Energys Horsemen of the Apocalypse Taxes, Cap&Trade, Fracing,
Energys Horsemen of the Apocalypse Taxes, Cap&Trade, Fracing, Green Pestilence H. Martin Gibson 2001 Ross Avenue, Suite 3000 Dallas, Texas 75201 The First Horseman Tax 1. Oil and Gas Company Tax Preferences 2.Termination of Oil and Gas R&D The First Horseman Tax
1. Oil and Gas Company Tax Preferences: Repeal Enhanced Oil Recovery Credit Repeal Marginal Well Tax Credit Repeal Expensing of Intangible Drilling Costs Require Cost Depletion/Amortization Change Amortization to 7 years The First Horseman Tax 1. Oil and Gas Company Tax Preferences: Repeal Deduction for Tertiary Injectants Repeal Passive Loss Exemption
for working interest Non-Operator deductions treated as passive and cannot be deducted against active income. Repeal Manufacturing Tax Deduction Section 199 deduction for all American manufacturing; begins at 3 % growing to 6% and stops at 9%; deduction limited to 50 % of U.S. W2 payroll. 2008 limits deduction to oil and natural gas to 6% The First Horseman Tax 1. Oil and Gas Company Tax
Preferences: Eliminate Preferential Time Period Treatment for G&G Amortization for Independents Repeal Percentage Depletion for Oil and Natural Gas. The First Horseman Tax Why? Oil and Gas subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices. GAO study indicate the U.S. GOM and other U.S. oil and gas producing regions are attractive places to invest. Any claim that this
proposal would have a significant impact on oil and gas production is unfounded. Oil and gas are internationally traded commodities as a result, domestic oil and gas production subsidies do not significantly reduce prices resulting in higher returns to the oil industry. To further Presidents vision of a green economy. The First Horseman Tax Status: Only in Presidents Budget Start January 1, 2011 Expect they will include it in an energy tax measure to be
taken up by the Senate Finance Committee next Fall. The Second Horseman Regulation of Hydraulic Fracing Current form: Excludes from the Safe Drinking Water Act the following: the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.
Proposed Form: Deletes Exclusion; EPA may now regulate all fracing. The Second Horseman Regulation of Hydraulic Fracing Status: House H.R. 2766 House Committee on Energy and Commerce Senate S. 1215
Senate Committee on Environment and Public Works. The Second Horseman Regulation of Hydraulic Fracing Removing this exemption Require the EPA to establish regulations for state programs for fracing. Could (i) prohibit fracing altogether, (ii) restrict the fluids that can be used, (iii) subject fracing to general Underground Injection Control
programs of the SDWA. The Second Horseman Regulation of Hydraulic Fracing API Fluid restrictions EPA would prohibit water containing surfactants or detergents nitrogen foams and gels which could interact with water and create ammonia acid used to regulate the pH Allow water with additives such as salt and
iron control and CO2 foams and gels The Third Horseman Cap and Trade 1,427 Pages Voted On Without Reading Democrats who voted against (29) were in Districts McCain carried Republicans who voted for (8), seven in Districts Obama carried 5 Major Parts
Clean Energy Energy Efficiency Reducing Global Warming Pollution Transition to Clean Energy Agricultural and Forestry Related Offsets The Third Horseman Clean Energy Renewable Energy Standards By 2020, 20% of electric generation must be from renewable sources BUT up to 8% can come from efficiency
gains. Present projections say cannot get to that level. What happens? Pay $25/megawatt hour, adjusted for inflation. Tax Paid to State Used for renewable energy or energy efficiency. The Third Horseman Clean Energy Carbon Capture and Sequestration $10 billion Capture CO2 as coal is burned -- inject it into the ground Volume Increase
Carbon molecular weight is 12 Carbon Dioxide molecular weight is 44.01 May run through suitable reservoirs quickly. Clean Transportation Local utility must provide electric charging stations in parking garages, gas stations, streets, etc. Battery exchanges. Money for electric drive vehicle manufacturing Require 15% gasoline 85% ethanol or methanol to be produced to the extent ordered by EPA May require bulldozers and tractors to meet fuel efficiency standards The Third Horseman Energy Efficiency
Smart Grid Allows utility to adjust electricity flows for maximum efficiency Local utility can shut off your electricity Other Sets standards for light bulbs for your home. Energy Innovation Hubs Centers for Energy and Environmental Knowledge and Outreach. Nuclear and advanced technologies Clean Energy Deployment Administration Energy Technology Advisory Council The Third Horseman
Energy Efficiency Building Energy Efficiency Lighting and Appliance Efficiency Transportation Emissions Industrial Efficiency The Third Horseman Energy Efficiency Energy Efficient Neighborhoods All home appraisals must include renewable energy sources, energy efficiency and energy-conserving improvements. Bank must provide home loan borrower
with info on energy-saving improvements and how to obtain better terms for mortgage secured by home meeting energy efficiency standards. HUD given authority to guarantee loans for eligible sustainable building elements home The Third Horseman Cap and Trade Reducing Global Warming Pollution Goals
97% of 2005 levels in 2012 80% of 2005 levels in 2020 58% of 2005 levels in 2030 17% of 2005 levels in 2050 Lots of Reports The Third Horseman Cap and Trade Reducing Global Warming Pollution 7 Greenhouse Gases including CO2
Anything Else EPA Says Greenhouse Gas Registry May usurp EPAs March 10, 2009 reporting rules. Allowance is not a property right. The Third Horseman Cap and Trade Reducing Global Warming Pollution Allowances stated in millions
2012 2016 2025 2030 2040 2050 4,627 million 5,482 million 4,294 million 3,533 million 2,284 million 1,035 million
Have to have one allowance for each metric ton emitted. EPA may adjust Correct base data Compensatory Allowance The Third Horseman Cap and Trade Starts January 1, 2012 Must have one allowance per ton by April 1, 2013 Granted some; must buy the rest or not emit. Violations
Pay twice the auction clearing price for the earliest vintage year emission allowances in the last auction The Third Horseman Cap and Trade Offset Credits Unclear determined by the Offsets Integrity Advisory Board. Will list project types one year after enactment. Agricultural Offsets will be determined by Department of Agriculture.
International Offset Credits credits based on activities that reduce or avoid greenhouse gas emissions or increase sequestration in a developing country. Regs in 2 years, but 2.5 billion allowances in reserve to reduce price spikes. Can use offsets instead of allowances. The Third Horseman Cap and Trade Covered Entities Anything emitting 25,000 or more tons of CO2
These regardless of emission level Any electricity source Any Petroleum Refinery Geologic sequestration site The Third Horseman Cap and Trade Granting of Allowances. Electricity Consumers 43.75% first two years; none after 2029 To LDC Must be used to benefit ratepayers Rebates cannot be distributed according to usage, but must be with regard to the fixed portion of
bills or as a fixed credit or rebate. Natural Gas Users 9%; none after 2029 To LDCs based on volume delivered 1/3 to energy efficiency, balance to ratepayers The Third Horseman Cap and Trade Granting of Allowances Home Heating Oil and Propane 1.875% Low Income Consumers 15% Trade Vulnerable Industries 2%/15%
in 2014 Carbon Capture and Sequestration 1.75% Energy Efficiency 9.5% Energy Innovation Hubs 0.45% Clean Vehicle Technology 3% The Third Horseman Cap and Trade Granting of Allowances Refineries 2% (none in 2012 or 2013; none after 2026) Additional 0.25% to small refiners Lawyer math says refineries will have to purchase 95% of their
allowances starting in 2014 One gallon of gasoline = 19.4 pounds of CO2 Its the addition of two oxygen atoms for each carbon atom. Lawyer math assumes all refinery production yields 19.4 pounds. Not right: diesel yields 22.2 pounds. The Third Horseman Cap and Trade Granting of Allowances 0.5% in Climate Change Worker Assistance Fund 1% post 2026 0.9% for Domestic Adaptation in Climate
Change Health Protection and Promotion Fund 3.9% after 2026 0.385% for Wildlife and Natural Resource Adaptation 1.54% post 2026 1% for International Adaptation 1% for International Clean Technology Deployment Anything left over Deficit Reduction Climate Change Consumer Refund starts in 2026 The Third Horseman Cap and Trade One Example the 0.9% for Domestic Adaptation 2 yrs EPA or other fed agency designated
by the President must issue regulations 1% for Indian Tribes Balance to the states based on: the per capita income of the US divided by the per capita income of all individuals in the State Climate Change Consumer Refunds same way Use of funds: to build resilience to the impacts of climate change more flooding and cyclones, more heavy rain, water scarcity, heat waves, droughts, sea level rise Requires State and Tribal Climate Adaptation Plans Reporting
The Third Horseman Cap and Trade Other Modifies payable, earned income credit for individuals with no children to $11,640. Allows Sec. Treasury to transfer fund to SS and Medicare without appropriation. Creates National Climate Service and many more Sets up auction to sell, quarterly, allowances Davis-Bacon Act applies to all laborers and mechanics employed by contractors and subcontractors on any project or no allowances. Carbon Market Assurance FERC regulates spot market for allowances; CFTC over
derivative markets and credit default swaps Deleted Swap exemption; limits number of hedges held by any person Can prohibit imports if results in carbon leakage. The Third Horseman Cap and Trade Prognosis No final action until 2011 or 2012 Health Care, SC nomination, financial services reform, annual appropriations bills.
Waxman-Markey Cannot pass the Senate Likely Energy Legislation Renewable Electricity Standard Security Threats to electric grid Energy Efficiency Might authorize additional OCS leasing [?] The Third Horseman
Cap and Trade Prognosis Senate Procedural Against using special budget procedures Point of order if would cause significant job losses in manufacturing and coal-dependent regions (blue states) Must not increase electricity or gasoline prices The Third Horseman
Cap and Trade EPA May Do It Instead U.S. Supreme Court Clean Air Act of 1990 authorizes EPA to regulate CO2 because meets the definition of air pollutant July, 2008 EPA Notice of Rulemaking to regulate greenhouse gases under the Clean Air Act. April, 2009, EPA proposed finding that greenhouse gas tailpipe emissions anticipated to endanger public health If Congress does not act, expect EPA to make the endangerment finding.
The Fourth Horseman Green Pestilence Can we save the planet? Under cap and trade, US emissions should be 83% of the 2005 level by 2050. Thats 4,980 million metric tons of CO2 reduction It takes 14,138 mmt CO2 to raise the CO2 concentration by 1 part per million. It takes 125 ppm to raise the temperature 1 degree Centigrade The Fourth Horseman
Green Pestilence Can we save the planet? Therefore it take 1,767,250 mmt to raise temp 1 degree 4,980 mmt divided by 1,767,250 = 0.0028C/year Multiply by 40 years = 0.112C The Fourth Horseman Green Pestilence The Fourth Horseman
Green Pestilence The Fourth Horseman Green Pestilence EPA dissident Note on EPA Endangerment Finding. Lack of observed upper tropospheric heating in tropics Satellite data show no appreciable temp increases 19781997 Models ignore PDO, AMO and ENSO natural variation Solar Variability ignored Other natural effects Surface temp data hopelessly corrupted by urban heat island effect Most disturbing
EPA had no analysis of whether GW or AGW is real Ages-Old Icecap at North Pole Is Now Liquid, Scientists Find New York Times By JOHN NOBLE WILFORD Published: Saturday, August 19, 2000 The North Pole is melting. The thick ice that has for ages covered the Arctic Ocean at the pole has turned to water, recent visitors there reported yesterday. At least for the time being, an ice-free patch of ocean about a mile wide has opened at the very top of the world, something that has presumably never before been seen by humans and is more evidence that global warming may be real and already affecting climate. The last time scientists can be certain the pole was awash in water was more than 50 million years ago. ''It was totally unexpected,'' said Dr. James J. McCarthy, an oceanographer, director of the Museum of Comparative
Zoology at Harvard University and the co-leader of a group working for the Intergovernmental Panel on Climate Change, which is sponsored by the United Nations. The panel is studying the potential environmental and economic consequences of marked climate change. Dr. McCarthy was a lecturer on a tourist cruise in the Arctic aboard a Russian icebreaker earlier this month. On a similar cruise six years ago, he recalled, the icebreaker plowed through an icecap six to nine feet thick at the North Pole. This time, ice was generally so thin that sunlight could penetrate and support concentrations of plankton growing under the ice. Dr. McCarthy said the icebreaker's Russian captain, who has made the voyage 10 times in recent years, said he had never before encountered open water at the pole. Another lecturer, Dr. Malcolm C. McKenna, a paleontologist at the American Museum of Natural History, said the ship, the Yamal, crunched through miles of unusually thin ice and intermittent open water on the approach from Spitsbergen, Norway, to the pole. When the ship reached the pole -- which Dr. McKenna and his wife, Priscilla, confirmed with a handheld Global Positioning System navigation device -- water lapped its bow. Predictions made on the occasion of Earth Day 1970:
The world has been chilling sharply for about twenty years. If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age. Kenneth Watt, Ecologist At the present rate of nitrogen buildup, its only a matter of time before light will be filtered out of the atmosphere and none of our land will be usable. Kenneth Watt, Ecologist
Air pollutionis certainly going to take hundreds of thousands of lives in the next few years alone. Paul Ehrlich, Stanford University biologist We are prospecting for the very last of our resources and using up the nonrenewable things many times faster than we are finding new ones. Martin Litton, Sierra Club director By the year 2000, if present trends continue, we will be using up crude oil at such a ratethat there wont be any more crude oil.
Youll drive up to the pump and say, `Fill er up, buddy, and hell say, `I am very sorry, there isnt any. Kenneth Watt, Ecologist Dr. S. Dillon Ripley, secretary of the Smithsonian Institute, believes that in 25 years, somewhere between 75 and 80 percent of all the species of living animals will be extinct . Sen. Gaylord Nelson We have about five more years at the outside to do something. Kenneth Watt, ecologist Civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.
George Wald, Harvard Biologist We are in an environmental crisis which threatens the survival of this nation, and of the world as a suitable place of human habitation. Barry Commoner, Washington University biologist Man must stop pollution and conserve his resources, not merely to enhance existence but to save the race from intolerable deterioration and possible extinction. New York Times editorial, the day after the first Earth Day Population will inevitably and completely outstrip whatever small increases in food supplies we make. The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years. Paul Ehrlich, Stanford University biologist
By some experts feel that food shortages will have escalated the present level of world hunger and starvation into famines of unbelievable proportions. Other experts, more optimistic, think the ultimate food-population collision will not occur until the decade of the 1980s. Paul Ehrlich, Stanford University biologist It is already too late to avoid mass starvation. Denis Hayes, chief organizer for Earth Day
Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions.By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine. Peter Gunter, professor, North Texas State University Scientists have solid experimental and theoretical evidence to supportthe following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollutionby 1985 air pollution will have reduced the amount of sunlight reaching earth by one half. Life Magazine, January 1970
Energys Horsemen of the Apocalypse Taxes, Cap&Trade, Fracing, Green Pestilence H. Martin Gibson 2001 Ross Avenue, Suite 3000 Dallas, Texas 75201
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