DISCOUNTING LOGIC

If you're the type of person who sets aside money today for the university education of your great-great-great grandchildren, even if it means that you may not be able to afford university tuition for your own children, you may think it sensible for society to invest now in major measures to stop global warming. If you're not this type -- and who in his right mind is -- you should forget about Kyoto-like greenhouse-gas reduction targets and the crash programs that would be required to meet them. Doing so would not only be economically prudent, it would be -- by almost any measure -- the ethical thing to do.

So argues celebrated economist William Nordhaus, author of pathbreaking books and studies on global warming, and generally considered the most authoritative economist in the climate change field. His verdict on global warming alarmism, as exemplified by the UK's Stern review, which demanded drastic measures now to avert climate change calamity later: "Completely absurd."

The Stern review, released last year to banner headlines, argues that the cost of inaction greatly exceeds the cost of action. It has been much criticized for its selective use of data -- Sir Nicholas Stern piles one worst-case scenario upon another to arrive at his fantastical costs, and Dr. Nordhaus is among those who note this failing.

In fact, Sir Nicholas uses Nordhaus as a source for global-warming costs that could present themselves well after the year 2100, although Nordhaus characterized that data as particularly unreliable. But a series of unreliable, worst-case scenarios centuries off, by themselves, still would not warrant the extreme greenhouse gas prevention investments that the Stern review recommends.

To make an economic case for immediate action, Sir Nicholas adjusted his model to have us paying now for potential damage that could be happening hundreds of years from now. Sir Nicholas estimates the potential costs of climate change to be so great as to force on us a "20% cut in per-capita consumption, now and forever." Yet his data showed low damages from climate change in the next two centuries.

To overcome his data, he applied to his model what economists call a "near-zero social discount rate." Doing so brings forward future expenses -- in the Stern review's case, expenses that might occur in the 23rd and 24th centuries. The Stern review then presents us with a tab that includes these far-out costs, and the invoice is eye-popping indeed.

But the Stern review approach defies logic, as Dr. Nordhaus illustrates by demonstrating just where zero social-discount-rate thinking leads. "Suppose that scientists discover that a wrinkle in the climatic system will cause damages equal to 0.01% of output starting in 2200 and continuing at that rate thereafter," he explains. "How large a onetime investment would be justified today to remove the wrinkle starting after two centuries? The answer is that a payment of 15% of world consumption today (approximately US$7-trillion) would pass the review's costbenefit test. This seems completely absurd.

The bizarre result arises because the value of the future consumption stream is so high with near-zero discounting that we would trade off a large fraction of today's income to increase a far-future income stream by a very tiny fraction." Moreover, who should be asked to forgo that consumption? It hardly seems fair to keep back poor countries, yet, if paid by the rich countries alone, the decline would far exceed that of the Great Depression.

Some climate-change alarmists argue that we should invest in combating climate change now as an insurance policy against the risk of future damage. Sounds prudent, until you consider the premium to be paid. "Suppose that we suddenly learn that there is a 10% probability of the wrinkle in the climatic system that reduces the post- 2200 income stream by 0.01%," Dr. Nordhaus explains, again to illustrate the Stern review's logic. "What insurance premium would be justified today to reduce that probability to zero? With conventional discount rates, we would probably ignore any tiny wrinkle two or three centuries ahead. If we did a careful calculation using conventional discount rates, we would calculate a break-even 0.0002% insurance premium to remove the year 2200 contingency, and a 0.0000003% premium for the year-2400 contingency. Moreover, these dollar premiums are small whether the probability is large or small. "With the review's near-zero discount rate, offsetting the low-probability wrinkle would be worth an insurance premium today of almost 2% of current income, or $1-trillion. We would pay almost the same amount if that threshold were to be crossed in 2400 rather than in 2200."

Dr. Nordhaus's conclusion about such scares: "We are in effect forced to make current decisions about highly uncertain events in the distant future, even though these estimates are highly speculative and are almost sure to be refined over the coming decades." Dr. Nordhaus discounts climate-change alarmism, but not climate change itself. He advocates research to better understand its consequences and to develop more efficient technologies. He advocates the elimination of subsidies that artificially increase greenhouse- gas emissions, and other "no-regrets" measures that would benefit the environment without harming the economy. The costs of climate change are real, he believes, and society should act. But not overreact

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FEARS OVER LOOMING ENERGY CRISIS IN UK

Across Britain, cities are plunged into darkness. In London, the Underground grinds to a halt, leaving panicked commuters stranded in oppressively hot carriages. In office blocks, lifts stop operating and the air-conditioning shuts down. Employees swelter in stifling conditions. This is not the postapocalyptic vision of some film-maker, but a realistic scenario as Britain grapples with a looming energy crisis.

The statistics are frightening. In only eight years, demand for energy could outstrip supply by 23% at peak times, according to a study by the consultant Logica CMG. The loss to the economy could be 108 billion each year."The idea of the lights going out is not a fantasy. People seem to accept that security of energy supply is a right. It is not. The industry will have to work hard to maintain supply and for that we need a clear framework," said Simon Skillings, director of strategy and energy policy at Eon UK, Britain's largest integrated energy company.

This Wednesday, the government's delayed energy white paper will attempt to provide some answers. It is a crucial document that will determine whether Britain can deliver on its pledge to slash carbon emissions by 20% from 1990 levels by 2020. The white paper will seek to tackle a host of tough issues -- from nuclear power to energy efficiency, renewable power sources and clean-fuel projects. A planning white paper, due tomorrow, is also seen as crucial after a number of energy projects have been delayed for years or slapped down by local authorities.

The scale of the challenge is immense. By 2015, Britain's generating capacity could be cut by a third as ageing coal and nuclear power stations are closed. Britain is also moving from being self-sufficient in oil and gas as North Sea production declines. In 2005, the UK became a net importer of gas. By 2010, imports could account for 40% of British gas needs; by 2020, 80% to 90%.

The most contentious area is likely to be nuclear power. Nuclear reactors account for about 20% of Britain's electricity, but this will shrink to 6% in 20 years as ageing plants are closed down. By 2023, only Sizewell B could be in operation. Already controversial, the government's commitment to building new nuclear power stations became even more sensitive when the High Court agreed with the environmental lobby group Greenpeace that the consultation process was"seriously flawed".

The white paper is expected to give guidance on how the government would like to see new reactors built, but will have to stress that any decision will depend on a new, more detailed, consultation round. What the energy industry wants is clarity. Even so, energy companies, including RWE, Eon, Suez, EDF, General Electric and Westinghouse, have already held talks with British Energy about using the sites of its eight nuclear power stations to build new reactors.

Combining the need to secure Britain's energy supply and reduce carbon emissions will require 55 billion in investment in the next few decades, according to Logica CMG. Exactly where the money will be spent hangs in the balance. One of the big issues is how the government plans to encourage operators to build cleaner but more expensive power stations.

To make the economics work, much will depend on the price of carbon and the credits power operators need to buy if they overshoot emissions targets. This falls under the EU emissions-trading scheme. If the EU cracks down and imposes higher penalties on"dirty" power producers, the price of carbon would in theory be pushed up. Centrica believes that carbon prices would need to double from the current, 19 euros per tonne to make a1 billion clean-coal project it is considering in Teesside economically viable."If the UK is to hit tough targets on reducing CO2 emissions, it is vital that the structure of the EU emissions-trading scheme is optimised to encourage the building of really low-emitting power generation stations," said Jake Ulrich, managing director of Centrica Energy.

Another key area is carbon capture; this involves trapping carbon-dioxide emissions from coal or gas-fired stations and storing them underground, probably in old North Sea oil reservoirs. Schemes include Centrica's Teesside proposal while BP is considering building a 500m power station in Peterhead, Aberdeenshire, in partnership with Scottish & Southern Electricity. However, power-industry executives claim that each project would need several hundreds of millions of pounds in government support -- far higher than the Treasury's financing plans.

Meanwhile, the government is under pressure to encourage desperately needed new gas-storage facilities. The UK has storage capacity to cover only two weeks of gas needs against two to three months for France and Germany. New objectives for renewable energy are also expected. The renewables obligation, where suppliers are bound to source a rising percentage of electricity supply from renewable sources, will be refocused to give more support to costlier offshore wind farms and biomass projects used to co-fire coal-powered stations.

Britain is already struggling to meet its ambitious target of supplying 10% of electricity needs from renewables by 2010 and 15% by 2015. Today's figure is about 2%."The goals are very ambitious and we are currently behind the curve. Investment would have to be accelerated very substantially to have any chance of meeting those targets," said Jayesh Parmar of Ernst & Young.

Those targets are likely to get even tougher. In a little-noticed detail, the EU agreed in March to make it compulsory for 20% of all energy used to come from renewable sources by 2020. As for the British consumer, the white paper will underline the need for smart meters, which measure exact energy use and cost, to be installed in people's homes. There is also support for microgeneration projects -- small-scale wind turbines, solar panels and gas devices to create electricity. However, the sums are tiny -- "12m pounds in grants is up for grabs this month from the Department of Trade and Industry, in addition to6.8m already paid out.

The big question is whether the UK can act fast enough to tackle the looming crisis. Even if the government's nuclear plans remain intact, it could be at least 10 years before the first new nuclear station is ready. A typical coal or gas-fired project could take between three and five years to construct.

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COAL TO HIT GREEN FAN

A load of coal is about to hit the green fan. Earlier this month we attended a conference on coal-fired electric power. A titanic collision is in progress, albeit unseen so far. An iceberg ahead in the night. The ship unable to swerve. Here's the deal. US peak power use increases pretty steadily about 20,000 MW a year. It has for 40 years, an incredible straight line in a world of economic wiggles. We handle this growth with spurts of power plant construction. The last spurt was around 2000 and we quietly built about 150,000 MW, all natural gas-fired because gas was cheap and green. That is roughly 150 large power plants.

Now gas is prohibitively expensive, we are once again running out of power, and coal is the only large scale option. So the industry is gearing up to build a huge new fleet of coal fired power plants. They will do so for there is no option. You can't make electricity out of political rhetoric, would that you could. What this cold shot of reality will do to the great green political movement presently underway remains to be seen. It will not be a pretty picture. Enjoy the show.

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A revealing analogy in the New York Times

Post lifted from American Thinker. See the original for links



re: Jerome J. Schmitt's "Mindless reporting in the NYT Magazine" of May 19, 2007. Mr. Schmitt points out that "climate modeling is a premier example of the thermodynamics of open systems", in the first paragraph of the article, bravo! But he misses an astonishing quote down in the eighth paragraph....

"...James Hansen, the director of the NASA Goddard Institute for Space Studies (and one of Gore's own gurus), who wrote, in The New York Review of Books, "Al Gore may have done for global warming what `Silent Spring' did for pesticides."

Man, I couldn't even tell you where to START with THAT admission. Let's see, Carson's "S/S" pretty much killed off the worldwide use of DDT bringing malaria back from the brink of extinction to once again thrive and kill people by the millions instead of by the hundreds, and it was all based on a pack of lies.

Well, I'd say that Gore's book hasn't YET done "for" humanity what Carson's book has, but it could if we aren't careful!





Biodiversity good for mental health

The findings below are entirely to be expected, given our evolutionary origins, but it is interesting that the effects can be obtained from an artificial environment like a park. Pristine wilderness is not necessary



Biodiversity, an area's richness in different species, is good for more than just the environment, researchers have found: it benefits us psychologically, at least in city parks and green spaces. For the world's burgeoning city populations, "public urban greenspaces provide one of the few avenues for direct contact with the natural environment," the researchers noted in a paper describing the study. "Such contact has measurable physical and psychological benefits."

A wide diversity of organisms is good for more than just the creatures themselves, research finds. (Image courtesy City of Vernonia, Oregon) For instance, a 1984 study by Roger Ulrich at Texas A&M University found that hospital patients recovered faster if their hospital room windows overlooked trees rather than brick walls. The new study shows that benefits of this sort "increase with the species richness of urban greenspaces," wrote the authors, Richard Fuller and colleagues at the University of Sheffield, U.K.

The findings appeared online May 15 in the research journal Biology Letters. Fuller's team studied 15 urban parks and green spaces throughout the U.K., analyzing their biodiversity levels and questioning visitors. The visitors were given questionnaires asking whether coming there helped them clear their minds, gain perspective on life, think easily about personal matters or feel connected to nature. Visitors not only felt better in more biodiverse places: they could roughly accurately gauge the level of biodiversity, at least in terms of easily visible speciesbirds, butterflies and plants, the scientists found.

The findings are important since about half of the world's people now live in cities, increasingly isolated from nature and its benefits, Fuller and colleagues wrote. The results "indicate that successful management of urban greenspaces should emphasize biological complexity to enhance human wellbeing in addition to biodiversity conservation," they concluded.

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Many people would like to be kind to others so Leftists exploit that with their nonsense about equality. Most people want a clean, green environment so Greenies exploit that by inventing all sorts of far-fetched threats to the environment. But for both, the real motive is generally to promote themselves as wiser and better than everyone else, truth regardless.

Global warming has taken the place of Communism as an absurdity that "liberals" will defend to the death regardless of the evidence showing its folly. Evidence never has mattered to real Leftists

For more postings from me, see TONGUE-TIED, EDUCATION WATCH, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, GUN WATCH, SOCIALIZED MEDICINE, AUSTRALIAN POLITICS, DISSECTING LEFTISM, IMMIGRATION WATCH and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here. For times when blogger.com is playing up, there are mirrors of this site here and here.

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