Climate Initiatives

Why More USA CO2 is a Good Thing

Posted on by Ron Clutz

A new editorial at Investor’s Business Daily explains: Don’t Join The Media Freak Out Over Recent Jump In CO2 Emissions — It Won’t Last. Excerpt in italics with my bolds.

CO2 Emissions: For the first time in years, U.S. carbon dioxide output rose last year, a new report says. The jump has set off alarms in all the predictable media quarters. Relax. It’s a great sign for the economy, and will mean nothing long term for the environment.

CO2, the main greenhouse gas that global warming advocates most fear, happens to be rising around the world right now. It has been for decades.

But in recent years the U.S. has been the big exception to that trend, with declining amounts of CO2 spewed into the air from its industry. The reason for this is that, thanks to fracking, companies and utilities around the country are replacing coal with natural gas.

At least, that is, until 2016. But in 2018, U.S. carbon dioxide output jumped by 3.4%, according to Rhodium Group, a research firm.

It’s not hard to understand why. Thanks to a booming economy set off by President Trump’s new trade deals, tax cuts and deregulation, in the past two years the U.S. has seen manufacturing jobs surge.

CO2 Emissions Vs. Factory Jobs
Indeed, since Trump entered office, the number of manufacturing jobs has jumped by close to half a million. Once-moribund industrial areas around the country, many of which voted for Trump, are coming back to life. Minority unemployment rates are at or near record lows. Meanwhile, wages rose 3.2% last year, the fastest in a decade.

These are good things. This is prosperity.

Sources: US Federal Reserve Board and MAPI Foundation.

All those people going back to work in refurbished factories in America’s Heartland — you remember, the ones Hillary Clinton called “deplorables” — helped push emissions from manufacturing up 5.7% last year alone.

Transportation also contributed, of course, in the surging economy, with jet fuel (up 33.1%) and diesel fuel (up 3%) posting solid gains. A growing economy also means more electricity demand. Emissions in the electricity producing sector jumped 1.9%.

Then there’s the irony of ironies: some of the increase in greenhouse gas emissions, which activists fear are causing runaway global warming, was due to an unusually cold winter last year. That’s right: Businesses and homes used more fuel for heat than they have in years. Rhodium noted that CO2 from this winter effect rose 10% in 2018.

A Cold, Cold Winter
Are these bad things? No. Not at all.

First off, people need to heat their homes and businesses in winter. That’s a given. Anyone who doubts that deserves the scorn and ridicule that surely would come their way for suggesting otherwise.

Second, those who have regained their jobs in factories across America should be cheered after living through years of steady, unremitting industrial decline. That some media outlets are now treating the very recent rise in CO2 output as some epic tragedy, please.

A healthy economy always produces more CO2 when its growing fast than otherwise. Our current growth rate is roughly 50% higher than it was under President Obama. If it didn’t produce more CO2, that would be surprising.

“The boom in manufacturing is good news for American workers,” said The Daily Caller, “however, major media outlets sounded the alarm on global warming.” Both Washington Post and Bloomberg .

The Post was worst, claiming the “world has only about a decade to make the ‘unprecedented changes necessary” to stave off climate disaster.

Of course, such predictions of doom are based on statistical models that have proven wrong repeatedly in the past. That’s not science; it’s little better than a Ouija Board. And yet, these prophets of climate doom would have us slash CO2 output and destroy hundreds of thousands of jobs just to satisfy the demands of the green socialist movement.

Nothing’s Forever — Not Even CO2
By the way, those gains in CO2 won’t go on forever. The next slump or slowdown will take care of that, by causing many companies to close and many people to lose their jobs. And fracking will continue to chip away at our CO2 emissions.

Meanwhile, around the world, countries are abandoning their restrictions on CO2 emissions that have impoverished them and angered voters. They’re also throwing aside the idea of punitive carbon taxes. People want jobs. They want incomes. They want better lives. And taxing them and the businesses they work for so that they’ll be poorer and pollute less creates resentment, even rage.

Just ask France’s Gilets Jaunes, who have nearly paralyzed President Emmanuel Macron’s administration over his proposal for higher energy taxes. It should be a warning to U.S. Democrats, who hope to parlay fear of a changing climate into total control of the U.S. government.

As Nancy Pelosi said earlier this month, on becoming House speaker again, “We must… face the existential threat of our time: the climate crisis — a crisis manifested in natural disasters of epic proportions.” This is nonsense on steroids.

Capitalism Cleans Up
The truth is, the world is getting much cleaner, when measured by CO2 output per dollar of GDP. So is the U.S. It’s decarbonizing. And as the world population begins to decline later this century and new energy technologies come on line — everything from new battery technology to ultra-safe nuclear power designs — CO2 emissions won’t be a problem, real or imagined.

The real problem? Having enough people working and paying taxes to support all the retirees around the world and pay off hundreds of trillions of dollars of global debt.

What is a problem is the nonstop fear-mongering, demands for more taxes, and dangerous socialist experiments in expanding government control of the economy, all in the name of warding off the threat of global warming.

So don’t worry about this jump in CO2. It won’t last. But the damage from bad green policies foisted on the economy will.

Kids Climate Case to be Appealed Before Trial

Posted on by Ron Clutz

A monkey wrench in the Works.

Previous posts have followed the twists and turns of the lawsuit Juliana vs. US, initiated and funded by Our Children’s Trust.  In November the Supreme Court signaled their desire that lower courts rein in the scope of the lawsuit.  The District Court backed off and now the Ninth Circuit Court will take up the appeal in advance of any trial activity.  The significance and implications are described in an article by Karen Savage at Climate Liability News Appeals Court OKs Pre-Trial Appeal of Kids Climate Case, Siding With Government  Excerpts in italics with my bolds.

The Ninth Circuit Court of Appeals has granted a petition by the Trump administration for a rare pre-trial appeal in the landmark constitutional climate lawsuit, Juliana v. United States. The appeals court agreed to the interlocutory appeal, which leaves the future progress of the case unclear.

Generally, interlocutory appeals consider certain aspects of a case while allowing other issues to proceed. The young plaintiffs in the case, 21 young people from around the country, have asked District Court Judge Ann Aiken to clarify how the case will move forward while the Ninth Circuit considers its appeal. They argue that they should be allowed to continue the discovery process and other pre-trial proceedings.

The Ninth Circuit’s decision came as somewhat of a surprise because it had denied repeated attempts by the government to short-circuit the case before trial. A three-judge panel voted 2-1 to grant this request, while denying other motions, including the government’s fourth writ of mandamus request. The writ of mandamus is even rarer than an interlocutory appeal because it requires the higher court to decide the lower court clearly abused its judicial power.

But granting the interlocutory appeal still throws the case into uncertainty.

Chief Judge Sidney Thomas and Circuit Judge Marsha Berzon voted for the government’s motion while Circuit Judge Michelle Friedland dissented.

The Ninth Circuit Dec.26, 2018 ruling (here) states:

An interlocutory appeal under 28 U.S.C. § 1292(b) is authorized when a district court order “‘involves a controlling question of law as to which there is substantial ground for difference of opinion’ and where ‘an immediate appeal from the order may materially advance the ultimate termination of the litigation.’” Reese v. BP Expl. (Alaska) Inc., 643 F.3d 681, 687–88 (9th Cir. 2011) (quoting 28 U.S.C. § 1292(b)). The district court properly concluded that the issues presented by this case satisfied the standard set forth in § 1292(b) and properly exercised its discretion in certifying this case for interlocutory appeal.

The petition for permission to appeal pursuant to 28 U.S.C. § 1292(b) is granted. Within 14 days after the date of this order, petitioners shall perfect the appeal in accordance with Federal Rule of Appellate Procedure 5(d). All pending motions are denied as moot.

Previously, the petitioners (Our Children’s Trust) have repeatedly argued for a 50 day trial first and then appeal afterward.

In a reply brief, the federal government pushed back, telling the justices that it had made every possible effort in the lower courts to avoid reaching this point, but had been unsuccessful. The government emphasized that what the plaintiffs are asking the federal courts to do is extraordinary, “nothing less than a complete transformation of the American energy system – including the abandonment of fossil fuels.” Such a request, the government continued, “has no place in federal court,” so that granting the government a reprieve from the upcoming trial would “preserve the judiciary’s essential role under the Constitution.”

The government added that, contrary to the plaintiffs’ assurances, the prospect winning on appeal after an “extensive” trial had already taken place would provide little comfort to the government, because of the enormous amount of resources that would have to be devoted to pretrial preparations and the trial itself.

Summary:

What a concept!  Let’s have judges decide national energy policy.  And when the economy fails because energy supply is too expensive and unreliable, will the black robes be accountable to the public?  Nope.  And let’s turn a courtroom over to members of a doomsday cult for 50 days so they can persuade the public of their beliefs and fears. Even worse idea. Let’s hope even the Ninth Circuit can see the folly in this proceeding.

For background on the lawsuit see:  Supremes Kick Kids Lawsuit Down the Road

For background on the false GHG Endagerment Finding see: GHGs Endangerment? Evidence?

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Exaggerating Green Energy Supply

Posted on by Ron Clutz

dave_gangland

As noted here before, public opinion surveys are often “push polls”, raising issues like climate change as part of an effort to promote public concern.  Such surveys also inform activists how successful or not has been the media messaging in generating belief and support for climate policy proposals.

Sometimes the questionnaires are manipulated to show the greatest possible public awareness and support..  For example, see:  The Art of Rigging Climate Polls.

Other times, the survey is used to chide the public for failing to buy into claims and propaganda prominently advanced in the media.  For example, see: “Hottest Year” Misdirection, where mainstream media claims 17 of the last 18 years were the hottest on record, while the public in 37 countries guessed only 9.  After checking the data, the correct answer is more likely 5.

That same survey, Perils of Perceptions, reported that in most countries the public overestimates how much green energy they consume.  That finding is the subject of this post.  As we will see, energy from renewables is perceived to be much higher than numbers from the World Bank.  And since those numbers are themselves exaggerated, the gap between virtuous green behavior and performance is even greater than stated.

The renewable energy finding from Ipsos (here):

The majority of countries overestimate the amount of energy used that comes from renewable sources in their country. The average guess is 26% when it’s actually only 19%. Malaysia, Saudi Arabia, China and Singapore were the furthest out; some countries, though, actually underestimate how much progress they have made with renewables, such as Sweden and Montenegro.

Now, 19% of energy consumed coming from renewables looks high to me, so let’s explore two of the countries:  Canada and the Netherlands.

First, The Canadian Story on Green Energy Supply

energyuse

Question is Framed to be Misleading

Note that wind and solar power are presented as examples of renewable energy sources, when in reality hydro and nuclear are much larger sources of power (electricity). Note also respondents are led to confuse power with total energy, which is a much larger amount.

What is the Reality of Canadian Energy Supply (Consumption)

World Bank shows 22% of Canada’s total energy consumption was from renewables in 1990 and 2015.

Let’s test that number against the Canadian Energy Fact Book 2016–2017 (which presents 2014 as the latest statistics).  The categories are defined nicely in this diagram:
Energy FlowWorking from the top down, first is the mix of total primary energy supply by source:
Canada Primary Energy Supply
In this fact book, energy supply is equivalent to energy consumed, since it is calculated after adjusting for energy imports and exports. Note that 17.7% is the amount of energy from renewables, and hydro is 11.6%.   Let’s see how much of renewable energy comes from wind and solar:
Canada Renewable EnergySo Canadians actually consume 4.35% of their renewable energy from wind and solar. 92% of Canadian renewable energy comes from the traditional sources:  Hydro dams and burning wood.

Combining the two tables, we see that 80% of the Other Renewables is solid biomass (wood), which leaves at most 1% of Canadian total energy supply coming from wind and solar.

Second, the Netherlands Green Energy Story

According to the Ipsos Perils of Perception survey, respondents from the Netherlands said on average 22% of their energy is Green, while the World Bank says only 6% comes from Green sources.  Last year there was a provocative and entertaining analysis of Dutch perceptions versus green energy realities broadcast on a popular Sunday morning TV show.  The episode was called Green Electrical Shocks, and is provided below for your enjoyment and edification.

Green Electrical Shocks

 

On Sunday Feb.4, 2018, a weekly news program aired in the Netherlands on the titled subject. H/T Climate Scepticism. The video clip is below with English subtitles. For those who prefer reading, I provide the substantial excerpts from the program with my bolds.

How many of you have Green Electricity? I will estimate 69%
And how much nationally? Oh, 69%!
So we are very average, and in a good way, because the climate is very important.

Let me ask: Green electricity comes from . . .?
Yes, electricity produced from windmills and solar panels.
Nearly 2/3 of the Dutch are using it. That’s the image.

Well I have green news and bad news.
The green news: Well done!
The bad news: It is all one big lie.
Time for the Green Electrical Shocks.

Shock #1: The green electricity from your socket is not green.
When I switched to green electricity I was very proud.
I thought, Yes, well done! The climate is getting warmer, but not any more thanks to me.

Well, that turned out to be untrue.
All producers deliver to one communal grid. Green and grey electricity all mix.
The electricity you use is always a mix of various sources.
OK. It actually makes sense not to have separate green and grey cables for every house.
So it means that of all electricity, 69% is produced in a sustainable way. But then:


Shock #2: Green Electricity is mostly fake.
Most of the green electricity we think we use comes from abroad.
You may think: So what. Green is green.

But that electricity doesn’t come from abroad, it stays abroad.
If you have green electricity at home, it may mean nothing more than that your supplier has bought “green electricity certificates”.

In Europe green electricity gets an official certificate,
Instead of selling on the electricity, they sell on those certificates.
Norway, with its hydro power, has a surplus of certificates.
Dutch suppliers buy them on a massive scale, while the electricity stays in Norway.

 

The idea was: if countries can sell those certificates, they can make money by producing more green electricity.
But the Norwegians don’t produce more green electricity.
But they do sell certificates.

The Dutch suppliers wave with those certificates, and say Look! Our grey electricity is green.
Only one country has produced green electricity: Norway.
But two countries take the credit.
Norway, because they produce green electricity, and the Netherlands because, on paper, we have green electricity. Get it? That’s a nice deal.

More and more countries sell those certificates. Italy is now the top supplier.
We buy fake green electricity from Italy, like some kind of Karma ham.

Now, let’s look again at the green electricity we all think we use.
So the real picture isn’t 69%. If you cancel the certificates, only 21% of electricity is really green.
Nowadays you can even order it separately if you don’t want to be part of that Norway certificates scam.
You may think: 21% green is still quite a lot. But it is time for:

 

Shock #3: Not all energy is electricity.
If you talk about the climate, you shouldn’t just consider electricity but all energy.
When you look at all energy, like factories, cars, trains, gas fires, then the share of consumer electricity is virtually nothing.
If you include everything in your calculation, it turns out that only 6% of all the energy we use in the Netherlands is green. It is a comedy, but wait:

Trees converted into pellets by means of petroleum powered machinery.

Shock #4: Most green energy doesn’t come from sun or wind, like you might think.
Even the 6%, our last green hope, is fake. According to the CBS we are using more sun and wind energy, but most of the green energy is produced by the burning of biomass.
Ah, more than half of the 6% green energy is biomass.

Ridiculous. What is biomass really? It is organic materials that we encounter every day.
Like the content of a compost heap. How about maize leaves or hay?
The idea behind burning organic materials is that it will grow up again.
So CO2 is released when you burn it, but it will be absorbed again by new trees.

However, there is one problem. The forest grows very slowly and our power plants burn very fast.
This is the fatal flaw in the thinking about biomass. Power plants burn trees too fast, so my solution: slow fire. Disadvantage: it doesn’t exist. So this is our next shock.

Shock#5: Biomass isn’t all that sustainable.
It’s getting worse. There aren’t enough trees in the Netherlands for biomass.
We can’t do it on our own. We don’t have enough wood, so we get it from America.

In the USA forests are cut at a high rate, Trees are shredded and compressed into pellets.
These are shipped to the Netherlands and end up in the ovens of the coal plants.
It’s a disaster for the American forests, according to environmental groups.

So we transport American forests on diesel ships to Europe.
Then throw them in the oven because it officially counts as green energy.
Only because the CO2 released this way doesn’t count for our total emissions.

In reality biomass emits more CO2 than natural gas and coal.
These are laws of nature, no matter what European laws say.
At the bottom line, how much sustainable energy do we really have in the Netherlands?
Well, the only real green energy from windmills, solar panels etc. Is only 2.2%. of all the energy we use.

In Conclusion
So the fact that 2/3 of the audience and of all Dutch people use green electricity means absolutely nothing. It’s only 2.2%, and crazier still, the government says it should be at 14% by 2020.
They promised: to us, to Europe, to planet Earth: 14 instead of 2.2.

Instead of making a serious attempt to save the climate, they are only working on accounting tricks, like buying pieces of paper in Norway and burning American forests.
They are only saving the climate on paper.

Summary Comment

As the stool above shows, the climate change package sits on three premises. The first is the science bit, consisting of an unproven claim that observed warming is caused by humans burning fossil fuels. The second part rests on impact studies from billions of research dollars spent uncovering any and all possible negatives from warming. And the third leg is climate policies showing how governments can “fight climate change.”

It is refreshing to see more and more articles by people reasoning about climate change/global warming and expressing rational positions. Increasingly, analysts are unbundling the package and questioning not only the science, but also pointing out positives from CO2 and warming.  And as the Dutch telecast shows, ineffective government policies are also fair game.

More on flawed climate policies at Reasoning About Climate

“Hottest Year” Misdirection

Posted on by Ron Clutz

Once again Joe Public comes out smarter than politically correct opinion surveyors, fact checkers and journalists.  The latest evidence of elite blindness comes from a smart-alecky reporter writing at GlobalNews Survey says Canadians think Earth beat its heat record in only 10 of the last 18 years. They’re wrong Excerpts in italics with my bolds.

Ipsos polling agency released “Perils of Perception” on Wednesday.

It’s an annual international survey conducted in 37 countries that looks at whether respondents have accurate, or inaccurate ideas about major issues.

This one ranked Canada 11th out of 37 countries when it came to accurate understandings of major issues.

One area of misunderstanding — climate change.

The survey found that Canadians are underestimating the number of years that the planet Earth has set heat records over the last two decades.  Canadians estimated that Earth set heat records in 10 out of the last 18 years.

It also found that Canadians are overestimating the share of energy that they consume from renewable resources.

I’ll save the renewables issue for another day. (See Exaggerating  Green Energy Supply) This post will show the reporter’s dog ate his homework, because there are large holes in his information.  He didn’t do professional due diligence so I will investigate to put the record straight for him and anyone else misled by the press.

What Ipsos Asked and Thought Was the Right Answer

Q. The World Meteorological Organization collects annual global temperatures, to see whether they are rising or falling across the world. How many of the last 18 years have been the hottest for the world as a whole since they began collecting data in 1961?

A.  17 of the past 18 years have been the hottest since records began. However, every country in the study underestimates the global temperature rise over the past 18 years. The average estimate across the study was 9 years.

Misdirection #1  Framing the Question to Exclude Undesired Data

Note the question context:  The World Meteorological Organization collects annual global temperatures (. . . began collecting data in 1961), to see whether they are rising or falling across the world. When you go looking for the data, WMO directs you to three datasets produced by others:  Hadcrut (UK Met Office), NOAA (US agency) and Gistemp (NASA, US agency).  So the frame serves to exclude satellite-based datasets, and limit the expected answer to three land+ocean products.  And as many will know, those records go back to late 1800s, far earlier than 1961.  Apparently, the surveyors wanted to put anyone off from thinking temperatures were warmer in the 1930s or 40s.

Misdirection #2  Failing to Do the Math

Getting data right now out of US federal agencies is problematic since websites are shut down.  It seems many federal employees are taking leave in order to help reduce the government deficit.  Fortunately, the Met Office has a site ( here) providing the relevant annual global temperature anomalies from the three sources. I compiled a table which makes the asked for comparisons.

The table shows 1998 was the hottest of all preceding years in the record, with slightly different values in the three datasets.  Years in blue were cooler than 1998, while years in red were reported hotter than 1998.  The math says in the last two decades, compared to the previous record year 1998, there were 6 hotter years in Hadcrut4, 8 hotter years in NOAA (NCEI), and 9 hotter years in GISS. Considering “hottest” to mean hotter than all previous years, the table shows exactly 5 hottest years in the last 18 years, with 2016 setting the record.

Ipsos says 17 of the last 18 were the hottest. Really?  Epic Fail: That so-called “correct” answer is three times too high!  Around the world people said 9, and that’s much closer to the truth. Canadians said 10, perhaps biased higher by all the fake news around.

Misdirection #3  Failing to Do the Statistics

Now it may have occurred to you that some of the hotter years were not much warmer.  When you consider the 95% confidence intervals, some years fall out of the list.  For example, Hadcrut also provides each year a calculation of the upper and lower bounds on the error range, combining bias, measurement uncertainty and coverage uncertainty.

As the table shows, they estimate about +/- 0.09 for a typical year.  So for  1998, they say with 95% confidence the true anomaly lies between 0.45C and 0.63C.  Graphically the error range looks like this:

The chart shows that after considering the estimated uncertainty, it is actually the last three years that were hotter than 1998 in Hadcrut4.  The other land+ocean datasets have similar uncertainties and results (five hotter years in NOAA and GISS).

When it comes to UAH satellite dataset, we have this analysis:
University of Alabama Huntsville  Summary:
Globally, 2016 edged out 1998 by +0.02 C to become the warmest year in the 38-year satellite temperature record, according to scientists. Because the margin of error is about 0.10 C, this would technically be a statistical tie, with a higher probability that 2016 was warmer than 1998. The main difference was the extra warmth in the Northern Hemisphere in 2016 compared to 1998. Source: https://www.sciencedaily.com/releases/2017/01/170104130257.htm

No wonder they wanted UAH excluded.  And others say the confidence ranges are much larger than these estimates, which consider processing uncertainties not including errors of the instruments themselves.

Such characterizations are absurd, according to Richard Lindzen, a meteorology professor at MIT and one of the world’s foremost skeptics that global warming represents an existential threat.

“It’s typical misleading nonsense,” Lindzen said in an e-mail. “We’re talking about less than a tenth of degree with an uncertainty of about a quarter of a degree. Moreover, such small fluctuations – even if real – don’t change the fact that the trend for the past 20 years has been much less than models have predicted.”

 

 

 

Courts Still Shielding Mann from Climate Exposure

Posted on by Ron Clutz


An editorial from National Review summarizing how the courts function as Michael Mann’s protective shield  NR Won’t Be Cowed by a Litigious Michael Mann  December 21, 2018.  Excerpts below with my bolds.

At this rate, Jarndyce v. Jarndyce will be replaced in the Western canon as the go-to example of the court case that never ends by National Review, Inc. v. Michael E. Mann, which is now well into its seventh year as a live proposition and, alas, showing no end in sight.

For those who have forgotten, this is the 2012 case in which Mann sued National Review for libel over a 270-word blog post that criticized his infamous “hockey stick” graph portraying global warming, in response to which National Review refused to acquiesce to what was, and remains, nothing less than an attempt to use the law to bully the press into submission. That this case is both frivolous in nature and clear-cut in National Review’s favor seems to be obvious to everyone except for Michael Mann and the D.C. Court of Appeals. Indeed, in the years since Mann made his play, National Review has been joined by a veritable Who’s Who of American media organizations — including, but not limited to, the ACLU, the National Press Club, Comcast, the Cato Institute, the Washington Post, Time Inc., Reporters Committee for Freedom of the Press, and the Electronic Frontier Foundation, all of which have filed amicus briefs on NR’s side. Tellingly, National Review has also been supported by the City of Washington, D.C., in which jurisdiction the case was brought. And yet, inexplicably, the D.C. Court of Appeals continues to drag its feet.

This is extraordinary, especially given that at stake here is the integrity of the First Amendment. It is extraordinary foremost because National Review’s case is both straightforward and strong: that it is not, and it has never been, the role of the courts to settle literary or scientific disputes. But it is also extraordinary because National Review’s case is being heard under rules laid out by Washington, D.C.’s robust “anti-SLAPP” law, the explicit purpose of which is to make it more difficult to harass people and organizations with frivolous libel threats and thereby to protect a sturdy culture of free speech. How, we ask, can this be reconciled with a case such as ours, in which, among other inexplicable delays, the court has taken two years to add a single footnote to the records (and modify another)? That a slam-dunk case that is being examined under an expedited process should have yielded so many years of expensive radio static is a genuine national disgrace, and should be widely regarded as such.

National Review neither encourages nor enjoys protracted, expensive, tedious litigation. Indeed, it is our resolute view that questions such as these must be resolved outside of the courtroom. But we will be cowed neither by pressure nor by the passage of time, and we are proud of our role as a champion of the First Amendment. To those who would abridge, undermine, or attempt to circumvent that bulwark of free expression, our response is, as it ever was: Get Lost.

See also:  Rise and Fall of the Modern Warming Spike

Energy Conundrums

Posted on by Ron Clutz

world energy by sources

Anyone paying attention to global warming/climate change knows that activists intend to disrupt (legally or otherwise) the energy platform supporting modern industrial society. It is a radical movement since the developed world (think G20) depends upon fossil fuels for nearly 90% of its energy. Gail Tverberg has again insightfully probed into the ways our energy supply is impacted by these alarmist concerns. Whether or not you believe global warming is now or could become catastrophic (I don’t), policymakers around the world are tinkering with energy supplies under pressure from greens convinced oil, coal and gas should be left in the ground.

At her blog Our Finite World, Tverberg describes the implications and dangers in a recent post  Electricity won’t save us from our oil problems The title is a link to her presentation, and I encourage you to go and read the whole thing. Here are some excerpts in italics with my bolds, selected and somewhat reordered according to my sense of her findings, along with some added images.

Electrical Supply Threatened by Prices Too Low for Producers

Almost everyone seems to believe that our energy problems are primarily oil-related. Electricity will save us.

It wasn’t until I sat down and looked at the electricity situation that I realized how worrying it really is. Intermittent wind and solar cannot stand on their own. They also cannot scale up to the necessary level in the required time period. Instead, the way they are added to the grid artificially depresses wholesale electricity prices, driving other forms of generation out of business. While intermittent wind and solar may sound sustainable, the way that they are added to the electric grid tends to push the overall electrical system toward collapse. They act like parasites on the system.

We end up with an electricity situation parallel to the chronic low-price problem we have for oil. Prices for producers, all along the electricity supply chain, fall too low. Of course, consumers don’t complain about this problem. The electricity system also becomes more fragile, as we depend to an ever greater extent on electricity supplies that may or may not be available at a reasonable price at a given point in time. The full extent of the problem doesn’t become apparent immediately, either. We end up with both the electrical and oil systems speeding in the direction of collapse, while most observers are saying, “But prices aren’t high. How can there possibly be a problem?”

Perverse Direct and Indirect Subsidies

Simply removing the subsidies that come from Production Tax Credits doesn’t fix the situation either. In one sense, the problem reflects a combination of many types of direct and indirect subsidies, including state mandates and the requirement that intermittent renewables be allowed to go first. In another sense, the problem is that, in a self-organizing economy, energy prices (including electricity prices) can only rise temporarily. The increase in energy prices is made possible by a growing debt bubble. At some point, this debt bubble collapses. Raising interest rates, as the US is doing now, is a good way of collapsing the debt bubble.

Slide 18 shows that in the US, the only types of renewable generation growing to any significant extent are intermittent wind and solar. Very high subsidies have helped push these types of generation along.

Parts of these subsidies are being phased out, but other, less visible subsidies remain. The fact that intermittent wind and solar are given priority on the grid, when they happen to be available, is a huge subsidy. Also, renewable mandates mean that generation is being added that is not really needed, lowering prices that that the self-organizing competitive pricing system creates for backup electricity providers. This is part of the reason for the unprofitability of many natural gas, coal, and nuclear companies.

There is also a problem with wholesale rates being too low for nuclear, when electricity rates are competitively set. To work around this problem, some areas use capacity auctions, which are intended to offset the inadequate funding for electricity providers providing backup electricity capacity. One catch is that a capacity auction is, in some sense, needed for every member of the supply chain. Just asking electricity generating companies to bid on providing capacity doesn’t guarantee that the full supply chain will be available.

Furthermore, the subsidies for intermittent wind and solar discourage other innovation because they lead to terribly low wholesale prices for innovators to compete against, particularly in areas where hour by hour competitive rating is done. The ultimate problem is that if one type of electricity production is subsidized (even if in subtle ways), all electricity producers must be subsidized. Governments cannot possibly afford such widespread subsidies.

Falsely Hoping Future Prices Will Save the Industry

By way of background, the US Energy Information Administration publishes “levelized cost of electricity” estimates that companies producing electricity are expected to use for planning purposes. When new generating capacity is added, planning needs to be started several years in advance. This is why what is being published now is the EIA’s calculation of expected wholesale costs (at a 2017 price level) for 2022.

Current wholesale prices for “dispatchable” electricity (the opposite of intermittent electricity) seem to be in the 3 to 4 cents per kWh range in the continental US, so all of the amounts shown assume that electricity prices will be much higher in the future. This thinking is in parallel with the “high oil prices will save the oil industry in the future” view that is prevalent in the oil industry. This thinking has helped keep the prices of shares of energy stocks up: “Even if there are problems now,” the thinking goes, “certainly higher prices in the future will fix the situation.”

With respect to wind, there are two reasons why variable wind can be sold in Power Purchasing Agreements (PPAs) for 2 to 3 cents per kWh. The first is the substantial subsidies that have been available, making this pricing arrangement profitable to wind producers. The second is the low value that intermittent electricity provides to the grid. In fact, prices locked into these PPAs are slightly below the bottom of the range of expected future natural gas prices (Figure 1, below). This suggests that the primary value of wind generation is to replace natural gas as a future fuel.

There is one reason why it might make sense to somewhat believe the first item, “Rising cost of electricity production will be no problem.” This has to do with the cost-plus type of electricity pricing (“regulated pricing”) that is used in some states of the United States. When cost-plus pricing is used, higher costs can, in theory, be passed on to consumers. The catch is that higher electricity prices tend to raise the price of finished goods and services. If wages are not rising rapidly enough, this can lead to an affordability problem. Industrial users of electricity are especially likely to cut back their electricity demand because higher prices make their products less competitive in the world economy.

After the talk, I decided to look at this situation a bit more closely. This analysis strongly suggests that since 2000, increased globalization has been playing a major role in holding down US demand for electricity. If there is an opportunity, industrial production will move to jurisdictions where the total cost of production (including wages, benefits, electricity costs, and other costs) is lower, even if there has not been a big increase in industrial electricity prices.

Industries get very unhappy when their electricity rates rise, making them uncompetitive with producers in other countries. The rates we are discussing are UK industrial electricity rates, so are a little higher (perhaps 1.5 times higher) than the wholesale prices discussed on Slides 5 and 6. If the price of 8.3 cents per kWh for industrial electricity is a big problem today, how can countries possibly withstand much higher rates, based on higher carbon prices or based on required technology that is much more expensive?

Suppose a worker gathers reeds and uses them to make baskets. If his production per hour falls, he will have fewer baskets to sell in the marketplace. He cannot expect the price of each basket to rise to make up for his lower production.

For some reason, economists seem to have overlooked this obvious problem. There is no reason to expect that the buyer will be penalized for the higher costs of the energy industry. These higher costs look much like growing inefficiency. In the real world, the seller is generally penalized for falling efficiency. Why do we have so much confidence that the price per barrel of oil can rise, or the price per kWh of electricity can rise, if the price of baskets that a less-efficient worker makes doesn’t rise?

Coal (and nuclear) are the products that have historically kept US electricity prices low. Replacing coal with fuels that are much higher in cost and more variable in availability seems likely to be problematic. Industrial users are likely to be especially distressed.

The United States has been fortunate enough to have very low natural gas prices recently. A major problem is that these prices are not really high enough for companies extracting natural gas as their primary business. If we really need to depend on natural gas, we will likely need much higher prices. In particular, natural gas prices will need to be high enough for natural gas companies to have bond ratings that are above junk ratings.

Low Prices Also Threaten Oil Production

I have been following oil since 2005, so I have had a chance to hear the discussion evolve. Oil prices were clearly too high for some consumers back in July 2008, when the sub-prime housing debt bubble popped in the United States. By early 2014, I started hearing that oil companies were very unhappy about the low price level available in 2013. In fact, some companies were sufficiently unhappy that they began cutting back on investment in new fields. It was not much later that oil prices dropped further, making the low-price problem even worse for producers.

It is difficult for any new technology to get a foothold in a situation where energy prices of all kinds tend to be low. In addition, the pressure seems to be in the direction of reducing energy prices further, even if this means less energy production of all kinds.

One common inaccurate assumption is that oil prices rise primarily in response to the rising cost of oil production. If a person looks at the data, it becomes clear that interest rates have a huge impact on prices. This seems to happen because the purchase of high-value goods with debt (such as factories, homes, cars, and buildings of all kinds) seems to have a very significant impact on total Demand. Lower interest rates make these high-value goods more affordable. (Quantitative Easing (QE) is a way of reducing long-term interest rates; it also seems to affect oil prices.)

Economies Collapse When Goods are Unaffordable

One way of understanding the situation is by understanding that energy consumption is required for jobs that pay well. If insufficient energy supplies are available at a low price, the vast majority of jobs available will be low-paid service jobs. There will, of course, be a few managers and business owners. But these few managers and owners cannot, by themselves, generate enough Demand for goods and services made with energy products to keep commodity prices up. This is why the system tends to fail.

This is probably the most important reason that economies tend to collapse. Most people miss the affordability connection because they interpret “Demand” to be something that anyone can do, without thinking about the affordability aspect. Without sufficient income, a person cannot demand a new home or new car, or gasoline from a fuel station.

See also:  Killing the Energy Goose

Climateers Tilting at Windmills

US CBO Skeptical of Carbon Tax

Posted on by Ron Clutz

Introduction:  HuffPost Gets Huffy over CBO Analysis

In a baffling repudiation of the federal government’s own scientists, the Congressional Budget Office (CBO) last week said that climate change poses little economic risk to the United States in the next decade.

The statement, which went so far as to highlight dubiously positive effects of rising global temperatures, poses a potential hurdle for future legislation to curb surging greenhouse gas emissions, experts said, and amounts to textbook climate change denial.

What CBO Actually Said

The US Congressional Budget Office released the document Options for Reducing the Deficit: 2019 to 2028 (Title is link to pdf)  It consists of 35 policy options of which #35 is Impose a Tax on Emissions of Greenhouse Gases. The discussion is as follows (text in italics with my bolds).

Background

The accumulation of greenhouse gases in the atmosphere— particularly carbon dioxide (CO2), which is released when fossil fuels (such as coal, oil, and natural gas) are burned and as a result of deforestation—contributes to climate change, which imposes costs on countries around the globe, including the United States.

Many estimates suggest that the effect of climate change on the nation’s economic output, and hence on federal tax revenues, will probably be small over the next 30 years and larger, but still modest, in the following few decades. Among the more certain effects of climate change on humans over the next several decades, some would be positive, such as reductions in deaths from cold weather and improvements in agricultural productivity in certain areas. However, others would be negative, such as declines in the availability of fresh water in areas dependent on snowmelt and the loss of property from high-tide flooding and from storm surges as sea levels rise. Uncertainty about the effects of climate change— and the potential for unlimited emissions to cause significant damage—grow substantially in the more distant future.

Scientists generally agree that reducing global emissions of greenhouse gases would decrease the magnitude of climate change and the expected costs and risks associated with it. The federal government regulates some emissions in an effort to reduce them; however, emissions are not directly taxed. A well-designed tax that covered most energy-related emissions would be expected to reduce emissions.

Greenhouse gas emissions are typically measured in CO2 equivalents (CO2e), which reflect the amount of carbon dioxide estimated to cause an equivalent amount of warming. Under current law, emissions are projected to decline from 5.4 billion metric tons of CO2e in 2019 to 5.2 billion metric tons of CO2e in 2028.

Option

This option would impose a tax of $25 per metric ton on most emissions of greenhouse gases in the United States—specifically, on most energy-related emissions of CO2 (for example, from electricity generation, manufacturing, and transportation) and some other greenhouse gas emissions from large manufacturing facilities. To simplify implementation, as well as to provide incentives to deploy technologies that capture emissions generated in the production of electricity, the tax could be levied on oil producers, natural gas refiners (for sales outside the electricity sector), and electricity generators. The tax would increase at an annual inflation-adjusted rate of 2 percent.

Revenues—Option 35 Impose a Tax on Emissions of Greenhouse Gases (Billions of Dollars)

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 2023 2019– 2028
66.0 103.4 105.9 108.2 111.2 115.1 118.9 119.5 123.2 127.1 494.7 1,099.0

Effects on the Budget

According to estimates made by the staff of the Joint Committee on Taxation and the Congressional Budget Office, implementing this option would increase federal revenues by $1,099 billion from 2019 through 2028. On average, about 5 billion metric tons of greenhouse gas emissions would be taxed each year over that period. Taxed emissions would be roughly 4 percent lower than projected under current law in 2019 and 11 percent lower in 2028. Despite the projected decline in emissions over the 10-year period, tax revenues would rise over time because the additional revenues caused by increases in the tax rate would more than offset the decrease in revenues caused by the decline in taxable emissions. A tax that was somewhat higher or somewhat lower than the $25 dollar per ton tax considered in this option would generate a roughly proportionally larger or smaller amount of revenues.

A tax on greenhouse gas emissions would reduce taxable business and individual income. The resulting reduction in income and payroll tax receipts would partially offset the increase in excise taxes. The estimate for the option reflects that income and payroll tax offset.

The estimate for this option is uncertain for two key reasons. First, the projected amount of emissions released in the absence of the tax depends on estimates of future economic activity and future changes in the relative prices of various fuels and energy technologies, both of which are uncertain. Second, even if projections of future emissions under current law are accurate, estimated reductions in emissions stemming from the tax are uncertain, in part because they depend on the development of new technologies and on individuals’ and firms’ reactions to the changes in prices that the tax would induce. CBO’s estimates of reductions in emissions rely on past responses to such changes, as reported in the published literature.

Other Effects

An argument in favor of this option is that it would reduce U.S. emission of greenhouse gases and would do so in a cost-effective way. In particular, the tax would reduce emissions in a more cost-effective manner than regulations because such a tax would create uniform incentives for businesses and households throughout the economy to reduce their emissions. The tax would increase the cost of producing carbon-intensive goods and services in proportion to the amount of greenhouse gases emitted as a result of their production and consumption. Moreover, those cost increases would trigger corresponding increases in the prices of consumer goods. As a result, the tax would provide incentives for businesses to produce goods in ways that yield fewer emissions (for example, by generating electricity from wind rather than from coal) and for individuals to consume goods in ways that yield fewer emissions (for example, by driving less). Specifically, this tax would motivate emission reductions that cost less than $25 per ton to achieve, but not those that would cost more than $25 per ton.

Although the effects of climate change on the U.S. economy and on the federal budget are expected to be small in the next few decades, the effects are much more uncertain—and potentially far larger—in the more distant future. Many scientists think there is at least some risk that large changes in global temperatures will trigger catastrophic damage, causing substantial harm to human health and well-being as well as the economy. Moreover, greenhouse gases are long-lived, affecting the climate for many decades after they are emitted. As a result, delaying actions to limit emissions reduces the possibility of avoiding potentially harmful future effects. Because this option would take effect in January 2019, it would help avoid the compounded problems that might be caused by such delays.

An argument against a tax on greenhouse gas emissions is that curtailing U.S. emissions would burden the economy by raising the cost of producing emission-intensive goods and services while yielding uncertain benefits for U.S. residents. For example, most of the direct benefits of lessened emissions and associated reductions in climate change might occur outside of the United States over the next several decades, particularly in developing countries that are at greater risk from changes in weather patterns and an increase in sea levels.

Another argument against this option is that reductions in domestic emissions could be partially offset by increases in emissions overseas if carbon-intensive industries relocated to countries without restrictions on emissions or if reductions in energy consumption in the United States led to decreases in foreign fuel prices. More generally, averting the risk of future damage caused by emissions would depend on collective global efforts to cut emissions. Most analysts agree that reducing emissions in this country would have small effects on climate change if other countries with high levels of emissions did not also cut them substantially (although such reductions in the United States would still diminish the probability of catastrophic damage and could spur other countries to cut their emissions).

An alternative approach for reducing emissions of greenhouse gases in a cost-effective manner would be to establish a cap-and-trade program that set caps on such emissions in the United States. Under such a program, allowances that conveyed the right to emit one metric ton of CO2e apiece would be sold at open auction. The overall number of allowances in a given year would be capped, and the cap would probably be lowered over time. If the caps were set to achieve the same cut in emissions that is anticipated from the tax, then the program would be expected to raise roughly the same amount of revenues between 2019 and 2028. In contrast with a tax, a cap-and-trade program would provide certainty about the quantity of emissions from sources that are subject to the cap (because it would directly limit those emissions), but it would not provide certainty about the costs that firms and households would face for the greenhouse gases that they continued to emit.

Footnote: Additional CBO Response to HuffPost

In a lengthy statement to HuffPost, the CBO referred to three of its own past reports, including one that said, “Even under scenarios in which significant climate change is assumed, the projected long-term effects on GDP would tend to be modest relative to underlying economic growth.”

“Although CBO has not undertaken a full analysis of the budgetary costs stemming from climate change, it has recently analyzed the potential costs of future hurricane damage caused by climate change and coastal development,” read an excerpt from one report highlighted in the statement. “All told, CBO projects that the increase in the amount of hurricane damage attributable to coastal development and climate change will probably be less than 0.05 percent of GDP in the 2040s.”

The agency’s report attributed differing climate predictions to “the imperfect understanding of physical processes and of many aspects of the interacting components (land, air, water, ice, and all forms of life) that make up the Earth’s climate system.”

My Comment

The US Congressional Budget Office is required to examine any reasonable and feasible policies to reduce the government’s operating deficit. In that context, it looked at pricing carbon emissions and projected revenues and economic effects. Arguments for and against the policy option were summarized accordingly. Alarmists are intolerant of arguments against their preferred objective to keep fossil fuels in the ground. On the other hand, CBO weighs likely negative economic effects against the unlikely prospect of concerted international cooperation to reduce emissions.

Why People Hate Energy Taxes (and why Politicians prefer Trading Schemes)

Posted on by Ron Clutz

The French uproar happened because direct taxation of fuels was announced, and the wallet impact was obvious. USC professor Matthew Kahn is a leading microeconomist, meaning he studies behavior of buyers and sellers in market economies. His recent post on the French uprising is The Substitution and Income Effects Induced by Introducing Carbon Taxes. Excerpts in italics with my bolds.

The protests in France over raising gasoline taxes there highlights that middle class people understand that higher carbon taxes have income effects. If you drive 15,000 miles a year and if your vehicle achieves 30 miles per gallon and if the price of gasoline increases from $4 to $4.40 due to a 10% increase in the gas tax, then your disposable income declines each year by (15000/30)*.4 = $200.

Economists celebrate the substitution effects induced by the carbon tax — that people who drive will demand more fuel efficient vehicles and drive them less. On the supply side, the tax will nudge firms such as Tesla to engage in induced innovation to create even more fuel efficient vehicles.

Since voters are smart and do not want to be poorer (as their purchasing power declines due to the tax), economists have pondered how to offset the income effect through policies such as “tax and dividend” or by lowering income taxes and raising carbon taxes (see Gib Metcalf’s 2007 Hamilton Project paper).

A deep issue arises here. Who has the property rights to pollute? If the incumbent polluters have this right, then the designed policy must fully offset the negative income effect I sketched above. Recall that in the 1990 Clean Air Amendments that created the so2 sulfur dioxide market that utilities received free allotments of permits. This meant that they had the property right to pollute and this must have angered some environmental groups. But, the tight cap on total emissions and the incentive effect of being able to sell unused permits created an incentive for these polluters to reduce their emissions.

In my work with Jonathan Eyer, (see our 2017 paper) , we explore how states and local governments have tried to protect their coal interests in the face of increased federal government regulation and market conditions favoring using natural gas for generating electricity. On some level, this is a battle over property rights.

Do fossil fuel consumers and producers have the property rights to engage in this activity? If they do, then those who seek to mitigate the challenge of climate change must compensate them for their income loss associated with carbon pricing. Are progressives willing to identify themselves and pay for this property? If these polluters do not have this property right, then they will suffer an income loss from this new well intended policy and they will use their full arsenal of strategies (including protests) to oppose a change from the status quo.

Given that every American differs with respect to her current production/consumption of fossil fuels, how does a smart public finance economist design a carbon tax and refund policy that induces the substitution effect of carbon pricing without the income effect?

The political economy of climate change mitigation and adaptation has not been fully explored by academic environmental economists who in recent years have focused on creating computable general equilibrium IAM models (see Nordhaus) or on reduced form empirical studies examining the “cause and effect” relationship between climate effects and economic outcomes. Such reduced form “cause and effect” studies should play a key role in determining which voters support carbon taxes. For example, if my home will be flooded because of climate change then I have strong asset protection incentives to vote in favor of a carbon tax. The role of self interest (beyond ideology) in spurring support for carbon taxes should be explored more in new research.

What else do we know about the political support for carbon pricing? Riley Dunlap has been the leader in environmental sociology studying long run trends in support among republicans and democrats.
Michael Greenstone released an optimistic contingent valuation study a few years ago. I tend to be skeptical about such survey evidence. I wish that his survey is right. My results in my 2013 paper on the voting on the Waxman-Markey Carbon Tax bill in Congress and my 2015 paper on California’s voting on introducing carbon pricing tell a different story. High carbon area voters oppose such taxes. This dovetails with this blog post’s main theme.

Soren Anderson has new research on this subject; Here is his preliminary paper. Read the abstract and you will see that his paper’s findings are consistent with this blog post’s main themes and with my past research findings. In studying recent voting on Washington state’s proposed carbon tax he finds;

” Support (for carbon taxes) is weaker in precincts with larger shares of car commuters, bigger homes, and workers in carbon-intensive industries and stronger in precincts with larger shares of young people, racial and ethnic minorities, college educated adults, and voters that are ideologically aligned with the left’s broader policy agenda.”

This is the challenge that we environmental economists face as we try to implement incentives to combat climate change. Let the competition to design a proposal that induces substitution effects without negative income effects begin!

UPDATE; A fundamental question in microeconomics asks; “who is at the margin?” In the case of supporting carbon pricing a given person will support the policy if her expected present discounted value of benefits from the policy exceeds the expected present discounted value of the costs she will incur from the policy.

In an economy where people differ on many attributes such as location, asset ownership, industry, education — it is difficult to quantify these factors and include them in a voting regression. After all, we do not observe how individuals vote on election day; instead we rely on precinct level data and face the ecological regression fallacy.

This is a long winded way of saying that if the costs faced by suburbanites for voting in favor carbon taxes decline then more suburbanites will vote for carbon taxes and support Representatives who vote in favor of these policies. Our 2017 paper explored how the private choice of buying solar panels bundled with electric vehicles could flip some suburban voters toward supporting carbon pricing because the income effect they would face would shrink to zero.

My Comment:

French PM Macron wanted to virtue-signal his leadership regarding the Climate file. But France is powered mostly by emission-free nuclear electricity. So to up the emission reduction ante, Macron went after the transportation sector, i.e. taxes on gasoline and diesel. For everyone outside of the La métropole (Parisians enjoy public transit), this was effectively a tax on personal mobility. And as we are seeing, totally unacceptable in a modern society. Prof. Kahn explains how suburbanites and exurban folks recognize immediately how this policy diminishes them and their lifestyle.  As an environmental economist, Kahn does not question the claim that fossil fuels cause global warming, unfortunately.  So he and his colleagues face the task of convincing the public that raising carbon prices is in their personal interests.

It is why politicians like the EU and Gov. Brown (and Schwarzenegger before him) preferred carbon trading schemes. Such schemes are stealth pricing programs, since they force companies to pay more for energy, who then pass on the cost to consumers when they buy goods or services. But the government’s hand in your pocket is hidden, and the cost of living inflation is spread out by price increases on everything, not just fuel purchases. So the public grumbles about how expensive life is becoming, while the policymakers are shielded by skimming on top of all commercial transactions. And politicians still get money coming into “green funds”, which can be distributed to their friends and supporters in the form of grants and subsidies.

 

 

2018: Trump Winning, IPCC Losing

Posted on by Ron Clutz

Trump vs IPCC
Don’t take it from me, this is the state of affairs according to IPCC insiders. This report comes from a carbon alarmist who is dismayed by recent developments in the battle against global warming.

The Paris Climate Agreement versus the Trump Effect: Countervailing Forces for Decarbonisation  by Joseph Curtin, Senior Fellow, Institute of International and European Affairs.  Excerpts below in italics with my bolds.

In this publication, IIEA Senior Fellow Joseph Curtin argues that the “Trump Effect” has created a powerful countervailing force acting against the momentum which the Paris Agreement on climate change hoped to generate.

At the heart of the Agreement is an “ambition mechanism”, under which Parties are required to make progressively more ambitious pledges to reduce emissions following global “stocktakes” every five years. This mechanism was designed to catalyse greater efforts over the coming decades, but the Trump Effect has applied a brake via three distinct channels:

  • US Federal rollbacks have increased the attractiveness of fossil fuel investments globally;
  • The US decision to withdraw from the Agreement has created moral and political cover for others to follow suit; and
  • Goodwill at international negotiations has been damaged.

Domestic regulatory rollbacks are increasing the cost of ambition

The widespread rollback of Federal regulations is reducing risk premiums associated with investing in dirty technologies. It is true that market fundamentals and sub-Federal initiatives will ameliorate some of the damage. However, at the very least years of stasis, litigation and uncertainty can be anticipated. We can already see an impact. Following Paris, there was a plunge in investment in the dirtiest fossil fuel investments (coal and tar sands) in 2016, but the Trump Effect reversed the trend in 2017, while investment in renewables has declined. Given the size of the US economy, slower deployment of green technologies flattens learning curves globally, making it harder for other Parties to take on more ambitious pledges in the future.

In the first case, withdrawal from the Paris Agreement, and the concurrent roll-back of domestic regulation, is slowing the rate of investment in green technologies at a time when rapid scaling up is required. According to the International Energy Agency (IEA), meeting agreed global targets will require an estimated $3.5 trillion in energy-sector investments each year until 2050, about double the current level of investment. US withdrawal has the potential to undermine the “ambition mechanism” over time.

The first steps have been taken to repeal the Clean Power Plan, and to freeze fuel efficiency standards for vehicles at 2020 levels, among many other environmental policy roll-backs. Some have argued that these reversals have not yet taken effect, and, in any case, that their impact will be marginal if they ever do, because many clean investments are underpinned by market fundamentals, such as cheap natural gas prices and the falling costs of renewable energy. This view is supported by others who have argued that the Trump Effect will be ameliorated by the sub-Federal responses amalgamated under the “We Are Still In” initiative. Former Mayor of New York, Michael Bloomberg, and the Governor of California, Jerry Brown, have even argued that these efforts would “put the country within striking distance of the 26% reduction in greenhouse gases, by 2025, that the United States promised to hit in Paris”. 

However, these noble efforts and associated pronouncements not only put the brightest possible spin on city, state and business initiatives, they also understate the impact of Federal reversals. At the very least,years of stasis, regulatory process and subsequent litigation await, creating considerable uncertainty and affecting the risk perceptions. This in turn feeds into the cost of capital—a central determinant of the pace of technology deployment in the marketplace.

By creating uncertainty, the Trump Effect has already changed the calculus facing investors. Following Paris, in 2016 there was a plunge in investment in dirty assets like coal and tar sands, reflecting their increasing risk profiles as investors sought to determine if political leaders were serious about their stated intentions. This is because fossil fuels investments face “stranding” risk in a carbon-constrained world, potentially inducing very significant financial losses, and this is particularly the case for the most emissions-intensive sources of energy. However, the Trump Effect has reduced the risk premium associated with these investments by creating the impression that the era of fossil fuels may not be drawing to a close, or at least not as rapidly as the Agreement in Paris had suggested. Analysis has found that a sharp flight from the dirtiest fossil fuels investments was reversed in 2017, and that American banks led a race back into unconventional energy. For example, JPMorgan Chase quadrupled its tar sands investments. In the coal sector, among 36 banks surveyed in the same study, investment increased by 6% in 2017 after a 38% drop in 2016. The other side of the same coin is that, according to the IEA, investment in renewables declined by 7% in 2017. Its Executive Director, Dr Fatih Birol, ascribed this to the uncertainties created by politics.

In the long-run, the Trump Effect may not fundamentally challenge the underlying logic or the economic case for decarbonisation, but in the short-run its impact is already evident. Given the size of the US economy, slower deployment of green technologies not only affects the pace of decarbonisation in the US, but it also somewhat flattens “learning curves” for green technology globally. This in turn could damage the “ambition mechanism” of the Paris Agreement, although the importance and magnitude of these impacts remains speculative.

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US withdrawal creates political and moral cover for further defections

While major players including the EU, India and China remain committed to the Paris Agreement, and are on track to achieve their pledges, the Trump Effect has emboldened others to shirk their commitments. The Russian Federation and Turkey have abandoned plans to ratify, while Australia abandoned measures to comply with the Agreement, all citing President Trump. Most significantly, the newly elected President of Brazil, Jair Bolsonaro, has promised to withdraw from the Paris Agreement, following in footsteps of President Trump.

Social psychologists like Jonathan Haidt have suggested that evolutionary dynamics hardwire a sense of fairness and reciprocity into the human psyche.  Research has uncovered a tendency for parties to step away from negotiations when commonly held principles of fairness are perceived to have been transgressed,  and this applies even for beneficial deals.  Needless to add, the moral authority of the US to punish defection from the Paris consensus has also been sacrificed. Withdrawal therefore creates political space for other wealthy countries to follow suit—if the wealthiest and most powerful of all is not playing ball, they may well ask, then why should they?

The Trump Effect therefore leaves a moral vacuum at the heart of the Agreement, which makes building new global norms around decarbonisation more challenging. . . It has been reported by several media (not least the New York Times and Washington Post) that most national governments are falling far short on promises to curb GHGs, creating the impression of an Agreement in crisis.

COP Where's my money

Goodwill at international negotiations is being damaged

At ongoing international climate negotiations, the Trump Effect is slowing progress. The Trump Administration has reneged on a pledge to the Green Climate Fund, leaving an outstanding liability of $2 billion, and has opposed stringent rules for reporting on efforts to scale up financial commitments from rich countries. These decisions have aggravated distrust between developed and developing countries, which is a necessary ingredient for progress. Meanwhile, the EU, China and India, which have room to take on more ambitious commitments in 2020, are unlikely to play their cards in the absence of a similar commitment from the US. In this manner, the Trump Effect could grind the Paris “ambition mechanism” to a halt.

Following withdrawal, US officials have continued to attend, and have even played a constructive role at times. Negotiations have moved on to considering the rulebook to monitor pledge implementation. Key differences remain over the accounting rules to be used; the information to be included; and the extent to which the same rules should be universally applied. China and other emerging economies proposed that some elements of these updates should only be compulsory for developed countries. The Umbrella Group (led by the US, and supported by the EU) opposes any differentiation, and the US delegation remains resolutely opposed to providing funding for “loss and damage” associated with climate impacts. But these positions are holdovers from the Obama Administration.

However, when it comes to climate finance there has been a Trump Effect. Pledges of hard grant-aid have always lubricated the wheels of international agreements between wealthy and poorer countries. While the Obama Administration promised $3 billion to the Green Climate Fund, which was established in 2009 as a conduit for funds, the Trump Administration has reversed this decision, leaving an outstanding liability of $2 billion.

Controversy has surrounded the workings of the Green Climate Fund, and while the funding gap created by the Trump administration has been a key problem, it has faced other unrelated governance and administrative challenges. . . Developed countries, including the US, are opposed to reporting on climate finance as part of their pledge updates. They oppose stringent rules and want more private capital to meet their commitments, whereas developing countries are calling for more grant-aid. Observers to negotiations are concerned that the Trump administration’s uncompromising position on finance may be influencing other developed countries, which in turn may be feeding into a broader divide and sour negotiations.

At the time of writing, it is unclear if this process will yield any increases in pledge ambition in 2020. In previous cases “horse-trading” of increased ambition took place. For example, the US and China jointly agreed their pledges and prior to that the EU promised to increase its ambition (for 2020) if similar pledges were forthcoming from other parties. The EU Commissioner for Climate Action, Miguel Arias Cañete, has indicated a willingness to increasing the EU’s Paris pledge to a 45% GHGs cut by 2030,51 although Germany and Poland are opposed to any increased ambition on competitiveness grounds. There also appears to be technical scope for India and China to increase pledges based, but in both cases there would also be domestic opposition to pledge increases to be overcome. We therefore see these Parties as unlikely to play their cards in the absence of a similar move from the US. On this basis, it is unlikely that more ambitious pledges will be forthcoming before the end of 2020.

Conclusion

In this analysis, we uncover considerable evidence of a distinct Trump Effect, which is counteracting the momentum created by the Paris Agreement. The US economy is large enough to affect global technology learning curves, and the uncertainty created by the withdrawal has already altered the risk profiles associated with green versus fossil fuel technologies. Furthermore, withdrawal appears to violate commonly held perceptions of fairness, and there are reduced reputational, political and economic risks for turning one’s back on the Agreement, as already evidenced by the decisions of Turkey and Australia; and the EU, China and India are perhaps less likely to play their hands and increase ambition before the end of 2020, given the posture of the US. Finally, there has been a Trump Effect at international negotiations, particularly in the area of climate finance, which has diminished goodwill between developing and developed country Parties – an intangible commodity, but nonetheless a vital ingredient for progress.

“The Paris Accord is not dead, it is just resting.”

And there is more evidence that the Paris Accord is a dead parrot.  Lawrence Solomon of Energy Probe writes in the Financial Post: Paris is dead. The global warming deniers have won. Excerpts below with my bolds.

As Solomon sees it, events are unfolding in a way that proves Trump’s wisdom in withdrawing the US from the failing Paris Accord.

Huge Expansion of Coal-fired Power Plants

The Global Coal Plant Tracker portal confirmed that coal is on a tear, with 1600 plants planned or under construction in 62 countries. The champion of this coal-building binge is China, which boasts 11 of the world’s 20 largest coal-plant developers, and which is building 700 of the 1600 new plants, many in foreign countries, including high-population countries such as Egypt and Pakistan that until now have burned little or no coal.

China builds UHV projects across regions allowing coal-fired power stations to be built near coal reserves, away from population centers

All told, the plants underway represent a phenomenal 43 per cent increase in coal-fired power capacity, making Trump’s case that China and other Third World countries are eating the West’s lunch, using climate change as a club to kneecap us with expensive power while enriching themselves.

Sagging Investment in Renewables

As reported by Bloomberg New Energy Finance, renewables investment fell in 2016 by 18 per cent over the peak year of 2015, and nine per cent over 2014. In the first two quarters of 2017, the trend continued downward, with double-digit year-over-year declines in each of the first two quarters. Even that paints a falsely rosy picture, since the numbers were propped up by vanity projects, such as the showy solar plants built in Abu Dhabi and Dubai. In the U.K., renewable investment declined by 90 per cent.

None of the Bloomberg data represents hard economic data, however, since virtually all renewables facilities are built with funny money — government subsidies of various kinds. As those subsidies come off, a process that has begun, new investment will approach zero per cent, and the renewables industry will collapse. Even with Obama-sized subsidies, the clean-energy industry has seen massive bankruptcies, the largest among them in recent months being Europe’s largest solar panel producer, SolarWorld, in May, and America’s Suniva, in April.

Renewables are Environmental Hazards

As reported in July in Daily Caller, solar panels create 300 times more toxic waste per kilowatt-hour than nuclear reactors — they are laden with lead, chromium, cadmium and other heavy metals damned by environmentalists; employ hazardous materials such as sulfuric acid and phosphine gas in their manufacture; and emit nitrogen trifluoride, a powerful greenhouse gas that is 17,200 times more potent than CO2 as a greenhouse gas over a 100-year time period.

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Climate Doom and Gloom Predictions Prove Unreliable

One recent admission comes from Oxford’s Myles Allen, an author of a recent study in Nature Geoscience: “We haven’t seen that rapid acceleration in warming after 2000 that we see in the models,” he stated, saying that erroneous models produced results that “were on the hot side,” leading to forecasts of warming and inundations of Pacific islands that aren’t happening. Other eye-openers came in the discovery that the Pacific Ocean is cooling, the Arctic ice is expanding, the polar bears are thriving and temperatures did indeed stop climbing over 15 years.

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Public Opinion Manipulated by Fake Evidence

As the Daily Caller and the Wall Street Journal both reported in April, Obama administration officials are admitting they faked scientific evidence to manipulate public opinion. “What you saw coming out of the press releases about climate data, climate analysis, was, I’d say, misleading, sometimes just wrong,” former Energy Department Undersecretary Steven Koonin told the Journal, in explaining how spin was used, for example, to mislead the public into thinking hurricanes have become more frequent.

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The evidence against Paris continues to mount. Paris remains dead.  

Brazil’s Brave Eco-Realism

Posted on by Ron Clutz

Ricardo de Aquino Salles, former São Paulo’s Secretary of Environment, has been appointed by Jair Bolsonaro to head the Ministry of Environment Divulgação

Climate Change Is a Secondary Issue, Says Future Minister Of Environment is published at Folha de S.Paulo, December 8 2018. Excerpts in italics with my bolds.

Ricardo Salles says that until now, Brazilian environment policy decisions have been based on “guesswork”

Appointed on Sunday (9th) by president-elect Jair Bolsonaro (PSL), the future Minister of Environment Ricardo Salles classifies the debate around climate change as “pointless” at the moment.

Salles, a lawyer, told Folha that his goal is to “develop Brazil. We will preserve the environment with no ideology and in a very reasonable matter.”

“We will respect all those who work and bring Brazil forth, not only in farming but also in all industries, including infrastructure,” he said.

The future minister also said that there are practical issues to be addressed at the beginning of the administration, such as the preservation of soil and water, and recovering areas affected by deforestation. However, he declined to talk about climate change. “Right now this debate is pointless.”

Salles ran for House Representative for right-wing party Partido Novo in the 2018 elections but didn’t gain a seat. He is one of the founders of the conservative movement “Endireita Brasil” (Straighten Up, Brazil). When asked about how his relationship with environmentalists, Salles said: “Everyone will be respected and heard.”

Bolsonaro’s ideas for the Ministry of the Environment have been the target of controversy even before the election. During the campaign, he promised to merge the department with the Ministry of Agriculture but eventually backed out of the idea after pressure from environmentalists and ruralists.

Salles appointment comes in the wake of negative repercussions generated by the Brazilian government’s withdrawal from hosting the UN Climate Conference COP25 in 2019. Although the Ministry of Foreign Affairs has declared that the reason was lack of budget, Folha reported that those issues had already been resolved.

Footnote from Climate Home:

Salles served as secretary of environment in Sao Paulo state government, when centrist Geraldo Alckmin was governor and had ample support from Brazilian industry and agriculture groups to become minister. He leads a business-friendly organisation in Brazil called Movimento Endireita Brasil, that backs less bureaucracy and lower taxes.

The ministry of environment oversees hundreds of protected areas, which encompass almost 10% of Brazil’s territory. Most of them are in the Amazon. It also controls Ibama, an environmental agency which acts as a police force and is also in charge of the licensing process for oil wells, federal highways and hydroelectric plants.

Asked if Bolsonaro’s government would abandon the Paris Agreement, Salles said: “Let’s examine carefully the most sensitive points and, once the analysis is over [we will make the decision], remembering that national sovereignty over territory is non-negotiable”.

Salles ministry does not directly oversee Brazil’s participation in the Paris Agreement, but it works closely with the foreign office on the issue.

The appointed minister Salles said defending the environment was of “unquestionable value”. But said protections must comply with the rule of law and due legal process, echoing Bolsonaro’s view that the ministry of environment is controlled by a “militant ideology” that persecutes agribusiness.

Postscript:

This reminds of the uproar after Scott Pruitt was appointed to lead the US EPA.  In his hearings he rejected the false dichotomy:  If you are for the environment, you are against development; and if you are for development, you are against the environment.  Eventually Pruitt was forced out, partly due to his own missteps, but mostly due to his ideological enemies.  Let’s see how Salles fares against the same unbending opposition.