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Kerry campaign issues energy plan

by William Yeatman on August 3, 2004

in Politics

The presidential campaign of Senator John Kerry (D-Mass.) released a fourteen-page energy policy paper on August 2 that emphasizes reducing Americas dependence on foreign oil. “An Energy Independent America” argues that, “Dependence on foreign oil is a security problem because it forces us to rely on volatile regions ruled by some of the world’s most authoritarian regimes. We believe a strong America must no longer rely on the cooperation of regimes that may not share our values, and we are not willing to risk a future in which our young men and women might have to risk their lives to protect Mideast oil supplies.”

Energy independence has been a favorite rallying cry across the political spectrum for some years, but ignores the fact that crude oil is a global commodity and therefore prices are set in a global market.

The Kerry campaign plan also calls for $10 billion in taxpayer funding for clean coal technology research and the use of “flexible, market-based strategies” to lower nitrogen oxides (NOx), sulfur dioxide (SOx), carbon dioxide (CO2), and mercury emissions from such facilities. “Flexible, market-based strategies” would appear to mean that Kerry supports cap-and-trade programs for carbon dioxide emissions and the various air pollutants. Senator Kerry voted for the Lieberman-McCain Climate Stewardship Act on October 30, 2003, which would have put a cap on CO2 emissions.

The proposal also states that as President Kerry would “update and strengthen” fuel-efficiency standards and provide incentives for automakers to build more efficient automobiles and for consumers to purchase these automobiles. This appears to be a retreat from Kerrys earlier call to increase corporate average fuel efficiency (CAFE) standards to 36 miles per gallon from the current 27.5 mpg by 2015. Such a requirement would place many drivers lives in danger as automakers would be forced to produce smaller, lighter vehicles.

The plan re-iterates Kerrys goal of a 20 percent renewable portfolio standard by 2020 for electric utilities and an expansion of the production tax credit for wind and biomass energy sources (Greenwire, Aug. 3).

On the campaign trail in West Virginia, Senator John Edwards (D-N. C.), Kerrys vice presidential running mate, emphasized the Democratic tickets support for coal. “For us, coal is an enormous part of our energy strategy for America. We need to be investing in clean coal technology, which is not happening now. We want to make sure people who work in coal now keep their jobs (Wheeling News Register, Aug. 1). The Bush campaign suggested that Kerrys “rhetoric doesnt match his actions.”

Japan may tax fossil fuel use

by William Yeatman on August 3, 2004

in Blog

Japan is considering taxing consumers of fossil fuels, including petroleum and coal, in their latest plans to meet their targets to reduce greenhouse gas emissions. To ensure that Japanese business does not suffer, steel makers and other businesses using coal and oil as fuel would be given tax waivers or receive lower rates.

The environment ministry expects tax revenues of roughly 600 billion yen (US$5.4 billion) a year. With approximately 45 million households in Japan, this will cost each household roughly $120 per year.

Specific tax amounts will be determined according to carbon dioxide emission volume and added to gasoline prices, electricity fees, and the like. Under the ministry’s draft proposal, a tax of slightly more than 1 yen (US$0.009) would be imposed for each liter of gasoline. The revenues would be used to finance energy-saving policies.

The ministry will present this proposal to the Liberal Democratic Partys environmental research council Thursday. The ministry hopes to incorporate their proposal into fiscal 2005 tax reform. (Asia Pulse/Nikkei, Aug. 3).

Great Britain at sea over global warming programs

by William Yeatman on August 3, 2004

in Politics

A new report from Cambridge Econometrics finds that, “The [British] governments 20 percent domestic carbon-reduction goal is likely to be missed by a large margin” (Bloomberg News, July 30). The forecasters suggest that emissions will only be 12.3 percent down on 1990 levels. Emissions from power generation will drop by 5.5 percent, but emissions from domestic and transportation sources will rise.

The study also found that United Kingdom participation in the controversial European Union emissions-trading plan alone won’t be enough to cut British emissions to the government target, although it did conclude that the UK is “expected easily to meet its target under the Kyoto Protocol” (to reduce emissions by 12.5 percent by 2012 from 1990 levels).

Cambridge Econometrics also concluded that emissions from road transport will rise by 14 percent by 2010 from 1990 levels.

In related news, the Guardian reported (July 29) that the UK government is to, “press on with plans to build 120,000 homes in the Thames Gateway flood plain despite accepting the increased chance of flooding disasters due to global warming.” The announcement said that, “New homes on floodplains would have to be sited and designed to ensure that they were flood resilient.”

This action, placing current needs over future worries, may reflect the current state of public opinion in the UK. A BBC poll (taken in mid-July to coincide with a series of BBC television programs pushing the alarmist case on global warming) found that climate change finished at the bottom of a list of seven “important issues” facing the UK, below even immigration. Of the respondents, 53 percent thought Britain would be affected “only a little” or “not at all” by climate change. Finally, while most respondents said that they would be willing to change their lifestyles to combat global warming, only low-cost options were popular. A mere 37 percent would be willing to pay more for gasoline.

Glacial melting on Mt. Kilimanjaro not due to global warming

by William Yeatman on August 3, 2004

in Science

In a new paper published in the International Journal of Climatology (24; 329-339), Georg Kaser of the University of Innsbruck and colleagues from the University of Massachussets, Amherst, and the Tanzania Meteorological Agency provide more proof that the snows of Kilimanjaro are disappearing owing to factors other than global warming.

In “Modern Glacier Retreat on Kilimanjaro as Evidence of Climate Change: Observations and Facts,” Kaser et al. “develop a new concept for investigating the retreat of Kilimanjaros glaciers, based on the physical understanding of glacierclimate interactions.”

They say, “The concept considers the peculiarities of the mountain and implies that climatological processes other than air temperature control the ice recession in a direct manner. A drastic drop in atmospheric moisture at the end of the 19th century and the ensuing drier climatic conditions are likely forcing glacier retreat on Kilimanjaro.”

The authors reference another study, soon to be published in the Journal of Geophysical Research. According to them, “Mlg and Hardy (2004) show that mass loss on the summit horizontal glacier surfaces is mainly due to sublimation (i.e. turbulent latent heat flux) and is little affected by air temperature through the turbulent sensible heat flux.”

Guess your liability!

by William Yeatman on August 2, 2004

in Politics, Small business

In these days of corporate scandal, who can argue against full disclosure on financial statements?  But now comes one cockeyed movement that pushes the concept to extremes.  It would require executives to guess potential liabilities from environmental and social problems that just might affect their companies, and list them on balance sheets.

 I can envision, for instance, that an oil company like Royal Dutch/Shell, as supplier of fuels that supposedly contribute to global warming, would have to report the potential environmental liabilities.  How much?  A ready estimate can be derived from the movie The Day After Tomorrow.  As the film ends, half the U.S. population lies frozen beneath a gigantic ice sheet.  So lets say $100 billion.  Or maybe $10 trillion is a better number.

 See how ludicrous this gets?  Remarkably, this movement is drawing support from Wall Street.  In June Goldman Sachs and Morgan Stanley endorsed a report of the United Nations Global Compact that calls upon regulators to require a minimum degree of disclosure and accountability on environmental, social and governance issues from companies, as this will support financial analysis.

 The Rockefeller Family Fund, the Turner Foundation and the United Steelworkers have also signed on to the balance-sheet responsibility movement. California Treasurer Phil Angelides wants his states public pension funds to push for accurate corporate environmental accounting.  The Rose Foundation for Communities & the Environment, in Oakland, Calif., has already asked the SEC to mandate disclosure of financially significant environmental liabilities.  These activists arent trying to improve the reliability of Moodys bond ratings.  They are out to influence corporate behavior.

 Yes, environmental and social liabilities can be hugewitness Superfund, asbestos and breast-implant costs.  In todays world of strict, joint and several liability, where almost anyone can be assigned fiscal responsibility for almost anything, conservative accounting would seem to require the disclosure of all the future damage that could be done by tort lawyers, The problem is coming up with a number.

 A federal judge in California just gave a green light to a class action on behalf of 1.6 million women who worked at Wal-Mart anytime since December 1998.  The plaintiffs accuse the retailer of denying women equal pay and opportunities for promotion.  Should Wal-Mart have anticipated this suit?  Should its 2004 balance sheet have included a liability of, say, $104 million (the amount Home Depot paid in 1997 to settle similar suits) or maybe $176 million (what Texaco agreed to pay out in 1996 to settle a race-discrimination class action)?  Wal-Marts bigger, though.  How about a few billion dollars?

 Note that American and United Airlines, Boeing and the owners of the World Trade Center are all being sued (by families who opted out of the September 11th Victim Compensation Fund) for failing to take measures to prevent the attacks.  Maybe juries will size up damages in the billions.  Should AMR, UAL, and Boeing be listing massive conditional liabilities on their quarterly reports?

 There are an infinite number of possible futures and thus an infinite number of possible asset/liability estimates.  Which of the myriad low-probability (but possibly high-cost) risks should be incorporated on companies balance sheets?  At what point does the noise introduced by adding more and more low-accuracy valuations destroy the informational value of accounting itself?  In mandating the disclosure of information about less-likely risks, dont we run the risk of omitting information about more-likely risks?

 Assets and liabilities that cant be connected to historical transactions or tradable contracts have no assignable market value.  Goodwill is like that.  If it isnt from an arms-length acquisition, the number you might put on this asset is entirely arbitrary.  So investors are better off if the asset is not counted.  So, too, for liabilities that are to be plucked from the air.  Accounting is not a field in which we want to encourage fanciful thinking.

Schleede examines costs and benefits of wind power

by William Yeatman on July 20, 2004

in Blog

In a paper delivered to about 650 member-owners of Associated Electric Cooperative, Inc. at their annual meeting in St. Louis, respected retired energy consultant Glenn Schleede examined some of the arguments routinely made in favor of wind power.  Schleede summarizes:

The paper places the past (1950-2000) and prospective (2010-2025) contribution of wind energy in the context of overall US energy consumption and US electricity generation.  The paper demonstrates that the contribution of wind has been and will be tiny despite the massive subsidies and mandates being provided, unwisely, by federal and state governments.

The paper notes that the wind industry, US Department of Energy (DOE) and DOE’s National Renewable Energy Laboratory (NREL) using our tax dollars  has been highly successful in misleading the media, public, Congress, and other federal and state regulators and legislators about the costs and benefits of wind energy.  The advocates have grossly overstated the benefits of wind energy, and greatly underestimated the environmental, ecological, economic, scenic and property value costs of wind energy.

The false and misleading claims by the advocates have led to government policies, programs and regulations that are detrimental to the interests of consumers and taxpayers.

The paper also admits that it is difficult, given the success of the advocates’ propaganda, to reverse bad federal and state wind energy policies, programs and regulations.  However, it notes that emerging citizen-led efforts around the world (e.g., US, UK, Germany, Denmark, Spain, Italy, Australia, and New Zealand) are beginning to be effective in bringing the TRUTH about wind energy to the attention of the media, public and government officials.

Schleede will deliver a talk based on his paper at a Cooler Heads Coalition briefing on July 23 in Room 628 of the Senates Dirksen Building beginning at noon.  A copy of the paper is available at the Cooler Heads Coalitions web site at http://www.globalwarming.org/article. php?uid=714.

Extraordinary scenes at Russian conference

by William Yeatman on July 20, 2004

in Politics, Science

The British scientific establishment reacted so badly to dissenting voices at a Moscow conference on climate change science that they disrupted the event.  The two-day seminar, entitled Climate Change and the Kyoto Protocol, had been organized by the Russian Academy of Sciences and was chaired by distinguished climatologist Yuri Izrael, a Vice-Chairman of the Intergovernmental Panel on Climate Change. 

On being informed that the program would include contributions from scientists who question the effects of global warming, such as Richard S. Lindzen of the Massachusetts Institute of Technology, Nils-Axel Morner of Stockholm University, and Paul Reiter of the Pasteur Institute, the British delegation, led by Sir David King, objected to their inclusion.  They first delayed the conference, then asked British foreign secretary Jack Straw to exert political pressure in an effort to get the program changed.  When this failed, there were reports that the conference was disrupted on at least four occasions (one reporter asked why security guards did not intervene).  In the end, Sir David, who is on record as judging global warming a worse threat than terrorism, walked out. 

Peter Cox of the U.K.’s Hadley Centre for Climate Prediction and Research attempted to justify the British actions by telling Science magazine (July 16), We knew that we would not get to the scientific issues if we went down every rabbit hole of skepticism.

During the conference, Paul Reiter used a simple experiment to demonstrate the low relevance of climate to the spread of malaria.  He said, When I asked whether any of the Russian Academicians at the symposium had had malaria, nearly all raised their hands.  Several had contracted the disease in Siberia!

The French newspaper Le Figaro in reporting the controversy (July 16) commented, The clash was more than a minor diplomatic incident because it revealed a form of intellectual bullying that is beginning to dominate the scientific community on the question of climate change.

Study rejects anthropogenic origin of mercury

by William Yeatman on July 20, 2004

in Science

A recent study published in Hydrology and Earth System Science has found that high mercury levels in the environment may not be the result of coal-fired power plants.  The paper by E.C. Krug and D. Winstanley of the Illinois State Water Survey, Comparison of mercury in atmospheric deposition and in Illinois and USA soils, comes after the recent emergence of an environmentalist offensive calling for increased regulation of mercury (Hg) emissions from coal-fired power plants.

Krug and Winstanley tested the hypothesis that mercury in Illinois and USA soils is the result of human activities by comparing the rates of atmospheric mercury deposition with soil and Earth crust mercury content. They discovered that, contrary to popular belief, environmentally significant amounts of natural mercury are generally found in soils and quantities of Hg in USA soils are too great to be attributed to anthropogenic atmospheric Hg deposition.

The effort to impose federal regulations to reduce coal-fired power plant mercury emissions is based on the unsubstantiated theory of a direct correlation between power plant locations and high mercury levels.  Krug and Winstanleys paper discredits the environmentalists claim that amounts of mercury in the environment were naturally low before anthropogenic Hg environmental deposition.  Their paper has attracted little major media attention, but was covered in an article by David Wojick appearing in Electricity Daily (www.electricity-online.com, July 14).

Global warming creates biodiversity boom

by William Yeatman on July 20, 2004

in Science

A recent study published by the Yale Journal of the School of Forestry and Environmental Studies claims a rise in global temperatures is causing a northward shift of vegetation and mammals. The study involved eight U.S. parks, and how a supposed rise in temperatures could entice the movement of species to and from these parks.

The study predicts that the parks they studied stand to gain 92% more mammals through immigration within the next century, and 20% of the mammals to relocate outside of the parks. Oswald Schmitz, professor of population and community ecology, cautions, the species that were in the parks, especially in the northern parks, arent leaving those parks and going even farther north. So this migration crowds species much more (www.vaildaily.com, July 21).

Attorneys General sue five big electric utilities

by William Yeatman on July 20, 2004

in Politics

The Attorneys General of California, Connecticut, Iowa, New Jersey, New York, Vermont, and Wisconsin, and the Corporation Counsel of New York City filed a complaint July 21 in federal district court in Manhattan that alleges that five leading electric power generators had created a public nuisance by emitting carbon dioxide and thereby contributing to global warming. 

The taxpayer-financed lawyers are not seeking monetary damages but rather an abatement order requiring the utilities to reduce their emissions.  Connecticut Attorney General Richard Blumenthal said at a press conference that their aim was to, Save our planet from disastrous consequences that are building year by year and will be more costly to prevent and stop if we wait.  Mr. Blumenthal also told reporters to, Think tobacco, without the money.

The complaint alleges that the States are suffering and will suffer damage from global warming in the form of heat-related deaths, sea-level rise, injuries to water supplies, injuries to the Great Lakes, injuries to agriculture in Iowa and Wisconsin, injuries to ecosystems, forests, fisheries and wildlife, wildfires in California, economic damages, increased risk of abrupt climate change, and, Injury to States Interests in Ecological Integrity.

The companies targeted are American Electric Power Co., Southern Co., Xcel Energy Inc., Cinergy Corp., and the federal Tennessee Valley Authority.  The complaint uses various statements and admissions by these companies that global warming is a problem that they want to do something about as proof that they manage and control the emission of carbon dioxide.

Only Xcel through its subsidiary Northern States Power of Wisconsin provides electricity to customers in any of the States that have filed suit.  Perhaps recognizing that they are on tenuous legal ground with their federal complaint, the complaint also includes specific complaints for each state, making the litigation a complex matter.

Initial reaction to the lawsuit has not been favorable beyond radical environmental groups.  Even some supporters of action to curb carbon dioxide emissions criticized the suit.  Eileen Claussen, the president of the Pew Center on Global Climate Change, told the New York Times (July 22) that she found the suit, Slightly perverse.  Of course, we need a national program and of course, we need some legislation.  The real question is, does this help you get there?  It’s not clear to me that this lawsuit will help.

Initial response from newspapers was also unenthusiastic.  The San Jose Mercury News (July 22) called the complaint a cheap shot and noted, Generation by a public utility is about as regulated as an activity can be.  Utilities are not only permitted to produce electricity, they’re also obligated to.  So any ill effects from an operation that has been approved from the local to the federal level can’t be laid at the feet of the utilities alone.

The Cincinnati Post (July 22) was equally unimpressed.  It satirized Rhode Island Attorney General Patrick Lynchs statement that, It’s imperative that we confront those responsible for unleashing an invader with the power to wreak unspeakable havoc on our climate and to damage, and destroy, our ecosystems as follows: Good golly.  If fossil-fueled power plants are that much of a public nuisance, maybe we’d better shut them down right now.  That might reduce Rhode Islanders to living off whatever fish they can catch with a net, but it would take care of that invader.

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