Climate Initiatives

DOJ Office of Environmental Justice: What’s Wrong?

Posted on by Ron Clutz

I can think of five major things wrong with this initiative  But first the announcement news from various sources:

AG Garland:  “Consistent with the President’s Executive Order on Tackling the Climate Crisis at Home and Abroad, we are issuing a comprehensive environmental justice enforcement strategy,” Garland said. “I am pleased to announce that we are launching the Justice Department’s first-ever Office of Environmental Justice to oversee and help guide the Justice Department’s wide-ranging environmental justice efforts. Like all parts of government, it will get its own acronym: OEJ.”

On Thursday, Garland said the department will prioritize cases that create the greatest impact on communities “most overburdened by environmental harm.”

“Although violations of our environmental laws can happen anywhere, communities of color, indigenous communities, and low-income communities often bear the brunt of the harm caused by environmental crime, pollution, and climate change,” Garland said.

According to The Hill, the Office of Environmental Justice will work with “communities that have been the victims of environmental crimes and requires all 93 U.S. attorneys across the country to designate an environmental justice coordinator to find ‘areas of concern’ in their communities.”

Since taking office, President Biden has launched the “Justice40” initiative, which aims to provide 40% of the benefits of government climate and clean energy investments to “historically disadvantaged communities.”  

What’s wrong with this?  Let’s count five ways.

Distracts from More Pressing Priorities

How about stopping the flood of illegal immigration through the wide-open border controlled by drug cartels?
What about reducing the worst rates of crime in US cities since the 1990s?
Shouldn’t DOJ focus on ending the cruel and unusual punishment of people expressing their free speech rights on January 6, 2020?

Just three examples of widespread injustices ignored or exacerbated by this DOJ.  We could add treating parents of school children as “domestic terrorists”.  Also firing workers and discharging soldiers for their vaccine status.  And so on, and so on.

Actually Enforcing Existing Laws Solves the Stated Problem 

Garland:  “Although violations of our environmental laws can happen anywhere, communities of color, indigenous communities, and low-income communities often bear the brunt of the harm caused by environmental crime, pollution, and climate change”

Garland’s remarks represent contemptible propaganda. As if smog and air pollution are wafting through cities, only affecting citizens with darker skin pigmentation. And, as if the communities referenced by Garland aren’t interspersed with other groups, at all, living exclusively in homogeneous neighborhoods. Such total nonsense and rubbish.

Every state already has an environmental state protection agency and access to the EPA. Anyone who finds or thinks they have discovered an environmental problem, can call these agencies, and the agencies will send some one to investigate. Currently the EPA investigates & gives evidence to the U.S. Attorneys Office in their District. It is examined & determined if there is enough evidence for a case to be brought against the individuals involved.

If what he says about “anywhere” is true, how about just enforcing the existing laws, with the existing agencies and offices, and without the expansion, expense, and bloat that he proposes? Such enforcement would, by its nature, address these problems in minority communities in proportion to their spatial distribution and criticality.

I have absolutely no idea what this new agency will do, except using more taxpayer money to fund it. What I suspect is that they’ll give more money to low income areas, for what exactly, will never be explained.

Covers for an Agenda to Cancel Climatist Dissenters

A naïve person might think is that this would “merely” be some kind of ecological jihad against “dirty” things like power lines, gas lines, and other things that prop up the modern world and keep America’s economy humming. But of course this is thinking too small,  underestimating the awfulness Garland and minions have in store for us.

So instead we have another paean to Gaia with the old “Climate Change” nonsense, thus bringing the DOJ into obviously redistributionist grounds, and turf that you’d expect would be the purview of the EPA. Because what we really needed in Current Year with political prisoners from Jan 6th still rotting away is yet another batch of heretics to harass and disappear.

There is no coherent definition of “environmental justice”. That is deliberate. It provides a means by which the government can act against any citizen for any reason it wants. It is the establishment of yet another department of the American Stasi, just like biden’s ministry of “truth”.

WOTUS (Waters of the US) EPA rule is still murky after all these years. And what, pray tell, is the definition of “environmental crime” and “environmental justice”, what is the legal and judicial rationale for establishing such an agency and why is such a redundant agency an imperative now when no such need has ever been identified and implemented before?

Be warned, ESG (environmental, social and governance) standards for corporations are being developed as we speak. They are being worked on internationally and created out of thin air. The DOJ and our government will beat us all – organizations and individuals – into submission with this.

Turns a Blind Eye to Real Environmental Degradation by Wind and Solar Farms

I am assuming the penalty for killing a tree will be harsher then the penalties for robbery and assault by Dem AGs. So will hunting and fishing be listed as crimes against the environment. Things just keep getting more and more weird. I hope the silent majority is paying attention and votes like their life depends on it this November.

Even if wind power curbs CO2 emissions, wind installations injure, maim, and kill hundreds of thousands of birds each year in clear violation of federal law. Any marginal reduction in emissions comes at the expense of protected bird species, including bald and golden eagles

To put this in perspective, powering the entire nation with wind and solar would require over 42 million acres — 18 times the size of Yellowstone National Park! This is at least 10 times the land footprint of our current energy system. The environmental destruction this effort would cause cannot be overstated.

But wait, there’s more! Both wind and solar generation also require massive amounts of elements like lithium, cobalt, and neodymium that are difficult and environmentally hazardous to mine. The tales of rare earth mines leaving behind lakes of toxic sludge in China and children as young as four mining cobalt in the Congo are chilling.

Unfortunately, most wind turbines and solar panels are expected to last only 20 to 30 years, and recycling them is still prohibitively expensive. A recent study estimates a whopping 8 million tons of solar panels will be sent to landfills by 2030, ballooning to 80 million tons by 2050. If renewable energy use grows at the projected scale, solar panels alone will represent 10% of global electronic waste — potentially leaching toxic chemicals all the while.

Another Excuse to Expand Governmental Social Control and Bureaucracy

This new office is nothing but wasting more money of the taxpayer. It appears Biden is creating more government jobs for his democrat friends.

But the real danger of an “environmental justice” office is, as with anything having to do with the enforcement of environmental laws, the government’s tendency to wildly overregulate with no means for private citizens or companies to correct the overreach.  It won’t be long before we’re writing about some OEJ idiocy that demonstrates why fanatics and ideologues should never be put in any position where they can exercise power.

With an Office for Environmental Justice, we are one step closer to a chinese-style social credit system. This is worse the the Ministry Of Truth down the street at Homeland Security because they can sue. 

FERC Aims to Decarbonize, Shoots Down Energy Security

Posted on by Ron Clutz

Marlo Lewis explains the Biden regime push to undermine critical energy supply in pursuit of climate virtue in his CEI article Why FERC’s Greenhouse Gas Regulatory Policy Cannot Pass a Cost-Benefit Test.  Excerpt in italics with my bolds.

Today, the Competitive Enterprise Institute (CEI) filed comments on the Federal Energy Regulatory Commission’s (FERC) proposal to consider climate change impacts in reviews of infrastructure projects under the Natural Gas Act (NGA). The comments were jointly submitted by my CEI colleague Patrick Michaels; Heritage Foundation Chief Statistician, Data Scientist, and Senior Research Fellow Kevin Dayaratna (commenting as an independent scholar rather than as a representative of any organization); and yours truly.

We submitted comments back in January on FERC’s November 2021 technical conference on the same issues. We advised FERC to steer clear of climate policy, for three main reasons.

1.  Decarbonizing Goals Conflict with Natural Gas Act Purpose

First, the Biden administration’s NetZero agenda to decarbonize and degasify the U.S. electric power sector cannot lawfully be aligned with the Natural Gas Act. Biden’s goals conflict with the NGA’s “principal purpose,” which is to:

 “encourage the orderly development of plentiful supplies
of electricity and natural gas at reasonable prices.”

In addition, climate change is not a factor Congress authorized FERC to consider. The words “climate,” “carbon,” “greenhouse,” “global,” “warming,” “mitigate,” or any of their cognates do not occur in the Act.

2.  Infrastructure Emissions Do Not Threaten the Environment

Second, although the direct and indirect emissions of natural gas infrastructure may be “reasonably foreseeable,” the climate effects are not. FERC’s project reviews are governed by the National Environmental Policy Act (NEPA), which requires scrutiny of major federal actions “significantly affecting the human environment.” Even the emissions of the largest natural gas projects are too small to discernibly affect global climate, and no project’s “carbon footprint” is big enough to influence the fate or fortunes of any community, business, or human being anywhere in the world.

3.  Social Cost of Carbon Is Speculative and Subjective

Third, the social cost of carbon (SCC)—an estimate of the present value of the cumulative climate damages of an incremental ton of carbon dioxide equivalent (CO2e) greenhouse gas (GHG) emissions—is too speculative and subjective, and too easily manipulated for political purposes, to be weighed in the same scales with an infrastructure project’s estimated economic benefits. The Biden administration’s SCC estimates are egregiously biased in favor of climate alarm and regulatory ambition, rendering any agency action that relies on them arbitrary and capricious.

Unsurprisingly, FERC did not take our advice, and proceeded in February to adopt an “interim” policy statement on NGA project review and greenhouse gas (GHG) emissions. That stirred up controversy, including pushback by Senate Energy and Natural Resources Chairman Joe Manchin (D-WV) and Ranking Member John Barrasso (R-WY). As a result, FERC in March demoted its GHG policy statement from “interim” to “draft,” and extended the comment period until today, April 25.

Unlike several presenters at FERC’s November 2021 technical conference, the draft GHG policy statement does not advocate requiring SCC analysis in NGA determinations of public convenience and necessity. Neither, however, does FERC disavow an intent to require it in later policy statements. The Commission may simply be waiting for the Biden administration’s Interagency Working Group (IWG) to finalize its interim SCC estimates, or for courts to resolve Louisiana’s challenge to federal agencies’ use of those metrics.

The Commission’s draft GHG policy statement establishes a “rebuttable presumption that proposed projects with 100,000 metric tons per year of carbon dioxide equivalents (CO2e) emissions will be deemed to have a significant impact on climate change.” FERC also implies that it may condition project approval on the sponsor’s plans to “mitigate all or a portion of the project’s climate change impacts.”

The camel’s nose is already under the tent.

It is not hard to guess where this is going if FERC does not quickly reverse course. The usual suspects will pressure the Commission to:

(1) progressively lower climate significance thresholds,
(2) monetize undetectably small project-related climate “impacts” using agenda-driven SCC estimates, and
(3) either reject needed natural gas infrastructure projects outright or impose mitigation requirements that render them uneconomic.

This is bad policy, as Michaels, Dayaratna, and I explained in our January 7 comments. If an infrastructure project is commercially viable and helps ensure plentiful supplies of electricity and natural gas at reasonable prices (the NGA’s principal purpose), the Commission knows in advance that the project’s economic benefits far exceed its climate-related externalities. Therefore, no further investigation of the project’s GHG emissions is required, nor does it make sense to condition the certificate of public convenience and necessity on the project’s adoption of mitigation measures.

Conclusion

New research by Dayaratna (hereafter “Heritage analysis”) further confirms that conclusion. Using the U.S. government’s leading energy and climate policy models, the Heritage analysis demonstrates that banning construction of new U.S. pipelines would have a negligible effect on U.S. annual CO2 emissions through 2050 and, thus, a similarly negligible effect on global temperatures through 2100. The policy implication for FERC is clear. No level of overregulation or prohibition that regulators might apply to the development of U.S. natural gas pipelines could meaningfully affect the Earth’s climate.

Consequently, no regulation or prohibition of new natural gas pipelines could possibly be worth the economic losses imposed on construction companies, natural gas producers, and energy consumers.

See Also Seeking Climate and Energy Security

If That Tesla Battery Could Talk

Posted on by Ron Clutz

Let’s imagine what an EV battery could tell us about its reality. A short story.  H/T Graeme Weber

The packed auditorium was abuzz; nobody seemed to know what to expect. The only hint was a large aluminum block sitting on a sturdy table on the stage.

When the crowd settled down, a scholarly-looking man walked out and put his hand on the shiny block, “Good evening,” he said, “I am here to introduce NMC532-X,” and he patted the block, “we call him NM for short,” and the man smiled proudly. “NM is a typical electric vehicle (EV) car battery in every way except one; we programmed him to send signals of the internal movements of his electrons when charging, discharging, and in several other conditions. We wanted to know what it feels like to be a battery. We don’t know how it happened, but NM began to talk after we downloaded the program.

“Despite this ability, we put him in a car for a year and then asked him if he’d like to do presentations about batteries. He readily agreed on the condition he could say whatever he wanted. We thought that was fine, and so, without further ado, I’ll turn the floor over to NM;” the man turned and walked off the stage.

“Good evening,” NM said. He had a slightly affected accent, and when he spoke, he lit up in different colors.

“A few days ago, at the start of my last lecture, three people walked out. But here is what I noticed about them. One was wearing a battery-powered hearing aid, one tapped on his battery-powered cell phone as he left, and a third got into his car — which would not start without a battery. So, I’d like you to think about your day for a moment; how many batteries do you rely on?”

He paused for a full minute which gave people time to count their batteries. Then he went on, “Now, it is not elementary to ask, ‘what is a battery?’ I think Mr. Tesla said it best when they called us Energy Storage Systems. That’s important. We do not make electricity — we store electricity produced elsewhere, primarily by coal, uranium, natural gas-powered plants, or diesel-fueled generators. So, to say an EV is a zero-emission vehicle is not at all valid. Also, since 40% of the electricity generated in the U.S. is from coal-fired plants, it follows that 40% of the EVs on the road are coal-powered, n’est-ce pas?”

He flashed blue again. “Einstein’s formula, E=MC2, tells us it takes the same amount of energy to move a 5,000 lb. gasoline-driven automobile a mile as it does an electric one. The only question again is, what produces the power? To reiterate, it does not come from the battery; the battery is only the storage device, like a gas tank in a car.”

He lit up red when he said that, and then he continued in blue and orange. “Mr. Elkay introduced me as NMC532. If I were the battery from your computer mouse, Elkay would introduce me as AA, if from your cell phone as CR2032, and so on. We batteries all have the same name depending on our design. By the way, the ‘X’ in my name stands for ‘experimental.’

“There are two orders of batteries: rechargeable and single use. The most common single-use batteries are A, AA, AAA, C, D, 9V, and lantern types. Those dry-cell species use zinc, manganese, lithium, silver oxide, or zinc and carbon to store electricity chemically. Please note they all contain toxic, heavy metals.

“Rechargeable batteries only differ in their internal materials, usually lithium-ion, nickel-metal oxide, and nickel-cadmium.

“The United States uses three billion of these two battery types a year, and most are not recycled; they end up in landfills. If you throw your small, used batteries in the trash, here is what happens to them.

“All batteries are self-discharging. That means even when not in use, they leak tiny amounts of energy. You have likely ruined a flashlight or two from an old, ruptured battery. When a battery runs down and can no longer power a toy or light, you think of it as dead; well, it is not. It continues to leak small amounts of electricity. As the chemicals inside it run out, pressure builds inside the battery’s metal casing, and eventually, it cracks. The metals left inside then ooze out. The ooze in your ruined flashlight is toxic, and so is the ooze that will inevitably leak from every battery in a landfill. All batteries eventually rupture; it just takes rechargeable batteries longer to end up in the landfill.

“In addition to dry-cell batteries, there are also wet-cell ones used in automobiles, boats, and motorcycles. The good thing about those is, 90% of them are recycled. Unfortunately, the cost of recycling EV batteries is more expensive than the cost of mining and creating a new battery. EV batteries that don’t have enough potency to power a vehicle can sometimes be used to power home appliances, street lights or solar panel backup until they finally lose all their energy.

“But that is not half of it. For those of you excited about electric cars and a green revolution, I want you to take a closer look at batteries and windmills and solar panels. These three technologies share what we call environmentally destructive embedded costs.”

NM got redder as he spoke. “Everything manufactured has two costs associated with it: embedded costs and operating costs. I will explain embedded costs using a can of baked beans as my subject.

“In this scenario, baked beans are on sale for $1.75 a can. As you head to the checkout, you begin to think about the embedded costs in the can of beans.

“The first cost is the diesel fuel the farmer used to plow the field, till the ground, harvest the beans, and transport them to the food processor. Not only is his diesel fuel an embedded cost, so are the costs to build the tractors, combines, and trucks. In addition, the farmer might use a nitrogen fertilizer made from natural gas.

“Next is the energy costs of cooking the beans, heating the building, transporting the workers, and paying for the vast amounts of electricity used to run the plant. The steel can holding the beans is also an embedded cost. Making the steel can requires mining taconite, shipping it by boat, extracting the iron, placing it in a coal-fired blast furnace, and adding carbon. Then it’s back on another truck to take the beans to the grocery store. Finally, add in the cost of the gasoline for your car.

“But wait — can you guess one of the highest but rarely acknowledged embedded costs? It’s the depreciation on the 5000-lb. car you used to transport one pound of canned beans!”

“But that can of beans is nothing compared to me! I am hundreds of times more complicated. My embedded costs not only come in the form of energy use; they come as environmental destruction, pollution, disease, child labor, and the cost to be recycled.”

He paused, “I weigh 1,000 pounds, and as you see, I am about the size of a travel trunk. I contain 25 pounds of lithium, 60 pounds of nickel, 44 pounds of manganese, 30 pounds cobalt, 200 pounds of copper, and 400 pounds of aluminum, steel, and plastic. Inside me are 6,831 individual lithium-ion cells.

“It should concern you that all those toxic components come from mining. For instance, to manufacture EACH auto battery like me, you must process 25,000 pounds of brine for the lithium, 30,000 pounds of ore for the cobalt, 5,000 pounds of ore for the nickel, and 25,000 pounds of ore for copper. All told, you dig up 500,000 pounds of the earth’s crust for just. one. battery.

“I mentioned disease and child labor a moment ago. Here’s why. Sixty-eight percent of the world’s cobalt, a significant part of a battery, comes from the Congo. Their mines have no pollution controls, and they employ children who die from handling this toxic material. Should we factor in these diseased kids as part of the cost of driving an electric car?”

400MW/1600MWh Moss Landing Energy Storage Facility in California Image: LG Energy Solution

“Finally, “I’d like to leave you with these thoughts. California is building the largest battery in the world near San Francisco, and they intend to power it from solar panels and windmills. They claim this is the ultimate in being ‘green,’ but it is not! This construction project is creating an environmental disaster. Let me tell you why.

“The main problem with solar arrays is the chemicals needed to process silicate into the silicon used in the panels. To make pure enough silicon requires processing it with hydrochloric acid, sulfuric acid, nitric acid, hydrogen fluoride, trichloroethane, and acetone. In addition, they also need gallium, arsenide, copper-indium-gallium-diselenide, and cadmium-telluride, which also are highly toxic. Silicon dust is a hazard to the workers, and the panels cannot be recycled.

“Windmills are the ultimate in embedded costs and environmental destruction. Each weighs 1688 tons (the equivalent of 23 houses) and contains 1300 tons of concrete, 295 tons of steel, 48 tons of iron, 24 tons of fiberglass, and the hard to extract rare earths neodymium, praseodymium, and dysprosium. Each blade weighs 81,000 pounds and will last 15 to 20 years, at which time it must be replaced. We cannot recycle used blades. Sadly, both solar arrays and windmills kill birds, bats, sea life, and migratory insects.

“There may be a place for these technologies, but you must look beyond the myth of zero emissions. I predict EVs and windmills will be abandoned once the embedded environmental costs of making and replacing them become apparent. I’m trying to do my part with these lectures.”

See Also World of Hurt from Climate Policies, Part 3 Wind and Solar Infrastructure Consumes Rare Metals Far Beyond World Supplies

Global critical metal demand for wind and solar power plants

When considering a global perspective, the critical metal demand for our future renewable electricity production is significant. This graph shows the annual metal demand for the six most critical metals, compared to the annual production. The dotted line represents present-day annual production.  

Seeking Climate and Energy Security

Posted on by Ron Clutz

Europe at night from space NASA 2016

News is out that US Senators are meeting in search of (using Sen. Joe Manchin’s words)  “a bipartisan climate and energy security package.” . . .  “It’s urgent to find out if there is a pathway.”

The principals should attend to Dieter Helm’s expert March 2022 analysis of Climate and Energy Security entitled Energy policy  Some excerpts are below in italics with my bolds, suggesting the thrust of his wisdom in this regard.

Introduction

Energy policy is not rocket science. It is about achieving core objectives – security of supply and decarbonisation – and achieving them at the lowest cost. Neither will be met by purely private markets, since the former is a public good and carbon is an externality not properly integrated in competitive markets. Furthermore, energy is a primary good for citizens: not to have energy deprives people and businesses from access to the wider economy and to society. It is a core USO: a Universal Service Obligation. That is why energy cannot be treated like any other commodity, as some of the architects of the “privatisation, liberalisation and competition” paradigm believed. Citizens are more than just consumers.

Security of supply requires a capacity margin: “just in case” rather than “just in time”. Decarbonisation requires more renewables, possibly nuclear, and maybe hydrogen, carbon capture and storage (CCS) and an active demand side. Security of supply sits in this decarbonisation context, and because many of the options on the generation side are intermittent, security of supply takes on a much more demanding dimension – not just the old question of access to fuels and power, but the ability to handle large-scale intermittency.

The Policy Mess We Are In

This pressure to “do something” is most intense in a “crisis”, and what is happening right now is a classic example. Lots of interventions currently being proposed by all the lobbyists are likely to make things worse.

Complexity is a lobbyist’s utopia. Engaged in each consultation, clear about the single aims of its vested interest, able to engage in each and every consultation, able to brief MPs, the media and the ministers, and sow doubt where interests are threatened, it is no wonder that the energy sector is now close to resembling that of agriculture, captured by the core interests. Spending (and it is very large-scale spending) on lobbying keeps going up as the government is more and more engaged in the details of all the main contracts.

These lobby interests have been very successful in getting subsidies and convincing government that the transition to net zero is going to be cheap (just not yet), and that there is no threat to security. Just go for net zero, they argue – on a territorial carbon production basis – sign up for lots and lots of targets and then, once the fish is hooked, play in the threat of failures and hence the case for more and more subsidies. (If it was all so cheap, we could of course abolish the subsidies – but no vested interest is demanding the end to subsidies.)

The facts –not only that decarbonisation is essential, but it is going to cost a lot – remain, and they are increasingly emerging. Each time they do, the lobbyists turn to the Treasury and ask the taxpayer to bail them out.

At its simplest, the government has been pursuing decarbonisation without addressing in parallel the security of supply implications. The failures are multiple. It is not just the gas price and the collapse of suppliers; it is also about the balancing market, and the distribution companies.

Behind all of these is the lack of a coherent market design
fit for the decarbonising purposes.

Exposure to the spot markets, with no storage and no special relationship to North Sea producers, is only one reason why the gas price increases hit the UK particularly hard. A second reason is that the UK has built a lot of intermittent wind capacity without thinking through how to manage the intermittency. In the UK (for good reasons) there is very little coal generation capacity left – except DRAX. For all the hype about batteries and smart demand management, the fact is that gas (and small diesel generators) is almost all that is currently left to do the heavy lifting.

In a renewables energy system, there needs to be a lot more capacity
to meet any given demand.

In theory, if there was no wind, then there would need to be another complete system to be on standby. As demand keeps going down – in part because of de-industrialisation (industry demand is down 20% since 2000) – capacity has been going up towards the 100GW mark, an increased requirement of over 20GW for a significantly lower total demand. It will need to go up a lot more with 40GW of offshore wind as planned. It seems to have escaped the notice of all those projecting that the costs of the transition would be very low, and claiming that renewables are cost-competitive with fossil fuels, that all this capacity has to earn a reasonable rate of return. It is a cost of renewables.

Needing the gas capacity is only one dimension of the problem. The other is how to deliver it, given that the wind has a marginal cost close to zero. Whereas a conventional gas power station could rely on running most of the time when first built, now it is itself intermittent, depending on whether the wind is blowing. This breaks the conventional back of the economics of gas investment. Hence there is no merchant gas investment. Gas shifts from being driven by a normal wholesale market towards a strategic reserve of capacity. The market design has not caught up with this. Gas now needs a capacity payment to make its reasonable return, and hence a capacity contract, which only the government can underpin.

Back to Basics

The very concept of a competitive retail energy supply market cuts across the basic idea that energy is a USO. Some think that goes beyond the pure commodity to an essential service necessary for a citizen to participate in society. Without electricity and gas, citizens can die of hyperthermia (quite a lot do each winter), they cannot access the internet, phones may not work, and the freezer thaws out. Any decent society recognises that energy cannot be simply about price, supply and demand. Yet that is precisely what the architects of the privatisation and liberalisation paradigm thought they were doing. The current crisis is not just about whether people can or will pay: it is also about all those voluntary actions to stop using the heating and the electricity, with all the consequences for the poor that this implies. Paying the electricity bill can be a trade-off with food.

The supply market is now broken, and it is unlikely that many customers will now want to switch – especially amongst the poorer ones. The government has had to step in to bail out Bulb. All electricity customers are now going to pay more than £60 each in their bills to pick up the tab for the costs of sorting out all the company failures. We have come full circle, back to an oligopoly again, and one that will need proper regulation.

The right way to address supply is to start with what customers want, to ensure that the companies serve the customers, not that the customers serve the interests of the suppliers.

How It Could Be Different

Though it is true that we are where we are, it is worth considering how it could be different by looking at what is happening elsewhere. Recall the reasons why the gas price increases have hit so hard are that the UK has lots of intermittent wind, and the electricity price is determined by the (marginal) wholesale price. Intermittency reads across to greater demand for gas, and that translates straight into the electricity price. The gas and electricity price paths match each other remarkably closely in the UK.

To see how it could be different, consider what is happening in France. It is around 70% nuclear and has a lot of hydropower. As the gas prices have shot up, the cost of nuclear and hydropower has not changed at all. Similarly in the UK, the cost of wind, solar and nuclear generation has not gone up. But now the difference. In France, the price increases are being limited to 4%. This reflects the costs. EDF understandably protests that this will lose it money (around €8 billion), because it could have sold its power into the EU markets at the spot price.

But the €8 billion is not a loss, but rather an additional profit that would go to EDF. Since EDF is largely owned by the French state, the €8 billion would be a taxpayer gain, and stands against a customer gain if the benefits of a stable nuclear power supply go to the French citizens and industry. Quite why Germans should benefit from French nuclear at this point of the gas price crisis, when it has closed its own nuclear fleet, is hard to fathom.

The building blocks of a sensible energy policy

Energy policy is all about setting a system framework within which markets operate to deliver what citizens and customers want. It starts with setting the objectives, and then ensures that these are met by a set of institutions, interventions, regulations, licences and auctions and so on.

The objectives

There are two primary objectives: security of supply and decarbonisation. Unless these are clearly and appropriately specified, no amount of ingenuity about the development of policies will be anything other than inefficient.

Security of supply includes price and costs, as does decarbonisation. Setting either independently of prices and costs make them unlikely to be attainable. In both cases higher prices have an impact on demand and hence the required supply-side infrastructure, reserves, capacity margins and the total envelope of investments. For example, gas security is always possible if the price is high enough. Supply equals demand at a clearing price. Security of supply has to be at reasonable costs, as must decarbonisation.

Both objectives are currently set as if they are independent of prices and costs. Hence they are in doubt: market participants need to try to guess the reaction function of government if and when customers and voters rebel or are simply unable to pay. In particular, there is an assumption as noted above that decarbonisation will be very low cost (perhaps 1% GDP per annum), but this is hopelessly unrealistic – it assumes as noted, for example, not only that the costs of renewables and low-carbon technologies will keep falling, but also that government policy will be perfect. There will be no government failure.

This is nonsense. Pretending that the costs are low to get governments signed up is a classic NGO trick, but the unfortunate reality is that the costs do not go away by assumption. In the current circumstances, few can bank on getting the net zero for the electricity sector by 2035. The uncertainty raises risk and hence the cost of capital.

The security of supply objective is also ill-defined, if defined at all. How much risk does the government want the economy and its companies and citizens to take that they will face price shocks? It is easy to be very secure, provided the economy can withstand the costs of a range of policies, including strategic stocks, reinforced networks and large capacity margins. We could, for example, agree to pay whatever it takes to secure LNG cargoes by agreeing to outbid every other country in the world. The costs of all of this would be beyond those that the economy could withstand.

The task of government in general, and BEIS in particular, is to set out serious and sensible objectives, and then delegate their achievement in a credible way.

Stakes in the ground

There are a number of decisions which cannot be taken by the private sector, or at least not without a very high cost of capital. The government is already the central buyer for almost everything in the electricity sector – directly or indirectly. Almost all new generation comes with a government-backed contract: a capacity contract or a CfD or a RAB. All the networks are regulated, and the regulator has a duty to finance functions in one form or another. The government controls the North Sea licences for oil and gas, and The Crown Estate runs the seabed licences.

The first stake in the ground concerns nuclear.

It can never be a purely private investment, for multiple reasons. Waste is an intergenerational liability. The political nature of nuclear means that investors always face the risk that government performs the sorts of U-turns made in Germany. Limited liability of private sector firms leaves the government with the unlimited liabilities. These considerations trump the further worries about the length of the project, cost and construction overruns, and changing regulatory requirements. Every major incident globally at a nuclear facility leads to a review of safety regulators, and safety regulators usually come up with new tighter regulations as a result.

Having a nuclear capability is part and parcel of having a robust nuclear programme, as it is of a military nuclear deterrence. Looking ahead, it is possible to envisage a joint UK– France nuclear programme, adding France’s six to say four to six in the UK, making a programme of at least ten. This would yield a supply chain. But it would need a UK company as part of the deal and a joint political framework. All of this, in the current context, is fantasy. If the UK does nuclear, it will be far less ambitious, less joined-up, and probably much more costly.

The conclusion that follows is that it is very hard to think of any worse way of taking nuclear decisions than the recent past in Britain. It maximises the cost of capital without complete risk transfer, and it minimises the supply chain efficiencies. Opting for more nuclear now as part of a security and decarbonising strategy requires the ambition to be matched by a more coherent and joined-up commitment, sustained over more than a decade.

A second stake in the ground is offshore and onshore wind.

The key point about wind is its difficult economics: it is low-density, disaggregated, intermittent and remote from consumers. Nevertheless, its lobbyists claim that wind is the cheapest form of electricity generation. Sadly this is not true once the full costs are taken into account, and that means that it is government that has to decide how much offshore and onshore wind and has to provide the subsidies to the full costs to make it happen. The regulator has to instruct the network companies to build an interconnected system between the offshore wind farms and then between the wind farms and the mainland grids. Offshore wind – the main play – differs from nuclear in all the above respects. It also differs in having shorter lead times and its components can be manufactured, currently primarily in China.

The stake in the ground decisions about the volume of offshore and onshore wind are conditional on deciding about the system infrastructure to collect and distribute the energy, and how to deal with the intermittency.

This is a system question that depends not only on the quantity in GWs of offshore wind in particular, but also on what else is on the system at the same time. It is rarely observed that the decision about wind needs to be taken in conjunction with the decision about gas – at least until there is a largescale alternative storage technology that can cope with longer periods of low wind, notably in winter (but increasingly in summer, too, as the air conditioning loads grow). Given the 2035 target for decarbonising electricity, the gas decision depends in turn on the CCS decision, since more wind means more gas, which means more CCS if the gas is to meet the net zero requirement by 2035.

This leads to the third stake in the ground – CCS.

Successive governments have stalled on CCS (Carbon Capture and Storage) investments and decisions. As noted, a Treasury paper in 2007 promised £1 billion of support to develop CCS. Fifteen years later, and despite there being even a competition for the £1 billion, CCS remains largely on the drawing board. It requires a regulatory and licences framework, a liability insurance regime, a pipeline system, and a price of carbon sequestrated.

Though all of this is reasonably straightforward, these ancillary stakes in the ground are not yet in place, and the clock is ticking both as the offshore wind develops and the 2035 deadline gets ever closer.

The fourth stake is the new kid on the block – hydrogen and green ammonia.

It is unlikely to be the last “new kid”. The promise of hydrogen is that it can be manufactured by using excess wind and perhaps even solar, thereby being truly “green”. (Nuclear could do this too, though it is unlikely to be surplus unless on a French scale.) In the meantime, hydrogen is “blue”, made from natural gas, which brings us back to CCS. Blue hydrogen is inconsistent with the net zero targets without CCS. The hydrogen decision differs from the nuclear and wind stakes in the ground because it is very much at the R&D and demonstration stage. R&D is a public good and hence there is an obvious role here for government support.

There are several other stakes in the ground, though they tend to be more about the frameworks and less the technology per se. Solar falls into this category, and targets are particularly inappropriate given the major differences between rooftop, household, farmland and other variants. In an ideal world with perfect foresight, governments might want to go further, but there are corollary dangers as the lobbyists get their teeth into government and regulators, and getting the really big decisions right on the above stakes in the ground would be a major achievement. All of the above are decisions which cannot be taken by markets.

Governments should resist the temptation to do everything. Just doing a few things well would be a massive improvement on the current policy mess described above.

Delivering the plan – guidance and the system operator and regional system operators

Government can and indeed has to take the decisions about the major stakes in the ground. What then is required is a plan to deliver the energy system within which these stakes are embedded.

These objectives will not be achieved without a plan. If, for example, the government seriously intends to get to net zero for the electricity sector by 2035, then with 13 years to go, it needs to radically up its game and set out a plan to get from here to there. To give some examples, if part of the plan is to build lots more offshore wind and to increase electricity capacity to tackle transport and some heating, then as noted it will need a lot of gas capacity to back it all up. That in turn will need CCS, since electricity will not be net zero if there is a lot of gas on the system unless the gas is net zero and the only plausible way of doing this is to use very large-scale CCS. Similarly, it makes a lot of difference to the networks and the capacity requirement whether there is more nuclear or not. To get more nuclear in just 13 years on the system requires a lot of actions now. The stakes in the ground are for government: the delivery of the system to meet these is an evolving and detailed matter. Things will change. Nuclear might be late, wind costs may increase, and so on.

Someone has to manage this process, and whilst the government and BEIS can and should issue guidance – notably in respect of the overall objectives and the stakes in the ground – there need to be a system architect. The obvious place to start is with the SOs at the national and also at the regional level too. The Cost of Energy Review sets out how these should be separated from National Grid and the distribution network operators (DNOs) and details some of the consequences for Ofgem and system regulation. Five years later, the government is still prevaricating about how to do this. Every year means that the system plan remains incomplete, which means that it is harder and harder to meet the 2035 target and the costs of doing so goes up. It has an impact on the generation investment decisions, notably because without a network system in place, uncertainty increases and hence the costs of capital goes up.

Creating a market fit for the purposes of the twenty-first century

Critical to rebasing energy policy now is a series of decisions – stakes in the ground – that have been fudged in recent years. Either do nuclear properly or not at all. Recognise the security implications of lots of intermittent wind on the system and plan the system architecture to deal with this. Integrate the offshore and onshore electricity grids. Do not ignore the gas that will be a part of the back-up for at least a decade to come. Do not pretend that stopping new gas production in the North Sea solves the problem of UK consumers consuming a lot of gas by importing it instead.

Get on with separating out the regional SOs and the national SO. Evolve quickly to an EFP market to supersede the fossil-fuel-driven wholesale markets of the twentieth century. Take longer term contracts seriously rather than relying overwhelmingly on spot markets, and extend the price cap periods to a year. Get on with designing and implementing an integrated CCS system offshore.

Do these things, and spend less on perverse subsidies, and the UK can have secure energy at a reasonable cost and decarbonise at the same time. Ignore all these, and not only will the UK lack security, but it will pay higher prices and the 2035 target will fade, and possibly with it the willingness of the public to support the vital objective of decarbonisation.

See also World of Energy Infographics

 

 

#1 Security Threat: Net Zero Asset Managers

Posted on by Ron Clutz

Rupert Darwall writes at Real Clear Energy Woke Investors Threaten the West’s Security.  Excerpts in italics with my bolds and added images.

In an era of rising geopolitical tensions, it is folly
to let Wall Street determine the nation’s energy policy.

As the West grapples with the energy implications of a hostile Sino-Russian alliance, the steering group of the Net-Zero Asset Owner Alliance, whose members manage over $10.4 trillion of assets, issued a statement urging Western governments not to sacrifice climate goals for energy security. “The world is still heading for an excess of fossil fuel-based energy use that will vastly exceed the carbon budget needed to meet the 1.5° Celsius Paris agreement goal. This trend must be halted,” the United Nations-backed alliance said in its April 8 statement, arguing that “the national security argument for accelerating the net-zero transition has strengthened considerably.”

What, one might ask, is the standing of asset managers to opine on national security matters? They have no expertise in this domain. It turns out that their understanding of the economics of energy policy is defective, too.

The Net-Zero Asset Owner Alliance claims that development of new oil and gas reserves will lock in fossil fuel subsidies, exacerbating market distortions. In fact, the International Energy Agency (IEA) in its 2021 net-zero report states that under its net-zero pathway, tax revenues from oil and gas retail sales fall by about 40% over the next twenty years. “Managing this decline will require long-term fiscal planning and budget reforms,” the IEA warns. Similarly, Britain’s Office of Budget Responsibility estimates that net zero policies will result in the loss of tax receipts representing 1.6% of GDP. So much for the fossil fuel subsidy myth.

If fossil fuels were heavily subsidized, eliminating them would mean fossil fuel subsidies disappear. Instead, it’s tax revenues that would melt away to zero.

The net-zero investors cite figures for the decline in solar and wind energy costs. These numbers are based on so-called levelized cost of energy (LCOE), a metric that aims to measure a plant’s lifetime costs. Wind and solar power are intermittent, but LCOE metrics exclude the costs of intermittency, which increase the more wind and solar are put on the grid. Because wind and solar output responds to weather and not to demand, the value of this output declines the more installed wind and solar capacity is available. It was for these reasons that MIT professor of economics Paul Joskow concluded in a foundational 2011 paper that using LCOE metrics to compare intermittent and dispatchable generating technologies, such as coal and natural gas, is a “meaningless exercise.”  [ See proper energy costing here: Cutting Through the Fog of Renewable Power Costs ]

Wind and solar investors don’t need to understand the economics of the grid to make money – they are shielded from the intermittency costs their investments inflict on the rest of the grid, which is one reason why their views on energy policy can be taken with a pinch of salt. Their economic illiteracy does, however, make it easy for them to subscribe to the green fairy tale of 100% renewables. They’re not responsible for keeping the lights on – that depends on traditional power plants staying fueled up and ready to spin, which is what Germany can’t do without Russian gas. Adopt the net-zero alliance’s call for no new fossil-fuel investment, and the cost of energy is bound to spiral. And if the lights go out, politicians – not woke investors – get the blame.

Investors’ opinions on energy and national security would matter less if they didn’t have political power. Bloomberg opinion writer Matt Levine argues that asset managers of giant funds form a parallel system of government that exercises overlapping legislative powers with those of governments. These government-by-asset-managers, as Levine calls them, tell companies to do things they think are good for society as a whole, “making big collective decisions about how society should be run, not just business decisions but also decisions about the environment and workers’ rights and racial inequality and other controversial political topics.”

Foremost among these areas is climate policy. Although the Biden administration has set a net-zero goal, Congress has not legislated it, and it lacks the force of law. The absence of legislation passed by democratically accountable legislators, however, presents no barrier to government-by-asset-managers legislating climate policy for the companies in which they invest. “Investors are making net zero commitments for themselves and demanding that companies issue greenhouse gas reduction targets and transition plans for meeting those targets,” says the Reverend Kirsten Snow Spalding of the not-for-profit Ceres Investor Network on Climate Risk and Sustainability.

Neither Spalding nor the Net-Zero Asset Owner Alliance make a case that forcing net-zero targets on companies will boost investor returns, demonstrating that this is not about investors’ traditional concerns – making money – but about pursuing politics by other means. In this, the Securities and Exchange Commission (SEC) is working hand in glove with woke climate investors. Commenting on the SEC’s newly proposed rule on climate-risk disclosure, Spalding says that for investors who have committed zero emissions by 2050, “this draft rule is absolutely critical.”

Unlike elected politicians, woke climate investors are not accountable for the effects of their climate policies: They exercise power without responsibility. This arrangement weakens America’s ability to respond to the geopolitical challenges of a revanchist Russia and an expansionist China. “We are on a war footing – an emergency,” Energy Secretary Jennifer Granholm declared at the CERA energy conference in Houston last month. “We have to responsibly increase short-term supply where we can right now to stabilize the market and to minimize harm to American families.” Addressing oil executives in the audience, Granholm told them: “I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply . . . right now, we need oil and gas production to rise to meet current demand.”

As Granholm suggested, woke investors have been trying to do the opposite. Despite the war in Ukraine, there has been no let-up in investor pressure on oil and gas companies to scale down their operations. Whatever criticisms might be made of the Biden administration’s handling of the war in Ukraine, it is responsible for taking the awesome decisions that war involves. Investors, by contrast, have no responsibility for the nation’s security and America’s ability to lead the West. By helping investors impose their desired energy policies on American oil and gas companies, the SEC is undermining the national security prerogatives of the Biden administration and eroding America’s ability to meet the challenges of a dangerous world. The SEC is playing in a domain that it has no business being in.

Climate-Change ‘Solutions’ Way Worse Than the Problem

Posted on by Ron Clutz

Wonder Land: Democrats have wrecked the cities and the border. Why would climate policy be any different? Images: Zuma Press/Getty Images Composite: Mark Kelly  Link to video is below

https://video-api.wsj.com/api-video/player/v3/iframe.html?guid=5D0A20A9-75C5-4506-B1B1-9EC96ABBBEE9

Jason De Sena Trennert writes at WSJ Opinion Climate-Change ‘Solutions’ That Are Worse Than the Problem.  Excerpts in italics with my bolds and added images H/T John Ray (here)

The political assault on fossil fuels comes at the expense
of the poor, peace, and the environment.

If you can afford a Tesla, you probably find it hard to imagine that there are some 3.5 billion people on Earth who have no reasonably reliable access to electricity. Even less obvious may be the way rich countries’ pursuit of carbon neutrality at almost any cost limits economic opportunities for the world’s poor and poses serious geopolitical risks to the West.

Anyone on an investment committee has likely spent untold amounts of time discussing ways to mitigate the impact of climate change, but they’ve likely never heard anyone state one simple and incontrovertible fact: The widespread exploration and production of fossil fuels that started in Titusville, Pa., not quite 170 years ago, has done more to benefit the lives of ordinary people than any other technological advance in history.

Before fossil fuels, people relied on burning biomass, such as timber or manure, which was a far dirtier and much less efficient source of energy. Fossil fuels let people heat their homes in the winter, reducing the risk of death from exposure. Fossil-fuel-based fertilizers greatly increased crop yields, reducing starvation and malnutrition. Before the advent of the automobile, the ability for many people to venture far from their hometown was an unfathomable dream. Oil- and coal-burning transportation opened up access to education, commerce, professional opportunities, and vital services such as medicine. There has been, and remains, a strong correlation between the use of fossil fuels and life expectancy.

Limiting the availability of fossil fuels in the name of climate activism would cut off many of the world’s poor from these benefits. Climate activists worry about a potential “existential crisis” decades down the road, but poor people, really poor people, face an existential crisis every day. Even for those who aren’t among humanity’s most unfortunate, rising energy prices force serious economic trade-offs. Purposely eschewing America and Europe’s own natural resources increases costs to consumers, raises the cost of doing business, and limits economic growth. Viewed with this in mind, the debate over emissions seems like an upper-class problem.

If Chinese belligerence and increasing authoritarianism over the past two years have taught us anything, it is that no amount of trade and international cooperation will instill what are generally considered to be Western values in other civilizations who have no real desire to adopt them. Trusting China to do anything other than what is directly in its own best interests, especially when it comes to the trade-offs between economic development and climate issues, would seem to be in direct conflict with history and common sense—and it poses serious geopolitical risks to the international democratic order. The war in Ukraine has emphasized how leaving European and American fossil fuels in the ground can put the West at the will of dictators, increasing the risk of atrocities, war or even the use of weapons of mass destruction.

An easing of regulations on drilling in the U.S. and easier regulations on liquefied natural gas exports to flood the global market with oil and natural gas would do far more than any sanctions to stop Vladimir Putin’s barbarism.

The climate-change solutions the West is pursuing also pose a danger to the environment. The lodestar of the environmental movement today appears to be electric vehicles. One would be hard-pressed to find a product more dependent on resources from extractive materials. An electric car requires almost four times as much copper as an automobile powered by an internal combustion engine. The widely accepted goal of having 30% of the world’s vehicle sales be electric by 2030 would require enormous investments in mining industries that are decidedly not eco-friendly.

And whatever emission cuts America and Europe manage to make by forcing electric vehicles and other inefficient technology on consumers will be negated by emissions from other nations. Regimes like Russia and China won’t put aside their geopolitical ambitions for climate activism; developing countries like India won’t sacrifice economic development and their peoples’ well-being in the hope it’ll slow global warming.

Sadly, environmentalism has grown into a secular religion
in which reasonable debate is regarded as heresy.

But if politicians and voters can approach climate change with an open mind, they’ll see that economic growth is likely to solve the issue without heavy-handed government intervention. History has shown that free markets produce incredible leaps in human ingenuity. The greater access the world has to all sorts of energy sources, the faster humanity will discover new technologies that are more environmentally friendly. Rationing fossil fuels would only retard the process of decreasing carbon emissions and cost lives in the process.

Resources:  Four Part Series of infographics World of Hurt From Climate Policies

 

Fuel Efficiency Rule De Facto EV Mandate

Posted on by Ron Clutz

Kevin Stone explains at Heartland Daily News. Fuel Producers, States Challenge New EPA Rule Effectively Mandating Electric Vehicles.  Excerpts in italics with my bolds.  H/T John Ray

An unlikely coalition is challenging the U.S. Environmental Protection Agency’s (EPA) revised fuel economy rules.

At issue is a revised fleetwide. corporate average fuel economy (CAFE) standard of 55 miles per gallon in model year 2026. The shortened timeline for the much higher fuel economy forces automakers to reduce their fleets’ carbon dioxide emissions by 22.6 percent more than previous rules required.

Sixteen states, plus groups representing the fossil fuel and ethanol industries in 15 states, are challenging the Biden EPA’s emissions rules. They argue the EPA’s new standards effectively mandate a national transition from internal combustion powered vehicles to electric vehicles starting in 2026.

Farmers, Drillers, Attorneys General

A mix of corn and soybean growers associations from the states of Illinois, Indiana, Iowa, Michigan, Minnesota, North Dakota, Ohio, and South Dakota joined with Diamond Alternative Energy in one of the lawsuits filed to block the EPA’s new rules.

In addition, Texas Attorney General Ken Paxton filed a lawsuit on behalf of Texas, joined by the states of Alabama, Alaska, Arkansas, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Ohio, Oklahoma, South Carolina, and Utah. Arizona filed a separate lawsuit to block the rules.

The Competitive Enterprise Institute (CEI), along with additional petitioners such as the Domestic Energy Producers Alliance, a nationwide coalition of 39 associations representing the oil and gas industry, also filed a lawsuit to block the new standards.

Essentially an EV Mandate

The lawsuit filed by representatives of various states’ biofuel associations argues the new standard is an unauthorized de facto mandate forcing people to use electric vehicles.

“Through the final rule, EPA seeks to unilaterally alter the transportation mix in the United States, without congressional authorization and without adequately considering the vast greenhouse gas reduction benefits provided by renewable fuels,” the complaint states.

CEI and its co-petitioners make a similar argument in their filing by lead attorney Devin Watkins, saying the rules exceed the agency’s authority.

“EPA is trying to transform the motor vehicle market from gas-powered to electric vehicles by making gas-powered cars more expensive,” Watkins’ petition states.

Ambitious or Unworkable?

The EPA’s new standard and timeline are unrealistic because the mass adoption of electric vehicles and construction of the infrastructure needed to support and power them won’t magically appear overnight, says Paul Driessen, a senior policy advisor with the Committee For A Constructive Tomorrow, which co-publishes Environment & Climate News.

“It’s vital to remember that President Joe Biden, Rep. Alexandria Ocasio-Cortez (D-NY), and other climate-focused activists aren’t talking about just replacing current fossil fuel vehicle use or electricity generation,” said Driessen. “They also want to convert home and office heating, cooking, and water heating to electricity; convert factories from coal and gas to running on wind- and solar-generated electricity; and have massive battery modules as backup power for windless, sunless days.

“That means nearly doubling existing U.S. electricity generation, and doing all of it with intermittent, unreliable, weather-dependent power generation systems,” said Driessen. “It means millions of onshore and offshore wind turbines, billions of solar panels, billions of 1,000-pound battery modules, and thousands of new transformers, covering tens of millions of acres, all powered by wind and sunshine, and all connected via thousands of miles of new transmission lines to power users all across America.”

‘It Is a Pipedream’

Electrifying the transportation system and in fact the entire U.S. economy is a fool’s errand, doomed to fail while placing an unnecessary burden on the public, says Driessen.

“They expect, hope, and fantasize this will somehow work, that a massively stressed power grid never built or tested before will be able to handle huge, sudden electricity surges and cutoffs due to wind and sunlight cooperating with demand only incidentally, failing minutes, hours, or days at a time and crashing repeatedly and catastrophically,” said Driessen.

“It is a pipedream that has failed everywhere it’s been tried on much tinier scales than what they intend to impose on us,” said Driessen. “Think of Texas two winters ago, and South Australia a few years ago, multiplied a thousand times over. We’re going to be asked to accept having electricity for every aspect of our industry, hospitals, and lives, when it’s available instead of when we need it.”

It’s ‘MAGIC’

There is no way the United States can get the needed raw materials and do the infrastructure transformation required by the EPA’s and other agencies’ new rules implementing Biden’s “whole of government approach” to fighting climate change, says Driessen.

“Just getting the metals, minerals, plastics, concrete, and other raw materials to create this system will take mining at scales unprecedented in human history,” said Driessen. “Team Biden seems to think this will just happen, under a government-mandated program you could call Materials Acquisition for Global Industrial Change, abbreviated MAGIC.

“This new, unworkable system would totally bankrupt America,” said Driessen. “Energy analyst David Wojick, Ph.D. calculates that building a battery system to back up just New York City’s current peak electricity needs, not counting new electric cars or future growth, for one week of no wind or sunshine would cost $3 trillion! For all of New York State, it would cost $8 trillion. And that’s just New York.”

 

 

Pipe Dreams: How America Is Energized

Posted on by Ron Clutz

Kite and Key Media provides a primer on America’s Energy supply in the above video and transcript below in italics with my bolds.

Pipe Dreams: How America Gets Energy.
The Backbone of America’s Energy Infrastructure

In the winter of 2022, the world watched in horror as Russian forces invaded Ukraine.  The question on everyone’s mind: “How did they think they could get away with this?”

One very good answer to that question: Because over 40% of the natural gas Europe relies on to keep itself warm during the winter … comes from Russia.  And standing up to the people who are keeping you from freezing … is a tall order.

Now, if you’re an American, this scenario might seem unthinkable. After all, the U.S. produces more natural gas than any other nation in the world.   We’d never have to rely on a hostile nation to keep ourselves warm.

Or at least that’s what you’d think…
…unless you were there the day that Russian gas pulled into Boston harbor.

Here’s a simple test to determine whether you live in a prosperous society: Do you ever worry about where you’re going to get the necessities of life?

Do you ever pull up to the gas station and worry that the pumps might be empty? Do you ever go to switch on the lights and worry that nothing will happen?

Most of the time, the answer is ‘no’ … which is why it’s so terrifying when the answer is ‘yes.’

Blackouts in Texas in early 2021. Over 10,000 gas stations running dry after a cyberattack only a few months later.   What do those incidents have in common?

They demonstrate what happens when pipelines aren’t working.

If America’s energy supplies are the lifeblood of our economy, then we can think of pipelines as something like the nation’s circulatory system.

In the U.S., pipelines are used to bring us about 90% of our petroleum and virtually all of our natural gas — which is pretty significant, given that those two power sources alone make up about 70% of the country’s entire energy use.

That’s why America has over 2.6 million miles worth of pipelines. Because without them … the whole country gets very Amish very fast.

But, as you may have noticed … not everyone is thrilled about this. In recent years, legal challenges have led to the cancellation of several major pipelines and delays for many others. From 2009 to 2018, the time it takes to get pipelines approved increased by more than 50%. 

So, what’s happening here? The objections to pipelines rest primarily on two critiques. The first is that they’ll contribute to carbon emissions. The second is that pipeline accidents could lead to oil spills.

And both of those claims … really require context to understand.

When it comes to carbon emissions, it’s important to know that the pipelines themselves aren’t really the issue. They’re just a mode of transportation.

The carbon emissions come from the petroleum and natural gas that flow through the pipelines. But here’s the catch: Getting rid of the pipelines … doesn’t mean getting rid of the emissions.

Cancelling the Keystone XL pipeline, for instance, may have felt like a win for the environment — but it’s not like that oil is gonna stay in the ground as a result. In fact, much of it is likely to be shipped to China — which isn’t exactly a low-emissions trip.

And we can probably expect to see more of that. Current government projections are that, even with a steep increase in the use of renewable fuels, we’ll still be getting about 2/3 of our energy from natural gas and petroleum … 30 years from now.

Refusing to build pipelines won’t change that reality …
but it will make the system we actually have much harder to operate.

Which gets to those concerns about safety. Do accidents occur with pipelines? Yes. It happens. However, accidents occur with all forms of energy transportation. So, the real question is what’s safest among the available options.

And on that front … pipelines do pretty well. Because if you’re not going to move fuel through the ground, you only have three other options: put it on trains, put it on trucks, or put it on boats.

Now, none of those methods is especially dangerous, but pipelines spill a lower percentage of the oil they transport than any method except boats.  And boats have … limited utility on this front. Because they still need fuel in Nebraska … and America’s 26 other land-locked states. 

So, what does a world without pipelines look like?
We already sorta know the answer.

The reason that Boston was getting gas from Russia, for instance, was because the state of Massachusetts refused to allow a pipeline to bring it from Pennsylvania. That’s the same reason, by the way, that, in January of 2022, the citizens of Boston … were paying 400% more for natural gas than those Pennsylvanians only 200 miles away — in the middle of a New England winter.

Here’s the reality: None of us are willing to live in a world where the lights don’t reliably come on or gas doesn’t reliably come out of the pump. We can aspire to a future powered by cleaner energy sources, but until that day comes … we’re going to be relying on fuel sources like petroleum and natural gas.

Which means we either rely on pipelines…

…or rely on places like Moscow…

…or get very comfortable with horses.

 

Investors Resisting Corporate Climate Activism

Posted on by Ron Clutz

Jerry Bowyer writes at Real Clear Markets Return-Focused Investors Are Starting to Notice the Politicization of Corporations.   Excerpts in italics with my bolds and added images.

We monitor and analyze proposals placed before shareholders for annual meetings held by publicly traded companies for funds, financial advisors and individual stockholders. For far too long, investors who are actually focused on returns have thrown annual proxies into the wastebasket while highly organized activist groups motivated chiefly by political considerations have been using shares as a mechanism to promote their own particular brand of social change. Recently, however, return-focused investors have begun to notice the degree to which a small minority has been politicizing corporate life, and a backlash has clearly formed against that.

One of the main issues has been increasing attempts to use shareholder engagement against fossil fuel usage, which came to a head last year when three anti-oil board members were elected to board seats at Exxon, a major oil company (Activist firm Engine No. 1 claims third Exxon board seat (cnbc.com)). A small activist fund received some assists in this campaign from a number of government employee pension funds and Blackrock. There was understandable backlash from public pension plans of energy-producing states, which received media coverage. Blackrock executives have tried to walk back some of the more heated rhetoric from CEO Larry Fink when dealing with energy-friendly clients.

Climatists storming the Exxon Bastion, here seen without their shareholder disguises.

What we are seeing so far in the early phase of this year’s annual shareholder meeting season is a spate of proposals, typically from political activist groups, pushing more aggressive anti-carbon measures. We’re also seeing investors rejecting such proposals. For example, as of this writing, the tentative vote counts for Royal Bank of Canada show shareholders voting down all of the items placed on the ballot by activists, including several having to do with fossil fuels. This is consistent with the pattern we’ve seen so far.

We’ll leave aside self-imposed fossil fuel divestment plans put forward by management under the moniker “Climate Action Plan”, as we’ve dealt with that issue here (How “sustainable investing” emboldens Putin | Analysis News (christianpost.com)). This analysis is focused on activists’ recent attempts to go even further in opposition to fossil fuels. In general, management teams have opposed these types of proposals, but it is arguable that they are somewhat responsible for bringing them about: advocates frequently cite public statements about environmental commitments and statements about the risks of climate change made by the company and argue that they are simply asking the company to live up to its public posturing.

Managers of these companies are beginning to see that public political pronouncements
do not assuage, but rather embolden, activist demands.

Let’s look at some of the proposals which are showing up on proxies this year:

♦  Annual Advisory Vote Policy on the Bank’s Environmental and Climate Change Action Plan and Objectives

Climate action plans in general have not been rigorously shown to be of benefit to shareholders, nor even to reduce GHG emissions (since nothing prevents other banks from financing the fossil fuels companies which would be de-banked by the proposed plan). So adding an extra level of institutional pressure to managers in the form of automatic annual votes is not warranted. If there is adequate support for a vote in any given year, shareholders of even modest scale can place it on the ballot.

♦  Annual Advisory Vote Policy on the Bank’s Environmental and Climate Change Action Plan

The proposal fails to make a rigorous case for shareholder benefit. The proposal is ostensibly modeled on the Paris Accords, but the Paris Accords are a proposal for regulations which governments would impose on industry, not for limitations which industry would impose on itself. When businesses, for example banks, limit customers on some basis other than profitability, that likely subtracts from shareholder value. And the limitation fails to decrease carbon emissions unless there are broad global restrictions on carbon emissions. Such arbitrary (from a revenue point of view) restriction of potential customers for banking services doesn’t shrink emissions, it simply transfers that business opportunity to other companies and countries. 

♦  Set Up a Climate Change and Environment Committee.

The proposal is for the board to set up a standalone committee focusing exclusively on environmental issues. The support statements tend to be thinly argued, doing little more than asserting that climate change is an important issue and navigating it is a matter of some complexity. In some cases boards of directors have argued against such resolutions by pointing out that there are several committees already which deal with environmental issues, including risk committees. To the degree that environmental issues are specifically of shareholder concern and not just general social concern, it is because of the potential risks, therefore environmental concerns seem most properly housed in the risk committee where they typically reside. There, environmental risks can be analyzed in relation to all risks, not elevated above them as a unique concern above all other risks.

♦  Avoid Bank Participation in Pollution-Intensive Asset Privatizations

When we have seen this proposal it has come from a labor union which tends to engage on political issues. This appears to be an anti-privatization measure with an environmental element added perhaps to get broader support. Financing of privatization is a standard banking practice because it is of potential benefit to shareholders. Whether privatization is beneficial or detrimental to society as a whole is a matter of long debate. In addition, in the case we’ve seen, the proponents make no argument to establish that an operation currently operated by government, which produces environmental impact, would become more environmentally harmful if it were transferred to the private sector, and so it provides no environmental reason why banks should not engage in the otherwise profitable business of financing such transfers.

♦  Update the Bank’s Criteria for Sustainable Finance to Preclude Fossil Fuel Activity and Projects Opposing Indigenous Peoples

This resolution was submitted by an activist group, Investors for Paris Compliance, on behalf of two shareholders (this is a common practice in regards to ESG proxy proposals). This proposal strongly overreaches standard climate plans, in that it precludes, rather than just reduces, investment in certain energy sources. In addition, the inclusion of the indigenous peoples element seems tangential to the main issues. Per comments made live at the shareholder’s meeting for Royal Bank of Canada, this is not about situations in which indigenous people actually own the property and therefore can legally block the projects. The rhetoric has instead invoked situations in which indigenous peoples opposed development on land they did not own, and were arrested for protesting on the property of others. It can reasonably be postulated that this is an attempt to bolster the anti-fossil fuels agenda by tapping into the indigenous people’s cause which is currently quite prominent in Canadian politics.

It seems plausible that the politicization of corporate governance in and around climate change may well have gone farther than corporate managers, in this case, Canadian banks, are willing to go in terms of sacrificing profit for the protection of alleged “reputational risk”. Even more interesting is the fact that a largely Canadian investor base also seem unenthusiastic about such proposals.

Jerry Bowyer is the President of Bowyer Research, an economic and financial research and consulting firm.

IPCC World’s Last Chance (Again)

Posted on by Ron Clutz

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James Macpherson reports on the latest deadline in his Australian Spectator article The IPCC say the world is ending! (Again?) .H/T John Ray.  Excerpts in italics with my bolds.

In the latest ‘now or never!’ since the ‘last now or never!’ the United Nations has warned the world that it is once again ‘now or never!’ to avoid disastrous Climate Change.

Forget Prince Charles’ warning back in July 2009 that we had just 96 months to save the planet.

Ignore former British PM Gordon Brown’s prediction, just three months later, that we had fewer than 50 days to avoid disaster.

And never mind French Foreign Minister Laurent Fabius who, standing beside then American Secretary of State John Kerry, told the world on May 13, 2014, that ‘we have 500 days to avoid climate chaos’.

The irony of that particular Chicken Little routine was that Fabius was scheduled to host the 21st Conference of the Parties on Climate Change on November 30 the following year – 65 days after the world, by his reckoning, would have ended.

I was going to quip that you couldn’t make this stuff up, but it seems like they do.

Anyway, enough joking around. This is it. Seriously. They’re not even kidding this time. Honestly. Like, for real guys. ‘It’s now or never!’

Yes, I know that’s what American defence chiefs were warning back in 2004 when they predicted European cities would sink beneath rising seas, and that Britain would be plunged into ‘a Siberian climate’ by 2020.

But it wasn’t like they got everything wrong.

Their predictions of widespread rioting across the world by 2020 did come to pass. And if you overlook the fact that the rioting was caused by the death of George Floyd and the imposition of compulsory injections – rather than the complete collapse of the ecosystem – you’ll see just how prescient the defence chiefs were.

You can’t expect climate catastrophists to get it right all the time. Or any of the time. It’s not like they’re astrologers.

Doomsday was predicted but failed to happen at midnight.

The important thing to worry about is that things are now a lot more worrying than the last time we were warned to worry, and so there is now good reason to be worried.

We have this week reached a tipping point that is even pointier than every other tipping point so far reached; which is to say we will soon be at a point of no return that is well past the point of no return that we were last warned there was no returning from.

The latest UN climate panic comes in the form of what media outlets called ‘a massive 3,000-page document’ published Monday.

It’s unlikely anyone will read all 3,000 pages, but no one should need to. The sheer size of the document – let me remind you, it’s ‘massive’ – tells you everything you need to know.  Things are bad.

And if the thickness of the report does not convince you that things are dire, environmentalists at the UN can make their next dossier of doom and gloom run twice that length. It’s only trees, after all.

Let me remind you just how massively bad things are.

Back in 1972, the then UN Under General Secretary Maurice Strong warned we had ‘only 10 years to stop the catastrophe’.

In 1982, which was the deadline for stopping the catastrophe, the head of the UN Environment Program Mostafa Tolba told us we had just 18 more years before we would face an environmental catastrophe ‘as irreversible as any nuclear holocaust’.

Just eight years later, he was insisting we needed to fix global warming by 1995 or we would ‘lose the struggle’.

The great climate doomsday of 1995 failed to materialise, as did the climate Armageddon of 2000. But the flurry of final warnings, last chances, and tipping points continued; every prediction more hysterical than the last.

UN Climate Panel chief Rajendra Pachauir, who was no doubt surprised to still be here in 2007, warned that ‘if there is no action before 2012, that’s too late’. He further insisted that ‘what we do in the next two to three years will determine our future’.

Our betters spent the next two or three years jetting around the globe, holding lots of conferences and summits, which must have saved our bacon since not only did we survive the predicted 2012 apocalypse, but we hung on grimly until 2019 at which point the UN informed us we had just 11 years to prevent irreversible damage from climate change.

To emphasise just how serious things were, they invited a Swedish school girl to berate them for robbing her of her dreams, or something. These days she’s performing Rick Astley covers for adoring fans.

Now, just three years into that 11-year do-or-die period,
we are being told that it’s ‘now or never’.

One could be forgiven for thinking that when the world doesn’t end as these activists predict, they simply change the date and call it science.

The UN report, the most comprehensive report since the last most comprehensive report, says emissions must be curbed by 2030 or things will be even worse than the last time we were told they couldn’t possibly be any worse.

The report says that people must change their diets and their lifestyles which, as we already know, means eating bugs and walking.

And if we fail to heed the latest hysterical shrieks from those who warn of rising sea levels while purchasing beachside mansions, we can be sure there will be even shriekier histrionics in the future.

This is it. Our final, cataclysmic warning. Until the next one. And probably the one after that.

When the UN insist that it is ‘now or never’ for climate action, what they really mean is that they want now and never-ending emergencies as a pretext for herding us around the room. First here and then there, but never to an exit.