William Yeatman

I see that Henry Derwint, President and CEO, International Emissions Trading Association in Geneva, Switzerland is scheduled to testify at Thursday’s hearing by the Senate Finance Committee on “Tax Aspects of a Cap-and-Trade System”. It took me a moment, as it seems he switched jobs, but now I recall my exposure to Mr. Derwint’s work in Europe. It is highly relevant to the testimony he is going to give tomorrow.

 

As I relate in my new book, or at least in the manuscript sent off – which, I regret, was much bigger than stood any realistic chance of making it through, with there certainly being no shortage of material – then-Chancellor of the Exchequer official Derwint traveled around Europe in 2006 selling a post-2012 cap-and-trade plan to Member States understandably wary of taking on a deeper promise.

 

After all, as we have serially established in these pages, Europe’s emissions have continued to steadily climb since Europe agreed to Kyoto in 1997, something which the “first” Kyoto cap-and-trade plan, their Emissions Trading Scheme, did absolutely nothing to arrest. Despite what you may hear tomorrow.

 

When Mr. Derwint arrived in Madrid, in between meeting with Ministries of the Environment and Economy, he asked to meet with a colleague of mine not affiliated with any governmental office (outside of his professorship at a local university), but who had been vocal in opposing the rationing plan. Fearing a realistic reassessment by Spain, Mr. Derwint indicated that he came bearing “temporary exemptions for energy-intensive industries” in order to gain Spain’s agreement for a deeper “Round II” promise. The key word for Spain here is “temporary”. The key message for us is that the ETS chases jobs away. Spain knows this, their Acerinox having graced us with new steel jobs in Carroll County, KY (its North American Stainless subsidiary).

 

Derwint, I was informed in an amazed phone call after the meeting broke up, also indicated a willingness to plead on behalf of Spain in the (ongoing, as we’ve reported) talks about new quotas. He expressed a willingness to assert that their “first” obligation represented a raw deal; that of course was a “reduction” promise not to exceed a 15% increase over 1990 levels. A Polish minister with whom I subsequently met informed me that the same crew, led by Mr. Derwint, also paid them a visit and the exchange was such that my hosts inquired if I had an explanation for why the UK emissaries “had the zeal of missionaries” and were so much more heavy-handed than even Brussels. I didn’t, and still don’t.

 

There was more, but let’s see what made it into the book. All of this is to say that Mr. Derwint’s sunny message of hope and change tomorrow does tend to fly in the face of his past efforts revealing a thorough understanding of the ETS’s impacts. Possibly he can explain why, if ETS is such a success, Europe increasingly threatens us with trade wars should we refuse to do it to ourselves, too, because they can’t take the hit to their competitiveness much longer. Just a thought.

Sunspot activity has not resumed up after hitting an 11-year low in March last year, raising fears that — far from warming — the globe is about to return to an Ice Age, says an Australian-American scientist.

Food Crisis Rounds Up

by William Yeatman on April 23, 2008

As food prices soars to new heights, researchers at Texas A&M makes a potentially revolutionary discovery. They discover a plant gene for saline tolerance in Arabidopsis. Arabidopsis is the trusty old model organism for plant scientists, and this discovery will help us produce new plants using molecular plant breeding methods (PMB’s), if the environmentalists will let us.

 

Although some of our current ailments are based on ill conceived ethanol mandates, subsidies that skew the food markets, and increased consumption in India and China, a recent op ed in the Telegraph joins a more and more unified Brittish demand for adopting PMB’s. The op ed also points the finger in the direction of OPEC, and the hypocrisy of leaders like Hugo Chavez. Chavez is supposedly a champion of the poor, but the high oil prices caused by the cartel’s price fixing are part of the problem with the rise in the cost of food.

 

Parts of the Arab world are harvesting the riches from the price fixing, it is important to remember that not all countries in the Arab world have oil. The region is balancing on a precarious edge between civil unrest and political chaos by choosing either of the options available to alleviate the situation.

 

Zimbabwe is again looking at starvation, not only due to the food prices, but also due to new bouts of drought. Last time they faced this situation, about 6 years ago, the government in Zimbabwe refused to accept aid shipments of maize because the grains came from PMB’s. This is the same corn that Americans eat every day. Luckily the starving population would not stand for this decision, spurred on by jet-setting environmental activists from Europe and USA. They raided the food containers, so the grain eventually got the people it was intended for, but what will the misguided leaders in Zimbabwe do this time around?

 

On the good news side, Ethopia opened up its first commodity exchange last week, which will lower the transaction cost for several major commodities in the country. Hopefully that will help Ethiopian farmers and consumers with lower cost for important foodstuffs.

Yesterday, a listener on the Michael Medved show challenged me that (I paraphrase), "Denmark has adopted wind power at no cost."

I said that I was no expert on Denmark but that there were significant subsidies involved. As this Economist article makes clear, it is certainly not correct to say that Denmark has adopted wind power at no cost:

Researchers in Denmark have gone a step further and put a value on this effect. They believe that wind power shaved 1 billion kroner ($167m) off Danish electricity bills in 2005. On the other hand, Danish consumers also paid 1.4 billion kroner in subsidies for wind power.

The Danish government cut wind power subsidies that year. The result:

The building of wind turbines has virtually ground to a halt since subsidies were cut back.

Meanwhile, compared with others in the European Union, Danes remain above-average emitters of the greenhouse gas carbon dioxide. For all its wind turbines, a large proportion of the rest of Denmark's power is generated by plants that burn imported coal.

Moreover, because you cannot store any wind power that is generated when no-one wants to use it, Denmark has to sell excess wind-power to Sweden at a price of 0c per KWh. This has caused some trouble:

Much has been written about Denmark's success as the world's wind power pioneer. But the regularly repeated claim – that Denmark generates 20 percent of its electricity demand from wind sources – is highly misleading. That 20 percent of electricity is not supplied continuously from wind power. Denmark’s wind supply is so variable that it relies heavily on neighbors Norway and Sweden, taking their excess production.

In 2003 its export figure for wind power electricity production was as high as 84 percent, as Denmark found it could not absorb its own highly variable wind output capacity into its domestic system. The scale of Denmark’s subsidies was such that in 2006-07 the government increasingly came under scrutiny from the Danish media, which claimed the subsidies were out of control.

Overall, Denmark, a small, flat, windy country of about 5.5 million souls cannot be a model for the US to follow, even if they had succeeded in making wind power work efficiently.

A new Gallup Poll shows a high level of awareness among Americans about global warming, but a far lesser degree of worry about the phenomenon.

The plan advocated by global warming zealots to limit access to proven, affordable energy sources "would have a far worse impact on poor and vulnerable populations around the world than any expected rise in average global temperatures," says the Competitive Enterprise Institute's senior fellow Marlo Lewis. But we don't expect the new billion-dollar, global warming think tank to think much about that.

The most outrageously repulsive and hypocritical reaction to the Pope’s visit came from House Speaker Nancy Pelosi (D-Calif.).  Her office's press release included the following admonition from Pelosi: “As we are honored by the visit of His Holiness Pope Benedict XVI, the President should heed his warnings about our moral responsibility to act, calling for a ‘strong commitment to reverse those trends that risk making the situation of decay irreversible.’”  The Washington Times ran a front-page photo [find photo] of the militantly pro-abortion Speaker bowing and kissing the Pope's ring when she was presented to him in the White House Rose Garden.   

Perhaps Germans fear Russia more than rising temperatures. A national debate has started on energy security, and there has even been talk of a coal revival in Germany, irrespective of the impact on climate change. In the end, the German people will have to decide what they are willing to sacrifice for a cleaner environment. After all, there's no such thing as a free lunch.

We'll refrain from commenting on the sartorial nightmare suggested by a buzz phrase that is as silly as it is deceptive. But we cannot resist the chance to expose the economic nonsense that surrounds the green-collar solution. Sens. Barack Obama and Hillary Clinton both promise to create high-paying jobs for workers who will battle global warming, pollution, and all manner of environmental ills. Of course, the economy is already doing just that — and as environmental technology develops, more jobs will be created.

Bad Energy Ideas

by William Yeatman on April 21, 2008

In the realm of energy policy, there are a great many bad ideas and a very few good ones. The usual practice of presidential candidates is to (1) sift through all these proposals, (2) separate the wheat from the chaff and (3) keep the chaff.