2010

This morning’s Pajamas Media.Com carries a column by yours truly entitled, “Ethanol’s Policy Privileges: Heading for History’s Dustbin?” With links to the relevant studies, the piece explains why Congress should let the ethanol tariff and tax credit expire when their statutory authority runs out at midnight, Dec. 31, 2010.

The most fun I had writing the op-ed was in debunking the propaganda that ethanol’s policy privileges ease our pain at the pump. My evidence? None other than www.fueleconomy.gov, a Web site jointly administered by the Environmental Protection Agency and the Department of Transportation. Fueleconomy.Gov shows that if you own any one of 110-plus “flexible fueled” vehicles, you pay hundreds of dollars more per year if you fill the tank with E-85 (motor fuel blended with 85% ethanol) than if you fill it with regular gasoline.

The column also argues that, even if one believes in Al Gore’s “planetary emergency,” the ethanol tariff and tax credit are at best horribly inefficient and at worst counter-productive as climate policy.

Not that I disagree with everything Al Gore says. As noted in the column, Mr. Gore now acknowledges that his previous support for ethanol subsidies was a mistake, noting their contribution to the food price crisis of 2008. Gore says he “had a certain fondness for the [corn] farmers in the state of Iowa because I was about to run for president” in 2000. As comedian Bill Maher  once quipped, “No one asked for corn in their gas tank. . .But I suppose if the first presidential primary was in Vermont, we would all be pouring maple syrup into our gas tanks.”

“Corn is King” has been the statist quo for many years in farm state politics — hence also in Washington, D.C. But the times they are a-changin. A bipartisan group of 17 senators, led by Sens. Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.), say it’s time for the tariff and tax credit to go gently into the night. A broad coalition of environmental, taxpayer, hunger, free market, and food industry organizations are urging House and Senate leaders to let the tax subsidy meet its statutorily appointed fate.

The lame-duck Congress has a rare opportunity to avoid $25-30 billion in new deficit spending over the next five years, ease consumers’ pain at the pump, and scale back political manipulation of energy markets just by letting two special-interest giveaways tumble into history’s dustbin. They can do good just by doing nothing — surely there’s a lesson in that too.

In March 2009, I posted a blog over at MasterResource.Org entitled, “Are Depressions Green?” What prompted that piece was speech by Cambridge University economist Terry Barker at the Copenhagen climate conference.

Barker told delegates that the Great Depression of the 1930s reduced global CO2 emissions by 35%. He opined that if the current economic downturn persists for several years, it might cut global emissions in half.

Citing the International Energy Agency’s CO2 Emissions from Fuel Combustion Highlights (2005 Edition), I offered additional proof of the emission-cutting power of economic collapse. From 1990 to 2003, CO2 emission declined 38% in Bulgaria, 35.3% in Estonia, 52.3% in Latvia, 43.5% in Lithuania, 43.3% in Rumania, 24.5% in Russia, 30.2% in the Slovak Republic, and 50.1% in Ukraine.

I commented:

So clearly, governments do have the power to achieve deep emission cuts in in a single decade or even in a few years. However, there’s not a shred of historical evidence that they can do this without first engineering severe economic contractions.

A new study by University of Exerter scientist Pierre Friedlingstein and colleagues finds that from 2008 to 2009, global emissions declined by 1.3%, the first time since the late 1990s. There were significant regional differences, depending on whether a country’s economy was shrinking or growing. As summarized by USA Today:

The largest decreases occurred in Europe, Japan and North America: 6.9% in the United States, 8.6% in the U.K., 7% in Germany, 11.8% in Japan and 8.4% in Russia.

In contrast, emissions jumped in emerging economies, including 8% in China and 6.2% in India. China remains the top emitter of carbon dioxide from the burning of fossil fuels, followed by the USA, India, Russia and Japan.

A question for the greenhouse lobby: If depressions induce deep emission cuts, then wouldn’t mandating deep cuts prolong or intensify our current economic woes?

Seems like a no-brainer, but they’ll tell you that putting a price on carbon will stimulate the creation of “green jobs” (like window caulkers?) and “industries of the future” (like windmills?). Our friends at the Institute for Energy Research summarize and link to several studies debunking the green jobs myth. 

Here’s how I ended “Are Depressions Green?”:

So-called green industries and jobs were bit players even when the economy was booming. That’s because even when credit markets were flush and fossil energy prices were high, green industries were relatively unproductive. For example, as my colleague Iain Murray estimates, one coal-industry job supports seven times as much electricity as one wind-industry job.

It strains credulity to claim that diverting capital and labor from, e.g., the coal industry to the wind industry will create a macroeconomic benefit, or that economic recovery can be built on jobs and industries that depended heavily on subsidies, tax preferences, and mandates even in prosperous times.

In “Nations that Debate Coal Use Export It to Feed China’s Need,” New York Times reporter Elizabeth Rosenthal exposes a huge unintended consequence of Kyotoism’s assault on coal-fired power plants: U.S. and Australian coal companies are shipping their product to Asian countries, especially China, which in 2008 outstripped the United States as the world’s top emitter of carbon dioxide (CO2).  

Rosenthal explains why this situation drives climate activists up the wall:

Traditionally, coal is burned near where it is mined — particularly so-called thermal or steaming coal, used for heat and electricity. But in the last few years, long-distance international coal exports have been surging because of China’s galloping economy, which now burns half of the six billion tons of coal used globally each year.

As a result, not only are the pollutants that developed countries have tried to reduce finding their way into the atmosphere anyway, but ships chugging halfway around the globe are spewing still more.

This is “carbon leakage” with a vengeance. “Leakage” refers to emissions that migrate overseas as domestic firms offshore production and jobs to countries with less restrictive controls on carbon-based energy. Up to now, nearly all the discussion has focused on “energy-intensive, trade-intensive” industries such as producers of iron, steel, aluminum, copper, cement, glass, ceramics, and paper. Such energy-intensive manufacturers can pick up and leave if domestic climate policy puts them at a competitive disadvantage, and climate campaigners don’t want to be blamed for destroying American jobs.

Policymakers have not considered coal industry jobs in this context, however, because coal mines are pretty much stuck where they are. Besides, Al Gore and the Repower America campaign say we should replace all U.S. electric generation with “zero-carbon” energy by 2018. Who needs coal!

In a House Ways and Means hearing last year on the Trade Aspects of Climate Legislation, not one witness mentioned that carbon policies, especially a de-facto ban on new coal-fired power plants, would ramp up coal exports to China, fueling industries that typically emit much more CO2 per unit of output than do their U.S. counterparts.

David Hamilton of the Sierra Club, for example, saw carbon leakage to China as a big problem, but did not say a word about his organization’s “Stopping the Coal Rush” campaign much less whether it might stimulate a surge in coal exports to the (ahem) People’s Republic. Sierra Club now regards this as a big problem, as Rosenthal reports: 

“This is a worst-case scenario,” said David Graham-Caso, spokesman for the Sierra Club, which estimates that its “Beyond Coal” campaign has helped to block 139 proposed coal plants in the United States over the last few years. “We don’t want this coal burned here, but we don’t want it burned at all. This is undermining everything we’ve accomplished.” [Emphasis added.]

This photo from the NYT article shows Australian coal waiting to be shipped to China:

Rosenthal quotes Vic Svec, senior VP of Peabody Energy, the world’s largest coal company, as saying, “Coal is the fastest-growing fuel in the world and will continue to be largely driven by the enormous appetite for energy in Asia.”

Here are some key facts she reports (in her words):

• This summer an Australian company signed a $60 billion contract with a state enterprise, China Power International Development, to supply coal to Chinese power stations beginning in 2013 from a vast complex of mines, called China First, to be built in the Australian outback. It was Australia’s largest export contract ever, the company said.
• For Australia, coal exports to China grew to $5.6 billion from $508 million between 2008 and 2009, government statistics show. While it still sends more coal to its longtime customers Japan and Korea, that balance could shift as Australian coal giants sink billions into new projects like China First.
• Last year, the United States exported only 2,714 tons of coal to China, according to the United States Energy Information Administration. Yet that figure soared to 2.9 million tons in the first six months of this year alone — huge growth, though still a minuscule fraction of China’s coal imports.
• The growth and shifts in coal exports to China are impressive, flowering even during the recession. Seaborne trade in thermal coal rose to about 690 million tons this year, up from 385 million in 2001.
• The price rose to $60 from $40 a ton five years ago to a high of $200 in 2008. Coal delivered to southern China currently sells for $114 per ton.
• China, which was a perennial coal exporter until 2009, the first year that it imported more than it sent out, is expected to import up to 150 million tons this year.
• Another emerging customer is India, whose coal imports rose from 36 million tons in 2008 to 60 million tons in 2009, the last full year for which data is available.