Post image for The Growing Irrelevance of U.S. Climate Policy

The world will burn around 1.2 billion more tons of coal per year in 2017 than it does today — an amount equal to the current coal consumption of Russia and the United States combined.

Today’s Climatewire (subscription required) summarizes data and projections from the U.S. Energy Information Administration (EIA) and the Paris-based International Energy Agency (IEA) from which we may conclude that EPA regulation of greenhouse gases (GHGs) is increasingly irrelevant to global climate change even if one accepts agency’s view of climate science.

Basically, it all comes down to the fact that China’s huge and increasing coal consumption overwhelms any reduction in carbon dioxide (CO2) emissions the EPA might achieve.

From the Climatewire article:

Chinese coal consumption surged for a 12th consecutive year in 2011, with the country burning 2.3 billion tons of the carbon-emitting mineral to run power plants, industrial boilers and other equipment to support its economic and population growth.

In a simple but striking chart published on its website, the U.S. Energy Information Administration plotted China’s progress as the world’s dominant coal-consuming country, shooting past rival economies like the United States, India and Russia as well as regional powers such as Japan and South Korea.

China’s ravenous appetite for coal stems from a 200 percent increase in Chinese electric generation since 2000, fueled primarily by coal. Graph courtesy of U.S. Energy Information Administration. 

In fact, according to EIA, the 325-million-ton increase in Chinese coal consumption in 2011 accounted for 87 percent of the entire world’s growth for the year, which was estimated at 374 million tons. Since 2000, China has accounted for 82 percent of the world’s coal demand growth, with a 2.3-billion-ton surge, the agency said.

“China now accounts for 47 percent of global coal consumption — almost as much as the rest of the world combined,” EIA said of the latest figures.

[click to continue…]

Post image for EU Gropes — in Vain — for Carbon Price Sweet Spot

Two stories reprinted in Climatewire today provide a funny reminder that politicians can’t set the ‘right’ price of a commodity even when the fate of the Earth supposedly hangs in the balance. 

On Tuesday, Norway decided to follow European Union (EU) policy and establish a carbon ‘compensation fund.’ The program will bribe pay some 80 energy-intensive firms $90 million not to move their operations overseas. The government contends that without such payments, the EU Emission Trading System (ETS), adopted to implement the Kyoto Protocol, will trigger (or accelerate) the flight of capital, jobs, and emissions abroad. Reuters reports:

“The purpose is to prevent the Norwegian manufacturing industry from moving their enterprises to countries with less strict climate regulations,” Prime Minister Jens Stoltenberg said.

Changes to the EU’s Emissions Trading Scheme (ETS) from next year allow member states to compensate big energy users, like aluminum or steel producers, for costs linked to carbon emissions. The plan is to prevent higher costs driving business out of Europe.

Although ETS carbon prices are high enough to make EU manufacturers uncompetitive, those prices are not high enough (according to critics) to spur technology innovation*:

“This shows some of the fundamental problems with emissions trading,” said Steffen Kalbekken, head of research at the Center for International Climate and Environmental Research in Oslo. “We are getting the worst of two worlds.

“The (carbon) prices are too low to produce the technological shift we need” to force big emitters to clean up, he said. “But they are still high enough to cause some problems for industry and international competition.”

EU carbon permit prices for December have fallen to 7.74 Euros ($9.98) per ton — lower than three of the U.S. Government’s four ‘social cost of carbon‘ estimates. The European Commission is now “pressing ahead with a plan to counter an oversupply of CO2 permits in the EU emissions trading market after a 37 percent drop in prices last year,” Bloomberg reports. The commission “is preparing a proposal to postpone sales of an as-yet unspecified number of allowances in 2013.”

Of course, if that plan goes through, and carbon permit prices rise, European countries may have to pony up even larger subsidies to keep manfacturers from moving to Asia and South America.

So are ETS carbon permit prices too low or too high? They’re high enough to spur innovative ways to get the heck out of Europe asap. [click to continue…]

Green groups in Wisconsin are attacking a bill that would allow utilities and electric cooperatives to comply with the state’s renewable portfolio standard (RPS) by importing hydroelectricity from Manitoba, Canada, today’s Climatewire reports. The bill (SB 81) passed in the state Senate earlier this week.

Talk about dumb and dumber. Wisconsin’s RPS mandates that 10% of the state’s power come from renewable sources by 2015. A soviet-style production quota, an RPS props up electricity sources — such as wind and solar power — that can’t compete on the basis of cost and quality. As economic policy, an RPS is about as cheesy as it gets.

But as long as a state is going to have an RPS, why not at least allow electric service providers to obtain renewable electricity at the lowest price and the highest quality? That is the objective of SB 81. [click to continue…]

In discussions of trade and economic policy, China increasingly plays the role that Japan once did — simultaneously vilified and lionized as both threat and model.

In the 1980s, “trade hawks” warned that Japan would “hollow out” our economy unless we adopted Japanese-style industrial policy to counter Japan’s “unfair” trade practices. Today, “progressives” warn that China will “eat our lunch” in the “clean tech race” unless we aggressively subsidize domestic manufacturers of wind turbines, solar panels, and the like, to counter China’s clean-tech subsidies, which, we are told, constitute “unfair” trade practices.

If there is any consistency in these discussions, it is that subsidies are always either good or bad, fair or unfair, depending on whether they rig the market for “our” companies or “their” companies.

Oh yes, there is one other point of consistency — everybody agrees “clean tech” can’t compete without subsidies. This came out during a conference earlier in the week at the Center for Strategic and International Studies. Sun Guoshun, first secretary of the Chinese embassy in Washington, D.C., defended his government’s use of subsidies as necessary to having a clean-tech sector. 

As reported today in Climatewire (subscription required), Mr. Sun said: “It is the consensus of the international community that renewable energy is not in a position to compete with fossil fuel energy. So if you’re not going to subsidize renewable energy, there will be no renewable energy.”