by William Yeatman on March 19, 2009

in Blog

Energy Chief Open to a Carbon Trade War
Iain Tally & Tom Barkley, Wall Street Journal, 18 March 2009

Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a “weapon” to protect U.S. manufacturing, just a day after one of China’s top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.

[N.B. Read commentary on carbon tariffs from CEI’s Fran Smith at www.globalwarming.org]

China Responds to Chu’s Threat of Trade War
Michael Forsythe, Bloomberg, 19 March 2009

China’s top negotiator on climate change said a U.S. proposal to impose duties on imports with countries that don’t try to limit their carbon emissions was “an excuse to impose trade restrictions.”

Climate Hype: Let the Backlash Begin
Iain Murray, DC Examiner Opinion Zone, 17 March 2009

Environmentalists and their allies in the Administration were stunned by the news last week that skepticism about the effects of global warming is growing.  With complete domination of both the mainstream media and the political institutions by true believers in global warming, the news from Gallup that 44 percent of Americans believe that global warming has been exaggerated must have come as a shock.  Yet last week’s news contained two good examples of why this should be, and why the debate that Al Gore claims is over may only just be starting.

White House Admits Cap-and-Trade Costs Triple Their Initial Estimate
Phil Kerpin, Fox News, 17 March 2009

I’ve already explained here on the Forum how the cap-and-trade energy tax works, and would be the biggest tax increase in the history of the country. Now, amazingly, the White House is telling something closer to the truth about this tax hike, admitting that the official budget estimate of $646 billion over 8 years-already a mighty steep price to pay-is far, far lower than the real cost.

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.

Thanks, Fran, for blogging on the carbon tariff threat to the peace and prosperity of the world.

We should all remember that carbon tariffs are no mere quirk of this or that administration, political party, or government agency. Protectionism is an inherent feature of carbon suppression policies, for three reasons:

(1) Companies and labor unions in carbon-constrained countries will demand carbon tariffs to “level the playing field” vis-a-vis firms in non-carbon constrained countries. Absent carbon tariffs, domestic industry and labor will not support cap-and-trade or carbon taxes.

(2) Carbon suppression programs all exhibit the classic collective action problem. However much it might be in the collective interest of every nation to “save the planet,” it is in the separate interest of each nation to free-ride on the sacrifices of others. The environmental harm any individual country incurs because it cheats on its emission reduction obligations is likely to be immeasurably small (even if we assume that global warming is an unfolding catastrophe), whereas the gains from cheating are likely to be both measurable and substantial. Unless credibly deterred and punished, cheating will be widespread and the system will collapse. Absent the threat or use of military force, trade sanctions (carbon tariffs) are the only way to prevent cheating.

(3) The EU-IPCC-Al Gore goal of achieving a 50% reduction in global emissions by mid-century is impossible absent deep emission cuts in developing countries. As this U.S. Chamber of Commerce presentation shows, the vast majority of the growth in global emissions is projected to occur in developing countries. Thus, even if industrialized countries go cold turkey and cut their net emissions to zero by 2050, developing countries would have to cut their CO2 emissions 62% below baseline projections to achieve a 50% reduction in global emissions. Whether trade sanctions would be enough to bully China and India into cutting their emissions is doubtful. One thing is certain: Preaching Gorethodoxy is not going to make them stop building coal plants and buying automobiles.

More on carbon tariffs

by Fran Smith on March 18, 2009

in Blog

For more on the insanity of carbon tariffs, there’s an excellent 2008 article by the National Post’s Terence Corcoran appropriately titled “Blowing up the WTO.”  Here’s what he says:

This is a legal and practical quagmire. To figure out the appropriate tax level would require a mind-blowingly elaborate carbon-measurement scheme, created on a global scale. It would have to be able to determine how much carbon emissions are embedded in the power drill that is nominally made in China, but is actually assembled from parts made in a dozen other countries. Some of those countries may or may not have carbon control programs in place.

Corcoran concludes:

. . . all this is a recipe for global trade wars. It would mean, in effect, blowing up the WTO trade system to create a parallel Carbon Trade System that would be based on the opposite principles. The objective would be to restrict trade, not increase it; to control trade, not liberate it; to increase trade conflict, not reduce it; to weaken the economy, not strengthen it.

And these ideas are coming from economists?

Carbon tariffs quid pro quo?

by Fran Smith on March 18, 2009

in Blog

Just as the World Bank put out a report on increased trade protectionism in the world, U.S. Energy Secretary Steven Chu came out in favor of using carbon tariffs as a “weapon” against countries that aren’t taking steps to reduce their carbon emissions and as a way to protect U.S. manufacturers.

He seemed not to notice that the day before China’s top climate change official Li Gao had warned that carbon tariffs imposed on developing countries would be a “disaster” and perhaps start a trade war.

Li had suggested too that maybe those rich countries that import goods from China might themselves pay for offsetting the emissions in their production.

We are at the low end of the production line for the global economy. We produce products and these products are consumed by other countries, especially the developed countries. This share of emissions should be taken by the consumers but not the producers.

Chu also doesn’t seem to remember that the European Union likes the idea of carbon tariffs against such countries as – gasp – the U.S.

Smoot and Hawley ain’t seen nothing yet if carbon tariffs play out.

In the News

by William Yeatman on March 17, 2009

in Blog

Elitist Enviros Hurt Blue-Collar Americans
Joel Kotkin, Forbes, 17 March 2009

The great Central Valley of California has never been an easy place. Dry and almost uninhabitable by nature, the state’s engineering marvels brought water down from the north and the high Sierra, turning semi-desert into some of the richest farmland in the world.

UK, Running out of $, Halts Green Investments
Ashley Seagen, Guardian, 17 March 2009

The government ran into a storm of criticism yesterday after quietly closing its grant program for solar energy last week, which campaigners said made a mockery of its commitment to build a low-carbon economy.

Senate Democrats Revolt against Obama’s Climate Policies
Andrew Taylor, AP, 16 March 2009

Eight Senate Democrats are opposing speedy action on President Barack Obama’s bill to combat global warming, complicating prospects for the legislation and creating problems for their party’s leaders.

White House Open to Drilling in Alaska?
H Josef Herbert, AP, 16 March 2009

Interior Secretary Ken Salazar said Monday he would consider tapping oil from Alaska’s Arctic National Wildlife Refuge by drilling outside its boundaries if it can be shown that the refuge’s wildlife and environment will remain undisturbed. But Salazar emphasized that the Obama administration stands firm that the Alaska refuge, known as ANWR, “is a very special place” that must be protected and that he is not yet convinced directional drilling would meet that test.

The Independent in London this week ran with the latest claim about sea level rise. Their headline illustrated perfectly how ridiculous predictions quickly transform into facts. The story was headlined, “Sea levels rising twice as fast as predicted.” The first sentence did not agree with the headline: “Sea levels are predicted to rise twice as fast as was forecast by the United Nations only two years ago….” That is, the soothsayers have read their chicken entrails again and decided that their previous divinations were not dire enough. This has nothing to do with actual sea level rise. For the past several years, sea level rise has been below the average rate of the twentieth century, which in total was about seven inches.

As I suggest today in an American Spectator piece, we may be to the point where public opinion is completely out of sync with how the best known (at least historically) news outlets are covering the global warming issue. Witness:

  • A poll from last summer found that the vast majority of Americans opposed Lieberman/Warner and would not be willing to pay higher prices for electricity or gasoline to combat global warming.
  • Pew found in January that of 20 policy issues it asked people to place in order of importance, global warming ranked last.
  • A series of recent Rasmussen polls determined: that more respondents believed global warming was due to planetary trends than by human causes; that voters are evenly divided over whether immediate action on global warming is necessary; that 46 percent believe giving government greater control over the economy to fight global warming will be bad for America; and that a majority (54 percent) believe the media exaggerates the dangers of global warming.
  • This week Gallup found a record-high 41 percent believe the media exaggerates the threat of global warming. “This represents the highest level of public skepticism about mainstream reporting on global warming seen in more than a decade of Gallup polling on the subject,” the polling firm reported.

So what does this say after 20+ years of irresponsible media exaggeration of the issue? It tells me a few things: that there is no such thing as a dominant “mainstream media” any more that captivates the news-consuming public. That while it’s nice to have one of these news outlets do your story, it’s not vital, and it’s not necessary to agonize over whether they do so or not. That these historically well-known news outlets are not only losing readership and revenues because of advertising losses, but because of credibility loss and disconnect with their communities. News consumers are smarter these days and know how to detect biased reporting, and they are not buying the product any more. With the speed and efficiency of the Web, it almost doesn’t matter any more where your information gets published; it’s that it does get published, gets found by a few key constituents, and gets launched from there. Can anyone purchase a Sunday paper in any city these days and honestly say it was worth the money?

Yet too many in political activism, public relations, and business believe that if your message hasn’t penetrated these media dinosaurs, then you’ve failed. Well, as the global warming issue illustrates, the skeptics are at least tied with the alarmists if they are not outright winning, despite the lack of respect and attention from the dying news giants. The polls show it clearly. So if the big businesses (you know who you are) who are in bed with the cap-and-taxers in big government and big environmentalism only so they can reap benefits for themselves, while passing costs to consumers and electricity users, you risk a backlash from those who will pay the bill. You are believing the wrong messengers and the evidence is clear.

In the News

by William Yeatman on March 12, 2009

in Blog

Why Going Green Means Making Green
Tim Carney, DC Examiner, 12 March 2009

“Big business is increasingly embracing green legislation – and taking advantage of opportunities for big profits for companies with a strong lobbying presence in Washington and in state capitals.”

The Climate Scare Is a Media Driven Scare
Roger Helmer, Conservative Home, 12 March 2009

“I’ve just got back to Strasbourg from the Heartland Institute’s International Climate Conference in New York (Subtitled “Global Warming: was it ever Really a Crisis?”), which brought together around 800 scientists, politicians and commentators from across the USA and around the world, all of a broadly climate-realist disposition.  This was the second Manhattan Climate Conference, and 2009 attracted about double the attendance of the 2008 event.”

America, China Taking Different Paths on Energy
Thomas Pyle, DC Examiner, 12 March 2009

“In spite of the fact that gasoline prices are nearly halved from last summer’s highs, the American people still overwhelmingly support offshore energy exploration and production.”

Senate: Obama’s Climate Policy Dead on Arrival
Walter Alarkon, The Hill, 11 March 2009

“President Obama’s budget doesn’t have enough support from lawmakers to pass, the Senate Budget Committee chairman said Tuesday.”

The Crumbling Case for Global Warming
Peter Foster, National Post, 10 March 2009

“One young radical turned up at the Heartland Institute’s climate change skeptics’ conference in New York this week to declare that he had never witnessed so much hypocrisy. How, he asked the panelists of a session on European policy, could they sleep at night? Clearly puzzled, one of the panelists asked him with which parts of their presentations he disagreed. “Oh,” he said “I didn’t come here to listen to the presentations.”