Category: Energy and Climate

Avoid Conflating Renewables and Fossil Fuels in the Subsidies Debate

Here at the American Council for Capital Formation, we have contributed extensive commentary to clarify the definitions of subsidies, deductions, and various tax provisions and their implications on public policy. Often times, we have witnessed progressive public officials, some academics, and even multilateral bodies such as the G-20 and IMF call for the elimination of so-called “fossil fuel subsidies.” These critics have alleged both the U.S. and global fossil fuels industry benefit by subsidies from U.S. and international governments, when the reality couldn’t be further from the truth. Traditional energy producers do not receive subsidies from the United States government – they take tax deductions much like virtually all other manufacturers.

The latest allegation comes from libertarian-leaning Cato Institute in a new analysis released in late December that looked specifically at Department of Energy (DoE) subsidy programs. The analysis’s author correctly pointed out a number of past and current DoE projects where taxpayer dollars have been wasted on mismanaged on ill-conceived projects. They are detailed in nine case studies to substantiate their case to get rid of all subsidies for solar, coal, wind power, and hydrogen fuel programs.

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Two Compelling Charts Show Why It’s Time to End Crude Export Ban

Today’s Wall Street Journal article by Amy Harder states: “Big voices in the oil industry and Congress now support a move that would have been unthinkable not long ago: opening the U.S. oil industry to exports.” The reasons couldn’t be clearer.  Seven years after the end of the recession, U.S. investment remains sluggish: Gross nonresidential fixed investment is only 8 percent above it’s pre-recession level. In addition, investment as a percent of cash flow remains a record low levels, see:   Lifting the ban on crude oil exports from the U.S. would help boost investment and job growth.

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ICYMI: CRS memo asks wrong questions on crude exports and Eastern Europe

CRS has published a memo (May 29, 2015) on oil exports demonstrating the principle that if you ask the wrong question, you may not get the most helpful answer.  The CRS memo looks at ability of Eastern Europe to absorb US crude oil, if policy did not prohibit this.  But the real question is how might Eastern Europe be impacted if US oil exports are allowed – after all, there is a global market for oil so it may not matter WHERE the US oil is actually consumed.  Instead, the impacts for Europe could be transmitted through the global market for oil. While the CRS memo acknowledges that lifting the ban on U.S. crude oil exports would tend to reduce the global price of oil, it seems to overlook the potential beneficial impact on Eastern European countries and refiners. CRS notes that there are various reasons why lifting the U.S. crude oil ban may not result in sales to Eastern European refiners including the fact that their refineries may not be well suited to process U.S. light sweet crude and lack of infrastructure to get it to them. However, CRS seems unclear about the fact that if U.S. crude oil…

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Don’t Let Environmentalists Set Trade Policy Agenda

See my response to this week’s question for National Journal’s Energy Insiders: Energy Insiders Weekly Question: Environmentalists are fuming over Obama’s trade deal. A slate of green groups say that the pact known as the Trans-Pacific Partnership could undermine key environmental safeguards, lead to increased natural gas exports, and boost fracking and coal. The White House counters, saying the deal contains extensive conservation protections that would curb illegal fishing, logging, and wildlife-trafficking and defending the deal as good for the economy overall. How would Obama’s trade deal impact energy and the environment? What are the potential risks and rewards of the deal, and what is the chance that it could reshape energy and environmental policy at home and abroad? Margo Thorning response:  It is unfortunate that environmentalists are shooting their own agenda in the foot through opposition to the Trans-Pacific Partnership deal. International trade is a critical ingredient to economic growth. See more in ACCF’s recent op-ed in The Hill (http://accf.org/we-need-trade-…. Research also shows that in the long run, as countries prosper, their environment improves as they look forward to cleaner, more efficient forms of technology and energy. One example of this is the broadened global use of liquefied natural gas (LNG).…

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U.S. INDC to United Nations Raises Many Questions; U.S. CO2 Reductions Should Be Based on Cost/Benefit Analysis

Washington, DC – The U.S. Intended Nationally Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change (UNFCCC) raises many questions related to international commitments and concerns over the impact on the U.S. economy. Cost/benefit analysis should guide any policy related to climate change., according to American Council for American Council for Capital Formation Senior Vice President and Chief Economist Margo Thorning. Thorning offered her views today at a hearing of the U.S. House Committee on Science, Space and Technology. Thorning questioned the likelihood of reduced fossil fuel generation in exchange for more expensive renewable energy sources in many developing nations at the same time that global energy demand is projected to grow by 37 percent by 2040. She also pointed to the challenge for the U.S. to reach previously announced emission targets by 2020 that were even lower than those proposed in the INDC. Last, how will implementation of regulations to achieve those targets impact the U.S. economy? “Policymakers need to balance environmental goals with the need to promote strong economic growth. They must consider the potential impact of regulations implementing the INDC since the U.S. economic recovery remains weak. Real GDP growth has averaged only 1.1…

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