Showing posts with label global warming. Show all posts
Showing posts with label global warming. Show all posts

Monday, January 9, 2017

A way to market to conservatives the science behind climate change more effectively

Past-focused environmental comparisons promote pro-environmental outcomes for conservatives. By Matthew Baldwin and Joris Lammers


Political polarization on important issues can have dire consequences for society, and divisions regarding the issue of climate change could be particularly catastrophic. Building on research in social cognition and psychology, we show that temporal comparison processes largely explain the political gap in respondents’ attitudes towards and behaviors regarding climate change. We found that conservatives’ proenvironmental attitudes and behaviors improved consistently and drastically when we presented messages that compared the environment today with that of the past. This research shows how ideological differences can arise from basic psychological processes, demonstrates how such differences can be overcome by framing a message consistent with these basic processes, and provides a way to market the science behind climate change more effectively.


Conservatives appear more skeptical about climate change and global warming and less willing to act against it than liberals. We propose that this unwillingness could result from fundamental differences in conservatives’ and liberals’ temporal focus. Conservatives tend to focus more on the past than do liberals. Across six studies, we rely on this notion to demonstrate that conservatives are positively affected by past- but not by future-focused environmental comparisons. Past comparisons largely eliminated the political divide that separated liberal and conservative respondents’ attitudes toward and behavior regarding climate change, so that across these studies conservatives and liberals were nearly equally likely to fight climate change. This research demonstrates how psychological processes, such as temporal comparison, underlie the prevalent ideological gap in addressing climate change. It opens up a promising avenue to convince conservatives effectively of the need to address climate change and global warming.

Friday, November 29, 2013

Tesla Meets the Auto Regulators - Remember Toyota's invisible defect and drivers that are inordinately prone to "pedal misapplication"

Tesla Meets the Auto Regulators. By Holman W Jenkins 
The feds have opened a safety investigation into the Model S fires. Elon Musk should be worried.
WSJ, Nov 27, 2013

Look out, Elon Musk. Expecting rational results from regulatory agencies is often a recipe for disappointment.

Two of Mr. Musk's Tesla Model S cars burned up when road debris punctured the battery, a vulnerability not seen in other electric cars. Mr. Musk says his cars are no more fire-prone than gasoline cars. He claims to welcome a National Highway Safety Administration investigation into whether the cars are defective and warrant a recall.

Good luck with that. Mr. Musk is embroiled in a process that, he may soon discover, can quickly become more about politics than engineering. GM pickups with side-mounted gas tanks in the 1980s were necessarily more fire-prone in side collisions. Yet the truck's overall safety record was exemplary and the vehicle fully complied with federal fuel-system safety standards. That didn't stop the feds from eventually ruling the trucks defective, in response to over-the-top media and interest-group allegations against the company.

Those nearing ecstasy over the driverless car ought to sober up too. Tesla is not the only example of how unwelcoming our system of auto regulation is to new ideas. At a congressional hearing on the robotic car last week, a GM executive pleaded for "protection for auto makers and dealers from frivolous litigation for systems that meet and surpass whatever performance standards are established by the government." NHTSA's David Strickland was also present and seemed a lot more interested in extending his agency's remit to "things like, you know, navigation on an iPhone. . . . That is a piece of motor vehicle equipment and I think we have a very strong precedent."

And recall NHTSA's performance during the furor almost four years ago over alleged runaway Toyotas. Its then-overseer, Transportation Secretary Ray LaHood, happily participated in congressional hearings designed to flog for the benefit of trial lawyers the idea of a hidden bug in Toyota's electronic throttle control.

When the agency much more quietly came out with a report a year later debunking the idea of an electronic defect, notice how little good it did Toyota. The car maker still found it necessary to cough up $1.2 billion to satisfy owners who claimed their cars lost value in the media frenzy over a non-defect. Toyota has also seen the tide turning against it lately as it resists a deluge of accident claims.

At first, opposing lawyers were hesitant to emphasize an invisible defect that government research suggested didn't exist. That was a tactical error on their part. In an Oklahoma trial last month involving an 82-year-old woman driver, jurors awarded $3 million in compensatory damages and were ready to assign punitive damages in a complaint focused on a hypothetical bug when Toyota abruptly settled on undisclosed terms.

In another closely-watched trial set to begin in California in March, an 83-year-old female driver (who has since died from unrelated causes) testified in a deposition that she stepped on the brake instead of the gas. The judge has already ruled that if the jury decides to believe her testimony, it is entitled to infer the existence of a defect that nobody can find.

These cases, out of some 300 pending, were chosen for a reason. Study after study, including one last year by the University of North Carolina Highway Safety Research Center, finds that elderly female drivers are inordinately prone to "pedal misapplication." If Toyota can't prevail in these cases, the company might be wise to run up the white flag and seek a global settlement that some estimate at upwards of $5 billion—quite a sum for a non-defect.

Why do we mention this? These episodes describe the regulatory-cum-political thicket that Tesla wandered into when it started making cars. This thicket has served as a near-perfect barrier to entry to startup car makers for the better part of a century.

Even more so because Tesla's troubles come at a time when much bigger companies, with vast lobbying and political resources, are entering the market for high-end electric cars—including Cadillac, Porsche, BMW and Audi. Maybe this explains a note of hyperbole that has begun to creep into Mr. Musk's frequent blog postings. "If a false perception about the safety of electric cars is allowed to linger," he wrote last week, "it will delay the advent of sustainable transport and increase the risk of global climate change, with potentially disastrous consequences worldwide."

Federal regulators have been warned. They can always be denounced as climate criminals if they find the Tesla Model S defective. Maybe Mr. Musk is ready to play the political game after all.

Wednesday, November 13, 2013

L'Energia Verda és la realment subvencionada. Per Bjorn Lomborg

L'Energia Verda és la realment subvencionada. Per Bjorn Lomborg
Espanya malgasta l’1% del PIB en energies verdes
Les renovables reben tres vegades més diners per unitat d'energia que els combustibles Fòssils.
Wall Street Journal , 11 novembre 2013
Translation of Green Energy Is the Real Subsidy Hog to Catalan by Un Liberal Recalcitrant

Extractes :

Durant 20 anys el món ha provat de subvencionar l'energia verda en lloc de centrar-se en fer-la més eficient . Avui Espanya gasta al voltant de l'1% del PIB en energies verdes com la solar i l'eòlica . Aquests 11.000 milions d’euros anuals sobrepassen la despesa espanyola en educació superior .

A finals d’aquest segle, amb els actuals compromisos, aquests esforços dels espanyols hauran retardat l'impacte de l’escalfament global en unes seixanta- una hores, segons les estimacions del prestigiós model dinàmic integral econòmic-climàtic de la Universitat de Yale. ¿Milers de milions d’euros per a seixanta-una hores adicionals? És un mal negoci .
Però quan es critiquen aquests ineficients subsidis verds, poden estar sergurs de que els defensors assenyalaran que el planeta subsidia encara més els combustibles fòssils. No hauríem de fer-ho amb cap. Però la desinformació que envolta els subsidis energètics és considerable i ajuda a impedir que el món prengui mesures raonables .

Tres són els mites dels subsidis de combustibles fòssils que val la pena desmuntar. El primer és l'al·legació [ ... ] de que els EUA subsidien més els combustibles fòssils que les energies verdes. No és així.

[S'estima] que el 2010 [aquests] subsidis van arribar als $4.000 milions anuals. Això inclou $ 240 milions en inversions per a instal·lacions de carbó net [que a aquest traductor no li sembla una cosa molt allunyada del “rotllet verd”], [ i ] una deducció de despeses sobre l'amortització dels equips de control de la pol·lució [alguna cosa que els verds haurien aplaudir, en la meva humil opinió]. Les fonts renovables van rebre més del triple d’squesta xifra, uns 14.000 $ milions . En tot això no considerem $ 2.500 milions per a l’energia nuclear [que estalvia emissions de CO2].

Encara més del que sembla, és més gran la desviació real de real de la despesa a favor de l'energia verda perquè les turbines eòliques i altres fonts renovables produeixen molta menys Energia que els combustibles fòssils, i els EUA estan pagant més per menys. L'electricitat que s'obté a partir del carbó és subsidiat per les Nacions Unides un 5% d’un centau per cada kWh produït, mentre que l'eòlica rep prop d’un centau per kWh. Per a la solar, el cost per al contribuent és de 77 centaus per kWh .

Els crítics de subsidiar els combustibles fòssils, com el científic climàtic Jim Hansen, també indiquen que la immensa grandària dels subsidis slobals és l’evidència del poder que tenen les companyies de combustibles fòssils i els escèptics del canvi climàtic sobre els governs.
[Aquests] subsidis globals superen els de les renovables en dòlars nominals - $523 milers de milions sobre $88 millers de milions [per a les les renovables], segons l'Agència Internacional d'Energia. Però aquesta disparitat es reverteix si es té en compte la proporció. Els combustibles fòssils suposen més del 80% de l'energia global, mentre que la moderna energia verda suposa prop del 5%. Això vol dir que les renovables reben encara tres vegades més de diners per unitat d'energia.

Però encara més important: els crítics ignoren que aquests subsidis de combustibles fòssils pertanyen gairebé de forma exclusiva a països no occidentals. Dotze d’aquestes nacions són responsables del 75% dels subsidis globals d’aquests combustibles. Iran és el primer amb $82.000 milions anuals, seguit per l’Aràbia Saudita amb $61.000 milions. Rússia, Índia i Xina, apliquen un pressupost d’entre $30.000 i $40.000 milions i Veneçuela, Egipte, Iraq, Emirats Àrabs Units, Indonèsia, Mèxic i Algèria, la resta.

Aquests subsidis no tenen res a veure amb intentar de congraciar-se amb companyies petrolieres o amb fer-los un bon regal als escèptics de l'escalfament global. Aquesta despesa és una manera de que aquests governs comprin estabilitat política: a Veneçuela, la gasolina es ven a uns 5,9 centaus el galó [un galó són 3,8 litres] , el que li costa al govern uns $22.000 milions anuals, més del doble del que es gasta en sanitat.

Un Tercer mite el difon el recent informe de l'FMI, "Reforma dels Subsidis Energètics - lliçons i implications". L'Organització va anunciar el març passat que hi havia descobert uns $ 1.4 bilions de subsidis als combustibles fòssils que ningú havia vist . D’aquesta xifra , al·lega l'Informe, $ 700.000 milions vénen del món desenvolupat.

La gasolina i el dièsel dels EUA són receptors, en sí mateix, de prop de la meitat d’aquests 700.000 dòlars que l’FMI en diu subsidis. La gasolina i el dièsel haurien de tenir impostos més alts, atès l'informe, i així l’FMI considera aquests impostos no aplicats com a “subvencions” [Aquest traductor creu que aquestes idees tan brillants podria ser que sorgissin de la pròpia Administració Federal perquè casen amb les línies, o més ben dit, les corbes sinuoses del raonament de gent amb la preparació del Community Organizer in Chief]. Així, la pol·lució de l'aire acredita un impost de 34 centaus/galó, segons els models de l'FMI, mentre que els accidents de trànsit i la congestió haurien d’afegir prop d’un dòlar per galó .

A més hauria d’haver un IVA del 17% com en altres països, segons l'FMI, o prop de $0.80 per galó. Tots aquests impostos recaptarien $ 350.000, tractats ara per l’FMI com a subsidis.

[Això té diversos problemes.] L'Organització assumeix un cost social del CO2 de cinc vegades el que actualment té la Unió Europea. Els danys atribuïts a la pol·lució de l'aire són deu vegades més grans que les estimacions de la Unió Europea. ¿I què tenen a veure els accidents de trànsit amb els subsidis a la benzina?

Finalment, l’FMI Ignora a la pràctica els 49,5 centaus d'impostos sobre el galó de gasolina que el consumidor americà paga realment. Els models cancel·len, inexplicablement, aquest impost amb un "cost internacional d’enviament" [per mar, oleoductes, etc.] Però fins i tot si  vostè accepta les estimacions de l'FMI dels costos de la pol·lució i l'IVA a l'estil Europeu, el total del que parla l’FMI que no es recapta, es redueix només a 44 centaus / galó - menys que els impostos reals en les  EUA per centaus/galó [ ... ]
Les informacions inexactes com aquesta desinformen de manera innecessària la presa de decisions sobre polítiques públiques. Estic a favor d’acabar amb els subsidis globals als combustibles fòssils -i amb els subsidis a les energies verdes. Subsidiar energies verdes de primera generació, ineficients, fa als acomodats sentir bé en ells mateixos, però no transformarà els mercats energètics .

[ ... ]

El Dr Lomborg, director del Copenhagen Consensus Center , és l'autor de "How Much HaveGlobal Problems Cost the World? A Scoreboard from 1900 to 2050" ( Cambridge,  2013 ).

Original, etc.:

Tuesday, November 12, 2013

La energía verde es la realmente subvencionada. By Bjorn Lomborg

La energía verde es la realmente subvencionada. Por Bjorn Lomborg
Las renovables reciben tres veces más dinero por unidad de energía que los combustibles fósiles.
Wall Street Journal, Nov 11, 2013


Durante 20 años el mundo ha intentado subvencionar la energía verde en vez de centrarse en hacerla más eficiente. Hoy España tira alrededor del 1% del PIB en energías verdes como la solar y la eólica. Esos €11 000 millones anuales son más de lo que España gasta en educación superior.

A finales de este siglo, con los actuales compromisos, esos esfuerzos de los españoles habrán retrasado el impacto del calentamiento global por unas sesenta y una horas, según las estimaciones del reputado modelo dinámico integral económico-climático de la Universidad de Yale. ¿Cientos de miles de millones de dólares para sesenta y una horas adicionales? Es un mal negocio.

Pero cuando se critican esos ineficientes subsidios verdes, pueden estar seguros de que los defensores señalarán que el planeta subsidia los combustibles fósiles aun más. No deberíamos hacerlo con ninguno. Pero la desinformación que rodea los subsidios energéticos es considerable y ayuda a impedir que el mundo tome medidas razonables.

Tres son los mitos de los subsidios de combustibles fósiles que vale la pena desmontar. El primero es la alegación [...] de que los EE UU subsidian más los combustibles fósiles que la energía verde. No es así.

[Se estima] que en 2010 [esos] subsidios alcanzaron los $4000 millones anuales. Esto incluye $240 millones en inversiones para instalaciones de carbón limpio [que a este traductor no le parece algo muy alejado del rollito verde]; [y] una deducción de gastos sobre la amortización de equpos de control de la polución [algo que los verdes deberían aplaudir, no?]. Las fuentes renovables recibieron más del triple de esa cifra, unos $14 000 millones. En todo esto no consideramos $2500 millones para energía nuclear [que ahorra emisiones de CO2].

Aun más de lo que parece, es mayor el sesgo real del gasto a favor de la energía verde. Ya que las turbinas eólicas y otras fuentes renovables producen mucha menos energía que los combustibles fósiles, los EE UU están pagando más por menos. La electricidad que se obtiene a partir del carbón se subsidia a un 5% de un centavo por cada kWh producido, mientras que la eólica recibe cerca de un centavo por kWh. Para solar, el coste para el contribuyente es de 77 centavos por kWh.

Los críticos de los subsidios de combustibles fósiles, como el científico climático Jim Hansen, también indican que el inmenso tamaño de los subsidios globales es evidencia del poder que sobre los gobiernos tienen las compañías de combustibles fósiles y los escépticos del cambio climático. [En opinión de este traductor, Jim está mayor.]

[Estos] subsidios globales exceden los de las renovables en dólares nominales — $523 miles de millones sobre $88 miles de millones [para las renovables], según la International Energy Agency. Pero la disparidad se revierte cuando la proporción se toma en consideración. Los combustibles fósiles suponen más del 80% de la energía global, mientras que la moderna energía verde supone cerca del 5%. Esto significa que las renovables reciben aun tres veces más dinero por unidad de energía.

Pero mucho más importante, los críticos ignoran que estos subsidios de combustibles fósiles pertenecen casi exclusivamente a países no occidentales. Doce de tales naciones son responsables del 75% de los subsidios globales de tales combustibles. Irán es el primero con $82 000 millones anuales, seguido por Arabia Saudí con $61 000 millones. Rusia, India y China presupuestan entre $30 000 y $40 000 millones y Venezuela, Egipto, Iraq, Emiratos Árabes Unidos, Indonesia, México y Argelia son el resto.

Estos subsidios no tienen nada que ver con intentar congraciarse con compañías petroleras o con regalar a los escépticos del calentamiento global. Este gasto es una forma de que estos gobiernos compren estabilidad política: en Venezuela, la gasolina se vende a 5.9 centavos el galón [el galón son 3.8 litros], lo que cuesta al gobierno unos $22 000 millones anuales, más del doble de lo que se gasta en sanidad.

Un tercer mito lo difunde un reciente informe del IMF, "Reforma de los subsidios energéticos — Lecciones e implicaciones" ("Energy Subsidy Reform—Lessons and Implications"). La organización anunció en marzo que había descubierto unos $1.4 billones de subsidios a los combustibles fósiles que nadie había visto. De esa cifra, alega el informe, $700 000 millones vienen del mundo desarrollado. [Este traductor está parcialmente de acuerdo con el informe del IMF y cree que Lomborg yerra al no mencionar lo positivas que son muchas de las valoraciones y recomendaciones del informe. Los subsidios en países no desarrollados son una salvajada para esas economías, además de que benefician en igual proporción a todos los consumidores, es decir, benefician también a quienes no los necesitan, como los jerarcas del partido dominante o los crazy mullahs. Otra cosa es lo que comenta Lomborg, que es muy razonable IMHO: el rollo este de estimar costes que deberían ser impuestos y encima los suben más que los locos de Bruselas y que al no ser recaudados los meten en la línea de subsidios.]

La gasolina y el diesel en los EE UU por sí solos son cerca de la mitad de esos $700 000 millones que el IMF dice son subsidios. La gasolina y el diesel deberían tener impuestos más altos, dice el informe, así que el IMF cuenta tales impuestos no impuestos como "subsidios" [este traductor barrunta que estas ideas tan brillantes pudiera ser que surjan de la propia Administración Federal porque casan con las líneas, o más bien sinuosas curvas, del razonamiento de gente con la preparación del Community Organizer in Chief]. Así, la polución del aire amerita un impuesto de 34 centavos/galón, según los modelos del IMF, mientras que los accidentes de tráfico y la congestión deberían añardir cerca de $1 por galón.

Además debería haber un IVA del 17% como en otros países, según el IMF, o cerca de $0.80/galón [es fácil de engordar esta estimación, el gobierno español puede sugerir el vigente 21%]. La suma que tales impuestos recaudarían, $350 000 millones, se tratan como un subsidio.

[Esto tiene varios problemas.] La organización asume un coste social del CO2 de cinco veces el que actualmente emplea la Unión Europea. Los daños atribuidos a la polución del aire son 10 veces mayores que las estimaciones de la Unión Europea. ¿Y qué tienen que ver los accidentes de tráfico con los subsidios a la gasolina?

Por último, el IMF ignora en la práctica los 49.5 centavos de impuestos sobre el galón de gasolina que el consumidor americano paga realmente. Los modelos cancelan, inexplicablemente, este impuesto con un "coste internacional de envío" [por mar, oleoductos, etc.]. Pero incluso si Vd acepta las estimaciones del IMF de los costes de la polución y el IVA al estilo europeo, el total que dice el IMF que no se recauda se reduce a solo 44 centavos/galón — menos que los impuestos reales en los EE UU por cents/galón. [...]

Información inexacta como esta perjudica innecesariamente la toma de politicas públicas. Estoy a favor de terminar con los subsidios globales de combustibles fósiles — y con los subsidios a las energías verdes. Subsidiar energías verdes de primera generación, ineficientes, hace a los acomodados sentirse bien consigo mismos, pero no transformará los mercados energéticos.


El Dr. Lomborg, director del Copenhagen Consensus Center, es el autor de "How Much Have Global Problems Cost the World? A Scoreboard from 1900 to 2050" (Cambridge, 2013).
Translation to Catalan: By Un Liberal Recalcitrant

Green Energy Is the Real Subsidy Hog. By Bjorn Lomborg
Renewables receive three times as much money per energy unit as fossil fuels.
Wall Street Journal, Nov 11, 2013

For 20 years the world has tried subsidizing green technology instead of focusing on making it more efficient. Today Spain spends about 1% of GDP throwing money at green energy such as solar and wind power. The $11 billion a year is more than Spain spends on higher education.

At the end of the century, with current commitments, these Spanish efforts will have delayed the impact of global warming by roughly 61 hours, according to the estimates of Yale University's well-regarded Dynamic Integrated Climate-Economy model. Hundreds of billions of dollars for 61 additional hours? That's a bad deal.

Yet when such inefficient green subsidies are criticized, their defenders can be relied on to point out that the world subsidizes fossil fuels even more heavily. We shouldn't subsidize either. But the misinformation surrounding energy subsidies is considerable, and it helps keep the world from enacting sensible policy.

Three myths about fossil-fuel subsidies are worth debunking. The first is the claim, put forth by organizations such as the Environmental Law Institute, that the U.S. subsidizes fossil fuels more heavily than green energy. Not so.

The U.S. Energy Information Administration estimated in 2010 that fossil-fuel subsidies amounted to $4 billion a year. These include $240 million in credit for investment in Clean Coal Facilities; a tax deferral worth $980 million called excess of percentage over cost depletion; and an expense deduction on amortization of pollution-control equipment. Renewable sources received more than triple that figure, roughly $14 billion. That doesn't include $2.5 billion for nuclear energy.

Actual spending skews even more toward green energy than it seems. Since wind turbines and other renewable sources produce much less energy than fossil fuels, the U.S. is paying more for less. Coal-powered electricity is subsidized at about 5% of one cent for every kilowatt-hour produced, while wind power gets about a nickel per kwh. For solar power, it costs the taxpayer 77 cents per kwh.
Critics of fossil-fuel subsidies, such as climate scientist Jim Hansen, also suggest that the immense size of global subsidies is evidence of the power over governments wielded by fossil-fuel companies and climate-change skeptics. Global fossil-fuel subsidies do exceed those for renewables in raw dollars—$523 billion to $88 billion, according to the International Energy Agency. But the disparity is reversed when proportion is taken into account. Fossil fuels make up more than 80% of global energy, while modern green energy accounts for about 5%. This means that renewables still receive three times as much money per energy unit.

But much more important, the critics ignore that these fossil-fuel subsidies are almost exclusive to non-Western countries. Twelve such nations account for 75% of the world's fossil-fuel subsidies. Iran tops the list with $82 billion a year, followed by Saudi Arabia at $61 billion. Russia, India and China spend between $30 billion and $40 billion, and Venezuela, Egypt, Iran, U.A.E., Indonesia, Mexico and Algeria make up the rest.

These subsidies have nothing to do with cozying up to oil companies or indulging global-warming skeptics. The spending is a way for governments to buy political stability: In Venezuela, gas sells at 5.8 cents a gallon, costing the government $22 billion a year, more than twice what is spent on health care.

A third myth is propagated by a recent International Monetary Fund report, "Energy Subsidy Reform—Lessons and Implications." The organization announced in March that it had discovered an extra $1.4 trillion in fossil-fuel subsidies that everyone else overlooked. Of that figure, the report claims, $700 billion comes from the developed world.

U.S. gasoline and diesel alone make up about half of the IMF's $700 billion in alleged subsidies. Gasoline and diesel deserve more taxation, the report says, so the IMF counts taxes that were not levied as "subsidies." Thus air pollution merits a 34-cents-per-gallon tax, according to the IMF models, while traffic accidents and congestion should add about $1 per gallon.

According to the IMF, the U.S. also should have a 17% value-added tax like other countries, at about 80 cents per gallon. The combined $350 billion such taxes allegedly would raise gets spun as a subsidy.

The assumptions behind the IMF's math have some problems. The organization assumes a social price of carbon dioxide at five times what Europe currently charges. The air-pollution damages are upward of 10 times higher than the European Union estimates. And what do traffic accidents have to do with gasoline subsidies?

Finally, the IMF effectively ignores the 49.5 cents per gallon in gasoline taxes the U.S. consumer actually pays. The models cancel out this tax, inexplicably, with an "international shipping cost." But even if you accept the IMF's estimated pollution costs and the European-style VAT, the total tax the IMF says goes uncollected comes to only about 44 cents per gallon—or less than the actual U.S. tax of 49.5 cents per gallon. The real under-taxation is zero. The $350 billion is a figment of the IMF's balance sheet.

Inaccurate information of this sort is needlessly misinforming public policy. I'm in favor of ending global fossil-fuel subsidies—and green-energy subsidies. Subsidizing first-generation, inefficient green energy might make well-off people feel good about themselves, but it won't transform the energy market.

Green-energy initiatives must focus on innovations, making new generations of technology work better and cost less. This will eventually power the world in a cleaner and cheaper way than fossil fuels. That effort isn't aided by the perpetuation of myths.

Dr. Lomborg, director of the Copenhagen Consensus Center, is the author of "How Much Have Global Problems Cost the World? A Scoreboard from 1900 to 2050" (Cambridge, 2013).

Tuesday, December 22, 2009

Time for a Climate Change Plan B

Time for a Climate Change Plan B. By NIGEL LAWSON

The world's political leaders, not least President Barack Obama and Prime Minister Gordon Brown, are in a state of severe, almost clinical, denial. While acknowledging that the outcome of the United Nations climate-change conference in Copenhagen fell short of their demand for a legally binding, enforceable and verifiable global agreement on emissions reductions by developed and developing countries alike, they insist that what has been achieved is a breakthrough and a decisive step forward.

Just one more heave, just one more venue for the great climate-change traveling circus—Mexico City next year—and the job will be done.

Or so we are told. It is, of course, the purest nonsense. The only breakthrough was the political coup for China and India in concluding the anodyne communiqué with the United States behind closed doors, with Brazil and South Africa allowed in the room and Europe left to languish in the cold outside.

Far from achieving a major step forward, Copenhagen—predictably—achieved precisely nothing. The nearest thing to a commitment was the promise by the developed world to pay the developing world $30 billion of "climate aid" over the next three years, rising to $100 billion a year from 2020. Not only is that (perhaps fortunately) not legally binding, but there is no agreement whatsoever about which countries it will go to, in which amounts, and on what conditions.

The reasons for the complete and utter failure of Copenhagen are both fundamental and irresolvable. The first is that the economic cost of decarbonizing the world's economies is massive, and of at least the same order of magnitude as any benefits it may conceivably bring in terms of a cooler world in the next century.

The reason we use carbon-based energy is not the political power of the oil lobby or the coal industry. It is because it is far and away the cheapest source of energy at the present time and is likely to remain so, not forever, but for the foreseeable future.

Switching to much more expensive energy may be acceptable to us in the developed world (although I see no present evidence of this). But in the developing world, including the rapidly developing nations such as China and India, there are still tens if not hundreds of millions of people suffering from acute poverty, and from the consequences of such poverty, in the shape of malnutrition, preventable disease and premature death.

The overriding priority for the developing world has to be the fastest feasible rate of economic development, which means, inter alia, using the cheapest available source of energy: carbon energy.

Moreover, the argument that they should make this economic and human sacrifice to benefit future generations 100 years and more hence is all the less compelling, given that these future generations will, despite any problems caused by warming, be many times better off than the people of the developing world are today.

Or, at least, that is the assumption on which the climate scientists' warming projections are based. It is projected economic growth that determines projected carbon emissions, and projected carbon emissions that (according to the somewhat conjectural computer models on which they rely) determine projected warming (according to the same models).

All this overlaps with the second of the two fundamental reasons why Copenhagen failed, and why Mexico City (if our leaders insist on continuing this futile charade) will fail, too. That is the problem of burden-sharing, and in particular how much of the economic cost of decarbonization should be borne by the developed world, which accounts for the bulk of past emissions, and how much by the faster-growing developing world, which will account for the bulk of future emissions.

The 2006 Stern Review, quite the shoddiest pseudo-scientific and pseudo-economic document any British Government has ever produced, claims the overall burden is very small. If that were so, the problem of how to share the burden would be readily overcome—as indeed occurred with the phasing out of chorofluorocarbons (CFCs) under the 1987 Montreal Protocol. But the true cost of decarbonization is massive, and the distribution of the burden an insoluble problem.

Moreover, any assessment of the impact of any future warming that may occur is inevitably highly conjectural, depending as it does not only on the uncertainties of climate science but also on the uncertainties of future technological development. So what we are talking about is risk.

Not that the risk is all one way. The risk of a 1930s-style outbreak of protectionism—if the developed world were to abjure cheap energy and faced enhanced competition from China and other rapidly industrializing countries that declined to do so—is probably greater than any risk from warming.

But even without that, there is not even a theoretical (let alone a practical) basis for a global agreement on burden-sharing, since, so far as the risk of global warming is concerned (and probably in other areas too) risk aversion is not uniform throughout the world. Not only do different cultures embody very different degrees of risk aversion, but in general the richer countries will tend to be more risk-averse than the poorer countries, if only because we have more to lose.

The time has come to abandon the Kyoto-style folly that reached its apotheosis in Copenhagen last week, and move to plan B.

And the outlines of a credible plan B are clear. First and foremost, we must do what mankind has always done, and adapt to whatever changes in temperature may in the future arise.

This enables us to pocket the benefits of any warming (and there are many) while reducing the costs. None of the projected costs are new phenomena, but the possible exacerbation of problems our climate already throws at us. Addressing these problems directly is many times more cost-effective than anything discussed at Copenhagen. And adaptation does not require a global agreement, although we may well need to help the very poorest countries (not China) to adapt.

Beyond adaptation, plan B should involve a relatively modest, increased government investment in technological research and development—in energy, in adaptation and in geoengineering.

Despite the overwhelming evidence of the Copenhagen debacle, it is not going to be easy to get our leaders to move to plan B. There is no doubt that calling a halt to the high-profile climate-change traveling circus risks causing a severe conference-deprivation trauma among the participants. If there has to be a small public investment in counseling, it would be money well spent.

Lord Lawson was U.K. chancellor of the exchequer in the Thatcher government from 1983 to 1989. He is the author of "An Appeal to Reason: A Cool Look at Global Warming" (Overlook Duckworth, paperback 2009), and is chairman of the recently formed Global Warming Policy Foundation (

Industry views: Five Troubling Aspects of the Copenhagen Accord

Five Troubling Aspects of the Copenhagen Accord

IER, December 21, 2009

Even though the climate change PR machines are spinning away in the aftermath of Copenhagen’s COP 15, a few of the Copenhagen Accord’s more troubling consequences are not getting the attention they deserve.

Senator McCain called “the agreement to take note of the accord” reached by the United States and a handful of developed nations a “nothing burger.” Senator Kerry, on the other hand, believes the accord is important and called China’s participation “the most critical thing” to ensuring Senate passage of the national energy tax, even though few observers believe China will actually do anything to curtail their growing use of carbon-based energy. Meanwhile, the question of whether the outcome in Denmark was enough to advance international efforts to control emissions can best be summarized by Henry Derwent, president of the Geneva-based International Emissions Trading Association, who noted that the climate talks were a “step backward” in terms of a signal that will support carbon prices.

While the Copenhagen Accord does not represent a major change from the status quo, there are a few troubling aspects of the U.S. effort in Copenhagen worth noting.

First, U.S. negotiators opposed efforts from China and India to ban the use of border tariffs on energy-intensive exports. That means the U.S. actively fought to leave the prospect of Smoot-Hawley-type trade wars on the table for Senate cap-and-trade negotiators. The United States has benefited greatly from free trade; now the U.S. government is opposing free trade.

Second, unlike China and other developing countries, the U.S. will allow “international consultations and analysis” of our greenhouse gas emissions. It is not clear how intrusive these international consultations will be, but with millions of sources of greenhouse gas emissions, it’s hard to believe that they won’t in some way encroach on U.S. sovereignty.

Third, the U.S.’s commitment to hand over billions of dollars a year in taxpayer money was a premature gesture that will only serve as the new floor for developing nations in the next round of international talks. Why would nations in the third world operate under this agreement if they can now see that the starting point for COP 16’s bargaining talks is $30 billion?

Fourth, we must consider the sheer size of the U.S. delegation; press accounts reveal that in addition to the President, five cabinet officials, four other high ranking officials, one czar, over thirty Members of Congress and a host of staff attended all or part of the conference. The United States spent millions to send a small army to Copenhagen to forge a non-binding “accord” that very few Americans view as a priority.

Finally, contrary to Senator Kerry’s hopes, China’s willingness to sit at a non-binding negotiating table will not ease the pain a national energy rationing cap-and-trade tax will cause for American families and is certainly not a sufficient gesture to justify its passage.

Ultimately, Copenhagen will have no impact on the outcome of the cap-and-trade legislation moving through Congress. As we have just seen in the health care debate, Senate passage of this increasingly unpopular measure will depend on how much taxpayer money Majority Leader Reid is willing to give away to his fence-sitting colleagues to reach the 60 votes necessary to move this bill forward.

Wednesday, October 7, 2009

Why Sustainability Standards for Biofuel Production Make Little Economic Sense

Why Sustainability Standards for Biofuel Production Make Little Economic Sense. By Harry de Gorter and David R. Just
Cato, October 7, 2009

The federal "sustainability standard" requires ethanol to emit at least 20 percent less carbon dioxide (CO2) than gasoline. Recent rulings by California and the Environmental Protection Agency, however, have cast doubt on the methodology of the sustainability calculus and whether those standards are being met. We show that the methodological debate is misplaced because sustainability standards for ethanol are, by definition, illogical and ineffective. Moreover, those standards divert attention from the contradictions and inefficiencies of ethanol import tariffs, tax credits, mandates, and subsidies, all of which exist whether ethanol is sustainable or not.

Ethanol is sustainable by definition. The CO2 sequestered by growing corn is exactly offset by the CO2 emissions that follow from burning the fuel in a car. The same observation applies to, say, consuming bourbon made from corn, but ethanol can replace energy — bourbon cannot. Hence, any sustainability standard should be applied to all corn and other crop products, and not just ethanol.

Sustainability standards are based on "lifecycle accounting," in which ethanol is assumed to replace gasoline; but in fact, it may be replacing coal or other energy sources. Life-cycle accounting also fails to recognize that if incentives are given for ethanol producers to use relatively "clean" inputs (e.g., natural gas), the "dirtier" inputs (e.g., coal) that might otherwise have been used for the ethanol production will simply be used by other producers to make products that are not covered by the sustainability standard. Sustainability standards reshuffle who is using what inputs — with no net reduction in national emissions.

Finally, sustainability standards are discriminatory under World Trade Organization law and are unlikely to survive a legal challenge from ethanol producers abroad. The United States will not be able to rely on the World Trade Organization's exception for trade laws protecting the environment because of lax U.S. policies dealing with greenhouse gas emissions relative to its trading partners. Moreover, the imposition of U.S. tariffs on more climate-friendly ethanol produced abroad weakens any U.S. defense of ethanol sustainability standards under the WTO.

Full text:

Harry de Gorter and David R. Just are economists in the Department of Applied Economics and Management at Cornell University.

Monday, September 14, 2009

Federal Pres Says Danes Receive 20% of Their Power Via Wind; New Study Tells Different

Something Rotten? Obama Says Danes Receive 20% of Their Power Via Wind; New Study Tells the Real Story
Danish experts visit Washington this week to explain to American audiences what’s really happening in Denmark
IER, Sep 15, 2009

WASHINGTON – President Obama has frequently cited Denmark as an example to be followed in the field of wind power generation, stating on several occasions that the Danes satisfy “20 percent of their electricity through wind power.” The findings of a new study released this week cast serious doubt on the accuracy of that statement. The report finds that in 2006 scarcely five percent of the nation’s electricity demand was met by wind. And over the past five years, the average is less than 10 percent — despite Denmark having ‘carpeted’ its land with the machines.
“As climate officials descend upon Copenhagen later this year to continue their work to engineer a world in which energy is rendered less reliable, less affordable and increasingly scarce, the eyes of the world will naturally fall upon the host country as well,” said Thomas J. Pyle, president of the Institute for Energy Research (IER), which commissioned the report.

“In the case of Denmark,” added Pyle, “you have a nation of 5.4 million, occupying some of the most wind-intense real estate in the world, whose citizens are forced to pay the highest electricity rates in Europe — and it still doesn’t even come close to the 20 percent threshold envisioned by President Obama for the United States. This may indeed be the model for the future – but only if you believe that a combination of smoke, mirrors and prohibitively high utility rates are the key to our economic and environmental salvation.”

Prepared by the independent Danish think tank CEPOS and co-authored by economist Henrik Meyer and Hugh Sharman, a prominent Denmark-based international energy consultant, the report details the extent to which Denmark’s claim to wind superiority is essentially founded on a myth – the function of a complicated trading scheme in which the Danes off-load excess, value-subtracted wind generation to other nations for roughly free, asking only in return that these countries sell some of their baseload power back to Denmark on the frequent occasions in which the wind does not blow there

The upshot? The Danes retain the title of world’s most prolific wind producer, and President Obama cites their experience as a path to be followed. The cost? Danish ratepayers are forced to pay the highest utility rates in Europe. And the American people are led to believe that, though wind may only provide a little more than one percent of our electricity now, reaching a 20 percent platform – as the Danes have allegedly done – will come at no cost, with no jobs lost and no externalities to consider.

Speaking of jobs, the report also pulls back the curtain on the wind power industry’s near-complete dependence on taxpayer subsidies to support the fairly modest workforce it presently maintains. Just as in Spain, where per-job taxpayer subsidies for so-called “green jobs” exceeds $1,000,000 per worker in some cases, wind-related jobs in Denmark on average are subsidized at a rate of 175 to 250 percent above the average pay per worker. All told, each new wind job created by the government costs Danish taxpayers between 600,000-900,000 krone a year, roughly equivalent to $90,000-$140,000 USD.

“That the current political leadership in Washington is enamored of the European energy model has been made abundantly clear — from the president himself, all the way on down,” added Pyle. “Less clear is the extent to which these people actually know what’s taking place over there, and whether they’re willing to level with the American people about the serious costs associated with following this dubious path.”

On Tuesday, report co-author Hugh Sharman will join CEPOS chief executive officer Martin Agerup in Washington, D.C., part of a three-day tour (Tues-Thurs) aimed at explaining to a wider American audience the core conclusions of their report. Those interested in speaking with Messrs. Sharman and/or Agerup or setting up an interview should contact Patrick Creighton (202.621.2947) or Chris Tucker (202.346.8825).

Tuesday, July 28, 2009

Germany and the U.K. resist France and the U.S. on green tariffs

Resisting Green Tariffs. WSJ Editorial
Germany and the U.K. resist France and the U.S. on green tariffs.
WSJ, Jul 28, 2009

One of the most dangerous but least reported undercurrents of the global-warming movement is trade protectionism. Now some politicians in Europe are beginning to push back, and we’re delighted to see it.

A carbon tariff has been popular on the intellectual left for some time, as a way to sell heavy new energy taxes to Western voters worried that their jobs will get shipped to countries that don’t also punish carbon use. The U.S. House of Representatives wrote a tariff provision into its recent cap-and-tax bill, rolling over the muted objections of President Obama. Coming from the world’s largest economy and ostensible free-trade leader, the bill is an invitation to the world’s protectionists to camouflage their self-interest in claims of green virtue.

French President Nicolas Sarkozy—a mercantalist in the best of times—escalated the threat last month by suggesting import duties to “level the playing field” with countries that oppose binding greenhouse-gas targets at December’s United Nations climate talks in Copenhagen. Just what a world trying to rebound from recession needs: beggar-thy-neighbor environmentalism.

Now other leaders are beginning to recognize and speak up about the peril. With typical British understatement, U.K. Secretary of State for Energy and Climate Change Ed Miliband said Saturday his government was “skeptical” about the French proposal for carbon tariffs. Germany’s Deputy Environment Minister Matthias Machnig was even more forthright on Friday, branding the exercise as “eco-imperialism” for attempting to punish countries that don’t follow these green dictates. “We are closing our markets for their products, and I don’t think this is a very helpful signal for the international negotiations,” he added. Both statements are notable coming as they do from parties on the political left.

Berlin’s criticism is especially important. Germany has been at the forefront of Europe’s eco-movement from the start, enriching the French language with such words as “le Waldsterben,” a German compound meaning “forest death.” The idea of the man-made destruction of Europe’s trees was the great green scare of the 1970s and 1980s. The forests are still with us, and scientists now believe that the tree decline was as much due to natural phenomena as to “acid rain.” That episode is a lesson in the need for skepticism about proposals that would do tangible economic harm in the heat of environmental manias.

A climate tariff would be damaging even on its own green terms. To the extent it reduced global trade, carbon protectionism would slow the rise in income that we know from the last half century has been crucial to antipollution progress. The richer people are, the more of their income they are willing to devote to cleaner air and water. Several hundred million people have risen from poverty in the last generation thanks to expanding trade, and the world doesn’t need a reversal thanks to old-fashioned protectionism dressed in green drag.

India Picks Economic Growth Over Carbon Dioxide Caps

India Picks Economic Growth Over Carbon Dioxide Caps
IER, July 27, 2009

The Obama Administration and European governments continue to lobby developing countries, such as India and China, to reduce their carbon dioxide emissions. But India and China reject these calls because they understand that artificial restrictions on carbon dioxide emissions will harm their economies.

During her recent visit, India’s Environment Minister reminded Secretary of State Hillary Clinton that India would not accept caps on their carbon dioxide emissions. According to the Washington Post:

But the clash between developed and developing countries over climate change intruded on the high-profile photo opportunity midway through Clinton’s three-day tour of India. Indian Environment Minister Jairam Ramesh complained about U.S. pressure to cut a worldwide deal, and Clinton countered that the Obama administration’s push for a binding agreement would not sacrifice India’s economic growth.

As dozens of cameras recorded the scene, Ramesh declared that India would not commit to a deal that would require it to meet targets to reduce emissions. “It is not true that India is running away from mitigation,” he said. But “India’s position, let me be clear, is that we are simply not in the position to take legally binding emissions targets.” [emphasis added]

It is refreshing to see that at least some government officials—though not from this country – understand that when you take options away from businesses, you reduce economic activity. If it were really true, as Secretary of State Clinton alleges, that reducing emissions will actually spur job creation and economic growth, then why would the government need to force its plan on the private sector? (See video.)

Furthermore, why stop with caps on carbon dioxide emissions? Why not impose a cap-and-trade plan on the use of steel? All those businesses currently using steel as an input would then have to scramble to find higher-priced substitutes, and this would create jobs in the plastics industries.

Of course the above “logic” is nonsense. Steadily shrinking the cap on permissible emissions will hamper U.S. economic growth and because businesses will be forced to switch to lower-carbon-intensive techniques than they otherwise would have chosen, their output will be lower and the productivity of labor will fall. That is, of course, the intent of the proponents of cap and trade plans including the Waxman-Markey bill that recently passed in the House of Representatives. The so-called “green jobs” created in some sectors, such as wind turbines and solar panels, will be counterbalanced by job destruction in other sectors that rely on fossil fuels and inexpensive energy.

Indian officials have it exactly right: They are being asked to sacrifice the welfare of their own citizens by Western leaders whose countries were built on a foundation of abundant energy.
India’s declaration also undermines the entire rationale for the Waxman-Markey bill. Taken in isolation, some experts contend that the Waxman-Markey caps on U.S. emissions will have virtually no impact on the trajectory of global warming, even taking the standard climate models at face value. Even the most outspoken scientists on global warming agree that unilateral American efforts are pointless, without similar targets being adopted by the developing world.

Proponents of cap and trade have justified its economically crippling, yet environmentally irrelevant, constraints on the U.S. by saying it will provide American negotiators with moral authority when seeking worldwide restrictions on industry. The idea is that we need to impose limits on the U.S. economy before other governments will agree to shackle their own economies in turn.

India, rightly so, has just declared that it will do no such thing. Let us hope that our leaders see the flaws in their logic and reverse course on this job-killing cap and trade plan before it is too late.

Wednesday, July 8, 2009

The economic reality of climate-change policy is sinking in at last in Europe

European Hot Air. WSJ Editorial
The economic reality of climate-change policy is sinking in at last.
WSJ, Jul 08, 2009

Climate change is set to figure prominently in this week's Group of Eight summit in Italy, but take any pronouncements about greenhouse-gas emissions targets with a grain of salt. While leaders may still think it's good politics to sing from the green hymnal, other realities are finally starting to sink in, especially in Old Europe. To wit: Restrictions on greenhouse-gas emissions involve huge costs for uncertain gains and are just what economies in recession don't need.

Concerns about high costs and lost jobs have already threatened carbon-emissions control plans in Australia and New Zealand, and to make sure cap-and-trade would pass in the U.S. House of Representatives, supporters had to push through the legislation before anyone could read it. The fraying of the anti-carbon consensus in Western Europe is especially striking. Polls consistently show that voters in most Western European countries support attempts to ameliorate climate change, at least in the abstract. The EU implemented a cap-and-trade Emissions Trading Scheme in 2005.

But that enthusiasm may be reaching its limit. Governments in industry-heavy countries are now less willing to sacrifice jobs for cooler temperatures. Germany's generally environmentalist Chancellor Angela Merkel insisted on exemptions for her country's industry from December's EU climate package, which pledged to reduce carbon emissions by 20% below 1990 levels by 2020. Germany also plans to build several dozen coal-fired power plants in the next few years.

Italy insisted on a clause in the December climate deal that requires the EU to renegotiate its climate policy after the United Nations summit in Copenhagen later this year. That amounts to a veto since China and India aren't expected to sign up for aggressive emissions targets; any renegotiated EU deal is likely to contain even more loopholes and exemptions to keep from denting European competitiveness.

Just as telling, Europe has been at best half-hearted in meeting its emissions-reduction targets under the 1997 Kyoto Protocol. To the extent Europe appears on track to meet its targets, it's largely because warmer weather and higher market prices for energy have driven consumption down.

Credit a deteriorating economy for this about-face. Businesses and unions finally are starting to speak out against intrusive and expensive emissions regulations. In December, Phillipe Varin, chief executive of Corus, Europe's second-largest steel producer, told the London Independent that the cost of carbon credits and new technologies needed to reduce emissions would destroy European steel production, forcing manufacturing overseas.

Jaroslaw Grzesik, deputy head of energy at Poland's Solidarity trade union said last month that the union estimated the EU's climate policy would cost 800,000 European jobs. Before the December negotiations, the London-based think tank Open Europe estimated the EU climate package would cost governments, businesses and householders in the EU-25 more than €73 billion ($102 billion) a year until 2020. No wonder leaders decided to water it down.

Meanwhile, the supposed economic benefits of climate-change amelioration are evaporating. In Germany, government subsidies for installing solar panels -- and, it was presumed, thereby creating domestic manufacturing jobs -- backfired when it turned out that it was cheaper to make solar panels in China. A recent paper by Gabriel Calzada Álvarez, an economics professor at Universidad Rey Juan Carlos, said that since Spain starting investing in "green jobs" policies in 2000, the country has lost 110,500 jobs in other parts of the economy. That amounts to 2.2 jobs lost for every new "green job" created.

This has politicians worried. They might have been willing to sacrifice a few jobs when they signed Kyoto in 1997. But economic times were flush then. Now a global slowdown is forcing a rethink on whether emissions control is worth the cost. With the scientific debate about the causes, effects and solutions of climate change growing more vigorous, that's a question worth asking.

Despite all the backtracking in practice, climate rhetoric is still alive and well. Sweden, which assumed the EU presidency last week, promises more action on emissions control. Gordon Brown, Nicolas Sarkozy and other leaders continue to talk a good game. Mr. Brown has even proposed a $100 billion-a-year fund to help countries like China and India clean up their emissions acts. Good luck getting that passed in the current fiscal and economic environment.

In other words, Western European leaders are the latest to discover that climate-change talk is cheap, but carbon-emissions regulation is expensive. That might be bad news for green activists, but it's very good news for Europeans worried about their jobs and their economy.

Tuesday, July 7, 2009

Ethanol and biofuels get 190 times as much subsidies as natural gas and petroleum liquids

So Much for 'Energy Independence.' By ROBERT BRYCE
The Wall Street Journal, Jul 07, 2009, p A15

Whenever you read about ethanol, remember these numbers: 98 and 190.

They offer an essential insight into U.S. energy politics and the debate over cap-and-trade legislation that recently passed the House. Here is what the numbers mean: The U.S. gets about 98 times as much energy from natural gas and oil as it does from ethanol and biofuels. And measured on a per-unit-of-energy basis, Congress lavishes ethanol and biofuels with subsidies that are 190 times as large as those given to oil and gas.

Those numbers come from an April 2008 report by the Energy Information Administration: "Federal Financial Interventions and Subsidies in Energy Markets 2007." Table ES6 lists domestic energy sources that get subsidies. In 2007, the U.S. consumed nearly 55.8 quadrillion British Thermal Units (BTUs), or about 9.6 billion barrels of oil equivalent, in natural gas and oil. That's about 98 times as much energy as the U.S. consumed in ethanol and biofuels, which totaled 98 million barrels of oil equivalent.

Meanwhile, ethanol and biofuels are getting subsidies of $5.72 per million BTU. That's 190 times as much as natural gas and petroleum liquids, which get subsidies of $0.03 per million BTU.
The report also shows that the ethanol and biofuels industry are more heavily subsidized -- in total dollar terms -- than the oil and gas industry. In 2007, the ethanol and biofuels industries got $3.25 billion in subsidies. The oil and gas industry got $1.92 billion.

Despite these subsidies, the ethanol lobby is queuing up for more favors. And they are doing so at the very same time that the Obama administration and Congress are pushing to eliminate the relatively modest subsidies for domestic oil and gas producers. Democrats want to cut drilling subsidies while simultaneously trumpeting their desire for "energy independence."

The cap-and-trade bill passed by the House aims to "create energy jobs" and "achieve energy independence." Meanwhile, Democrats are calling to eliminate drilling subsidies that have encouraged advances in technology that have opened up vast new U.S. energy sources. These advances have made it profitable to extract natural gas from the Barnett Shale deposit in Texas and the Marcellus in Pennsylvania -- deposits once thought too expensive to tap.

President Barack Obama's 2010 budget calls for the elimination of two tax breaks: the expensing of "intangible drilling costs" (such as wages, fuel and pipe), which allows energy companies to deduct the bulk of their expenses for drilling new wells; and the allowance for percentage depletion, which allows well owners to deduct a portion of the value of the production from their wells. Those breaks provide the bulk of the $1.92 billion in oil and gas subsidies.

In May, Mr. Obama called the tax breaks for the oil and gas industry "unjustifiable loopholes" that do "little to incentivize production or reduce energy prices."

That's flat not true. The deduction for intangible drilling costs encourages energy companies to plow huge amounts of capital into more drilling. And that drilling has resulted in unprecedented increases in natural gas production and potential.

An April Department of Energy report estimated that the newly available shale resources total 649 trillion cubic feet of gas. That's the energy equivalent of 118.3 billion barrels of oil, or slightly more than the proven oil reserves of Iraq.

Eliminating the tax breaks for drilling will make natural gas more expensive. Tudor, Pickering, Holt & Co., a Houston-based investment-banking firm, estimates that eliminating the intangible drilling cost provision could increase U.S. natural gas prices by 50 cents per thousand cubic feet. Why? Because without the tax break, fewer wells will be drilled and less gas will be produced. The U.S. consumes about 23 trillion cubic feet of gas per year. Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.

Amid all this, Growth Energy, an ethanol industry front-group, is pushing the Environmental Protection Agency to adopt a proposal that would increase the amount of ethanol blended into gasoline from the current maximum of 10% to as much as 15%.

That increase would be a gift to corn ethanol producers who have never been able to make a go of it despite decades of federal subsidies and mandates. Growth Energy is also pushing the change even though only about seven million of the 250 million motor vehicles now on U.S. roads are designed to run on fuel containing more than 10% ethanol.

There is plenty of evidence to suggest that gasoline with 10% ethanol is already doing real harm. In January, Toyota announced that it was recalling 214,570 Lexus vehicles. The reason: The company found that "ethanol fuels with a low moisture content will corrode the internal surface of the fuel rails." (The rails carry fuel to the engine injectors.) Furthermore, there have been numerous media reports that ethanol-blended gasoline is fouling engines in lawn mowers, weed whackers and boats.

Lawyers in Florida have already sued a group of oil companies for damage allegedly done to boat fuel tanks and engines from ethanol fuel. They are claiming that consumers should be warned about the risk of using the fuel in their boats.

There is also corn ethanol's effect on food prices. Over the past two years at least a dozen studies have linked subsidies that have increased the production of corn ethanol with higher food prices.

Mr. Obama has been pro-ethanol and anti-oil for years. But he and his allies on Capitol Hill should understand that removing drilling incentives will mean less drilling, which will mean less domestic production and more imports of both oil and natural gas.
That's hardly a recipe for "energy independence."

Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'" (PublicAffairs, 2008).

Monday, July 6, 2009

Pay More, Drive Less, Save the Planet

Pay More, Drive Less, Save the Planet. By GABRIEL ROTH
To fight climate change, Washington wants you to take a bus.
The Wall Street Journal, Jul 06, 2009, p A11

What is the appropriate response to Secretary of Transportation Ray LaHood, who as General Motors prepared to file for Chapter 11 bankruptcy protection declared that he wants to "coerce people out of their cars"? One might be inclined to dismiss these words as overkill -- except for recently introduced legislation by some congressional heavy-hitters that would take us down this road.

First there was the "Federal Surface Transportation Policy and Planning Act of 2009," introduced in May by Jay Rockefeller (D., W.Va.), chairman of the Senate Committee on Commerce, Science and Transportation, and Frank Lautenberg (D., N.J.), chairman of the Subcommittee on Surface Transportation. Next, in June, came the "Surface Transportation Authorization Act of 2009," introduced by James Oberstar (D., Minn.), chairman of the House Committee on Transportation and Infrastructure.

Messrs. Rockefeller and Lautenberg aim to "reduce per capita motor vehicle miles traveled on an annual basis." Mr. Oberstar wants to establish a federal "Office of Livability" to ensure that "States and metropolitan areas achieve progress towards national transportation-related greenhouse gas emissions reduction goals."

What does this mean? Most travel is not for its own sake. So reducing the total miles traveled -- whether the length or number of trips -- means people would have to reduce the activities they want and need to do. People would be "coerced," in effect, to live in less desirable places or work in less desirable jobs; shop in fewer and closer stores; see their doctor less frequently; visit fewer family members and friends.

There are three likely ways this could work. The cost of travel could be increased by raising the prices of vehicles or fuel; travel time could be increased by not expanding the highway system; or superior alternatives to the private car could be developed. The most likely way to increase the cost of travel would be by increasing fuel taxes perhaps to as much as $4 per gallon, as some have suggested.

Allowing congestion to increase travel times would be politically easier. In the name of "multimodal planning," for example, road-use taxes could be diverted, as Messrs. Rockefeller and Lautenberg suggest, to "increase the total usage of public transportation." But public transportation (where it's available) typically takes twice as long as automobile travel, so it's not practical for many Americans.

Moreover, public transportation (passenger rail services, subways, buses, light rail) requires heavy subsidies, while roads mostly pay for themselves through fuel taxes. Our roads would be even more self-sustaining if 20% of the federal fuel tax were not already diverted to public transit from the federal Highway Trust Fund. Messrs. Rockefeller, Lautenberg and Oberstar want to grab even more money from the trust fund.

Americans have always valued their independence and mobility. One way to reassert their rights would be to abolish the misnamed Highway Trust Fund, which finances highway construction and maintenance. Let the states decide what roads they need and how to finance them. The present system expires on Sept. 30 unless Congress reauthorizes it. Let it die.
Sen. Kay Bailey Hutchison (R., Texas) has in this regard introduced the "Highway Fairness and Reform Act of 2009," which would explicitly allow states to opt out of the federal financing system. A companion bill has been introduced in the House.

If a significant number of states opted out of the federal system, it would collapse and responsibility for roads would revert to the states. The vast majority of road users would benefit from such a change. And, if "livability" standards were deemed desirable, local preferences would determine them, rather than federal "greenhouse gas emissions reduction goals."

Mr. Roth is a research fellow at The Independent Institute and editor of "Street Smart: Competition, Entrepreneurship and the Future of Roads" (Transaction, 2006).

Thursday, July 2, 2009

Tilting at Windmill Jobs: The 'stimulus' promised a jobless peak of 8%; it's now 9.5%

Tilting at Windmill Jobs. WSJ Editorial
The 'stimulus' promised a jobless peak of 8%; it's now 9.5%.
The Wall Street Journal, Jul 03, 2009, p A12

About the best we can say about yesterday's June jobs report is that employment is usually a lagging economic indicator. At least we hope it is, because the loss of 467,000 jobs for the month is one more sign that the economy still hasn't hit bottom despite months of epic fiscal and monetary reflation.

The report is in many ways even uglier than the headline numbers. Average hours worked per week dropped to 33, the lowest level in at least 40 years. This means that millions of full-time workers are being downgraded to part-time, as businesses slash labor costs to remain above water. Because people are working less, wages have fallen by 0.3% this year. Factories are operating at only 65% capacity, while the overall jobless rate hit 9.5%. Throw in discouraged workers who want full-time work, and the labor underutilization rate climbed to 16.5%.

The news is even worse for young people, with nearly one in four teenagers unemployed. Congress has scheduled an increase in the minimum wage later this month, which will price even more of these unskilled youths out of a vital start on the career ladder. One useful policy response would be for Congress to rescind the wage hike to $7.25 an hour (from $6.55) that is scheduled for July 24. But the union economic model that now dominates Washington holds that wages only matter for those who already have jobs. The jobs that are never created don't count.

The goods producing sector -- Americans who make things -- shed 223,000 more jobs last month. Asked about these job losses by the Associated Press yesterday, President Obama said Congress should pass his cap-and-tax on carbon energy because "If we're weatherizing every building and home in America, if we are creating windmills and solar panels and biofuel facilities, that is a huge promising area not only for jobs here in the United States, but also for export growth." But even under the most optimistic scenario, not every hard-hat worker in America can make windmill blades and solar panels. With manufacturing on its back, enacting a new energy tax to drive more jobs offshore is crazy even on Keynesian grounds.

Of course, the economy can't keep falling forever, and most forecasters still see a recovery starting this year. The decline in manufacturing slowed last month and housing sales have picked up -- both positive leading indicators. The plunge in inventories means industrial production and durable goods orders are bound to increase. Consumers are also spending more again, albeit with more caution than if gasoline hadn't increased by $1 a gallon in recent months and if they felt more confident about their job security.

The real question is how strong and sustained any expansion will be. If the "stimulus" were working as advertised, it ought to be very strong. Washington has thrown trillions of dollars at this recession, including that famous $787 billion in more spending that was supposed to yield $1.50 in growth for every $1 spent. This followed the $168 billion or so stimulus that George W. Bush and Nancy Pelosi promised in February 2008 would prevent a recession. The jobless rate that month was 4.8%.

Most of this government spending has gone to transfer payments -- Medicaid, jobless benefits and the like -- that do nothing for jobs or growth. The spending that might create jobs -- on roads, say -- is dribbling out with typical government efficiency. Meanwhile, the money for all of this has to come from somewhere, and Democrats are already saying it will require big (unstimulating) tax increases in 2011, and perhaps sooner.

The Administration argues that the recession would be worse without the stimulus, which is impossible to disprove. However, it's worth recalling that Mr. Obama's economists predicted late last year that the stimulus would keep the jobless rate from exceeding 8%. That was a percentage point and a half ago. It's far more likely that the economy would have been better off without the spending, and the higher taxes and debt financing that it implies.

As always, a sustained expansion and job creation must come from private investment and risk-taking. Yet as America's entrepreneurs look at Washington they see uncertainty and higher costs from a $1 trillion health-care bill; higher energy costs from the cap-and-tax bill that just passed the House (see below); new restraints on consumer lending in the financial reform bill; new tariffs and threats of trade protection; limits on compensation and banker baiting; and the possibility of easier unionization, among numerous other Congressional brainstorms.

None of this inspires "animal spirits." The best thing Mr. Obama could do to create jobs would be to declare he's dropping all of this and starting over.