Preview Newsletter
PM ACC Clips Report - February 12, 2018
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China, U.S. Seek to Narrow Gap on Trade for Trump, Xi to Close at a Summit
Feb 12, 2019 | Wall Street Journal
By Lingling Wei and Bob Davis
Chinese and U.S. negotiators are focusing this week on producing a broad outline of a trade agreement for their presidents to clinch at a possible summit, according to people with knowledge of the matter. Officials holding trade... -
(ACC Mentioned) CEI Steps up Push to Scale Back IRIS
Feb 12, 2019 | Inside EPA
The Competitive Enterprise Institute (CEI), a free-market group, is stepping up its calls to abolish, or substantially revise, EPA's Integrated Risk Information System (IRIS) program, possibly by rolling it into the agency's effort to... -
(ACC Mentioned) EPA Declines Petition for Increased Reporting
Feb 12, 2019 | E&E - Greenwire
By Cecelia Smith-Schoenwalder
EPA today moved to deny a petition from health advocacy groups that sought to increase asbestos reporting requirements. The groups asked for amendments to EPA's Chemical Data Reporting rule in an effort to increase... -
Group Calls for Elimination of Chemical-Testing Program
Feb 12, 2019 | E&E - Greenwire
By Cecelia Smith-Schoenwalder
EPA's program for toxic chemical risk assessments should be dissolved and its responsibilities split among other offices in the agency, the Competitive Enterprise Institute argued in a report released today. The report, by Angela... -
California SCP Programme Confirms Flame Retardant Phase-Out
Feb 12, 2019 | Chemical Watch
By Kelly Franklin
Testing by California’s Department of Toxic Substances Control has confirmed that children’s sleep products sold in the state "appear to be in compliance" with its Safer Consumer Products (SCP) regulations. California designated... -
Will Trump’s EPA Protect Americans from Toxic PFAS Chemicals?
Feb 12, 2019 | Environmental Working Group
By Melanie Benesh
The toxic chemicals known as PFAS (per- and polyfluoroalkyl substances) are a national crisis demanding action. They’re found everywhere we look. They’re in the blood of virtually all Americans, including newborn babies. They persist... -
LA to Shutter Natural Gas Plants in Clean Energy Push
Feb 12, 2019 | E&E - Greenwire
By Anne C. Mulkern
Los Angeles will shut down three natural gas plants used for electricity and replace them with clean energy options, Mayor Eric Garcetti said today. "This is the beginning of the end of natural gas in Los Angeles," Garcetti said in a... -
Big Oil’s Big Issue With Embracing ‘Big Energy’
Feb 12, 2019 | Bloomberg
By Liam Denning
Oil majors increasingly are trying their hand at being alternative-energy minors. Royal Dutch Shell Plc, which traces its roots back to the late 19th century, just bought Greenlots Global, a California software company serving the electric... -
Push the Envelope with Autonomous Freight Trains?
Feb 12, 2019 | Railway Age
By Robert L. Peterson
According to the most recent earnings reports, North American Class I railroads are producing record-low operating ratios and posting record-setting earnings. These results strongly suggest that the current operating format of two-person... -
Trade, Public Groups Seek Prompt Approval of Pipeline Safety Update
Feb 12, 2019 | Oil & Gas Journal
By Nick Snow
Six public and trade associations have asked US Transportation Sec. Elaine Chao “to act expeditiously” to approve revisions to the US Pipeline and Hazardous Materials Safety Administration’s federal natural gas pipeline safety... -
Aide: McConnell May Bring Vote on Green New Deal
Feb 12, 2019 | Politico Pro - Energy Whiteboard
By Anthony Adragna
Senate Majority Leader Mitch McConnell is considering bringing the Green New Deal resolution S. Res. 59 (116) introduced by Sen. Ed Markey (D-Mass.) up for a vote to put the Democratic caucus on the record about the issue, an...
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China, U.S. Seek to Narrow Gap on Trade for Trump, Xi to Close at a Summit
Feb 12, 2019 | Wall Street Journal
By Lingling Wei and Bob Davis
Chinese and U.S. negotiators are focusing this week on producing a broad outline of a trade agreement for their presidents to clinch at a possible summit, according to people with knowledge of the matter.
Officials holding trade and economic portfolios for both governments are seeking to narrow the still-substantial gap between the concessions China is willing to offer and what the Trump administration will accept. Discussions between midlevel officials began on Monday in China’s Commerce Ministry. Then, a high-level U.S. delegation led by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will hold two-day talks, starting Thursday, with Chinese Vice Premier Liu He and his entourage.
Both sides hope to hash out a framework of a deal, the people said, with the goal of getting it finalized in a meeting between President Trump and Chinese President Xi Jinping. The date for such a session hasn’t been set. Mr. Trump last week appeared to rule out a meeting by the March 1 deadline for a deal—after initially suggesting he was planning on meeting with the Chinese leader.
If the two sides don’t agree by then or don’t agree to extend the deadline, tariffs on $200 billion of Chinese goods will jump to 25% from 10% at 12:01 a.m., Saturday March 2.
Some of Mr. Trump’s more hawkish advisers on trade have been warning him against a meeting, arguing that market expectations for a deal would reduce his leverage once a summit were scheduled. After Vice Premier Liu went to Washington for a round of talks at the end of January, Mr. Lighthizer warned that if the two sides didn’t make further headway this month, he would advise Mr. Trump “that we can’t finish” before March 1—suggesting tariffs would be hiked.
Since then, there has been signs that Mr. Trump is reconsidering again. “He wants to meet with President Xi very soon,” White House senior counselor Kellyanne Conway told Fox News in an interview on Monday. “This president wants a deal.”
Beijing so far has remained reluctant to give ground on issues it sees as crucial to maintaining the Communist Party’s rule. Those include eliminating government subsidies to state-owned companies and other policies that underpin its state-led economic model. Washington sees such steps as essential to level the playing field for American businesses operating in the world’s second-largest economy.
When Mr. Liu was in Washington, Chinese officials talked of boosting Chinese purchases of U.S. farm and energy products and services, accelerating China’s market-opening efforts in sectors such as financial services and manufacturing, and improving its protection of American intellectual-property rights, according to people briefed on the discussions. China’s leadership sees all those measures as aligned with the nation’s own interests.
Sharp divisions have remained on items such as how Beijing can address U.S.’s complaints that Chinese authorities and companies pressure U.S. companies to share technology, and what Washington calls Beijing’s protectionist industrial policies that favor state-controlled companies at the expense of U.S. competitors.
Beijing denies that there is ever any official pressure on U.S. businesses to transfer technology. Instead, Chinese officials have said, foreign companies voluntarily share technology in exchange for access to China’s markets. The issue of coerced technology transfer is a key reason that U.S. businesses’ support for Beijing has waned in recent years, with major companies complaining of threats and pressure to turn over proprietary information and technology to Chinese partners.
In a recommendation to Mr. Lighthizer’s office last year, the U.S.-China Business Council, a group representing more than 200 American businesses that do business with China, suggested a number of ways that Beijing could address such concerns. One was installing independent, transparent regulatory panels that wouldn’t expose trade secrets provided by foreign companies as they say sometimes happens with the expert boards that currently review new products ahead of commercial production.
If both sides hammer out a broad framework of a deal this week, it would likely include the offers China is making but leave the thornier issues, such as China’s industrial policies, for the presidents to work out, according to the people.
Another challenge that both sides face is how to ensure that Beijing follows through on its promises. U.S. officials, who have for years complained about China’s poor follow-up record, are pushing for provisions that would either permit Washington to reimpose tariffs on Chinese goods should Beijing fail to meet certain milestones—“snap-back” in trade lingo—or leave the levies in place and gradually remove them if Beijing meets agreed-upon yardsticks.
Chinese negotiators have pushed back at both ideas, saying that these mechanisms would violate China’s sovereign rights. Former U.S. negotiators say that snap-back enforcement might be more palatable to Beijing.
Wendy Cutler, a former Asia negotiator for the U.S. Trade Representative’s office, said Korea agreed to such a provision in the U.S.-Korea Free Trade Agreement concerning automobiles. A snap-back deal would also be easier than leaving tariffs in place until Beijing hit certain benchmarks, she said, because questions of compliance usually aren’t clear-cut and reimposing tariffs would be politically difficult for the U.S.
Both Washington and Beijing have economic incentives to prevent the tariff fight from getting worse. China’s economy is slowing faster than officials expected, with more than half of the 31 provinces in the country failing to meet their growth targets last year. That’s in part due to the 10% tariffs the U.S. imposed in September on half China’s U.S.-bound exports, on top of 25% tariffs imposed on $50 billion in Chinese goods earlier in 2018.
Farmers and other types of businesses in the U.S., on the other hand, are also feeling the pinch from Beijing’s retaliatory tariffs and China’s economic slowdown. “The trade truce won’t last unless both sides realize no one wins in a trade war,” said Yu Yongding, a member of the Chinese Economists 50 Forum, a think tank that advises Chinese policy makers.
https://www.wsj.com/articles/china-u-s-seek-to-narrow-gap-on-trade-for-trump-xi-to-close-at-summit-11549976897?mod=hp_lead_pos1
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(ACC Mentioned) CEI Steps up Push to Scale Back IRIS
Feb 12, 2019 | Inside EPA
The Competitive Enterprise Institute (CEI), a free-market group, is stepping up its calls to abolish, or substantially revise, EPA's Integrated Risk Information System (IRIS) program, possibly by rolling it into the agency's effort to stand up a new program under the Toxic Substances Control Act (TSCA).
“IRIS has a long history of sloppy research and lack of transparency that has advanced faulty and often counterproductive regulations that impose needless burdens on the public. In addition, poorly conducted IRIS assessments have sounded false alarms about risk and produced unwarranted health scares,” the group said in just-issued report.
The report, “EPA’s Flawed IRIS Program Is far from Gold Standard,” also charges that the IRIS program “suffers from a fundamental, agency-wide flaw. EPA risk assessments, by and large, focus on preventing worst-case scenarios -- even absurd ones -- and ignore more plausible scenarios, while ignoring more serious risks created by the EPA’s own regulations,” citing a “helpful paper by scientists at the American Chemistry Council (ACC).”
Logomasini points as one example to IRIS' 2010 draft assessment of formaldehyde, which concluded that exposure to the chemical could result in certain forms of leukemia, a finding hotly contested by industry. Logomasini notes that formaldehyde has some essential uses, such as a preservative for vaccines, and that EPA's draft risk estimate suggested human breath, which contains formaldehyde, could be harmful.
After a critical 2011 review by the National Academy of Sciences (NAS), which critiqued EPA's approach and transparency, the assessment -- and the IRIS program -- remain largely stalled. Few assessments have been finalized since, as EPA has sought to recreate the program in accordance with NAS' advice while continuing to craft assessments.
The report represents the latest critique of EPA's influential risk analysis program by CEI Senior Fellow Angela Logomasini, who makes the case for legislation introduced in the last Congress that sought to split the IRIS program, housed in EPA's research office, among EPA's program offices.
Its sponsor, Rep. Andy Biggs (R-AZ), introduced very similar legislation last month, known as H.R. 89, though it will almost certainly not make it through the Democratic-controlled House.
Logomasini also argues that Acting Administrator Andrew “Wheeler would be wise to roll IRIS functions into the [Toxic Substances Control Act (TSCA)] program, a possibility he seems to be considering ... TSCA has stronger language directing the agency to use the “best available science,” rather than rely on outdated approaches that misrepresent actual risks. ... there are good reasons to believe that TSCA’s approach would be superior to that of IRIS.”
The TSCA program's self-developed systematic review approach, however, has drawn widespread criticism from environmentalists and academics, including some leaders in the systematic review field.
Logomasini concludes there are multiple avenues for reforming the program. “[I]t is time to shut down IRIS, or at the very least give it a massive overhaul. The Improving Science in Chemical Assessments Act offers one opportunity to reform the program. The EPA can also reform IRIS from within, since it was created administratively.”
https://insideepa.com/daily-feed/cei-steps-push-scale-back-iris
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(ACC Mentioned) EPA Declines Petition for Increased Reporting
Feb 12, 2019 | E&E - Greenwire
By Cecelia Smith-Schoenwalder
EPA today moved to deny a petition from health advocacy groups that sought to increase asbestos reporting requirements.
The groups asked for amendments to EPA's Chemical Data Reporting rule in an effort to increase asbestos reporting and provide EPA with "the comprehensive information on asbestos importation and use it needs for its ongoing risk evaluation."
EPA said in a proposed rule published in today's Federal Register that the agency "does not believe that the requested amendments would result in the reporting of any information that is not already known to EPA."
"After more than a year of research and stakeholder outreach, EPA believes that the Agency is aware of all ongoing uses of asbestos and already has the information that EPA would receive if EPA were to amend the CDR requirements," it continued.
Even if the agency thought the additional amendments would bring in new information, EPA would not be able to finalize those changes in time for use in the ongoing risk evaluation, it argued.
The petitioners were unhappy with EPA's response.
"The hundreds of thousands of deaths caused from asbestos in the U.S. alone should be reason enough for the Trump administration to better inform the public about potential routes of exposure," Linda Reinstein, the president and co-founder of the Asbestos Disease Awareness Organization, said in a statement.
Environmental Working Group President Ken Cook argued that the Trump administration has "turned EPA into an extension of the chemical industry."
"Ratcheting up reporting requirements for one of the deadliest substances known would be a layup for any other president or EPA chief," Cook said in a statement.
Other petitioners included the American Public Health Association; the Center for Environmental Health; the Environmental Health Strategy Center; and Safer Chemicals, Healthy Families.
The American Chemistry Council, the chemical industry's powerful trade group, said in a statement that it "defers to EPA's determination that it has sufficient information to conduct a robust risk evaluation."
https://www.eenews.net/greenwire/2019/02/12/stories/1060120355
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Group Calls for Elimination of Chemical-Testing Program
Feb 12, 2019 | E&E - Greenwire
By Cecelia Smith-Schoenwalder
EPA's program for toxic chemical risk assessments should be dissolved and its responsibilities split among other offices in the agency, the Competitive Enterprise Institute argued in a report released today.
The report, by Angela Logomasini, a senior fellow at the conservative business group, said the Integrated Risk Information System has problems with its methodology, relies on sloppy research and lacks transparency.
"Far from being the 'gold standard' for risk assessment, EPA's IRIS has a long history of flawed risk assessments based on faulty research that have led the agency to release counterproductive regulations," Logomasini said in a statement.
Logomasini said the program, which identifies and characterizes the health hazards of chemicals, is too cautious.
"Some may argue that it is sensible to be overly precautionary, but excessive caution can lead to regulations and market changes that can undermine safety and quality of life, ultimately doing more harm than good," the report said.
The report points to a piece of legislation from the 115th Congress as a possible solution.
The "Improving Science in Chemical Assessments Act," from Rep. Andy Biggs (R-Ariz.), would shift the chemical risk assessment process from IRIS to various program offices. The House Science, Space and Technology Committee passed the bill last year, but it was not taken up by the full chamber.
In 2011, a report from a National Academies of Sciences, Engineering and Medicine panel criticized IRIS for its handling of a formaldehyde risk assessment.
Logomasini argued that IRIS staff have worked to implement the report's recommendations but "progress has been sluggish at best."
However, a 2018 report from the National Academies found the program has made "substantial progress" in implementing recommended reforms (E&E News PM, April 11, 2018).
Improvements to IRIS were "glossed over or omitted in an effort to continue to demonize the program," Richard Denison, lead senior scientist with the Environmental Defense Fund, said of the report.
Denison also took issue with a specific line from the report: "[IRIS] operates outside the regulatory framework; therefore systems to ensure the scientific integrity of IRIS assessments are limited," the report said.
IRIS was designed to "increase scientific integrity by keeping regulatory decisions at arm's length," Denison said. The notion that the program's independence from regulatory offices would hurt its scientific integrity is "laughable," he added.
EPA did not respond to a request for comment on the report.
https://www.eenews.net/greenwire/2019/02/12/stories/1060120349
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California SCP Programme Confirms Flame Retardant Phase-Out
Feb 12, 2019 | Chemical Watch
By Kelly Franklin
Testing by California’s Department of Toxic Substances Control has confirmed that children’s sleep products sold in the state "appear to be in compliance" with its Safer Consumer Products (SCP) regulations.
California designated children’s foam-padded sleeping products containing the flame retardants TDCPP and TCEP as its first ‘priority product’ under the SCP programme, effective in July 2017. And under the state’s regulations, manufacturers had either to stop using the targeted chemicals, or to begin an analysis to determine if safer alternatives exist.
The agency received no notifications from manufacturers indicating they were planning to conduct such an analysis by the September 2017 deadline. The state therefore began carrying out compliance checks to ensure that the covered products were free from those substances.
In a report released last week, Testing Children's Foam-Padded Sleeping Products in California: A Summary of Findings, the DTSC confirmed that none of the 21 products it tested contained TDCPP or TCEP at levels that indicated they were intentionally added.
Based on these findings, it said it believes the substances are being phased out of these products and that no further compliance activities are warranted at this time.
Further findings
The report indicated that, despite finding no significant levels of TDCPP or TCEP in any of the products it tested, other common flame retardants that the regulations do not cover did appear in products at levels near or above 1,000 parts per million (ppm).
This included: the ‘Firemaster’ compound in a bassinet (1,160ppm) and a resting mat (57,852ppm); a mixture of TCEP, TCPP and TDCPP in a foam pillow (914ppm); and TCIPP in a cot (41,910ppm).
The testing further identified a product marked as meeting CertiPUR-US certification – an industry standard that certifies products have been tested and shown to be free of certain chemicals – which contained flame retardants not permitted under the scheme.
The DTSC also noted that testing revealed some manufacturers are using recycled foam in children’s products, which "may increase the probability that products may contain unknown flame retardants at high concentrations".
But the report said that the products with high flame retardants were manufactured in 2013-15, or had no manufacture date. And since none of those manufactured within the last two years contained flame retardants, "we believe this may indicate manufacturers have started phasing out or have ceased adding flame retardants to these types of children’s products," it said.
"Before DTSC listed children’s foam-padded sleeping products as a priority product, we suspected manufacturers were gradually phasing out the use of flame retardants in children’s products. It appears our regulations helped accelerate that trend," it added.
A California bill (AB 2998) was signed into law last autumn that will ban the use of all flame retardants above 1,000ppm in upholstered furniture and children’s products, effective in 2020. The statute directs a separate state agency – the Bureau of Electronic and Appliance Repair, Home Furnishings, and Thermal Insulation (Bearhfti) – to conduct testing to ensure compliance.
https://chemicalwatch.com/74243/california-scp-programme-confirms-flame-retardant-phase-out
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Will Trump’s EPA Protect Americans from Toxic PFAS Chemicals?
Feb 12, 2019 | Environmental Working Group
By Melanie Benesh
The toxic chemicals known as PFAS (per- and polyfluoroalkyl substances) are a national crisis demanding action.
They’re found everywhere we look. They’re in the blood of virtually all Americans, including newborn babies. They persist forever in the environment. Ever-growing reams of studies link them to cancer, thyroid disease, weakened childhood immunity and other serious health problems.
Yet for two decades, federal regulators have dragged their feet on taking meaningful action to protect the public. In coming weeks, the Environmental Protection Agency is expected to release the first federal PFAS management plan. Here’s what it should do.
-Find out where they’re coming from. Adding PFAS chemicals to the Toxic Release Inventory would disclose who is releasing them into our air and water, and polluters should be required to tell neighboring communities.
-Find out where they already are. Requiring utilities and regulators to monitor for PFAS in drinking water, air, and food, and improving the tools to measure contamination, would help us understand the extent of the crisis. We should also conduct body burden testing, medical monitoring, and health impact studies of people near PFAS contamination, especially military families.
-Stop approving new PFAS chemicals. An estimated 5,000 PFAS chemicals are in use, so there’s no reason for the EPA or Food and Drug Administration to let any more on the market. EPA should also finalize a rule that would require companies to get EPA approval before using some kinds of PFAS chemicals.
-Stop adding more PFAS chemicals to the environment. PFAS should be banned from consumer products, including cookware, food packaging, cosmetics and clothing. They should also be banned from firefighting foam, especially foam used at civilian airports and in training exercises. It should be illegal for manufacturers to discharge toxic PFAS chemicals into our air and water.
-Add PFAS to the Clean Water and Superfund cleanup law. Classifying PFAS as a hazardous substance under the Clean Water Act and Superfund will help communities begin to clean up contaminated sites. And, EPA should make sure PFAS chemicals are properly disposed.
-Set a legally enforceable limit for PFAS in tap water. More than 1,500 drinking water systems serving more than 110 million Americans may be contaminated with PFAS chemicals at levels scientists say is harmful. Setting a legal limit, known as a maximum contaminant level, will require utilities to treat tap water to remove or lower PFAS contamination. States should also set their own legal limits. If, as reported, the EPA fails to start the process to establish a maximum contaminant level for PFAS in drinking water, state action will be especially important.
-Direct the military to quickly clean up contaminated bases. Pentagon data shows that at least 36 military installations have on-base drinking water contamination that exceeds the EPA’s health advisory for the PFAS chemicals formerly used to make DuPont’s Teflon and 3M’s Scotchgard. The Department of Defense has identified 401 military installations with known or potential contamination.
-Make polluters pay their fair share. Many of the companies who manufactured or used PFAS understood the risks to human health but failed to protect workers or nearby residents. Adding PFAS to Superfund will ensure that polluters pay. Polluters should also be responsible for taking back and safely disposing of their PFAS products, like firefighting foams. But other measures, such as a clean-up trust fund, should be created, and Americans impacted by PFAS pollution should be allowed to take action through the courts.
Will Trump’s Environmental Protection Agency do what’s needed to address this growing contamination crisis? On the basis of the agency’s history of inaction, we’re skeptical.
So it’s good news that states aren’t waiting to make PFAS a priority. At least 13 states will consider bills, ranging from more PFAS disclosure to bans on PFAS in food packaging, firefighting foam, and flame retardants. Some members of Congress are also introducing bills to expand PFAS monitoring, to ban some PFAS uses, and to set tough cleanup standards, among other priorities.
https://www.ewg.org/news-and-analysis/2019/02/will-trump-s-epa-protect-americans-toxic-pfas-chemicals
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LA to Shutter Natural Gas Plants in Clean Energy Push
Feb 12, 2019 | E&E - Greenwire
By Anne C. Mulkern
Los Angeles will shut down three natural gas plants used for electricity and replace them with clean energy options, Mayor Eric Garcetti said today.
"This is the beginning of the end of natural gas in Los Angeles," Garcetti said in a statement. "The climate crisis demands that we move more quickly to end dependence on fossil fuel, and that's what today is all about."
The Scattergood, Haynes and Harbor plants will be phased out by 2029. Combined, the plants constitute nearly 40 percent of the city's current natural gas portfolio.
The decision came as the city faced costly overhauls of the sites because of a 2010 California rule mandating an end to use of seawater for plant cooling. Other options included having the sites generate smaller amounts of electricity, or closing fewer than all three.
Shuttering the plants puts the city on track to meet its goal of going carbon-neutral by 2050, the mayor's office said. LA makes most of its power through a municipal utility, the Los Angeles Department of Water and Power (LADWP), the largest municipal utility in the country.
Garcetti had already directed LADWP to research switching to 100 percent renewable energy. LADWP in 2017 launched a $10 million study, working with the National Renewable Energy Laboratory.
LADWP will also allocate financial resources to explore other alternatives, including public-private partnerships, new and upgraded transmission and distribution systems, microgrid technologies, and enhanced energy storage projects, Garcetti's office said.
The city utility in November issued a study on options for what to do with Scattergood, Haynes and Harbor. In a case in which all three were closed, the study provided two scenarios for replacing the power. Both called for about 1,800 megawatts of energy storage. The two alternatives then differed on amounts allocated to wind, solar and geothermal power, energy efficiency and demand response, or getting customers to use less power when asked.
The options also included some external transmission — less than 100 miles in one case, and less than 200 miles in the other. That's needed because LADWP has lines that go outside the region, including one that goes to Utah, said Luis Amezcua, the Sierra Club's senior campaign representative for its Beyond Coal campaign.
"It just makes it easier for power to move in and out of the LA basin," he said of that external transmission.
Together, the replacement power needed equals at least 3 gigawatts of clean energy and battery storage resources, the Sierra Club said.
"Investing in our clean energy economy means creating family-sustaining careers, cleaner air and building a healthier future," Amezcua said.
Food & Water Watch also lauded the move.
"Mayor Garcetti is showing the rest of the country what a Green New Deal can mean for our communities," said Alexandra Nagy, senior organizer with Food & Water Watch. "We are hopeful that this is a first step to swiftly transition LA off fossil fuels and move the city to 100 percent renewable energy by 2030."
https://www.eenews.net/greenwire/2019/02/12/stories/1060120337
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Big Oil’s Big Issue With Embracing ‘Big Energy’
Feb 12, 2019 | Bloomberg
By Liam Denning
Oil majors increasingly are trying their hand at being alternative-energy minors.
Royal Dutch Shell Plc, which traces its roots back to the late 19th century, just bought Greenlots Global, a California software company serving the electric-vehicle charging sector. This follows other deals by Shell – along with the likes of BP Plc, Chevron Corp. and Total SA – to invest in renewable energy, retail power, batteries and other non-fossil fuel businesses.
For now, though, this is still pinky-toe dipping. Shell’s plan to invest $1-2 billion a year on “new energy” opportunities is a hefty check, but less than 10 percent of its capital expenditure budget. Besides anything else, there’s a straightforward reason for taking it slow: returns.
Oil majors have a testy relationship with investors these days. Shell’s stock is one of the better performers, but mainly because it has embraced a strategy centered on payouts: Its dividend yield scrapes six percent. A decade of high spending trashed return on capital across the industry.
Uncertainty around long-term oil and gas demand has compounded the erosion of trust when it comes to the majors’ spending plans. In a recent survey of institutional investors, the Oxford Institute for Energy Studies found hurdle rates required for new conventional oil projects have risen appreciably compared with historical rates of return, as investors price in risks around the energy transition.
Transition Insurance
In this context, alternative-energy investments can be justified on one level. A solar farm in the southwestern U.S. is a relatively low-risk project for a more risk-averse crowd. But they also raise a conundrum, especially if eventually done at a meaningful scale. As the chart suggests, investments in power-related infrastructure provide fundamentally different returns from what oil majors have offered historically. These companies have been built to take world-scale risks in the hope of generating high returns to match that.
French oil major Total provides a useful example here, because it has made some of the biggest investments in alternative energy businesses and, as a result, has come closest to actually splitting this business line out in its accounts. The “Gas, Renewables & Power,” or GPR, segment includes downstream natural gas activities, but it offers some insight to how these businesses compare with Total’s traditional operations:
The Sum Of Total
While that chart shows what’s happened to returns, it doesn’t show relative scale. This chart shows average capital employed for each of Total’s divisions in 2015, when data for the GPR division begin, and 2018.High Center Of Gravity
It’s hard to see there, but capital employed in the GPR business has risen by 18 percent a year, compounded, since 2015. In absolute-dollar terms, though, the upstream division has expanded by almost four times as much. The upshot is that a one percentage-point improvement in return on average capital employed in the exploration and production business translates to $1.1 billion of adjusted operating income for Total – almost 16 times what a one-point improvement in the GPR business’ return would generate.
What complicates this further is the commodity cycle. Even if an oil major’s leadership has taken the view that oil demand is nearing a plateau, that doesn’t mean oil-price cycles are dead. And that can make a huge difference to returns in the traditional upstream and downstream bits of an integrated oil company. To get a sense of that, here is the annual change in adjusted operating profit by business line for Total over the past three years:
This Way Up
This may seem like a truism: Bigger divisions move the needle more. But this will continue to matter as oil majors discuss capital allocation with shareholders, who may well prefer to make their own decision about allocating excess oil rents to new ventures rather than leave it to an oil CEO. Managers in dominant upstream divisions enjoying a commodity upswing may chafe at seeing budgets allocated to businesses that are ultimately antithetical to oil, even if they do fall under the rubric of “Big Energy.”
It can be argued that alternative-energy businesses may not necessarily provide the thrills of cyclical upswings, but they do generate steady returns. Certainly, renewable-power projects seem to do so. But these are still early days. John Abbott, who runs Shell’s downstream business and was in San Francisco last week for Bloomberg NEF’s summit on the future of mobility, told me and the audience quite candidly, “The reality is, in some of these value chains that we’ve been talking about, we don’t know exactly where the rent will sit.”
Hence, Shell is taking an integrated approach to power, electric-vehicle charging and the like, similar to its existing model in oil and gas, aimed at capturing margins on several levels. One critical question concerns whether or not value will move up and down the electrified value chain, the way it does with oil and gas. I think this will be less the case, with value tending to accrue at the customer-facing level, given that deflation in power generation is one of the primary drivers of greater electrification in the first place.
Proponents of oil majors pivoting to a brave new world can point to examples such as Ørsted ASA, the Danish oil and gas company that became an offshore wind-power giant. Two caveats, however: First, Ørsted’s target for annual return on capital employed through 2025 is 10 percent – about what you would expect for this sort of company but not an oil major. Second, getting investors comfortable with such a transformation is definitely a lot easier when you’re 50 percent-owned by the Kingdom of Denmark. For everyone else, the battle royal over what that incremental dollar goes toward – old energy, new energy, shareholders – is just getting going.
https://www.bloomberg.com/opinion/articles/2019-02-12/oil-companies-and-renewable-energy-cautious-for-now
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Push the Envelope with Autonomous Freight Trains?
Feb 12, 2019 | Railway Age
By Robert L. Peterson
According to the most recent earnings reports, North American Class I railroads are producing record-low operating ratios and posting record-setting earnings. These results strongly suggest that the current operating format of two-person train crews utilizing innovative safety and fuel conservation technologies is helping achieve these desired, value-added financial results. In short, it is possible for innovative technology and human-operated freight trains to exist in a complimentary fashion. The combination is currently working quite well.
Why Operate Autonomous Freight Trains?
One important question the Federal Railroad Administration (FRA) should be asking itself regarding the railroads’ push for autonomous trains: What is the railroads’ safety record? Even if advanced technology could operate a freight train without a crew on board, why would it be allowed?
Pros and cons exist regarding this highly contentious issue.
The majority of the “pros” are promoted by individuals whose job it is to support such a technological transition. These individuals have most likely never ridden a freight train, much less attempted to operate one safely over varying topography stretching several hundred miles, in all types of weather conditions. Most likely they are economists, research fellows, administrators and/or analysts.
One of the strongest “cons” would be an unfortunate accident of an autonomous freight train. That would be all that is necessary to discover perhaps that the technology itself is as infallible as humans. So-called “experts” say autonomous train operation is safe and eliminates the possibility of human error, but the software programs that make autonomous operation possible were created by humans, and unexpected situations can and will occur.
Safety is Paramount
Railroad safety has improved dramatically. According to FRA data, U.S. railroads had the lowest train accident rate on record in 2016. The 2017 rail safety statistics continue a string of record-setting years, showing this period has been the safest-ever for the rail sector. According to December 2017 FRA data per million train-miles, since 2000 the train accident rate is down 44%, the equipment-caused accident rate is down 38%, the track-caused accident rate is down 55% to an all-time low, and the derailment rate is down 42%. The ultimate safety goal is, of course, an accident-free future.
This data implies an improved safety trend is due in part to current operating rules that utilize two-person train crews and technological safety advances in train operations. Such safety overlay and fuel conservation technologies as Positive Train Control (PTC), GE’s Trip Optimizer and New York Air Brake’s LEADER should be considered resources in the toolbox of two-person train crews.
Why risk automated control of a freight train loaded with potentially hazardous material when there is no evidence to suggest it could be done safely across a variety of terrains and settings (public crossings, rivers, highways, cities, etc.)? True, heavy-haul Rio Tinto trains in Australia operate autonomously, under close monitoring by company and government officials and presumably along a relatively tangent and level stretch of railway. But Rio Tinto’s AutoHaul operation should not imply identical results in North America.
In addition, according to the FRA data, 30% to 40% of railway accidents are “track-related,” (e.g., rail defects and track geometry), second only to human-caused. Yet even now, the accuracy of the Weibull-based defect analysis and formulas used to analyze such track-related defects are being re-examined. This begs the question: If railroads continue on their quest for autonomous trains, what recourse remains when the rail itself is determined to be the culprit in an accident? Which cost-cutting measures would be considered at that juncture? Reduced management bonuses?
The media appear biased toward this push for automation and is working overtime to support a corporate railroad agenda. To the average reader, bold, matter-of-fact-sounding statements claiming no data exists indicating that two-person crews are safer than one-person crews can be misleading. Such statements make no mention of data suggesting that one-person crews are safer than two-person crews, or that automation is safer than no crew at all—because such data does not exist.
Current two-person train crews use safety and fuel conservation innovations that have been implemented on every North American Class I. Regardless, the AAR gives the impression it fully supports the railroads’ apparent plans to phase out their own highly skilled and professional workforce—the railroader. The AAR is currently saying that two-person crew mandates are impeding the path of progress and deterring future investments. This is simply not true.
Funding opportunities supporting the railroad industry’s technological innovations abound. In fact, they are increasing. Through a Notice of Funding Opportunity (NOFO), the FRA recently awarded more than $200 million to short lines and passenger railroads to implement new technology. An additional $46 million is expected to be issued. These funds were awarded through the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program, and support PTC implementation. Funding for the CRISI program was increased in 2018 from $68 million to $593 million.
Other federal grants are being distributed through such programs as Better Utilizing Investments to Leverage Developments (BUILD), Infrastructure for Rebuilding America (INFRA), and Fostering Advancements in Shipping and Transportation for the Long-Term Achievement of National Efficiencies (FASTLANE). It is anticipated that such programs will continue to receive robust funding.
What Are the Drivers?
Is the railroads’ competition with the trucking industry and its threat of autonomous trucks one of the main drivers of this autonomous train push? According to the AAR, America’s freight railroads move more freight more efficiently, safely and cleanly than ever before, at a substantial cost savings over trucking. Is technology itself and the desire to become an automated society pushing this envelope? Or is it more likely driven by Wall Street and “shareholder value”?
At what cost?
The estimated costs associated with a transfer from an onboard crew operating a freight train to one in which the train is operated automatically with little or no human intervention are potentially astronomical. The cost of Rio Tinto’s AutoHaul operation of heavy-haul trains in Australia’s Pilbara region exceeds $900 million. The estimated costs of implementing autonomous trains across portions of North America’s 140,000-mile Class I network seem prohibitive by comparison. But is the real cost or “price” to consider that of a human life? Is the American public ready to gamble lives on a computer-run vs human-run freight train?
https://www.railwayage.com/cs/push-the-envelope-with-autonomous-freight-trains/
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Trade, Public Groups Seek Prompt Approval of Pipeline Safety Update
Feb 12, 2019 | Oil & Gas Journal
By Nick Snow
Six public and trade associations have asked US Transportation Sec. Elaine Chao “to act expeditiously” to approve revisions to the US Pipeline and Hazardous Materials Safety Administration’s federal natural gas pipeline safety regulations.
“PHMSA’s rule will advance gas transmission pipeline safety by defining specific requirements to facilitate the use of 21st-century pipeline safety technologies and processes,” the groups, which include the Interstate Natural Gas Association of America and the American Gas Association, said in their Feb. 7 letter.
For example, it will facilitate deployment of noninvasive tools that can evaluate a pipeline’s condition and identify sections needing repairs or replacement, they noted.
“The rule provides a foundation upon which PHMSA can better promote the utilization of modern pipeline inspection technologies, recognizing the safety, environmental, and consumer benefits that such technologies can provide,” the groups said.
It also sets out requirements for operators to test certain existing pipelines to ensure that they meet today’s safety standards, they said. “Thus, the rule provides a means for pipeline companies to continue advancing the safety initiatives identified by Congress in 2011.”
The organizations said they are represented on DOT’s gas pipeline advisory committees and that they provided PHMSA recommendations on the proposed rule’s technical feasibility, reasonableness, cost-effectiveness, and practicability during public meetings of the proposed rule throughout 2017 and 2018.
“While our organizations sometimes disagree about the specifics of pipeline safety regulations, in this case consensus was achieved on many important pipeline safety topics through the advisory committee process. The advisory committee ultimately provided PHMSA with recommendations to support finalizing the rule,” they said.
In addition to INGAA Pres. Donald F. Santa and AGA Pres. David K. McCurdy, the letter was signed by officials from the American Petroleum Institute, American Public Gas Association, Pipeline Safety Trust, and Pipeline Safety Coalition.
https://www.ogj.com/articles/2019/02/trade-public-groups-seek-prompt-approval-of-pipeline-safety-update.html
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Aide: McConnell May Bring Vote on Green New Deal
Feb 12, 2019 | Politico Pro - Energy Whiteboard
By Anthony Adragna
Senate Majority Leader Mitch McConnell is considering bringing the Green New Deal resolution S. Res. 59 (116) introduced by Sen. Ed Markey (D-Mass.) up for a vote to put the Democratic caucus on the record about the issue, an aide to the Republican told reporters today.
There are 12 members of the Democratic caucus currently sponsoring the resolution, but the degree of support varies throughout the 47 member group. Co-sponsors include declared and likely Democratic presidential contenders Sens. Cory Booker (N.J.), Kirsten Gillibrand (N.Y.), Amy Klobuchar (Minn.), Kamala Harris (Calif.), Elizabeth Warren (Mass.), Bernie Sanders (I-Vt.) and Jeff Merkley (Ore.).
Senior Republicans have repeatedly railed against the proposal as a socialist policy platform that would drastically alter the U.S. in recent days.
"It's possible the Democrats didn't provide any details for their plan is because they knew outlining the actual cost would sink their plan from the very beginning," Senate Majority Whip John Thune said today on the Senate floor. "Like other socialist fantasies this is not a plan that can be paid for by merely taking money from the rich. Actually implementing this so-called Green New Deal would involve taking money from working families."
https://subscriber.politicopro.com/energy/whiteboard/2019/02/aide-mcconnell-may-bring-vote-on-green-new-deal-2675860
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