June 2013

Post image for How Much Warming Will the President’s Plan Avert? (Hint: It’s way too small to be detected or verified)

President Obama unveiled his Climate Change Action Plan at Georgetown University today. As expected, the President advocated carbon dioxide (CO2) emission standards for new and existing coal-fired power plants, tough new energy efficiency standards for homes and appliances, and federal support for private renewable energy investment on public lands.

Congress’s failure to approve his plan would have “a profound impact on the world that we leave behind not just to you, but to your children and to your grandchildren,” Mr. Obama contended.

The President’s plan, however, provides no specifics on the EPA’s pending power plant emission standards, nor does it estimate how many tons of CO2 emissions those standards will avoid or reduce.

Surprisingly, the 21-page plan contains only four emission reduction estimates. The administration’s fuel economy standards are projected to avoid 6000 million tons of CO2; appliance efficiency standards, 3000 million tons; heavy truck fuel economy standards, 270 million tons; and improved forestry practices, 140 million tons. The grand total of itemized CO2 reductions is 9,410 million tons.

How much climate change will that avert? Too little to be detected or verified.  [click to continue…]

President Barack Obama unveiled a climate change plan in a speech Tuesday at Georgetown University in Washington, D.C. A transcript of the speech is available here, and a copy of the president’s climate memo is available here.

In the speech, the president struck a far different tone than he did during the presidential debates last year. Back then, on stage during the debates, President Obama was a friend of fossil fuels, and he never mentioned climate change. Indeed, he tried to present himself to the right of Romney on energy policy. On Tuesday, he was a different man. He presented climate change as an existential threat to our children. At one point, he asked whether “we will have the courage to act before it’s too late.” I think it’s fair to question where the president’s courage was when he was up for election.

Another troubling aspect of President Obama’s climate plan is that it is avowedly authoritarian. In his speech, the president effectively declared that the Congress won’t enact climate policies, so he’s going to impose them. Sort of like a king. The president is using congressional inaction as a pretext for a power grab, and that is worrying.

The most important component of the president’ climate plan is an order for EPA to re-propose greenhouse gas regulations for new power plants and also propose such regulations for existing power plants. He didn’t specify what these regulations would entail, but there are clues that they will result in a ban on the construction of new coal fired power plants. For starters, EPA’s original proposal effectively outlawed new coal power plants, so it’s clearly an agency priority. Also, on page 19 of the president’s new climate plan, the administration states that, “going forward, we will promote fuel switching from coal to gas for electricity production.”

In addition to these regulations, the plan includes more subsidies for green energy, fuel efficiency standards for trucks, and federal expenditures on adaptation. The last one is the most dangerous of the three, because virtually any infrastructure improvement can be portrayed as necessary in the face of a changing climate. The upshot is that this adaptation initiative, in practice, would likely become a subsidy slush fund.

Post image for President Obama’s Climate Speech: Pre-Game Commentary

This week’s National Journal energy insiders blog poses the question: “Should Obama Go Big on Climate Agenda?” What I’m about to post here is I would have posted there, except that I don’t know how to operate the new and improved self-publication program!

My title would have been: “Obama Should Upend Climate Agenda.” Here goes.

In his address tomorrow at Georgetown University, President Obama is expected to lay out a climate change action plan featuring carbon dioxide (CO2) emission limits for existing power plants, tougher efficiency standards for homes and appliances, and more renewable energy development on public lands.

There are strong reasons to oppose each element of this plan.

Renewable energy is costly, intermittent, and unreliable. If it weren’t a bad buy for consumers, Congress would not need to subsidize it (in perpetuity – if President Obama gets his wish), nor would 30 states and the District of Columbia need to mandate it.

Before environmentalists start cheering, they should remember that subsidized, mandated wind energy slices and dices vast numbers of bats and birds, including endangered species. The Obama administration has never fined or prosecuted a wind farm for killing a protected bird. As one former Fish and Wildlife official described the administration’s policy: “If you electrocute an eagle, that is bad, but if you chop it to pieces, that is OK.” Accelerating renewable energy development on federal lands will likely lead to more bat and avian mortality and a further retreat from honest enforcement of the Migratory Bird Treaty Act and the Bald and Golden Eagle Act.

As for appliance efficiency standards, the one thing they invariably do is limit consumer choice. From toilets that don’t flush to washing machines that don’t get clothes clean to automobiles that provide less protection in crashes, efficiency standards can make products less valuable even while making them more costly.

Proponents claim the payback in reduced electricity and fuel expenditures more than offsets the increase in purchase price. But if these technologies will save us money, why do we need a law forcing us to buy them?

Ironically, energy efficiency standards are an inefficient climate mitigation strategy.  A major review by the Breakthrough Institute concluded: “There is a large expert consensus and strong evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much and in some cases all of the expected energy savings.”

The administration’s proposed CO2 emission limits for existing power plants pose the biggest risk to consumer welfare and the economy. Like it or not, coal still provides the largest share of U.S. electric power. At best, CO2 emission limits make electricity more costly. At worst, they can destroy coal as an economically-viable electricity fuel and force coal power plants to shut down.

Let’s briefly review the unsavory history of this policy. [click to continue…]

The lead article in the summer issue of Regulation magazine, the Cato Institute’s flagship publication, is titled “What is the right price for carbon emissions?”  The author is Bob Litterman, a Ph. D. economist who is currently a partner in a NYC-based hedge fund.

Here is Litterman’s conclusion: “It would be best to get started immediately by pricing carbon emissions no lower, and perhaps well above, a reasonable estimate of the present value of expected future damages, and allow the price to respond appropriately to new information as it becomes known.”

Litterman’s article is followed by four comments by Robert Pindyck, Daniel Sutter, Shi-Ling Hsu, and David R. Henderson.  Pindyck and Hsu are for a carbon tax; Sutter and Henderson are opposed.

These articles were described by someone at Cato as “exploring the case for a carbon tax from a free market perspective.”  But I don’t see anything resembling a free market case for a carbon tax being made in Litterman’s article or in the pro-carbon tax comments of Pindyck and Hsu.

Nor can I find anything in Litterman’s background or in the references in his article to suggest that he is a free market economist.  He was at Goldman Sachs in high positions for twenty-some years and is a member of the board of the World Wildlife Fund.  Goldman Sachs is one of the leading practitioners of crony capitalism.  The World Wildlife Fund supports a variety of command-and-control environmental and energy-rationing policies that help keep poor people poor around the world.

It appears that some people at Cato are warming to the idea of rule by experts.  Manipulating the tax code in order to remake society and force people to conform to some authoritarian agenda is really just another variant of central planning.  Rule by experts was criticized insightfully in a 1945 essay, “The Use of Knowledge in Society,” by Friedrich A. Hayek, the Austrian economist for whom the Cato Institute’s auditorium is named.  Hayek argued that rule by experts threatens human freedom.  In my own view, the proper “free market perspective” on a carbon tax is: No way in hell.

Post image for Is a Carbon Tax a Conservative Idea Whose Time Has Come? Thoughts on the R Street – Heartland Debate

On Thursday, the R Street Institute and the Heartland Institute held a debate in a Washington, D.C. auditorium on the proposition: “Resolved: Under no circumstances should conservatives support a tax on carbon emissions.” About 150 people attended.

Arguing for the proposition were James Taylor of Heartland and David Kreutzer of the Heritage Foundation. Arguing against were Andrew Moylan of R Street and former Rep. Bob Inglis (R-S.C.) of the Energy and Enterprise Institute.

After the debate, moderator and Reason Foundation science correspondent Ron Bailey called for a division of the house. A majority of the audience opposed the proposition. The next day Bailey reported on Reason’s blog that “About 60% of Conservatives Support a Carbon Tax.” When this headline provoked the ire of some conservatives, Bailey said it was meant to be somewhat tongue in cheek.

Whether offered in jest or not, Bailey’s headline is false. Had he put the question to the 150 or so movement conservatives who attend Grover Norquist’s Wednesday Meeting, the head count might have been 148-2 — with only Moylan and Eli Lehrer of R Street standing in favor of a carbon tax.

Most people who attend carbon tax events in D.C. are ‘progressives.’ I suspect many who came to the debate were staunch carbon taxers and would not have stood for the proposition even if Taylor and Kreutzer dazzled with the oratory of Abe Lincoln and Dan’l Webster.

An unfortunate word choice may also have tilted the straw poll against the proposition. Prudence counsels us never to say never. In some circumtances, bad choices are the only way to avoid even greater evils. The categorical formulation (“under no circumstances”) made the proposition literally unreasonable.

Here’s what the debate was really about: “Resolved, a carbon tax is a conservative idea whose time has come.” That proposition is almost farsical on its face. Even some greenies in the room might have had to swallow hard before standing up for it.

Let’s review some of the back and forth.

Do carbon taxes pick winners and losers?

Inglis led off by arguing that a conservative energy policy does not “pick winners and losers.” What conservatives want is an “impartial cop on the beat.” That’s a carbon tax, which applies equally to all forms of energy and then lets the “free market” decide. Not so — not even close.

A carbon tax discriminates against carbon-based (fossil) fuels. That’s its core function! Inglis might as well say that a nuclear tax applies equally to all forms of energy and lets the free market decide. Just because the market sorts out the effects of a discriminatory tax does not make the tax non-discriminatory. [click to continue…]

Post image for Climate Models: “Epic Failure” or “Spot on Consistent” with Observed Warming?

NASA scientist Roy Spencer recently posted on his Web site some startling graphs produced by John Christy, his colleague at the University of Alabama in Huntsville. The graph immediately below compares the linear-trend temperature projections of 73 climate models with the linear trend of observed temperatures for the bulk tropical atmosphere during 1979-2012.


The 73 models are part of the fifth phase of the Coupled Model Intercomparison Project (CMIP-5), a collaborative effort of 20+ modeling groups to inform the IPCC’s forthcoming Fifth Assessment Report (AR5). The Project’s three main objectives are to “evaluate how realistic the models are in simulating the recent past,” “provide projections of future climate change” out to 2035 and 2100, and “understand some of the factors responsible for differences in model outputs” such as different estimates of feedback effects.

Christy’s graph reveals what Spencer calls an “epic failure” of the models to match the actual behavior of the tropical atmosphere. Models that overestimate recent warming are likely to overestimate future warming as well.

Of course, observational systems may have biases and errors, but that is an implausible explanation for the mismatch. The observations come from two satellite and four radiosonde (weather balloon) datasets, which all independently give “virtually identical trends.”

What about the subset of U.S.-designed models — do they get the trend right? Nope. Take a gander at the next graph.


[click to continue…]

Post image for Where Does America’s Oil Come From? (An Update)

In 2005, 60% of all petroleum consumed in the U.S. came from imports. The conventional wisdom then and for several years thereafter was that America was fated to become ever-more-dependent on increasingly costly petroleum imports.

Peak oil alarm was in vogue, popularized by books such as Peak Oil Survival: Preparation for Life after Gridcrash (2006), Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (2006), A Crude Awakening: The Oil Crash – We’re Running Out and Don’t Have a Plan (2007), Hubbert’s Peak: The Impending World Oil Shortage (2008), and Confronting Collapse: Energy and Money in a Post Peak Oil World (2009).

M. King Hubbert, the originator of peak oil theory, correctly predicted in 1956 that U.S. domestic petroleum production would peak between 1965-1970. He also forecast a peak in global production by the late-2000s. In 2008, many commentators interpreted spiking crude oil prices as confirmation of Hubbert’s theory.

But Hubbert, who died in 1989, did not live to see the “shale revolution.” During the past decade, advances in directional drilling and hydraulic fracturing have made it economical to extract oil from the pores of rock. Although U.S. petroleum production is still lower than it was at its peak in 1970, it has increased every year since 2008 with no end in sight.

Citi GPS, a highly respected analytic group, argues that “surging supply growth” from fracked shale formations, deep-water wells, and Canada’s oil sands could “transform North America into the new Middle East by 2020.” Peak oil, if it exists at all, is likely decades away, not around the corner, as the books cited above assumed.

In a previous post, I discussed the Energy Information Administration’s  July 2011 analysis of U.S. dependence on foreign oil. The EIA updated its analysis in May 2013. What has changed?

Basically, there’s more of the same. Already by 2010, more than half of all the oil we consumed came from the U.S. But whereas the balance then was 51% domestic and 49% imports, the balance as of 2012 was 60% domestic and 40% imports (exactly the reverse of the percentages in 2005).

imports_domestic_petro_shares_demand-small 2010


[click to continue…]

On Monday, May 20, in room 406 of the Senate Dirksen Office Building, the Competitive Enterprise Institute held a Congressional staff and media briefing on “EPA’s FOIA Scandals: ‘Richard Windsor,’ Gina McCarthy, and the Abuse of Power,” given by Chris Horner, author of The Liberal War on Transparency and CEI Senior Fellow. Video of Chris’s presentation is available below.

EPA’s FOIA Scandals: “Richard Windsor,” Gina McCarthy, and the Abuse of Power from CEI Video on Vimeo.

Post image for Social Cost of Carbon: Interagency Group Predictably Predicts Climate Change Worse Than Predicted

Hold the presses! A U.S. Government interagency working group has just released its updated Technical Support Document (TSD) on the social cost of carbon (SCC).

This is joyous news in some circles. “The ‘Social Cost of Carbon’ Is Almost Double What the Government Previously Thought,” Climate Progress enthuses. Why are they pleased? Because the higher the SCC, the stronger the (apparent) case for suppressing the production and export of hydrocarbon energy in general, and for blocking the Keystone XL pipeline in particular.

SCC is an estimate of how much damage an incremental ton of carbon dioxide (CO2) emissions does to humanity and the biosphere. SCC estimates are driven by assumptions about such issues as climate sensitivity (how much warming results from a given increase in CO2 concentrations), climate impacts (how warming will affect weather patterns and sea-level rise), economic impacts (how changes in global temperature, weather, and sea-level rise will affect agriculture and other climate-sensitive activities), and technological change (how adaptive capabilities will develop as climate changes).

Modelers feed the assumptions into computer programs called “integrated assessment models” (IAMs). By tweaking those values, the modeler can get pretty much any result he desires. Outcomes also vary based on the discount rate selected, i.e., how much people are assumed to value income in the future compared to income in the present.

Using three IAMs, three discount rates (2.5,% 3,% and 5%), and a fourth value representing low-probability catastrophic impacts, the interagency group calculates four SCC estimates for the year 2020. In the working group’s 2010 TSD, the SCC estimates were $7, $26, $42, and $81 (2007$). In the updated TSD, the corresponding estimates are $12, $38, $58, and $129 (2007$). Excuse me, but even for the high-impact projections, the updated estimate ($129) is 59% higher than the 2010 estimate ($81), which is more than a tad shy of “almost double.”

Let’s cut to the chase. Those who say the SCC is bigger than the government previously thought merely recycle the old saw that climate change is “worse than scientists previously thought.” They are mistaken. The climate change outlook is better than we have long been told.

One reason the updated estimates are higher is that the IAMs contain an “explicit representation” of sea-level rise “dynamics.” Are the modelers keeping up with the scientific literature? Consider two recent studies

  • King et al. (2012): The rate of Antarctic ice loss is not accelerating and translates to less than one inch of sea-level rise per century.
  • Faezeh et al. (2013): Greenland’s four main outlet glaciers are projected to contribute 19 to 30 millimeters (0.7 to 1.1 inches) to sea level rise by 2200 under a mid-range warming scenario (2.8°C by 2100) and 29 to 49 millimeters (1.1 to 1.9 inches) under a high-end warming scenario (4.5°C by 2100).

If 21st century sea-level rise is more likely to be measured in inches rather than feet or meters, shouldn’t SCC estimates decline?

And what about the 15-year period of no-net warming, which the climate science establishment did not predict and still struggles to explain? The warming pause is hard to square with the mantra of “worse than we thought.” It is evidence that the SCC is lower than they thought.

Let’s look at the disconnect between what they predicted and what happened.  The graph below comes from NASA scientist Roy Spencer[click to continue…]

Post image for The Inanity of the Global Solar Panel Market

Last week, the Wall Street Journal gave a fascinating snapshot of the stupidity of the global solar market. As it is with all good news reports, the first paragraph says it all:

BEIJING—Solar-panel makers in China are open to raising prices and limiting exports to the European Union as a way to avoid steep trade tariffs, industry representatives said Thursday.

Allow me to put this in perspective. European consumers want solar panels. Indeed, they are forced to want them, due to Soviet-style green energy production quotas enacted by the EU. That’s the context: Europeans wanting/having to buy this product.

Against this backdrop, manufacturers in China are OFFERING to raise prices. They aren’t colluding to make more money; rather, they are voluntarily raising prices against their better judgment. Why? Because EU officials are threatening to raise prices by slapping tariffs on imports of Chinese solar panels (which, again, are products that Europeans want to buy).

Keep in mind as well that the EU’s threatened tariff would co-exist with national-level subsidies, known as “feed in tariffs,” designed to suppress the price of solar panels. This is true in Germany and Spain, off the top of my head, and likely true in other countries.

So there’s an EU policy that forces Europeans to buy solar panels. Yet there is also an EU policy meant to make solar panels much more expensive. Finally, there are several European policies meant to make them much cheaper. Got that?

Such are the endless and inefficient complexities wrought when government creates an industry out of whole cloth, as any member of the Gosplan could have told you.