Little Green Lies

Introduction to a new book from an Australian scientist







Rare snowfall stuns much of South Africa

Global cooling!

Snowball fights, toboggan runs and slippery streets are old hat for Canadians accustomed to the worst snow storms winter has to offer, but a dusting of the white stuff for South Africans is enough to get the entire country excited.

After temperatures dropped below the freezing mark Monday night, heavy snow was reported in the Western Cape Mountains, the Eastern Cape, Lesotho and the Drakensburg mountains.

By Tuesday morning, the snowfall grew more widespread, propelled by the extreme cold snap gripping Africa's southernmost country.
By mid-afternoon, the South African Weather Service confirmed snow in every province except Limpopo, where officials said an official report had yet to be filed. But satellite images, they said, indicated snow had fallen there too.

Snow is not unheard of in parts of South Africa, particularly in the mountainous regions where there is even a ski resort. But it's unusual, even in those areas, for so much snow to fall that roads have to be closed, as they were Tuesday.

The snow was so heavy that several border posts between South Africa and Lesotho were shut and the highway linking the commercial hub Johannesburg to the continent's busiest airport Durban was also closed to traffic for several hours.

The snow in Johannesburg -- where officials say it has snowed on just 22 days in more than a century -- was the heaviest in more than 30 years and the first since 2007.

That inspired everyone, from schoolchildren to office workers, to brave the cold winds and frosty temperatures to head into the streets for a first-hand taste of the white stuff. "I have never seen snow in Jo'burg," Refilwe Kgofelo told reporters, barely containing her thrill as she proudly clutched a ball of the cold, sticky stuff. "And this is my first time experiencing snow!" she cheered.

Most shared her excitement to merely touch or taste the snow, while others fashioned tiny snowmen, rode makeshift toboggans, waged impromptu snowball battles and posed for commemorative pictures.

The South African Weather Service is calling for more snow overnight Tuesday and cold temperatures in the coming days, but the mercury is expected to creep back up in time for the country's national Women's Day holiday on Thursday.

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Germany's Green Energy Transition May Force Out Industry

The public discussion about Germany's green energy transition has taken a new direction. The rise of electricity prices in Germany is suddenly no longer blamed on the billions spent for building solar and wind farms, biomass plants and power grids. Now it is “the industry” which is being blamed for its lobbying which has resulted in a variety of financial reliefs, compensations and tax exemptions and for abandoning the 'community solidarity' of this 'national effort.'

The green industry lobby has agreed to this new line of attack after it came under increasing pressure by the rampant increase in costs. It's new motto: it is not the absolute level of costs, which is the problem, but its unjust distribution.

Political horse trading in eco-tax policy

What makes this argument so dangerous is that it has a kernel of truth. It is true that the number of companies that are exempt from net charges, levies and green electricity taxes, has risen sharply in recent months. The number of companies which enjoy energy policy privileges go now far beyond the circle of those energy-intensive industries which have to compete with their products in international markets and thus would be eligible for exemptions.

Behind this questionable political development appears to be a political deal: If we are to pay for the really absurd and inefficient expansion of expensive solar power in Germany to 52 gigawatts, you need to ensure a de facto eco-tax exemption for industry. There is an old method of finding a majority in politics, not just with regards the green energy revolution: criticism of escalating costs is not met by cost reductions, but by giving more money to the critics.

Energy policy is becoming an election issue

The only problem with this approach is that the Germans, with their rigorous application, tend to throw out the baby with the bathwater. Facts that apply to specific cases and to certain segments are used indiscriminately, especially during election campaigns. And the next elections are coming up: the Lower Saxony state election campaign this fall and winter is also the early start of the general election campaign in 2013.

Especially in Lower Saxony, which is so crucial for the expansion of the grid network and the generation of green energy, the issue of energy policy will determine the political debate. The new allegation that the rising cost of the green energy revolution is caused by industry examptions could readily get stuck in the minds of voters here - and stay there until the general election in September next year.

Some major buyers pay little for electricity

Nothing would be more dangerous, however, than to belittle and to trivialize the costs of the green energy revolution or distract from the issue at all. The ecological restructuring of Germany’s energy system would only be seen as a model worthy of imitation internationally if it had not been enforced with billions of handouts by a very affluent economy, but if it can be shown to be implemented economically and efficiently.

Consequently, a close look at the level of costs and their distribution is essential: it is true that green power reduces temporally the wholesale price of electricity on the electricity exchange and that some big buyers in the industry, as a result, can buy power relatively cheaply - especially if they have been exempted from both of environmental tax- and from network charges.

But this should not obscure the fact that private consumers and especially small and medium-sized businesses are heavily burdened by rising energy prices. Especially the medium-sized companies suffer doubly: first, from the higher energy costs in production and secondly because customers have less money in their wallets because of the rising electricity prices

It should also be remembered that the absolute level of wholesale prices is not really important for the competitiveness of the industry. The comparison with the electricity prices of other countries is much more important for the decisions regarding relocation or outsourcing.

And this comparison does not look good. Germany has the highest industrial electricity prices in Europe. With increasing costs of the green energy policy, relocating abroad is becoming increasingly attractive for companies, especially for energy-intensive businesses.

In the U.S., the energy price is currently falling dramatically. The recent development of shale gas production there means that the U.S. natural gas price is currently only about 20 percent of the European price. Thus the U.S. produces electricity much cheaper. This fact cannot simply be ignored by German chemical or metallurgical companies when it considers decisions about the location of a new factory.

The supply chains are at stake

The loss of such industries would have potentially disastrous consequences for Germany, however. The strength of Germany’s economy – compared to international standards - is mainly due to unusually intact and tightly knit supply chains. Basic industries are not the dinosaurs of "old economy” - already condemned to extinction. They are rather at the beginning of the value chains; with their quality and price level they set the starting point for all subsequent stages of industrial production.

German machine producers, car manufacturers and electrical industry are world leaders, because their engineers and skilled workers have an exceptional knowledge of the characteristics and abilities of their materials.

This expertise also stems from the geographical proximity and close ties of primary industry and processing companies in the manufacturing sector. This proximity should not be put at risk through negligence, allowing value chains to break because companies are driven abroad by unilateral cost burdens due to the green energy transition.

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UK government scraps environmental regulations to save £400 million

UK Energy Minister Charles Hendry announced yesterday the scrapping of 86 environmental regulations that will save businesses £400 million over the next 20 years.

The package of reforms, which also includes improvements to a further 48 regulatory regimes, is part of the government’s Red Tape Challenge that aims to remove surplus regulation hindering businesses.

“It is vital that we have a regulatory regime which promotes fairness and consumer and environmental protection, but does not impose unnecessary costs or barriers to generating the necessary investment, innovation and skills we need to build the low carbon economy,” says Hendry.

As well as simplifications to the EU Emissions Trading Scheme (EU-ETS) and the Carbon Reduction Commitment (CRC) energy efficiency scheme, the changes cover areas from discharges from chemical installations to requirements for electricity lines and gas pipelines.

The changes to the EU ETS, which were confirmed earlier this summer, will allow small emitters and organisations like hospitals to opt out of the scheme from 2013.

The government maintains that the changes will maintain all environmental protections reducing costs and unnecessary burdens.

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Global Warmers and Stupidity Credits

The problem with elitist "management" of "free" markets is the inevitable unintended consequences. Sometimes those consequences are accurately predicted by conservatives. Other times it takes turning the government micro-management loose on the free market to see what happens.

“They quickly figured out that they could earn one carbon credit by eliminating one ton of carbon dioxide, but could earn more than 11,000 credits by simply destroying a ton of an obscure waste gas normally released in the manufacturing of a widely used coolant gas. That is because that byproduct has a huge global warming effect. The credits could be sold on international markets, earning tens of millions of dollars a year...

So since 2005 the 19 plants receiving the waste gas payments have profited handsomely from an unlikely business: churning out more harmful coolant gas so they can be paid to destroy its waste byproduct. The high output keeps the prices of the coolant gas irresistibly low, discouraging air-conditioning companies from switching to less-damaging alternative gases. That means, critics say, that United Nations subsidies intended to improve the environment are instead creating their own damage.”

So while the whole concept of carbon credits was to reduce gases related to alleged global warming, this perverse system has actually created an incentive to create more of those gases.

This would be a good time for conservative critics of carbon credits to say "We told you so."

We told you so.

The whole concept of carbon credits is the worst of both worlds. Not only is the government interfering in the free market, it's trying to create a market out of thin air by forcing people to want something they really have no use for (carbon credits).

But--as mentioned above--the free market is smarter than any politician, government, scientist or economist. The free market will look for a way to profit, and it will always out-smart the politicians and their regulations.

So here we have an example where an industry creates two gases regulated by carbon credits. And it just so happens that by creating more of one, it can create and destroy more of the other--resulting in the accumulation of artificial, yet lucrative, carbon credits.

To those who would quickly suggest "fixing" the regulations to eliminate this loophole, good luck. The combination of global warming gases produced by this process is unique to this process. Any of the other unknown number of industries that generate controlled gases will produce them in other combinations, or perhaps the same gases in different proportions.

There's truly no way to architect a carbon credit scheme that will accomplish the stated environmental goal.

This should come as no surprise. Carbon credits were marketed as "regulation light" or even a "free market" solution. They're neither. They're hard-fisted government regulation with all the downsides and costs involved in any other regulation. And given artificially imposed regulations, the free market has done what it does best: It has figured out how to profit, and the politicians have actually created an incentive to make matters worse.

This should serve as yet another crystal clear example of the dangers of government regulation and market manipulation.

Even supposedly good-intentioned regulations can produce results precisely opposite of what was desired. Encouraging home ownership led to a housing bubble and crash. Interfering in the higher education market has led to higher tuition and a student loan bubble. Artificially low interest rates has led to the stock market ballooning and crashing. And trying to manipulate the market to reduce certain gases has actually result in their increase. One shudders to think of the eventual outcome of government interference in the health care industry.

Politicians tinker with the free market at our own risk because politicians aren't as smart as they think they are. The free market is much smarter every time. In this case, the air conditioning industry just outsmarted the entire worldwide global warming industry.

And, in fact, the air conditioning industry is currently profiting from the arrogance and stupidity of the global warming industry.

Now if I could just convince the government to create a stupidity credit market from which I could skim a commission on each transaction, I'd be all set.

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It's a disaster that 'peak oil' is not a disaster

For regular entertainment, look no further than George Monbiot, the one-time green-leftie who is building a reputation as a master of the candid volte face. Having fallen in love with nuclear power after Fukushima, he has now been convinced that “the facts have changed” on peak oil. But that, he says, is a “disaster for humanity”.

“The facts have changed, now we must change too,” declared George Monbiot, in a recent op-ed for the Guardian, headlined: “We were wrong on peak oil. There's enough to fry us all”.

That the facts have changed is news to those of us who never believed that the world is running out of resources. To Monbiot and his fellow-alarmists, however, rising prices were a sign of impending doom. It proved that scarcity was on the rise, and therefore showed that the oil would soon dry up.

The error of the peak oil alarmists was not understanding that the cure for high prices is high prices. When prices rise, this may indeed signal scarcity, but if so, it also provides a financial incentive to throw investment, ingenuity and effort at the problem. Moreover, a high price for one commodity makes alternatives more competitive by comparison.

As I wrote two years ago: “The problem is, we're not [running out of resources]. This can be reliably concluded from the fact that even if a particular resource were to become particularly scarce, the price mechanism unfailingly makes it worth our while to economise, or seek alternatives, or both.

“Resource replacement has happened before, and will happen again, but more often, the opposite happens: improved productivity and new finds simply combine to match growing demand.”

That is exactly what happened. Knowledge does not stand still, and supply challenges simply create economic incentives for progress. We didn’t stop using horses because we ran out of hay. We stopped because we invented motor cars.

What changed Monbiot’s mind was an analysis of global oil reserves by Leonardo Maugeri, published by the Harvard Kennedy School’s Belfer Centre for Science and International Affairs. Maugeri makes the case in the report’s opening sentence: “Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.”

According to Maugeri, capacity exists to increase the world’s 2011 production of 93 million barrels per day (mbd) by half. By 2020, he expects world oil production to be around 111 mbd and still rising.

The “peak oil” theory, first popularised in 1974 by the late Marion King Hubbert, a geologist working for Shell, has a lot to recommend it if you’re in the business of finding, extracting and selling petroleum products. His employers have a lot riding on the rate of new discoveries, how fast existing resources dry up, and what technology is required to sustain production levels at a given price point. He cautioned them that easy finds would become increasingly rare, and remaining reserves increasingly expensive to produce, leading to a bell-curve-shaped graph of production over time.

Hubbert himself projected an oil production peak, when new discoveries would begin to decrease globally, of around 1995. It didn’t happen.

However, the Hubbert theory, suitably simplified, became popular with environmentalists and left-wing anti-capitalists, who yelled that any day now we’d hit an oil production peak, after which prices would skyrocket, supply would dwindle, and we’d all sit around with stupid expressions wondering what happened to all the cars. And “running out of resources”, as they saw it, would serve the greedy lot of us right.

The late Matthew Simmons, an advisor to the US government, member of the National Petroleum Council and member of the Council on Foreign Relations, called the oil peak in 2005. In a beautiful piece of rhyming history, he accepted a $5,000 bet with journalist John Tierney that the average daily price of oil in 2010 would be $200. Tierney thoughtfully got Rita Simon, the widow of the economist Julian Simon, in on the bet. If Simmons had lived out 2010, he would have lost $10,000 for exactly the same reasons Paul Ehrlich lost his infamous bet about resource depletion with Rita’s late husband.

A 2005 report conducted for the US Department of Energy by Robert Hirsch also said peak oil would happen and would do so abruptly. Most of its experts predicted a peak before 2010. Among them were the aforementioned gambler, Matthew Simmons; the late Ali Samsam Bakhtiari of the National Iranian Oil Company and advisor to the Oil Depletion Analysis Centre (ODAC); Chris Skrebowski, a founding member of the Association for the Study of Peak Oil and Gas (ASPO), a colleague of Bakhtiari’s on ODAC, advisor to the UK government, and director of Peak Oil Consulting; Kenneth Deffeyes, a colleague of Hubbert’s at Shell and professor emeritus at Princeton; David Goodstein, a physics professor at the California Institute of Technology; and Colin Campbell, another founder of ASPO and drafter of the Rimini Protocol, which involved draconian production controls, import stablisation and consumption limits.

The Hirsch Report came with a disclaimer: “Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information ...”

That was as prescient as the report got. As far as its actual peak oil predictions went, most supposed experts picked dates prior to 2012, and so far, all of them have been proven wrong.

The famed Texas oilman, T Boone Pickens, testified before Congress in 2008, saying, “I do believe you have peaked out at 85 million barrels a day globally.” He, too, was wrong.

In 2005, Douglas Reynolds, professor of oil and energy economics at the University of Alaska at Fairbanks, predicted peak gas in 2007, after which American reserves would begin to decline. Ironically, he picked the very year in which the great North American shale gas boom began. The technical developments that permitted shale gas exploitation – namely horizontal drilling and hydraulic fracturing – were not new, and a professor in the field ought to have known about them.

So great was this boom that the biggest concern for non-US oil refineries is low oil prices.

Unchastened, Reynolds earlier this year predicted oil prices to spike over $200 within five to ten years. You would be forgiven for not running out to fill jerrycans to hoard.

According to the Maugeri Report, not a single oil-producing country is expected to produce less in 2020 than 2011, other than Norway, the UK, Mexico and Iran. Those exceptions, which are expected to produce marginally less than today, make up the sum total of evidence for disastrous peak oil predictions.
“Oil is not in short supply,” Maugeri concludes. “From a purely physical point of view, there are huge volumes of conventional and unconventional oils still to be developed, with no ‘peak-oil’ in sight. The real problems concerning future oil production are above the surface, not beneath it, and relate to political decisions and geopolitical instability. ”

And that’s not even counting the vast unconventional oil resources that are not yet technically or economically recoverable, but may well become so as abruptly as shale gas exploded onto the scene. Those that are already being exploited – in shales and tight sands, much like unconventional natural gas – are economically viable at between $50 and $65 a barrel, which is well below today’s price. This, says Maugeri, makes them “sufficiently resilient to a significant downturn of oil prices.”

But none of that is good news to Monbiot. He admits he was wrong, but quickly pivots to point out that this doesn’t make the truth any less scary: “So this is where we are. The automatic correction – resource depletion destroying the machine that was driving it – that many environmentalists foresaw is not going to happen. The problem we face is not that there is too little oil, but that there is too much.”

Fancy that. For decades environmental activists and government bureaucrats told us to bow to expert consensus, or face impending industrial collapse. Now we discover that we’re swimming in enough oil to roast the planet. Either way, we’re doomed.

Sound familiar? To justify his claim that the non-disaster of peak oil is now a global warming disaster, Monbiot appeals to a consensus of a different kind.

But that consensus is also on shaky ground. The UN’s Intergovernmental Panel on Climate Change (IPCC), despite several scandals that cast grave doubt on the honesty of its members, bitterly clings to its guns. So does the climate science inner circle, despite leaked emails that show them to be more concerned with telling a consistent public relations story and silencing sceptics than with cleaning up their own messy data and figuring out the rather large swathes of climate science they cannot yet explain.

I’ll likely have more to say on the most recent spate of climate change alarmism in a future column, but it isn’t very convincing either.

In any case, it seems that betting against the “consensus” of left-wing academics, regulatory-state bureaucrats and anti-capitalist activists can be a rather profitable sideline.

First nuclear power, and now peak oil. At the rate Monbiot is changing his mind, we’ll all soon agree that the disaster of the peak oil non-disaster is not much of a disaster after all. DM

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