When Ford Motor Co. buckled, it was not its seat belt, but its spine and perhaps profits. This is what happens when shareholders get a chairman who carries the Ford name and is a self-described "life-long environmentalist." Great qualifications for the job!

The Week That Was December 18, 1999 brought to you by SEPP

EPA TRIES END RUN TO ENFORCE KYOTO PROTOCOL

Northeastern states complain that they cannot meet federal clean-air standards because Midwestern emissions drift east. The EPA responded in 1994 by assembling scientists and state-level environmental officials into the Ozone Transport Assessment Group. OTAG reported in June 1997 that the effect on Northeast smog is small compared with local sources. The expert panel also found that the sources of emissions cannot be traced and are so numerous that controlling them would be enormously expensive - without guarantee of any improvement in air quality.

Nevertheless, in September 1998, evidently under the influence of the (unratified) Kyoto Protocol, the EPA ordered 22 states to significantly reduce emissions of ozone precursors, mostly from Midwestern coal-burning power-plants. Faced with billions of dollars in unjustified costs, several of the Midwest states and power plants sued the EPA. A federal appeals court suspended the EPA rule last May, giving the Midwest more leverage in negotiating with the EPA.

Meanwhile. the "Working Group to Oppose Expanded EPA Authority" opposes a recent petition for rulemaking by the International Center for Technology Assessment (ICTA) and other activist groups that seeks to compel the EPA to regulate carbon dioxide and other emissions from new motor vehicles.

[The Working Group is a project of the Washington Legal Foundation (WLF), a national non-profit public-interest law and policy center, based in Washington, D.C., that frequently opposes excessive and unlawful regulation by the EPA in the courts.]

In its 46-page response to ICTA's petition, the Working Group argues that EPA has no authority under Section 202 of the Clean Air Act to regulate greenhouse-gas emissions from new motor vehicles or any other source, including power plants. The Working Group also argues that even if EPA did have the authority to regulate GHG emissions, there is no sound scientific basis for doing so, and that any such regulation poses excessive and unnecessary costs on our society and economy. The Working Group's response cites numerous scientific studies debunking the petitioners claims that there is "global warming"

So where does EPA come from in this: Are they against the Midwest for political reasons, or against Western coal, or just intent to push for Kyoto-type regulation against the express wishes of Congress? It sure isn't air quality.

ELECTRICITY DEREGULATION IN EUROPE

Many countries have gradually opened their electricity markets to competition. But in February, Germany abolished all restrictions in a single radical move that has resulted in fierce price wars. Households, as well as businesses, have watched with glee as their electric bills tumbled. Wholesale electricity prices -- what local utilities pay for power -- have plunged as much as 60 percent in the past year. Corporate customers are getting reductions of 30 percent and more -- often without even having to switch providers. Residential consumers are being wooed by slick sales presentations in department stores, on television, and over the Internet.

German deregulation is more radical than in the United States; German officials are not applying surcharges to let utilities recover "stranded costs"-the costs of power plants built when prices were regulated.

Indeed, German electricity prices have had a long way to fall. They were more than twice those of the United States and higher than in any other European country except Italy. Germans had been paying 16.1 cents per kilowatt-hour, compared to an average of 8.5 cents in the U.S. As a result, Germans consumed an average of only 5,814.5 kilowatt hours per person annually. That compares to 12,025.4 kilowatt-hours in the U.S. [statistics for 1997, courtesy of the US Energy Information Administration]

Deregulation has sent electricity companies scurrying to protect their bottom lines. One strategy is to set up shop in neighboring countries and hunt for private and state-owned utilities to purchase. The rush is on to set up sales offices in countries like Poland, Italy and the Netherlands.

With deregulation rampant, Germany is attracting cheap electricity from all directions: nuclear power from France and hydro-power from Scandinavia. Suddenly Germany finds itself with excess capacity but also a reluctance to close down nuclear plants as previously advertised.. As a result prices have fallen by as much as 50%. It complicates the nuclear energy issue in Germany, with the socialists, the senior partners in the socialists-green coalition, reluctant to follow through in closing down nuclear reactors. At the same time electric utilities are still forced to buy wind energy at about five times the cost of production of fossil energy. As deregulation proceeds, with international competition growing the future of German wind energy does not look calm. But in a bid for environmentally-aware customers, some electric companies are even offering "green electricity" -- which costs more but is supposed to come exclusively from renewable sources such as hydroelectricity and windmills.

BTW, something is rotten in the Kingdom of Denmark where hurricane-force storms earlier this month shut down wind turbines. Good thing they had backup from a power grid based on conventional fossil plants. We'll have more on Europe's wind turbines soon, in a special report from our Scandinavian correspondent…