A free-market energy blog

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 →]

In May 2010, the InterAcademy Council (IAC) was selected to “conduct an independent review of the IPCC processes and the procedures by which it prepares its assessments of climate change.” In June, economist David (P. D.) Henderson shared with MasterResource his rather critical comments submitted to the IAC which centered around the IPCC’s lax adherence to their own set of governing principles. In this article, we highlight several other submissions to the IAC that Dr. Henderson thought MasterResource readers may find particularly interesting.

Additionally, we offer a compilation of all other IAC submissions that we could find scattered across the web—a service that the IAC does not itself provide.

Background

The IAC bills itself as “a multinational organization of science academies created to produce reports on scientific, technological, and health issues related to the great global challenges of our time, providing knowledge and advice to national governments and international organizations” and as such has been asked by the United Nations to:

[E]stablish a Committee of experts from relevant fields to conduct the review and to present recommendations on possible revisions of IPCC processes and procedures. In particular the IAC Committee of experts is asked to recommend measures and actions to strengthen the IPCC’s processes and procedures so as to be better able to respond to future challenges and ensure the ongoing quality of its reports.

Such a review has been welcomed by all quarters—and is especially relevant considering the revelations of the apparent shortcomings of IPCC procedures that have been revealed both directly from the contents of the Climategate emails as well as the increased scrutiny it has received as a result of the Climategate revelations. [Read more →]

The innocent layperson may have gotten the idea that the Intergovernmental Panel on Climate Change (IPCC) represented the “consensus” view that urgent government action is needed to avert catastrophic impacts on humanity.

And yet, as Jim Manzi’s recent exchange with uber-alarmist Joe Romm makes perfectly clear, even the latest IPCC report punctures holes in the alarmist claims. Perhaps without realizing it, Romm implicitly admits that the IPCC AR4 report never supported the alarmist view.

Manzi Uses the IPCC to Take Down Al Gore

In his relatively new position as “in-house critic” at The New Republic, Manzi criticized a characteristically alarmist piece that Al Gore had published in the same venue. Manzi wanted to show that Gore was misleading the public on what the “scientific consensus” actually had to say about the risks of climate change. [Read more →]

[Editor note: Senator Harry Reid (D-Nev.) removed a federal renewable mandate from the energy bill now under debate. However, Sen. Brownback of Kansas has indicated his intention to add an amendment to the bill resurrecting such a mandate.]

US Senator Sam Brownback (R-KS) displays a national debt clock on his home page and is a proclaimed conservative. Yet he supports wasteful government spending on deployment of impotent technologies like wind energy.

I believe Sam and his kind are the root cause of a failure for industrial windpower opponents to gain the upper hand in Washington D.C. I further believe that in Brownback’s case, his faulty platform correlates to his committee membership, which shows his allegiance to the agriculture lobby, which represent the secondary financial beneficiaries of wind energy deployment.

It would be more fiscally conservative and environmentally benign to simply hand the agri-community the equivalent taxpayer money Carte-Blanche which they stand to receive from wind energy leases. But I do not advocate this over the best course of action: removing special government favors and mandates for windfarms.

While it is unfathomable to me that Sam Brownback can display a national debt clock on his web site while simultaneously calling for a national renewable energy standard (RES),  I cannot change Senator’s position on wind energy in light of his allegiance to agriculture on my own.

I feel obligated as an American, however, to do all I can to franchise scientific truth to the public and to lawmakers in light of the sadly misdirected policy efforts of name-only “conservatives” like Brownback.  That is why I recommend the finely constructed presentation found at www.energypresentation.info. and then plead for your help (not your money).

Please also take a moment to read my letter to Senator Brownback, which is attached.  After I sent that letter, I also called his office and asked that he return my call so we could discuss his misunderstanding of an urgent matter concerning energy policy. [Read more →]

Editor note: Milton Friedman would be 98 this Saturday July 31. (He died on November 16, 2006.) This exchange with Robert Bradley–when Dr. Friedman was 91 years old–is testament to the mental powers of one of the greatest social thinkers of modern time.

Friedman had not met Bradley but was in the habit of actively communicating with scholars until his final illness.

I had heard that the great economist and social thinker Milton Friedman (1912–2006) was a prolific communicator with those who posed worthy questions to him. So when I got interested in mineral resource theory, which would culminate with my 2007 essay, Resourceship: An Austrian Theory of Mineral Resources, I asked Dr. Friedman in August 2003 about his views on the late Julian Simon (1932–98), specifically whether Simon’s work on resources, and his conception of the ultimate resource, merited a Nobel Prize in economics.

The discussion continued from there as I tried to flesh out his views of whether “depletable” minerals such as oil were somehow different from “nondepletable” resources. I believe Friedman agreed with Simon that there is no difference from a social science/business perspective. But Friedman disagreed with Simon’s assessment of the contribution of Harold Hotelling, who mathematically proved that the cost and thus price of a fixed resource in a world of perfect knowledge was ‘good’ economics. Read on…. [Read more →]

New Mexico has enjoyed some of the lowest energy prices in the country—which is good as it is a poor state. However, the major supplier of electricity to the state, PNM, has just asked for a 21.2% rate increase on top of the 24% they’ve received over the last few years. Welcome to the new world of government-forced renewable energy–and one reason why Senator Harry Reid (D-Nev.) recently said he didn’t have the votes for a federal renewable portfolio standard (RPS).

The anticipated rate shock gets worse for New Mexicans: a nearly 50% rate hike in five years. While PNM claims New Mexico still has some of the lowest rates in the country, the citizens are not taking the preventable increase lying down. David King, chairman of the New Mexico Public Regulation Commission (PRC), for example, calls the rate increase a “hot potato” saying that he’s received “a flood of calls from ratepayers.”

Public Outcry

During the month of July, PNM has been holding Public Forums through out their service area regarding their Integrated Resource Plan (IRP). The flyer promoting the event invited the “public” to join in on the discussion on topics such as “To what degree are consumers willing to pay more for a different combination of power sources?” The news about the proposed rate increase came out at the same time as the forums were scheduled. While PNM had a set program they’d planned to deliver, the attendees had little interest in the PNM’s dog-and-pony show. [Read more →]

[Editor note: The summary and analysis below is reprinted with the permission of the Institute for Energy Research. The sections past the summary are authored by Dr. Andrew Chamberlin. Cap-and-trade remains alive unless the U.S. Senate fails to pass legislation to go to conference with HR 2454, The American Clean Energy and Security Act of 2009.)

To better understand the broad consequences of the proposed Kerry-Lieberman American Power Act on the U.S. economy, the Institute for Energy Research commissioned Chamberlain Economics, L.L.C to perform an economic and distributional analysis of cap-and-trade portion of the proposal.

The report examines the impacts that the American Power Act would have on the U.S. economy, the method by which emission allowances are distributed to corporations and the distributional cost of the bill on households by income, age group, region and family type.

The study’s key findings of the American Power Act follow:

•   U.S. employment would be reduced by roughly 522,000 in 2015, rising to over 5.1 million jobs by 2050.
• Households would face a gross annual burden of $125.9 billion per year or $1,042 per household, with costs disproportionately borne by low-income households.
• On a net basis, the top income quintile will benefit financially, redistributing to these households roughly $12.3 billion per year from the bottom 80 percent of earners.
• Households over age 75 bear the largest burden at 2.3 percent of income, followed by households aged 65-74 and under age 25 at 2.1 percent. By contrast, the nation’s highest-earning households between age 45 and 54 years would bear the smallest percentage burden of just 1.5 percent.
• Contrary to the legislation’s stated goal of reducing price volatility by excluding petroleum refiners from quarterly auctions, the Kerry-Lieberman bill is likely to significantly increase allowance price volatility from quarter to quarter, compared to an ordinary auction in which all covered industries bid for allowances.

The authors also explored two specific propositions: the first, the potential for shareholders, and not consumers, to benefit from the distribution of free emission allowances; and, second, the expected consequences of the bill’s creation of a separate pool of allowances for petroleum refiners, thus adding to the price volatility of those allowances.  Both conclusions are contrary to Kerry and Lieberman’s stated intent of the legislation. [Read more →]

[Update 07/29/10: The EPA has announced its decision to deny all the petitions asking it to reconsider its Endangerment Finding, claiming that it could find no evidence in the Climategate emails indicating that climate change science could not be trusted. Read on to see if you think this decision is justified.]

While the U. S. Environmental Protection Agency would surely love to use the findings of the Independent Climate Change Email Inquiry (aka the Muir Russell report) to brush aside the many challenges mounted, in response to the Climategate email scandal, to the EPA’s finding that greenhouse gases endanger the public’s health and welfare (a finding which enables the EPA to regulate greenhouse gas emissions), they’ll find little in the Muir Russell report to help in their defense.

Well, I should qualify that. They’ll find little scientifically to help their defense. Politics is another matter.

Since the EPA has largely based its Endangerment Finding on an appeal to authority—the primary authority being the IPCC—rather than its own investigations, the Muir Russell report plays right into the EPA’s hands when concluding (emphasis in original):

[W]e do not find that their [influential scientists from the Climate Research Unit of the U.K.’s University of East Anglia] behaviour has prejudiced the balance of advice given to policy makers. In particular, we did not find any evidence of behaviour that might undermine the conclusions of the IPCC assessments.

At face value, it seems as if the EPA could take this as the only proof needed to dismiss all of the post-Climategate calls for it to reconsider it pre-Climategate Endangerment Finding.

But, as with just about everything else about the EPA’s Endangerment Finding, such action would be a gross oversimplification, a side-step around the deeper complexities, and an incomplete address of the issues raised against it. [Read more →]

Reactions to the findings of the last of the investigations into the “meaning” of the contents of the Climategate emails—the so-called Muir Russell report—are still trickling in. And truly, there have been few surprises.

The Muir Russell panel—hired by the University of East Anglia (UEA)—concluded (some add, predictably) that the scientists from for the Climate Research Unit (CRU, which is part of the UEA) had not really done anything wrong aside from not being particularly cooperative with folks that they didn’t like.

The CRU scientists and their close colleagues who were caught up in the Climategate affair claim vindication (see RealClimate), alarmists love it (see ClimateProgress, Newsweek), those in the middle were a bit displeased (see The Atlantic, New Scientist) or wishy-washy (see DotEarth), and those feel that the Climategate emails revealed glaring problems with how climate change research is being conducted and brought to the public were crying “whitewash” (see Wall Street Journal, Watts Up with That).

It makes me wonder why Muir Russell bothered in the first place.

I find my reaction somewhere between the last two categories, which I guess would make me wishy-whitewashy. I don’t think Climategate revealed any great fractures in the general concept that human greenhouse gas emissions are leading to a warmer world, but it most definitely did confirm what I felt had been the case all along—that the Climategaters were not playing fair. And not playing fair has a lot more consequences than the Muir Russell panel cared to admit—this is where the “whitewash” comes in for me. [Read more →]