Posts from — August 2010

Barring the trickery of a lame duck conference committee, cap-and-trade is dead in the 111th Congress. Some blame President Obama for not taking a more hands-on role. Others blame environmental groups for waging a $100 million lobbying campaign without winning a single GOP convert to the Kerry-Lieberman bill. Others blame the allegedly “well-funded denial machine,” even though proponents, who include major corporations like BP as well as Big Green, must have outspent free-market and conservative advocacy groups by more than 100 to 1.

The August 11 edition of Climatewire (subscription required) featured interviews with Exelon Corp. VP Betsy Moler and Resources for the Future President Phil Sharp, who lament that Republican lawmakers, the “inventors” of “market-based” environmental policy, turned against their own “invention.” Moler and Sharp are trying to spin GOP opposition to cap-and-trade as self-contradictory, hence as unstable, hence as reversible. As Climatewire reports, Moler is not ready to “throw in the towel” and Sharp entertains the hope that a “new kind of coalition” will emerge in the next Congress.

Now, let’s look at this notion, peddled by Moler and Sharp, that Republicans flip-flopped and trashed their own legacy by nixing cap-and-trade. [Read more →]

In his highly relevant study, Dr. Joseph R. Mason, chair of banking at the Ourso School of Business at Louisiana State University, offers a sophisticated estimate of the economic impacts of a federal moratorium on exploratory offshore oil drilling. The new moratorium, issued by the Obama administration after federal judge Martin Feldman issued an injunction banning the government from enforcing the original moratorium, freezes some 33 current exploratory drilling operations and places a six-month ban on the issuance of exploration permits by the MMS (now the Bureau of Ocean Energy Management, Regulation, and Enforcement).

Dr. Mason begins by identifying the “phases” of drilling that support local economies. Exploratory drilling and the development of offshore facilities, the extraction process, and the refining of the crude oil are all identified as impacting Gulf of Mexico economies. Additionally, those services and industries that support the offshore oil drilling sector provide jobs and economic investment in the area. Some of the service industries that Dr. Mason identifies are the chemical, platform construction, drilling services, transportation, gas processing, helicopter construction, and consumer goods industries. Also, the refining phase is likely to create an economic “spillover,” as refining capacity exists in many states outside the Gulf region.

As expected, all of these industries comprise a large section of the overall Gulf economies. In the state of Louisiana, 2005 figures estimate 15.4 percent of total household earnings could be traced back to these earnings, amounting to some $12.7 billion dollars. The moratorium will lead to a cessation of worker training, as well as job losses among those already employed in these industries. One estimate by a consulting firm places total job losses by 2014 at 120,000. Many of these job losses would be outside the “big” oil companies that have become synonymous with the area, as Gulf oil exploration was essentially pioneered by smaller energy companies. [Read more →]

I was recently informed of a website called “Skeptical Science” run by a Mr. John Cook. As a scientist (physicist), I decided to check it out to see what I could learn. I started with the assumption that Mr. Cook was a competent and well-intentioned person. After some looking around there, here’s what I found out and concluded.

The first red flag is the fact that Science (by definition) is skeptical, so why the repetition in the name? It’s something like naming a site “The attractive fashion model”.

Of more concern is the fact that (c0ntrary to what one might be led to believe by the title) the site is actually focused against skeptical scientists — specifically those who have the temerity to question anthropogenic global warming (AGW). Hmmm.

Mr. Cook says he’s motivated by his young daughter’s future. Great — all the more reason he should want to get it right.

I was fascinated by his site’s supposedly comprehensive list of 119 reasons given by “AGW skeptics,” as well as his rather cursory dismissal of each of these.

For instance, his answer to the consensus matter (#3) is that “97% of climatologists support AGW.” Well that in itself is debatable, but nowhere do I see any discussion that addresses the larger issue: the fact that science is not decided by consensus. What was the consensus of 99% of the “experts” about the solar system in Galileo’s time? Twenty-five years ago what was the consensus of 99% of the “experts” about the cause of ulcers? In both cases (and in many others) 99% of the experts were 100% wrong. That is exactly why science is not decided by consensus.

Another example is item #94: “Over 31,000 scientists signed the OISM Petition Project” and his response is  “The ‘OISM petition’ was signed by only a few climatologists.” Maybe I’m missing something, but I thought that this was a scientific matter (remember the website title?). Is he really saying something so elitist as “physicist, chemists, biologists and other scientists are not qualified to assess the scientific legitimacy of AGW”? Apparently so.

Oops — if so then that means that Dr. Hansen’s theories should be discarded, since he is a physicist! [Read more →]

Texas is fighting back against the heavy hand of the U.S. Environmental Protection Agency (EPA). All Americans should be proud of–and other states should take note of—not just the spirit but the technical arguments of the Lone Star revolt.

A recent letter to the EPA by both the state’s Attorney General and the Chairman of the Texas Commission on Environmental Quality made it absolutely clear that the state is not going to comply with the EPA’s regulations on the permitting of greenhouse gas emissions.

From the letter:

Dear Administrators Jackson and Armendariz:

In order to deter challenges to your plan for centralized control of industrial development through the issuance of permits for greenhouse gases, you have called upon each state to declare its allegiance to the Environmental Protection Agency’s recently enacted greenhouse gas regulations–regulations that are plainly contrary to United States law [citations omitted]. To encourage acquiescence with your unsupported findings you threaten to usurp state enforcement authority and to federalize the permitting program of any state that fails to pledge their fealty to the Environmental Protection Agency (EPA).

On behalf of the State of Texas, we write to inform you that Texas has neither the authority nor the intention of interpreting, ignoring, or amending its laws in order to compel the permitting of greenhouse gas emissions.

Background [Read more →]

“Material insufficiency and environmental problems have their benefits, over and beyond the improvement which they invoke. They focus the attention of individuals and communities, and constitute a set of challenges which can bring out the best in people” (emphasis added).

- Julian Simon, The Ultimate Resource 2 (1996), p. 587.

“We need our problems, though this does not imply that we should purposely create additional problems for ourselves.”

- Julian Simon, The Ultimate Resource 2 (1996), p. 588.

If he were alive, Julian Simon (1932–1998) would apply his view that our problems can make us better to the worst-case scenario that BP uniquely brought to life in the Gulf of Mexico this year.

Simon argued that there was a third driving force or condition for human improvement beyond the the institutional  framework for progress (private property, voluntary exchange, the rule of law) and the insightful reasons given for capitalistic progress (motivation, effective use of knowledge, trial and error feedback, etc.).

The third element is the very fact of problems and setbacks, which create challenges that human ingenuity would not need to confront and solve as much as in an incremental improvement process.

The recent Gulf oil spill was certainly not anticipated by anyone in government or in private industry. Yet it happened. And BOOM, the whole offshore industry had to lock heads to try to find the best way to contain the spill and to eventually stop the same. After 87 days, the runaway well was capped. After about 110 days, the cement held, and the well was entombed.

And now will come a new generation of offshore technology to ensure that such an accident does not happen again (see below). Whatever the combination of new regulation, insurance requirements, or just best practices for cost minimization, there must be sound, failsafe, redundant technology for safe, spillage-free deepwater exploration. The reprinted article before is one early recognition of this fact.

APPENDIX: OFFSHORE DRILLING: Disaster Will Lead to Leaps in Engineering Innovation, Greenwire, July 20, 2010.

Disaster begets innovation more often than success does. The modern feats of technology often stemmed from some inevitable mistakes, say historians of engineering.

“It’s a great source of knowledge — and humbling, too — sometimes that’s necessary,” said Henry Petroski, a historian of engineering at Duke University and author of the book, “Success Through Failure.” “Nobody wants failures. But you also don’t want to let a good crisis go to waste.”

The Deepwater Horizon incident, experts say, will provide rich fodder to spur innovation into developing safe and complex techniques to drill into ever-deeper waters. Among lessons learned from this incident are ones about the importance of blowout preventers — the switches on top of wells that cut off the oil supply and are often the last line of defense. The devices were not working in the Gulf of Mexico oil spill.

Environmentalists learned a different lesson about the need to move away from offshore drilling and reduce the amount of greenhouse gas emissions into the atmosphere.

But the history of engineering suggests that though devices may become unfavorable, whole ideas do not become obsolete. Following the Hindenburg disaster where a hydrogen-filled blimp exploded, engineers simply built airships with inert helium gas. Other disasters including the sinking of the Titanic, the Chernobyl nuclear reactor meltdown and the collapse of the World Trade Center all taught engineers to come to terms with flaws and evolve.

Engineers think that the present disaster will help wells become safer as designers search for solutions to reduce risk. The profession itself is inherently problem-solving and would not concern itself with the politics or ethics of reducing dependence on oil, say historians.

Forensic engineers say that analyzing the Deepwater Horizon disaster will take time, and investigations will be necessary to refine the art of drilling. One of the biggest lessons so far: to build blowout preventers with more than one blind shear ram. These blades slice right through the pipe to cut off flow, and two of these plates would be better than one.

“It’s like our personal lives,” said David Fowler, a professor at the University of Texas, Austin, who teaches a course on forensic engineering. “Failure can force us to make hard decisions” (William Broad, New York Times, July 20). –GV

[This post, an abstract of a longer article from The American, was written with the assistance of Hiwa Alaghebandian, an energy and environment research assistant at AEI. Dr. Green's post The Death Spiral for Climate Alarmism Continues (June 2, 2010) is one of the most viewed and influential published at MasterResource.]

In a Wired article published at the end of May, writer Erin Biba bemoans the fact that “science” is losing its credibility with the public. The plunge in the public’s belief in catastrophic climate change is her primary example. Biba wonders whether the loss of credibility might be due to the malfeasance unearthed by the leak of emails from the Climatic Research Unit at the University of East Anglia in the United Kingdom, but comes to the conclusion that malfeasance isn’t the cause of the public’s disaffection. No, people have turned against science simply because it lacks a good public relations outfit. Biba quotes Kelly Bush, head of a major PR firm, on the point:

Bush says researchers need a campaign that inundates the public with the message of science: Assemble two groups of spokespeople, one made up of scientists and the other of celebrity ambassadors. Then deploy them to reach the public wherever they are, from online social networks to “The Today Show.” Researchers need to tell personal stories, tug at the heartstrings of people who don’t have PhD’s. And the celebrities can go on “Oprah” to describe how climate change is affecting them—and by extension, Oprah’s legions of viewers.

“They need to make people answer the questions, What’s in it for me? How does it affect my daily life? What can I do that will make a difference? Answering these questions is what’s going to start a conversation,” Bush says. “The messaging up to this point has been ‘Here are our findings. Read it and believe.’ The deniers are convincing people that the science is propaganda.” [Read more →]

For months, the corn ethanol industry has been pushing the Obama administration for permission to increase the amount of ethanol that can be blended into the U.S. gasoline supply.

But the ethanol industry’s opponents are launching a counterattack. And it’s a big one. Last week, a coalition of 36 groups sent a letter to the leaders of the Senate asking them to reject “any attempt to attach a mid?level ethanol authorization amendment during the Senate’s consideration of energy legislation in the coming weeks and months. Such an amendment would be bad for consumers, bad for safety, bad for the environment, and, by placing politics over sound science, bad public policy.”

FollowTheScience.org

The group, which has dubbed itself FollowTheScience.org, may be the oddest coalition in modern American politics. Indeed, the ethanol scam is so offensive that it has united groups ranging from the American Petroleum Institute and the National Petrochemical & Refiners Association, to the Natural Resources Defense Council and the Sierra Club.

Members of the coalition include:

American Frozen Food Institute (AFFI)
American Lung Association
American Meat Institute (AMI)
American Petroleum Institute (API)
American Sportfishing Association (ASA)
American Watercraft Association (AWA) [Read more →]

[Editor note: Harry de Gorter is Professor in the Department of Applied Economics and Management at Cornell University; Jerry Taylor is a senior fellow at the Cato Institute specializing in energy and environmental policy.]

The nonpartisan Congressional Budget Office (CBO) recently issued a report on how the corn-ethanol tax credit costs $1.78 to reduce one gallon of gasoline consumption and $754 to reduce one ton of greenhouse gases. The Wall Street Journal immediately noted that “to put that [latter] number in perspective, the budget gnomes estimate that the price for a ton of carbon under the cap-and-tax program that the House passed last summer would be about $26 in 2019”.

While this study is being used by critics of the tax credit - which will cost about $30 billion over the next five years and is up for reauthorization this year - the CBO nonetheless severely underestimates the true costs of the ethanol tax credit in their calculations because:

(1) It ignores the existence of the ethanol consumption mandate (the Renewable Fuel Standard);

(2) It assumes each (energy equivalent) gallon of ethanol produced due to the tax credit replaces a gallon of gasoline;

(3) It ignores the fact that with an ethanol consumption mandate, the ethanol tax credit subsidizes gasoline consumption instead, and

(4) It erroneously suggests that the ethanol consumption mandate has not been binding in the past.

We analyze each error in turn. [Read more →]

A new frontier for the world energy market is atop the world where thawing sea ice (a positive externality in this case) has opened up the possibility of major energy and other mineral production. The U.S., Canada, Russia, Denmark (via Greenland), and Norway have stakes in the Arctic domain:

Estimated potential resources are substantial (see below). The challenge is to turn potential resources in proven and probable reserves of both oil and gas.

New Developments: One Bad, One Good

Unforeseen events can have an enormous impact on the development of new markets and on public policy. Two such events occurred in April 2010. [Read more →]

The North American Electric Reliability Corporation (NERC), an international regulatory authority whose purpose is to ensure reliability of the bulk power systems in North America, has just released a study on the Reliability Impacts of Climate Change Initiatives. It provides a comprehensive review of future reliability risks including smart grid initiatives. NERC appropriately looks at a number of future time frames, or horizons, which provide perspective in its analysis – 1-10 years, 10-20 years, and 20-plus years (up to 2050).

A review of the NERC study by Environment & Energy Publishing (E&E), reproduced as an appendix to this post, noted:

“A task force on climate change formed by North American Reliability Corp. urges that policy makers not count on large amounts of renewable energy, demand reduction from smart grid systems or new storage technologies before they prove they can be worked into the grid without endangering the system’s reliability.”

[Read more →]