A free-market energy blog
Random header image... Refresh for more!

Posts from — November 2012

Bill McKibben: Energy Enemy Number One

Bill McKibben, who has been called “the nation’s leading environmentalist,” is leading a movement to destroy the fossil fuel industry, which he calls “Public Enemy Number One.” This is the signature issue of his mega-popular organization 350.org under the names Do the Math and Fossil Free.”

As an energy researcher who knows the indispensability of the fossil fuel industry to my own life and billions of lives around the world, I am doing whatever I can to stop this movement.

My Debate with Bill McKibben

Earlier this month I publicly debated Bill McKibben in order to make the case that his quest “to cut our fossil fuel use by a factor of 20 over the next few decades” is pseudoscientific and suicidal.

Throughout the debate I stressed four points:

  1. For the foreseeable future, fossil fuels are the indispensable source of the abundant, affordable energy that human flourishing depends on.
  2. The proven science about climate illustrates a mere half-degree warming in the last 70 years, including virtually no warming in the last 15McKibben’s claims of catastrophe are based on the extreme speculation of climate prediction models that can’t predict the climate.
  3. The overall impact of fossil fuel use and the technologies it powers has been to make our climate dramatically safer–climate-related deaths have fallen 98% since 1920.
  4. The world desperately needs more energy–3 times as much if everyone is to get to the same level as Germany–and yet McKibben is calling for 95% of fossil fuels to be illegal.

Readers should watch the debate and draw their own conclusions, but from my vantage point the thing that struck me most about McKibben’s approach was that he was intellectually and emotionally indifferent to the fundamental importance of affordable, abundant energy. [Read more →]

November 30, 2012   14 Comments

Energy Transformation and “Moore’s Curse”: Realism Before Action

[Editor Comment: Previous posts at MasterResource (see here and here) have critically reviewed Moore's Law applied to energy systems. Mr. Lightfoot revisits the issue below based on his article in Engineering Dimensions (May/June 2013). His views about the need for government direction to achieve energy transformation are the author's alone.]

In a 2009 speech before the United Nations, Israeli Prime Minister Benjamin Netanyahu spoke about hope for the future:

“It took us centuries to get from the printing press to the telephone, decades to get from the telephone to the personal computer, and only a few years to get from the personal computer to the internet. What seemed impossible a few years ago is already outdated, and we can scarcely fathom the changes that are yet to come. We will crack the genetic code. We will cure the incurable. We will lengthen our lives. We will find a cheap alternative to fossil fuels and clean up the planet.”

Mr. Netanyahu was expressing a commonly held assumption – that the history of telecommunications and microelectronic development will predict the development trajectory of a low-carbon energy future.

The phenomenon described by Mr. Netanyahu is called Moore’s Law, named after the co-founder of Intel, Gordon E. Moore, who described the trend of accelerating computing development in the 1960s. He noted that the number of transistors that can be placed inexpensively on an integrated circuit has doubled approximately every two years. This trend has continued for more than half a century.

Vaclav Smil, a widely recognized energy expert, has written extensively on the history of energy technology development, taking a multi-disciplinary approach. He has given due consideration to the viability of applying Moore’s Law to energy systems. His views on this subject can be summarized as follows from his 2006 speechEnergy at the Crossroads,” given at the 2006 OECD Global Science Forum:

“[F]uture technical developments will not conform to simplistic notions of accelerated development and exponentially declining costs of new conversions”…. Energy transitions span generations and not, microprocessor-like, years or even months: there is no Moore’s law for energy systems.”

Moore’s Curse

Professor Smil has even given a name to the belief that transitioning to a low carbon/sustainable energy future will follow a Moore’s Law like trajectory – Moore’s CurseMoore’s Curse, leads to several negative outcomes: [Read more →]

November 29, 2012   3 Comments

Saving the Wind Industry: Henry Hazlitt’s Lesson Applied Today

“Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousand fold by a factor that is insignificant in, say, physics, mathematics or medicine – the special pleading of selfish interests.”

- Henry Hazlitt, Economics in One Lesson (1946)

Henry Hazlitt (d. 1993) was born on this day in 1894. As has been done with other great classical liberal thinkers at MasterResource, this post celebrates Hazlitt’s birthday by applying his thinking to the current policy debate.

Specifically, Chapter 14 of Hazlitt’s book Economics in One Lesson, “Saving the X Industry,” despite being published in 1946, enlightens the current discussion about the wind production tax credit, which is set to expire at the end of this year unless Congress extends it.

I first read Hazlitt’s book while studying economics in college. It was a refreshing departure from the textbooks I was reading at the time, which were more numbers-focused and removed from reality. Economics in One Lesson is easy reading (some might say that’s because the truth is easy to understand), but for me it carried much more weight than the average textbook. It reframed my thinking and showed how widespread the broken window fallacy (the fallacy of believing that destruction creates positive net economic activity) is in our energy debates.

Economics in One Lesson traces through the many applications of the broken window fallacy, as they arose in past debates over economic policy. Those selfish interests repeated the same argument for nearly all industries that struggled to succeed in a competitive environment, so Hazlitt devoted a chapter to the “X” industry (the fill-in-the-blank industry). [Read more →]

November 28, 2012   3 Comments

Texas Windpower: Will Negative Pricing Blow Out the Lights? (PTC vs. reliable new capacity)

“It is well known that Texas is undergoing a major challenge in maintaining resource adequacy due to improper price signals; less well known is that a significant portion of the problem can be laid directly on the doorstep of subsidies for wind generation.”

The federal Production Tax Credit (PTC), which currently provides a $0.022/kWh subsidy to qualifying renewables, is set to expire at year-end. Just the prospect of expiration has dramatically slowed new construction of industrial wind capacity, despite a raft of other subsidies to politically correct energy. [1]

The Texas Public Policy Foundation has released a new paper looking at the effect of the production tax credit both on taxpayers and consumers. Bill Peacock and I found that PTC continuance puts the Texas electricity market at increased risk of price spikes and blackout by discouraging the construction of new reliable, on-peak generating capacity.

Texans are not only paying for the PTC’s direct annual cost of $622 million; they could pay billions of dollars more from forgone capacity given negative pricing where wind producers generate unneeded electricity just to pocket tax credits.


It is well known that Texas is undergoing a major challenge in maintaining resource adequacy due to improper price signals; less well known is that a significant portion of the problem can be laid directly on the doorstep of subsidies for wind generation.

When wind is bid into the market at a negative price, superior forms of generation must match that price or risk getting knocked off the grid. This decreases the profitability of non-wind generation and makes companies less likely to invest in new capacity. This has already degraded Texas’s resource adequacy, and it could get worse before it gets better. This increases the risk of blackouts if unusual events reduce capacity and/or increase demand. [Read more →]

November 27, 2012   3 Comments

San Francisco’s ‘Green’ Energy Plan: Back-Door Coercion, Front-Door Costs

“I don’t think it’s the right thing to do to foist onto consumers … 20 to 30 percent higher energy rates in an opt-out program. If people want to spend more money … to buy green energy … that is terrific…. But to coerce them into doing it in an opt-out program … is the wrong approach.”

-   Mark Farrell, San Francisco Supervisor, 2012 (quoted below)

Thousands of San Francisco residents may be sucked into a green energy plan that will raise their electricity rates 77 percent without their knowledge or consent. Beginning next spring, half of the city’s 375,000 residential ratepayers will automatically be enrolled in CleanPowerSF – unless they take action to opt out of the program. Eventually the entire city will be enrolled in the program unless they choose to opt out.

Here is the sales pitch of CleanPowerSF:

Currently, you don’t have a choice in how PG&E selects your power. Your PG&E electricity is generated from a portfolio that includes carbon-emitting and nuclear energy sources like natural gas and nuclear power. CleanPowerSF will generate your electricity from a 100% renewable electricity portfolio. CleanPowerSF’s energy mixture will utilize resources like solar, wind, biogas and geothermal power, effectively the cleanest energy available in the United States.

City officials are hoping at least 90,000 households will choose to remain in the program — despite paying an average $18 more each month. That could be a safe bet, because many liberal, wealthy San Franciscans will embrace the opportunity to boast that their power is coming from a clean, green, renewable energy source.

Many residents, perhaps tens of thousands, who could not care less where their energy comes from may be stuck with a 23 percent total rate hike (the 77 percent commodity-charge increase averaged down by unchanged items such as transmission). They would be unaware of the change and not know about their option to get out of it–thanks to CleanPowerSF’s “Do nothing, and you will receive cleaner energy; it’s that simple” siren song. [Read more →]

November 26, 2012   4 Comments

Thanksgiving & Capitalism

In good economic times or bad, Thanksgiving is when Americans gather with their families and friends and enjoy the most special meal of the year. The event remembers those early Pilgrim Fathers who crossed the uncharted ocean from Europe to make a new start in Plymouth, Massachusetts.

What is less appreciated is that Thanksgiving also is a celebration of the birth of free enterprise in America.

The English Puritans, who left Great Britain and sailed across the Atlantic on the Mayflower in 1620, were not only escaping from religious persecution in their homeland. They also wanted to turn their back on what they viewed as the materialistic and greedy corruption of the Old World.

In the New World, they wanted to erect a New Jerusalem that would not only be religiously devout, but be built on a new foundation of communal sharing and social altruism. Their goal was the communism of Plato’s Republic, in which all would work and share in common, knowing neither private property nor self-interested acquisitiveness.

Collectivism Tried and Abandoned

What resulted is recorded in the diary of Governor William Bradford, the head of the colony. The colonists collectively cleared and worked land, but they brought forth neither the bountiful harvest they hoped for, nor did it create a spirit of shared and cheerful brotherhood. [Read more →]

November 22, 2012   4 Comments

Alliance for Wise Energy Decisions: Recent Newsletter

The Alliance for Wise Energy Decisions (AWED) is an informal coalition of individuals and organizations who are interested in improving national. state and local energy & environmental policies. Our basic position is that: 1) we do have energy and environmental issues, and 2) these technical matters should be resolved by using genuine science.

Instead our energy and environmental policies have essentially being written by those who stand to economically or politically profit from them. As a result of our current methodology, anything genuinely science-based in these policies is usually inadvertent and accidental.

A key element of AWED’s efforts is to educate the public. Towards that end we send out a newsletter every 2-3 weeks, and this attempts to put some balance into what the mainstream media is conveying about energy and environmental matters. The newsletter readership is now about 10,000.

Below is a sample newsletter that combines parts of the two most recent issues. [Read more →]

November 21, 2012   3 Comments

Wind PTC: Facts vs Fluff

“AWEA says that Congress should provide a tax credit for high-income earners to pay less than their “fair share,” while middle-class taxpayers borrow $12+ billion from China to subsidize an expensive, unreliable, environmentally destructive, alternative energy source, based on unsubstantiated claims, that will actually result in net job losses! Exactly why is that a good idea?”

Last week, head wind lobbyist, Denise Bode (AWEA), waxed eloquently about why extending the wind Production Tax Credit (PTC) is a splendid scheme that some of our legislators are supposedly supporting.

This immediately brings to mind Upton Sinclair’s insightful observation: “A man cannot be expected to understand something when his income depends on his not understanding it.”

Put another way, when a salesperson says their product is the cat’s meow, be careful that you don’t get caught in the claws.

‘All of the Above’: Caveat emptor

Denise says that an “All of the Above” energy policy is a terrific plan — but is it?

Let’s skip the hype and do some critical thinking about this for a minute, and see if this superficial sound-bite is sensible.

If we use all energy sources, that would include expensive sources — how is that a good idea?
If we use all energy sources, that would include unreliable sources — how is that a good idea?
If we use all energy sources, that would include environmentally destructive sources — how is that a good idea?

If you are connecting the dots here, you can now understand why Denise loves the “All of the Above” slogan — as (surprise!) such a lax directive would qualify her expensive, unreliable and environmentally destructive product to be included in our energy mix! [Read more →]

November 20, 2012   5 Comments

Environmental Battles Under Obama 2

“America can continue paying billions in subsidies annually to finance “green” technologies and agenda-driven science. Or we can generate hundreds of billions a year in royalties and taxes, create millions of jobs, and rejuvenate our economy by applying commonsense regulation to the Big Three consumer-chosen energies–oil, gas, and coal.”

The United States is now Balkanized into five distinct voting blocs, notes Joel Kotkin (two blue, two red, one blue?red). Other political analysts see the nation bifurcating along “makers” and “takers” lines, while still others say 50.6% of the popular vote is hardly a mandate.

In any event, when American voters reelected President Obama, they also returned his wide-ranging agenda at the EPA, Interior, Energy, and Justice departments for “fundamentally transforming” our nation from its limited-government roots. And not in the name of sound science and realistic tradeoffs between market failure and government failure. 

This won’t mean just ObamaCare, higher taxes on businesses and families, deficit spending, and tens-of-thousands of pages of new regulations. It will also bring more disputes over energy and environmental policies, the vanguard of Mr. Obama’s determined campaign to substitute so-called “green” energy for hydrocarbon energy.

Six-Front Interventionism

This conflict will be fought primarily on six battlegrounds.

1. Carbon taxes

Hurricane Sandy presented another pretext for regulating and taxing hydrocarbons. No respectable climatologist or meteorologist believes atmospheric carbon dioxide conjured up the destructive storm, but climate alarmism has always been about political science, not real science. [Read more →]

November 19, 2012   3 Comments

Governors Demand Wind PTC to Cover State Costs

“The Governors know that the federal PTC disproportionately benefits States with renewable mandates by distributing the high cost of their policies to taxpayers at large. They also understand that eliminating the PTC will impose the full burden of costly renewable mandates squarely on the States who enacted them. If California, New York, and Minnesota mandate large wind development, it’s appropriate they bear the full cost of their energy choices.”

The United States is in the midst of a fiscal crisis. If Congress and the White House are unable to reach agreement on spending by January 1, crushing tax increases and draconian budget cuts will go into effect sending the country’s already weakened economy into another destructive recession.

Against this backdrop, the 23-member Governors’ Wind Energy Coalition put aside their own states’ $2+ trillion deficits[1] to deliver a message to Congress — extend the wind production tax credit (PTC).

The staged media event on Capitol Hill was a modern-day equivalent of Nero fiddling while Rome burned.

The Letter

In their letter, the governors acknowledge the wind industry is not yet competitive with other fuel sources but insist it will be “in the not-so-distant future.” [Read more →]

November 16, 2012   4 Comments