MAC: Mines and Communities

US update

Published by MAC on 2007-05-14

US update

14th May 2007

As the Bush regime seeks.(once again) to sabotage any decision seeking cuts to global greenhouse gas emissions at next month's G8 summit, a little-known aspect of US "coal politics" is brought to light by the Washington Post.

The powerful National Rural Electric Cooperative Association (NRECA) is lobbying for some US$35 million to be spent on building coal-fired power plants during the coming decade It's a plan which even the right-wing Heritage Foundation can't support (no doubt because it boosts federal government subsidies, rather than dashes the growing anti-carbon consensus in Congress).

If you thought the NRECA primarily served poor country folk, or operated in a fundamentally cooperative fashion - then think again!

Meanwhile, Bush's announcement that four federal agencies must develop regulations limiting greenhouse gas emissions from new mobile (vehicular) sources has been widely criticised as little more than hype.

Federal Loans for Coal Plants Clash With Carbon Cuts

By Steven Mufson, Washington Post Staff Writer

14th May 2007

A Depression-era program to bring electricity to rural areas is using taxpayer money to provide billions of dollars in low-interest loans to build coal plants even as Congress seeks ways to limit greenhouse gas emissions.

That government support is a major force behind the rush to coal plants, which spew carbon dioxide that scientists blame for global warming.

The beneficiaries of the government's largesse -- the nation's rural electric cooperatives -- plan to spend $35 billion to build conventional coal plants over the next 10 years, enough to offset all state and federal efforts to reduce U.S. greenhouse gas emissions over that time.

The Office of Management and Budget wants to end loans for new power plants and limit loans for transmission projects in the most remote rural areas. But the powerful National Rural Electric Cooperative Association deployed 3,000 members on Capitol Hill last week to push Congress to keep the program intact, arguing that the loans for new coal plants are needed to keep electricity cheap and reliable in rural areas.

Environmentalists have also targeted the program. They say it removes any pressure for the rural co-ops to promote energy efficiency or aggressively tap renewable resources. Rural co-ops rely on coal for 80 percent of their electricity, compared with 50 percent for the rest of the country, and electricity demand at rural co-ops is growing at twice the national rate.

The money comes from the Agriculture Department's Rural Utilities Service, an outgrowth of the Rural Electrification Administration created in 1935 by President Franklin D. Roosevelt to bring electricity to farms. More than 70 years later, the goal of providing electricity to rural areas has long been accomplished, but the federal government is still making the subsidized loans.

Rural-utility cooperatives are owned by their customers; they are nonprofit organizations. There are more than 800 co-ops that distribute electricity and more than 50 that own power-generating plants.

James R. Newby, assistant administrator of the Rural Utilities Service, estimates that federal loan rates are 2 to 2.25 percentage points lower than the rates for commercial loans. Some budget experts say the favorable federal loans have reduced the cost of new power generation by 15 percent.

But many of the utility co-ops that are considered rural provide electricity to expanding suburbs, such as the Dallas-Fort Worth metropolitan area, the Atlanta area and parts of Northern Virginia. Others are expanding to meet growing commercial, residential and tourism demands. And some are facing demands from the growing number of ethanol plants, blunting the climate-related benefits of producing ethanol.

"Rather than declare the mission accomplished and disband the expensive subsidy program, Congress continued it and allowed it to become even more generous," a 2004 Heritage Foundation report said.

Ronald D. Utt, co-author of the report and a former official at the OMB, calls the program a "remnant of the New Deal." "Poverty is no longer a characteristic of the agricultural community as it was during the Depression . . . and as areas have grown, the basic clientele are well-to-do people who have nothing to do with agriculture," Utt said. Many of the areas served by co-ops are densely populated and do not need help, critics say.

James J. Jura, chief executive of Associated Electric Cooperative, a co-op that has both government and commercial loans, said much of his region's growth comes from retirement and recreational developments near lakes around Branson in southwest Missouri. The town's Web site boasts of a 17-story luxury condominium complex, a new shopping mall, 17,000 hotel rooms and dozens of theaters. "No, this isn't Manhattan or Las Vegas; it's Branson, Missouri," the site says.

Glenn English, chief executive of the National Rural Electric Cooperative Association, said rural areas still need help to meet growing power demands at reasonable costs and that burning coal makes sense. He said per capita income of co-op members and consumers is 15 percent below the national average.

The key to the longevity of the Agriculture Department's programs for rural utilities has been the co-ops' powerful political voice. More than 30,000 members gave an average of $41 last year to the co-op association for political contributions. Given their geographic scope, the co-ops can mobilize letter-writing campaigns across a vast number of states and congressional districts.

Rural utilities often assume broader roles in local economies. One co-op, English said, reopened a gas station that went out of business. Another, he said, bought and kept open a beloved Dairy Queen.

"Sometimes they can take over functions even local government can't," said English, a former Democratic congressman. And that, he said, can help keep people from moving away from places like his home town of Cordell, Okla., where the population, now about 3,000, peaked in the late 1920s.

Although presidents over the years have tried to curtail the rural-electricity lending program, it has survived, proving one of the basic laws of legislative thermodynamics: Creating a government program is easier than killing one.

This year is no exception. In his fiscal 2008 budget, President Bush asked Congress to tighten lending rules for rural co-ops. Reps. Allen Boyd (D-Fla.) and Frank D. Lucas (R-Okla.) are gathering signatures for a letter asking that the low-cost government loans be continued.

English chalks it up to "political gamesmanship." "Congress knows that the president expects them to restore that money so that it doesn't look like he's the big spender," he said. "So Congress will tweak it and get it back to where the president wanted it in the first place."

Among those asking for federal loans:

* The Seminole Electric Cooperative in Tampa is planning a $1.8 billion, 750-megawatt coal plant that would boost the utility's generating capacity by 60 percent. The co-op applied for a $1.4 billion loan. If approved, the interest rate for the heavily indebted co-op, which Standard & Poor's says has less than a month's worth of cash, would be as low as the rates for the most rock-solid corporate bonds.

* A group of rural cooperatives plans to build two, 700-megawatt plants in western Kansas.

* The East Kentucky Power Cooperative -- which is fighting the Justice Department over alleged violations of the Clean Air Act -- has received approval for Rural Utilities Service loans to pay for new coal-fired capacity.

English acknowledged that global warming has shifted the debate. But, he said, any climate change legislation should show leniency toward the rural co-ops.

"Rural electric generating cooperatives . . . are in economic situations that make it very hard for them to invest in cutting-edge technologies," he wrote in a letter to the House Energy and Commerce Committee.

English is quick to point out that taxable utilities get tax breaks to encourage wind farms or more-efficient coal plants, and that municipal utilities can sell tax-exempt bonds to raise money cheaply. English wants Congress to give the nonprofit, tax-exempt rural utilities similar incentives, such as no-interest loans.

In March, 10,000 rural-utility executives and spouses attended their annual meeting in Las Vegas. Guests included former CIA director R. James Woolsey Jr., former NFL coach Mike Ditka and singer Charlie Daniels.

English rallied the association's members to fight proposed laws on climate change that might hurt the rural co-ops. Such proposals would mean higher electricity rates, he said, and that would anger voters.

"So are we supposed to tell members of Congress that you've got to be willing to sacrifice your seat for the sake of energy efficiency?" he said. "I don't think the political community wants to take out the knife and commit hara-kiri.

G8 Set for Transatlantic Clash on Climate

PlanetArk UK

14th May 2007

LONDON - The United States is trying to dilute a declaration on global warming to be made at next month's G8 summit, sources close to the talks said on Friday, putting it on a collision course with hosts Germany.

In a draft of the declaration dated April 2007 seen by Reuters, the United States objects to a pledge to limit global warming to two degrees Celsius this century and cut world greenhouse gas emissions by 50 percent below 1990 levels by 2050.

Washington also questions whether the United Nations is the best forum to tackle the climate crisis and rejects a section stating that carbon markets are a key means of developing and deploying climate-friendly technologies.

"They have rejected any mention of targets and timetables, don't want the UN to get more involved and refuse to endorse carbon trading because it must by definition involve targets," one well-placed source said on condition of anonymity.

The leaders of Britain, the United States, Russia, Canada, Japan, Italy and France will attend the summit hosted by Germany in the Baltic resort town of Heligendamm from June 6-8.

Also present at the meeting will be the heads of state of South Africa, Mexico, Brazil, China and India as the key group of major developing countries.

German Chancellor Angela Merkel is determined to push through wide ranging declarations committing to global action on climate warming and energy security, but is meeting equally strong resistance from Washington, supported by Canada.

"There is a very serious game of poker being played, which is very disappointing at this late stage and given the scale of the problem," another source close to the negotiations said.

"It is an open question whether Merkel will be prepared to accept a watered-down declaration or break with G8 tradition and declare a failure on climate change.

"Either way the ink will still be wet when the final declaration is made," the source said.

Scientists predict that average temperatures will rise by between 1.8 and 3.0 degrees Celsius this century due to carbon gases from burning fossil fuels for power and transport, causing floods, famines and putting million of lives at risk.

The Kyoto Protocol is the only global agreement on curbing carbon emissions, but it was rejected by the United States in 2001, is not binding on China and India and effectively expires in 2012. Negotiations to expand and extend Kyoto beyond 2012 are barely moving, and diplomats are hoping that the G8 summit will agree a declaration strong enough to revitalise the talks.

They say success at Heiligendamm would raise hopes that a meeting of environment ministers under the United Nations Framework Convention on Climate Change in Bali in December could agree outline principles for new post-2012 negotiations.

Failure in Germany could delay the process even further and risk leaving a post-2012 vacuum given the time it is likely to take to negotiate and ratify any Kyoto replacement.

Story by Jeremy Lovell


Bush Orders First Federal Regulation of Greenhouse Gases


14th May 2007

After resisting the regulation of greenhouse gases since he took office in 2001, President George W. Bush today signed an Executive Order directing four federal agencies to develop regulations limiting greenhouse gas emissions from new mobile sources. Greenhouse gases, such as carbon dioxide emitted by the combustion of fossil fuels, contribute to global climate change.

The President directed the U.S. Environmental Protection Agency, EPA, the Department of Transportation, the Department of Energy, and the Department of Agriculture to work together "to protect the environment with respect to greenhouse gas emissions from motor vehicles, nonroad vehicles, and nonroad engines, in a manner consistent with sound science, analysis of benefits and costs, public safety, and economic growth," the Executive Order states.

The President's new policy is based on a decision by the U.S. Supreme Court April 2 in Massachusetts v. EPA that the Bush administration failed to follow the requirements of the Clean Air Act when it refused to regulate greenhouse gas emissions from motor vehicles.

Announcing his new policy at the White House today, President Bush said, "Last month, the Supreme Court ruled that the EPA must take action under the Clean Air Act regarding greenhouse gas emissions from motor vehicles. So today, I'm directing the EPA and the Department of Transportation, Energy, and Agriculture to take the first steps toward regulations that would cut gasoline consumption and greenhouse gas emissions from motor vehicles, using my 20-in-10 plan as a starting point."

Bush has sent Congress a proposal that would meet this goal in two steps. First, a mandatory fuel standard that requires 35 billion gallons of renewable and other alternative fuels by 2017. "That's nearly five times the current target," he said. The second step is an increase in fuel efficiency standards for light trucks and cars.

"The steps I announced today are not a substitute for effective legislation," Bush said today. "Members of my Cabinet, as they begin the process toward new regulations, will work with the White House, to work with Congress, to pass the 20-in-10 bill."

Developing regulations will require "coordination across many different areas of expertise," Bush said today.

"This is a complicated legal and technical matter, and it's going to take time to fully resolve. Yet it is important to move forward, so I have directed members of my administration to complete the process by the end of 2008." Bush's term of office expires January 20, 2009.

EPA Administrator Stephen Johnson said, "This is a complex issue, and EPA will ensure that any possible rulemaking impacting the emissions from all new mobile sources throughout the entire United States will adhere to federal law."

Johnson said that while the 20-in-10 plan would serve as a guide, "we have not reached any conclusions about what any final rule will look like."

"We will solicit comment on a proposed rule from a broad array of stakeholders and other interested members of the public," he said. "Our ultimate decision must reflect a thorough consideration of public comments and an evaluation of how it fits within the scope of the Clean Air Act."

"While this is the first regulatory step," said Johnson, "it builds on the Bush administration’s unparalleled financial, international and domestic commitments to reducing global greenhouse gas emissions.

"Since 2001, EPA and the entire administration have invested more than $37 billion to study climate change science, promote energy-efficient and carbon dioxide-reducing technologies, and fund tax incentive programs," Johnson said. "That’s more money than any other country in the world has spent to address this global challenge."

On Capitol Hill, Speaker of the House Nancy Pelosi said, "The President's announcement today is one more in a long series of pronouncements claiming to reduce our dependence on foreign oil. Yet after six years of failed energy policies that have favored Big Oil, the American people are still left with record gas prices and record dependence on foreign oil."

"It appears that the President wants to run out the clock to the end of his term without addressing our energy needs, because the executive order will do nothing to promote energy independence. Instead," Pelosi said, "it is clearly designed to bog down the Environmental Protection Agency in a bureaucratic interagency process that will ensure that no steps are taken to regulate greenhouse gases from motor vehicles."

"Here in the House, we are working to develop legislation that will reduce energy dependence and global warming emissions; we will introduce a package of initiatives that will make this July 4th Energy Independence Day."

Congressman Edward Markey, a Massachusetts Democrat who chairs the Select Committee on Energy Independence and Global Warming, today welcomed President Bush’s reiteration of his "20-in-10" plan, which includes a goal of increasing fuel economy standards by four percent a year for 10 years, but warned that such a goal will never be achieved unless this requirement is made mandatory through legislation.

"After six years of hemming and hawing on setting fuel economy standards, the President has suddenly discovered the regulatory powers he has had all along," Markey said.

"Only asking for agency heads to take the first steps towards new rules will leave motor vehicle fuel economy stuck in neutral until Bush’s successor takes office," Markey added.

Senate Majority Leader Harry Reid said, "Six years ago this week, the Bush-Cheney secret task force made up of oil and energy company lobbyists released its report on the nation's energy policy. Since then, the administration has rolled back environmental regulations, ignored climate change and under-funded the energy research budget. Meanwhile, our oil dependency and consumption have grown, harming our national security and leaving America vulnerable to price shocks and supply disruptions."

"Democrats are committed to achieving greater energy independence - an issue this administration and past Republican Congresses have failed to adequately address. In the coming weeks, we will move forward with bipartisan legislation that will increase the production of clean renewable fuels, improve energy efficiency, punish gas price gougers and support research on greenhouse gas capture and storage," said Reid.

The oil savings that might be obtained by the President's proposal may be less than the expected savings from the projected increases in new vehicle fuel economy due to market-driven increases in the sale of unconventional vehicle technologies, such as flex-fuel, hybrid, and diesel vehicles, and a slowdown in the growth of new light truck sales, Reid said based on figures in the Energy Department's Annual Energy Outlook 2006.

Environmental groups were quick to criticize the new policy. Friends of the Earth, one of the original plaintiffs in Massachusetts v. EPA, said the President's new policy does little to address the Supreme Court's ruling.

Friends of the Earth President Brent Blackwelder said, "The President’s proposal focuses primarily on replacing oil with renewable energy sources such as corn ethanol, and the facts are clear – substituting most formulations of corn ethanol for oil does almost nothing to reduce greenhouse emissions."

"Additionally, by directing his administration to do nothing but study this issue until the end of 2008, when a new president is coming into office, President Bush passed the buck on global warming at a time when we cannot afford delay," Blackwelder said.

Some view the Bush policy as a step backward that is weaker than existing targets that were signed into law in 1992 by his father, President George Bush Sr.

"The President's policy is a retreat, not an advance. It would weaken existing federal targets for alternatives to petroleum fuel, not improve them," said Julie Teel, an attorney for the Center for Biological Diversity’s Climate, Air, Energy Program. "This shameful ploy proves that the president still doesn’t understand the dire consequences of global warming."

The 1992 law required the replacement of 10 percent of petroleum motor fuel consumption with alternative fuels by the year 2000 and 30 percent by 2010.

To attain this goal, the law first required a replacement of 75 percent of federally owned vehicles with alternative fuel vehicles by 1999. The Department of Energy was then required to determine if extension of the regulation to municipal and corporate fleets is necessary to meet the national 30 percent reduction target. If so, the Department is required to institute alternative fuel standards for municipal and corporate fleets.

The federal government violated the Energy Policy Act by not converting its own fleets to alternative fuel vehicles and not establishing a municipal and corporate standard when it was clear that federal action alone was insufficient.

The Center for Biological Diversity and Friends of the Earth sued over these violations, winning one court order in 2002 and two more in 2006 requiring compliance with both aspects of the law.

In response, the federal government has increased the number of fuel efficient vehicles in its fleets. However, it still has not set alternative fuel vehicle requirements for municipal and corporate fleets.

Instead, on March 15, 2007, it issued a ruling which delayed the compliance date for a 30 percent reduction from 2010 to 2030. The rule is opposed by environmental groups and Teel says it is "likely" to be challenged in court.

Frank O'Donnell of the nonprofit Clean Air Trust interpreted the Executive Order as "an attempt to sideswipe the greenhouse gas standards developed by the state of California and adopted by 11 other states. The Bush administration apparently wants to knock those standards off the road."

O'Donnell says because the four federal agencies are expected to concur on any news regulation, and must do so under the direction of the White House Office of Management and Budget and the Council on Environmental Quality.

"In other words," O'Donnell said, "the White House has just wrapped the EPA in a straitjacket of bureaucratic process."

The nonprofit Diesel Technology Forum used the president's announcement to promote diesel fuel as part of the fuel economy and global warming solution.

Allen Schaeffer, the Forum's executive director, said, "Diesel cars, trucks and SUVs deliver superior fuel economy - typically 20 percent to 40 percent better than a comparable gasoline vehicle - without requiring drivers to sacrifice the power and performance Americans demand.

"The U.S. Environmental Protection Agency estimates that America could save up to 1.4 million barrels of oil per day - an amount equivalent to the oil we currently import from Saudi Arabia - if one-third of U.S. cars, pickup trucks and SUVs were diesel-powered," he said.

Manufacturers, including Dodge, General Motors, Ford, BMW Group, Mercedes, Jeep, Audi, Volkswagen, Honda, Nissan, Hyundai and Mitsubishi, are planning to introduce new clean diesel vehicles in the next two to three years.

The Grocery Manufacturers Association, GMA, supports the goal of reducing America's reliance on fossil fuels but cautioned that a sharp increase the use of corn for ethanol could hamper the ability of the food industry to provide consumers, both in the U.S. and around the world, with a reliable and affordable supply of food.

Cal Dooley, GMA president and CEO, said, "Consumers have already seen an increase in the cost of food, as corn traditionally used for livestock feed and processed food is increasingly used for fuel. In fact, the price of corn has nearly doubled in the last nine months."

"In addition to its inflationary impact, there are many unintended, but nonetheless important, consequences of an ambitious corn ethanol strategy," Dooley warned.

"A 35 billion gallon ethanol mandate will require a substantial increase in the use of fossil fuels for corn and ethanol processing and transportation, as well as an additional 15 million acres devoted to corn crops, which will encroach on agriculturally marginal and environmentally sensitive land," he said.

To meet this mandate, the U.S. would have to cut its corn exports to ensure an adequate supply of corn for food and fuel, Dooley said. "Such a reduction will result in a decrease in the amount of food available overseas, which in turn will have a negative affect on world hunger."

On a conference call with reporters today, Agriculture Secretary Mike Johanns attempted to assure the public that ethanol manufacture would not take food out of people's mouths.

"We've already put forth a Farm Bill proposal that would increase funding for renewable energy by $1.6 billion. Without question, the President's proposals represent the most significant commitment to renewable energy that's ever been proposed in farm legislation," Johanns said. "It's focused on cellulosic ethanol, which is where we believe the next step is in terms of ethanol development. And it's also one of the building blocks that will help us achieve 20-in-10."

Cellulosic ethanol is not made from corn kernels but is distilled from the fermentation of sugars from the entire plant, not just the grains. Perennial grasses, corn stover, sugar can bagasse, logging slash, and yard trimmings can all be sources of cellulosic ethanol.

The Farm Bill proposals would expand research into cellulosic ethanol, to improve biotechnology, and create a better crop for conversion to renewable energy and to improve that conversion process, making it more efficient and, therefore, more commercially viable," Johanns said.

The American Petroleum Institute, API, an industry trade association, said the industry has invested heavily to meet and exceed the federal requirement for ethanol-blended gasoline. "In 2006, we used 25 percent more than required - and, according to Energy Information Administration estimates, will exceed the 2007 requirement as well."

The API says that the role of ethanol as a transportation energy source will be limited until technology breakthroughs permit economic production of cellulosic ethanol from biomass.

"The timing of such breakthroughs is highly speculative," the API said. "There is no guarantee that technologies would emerge to enable large-scale economic cellulosic ethanol production in the next decade and ensure reliable energy for U.S. consumers at affordable prices."

It is "critical" that any alternative fuels standard include technology and feasibility reviews that would trigger adjustments to mandates to ensure companies and consumers are not penalized if obstacles arise that prevent meeting usage targets, said the API.

Chris Somerville, professor of biological sciences at Stanford University and director of the Carnegie Institution's Department of Plant Biology, estimates it will take seven to 10 years to produce cellulosic ethanol at competitive prices.

"It is certainly possible to achieve Bush's goals technically," he said. "The question in my mind is whether investors are ready to put up the money required to make it happen."


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