January 28, 2020

Challenges Await Plan to Reduce Emissions

The draft rule was announced on Friday at the National Press Club by Gina McCarthy, the administrator of the Environmental Protection Agency. But to protect industries from pie-in-the-sky requirements, current law limits what rules the agency can make.

E.P.A. rules sometimes demand technological advancements, but the goals that the agency establishes have to be met by techniques that existing law describes as “adequately demonstrated.”

The proposal would limit new gas-fired power plants to 1,000 pounds of carbon dioxide emissions per megawatt-hour and new coal plants to 1,100 pounds of carbon dioxide. Industry officials say the average advanced coal plant currently emits about 1,800 pounds of carbon dioxide per megawatt-hour. A megawatt-hour is a little more than a typical American household uses in a month.

Once the rule is in place, new plants would be required to capture carbon dioxide from the smokestacks and “sequester” it underground. Officials said the regulation could be completed by the fall of 2014.

But, utilities say, laws governing underground disposal were not written with carbon dioxide in mind, and sequestration is in a legal quagmire.

Three systems of carbon capture are in various stages of development. The most common is to convert coal into a mixture of hydrogen, carbon monoxide — which in this context is a fuel, not a pollutant — and carbon dioxide, and to recover the carbon dioxide at two different stages.

Another method, demonstrated by the utility American Electric Power in recent years at its Mountaineer plant in West Virginia, is to burn coal conventionally and use an ammonia process to grab the carbon dioxide out of the flue gas. And if coal is burned in nearly pure oxygen, the flue gases are nearly pure carbon dioxide.

In the last few days, Ms. McCarthy has referred to several early-stage carbon capture projects as a sign that industry can build the needed equipment. In testimony on Wednesday before the House Energy and Power Subcommittee, Ms. McCarthy cited four such projects. She told reporters on Friday that the draft rule was based on “technologies that are already entering the market and being constructed in plants today.” But the four she referred to in the committee hearing ranged from under construction to planned. None of them would sequester the carbon dioxide, and all would sell it.

The closest to opening is the Southern Company’s Kemper County plant in Mississippi, which will convert coal to gases and then filter out some of the carbon dioxide, reducing emissions by about 65 percent.

But the plant, at $5 billion, is $1 billion over budget. Southern Company said in a statement on Friday that the plant’s economics were peculiar to its location, and not a national model. Its captured carbon will be sold for use in the oil fields, where it helps force more oil to the surface.

But most power plants are not in areas where they can sell their carbon dioxide.

Revis W. James, director of the Energy Technology Assessment Center at the Electric Power Research Institute, said that before a technology could be considered commercially demonstrated, “you’d need Kemper to be operational and a couple more Kempers, and have the kinks worked out.”

Carbon capture and sequestration, he said, was unlikely to be competitive unless natural gas prices increased by 100 to 150 percent and the construction of nuclear plants was ruled out.

Ms. McCarthy also referred to three projects that would sell carbon dioxide to the oil industry: a coal plant in Saskatoon, Saskatchewan, the Boundary Dam project, where the provincial utility plans to rebuild a small 45-year-old unit to capture carbon dioxide; the Texas Clean Energy Project, 15 miles west of Odessa, where the builders hope to soon break ground; and Hydrogen Energy California, proposed for the oil fields of Kern County.

As the price of oil has risen, so has the value of carbon dioxide to oil drillers. The value as a carbon-reduction mechanism is unclear, though, because the result is to produce more oil, all of which will be burned, producing more carbon emissions.

E.P.A. officials say that a carbon-emissions rule would push improvements in the technology. Two decades ago when the agency required technology to reduce emissions of a different pollutant — nitrogen oxides, a smog precursor — that, too, was expensive and not thoroughly demonstrated, but today it is routine, they said.

The biggest carbon-capture project to date was at the American Electric Power’s Mountaineer plant in New Haven, W.Va. But Nicholas K. Akins, the company’s chairman and chief executive, said that technology was “definitely not ready for prime time.”

Mountaineer was a pilot project. Equipping the whole plant would have cost $1 billion, he said, and driven up costs per kilowatt-hour by 60 to 80 percent. The company eventually shut down the effort because it could not recover the costs from its customers. And injection of carbon dioxide into the earth was only possible because it was classified as a research project, he said.

Mr. Akins and other industry executives say that a rule governing new coal plants would have little impact because of the low price of natural gas. “No one in their right mind is going to start a coal unit at this point,” he said.

But they fear it will become a precedent for limits on existing plants. Rules on smog, mercury and other pollutants are accelerating the retirement of many old coal plants, and a rule on carbon dioxide would hit many more, they say.

Many of the environmental groups that applauded the E.P.A.’s proposed standard appear to agree. They took pains to note that coal plants also emit a variety of smog-forming and toxic chemicals, and that suppressing new plants because of their carbon dioxide emissions would have the effect of reducing the other emissions, too.

On the other side, Senator Mitch McConnell, who is from coal-dependent Kentucky, promised to prevent the measure from being carried out. “The president’s decision today is an escalation of the war on coal,” he said.

Article source: http://www.nytimes.com/2013/09/21/business/energy-environment/challenges-await-plan-to-reduce-emissions.html?partner=rss&emc=rss

Economix Blog: Positive News Muddles Political Talking Points

Ana Navarro, a Republican strategist and commentator, had a novel thought in response to Friday’s jobs report, which showed 195,000 new jobs created in June:

Not really.

The positive report actually deprived both sides of talking points. Republicans acknowledged that the numbers were good — but not good enough. The White House appeared to tacitly concede that the effects of automatic budget cuts were not as dire as feared. In reaction to recent jobs reports, the Obama administration has called on Congress to replace so-called sequestration with a more deliberate approach to help the economy. But Alan B. Krueger, chairman of the Council of Economic Advisers, did not pick that bone on Friday, for the first time since sequestration went into effect.

“While more work remains to be done, today’s employment report provides further confirmation that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Mr. Krueger said in a blog post. He was vague in policy prescriptions going forward, saying that Washington should not “impose self-inflicted wounds on the economy” and that President Obama would continue to push the agenda he outlined in his State of the Union address.

Republicans, on the other hand, did have specific complaints. Just as they praised the uptick but called for stronger growth, Republican leaders called on Mr. Obama to delay the employer mandate beyond the year announced earlier this week.

“Delaying the inevitable for one year will bring no solace,” said Representative Eric Cantor of Virginia, the House majority leader, in a statement. “We must have a permanent delay of Obamacare before we can realize our full job creating potential.” [Read more…]

Article source: http://economix.blogs.nytimes.com/2013/07/05/positive-news-muddles-political-talking-points/?partner=rss&emc=rss

Obama’s Budget Would Cut $1 Trillion From Deficit

Mr. Obama’s budget — one aimed at bringing Republicans to the table to finish a long-term deficit deal, as unlikely as that prospect seems now — includes unpopular cuts to both the Social Security and Medicare programs. His budget would change the calculation used to ensure that Social Security payments keep up with the pace of inflation, for instance, providing less money to retirees over time.

The budget plan also includes almost $1 trillion in tax increases, by further limiting the deductions and exclusions high-income families can claim, increasing taxes on tobacco products and adopting the so-called Buffett Rule, a new minimum tax on income over $1 million.

Compared with the baseline the budget office uses, which assumes no change in current laws, the proposal would widen deficits slightly in the fiscal years 2013 through 2015, but reduce them later on, the budget office said. Starting in 2014, tax increases would bump up revenue by $27 billion to $155 billion a year. Spending would increase by as much as $142 billion a year until 2018, when it would decline beneath the levels indicated by current law.

When it released its budget last month, the Obama White House claimed that it would save $1.8 trillion over 10 years. The difference between its estimate and the Congressional Budget Office’s primarily stems from the fact that the White House assumed the $85 billion in automatic budget cuts known as sequestration — cuts that continue for the next decade — would be repealed or replaced with a new policy. The budget office did not. Other than that, the independent office’s assessment of how the budget proposal would affect spending and revenue mostly differs only marginally from the White House’s.

Article source: http://www.nytimes.com/2013/05/18/business/obamas-budget-would-cut-1-trillion-from-deficit.html?partner=rss&emc=rss

Unemployment Benefits Are Cut for Some New Yorkers

Starting this week, benefits for more than 140,000 New York State residents will be cut by almost 11 percent as a result of the budget stalemate in Washington. New York is one of the first states to carry out the cuts, which are a result of automatic budget cuts known as sequestration, which mandated an $85 billion across-the-board reduction in spending on military and domestic programs.

For Stephanie Cozart, a stage actress in Manhattan, that means a cut to $361 per week from the $405 she had been receiving since last fall. If she does not find work by the end of September, when the cuts expire, the loss would amount to $1,100.

“It just seems really mean and really dumb, given that everyone knows that unemployment benefits stimulate the economy,” said Ms. Cozart, who is married and has a 7-month-old daughter. “I don’t save my unemployment benefits. I spend them on diapers and baby food and so forth.”

As part of the cutbacks, every state was ordered to reduce the benefits paid to people who have exhausted their 26 weeks of regular unemployment benefits and have begun collecting what are known as emergency unemployment benefits. New York is one of 14 states that was ready by early April to reduce the payments, according to Jason Kuruvilla, a spokesman for the federal Labor Department. The cuts will be proportionally larger in states that take longer to start making them.

Though the budget cuts were uniform, the effect on the unemployed is not. People collecting regular benefits are unaffected. And those collecting emergency benefits in states like Connecticut that have been slower to implement the cuts may find work before losing any benefits. Connecticut expects to make the cut in mid-June, when it will amount to about 19 percent of a weekly payment, or about $112 out of that state’s maximum benefit of $591. In New Jersey, the payments start shrinking this week by as much as $66.

“They’re inequitable,” said Maurice Emsellem, a policy co-director of the National Employment Law Project, which has lobbied to preserve the additional benefits that lawmakers in Washington approved when unemployment soared after the financial crisis.

A study released this month by his group reported that five million Americans have been out of work for 27 weeks or more and that the average duration of unemployment nationwide is now 37 weeks.

In New York, as in many other states, the maximum duration of unemployment benefits stretched to 99 weeks at the depths of the recession. But as the state’s unemployment rate has declined, so has the availability of benefits.

At the end of last year, New York stopped offering a sort of last-resort program known as extended benefits that lasted for up to 20 weeks. Now, the longest an unemployed New Yorker can collect benefits for is 79 weeks.

But some who only recently started collecting emergency benefits, like Ms. Cozart, may only collect them for a maximum of 37 weeks. For most of that period, the benefits would be reduced by the automatic cuts.

The $44 a week that Ms. Cozart will lose may not sound onerous in New York City, where it would barely cover one prix fixe dinner during Restaurant Week. But advocates for the unemployed point out that they had to lobby for years in Albany to obtain the $5 increase in weekly unemployment benefits that New Yorkers are scheduled to receive next year.

That increase, the first since 2000, will raise the maximum weekly benefit in the state to $410. But it still will be at least $180 lower than the maximum benefit in Connecticut or New Jersey.

Ms. Cozart’s last role was as Aunt Gert in an Off Broadway revival of “Lost in Yonkers,” and she had hoped to find another acting job. But with a baby to feed and clothe and a husband whose job does not provide health insurance, she said she had begun considering office jobs.

“I would much rather have a job that paid well and provided health benefits than be sort of scrimping and saving,” said Ms. Cozart, 42. Referring to the cut in her weekly benefits, she said: “$40 a week adds up. It just made me see red, made me really angry.”

For Patricia Torres, 29, the cut will just be the latest indignity that has followed the loss of her job selling wireless phone service in Downtown Brooklyn in June. Ms. Torres, who said she earned $60,000 a year before she was dismissed, said she had to move out of a Manhattan apartment she shared with a roommate and back in with her grandmother and ailing grandfather.

She said she ran through her savings in the first few months of unemployment and has defaulted on the student loans she took out to study fashion design and marketing. She has no health insurance because the cost to continue coverage provided by her former employer was $800 a month.

Without insurance, she said, she could no longer afford to see her regular doctors or buy all the medicines they have prescribed. Instead, she visits a city-financed clinic at NewYork-Presbyterian Hospital, she said.

Most of the jobs she finds in her searches offer low pay and meager benefits, if any, she said.

“My résumé is pretty strong, which is why I get the interviews,” Ms. Torres said. “But they don’t want to pay me anything. They want me to work for minimum wage, which is less than I get from unemployment” — though by a narrower margin than before this week.

“I’ve worked every single day since I was 17 years old,” she said. “For the first time, I need help and they’re taking it away.”

Article source: http://www.nytimes.com/2013/04/12/nyregion/unemployment-benefits-are-cut-for-some-new-yorkers.html?partner=rss&emc=rss

Economix Blog: Sequestration and the Jobs Report

The March jobs report came in much weaker than expected, with employers adding just 88,000 workers over the course of the month. Did sequestration – the $85 billion in mandatory budget cuts that Congress never managed to unwind, despite promises to the contrary – take a bite?

The short answer is no. At least according to the preliminary data, sequestration does not seem to be particularly at fault.

Government employment actually climbed during March, if you exclude the Postal Service, which shed nearly 12,000 workers. Economists expect the government ranks to take a hit as agencies and offices carry out their budget cuts before the end of the fiscal year in September.

But not yet. The budget cuts formally came into effect on March 1, and many agencies waited to see if Congress might undo them later in the month. Furloughs, layoffs, contract changes and other disruptions have started accumulating, but remain very small at this point. Economists expect the jobs hit from sequestration to be significant, but backloaded toward the end of the year.

But another change emanating from Washington seems as if it might be having a serious effect on jobs: the expiration of the payroll tax cut. In January, Congress effectively increased payroll taxes by declining to extend a temporary tax holiday. That wiped out a full year’s worth of wage gains for millions of Americans, and economists expected it to depress consumer sentiment and consumer spending.

Lo and behold, the retail sector showed significant weakness in this report, perhaps evidence of families’ having less spending money and cutting back at the mall. Employment dropped by 24,000 positions, with significant declines in clothing stores, garden supply stores and electronic stores.

Granted, that could just be statistical noise, and next month’s revisions could erase the drop. In other government reports, the retail sector has looked just fine. Commerce data showed consumer spending surging, and separate private reports have showed consumer confidence climbing. But it could be that families are spending a little less, thinning retailers’ profits and forcing them to cut back on staffing.

Article source: http://economix.blogs.nytimes.com/2013/04/05/sequestration-and-the-jobs-report/?partner=rss&emc=rss

Factory Output Rises; So Do Forecasts for Growth

The latest evidence came on Friday with a better-than-expected report on industrial production, led by a jump in the automobile sector. It follows bullish indicators earlier in the week, including a drop in new unemployment claims and strong retail sales.

The data has surprised economists like Ethan Harris of Bank of America Merrill Lynch, who on Friday revised upward the company’s prediction for growth in the first quarter to 3 percent from an earlier estimate of 2 percent.

Many experts had been looking for more of a drag from the restoration of full Social Security taxes in January and the automatic, across-the-board cuts in federal spending that began March 1, a process known as sequestration.

“It feels like the economy has some momentum and is in a little bit better shape to handle the sequester,” Mr. Harris said. While higher taxes and lower federal spending are a “speed bump,” he said, “the economy has better shock absorbers.”

Industrial production jumped 0.7 percent in February, the biggest gain in three months, the Federal Reserve said. Economists had been expecting a 0.4 percent rise.

Factory production and hiring are being bolstered in part by a rebound in China, which is driving output and exports among many major corporations, said Ian Shepherdson, chief economist for Pantheon Macroeconomic Advisors.

The Chinese economy, the world’s second-largest, slowed last summer and fall but regained momentum in recent months. To be sure, there are still reasons to be cautious, particularly in spring and early summer, when the combined force of Washington’s fiscal restraint is expected to have its biggest impact.

Gasoline prices have also been rising. Higher gas prices helped lift consumer prices by 0.7 percent in February, although the less volatile core reading that is closely followed by the Fed was up just 0.2 percent, according to other data released Friday by the Labor Department.

The jump in payroll taxes and gas prices is squeezing lower-income consumers in particular, said Steve Blitz, chief economist at ITG.

Big-ticket items like homes and cars continue to sell well, but otherwise-strong retail sales data out earlier this week showed that spending at restaurants declined for the second month in a row.

“People who can’t afford it aren’t going out as much to eat,” Mr. Blitz said.

Consumer confidence is also shaky. The preliminary Thomson Reuters/University of Michigan reading for March showed an unexpected drop Friday, dropping to 71.8, from 77.6 in February, its lowest level since December 2011. But so far consumers have not markedly changed their spending habits; retail sales data on Wednesday was better than had been expected.

The improved retail spending over all was the “clincher” in Mr. Harris’s decision to raise his forecast for growth.

Nigel Gault, chief United States economist at IHS Global Insight, said that the wariness of consumers in the new survey “may simply be a vote of no confidence in the government and the problems in Washington. It may not be represented in what consumers do.”

According to Mr. Gault, the most important factor underlying the economy’s recent strength is an improving housing sector — a trend that may be further confirmed next week when Februrary statistics are released on housing starts and home sales.

Not only do consumers feel more confident about spending when home values are rising, Mr. Gault said, but growth in the housing sector also results in greater demand for goods like furniture, carpeting and other furnishings.

There are suggestions of that kind of trickle-down in other recent economic reports. Of the 236,000 jobs the government reported as being created in February, 48,000 were in the construction sector. Similarly, building supplies were among the strongest components in the most recent report on retail sales.

“Housing helps everything,” said Mr. Gault, who also lifted his estimates for growth in the first quarter.

Like Mr. Harris and several other economic forecasters, he also foresees a temporary slowdown in the second quarter when the worst fallout from the sequester and the higher taxes is expected to show up in the economy’s Geiger counters.

Despite the more robust indicators in recent weeks, the Fed is expected to maintain its efforts to keep interest rates ultralow and pump tens of billions of dollars into the economy each month, a policy known as quantitative easing. The majority of Fed officials have said they would not consider a shift in policy as long as unemployment was above 6.5 percent. Fed policy makers are to meet Tuesday and Wednesday.

While unemployment has come down slowly from its recent high of 10 percent, economists say the Fed’s easy money policy has been integral to keeping the economy moving, as well as lifting the stock market to new highs. The Fed is pumping $85 billion into the financial system each month — about what the sequester will drain from the economy between now and Sept. 30, said Maury Harris, chief United States economist at UBS.

The money created by the Fed’s policies is slowly filtering its way through the economy as banks ease lending standards and increase some lines of credit.

“It’s not as quick as everyone hoped, but the money is being deployed,” said Mr. Harris. “It has a lot of knock-on effects.”

Article source: http://www.nytimes.com/2013/03/16/business/economy/consumer-inflation-jumps.html?partner=rss&emc=rss

Jobless Rate Down, Stocks Up, Washington Is Unmoved

Even as analysts hailed a better-than-expected jobs report on Friday that pointed to an acceleration in growth, they warned that stronger employment gains are being put at risk by sequestration, the automatic spending cuts being imposed by the federal government.

“They’re doing their best to get in the way,” Nigel Gault, chief United States economist at IHS Global Insight, said of lawmakers and other officials. “But the good news is that the economy is carrying plenty of momentum going into sequestration.”

The Labor Department reported that the economy added 236,000 jobs in February as the unemployment rate sank to 7.7 percent, down from 7.9 percent in January and the lowest level since December 2008.

Wall Street expected no more than 165,000 additional jobs in February, and the surprise helped lift the Dow Jones industrial average to another new nominal record, its fourth for the week. It closed at 14,397.07.

But many experts said if it weren’t for political gridlock in Washington, which led to the automatic spending reductions on March 1, the performance of the job market and the broader economy would be even more robust in the months ahead.

“It does suggest a bit more cushion heading into the spring, when we will see the bulk of the impact from the sequester and fiscal pullback,” said Michelle Meyer, senior United States economist at Bank of America Merrill Lynch. “This was a good report. It’s hard to poke holes in it. But we think we’ll see some slowdown in April and May because of the sequester.”

Mr. Gault estimated that the economy would achieve a 1.5 percent growth rate in the first half of 2013. Without the spending cuts and a rise in Social Security taxes that went into effect in January, he said, the economy would probably advance at double that pace.

As a result, he and other economists expected that the pace of job creation would slow, leaving the unemployment rate not much lower than where it is now. If jobs were added at February’s pace for the rest of 2013, the unemployment rate would crack the closely watched 7 percent level by the end of the year. Instead, Ms. Meyer predicted that unemployment would remain near 7.5 percent.

Macroeconomic Advisers, an independent forecasting firm, predicted that the federal spending cuts would cost about 700,000 jobs this year, with most of the damage occurring in the second and third quarters.

While the economy is expected to continue to add enough jobs to keep the jobless rate from rising significantly, estimates like these suggest that without the drag from Washington the labor market might have added, on average, a robust 300,000 jobs a month or so.

The data for February, adjusted for normal seasonal variations, don’t reflect the federal cuts, which are expected to affect not just government jobs but also industries that rely on public spending.

Public sector employment continued a long decline, with the number of state and local government workers falling by 10,000 in February. Over all, there are now 366,000 fewer government workers in the United States than there were two years ago.

On Friday, the White House was quick to point to the new data as a sign that the economy is strengthening even as it warned of the impact from the squeeze on spending.

“The recovery is gaining traction,” said Alan Krueger, chairman of the White House Council of Economic Advisers. But the sequestration, he said, “is an unnecessary headwind. It’s something that will slow the expansion. We’re poised for stronger growth if we don’t get in the way with misguided fiscal policy.”

In some respects, the rest of the year is shaping up as a tug of war between a strengthening private sector and federal austerity.

Private hiring last month was broad-based, with healthy job gains in several areas, including business services and manufacturing.

Article source: http://www.nytimes.com/2013/03/09/business/economy/us-added-236000-jobs-in-february.html?partner=rss&emc=rss