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Cargill, UNIPEC UK to Charter Only Eco-Friendly Ships

Cargill, one of the world’s leading international transporters, and UNIPEC UK Company Ltd, trader of crude oil and oil products, announced today that they will only charter the more efficient vessels operating in the shipping market. This commitment is the first of its kind in the industry to reduce the existing fleet carbon emissions.

The announcement, from Cargill, Huntsman Corporation and UNIPEC UK who combined charter over 350 million tonnes of commodities annually, signifies a milestone for the vessel fuel efficiency ratings system, the Existing Vessel Design Index (EVDI), created by ship vetting specialist RightShip and published on ShippingEfficiency.org – an initiative launched by the Carbon War Room and RightShip to increase information flows around international shipping’s energy efficiency, as an GHG Emissions Rating (A-G rating) benchmarking system. The efficiency ratings system – containing efficiency information on over 60,000 vessels including container ships, tankers, bulk carriers, cargo ships – enables charterers to instantly see a ship’s theoretical greenhouse gas emissions and relative energy efficiency as determined by RightShip’s EVDI rated from A (most efficient) to G (least efficient), compared to ships of similar size and type.

“Cargill has introduced a senior management override on the use of the least energy efficiency vessels. By choosing the more efficient vessel available to us, we are making a strong statement to the market,” commented Jonathan Stoneley, Environment and Compliance Manager, Cargill Ocean Transportation. “We hope this action will demonstrate to ship owners that they can and should do more in terms of efficiency, and that the market will reward them and will also show other charterers the decision support tools available if they want to operate more efficiently. We will work together with customers, as best appropriate, to help them meet their environmental objectives linked to transportation and this rating system.”

Stoneley continued: “Cargill is committed to minimizing our environmental impact throughout our global operations. We do this by developing management systems and policies to ensure best practice environmental compliance and continually improving performance on criteria relevant to our business and operations. We partner with governments, non-governmental organisations, communities, employees and customers to leverage market-based solutions to reduce the environmental footprints of the supply chains in which we participate.”

Peter Boyd, COO of Carbon War Room commented: “This deal represents the first major capital shift on behalf of the charterers towards making greater efficiency a factor in their vessel chartering decisions. Cargill, Huntsman Corporation and UNIPEC UK should be congratulated for being the first to make this commitment. We’d encourage other charterers within the market, to look towards the simple and understandable ways to quantify, measure and track efficiency represented by the efficiency rating system and the A-G benchmark. Those that lead the curve on presenting more eco-efficient vessels will benefit from the choices charterers are making and the charterers themselves will see lowered operating costs through fuel efficiency – a win-win-win decision for the owner, the charterer and the environment.”

Warwick Norman, Chief Executive Officer, RightShip, added: “Cargill, Huntsman Corporation and UNIPEC UK have strong commitments to maximise efficiency on environmental grounds, and we are proud to provide them with the decision support tool they need to implement their environmental leadership position. With the common decision making framework first movers will have significant market advantage over competitors who are using traditional methods to evaluate efficiency.”

“Without this level of information it’s very difficult for charterers to make informed decisions on vessels based on their efficiency – for example, newer ships aren’t always more efficient than older ships. We’ve developed the Existing Vessel Design Index, or EVDI™, to estimate the amount of CO”

World Maritime News – Cargill, UNIPEC UK to Charter Only Eco-Friendly Ships.

Alan Krueger Has Some Peculiar Views on Energy Policy

By Daniel Kish

Daniel Kish is the senior vice president for policy at the Institute for Energy Research.

The latest in President Obama’s revolving door of White House Economic Council Chairmen—Dr. Alan Krueger—has some peculiar views on our national energy policy, to say the least.

In his previous capacity as United States Assistant Secretary of the Treasury for Economic Policy and Chief Economist, Krueger testified before the Senate Finance Committee Subcommittee on Energy, Natural Resources and Infrastructure back in 2009 to defend the administration’s budget proposals regarding oil and gas. Krueger began by defining two central tenets to the administration’s environmental and energy policy: (1) that the United States must build a new clean energy economy and reduce greenhouse gas emissions; and (2) that finding more fossil fuels will no longer address our nation’s energy needs.

The logic of this position is elusive, especially if you take a look at the amount of fossil fuels we can recover in the United States with existing technology. According to data from the U.S. Energy Information Administration and the U.S. Geological Survey, relative to current rates of consumption, America has enough oil to power itself for 29 years, enough oil shale for 140 years, enough natural gas for 88 years, and enough coal for a whopping 465 years of use. And that’s just what we could extract today, with existing technology. History shows energy supplies grow geometrically with technological advances, the shale gas revolution being the latest proof. [See a collection of political cartoons on gas prices.]

Nonetheless, according to Krueger’s testimony, what we should really be worried about is the overproduction of oil. In attempting to make the case for why a discriminatory repeal of tax deductions for U.S. oil and gas businesses is a good thing—while leaving this particular deduction for all other U.S. manufacturing and production industries—Krueger exposed his ignorance with the following statement: “To the extent that current tax subsidies encourage the overproduction of oil and natural gas, they divert resources away from other, potentially more efficient investments and they are inconsistent with the Obama administration’s goals to reduce GHG emissions and build a new, clean energy economy.”

Reading that first part, one might think Krueger sounds like a supporter of the free market, bemoaning as he does the diversion of resources to inefficient investments. Alas, Krueger conveniently neglects to mention that in building a “new, clean energy economy,” the federal government provides massive subsidies to green energy technologies that apparently can’t get off—or more importantly, stay off—the ground without taxpayer dollars. If that’s not inefficiency, I don’t know what is, and if you don’t believe me, ask someone from Spain where green energy subsidy programs have contributed to 21 percent unemployment.  Its commitment to renewable energies subsidies has cost the government four times what it had originally budgeted and totals 11 percent of its gross domestic product, while the sovereign debt crises has led to significant doubt that government energy subsidy programs will even be honored.

Ultimately, then, cost-effectiveness isn’t the true end goal for Krueger. In his testimony to the Senate, he stressed the importance of leveling the energy playing field by taking into account nebulous “externalities,” like global climate change, foreign oil dependency, and—wait for it—the costs of traffic congestion. He makes the case for a social conscience when it comes to budget policy, but job losses and increased foreign energy dependence associated with restricting our access to domestic oil and gas resources don’t appear to count. Indeed, he never even addressed how making energy cost more for consumers and making U.S. production of energy uncompetitive with that in foreign countries will help America’s economy or produce jobs. [Read the U.S. News debate: Should offshore drilling be expanded?]

What this all adds up to is a troubling scenario for a president looking to address our nation’s economic and energy troubles. As Chairman of the White House Economic Council, Krueger—renowned for his expertise in labor issues—will ostensibly be expected to advise President Obama on how to get our unemployment situation back on track and bring down gas prices. Proposals like building the Keystone XL pipeline, lifting the Gulf of Mexico “permitorium,” beginning to tap Alaska’s vast energy resources, and opening up a bit more than 4 percent of government lands for energy exploration stand out as ways to create jobs, attract investment and bring prices down almost immediately.

It’s doubtful that Krueger will be suggesting these ideas to the president, though. Not only did he lead the charge to repeal the aforementioned tax deductions—a proposal that the administration has recently revived in budget talks—but Krueger also advocated for a new excise tax on offshore oil and gas and the national cap-and-trade program, which was nothing more than a new tax on energy use. Affordable energy is like fertilizer for an economy, but taxing it to make it more expensive is like sowing salt in a field. [Read: How Much Oil is There?]

Had these proposals become law in 2009, the impacts would have been disastrous for U.S. energy security and the economy. Let’s hope the President conditioned Krueger’s appointment on him reversing his previous policies.

Original Article

EPA plans wave of coal plant shutdowns lawmakers say will send energy costs soaring

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The Environmental Protection Agency (EPA) is planning to shut down a number of coal-fired power plants in a controversial bid to curb pollution in the U.S.

The shutdowns are part of a new effort to regulate Mercury, smog, ozone, greenhouse gases, coal ash and water intake over the next 18 months.

However, rising tensions are resulting between environmental, industry groups and Republican members of the House, who say the regulations will result in higher electric bills, more blackouts and fewer jobs.

The Environmental Protection Agency (EPA) is planning to shut down a number of coal-fired power plants in a controversial bid to curb pollution in the U.S.

The shutdowns are part of a new effort to regulate Mercury, smog, ozone, greenhouse gases, coal ash and water intake over the next 18 months.

However, rising tensions are resulting between environmental, industry groups and Republican members of the House, who say the regulations will result in higher electric bills, more blackouts and fewer jobs.

Meanwhile, environmental groups argue substantial public health benefits and have accused utilities of exaggerating the cost of such regulation.

A newly-released report by the non-partisan Congressional Research Service (CRS), which conducts policy research for members of Congress, acknowledged EPA regulations will predictably force many coal plants to close through the year 2017.

However, it noted ‘In most cases… the benefits (of new regulations) are larger.’

The EPA estimates that an air-transport rule to regulate smog-causing sulphur dioxide and nitrogen dioxide would help prevent 21,000 cases of bronchitis and 23,000 heart attacks, and save 36,000 lives.

That could result in $290billion in health benefits, compared with $2.8billion per year in costs by 2014, according to the EPA.

The country’s oldest plants are expected to be the first casualties. According to the report, one-third of all coal capacity became active between 1940 and 1969 and about two-thirds of them do not have scrubbers.

The CRS report states: ‘Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel – natural gas – continues to be low, almost regardless of EPA rules.’

The CRS staved off arguments coal plant closures would result in a catastrophic affect on the U.S. power grid. According to the report,coal plants that came online before 1970 are in use, on average, only 41 per cent of the time. Electric plants have the added ability of increasing power relatively quickly.

‘There is a substantial amount of excess generation capacity at present,’ it reads, noting the affect of the recession and the growing use of natural gas plants.

The CRS does not directly comment on costs of EPA regulations for consumers, although it notes costs will vary by utility and state.

Original Article

Natural Gas Vehicle Subsidies Hurt Consumers

Published on May 11, 2011 by Nicolas Loris

The bipartisan New Alternative Transportation to Give Americans Solutions (NATGAS) Act provides preferential tax treatment to subsidize the production, use, and purchase of natural gas vehicles (NGVs). Supporters argue that it promotes transportation fuel competition and reduces foreign oil dependence and greenhouse gas emissions.

In reality, the NATGAS Act simply transfers a portion of the actual costs of using and producing NGVs to taxpayers. Special tax credits create the perception that NGVs are more competitive than they actually are by artificially reducing their price for consumers. Rather than increase competition, this artificial market distortion gives NGVs an unfair price advantage over other technologies.

Unfortunately, this shortcut to market viability does not work. Indeed, Washington has an abysmal record of picking energy winners and losers. Instead of adding more market distortions to the energy sector, Congress should remove energy subsidies and increase access to America’s resources.

The Market Is Already Working

The legislation creates, expands, or extends tax credits that subsidize NGVs. Supporters argue that the legislation would help NGV vehicle and infrastructure producers overcome investment obstacles and begin introducing new technologies to the marketplace. The truth, however, is that NGVs are already available, and nothing is stopping the market from expanding. The notion that no alternative fuels compete with gasoline is just not true. Consumers can choose vehicles that are powered by electricity, natural gas, or biofuels, as well as hybrid vehicles.

In fact, the trade group Natural Gas Vehicles for America claims that the United States has 110,000 NGVs and that more than 12 million NGVs are on the roads worldwide.[1] Billionaire investor T. Boone Pickens, a supporter of the bill, boasted in a recent speech that he owns a Honda Civic GX that he fuels with natural gas for less than $1 per gallon.[2] At a UPS facility, President Obama challenged transportation fleets to switch their vehicles to natural gas because it would be good for their bottom lines.[3] But if natural gas vehicles are economically competitive, vehicle manufacturers will make them and consumers will switch over without market manipulation from Washington.

A full-fledged competitive NGV fleet may eventually emerge. Rising gas prices make alternatives like NGVs more economically inviting, which should move investment to those technologies. That happens most efficiently when it is the result of a market-based response as opposed to government intervention. Indeed, government intervention to promote one technology over another only interferes in the process and creates another set of government-picked, taxpayer-funded winners and losers.

Reducing Foreign Dependence No Excuse for Bad Policy

The focus on decreasing energy dependence through government intervention and market distortion is folly. Policies that maximize access to a broad array of energy sources, domestic and foreign, will best serve Americans. A market-based approach would ensure that every American has access to affordable energy by putting a premium on sound economics through competition and choice.

This is not the approach of the NATGAS Act, which would make America economically weaker. When the government artificially lowers the cost of production, manufacturers must forgo the value of the goods they might have produced had they allocated their time, effort, and other resources in alternative ways. In this case, the NATGAS Act uses tax credits to create the perception of lower costs. This will fool consumers into purchasing more of these vehicles. Further, those hidden costs now have to be paid by someone else—the taxpayer. This leaves fewer resources for more productive activities.

A better approach to decreasing energy dependence is for the federal government to remove unnecessary rules and regulations that restrict access to all types of energy sources.

Reducing Greenhouse Gas Emissions No Excuse for Bad Policy

Reducing greenhouse gas (GHG) emissions is another dubious policy goal. Years of pressure from political leaders has forced significant changes in much of the business community. Energy producers became vested stakeholders and lobbied for handouts to produce what Congress determined to be cleaner energy. If these sources can compete without help from the government, the consumer will benefit through increased competition and lower costs. But creating an artificial market to reduce GHG emissions ignores both consumer preferences and economic fundamentals.

Moreover, Congress continues to ignore the vigorous disagreement within the scientific community concerning the effects of anthropogenic global warming.[4] Policy should never rest on a shaky set of assumptions, particularly when it can have far-reaching implications for American businesses and everyday Americans and could therefore fundamentally alter decisions in ways that harm America’s productive system of free enterprise.

Subsidies Do Not Work

Proponents of NGVs argue that because other alternative transportation technologies receive preferential treatment, so should natural gas. The problem is that government subsidies have a proven track record of not working. Congress should therefore remove subsidies from the transportation fuel market, not increase them.

Subsidies centralize power in Washington and allow lobbyists and politicians to decide which companies will produce. The more concentrated the subsidy or preferential treatment, the worse the policy is because the crowding-out effect is larger.

The NATGAS Act is a perfect example. Soon after its introduction, the National Propane Gas Association understandably voiced its opposition to the bill because the tax credits do not include propane gas. And that is just one problem with such bills: They distort the competitive process that so capably yields affordable and viable products, moving the decision-making process from the marketplace to Washington. Consumers, not Washington, should decide whether NGVs are better than propane.

Furthermore, subsidies funnel money toward projects that have little market support and offset the private-sector costs for investment that would have been made either way. This creates industry complacency and perpetuates economic inefficiency by disconnecting market success from production costs. By artificially lowering the cost of investment, subsidies take resources away from more competitive projects. The fact that other transportation fuels receive government support is not a good reason to continue or expand special treatment for natural gas. It is a good reason to remove those subsidies.

More Handouts, No Solutions

Pieces of legislation like the NATGAS Act will not be a quick fix for high gas prices and are not the way to reduce either America’s dependence on foreign oil or GHG emissions. They provide special benefits to one industry, distorting the market and misallocating resources away from potentially more economically viable alternatives.

If Congress truly wants to promote NGVs, it should eliminate subsidies in the transportation industry and consider other market-oriented policies—such as full expensing, lowering corporate tax rates, and removing barriers to drilling—that would incentivize the production of profitable endeavors and ultimately lower prices through competition.

Nicolas D. Loris is a Policy Analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Original Article

How Much Will EPA Regulation of Carbon Cost?

Simply put, a lot.

According to the American Council for Capital Formation, EPA regulation of carbon could destroy as many as 1.4 million U.S. jobs and cost the economy up to $141 billion, all by just 2014. ACCF concluded that the “main effect” of carbon regulation “will be to make energy more expensive, increase production costs and slow productivity and economic growth.” The impact on American manufacturing would be particularly destructive: 200,000 manufacturers would be vulnerable to losing their jobs.

(read more)

How Much Will EPA Regulation of Carbon Cost? | Stop the Energy Tax | American Solutions.

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