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Game changer, Part 2: Why unconventional natural gas makes the 2020 Waxman-Markey target so damn easy and cheap to meet

In Part 1: Is there a lot more natural gas than previously thought? I asserted it now appears likely that, thanks to unconventional supplies, natural gas alone could meet a great deal of the Waxman-Markey CO2 target for 2020 “” without requiring gobs of new power plants to be sited and built or thousands of miles of new transmission lines.  In this post I will explain the two key reasons why.

First, today, dirty coal plants are being “dispatched” (or utilized) to provide electricity by grid operators first, while natural gas plants that could provide electricity with far lower emissions of carbon dioxide remain unutilized or underutilized — even though their electricity costs are only slightly higher.  This is occurring in at least two regions of the country, according to a major under-reported May study by the Energy Information Administration, “The Implications of Lower Natural Gas Prices for Electric Generators in the Southest.”  A cap on CO2 emissions and even a low price of CO2 will switch the dispatch order, generating large emissions savings at low cost (if the gas is available, as now seems likely).

Second, the fundamental flaw in Waxman-Markey is that the 2020 target is too weak both from the perspective of what climate science says is needed (see “The U.S. needs a tougher 2020 GHG emissions target“) and from the perspective of what straightforward energy analysis suggests can be done at $15 a ton of CO2 or less.

Let me run through a rough analysis.  The W-M bill requires a 17% emissions cut by 2020.  Now EIA’s amazing April report — Updated Annual Energy Outlook 2009 Reference Case Reflecting Provisions of the American Recovery and Reinvestment Act and Recent Changes in the Economic Outlook — forecasts that just on the basis of the clean energy deployment from the stimulus (together with the lingering impact of the recession), U.S. energy-related carbon dioxide emissions will be some 2% lower in 2020 than in 2005 (see “EIA projects wind at 5% of U.S. electricity in 2012, all renewables at 14%, thanks to Obama stimulus!“):

But then we have to throw in the oil reductions from Obama’s recent fuel economy deal (see Obama to raise new car fuel efficiency standard to 39 mpg by 2016 “” The biggest step the U.S. government has ever taken to cut CO2) — and, of course, from higher oil prices than EIA forecasts since it mostly ignores peak oil (discussed here).  Let’s call that another 2% emissions drop.

Then we have Waxman-Markey itself.  It achieves huge energy efficiency savings.  The American Council for an Energy-Efficient Economy (ACEEE) projects “such savings will avoid about 293 million metric tons of carbon dioxide emissions in 2020” (see “Waxman-Markey could save $3,900 per household“).  That’s another 5% drop.

So far we are maybe 9% below 2005 levels in 2020.  I’m going to skip the large low-cost savings potential from conservation — although I think by 2020 that the painful reality of global warming will be so obvious to all that a large fraction of the public and businesses will want to pitch in to avert Hell and High Water (but then, I’m an optimist or is that a pessimist?).

Now we have to meet the remaining 8% cut with some combination of low-cost renewables, natural gas, and offsets.  How will that break out by cost?

Read more

Politics

Sanford: Cheney’s prominence ‘probably isn’t’ good for the GOP.

sanfordToday, ABC News’ Jake Tapper interviewed Gov. Mark Sanford (R-SC) for an ABC News podcast. Sanford conceded that it is not good for the Republican Party to have Vice President Cheney at the forefront, and repeatedly suggested that old leaders need to make a “conscious deferral” and step aside:

TAPPER: What’s your view on the prominent that Vice President Cheney has created for himself?

SANFORD: I’d say the beauty of America is, you know, it’s everybody’s prerogative. So if that’s his thing, you know, go for it.

TAPPER: But is it good for your party?

SANFORD: Probably isn’t. … You know, while somebody may have been at the top at one point, to really keep an invigorated political system, you’ve got to have new voices stepping in and stepping to the plate and giving their opinions. And any time you have some of the senior leaders continuing to lay out their case for what they believe, it probably usurps the voice of new leaders coming in.

When Tapper asked Sanford how he felt about Rush Limbaugh, Sanford suggested that Limbaugh was one of the leaders “who have had more than their share of time at a front-row seat.” “If you’ve got a disproportionate microphone, you might want to share it,” Sanford said. Listen to it:

Health

Rockefeller’s Public Plan Outline Relies On Medicare Plus Rates

john-rockefeller_5Sen. John Rockefeller (D-WV) — who is a member of the Senate Finance Committee — is circulating draft legislation for a new public health care plan. Rockefeller’s Consumer Choice Health Plan would compete on a level playing field with private insurers:

The Consumer Choice Health Plan [CCHP] will be financially self-sustaining… The Administrator will establish and fund a contingency reserve for CCHP in a manner similar to that of the contingency reserve established by OPM for the Federal Employees Health Benefits Plan. Funds to operate the plan shall be derived from premiums for individuals enrolled under the plan and from contributions by employers not providing private health benefit plans.

On the controversial question of provider reimbursement rates — the actual question is: should the public plan reimburse providers Medicare rates or the prevailing market rates of private insurers — Rockefeller lands somewhere in the middle. He argues that “the provider payment rates for the first two years of the Consumer Choice Health Plan will be based on Medicare provider payment rates.” A significant lesson learned from Medicare Advantage is that private plans do not have strong tools, or incentives, for controlling costs relative to traditional Medicare,” Rockefeller explains. “Private plans consistently pass higher costs onto consumers while simultaneously increasing their profits.”

A public plan that uses Medicare-like prices could, in an environment of head-to-head competition, push private insurance companies to negotiate more aggressively with providers and dramatically lower health care spending. Still, critics charge that Medicare rates underpay providers (doctors and hospitals), forcing them to “make up the shortfall in the prices they charge private insurers, effectively subsidizing Medicare.”

But during recent testimony in front of the House Ways and Means Committee, Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC) said that Medicare — which pays providers approximately 14 percent lower than private insurers — “doesn’t underpay doctors and hospitals.” It promotes system efficiency. As the WSJ reported:

Hackbarth largely dismissed complaints about Medicare payment rates. “We think that Medicare rates are adequate and consistent with the efficient delivery of services,” Hackbarth said. One exception, according to Hackbarth, is that Medicare pays too little to primary care physicians. Hackbarth said “overly generous” payments by private insurers to health-care providers drives up overall costs, eventually affecting Medicare payment rates. He said research showed that hospitals which didn’t rely on high payment rates from private insurers “are able, in fact, to control their costs and reduce their costs when they need to” and “combine low costs with quality.”

Moreover, a recent Commonwealth Fund survey found that elderly Medicare beneficiaries “reported greater overall satisfaction with their health coverage, better access to care, and fewer problems paying medical bills than people covered by employer-sponsored plans.” This is partly due to Medicare’s market power — the program is so large that doctors can’t afford to deny treatment to Medicare patients.

Medicare rates aren’t all bad, but it’s unclear if doctors would be willing to accept lower fees from the new public option. In a competitive environment, a public plan that can’t attract providers will rot at the vine; in other words, to attract patients any plan would have to retain doctors its enrolless would want to see. But if Congress requires all providers who accept Medicare to also accept patients with the new public option, then the new public plan would serve as a robust option that could lead to lower health care spending.

Economy

CNBC: TARP ‘Slush Fund’ Will Be Used To Bail Out ‘The Boston Globe’ And ‘The Guys That Make Chia Pets’

Yesterday, the Treasury Department announced that it’s allowing ten banks to repay $68 billion in TARP money. McClatchy added today that the federal government actually saw a profit on this $68 billion, albeit a small one:

In addition to returning the $68 billion, the 10 banks paid the government $1.8 billion in dividends on the preferred shares of stock the government owned. That translates to an annualized rate of return of about 4.64 percent on the $68 billion. In all, the government has received $4.5 billion from all bailout recipients, who’ve received $200 billion, for an annualized rate of return since Nov. 12, 2008, when the money was lent out, of 3.94 percent.

As Matthew Yglesias pointed out, this seems to show that “for all the complaining from both the right and the populist left about spending $700 billion on bailouts, the net fiscal cost of the $700 billion TARP program is likely to be dramatically lower.” However, CNBC’s crack economic team isn’t buying it, and spent a segment today discussing how the Treasury is clearly going to put the repaid TARP funds into a government slush fund to bail out “the Boston Globe” and “the guys that make Chia pets,” and thus taxpayers will never see the money again. Watch it:

CNBC contributor Steve Leisman provided a nice moment of sanity during the segment, reminding his co-contributor Stephen Moore that “you were the one arguing that the taxpayers would never see a dime from this, the banks would never pay it back, and now you want us to believe your next new warning?”

There are real questions about where the money repaid from TARP should go, and one of the options is having Treasury hold onto it in case of another economic free fall. This is what Herb Allison, who the Obama administration has tapped to run the program, thinks we should do. Other options include paying down debt or using the funds to aid smaller, community banks.

There is also some ambiguity about Treasury’s plan for winding down its interest in institutions like Citigroup and GMAC, from which there will likely be no repayment anytime soon. But CNBC couldn’t be bothered with a serious discussion, and decided that it would be more entertaining to laugh about the federal government buying Chia pets.

Update

The Federal Reserve has also made $2.7 billion on its investments in banks and lenders in the first quarter of 2009.

Politics

News Corp. forms ‘diversity community council’ in response to chimpanzee cartoon controversy.

rupertmurdochwebDuring the debate on the economic recovery package shortly after President Obama assumed office, News Corp’s New York Post ran a cartoon likening Obama to a dead chimpanzee. After protests and extended criticism, the Post editorialized that they apologize “to those who were offended by the image” while News Corp. chairman Rupert Murdoch later issued a personal apology. Now, the company has formed a diversity council in response the controversy:

News Corp. has agreed to form an external diversity council after meeting with civil rights groups about a New York Post cartoon that critics said likened President Barack Obama to a dead chimpanzee.

The company will form a “diversity community council” in New York City that will meet with senior company executives twice a year, NAACP President and CEO Benjamin Todd Jealous said Wednesday. It also will include a statement of commitment to diversity in its annual report.

Representatives from the NAACP, Rev. Al Sharpton’s National Action Network, the National Urban League, and 100 Black Men of America met with News Corp. executives on May 19, but it is unclear how diverse the council will be.

Security

Zakaria Declares ‘Victory’, Qualifies

iraq-peekabooJoshua Keating has a good post exploring the significance of Steven Colbert’s Iraq tour and his stint as guest/stunt editor of Newsweek. I don’t know if I’d go as far as Keating in calling Fareed Zakaria’s cover story on “victory” in Iraq “the kind of goalpost moving that Colbert has relished mocking for years,” but I do think the use of the term “victory” is troublesome — not least because it plays into the narrative of the war architects for whom the key goal of the surge was the salvaging of their reputations. We should note, however, that the word victory only appears in the article’s title (over which writers have notoriously little control, though I would suspect a star like Zakaria has quite a bit more), and that much of what Zakaria reports strongly challenges the idea that the word applies to what has been achieved. While U.S. and Iraqi forces may have admirably clawed Iraq back from the brink of total collapse, the costs of the war so staggeringly outweigh its benefits (most of which remain in the realm of the potential) that there is no moral or political calculus by which the decision to invade can reasonably be called the correct one.

Zakaria:

American influence is not what it was a few years ago. Yet America still has enormous leverage with a government that relies on U.S. forces for its basic security and well-being. The question is whether the Obama administration will use this leverage in a focused and purposeful way.

The reason to do so is simple. How Iraq evolves in the next few years will define America’s legacy there. After all, there were no weapons of mass destruction. The costs — in blood, treasure, anti-Americanism — have already been paid. All that is left to redeem the mission is the hope of a decent outcome — a democratic Iraq that represents a new model of Arab politics, one that does not force its citizens to choose between a repressive regime and an extreme opposition. But for that to happen, Iraq must become an inclusive democracy for all its people. Its potential as any kind of a model rests largely on this evolution.

On the contrary — while our forces remain in Iraq by the tens of thousands, while takfiri terrorists continue to employ and spread tactics and technologies developed in the Iraqi training ground we provided them, and while Iran continues to expand and strengthen its regional influence as a result of our removing their greatest enemy, we will continue to pay the costs of the war.

Zakaria writes that “Arab regimes paint a picture of Iraq that suggests that American-led democracy has led to chaos, collapse and, perhaps more crucially, to Shiite tyranny. This is a damning indictment because for the rest of the Arab world — which is overwhelmingly Sunni — it suggests that democracy is something to be feared.” I think this is right, but let’s be honest, it doesn’t take much of a propagandist to convince people that the limb-strewn and blood-spattered marketplaces that they see almost every day on Al Jazeera are not preferable, or that a political system that produces such outcomes is sub-optimal. The greatest portion of blame for the disrepute into which democracy has fallen in the Middle East belongs to the president who undertook to remake Iraq as a shining example of it.

I do agree with Zakaria, though, that the manner in which President Obama manages the U.S.-Iraq relationship is hugely important. Acknowledging that the invasion of Iraq was and remains a major U.S. foreign policy blunder shouldn’t blind us to the potential ways in which a genuinely democratic Iraq could positively influence the region. I only advise against using words like “victory” in the hope that it will help us avoid trying to reproduce this experiment, and this policy, elsewhere. Ever.

Yglesias

Endgame

Sleepy all day:

— Michael O’Hanlon says defense spending must grow two percent faster than inflation forever irrespective of the objective budgetary or international situation.

— I looked into buying a unit here but their lack of price flexibility was ridiculous.

— New sanctions on North Korea in the works.

— Tommy Franks owns stud stallions named “shock” and “awe”.

— Shep Smith gets one right.

Going to a Tom Friedman talk tonight, but it’s about the environment so I hope “the good Friedman” will be the one who shows up.

Politics

House GOP energy plan declares that impact of global warming ‘shall not be considered for any purpose.’

House Republicans today introduced their alternative energy plan. Developed by the Republican American Energy Solutions Group, the American Energy Act is billed as an “all of the above” energy program. But as The Wonk Room’s Brad Johnson notes, the legislation looks more like an attempt to legislate the threat of global warming “out of existence.” Indeed, the bill specifically states that at no point in implementing their energy plan can the effects of global warming on the environment “be considered for any purpose”:

geg_impact

Johnson remarks, “The Republican response to our dependence on fossil fuels and their pollution is to give billions of dollars in new tax breaks and subsidies to the oil, coal, and nuclear industries.”

Climate Progress

GOP American Energy Act: Impact Of Global Warming ‘Shall Not Be Considered For Any Purpose’

A Republican energy plan launched with great fanfare attempts to deny the threat of global warming out of existence. Today, Rep. Mike Pence (R-IN), the leader of the Republican “American Energy Solutions Group” and a prominent denier of climate change science, unveiled the latest repackaging of Bush-era dirty energy policies. The “American Energy Act” confronts the problem of greenhouse gases head on — by prohibiting their regulation:

Prohibit Greenhouse Gas Consideration

The Republican response to our dependence on fossil fuels and their pollution is to give billions of dollars in new tax breaks and subsidies to the oil, coal, and nuclear industries, while rolling back environmental protections, despite the claims of their Orwellian talking points.

Further following George Orwell’s principles of Newspeak, the GOP website that trumpets this dirty legislation as an “all-of-the-above solution” attempts to erase the climate threat from existence by leaving out mention of global warming in the bill’s talking points document and summary. Unfortunately for Pence and his climate denier colleagues, they haven’t figured out how to rewrite the laws of physics as well.

Media

Fox News’ Shep Smith: DHS Report Was A ‘Warning To Us All,’ But ‘The Right Went Absolutely Bonkers’

This afternoon, a gunman — reportedly white supremacist James von Brunn — shot and killed a security guard at the Holocaust Museum in Washington. Discussing the shooting, Fox News’ Shepard Smith reminded the audience that when the Department of Homeland Security released a report warning of violent, right-wing extremists earlier this year, “the right went absolutely bonkers!” He called the report a “warning to us all,” and said DHS was “warning us for a reason.” Watch it:

Southern Povery Law Center’s Heidi Beirich told Smith that the shooting is a reminder of the real danger extremists and “crazies” pose to the U.S.:

SMITH: There’s these crazies out there. And we know it’s absolutely — there is no truth whatsoever — zero to any of those ideas. Yet, they live within the computer and they fester within people’s minds.

BEIRICH: Shepard, you’re hitting the nail on the head. We’re extremely concerned about these kinds of crazed conspiracies, whether they’re about the President, or the fact — we’re hearing things like FEMA setting up camps to round up Americans and put them in. I’m getting bad sort of deja vu from the 1990s, when anti-government militias were on the rise, when Tim McVeigh committed that violence in Oklahoma City. I’m really hoping we’re not going through a repeat of that.

Watch it:

The Wonk Room’s Andrea Nill highlights anti-immigrant screeds written by Brunn.

Update

Smith said that the e-mail Fox receives from viewers “has become more and more frightening.” He read an example, from a “birther” who called President Obama “Hussein,” and said it was, “I promise, a representative sample of the kinds of things that we get here.” Watch it here.

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