Institute for Energy Research


Institute for Energy Research photo
[i]The [url=http://www.InstituteforEnergyResearch.org]Institute for Energy Research[/url] (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.[/i]

Most Recent Articles by Institute for Energy Research:

Switching to Markets Could Save You 15 Percent or More on Climate Insurance

Jul 26, 2017 — Institute for Energy Research

A recent piece in The Week on the climate change debate is at once refreshing and disappointing. On the one hand, the author Jeff Spross tries to be fair to the opponents of government intervention into the energy sector. He agrees that they aren’t “science deniers” and goes so far as to concede that they know the science as well as the alarmists clamoring for stringent new regulations and taxes.

On the other hand, Spross is still a supporter of vigorous government intervention, and he uses the analogy of insurance to justify his stance. Yet Spross’s case is flawed. He misunderstands the IPCC report: the economic damage from popular climate change policies is projected to be 80 times higher than what Spross tells his readers. Furthermore, even on his own terms, Spross hasn’t really shown that the popular proposals to combat climate change make sense. Nobody—including Jeff Spross—would buy life or car insurance on these terms.

Despite the Paris Agreement, China and India Continue To Build Coal Plants

Jul 25, 2017 — Institute for Energy Research

With the United States on its way to official withdrawal, China and Germany are expected to take the lead promoting the Paris Agreement.1 This is despite China’s role in constructing over 700 new coal-fired power plants around the world. According to Urgewald, an environmental group based in Berlin, some of these new coal plants will be built in countries that burn little or no coal today. While many of the coal plants will be located in China, about one-fifth of the capacity of these new coal power plants is going to be located in other countries.2

China is not alone in constructing coal-fired power plants. According to Urgewald, about 1,600 coal plants are planned or under construction in 62 countries; this data comes from the Global Coal Plant Tracker portal. If constructed, these new plants would increase global coal-fired capacity by 43 percent. According to Urgewald, 11 of the world’s 20 biggest coal plant developers are Chinese.

BP Predicts Global Oil Demand Will Peak in 2042

Jul 21, 2017 — Institute for Energy Research

BP predicts that global oil demand will peak in 2042 due to the penetration of electric vehicles, the slowing economic growth in China and global actions taken to reduce greenhouse gas emissions. But not all forecasters agree. The International Energy Agency expects oil demand to continue to increase through the end of its modeling horizon—2040. Saudi Arabia and Russia, the world’s largest oil exporters, believe it will continue to grow until at least 2050.1 The expectation that oil demand will peak is the opposite of what was once expected. Some forecasters had expected oil supply to peak, but technological advances (e.g. hydraulic fracturing) have changed that thinking.

BP’s Energy Outlook forecasts global supply and demand through 2035. Some of the major themes in its 2017 forecast are2:

  • China’s energy demand growth slows to 1.9 percent per year by 2035—less than one-third its rate in the past 20 years (6.3 percent per year). Its GDP growth averages about 5 percent per year, around half the average pace of growth since 2000. China gradually shifts away from energy-intensive industrial output toward more energy-light consumer and services activity.
  • India’s energy consumption grows the fastest among the world’s economies.
  • Emerging Asia’s energy consumption increases by 62 percent by 2035, with coal contributing the largest increment of growth.
  • The global car fleet doubles due to rising prosperity, which boosts car ownership, especially in emerging markets. Fuel efficiency goals and lower battery costs spur electrification. The number of electric cars increases from 1.2 million in 2015 to about 100 million by 2035 (6 percent of the global fleet).
  • There is an abundance of oil supply, which contrasts with slow growing oil demand. Cumulative oil demand to 2035 is expected to be around 700 billion barrels—significantly less than recoverable oil in the Middle East alone.

‘Deep Decarbonization’ vs. Direct-Use Natural Gas

Jul 15, 2017 — Institute for Energy Research

“With a clean electricity system comes opportunities to reduce fossil fuel usage in these sectors: for example, electric vehicles displace petroleum use and electric heat pumps avoid the use of natural gas and oil for space and water heating in buildings.” —The White House, United States Mid-Century Strategy for Deep Decarbonization, 2016

The Obama Administration opened many fronts in its war against fossil fuels. The best known was the Clean Power Plan, stayed by the US Supreme Court and now being dismantled by the US Environmental Protection Agency.

States Consider Moratoria on Wind Construction

Jul 13, 2017 — Institute for Energy Research

North Carolina could soon join its neighbor Tennessee by placing an 18-month moratorium on wind farm construction. Lawmakers in the Tar Heel State recently passed its moratorium to avoid higher energy costs interference to military operations.1  If signed by the governor before the July 30 deadline, the measure would be the longest statewide stoppage on wind energy development in the nation. Tennessee passed its year-long moratorium on new wind turbines in May.

California’s Solar Energy Overload

Jul 11, 2017 — Institute for Energy Research

On 14 different days in March, California produced so much solar power that it needed to pay Arizona, Nevada and other states to take the excess electricity to avoid overloading its power lines. The phenomenon also occurred on eight days in January and nine days in February. As a result, California has ordered some of its solar plants to reduce generation. In fact, solar and wind power production was curtailed by about 3 percent in the first quarter of 2017—more than double the same period last year.

California has an ever-increasing glut of power because of the state legislature’s push for renewable energy and state regulators’ push for natural gas. The California legislature has mandated that half of the state’s electricity come from renewable sources by 2030—about double what it is today. At the same time, state regulators have had utility companies build natural gas power plants to provide reliable power and back-up power to the wind and solar units. Utilities are happy to comply because constructing power plants provides new revenue. Once state regulators approve new plants or transmission lines, the cost is included in users’ electricity bills—no matter how much or how little is used. This two-track approach has created the glut and has proved costly for California electricity consumers. Electricity prices in California have increased faster than in the rest of the United States and they are over 40 percent higher than the national average.

U.S. Has Large Backlog of Uncompleted Oil Wells

Jul 8, 2017 — Institute for Energy Research

Source: Bloomberg

There were 5,946 drilled-but-uncompleted wells in U.S. shale oil fields at the end of May—almost 40 percent more than two and a half years ago.1 These drilled but uncompleted (DUC) wells will provide new oil supplies when they are completed for consumption later this year and into next year. This U.S. oil boom is clearly a problem for the Organization of Petroleum Exporting Countries (OPEC), who have been limiting oil production in member states and obtaining agreements from some non-OPEC countries to limit output in an attempt to raise oil prices. The influx of American crude, however, is compensating for the OPEC and non-OPEC cuts in oil production, making it difficult to sustain oil prices in the $50 to $60 range. In fact, oil prices are in the $40 per barrel range currently and there are fears it may go below that.

Clarifying Paris, Part 2

Jul 6, 2017 — Institute for Energy Research

In Part 1 of this series, I explained that the conventional narrative on President Trump’s decision to pull out of the Paris Climate Agreement was absurd on several levels. (The latest example is Stephen Hawking telling us that Trump will turn Earth into Venus.) In the first article, I focused on the slippery elements of the pro-Paris argument—such as claiming that the Agreement has no teeth, but at the same time warning that pulling out would doom humanity.

In this present article, Part 2, I will focus on the Agreement’s central climate goal: limiting global warming to 2 degrees Celsius. As we will see, the popular discussion of this target vis-a-vis the Paris Agreement is downright Orwellian.

For the First Time in Six Years, a New American Coal Mine Has Opened

Jul 6, 2017 — Institute for Energy Research

Former President Obama’s “war on coal” is over due in part to President Trump’s policies. The Corsa Coal Corporation just opened a new metallurgical coal mine, the Acosta Mine, about 60 miles south of Pittsburgh. The mine will create 70 to 100 new, direct, full-time jobs, which will pay an average of $80,000 to $100,000 annually, and about 500 indirect jobs.1 The mine will have an operating life of at least 15 years. The company received a mining permit in 2013, but market conditions prevented it from opening the mine earlier. A rebound in the global steel market and more favorable federal policies have made it possible. Metallurgical coal is high-quality coal used in steelmaking.

President Trump’s policies of lowering the regulatory burden, simplifying and lowering taxes, stimulating infrastructure spending, and balancing economic growth and environmental policy are providing American industries with new life. U.S. coal companies have added 1,300 jobs since President Trump was elected in November—a 3 percent increase to 51,000 jobs.2

The Philosophic Roots of the Paris Agreement Part V: “Small is Beautiful”

Jul 3, 2017 — Institute for Energy Research

“Whenever something is wrong, something is too big.”—Leopold Kohr

In energy, what is hyped as new and transformative is often not. Renewable energies predate the fossil-fuel era—and with a 100 percent market share, no less. Wind power and solar power have a nineteenth century history, not only a twentieth. Fuel cell physics was developed in the mid-19th century. Electric vehicles dominated the transportation market until the internal combustion engine took over a century ago. Energy conservation/efficiency is as old as energy itself.

Enter the environmental panacea of smallness, the fourth strand in the philosophical underpinnings of the Church of Climate. Other movements behind the global aspirations to control climate change from the enhanced greenhouse effect in this series were Deep Ecology, Malthusianism, and Conservationism. (The political roots of the Paris climate agreement, involving Enron CEO Ken Lay and President George H. W. Bush, were explored here.)

BP Sees Large Drop in Global Coal Production, Small Drop in Consumption

Jun 27, 2017 — Institute for Energy Research

According to BP’s Statistical Review of World Energy1, global coal production dropped by 6.5 percent in 2016 with a slower drop in global coal consumption of 1.7 percent. Coal consumption was 2.1 percent higher than coal production in 2016, lowering the level of global coal stocks. China, the world’s largest energy consumer and emitter of greenhouse gases, consumed the less coal in 2016 than in any of the previous six years, dropping its consumption by 1.6 percent from the previous 2015. In the United States, coal consumption dropped by over 8 percent to a level last seen in the early 1980s. Not all countries lowered their coal use, however. Turkey and the Ukraine, for example, increased their use of coal, as did Indonesia and some other Asian countries.

The Philosophic Roots of the Paris Agreement Part IV: Conservationism

Jun 24, 2017 — Institute for Energy Research

Previous posts in this series have linked the philosophical roots of the global climate-change movement to the doctrines of Deep Ecology (optimal, fragile, sacrosanct nature) and Malthusianism (the people problem). A third sister intellectual/activist movement is conservationism, or less-is-more as a physical (versus economic) imperative.[1]

Nonuse or less use for its own sake is different and beyond self-interested, voluntary conservation, or market-based efficiency, wherein cost-minimization/profit-maximization by the economic actor reduces usage. In personal situations, it generally is an affordability decision to not buy; in business settings, it is paring inputs (reducing cost) for a desired, given output.

The Wind Lobby’s Policy Two-Step

Jun 24, 2017 — Institute for Energy Research

On Tuesday, June 20, 2017, the American Wind Energy Association (AWEA) announced the publication of a report touting wind as both a cost-effective and a reliable source of energy for the electricity grid. The report—which was supported with AWEA funding and written by the Analysis Group—presents energy-source diversity on the grid as a necessary good and wind’s emergence as a product of market forces. IER’s initial response can be found here and today we will follow up with an addendum from IER’s chief economist, Dr. Robert Murphy. Murphy’s commentary can be read below:

The Analysis Group report illustrates the familiar two-step in current energy policy debates. On the one hand, it is considered critical to keep in place measures such as state-based Renewable Portfolio Standards (RPS) and federal measures such as the Production Tax Credit (PTC) and the so-called Clean Power Plan (CPP). On the other hand, when critics object to the distortions that these measures cause, the defenders rush to claim that these policies have very little impact on the energy sector, because the major changes are all driven by market fundamentals. So which is it? If most of the changes really are driven by the market, then the interventionists shouldn’t defend RPS, PTC, CPP, and so on with such vigor.

New York’s Bet on Silevo’s Solar Technology Fails to Deliver

Jun 22, 2017 — Institute for Energy Research

New York’s deal with Silevo Inc. is a sham and illustrates the problems that arise when politicians use taxpayer money to attract and reward favored industries. Silevo, which was acquired by Solar City, is a photovoltaic cell and module technology company that developed the proprietary Triex solar modules. New York’s deal with Silevo was to establish a manufacturing facility to produce 1 gigawatt worth (10,000 solar panels a day) of its Triex module technology with the potential of adding an additional 5 gigawatts of capacity in a later phase.

The agreement granted Silevo the use of a 1,000,000-square-foot factory in Buffalo, occupying 88 acres, with a lease that runs for 10 years and a 10-year renewal right. The rent is $1 or $2 per year. New York promised to spend $750 million on the factory and purchasing manufacturing equipment.1