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?

 

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!

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Punishing Climate Policies to Fix What’s Not Broken

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Ben Pile writes at Spiked Climate policy, not climate change, poses the biggest risk to our daily lives.  Excerpts in italics with my bolds.

Firstly, Ben provides evidence for a reasonable person to conclude the weather and climate is doing nothing out of the ordinary.  Drawing on this year’s UK State of the Climate report:

But how significant are these changes really? Take, for example, the claim that the UK’s temperatures have increased. Leaving aside the possibility that land-use change thanks to the UK’s economic development might influence temperatures, the report offers this chart depicting 140 years of anomalies in UK and global annual temperatures:

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Though the chart clearly shows that UK temperatures have risen, there is substantial year-to-year variability – far greater in the UK than for the world as a whole – that might make us wonder how impactful this extra warmth really is.

The point is shown more clearly by the report’s chart which shows temperature anomalies in each season:

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Over the past 370 years, winters appear to have become substantially warmer. Really what this means is that they have become substantially less cold, rather than actually warm. Autumn and spring also seem to have become milder, whereas the summer has warmed the least.

What’s more, each season shows remarkable changes over the decades and even centuries – showing large-scale change was occurring long before manmade climate change became an issue. The temperature changes of the 1990s are not unprecedented in their degree or speed.

Pile goes on to discuss the absence of facts for other claims regarding precipitation, storms, heatwaves. etc.  Then comes the meat of his argument.

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Climate is Not the Problem:  It’s the so-called “solutions”

But the climate, again, is not the real issue here. An even more uncomfortable truth for environmentalists is that cheap, abundant and easy-to-use energy – ie, gas – has done and could continue to do far more to keep older and infirm people alive in the winter than milder weather ever could. In other words, fossil fuels save lives.

It is climate policy not climate change that wants to deny people the right to heat or cool their homes cheaply and efficiently. Just look at the exorbitant costs to households of Boris’s planned boiler ban. The weather itself does not play any significant role in daily life in historically wealthy, industrialised and liberal societies.

This fact is seen even more clearly in that other preoccupation of climate doomsayers: floods. The environmentalist argument is that warmer air carries more water, and so rainfall events have become more intense, leading to more flash flooding in particular. ‘The higher global warming, the more rainfall’, climate academic Friederike Otto told the Independent, in an article which tried to pin blame for the recent floods in Germany on climate change.

Floods certainly are disruptive. Unsurprisingly, this captures the news media’s attention. But proving a link to climate change is much harder than the media have made out. The most recent IPCC report, for instance, has ‘low confidence’ in the claim ‘that anthropogenic climate change has affected the frequency and the magnitude of floods’. Meanwhile, it has ‘high confidence’ that ‘streamflow trends since 1950 are not statistically significant in most of the world’s largest rivers’. Similarly, other research suggests that there is little evidence of flash floods getting worse in the UK.

What causes floods, then? In the recent case of the tragic floods in Germany, flood warnings were ignored by civil planners and politicians.

Floods in Britain are rarely fatal. But when horrendous flooding does occur, it should be seen as a result not of an altered climate, but of engineering, planning and policy failures. As the nearly three-centuries-long record in the Met Office’s possession clearly shows, various parts of the UK, from time to time, suffer periods of intense rainfall, causing floods. Any urban or infrastructure design that fails to take account of the likelihood of flooding makes flooding inevitable.

In other words, flooding is a manmade event – but not one caused by climate change. There is no such thing as a ‘natural disaster’ in a country as wealthy as the UK. Even if adverse weather events are made ‘more likely’ or even ‘more intense’ by CO2 emissions in the future, as the Met Office report argues, we already know what kind of policies and infrastructure we need to deal with this. There is no excuse for not building this infrastructure: warmer, wetter, colder and drier conditions all existed in the past, and so will likely appear again in the future. What’s past is prologue.

Ironically, it is environmentalism that makes the climate actually dangerous.

Green austerity will deny people the resources and technology they need and deserve to keep warm in winter and cool in summer. And it is environmentalism, with its promise to make the weather ‘safe’ and unchanging if we follow its agenda, that is selling us false hope. That is a much greater threat than climate change or extreme weather could ever be.

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See also my series World of Hurt from Climate Policies 

World of Hurt from Climate Policies-Part 4

CO2 and COPs

This is a fourth post toward infographics exposing the damaging effects of Climate Policies upon the lives of ordinary people.  (See World of Hurt Part 1Part 2, and Part 3 )  And all of the pain is for naught in fighting against global warming/climate change, as shown clearly in the image above.  This post presents graphics to illustrate the fourth of four themes:

  • Zero Carbon Means Killing Real Jobs with Promises of Green Jobs
  • Reducing Carbon Emissions Means High Cost Energy Imports and Social Degradation
  • 100% Renewable Energy Means Sourcing Rare Metals Off-Planet
  • Leave it in the Ground Means Perpetual Poverty
The War Against Carbon Emissions Diminishes Efforts to Lift People Out of Poverty

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The OurWorldinData graph shows how half a billion people have risen out of extreme poverty in recent decades.  While much needs to be done, it is clear that the world knows the poverty factors to be overcome.

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That comprehensive diagram from CGAP shows numerous elements that contribute to rising health and prosperity, but there is one resource underlying and enabling everything:  Access to affordable, reliable energy.  From Global Energy Assessment: 

“Access to cleaner and affordable energy options is essential for improving the livelihoods of the poor in developing countries. The link between energy and poverty is demonstrated by the fact that the poor in developing countries constitute the bulk of an estimated 2.7 billion people relying on traditional biomass for cooking and the overwhelming majority of the 1.4 billion without access to grid electricity. Most of the people still reliant on traditional biomass live in Africa and South Asia.

The relationship is, in many respects, a vicious cycle in which people who lack access to cleaner and affordable energy are often trapped in a re-enforcing cycle of deprivation, lower incomes and the means to improve their living conditions while at the same time using significant amounts of their very limited income on expensive and unhealthy forms of energy that provide poor and/or unsafe services.”

The moral of this is very clear. Where energy is scarce and expensive, people’s labor is cheap and they live in poverty. Where energy is reliable and cheap, people are paid well to work and they have a better life.

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How Climate Policies Keep People Poor

Note that the vision for 100% access to electric power was put forward by the African Development Bank in 2016.  (Above slides come from The Bank Group’s Strategy for The New Deal on Energy for Africa 2016 – 2025).  Instead of making finances available for such a plan, an International Cabal organized to deny any support for coal, the most available and inexpensive way to electrify Africa.
ieefa coal restrictionsThis is an organized campaign to deny coal-fired power anywhere in the world, despite coal being the starting point in the development pathway for every modern society, and currently the success model for Asia, and China in particular.  [Note in Figure 3 above that South Africa, the most advanced of African nations gets the majority of its power from coal.] The chart above comes from IEEFA 2019 report Over 100 Global Financial Institutions Are Exiting Coal, With More to Come.  Their pride in virtue-signaling is expressed in the subtitle:
Every Two Weeks a Bank, Insurer or Lender Announces New Restrictions on Coal.

How Climate Policies Waste Resources that could Improve Peoples’ Lives

The Climate Crisis Industry costs over 2 Trillion US dollars every year, and is estimated to redirect 30% of all foreign aid meant for developing countries into climate projects like carbon offsets and off-grid wind and solar. 

A much better plan is put forward by the Copenhagen Consensus Center.  A panel of social and economic development experts did cost/benefit analyses of all the Millenium Goals listed by the UN working groups, including climate mitigation and adaption goals along with all the other objectives deemed desirable. They addressed the question: 

What are the best ways of advancing global welfare, and particularly the welfare of developing  countries, illustrated by supposing that an additional $75 billion of resources were at their disposal  over a 4‐year initial period?

These challenges were examined:

  1. Armed Conflict
  2. Biodiversity
  3. Chronic Disease
  4. Climate Change
  5. Education
  6. Hunger and Malnutrition
  7. Infectious Disease
  8. Natural Disasters
  9. Population Growth
  10. Water and Sanitation

CCC budget

Imagine how much good could be done by diverting some of the trillions wasted trying to bend the curve at the top of the page?

 

World of Hurt from Climate Policies-Part 3

CO2 and COPs

This is a third post toward infographics exposing the damaging effects of Climate Policies upon the lives of ordinary people.  (See World of Hurt Part 1 and Part 2)  And all of the pain is for naught in fighting against global warming/climate change, as shown clearly in the image above.  This post presents graphics to illustrate the third of four themes:

  • Zero Carbon Means Killing Real Jobs with Promises of Green Jobs
  • Reducing Carbon Emissions Means High Cost Energy Imports and Social Degradation
  • 100% Renewable Energy Means Sourcing Rare Metals Off-Planet
  • Leave it in the Ground Means Perpetual Poverty
Part 3:  Wind and Solar Infrastructure Consumes Rare Metals Far Beyond World Supplies

WHCP3 Rare Metals Demand by techMetal demand per technology

There are various technologies available for the production of electricity through wind and solar. Each technology requires different amounts of critical metals. This figure shows the metal demand for the five most common technologies.

Conclusions
• Newer technologies are often more efficient and cheaper, however, they rely on the properties of critical metals to achieve this.
• Thin film cadmium-tellurium solar PV cells have the best performance in terms of CO2 -emissions and energy payback times. They do however require large quantities of tellurium and cadmium, and tellurium is one of the rarest metalloids.
Direct-drive wind turbines use neodymium-dysprosium based permanent magnets. They are more expensive to produce, but cheaper in their exploitation phase. Gearbox turbines require less critical metals, but are generally understood to have higher maintenance costs because they have more moving parts. Gearbox turbines also have a shorter energy payback time.

Method The average metal demand per unit of electricity is calculated based on load hours in the Netherlands.7–9 The entire lifespan of the specific technologies has been taken into account.WHCP3 Rare Metals Dutch DemandMetal demand for Dutch renewable electricity production

This chart shows the average annual metal demand (for 22 metals) required for the installation of new solar panels and wind turbines. This assumes a linear installation of capacity.

The annual metal demand is compared to the annual global production of these specific metals, resulting in an indicator for the share of Dutch demands for renewables in global production.

Conclusions
• For five of the metals, the required demand for renewable electricity production capacity is significant: neodymium, terbium, indium, dysprosium, and praseodymium.
• If the rest of the world would develop renewable electricity capacity at a comparable pace with the Netherlands, a considerable shortage will arise.
• When other applications (such as electric vehicles) are also taken into consideration, the required amount of certain metals would further increase.

Method The renewable electricity targets for 2030 serve as the starting point for the calculations. Based on these targets, the annual installed capacity is calculated. The metals required for this capacity are shown as a percentage of the annual global production.
WHCP3 Rare Metals FlowsOrigin of critical metals

This diagram shows the origin of the metals required for meeting the 2030 goals. The left side of the diagram shows the origin, based on today’s global production of metals. The right side shows the cumulative metal demand for wind and solar technologies until 2030.

Conclusions
• The Netherlands is entirely dependent on countries outside of Europe – and mainly on China – for its critical metals.
• Not only is the main share of current production located in China, the country also hosts refinery facilities for many metals.
• Australia and Turkey are also important countries for the extraction of specific metals, particularly neodymium (Australia) and boron (Turkey).

Method The renewable electricity capacity required is calculated from the goals in the Climate Agreement outlines. This capacity is then translated to a metal demand. The ratio of world production is based on the annual production statistics of 2017.
WHCP3 Rare Metals Supply DemandGlobal critical metal demand for wind and PV 

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

Conclusions
Future annual critical metal demands of the energy transition surpass the total annual critical metal production.
• An exponential growth in renewable energy production capacity is not possible with present-day technologies and annual metal production. As an illustration: in 2050, the annual need for Indium (only for solar panel application) will exceed the present-day annual global production twelvefold.
• To be able to realize a renewable energy system, there is a need to both dematerialize renewable electricity production technologies and increase global annual production.

Source: Metal Demand for Renewable Electricity Generation in the Netherlands.

[Note:  The US consumes 30 times more energy than the Netherlands.]

And there is another precious resource required for wind and solar power plants:  Land in proximity to human settlements

Wind Farms Area for LondonThe gray area would be required for a wind farm large enough to power London UK.  The yellow area would be required for solar panels.

Albany and Indian Point2

Just to replace the now closed Indian Point nuclear plant will require a wind farm the size of Albany County New York.

 

 

 

 

World of Hurt from Climate Policies-Part 2

CO2 and COPs

This is a second post toward infographics exposing the damaging effects of Climate Policies upon the lives of ordinary people.  (See World of Hurt Part 1)  And all of the pain is for naught in fighting against global warming/climate change, as shown clearly in the image above.  This post presents graphics to illustrate the second of four themes:

  • Zero Carbon Means Killing Real Jobs with Promises of Green Jobs
  • Reducing Carbon Emissions Means High Cost Energy Imports and Social Degradation
  • 100% Renewable Energy Means Sourcing Rare Metals Off-Planet
  • Leave it in the Ground Means Perpetual Poverty

Part 2:  California Exemplifies Ruination from Self-imposed Climate Policiesca-oil-supplies-source-700x507-1For the past 25 years the amount of oil supplied to California’s refineries has essentially held steady at around 660 million barrels per year, but the source of the supply has changed drastically. In 1995, nearly all of that oil came from within California’s borders and Alaska. Today, the majority of the oil comes from foreign imports as data from the state’s Energy Commission shows.WHCP2 Cal oil productionWHCP2 Cal oil leasesBy blocking domestic production through permit denials, California is playing a shell game with emissions. Overall use of petroleum products has held steady but shifted from energy produced within the state – where the industry is subject to U.S. environmental regulations and supports local workers and companies – to overseas.

California isn’t reducing its dependence on oil; it’s just adding a higher carbon footprint to get it.ca-oil-foreign-source-768x500-1Californians pay one of the highest electricity rates in the United States. In 2015, the average resident spent 2.7 percent of their salary on electricity and paid approximately $1,700 annually to keep their lights on. This percentage has been increasing since 2008 Prices have climbed 30 percent over the last decade as successive governors have mandated that an increasing share of electricity is sourced from renewables.cg5b8ded55e8c77aga-energy-transferDespite natural gas rates being at their lowest levels since 1999, several municipalities across California have proposed or implemented bans on the use of the resource in homes and businesses. 

As individuals leave the gas grid, the poor will face higher prices on the grid and higher electricity prices when they switch. They will be threatened with a higher cost of living that could force them from their homes. Lower income individuals are priced out of neighborhoods where they could build equity because of higher electric costs. Middle class and wealthy individuals pay four times more for electricity, diminishing disposable income, while still paying for a gas grid they are unable to connect to through municipal law.

The result of California’s efforts? A reduction of global emissions by less than half of one percent.5db36b3ee25b2.image_Sources:  EnergyInDepth:  California

See also:  California on the Road to Ruin

 

 

 

 

 

 

 

 

World of Hurt from Climate Policies-Part 1

CO2 and COPs

This is a beginning post toward infographics exposing the damaging effects of Climate Policies upon the lives of ordinary people.  And all of the pain is for naught in fighting against global warming/climate change, as shown clearly in the image above.  This post presents graphics to illustrate the first of four themes:

  • Zero Carbon Means Killing Real Jobs with Promises of Green Jobs
  • Reducing Carbon Emissions Means High Cost Energy Imports and Social Degradation
  • 100% Renewable Energy Means Sourcing Rare Metals Off-Planet
  • Leave it in the Ground Means Perpetual Poverty
Part 1:  Zero Carbon will Decimate US Workforce

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Tables of Oil and Natural Gas Employment and Economic Impact come from API Price Waterhouse Cooper  Impacts of the Oil and Natural Gas Industry on the US Economy in 2019    As for Coal, EIA estimates the industry lost 75% of its workforce down to 53,000 employees (2019) working in coal mines, and the number has stabilized with exports offsetting declines in domestic consumption.  The losses of jobs in oil and gas come from EID (Energy in Depth) CLIMATE ACTIVISTS PUSH STUDY SHOWING 3.8 MILLION LOST JOBS FROM RENEWABLE ENERGY TRANSITION.

“While many experts dispute the feasibility of Jacobson’s plan for a renewables-only energy grid, the severe job losses are far more difficult to dispute, given that they come directly from Jacobson’s research. Those job losses would undoubtedly be devastating for millions of American families.”

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And about Those Promised Green Jobs to replace the lost ones:  

In February 2009, the last time Democrats controlled the White House and both chambers of Congress, President Barack Obama and Vice President Joe Biden flew to Colorado to sign their $787 billion stimulus package into law.

The plan was to invest $150 billion over 10 years that would advance a “clean energy” economy built around biofuels, hybrid cars, low-emission coal plants, and renewable sources such as solar and wind. Obama and Biden promised to create five million green jobs that would specifically benefit low-income earners, claiming that the stimulus package included “help for those hit hardest by our economic crisis.”

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A decade later, we now know that the 2009 green jobs program was a complete failure. The Department of Labor (DoL) and the Bureau of Labor Statistics (BLS) issued several reports on the green jobs program. Each report was an indictment on the program, as job placement met only 10 percent of the targeted level, and many of those who were hired remained employed for less than six months.

Even the new, redefined green jobs did not reach the five million promised in February 2009. According to a study by the Brookings Institution, the Obama–Biden administration identified nearly 2.7 million green jobs, but most were bus drivers, sewage workers, and other types of work that do not match the “green jobs of the future” that the administration promised. Most of them were preexisting jobs, which were simply re-characterized by the government, apparently in an effort to boost the numbers.  Source: If at First You Don’t Succeed, Try ‘Green Jobs’ Again

See also Green Energy Failures Redux

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Don’t Assume Global Warming Blunts Economic Growth

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In recent years, a strand of economic literature has argued that warming
not only negatively affects the level of economic activity,
but also the rate of income growth. PHOTO BY BLOOMBERG

Ross McKitrick explains in his Financial Post article Why climate change won’t hurt growth.  Excerpts in italics with my bolds.

There is no robust evidence that even the worst-case warming scenarios would cause overall economic losses

It has long been observed that global poverty tends to be concentrated in hot, tropical regions. But persistent poverty in African and South American countries has political and historical roots, especially their embrace of Soviet-backed communism in the 20th century. In places where economic reforms were adopted, like South Asia, growth took off and they quickly converged with the West, despite having tropical climates. So the connection to climate may be coincidental.

But in recent years, a strand of economic literature has argued that warming not only negatively affects the level of economic activity, but also the rate of income growth. This matters because when conducting an analysis over a 100-year time span, small changes in the growth rate can compound over a century and result in large total changes.

A 2012 study led by Melissa Dell of Harvard University presented evidence that warming had insignificant effects on income growth in rich countries, but in poor countries the effect was negative and statistically significant. Another team used this result in a policy model to argue that the “social cost of carbon” was at least 10 times higher than previously thought.

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This was followed up by several studies led by economists Marshall Burke of Stanford and Solomon Hsiang of Berkeley, who reported evidence that warming had significant negative effects on wealthy and poor countries alike. Suddenly a picture emerged that warming is much more harmful than we thought, so it should be full steam ahead on aggressive climate policy. Global policymakers have embraced this belief, in part at the urging of the United Nations Intergovernmental Panel on Climate Change’s (IPCC) 2018 special report on global warming of 1.5 C, which highlighted this research.

But other research tells a different story. One of the challenges in climate economics is that climate data are collected on a grid cell basis (organized in latitude-longitude boxes), while economic data is collected at the national level. To match them up, Dell’s group averaged the climate data up to the national level. There are different ways of doing the averaging, however, and the results are sensitive to the chosen method.

Other teams have begun trying to build economic data sets at the local and regional level so the averaging step can be omitted. One group from Northern Arizona University used grid cell-level economic data from around the world and found, like Dell, that warming temperatures has no effect on growth in rich countries, but they found it has a positive effect in poor countries up to an average temperature of about 17.5 C, which is above the sample average temperature of 14.4 C.

Then a team from Germany developed a regional economic database that lets them account for what economists call “country fixed effects,” namely, unobservable historical and institutional factors specific to each country that are unrelated to, in this case, the climate variables.

When they apply this method, the climate effects on growth and output vanish for rich and poor countries alike.

More recently, a group led by Richard Newell of Resources for the Future raised the issue that the econometric modelling can be done many different ways. Given the same data set, there are lots of decisions to make, such as how many lagged effects to include, whether to use linear or nonlinear equations and whether to use time trends. Altogether, they counted 800 different ways the same data could be analyzed.

In order to determine whether the results depend on the choice of models, they obtained the data set used by the Burke team and used the same country-level averaging method employed by Dell’s team. Then they ran a meta-analysis in which they ran all the possible models and evaluated at how well each one fit the data, in order to identify the best-performing models to reach their conclusions.

Dozens of different models all fit the data about equally well, and they could not rule out that the best ones do not include any role for temperature in economic growth. There was some evidence that warming is good for growth up to 13.4 C, but the positive and negative effects were not statistically significant.

Across the entire range of temperatures in the sample there was no significant influence of climate on either output or growth.

Under the highest-warming scenario, the Burke team had projected a 49 per cent global GDP loss from climate change by 2100, but Newell found the model variant that fits their data best implied a slight global GDP gain. The best growth models as a group project an effect on GDP by 2100 ranging from -84 per cent to +359 per cent, with the central estimates very close to zero. In other words, the effects are too imprecise to say much of anything for certain.

Now we come up against the challenge that policymakers seem to find it easier to deal with gloomy certainty than optimistic uncertainty. In the blink of an eye, a handful of studies in a new research area had become the canonical truth, on which governments swung into a much more aggressive climate policy stance.

But as time has advanced, new data sets, and even reanalysis of the old data sets, has called those results into question and has shown that temperature (and precipitation) changes likely have insignificant effects on GDP and growth, and the effects are as likely to be positive as they are to be negative. This does not mean there aren’t specific regions and specific industries where there are potential losses, especially if the countries don’t adapt. But for the world as a whole, there is no robust evidence that even the worst-case warming scenarios would cause overall economic losses.

It now falls to advisory groups like the IPCC to tell this to world leaders, before they enact any more disastrous climate policies that will do all the harm (and more) that the evidence says climate change itself will not do.

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Footnote:  There are also economists pushing the notion of direct costs from global warming/climate change due to supposed increasing health and prosperity impacts from extreme weather.  This is contrary to IPCC approved studies by economist William Nordhaus.  See IPCC Freakonomics

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Supremes Asked to Rule on EPA Energy Authorities

wrecking_ball_destroyEPABackground from Reed Smith lawyers The fall of Trump’s Affordable Clean Energy Rule and the strengthened EPA authority to regulate greenhouse gases.  Excerpts in italics with my bolds

The Affordable Clean Energy Rule

The EPA promulgated the ACE Rule in 2019 under the CAA, replacing the Obama administration’s 2015 Clean Power Plan (CPP). Both rules sought to reduce GHG emissions from the power sector; but where the CPP implemented broader industry-wide mechanisms, the ACE Rule limited reduction efforts to the actual source power plants.

The 2015 CPP offered “beyond the fenceline” tools for states to reduce emissions by replacing fossil fuels with renewable energy sources and participating in emissions credit-trading programs; however, in February 2016 the U.S. Supreme Court stayed the implementation of the CPP pending litigation in the D.C. Circuit. During the stay and subsequent freeze of litigation, the Trump administration rescinded the CPP and promulgated the ACE Rule.

In promulgating the ACE Rule, the Trump EPA took an alternative view of the CAA than the Obama EPA and reasoned that the CAA expressly limited the EPA’s power to only “at the source” emissions reduction options, such as heat rate improvement technologies. As a result, the Trump administration removed all of the CPP’s “beyond the fenceline” options and limited emissions restrictions to those applied directly to power plants.

DC Circuit Court of Appeal Ruling January 19, 2021

Judges Millett and Pillard of the D.C. Circuit Court disagreed with the (Trump) EPA’s interpretation. In the majority opinion, the Court concluded that there is “no bases—grammatical, contextual, or otherwise—for the EPA’s assertion” that its authority was limited to “at the source” controls. In the end, the Court vacated the ACE Rule and remanded it back to the EPA just in time for the Biden administration to take over.  The Court’s decision appears to clear the way for the Biden administration to regulate GHG emissions from the power sector.

In his first week in office, President Biden has taken a number of actions to undo many of the Trump administration’s environmental policy decisions, including rejoining the Paris Climate Accord. The new Biden EPA has also requested that the Department of Justice have all Trump-era litigation seeking judicial review of any EPA regulation promulgated between January 20, 2017 and January 20, 2021. Based on the Court’s show of support and the Biden Administration’s actions within the first week, we may see some of the Obama-era or similar regulation brought back to life in the coming months.

Petitions to Supreme Court April 29 and 30, 2021

The May Update at Columbia Climate Law Blog reports the latest development bringing the issue to Supreme Court attention:  States and Coal Company Sought Review of D.C. Circuit Decision Vacating Affordable Clean Energy Rule  Excerpts in italics with my bolds.

Two petitions for writ of certiorari were filed in the U.S. Supreme Court seeking review of the D.C. Circuit’s January opinion vacating EPA’s repeal and replacement of the Obama administration’s Clean Power Plan regulations for controlling carbon emissions from existing power plants. The first petition was filed by West Virginia and 18 other states that had intervened to defend the repeal and replacement rule, known as the Affordable Clean Energy rule. The states’ petition presented the question of whether Section 111(d) of the Clean Air Act constitutionally authorizes EPA “to issue significant rules—including those capable of reshaping the nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy—without any limits on what the agency can require so long as it considers cost, nonair impacts, and energy requirements.” They argued that Congress had not clearly authorized EPA to exercise such “expansive” powers and that the D.C. Circuit majority opinion’s interpretation was foreclosed by the statute and violated separation of powers. The states argued that the Supreme Court’s stay of the Clean Power Plan while it was under review by the D.C. Circuit in 2016 signaled that the legal framework for the Clean Power Plan “hinges on important issues of federal that EPA then—and the court below now—got so wrong this Court was likely to grant review.” The states contended that further delay in the Court’s resolution of these “weighty issues” would have “serious and far-reaching costs.”

The second petition was filed by a coal mining company. The coal company’s petition presented the question of whether Section 111(d) “grants the EPA authority not only to impose standards based on technology and methods that can be applied at and achieved by that existing source, but also allows the agency to develop industry-wide systems like cap-and-trade regimes.” The company argued that the D.C. Circuit erred by “untethering” Section 111(d) standards from the existing source being regulated. Like the states, the company contended that Supreme Court had already recognized the critical importance of this question when it stayed the Clean Power Plan.

The company argued that debates regarding climate change and policies to address climate change “will not be resolved anytime soon” but that “what must be resolved as soon as possible is who has the authority to decide those issues on an industry-wide scale—Congress or the EPA.”

EPA’s response to the petitions is due June 3, 2021. West Virginia v. EPA, No. 20-1530 (U.S. Apr. 29, 2021); North American Coal Corp. v. EPA, No. 20-1531 (U.S. Apr. 30, 2021).

Comment:  The question of decision authority seems especially urgent since no one knows who is the actual decider for the Executive Branch.

 

Biden’s Bogus Climate Report

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The latest criticism comes from James Broughel writing at Real Clear Politics Biden’s Climate Report Is Based on Personal Values, Not Science. Excerpts in italics with my bolds.

Late last month, the Biden administration quietly released an update of the government’s “social cost of carbon” (SCC) estimate, a metric used to value the benefits of global warming policies, especially regulations. The update hasn’t received much attention yet, but it will be important in justifying the administration’s climate agenda in the months ahead.

There are numerous shortcomings with the Biden team’s calculations. Some may be due to the report being rushed, but others reflect misunderstanding of economic principles, and, more simply, poor judgment.

Biden’s People Get the Units Wrong

First, numerous tables in the document released by the administration are mislabeled. The interagency working group that produced the update claims its primary estimate of the SCC is 51 dollars per ton. But the models the working group uses calculate the figure in terms of social welfare — not dollars. Thus, 51 is a measure of the amount that the current generation’s “welfare” is reduced by carbon pollution. Even assuming that number is credible (and measuring welfare is no easy task), the administration doesn’t get the units right.,

This is a big deal because the numbers in the new report shouldn’t be used in cost-benefit analysis unless further adjustments are made. Cost-benefit analysis is supposed to measure impacts in dollars, not the Biden administration’s social welfare units. So any analysis that tries to compare these numbers to financial costs will be nonsensical. These problems with units extend to estimates of the social cost of methane and of nitrous oxide, which also appear in last month’s report.

Misleading Social Discount Rate

There are other misleading parts of the document. For example, there is extensive discussion about the correct “social discount rate” to use in cost-benefit analysis. The social discount rate describes how much less a future benefit from a policy should count relative to a present benefit. For example, many economists generally assume a life saved in 100 years is far less valuable than a life saved today — which is, of course, controversial and has implications beyond economics.

The report makes a number of dubious claims about the social discount rate, but here are just a few worth highlighting.

First, Biden’s team argues that risk-free market interest rates have declined in recent years, and that this provides a basis for using a lower social discount rate. However, claims like this reflect a misunderstanding of the discounting concept.

The decision of how much to weight future health, wellbeing, and lives saved is an ethical choice. One cannot find the correct social discount rate by opening up the Wall Street Journal and turning to the page on interest rates. Ultimately, we need some philosophical compass to guide our choice. Yes, one could choose to base an ethical decision on market criteria, but one could just as easily choose an alternative paradigm, like introspection. Nor should this issue be conflated with the rate of return on capital, which is a separate issue that is sometimes confused with social discounting.

In fact, it would be just as legitimate to pick any plausible number out of a hat (you might laugh, but some approaches do draw a discount rate from a distribution of rates based on surveys of economists). Whatever method is chosen, the choice of the social discount rate is inevitably a value judgment.

Similarly, the report tries to justify lower discount rates in the future by pointing to “Ramsey discounting,” a method named after the early 20th century mathematician Frank Ramsey. Under this approach, analysts assume a benevolent dictator — a proxy for our whole generation’s social welfare — centrally plans the economy. Economists have concocted various mathematical schemes to estimate how the dictator discounts the future.

Again, because the choice is an ethical one, there is no particular reason to believe this Ramsey discounting approach is wrong. But there’s no reason to believe it’s right, either.

Personal Preferences, Not Science

The problem with the government’s report is that it presents these various approaches as somehow scientific. In fact, they conceal what is fundamentally a question about values and make it appear as though the answer can come from technical measurement.

Perhaps most concerning is that the administration is already violating its own principles of social justice. In a memo signed by President Biden on his first day in office, he identified promoting the interests of future generations as a top priority, which is a noble goal, to be sure.

But the SCC is calculated using a version of the Ramsey model. In it, the present generation functions as the dictator whose welfare is measured, while the welfare of future generations counts for basically nothing. Present citizens may display some empathy for future generations — for example, the administration’s climate policy is probably motivated by their concern for the future — but the analysis doesn’t consider the welfare of future generations in a direct way.

The new social cost of carbon report comes across like an attempt by experts to ram through a political agenda, while trying to pass off their efforts as scientific. But the public should not be fooled. What’s behind the updated numbers is the administration’s personal values, for better or worse, not science.

Background from Previous Post Biden’s Arbitrary Social Cost of Carbon: What You Need to Know

The news on Friday was Biden signing another order, this one restoring the so-called “Social Cost of Carbon” to Obama’s $51 a ton, along with threats to raise it up to $125 a ton.  The whole notion is an exercise in imagination for the sake of adding regulatory costs to everything involving energy,  that is to everything.  A background post below describes the history of how this ruse started and the manipulations and arbitrary assumptions to gin up a number high enough to hobble the economy.

Background from 2018 post: US House Votes Down Social Cost of Carbon

The House GOP on Friday took a step forward in reining in the Obama administration’s method of assessing the cost of carbon dioxide pollution when developing regulations.

The House voted 212-201, along party lines, to include a rider blocking the use of the climate change cost metric to an energy and water spending bill.

The amendment offered by Texas Republican Rep. Louie Gohmert bars any and all funds from being used under the bill to “prepare, propose, or promulgate any regulation that relies on the Social Carbon analysis” devised under the Obama administration on how to value the cost of carbon. (Source Washington Examiner, here)

To clarify: the amendment in question defunds any regulation or guidance from the federal government concerning the social costs of carbon.

Background: 
The Obama administration created and increased its estimates of the “Social Cost of Carbon,” invented by Michael Greenstone, who commented on the EPA Proposed Repeal of CO2 emissions regulations.  A Washington Post article, October 11, 2017, included this:

“My read is that the political decision to repeal the Clean Power Plan was made and then they did whatever was necessary to make the numbers work,” added Michael Greenstone, a professor of economics at the University of Chicago who worked on climate policy during the Obama years.

Activists are frightened about the Clean Power Plan under serious attack along three lines:
1. No federal law governs CO2 emissions.
2. EPA regulates sites, not the Energy Sector.
3. CPP costs are huge, while benefits are marginal.

Complete discussion at CPP has Three Fatal Flaws.

Read below how Greenstone and a colleague did exactly what he now complains about.

Social Cost of Carbon: Origins and Prospects

The Obama administration has been fighting climate change with a rogue wave of regulations whose legality comes from a very small base: The Social Cost of Carbon.

The purpose of the “social cost of carbon” (SCC) estimates presented here is to allow agencies to incorporate the social benefits of reducing carbon dioxide (CO2) emissions into cost-benefit analyses of regulatory actions that impact cumulative global emissions. The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change. From the Technical Support Document: -Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis -Under Executive Order 12866

A recent Bloomberg article informs on how the SCC notion was invented, its importance and how it might change under the Trump administration.
How Climate Rules Might Fade Away; Obama used an arcane number to craft his regulations. Trump could use it to undo them. (here). Excerpts below with my bolds.

In February 2009, a month after Barack Obama took office, two academics sat across from each other in the White House mess hall. Over a club sandwich, Michael Greenstone, a White House economist, and Cass Sunstein, Obama’s top regulatory officer, decided that the executive branch needed to figure out how to estimate the economic damage from climate change. With the recession in full swing, they were rightly skeptical about the chances that Congress would pass a nationwide cap-and-trade bill. Greenstone and Sunstein knew they needed a Plan B: a way to regulate carbon emissions without going through Congress.

Over the next year, a team of economists, scientists, and lawyers from across the federal government convened to come up with a dollar amount for the economic cost of carbon emissions. Whatever value they hit upon would be used to determine the scope of regulations aimed at reducing the damage from climate change. The bigger the estimate, the more costly the rules meant to address it could be. After a year of modeling different scenarios, the team came up with a central estimate of $21 per metric ton, which is to say that by their calculations, every ton of carbon emitted into the atmosphere imposed $21 of economic cost. It has since been raised to around $40 a ton.

Trump can’t undo the SCC by fiat. There is established case law requiring the government to account for the impact of carbon, and if he just repealed it, environmentalists would almost certainly sue.

There are other ways for Trump to undercut the SCC. By tweaking some of the assumptions and calculations that are baked into its model, the Trump administration could pretty much render it irrelevant, or even skew it to the point that carbon emissions come out as a benefit instead of a cost.

The SCC models rely on a “discount rate” to state the harm from global warming in today’s dollars. The higher the discount rate, the lower the estimate of harm. That’s because the costs incurred by burning carbon lie mostly in the distant future, while the benefits (heat, electricity, etc.) are enjoyed today. A high discount rate shrinks the estimates of future costs but doesn’t affect present-day benefits. The team put together by Greenstone and Sunstein used a discount rate of 3 percent to come up with its central estimate of $21 a ton for damage inflicted by carbon. But changing that discount just slightly produces big swings in the overall cost of carbon, turning a number that’s pushing broad changes in everything from appliances to coal leasing decisions into one that would have little or no impact on policy.

According to a 2013 government update on the SCC, by applying a discount rate of 5 percent, the cost of carbon in 2020 comes out to $12 a ton; using a 2.5 percent rate, it’s $65. A 7 percent discount rate, which has been used by the EPA for other regulatory analysis, could actually lead to a negative carbon cost, which would seem to imply that carbon emissions are beneficial. “Once you start to dig into how the numbers are constructed, I cannot fathom how anyone could think it has any basis in reality,” says Daniel Simmons, vice president for policy at the American Energy Alliance and a member of the Trump transition team focusing on the Energy Department.

David Kreutzer, a senior research fellow in energy economics and climate change at Heritage and a member of Trump’s EPA transition team, laid out one of the primary arguments against the SCC. “Believe it or not, these models look out to the year 2300. That’s like effectively asking, ‘If you turn your light switch on today, how much damage will that do in 2300?’ That’s way beyond when any macroeconomic model can be trusted.”

Another issue for those who question the Obama administration’s SCC: It estimates the global costs and benefits of carbon emissions, rather than just focusing on the impact to the U.S. Critics argue that this pushes the cost of carbon much higher and that the calculation should instead be limited to the U.S.; that would lower the cost by more than 70 percent, says the CEI’s Mario Lewis.

Still, by narrowing the calculation to the U.S., Trump could certainly produce a lower cost of carbon. Asked in an e-mail whether the new administration would raise the discount rate or narrow the scope of the SCC to the U.S., one person shaping Trump energy and environmental policy replied, “What prevents us from doing both?”

See Also:

Six Reasons to Rescind Social Cost of Carbon

SBC: Social Benefits of Carbon

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