Archive for the ‘Energy and Environment’ Category
Kerry and Lieberman Unveil Their Climate Bill: Such a Deal!
I see that my colleague Sallie James has already blogged on the inherent protectionism in the Senate’s long-awaited cap-and-tax bill. A summary was leaked last night by The Hill.
Well, we now have the real “discussion draft” of “The American Power Act” [APA], sponsored by John Kerry (D-NH) and Joe Lieberman (I-CT). Lindsay Graham (R-SC) used to be on the earlier drafts, but excused himself to have a temper tantrum.
So, while Sallie talked about the trade aspects of the bill, I’d like to blather about the mechanics, costs, and climate effects. If you don’t want to read the excruciating details, stop here and note that it mandates the impossible, will not produce any meaningful reduction of planetary warming, and it will subsidize just about every form of power that is too inefficient to compete today.
Senate Climate Bill Trade FAIL
The Kerry-Lieberman-Graham (is he still part of these efforts?) climate bill summary has been leaked. I’m sure my colleague Pat Michaels will weigh in on its contents soon, but in the meantime I thought I would comment on the trade-related aspects of the bill, or at least the summary that is now in the public domain.
As Scott Lincicome points out, the drafters have gone to great pains to emphasize that this bill is, like, totally about saving the environment. (Which, by the way, is a bit of a turnaround). I’ve blogged before about why advocates of “border adjustment measures” need to be careful about the justification they offer. In short, the World Trade Organization does not look too kindly upon disguised protectionism, and any legal challengers would probably use things like, say, press releases touting the (traditional) protective benefits of carbon tariffs as evidence of U.S. wrongdoing. The House bill fell short in that regard, with lots of talk about equalizing costs etc, and apparently the sponsors of the Senate bill have learned from warnings from trade experts. Not completely, though. Here’s Scott on their efforts to be more careful, and why they fall short:
The bill’s short summary (available here) also follows [a] new “green” road-map…:
In order to protect the environmental goals of the bill, we phase in a WTO-consistent border adjustment mechanism. In the event that no global agreement on climate change is reached, the bill requires imports from countries that have not taken action to limit emissions to pay a comparable amount at the border to avoid carbon leakage and ensure we are able to achieve our environmental objectives.
You couldn’t shoehorn more “environmental” references into this summary if you tried. Only one small problem: this strictly “environmental” summary falls clearly under the main heading “Expanding America’s Manufacturing Base,” and the long summary of Sections 775-777 above comes under the main heading “Subtitle A – Protecting American Manufacturing Jobs and Preventing Carbon Leakage.” So did the Senate drafters really just take all that time purging all of the scary “competitiveness” language from their new bill’s carbon tariffs provisions, only to keep them under a legislative subtitle that expressly denotes provisions dealing with domestic industrial competitiveness?
Scott’s right, but I found the heading in the bill’s long summary even more blatant: Title IV, under which the international provisions are explained, is called “Job Protection and Growth”. Call me overly cautious, but I don’t think having the phrase “job protection” as the first words in the title on border measures is a good way to hide your intent from the WTO or, for that matter, your increasingly-fractious trade partners.
Of Butterflies, Tsunamis, and Draconian Recusal Standards
Last October, I blogged about Comer v. Murphy Oil USA, a lawsuit in Mississippi alleging that the defendant oil, coal, utility, and chemical companies emit carbon dioxide, which causes global warming, which exacerbated Hurricane Katrina, which damaged the plaintiffs’ property. Mass tort litigation specialist Russell Jackson called the case “the litigator’s equivalent to the game ‘Six Degrees of Kevin Bacon.’” In a brief that Cato was due to file this week, I framed the operative question as, “When a butterfly flaps its wings, can it be sued for the damage any subsequent tsunami causes?”
The plaintiffs asserted a variety of theories under Mississippi common law, but the main issue at this stage was whether the plaintiffs had standing, or whether they could demonstrate that their injuries were “fairly traceable” to the defendants’ actions. The federal district court dismissed the case but a dream panel (for the plaintiffs) of the Fifth Circuit Court of Appeals held that the plaintiffs could indeed proceed with claims regarding public and private nuisance, trespass, and negligence.
In my blog post, I predicted that the Fifth Circuit would take up the case en banc (meaning before all the judges on the court, in this case 17) and reverse the panel. And this was all set to happen — even though eight judges recused themselves, presumably because they owned shares of defendant companies – with en banc argument slated for May 24. I was planning to head down to New Orleans for it, in part because the judge I clerked for, E. Grady Jolly, was going to preside over the hearing (the only two more senior active judges being recused).
But a funny thing happened on the way to legal sanity. On Friday, not half an hour after I had finished editing Cato’s brief, the court clerk issued a notice informing the parties that one more judge had recused and, therefore, the en banc court lacked a quorum. As of this writing, I still don’t know who this judge is and what circumstances had changed since the granting of the en banc rehearing to cause the recusal. And indeed, by all accounts the Fifth Circuit is still figuring out what to do in this unusual (and, as far as I know, unprecedented) situation where a court loses a quorum it initially had — having already vacated the panel decision.
In short, the court could decide that the vacatur stands and either remand to a (now-confused) district court or rehear the case in a new random panel assignment. More likely, however, the court will now reinstate the terrible, horrible, no good, very bad panel decision — and we’ll tweak our brief to make into one that supports the defendants’ inevitable cert petition.
All in all, an illustration of the absurdity both of litigating climate change politics in the courts and of forcing judges (including Supreme Court justices) to withdraw from cases for owning a few hundred dollars’ worth of stock. If that’s all it takes to corrupt federal judges, we have bigger problems than trial lawyers run amok!
Why the Neo-Malthusian Worldview Fails the Reality Check
Why does the Neo-Malthusians’ dystopian worldview — that human and environmental well-being will suffer with increases in population, affluence and technological change — fail the reality check? Why has human well-being improved in the Age of Industrialization despite order-of-magnitude increases in the consumption of materials, fossil fuel energy and chemicals?
I offer some reasons in the last of a series of posts (1, 2, 3, 4) at MasterResource.
I note that although population, affluence and technology can create some problems for humanity and the planet, they are also the agents for solving those problems. In particular, human capital and greater affluence have helped the development and adoption of new and improved technologies, which empirical data show have reduced risks faster than the new risks that may have been created — hence the continual improvement in human well-being in the era of modern economic growth.
A corollary to this is that projections of future impacts spanning a few decades, but that do not account for technological change as a function of time and affluence, more likely than not will overestimate impacts, perhaps by orders of magnitude. In fact, this is one reason why many estimates of the future impacts of climate change are suspect, because most do not account for changes in adaptive capacity either due to secular technological change or increases in economic development.
Yogi Berra is supposed to have said, “It’s tough to make predictions, especially about the future.” Most analysts recognize this. They know that just because one can explain and hindcast the past, it does not guarantee that one can forecast the future. Neo-Malthusians, by contrast, cannot hindcast the past but are confident they can forecast the future.
Finally, had the solutions that Neo-Malthusians espouse been put into effect a couple of centuries ago, most of us alive today would be dead and those who were not would be living poorer, shorter, and unhealthier lives, constantly subject to the vagaries of nature, surviving from harvest to harvest, spending more of our time in darkness because lighting would be a luxury, and spending more of our days in the drudgery of menial tasks because, under their skewed application of the precautionary principle (see here, here and here), fossil fuel consumption would be severely curtailed, if not banned.
Nor would the rest of nature necessarily be better off. First, lower reliance on fossil fuels would mean greater demand for fuelwood, and the forests would be denuded. Second, less fossil fuels also means less fertilizer and pesticides and, therefore, lower agricultural productivity. To compensate for lost productivity, more habitat would need to be converted to agricultural uses. But habitat conversion (including deforestation) — not climate change — is already the greatest threat to biodiversity!
Read the whole post here.
U.S. Well-Being in the Age of Fossil Fuels
Elsewhere, I have shown data that, notwithstanding the Neo-Malthusian worldview, human well-being has advanced globally since the start of industrialization more than two centuries ago, despite massive increases in population, consumption, affluence, and carbon dioxide emissions. Here I will focus on long-term trends in U.S. well-being, as measured by the average life expectancy at birth, in the age of fossil fuels.
Since 1900, the U.S. population has quadrupled, affluence has septupled, GDP has increased 30-fold, synthetic organic chemical use has increased 85-fold, metals use 14-fold, material use 25-fold, and CO2 emissions 8-fold. Yet life expectancy advanced from 47 to 78 years.
During the same period, emissions of air pollution waxed and waned. Food and water got safer, as indicated by the virtual elimination of deaths from gastrointestinal (GI) diseases between 1900 and 1970. Cropland, a measure of habitat converted to human uses — the single most important pressure on species, ecosystems, and biodiversity — was more or less unchanged from 1910 onward despite the increase in food demand.
For the most part, life expectancy grew more or less steadily for the United States, except for a brief plunge at the end of the World War I, accentuated by the 1918–1920 Spanish flu epidemic. As in the rest of the world, today’s U.S. population not only lives longer, it is also healthier. The disability rate for seniors declined 28 percent between 1982 and 2004/2005 and, despite quantum improvements in diagnostic tools, major diseases (e.g., cancer, and heart and respiratory diseases) now occur 8–11 years later than a century ago.
The reductions in rates of deaths and diseases since at least 1900 in the United States, despite increased population, energy, and material and chemical use, belie the Neo-Malthusian worldview. The improvements in the human condition can be ascribed to broad dissemination (through education, public health systems, trade and commerce) of numerous new and improved technologies in agriculture, health and medicine supplemented through various ingenious advances in communications, information technology and other energy powered technologies (see here for additional details). The continual increase in life expectancy accompanied by the decline in disease indicates that new technologies reduced risks by a greater amount than any risks that they may have created or exacerbated due to pollutants associated with greater consumption of materials, chemicals and energy,
And this is one reason why the Neo-Malthusian vision comes up short. It dwells on the increases in risk that new technologies may create or aggravate but overlooks the larger — and usually more certain — risks that they would also eliminate or reduce. In other words, it focuses on the pixels, but misses the larger picture, despite pretensions to a holistic worldview.
It was this mindset — legitimized as the “precautionary principle” — that led, for instance, to the premature reduction in DDT usage even in areas where malaria was endemic and could be reduced through its use.
Read the more detailed post, with figures, here.
A Reality Check for Neo-Malthusians
Neo-Malthusians bemoan population growth and view economic, technological, and fossil fuel development as inventions of the Devil. Yet between 1750 and 2007, despite an octupling of global population, and increases in affluence by an order of magnitude and CO2 emissions by three orders of magnitude, the average global life expectancy at birth — the single most important indicator for human well-being — more than doubled from 26 years to 69 years.
Not only are we living longer, we are also living healthier.
Read more here.
Return of the Neo-Malthusians
This Earth Day we heard various commentators bemoan the growth in population, consumption, and carbon emissions driven by fossil fueled technologies. Once again we are told that this is unsustainable, that we are running out of resources, prices are inevitably headed up, and, worse, such consumption reduces both environmetal and human well-being. In this worldview, industrialization and economic development were fashioned in the Devil’s crucible, and that de-industrialization and de-development will be our saviour.
I have started a series of posts at Master Resources that compares the above Neo-Malthusian view of industrialization, economic growth, and technological change against empirical data on human well-being from the age of industrialization. The first post revisits the bet made in 1980 by Julian Simon and Paul Ehrlich on the direction of commodity prices, and examines long term trends in the prices and affordability of various commodities. Specifically, for metals, I look at trends going back to 1800, while for food I examine trends from 1900 onward. Parts II and III will compare long term trends in population, consumption, economic development, and carbon emissions against trends in human well-being for the world (from 1750 onward) and the United States (from 1900 onward). Finally, Part IV will provide an explanation as to why empirical data is at odds with the Neo-Malthusian worldview.
Part I, which examines the Simon-Ehrlich Bet in the context of long term trends in the prices and affordability of various commodities, is here.
Oil Import Make Believe
A conversation with documentarian Robert Stone regarding Earth Day is featured today in The New York Times’s “Dot Earth” online column. In the course of his conversation with the Times’s Andrew Revkin, Mr. Stone — who is quite alarmed about our reliance on foreign oil — asks: “How many Americans know that we send about $800 billion to the Middle East every year for oil?”
Hopefully, not many. According to the U.S. Department of Commerce, the U.S. spent $95.4 billion on crude oil imports from OPEC sources in 2009. But not all OPEC members are from the Middle East. That $95.4 billion includes dollars spent on oil originating from Algeria ($6.3 billion), Angola ($9 billion), Ecuador ($3.4 billion), Nigeria ($17.7 billion), and Venezuela ($23.4 billion) – none of which are in the Middle East. Subtract out that oil and we arrive at $35.6 billion spent on Middle Eastern crude oil (a figure rounded from the original nominal counts. I have used the customs value – that is, the estimated value — of the oil being imported rather than the figures that include additional costs for insurance and transportation because money being spent on insurance and shipping goes to third parties that are not for the most part located in the Middle East. But if one wants to use those slightly higher figures, it won’t change the numbers very much at all).
For what it’s worth, the total amount of dollars Americans sent abroad for crude oil from all sources was $188.5 billion last year.
Even if the figure were $800 billion, so what? No one is forcing refineries to buy crude oil from foreign suppliers. They presumably believe that the oil at issue is more valuable than the money that must be offered to secure said oil and that oil from other sources is more expensive than oil from the Middle East. Hence, they buy. This is by definition a wealth creating transaction for American business enterprises. Foreign trade, Mr. Stone, is a good thing.
The implicit claim, of course, is that there are negative externalities associated with foreign oil consumption. This, however, is faith masquerading as fact (an argument also well made by Cato adjunct scholar Richard Gordon).
Regardless, Mr. Stone overstates the alleged problem by orders of magnitude.
Earth Day Links
Today is the 40th anniversary of Earth Day, a time to highlight and discuss ways to work toward a cleaner planet. Cato’s energy and environment research promotes policies that would help protect the environment without sacrificing economic liberty, goals that are mutually supporting, not mutually exclusive.
- Why we should thank capitalism for environmental gains: “It is businessmen — not bureaucrats or environmental activists — who deserve most of the credit for the environmental gains over the past century and who represent the best hope for a Greener tomorrow.”
- Finding the right balance: “Today, America’s environment is cleaner—and Earth Day has indeed helped ensure that. …We should renew our promise to keep the environment clean—without adding to human misery or stalling improvements in the human condition.”
- Want clean air? Try this.
- Is high-speed rail really an environmentally friendly alternative to driving and air travel? “Planners have predicted that a proposed line in Florida would use more energy and emit more of some pollutants than all of the cars it would take off the road.”
Ten Protectionist Senators Pay Lip-Service to International Trade Rules
Sen. Sherrod Brown (D, OH), along with eight other “usual suspects,” yesterday sent a letter to Senators John Kerry (D, MA), Joe Lieberman (I, CT) and Lindsey Graham (R, SC), outlining what’s necessary for their support of the latter’s climate green jobs bill (there seems to be some confusion about the precise purpose). The math, assuming that Republicans vote as a block to defeat the bill, requires that these senators’ demands be met if the Democrats are to overcome a filibuster and pass the bill.
So what exactly do they want? The main thrust of their demands seems to be for U.S. manufacturing’s competitiveness to be “addressed,” including by asking for the bill to “invest” (don’t you just love the way that word is used in the public policy context?) in retooling, R&D, and “support [for] American manufacturers of clean energy technology,” among other requirements.
Of course, no letter from these folks* would be complete without the obligatory calls for a “level playing field.” Their wish-list therefore also includes provisions to ”apply border measures to prevent carbon leakage”. That, my friends, is a clear reference to carbon tariffs. The senators explain their concerns as follows:
An automatically triggered border measure is necessary to promote comparable action from other countries and prevent carbon leakage. To avoid undermining the environmental objective of the climate legislation, a WTO-consistent border adjustment measure, which the WTO has recognized as a usable tool in combating climate change, should apply to imports from countries that do not have in place comparable greenhouse gas emissions reduction requirements to those adopted by the United States. A border adjustment measure is critical to ensuring that climate change legislation will be trade neutral and environmentally effective.
Much of these sentiments are familiar. Indeed, I have combatted some of the myths implicit in the statement, including why “carbon leakage” might be a bit of a red herring, in my paper from September 2009, “A Harsh Climate for Trade,” and at a Hill brief I gave on this topic last year.
Atomic Dreams
Last week I was on John Stossel’s (most excellent) new show on Fox Business News to discuss energy policy — in particular, popular myths that Republicans have about energy markets. One of the topics I touched upon was nuclear power. My argument was the same that I have offered in print: Nuclear power is a swell technology but, given the high construction costs associated with building nuclear reactors, it’s a technology that cannot compete in free markets without a massive amount of government support. If one believes in free markets, then one should look askance at such policies.
As expected, the atomic cult has taken offense.
Now, it is reasonable to argue that excessive regulatory oversight has driven up the cost of nuclear power and that a “better” regulatory regime would reduce costs. Perhaps. But I have yet to see any concrete accounting of exactly which regulations are “bad” along with associated price tags for the same. If anyone out there in Internet-land has access to a good, credible accounting like that, please, send it my way. But until I see something tangible, what we have here is assertion masquerading as fact.
Most of those who consider themselves “pro-nuke” are unaware of the fact that the current federal regulatory regime was thoroughly reformed in the late 1990s to comport with the industry’s model of what a “good” federal regulatory regime would look like. As Oliver Kingsley Jr., the President of Exelon Nuclear, put it in Senate testimony back in 2001:
The current regulatory environment has become more stable, timely, and predictable, and is an important contributor to improved performance of nuclear plants in the United States. This means that operators can focus more on achieving operational efficiencies and regulators can focus more on issues of safety significance. It is important to note that safety is being maintained and, in fact enhanced, as these benefits of regulatory reform are being realized. The Nuclear Regulatory Commission — and this Subcommittee — can claim a number of successes in their efforts to improve the nuclear regulatory environment. These include successful implementation of the NRC Reactor Oversight Process, the timely extension of operating licenses at Calvert Cliffs and Oconee, the establishment of a one-step licensing process for advanced reactors, the streamlining of the license transfer process, and the increased efficiency in processing licensing actions.
It’s certainly possible that the industry left some desirable reforms undone, but it seems relevant to me that the Nuclear Energy Institute — the trade association for the nuclear energy industry and a fervent supporter of all these government assistance programs — does not complain that they’re being unfairly hammered by costly red-tape.
For the most part, however, the push-back against the arguments I offered last week has little to do with this. It has to do with bias. According to a post by Rod Adams over at “Atomic Insights Blog,” I am guilty of ignoring subsidies doled-out to nuclear’s biggest competitor — natural gas — and because Cato gets money from Koch Industries, it’s clear that my convenient neglect of that matter is part of a corporate-funded attack on nuclear power. Indeed, Mr. Adams claims that he has unearthed a “smoking gun” with this observation.
Normally, I would ignore attacks like this. This particular post, however, offers the proverbial “teachable moment” that should not be allowed to go to waste.
Obama Knows the Drill
President Obama should be credited—albeit cautiously—for his announcement yesterday that he will open some U.S. coastal waters to offshore oil drilling. The fact that this is an interesting political reversal on Obama’s part has been treated extensively elsewhere. But what of the substance of the president’s drilling proposal?
I and other free-market advocates have spoken for years of the potential energy benefits of allowing this drilling, so I won’t devote too much space to repeating myself. The best encapsulation of my own thinking on the subject is this piece I wrote for the LA Times in 2008.
A few points worth adding:
Obama’s press conference at Andrews Air Force Base yesterday did indicate a welcome new direction for U.S. energy policy. But in an absolutely perfect world, the government would not be in the business of allocating scarce resources—in this case, the offshore oil fields—to competing user groups. The market would play that role.
Hence, the best policy would be to divest this land via auction and allow environmentalists, recreationalists and preservationists to compete with oil and gas companies for the rights to those resources.
It is not at all inconceivable to me that those opposed to drilling, whatever their reasons, might well out-bid extraction industries for rights to some of these fields. Unfortunately, there seems to be limited political support for privatization, so President Obama’s initiative is probably better than the status quo.
We need to remember, however, that if governments could intelligently allocate scarce resources across the economy without recourse to market information or institutions, then the North Korean economy would work swimmingly.
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