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Posts from — February 2010

The Beginning of the End for Cap-and-Trade? (BP America, Conoco-Phillips, and Caterpillar bolt) (UPDATED)

With little fanfare, an earthquake has rippled through the United States Climate Action Partnership (USCAP). Three significant members, two of them being integrated oil majors, are no longer planning the cap-and-trade (aka, cap-and-tax) game. And if energy affordability and reliability is a metric, expect more companies to bolt. Social corporate responsibility, anyone? After all, there is no climate gain from a unilateral U.S. cap by the alarmists’ own math.

Here is the background. According to its website, USCAP is “a group of businesses and leading environmental organizations that have come together to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.” Others of a less charitable bent would characterize them as central headquarters of the U.S. Climate-Industrial Complex, a group of corporate rent-seekers (the bootleggers), made whole by the environmental scaremongers (the Baptists) hell-bent on slapping the United States into a carbon rationing scheme.

Members of USCAP include AES, Alcoa, Alstom, Boston Scientific Corporation, Chrysler, Deere & Company, The Dow Chemical Company, Duke Energy, DuPont, Environmental Defense Fund (EDF), Exelon Corporation, Ford Motor Company, FPL Group, General Electric (GE), General Motors Corporation, Honeywell, Johnson & Johnson, Natural Resources Defense Council (NRDC), The Nature Conservancy, NRG Energy, PepsiCo, Pew Center on Global Climate Change, PG&E Corporation, PNM Resources, Rio Tinto, Shell, Siemens Corporation, and the World Resources Institute (WRI).

It doesn’t take a great deal of analysis to see who hopes to get what from cap-and-trade. The environmental posse– EDF, NRDC, Nature Conservancy, Pew Center, and WRI–get their ultimate dream: control of the U.S. economy by environmental bureaucrats who can determine who gets to buy carbon permits, who gets to sell them, how many can be bought overseas, who gets to slurp from the giant trough of government permit sales, and so on.

It’s not much harder to figure out what the corporations get, whether it’s simply “green” bragging rights to use in commercials (PepsiCo), or the hope to sell subsidized hybrid cars (Ford and GM), or the chance to sell new thermostats to millions of houses and businesses (Honeywell), to build nuclear plants, windmills, or solar farms (GE, Exelon), or to get in early in the hopes of getting free permits from the government (coal, oil, and other high GHG emitters). Again, a sober comparison of social costs and benefits should get these ‘greenwashers’ to bolt.

Three groups that used to be on that list which you won’t find mentioned at USCAP’s website are Caterpillar Inc., BP America, and ConocoPhillips which have made a relatively quiet exit, stage left. [Read more →]

February 17, 2010   4 Comments

Pacific Legal Foundation vs. EPA on Endangerment (Bad science and bad policy can be avoided)

Another defender of limited government (and sound science) has petitioned U.S. Environmental Protection Agency to reopen the regulatory process that led to EPA’s controversial endangerment finding, arguing that new information casts doubt on the scientific integrity of the determination. The Pacific Legal Foundation (PLF), a Sacramento, Calif.-based group that defends individuals against large, intrusive government, filed an administrative petition with EPA last week that challenges the agency’s finding on procedural grounds. The petition to the EPA is available at PLF’s web site.

According to the filing, EPA must reopen the proceedings surrounding its determination that greenhouse gases threaten public health and welfare, in light of recent controversy over e-mails released from prominent climate scientists whose work formed the very foundation of the Intergovernmental Panel on Climate Change (IPCC)’s 4th assessment on climate change (2007). The filing also demands that EPA’s Scientific Advisory Board evaluate whether the finding itself should be reconsidered. The IPCC reports were preeminent among the data used to underpin EPA’s endangerment finding.

Invalidated Science

At issue is the EPA’s finding–announced December 2009–that “greenhouse gas” emissions from automobiles [and hence from nearly every single other human activity] pose a danger to public health and welfare.

“PLF has filed this administrative petition because the integrity of the process that yielded the endangerment finding has been put in question by the revelations popularly known as ‘Climategate,’” said PLF attorney Ted Hadzi-Antich. “Thousands of emails and other documents have come to light that show the very scientists involved in arriving at the endangerment finding questioning the data that underlie the finding.”

“PLF takes no position on the scientific data itself, but as a legal watchdog for limited government and enforcing the legal and constitutional limits on regulatory agencies, we are very concerned that the regulatory process in this case may have been compromised,” added Hadzi-Antich. “Because significant revelations suggest that the scientific data that was used for the endangerment finding may be unreliable, a formal reconsideration of the process and the finding must be undertaken.”

I would note that the data from the Climate Research Unit (CRU) at East Anglia College (EAC) that was released primarily regards historical (and pre-historical) temperatures, and forms the regression base for future projections of temperature. And if the data describing the past is faulty, so are regression-based projections.

The emails also reveal attempts by climate alarmists to hide data that conflicts with their world views. The PLF petition argues that reopening the process is required by statute because the integrity of the process has been called into question by the revelations. Indeed, when reasons come to light that cast doubt on the reliability of a regulatory finding, the Clean Air Act requires reassessment by the agency’s Science Advisory Board, as part of a reassessment by the general public. [Read more →]

February 16, 2010   5 Comments

Julian Simon Changed His Mind–Can Others Come to View Humans as the Solution, not the Problem?

“The quality of [truth-seeking] depends on a willingness to respectfully engage in open, honest, and objective debate, to challenge … our own beliefs…. As the philosopher, economist, and Anglican bishop Richard Whately observed: ‘It is one thing to wish to have truth on our side, and another thing to wish sincerely to be on the side of truth’.”

- Charles Koch, The Science of Success (John Wiley & Sons, 2007), p. 115. [Book review here]

A week ago I posted a tribute to Julian Simon (1932–1998) on the anniversary of his death. The post was picked up elsewhere in the blogosphere, and I received a number of emails from academics who remarked about how much they appreciated Simon’s personal kindness and scholarly qualities. Steve Horwitz wrote at Coordination Problem:

[Simon] was a model of what a scholar can and should be:  well-read, totally on top of the relevant data, fearless about taking on sacred cows, unafraid to be in your face but always with a smile on his face.  Plus, his boundless optimism for humanity’s future makes for a wonderful contrast to not just the doom-and-gloom of the environmentalists, but even the doom-and-gloom of some libertarians, for whom disaster (though political not environmental) lurks just around the corner.

Plus, Simon’s bet with Ehrlich is the best example of challenging “cheap talk” ever.

Above all of that, he was a charming man who even had time for three over-eager assistant professors on a boat ride in the middle of the Mediterranean in the fall of 1994.  I know that Pete, Dave, and I would all tell you that the 45 minutes we spent chatting with Julian at the rear of that boat on a gorgeous sunny day was one of the fonder memories we have of time spent with Big Thinkers.  He was funny, charming, and gracious.  And he is missed.

Yes, Simon was a true scholar who worked in a ‘challenge culture’ inside his mind.  I remember how at his Houston Forum talk, “More People, Greater Wealth, Expanded Resources, Cleaner Environment,” he was asked perhaps the hardest question of all: what do you think is the major weakness of your view. (What would your answer be to this question?) I remember the pained expression on Simon’s face as he grabbled with that question. I just knew how hard he was trying…. [Read more →]

February 15, 2010   3 Comments

Will Cape Wind Save Billions? Challenging a Study by Charles River Associates

[Editor note: Glenn Schleede wrote this letter-to-the-editor in response to  a news report published in the Cape Cod Times, "Cape Wind Savings Pegged in Billions".]

Dear Editor:

Thanks for the article in your February 11, 2010, edition, but electric customers in New England should not believe the claim that the Cape Wind project will save them “Billions” on their electric bills.

Frankly, the numbers in the slick 9-page “consultant” study released by the developer of the Cape Wind project of $4.6 billion in savings over 25 years just don’t add up for at least four major reasons:

1. Huge Cost of Cape Wind electricity. The true cost of electricity from wind – particularly offshore wind — is huge. No one who is paying attention expects the price that Cape Wind charges for its electricity to be cheap. In fact, over 25 years, the wholesale cost to New England utilities for electricity from Cape Wind apparently will be well over $5.75 billion and probably much more.

The arithmetic is simple: The CRA “study” (table 1, page 6), shows that the developer expects to produce about 1,150,000,000 kilowatt-hours (kWh) of electricity per year. If utilities are forced to pay even $0.20 per kWh, the utilities cost over 25 years would be $5.75 billion. [1] The cost would be $6.9 billion if utilities have to pay the $0.24 per kWh that NatGrid apparently agreed to pay for electricity from the planned Rhode Island offshore “wind farm.”
Does anyone in New England seriously expect that the WHOLESALE price of non-Cape Wind electricity in New England will average $0.20 or $0.24 per kWh over the next 25 years (up from about $0.08 per kWh in 2008. [2]

You would have to believe that it would be well above $0.20 to $0.24 per kWh to believe that electric customers would SAVE $4.6 billion if Cape Wind is built.

2. The CRA “study” used old data. For some reason not explained in the “study,” CRA used the Energy Information Administration’s (EIA’s) 2009 energy forecast (AEO2009 revised) rather than its 2010 forecast (AEO 2010) that has been available since last December. The fact is that a lot has changed since EIA’s 2009 report, particularly on US natural gas resources. As a result, the prices now expected by EIA for natural gas, electricity, and oil are dramatically lower than the outdated forecast used by CRA. [3] Using current data would lower significantly the CRA-Cape Wind claim for savings.

3. Doubtful Assumptions. The “savings” shown by the CRA report are driven by assumptions, including the assumption that Federal legislation will impose a $30 to $60 per ton charge for carbon emissions. Because of the high uncertainty, an objective analysis would have shown results both with and without this dramatic assumption.

4. Missing Costs. The CRA report is silent on who would bear the cost of the transmission capacity that would be needed to bring the electricity from the Cape Wind project to New England customers. Unless Cape Wind is going to absorb those costs within the price it charges, those costs undoubtedly will be passed along to New England’s electric customers and hidden in their monthly bills. [Read more →]

February 13, 2010   4 Comments

Wind Integration: Incremental Emissions from Back-Up Generation Cycling (Part V: Calculator Update)

Why has California expressed concern over the EPA holding up approvals for natural gas-fired power plants?

Answer: because state regulators know that California’s gas plants are crucial for establishing new wind and solar projects. After all, firming intermittent power sources is essential short of employing cost-prohibitive battery packs to continuously match supply to consumption.

But the analysis can go a step further. What if the gas backup actually runs more poorly in its fill-in role than if it existed in place of the wind and/or solar capacity? It does run less efficiently, in fact, creating incremental fuel use and air emissions that cancel out the fuel/emissions “savings” from wind.

Thus California should go a step further than just allowing new natural gas capacity. Regulators should rethink the rational of wind per se and block its new capacity–if only by removing the government subsidies that enable industrial wind power in the first place.

Background

Parts I to IV (links provided at end) introduced an analytic framework and calculator as a working hypothesis to assess the impact of industrial-scale wind on fossil fuel consumption and CO2 emissions. This post, Part V, provides an update to the calculator. The methodological framework has not changed, and the need for confirmation from actual performance data using extensive real-time local dispatch analysis at finely grained time intervals capable of accurately and sufficiently assessing how wind affects all the variables within the electricity system remains. In summary, the calculator:

(1) refines the emissions rates for the fuel plants modeled;

(2) improves the manner in which fossil fuel consumption is calculated, which increases the amounts previously reported; and

(3) adds a coal plant scenario.

This update also includes examples of the use of some of the input parameters to incorporate subtleties not considered in Part I and Part II. [Read more →]

February 12, 2010   23 Comments

Why the EPA is Wrong about Recent Warming

[Editor note: The author has added an update at the end showing why it can be reasonably argued that anthropogenic greenhouse gases may be responsible for less than half of the observed warming since the mid-20th century]

Back in December, the EPA announced that it had determined that greenhouse gases released by human activities “threaten the public health and welfare of current and future generations.” This “Endangerment Finding” is the first step toward EPA’s issuing regulations aimed at restricting GHG emissions in the U.S.

Unfortunately for the EPA, a major pillar of support of the Endangerment Finding—that “most” of the “observed warming” since the mid-20th century is from greenhouse gas emissions from human activities—has been shown by recent scientific research in major peer-reviewed scientific journals to be largely in doubt.

Add this result to the list of problems that seems to grow longer with each passing day as more IPCC gaffes are uncovered and Climategate emails are parsed. One has to wonder just how long it will be until the EPA is challenged to reconsider its Endangerment Finding.

The basis for the Engangerment Finding is contained in the EPA’s Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (TSD). The TSD does not describe any new, independent research carried out by the EPA (because they did not undertake any), but instead largely summarizes the findings of the Intergovernmental Panel on Climate Change (IPCC).

One of the key statements (from page 2 of the Executive Summary of the EPA’s TSD) is this—a simple mimic the IPCC AR4 finding:

Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG [greenhouse gas] concentrations.

As I shall show, this statement is no longer tenable.

Background

First off, here is my take on what the EPA/IPCC is claiming.

For “most” I’ll assume “more than half.” For “observed increase in global temperature” I’ll assume the linear least-squares regression trend through the most recent version of the global temperature dataset compiled jointly by the U.K.’s Hadley Center and Climate Research Unit (dataset HadCRUT3). [Read more →]

February 11, 2010   40 Comments

“Cap-and-Divide”: More Civil War on the Left Over Capping Carbon

George Carlin once asked, “Is it really possible to have a civil war?” Readers of Joe Romm’s pronouncements on greenhouse gas legislation would answer in the negative. Romm has always been a caustic critic of the “anti-science disinformers” who do not toe the line on the alleged scientific consensus, but lately he has turned his fire on former allies who dare to question the legislative developments in Washington.

An illustration of this internal squabbling is Romm’s recent post on the “cap and dividend” proposal put forth by Senators Cantwell and Collins. Here’s Romm’s take (emphasis added):

Climate politics can be very strange indeed.  Because cap-and-trade bills like Waxman-Markey are seen as having no chance of passing the Senate, some enviros appear to be shifting their support to bills that are politically even less attractive and environmentally even less adequate.

The latest misguided missile is the Carbon Limits and Energy for America’s Renewal (CLEAR) Act put forward by Maria Cantwell (D-WA) and Susan Collins (R-ME) — full text and info hereSupporters call it “Cap-and-Dividend,” but right now I think the best term for it is, “Cap-and-Divide,” since it has no chance whatsoever of becoming law but is serving to undercut the tripartisan effort by Graham, Kerry, and Lieberman to develop a bill that might get 60 votes….

Cap-and-Divide…doesn’t even pass the environmental viability test, as the first-rate researchers at World Resources Institute have shown…. And while W-M is far from perfect environmentally, as I’ve said many times,  it would enable a global deal.  W-M’s biggest problem is that it can’t get 60 votes in the Senate or even close.   But “cap-and-divide” is certainly less politically viable than Waxman-Markey or Kerry-Boxer. [Read more →]

February 10, 2010   1 Comment

The Left Confronts the Eco-Police State (yet another PR problem for climate alarmism?)

An odd thing happened during Sunday night’s Superbowl game: Joe Romm at Climate Progress and I came to the same conclusion regarding an environmentally controversial Superbowl commercial. We both thought the advertisement portraying Audi’s ability to thrive in an environmental police state with its ‘clean diesel’ technology missed its mark here in the U.S., at least among left-of-center environmentalists.

Sure, Romm wanted the Saints and I the Colts in the big game … and Joe would probably like the environmentalist police portrayed in the commercial, while I’d hate it. But still, there were areas of agreement between us, including on the practice of so-called greenwashing.

As Romm puts it, casting a scurrilous aspersion on the appropriateness of Germanic humor:

I’m not sure the German car company understands that the idea of “Green Police” they are spoofing is, in fact, precisely what many conservatives in this country actually think is the primary reason people who care about the environment—the apparent target audience of this ad—are trying to get the nation to take action on global warming.

And by pointing out Audi’s incongruous focus on powerful cars, Romm sees a bit of greenwashing at work: ”Audi isn’t perceived as a green car company, so they aren’t poking fun at themselves, a typically much safer strategy.”

Romm is right on this point. On their website, Audi’s vehicle descriptions focus on driving performance far more than environmental performance. Audi, we’re told, features “legendary,” “nimble,” and “supreme” performance (all euphemisms for high horsepower). The focus is clearly on “Legendary Audi Power,” rather than “Legendary Audi Environmentalism,” as the ad would suggest.

But I wouldn’t call that modest greenwashing, I’d call it blatant and shameless greenwashing–in a league with that of Al Gore, the head of the IPCC, most Hollywood green-advocates, the Obama Administration, and the Democrats in Congress, all of whom encourage others to live green lifestyles while consuming more energy per capita than some of the small countries they claim will be drowned by global-warming-induced sea level rise. And did I mention Nancy Pelosi’s entourage going to climate negotiations in Copenhagen? They put out enough carbon dioxide to fill 10,000 Olympic sized swimming pools! Now that’s a bodyprint, not a footprint, by green standards!

But Romm’s big concern probably isn’t about the state of Germanic humor, nor is it really about greenwashing (he’s all for that when various companies flog his favorite carbon-rationing schemes). It is that humor might inadvertently lead people to actually think about what a future of bag police, lightbulb police, foam-cup police, recycling police, plastic bottle police, and hot-tub-temperature police might be like, and view such a development with less than a humorous attitude. [Read more →]

February 9, 2010   10 Comments

Remembering Julian Simon (1932–1998)

Editor note: Julian Simon is a primary inspiration for this free-market energy blog, the name of which comes from his characterization of energy as the master resource.

Twelve years ago today came the shocking news: Julian Simon, age 65, had died of heart failure after his regular morning workout in Chevy Chase, Maryland. He had undiagnosed heart disease.

Just two months before, I had visited extensively with Simon when he came Houston to give what would be his last major address, titled: “More People, Greater Wealth, Expanded Resources, Cleaner Environment.” A full house of 200 heard Simon that day, and one in attendance, free-market entrepreneur Gordon Cain, was so impressed that he mailed Simon an unsolicited $25,000 check for research.

Simon invited me to coauthor an energy paper with him for a conference he was planning. This excited me, as did his warm inscription to my first edition copy of The Ultimate Resource. After all, he was the latest major influence on me in a line of thinkers that began with Ayn Rand and had continued with Ludwig von Mises and F. A. Hayek. Not unlike other libertarians, I had gone from individualism-is-cool (Rand’s The Fountainhead) to free-markets-work (Mises’s Human Action) to the-perils-of-government-planning (Hayek, various).

I am not the only one to list Simon alongside other top classical liberal/libertarian scholars. Don Boudreaux, chair of the department of economics at George Mason University, wrote:

The three scholars who have had the the greatest impact on my own thinking are F. A. Hayek, James Buchanan, and Julian Simon….  [Simon's] vital idea of “the ultimate resource”  … is one of the most profound—and least understood—in all of the social sciences.

Hayek, in fact, credited Julian Simon for having crystallized the big picture for him and wrote a self-described “fan letter” to him in 1981.

 Dear Professor Simon,

I have never before written a fan letter to a professional colleague, but to discover that you have in your Economics of Population Growth provided the empirical evidence for what with me is the result of a life-time of theoretical speculation, is too exciting an experience not to share it with you. The upshot of my theoretical work has been the conclusion that those traditional rules of conduct (esp. of several property) which led to the greatest increases of the numbers of the groups practicing them leads to their displacing the others — not on “Darwinian” principles but because based on the transmission of learned rules — a concept of evolution which is much older than Darwin.

I doubt whether welfare economics has really much helped you to the right conclusions. I claim as little as you do that population growth as such is good — only that it is the cause of the selection of the morals which guide our individual action. It follows, of course, that our fear of a population explosion is unjustified so long as the local increases are the result of groups being able to feed larger numbers, but may become a severe embarrassment if we start subsidizing the growth of groups unable to feed themselves.

Sincerely, F. A.Hayek

Hayek wrote a second letter upon reading The Ultimate Resource: [Read more →]

February 8, 2010   7 Comments

‘Green’ Wind, ‘Smart’ Grid–A Thought Experiment and a Policy Proposal for the Environmental Left

Suppose you began this morning by learning that some investors and developers had stepped forward with a reportedly new type of commercial grade electrical power called “Zephyr Integrated Power” (ZIP). Being clever, they are spending a LOT of time and money marketing ZIP, knowing that this is their chance to break into the grid in a BIG way.

Their message– ZIP is “FREE, CLEAN, AND GREEN”–sounds great! Oh yes, and for good measure, ZIP will create oodles of jobs.

So the basic question is this: exactly what do we do before we allow these people and their new product on the electric grid?

We wouldn’t be so gullible to just take their word for it, would we? Yet this is exactly what we are doing today!

And there is more: our politicians are so enamored with ZIP that they tell these promoters that we will not only allow them on the grid, we will FORCE utilities to use ZIP. (Hmmm. Wouldn’t utilities WANT to use ZIP if it was so great?) How are utilities going to be forced to use ZIP? Lobbyists have sold our politicians a clever tool called the Renewable Portfolio Standard (RPS) to do just that.

Yet there is more. Despite the supposed benefits (which a free market would obviously jump on without government involvement), our wise government is going to offer the ZIP promoters billions of dollars of taxpayer money and ratepayer guarantees to support their product.

Remember, all this is without independent proof that ZIP has any real benefits…

Sadly, this astounding state of affairs is how our currently lobbyist-driven system operates.

Policy Proposal for the Environmental Left

The Left looks to government to do good things for the environment. My Pollyanna vision is that complex technical matters should be solved by science. So here is my (government-involved) proposal (with apologies to the libertarian bloggers and readers of MasterResource). It would go something like this… [Read more →]

February 6, 2010   9 Comments