No one would accuse the Brookings Institution of being a bunch of Tea Party radicals. In fact, the think tank is a bellwether of left-of-center thought in Washington, DC. So it’s an indication of just how far from reality the EPA has strayed that two Brookings scholars have criticized the math behind its new carbon regulations.
Brookings fellow Ted Gayer and Vanderbilt University economist Kip Vicusi argue that the agency incorrectly counts the “global” benefits of its regulations, while only taking into account local costs. That crooked bit of accounting making the proposed regulations look much more beneficial than they actually are.
Such “cherry picking” between global benefits and local costs allows the agency more leeway to advance its favored policies. The EPA estimates that the global climate benefits accruing from the regulations will be $30 billion by 2030. According to Gayer and Vicusi, however, “only 7 to 23 percent of these benefits would be domestic benefits,” meaning that the true “benefits” could be as low as $2.1 billion– far less than the estimated compliance cost for the rule of $7.3 billion.
Like the recent misleading “heat related deaths” data, these juiced numbers were used as the basis for major new carbon regulations that will negatively impact the lives of millions of Americans. Whether these revelations are justification for killing the proposed regulations before they become law is yet to be seen. But it’s clear, according to the Brookings authors, that the expansion of “benefit assessments to include global impacts merits much more scrutiny and justification than it has received to date.”
Lost in the talk about the EPA’s recent proposed cut to carbon emissions ismention of how the reduction will be based not only on energy supply regulations but also on end-use energy demand controls. That’s a fancy way to say that you’ll either pay more for the power you use (“demand pricing”), or you’ll have less control over your thermostat (“demand response”).
Demand pricing is a management method where consumers are charged more for peak usage and less for off-peak usage. Most utilities already implement some form of peak pricing, but the new emission requirements will likely result in it being scaled up to a larger degree – to the point that some consumers may not be able to afford energy during the daytime. This is the case in the U.K., where Tata Steel regularly shuts down between 4-6 pm to avoid peak charges that can be up to 300 times the off-peak rate.
Demand response is a management method where energy control is taken out of the consumer’s hands and given over to the utility to adjust based on the level of demand on the grid as a whole. This means that on peak days (e.g. a muggy summer afternoon) you may find that you cannot adjust your thermostat as you would like. Demand response programs that currently exist give us a good idea of what might become mandatory down the road. For example, in California, the utility installs an electric meter in your home or business that it reads and analyzes remotely and then adjusts electricity capacity accordingly.
There are big concerns about how these demand controls would affect businesses. Higher costs and loss of energy control during peak times will make doing business during regular hours much more difficult. The situation in the U.K. is again instructive: Demand response has led utilities to ask factories to “voluntarily” shut down during peak hours. “This is the beginning of a world in which demand will be managed more actively by all of us consumers,” said Steve Holliday, the CEO of the country’s national grid.
In addition to demand management, implementation of energy efficient products will likely be mandated by state governments needing to comply with the emissions standards. This means more nanny-like bans on your favorite consumer products like incandescent light bulbs, which have essentially been made illegal since the beginning of this year.
Higher prices, more regulations, and less freedom – demand controls are a perfect fit for the EPA’s agenda.
Rather than present its data based on one criteria set over a given time (as is the norm), the EPA engaged in some apples-and-oranges shenanigans–cherry-picking the numbers to further the EPA’s favored conclusion that heat related deaths are increasing.
To the casual observer of the EPA’s analysis, it looks as though heat related deaths have been increasing since 1979. It takes a savvy reader to catch the fine print to find out that the World Health Organization revised its death classification between 1998 and 1999, meaning that post-1999 data should not be compared with pre-1999 data.
Sound complicated? It’s not, really. According to climatologists Dr. Patrick Michaels and Paul Knappenberger, “[The EPA] plots the two sets of not-easily-compared data side by side on the same chart, ensuring that they are compared! Such an analysis would probably grade out as an F in an undergraduate paper.”
The proper way to read the chart is to view these two data sets independently; in doing so, one finds that the heat related death rate has actually remained relatively flat.
This data deception fits with the EPA’s long history of using questionable science. The National Academies recently called it out for improper use of the scientific method, insufficient documentation, and a lack of consistency and transparency. With a track record like this, these mistakes may be more than just agency incompetence but rather part of a campaign to achieve a political – rather than scientific – mission. For an agency that considers science to be its “North Star,” that’s a scary thought indeed.
The Inspector General is out with anotherscathing report on the EPA, pointing to inadequate management of service contracts that left taxpayer-funded grants susceptible to waste, fraud, and abuse.
The IG examined the $25.1 million dollar, multi-year EPA service contract titled, “Technical Outreach Support Services for Domestic and Global Climate Initiatives and Global Climate Change Programs.” It found it to be a classic bureaucratic boondoggle – exemplified by the fact that the original signed contract had been lost. In addition to cost overruns, egregious delays, and general disorganization, the IG’s investigation found:
No skill verification process for contractors. The IG found the EPA to have no uniform process in place to verify contractor personnel qualifications. This lack of verification, says the IG, leaves the agency at risk of not knowing whether contractor performance is adequate, qualified, or conducted at an appropriate cost. When confronted with this inadequacy, EPA staff stated they “relied on personal judgment” or said verification was not required because the professional field was small and there was familiarity among those working in the field.
Vague or ill-defined deliverables. The IG found EPA contract deliverables to be vague, outside of scope, and with uncertain timelines. Such inadequacies resulted in cost and time overruns. For example, poorly defined deliverables caused one task order to balloon from a cost ceiling of $310,917 to more than $2 million, and the time allotment to be extended by almost three years. Many other tasks were at least 18 months late or failed to include delivery dates at all.
No contract surveillance plan. The IG found virtually no management or surveillance of the contract’s implementation. The contracting officers had yet to even meet despite the contract being only a few months from completion and both officers residing in Washington, D.C. Without surveillance, says the IG, there is a lack of assurance in the costs, standards, and deliverables in the contract. When confronted with this inadequacy, the EPA contracting officer responded that “the contract clauses constitute the surveillance plan,” an excuse with which the IG wholeheartedly disagreed.
Million dollar contract boondoggles are just the latest example of mismanagement at the EPA. The IG has revealed a string of inadequate internal processes and negligent high-level employees at the agency in recent years. But until Congress recognizes that the same problems that plague the EPA’s service contracts – no skill verification, vague deliverables, no surveillance, and general bungling – also plague the EPA as whole, we can expect little to change.
EPA Facts placed a full-page ad in USA TODAY on June 3 Politico on June 2, comparing the threat that EPA regulations pose to the country’s electric grid to that posed by terrorists. The ad highlights how new regulations on coal-fired power plant – including ones issued today by President Obama and the EPA – threaten to shut down a substantial percentage of the U.S. electric grid.
The ad reads: “What would you call a radical organization that threatens to shut down 25 percent of our electric grid?” The potential answers – anarchist, militia, and terrorist – are all struck out, leaving “Obama’s EPA” as the only answer. It then explains: “Obama’s Environmental Protection Agency has issued regulations that threaten to shut down about 25 percent of the energy that powers America’s electric grid. With radicals like this in power, who needs enemies?”
EPA threatens grid reliability
Over the next two decades, EPA regulations are expected to contribute to the closing of 60 percent of America’s coal-fired power plants, according to a new report conducted by IHS Energy on behalf of the U.S. Chamber of Commerce. Such a regulatory onslaught threatens grid reliability. Philip Moeller, a commissioner for the Federal Energy Regulatory Commission (FERC), said that EPA regulations could cause rolling blackouts in parts of the country. And, acting FERC Chairman Cheryl LaFleur mentioned “new environmental regulations” alongside physical and cyber threats in her congressional testimony on the biggest challenges the nation’s electric grid faces. Our ad highlights this often overlooked threat.
The U.S. Chamber of Commerce released a report this week analyzing the costs of the EPA’s forthcoming carbon emissions regulations, which are widely expected to be the most costly and significant environmental regulations in the country’s history.
The analysis finds that the regulations’ heavy impact on energy will cost the economy $51 billion and eliminate 224,000 jobs each year through 2030. They will significantly raise energy prices, forcing U.S. consumers to pay $289 billion more for electricity through 2030. This will lower disposable income for U.S. households by $586 billion over the same period. In the words of the report:
When the costs for new incremental generating capacity, necessary infrastructure (transmission lines and natural gas and CO2 pipelines), decommissioning, stranded asset costs, and offsetting savings from lower fuel use and operation and maintenance are accounted for, total cumulative compliance costs will reach nearly $480 billion (in constant 2012 dollars) by 2030.
The primary energy source impacted by these regulations, says the report, will be coal, whose share of domestic energy generation will fall to 14 percent from about 40 percent now. The regulations will take 114 gigawatts of coal-fired plants off the grid, about 40 percent of existing capacity.
In return for significantly higher electricity costs, less disposable income, slower economic growth, and fewer jobs, these regulations will only achieve a very slight 1.8 percent reduction in domestic carbon emissions by 2030, says the report. This reduction will be overwhelmed by global increases over this period.
These regulations, which target existing power plants, are the much anticipated follow-up to last-year’s proposed regulations affecting new power plants that essentially mandate that new coal plants utlilize the expensive and unproven carbon capture and storage (CCS) technology. But as devastating the outcomes of these carbon regulations are, they are simply one tentacle of the EPA’s regulatory reach that is measurably lowering Americans’ standards of living in return for opaque and unmeasurable gains.
The EPA is talking out both sides of its mouth on carbon capture and storage (CCS) technology. On one side, it is proposing that all new coal-fired power plants in the U.S. use it, while on the other, saying that the technology is prohibitively expensive and therefore not required for chemical plants. Such inconsistency suggests a political, rather than scientific, mission and sets it up for legal challenges.
CCS theoretically separates carbon dioxide from exhaust and pumps it into underground reservoirs for storage. It is still at the theoretical stage because it has not been demonstrated on a large-scale power plant anywhere in the world. It has also been estimated to increase capital costs by 25 percent. Since the Clean Air Act requires the EPA’s regulations use technology that is both adequately demonstrated and reasonably costly, CCS mandates seem to be precluded on two fronts.
Regional EPA offices have recognized this. On Nov. 25th, the Texas office decided that Exxon Mobil would not have to install the technology in its planned chemical plant (which also produces carbon dioxide) in Harris County because it would be prohibitively expensive. Though the Sierra Club challenged this decision, two weeks ago, three administrative judges on the Environmental Appeals Board upheld it, saying that the “addition of CCS would increase the total capital project costs by more than 25 percent.”
But the EPA head office keeps plowing ahead with its CCS regulation for power plants, planning to propose similar rules for existing plants on June 2. It defends CCS as economically viable despite its own proposals putting capital cost increases at 35 percent. Administrator Gina McCarthy recently said, “CCS is a technology that is feasible. It is ready today.” But many technical experts, including Nobel Prize-winning Burton Richter say otherwise, declaring the technology unready for widespread implementation.
In addition to making it look unscientific, the EPA’s flip-flopping on the issue sets it up for legal challenge. How can the federal office find it economically viable for one application while at the same time its regional ones find it prohibitively expensive for another? Using the Texas decision as precedent, legal challengers can claim that the mandate is unlawful under the Clean Air Act because it’s cost prohibitive. Let the lawsuits begin.
The EPA received $8.2 billion in taxpayer money this year for its budget. While some of this goes to important environmental initiatives, much of it is wasted – or worse, used to create burdensome regulations that take even more money from the private sector. Below, we list four of the most egregious ways this taxpayer money is wasted.
1) Incompetent or fraudulent employees
The EPA employs more than 16,000 full-time employees. A slew of them have recently been found to be incompetent or negligent. The latest example comes from the employee who was caught spending his workday watching porn on his taxpayer-issued computer. Because it is so difficult to fire a federal employee, this individual continued to draw his $120,000 paycheck, even after he was caught red-handed.
And these are only the examples we know about. Given what the Inspector General has called the lax management culture at the EPA, these abuses may only be the tip of the iceberg.
2) Antiquated records retention practices
In an age when virtually all businesses and organizations store their records digitally, the EPA still uses paper, at a big cost to taxpayers. As of December of last year, the EPA had a paper inventory of 18.4 million publications, which costs for the taxpayer equal $1.2 million per year, not to mention the additional $360,000 in yearly storage leasing costs. The inspector general, stating the obvious, said that the EPA could put taxpayer money to better use by reducing this inventory. (Not to mention saving a few trees!)
3) International grants
The EPA gives grants of up to a million dollars each year to foreign countries and international organizations. This may be a violation of its mandate to protect the domestic environment. In 2011, it gave China nearly one million taxpayer dollars to go to various environmental initiatives. In recent years, it has also given $1.2 million to the United Nations to promote clean fuels and $700,000 to Thailand to recover methane gas at pig farms.
And, earlier this year, EPA announced another $200,000 in taxpayer grants to Mexico to help its towns go green. Do U.S. taxpayers know that their tax dollars are going to fund environmental initiatives in other countries?
4) Burdensome regulations
The most egregious way that the EPA wastes taxpayer money is by implementing burdensome regulations, which cost the economy an astounding $350 billion per year. Its new ozone regulations alone are expected to cost businesses $20 to $90 billion annually, making it the single most expensive U.S. regulation ever.
EPA’s recent coal emission standards are so stringent that it’s nearly impossible to build a new coal power plant without using unproven carbon capture and storage technology. The capital cost of replacing conventional power plants with this technology is projected to be over $2.2 trillion.
These regulations don’t just cost businesses—they translate into higher prices for all of us. When the impact of what the EPA does with its taxpayer funding is taken into account, the U.S. taxpayer likely wishes more EPA employees would simply skip work and pretend to be CIA agents.
EPA Facts placed an ad today in USA Today, with a daily circulation of 2 million, showcasing the employee misconduct and lack of oversight at the EPA. It reads, “The Environmental Protection Agency Is A Joke,” then lists three of the most startling examples of recent employee misconduct at the agency before concluding: “But There’s Nothing Funny About It.”
The three instances listed are:
The career EPA official who has confessed to spending two to six hours a day surfing porn at work – while collecting $120,000 annually.
The EPA employee who has been working from home for the last 20 years, but stopped working five years ago while still getting a paid by the EPA – to the tune of $600,000.
The ex-EPA top level official John Beale who was paid nearly $1 million by the EPA while claiming that he was a secret CIA agent to get out of actually showing up for work.
We have detailed the seemingly endless string of EPA employees, many of whom are top or career officials, who have been negligent on the job. While their conduct is worrisome, the EPA’s lack of oversight is more so. How can we trust this agency to make billion dollar decisions that greatly affect our environment, economy, and standard of living if it can’t even keep a handle on its own employees?
Our ad hopes to bring greater attention to these abuses and the bungling at the EPA writ large.
