Marlo Lewis

The recent Papal Encyclical on “care of our common home” calls for “changes of lifestyle, production and consumption, in order to combat [global] warming,” and drastic reductions in greenhouse gas emissions, based on the assessment that fossil-fueled economies are “unsustainable” and “can only precipitate catastrophes.”

If that assessment were correct, population would be smaller today, and worse off, than in previous decades and centuries. The exact opposite is the case, observes economist Indur Goklany in a concise, by-the-numbers, rebuttal. The world’s population “is at a record level,” and human well-being “is at or near its peak by virtually every objective broad measure.”

The chart below shows a strong long-term correlation between carbon dioxide (CO2) emissions and increases in population, life expectancy, and per capita income — the best overall indicators of human health and well-being.

Those correlations are causal, not accidental.

The improvements in human well-being have been enabled directly or indirectly through the use of fossil fuels or fossil-fuel powered technologies and economic growth. This is because every human activity — whether it is growing crops, cooking food, building a home, making and transporting goods, delivering services, using electrical equipment for any purpose, studying under a light or going on holiday — depends directly or indirectly on the availability of energy (see below) and, in today’s world, energy is virtually synonymous with fossil fuels; they supply 82% of global energy used. [click to continue…]

A study published this week in Proceedings of the National Academy of Sciences (PNAS) frets that the “carbonization” of energy resulting from the “renaissance of coal” in developing countries could render “ambitious” emission stabilization goals “infeasible.” Gee, really — who’da thunk it?

Although the main takeaway conclusion is obvious, the study provides lots of information about the factors (population, GDP per capita, energy intensity of GDP, carbon intensity of energy) driving global and regional emission trends.

As illustrated in the chart below, the big drivers of emissions growth, especially in recent years, are increases in GDP per capita, primary energy consumption, and the carbon intensity of energy. Population growth is not a significant factor. Decreasing energy intensity of production has worked to restrain emissions growth.

The authors recognize that coal consumption in developing countries is strongly correlated with high rates of economic growth. Moreover, they find that the upsurge in consumption since 2000 is due to coal’s competitive price in global markets rather than domestic resource availability.

In summary, in recent years non-OECD countries have relied increasingly on coal to meet their energy needs. The poorer a country is and the higher its rate of economic growth, the stronger is this effect. Both effects become more pronounced over time, suggesting that increasing coal use is a general trend among poor, fast-growing countries and is not restricted to a few specific countries. These results confirm the hypothesis of a global renaissance of coal. This conclusion is strengthened by the fact that excluding China and India from the regression hardly affects the results (see SI Appendix for details), indicating that these two countries are not driving the results but rather are representative for the global sample. . . .This renaissance of coal has even accelerated in the last decade; this acceleration can be explained by the low prices of coal relative to other energy sources.

PNAS undoubtedly published the study because the results spell danger for the COP 21 climate treaty conference in Paris. In the authors’ words:

Our results raise the more general question of the role of developing countries in climate-change mitigation. Developing economies now account for such a large share of global energy use that the trend toward higher carbon intensity in these countries cancels out the effect of decreasing carbon intensities in industrialized countries. If the future economic convergence of poor countries is fueled to a major extent by coal, i.e., if current trends continue, ambitious mitigation targets likely will become infeasible.

The same conclusion implies, of course, that ambitious stabilization goals could make developing country efforts to eradicate poverty infeasible. Isn’t that the more important concern and issue? [click to continue…]

Why does any sensible person even bother submitting comment letters to the Obama administration about any matter relating to climate change? I find myself asking that question again and again, because the only ‘error’ the administration will ever admit is that climate change is ‘worse than we thought’ — an implicit boast that ‘we were more right than we knew.’

The administration has a party line and no agency is allowed to deviate from it on any matter of climate science, economics, or policy, no matter how speculative or minor the point at issue.

Nonetheless, I continue to submit comments — as other skeptics and free marketers do — just to ensure that the administration’s groupthink does not go unchallenged on the record.

What brings such thoughts to mind is the Office of Management and Budget’s response to comments, posted just before the July 4th weekend, on the Interagency Working Group’s May 2013 Technical Support Document (TSD) on the social cost of carbon. The social cost of carbon (SCC) is the cumulative damage to society allegedly inflicted by an incremental ton of carbon dioxide (CO2) emissions over an immense span of time (typically out to the year 2300).

Obama officials routinely use SCC estimates to calculate the putative benefits of CO2-reducing regulations. The higher the estimated SCC, the bigger the projected value of CO2 reductions becomes. For example, the 2013 TSD increased the SCC values of an earlier 2010 TSD by roughly 60%. So in just four short years, while climate models increasingly overshot observed global temperatures, climate change somehow got 60% worse and climate regulations 60% more valuable. Your government at work!

OMB reports it received 39,000 form letters and about 150 “substantive comments” on the 2013 TSD. The latter pile includes the comment letter I submitted on behalf of eleven pro-market organizations.

Along with its response to comments, OMB has also posted a revised TSD. True to form, the revised document does not accept any of the “substantive comments.” The only changes are minor technical corrections in how agencies are to run the integrated assessment models (IAMs) they use to estimate carbon’s social cost.

As explained in a recent post and accompanying Power Point, SCC analysis is computer-aided sophistry, an attempt by would-be central planners to hide raw political preferences behind a pretense of knowledge and precision.

Today’s post will briefly identify weaknesses in OMB’s response to our comments.

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The Institute for Energy Research (IER) has published a first of a kind study on the levelized cost of electricity from existing power plants. Although not discussed as such, the report corroborates concerns that EPA’s Clean Power Plan would significantly increase electricity prices by replacing low-cost existing coal generation with more costly new generation from natural gas and wind.

How much more costly? The authors, Tom Stacy and George Taylor, estimate that new natural gas combined cycle (NGCC) costs about twice as much as existing coal and new wind costs about three times as much.

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EPA last week released Climate Change in the United States: Benefits of Global Action. As summarized by the agency’s press release, the 96-page report “compares two future scenarios”:

a future with significant global action on climate change, where global warming [in 2100] has been limited to 2 degrees Celsius (3.6 degrees Fahrenheit), and a future with no action on climate change (where global temperatures rise 9 degrees Fahrenheit). The report then quantifies the differences in health, infrastructure and ecosystem impacts under the two scenarios, producing estimates of the costs of inaction and the benefits of reducing global GHG emissions.

The report has five main sections (health, infrastructure, electricity, water resources, agricultural and forestry, and ecosystems). At the end of each section, EPA cites to an underlying technical study. I may examine one or more of those in a later post. Here I will point out a few tricks EPA uses to make its case.

The core bias that predetermines all the alarming forecasts in EPA’s report is the assumption that, in the reference (“no action”) scenario, global temperatures will increase by 9°F (5°C) between 2010 and 2100 (the red line in the chart below).

Average U.S. temperatures are projected to rise even higher. In the reference scenario, EPA projects a 14ºF increase above present temperatures in the Mountain West and a 12°F increase in the northern regions. In contrast, temperatures rise no more than 4ºF in any state under the “global action” scenario.

Unsurprisingly, in EPA’s assessment, unmitigated warming produces terrible and terrifying climate impacts whereas “global action” reduces such impacts to manageable and non-threatening levels. For example, EPA claims significant global action would reduce U.S. urban heat-related mortality by 93% in 2100, saving approximately 12,000 lives in that year.

How reasonable is it, though, to suppose that average global temperatures in 2100 will be 9°F higher than they are today? Not very. [click to continue…]

Today I participated in a panel discussion at the Heritage Foundation titled “Social Cost of Carbon: A Controversial Tool for Misguided Policy.” Heritage Foundation economist David Kreutzer moderated the panel. He also introduced Senate Environment and Public Works Committee Chairman Jim Inhofe (R-Okla.), who spoke on climate science and policy for about 20 minutes before the panel began. Cato Institute scientist Patrick Michaels and Heritage Foundation economist Kevin Dayaratna also gave presentations as panelists.

To watch the entire event, click on http://www.heritage.org/events/2015/06/carbon

My Power Point presentation includes a lot of material I did not have time to cover. So I am posting it here.

My argument may summarized as follows:

1. Social Cost of Carbon — the cumulative damage allegedly inflicted by an incremental ton of carbon dioxide emitted in a particular year — is an unknown quantity, discernible in neither meteorological nor economic data.
2. The SCC is a product of speculative climatology combined with speculative economics. By fiddling with inputs in complex computer models, SCC analysts can get just about any result they desire.
3. What EPA and climate campaigners desire are ever-bigger SCC values to justify ever-more costly anti-carbon taxes and regulations.
4. However interesting as an academic exercise, when used to guide policy, SCC analysis is computer-aided sophistry. Its political function is to make renewable energy look like a bargain at any price and make fossil fuels look unaffordable no matter how cheap.
5. Even if SCC analysis were an exact science, it would still be biased unless paired with rigorous assessment of the social benefits of carbon energy and the social costs of carbon mitigation. It never is.
6. The economic and social costs of carbon mitigation in all likelihood greatly exceed the social costs of carbon.
7. By promoting regulatory excess, pseudo-scientific groupthink, and noble cause corruption, SCC analysis has become a menace to society.

The law of unintended consequences is a harsh mistress. The Clean Power Plan (CPP), a policy touted by EPA and others as mitigating climate change impacts on species, imperils the Florida manatee, a species listed as endangered under the Endangered Species Act (ESA).

To grasp the CPP threat to manatees, one does not need complex computer models or a Ph.D. in climate science. Cold stress is a leading killer of manatees. Coal power plants discharge heated water that keeps marine environments comfortably warm where thousands of manatees live (or rather, thousands congregate where power stations warm the surrounding waters). The CPP is a strategy to put the kibosh on coal generation. QED.

Photo: Manatee refuge courtesy of Florida Light and Power

House Natural Resources Chairman Rob Bishop (R-UT) and Senate Environment and Public Works Chairman Jim Inhofe (R-OK) spell out the CPP threat to manatees in a letter sent yesterday to EPA administrator Gina McCarthy. Because EPA failed to consult with the Fish & Wildlife Service about potential impacts of the CPP on manatees, the lawmakers conclude that the CPP flouts EPA’s obligations under section 7 of the ESA. [click to continue…]

American Fuel and Petrochemical Manufacturers (AFPM) has released four fact sheets on EPA’s proposed Renewable Fuel Standards (RFS) for 2014, 2015, and 2016, and the biomass-based diesel standard for 2017:

• Renewable Fuel Standard: Summary of 2014-2016 Proposed Rule 
• Fact Sheet: Renewable Fuel Standard Blend Wall
• Fact Sheet: EPA Renewable Volume Obligations (2014-2016)
• Fact Sheet: EPA’s Renewable Fuel Standard “Reset” Authority

Today’s post discusses two key points developed in the Fact Sheets:

• The Blend Wall — the practical limit on how much biofuel can actually be sold in a given year — is EPA’s chief reason for exercising its authority to adjust the statutory RFS blending targets for 2014-2016. However, EPA plans to breach the blend wall in 2016.
• In conceptualizing how the blend wall may be breached, EPA drastically overestimates how much biofuel can be sold as E85 (motor fuel blended with up to 85% ethanol).

First, some quick background on the RFS and EPA’s proposal. [click to continue…]

EPA today proposed Renewable Fuel Standard (RFS) biofuel blending targets for 2014, 2015, and 2016. The agency expects to complete the rulemaking by Nov. 30, which means it will be two years late finalizing the 2014 targets and one year late finalizing the 2015 targets.

The 2007 Energy Independence and Security Act (EISA), which established the RFS program in its current form, mandates that refiners, blenders, and fuel importers increase the amount of biofuel sold in the nation’s motor fuel supply from 4 billion gallons in 2006 to 36 billion gallons in 2022. However, EISA also authorizes EPA to adjust the annual targets if “there is an inadequate domestic supply,” broadly defined by the agency to include all infrastructure, market, and legal constraints “that could result in an inadequate supply of renewable fuel to the ultimate consumers.”

In Nov. 2013, EPA concluded that the 2014 RFS mandate would exceed the “blend wall” — the maximum quantity of ethanol that can be sold in a given year. The blend wall is a product of two factors: the overall size of the motor fuel market and practical constraints on how much ethanol can be blended into each gallon of motor fuel sold. Warranty and liability concerns, lack of compatible fueling infrastructure, and, most importantly, anemic consumer demand, effectively limit the standard blend to E10 — motor fuel containing up to 10% ethanol.

Based on blend-wall arithmetic, EPA in Nov. 2013 proposed to trim the overall 2014 statutory target from 18.15 billion gallons to 15.21 billion gallons — a 16% cut. That sparked a firestorm of protest from biofuel interests, and EPA has been dithering over the targets ever since – until today.

EPA’s proposal gets mixed reviews from biofuel lobbyists. On the one hand, the targets are lower than the corresponding EISA targets.

On the other hand, the proposed target for 2016 will exceed the E10 blend wall by about 840 million gallons (p. 58). It is important to biofuel producers that all ethanol produced actually be sold for use as motor fuel. Otherwise, supply will exceed demand, and the ensuing glut will depress biofuel prices.

EPA assumes up to 600 million of those gallons can be sold via increased sales of E85 – motor fuel blended with up to 85% ethanol (p. 60). In a coordinated move, the USDA yesterday announced plans to spend $100 million to subsidize installation of E85 blender pumps.

My best guess is that in 2017 (or sooner) the blend wall crisis will return.

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