Mayor and City Council Speaker Announce Support for Mandate of Cleaner No. 4 Heating Oil In NYC Commercial Buildings

Posted by Josh Garrett on July 26, 2010 at 1:29 pm

An early report states that New York City Mayor Michael Bloomberg (right) and City Council Speaker Christine Quinn (left) will both announce their support for a mandate to reduce the sulfur content in heating oil used in large city buildings. (image: nycrubberroomreporter.blogspot.com)

City leaders announced their support today for a measure requiring lower sulfur content in oil used to heat apartments and other commercial buildings in New York City, according to a blog by Rich Kassel of the Natural Resources Defense Council. The announcement comes just days after Governor Paterson signed into law a mandate to lower the sulfur content of no. 2 heating oil, which is used in smaller, residential buildings. No. 4 and no. 6 heating oils (known as “residual fuels” because they are essentially made up of the dregs of the refining process) are major sources of air pollution in New York City. Today’s announcement “will come” from Mayor Michael Bloomberg and City Council Speaker Christine Quinn, according to Kassel. It will refer to New York City Intro. 194, which would lower the maximum sulfur content in no. 4 and no.6 heating oils to 2,000 parts per million (ppm) and also require the heating fuels to contain at least 2 percent biodiesel beginning in October of 2012. Intro. 194 is currently under consideration by the city council.

The best available description of Intro. 194 and its benefits comes from Caswell F. Holloway, Commissioner of the NYC Department of Environmental Protection. Holloway’s prepared remarks for his testimony to the city council regarding the measure on May 28 of this year make clear his support for the low-sulfur and biodiesel mandates. Holloway’s statement notes that no. 6 and no. 4 (a mixture of no. 6 and no. 2 heating oils) are a major source of “air pollutants such as particulate matter, sulfur dioxide, and sulfur oxides,” which can cause or exacerbate respiratory problems. The testimony also references the fact that no. 4 and no. 6 oils’ dirty emissions are not just unhealthy, but unsightly:

That boilers using No. 6 and No. 4 oil pollute more than the other fuels is readily observable by the general public. These boilers are commonly the subject of 311 complaints about the emission of smoke from a building chimney that is caused by incomplete combustion.

Holloway’s testimony also addresses the concern that the low-sulfur and biodiesel requirements in Intro. 194 could lead to a shortage of low-sulfur fuel, but calls the concerns “overstated.” Holloway goes on to predict the enactment of the measure would give a boost to local biodiesel producers who manufacture the green fuel from used cooking oil (one such manufacturer is Tri-State Biodiesel in the Bronx).

New York City building owners who would be most directly affected by the measure have generally opposed it—a note on the Federation of New York Housing Cooperatives and Condominiums’ website claims, “When this new legislation goes into effect, it will be more costly for the consumers.” As is the case with the New York State low-sulfur requirement on no. 2 oil, the effect of the City requiring low-sulfur heating fuel on retail prices is unknown. Commissioner Holloway’s testimony included an estimate that tuning up or otherwise retrofitting oil boilers to run on low-sulfur heating oil will cost some building owners $10,000 or less.

However it affects heating oil prices, Intro. 194 will undoubtedly bring cleaner air to New York City, and that’s good news for all NYC residents, regardless of how they heat their homes.

Home Star Advances in Senate’s Limited Energy Bill

Posted by Michael Hoven on July 23, 2010 at 11:41 am

Home Star promises rebates and energy savings to homeowners who take up energy efficiency projects such as adding insulation. (image: betterinsulation.com)

Senate Democrats have cast aside many of their goals for energy and climate legislation in favor of a more limited bill that focuses on the oil spill and energy efficiency, Politico reported on Thursday. One program that party leaders say will make it into the final bill is Home Star (also known as cash for caulkers), a program that will give homeowners thousands of dollars to make their homes more energy efficient.

The Home Star program is a stimulus program, a job creation program, and an emissions reduction program all wrapped into one. By helping homeowners make improvements that will save them money on their energy bills, Home Star gives people more money to spend on goods and services instead of energy, helping to stimulate the economy. By encouraging people to add insulation, replace windows, and make other improvements, Home Star creates jobs for contractors and companies that perform these home improvements. And lastly, by making homes more efficient, Home Star reduces the amount of energy people use, which reduces emissions of carbon dioxide and other greenhouse gases.

Because of its myriad benefits, Home Star passed the House of Representatives with bipartisan support in a standalone bill (the Home Star Energy Retrofit Act) in May. In the House version of the program, homeowners could get up to $8,000 in rebates, depending on the extent of their retrofit, and the program planned to distribute $5.7 billion in rebates over the course of two years.

While the Senate program could differ in its details, the core of the Home Star program—paying homeowners to make improvements that will save them more money later on—will remain. Senate Democrats may try to push controversial programs such as a cap on carbon emissions later in the fall, but right now they have focused on creating a bill that will pass. If it does, Home Star could soon become a reality—maybe even in time to make your home more efficient for this winter.

Gov. Paterson Signs NY Low-Sulfur Heating Oil Mandate into Law

Posted by Josh Garrett on July 21, 2010 at 11:10 am

New York Governor David Paterson signed a low-sulfur heating oil requirement into law on Tuesday. (image: thegrio.com)

New York Governor David Paterson made official a new law mandating cleaner-burning heating oil in the state on Tuesday. The bill, passed by the state senate in June, requires all heating oil sold in New York to contain no more than 15 parts per million (ppm) of sulfur as of July 1, 2012. The requirement, similar to those recently enacted in heating oil-reliant Maine and Connecticut, has the support of public health advocates, environmental groups, and the heating oil industry in New York.

Supporters repeatedly cite the threefold benefits of low-sulfur heating oil: environmental and health benefits that come from fewer particulate emissions, more efficient operation of heating systems that saves consumers money by cutting oil consumption, and reduced maintenance costs. One Paterson administration official framed the bill’s passage as an important one for New Yorkers in a quote given to the New York Times’ Green blog:

“The bottom line? We’re saving lives,” said Peter Iwanowicz, the governor’s deputy secretary for the environment. “It’s a very big win for public health, the environment and the consumer.”

Opponents of the measure claim that it will drive up heating oil prices by forcing producers to make expensive changes in refining processes. Others say that, because 15 ppm is also the limit on sulfur content for road diesel, competition between diesel vehicles and residential heating systems for the same fuel will lead to tighter supplies that will push prices higher. Heating oil industry officials have dismissed these claims, pointing to the large quantities of low-sulfur diesel that US refiners export to Europe.

While the actual effect of the low-sulfur heating oil requirement will have on prices in New York and other Northeastern states remains to be seen, there is potential for tax policy in New York to significantly raise prices if legislative action is not taken. A statement from Governor Paterson’s office on the signing of the bill urged state legislators to amend it before it takes effect next year to ensure that it will not be taxed as an “enhanced diesel fuel.” Such a qualification would place a 40-cent-per-gallon tax on cleaner heating oil. The statement quoted Paterson as saying,

It is critical, however, that Legislators work to pass a chapter amendment this year that would ensure that tax exempt status of heating fuel oil is maintained. While the law does not take full effect until 2012, I will do everything in my power to ensure that homeowners are protected as quickly as possible, securing a shared win for the environment, homeowners and the health of all New Yorkers.

The passage of a new low-sulfur mandate appears to be good news for heating oil users and all New Yorkers. Assuming the tax issue is resolved by the legislature in the next two years, heating oil consumers have good reason to hope for significant savings in fuel and maintenance costs.

Plan to Update EIA’s Oil Inventory Reporting System Stalls

Posted by Josh Garrett on July 13, 2010 at 1:56 pm

The EIA’s plans to fix major deficiencies in its data collecting and reporting systems have been held up, but the agency continues to release inventory reports every week. (image: eia.doe.gov)

The system for reporting supplies of crude oil, heating oil and other petroleum products in the US is far from perfect. Each week, two organizations—the industry group American Petroleum Institute (API) and the Department of Energy’s Energy Information Administration (EIA)—release reports on stockpiles of crude oil, gasoline, and distillates (a category that includes heating oil and road diesel). The numbers in those reports, released 16 hours apart, are almost always wildly different. Last week, both organizations agreed that crude oil supplies dropped, but showed a 2.3-million-barrel discrepancy in their estimations of how much those supplies declined. Despite 2-million-barrel (and higher) margins of error, both the API and EIA reports are relied on heavily by oil traders and can bring about huge swings in oil prices. Clearly, the US oil industry is in urgent need of more reliable and accurate petroleum supply reporting.

With that need in mind, the EIA set out to improve its out-of-date and deeply flawed data collection processes in March, but has run into problems that has kept those updates from happening, the Wall Street Journal reported on Tuesday. Last September, an independent consulting firm found “critical” errors in the EIA’s systems for collecting and reporting inventory data. By March, the EIA had laid out a plan to fix many of those errors quickly and easily by “asking oil companies to report inventories at each facility, rather than aggregate them by region.” Unfortunately that solution only led to a new problem: more data broken into smaller parts that had to be entered into the EIA computer system by hand. Changes to address the new problem would require a major overhaul of the EIA’s data system, a process that would take years and need several million dollars to fund, said Stephen Harvey, director of the EIA’s office of oil and gas.

While the time and money required for the major overhaul will come eventually, it won’t be any time soon, as a request for funds to fix the system was denied in 2009. The agency is slated to receive an additional $18 million next year, but most of those funds are earmarked for other projects, Harvey said.

Last August, the Federal Trade Commission, in an effort to reduce instances of market manipulation, took steps to tighten regulation of oil companies that reported their own inventory data to the EIA. Today, the EIA is ready to reform its own methods in pursuit of fairer, more transparent, and more accurate petroleum supply data but is hindered by a lack of two crucial ingredients: funding and political support.

Until the EIA gets what it needs to make the changes, swings in crude and heating oil prices based on inaccurate inventory data will continue to affect heating oil users and all other consumers of petroleum products.

EIA: Gulf Drilling Moratorium Will Cut Oil Production by 82,000 BPD

Posted by Michael Hoven on July 8, 2010 at 12:11 pm

A ban on deepwater drilling will curb oil output more than previously estimated, says the EIA, but the agency’s price forecast hasn’t changed. (image: examiner.com)

The Energy Information Administration (EIA), a branch of the Department of Energy, raised its estimate of the impact a moratorium on offshore deepwater oil drilling would have on US oil production, reports Reuters. The agency now says that the ban would curb oil output by 31,000 barrels per day (bpd) in the fourth quarter of this year and 82,000 bpd in 2011.

Last month the EIA forecast reductions of only 26,000 bpd for the fourth quarter and 70,000 bpd for next year.

While the moratorium would halt deepwater drilling, it would not stop deepwater oil production already under way. Though “drilling” is often used to refer to oil production in general, its meaning is technically restricted to drilling holes that search for oil. If a well is pumping oil, then “drilling” has concluded, and that well would be unaffected by the ban. The EIA’s lower forecast for US oil production reflects the moratorium’s impact on deepwater oil drilling projects that were expected to begin producing oil this year or the next.

Because the moratorium would postpone potential oil output, it would have an increasingly large impact on oil production as time wore on, said the EIA:

The reductions in crude oil production increase from a monthly average of about 10,000 bpd in September 2010 to nearly 100,000 bpd by December 2011.

That’s assuming the moratorium will even be in place. A federal court blocked the drilling ban in June, though the Obama administration is appealing the ruling. The administration may also counter with a new moratorium that could allow drilling in some deepwater fields.

Even if the US does lose 82,000 bpd of oil production on average in 2011, the EIA doesn’t think that will have an effect on prices. As Bloomberg reports, the EIA’s forecast for 2011 oil prices remains unchanged from last month’s forecast.

Part of the impact of delayed offshore drilling will be offset by greater oil production elsewhere in the US; though the EIA sees 82,000 fewer bpd coming from the Gulf, it expects total US production to fall by only 26,000 bpd—a small amount in comparison to the 5.37 million bpd that the EIA predicts the US will produce in 2011.

New York State Assembly Follows Senate and Approves Low-Sulfur Heating Oil Bill

Posted by Michael Hoven on June 24, 2010 at 12:50 pm

New York’s legislature has passed a bill to clean up the state’s air, but critics say it unfairly exempts New York City’s heaviest polluting buildings. (image: nydailynews.com)

Legislation that would lower the sulfur content of home heating oil in New York state passed the State Assembly on Wednesday by a vote of 87 to 24, the New York Times reported. The bill passed the State Senate last week and needs only the signature of Governor David Paterson to become law.

Lowering the sulfur content of no. 2 heating oil, the grade of heating oil most commonly used to heat residential buildings, to the same 15 parts per million limit that already applies to on-road diesel would reduce pollution that is harmful to the environment and poses a threat to public health. However, opponents of the legislation say the new requirement would do more harm than good by causing fuel shortages and skyrocketing prices for heating oil consumers.

John Maniscalco, head of the New York Oil Heating Association, a heating oil industry group, assured consumers that the industry is prepared to move to the new fuel standard:

We are highly confident that ultra low sulfur heating oil will remain affordable and widely available while providing our valued customers with a superior, cleaner and more environmentally friendly fuel.

Regional divisions in New York politics have also figured into the debate, with many upstate legislators arguing that the bill would put an unfair burden on upstate residents while exempting New York City from shouldering the costs of the bill. Many large buildings in New York City burn no. 4 and no. 6 heating oil, fuels that are significantly dirtier and have much higher sulfur content than no. 2 heating oil, but the statewide bill applies only to no. 2 heating oil. The bill’s defenders have said that the legislature did not want to preempt what were likely to be more stringent regulations coming from New York City; Mayor Michael Bloomberg’s administration continues to work with the City Council to eliminate the use of no. 4 and no. 6 heating oil.

Governor Paterson has already advocated for a switch to low-sulfur heating oil in his energy plan, and is expected to sign the bill into law.

Obama’s Oil Spill Speech Offers More Support for Energy Bill but Few Specifics

Posted by Josh Garrett on June 16, 2010 at 11:34 am

President Obama addressed the nation on the BP oil spill and energy issues from behind his desk in the Oval Office on Tuesday night. (image: Doug Mills/The New York Times)

President Obama made a sixteen-minute speech from the Oval Office on Tuesday night that addressed the still-gushing oil leak in the Gulf of Mexico and the government’s response to the disaster (watch the full speech here and read the transcript here). The President reiterated his administration’s commitment to stopping the leak and cleaning up the oil that’s drifting toward (and has already arrived at) coastal communities: “We will fight this spill with everything we’ve got for as long as it takes.” But he offered few details of what that would entail and how much it would cost. He also assured Americans that “We will make BP pay for the damage their company has caused” and described the creation of an independently administered trust to dole out payments, but did not address the issue of the existing cap on BP’s economic liability for the damage. The speech offered very little in specific action plans, which earned some unfavorable reviews from pundits and policymakers.

The speech also included a call to action to help change the direction of America’s energy future—away from fossil fuels and toward domestically produced green fuels and other renewable energy sources. Obama repeated previous statements touting the economic benefits of a full-fledged push toward green energy:

As we recover from this recession, the transition to clean energy has the potential to grow our economy and create millions of jobs—but only if we accelerate that transition.

Like his remarks on the oil spill, however, Obama did not enumerate steps that would be taken to perform the acceleration. Though he did endorse the Waxman-Markey climate bill passed by the House of Representatives last year, calling it a “a strong and comprehensive energy and climate bill,” he did not urge the Senate to make debate and passage of the bill a higher priority.

Obama’s speech again reinforced his support for reducing US dependence on petroleum products through energy efficiency and new energy technology. He did not directly address the issue of carbon dioxide emissions, which many believe must be curbed through legislation in order to cut America’s fossil fuel “addiction.” Cap and trade and other proposals aimed at lowering emissions of carbon and greenhouse gases in general would have a direct effect on gasoline and heating oil prices. Obama’s speech did little to help or hinder the chances of the Waxman-Markey bill or any other climate and energy bill through Congress, so don’t expect your energy prices to change any time soon.

As oil continues to gush into the waters of the Gulf of Mexico, the fight over putting a price on carbon emissions and the burning of fossil fuels rages on. When and how measures to curb emissions might be implemented is no clearer now than it was before the President’s speech. The best advice for heating oil users and all other Americans is to invest in energy efficiency as soon as possible to guarantee energy savings no matter which directions the political winds are blowing.

Maine Raises Incentives for Home Energy Conservation Efforts

Posted by Michael Hoven on June 9, 2010 at 11:47 am

A home energy audit, pictured above, is the first step Maine residents can take to get up to $4,000 in energy-efficiency rebates. (image: northernenergytechnology.com)

Just in time for the summer building season, Maine is offering homeowners another $1,000 in rebates on weatherization and home retrofits that increase energy efficiency, reports the Morning Sentinel. Maine’s Home Energy Savings Program, funded by federal stimulus money, already offered $3,000 in rebates, so homeowners are now eligible for up to $4,000 cash back to make energy-saving improvements that will help them use less energy and lower their bills.

To qualify for the rebates, according to the Efficiency Maine website, homeowners must hire a contractor to perform a home energy audit and carry out improvements recommended by the audit. Rebates vary according to the cost of the improvements and the efficiency gained. Increasing efficiency by 25 percent can now earn homeowners back 30 percent of the cost up to $2,500 (it had previously been capped at $1,500); homes made 50 percent more efficient can get reimbursed for 50 percent of the total cost up to $4,000 (formerly $3,000).

The additional rebates represent just part of Maine’s large-scale push for energy efficiency. The stimulus package gave Maine $42 million for weatherization, said Governor John Baldacci, which has gone to fund projects like the Young Mainers Weatherization Corps, a program that funds weatherization for low-income homeowners while training young people to be weatherization professionals. Earlier this spring the Department of Energy awarded Maine another $30 million for a program that would offer energy-efficiency home loans, and on Friday the Department of Energy gave Maine $880,000 to build three weatherization training centers.

Baldacci’s stated goal is to weatherize all Maine homes by 2030. As a state in which 80 percent of homes are heated with oil, Maine is especially susceptible to fluctuations in the price of heating oil. The state’s leadership has opted to take back control of energy expenditures in the way that offers the quickest return on investment: energy efficiency. Weatherization, loan programs, and rebates are all part of what Baldacci called “a full-court press” on Mainers’ energy bills.

Heating oil users, whether they live in Maine or not, can similarly take charge of their energy expenses by seizing the “low-hanging fruit” that Energy Secretary Steven Chu sees in weatherization and conservation. With low up-front costs, simple measures like adding weatherstripping and insulation can reduce greenhouse gas emissions and yield big savings on energy bills year after year.

House Bill Extends Biodiesel Tax Credit and Quadruples Oil Spill Tax

Posted by Michael Hoven on June 2, 2010 at 1:32 pm

An extension of the biodiesel tax credit and a 24-cent hike on every barrel of crude oil passed the House, but they’re still far from becoming law. (image: RitaKim108 via photobucket.com)

Two measures that will have an impact on the heating oil industry were included in a jobs and spending bill that the House of Representatives passed on Friday. The House extend the $1-per-gallon tax credit for biodiesel, a credit that lapsed in January and whose absence threatened the entire biodiesel industry, and quadrupled a tax that goes to the Oil Spill Liability Trust Fund, which experts expect will add a penny to the per-gallon price of heating oil.

The biodiesel tax credit extension and the oil spill fund tax hike were two provisions in a House bill, called the American Jobs and Closing Tax Loopholes Act (H.R. 4213), that consisted of a variety of tax measures, spending provisions, and programs aimed at job creation. Extensions of unemployment benefits and of Medicare payments to physicians formed the centerpiece of the bill, as Politico reported, and the large price tag that accompanies those extensions made for a difficult fight in the House. The Senate will debate a similar measure after its Memorial Day recess, and then a compromise bill between the two chambers will have to be created and sent to the president, meaning it could be weeks (or longer) before these provisions take effect.

Every delay adds to the pain the biodiesel industry is already experiencing, having spent months struggling and hoping for the renewal of the tax credit. The tax credit started six years ago, and while it had to be renewed every year it had never been allowed to expire. Biodiesel Magazine heard from Manning Feraci, the vice president of federal affairs for the National Biodiesel Board, who summarized the grim effects that the tax credit’s expiration has had on the industry and emphasized his industry’s potential for job creation:

Since the incentive has lapsed the industry has shed thousands of jobs, shuttered plants and is struggling to survive. Timely reinstatement of [the] biodiesel tax incentive will undoubtedly reverse this troubling trend and allow the industry to create over 12,000 new jobs in this year alone.

While final passage of the extension of the biodiesel tax credit would take care of unfinished business that has been put off since December, the catastrophe unfolding in the Gulf of Mexico prompted fresh consideration of the oil spill tax. The fund has $1.5 billion dollars, but if it’s needed to pay for the damages in the Gulf it will quickly be exhausted—costs are estimated to run more than $14 billion. Raising the tax on crude oil from 8 cents per barrel to 32 cents per barrel could raise $12 billion over the next decade to help pay for the next oil spill. Since the tax would be imposed on crude oil, oil producers (e.g., Exxon or Chevron) would pay the tax, but the costs would in all likelihood be passed on to consumers. Despite increasing the tax by 400 percent, analysts expect the impact on consumers to be barely noticeable, adding a penny or less to the per-gallon price of finished products such as heating oil and gasoline.

As the petroleum industry faces an environmental, economic, and public relations crisis, the biodiesel industry received a life preserver from the House of Representatives. The oil spill tax hike could nudge up the cost of home heating oil, but that price increase could be mitigated by government support of the biodiesel industry. As the biodiesel industry expands the costs of production fall, lowering the price of the green heating fuel that many state and local legislatures are requiring to be blended with petroleum-based heating oil.

Heating Oil Weekly Roundup: Oil Spill Records, Energy Star Hotels, and the Climate Bill’s Slow Progress

Posted by Michael Hoven on May 28, 2010 at 11:55 am

(image: Tom Toles via climateprogress.org)

Exxon has set records for profit, but its rival BP just took a different record from Exxon. Unfortunately it’s the record for the largest oil spill in US history, as Matthew Scott reports for the news site DailyFinance. The Deepwater Horizon spill has blitzed past the previous record-holder, the Exxon Valdez oil spill of 1989, and could set a record as untouchable as Joe DiMaggio’s hitting streak.

Consumers are familiar with the Energy Star label on appliances, the EPA certification that an appliance—whether it’s a refrigerator, clothes washer, or oil boiler—meets a high standard of energy efficiency. Now the EPA is using the same Energy Star rating to let eco-minded travelers know which hotels are doing their part to use less energy and contribute fewer carbon emissions, and has a list of hotels that have earned the Energy Star stamp of approval. No word on whether the hotels’ energy savings lead to lower room rates for visitors.

If it seems like we’ve been watching the progress of the Senate’s climate bill for years, that’s because we’re rapidly approaching year number two of Senate debates and negotiations. Now, Ben Geman of The Hill’s E2 Wire blog reports that a coalition of business and environmental interests—including utilities and oil companies like Shell—has asked (again) for Congress to pass “bipartisan, national energy and climate legislation that increases our security, limits emissions, and protects our environment while preserving and creating American jobs.” What the Senate will actually do remains a total mystery.

Interior Secretary Salazar: Offshore Oil Drilling Will Continue

Posted by Michael Hoven on May 19, 2010 at 11:43 am

Sec. Salazar testified before the Senate on Tuesday. (foxnews.com)

In the aftermath of the collapse of the Deepwater Horizon rig in the Gulf of Mexico and the ongoing oil spill, new permits for offshore drilling have been temporarily halted, and some voices have called for that pause to be made permanent. Opponents of offshore drilling include politicians like Bill Nelson, a Democratic Senator from Florida, who has said that he will filibuster any climate bill that includes provisions for expanded offshore drilling.

This opposition, while understandable, is in need of a reality check, according to Secretary of the Interior Ken Salazar. The Houston Chronicle reported on Salazar’s testimony to the Senate on Tuesday, in which the sometime critic of the oil and gas industry emphasized the essential role that drilling in the Gulf of Mexico plays in supplying America’s energy:

“The reality is that we will be depending on oil and gas as we transition to a new energy future,” Salazar told a Senate energy committee. “And when you look at certain areas, specifically in the Gulf of Mexico, that is where we know there are huge oil and natural gas resources.”

“You are not going to turn off the lights of this country or the economy by shutting it all down,” Salazar added.

Salazar criticized his own department’s Minerals Management Services for “lax” enforcement of safety regulations, but noted that 36,000 wells had been drilled without an accident on the scale of the current oil spill.

A recent survey shows that US voters share Salazar’s opinion, with 64 percent of poll respondents in favor of offshore drilling. While the BP oil spill may serve as a wake-up call for more oversight of offshore drilling, the oil reserves are too promising—and our economy too dependent on oil—to end the exploration and production of offshore sources of oil. To halt offshore drilling would shrink the supply of oil and cause spiking prices of petroleum products such as heating oil, gasoline, and diesel, an outcome that politicians and voters alike are eager to avoid.

Senate Climate Bill Would Give Valuable Emissions Allowances to Refiners, Heating Oil Industry

Posted by Michael Hoven on May 18, 2010 at 2:17 pm

As a weekly allowance can teach a child the value of money, so emissions allowances are the highly prized training wheels to help the energy industry adapt to a new price on carbon. (image: timeinc.net)

Under the cap on carbon emissions provided for by Sen. Kerry and Sen. Lieberman’s American Power Act, nearly a quarter of emissions permits would initially be auctioned and the rest would be distributed as free emissions allowances. Electricity providers would receive the bulk of emissions allowances but some allowances would also be allocated to petroleum refiners and home heating oil consumers to help them weather the transition to putting a price on carbon emissions, reported ClimateWire (via the New York Times) on Monday.

The Senate bill, unlike the Waxman-Markey bill passed by the House, does not envision an economy-wide cap and trade system. Instead, it proposes different programs for different sectors of the economy. The bill targets the coal and natural gas industries that provide electricity through a cap on carbon emissions, while a fee on transportation fuels affects the petroleum industry. However, the Kerry-Lieberman bill allocates emissions allowances to a number of other carbon-heavy industries, and allowances will be distributed to cover emissions from refineries and from home heating oil and propane.

Industries lobbied hard to receive greater proportions of the allowances, since free allowances delay or mitigate the costs of reducing carbon emissions. Electricity providers came out as the big winners with 51 percent of the allowances given in 2013, the first year the emissions cap would take effect. Refiners would receive 4.3 percent of allowances, and 1.9 percent will be allocated to home heating oil and propane. Those seem like relatively paltry sums, but since refiners only have to account for their direct emissions—not the emissions of the finished oil products they turn out—and the amount of emissions produced by home heating oil and propane is paltry when compared to the emissions of coal-fired power plants, those allowances could go a long way to keep home heating fuels affordable while the industry works to reduce emissions.

Exactly how the allowances will be administered remains unclear. The allowances for home heating oil and propane will be distributed to the states, and though ClimateWire says the allowances go to “energy consumers using home heating oil and propane,” the impracticality of measuring emissions from individual households means that producers or distributors of heating fuels will be held accountable for reducing emissions. The bill (the full 987-page pdf is available at Sen. Kerry’s website) does refer to “home heating oil and propane consumers,” but it also refers to “natural gas consumers” who heat their homes with natural gas and specifies that allowances will go to local distribution companies. Similarly, allowances for heating oil emissions will probably end up in the hands of wholesale or retail heating oil suppliers.

Because heating oil suppliers are not personally responsible for large-scale emissions as are coal-fired power plants, for example, the bill specifies that allowances for home heating oil be used in a different manner. A coal plant could reduce emissions, and thereby reduce the cost of paying for carbon emissions, by improving how coal is processed and converted into electricity. A heating oil supplier, on the other hand, could only cut emissions by improving the energy-efficiency of heating oil users. To encourage this, the bill calls for all allowances to be used to help consumers through a combination of energy-efficiency and heating assistance programs. Greater efficiency will help cut emissions and lower heating bills, and to the extent that the price on carbon emissions gets passed on to consumers, a well-funded heating assistance program will help keep consumer costs down.

How much money the allowances will be worth is also unclear, but analysis of earlier climate bills estimated that 1 percent of allowances was worth $600 million to $1 billion. If that holds true, the 1.9 percent of allowances granted to home heating oil and propane would amount to roughly $1.2–2 billion. Since states are supposed to administer the program and ensure that the money saved by allowances is used to fund energy-efficiency and heating assistance programs, this $1.2–2 billion would help consumers, not industry.

Will that be enough to keep heating oil users from spending more as a result of the climate bill? Perhaps, if everything works as Kerry and Lieberman plan, but the best-case scenario is likely that rising prices will be mitigated by refunds aimed at helping consumers, keeping price hikes from being painful even if they are noticeable. With individual states in charge of heating oil and propane allowances, there could also be a wide divergence in heating oil prices as states take different approaches to administering the allowances.

Of course, this assumes that the climate bill passes the Senate at all, which is far from guaranteed. Even the absence of a climate bill, though, does not ensure affordable home heating oil.

Heating Oil Weekly Roundup: Gulf of Mexico Oil Spill, Climate Bill Comparison, and a TV that Watches You

Posted by Michael Hoven on May 14, 2010 at 3:35 pm

(image: Jeff Parker, Florida Today via cagle.com)

As the cartoon indicates, nature has some of its own methods for dealing with an oil spill. (Unfortunately, treating the oil slick like a birthday cake is not one of them.) For National Geographic, Christine Dell’Amore examines the microbes and chemical processes that the Gulf of Mexico’s ecosystem uses to defend itself.

One engineer says he knows how to clean up the oil spill, but he can’t convince anyone to try his plan. Mark Warren at Esquire has the story of the former Saudi Aramco engineer who says he used supertankers to suck up a 700-million-gallon oil spill in the Arabian Gulf.

Want to know the differences between the Waxman-Markey climate bill that passed the House and the American Power Act that Kerry and Lieberman proposed in the Senate? You could read the two climate and energy bills. Or you could look at Brad Johnson’s chart comparing them over at the Wonk Room.

Energy efficiency is good, but Sony’s latest advance is, well, a little creepy: a TV that watches you while you sleep. The UK’s Guardian explains that certain models of the Sony Bravia have facial recognition software that allows the TV to turn off if you fall asleep on the couch. This and a handful of other energy-saving innovations could cut electricity consumption by 30 percent. No word on whether or not the TV wakes you up if you’re snoring.

Kerry, Lieberman Finally Reveal Energy and Climate Bill

Posted by Michael Hoven on May 12, 2010 at 2:33 pm

Despite being unveiled in the wake of the devastating oil spill in the Gulf of Mexico—which left the above oil slick—the Kerry-Lieberman energy and climate bill contained few surprises. (image: AP via huffingtonpost.com)

After months of talks and weeks of promises to reveal the details, Sen. John Kerry (D-MA) and Sen. Joe Lieberman (I-CT) held a press conference on Wednesday to unveil their energy and climate bill titled the American Power Act, reports the Washington Post. The substance of the bill is familiar to those who have followed its progress—its key elements have been known since early March—but the oil spill in the Gulf of Mexico and the departure of Sen. Lindsey Graham from the front lines of the debate have altered offshore drilling provisions as well as the political calculus in the Senate.

Kerry and Lieberman’s bill would establish a cap on carbon emissions from utilities, a fee on transportation fuels, and offer incentives for the expansion of nuclear power and offshore oil drilling. Expanded nuclear and offshore drilling were meant to entice reluctant senators to vote for the bill, but the recent BP oil spill in the Gulf of Mexico has hardened some senators’ opposition to offshore drilling and forced a reappraisal of the bill’s offshore proposals. Kerry and Lieberman added a provision to the bill that would allow states to veto offshore drilling within 75 miles of its coast, even if the drilling occurs in a neighboring state’s waters.

With few surprises in the substance of the bill, a lot of commentary has been devoted to the political challenges the bill faces, especially since it appears to have lost its key Republican backer, Lindsey Graham. Graham, for his part, has fled what he believes to be a sinking ship. By his lights, the attempt to pass legislation on immigration this year—sure to be a hard-fought battle—has ruined any chance to pass an energy and climate bill, which is also hotly contested.

Though the language in the bill focuses on transportation fuels, not heating fuels, the added cost to oil companies that a fee on transportation fuels would impose would increase the cost of heating oil, as well. Much of the bill could still be changed as negotiations proceed in the Senate, and it may be the case that no version of the bill can secure the 60 votes needed to defeat a filibuster and be passed by the Senate.

HeatingOil.com Interview: State Legislators in Support of Biodiesel Heating Oil

Posted by Josh Garrett on May 12, 2010 at 1:09 pm

(image: nefi.org)

While attending the Bioheat Conference at Yankee Stadium on Tuesday, HeatingOil.com spoke with two state legislators on the subject of biodiesel and mandates that would expand the green fuel’s use in heating oil systems. Annette Quijano of New Jersey’s 20th district and Marc Alessi of New York’s 1st district both showed an interest in promoting biodiesel as a clean, renewable fuel—an interest that both legislators have backed up with action in their respective state houses. Expect to hear more about Assemblypersons Quijano and Alessi here at HeatingOil.com as they shepherd biodiesel policy through the New Jersey and New York legislatures.

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Cash for Caulkers Passes House, Would Give Homeowners $5.7 Billion in Rebates

Posted by Michael Hoven on May 10, 2010 at 11:50 am

The Home Star bill—or, Cash for Caulkers—could create more than $9 billion in energy savings. (image: csmonitor.com)

Making your home more energy efficient could soon be more affordable than ever. On Thursday, the House of Representatives passed the Home Star Energy Retrofit Act—more informally known as Cash for Caulkers—to help homeowners make upgrades to lower their utility bills, said the Associated Press. The program, slated to cost $5.7 billion over two years, would also create jobs in the construction industry and reduce carbon emissions, its supporters say.

The Home Star bill proposes two different rebate programs that consumers could choose from. The first, named the “Silver Star” program, would offer rebates of up to 50 percent on a variety of home improvement projects and purchases of energy-efficient appliances. From weatherstripping and insulation to window replacements and efficient furnaces, homeowners could get a combination of rebates up to a total of $3,000.

The second program, dubbed the “Gold Star” program, requires a more extensive retrofit but also yields greater rewards. Homeowners who undergo a home energy audit and make improvements that increase energy efficiency by 20 percent would get a $3,000 rebate, the same amount as the maximum rebate under the Silver Star program. But under the Gold Star program, homeowners can earn more upgrades when they increase efficiency beyond 20 percent. For every 5 percent increase in efficiency beyond the 20 percent mark earns another $1,000, up to a maximum total rebate of $8,000.

Consumers would get the rebates, or discounts, directly from vendors at the point of sale. Vendors would then apply to the government for Home Star funds. In this way, the program would be more streamlined than the weatherization program included in the stimulus package, which has been slowed down by bureaucratic hurdles, as Fox News points out.

The Home Star bill had bipartisan sponsorship—Rep. Peter Welch (D-VT) and Rep. Vernon Ehlers (R-MI) sponsored the bill—and received the backing of an unlikely coalition of environmental and business groups. However, when it came to the vote House Republicans mostly opposed the bill, citing concern over the high price tag when the House has not figured out a way to pay for the bill. John Boehner of Ohio succinctly summarized the Republican opposition:

We are going to authorize $6.6 billion of money we don’t have so we can caulk homes?

Home Star’s supporters counter that the program, expected to be used by 3 million households, would save $9.2 billion in energy costs over the next 10 years. With more money in their pockets, consumers could increase spending on other goods and stimulate economic recovery.

Don’t rush out and begin making purchases for your home retrofit just yet—the bill now moves to the Senate, which is still tangled up with a financial regulation bill and possible climate and energy legislation. But Home Star’s supporters think the bill could be on the legislative fast track, and Rep. Ed Markey (D-MA) has predicted that the bill will become law this summer, just in time for households to weatherize and prepare for the winter.

CT Legislature Approves Energy Bills that Include Heating Oil Low-Sulfur and Biodiesel Mandates, Incentives for Efficient Equipment

Posted by Josh Garrett on May 6, 2010 at 4:21 pm

Governor Jodi Rell must now consider two bills that could have a profound effect on heating oil dealers and consumers in Connecticut. (image: WNPR - Connecticut Public Radio via flickr.com)

In late March, HeatingOil.com covered a debate over the pros and cons of Connecticut State Senate bill SB 382, which calls for less sulfur and more biodiesel in the state’s heating oil. On Wednesday night, proponents of the bill scored a major victory when the Connecticut State House passed the bill by a vote of 146-1 following its unanimous passage by the Senate on Monday. The bill is now awaiting the approval of Governor Jodi Rell.

A second and more controversial bill, SB 463 was also passed by the Connecticut Senate on Tuesday night and given final approval by the House after an all-night debate at 6:01 am Wednesday morning, the Connecticut Mirror reported. SB 463’s main goal is to bring down’s Connecticut’s electricity prices, which are the second highest in the nation, requiring state utilities to lower rates by 15 percent by July of 2012. The bill also provides a major incentive for Connecticut residents to upgrade their heating systems and make them more energy efficient. Under the proposed law, Connecticut electric companies would be required to create a loan program to fund consumer improvements to their homes that would save energy. The program would offer low-interest loans to homeowners for improvements like installing better windows, adding insulation, and purchasing a more efficient furnace or boiler. According to a summary of the bill posted to the assembly’s website on April 7, “The energy efficiency measures can be designed to save electricity, natural gas, or heating oil.”

Although they were largely overshadowed in news coverage by the electricity price-reduction measure, the biodiesel and low-sulfur mandates and energy-efficiency loan program are big news for heating oil users and other citizens of Connecticut.

Requiring lower sulfur content and higher blends of biodiesel (beginning with 2 percent in 2011 and building to 20 percent by 2020) in the state’s heating oil means heating oil consumers could be enjoying the benefits of those provisions—cleaner-burning and more efficient heating systems—as soon as next year. However, political considerations required proponents of the bill to engage in some last minute horse-trading that tacked on an unusual proviso. According to an email sent by Independent Connecticut Petroleum Association president Gene Guilford, proponents had to strip a “fiscal note” from the bill that threatened its passage and did so by

amending the mandate language to require that these changes do not take effect until MASS, NY and RI pass similar laws. So CT will move, when we have nice partners and neighbors who do the same.

Assuming Governor Rell signs the bill into law, it will only take effect when the three neighboring states listed above all enact the same requirements. When Rhode Island and New York will both implement low-sulfur and biodiesel mandates is anything but clear, but Massachusetts mandates are on the books and will go into effect in July. The New York legislature is currently considering a bill containing low-sulfur and biodiesel requirements for heating oil. The heating oil requirements in SB 382 are a bold step toward greener and more efficient heating in Connecticut, but the “neighbors” provision will indefinitely delay practical implementation of that move.

Although the energy efficiency loan program in SB 463 provides a strong incentive for residents to make their homes more energy efficient (on top of existing federal tax breaks), the bill’s controversial nature makes it less likely to pass than SB 382. While citizens’ groups like the AARP and environmental groups like the Connecticut Fund for the Environment have strongly supported the bill in its entirety, they have faced stiff opposition in the form of lobbying efforts by Connecticut utilities. In addition, some legislators and citizens are skeptical of the means outlined by the bill that will supposedly lead to lower electricity prices, and others say it was passed too quickly to have been well thought out.

Governor Rell will no doubt have these criticisms in mind as she considers whether to sign or veto the measure.

Graham Walks Away from the Energy and Climate Bill He Helped Write

Posted by Michael Hoven on April 26, 2010 at 11:31 am

By withdrawing his support for the climate bill he co-sponsored, Sen. Lindsey Graham could kill any chances at passing energy and climate legislation. (image: msnbc.msn.com)

The grand unveiling of the climate bill, which had been scheduled for Monday, was called off after Sen. Lindsey Graham (R-SC) threatened to walk away from the legislation. As the only Republican engaged in drafting the bill, Graham would have to play a pivotal role in the effort to win enough Republican support to avoid a filibuster on climate and energy legislation. The bill’s other sponsors, Sen. John Kerry (D-MA) and Sen. Joe Lieberman (I-CT), remained optimistic that Graham would return to the fold and the bill would move forward, but without Graham’s support the bill may have little chance of success.

Graham said on Saturday that he would abandon the climate bill if the Senate moved immigration reform ahead of climate on its legislative agenda. In a letter to environmental and business leaders that he had worked with on the bill (available on the Washington Post’s website), Graham explained his decision:

I want to bring to your attention what appears to be a decision by the Obama Administration and Senate Democratic leadership to move immigration instead of energy. Unless their plan substantially changes this weekend, I will be unable to move forward on energy independence legislation at this time. I will not allow our hard work to be rolled out in a manner that has no chance of success.

Graham called the push for immigration reform a “cynical political ploy” that was aimed at the upcoming midterm election. The logic here, expressed most bluntly by New York Times columnist Thomas Friedman, is that the Democrats are eager to secure Hispanic votes in the wake of an Arizona law that expanded police powers to combat illegal immigration. The environment and energy news service ClimateWire (published on the Times’ website) quotes Friedman speaking on CBS’s Face the Nation: “I think they’re worried that Harry Reid is going to lose in Nevada, where you have a big Hispanic vote.”

Kerry and Lieberman insist that the climate and energy bill will continue to move forward, the Washington Post reports. “This certainly is not over, and to me, we’ve got a good bill,” said Lieberman. Kerry echoed that sentiment, saying that Graham’s current resistance was a “minor hiccup.” He added, “We’re going to get this done.”

A broad coalition had been scheduled to attend the rollout of the bill on Monday, including leaders of the Christian Coalition, ConocoPhillips, and Duke Energy. Supporters of the bill are nervous that the diverse coalition cannot be held together indefinitely, and certainly not without the second half of bipartisan support that Graham provided.

If Sen. Harry Reid, the majority leader who controls the legislative agenda, gave a clear signal that energy and climate legislation would take priority over immigration, Sen. Graham would likely renew his support of the bill. However, Reid has so far indicated that the Senate will work on both bills and move forward with whichever bill is ready.

That may not be enough to entice Graham to return to a leadership role on climate and energy legislation. Without Graham, no energy and climate bill is likely to pass—or even be brought to a vote—this year. This of course means that potential sweeping changes to the energy industry that would affect consumer prices for products like heating oil are postponed indefinitely.