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Energy Bill: Do you consider this good policy?
Posted by: McQ on Saturday, December 08, 2007

Oh, joy, the energy bill has passed the House.
On Thursday, just over a year after winning the majority, Democrats in the House of Representatives voted through an energy bill that represents a stark departure from the administration's approach. It would raise vehicle fuel efficiency (Cafe) standards for the first time in over 30 years, by 40%, to 35 miles per gallon for both cars and light trucks and SUVs. A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020. It would set a renewable fuel standard aiming to generate 36 billion gallons of ethanol a year by 2022. A tax package would roll back some $13.5bn in oil industry subsidies and tax breaks to help pay for $21bn worth of investments in clean energy development, mainly in the form of investment tax credits for wind and solar, along with the development and purchase of plug-in hybrid vehicles. And it would raise efficiency standards for appliances and buildings.

Oh my, how times have changed! Massachusetts Democratic Ed Markey, chair of the house climate committee, has called it the "perfect political moment" for a sea change in energy policy. Oil prices are flirting with $100 a barrel.
Let's parse this a little, shall we?
It would raise vehicle fuel efficiency (Cafe) standards for the first time in over 30 years, by 40%, to 35 miles per gallon for both cars and light trucks and SUVs.
And that will do what? Increase the price of automobiles. As usual, it's a mandate for which you, not anyone else, get to pay.

Of course loopholes do survive - big loopholes. Dan Becker, an environmental consultant and lawyer and former official with the Sierra Club explains:
“If I am G.M., God forbid, and I produce a certain number of flexible-fuel vehicles capable of running on E85 ethanol, they will be assumed to be running on ethanol 50 percent of the time. So the fuel economy of a 20 m.p.g. truck that is technically capable of running on E85 will essentially be 30 m.p.g.

“Because the auto companies are not as stupid as they look, they have chosen to make most of their flexible-fuel vehicles their least-efficient vehicles. So they get the maximum fuel economy benefit.”

Why aren’t these vehicles running on E85 all the time? Because E85 is hard to find in many states. There are only about 1,200 stations selling E85 nationwide and only nine in New York, according to the Energy Department. Even if you can find E85 the mileage is often about 30 percent worse than with gasoline, because ethanol contains less energy per gallon.

Nevertheless, for more than a decade the federal government has joined the auto industry in what amounts to make-believe. That fantasy continues in this bill. No wonder Mr. Becker calls it the “Energizer bunny of auto industry loopholes.”
Indeed. Flexible-fuel Hummers, oh my.

Moving on to "renewable energy":
A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020.
And that will require what? Well if your utility isn't generating any power from 'renewables' right now, it will be making a pretty hefty investment by 2020. And who do you suppose will be paying for that?
It would set a renewable fuel standard aiming to generate 36 billion gallons of ethanol a year by 2022.
Aren't mandates fun? Of course those mandating seem to never do the math:
In this year's State of the Union speech, he set a national goal of producing 35 billion gallons of alternative fuels by 2017. The next morning, C. Ford Runge, who studies food and agriculture policy at the University of Minnesota, calculated that this would require 108 percent of the current crop if it all came from corn.
And sure enough, even with the relatively small amount we produce, we see food costs rising because of the diversion of food sources such as corn (for both human and animal consumption) to fuel, while the science of converting cellulose to ethanol is both expensive and imperfect. So who do you suppose will pay for all of this in higher food prices?

To give you an idea of what is being mandated here, consider that the world production of ethanol in 2006 was 51 billion liters, (13.5 billion gallons), with 69% of the world supply coming from Brazil and the United States. Also consider that there is evidence that it takes more energy to produce ethanol than it produces when used (although it is claimed that it produces 34% more energy than is consumed to make it. Compare that with oil which has is at about 300% more energy produced than consumed to make it). And let's not forget the CO2 ethanol produces when burned.
A tax package would roll back some $13.5bn in oil industry subsidies and tax breaks to help pay for $21bn worth of investments in clean energy development, mainly in the form of investment tax credits for wind and solar, along with the development and purchase of plug-in hybrid vehicles.
Now, as you know, I'm not a friend of subsidies of any type, but here we have oil at near $100 a barrel and we're going to remove a big chunk of subsidies while giving tax credits to tiny industries which produce maybe a few percent of our present energy needs? Wow. Any wonder who's going to pay for that?

But speaking of subsidies and loopholes we apparently don't mind subsidizing Indonesia's biofuels for Europe:
The Christian Science Monitor recently reported that because of the way U.S. biofuel laws are written, foreign tankers loaded with Indonesian biodiesel can stop briefly at an American port, blend in a splash of regular petroleum diesel and qualify for a U.S. subsidy on every gallon. It's called "splash and dash," because the tankers generally push on to Europe to collect additional subsidies there. All in the name of greener fuels.
Yes your money is safe with Congress, an institution which always spends it wisely. [/sarcasm]
And it would raise efficiency standards for appliances and buildings.
Oh, good. I'm sure that's free of cost, isn't it?

And yet we have some politician saying it is the "perfect political moment" to be doing this? I refer you to my previous post about "Politicians on crack".

As reported by The Guardian, this is hardly some sweet little energy bill in which everyone benefits (although the author of the piece seems to think it borders on wonderful). In fact, it is a raft of mandates which are going to cost huge amounts of money and, if I were to guess, deepen the energy crisis, not alleviate it.

In the short run, fossil fuels are the fuel of choice because they are both available and relatively cheap. They should be exploited with an eye toward driving the price per barrel down, not up - that is if you're a fan of seeing the economy continue to do well and not have continually and consistently rising fuel costs impact all costs across the board.

Alternative energies aren't ready for prime time. As the article points out, we've been playing this alternative energy game since the '70s and Jimmy Carter's "solar" gambit and where are we? A very, very long time and large investment away from any viable and sizeable energy production from them, that's where. What we shouldn't do, as we continue to chase the alternative energy unicorn, is make it harder, more expensive or more restrictive to exploit the energy resources we do have.

Once we have viable and cleaner alternative energy sources perfected and ready to go, then it makes perfect sense to begin phasing one technology out as the other is phased in. That would be a viable energy policy. That's not what I read this energy bill doing (at least as The Guardian has presented it).

Then there is the latest savior of us all - ethanol. Less efficient and just as polluting (although in a slightly different way) than gasoline. So we raise the CAFE standards and then mandate the use of a less efficient fuel? And that's "good policy"?

No. It's not. But it is the policy, it seems, we're going to be stuck with if Congress gets its way. So grab your wallet and get ready for the tug-of-war for its contents. A lot of its contents.
 
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Did that ban automobiles with less than 36 MPH from Capitol Hill ? LOL
 
Written By: Neo
URL: http://
Smithsonian magazine’s take on bio-fuels.
 
Written By: Neo
URL: http://
(Mumble, Mumble... ’balanced’ government.... mumble)

 
Written By: Bithead
URL: http://bitsblog.florack.us
The amusing thing is that $4 per gallon fuel will go farther towards making people conserve than any CAFE standard will.
 
Written By: Dale Franks
URL: http://www.qando.net
"A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020."

How? Not only is the technology not ready but everytime they try to build a new wind farm it gets halted in its tracks. I am sure that if we built huge solar arrays in the deserts some little form of grass that shouldn’t be there would start growing in the shade of the panels, upsetting the ecosystem and shut the whole thing down. Any place that is ripe for geothermal is already a state or federal park and off limits.

How?
 
Written By: SkyWatch
URL: http://
"A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020."

Hmm....well SkyWatch, I think we’re going to be getting very familiar with brownouts. Let’s say you produce 1000 MW and only 75 are from renewable sources. If more renewable sources aren’t available, you’ll have to reduce your output to 500 MW to comply with the 15% mandate.

That should be fun.
 
Written By: researcher
URL: http://
Way back in 1991 I bought a Saturn SL with a manual shift. It cost me ~$9500 out the door. It averaged ~34mpg. I crashed it twice but it ran 11 years and 125,000 miles before the fuel pump died. The fuel pump repair was more than the blue book otherwise I would have repaired it and still be driving it today. Inexpensive high mpg cars are available, people just don’t buy them.
 
Written By: Paul
URL: http://
A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020.
Don’t worry. You see in Washington state we have that law already. And it included a nice kicker clause declaring all power produced by fresh water may not be considered renewable. So there’s plenty of extra power to sell since we get 80% from those special non-renewable dams.

We should be the fricking show piece for renewable... But it’s not good enough. Welcome to the slide.
 
Written By: Ryan
URL: http://
Inexpensive high mpg cars are available, people just don’t buy them.
Maybe because these cars don’t suit their needs? Before my kids came along, I survived just fine on small (high mileage) sedans. But after a while, I found I needed a minivan. Maybe later I can replace the van with another sedan. Maybe Congress can pass a law making it illegal to have more than 1 passenger in a car, so we can all drive small sedans.
 
Written By: Steverino
URL: http://
" calculated that this would require 108 percent of the current crop if it all came from corn."

So what? I am willing to sacrifice my corn chips for the common good. I will use pita bread with my salsa.



"A renewable energy standard mandates that utilities generate 15% of their power from renewables by 2020."

I have become a little bit familiar with the process of developing/acquiring new power plants. This just ain’t going to happen without some major changes in various environmental laws and regulations, which DEFINITELY ain’t going to happen.

 
Written By: timactual
URL: http://
Kinda’ off topic-Kinda’ related. Say, isn’t China exempt from Kyoto?
 
Written By: tom scott
URL: http://
Energy Bill: Do you consider this good policy?

Well if you want less energy, higher prices, more pollution, and more environmental destruction it is an excellent energy bill.

Otherwise not so much.
 
Written By: TJIT
URL: http://
"I am willing to sacrifice my corn chips for the common good."

Hey. Don’t fu*k with my Fritos. I’ll put up with a lot from these commissar-wannabes, but there are some lines that must be drawn, okay?
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
Way back in 1991 I bought a Saturn SL with a manual shift. It cost me ~$9500 out the door. It averaged ~34mpg. I crashed it twice but it ran 11 years and 125,000 miles before the fuel pump died. The fuel pump repair was more than the blue book otherwise I would have repaired it and still be driving it today. Inexpensive high mpg cars are available, people just don’t buy them.
Not only is that car nearly unmarketable today, but despite surviving two crashes, it wouldn’t survive today’s crash standards either.
 
Written By: jpm100
URL: http://
I can’t get passed the fact that you had dealerships cutting gas with alcohol in the past to the point where the government had to mandate standards are allowable alcohol. Yet somehow its not practical as an alternative all of a sudden.

I think I see the biggest objections right now are from availability and distribution. A chicken and the egg problem. You can’t solve the problems with ethanol without actually finding efficient ways to produce it and distribute it. To overcome that hump, some encouragement is required.

Even if it is more expense in the long run, people will pay a premium for a hybrid to reduce gas/oil consumption. There’s a good chance they’ll pay a premium for ethanol. In the long run, if it fails it fails. But we would have at least tried something new.

Yet people want to abort this baby before it has a chance to even crawl. I think those with the biggest objection come in two flavors.

Environmentalists who pay lip service to alternatives, but really don’t care for alternatives that don’t lead to smaller more expensive cars. They really want people to take the bus. So when a real alternative comes forward they talk it down.

The other are those responsible for distribution. Unlike the auto industry which hopes this will help them stay in business, distributers gain nothing from selling ethanol in the long run. They have to carry and distribute a second fuel that has massive negative consequences if its accidentally put in the wrong tank. I suspect everyone from the local station owner all the way up to the top execs at chains see nothing but cost and headache.

They are all OK with changes that improve gas consumption. Because in a marketplace all but devoid of competition, if they sell 40% less, they can up profits 40% more. As long as there are no alternatives.
 
Written By: jpm100
URL: http://
jpm100,

Ethanol has been heavily subsidized for decades, and mandated for the past few years. Ethanol probably requires more energy to produce then it contains, has negative economic impacts in other sectors of the economy, and the whole biofuel fiasco in general causes large amounts of environmental destruction.

Boondoggle is too kind of a description for it. Do a search on ethanol at the blog below to find out why ethanol does not work and what types of alternative fuel might eventually work.

R-Squared Energy Blog
 
Written By: TJIT
URL: http://
TJIT,

can you tell me where the data for the for the energy cost of ethanol comes from?
 
Written By: jpm100
URL: http://
jpm100,

Do a search on ethanol at the link I provided above. It will give you all of the ugly details chapter and verse.

 
Written By: TJIT
URL: http://
TJI-Thanks for the link. I’ve read Rapier before but on The Oil Drum. Bookmarked it.
 
Written By: tom scott
URL: http://
I’m not saying that a 4dr sedan works for all people at all times. My point is that for many people, there are (and were) inexpensive cars that get you from point A to point B reliably. My SL was a commute car, my wife uses an Odyssey to haul our progeny to and fro. I look around at the huge trucks whizzing down the highway during my commute and they are occupied by 1, maybe 2, people.

I think the whole CAFE thing is stupid. Producers should make what people want to buy.
 
Written By: Paul
URL: http://

 
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