Iain Murray

Blowing Sunshine

by Iain Murray on July 7, 2009

Apologies for the late notice, but I had an article on the potential of solar power in last Friday’s Washington Examiner:

If the American Clean Energy and Security Act, which passed narrowly in the House of Representatives this week, also passes the Senate, does this mean that we’ll soon replace coal-derived electricity with clean and green solar power? Don’t count on it. Solar has a lot of problems, and those relying on it for the promised “green jobs” will probably be let down.

You might also be interested in the levelized cost-comparisons for building new power plants in 2016 from the Energy Information Administration, helpfully compiled by the Institute for Energy Research.  The cheapest form of energy (assuming a cost of carbon at $15 a ton)? Nuclear.  The most expensive? Solar thermal and solar photovoltaic.

Compare and Contrast

by Iain Murray on May 26, 2009

in Blog

Bjorn Lomborg, November 2007:

…although it may seem almost comically straightforward, one of the best temperature-reducing approaches is very simple: paint things white. Cities have a lot of black asphalt and dark, heat-absorbing structures. By increasing reflection and shade, a great deal of heat build-up can be avoided. Paint most of a city and you could lower the temperature by 10C.

Steven Chu, May 2009:

Professor Steven Chu, speaking at the opening of the St James’s Palace Nobel Laureate Symposium, for which The Times is media partner, said this simple and “completely benign” approach to “geo-engineering” could have a vast impact at low cost. By lightening all paved surfaces and roofs to the colour of cement, it would be possible to reduce carbon emissions by as much as taking all the world’s cars off the roads for 11 years, he said.

I ask you to compare and contrast because one of these men is an “evil delayer” (or worse), and the other a planetary savior.  Yet the savior is now adopting a policy advocated for two years by the “delayer.”

Perhaps there is hope for the global warming debate yet.

I’ve always been a fan of Lewis Black’s take on things, even when it’s obvious we disagree politically, but this take on the way TV networks are marketing Earth Day to kids is great whether you’re deep green or a free-market environmentalist. Enjoy.

The Daily Show With Jon Stewart M – Th 11p / 10c
Back in Black – Kids’ Earth Day
Daily Show
Full Episodes
Economic Crisis Political Humor

It’s Not Just Income Tax

by Iain Murray on April 15, 2009

in Blog

Let’s not forget on this day that government has worked out a lot more ways to appropriate your money than income tax.  Sales Tax is the one we come across most often, but at least it’s out in the open and you see it being added to every purchase you make (an example of tax transparency not enjoyed by most of the world).  It is the hidden taxes – the “stealth taxes” – that are perhaps an even bigger problem.  When government taxes a particular activity, often at the source, so that costs are passed on to the end consumer – you and me – without us appreciating it, then government has acheived revenue without responsibility.

That is why “cap and trade,” the fashionable measure for imposing fees on emitters of greenhouse gases, is such an insidious idea.  Ostensibly, the fees would provide a ‘market-based’ incentive for emitters to reduce greenhouse gas emissions.  In practice, it would raise energy prices, as both President Obama and Rep. Henry Waxman (D. – Hollywood Millionaires) have admitted.  Thankfully, the vast majority of Senators have realized that cap-and-trade is a tax, which is why on April 1 they passed by the margin of 98-0 an amendment to the budget “To protect middle-income taxpayers from tax increases by providing a point of order against legislation that increase taxes on them, including taxes that arise, directly or indirectly, from Federal revenues derived from climate change or similar legislation.”  That amendment essentially recognizes cap-and-trade as a stealth tax, one that Americans for Tax Reform have calculated as amounting to $3000 for each family.

So where does this leave us?  The EPA is announcing that they will hold a knife to the nation’s throat if this tax doesn’t get passed.  There’s responsible government for you!  The intelligent environmentalists at The Breakthrough Institute recognize the folly of this strategy, but, sad to say, intelligent voices in the environmentalist movement are very rarely listened to.

In the face of this assault of Green Taxes, there may be no alternative but to hold a Green Tea Party.  Watch this space.

Showing that he believes Al Gore’s typical misunderstanding that the Chinese word for crisis is made up of the characters for threat and opportunity (it isn’t), Achim Steiner, head of the UN Environment Program, has said that the global financial crisis provides an opportunity for a global green new deal:

The UNEP report said investments of one percent of global gross domestic product, or about $750 billion, could bankroll a “Global Green New Deal” inspired by the “New Deal” of U.S. President Franklin D. Roosevelt that helped end the depression of the 1930s. [sic]

Investments should be split between more energy efficient buildings, renewable energies, better transport, improved agriculture and measures to safeguard nature — such as fresh water, forests or coral reefs, it said.

The $750bn bill would be paid for by – you guessed it – a tax on oil in rich countries:

“If, for argument’s sake, you were to put a five-year levy in OECD countries of $5 a barrel, you would generate $100 billion per annum. It translates into roughly 3 cents per liter,” he said.

“It would be almost, if not totally, unnoticed by the consumer,” he said, especially since oil prices have fallen from more than $140 a barrel at mid-2008 peaks to about $40.

A barrel of oil contains 158 liters and OECD consumption is about 20 billion barrels a year, he said. “This is just one example, there may be many others,” of funding, he said.

Ah, the “unnoticable” tax – the revenue stream with no consequences, the Holy Grail of socialists and their fellow travelers. While perhaps not noticable at the gas pump, such a tax would be noticable at the aggregate level of the economy. But why worry about a few jobs lost there, a few families forced into poverty here? It all leads to a much better world in terms of renewable energy, no?

Well, no. As is beginning to dawn on some people, the scale of the problem when it comes to CO2 is far beyond the ability of current renewable technology to solve:

The world used 14 trillion watts (14 terawatts) of power in 2006. Assuming minimal population growth (to 9 billion people), slow economic growth (1.6 percent a year, practically recession level) and—this is key—unprecedented energy efficiency (improvements of 500 percent relative to current U.S. levels, worldwide), it will use 28 terawatts in 2050. (In a business-as-usual scenario, we would need 45 terawatts.) Simple physics shows that in order to keep CO2 to 450 ppm, 26.5 of those terawatts must be zero-carbon. That’s a lot of solar, wind, hydro, biofuels and nuclear, especially since renewables kicked in a measly 0.2 terawatts in 2006 and nuclear provided 0.9 terawatts. Are you a fan of nuclear? To get 10 terawatts, less than half of what we’ll need in 2050, [Cal Tech scientist Nate] Lewis calculates, we’d have to build 10,000 reactors, or one every other day starting now. Do you like wind? If you use every single breeze that blows on land, you’ll get 10 or 15 terawatts. Since it’s impossible to capture all the wind, a more realistic number is 3 terawatts, or 1 million state-of-the art turbines, and even that requires storing the energy—something we don’t know how to do—for when the wind doesn’t blow. Solar? To get 10 terawatts by 2050, Lewis calculates, we’d need to cover 1 million roofs with panels every day from now until then. “It would take an army,” he says. Obama promised green jobs, but still.

In other words, this global green new deal will solve no problems, while exacerbating the current problem of too little money to go around by extracting more money from the viable economy. Just like the original New Deal, then.

Show Your Work!

by Iain Murray on March 19, 2009

in Blog

Fiona Harvey of the FT is one of the better journalists covering the environmental beat, but I’m afraid that is a bit like saying that someone is one of the better members of Congress. In this blog entry on green jobs she commendably raises some objections to the idea that “green jobs” can be a panacea, but then shows her own biases with an unsupportable assertion:

That said, the move to a low-carbon economy requires such major changes in the way the whole of the economy – from house building to vehicle manufacturing to recycling our rubbish to redesigning our cities – that it is sure to entail a large number of new jobs, which will almost certainly far outweigh the effects of any job losses.

Really? The Heritage Foundation’s analysis of green employment resulting from the weak CO2 restrictions proposed in last year’s Lieberman-Warner bill found a net reduction in American employment of some 900,000 jobs. A German government study found that green technology would only be a positive for employment as long as the country remained a net exporter of the technology, something bound to change as other countries usurped their comparative advantage. A Spanish study by the Instituto Juan de Mariana found that for each green job created in Spain, at least 2.2 “regular” jobs were lost (and also that thanks to the temporary nature of many green jobs, 40,000 such jobs will be lost this year).

Fiona’s assertion reminds me of this statement by Catherine Bennett in The Guardian, 2004:

In short, if we can rise to the challenge, the permanent abolition of the wheel would have the marvelously synergistic effect of creating thousands of new jobs – as blacksmiths, farriers, grooms and so on – at the same time as it conserved energy and saved the planet from otherwise inevitable devastation

The only difference is, Ms. Bennett was clearly joking.

Alarmism Has Consequences

by Iain Murray on March 2, 2009

in Blog

In a magnificent display of self-delusion, the green movement is holding a demonstration at the Capitol’s power plant today to protest the continued use of coal to keep people warm. Although I’d love to put the continued operation of Congress at the mercy of the weather, there is a more important point here. Coal is Affordable energy increases people’s income, keeps them in jobs, and keeps them alive. Here is a brief summary of some important research on the subject.

    The Human Consequences of Global Warming Alarmism

• Raising energy costs kills. According to a Johns Hopkins study, replacing ¾ of US coal-based energy with higher priced energy would lead to 150,000 extra premature deaths annually in the US alone.
• Reducing emissions hits the poorest hardest. According to the recent report by the Congressional Budget Office, a cap and trade system aimed at reducing emissions by just 15 percent will cost the poorest quintile 3 percent of their annual household income, while benefiting the richest quintile.
• Raising energy costs loses jobs. According to a Penn State study, replacing 2/3 of US coal-based energy with higher priced energy will cost almost 3 million jobs, and perhaps over 4 million.

    More detailed points

• We are already seeing the adverse effects of global warming policies in the ethanol debacle. Ethanol mandates have not just contributed to the spike in the price of gas, but have also increased food prices. Steaks are up 5.5% from a year ago, chickens up 7.7%. These increased costs force the poorest to make hard choices.
• The ethanol mandates also demonstrate that consumer behavior can’t be fine tuned. As fuel and food prices increased, the choices people made showed that they sacrifice food for fuel. A survey by the Food Marketing Institute found that more than 40% of consumers changed their food-buying habits in response to high gas prices. That illustrates that energy is one of the most important purchases they make.
• Coal production is also fundamental to the US economy. The Penn State study found that by 2015, coal production, transportation and consumption will contribute $1 trillion to the US economy and provide 6.8 million jobs and $362 billion in household income.
• That same study shows pronounced regional variations. If coal production was curtailed by 2/3rds, California would be hard hit. It would lose $58 million in economic activity. California households would lose $22 million a year. And 339,000 Californians would lose their jobs.
• But the states of the Central US would be worst hit – Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Nebraska, Oklahoma and Texas would lose 1.5 million jobs between them.
• Legislators must consider the unintended effects of their actions. If coal production is to be stamped out, the railroad industry in this country would probably collapse along with it. Without rail transport, other bulk commodities would rise in price. And they would increase congestion on the roads, which don’t have enough capacity to deal with freight transport as it is.

    Background: Lives Lost

The Johns Hopkins study (Harvey Brenner, “Health Benefits of Low Cost Energy: An Econometric Case Study,” Environmental Manager, November 2005) found the following:

An econometric model was applied to a hypothetical regulatory case study, whereby U.S. coal was replaced by alternative higher-cost fuels such as natural gas for the purpose of electricity generation. The model was used to estimate the premature mortality associated with increased unemployment and reduced personal income. The adverse impacts on household income and unemployment due to the substitution of higher-cost energy sources were estimated to result in 195,000 additional premature deaths annually

The results from this hypothetical case study may be scaled to apply to specific policy initiatives affecting the U.S. coal-based electricity generation sector. For example, the U.S. Department of Energy’s Energy Information Administration (EIA) estimates that climate change bills currently before the U.S. Congress—such as Senate Amendment No. 2028, rejected by the Senate in 2003 and again in June 2005—could result in the displacement of up to 78% of U.S. coal-based electricity generation with higher-cost energy sources. The methodology employed here suggests that, absent any direct mitigation measures to offset expected decreases in employment and income, implementation of such measures could result in an annual increase of premature mortality rates by more than 150,000.

    Background: Job, Income and Economic Impacts

The Penn State study (Rose, A.Z., and Wei, D., “The Economic Impact of Coal Utilization and Displacement in the Continental United States, 2015,” Pennsylvania State University, July 2006) found the following:

Assigning equal weight to each of the two energy price scenarios, we estimate that U.S. coal-fueled electric generation in 2015 will contribute:

• $1.05 trillion (2005 $) in gross economic output;
• $362 billion in annual household incomes, and
• 6.8 million jobs.

We also estimated the prospective net economic impacts of the “displacement” of coalfueled electricity generation at assumed levels of 66% and 33% from a projected 2015 base.

These levels of displacement are consistent with some of the potential impacts of major environmental policy initiatives in climate change or other areas. In these cases, we again calculated backward linkage and price differential effects to determine potential negative impacts on each state’s economy.

Additionally, we calculated potential positive economic benefits due to the operation of replacement electricity generation of various types. In all states, the net effect of displacing coal-based electricity was negative for the “high-price” scenarios, and in nearly all states, the net effect was negative for the “low-price” scenarios…

Assigning equal weight to the high- and low-price scenarios, we estimate the average impacts of displacing 66% of coal-fueled generation in 2015 at:

• $371 billion (2005 $) reduction in gross economic output;
• $142 billion reduction of annual household incomes; and
• 2.7 million job losses.

Assigning equal weight to the high- and low-price scenarios, we estimate the average impacts of displacing 33% of coal-based generation in 2015 at:

• $166 billion (2005 $) reduction in gross economic output;
• $64 billion reduction of annual household incomes; and
• 1.2 million job losses.

The Energy Tax Budget

by Iain Murray on February 26, 2009

in Blog

“Not one dime,” said President Obama in his address to Congress, referring to how much extra tax people earning under $250,000 a year will have to pay in his budget. Unfortunately, even if you don’t have to pay extra tax, you will have to pay extra fees for your energy, which are passed on to the government via energy companies. That’s the effect of the President’s cap-and-trade scheme for carbon emissions, an important part of his new budget. Energy companies will have to pay the government for permits for each ton of carbon dioxide or equivalent they emit in the generation of power. They will pass on these costs to the consumer, as has happened everywhere a cap-and-trade scheme has been tried. The Administration will split the revenues between $15bn for alternative energy pork and about $52 billion per year to help pay for the Making Work Pay tax cut/welfare check of $800 for “95 percent of all American workers.” By raising the price of fossil fuel energy and thereby making expensive alternative energy more competitive, the program is also aimed at reducing the amount of greenhouse gases emitted.

How much will cap and trade cost households in increased energy costs? Well, we know from a CBO study last year that a 15 percent reduction in emissions from 1998 levels would cost each household at least $660. That target is about 25 percent more stringent than the budget target, which is simply a return to 1990 emission levels by 2020 (far less than environmentalists demand). So we can apply simple arithmetic to estimate that the current budget cap and trade program will cost each income quintile $510, $660, $870, $1125 and $1635 (in 2006 dollars, slightly more in nominal values) respectively. This is a significant offset to the $800 “tax cut” per worker.

To those who might object that most households have two income earners these days, that’s not true. While the “traditional” family model of a husband supporting his family only accounts for 7 percent of householders now, dual-income families actually account for just 29 percent of households. Moreover, it is the bottom three quintiles that have on average just one earner, meaning that they suffer proportionally more from this energy tax increase.

Finally, for the highest quintile, the lower income limit is just $88,000. If you earn that amount, even if you have two income earners in the household, you will likely lose money from these stealth energy taxes. So will the average household earning between $35,000 and $55,000. So much for “not one dime.”

SOTU Watch: Energy Claims

by Iain Murray on February 24, 2009

in Blog

The President might make various remarks relating to energy tonight. These are likely to center around grandiloquent claims as to the effectiveness of “green jobs” and alternative energy in saving the economy, not to mention the planet. Here are a few notes on the reality of these claims.

Green Jobs: The President will probably claim to be creating millions of “green jobs” to save the economy, fight global warming and end dependence on foreign oil together. In fact, “green jobs” have a number of problems, outlined in my Examiner piece from yesterday. To summarize:
• “Green jobs” come at the expense of traditional energy jobs. At the moment, the wind industry employs 85,000 people in all its facets (including support staff and suppliers). The coal industry employs 81,000 miners alone, and probably over 1.4 million in all, including support staff and suppliers.
• “Green jobs” are more expensive to society in general. Those 85,000 people in the wind industry contribute to the generation of just 1.3 million MegaWatt-hours of electricity, while the coal industry generates 155 million MWh, making each coal industry job seven times more productive than a wind industry job. The difference in cost is born by the rest of us.
• “Green jobs” are mostly low-paid and transitory, according to a recent report by, among others, The Sierra Club and the Teamsters union.
• A German government report found that “green jobs” are only beneficial to the economy as long as Germany remains a net exporter of green technology and power. As soon as other countries utilize their comparative advantages in manufacture and power generation, “green jobs” become a drain on an advanced economy.
• Most “green jobs” are related to the generation of electricity, which is not used to power cars yet, and so do nothing to lower our “dependence” on foreign oil (and most oil we use comes from the US and Canada in any event).

Alternative Energy: The President may repeat his promise to double the use of alternative energy, again claiming effects in terms of climate and energy independence. This claim is, in all probability, disingenuous.
• A doubling of alternative energy electricity production by 2011 would require the main alternatives – solar, wind, geothermal and biomass – together to generate 144 billion KiloWatt-hours of electricity by then. However, under the Energy Information Administration’s “business-as-usual” projections, these industries are expected to supply 150 billion KWh by then, with no additional policies needed. (Note the EIA includes hydropower and wood in its renewables calculations, for the solar/wind/geothermal/biomass figure, see here.)
• Reduction in greenhouse gases as a result of this policy is not likely to occur, as the EIA predicts a similar increase in the use of coal to generate electricity by 2011. In all probability, therefore, we will be emitting greater amounts of greenhouse gases by 2011, not less.
• A “smart grid” is probably a useful technology, but the President and the stimulus plan gold-plated it in order to boost their renewable energy rhetoric. William Tucker has a good summary of what is wrong with the President’s version of a “smart grid” here.
• If the President means that he will double the use of biofuels, this is likely to mean a significant increase in corn ethanol production, resulting in greater diversion of the corn supply into fuel production. This will likely increase already-inflated food costs (the recent price drop would have been significantly greater were it not for ethanol manufacture) and thereby increase food insecurity in a recession. Increased ethanol production is opposed by most major environmental groups as well as free-market groups. See Facts About Ethanol for more.

Good news and bad news for drivers from federal Transportation Secretary Ray LaHood. The good news is:

LaHood said he firmly opposes raising the federal gasoline tax in the current recession.

The bad news is that, because people are using less gas as they switch to more fuel-efficient vehicles and just plain drive less, LaHood is thinking of taxing us according to how many miles we drive – a VMT (Vehicle Miles Traveled) Tax. Now in some ways, this is a more equitable taxation scheme to fund road maintenance than the gas tax – it’s more reflective of the amount you use the road – and is therefore less objectionable, especially if it replaces rather than supplements the gas tax. However, it comes with a host of ramifications.

Most seriously, it will entail government surveillance of our driving habits. So there are obvious civil liberty concerns. Older Britons – and not so old – will remember the government asking them, “Is your journey really necessary?” This will give the government the chance to ask that question more directly.

More generally, the tax may be self-defeating. It will serve as a disincentive to drive, thereby reducing the amount it raises. For those who have to drive long distances, because they have a long commute or because their job requires it in other ways, it will also serve as a burden on economic activity (although perhaps no more than the current gas tax). Environmentalists may worry that it will reduce the incentive to switch to more fuel-efficient vehicles. While this would probably be a good thing in terms of road safety, environmentalists are not ones to let 2000 deaths a year get in the way of their war on oil, so my betting is that the VMT tax will, in fact, supplement a gas tax, putting your journey in double jeopardy.

Finally, if the Secretary is so opposed to a gas tax, what does he think of cap-and-trade of greenhouse gas emissions, which will be functionally equivalent to a gas tax? That’s administration policy. So it looks like the Secretary is actually in favor of a gas tax, as long as we don’t call it that.

UPDATE: I meant to include a few words about an even better idea. The redoubtable Jerry Taylor has instead done it for me at The Corner: T

hat said, there is an even better reform — get rid of federal gasoline taxes altogether and send all road construction and maintenance programs back to the states. All the bridges to nowhere, all the Robert Byrd memorial thises and thats, all the corruption associated with log-rolling transportation earmarks in Congress . . . all goes away. Alas, not even the late, great President George W. Bush dared entertain such an idea, and with all roads to recovery thought to come out of some shovel-ready highway somewhere, LaHood most certainly won’t go there.