Published: Fri, 28 Oct 2016 00:00:00 -0400
Last Build Date: Fri, 28 Oct 2016 15:24:40 -0400
Thu, 29 Sep 2016 09:30:00 -0400
(image) Apparently Google searches for the terms like "oil glut" and "too much oil" are now much more popular than those for "peak oil" from a decade back. Back in in 2009, I wrote:
In May 2006, I reported in Reason that global oil reserves were ample to supply humanity's needs for liquid fuels until at least 2030, despite headline-grabbing predictions that our supply had already peaked. Afterwards, the world experienced an unprecedented run-up in oil prices topping out at $147 per barrel in July 2008, which led some negative prognosticators to get a little cocky. One of the leading doomsters, Houston investment banker Matthew Simmons, told CNBC in July 2008, "The idea that it's a bubble is all poppycock." He confidently added that the price of oil "is not going to collapse." Simmons advised Americans to move into villages and to buy locally produced foods and goods.
Prices did surge again, but human ingenuity in form of fracking and other innovations proved again that extent of resources is determined by technology and markets not just the accumulation of stuff in the ground. Global production soared and prices fell. The peak oil chorus of doom has largely gone silent. Over at RealClear Politics, there is a terrific article detailing the sorry history of periodic peak oil hysteria. From the article:
This perception that we would run out of oil, and sooner rather than later, became more than a theory, one that went by the name "peak oil." It became a kind of catechism. It was included in the prayer books of the environmental movement and incorporated into the legislative history and language of U.S. federal energy policy. It became an underlying basis for everything from Jimmy Carter's admonition to turn down the nation's thermostats, the enactment of 55-mile-per-hour speed limits, and federal mandates on gasoline standards for cars and trucks.
Today, the question is how policymakers should one react when the conventional wisdom is proven so spectacularly wrong, as is the case here. ...
One factor the peak-oil adherents never seemed to consider was that the supply of oil, like many commodities, was directly influenced by price—and that drillers and investors previously not searching for it would return to exploration if market prices became high enough.
"The biggest supporters of Peak Oil almost all are petroleum geologists; almost none of them are economists," said Ronald Bailey, an author and science correspondent with Reason magazine who has written extensively on climate and energy. "They really don't understand markets."
*Oh, wait. The article quotes me. Despite that, reading the whole column is well worth your time.
Mon, 18 Jul 2016 10:09:00 -0400
(image) The Energy Information Administration has just released its new data on energy intensity trends. Basically, the agency finds that humanity overall is using ever less energy to create more value. How much less? About a third less energy is being used to produce a dollar's worth of goods and services than was being consumed in 1990. In the meantime, world GDP nearly doubled and world population increased by 40 percent. This does not, however, mean that humanity is using less oil, coal, natural gas, nuclear, and renewable energy. In fact, the amount of energy being consumed globally increased by 60 percent between 1990 and 2015. On the other hand, U.S. primary energy consumption has been essentially flat since 2000 while the economy grew by more than 30 percent and U.S. population expanded by around 14 percent.
Is it possible that energy efficiency gains could become so great that that the absolute amount of energy consumed by humanity will begin to fall sometime in future? All things being equal - especially the price - this is not likely because energy freed up through efficiency would be used to fuel other new activities. The plain fact is that the only way to reduce energy consumption (like the consumption of any other normal good) is to increase its price relative to other goods. Ultimately, the EIA projects that world energy demand will increase by nearly 50 percent by 2040.
Tue, 05 Jul 2016 12:31:00 -0400The Rystad Energy consultancy has just released its new calculations of global oil reserves and estimates that the U.S. may harbor as much 264 billion barrels of oil compared to Saudi Arabia's 212 billion barrels. Overall, world oil reserves exceed 2 trillion barrels. At current production rates, this is enough oil to supply the world for 70 years. The Rystad analysts compare their estimates with those of the closely watched annual BP Statistical Review that conservatively calculates that the U.S. has 55 billion barrels of proved reserves and that world reserves stand at just under 1.7 trillion barrels. ExxonMobil's 2016 annual Outlook for Energy report observes: Technology is not just expanding our daily oil production; it also continues to increase the amount of oil and liquid fuels we can count on for the future. In 1981, the U.S. Geological Survey estimated that remaining global recoverable crude and condensate resources were 1 trillion barrels; today, the IEA estimates that it is 4.5 trillion barrels – enough to meet global oil demand beyond the 21st century. By 2040, the amount of resources yet to be produced will still be far higher than total production prior to 2040, even with a 20 percent rise in global oil demand. However, the folks at Rystad do note that ... ...cumulatively produced oil up to 2015 amounts to 1300 billion barrels. Unconventional oil recovery accounts for 30% of the global recoverable oil reserves while offshore accounts for 33% of the total. The seven major oil companies hold less than 10% of the total. This data confirms that there is a relatively limited amount of recoverable oil left on the planet. With the global car-park possibly doubling from 1 billion to 2 billion cars over the next 30 years, it becomes very clear that oil alone cannot satisfy the growing need for individual transport. Well, maybe. As I explain in my book The End of Doom: The the advent of self-driving vehicles could provide a technological end run around such projections of a growing vehicle fleet. Instead of sitting idle for most of every day, as the vast majority of automobiles do now, cars could be rented on demand. Researchers at the University of Texas, devising a realistic simulation of vehicle use in cities that took into account issues like congestion and rush-hour usage, found that each shared autonomous vehicle could replace eleven conventional vehicles. Notionally then, it would take only about 800 million vehicles to supply all the transportation services for 9 billion people. That figure is 200 million vehicles fewer than the current world fleet of 1 billion automobiles. ... In addition, a shift to fleets of autonomous vehicles makes the clean electrification of transportation much more feasible, since such automobiles could drive themselves off for recharging and cleaning during periods of low demand. Back in 2000, former Saudi oil minister Sheikh Yamani famously declared, "The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil." Given technological trends that prediction still sounds right.[...]
Tue, 10 May 2016 11:31:00 -0400
(image) Carbon dioxide released from burning fossil fuels is the largest contributor to U.S. greenhouse gas emissions. The Energy Information Administration has just released its analysis of carbon dioxide emissions for 2015 and reports that after a slight uptick in 2013 and 2014 energy-related emissions have again fallen. The agency notes, "U.S. energy-related carbon dioxide emissions were 12% below the 2005 levels, mostly because of changes in the electric power sector." The agency further notes that most of the reductions have occurred as a result of switching from coal to natural gas to generate electricity. Overall, the EIA reports that "the fuel-use changes in the power sector have accounted for 68% of the total energy-related CO2 reductions from 2005 to 2015." The bottom line is that this reduction in carbon dioxide emissions results largely from cheap natural gas from shale produced by horizontal drilling combined with fracking.
More good news: Companies are wringing more and more value out of each unit of energy consumed and each ton carbon dioxide emitted. The EIA reports that "on a per-dollar of gross domestic product (GDP) basis, in 2015, the United States used 15% less energy per unit of GDP and produced 23% fewer energy-related CO2 emissions per unit of GDP, compared with the energy and emissions per dollar of GDP in 2005." (image)
Warmer winter weather also contributed to lower emissions as Americans burned less fuel to keep themselves comfortable. Interestingly, I reported earlier that a new study has concluded that climate change so far appears to be making the weather more pleasant for most Americans.
While U.S. carbon dioxide emissions from declined by 12 percent, the Environmental Protection Agency reports that as of 2014 overall greenhouse gas emissions, including methane, nitrous oxide, fluorinated gases, are only about 9 percent lower than they were in 2005. The Obama Administration has promised the United Nations that the U.S. will cut by 2020 its greenhouse gas emissions by 17 percent below their 2005 levels. And by 2025, U.S. emissions are supposed to fall by 26 to 28 percent below their 2005 levels.
Tue, 10 May 2016 07:00:00 -0400British science fiction writer Arthur C. Clarke formulated three well-known laws, the third of which, "Any sufficiently advanced technology is indistinguishable from magic," is pertinent to my column today. From air-conditioned rooms in summer and heated apartments in winter, to hot cups of coffee at breakfast and cold glasses of water at lunch, the life of a typical Westerner is powered by energy that is both cheap and ubiquitous. Few of us stop and think about its almost miraculous abundance or can conceive of a world without it. Yet, only two centuries ago, most of us relied, primarily, on two types of energy—human and animal muscle—to meet our everyday needs. If you got tired or sick, or if your mule or horse had died, you were out of luck. The Industrial Revolution changed all that, as Alex Epstein documents in his superb book, The Moral Case for Fossil Fuels. Today, energy is so abundant that many Western governments are trying to limit its use through punitive tariffs. "Fuel poverty," or the unenviable choice between a freezing cold apartment and a massive heating bill, is already killing thousands of poor people and pensioners in Europe, and compounding the continent's manufacturing woes, as high energy prices force factories to close and move overseas. Unfortunately, our obsession with global warming and supposedly looming planetary destruction, and our misguided attempts to curtail CO2 emissions through limits on energy use, are slowly filtering down to places where access to cheap energy is still a distant dream. I was reminded of the pernicious effects of Western eschatology when speaking to a young World Bank official who works on promoting "renewable" energy in those parts of Africa which have not yet experienced the magic of abundant energy derived from fossil fuels. Angola, for example, is oil rich, but energy poor. What the Angolan people, not to mention the Angolan economy, need is a reliable and cheap source of energy. Why should they pay extra for unreliable sources of energy - like solar and wind - when they have oil to burn? Consider, also, South Africa. The country is, by African standards, rich in income and, by global standards, super rich in coal reserves. Yet South Africa will build eight Russian nuclear power stations. Why? Because the South African government wants to "transform" the country's "energy mix" from one where 100 percent of energy is derived from coal to one where 11 percent is generated by solar and wind, and another 13 percent is generated by nuclear power. The estimated, which is to say minimum, cost comes to a cool one trillion South African Rands. As the old saying goes: rich countries can get away with idiotic policies—at least for a time. Explore more data like this at HumanProgress.org.[...]
Fri, 22 Apr 2016 09:30:00 -0400
(image) The Earth Day Texas 2016 opens at the Dallas Fair Park on April 22nd and runs through the weekend. I will be on a moderated open-to-the public panel with U.S. EPA General Counsel Avi Garbow discussing public policy related to climate change. Garbow will be focusing on the Obama administration's regulatory efforts to cut greenhouse gas emissions. According to the organizers I am supposed to address wider policy and energy technology issues related to man-made global warming. From the event website:
Please join the General Counsel of the U.S. Environmental Protection Agency, Avi S. Garbow, for a discussion of what EPA hopes to accomplish in the last 8 months of the Obama administration as EPA implements The President’s Climate Action Plan, publishes and finalizes regulations, defends its major initiatives in court, continues its efforts on the international front, and prepares for the anticipated impacts of climate change.
What are the legal challenges ahead? What are the next steps in the legal arena if the Clean Power Plan is not upheld? What should we expect from the anticipated heavy duty vehicle emission standards to be published in the next few months, and what impact will these standards have on the environment? What can businesses and citizens do to participate as these critical issues are addressed?
Joining Mr. Garbow will be Ronald Bailey, a leading author on the subject of climate change, whose recent work includes the widely praised 2015, “The End of Doom, Environmental Renewal in the Twenty-first Century.” Mr. Bailey will offer his observations on the most recent science describing climate change, available technologies to reduce carbon, the timing and costs of unleashing innovation, and the role that the federal government might play in supporting research and development.
Mr. Bailey will also discuss the polarized and contentious history of the climate change debate, explore the role of cultural values, and suggest a productive approach for businesses and citizens to take as they continue to participate in these important policy decisions. In the town hall format, the speakers will take questions from the audience and discuss paths forward.
The panel is on Earth Day, Friday April 22 in the Hall of State (next to the Cotton Bowl stadium) in the 2nd floor library at the Fair Park (see map). The event begins at 1:30 pm and runs until 3 pm. RSVP not required but appreciated, firstname.lastname@example.org.
Fri, 18 Mar 2016 13:30:00 -0400"I'll tell you...one thing that no Cabinet has ever had is a Secretary of the Future, and there are no plans at all for my grandchildren and my great grandchildren," the novelist Kurt Vonnegut groused in 2005. Vonnegut's comment came up on the public radio show Marketplace this month, when the program asked, "What if we had a Secretary of the Future?" My quick answer: It's a really stupid idea. Human beings are terrible at foresight, and it would be especially terrible to try marry our purblind premonitions to government power. Vonnegut was far from alone in pining for some sort of far-seeing federal planner. For the past half century, the chief motive for establishing planning bureaucracies has been an allegedly impending ecological and economic castastrophe. For example, in the 1968 book The Population Bomb, the Stanford biologist Paul Ehrlich proposed a new Bureau of Population and Environment. The tasks of this "powerful governmental agency," he wrote, would include determining "the optimum population size of the United States and devis[ing] measures to establish it." One such measure would be research on sex determination, so as to guarantee that first-born children were always male, thus satisfying the cultural demand for male heirs. Needless to say, male heirs by themselves don't produce male grand-heirs. Ehrlich doubled down in Ark II: Social Response to Environmental Imperatives, a 1974 book that called for a Federal Planning Branch. Ehrlich and his co-author wanted to headquarter the new agency "not in the nations capital but in some relatively pleasant location that would induce talented young people to choose careers in public service." The planning board would, as Kirkus Reviews noted, be "composed of enlightened fellows" like Ehrlich. Its overall goal: to "curb individual appetites" and persuade the population to adopt "the lost tribalism of preindustrial society." Two years later, in The Genesis Strategy: Climate and Global Survival, climatologist Stephen Schneider endorsed the creation of a "Truth and Consequences Branch," a fourth branch of government whose members would be appointed for 20 year terms. The Truth and Consequences Branch would work with the Institute of Imminent Disasters, founded to "assess the probable costs of avoiding any and all perceived disasters impending." The fourth branch would also engage in propaganda, pushing the public to "question present value systems and adopt a new political consciousness. Such a consciousness would move us away from narrow and immediate economic-interest policies and redirect our efforts and resources toward the creation of a stable equilibrium world order." The fraught 1970s were capped off with two ominous federal exercises in crystal-ball gazing: The Global 2000 Report to the President commissioned by President Jimmy Carter, and the National Academy of Sciences' Energy In Transition: 1985-2010. In 1977, Carter directed the Council on Environmental Quality, the State Department, and 11 other federal agencies to analyze "probable changes in the world's population, natural resources, and environment through the end of the century." He added, "This study will serve as the foundation of our longer-term planning." The head of the study was one Gerald O. Barney, who insisted that the study could only establish a "useful and meaningful" planning foundation "if, to the fullest extent possible, the Study was performed by U.S. Government personnel using U.S. Government data, and U.S. Government Models." So what did the Global 2000 Report prognosticate? Let me quote Newsweek's stark summary: "The time: the year 2000. The place: Earth, a desolate planet slowly dying of its own accumulating follies. Half the forests are gone; sand dunes spread where fertile farm lands once lay. Nearly 2 million species of plants, bird, insects and animals have vanished. Yet man is propagating so fast that his cities hav[...]
Tue, 23 Feb 2016 12:40:00 -0500Microsoft founder and big time philanthrophist Bill Gates predicts in his annual foundation letter: "Within the next 15 years—and especially if young people get involved—I expect the world will discover a clean energy breakthrough that will save our planet and power our world." Gates accepts the mainstream scientific projections that rising global temperatures resulting from unabated emissions of greenhouse gases would likely cause significant problems for humanity later in this century. In order to avoid these problems, he argues humanity needs to shift away from fossil fuels to carbon-neutral forms of energy. Current versions of carbon-neutral energy, chiefly solar and wind power, are not adequate because the sun doesn't always shine and wind doesn't always blow. While the capital costs for both are falling steeply, they are still far too expensive for the 1.3 billion poor people around the world who still lack access to modern energy supplies. A breakthrough in battery storage would help a lot, but progress remains slow. The "miracle" Gates thinks will happen is that a new suite of zero-carbon technologies will drive the cost of energy production below that of fossil fuels. As he explains over at the Tech Insider, "When I say "an energy miracle," I mean that there will be some form of energy whose 24 hour cost really is competitive with hydrocarbons given, say, 20 years of learning curve. You invent it, then you look at how much its costs go down over the next 20 years, that it really beats hydrocarbons." Gates is the organizer of the Breakthrough Energy Coalition which is a "public-private partnership between governments, research institutions, and investors. Scientists, engineers, and entrepreneurs can invent and scale the innovative technologies that will limit the impact of climate change while providing affordable and reliable energy to everyone." Gates is a believer in the role of government in subsidizing energy innovation and argues that such R&D spending needs to be tripled in the U.S. from $5 billion to $15 billion per year. As examples of the type of research that might produce energy miracles, Gates cites work in which carbon dioxide is transformed into liquid fuels. The great thing about such liquid fuels, if they can be manufactured at scale, is that they are more or less compatible with our existing energy infrastructure, e.g., pipelines, internal combustion engines, etc. So what energy bets is Gates making? One is Terrapower which aims to produce electricity by burning nuclear waste in traveling wave reactors. However, as Gates told Andrew Revkin over at Dot Earth, "The best case is that we have our pilot plant built by 2023, and that by 2030, this fourth-generation inherently safe design with all sorts of nice characteristics, including cost, becomes the standard for all nuclear builds from that point forward. That’s the best case for this amazing, brilliant Terrapower design." Last September, Terrapower signed a memorandum of understanding with China National Nuclear Corporation to build the prototype of its reactor. Of course, as I reported recently, there are is a lot of effort and excitement in the nuclear power arena nowadays and it's possible - with the right regulatory system - that nuclear power will cost less than burning fossil fuels. In my newish book, The End of Doom: Environmental Renewal in the Twenty-first Century, I outlined what I called the emerging energy climate consensus. I noted: The fourth and most provocative plank of the new energy technology consensus is that government research and development spending on zero-carbon forms of energy supply must be dramatically ramped up. ... The better course would be to establish a level playing field by eliminating all energy subsidies and incentives and letting the cheapest technologies developed by innovators win in the marketplace. Pr[...]
Tue, 08 Dec 2015 09:38:00 -0500Paris, France – I’ve reported from so many U.N. climate change conferences that I’ve lost count (11 or 12, I think), but I have never before experienced what is happening in the slapped-together particle board hallways of the Le Bourget exposition site: Optimism. Even a bit of giddiness on the part of the diplomats, and even among the always dour environmentalist groups. At earlier meetings the set ritual has been for activists during the second week to issue a constant stream of urgent denunciations. Sure, one still hears here that there is only 24 hours to get this or that deal done, but the upbeat tone is nevertheless widespread. For example, during a press conference John Coequyt, the Sierra Club's Director of Federal and International Climate Campaigns flatly said, “We are very optimistic; we continue to believe that a good deal is possible.” Luxembourg's Minister for the Environment, Carole Dieschbourg, speaking as the European Union’s representative stated, “The new agreement is within reach, a binding global agreement applicable to all parties.” There is another reason for a feeling of serenity at the conference: the absence of mobs of protestors. The commotion produced by of masses of demonstrators inside and outside the climate conferences contributed significantly to the fraught atmosphere that pervaded previous meetings. The French government has used the terrorist atrocities in November as a justification to ban all public protests and marches. This seems to have taken the heart out of lot of would-be climate agitators. Yes, the occasional campaigner dressed in a polar bear costume does wander by, but participants are not being hectored by throngs of doomsters constantly crying climate calamity from their various soapboxes. The result is that the conference venue is imbued with an unaccustomed sense of orderly calm. While many of the 40,000 conference participants may believe that the world is facing catastrophic climate change, they now seem confident that the negotiators will be able to conclude the first ever universal climate accord by the end of this week. As U.S. Special Representative for Climate Change Todd Stern noted during a press conference, the Paris Accord would then guide global energy decisions for essentially the rest of this century. “Paris can be a decisive turning point in history,” declared U.N. Secretary-General Ban Ki-Moon. Noting the presence of hundreds of representatives from business and industry at the meeting, Ban said, “The business community is asking for a clear signal from governments that the low emissions economy is inevitable.” In fact, a lot of participants at the meeting are proclaiming that global warming is really a huge business opportunity. Among others so saying was Union of Concerned Scientists (UCS) Director of Science and Policy, ecologist Peter Frumhoff. “Commitment to a clean energy future is a moral imperative grounded in science and one of the greatest business opportunities of all time,” asserted Frumhoff at a UCS press conference. In the same session, biologist Chris Field who heads up the Carnegie Institution’s Department of Global Ecology, mirrored Frumhoff’s assertion calling the imminently mandated transition away from fossil fuels “the biggest business opportunity of the second half of the 21st century.” For my part, I will just say that people who take investment advice from activist scientists get what they deserve. But what about investment advice from investment banks? On the eve of the Paris conference, Goldman Sachs released its report, The Low Carbon Economy, as an equity investor’s guide to a low carbon world through 2025. The company sees tightening regulations that force the shift away from fossil fuels as driving a market for low carbon power supplies and energy efficiency. The firm identi[...]
Tue, 01 Dec 2015 11:05:00 -0500
(image) "Don't Nuke the Climate" is one of the more idiotic slogans being bandied about by activists at the Paris climate conference. Even James Hansen, the godfather of climate change concern, has argued in an open letter in 2013 which stated:
While it may be theoretically possible to stabilize the climate without nuclear power, in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear power
We understand that today's nuclear plants are far from perfect. Fortunately, passive safety systems and other advances can make new plants much safer. And modern nuclear technology can reduce proliferation risks and solve the waste disposal problem by burning current waste and using fuel more efficiently. Innovation and economies of scale can make new power plants even cheaper than existing plants. Regardless of these advantages, nuclear needs to be encouraged based on its societal benefits.
Over the weekend, entrepreneur Peter Thiel published an op-ed, "The New Atomic Age We Need," in the New York Times that reinforces the point:
Wind and solar together provide less than 2 percent of the world’s energy, and they aren’t growing anywhere near fast enough to replace fossil fuels.
What’s especially strange about the failed push for renewables is that we already had a practical plan back in the 1960s to become fully carbon-free without any need of wind or solar: nuclear power....
In fact, in the 1960s, the Atomic Energy Commission projected that 1,000 nuclear power plants would be running in the U.S. by 2000. Think how much that would have lowered U.S. carbon dioxide emissions. Instead, there are only about 100 operating now. It is also worth noting that the host country, France, derives 75 percent of its electricity from nuclear power. By opposing nuclear power, environmentalists helped in large measure to create the problem they now claim is destroying the world. Thiel continues:
The single most important action we can take is thawing a nuclear energy policy that keeps our technology frozen in time. If we are serious about replacing fossil fuels, we are going to need nuclear power, so the choice is stark: We can keep on merely talking about a carbon-free world, or we can go ahead and create one.
We already know that today’s energy sources cannot sustain a future we want to live in.
Anyone who claims to be worried about future man-made climate change and who still opposes modern nuclear power is not serious and should be ignored.
Fri, 30 Oct 2015 12:00:00 -0400You wouldn't know it from the happy spin emanating from the Oval Office, but a Third World revolt in Bonn, Germany, this week almost derailed the Paris climate change negotiations in November. Although peace has been restored for now, it only happened by papering over this fundamental conundrum: The world can either avert climate catastrophe or seek "climate justice," not both. The revolt was triggered when 130 developing nations including India and China noticed that the draft action plan that is supposed to serve as the blueprint for the Paris negotiations had omitted their most important conditions about the "fairness and financing" of the final deal—in other words, who is going to take responsibility for the warming and who should pay to reduce it? The South African delegation condemned the omission as "apartheid" that would penalize poor countries for the sins of the rich. It has a point. The Paris negotiations are supposed to be the mother of all climate negotiations. It was convened to impose binding emission reductions on all countries—not just the West, as was the case with the 1995 Kyoto protocol—to hold global temperature increases to no more than 2 degrees centigrade over pre-industrial levels. To this end, each country has been asked to submit its own good faith reduction plan that includes both how much it will cut emissions and its plan for getting there. Once finalized after a review in Paris, the plans will be legally binding—although how precisely they will be enforced is anyone's guess. Setting that aside, negotiations will boil down to an essential question: How much should each country cut and therefore whose idea of "climate justice," as Indian Prime Minister Narenda Modi has termed it, should prevail? All issues that require collective action, especially on a global scale, are difficult to resolve because they suffer from the free-rider problem, i.e. some parties seek to benefit from the "common good" without springing for it. But as Oren Cass, a Manhattan Institute analyst, notes, fighting climate change is a particularly vexing problem because the individual cost to each country, especially Third World ones, will be immediate and huge—and the benefits distant and uncertain. The notion that emission cuts can pay for themselves through increased energy efficiency is at best fanciful and, at worst, a lie. There are no low-carbon energy technologies available today that can sustain the economic growth rates these countries need to lift their people out of abject poverty, let alone offer Western living standards at anything resembling an affordable cost. Over 300 million Indians still live below the poverty line, earning less than $1 per day. India's per capita energy consumption is 15 times less than the United States'. India has to keep boosting its energy use—and therefore carbon emissions—for at least another two decades to eliminate dire poverty, which is why its reduction plan only commits to slashing "emission intensity"—its emission rate as a percentage of its GPD—not emissions themselves. Even this much, India claims, will require up to a $2.5 trillion investment over the next 15 years in renewable energy sources and adaptation technologies. Even if that figure is exaggerated, clearly this would be a challenge for a country that has yet to offer basic sanitation, transportation, and clean-water infrastructure to all its citizens. But Western countries have to date pledged to raise only $1 trillion over 10 years ($100 billion annually) to offset the climate change costs of the entire Third World. Upping that commitment while simultaneously absorbing their own emission reduction costs will require Western government to take very radical—and very draconian—steps to pare back the living standards of their [...]
Mon, 03 Aug 2015 14:21:00 -0400Today, President Obama and the Environmental Protection Agency are announcing the final regulations that would establish President's Clean Power Plan (CPP). The CPP aims to reduce the amount of greenhouse gases (chiefly carbon dioxide) from America’s electricity generation plants by 32 percent by 2030. Let’s set aside the question of whether or not the EPA has the legal authority to tell states how to generate electricity and ask a much simpler, yet not so easy question: How much will the CPP cost American consumers? In her “6 Things Every American Should Know About the Clean Power Plan” blogpost this morning, EPA Administrator Gina McCarthy claimed that “the Clean Power Plan is projected to cut the average American’s monthly electricity bill by 7% in 2030.” Not because electricity will cheaper but largely because McCarthy thinks that Americans will be using less energy due to the energy efficiency mandates that various agencies of the federal government are imposing. A preliminary analysis of the CCP issued in October, 2014 by the NERA economics consultancy on “Potential Impacts of the EPA Clean Power Plan” calculated that the CPP could boost retail electricity prices by between 12 to 17 percent. Keep in mind that the NERA study was commissioned by organizations that oppose the CCP. In May, the World Resources Institute issued an analysis of carbon reductions, “Delivering on the U.S. Climate Commitment: A 10-Point Plan Toward A Low-Carbon Future,” that included the implementation of the CCP. Like the EPA bureaucrats, the WRI analysts figure that energy bills for residential, commercial, and transport sectors will be lower due to “significant demand reductions from energy efficiency policies more than offset higher electricity rates and higher fuel prices.” Consequently, they project that monthly electricity bills will be reduced by 8–9 percent by 2030. Also in May, the Energy Information Administration released its “Analysis of the Clean Power Plan.” The agency projects that implementing the president’s plan will boost electricity prices by an average of 4 percent by 2030. Despite mandated energy efficiency that supposedly lowers residential energy demand, the EIA nevertheless notes that “average annual household electricity bills during the interim compliance period (2020-29) are 3.0% higher.” All of the analyses at least honestly recognize that spending more money on more expensive power generation technologies - solar, wind, nuclear - will boost electricity prices. The EPA and the WRI hope that regulations requiring improved energy efficiency in houses and appliances will offset those increases enough such that consumers won’t see their bills going up. On the other hand the EIA reports that the average price of electricity is 12.95 cents per kilowatt-hour and the average household consumes 10,908 kilowatt-hours per year. That totals to $1,412 per year. Assuming that the CCP increases electricity prices by the high NERA estimate of 17 percent that would mean that the price of electricity will rise to 15.15 cents per kilowatt-hour. The cost of household electricity consumption would thus rise to an average of $1,652, that is, about $240 more per year.[...]
Fri, 12 Jun 2015 09:30:00 -0400Earlier this week, President Barack Obama and the other leaders at the G7 meeting in Germany issued a declaration stating that the world's economy must be completely decarbonized by the end of this century. Otherwise, they worry, the continued burning of fossil fuels will boost global temperatures by more than 2°C, pushing man-made climate change into dangerous territory. This fear is largely based on projections from computer models. It is of more than passing interest that most of the models are running much hotter than the actual temperature trends. Nevertheless, the G7 leaders committed their countries to the goal; and by 2050, they want global greenhouse gas emissions down to 40 to 70 percent below the levels emitted in 2010. They further affirmed their "strong determination" to adopt a legally binding agreement at the Climate Change Conference this December in Paris. The leaders want all countries to submit their "intended nationally determined contributions" to the fight against climate change—their INDCs, in bureaucratic lingo—well in advance of the Paris conference. These are national plans for reducing greenhouse gas emissions after 2020. The goal is to have enough INDCs by the Paris meeting such that they are added up they are sufficient to be "in line with the global goal to hold the increase in global average temperature below 2°C." As it happens, climate negotiators from scores of countries were also meeting this week in Bonn, Germany, trying to hammer out that legally binding agreement—in the words of the G7 statement, a "protocol, another legal instrument or an agreed outcome with legal force." Why the convoluted language? Because the negotiators all know that if the new agreement is a treaty, it will have to be submitted to the U.S. Senate for its advice and consent. As French Foreign Minister Laurent Fabius explained earlier this month: "We must find a formula which is valuable for everybody and valuable for the U.S. without going to the Congress. We know the politics in the U.S. Whether we like it or not, if it comes to the Congress, they will refuse." Earlier U.N. negotiations concocted a possible workaround for America's inconvenient climate change politics: If each country can come up with those INDCs, the Obama administration could perhaps artfully interpret the Paris agreement as not being an actual treaty. Instead, they would argue, it is simply an elaboration of already existing U.S. obligations to stabilize greenhouse gases under the United Nations Framework Convention on Climate Change (UNFCCC). Some countries have already made their INDC pledges. Obama has promised to cut U.S. greenhouse gas emissions 17 percent from their 2005 levels by 2020, and then reduce them further by 26 to 28 percent by 2025. That's about a 14 to 17 percent reduction below 1990 levels. The European Union has committed to a binding target of an at least 40 percent domestic reduction in greenhouse gas emissions by 2030 compared to 1990. Russia intends to limit its greenhouse gas emissions to 70-75 percent of its 1990 levels by the year 2030. Since Russia's vast forests absorb a great deal of carbon dioxide it may only have to cut its actual emissions by 6 to 11 percent below 1990 levels. China does not plan any emissions reductions, but intends to peak its carbon dioxide emissions by 2030. Canada's INDC, which includes a forest carbon absorption component, aims to reduce by 2030 its greenhouse gas emissions by 30 percent below its 2005 levels. According to calculations made by the non-governmental group Climate Action Tracker that translates to a 21 percent reduction below 2005 emissions levels excluding forestry, or 2 percent below 1990 levels. Japan's draft INDC contains a reduction targe[...]
Mon, 06 Apr 2015 12:00:00 -0400Never underestimate the power of creative destruction—what economist Joseph Schumpeter called capitalism’s “essential fact.” The pages of history are littered with the skeletons of industries left behind by innovation. Public utilities certainly are not underestimating it. As a recent Washington Post story put it, power company executives consider rooftop solar systems “a grave new threat” to the electricity industry. In theory, the threat is simple: As more people get their energy from solar power arrays, the cost of the old system—all the generation plants and transmission lines and fuel and so on—will fall on a diminishing number of utility customers. Those customers will then have a rising financial incentive to go solar themselves, cutting the number of ratepayers even further, and so on—a death spiral for traditional utilities. Scenarios like that lead to stories like this, from Forbes: ”Distributed Generation Poses Existential Threat to Utilities.” And this, from Business Week: “Why the U.S. Power Grid’s Days Are Numbered.” That article quotes David Crane, the CEO of the wholesale power company NRG Energy, who predicts that “utilities will continue to serve the elderly or the less fortunate, but the rest of the population moves on.” Two years ago, the Edison Electric Institute, the trade group of the power industry, produced its own report on the “Disruptive Challenges” posed by distributed generation (i.e., the production of electric power from lots of little sources rather than a handful of big ones). It noted, among other things, the precipitous decline in the cost of solar photovoltaic cells, as well as policies such as net metering, which allows solar-power users to sell any extra juice back to utility companies—often at rates far higher than the utilities would have to charge for the same number of kilowatts. When might all of this happen? Not tomorrow. At present, the biggest impediment to solar power is its intermittency: Sometimes it’s sunny, but mostly it’s not. And power storage is a huge problem. Without quantum leaps forward in battery technology, solar users will always have to be plugged into the grid. But quantum technological leaps happen all the time. Hence even Edison “can imagine a day when battery storage technology or microturbines could allow customers to be grid independent.” After all: “Who would have believed 10 years ago that traditional wire-line telephone customers could economically ‘cut the cord?’” Given the rise of micromarkets in information (think blogs), lodging (think Airbnb) and transportation (think Uber), it’s even possible individual homeowners might someday buy and sell electricity among themselves without using the utility companies as intermediaries. Possible, yes, but how likely? That would depend on a number of factors. Power generation and distribution are immensely complex, and Virginia’s last effort to deregulate the system, in 1999, didn’t turn out so well. (This was partly owing to the way Virginia went about it—e.g., by imposing rate caps and artificial walls between generation and distribution.) And that deregulation effort was ridiculously simple compared to a system that would allow every consumer to be a supplier as well. There are also big technological hurdles. Utilities have to be able to ensure that every consumer receives precisely the amount of electricity she needs at every moment throughout the day—and to be able to make supply adjustments instantaneously as she turns lights, appliances, and devices on and off. They have to switch from one constant load to another, perfectly and instantly, every time. That’s hard enough to do for one custo[...]
Mon, 09 Mar 2015 14:39:00 -0400In 2006, when he was running for governor, Scott Walker took the opportunity of a proposed statewide ethanol mandate (which his opponent favored) to declare his opposition to all ethanol mandates, state or federal: "Currently, we have a problem with big government in Madison. On principle, I cannot support this proposal. "It is clear to me that a big government mandate is not the way to support the farmers of this state,” he continued [in a statement]. "Central planning will not help our family farmers, protect our environment or provide jobs. The free-enterprise system must drive innovation to relieve our dependence on foreign oil, not mandates from the state or federal government." Bolding mine, to cut to the quick. So what does Gov. Walker say now, in the early-caucus state of Iowa, as he vaults at or near the top of 2016 GOP presidential polls? That he's in favor of the (stupid, wasteful, and destructive) federal mandate, and that maybe he'd think about phasing it out in some dim future (when presumably not running for president in Iowa). Partial transcript of his reasoning, such as it is: "I'm willing to go forward on continuing the Renewable Fuel Standard and pressing the EPA to make sure there's certainty in terms of the blend levels set. […] "Now, long-term […] my goal would be to get to a point where we directly address those market access issues and I think that's a part of the challenge. So that eventually you didn't need to have a standard just like you no longer need in the industry to have the subsidies that were there before to help insure we had a strong system. I think eventually you can get to that. But you can't get to that unless you deal with market access. […] “That's ultimately the best way, to let the market decide, but right now we don't have a free and open marketplace. So that's why I'm willing to take that position." Washington Examiner columnist Philip Klein delivers the appropriate snort; his colleague Rebecca Berg tracks down other GOP embarrassments on ethanol, as well as this more appropriate answer from Sen. Ted Cruz (R-Texas): "I don't think Washington should be picking winners and losers," Cruz said frankly. Imagine that. Walker is no stranger to corporate welfare, supporting as he does $220 million in state-backed bonds so that Milwaukee can help build a new arena for its professional basketball team. No word yet on whether he thinks those welfare recipients should be drug-tested.[...]