Friday, August 14, 2015

The economics of mitigating climate change: What can we know?

The academic journal article below by Richard A. Rosena and  Edeltraud Guentherb is amusing.  It says that we have insufficient knowledge to predict future economic impacts of climate change but they still end up saying "mitigation policies must be forcefully implemented anyway".  They had to say that in order to get their article published


The long-term economics of mitigating climate change over the long run has played a high profile role in the most important analyses of climate change in the last decade, namely the Stern Report and the IPCC's Fourth Assessment. However, the various kinds of uncertainties that affect these economic results raise serious questions about whether or not the net costs and benefits of mitigating climate change over periods as long as 50 to 100 years can be known to such a level of accuracy that they should be reported to policymakers and the public. This paper provides a detailed analysis of the derivation of these estimates of the long-term economic costs and benefits of mitigation. It particularly focuses on the role of technological change, especially for energy efficiency technologies, in making the net economic results of mitigating climate change unknowable over the long run.

Because of these serious technical problems, policymakers should not base climate change mitigation policy on the estimated net economic impacts computed by integrated assessment models. Rather, mitigation policies must be forcefully implemented anyway given the actual physical climate change crisis, in spite of the many uncertainties involved in trying to predict the net economics of doing so.


EPA chemical spill was deliberate

Letter to Editor PREDICTED COLORADO EPA SPILL One Week Before Catastrophe=> So EPA Could Secure Control of Area

Last Wednesday, a small EPA-supervised work crew inspecting the Gold King mine accidentally knocked a hole in a waste pit, releasing at least three million gallons of acidic liquid laden with toxic heavy metals. (ABC)

This letter to editor, posted below, was published in The Silverton Standard and The Miner local newspaper, authored by a retired geologist, one week before EPA mine spill. The letter detailed verbatim, how EPA officials would foul up the Animas River on purpose in order to secure superfund money. If the Gold King mine was declared a superfund site it would essentially kill future development for the mining industry in the area. The Obama EPA is vehemently opposed to mining and development.

The EPA pushed for nearly 25 years, to apply its Superfund program to the Gold King mine. If a leak occurred the EPA would then receive superfund status. That is exactly what happened.

The EPA today admitted they misjudged the pressure in the gold mine before the spill – just as this editorial predicted.

The letter was included in their print edition on July 30, 2015. The spill occurred one week later.


Poor countries need coal power

Last week Oxfam released a report, “Powering up against poverty: why renewable energy is the future”, which argued that advances in renewable energy mean there is “no trade-off between improving lives and tackling climate change".

Comforting as this message is, it is also fundamentally inaccurate. Given existing technologies, expanding access to electricity almost always increases CO2 emissions. There are real trade-offs between addressing poverty and climate change.

The report’s primary purpose is to debunk claims that “coal is good for humanity”. Poor communities are generally the most vulnerable to climate impacts, so Oxfam has good reason to oppose disingenuous efforts to link coal with poverty reduction.

However, since western NGOs, governments and banks have enormous influence over what projects are funded in the developing world, misleading analysis can be disempowering.

Ideally, a development NGO should provide evidence-based analysis that assists affected communities to make their own decisions.

Is solar power best?

If a rural household or community living far from a central grid wants a very modest supply of electricity, then solar micro-grids are now the cheapest option.

However, low-cost solar systems are only sufficient to power a few lamps or small devices for a few hours a day. And while an electric lamp is better than nothing, if given the chance most people would also use electricity for refrigeration, cooking, washing and computing. Reliable power also makes a variety of businesses and light industries possible.

The lure of more reliable, higher-capacity supply means communities almost always opt for a centralised grid connection as soon as it becomes affordable (in some cases NGO-provided micro-grids have been abandoned). It’s at this level of access – where electricity consumption is typically still only a fraction of what the rich world takes for granted – where addressing energy poverty conflicts with climate goals.

Developing world still looks to fossil fuels

The Center for Global Development recently crunched the data for President Obama’s “Power Africa” initiative, and found that if the US Overseas Private Investment Corporation were allowed to invest in natural gas projects (not just renewables) it could roughly triple the number of people who gained electricity access from a US$10 billion investment. Whereas a renewables-only portfolio could supply 30 million people, natural gas could reach 90 million and generate around ten times as much electricity.

Oxfam emphasises the rapid growth of renewable energy in developing countries. This is partly because, since 2013, the World Bank and other funders have stopped supporting developing-world coal projects.

While there may be plausable justifications for these policies, honesty requires that we call them what they are: forms of “carbon conditionality” through which western priorities are imposed on the global poor.

Developing states commonly reject this conditionality. For example, one Indian official has confirmed New Delhi’s hope that the new Chinese-backed Asian Infrastructure Investment Bank will support coal projects.

India is seeking, in the name of development and poverty reduction, to double domestic coal production in the next five years and to rapidly expand coal-fired generation.

India’s plans illustrate the catch-22 facing the developing world. Climate change threatens impoverished people, but escaping poverty is near impossible without fossil fuels.


TransCanada quietly plots response as Keystone XL rejection seems imminent

The Canadian company involved in the controversy-plagued Keystone XL project has begun planning its response as indications mount the proposed oil pipeline will be rejected by U.S. President Barack Obama.

In its public statements, TransCanada Corp. is expressing hope Obama might still approve the pipeline, which over the course of its years-long delay has become an irritant between the U.S. and Canadian governments.

But people close to the project say the company has become all but convinced a rejection is imminent based on signals the White House is sending publicly and privately — and it's now considering the next move.

One possible response is a challenge under the North American Free Trade Agreement to recoup damages from the U.S. government. Another is immediately re-filing a permit application with the U.S. State Department before the 2016 presidential election..

A source involved in the project said the company is consulting lawyers on the mechanics of a NAFTA challenge, and weighing the legal and political implications.

He said the main suspense now is how Obama will make his big announcement — quietly, in a mid-summer Friday afternoon statement, or boldly from a platform like his upcoming Aug. 31 trip to a climate-change conference in Alaska.

"There's a broad acceptance that the decision's been made," he said, adding that different White House employees had suggested a rejection's coming.

"The rumour is that the decision to deny has been made, and they're just waiting for the right time and venue."

He said the company would not likely reveal its next move on the day of the Obama announcement: "I think the most likely scenario is we'll let it cool for a while. And then we'd have this more vigorous discussion."

One aspect of that internal discussion is the political calculus — and whether fanning the flames during the 2016 U.S. election campaign would help the project, or harm it.

Keystone could easily become a 2016 issue, with Republicans already accusing Democratic stalling of hurting the economy, energy security, and relations with next-door neighbour Canada. Meanwhile, Democrats have been pushing their party front-runner Hillary Clinton to state her position on the $8-billion (US) project.

One expert said he'd advise the company to hold off, and hope a more pipeline-friendly administration takes office in 2017. The U.S. government has a 13-0 record in NAFTA cases. A suit would likely fail, cost the company a few million dollars, and possibly antagonize the U.S. government, said David Gantz, who was been a panelist on NAFTA cases and who teaches trade law at the University of Arizona.

"I think it's a fairly long shot, it's an expensive way to do a long shot, and it doesn't seem to me to be something they're very likely to do," said Gantz.

"They can talk about doing it but my guess is once they have consulted with counsel... they will decide it's — if not a long shot, then well under a 50-50 chance."

He said the company could try filing under NAFTA's articles 1102, 1105 or 1110 — which deal with discrimination, unfair or arbitrary treatment and expropriation.

But another expert said the company might as well try. She said a recent decision against the Canadian government in the Bilcon case involving a Nova Scotia quarry could give TransCanada some hope.

"Why not? And see where it goes," said Debra Steger, who was the first director of the World Trade Organization's appellate body, and now teaches law at the University of Ottawa.


Carly Fiorina hits the ‘sweet spot’ on climate change

by Judith Curry

Carly Fiorina shows how to address the left on climate change

The National Review has an interesting article on Republican Presidential candidate Carly Fiorina’s views on climate change. Excerpts:

In the political battles over climate change, there are three distinct and relevant questions:

First, does mankind have a material effect on the Earth’s climate?
Second, if mankind does impact the climate, is that impact harmful?

And third, if we assume that mankind is harming the environment, will any given American policy or collection of policies have a meaningful beneficial impact?

So far, the conservative movement has mainly pushed back on the “scientific consensus” related to the first question — the extent of human influence over the Earth’s climate. To see a textbook example, watch Ted Cruz’s recent interview with Katie Couric earlier this year, when he confronted her with the miserable recent history of environmentalist predictions.  (JC note:  Ted Cruz’s climate change statement was discussed on this previous post).

But is there a path to consensus in the third key political question, whether climate-change regulations will have any meaningful impact on the climate? Climate-change activists constantly say that “we have to start somewhere.” But what if in fact we’re starting nowhere? What if we’re asking Americans to sacrifice to no purpose? What if America can’t stop climate change?

That’s Carly Fiorina’s argument, and it may represent the best, and most easily defensible, path forward to consensus. Here she is, like Ted Cruz,  making her case to Katie Couric.

JC note: Link to the original article to listen to Fiorina’s interview with Couric. She makes the following points: We need innovation rather than regulation – we need to make coal cleaner. We need to tell people the truth about tradeoffs and the fine print, about how wind power is slaughtering birds. Finds there to be many more serious threats than climate change – we need to keep climate change in perspective with other more serious issues facing us.

The short version of Fiorina’s argument is this: If the scientific consensus is that man-made climate change is real, there is also consensus that America, acting alone, cannot stop it. Indeed, the Chinese are only too happy to watch us constrict our economy as they capture the market in clean coal. California enacts regulations that will make no difference in global climate. The Obama administration enacts regulations that will make no difference in global climate. Yet Americans are asked to pay the price for — to take one example — climate regulations that, by 2030, would only save the world the equivalent of slightly over 13 days of Chinese emissions.

The Left doesn’t seriously dispute the notion that American regulations aren’t going to save the planet, but they justify the demand for American sacrifice by essentially ascribing a mystical power to our national policies — as if our decision to fall on our own sword will so move India and China and the rest of the developing world that they’ll essentially have their own “come to Jesus” movement in defiance of national interest and centuries of national political culture.

“America leads,” they proclaim. “The world laughs,” is the proper response. Nations, as the saying goes, do not have friends, only interests. Our geopolitical competitors will not sacrifice their strategic interests for the sake of combating global warming. Nor will developing nations sacrifice their economies, or their people’s lives, by restraining their own economic growth.

Americans have proven time and again that they’re willing to sacrifice — if convinced that their sacrifice has a purpose, that it accomplishes an objective. There’s certainly room for Cruz’s climate-change skepticism in the national debate, but there just may be more room for Fiorina’s economic, scientific, and geopolitical realism. The Left is asking America to sacrifice for nothing — for no true economic benefit, no true climate benefit, and no true or meaningful “global leadership.” That’s a bad deal even for those who believe in man-made climate change, yet that’s the “deal” the Left demands.

JC reflections

The debate on climate change needs to move to question #3, regarding whether the proposed policies will have any impact on the climate.  Not just America’s contributions to reducing emissions, but the cumulative global INDCs.  The answer is that it will not have any meaningful impact on the climate.  Once this is accepted, then the climate change problem is open to reframing and pushing the ‘restart’ button.

As a political tactic, Carly Fiorina hits the sweet spot.  She doesn’t challenge the scientific consensus, but rather focuses on the fact that if human caused climate change is real, we can’t stop it on the timescale of a few decades.  Her emphasis on innovation rather than regulation is exactly on target; wind and solar just aren’t going to cut it.

Carly Fiorina hit a ‘home run’ in the first Republican debate and is starting to rise in the polls.


Obama's War on Coal Targets Red States

Here’s today’s political quiz question: What do these five states — Rhode Island, Connecticut, Vermont, California and Maine — have in common? Yes, they are blue states ruled by Democrats, but that’s not all. These are the states that use the least amount of coal — 2 percent or less — for electric power.

In fact, almost all the states that are politically liberal and vote unfailingly Democratic are low coal use states. For instance, Washington, New York, Oregon and New Jersey are also in the top 10 states least reliant on coal. Only conservative Idaho is a red state with low coal consumption.

Meanwhile, the heavy coal using states bleed red. West Virginia, Kentucky and Wyoming all get about 90 percent of their electric power from coal. Missouri, Utah, Indiana and North Dakota also get 75 percent of their electricity from coal.

Obama announced last week the toughest environmental regulations ever against coal. This is part of the president’s war on coal that he announced when he was running for president in 2008. He has long admitted these policies, which aim to reduce emissions from coal burning electric power plants by 32 percent from 2005 levels by 2030, will “bankrupt” the coal industry. It’s working. Coal towns are being vaporized across America and coal companies are going out of business.

But the pain from the new Environmental Protection Agency rules won’t be evenly distributed across America. Far from it. The liberal coastal states will feel relatively modest jobs losses because they rely less on manufacturing. On the other hand, coal-producing states, such as West Virginia and Wyoming, will see massive job losses and increases in electric utility costs.

A 2014 study by the Heritage Foundation finds the nationwide costs will be about $100 billion a year eventually, or a reduction in GDP by about one-half a percentage point; additionally, a family of four’s annual income will drop by $1,200. Obama’s policies that have had such a crushing effect on middle-income family finances are about to get a whole lot worse.

Would Sens. Barbara Boxer of California and Sheldon Whitehouse from Rhode Island, two of the biggest cheerleaders for the new regulations, be so euphoric if their voters were paying these massive costs for their green agenda? But the East- and West-Coast environmentalists can live with raising costs and unemployment in “flyover country.”

It’s time to label the Obama green policies what they truly are: steep taxes on red state America. By the way, many purple states such as Pennsylvania, Ohio and Virginia also get hammered by Obama’s climate change agenda.

The de facto tax that Obama wants to impose on American coal is doubly dastardly because its impact will be felt hardest in relatively poorer states. And because Census Bureau data confirms that poor households spend four times more of their income on energy than rich families, the Obama policy will make income inequality much worse.

But of course the upper crust Manhattan liberals, who fund the Sierra Club and Obama and profess to care so much about the poor, can live with that. So much for “environmental justice.”

Maybe all of this pain would arguably be worth it if somehow these policies were going to reduce global carbon emissions and stop global warming as Obama assures us they will. They won’t. New data from the U.S. Energy Information Administration and other sources tells the opposite tale. China and India are adding coal plants on a massive scale. At least 1,000 new coal plants are planned worldwide.

According to data from the EIA, for every unit of reduction in U.S. coal power capacity from 2011-2040, China and India alone will add more than 14 units. Even if the U.S. cut coal use to zero over the next 25 years, global emissions from coal will rise sharply. By 2040, China’s coal power capacity alone will be nearly 4 times the current U.S. capacity. So the Obama plan is all pain and no gain. It would be like trying to reduce unwanted pregnancies in the third world by having Americans use more birth control. Stupid.

But back to the Obama assault on red and purple states. Let’s hope the voters get the message that Obama’s green energy policies are directed at their jobs and their paychecks. Most people in blue states and the workers around the rest of the world won’t feel a thing. This is fair?



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