Peter Vis, the chief of staff of EU Climate Commissioner Connie Hedegaard, has broken with protocol to warn that the European Commission’s draft Energy Efficiency Directive could “undermine” the bloc’s carbon market. It is extremely rare for Commission officials to comment on draft EU laws. Post.
But staff in the climate department are privately fuming that new efficiency regulations, due on 22 June, would apply not just to buildings and vehicles, but industrial sectors already covered by the EU’s emissions trading scheme (ETS), which puts a price on carbon by placing a limit on CO2 emissions.
Such a duplication could depress carbon prices, as efficiency measures cancel out the need for pollution permits, leading to a market glut.
“More than half of those measures [in the draft] target the installations covered by the emissions trading scheme (ETS),” Vis told a conference organised by the German Marshall Fund of the US in Brussels.
“We have got two policy approaches knocking up against each other and that isn’t helpful.”
Carbon prices at risk of free-fall
Vis was speaking a day after five European energy companies warned that the draft directive risked a “tremendous decline” in carbon market prices.
“We’re big supporters of energy efficiency,” he said, “but we have to be careful not to undermine a system that is in place now – the ETS – which is a global leader”.
Two internal EU studies contained in an impact assessment predict carbon prices falling from €25 a tonne to either €14 a tonne, or close to zero, as a result of the efficiency drive.
That would dent budgeted revenues for low-carbon investment across the EU in the third phase of the ETS, which runs from 2013-2020.
Henry Derwent, president of the International Emissions Trading Association (IETA), told EurActiv: “For a European climate policy which has been focused on achieving [carbon] prices high enough to drive investment to deliberately undermine and reduce that price seems quite extraordinary.”
Hedegaard has previously suggested that a corresponding number of “set aside” carbon permits could be removed from auction in the third phase of the ETS between 2013-20 to compensate for any carbon price shortfall. Vis described this as a “flanking measure”.
Policy dissonance
Meanwhile, market analysts have been shocked by the policy dissonance revealed in the latest spat.
Derwent bemoaned what he called “an extraordinary lack of understanding or faith” in the ETS by the architects of the efficiency directive.
Some analysts claim that EU climate policy has been increasingly influenced by energy-intensive firms, which have favoured low carbon prices, since the economic crisis began.
Vis stressed that the Commission’s environment department supported a free-market approach to reducing carbon emissions.
In a veiled reference to the EU’s energy commissioner, Günther Oettinger, he said: “Of course there are sometimes policymakers who say ‘let’s legislate and make it command and control and then we’ll be sure that they’re going to do it’.”
“But you can have an interaction which is less than happy between a regulatory approach and a market-based approach,” he added.
EurActiv understands that the final text of the efficiency directive is still being intensely negotiated behind closed doors by the commissioners’ staff in Brussels.
An official close to Hedegaard denied speculation that the problem occurred because Commissioner Oettinger had tried to shackle the ETS. “I don’t think there has been bad faith here,” he told EurActiv. “What we need to do is keep co-ordinating [between] ourselves.”
At a meeting of energy ministers in Luxembourg on 10 June, EU member states rejected one other key element of the draft directive: a binding 3% target for public building renovations that would have made schools and libraries more energy efficient. Portugal blamed the economic crisis for the proposal’s failure.
By Jim Hollingsworth
A bill to repeal the banning of ordinary incandescent light bulbs is bottled up in a congressional committee despite Americans’ apparent distaste for the more expensive bulbs that would replace them.
The 100-watt incandescent bulb is scheduled to be outlawed in January 2012, the 75-watt bulb will disappear in January 2013, and the 60-watt and 40-watt bulbs in January 2014.
The bill banning the bulbs - which use more energy than newer bulbs - was introduced in 2007 by then Rep. Jane Harman, a California Democrat, and Rep. Fred Upton, a Michigan Republican, and signed by President George W. Bush in December 2007.
Upton is now chairman of the House Energy and Commerce Committee, and while lobbying Republicans for the post he vowed to repeal the section of the 2007 bill that bans incandescent bulbs.
“We have heard the grass roots loud and clear, and will have a hearing early next Congress,” he said in December. “The last thing we wanted to do was infringe upon personal liberties, and this has been a good lesson that Congress does not always know best.”
In January, Texas Republican Rep. Joe Barton proposed the Better Use of Light Bulb (BULB) act, which would cancel the phase-out of incandescent bulbs. The bill has 62 co-sponsors, 61 of them Republicans, and a companion bill in the Senate has 28 co-sponsors.
But Upton’s committee has not yet held a hearing on the bill, and “House Republican leadership has evinced no interest in bringing the Barton bill to the floor,” Diana Furchtgott-Roth, an adjunct fellow at the Manhattan Institute, writes in RealClearMarkets. “Calls to repeal the incandescent light bulb ban are coming from consumers, who prefer incandescent lamps.”
“Chairman Upton,” she adds, “how about voting Mr. Barton’s bill out of committee and sending it to the House floor?”
Once incandescent bulbs vanish, Americans will have to purchase either compact fluorescent bulbs - known as CFLs - halogens, or light-emitting diodes (LEDs).
All three cost significantly more than incandescent bulbs, although they last longer. Many people don’t like the light cast by CFLs - the cheapest of the three - and they must be disposed of at special recycling centers because they contain mercury. They also pose a danger if broken in the home.
Another factor to consider: Incandescent bulbs are made in the United States, while almost all CFLs are made in China, according to Furchtgott-Roth.
She concludes: “Consumers should be free, in my opinion, to choose the light bulbs they prefer. If Congress believes that consumers should conserve energy, it can impose a tax on the model bulbs whose use it would discourage, or on electricity in general.”
Coal is from Earth, Lisa Jackson is from mercury
JUNE 13, 2011
Link to Inhofe EPW Press Blog
President Obama’s jobs council will make its first recommendations today on lifting hiring and strengthening the economy. Too bad the message doesn’t seem to be reaching the Administration’s regulators, in particular the Environmental Protection Agency.
The EPA is currently conducting a campaign against coal-fired power and one of its most destructive weapons is a pending regulation to limit mercury and other hazardous air pollutants like dioxins or acid gases that power plants emit. The 946-page rule mandates that utilities install “maximum achievable control technology” under the Clean Air Act-and even by the EPA’s lowball estimates, it is the most expensive rule in the agency’s history.
In 1990, Congress gave the EPA discretion to decide if mercury regulation is “necessary and appropriate,” and the Clinton Administration did so in its final days. The Bush Administration created a modest mercury program, only to have it overturned by an appeals court on technical grounds in its final days. The case was still in litigation when Mr. Obama took office, and his appointees used the opening to strafe the power industry, proposing a much more stringent rule.
The EPA issued the utility rule in March, with only 60 days for public comment. Basic administrative practice usually affords between 120 and 180 days, especially for complex or costly regulations of this scale. The proposal was obviously rushed, with numerous errors like overstating U.S. mercury emissions by a factor of 1,000. The word in Washington is that the openly politicized process unsettled even the EPA’s career staff.
The agency estimates that the utility rule will cost $10.9 billion annually but will yield as much as $140 billion in total health and environmental benefits. Sounds like a deal. But most of those alleged benefits are indirect-i.e., not from the mercury reductions that the rule is supposed to be for. Rather, they come from pollutants ("airborne particles") that the EPA already regulates under other parts of the Clean Air Act. A good analogy is a corporation double-counting revenue.
According to the EPA’s own numbers, every dollar in direct benefits costs $1,847. The reason is that electric generation-yes, even demon coal-results in negligible quantities of air pollutants like mercury. And mercury is on the decline: In 2005, the entire U.S. coal fleet emitted 26% less than the EPA predicted.
The real goal of the EPA’s rule is to shut down fossil fuel electric power in the name of climate change. The consensus estimate in the private sector is that the utility rule and eight others on the EPA docket will force the retirement of 60 out of the country’s current 340 gigawatts of coal-fired capacity. Reliability downgrades will hit the South and Midwest where coal energy is concentrated. American Electric Power recently announced that the rules will force it to shut down five plants in West Virginia and Ohio, a quarter of its coal fleet.
The power industry estimates that the true costs of the utility rule will far exceed the EPA estimates, which of course will be passed to consumers and businesses as higher prices. The International Brotherhood of Electrical Workers, normally a White House union ally, says the rule will destroy 50,000 jobs and another 200,000 down the supply chain. That’s more jobs lost than if Boeing went bust.
Astonishingly, EPA Administrator Lisa Jackson claimed in March that the utility rule is “expected to create jobs,” because it will “increase demand for pollution control technology” and “new workers will be needed to install, operate, and maintain” it. In other words, the government should harm an industry and force it to ruin working assets so maybe other people can clean up the mess.
Such theories help explain why the economic recovery and job creation are far weaker than they ought to be, but the good news is that even many Democrats are beginning to push back against the EPA’s willful damage. The least Congress can do is force the EPA to delay the final utility rule to allow for more public debate, though a better option would be to junk it.
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Similarly, Benny Peiser of GWPF in their weekly newsletter reports:
British industry’s ability to compete with companies overseas is under threat from punitive green energy costs, the new president of the CBI has told The Sunday Telegraph. Sir Roger Carr warns in an interview that the Coalition must give “some sort of support” over rising energy costs to UK manufacturers or else risk seeing businesses relocate abroad with the consequential loss of jobs. His comments - ahead of a CBI energy conference on Tuesday - come amid growing concern over the cost of renewable energy subsidies and so-called ‘green stealth taxes’. --The Sunday Telegraph, 12 June 2011
The CBI and Britain’s leading chemical firms have warned that the proposed UK “carbon floor” tax (unique in the world) will make our industry so uncompetitive that, unless the policy is changed, it will lead inevitably to mass plant closures and job losses. Similarly, the European Metals Association warned last week that the EU’s various “anti-carbon” policies are becoming so costly that they are already forcing steel, aluminium and other producers in their energy-intensive industry to relocate outside Europe, losing hundreds of thousands more jobs. Sooner or later, politicians must emerge with the sense and the courage to question this madness - as many other people are now beginning to do. But there is little sign of their emergence yet. --Christopher Booker, The Sunday Telegraph, 12 June 2011
The Coalition’s obsession with climate change is damaging Britain’s recovery from recession, former Tory chancellor Nigel Lawson warns today. Writing in the Daily Mail, Lord Lawson delivers a scathing assessment of David Cameron’s so-called ‘green agenda’ and says it is ‘time this Government grew up’. Lord Lawson, one of the most respected Tory figures of recent decades, accuses the Prime Minister of risking Britain’s economy to make a ‘symbolic’ point. In a devastating verdict he writes: “The Government’s highly damaging decarbonisation policy, enshrined in the absurd Climate Change Act, does not have a leg to stand on. It is intended, at massive cost, to be symbolic: To make good David Cameron’s ambition to make his administration “the greenest government ever”. --Nigel Lawson, Daily Mail, 11 June 2011