Posts from — September 2009

[Editor note: The post is a slightly revised version of what was posted at the Institute for Energy Research website on September 17. The primary author was Daniel R. Simmons, director of state energy affairs. Next week, Michael Giberson will evaluate IER's defense of the Danish study at MasterResource in light of his own first impressions.]

Energy is critical for our economy and our future, and the real issues deserve to be debated. That is why we appreciated the initial response on the American Wind Energy Association’s website to the recent study, Wind Energy: The Case of Denmark. It appears that AWEA actually read the study and raised some questions related to energy.

The same cannot be said of other responses, such as this blog post from NRDC. But then, of course, AWEA’s Senior Vice President for Public Policy couldn’t help himself and resorted to the same innuendo and ad hominem attacks against any effort that gets the facts out about the true costs of wind energy production.

Before we discuss AWEA’s disagreements with IER and the Danish wind study, it is important to note what AWEA did not disagree with.

• Wind is heavily subsidized;
• Wind power is an inefficient way to reduce carbon dioxide emissions. (The Danish wind study, for example, found that it costs on average $124 per ton of carbon dioxide reduced); and
• Subsidizing wind power is a very inefficient way to create jobs. (The Danish wind study found that, optimistically, “the subsidy per job created is 600,000-900,000 DKK per year ($90,000 – $140,000 USD). This subsidy constitutes around 175-250% of the average pay per worker in the Danish manufacturing industry.”)

The AWEA, however, disagreed, with a few other issues which we discuss below. [Read more →]

We are used to hearing about how far behind the curve the United States is on energy. Just today, we were reminded that Germany and China will gobble up our future since we have failed to invest in solar and wind technologies, in particular, photovoltaic fabrication plants.

Actually, that’s not quite true. There are quite a number of PV plants in the U.S., just not any using the technology touted by the New York Times reporter.

And as for wind: did you know that “China is going to eat our lunch and take our jobs on clean energy.” That is not true either. Current wind generating capacity in the U.S. is just shy of 30,000 MW, larger than any other country, including Germany (24,000 MW) and China (13,000 MW).

What about biofuels? We are told constantly that Brazil has cleared the field of all competition in the ethanol arena (some of us wish they would, and take the subsidies and over-priced food with them, but that is a story for another day). Well, that is another urban myth. In 2008 the U.S. produced about 457,000 b/d oil equivalent, almost half the world’s total. Brazil came in second with 382,000 b/d oil equivalent.

Hardly Worth Mentioning when the Future of World Energy Is Discussed?

And when it comes to conventional energy – oil, gas, coal, nuclear – one would be hard-pressed to think that the US was a factor at all (no mention in the IEA’s review of future energy supplies). [Read more →]

As an old-fashioned scientist, I prefer hard engineering realities to all those interminably vacuous and poorly informed policy “debates” that feature energy self-sufficiency (even Saudis import!), sustainability (at what spatial and temporal scales?), stakeholders (are not we all, in a global economy?) and green economy (but are not we still burning some 9 billion tonnes of carbon annually?).

High regard for facts and low regard for wishful thinking has forced me to deal repeatedly with many energy illusions–if not outright delusions–and to point out many complications and difficulties to be encountered during an inevitably lengthy transition from an overwhelmingly fossil-fueled world to economies drawing a substantial share of their primary energies from renewable sources.

Steel & Coal-Derived Coke

Here is another challenge for the energy transformationists, one that is both inexplicably neglected and extraordinarily important: steel’s fundamental dependence on coal-derived coke with no practical substitutes on any rational technical horizon.

Those with a warped understanding of the real world might scoff: steel? Is not the electronics everything that matters in the post-industrial world? Yes, according to scientifically illiterate media and to the ceaseless self-promoting noise coming from assorted software companies. But, contrary to these naïve perceptions of reality, ours is still very much the Iron Age and not a Microprocessor Age. [Read more →]

As an old-fashioned scientist, I prefer hard engineering realities to all those interminably vacuous and poorly informed policy “debates” that feature energy self-sufficiency (even Saudis import!), sustainability (at what spatial and temporal scales?), stakeholders (are not we all, in a global economy?) and green economy (but are not we still burning some 9 billion tonnes of carbon annually?).

High regard for facts and low regard for wishful thinking has forced me to deal repeatedly with many energy illusions–if not outright delusions–and to point out many complications and difficulties to be encountered during an inevitably lengthy transition from an overwhelmingly fossil-fueled world to economies drawing a substantial share of their primary energies from renewable sources.

Steel & Coal-Derived Coke

Here is another challenge for the energy transformationists, one that is both inexplicably neglected and extraordinarily important: steel’s fundamental dependence on coal-derived coke with no practical substitutes on any rational technical horizon.

Those with a warped understanding of the real world might scoff: steel? Is not the electronics everything that matters in the post-industrial world? Yes, according to scientifically illiterate media and to the ceaseless self-promoting noise coming from assorted software companies. But, contrary to these naïve perceptions of reality, ours is still very much the Iron Age and not a Microprocessor Age. [Read more →]

This is part 2 of my post on a recent Partnership for a Secure America (PSA) briefing on climate change, energy and national security. Yesterday’s post made two main points:

(1) The strange-bedfellow coalition of defense hawks and eco-warriers is based not on sound national security arguments but on a convergence of political interests. For defense hawks, the alleged climate crisis facilitates mission creep by providing an open-ended rationale to expand DOD programs, activities, capabilities, and the appropriations to fund them. For green groups, partnership with defense and intelligence big wigs builds their already formidable lobbying machine and gives them cachet with conservatives who generally oppose government meddling in energy markets and Kyoto-style “global governance.”

(2) The PSA panelists exaggerate the security risks of climate change. The “history” of global warming, recent research on climate sensitivity, and even the Stern Review (properly understood) call into question the claim that climate change is an important “threat multiplier.”

In today’s post, I discuss the national security risks of climate change policy — a topic ignored in the PSA panel’s lop-sided briefing. 

One-Sided Threat Assessment

In testimony (p. 7) before a joint hearing (June 25, 2008) of the House Permanent Select Committee on Intelligence and the House Select Committee on Energy Independence and Global Warming, Dr. Thomas Fingar, Chairman of the National Council on Intelligence (NIC), stated that, “Government, business, and public efforts to develop mitigation and adaptation strategies to deal with climate change — from policies to reduce greenhouse gases to plans to reduce exposure to climate change or capitalize on potential impacts — may affect U.S. national security interests even more than the physical impacts of climate change itself.” 

Those words provoked the ire of Chairman Ed Markey (D-MA), who demanded to know who at Bush’s OMB inserted that verbiage into Fingar’s testimony. Finger assured Markey that the entire testimony, including the offending sentence, reflects the consensus view of the U.S. intelligence community, and that OMB offered no comments on that portion of the text. (Incidentally, Fingar’s testimony also said that climate change was “unlikely to trigger state failure in any state out through 2030,” and that “the United States as a whole would enjoy modest economic benefits over the next several decades largely due to increased crop yields.”)

Regrettably, Fingar’s testimony did not explain how climate policies  might affect U.S. national security interests “more than the physical impacts of climate change itself,” nor did he elaborate in the back-and-forth with Chairman Markey. In general, the global warming debate lacks balance, with climate change risks highlighted, exaggerated, or even invented, and climate policy risks denied or ignored.

Let’s then consider some of the ways climate policies might damage U.S. national security interests. [Read more →]

Last week, I attended a briefing on “Climate Change, Energy and National Security,” sponsored by the Partnership for a Secure America (PSA), a veritable who’s who of (mostly former) moderate-to-liberal defense and foreign policy officials. Sen. Joe Lieberman (I-CT), former CIA Director James Woolsey, Ambassador Frank Wisner, and Vice Admiral Dennis McGinn USN (Ret.) were the featured speakers.

The self-described “blue ribbon” panel was unanimous, unequivocal, and very, very repetitive: Climate change is a national security issue; climate change threatens all Americans; combatting climate change should be a national security priority; transitioning to a clean energy economy can defeat both the climate change threat and the OPEC/Wahhabi/Terror threat.

Not-So-Strange-Strange Bedfellows

In one respect it’s surprising that climate change has not always been characterized as a national security issue. If Al Gore is correct and climate change ”threatens the survival of civilization and the habitability of the Earth,” then of course climate change imperils national security. Yet for many years, there was little if any discussion along those lines — maybe because, traditionally, greenies looked askance at the “military-industrial complex” and vice versa.

If I’m not mistaken, the first thematic treatment linking global warming to national security was an October 2003 Pentagon-commissioned study by Peter Schwartz and Doug Randall titled Imagining the Unthinkable: An Abrupt Climate Change Scenario and Its Implications for United States National Security.

In Imagining the Unthinkable, the authors hypothesize what might happen to the global economy and international stability if increased ice melt and precipitation due to global warming disrupt the Atlantic thermohaline circulation (THC) and Earth’s climate deteriorates into an ice age. Would the end of the world as we know it have ”implications” for U.S. national security?

Well, duh! In page after pulse-pounding page, Schwartz and Randall describe a world convulsed by famine, food riots, water shortages, energy shortages, trade wars, displaced populations, and armed conflict within and among nations.

As it happens, the THC-shutdown scenario no longer has any scientific credibility – if it ever did (Schwartz and Randall conjecture that this catastrophe could occur as soon as 2010!). It’s not even clear that a disruption of the THC would have the climate-wrenching effects Schwartz and Randall assume. Al Gore, naturally, endorsed this doomsday fantasy in An Inconvenient Truth (2006), though he was not the first in the biz to bring it to the big screen. Warming-causes-cooling made its Hollywood debut two years earlier in The Day After Tomorrow (2004), a preachy, Sci-Fi disaster film justly lampooned by South Park.

Whether or not Imagining the Unthinkable marked a turning point in the rhetoric of climate change, the collaboration between defense hawks and climate Cassandras was inevitable. Many a hawk (going as far back as President Richard Nixon) has decried America’s dependence on OPEC oil, a condition destined to continue as long as oil dominates the market for motor fuels. Petro-phobic hawks are thus predisposed to believe that government should tax and regulate us into a ”clean energy future.” As much as any environmentalist, they seek a world ”beyond petroleum” – exactly what cap-and-traders claim they can deliver.

The greening of the Pentagon – or the Pentagoning of climate advocacy, label it as you like — has political advantages for both groups. Cap-and-trade advocates gain allies respected by conservatives who, in general, not only oppose greater government control over energy markets, but also distrust green activists, UN bureaucrats, and the “authentic global governance“ of which Kyoto is a key component.  ”Even the generals are worried,” the greens lecture reluctant conservatives. [Read more →]

“It seems clear that the first major penalty man will have to pay for his rapid consumption of the earth’s nonrenewable resources will be that of having to live in a world where his thoughts and actions are ever more strongly limited, where social organization has become all pervasive, complex, and inflexible, and where the state completely dominates the actions of the individual.”

- Harrison Brown (1954), quoted in Anne Ehrlich, Paul Ehrlich, and John Holdren, Human Ecology: Problems and Solutions (San Francisco: W. H. Freeman, 1973), p. 388.

Free-market writers such as Ludwig von Mises and Milton Friedman have stressed that it is impossible for a government to restrict economic freedoms while retaining civil or “personal” liberties. For example, even if a democratic yet socialist government assures its citizens they have “freedom of the press,” that assurance is hollow because the government owns all the newspapers and radio stations. It’s also naive to say that citizens have the right to protest the government, if that same government has the power to reassign workers to Siberia (because they deem it best to maximize national “economic output”).

Because of these realities, people who call themselves progressives should rethink their commitment to more government control over energy markets. It’s not simply a matter of abstract property rights and fairness for shareholders of oil companies. If the government can’t be trusted to snoop on our phone conversations or emails–and I wholeheartedly agreed with the progressives who were alarmed at the erosion of civil liberties under the Bush Administration–then by the same token, how can that same government be trusted to fairly administer energy markets with only the fate of the planet in mind?

This is not a vague “right-wing scare story” that I’m cooking up here. For example, in a recent Spiegel Online interview, “Hans Joachim Schellnhuber, the German government’s climate protection advisor, [proposed] the creation of a CO2 budget for every person on the planet…”

In another example of climate concern bumping up against personal liberties, a new report issued by the London School of Economics concludes that “family planning should be seen as one of the primary methods of emissions reductions.” Relying on a UN estimate that 40 percent of all pregnancies are unintended, the report calculates that “[i]f these basic family planning needs were met, 34 gigatons (billion tonnes) of CO2 would be saved–equivalent to nearly 6 times the annual emissions of the US and almost 60 times the UK’s annual total.” (Note that the quotations come from the news article, not the report itself.) [Read more →]

[This excerpt from Capitalism at Work: Business, Government, and Energy prefaces a five-chapter review of energy Malthusianism from the time of Thomas Robert Malthus in the late 18th century through the Julian Simon/Paul Ehrlich debate of the late 20th century.]

“Here is a planet, whirling in sunlit space,” reads the opening of Rose Wilder Lane’s The Discovery of Freedom: Man’s Struggle against Authority, penned during the dark days of World War II. “The planet is energy,” she continues. “Every apparent substance composing it is energy. The envelope of gases surrounding it is energy. Energy pours forth from the sun upon this air and earth.”

Energy is pervasive and liberating. It moves people, makes things, and provides incalculable services. It vanquishes darkness, literally and figuratively. “Since early men ignited the first fires in caves,” it has been noted, “the unleashing of energy for light, heat, cooking, and every human need has been the essence and symbol of what it is to be human.” 

In economic terms, energy is the resource of resources, the master resource. Energy transforms mineral and natural resources from their raw form into consumable goods. Energy must be expended to create more energy and to refine energy into more usable forms. Thus, energy can be considered the fourth factor of production, in addition to the textbook triad of land, labor, and capital.

In business terms, energy has been and will likely always be the world’s biggest enterprise. The energy sector has spawned some of history’s great entrepreneurs. John D. Rockefeller shaped the American and world oil industry more than a century ago. Mr. Petroleum was one of the greatest business doers in U.S. and world history, if not the greatest.

Second to Rockefeller in the history of the U.S. energy industry is Mr. Electricity: Samuel Insull. An émigré who teamed with Thomas Edison to build the company that emerged as General Electric, Insull ventured on his own and built America’s largest gas and electricity entity. But his fortunes spectacularly reversed in the early 1930s. The dramatic rise and fall of the father of the modern electricity industry, “the Babe Ruth, the Jack Dempsey, the Red Grange of the business world,” is still the subject of contemporary books and articles.

In the 1980s and 1990s, another figure cut a unique path in the energy sector: Mr. Natural Gas, Kenneth L. Lay. He made a case for methane as the economic and environmental answer to America’s energy challenges and positioned Enron as the world’s first natural gas major. Lay’s star power put him in a league with the biggest names of the industry at the time, such as Lee Raymond of ExxonMobil and John Browne of BP. In early 2001, Paul Portney, president of Resources for the Future, declared, “In his role as chairman of Enron Corp., Ken Lay has almost singlehandedly made the world rethink what it means to be a modern energy company.” [Read more →]

The New York Times chief foreign affairs correspondent, Thomas Friedman, has finally come out of the closet as a fascist wannabee. Harsh words, but consider the evidence.

Here is the pertinent section from his recent op-ed, “One Party Democracy“ [with commentary]:

One-party autocracy certainly has its drawbacks [like the secret police and labor camps?]. But when it is led by a reasonably enlightened group of people, as China is today [that’s why they need all those internet filters], it can also have great advantages [such as locking away dissenters]. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century [no need to find out what people want, just tell them what to do].

It is not an accident [or, as Marxists.org puts it: “It is not mere coincidence . . .”] that China is committed to overtaking us in electric cars, solar power, energy efficiency [not quite, China uses more than twice as much coal as the US and almost three times as much energy per unit of output, by 2030 China will generate more CO₂ than the rest of the world can save, even with the most draconian “green” policies], batteries, nuclear power and wind power.

China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power [such as all that coal and CO₂?] and energy efficiency is going to soar. Beijing [!] wants to make sure that it owns [italics added] that industry [can’t we give then Chrysler and GM, too?] and is ordering the policies to do that, including boosting gasoline prices, from the top down [Chinese gasoline prices are still below world market levels, we do not worry about that because we have markets].

Green Fascism

Friedman quotes approvingly that renowned defender of freedom, Joe Romm, who notes that “China is going to eat our lunch and take our jobs on clean energy . . . and they are going to do it with a managed economy we don’t have and don’t want.” You are certainly right about that, Joe and Tom.

If this were just an aberration, we could forgive them. But it is not. [Read more →]

 [Editor note: This interview with Rob Bradley from the April 2006 issue of The New Individualist, published by The Atlas Society, is reproduced for two reasons: 1) the role of Lay and Enron in launching the global warming debate within the energy industry in the late 1980s and 1990s; 2) the role of Bradley during his 16 years at the company brought up by critics of the Institute for Energy Research/American Energy Alliance.]

TNI: Why should Objectivists, libertarians, and individualists take an interest in the collapse of Enron and particularly in the fall of Ken Lay?

Bradley: Enron will prove to be one of the most important episodes in the history of American business, and its story, from beginning to end, is inseparable from Ken Lay, its founder and long-time chairman. Thus, what people make of Enron—and what lessons they draw from it—will depend to a considerable degree on how they understand Lay.

As I’m sure you know, Enron has to date been blamed largely on free-market politicians, heartless corporate managers, and an egoistic chairman. In fact, as my book will show, Enron relied heavily on government favors, was run by postmodernist managers, and had as its chairman the kind of person Ayn Rand would have called “a second-hander.”

TNI: You have a long chapter near the beginning of your book that shows how Ayn Rand’s philosophy applies to Enron. Where did this germinate?

Bradley: Funny you should ask, Roger [Donway]! It was your piece [in Navigator] that confirmed for me the value of Objectivism in analyzing Enron. When Enron was sinking and Great Man Ken Lay was melting, I thought, “Wow! This is right out of an Ayn Rand novel!” I was not familiar with The Objectivist Center at the time. But several months after the bankruptcy, I did a Google search and came across your article on Enron as a postmodern corporation. The article opened my eyes to the fact that the causes of Enron’s financial bankruptcy were at root philosophical.

Since that time, I have plunged into the Objectivist literature as it relates to business and developed the theme that whatever may or may not be prosecutable fraud, Enron’s leaders were certainly engaged in massive philosophical fraud—an attempt to cheat reality itself.

TNI: Could you please tell our readers something about your personal involvement with Enron and Ken Lay?

Bradley: I was at Enron for just over sixteen years. I arrived about six months after Ken Lay did. And my last day was December 2, 2001, which was when the company declared bankruptcy and about 4,000 of us were laid off. [Read more →]