Tuesday, February 10, 2009

My Letter To Air Resources Board re AB 32 Scoping Plan

Below is the letter I wrote to the California Air Resources Board, in which I stated my views in opposition to the ARB adopting the Scoping Plan for AB 32, California's Global Warming Solutions Act of 2006. The ARB dutifully accepted my letter along with hundreds of others, and posted it as letter number 390 on its website here. Below the letter, I have added more comments.

December 9, 2008
Ms. Mary Nichols, Chair
California Air Resources Board
1001 I Street
Sacramento, California 95814

Subject: Comments on Climate Change Proposed Scoping Plan, October 2008

Dear Ms. Nichols,

I am a California attorney who has worked for two decades in chemical engineering world-wide for petroleum refineries, chemical plants, and petrochemical plants. I have substantial experience in the engineering and economics of such facilities and their complex energy systems. The views expressed herein are my own, and in no way reflect the opinions or views of any other person or entity.

I have two main points, first, that the Business As Usual case in the Scoping Plan dramatically overstates the level of greenhouse gas emissions in 2020, and second, that even if one were to accept that global warming is a result of greenhouse gases in the atmosphere, California can do nothing to stop it.

I. The Business As Usual Scenario Overstates Greenhouse Gas Emissions in 2020

Firstly, the Draft Scoping Plan under AB 32 has serious flaws, as has been repeatedly reported to you by others. One serious flaw that I have not yet seen brought to your attention is the assumptions under the Business As Usual scenario for greenhouse gas emissions in 2020. The amount of greenhouse gases in 2020 are overstated because the Business As Usual case does not account for 1) the federal CAFÉ standards of 35 miles per gallon, and 2) innovations that have already occurred even without AB 32 implementation. Below are just four such innovations for your consideration. There are many, many others.

The Pavley standards are only slightly more restrictive than the federal CAFÉ standards, yet the Scoping Plan treats the Business As Usual case as if cars will not attain the federal CAFÉ standards.

The first innovation is improved batteries suitable for hybrid vehicles, and is based on the very recent membrane technology of ExxonMobil. This technology is licensed to EnerDel, a division of Ener1, who manufactures high-technology batteries. Their batteries allow more energy storage in less volume and less weight. Such batteries will greatly decrease the quantities of transportation fuels consumed, and thus the greenhouse gases emitted due to transportation.

The second innovation also applies to transportation, and is a novel material for ultracapacitors. As reported on 9/17/08 in ScienceDaily, “Engineers and scientists at The University of Texas at Austin have achieved a breakthrough in the use of a one-atom thick structure called "graphene" as a new carbon-based material for storing electrical charge in ultracapacitor devices, perhaps paving the way for the massive installation of renewable energies such as wind and solar power.”

The third innovation uses both hybrid batteries and ultracapacitors, and is the patent-pending drive system developed by AFS Trinity that achieves 150 miles per gallon in a sports utility vehicle, the Saturn Vue. Their technology was demonstrated and showcased in January 2008 at the Detroit auto show.
The fourth and final innovation is a process to produce hydrogen from water and sunshine through synthetic photosynthesis, developed in 2004 by scientists at Imperial College, London. This one has some more development work ahead, but the fundamental breakthrough is complete. We will soon see abundant hydrogen from sunny areas, with the hydrogen used as fuel for power generation plants. This power will be as green as hydroelectric power.

It is important to note that none of these innovations were made in California, and none required incentives from AB 32. Yet, all are vitally important in reducing energy consumption and the greenhouse gases from producing energy. Each of these innovations, and many others not mentioned, will independently meet stated AB 32 goals by contributing substantially to economic growth, improving energy efficiency, creating jobs, and reducing greenhouse gases.

II. California’s AB 32 Cannot Stop Global Warming – California is Too Small

Secondly, the ARB cannot ignore the mandate to produce regulations as required under AB 32, even when there is much evidence that the world is not warming, but is cooling instead. However, the ARB should seriously consider the comments made at the December 5th, 2008 meeting of the Economics and Technology Advancement Advisory Committee, especially those regarding relocatable manufacturing leaving the state to escape higher energy prices, renewable energy infeasibility due to non-existent power transmission lines, and the utter failure of the economic models to produce sensible results. Another key comment was the unintended and unforeseen consequences of earlier legislative action on sulfur oxides emissions.

I spoke with Dr. Michael Hanemann, the eminent professor and economist, and he admitted to me that the model cannot be used to predict future behavior, nor is it sensitive to time, nor is it dis-aggregated. Given that the model is highly uncertain, and independent experts recently expressed grave doubts about its results, and many manufacturers will leave California, I urge the ARB to proceed cautiously. It is highly likely that petroleum refineries will find it more attractive to produce California-quality gasoline and diesel in other states and ship the products to California via pipeline. The gentleman from the GM/Toyota venture also made it very clear that cars can be assembled in other states, too, where the regulatory burdens are lighter. California has already seen an exodus of talent and industry over the past few decades, and many more will inevitably follow with AB 32 requirements.

The facts are clear. California consumes approximately ten percent of all the petroleum consumed in the U.S., and approximately five percent of all the electric power produced in the U.S. On a global scale, these values are much smaller, with California’s petroleum consumption representing approximately two and one-half percent of the world’s consumption, and less than two percent of all the power produced in the world. Therefore, even if California were to stop using all energy today, the effect on the world’s greenhouse gases emissions would be negligible. Cutting back to 1990 levels by 2020 will be even less noticeable.

Another dubious statement made in the ETAAC meeting on December 5th asserted that there is a link between lower energy consumption per capita and jobs growth in California. The example given was that household money not spent on energy is spent on latte coffees, thereby creating jobs in coffee shops. More generally, the assertion was that money saved on energy is spent on discretionary items. Such a link is tenuous at best, and more likely non-existent. Any household or commercial savings due to lower energy consumption in California is offset at least partially, and more likely more than offset, by higher energy prices, higher gasoline taxes, higher rents or real estate prices, and high state income taxes. As has been amply demonstrated in 2008, the price of petroleum and its products are far beyond the control of any country, any state, or any company. To a certain extent, the same is true for electric power from gas-fueled plants.

The unintended and unforeseen consequences of regulations aimed at reducing sulfur oxide emissions from combustion of petroleum fuels was that few, if any, facilities installed sulfur scrubbers on smoke stacks. Instead, most industries found it far more attractive to remove sulfur before the petroleum product is burned. It is very likely that, in spite of the ARB’s best intentions and superb team of talented and dedicated experts, AB 32 implementation regulations will also result in some unintended and unforeseen consequences. It is instructive to note that other countries have not succeeded in reducing their greenhouse gas emissions.

III. Conclusion

Innovations and federal regulations already exist that will substantially reduce greenhouse gases and should have been included in the Business as Usual case. The ARB should recognize that severe additional regulations that hobble industry, commerce, and households will lead to high unemployment, mass relocations of energy-intensive businesses to other states, and yet do virtually nothing to accomplish the stated goal of reducing world-wide atmospheric greenhouse gases. The idea that others will follow California’s regulatory example in this area is speculative, at best. The market is already providing hybrid and other low-emission vehicles to buyers, which will amply reduce transportation-sector greenhouse gases emissions. Clean electric power is only a few years away, produced with hydrogen from synthetic photosynthesis.


Roger E. Sowell, Esq.
Law Offices of Roger E. Sowell

California's stated goal in AB 32 is not to eliminate global warming, as my point about California being too small to accomplish that is admitted by the California legislature and ARB. Rather, the AB 32 proponents wish to serve as a leader in reducing GHGs to draconian levels, while growing a robust economy. What is buried deep inside the legislation and studies in support, is that one reason California has less energy consumption per capita is long-standing laws mandating the sale of high-efficiency appliances. Such ordinary items as dishwashers, refrigerators, freezers, and air conditioners are on that list. California's research shows that this is a primary reason that Californians use only 60 percent as much electric power as the average across the U.S. This was accomplished by providing rebates and other incentives to the consumer to purchase the new appliances.

While there is some room to expand the efficient-appliance program, there is not much more room for improvement. Thus, further reductions in energy consumed in households will be rather more difficult. With an expanding population, it is likely that new homes will be built, or new apartments or other dwelling places. These homes/apartments will be built according to the new laws, and use much less energy than existing homes. But that still leaves the problem of the approximately 15 million existing homes/apartments: how will their energy consumption be reduced 30 percent by 2020, and an additional 80 percent by 2050?

One of ARB's answers is through solar panels on rooftops, financed by state programs so that property taxes are increased to pay for the installation. The monthly energy savings are supposed to be more than enough to pay the increased property tax.

When I worked for 25 years or so as an engineer, I studied similar problems of energy efficiency, heat loss, economics of installing energy reduction projects, and related issues. What we found was that insulation is a very good investment, converting single-phase motors to three-phase power is expensive and not a good investment for small motors, and home-generation must be subsidized to be affordable.

But, the state has other ideas. State financing programs will be for 15 to 20 years, and interest rates are likely to be around 5 percent per year. This likely will create incentives for many to install the better appliances and solar panels.

But, renters face a different problem. The building owner must pay to install the new air conditioners, dishwashers, and washing machines. But, the tenant will be the one receiving the lower electric bill. The building owner could increase his rents, but that may be a problem in a rent-controlled building.

I suspect I will have more to write on this later.

Roger E. Sowell, Esq.

To contact Mr. Sowell, see his website here.

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