A free-market energy blog

“The ‘bait’ for legislators is each gets to ‘bring home the bacon’ in the form of rebate checks to voters and huge new tax revenues for the federal government…. The ‘switch’ … is to propose baby steps for the first 10 years [versus what will be necessary] … in the out years.”

The “Climate Protection Act” (House) and Sustainable Energy Act” (Senate), are the latest, and perhaps the most onerous, in a series of legislative proposals that seek to tap the immense revenue stream promised by taxing carbon dioxide (CO2) emissions from  fossil-fuel burning.

So-called Boxer-Sanders will neither “protect” the climate nor protect consumers and taxpayers despite its start-small provisions and gentle rhetoric.

Bait …

Sen. Barbara Boxer (D-Calif.), chair of the Environment and Public Works Committee, recently signed on as a co-sponsor of Sen. Bernie Sanders’ (I-Vt.) “fee and dividend” carbon tax legislative proposal. The law would impose a “fee” on carbon emissions at their source and rebate a “dividend” to “legal residents of the U.S.” for a portion of the cost impact of the tax, along with other incentives. The legislation carefully substitutes the more benign “fee” in place of the more pejorative “tax,” which it is. The government will also slice off a healthy portion of the carbon tax revenue for its own use. [Read more →]

“From all signs, the wind-energy field has reached that all-important turning point.”

- C. Flavin, Wind Power: A Turning Point (Worldwatch Institute: July 1981), p. 47.

Christopher Flavin, long associated with the Washington, DC-based Worldwatch Institute (see appendix below), was among the most thoughtful and prolific energy writer in the neo-Malthusian energy/environmentalist camp. His tone was positive, his writing clear, and his research well documented. Flavin’s work is scholarly compared to his (shrill) predecessor, Lester Brown, the founder of WorldWatch. Still, Flavin’s final products are little more than lawyer briefs for energy/climate alarmism.

Flavin is now paying the price for assuming alarmism to hype market-incorrect energies. He banked on wind and solar as primary energies despite the fact that they were dilute, intermittent, and environmentally invasive. Flavin pretty much forgot his early caution and warnings about windpower (see his introduction to Paul Gipe’s Windpower Comes of Age).

Flavin’s writings on the inevitability of windpower and the global warming issue inspired none other than Ken Lay, whose Enron invested in and lost money with solar, wind, and energy efficiency. That is a story for another time.

“Oil Short” World

Here is Flavin’s bio at the time of this piece, which reveals another spectacularly wrong prediction from the title of his then new book. [Read more →]

“The tax will not be implemented in the politically aseptic world of academic modelers, but in the real world of intense  political pressures. Its assumed purity will not survive the onslaught [as demonstrated by] … Sanders-Boxer [where] the carbon tax is treated as a huge honeypot for allocating money to powerful groups, including overseas interests.”

The carbon tax, a serious proposal supported by some thoughtful people, deserves careful consideration. This tax is the subject of an extensive and often technical literature with top scholars making proposals for Resources for the Future and for the Brookings Institution. [1] The term “carbon tax,” however, has a chameleon-like quality, meaning something different in each of three different contexts.

Three Rationals

In the context of economic theory, the carbon tax is a way to deal with an imperfection in the energy market. In this world, carbon dioxide (CO2) emissions cause harm for which the emitter does not pay. The purpose of the tax is to impose the full cost of his activities onto the user of carbon-based fuel, so as to force him to incorporate the cost of the harm into the price of the fuel. Once the level of harm and its costs are included in market prices, then the energy market will work properly.

In this formulation there is no preconception about the proper level of the tax or the final outcome of the competition between sources of energy. The tax is set by careful assessment of the costs of the harm caused by the emissions, and the level of use of carbon fuels is then determined by market prices. [Read more →]

[Ed. note: Dr. Grossman is author of the just-released U.S. Energy Policy and the Pursuit of Failure, an important and sobering tome with much insight about today's debate.]

The U.S. government has claimed over the years one and one reason only for government intrusion into markets: Market failure. As a Carter administration document put it:

The first assumption for any commercialization activity by the government is that the market either has failed or will fail to make the optimum choice … [and] that the government policy maker can make a better selection than can the market.

Every administration has reiterated something like this. The Clinton administration made the point that the government needed to get involved in creating an 80-miles-per-gallon “supercar” because as the president claimed, “[T]here are a lot of things that we need to be working on that market forces alone can’t do.”

In any case, the endeavor was a flop—like virtually every effort at government development of new energy-using technologies or alternative energy resources. It cost U.S. taxpayers about $1.5 billion.

Government Failure?

But what was that supposed market failure? Clinton didn’t say, but it seems his administration thought the failure was an information problem; the market was lacking foresight. The price of gasoline was too low (whatever that meant), and so government had to step in to help create something people would need when the price went up [Read more →]

“We were motivated by the public and political controversy fostered by alarming predictions of impending catastrophic anthropogenic global warming [at] NASA …. Many of us felt these alarming and premature predictions … would eventually damage NASA’s reputation for excellent and objective science and engineering achievement.”

The U.S. Global Change Research Program (USGCRP) was established in 1990 in order to “assist the nation and the world to understand, assess, predict, and respond to human-induced and natural processes of global change.”  Two reports have been released (2000 and 2009), and a third one is due out this year.

The whole (government) exercise from the beginning has been predictably politicized. The reports are a lawyer’s brief for climate alarmism and policy activism–complete with a call for expanded federal research dollars. But the lack of even-handedness with the physical science, no to mention the scientific method itself, has reached crisis proportions.

Will this change with the third national assessment? The draft 2013 report has received extensive corrective comments. Enter the Right Climate Stuff Research Team. Excerpts from their Anthropogenic Global Warming Science Assessment Report (April 12, 2013) are presented below.

——————————

The Right Climate Stuff (TRCS) research team is a group of engineers and scientists, most of whom are retired NASA Johnson Space Center employees, who have successfully worked together on manned space projects since the early days of the Apollo Program.

Although climate science is not one of our technical specialties, the required expertise in physics, chemistry, geology, meteorology, biology, data analysis and interpretation, and complex systems modeling, is similar to our collective academic training and experience gained through our typical 40 -50 years of experience working in our nation’s space program. Our natural interest in the Anthropogenic Global Warming (AGW) controversy led to invitations to guest speakers on the subject at our occasional NASA retiree organization meetings.

Responding to additional interest generated from these guest speakers, our NASA retiree organization hosted two Symposiums on global warming topics during September and October 2011, featuring speakers on either side of the AGW debate. These symposiums generated even more interest in climate science and motivated self-study of the science and related data by some of our colleagues.

In February 2012, we organized TRCS research team to coordinate and share our individual studies of climate science. We were motivated by the public and political controversy fostered by alarming predictions of impending catastrophic anthropogenic global warming by NASA’s current leadership of climate science research at the Goddard Institute for Space Studies (GISS).

Many of us felt these alarming and premature predictions of a climate disaster with so little empirical data to support these claims, would eventually damage NASA’s reputation for excellent and objective science and engineering achievement. Some members of our TRCS team, as well as a wider population of NASA retirees, signed two letters sent to the NASA Administrator expressing our concerns about alarming public statements regarding catastrophic AGW by NASA leaders of climate research.

These letters expressed concern that such statements by high NASA officials would be interpreted by the general public as official positions of NASA, and that such statements did not result from a wider NASA internal and external review and scientific debate that our nation has come to expect from official NASA positions on controversial issues.

Call to Action

Because of our past successes, working in a team environment to achieve difficult objectives, our TRCS team were confident that we had or could recruit the requisite expertise in all required scientific disciplines to study published climate research and available significant data to form an independent, objective assessment regarding the alarming and controversial claims of catastrophic AGW.

We invited others with interest and expertise to join our team and to share what they had learned from their previous individual studies of the scientific issues involved. In particular, the Texas State Climatologist, John Nielson-Gammon, agreed to work with us on this project and has been an invaluable resource in recommending peer-reviewed research for us to consider and in helping to moderate our discussions regarding critical reviews of available research papers. He has done an excellent job of defending the main stream climate science viewpoints on the AGW issue, and we are identifying the unsettled scientific issues that require further study and definition.

In addition to our study of peer-reviewed research, we have been fortunate to have several nationally known climate researchers make presentations of their research findings and scientific positions to our group.

As we proceed further with this project, we welcome similar presentations from scientists on both sides of the AGW controversy.

There are many fascinating aspects of climate science and various hypotheses to pursue that might explain what we can observe in the data, and that interest different members of our group to varying degrees. However, we decided that we would focus our initial TRCS team technical investigation on the most pressing question facing our public policy decision-makers,

“To what extent can human-related releases of CO2 into the atmosphere cause earth surface temperature increases that would have harmful effects?”

This is a summary report of what we believe to be true with high confidence at this point in our investigation.

Note: This diversity of opinion would be essentially academic had not many in the climate science community chosen to engage in direct advocacy to influence public policy on a global scale. This advocacy, particularly at the UN level, portends toward massive carbon-tax wealth-transfer payments, which would lower the standard of living in developed economies, and threatens the rise of underdeveloped economies out of poverty, i.e., it can be said with a high assessed confidence that the “cost” portion of the cost-benefit analysis to mitigate CO2 emissions will be excessive, crowding out more productive ways to spend the money.

The legitimacy of the Carbon-based AGW hypothesis is thus rightly subject to public challenge.

Conclusions

With respect to this topic, our bullet point conclusions are:

• Carbon-based AGW science is not settled. This refers only to the Carbon or CO2 role in induced warming.

• Natural processes dominate climate change (although many are poorly understood).

• Non-Carbon-based AGW anthropogenic forcings are significant. These include land use change, Urban Heat Island (UHI) effect, black carbon, and aerosols.

• Carbon-based AGW impact appears to be muted. Other sources are not necessarily muted; the impacts of changing solar activity, El Nino/La Nina – southern oscillation (ENSO), Pacific Decadal Oscillation (PDO), Atlantic Multidecadal Oscillation (AMO), , black carbon, etc., are observable.

• Empirical evidence for Carbon-based AGW does not support catastrophe.

• The threat of net harmful total global warming, if any, is not immediate and thus does not require swift corrective action.

• The U.S. Government Is Over-Reacting to Concerns About Anthropogenic Global Warming.

Final Thought

Our main objective of determining to what extent CO2 concentrations in our atmosphere can cause detrimental global warming has led us to an objective conclusion that this issue is not settled science.

Unfortunately, the scientific progress on this issue has been corrupted by political and special interest influences that determine where our research dollars get spent. Political influences in government sponsored research have focused climate change research on CO2 rather than a broader range of factors that need better definition.

“The energy and economic welfare of the United States and Mexico are intertwined by our shared geography, geology, and peoples. The Transboundary Hydrocarbon Agreement will help to tie our countries together and grow our economies.”

- Daniel Simmons, Testimony before House Natural Resources Subcommittee on Energy and Mineral Resources, “U.S.-Mexico Transboundary Hydrocarbon Agreement and Steps Needed for Implementation,” April 25, 2013.

Mexico is America’s third largest trading partner and has been one of the largest sources of oil exports to the United States. Mexico is the largest recipient of U.S. gasoline exports and the second largest recipient of our natural gas exports.

The energy trade between the United States and Mexico is growing, especially for America’s finished petroleum and natural gas exports. Mexico’s heavy oil production is falling, but that means more spare refining capacity on the Gulf Coast if Canadian oil sands can be transported to the Gulf Coast.

The Gulf of Mexico is one of the most prolific hydrocarbon-producing areas for both the United States and Mexico. Oil production, especially in deepwater on the U.S. side of the border, has moved closer to the U.S.-Mexico maritime border in recent years. Until last year, however, there was no agreement on how to divide resources between the United States and Mexico for resources that straddle the border.

The Agreement

A Fact Sheet released by the U.S. Department of State on February 20th announced and described the Transboundary Hydrocarbon Agreement. [Read more →]

“The notion that energy efficiency measures might bring deep emissions reductions along with greater economic growth has long promised an attractive ‘win-win’ for policy makers and business leaders. The extensive literature on rebound presents an uncomfortable challenge to this view, undermining the idea that efficiency leads to decreased energy use on anything approaching a one-to-one basis.”

The International Energy Agency’s World Energy Outlook 2013 grossly overestimates how much energy efficiency can reduce greenhouse gas emissions, according to scholars cited in this very study. As such, IEA’s claim that demand-side measures can account for almost three-quarters of emission reductions by 2020 could result in global-warming mitigation efforts that overinvest in efficiency and underinvest in low- and zero-carbon energy technologies.

The Paris-based agency’s projections of emissions reductions from energy conservation and efficiency are based on questionable assumptions, experts said, pointing out that rebound effects frequently take back much or all of the energy savings that efficiency policies attempt to capture.

Though the “rebound effect” is little known to policy makers, researchers around the world have published well over 100 peer-reviewed articles documenting empirically that energy savings from increased efficiency of factories, cars, and houses can result in rebounding energy consumption. Depending on the sector in question and the efficiency policies that are implemented, estimates of rebound range from just 5 percent to well over 100 percent. [Read more →]

A new study from researchers at Harvard University alleges that FracFocus “fails as a regulatory compliance tool.” Those of us who are actually familiar with the issues involved in fluid disclosure know that’s not true, but it seems the media saw a narrative too enticing to question: another alleged “failure” regarding hydraulic fracturing.

Here are a few examples:

• Bloomberg News: “FracFocus Fails as Fracking Disclosure Tool, Study Finds”
• Associated Press: “Report highlights problems with fracking database”
• Dallas Morning News: “Fracking disclosure site contains ‘serious deficiencies,’ Harvard study says”
• Denver Post: “Colorado fracking database questioned by Harvard study”
• FuelFix/Houston Chronicle: “Harvard report slams fracturing chemical website”
• E&E News: “FracFocus has ‘serious flaws,’ Harvard study says”

The problem is, most of these stories were essentially press releases describing publication of the study. Had the reporters done a little bit of investigation and research – like, say, what they do every darn time a study is released that finds hydraulic fracturing to be safe – their reports may have been much different. At the very least, the general public would have actually been able to weigh the claims in the study against the broader context in which it was released.

Here are four items that, for some reason, went underreported or completely unreported.

Lead Author Background

Think back to every study that had funding or assistance from industry. Can you think of any that were reported on without that affiliation mentioned? [Read more →]

“Some molecules are painted with a no export sign. Other molecules are painted with the OK to export sign, and there doesn’t seem to be any rhyme or reason as to why some molecules are OK and some aren’t.”

- Rusty Braziel, RBN Energy LLC, quoted in “Crude export ban no match for lightest U.S. shale oil,” Fuel Fix, February 26, 2013.

“It’s not often you get to participate in a paradigm shift in an industry, and I think we are doing that now.”

- Anders Ekvall (Shell LNG), quoted in Harry Weber, “Natural Gas Industry Expects Big Things,” Houston Chronicle, April 20, 2013.

At the LNG 17 mega-conference in Houston last week, more than 5,000 industry professionals from 80+ countries, and thousands more visitors enjoying 200,000 square feet of exhibits, plotted to make natural gas a global commodity not unlike oil. Fast forwarding this future were the International Gas Union (IGU), American Gas Association, Gas Technology Institute (GTI), and the International Institute of Refrigeration (IIR).

Gas suppliers are ready. Gas demanders are ready. Liquefied natural gas infrastructure is prime-timed and ready. Only government intervention, fueled in part by misplaced cronyism from the U.S. side, stands in the way.

The Burden of Proof

Import and export regulation of oil and gas has long created a surreal world of can do, cannot do, and superfluous entrepreneurship to profit-maximize under political constraints. [1] [Read more →]

In the final hours of the 2012 fiscal cliff negotiations, the now 20-year old wind production tax credit (PTC) was granted a 1-year extension at the estimated cost of $12 billion. [1] This move was done behind closed doors, without debate or opportunity for amendment and no obligation of the Congress to find a way to pay for it.

With this most recent extension of the PTC, the Congress took no action to address the harmful effects [2] of the PTC on competitive wholesale energy markets.

The PTC is set to expire on December 31st. Until this long postponed day, the legislative opportunity is for the Congress to amend the flawed tax provision to relieve market distortions [3] and promote more reliable, least-cost renewable choices for taxpayers.

Market Signals That Work

Nearly two decades ago, electric energy markets in most of the U.S. were highly regulated. Wholesale electricity prices were determined based on a generator’s cost of installation plus direct production cost, and not on customer demand. Under deregulation, plant ownership shifted to independent power producers which, in turn, brought about competitive wholesale energy markets aimed at meeting consumer energy needs with the most reliable, least cost generation.

Once fully implemented, fossil-fired generators responded to market price signals. New power plants were built to meet peak demand requirements while discouraging construction of excess capacity. Competitive energy pricing dissuaded generators from building power plants long distances from load centers, thus limiting the deployment of costly transmission.

Improved management increased power plant efficiencies, operator profits and grid reliability while keeping retail prices in check. This coupled with air, water and other environmental rules led to U.S. energy resources becoming progressively cheaper, cleaner, safer, and with a smaller footprint.

The correct policy led to the best economic results for consumers. [Read more →]