David Hay Explains “Greenflation”

A two part series at Evergreen financial advisers analyses the market effects of the intensified push for “green” energy.  Excerpts in italics with my bolds.  The two posts are:

Green energy: A bubble in unrealistic expectations?
David Hay / October 8, 2021
As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition. Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.

Green Energy: A Bubble in Unrealistic Expectations, Part II
David Hay / October 15, 2021
This is part two of our discourse regarding green energy and its profound – and somewhat misunderstood – impact on the global economy. In this issue, we specifically home in on China and how that country’s immense power needs are affecting the energy ecosystem at large.

Part I Green Bubble Summary:
  • BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary.
  • Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity.
  • To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting.
  • Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil.
  • It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure. Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays.
  • I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal.
  • In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined.
  • China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future.

In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year. This is an unprecedented development. However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article: “Energy companies are in a bind. The old solution would be to invest more in raising gas production. But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.”

Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies. One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley. Its title asked the provocative question: “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”

Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined. Where demand hasn’t gone horizontal is in the developing world which includes China. As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted.

Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way): “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC). The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’ Say again? If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?”

Part II Green Bubble Summary:
  • About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles.
  • Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.
  • The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket.
  • This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices.
  • Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area.
  • The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen.
  • It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy.
  • If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.

Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions. This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion. Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates.

Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion. Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light. Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them. For perspective, the total, already terrifying, level of US federal debt is $28 trillion.

Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high. Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.

Further, one of my other big fears is that the West is engaging in unilateral energy disarmament. Russia and China are likely the major beneficiaries of this dangerous scenario. Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe. Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).

Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.

If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about. This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s. On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now—even before winter sets in.

When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select?

 

Beware the Green Bubble Popping

David P. Goldman writes at Asia Times Green bubbles threaten to pop stock markets.  Excerpts in italics with my bolds.

Magical US thinking of a Green agenda financed by endless amounts of printing-press money will only end in tears

Prices for all energy commodities jumped during the past month, some by record margins, as a global energy shortage set off a scramble for gas, coal and oil. Brent crude has doubled in the past year, Newcastle coal has quadrupled, and Netherlands natural has risen seven-fold.  There are many small reasons for the global energy squeeze, and one big one:

Investment in hydrocarbons has collapsed under pressure from the Green agenda adopted by international consensus.

Energy investment in the United States has dwindled as large institutional investors boycott fossil fuel investments. China’s critical electricity shortage is the result of draconian regulation of coal mining, exacerbated by Beijing’s punitive ban on Australian coal imports.

The idea is fanciful that the world can re-direct US$100 trillion in capital investment during the next 30 years to reduce carbon emissions to zero by 2050, as the International Energy Agency has proposed. . . To put in context what this number implies, the entire free cash flow of the world’s private corporations would barely make up a third of the Global Reset investment budget.

The political pressure of the Green agenda has virtually wiped out investment in the US oil and gas industry. Capital expenditures for US exploration and development companies during 2021 (and projected for 2022) are only a fifth of the 2015 peak of $150 billion.

Meanwhile, oil and gas companies are sitting on mountains of cash. The free cash flow of the oil and gas industry will rise to $50 billion next year, the highest on record. In 2015 the oil and gas industry showed negative free cash flow because it borrowed to expand production.

Now oil and gas companies are paying down debt and returning cash to shareholders rather than take hydrocarbons out of the ground.

Virtually the whole of the world’s political elite has signed on to the carbon neutrality agenda, including the government of China, which appears to believe that support for carbon neutrality (which China has pledged by 2060) will mitigate hostility to China in the West.

But the energy market suggests that the hard reality of supply constraints will overwhelm the Green agenda before it gets started.

The cost of shelter, which comprises about two-fifths of the US Consumer Price Index, continues to rise at a record pace in the United States. This hasn’t turned up in the official data, because it takes time for old rental leases to expire and new leases to be written.

But several additional percentage points of inflation are now programmed into US inflation for the next two years.

As the Fed forced down the “real” interest rate, by reducing its overnight rate to zero and by purchasing hundreds of billions of dollars in TIPS, investors were forced into stocks.

At some point, the Fed’s game is going to come to an end. The magical thinking of a green agenda financed by endless amounts of printing-press money will be followed by a nasty hangover. Rates will rise and the asset bubble will pop.

Exactly when that will happen is beyond anyone’s capacity to forecast, but the unpleasant September in US equity markets was a foretaste of what we can expect.

A worker installs polycrystalline silicon solar panels as terrestrial photovoltaic power project starts on November 17, 2015 in Yantai, China. Photo: Getty

Climate Crisis Consultancy Race $$$

Consultants Race

Terence Corcoran writes at Financial Post Let the carbon consultancy games begin! Excerpts in italics with my bolds.

How does one avoid hell on earth? Who ya gonna call? Send in the consultants

After the release of the Intergovernmental Panel on Climate Change’s (IPCC) latest report, British Prime Minister Boris Johnson called it “sobering reading” and a “wake-up call” for the world’s politicians heading into the 26th Congress of the Parties (COP26), which is schedule to take place in Glasgow in November. Johnson, of course, did not intend his comments to be taken literally.

The IPCC report, formally titled “Climate Change 2021: The Physical Science Basis,” runs to 3,949 pages and contains approximately three million unreadable words from the deepest bowels of United Nations climate science that, if attempted, would induce readers to dip into the cabinet and ultimately leave them in the opposite condition, being neither sober nor awake.

UN Secretary General Antonio Guterres called the report a “code red” for humanity. I had to look up the meaning of “Code Red,” which turns out to have been the title of a 2020 blast from the heavy metal group AC/DC, with the opening lyrics:

Loading up the battery
Raising up insanity
Feeling like the old-time blues …
Don’t mess with fate
Hard fight, rough night
Dead in your sight
Fire light, a fire bright
Fire in the night

Maybe Guterres is hipper than we thought.  Not that it matters, since the dense content of the report, or even its 42-page “Summary for Policymakers,”  . . . is in fact irrelevant; the message is in the message carried by the media, which is that urgent action is needed at this “critical time,” to fight a crisis that requires a radical reduction of our greenhouse gas emissions to avoid the grave consequences of global warming.

Time Is Running Short To Avert ‘Hell On Earth,’ screamed a headline in the Financial Times.

How does one avoid hell on earth? Who ya gonna call? Send in the consultants.

The IPCC report was instantly seized upon by one sector of the economy that has been hyping itself up for one of the greatest money-making bonanzas of all time. Global consultancies — from big-names such as PwC, Deloitte, E&Y and KPMG, to the scores of less famous law firms and institutes — see the climate business as a profit-making bonanza.

At PwC’s United Kingdom office, the consultancy’s global sustainability and climate change leader instantly issued a response to the IPCC report that pumped up the firm’s net-zero agenda. Emma Cox urged all large businesses to engage with the IPCC’s monstrosity of a report. “For companies with a global footprint, the report provides the most detailed analysis of where and how your operations, supply chains and markets are vulnerable to the impacts of climate change,” she said.

The report actually does none of the above, but Cox continued: “Climate science should remain the hard basis for all decision making and target setting. In parallel, it must be used to inform and instigate a strong policy response to close the remaining ambition gap to keep the Paris Agreement objectives alive.”

How do corporations go about making climate science the basis for “all” decision making and target setting? No doubt PwC has an answer, as does Deloitte. A recent article on Deloitte’s website warned that the net-zero carbon target requires an urgency that exceeds previous industrial revolutions: “What’s needed is a more holistic system of systems approach that unlocks critical opportunities in the transition to a low-carbon economy by working at the intersection of emerging low-carbon initiatives.”

When consultants sound like UN bureaucrats, you know something is up.

The leadership at another global giant, KPMG, has created a management team called KPMG IMPACT that’s dedicated to pursuing the UN’s sustainability development goals, which is essentially a leftist takeover of world governance.

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In a report issued last November, the KPMG IMPACT team made its sales pitch to corporate executives and managers: “Business is not only a critical player in achieving the net zero goal; it is also at risk from the physical effects of the climate crisis and the economic impacts of transitioning to a net zero economy.”

The world’s corporate executives, managers and directors are ultimately caught between 3,949 pages of incomprehensible and speculative IPCC science pumped up by the media, and the exhortatory offerings of consultants eager to capitalize on IPCC climate alarmism.

And so, the great consultants’ Olympic are underway, a multi-year marathon competition among firms, legal teams and sustainability gurus to cash in on the promoted fears of hell on earth if corporations do not get behind net-zero with detailed planning, strategies and policy — and big dollars.

On your mark! Get set! Call your consultant!

7403a-money-down-the-drain

Deception: Climate Financial Risk

Carney GQ

John H. Cochrane writes at Project Syndicate The Fallacy of Climate Financial Risk.  Excerpts in italics with my bolds.

The idea that climate change poses a threat to the financial system is absurd, not least because everyone already knows that global warming is happening and that fossil fuels are being phased out.
The new push for climate-related financial regulation is not really about risk; it is about a political agenda.

In the United States, the Federal Reserve, the Securities and Exchange Commission, and the Department of the Treasury are gearing up to incorporate climate policy into US financial regulation, following even more audacious steps in Europe. The justification is that “climate risk” poses a danger to the financial system. But that statement is absurd. Financial regulation is being used to smuggle in climate policies that otherwise would be rejected as unpopular or ineffective.

“Climate” means the probability distribution of the weather – the range of potential weather conditions and events, together with their associated probabilities. “Risk” means the unexpected, not changes that everyone knows are underway. And “systemic financial risk” means the possibility that the entire financial system will melt down, as nearly happened in 2008. It does not mean that someone somewhere might lose money because some asset price falls, though central bankers are swiftly enlarging their purview in that direction.

Bomb of money hundred dollar bills with a burning wick. Little time before the explosion. Concept of financial crisis

In plain language, then, a “climate risk to the financial system” means a sudden, unexpected, large, and widespread change in the probability distribution of the weather, sufficient to cause losses that blow through equity and long-term debt cushions, provoking a system-wide run on short-term debt. This means the five- or at most ten-year horizon over which regulators can begin to assess the risks on financial institutions’ balance sheets. Loans for 2100 have not been made yet.

Such an event lies outside any climate science. Hurricanes, heat waves, droughts, and fires have never come close to causing systemic financial crises, and there is no scientifically validated possibility that their frequency and severity will change so drastically to alter this fact in the next ten years. Our modern, diversified, industrialized, service-oriented economy is not that affected by weather – even by headline-making events. Businesses and people are still moving from the cold Rust Belt to hot and hurricane-prone Texas and Florida.

insurance-exclusions

If regulators are worried even-handedly about out-of-the-box risks that endanger the financial system, the list should include wars, pandemics, cyberattacks, sovereign-debt crises, political meltdowns, and even asteroid strikes. All but the latter are more likely than climate risk. And if we are worried about flood and fire costs, perhaps we should stop subsidizing building and rebuilding in flood and fire-prone areas.

Climate regulatory risk is slightly more plausible. Environmental regulators could turn out to be so incompetent that they damage the economy to the point of creating a systemic run. But that scenario seems far-fetched even to me. Again though, if the question is regulatory risk, then even-handed regulators should demand a wider recognition of all political and regulatory risks. Between the Biden administration’s novel interpretations of antitrust law, the previous administration’s trade policies, and the pervasive political desire to “break up big tech,” there is no shortage of regulatory danger.

Climate Piggy Bank

To be sure, it is not impossible that some terrible climate-related event in the next ten years can provoke a systemic run, though nothing in current science or economics describes such an event. But if that is the fear, the only logical way to protect the financial system is by dramatically raising the amount of equity capital, which protects the financial system against any kind of risk.

Risk measurement and technocratic regulation of climate investments, by definition, cannot protect against unknown unknowns or un-modeled “tipping points.”

What about “transition risks” and “stranded assets?” Won’t oil and coal companies lose value in the shift to low-carbon energy? Indeed they will. But everyone already knows that. Oil and gas companies will lose more value only if the transition comes faster than expected. And legacy fossil-fuel assets are not funded by short-term debt, as mortgages were in 2008, so losses by their stockholders and bondholders do not imperil the financial system.

“Financial stability” does not mean that no investor ever loses money.

Moreover, fossil fuels have always been risky. Oil prices turned negative last year, with no broader financial consequences. Coal and its stockholders have already been hammered by climate regulation, with not a hint of financial crisis.

More broadly, in the history of technological transitions, financial problems have never come from declining industries. The stock-market crash of 2000 was not caused by losses in the typewriter, film, telegraph, and slide-rule industries. It was the slightly-ahead-of-their-time tech companies that went bust. Similarly, the stock-market crash of 1929 was not caused by plummeting demand for horse-drawn carriages. It was the new radio, movie, automobile, and electric appliance industries that collapsed.

If one is worried about the financial risks associated with the energy transition, new astronomically-valued darlings such as Tesla are the danger. The biggest financial danger is a green bubble, fueled as previous booms by government subsidies and central-bank encouragement. Today’s high-fliers are vulnerable to changing political whims and new and better technologies. If regulatory credits dry up or if hydrogen fuel cells displace batteries, Tesla is in trouble. Yet our regulators wish only to encourage investors to pile on.

Climate financial regulation is an answer in search of a question. The point is to impose a specific set of policies that cannot pass via regular democratic lawmaking or regular environmental rulemaking, which requires at least a pretense of cost-benefit analysis.

These policies include defunding fossil fuels before replacements are in place, and subsidizing battery-powered electric cars, trains, windmills, and photovoltaics – but not nuclear, carbon capture, hydrogen, natural gas, geoengineering, or other promising technologies. But, because financial regulators are not allowed to decide where investment should go and what should be starved of funds, “climate risk to the financial system” is dreamed up and repeated until people believe it, in order to shoehorn these climate policies into financial regulators’ limited legal mandates.

Climate change and financial stability are pressing problems. They require coherent, intelligent, scientifically valid policy responses, and promptly. But climate financial regulation will not help the climate, will further politicize central banks, and will destroy their precious independence, while forcing financial companies to devise absurdly fictitious climate-risk assessments will ruin financial regulation. The next crisis will come from some other source. And our climate-obsessed regulators will once again fail utterly to anticipate it – just as a decade’s worth of stress testers never considered the possibility of a pandemic.

John H. Cochrane is a senior fellow at the Hoover Institution.

global-warming-al-gore-wheel-650

 

 

SEC Warned Off Climate Disclosures

Warning banner

David Burton writes to the Securities Exchange Commission explaining the hazards they will be taking on needlessly should they continue desiring to impose Climate Change Disclosures on publicly traded enterprises.  His document was sent to the SEC Chairman entitled Re: Comments on Climate Disclosure.  Excerpts in italics with my bolds.

Summary of Key Points

1. Climate Change Disclosure Would Impede the Commission’s Important Mission.

The important mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Mandatory climate change disclosure would impede rather than further that mission. It would affirmatively harm investors, impede capital formation and do nothing to improve the efficiency of capital markets.

2. Immaterial Climate Change “Disclosure” Would Obfuscate Rather than Inform.

The concept of materiality has been described as the cornerstone of the disclosure system established by the federal securities laws. Disclosure of material climate-related information is already required under ordinary securities law principles and Regulation SK. Mandatory “disclosure” of immaterial, highly uncertain, highly disputable information would obfuscate rather than inform. It will harm rather than hurt investors.

3. Climate Models and Climate Science are Highly Uncertain.

There is a massive amount of variance among various climate models and uncertainty regarding the future of the climate.

4. Economic Modeling of Climate Change Effects is Even More Uncertain.

There is an even higher degree of variance and uncertainty associated with attempts to model or project the economic impact of highly divergent and uncertain climate models. Any estimate of the economic impact of climate change would have to rely on highly uncertain and divergent climate model results discussed below. In addition to this high degree of uncertainty would be added an entirely new family of economic ambiguity and uncertainty. Any economic estimate of the impact of climate change would also have to choose a discount rate to arrive at the present discounted value of future costs and benefits of climate change and to estimate the future costs and benefits of various regulatory or private responses. The choice of discount rate is controversial and important. Estimates would need to be made of the cost of various aspects of climate change (sea level rises, the impact on agriculture, etc.). Estimates would need to be made of the cost of various remediation techniques. Guesses would need to be made about the rate of technological change. Guesses would need to be made about the regulatory, tax and other responses of a myriad of governments. Estimates would need to be made using conventional economic techniques regarding the economic impact of those changes which, in turn, would reflect a wide variety of techniques and in many cases a thin or non-existent empirical literature. Guesses would need to be made of market responses to all of these changes since market participants will not stand idly by and do nothing as markets and the regulatory environment change. Then, after making decisions regarding all of these extraordinarily complex, ambiguous and uncertain issues, issuers would then need to assess the likely impact of climate change on their specific business years into the future – a business that may by then bear little resemblance to the issuers’ existing business.

Then, the Commission would need to assess the veracity of the issuers’ “disclosure” based on this speculative house of cards. The idea that all of this can be done in a way that will meaningfully improve investors’ decision making is not credible.

5. The Commission Does Not Possess the Expertise to Competently Assess Climate Models or the Economic Impact of Climate Change.

The Commission has neither the expertise to assess climate models nor the expertise to assess economic models purporting to project the economic impact of divergent and uncertain climate projections.

6. The Commission Has Neither the Expertise nor the Administrative Ability to Assess the Veracity of Issuer Climate Change Disclosures.

The Commission does not have the expertise or administrative ability to assess the veracity, or lack thereof, of issuer “disclosures”  based on firm-specific speculation regarding the impact of climate change which would be based on firm-specific choices regarding highly divergent and uncertain economic models projecting the economic impact of climate changes based on firm-specific choices regarding highly divergent and uncertain climate models.

7. Commission Resources Are Better Spent Furthering Its Mission.

Imposing these requirements and developing the expertise to police such climate disclosure by thousands of issuers will involve the expenditure of very substantial resources. These resources would be much better spent furthering the Commission’s important mission.

8. The Costs Imposed on Issuers Would be Large.

Requiring all public companies to develop climate modeling expertise, the ability to make macroeconomic projections based on these models and then make firm-specific economic assessments based on these climate and economic models will be expensive, imposing costs that will amount to billions of dollars on issuers. These expenses would harm investors by reducing shareholder returns.

9.Climate Change Disclosure Requirements Would Further Reduce the Attractiveness of Becoming a Public Company,
Harming Ordinary Investors and Entrepreneurial Capital Formation.

Such requirements would further reduce the attractiveness of being a registered, public company. They would exacerbate the decline in the number of public companies and the trend of companies going public later in their life cycle. This, in turn, would deny to ordinary (unaccredited) investors the opportunity to invest in dynamic, high-growth, profitable companies until most of the money has already been made by affluent accredited investors. It would further impede entrepreneurial access to public capital markets.

10. Climate Change Disclosure Requirements Would Create a New Compliance Eco-System and a New Lobby to Retain the Requirements.

The imposition of such requirements would result in the creation of a new compliance eco-system and pro-complexity lobby composed of the economists, accountants, attorneys and compliance officers that live off of the revised Regulation S-K.

11. Climate Change Disclosure Requirements Would Result in Much Litigation.

The imposition of such requirements would result in much higher litigation risk and expense as private lawsuits are filed challenging the veracity of climate disclosures. These lawsuits are virtually assured since virtually no climate models have accurately predicated future climate and the economic and financial projections based on these climate models are even more uncertain. Litigation outcomes would be as uncertain as the underlying climate science, economics and the associated financial projections. This would harm investors and entrepreneurial capital formation.

12. Material Actions by Management in Furtherance of Social and Political Objectives that Reduce Returns must be Disclosed.

Many environmentally constructive corporate actions will occur in the absence of any government mandate or required disclosure. For example, energy conservation measures may reduce costs as well as emissions. No new laws or regulations are necessary to induce firms to take these actions. Assuming they are not utterly pointless, climate change disclosure laws presumably would be designed to induce management to take action that they would not otherwise take. To the extent management takes material actions in furtherance of social and political objectives (including ESG objectives) that reduce shareholder returns, whether induced by climate change disclosure requirements or taken for other reasons, they need to disclose that information. The Commission should ensure that they do so. Absent some drastic change in the underlying law by Congress, this principle would apply to any reduction in returns whether induced by ESG disclosures (climate change related or otherwise) or taken by management on its own initiative to achieve social and political objectives.

13. Fund Managers Attempts to Profit from SRI at the Expense of Investors Should be Policed.

Fund management firms are generally compensated from either sales commissions (often called loads) or investment management fees that are typically based on assets under management. Their compensation is not closely tied to performance. Thus, these firms will often see a financial advantage in selling “socially responsible” products that perform no better and often worse than conventional investments. It is doubtful that this is consistent with Regulation BI. Their newfound interest in socially responsible investing should be taken with the proverbial grain of salt. The Commission should monitor their efforts to profit from SRI at the expense of investors.

14. Duties of Fund Managers Should be Clarified.

The extreme concentration in the proxy advisory and fund management business is cause for concern. As few as 20 firms may exercise effective control over most public companies. The Commission should make it clear that investment advisers managing investment funds, including retirement funds or accounts, have a duty to manage those funds and to vote the shares held by the funds in the financial, economic or pecuniary interest of the millions of small investors that invest in, or are beneficiaries of, those funds and that the funds may not be managed to further the managers’ preferred political or social objectives.

15. Securities Laws are a Poor Mechanism to Address Externalities.

Externalities, such as pollution, should be addressed by either enhancing property rights or, in the case of unowned resources such as the air and waterways, by a regulatory response that carefully assesses the costs and benefits of the regulatory response. Securities disclosure is the wrong place to try to address externalities. Policing externalities is far outside of the scope of Commission’s mission and the purpose of the securities laws.

16. Climate Change Disclosure Requirements Would Have No Meaningful Impact on the Climate.

When all is said and done, climate change disclosure requirements will have somewhere between a trivial impact and no impact on climate change.

17. Efforts to Redefine Materiality or the Broader Purpose of Business should be Opposed.

Simply because some politically motivated investors seek to impose a disclosure requirement on issuers does not make such a requirement material. The effort to redefine materiality in the securities laws is part of an increasingly strident effort to redefine the purpose of businesses more generally to achieve various social or political objectives unrelated to earning a return, satisfying customers, or treating workers or suppliers fairly. This is being done under the banner of social justice; corporate social responsibility (CSR); stakeholder theory; environmental, social and governance (ESG) criteria; socially responsible investing (SRI); sustainability; diversity; business ethics; common-good capitalism; or corporate actual responsibility. The social costs of ESG and broader efforts to repurpose business firms will be considerable. Wages will decline or grow more slowly, firms will be less productive and less internationally competitive, investor returns will decline, innovation will slow, goods and services quality will decline and their prices will increase.

18.  ESG Requirements will Make Management Even Less Accountable.

In large, modern corporations there is a separation of ownership and control. There is a major agent/principal problem because management and the board of directors often, to varying degrees, pursue their own interest rather than the interests of shareholders. Profitability is, however, a fairly clear measure of the success or failure of management and the board. If a firm become unprofitable or lags considerably in profitability, the board may well replace management, shareholders may replace the board or another firm may attempt a takeover. Systematic implementation of regulatory ESG or CSR requirements will make management dramatically less accountable since such requirements will come at the expense of profitability and the metrics relating to success or failure of achieving ESG or CSR requirements will be largely unquantifiable. For that matter, ESG or CSR requirements themselves tend to be amorphous and ever changing.

esg-smoke-and-mirrors

Activists Attack Energy Companies, State-owned Producers Benefit

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A previous post reprinted at the bottom warned that the ESG movement is a threat to the free world, as well as endangering supply of cost-effective energy.  Part of the issue is the way private sector energy companies are being undermined by regulations and ESG priorities, and shaming, which shifts market advantage to national producers like Russia and Saudi Arabia, among others.  Tyler Durden explains in his zerohedge article Fossil Fuels Aren’t Dying, They’re Shifting To National And State Backed Companies.  Excerpts in italics with my bolds.

Despite the activist shareholder battles, calls for ESG changes and just outright negative press about fossil fuels, it looks like rumors of oil’s death have been greatly exaggerated. Fossil fuels aren’t dying – rather, their output is just being shifted to national and state owned companies.

Even as the supermajor oil companies shrink in size and adhere to incessant criticism, fossil-fuel demand holds strong, according to Yahoo Finance. Activists have been the busiest they have been in years…

Recent weeks saw Exxon and Chevron rebuked by their own shareholders over climate concerns, while Shell lost a lawsuit in the Hague over the pace of its shift away from oil and gas. . . .and this has been a tailwind for national oil companies (NOCs) and state owned players who aren’t under the same pressure to play ball with activists. The report notes that “Saudi Aramco and Abu Dhabi National Oil Co. are spending billions to boost their respective output capacities”, as is Qatar Petroleum.

NOC’s share of global oil output is expected to rise to 65%, from about 50% today, by 2050. Companies like Exxon and Chevron are keeping output at lows and curtailing future investment in traditional oil and gas infrastructure.

Patrick Heller, an adviser at the Natural Resource Governance Institute, told Yahoo Finance: “We hear government officials and NOC officials say, ‘We look at the divestment of international oil companies from some projects as an opportunity for us to grow. And I do think that’s potentially really risky.”

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Jason Bordoff, director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, thinks that the shift to government owners could wind up doing just the opposite of what activists are intending on doing.

“A shift in production to major nationally owned companies — such as in Latin America or the Gulf or Russia — carries geopolitical supply risks, while smaller independents have often demonstrated poorer safety and environmental practices,” he said.

Amrita Sen from consultancy Energy Aspects said: “Oil and gas demand is far from peaking and supplies will be needed, but international oil companies will not be allowed to invest in this environment, meaning national oil companies have to step in.”

The Saudis, meanwhile, don’t seem quite as alarmed by the issue of climate change. When The International Energy Agency issued guidance last month to scrap all new oil and gas developments, Saudi Energy Minister Prince Abdulaziz bin Salman responded by stating:

“It (the IEA report) is a sequel of the La La Land movie. Why should I take it seriously? We (Saudi Arabia) are … producing oil and gas at low cost and producing renewables. I urge the world to accept this as a reality: that we’re going to be winners of all of these activities.”

A spokesperson from Gazprom jabbed: “It looks like the West will have to rely more on what it calls ‘hostile regimes’ for its supply”.

“Western oil majors like Shell have dramatically expanded in the last 50 years” as a result of the West trying to cut reliance on Middle Eastern and Russian oil, Reuters notes. Now these producers must balance a growing chorus of criticisms about climate change with continued output.

Nick Stansbury at Legal & General, which manages $1.8 trillion, said: “It is vital that the global oil industry aligns its production to the Paris goals. But that must be done in step with policy, changes to the demand side, and the rebuilding of the world’s energy system. Forcing one company to do so in the courts may (if it is effective at all) only result in higher prices and foregone profits.”

While Saudi Arabia claims to have targets to cut carbon emissions, it isn’t beholden to U.N.-backed targets or activist investors like Western companies are. Gazprom has indicated a shift to natural gas to try and manage its carbon emissions.

Western names account for about 15% of all output globally, while Russia and OPEC make up about 40%. At the same time, global oil consumption has risen to 100 million barrels per day from 65 million barrels per day in 1990.

“The same oil and gas will still be produced. Just with lower ESG standards,” one Middle Eastern oil executive concluded.

Background from Previous Post ESG Movement Threatens Us All

ESG smoke and mirrors

Alex Epstein puts out a stern warning in a twitter thread reprinted below with my headers.

What ESG Really Means

Over the last 5-10 years, “ESG”–standing for Environmental Social Governance–has gone from an acronym that virtually no one knew or cared about, to a cultishly-embraced top priority of financial regulators, markets, and institutions around the world.

The preposterous financial pretense of “ESG investing” is that the promoters of it have so accurately identified universal norms of long-term value creation–Environmental norms, Social norms, and Governance norms–that imposing those norms on every company is justified.

In reality, ESG was a movement cooked up at the UN–not exactly a leading expert in profitable investment–to impose moral and political agendas, largely left-wing ones, on institutions that would not adopt them if left to their own devices.

The number one practical meaning of ESG today is: divest from fossil fuels in every way possible, and associate yourself with “renewable” solar and wind in every way possible. That’s why I call it the “ESG divestment movement.”

Modern ESG’s obsession with unreliable “renewable” solar and wind, reflects its political nature. Any serious concern about CO2 emissions means embracing the only proven, reliable, globally scalable source of non-carbon energy: nuclear. But most ESG does not embrace nuclear.

Divesting from Fossil Fuels is Immoral

Divesting from fossil fuels is immoral because:
1. The world needs much more energy.
2. Fossil fuels are the only way to provide most of that energy for the foreseeable future.
3. Any problems associated with CO2 pale in comparison to problems of energy deprivation.

The world needs much more energy

Low-cost, reliable energy enables billions of people to enjoy the miracle of modern machines that make us productive and prosperous. Yet 800M people have no electricity and 2.6B people are still using wood or dung for heating and cooking.

Fossil fuels are indispensable

Only fossil fuels provide low-cost, reliable, versatile, global-scale energy.
Unreliable solar and wind can’t come close. That’s why fossil fuels continue to grow in the developing world; China and India have 100s of coal plants in development.

CO2 levels matter much less than energy availability.

CO2 emissions have contributed to the warming of the last 170 years, but that warming has been minor and manageable—1 degree C, mostly in cold parts of the world. And life on Earth thrived when CO2 levels were >5X today’s.

Fossil fuels have made climate far safer by powering a highly resilient civilization. That’s why climate disaster deaths—from extreme temps, droughts, wildfires, storms, and floods—have decreased 98% over the last century.

ESG Perpetuates Poverty by Denying Capital for Cost-effective Energy Projects

A moral financial movement would do everything it could to increase capital for all cost-effective energy, including fossil fuels. And including nuclear, which is by far the most promising form of low-carbon energy. Instead, ESG is starving cost-effective energy of capital.

By starving cost-effective energy of capital, the ESG movement is engaging in a fundamental act of mass destruction. Energy is the industry that powers every other industry. By making energy more expensive, ESG makes everything more expensive–hurting the poorest people most.

The most egregious immorality of the ESG movement, led by Larry Fink’s Blackrock, is its effort to destroy vital fossil fuel projects in poor places that desperately need them. This effort is guaranteed to perpetuate poverty.

Example of ESG poverty perpetuation: South Korea canceled new coal plants in South Africa and the Philippines after “Global investors including Blackrock…warned the South Korean utility to drop coal power projects.”

Another example of ESG poverty perpetuation: “International investors are increasingly restricting support to companies involved in extracting or consuming coal, yet nearly 70% of India’s electricity comes from coal plants, and demand for power is set to rise…”

ESG poverty perpetuation is getting worse as activist “investors” with increasing influence on large financial institutions try to stop all fossil fuel projects in poor places.
E.g., HSBC was attacked when it decided to fund 6 new coal power plants in Indonesia and Vietnam.

ESG defunding fossil fuel projects in the poorest parts of the world will mean: more babies die for lack of incubators and other medical equipment, more deaths from lack of water treatment plants and modern sanitation, more deaths from lack of heating and air-conditioning.

Every leading ESG institution should be called out for their genocidal policies toward the poorest parts of the world. They should be shamed for placing their own virtue-signaling above billions of actual human lives. They should lose all moral authority in the realm of energy.

ESG Movement Threatens Free World Security

The ESG movement is also an enormous threat to the security of the free world, because by depriving free countries and poor countries of low-cost, reliable energy, it furthers Communist China’s ambitions to become the world’s superpower using low-cost, reliable fossil fuels.

China has a clear strategy of running its economy on fossil fuels, while encouraging others to run on inferior, unreliable solar and wind — that is made using Chinese fossil fuels, which produce 85% of Chinese energy. China has 247 GW of coal plants (3 TX’s worth) in development.

China dominates the mining and processing of “renewable” materials to a staggering degree. The US does little mining or processing of the needed materials, largely because of “green” regulations. Our dependence on China for “renewables” dwarfs past Mideast oil dependence.

Energy security is national security. When hostile foreign powers can meaningfully cut off our access to energy they can manipulate us politically. Examples: US appeasement of Saudi Arabia and European appeasement of Russia.

Energy security is national security, above all in wartime. War requires continuous high-energy manufacturing and continuous fueling of high-energy mobile machines such as planes and aircraft carriers. Both world wars were won by the side with the most oil, the fuel of mobility.

What does the modern ESG movement do about the danger of an energy-dominant China? Deny reality and serve as “useful idiots.”

Example: Larry Fink’s sole mention of China in his influential letter to CEOs was to praise China’s “historic commitments to achieve net zero emissions”!

Renounce ESG and Commit to Long Term Cost-effective Energy

The ESG divestment movement should be publicly shamed as a virtue-signaling, financially idiotic, and most importantly immoral movement that perpetuates poverty and threatens freedom. All legal pressures to adopt it should be eliminated. ESG should be boycotted wherever possible.

The anti-energy, anti-freedom ESG movement should be replaced with a voluntary *long-term value creation movement*. Creating sustained value for companies’ owners requires a long-term perspective. But a long-term perspective means valuing cost-effective energy, not destroying it

 

ESG Movement Threatens Us All

ESG smoke and mirrors

Alex Epstein puts out a stern warning in a twitter thread reprinted below with my headers.

What ESG Really Means

Over the last 5-10 years, “ESG”–standing for Environmental Social Governance–has gone from an acronym that virtually no one knew or cared about, to a cultishly-embraced top priority of financial regulators, markets, and institutions around the world.

The preposterous financial pretense of “ESG investing” is that the promoters of it have so accurately identified universal norms of long-term value creation–Environmental norms, Social norms, and Governance norms–that imposing those norms on every company is justified.

In reality, ESG was a movement cooked up at the UN–not exactly a leading expert in profitable investment–to impose moral and political agendas, largely left-wing ones, on institutions that would not adopt them if left to their own devices.

The number one practical meaning of ESG today is: divest from fossil fuels in every way possible, and associate yourself with “renewable” solar and wind in every way possible. That’s why I call it the “ESG divestment movement.”

Modern ESG’s obsession with unreliable “renewable” solar and wind, reflects its political nature. Any serious concern about CO2 emissions means embracing the only proven, reliable, globally scalable source of non-carbon energy: nuclear. But most ESG does not embrace nuclear.

Divesting from Fossil Fuels is Immoral

Divesting from fossil fuels is immoral because:
1. The world needs much more energy.
2. Fossil fuels are the only way to provide most of that energy for the foreseeable future.
3. Any problems associated with CO2 pale in comparison to problems of energy deprivation.

The world needs much more energy

Low-cost, reliable energy enables billions of people to enjoy the miracle of modern machines that make us productive and prosperous. Yet 800M people have no electricity and 2.6B people are still using wood or dung for heating and cooking.

Fossil fuels are indispensable

Only fossil fuels provide low-cost, reliable, versatile, global-scale energy.
Unreliable solar and wind can’t come close. That’s why fossil fuels continue to grow in the developing world; China and India have 100s of coal plants in development.

CO2 levels matter much less than energy availability.

CO2 emissions have contributed to the warming of the last 170 years, but that warming has been minor and manageable—1 degree C, mostly in cold parts of the world. And life on Earth thrived when CO2 levels were >5X today’s.

Fossil fuels have made climate far safer by powering a highly resilient civilization. That’s why climate disaster deaths—from extreme temps, droughts, wildfires, storms, and floods—have decreased 98% over the last century.

ESG Perpetuates Poverty by Denying Capital for Cost-effective Energy Projects

A moral financial movement would do everything it could to increase capital for all cost-effective energy, including fossil fuels. And including nuclear, which is by far the most promising form of low-carbon energy. Instead, ESG is starving cost-effective energy of capital.

By starving cost-effective energy of capital, the ESG movement is engaging in a fundamental act of mass destruction. Energy is the industry that powers every other industry. By making energy more expensive, ESG makes everything more expensive–hurting the poorest people most.

The most egregious immorality of the ESG movement, led by Larry Fink’s Blackrock, is its effort to destroy vital fossil fuel projects in poor places that desperately need them. This effort is guaranteed to perpetuate poverty.

Example of ESG poverty perpetuation: South Korea canceled new coal plants in South Africa and the Philippines after “Global investors including Blackrock…warned the South Korean utility to drop coal power projects.”

Another example of ESG poverty perpetuation: “International investors are increasingly restricting support to companies involved in extracting or consuming coal, yet nearly 70% of India’s electricity comes from coal plants, and demand for power is set to rise…”

ESG poverty perpetuation is getting worse as activist “investors” with increasing influence on large financial institutions try to stop all fossil fuel projects in poor places.
E.g., HSBC was attacked when it decided to fund 6 new coal power plants in Indonesia and Vietnam.

ESG defunding fossil fuel projects in the poorest parts of the world will mean: more babies die for lack of incubators and other medical equipment, more deaths from lack of water treatment plants and modern sanitation, more deaths from lack of heating and air-conditioning.

Every leading ESG institution should be called out for their genocidal policies toward the poorest parts of the world. They should be shamed for placing their own virtue-signaling above billions of actual human lives. They should lose all moral authority in the realm of energy.

ESG Movement Threatens Free World Security

The ESG movement is also an enormous threat to the security of the free world, because by depriving free countries and poor countries of low-cost, reliable energy, it furthers Communist China’s ambitions to become the world’s superpower using low-cost, reliable fossil fuels.

China has a clear strategy of running its economy on fossil fuels, while encouraging others to run on inferior, unreliable solar and wind — that is made using Chinese fossil fuels, which produce 85% of Chinese energy. China has 247 GW of coal plants (3 TX’s worth) in development.

China dominates the mining and processing of “renewable” materials to a staggering degree. The US does little mining or processing of the needed materials, largely because of “green” regulations. Our dependence on China for “renewables” dwarfs past Mideast oil dependence.

Energy security is national security. When hostile foreign powers can meaningfully cut off our access to energy they can manipulate us politically. Examples: US appeasement of Saudi Arabia and European appeasement of Russia.

Energy security is national security, above all in wartime. War requires continuous high-energy manufacturing and continuous fueling of high-energy mobile machines such as planes and aircraft carriers. Both world wars were won by the side with the most oil, the fuel of mobility.

What does the modern ESG movement do about the danger of an energy-dominant China? Deny reality and serve as “useful idiots.”

Example: Larry Fink’s sole mention of China in his influential letter to CEOs was to praise China’s “historic commitments to achieve net zero emissions”!

Renounce ESG and Commit to Long Term Cost-effective Energy

The ESG divestment movement should be publicly shamed as a virtue-signaling, financially idiotic, and most importantly immoral movement that perpetuates poverty and threatens freedom. All legal pressures to adopt it should be eliminated. ESG should be boycotted wherever possible.

The anti-energy, anti-freedom ESG movement should be replaced with a voluntary *long-term value creation movement*. Creating sustained value for companies’ owners requires a long-term perspective. But a long-term perspective means valuing cost-effective energy, not destroying it

 

The True Cost of Imaginary Money

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Lionel Shriver explains in his Spectator article The true cost of make-believe money

Biden commands trillions in the way previous presidents have commanded billions

I like Bill Maher. He’s a rare practicing left-wing comic who’s actually funny. But last week, his routine on cryptocurrency hit eerie harmonics.

That monologue was broadcast in the same week Joe Biden promoted the third of his gargantuan spending programs, bringing his first 100 days’ total discretionary spending proposals to $6 trillion. (Context: total US GDP is $21 trillion.) This lavish largesse would be slathered atop the annual (and growing) nondiscretionary budget of nearly $5 trillion, against $3.5 trillion in tax revenue.

Let’s tweak Maher’s routine, then:

‘I fully understand that our financial system isn’t perfect, but at least, or so I’ve imagined, it’s real. But the American dollar increasingly resembles Easter bunny cartoon cash. I’ve read articles about Modern Monetary Theory. I’ve had it explained to me. I still don’t get it, and neither do you.

‘Dollars are now made up out of thin air and comparable with Monopoly money. We thought we knew that money had to originate from and be generated by something real, somewhere. Modern Monetary Theory says, “No, it doesn’t”… Or as another analyst put it, “Quantitative easing is an open Ponzi scheme”. The Federal Reserve is like having an imaginary best friend who’s also a banker.

‘Our problem here is at root not economic but psychological. People who have been raised in a virtual world are starting to believe they can really live in it. Much of warfare is a video game now; why not base our economy the same way? The conjuring of “borrowed” money from ether, only to have that debt swallowed by a central bank and disappear, is literally a game.

‘Do I need to spell this out? There is something inherently not credible about the Fed creating not just hundreds of billions, but trillions in wealth, with nothing ever actually being accomplished, and no actual product made or service rendered. It’s like Tinkerbell’s light. Its power source is based solely on enough infantilized citizens believing in it.’

Somehow that monologue isn’t as funny in the second version.

While Maher decries the electricity squandered on crypto ‘mining’, at least the color of the Fed’s money is genuinely green. Tap a few keys, and voilà: trillions from pennies on the energy bill. So in the past year, the Fed effortlessly increased the world’s supply of dollars by 26 percent and is on track for a similar surge in 2021.

But is drastic monetary expansion truly without cost?

I’ve made Maher’s Tinkerbell analogy myself, but to explain how traditional currency functions. I noted in an essay accompanying my novel The Mandibles, about America’s 2029 economic apocalypse: ‘Currency is a belief system. It maintains its value the way Tinkerbell is kept aloft by children believing in fairies in Peter Pan.’

In the novel, a fictional economics professor pontificates: ‘Money is emotional. Because all value is subjective, money is worth what people feel it’s worth. They accept it in exchange for goods and services because they have faith in it. Economics is closer to religion than science. Without millions of individual citizens believing in a currency, money is colored paper. Likewise, creditors have to believe that if they extend a loan to the US government they’ll get their money back or they don’t make the loan in the first place.

So confidence isn’t a side issue. It’s the only issue.’

My confidence is going wobbly. Biden commands trillions the way previous presidents have commanded billions, while the public is so dazzled by zeros that they don’t know the difference.

I’ve my quibbles with the particulars. Spending in inconceivable quantity courts waste and fraud. Biden’s American Families Plan casts so many freebies upon the waters as to constitute a de facto universal basic income, and government dependency doesn’t seem characteristic of a good life. Pandemic-relief unemployment supplements (which many Democrats would make permanent) are so generous that small businesses can’t find employees willing to work even for two to three times the minimum wage. Biden is effectively reversing Clinton-era welfare reforms, which moved so many poor Americans from state benefits to self-respecting employment. Financing all these goodies by hiking corporate taxes is popular, but only because few people realize that every-one pays corporate taxes through lower pension-fund returns, job losses from corporate flight, lower wages and higher prices.

But it’s the bigger picture that unnerves me. Zero interest rates have installed an accelerating debt loop. Governments, companies and individuals borrow because money is free. Central banks won’t raise interest rates, lest the cost of servicing all this burgeoning debt bankrupt the debtors. Governments, companies and individuals borrow still more because money is free. The Federal Reserve has already announced it won’t raise interest rates even if inflation climbs, while refusing to cite what level inflation would have to hit before reconsidering. I’ve plotted this story before. It doesn’t end well.

Background on Modern (Magical) Money Theory see MMT: Magical Money Theory

money-magician-big

The National Climate Bank Con

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At a Hearing April 27, 2021: “Legislative Hearing on S.283, National Climate Bank Act”, Benjamin Zycher provided testimony Summarized at AEI: Statement submitted for the record: Subcommittee on Clean Air, Climate, and Nuclear Safety, Committee on Environment and Public Works.

Summary

This Statement Submitted for the Record offers a critical review of legislation proposed in the 117th Congress, 1st Session, as S. 283, The National Climate Bank Act (hereafter NCBA), the subject of a hearing scheduled for April 27, 2021 before the Subcommittee on Clean Air, Climate, and Nuclear Safety of the Committee on Environment and Public Works. A summary of the arguments presented below is as follows:

  • A National Climate Bank cannot increase the capital resources available to the U.S. economy or to the federal government, and the true economic cost of the outlays envisioned to be made by the National Climate Bank would be almost double the notional budget.
  • The “climate” projects envisioned for the National Climate Bank would be highly inefficient regardless of the assumptions made about climate phenomena and the current and prospective effects of greenhouse gas emissions. This is because the envisioned projects would yield future climate impacts either trivial or undetectable. This explains the failure of the proposed legislation to specify a requirement or to offer a projection of reductions in GHG emissions attendant upon the projects to be funded by the National Climate Bank.
  • The “Findings” in the proposed legislation on current climate phenomena are not supported by the evidence.
  • The “Findings” in the proposed legislation on future climate phenomena are based upon Representative Concentration Pathway 8.5, an extreme scenario of future atmospheric concentrations of greenhouse gases virtually impossible.
  • Because the proponents of the National Climate Bank have based their analytic arguments in substantial part upon the findings and policy proposals presented by the Intergovernmental Panel on Climate Change in its Special Report “Global Warming of 1.5°C,” they implicitly are endorsing a gasoline tax of $28 per gallon by 2030.
  • The obvious underlying purpose of the National Climate Bank is a shift of political responsibility for the inevitable financial losses to be incurred from the Congressional proponents of the legislation to the administrators of the National Climate Bank. Such a shift is inconsistent with the basic constitutional structure of American governance, and thus with essential accountability inherent in our political institutions.
  • The actual results of a National Climate Bank would be substantial resource waste, a less-productive capital stock, lower wages, and an increase in the politicization of economic activity.

Read  the full report  Zycher Statement Senate EPW climate bank

Climate Piggy Bank

Unmasking Biden’s Climate Shakedown

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At Spectator, Real Jean Isaac explains How to End Biden’s Fake Climate Apocalypse.  Excerpts in italics with my bolds and images.

If there’s no pushback against the Left, we’ll see a dramatic drop in our standard of living.

With the wave of executive orders and legislation coming from the Biden administration, and the cultural antics of his woke supporters, Biden’s war on fossil fuels has received insufficient attention. Yet energy is the lifeblood of our economy, and making traditional energy sources vastly more expensive is the single most destructive aspect of Biden’s policies. If this country does not successfully mobilize against these policies, the vast majority will experience a dramatic drop in their standard of living.

mrz012921dbp20210129124515Supposedly the assault on fossil fuels — via regulation; cancellation of pipelines; concocting a huge, wholly imaginary “social cost of carbon”; taxes; and solar and wind mandates — is necessary to save the planet from imminent catastrophe produced by man-made global warming.

But genuine climate scientists, as we know from those who dare to speak up, are amazed and horrified. Richard Lindzen, long at the top of the field as a former professor of atmospheric sciences at MIT, laments that the situation gets sillier and sillier. He told the recent CPAC conference (his message was read by the Heartland Institute’s James Taylor):

“One problem with conveying our message is the difficulty people have in recognizing the absurdity of the alarmist climate message. They can’t believe that something so absurd could gain such universal acceptance. Consider the following situation. Your physician declares that your complete physical will consist in simply taking your temperature. This would immediately suggest something wrong with your physician. He further claims that if your temperature is 98.7F rather than 98.6F you must be put on life support. Now you know he is certifiably insane. The same situation for climate is considered “settled science.”

So how did an absurd message gain such widespread acceptance? The answer is something people find it hard to wrap their heads around: we aren’t dealing with science at all. We confront an apocalyptic movement, the kind of movement, recurring across time and space, that Richard Landes describes in Heaven on Earth: Varieties of the Millennial Experience. Its scientific veneer makes it credible to a modern audience. If today a charismatic leader cried, “Repent. Sacrifice your goods. The end of the earth is nigh,” at best he might attract a few dozen oddball followers. But when essentially the same message is clothed in the language of science, it sweeps the world.

In Roosters of the Apocalypse I point out the uncomfortable similarities between the global warming apocalypse and the apocalypse that led the Xhosa tribe (in today’s South Africa) in 1856 to destroy their economy, which was based on cattle as ours is on energy. Relying on the vision of a 15-year-old orphan girl, the Xhosa killed an estimated half million of their cattle, ceased planting crops, and destroyed their grain stores. In return the girl promised the Xhosa’s ancestors would drive out the British and bring an even greater abundance of cattle and grain. By the end of 1857 a third to a half of the population — between 30,000 and 50,000 souls — had starved to death.

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Even the age of the “prophetic” girl suggests a modern parallel. Greta Thunberg didn’t start the global warming apocalypse, but she was 15 when she began spending her school days in front of the Swedish Parliament carrying a sign reading “School Strike for Climate,” heralding the international children’s crusade against global warming she would lead a year later.

In some ways the current apocalypse is surprising. Landes reports that to be successful, an apocalypse needs to bring elites on board, and elites tend to be a hard sell, especially when prophecies demand a society self-mutilate. But in this case not only have elites been won over with breathtaking ease, but they have proved more susceptible over time than the man in the street. A recent Gallup poll found only 3 percent of the public citing climate as a key concern.

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If people understand the menace that global warming policies pose to their way of life, there should be a huge pool of followers.

Dissent is drowned out as educational, political, media, cultural, and business elites speak with one voice. Even fossil fuel companies have thrown in the towel. The American Petroleum Institute, the oil industry’s top lobbying group, is set to propose setting a price on carbon emissions. Children are being indoctrinated in global warming doctrine from kindergarten on, in humanities as well as science classes. My granddaughter, in sixth grade in a Manhattan public school, has a class in “Clifi” (Climate Fiction), where the children read stories on the dreadful aftermath of a climate apocalypse. Politicians at the state and local level pass mandates for expensive (and unreliable) renewables to replace fossil fuels at ever earlier dates. Even conservatives are caught up in the fever. At the most recent CPAC a group urged Republicans to “get in front” on the issue and outflank the Democrats.

What can be done to prevent the global warming locomotive from steamrolling over our economy?

Thus far efforts have focused on countering global warming science with better science. The Chicago-based Heartland Institute has organized 13 international conferences since 2008. The media has all but blacked out coverage, so neither the conferences nor the steady stream of climate research the Institute publishes receive any notice. The CO2 Coalition, which emphasizes that CO2, far from being a pollutant, is a nutrient vital for life, is given similar short shrift. For example, although the coalition includes distinguished scientists, Wikipedia defines it as “a climate change alarmist denial advocacy organization,” whose claims “are disputed by the vast majority of climate scientists.”

There are also excellent websites, such as Climate Depot, offering space to scientific research casting doubt on apocalyptic claims. Marc Morano, who runs the site, had the distinction in 2009 of being chosen by news outlet Grist as one of only five “criminals against humanity, against planet Earth itself” and in 2012 of being named “Climate Change Misinformer” of the Year by Media Matters.

Pitting one scientific study against another hasn’t worked. That’s because most climate scientists are on the global warming grant gravy train, the public can’t follow the abstruse language of academic studies of climate, and the apocalypse is only superficially about climate anyway. Under the circumstances, a mass movement against this folly would seem to be the only way to get through to a larger public. If people understand the menace that global warming policies pose to their way of life, there should be a huge pool of followers. Texas might be a good place to start, given its recent unexpected stay in the freezing dark, and the stark failure of its wind turbines. One advantage of such a movement is that it would cross party lines. Democratic-voting union members stand to lose their well-paid jobs in fossil fuel industries, with workers in China cornering much lower-paid jobs in solar and wind (despite pie-in-the-sky promises by President Biden and newly appointed climateer-in-chief John Kerry).

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The new movement could be titled “Lights On.” Participants should have fun. There was never a claim of “settled science” more ripe for ridicule. How about contests for college students rewarding those who can document the largest number of disproven prophecies of global warming doom (for example, the end of snow, no more Arctic glaciers, U.S. coasts under water, all with specified dates now long past)? In Breitbart, John Nolte recently claimed to have found 44 of them. There can be no shortage of candidates for an award of “False Prophet of the Year.” Or “Global Warming Hypocrite of the Year,” for which John Kerry would be an outstanding candidate with his private jet, yachts, multiple mansions, and cars. And what about an award to a prominent media figure for the most absurd claim for global warming causation? One of Lindzen’s favorites is the Syrian civil war.

And how about reviving the chronicle of Climategate, which almost wiped out faith in the apocalypse before the media buried the scandal? In 2009, a hacker downloaded candid emails among top climate scientists in England and the United States that bemoaned recalcitrant data, described the “tricks” (their term) used to coax the data, reported efforts to keep the views of dissenters out of reputable journals and UN reports, and boasted of deletion of data to make it unavailable to other researchers. “If science is on your side, why do you need to make it up?” would make a good bumper sticker or t-shirt slogan.

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There could be a bumper sticker with comedian George Carlin’s line: “The Planet has been through a lot worse than us.” There could be t-shirts that proclaim, “Wind Is for Sailboats.” There should be songs and cartoons (many of these can already be found on the website WattsUpWithThat.com).

The movement can have fun, but it must also be serious: members will only back politicians prepared to fight to maintain our access to cheap, reliable energy. To the extent solar and wind can someday compete on an even playing field, without subsidies and mandates, they are welcome to the energy mix.

For the current apocalypse to come to an end, the notion that man-made global warming poses an existential threat must come to be seen as ridiculous. Otherwise the policies of shutting down our traditional energy supplies to stave off this absurd end of days will themselves become an existential threat.

Gang Green