jet engines and, for good measure, questioned the ability of wings to provide lift.

Certainly, the NRC should be protected from outside pressure that might impinge on safety, but it should not be so ossified, so confined in a bunker, that it cannot evaluate anything new.

Yes, something big is going to happen in Paris: Those big polluting nations, China and India, but especially China, are going to lay out their ambitious plans to reduce carbon — with nuclear.

Champions of the president will cheer Paris as a big part of his legacy, but his achievement is less than it should be. And nuclear power, like so much else that America led the world in, is headed overseas where it will evolve and probably flourish as the carbon-free champion of the future. Shame on the administration. — For InsideSources.com

Energy Experts Predict Crisis-Free Winter

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There is something extraordinary happening on Main Street, in the suburban strips, and at country stores: workers are lowering the prices on the signs for gasoline.
Veterans of the energy crisis that began in 1973 and has continued, with perturbations, ever since, are trying to get their heads around this enormous reversal of fortune: there is no energy crisis for any fuel in the United States as winter approaches. That was the message delivered loud and clear at the annual Energy Supply Forum of the United States Energy Association (USEA).
Indeed the main problem, if there is one, is that oversupply is driving down some fuel prices, like for oil and natural gas, which could result in higher prices later as producers curb production.
"Who would have believed it?" asked Barry Worthington, president of USEA.
This year the forum, which has been known to be filled with alarm and foreboding predictions, was full of robust confidence that the nation will breeze through the coming winter, and that consumers will pay less to stay cozy than they have for several winters — but especially the last one. Stocks of gas and oil are plentiful. It is not just that heating oil will be cheaper, nature will also play a part: the National Oceanic and Atmospheric Administration predicts a mild winter.
No one is expecting a repeat of last winter's "Polar Vortex," which brought some big utilities close to being unable to meet customer demand in the extreme cold. Mark McCullough, executive vice president for generating at American Electric Power (AEP), which serves customers in 11 states, described how the giant utility came close to the edge.
This winter, McCullough thinks, things will be fine. But he is less sanguine about the future of AEP and its ability to deliver electricity in 2016 and beyond, if the Environmental Protection Agency holds firm on its proposed rule to curb carbon emissions from coal-fired plants.
AEP, which straddles the Midwest, has the largest coal-fired fleet in the country. McCullough said that his company had just come off extensive efforts with the so-called mercury rule and now was plunged into a very difficult situation.
McCullough was joined by oil producers and refiners in worrying about another proposed rule from the EPA on ozone. Neither the utilities nor the oil producers and refiners feel that the EPA's proposed ozone regulation can be met.
In short, in a buoyant energy world, there are clouds forming. But unlike the last 41 years, these clouds are regulatory rather than resource generated; public policy in their origin, rather than in the scheming of foreign oil cartels. Indeed Robert Strout of BP confidently predicted that in a little more than 20 years, the United States could be energy self-sufficient.
The other problem going forward, in the new time of bounty, is energy infrastructure. The industry needs more pipelines to facilitate the shift from coal to gas; better infrastructure to get the new oil to the right refiners. (Refiners actually favor moving oil by train as well as by pipeline.)
USEA's Worthington, a veteran of energy crises of the past, said ruefully the other thing that might happen is that excessive domestic production and falling prices will lead to a period when producers will stall new production and prices will rise. "Markets do work," he said, commenting on the cycles of the hydrocarbon market.
For now, with international economic activity waning, and hydraulic fracking unlocking oil and gas at an astounding rate, this is a bonus time for the American consumer.
For people like myself, who have spent more than 40 years commenting and reporting on the bleak energy future, this is indeed a time of astonishment. We had heard predictions of doom if China industrialized, expectations of steadily declining U.S. production, and more and more of our wealth being exported to buy energy. Now, if Congress acts, we will be a serious exporter.
This winter of our discontent is made glorious summer by fracking, as Richard III did not quite say. Astonishing! –— For the Hearst-New York Times Syndicate

King Coal Just Won’t Leave His Throne

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King Coal is back – not that he ever went very far away. But, according to Hal Quinn, president of the National Mining Association, coal in 2016 will again be the world’s favorite carbon fuel, pushing out petroleum as the world's largest source of energy.
 
This may seem especially surprising at a time when the use of coal in the United States is in decline, edged out by cheap natural gas and increasingly strict regulations from the Environmental Protection Agency. Yet a rising tonnage of coal is being used for electric generation worldwide.
 
The Third World is hungry for coal, as it increases electricity production. In the developed world, nuclear setbacks — most notably the aftereffects of the Fukushima-Daiichi nuclear power plant accident, when a tsunami wave knocked out six reactors — have helped boost the commitment to coal. The accident has forced the Japanese to burn more coal and the Germans to begin phasing out their nuclear power plants. Other European countries are dithering, and the cost of building nuclear plants is rising.
 
If you do not have an abundance of natural gas, as here in the United States, then coal is your default choice. It is shipped around the world in larger and larger quantities. The more the world has resisted the burning of coal, the more it has had to fall back on it. Alternative energy, attractive in theory, is yet to make its mark.
 
Because coal has always had an environmental price, it has always been under attack, and at the same time it has proven stubbornly hard to replace. King Edward I of England, who reigned from 1239 to 1307, was the first known major opponent of coal. He banned it in 1306.
 
Tales of why he did this vary. One story goes that his mother, Queen Eleanor of Provence, when staying at Nottingham Castle, was so affected by the coal fumes from the town that she had to move out.
 
Wood was hard to come by in towns, and it does not heat like coal. Anyway England was a cold place and wood was in short supply, so the ban was not very effective, despite the fact that the death penalty was standard for disobeying royal orders.
 
Two and a half centuries later, Queen Elizabeth I tried to ban coal with not much effect. The prospect of a coal ban was even more draconian then as her father, Henry VIII, had largely denuded the English forests to build his navy and she was even more committed to sea power.
 
With the invention of the steam engine in the early 1700s (ironically, it was originally intended to pump water out of coal mines), the supremacy of coal for was guaranteed. It led directly to the Industrial Revolution and coal’s preeminence as the fuel of the Industrial Age. There was a price in mine disasters, mine fires that burn for decades, and air pollution. But there were also huge benefits.
 
Britain led the way both in the use of coal and its environmental costs. An industrial area in the Midlands was known as the “Black Country.”
 
London fog was assumed to be just that, fog, but it was smog. The smog was so bad that I can recall, in the winter of 1962, walking in the streets holding hands with strangers because you could not see where you were going. So-called smokeless fuel – usually a kind of coke or other high- carbon fuel — ended that, and fog in London is now no worse than it is elsewhere.
 
“Clean coal” has been the rallying call of the industry for 30 or more years — and coal is getting a lot cleaner in its preparation, combustion and mining. The trick in combustion is higher temperatures and pressures, described as supercritical and ultra-supercritical, a technology China has embraced that increases the efficiency of coal, from a historical 28 percent to around 50 percent with concomitant reductions in the greenhouse gas per kilowatt.
 
Mining, too, has gotten safer in the developed world with stricter regulation and better equipment. Quinn of the National Mining Association says that reclamation after strip mining is better than it ever has been. Yet the scars remain from an earlier time across all the coal- producing states.
 
If, like Edward I, Elizabeth I and the EPA, we cannot stop coal use, we better get behind the technologies and regulations that reduce its impact, because King Coal looks set for a long, long reign. — For the Hearst-New York Times Syndicate
 
 

Obama and His Oil Sands Brer Rabbit

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If there were an Oscar for political ineptitude, President Barack Obama would be a front-runner for the prize. The president’s possible approval of the 2,000-mile-long pipeline from the oil sands (previously known as the tar sands, and most correctly bitumen sands) of Alberta, Canada to the refineries and shipping terminals of the U.S. Gulf Coast is a tale of political calculation that has gone sadly wrong.
 
Back in January 2012, when he was expected to give his approval and that of the State Department, to what is an international agreement, the president punted. Concerned about stout opposition in his own administration, and particularly from his Environmental Protection Administration chief Lisa Jackson, Obama demurred and requested more studies.
 
This did two things: It antagonized the Canadian people, always sensitive to slights from the United States, and humiliated the government of Prime Minister Stephen Harper. Joe Oliver, Canada's minister for natural resources, told me on the record just before Obama’s statement that he had had strong indications from the administration that the Keystone XL pipeline would be approved. In the event, he and the Canadian government were outraged and embarrassed.
 
As though offending our trading partner and favorite neighbor was not enough, Obama gave the environmentalists time to mobilize — a mobilization so complete that it resulted in a demonstration on the Mall in Washington immediately after the president’s second inauguration.
 
Not only did a broad front of environmentalists march against the pipeline but in the year since Obama kicked the can down the road, they extended and codified their objections not just to the pipeline, but also to the exploitation of the oil sands. Obama’s delay has allowed the environmental groups to declare a kind of non-governmental trade war against Canada.
 
Originally, the environmental movement and its supporters in the administration were concerned with the effects of the pipeline in Nebraska and the threat it would pose to rivers and aquifers in the state. While the company that wants to build the pipeline, TransCanada, has agreed to re-routing and Nebraska Gov. Dave Heineman has signed off on the project, the environmentalists have downplayed the Nebraska issues and concentrated on the whole matter of the exploitation of the oil sands. The Natural Resources Defense Council has called oil-sands oil “the filthiest oil in the world.”
 
This is a mighty assault on the economy of Alberta and Canada, as 44 percent of Canada’s oil exports come from the oil sands and they are scheduled to keep rising. If it were of less economic consequence, the protests might find more sympathy north of the border than they do. Mining the sands is a monumental undertaking, disturbing enormous tracts of earth and employing trucks and mechanical shovels, which are the largest on the globe. The disturbance to the earth is considerable and worth noting.
 
Also worth noting are the vast quantities of natural gas and water used in the extraction and retorting of the sands. More greenhouse gases are released in the production of the oil than in regular oil fields; the oil sands extraction is calculated to be the largest contributor to greenhouse gases in Canada.
 
However, Canadians are sensitive to these issues and are offended by the idea that Canada is a backward country with no regard to the environment. Canada maintains that evolving technology is reducing the impact on the environment year after year. The oil sands are going to be developed no matter what.
 
There is a pattern of escalation in environmental concerns about big projects. Nuclear power gives a fine historical perspective on this escalation. Back in the 1960s, the first concerns about nuclear power were on the thermal effluent into rivers and streams. This escalated into concern about radiation, then safety, then waste and finally a blanket indictment of the technology.
 
Bogdan Kipling, who has been writing about Canadian-U.S. relations from Washington for four decades, takes an apocalyptic view of the future U.S.-Canada relations if Obama wavers and does not approve the pipeline. In a recent column, he said that such an action would “decouple” the United States from Canada across a broad range of issues, social a as well as economic. “Such a decision would be sweet music to the ears of Canadian nationalists,” Kipling said.
 
Now Obama finds himself between the swamp of his own political left and the rock of international relations. It did not have to be like this. — For the Hearst-New York Times Syndicate