Climate Change Is Back On The Agenda

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 |  Includes: GAZ, OIL
by: Acting Man

The Silence is Broken…

We have previously remarked on the curious fact that global warming did not even rate a mention during the presidential debates, a first since the AGW hysteria began to gather steam in the early 1980s.

Something many readers may not be aware of: the first politician propagating the AGW theory and putting her weight behind it was actually Margaret Thatcher. At the time the theory was still in its infancy, some unknown climate tinkerer in Scandinavia had come up with it. Thatcher saw it as a gift that could help her in her struggle against Arthur Scargill and the UK coal mining unions. By portraying coal as a contributor to a dangerous climate trend, Scargill would lose the public's sympathies – this is how her calculation presumably went. We wonder if she had been so enthusiastic had she known what would become of this particular propaganda exercise. It sure has taken on a life of its own.

Anyway, now that president Obama has been reelected, he has suddenly rediscovered the topic of climate change.

Many politicians love the almost endless possibilities it offers to tax and regulate businesses and consumers alike. After all, who can possibly be against contributing a little something to save us from certain disaster? As you will see below, big business loves it too. The new taxes and regulations are yet another obstacle standing in the way of upstart competitors. Consumers and society as a whole are losing out, economic progress stalls, but rent seekers all over the show are growing fat and happy.

What 'We' Allegedly Want…

As Ezra Klein reports on the president's climate agenda in the Washington Post:

„We want our kids to grow up in an America… that isn’t threatened by the destructive power of a warming planet.” That was the president in his acceptance speech Tuesday night. Now that Obama has won reelection, apparently, he feels free to talk about climate change — a topic notably absent during the campaign. Now what does he actually plan to do about it?

An Obama second term could have fairly significant implications for energy and climate policy. Many of the bigger initiatives from his first term now won’t likely be repealed, from strict fuel-economy standards on automobiles to regulations on coal-fired power plants. And those could all have a modest effect on the America’s oil use, its energy mix — and ultimately its heat-trapping carbon emissions. Yet doing anything bigger on climate change will likely require working with a Republican Congress.“

(emphasis added)

We would comment here that what we really don't want is for our kids to grow up in a cooling world. Now that would certainly be a disaster of major proportions. However, there is nothing we could do about it. It seems actually highly likely that the world will eventually cool down again, as it has done regularly and repeatedly in the past following periods of warming. It also seems pretty certain that if the planet were to cool down by eight degrees Celsius or even more as has happened in the distant past, it won't be able to support seven billion plus people. Unless, that is, if capital accumulation has progressed to the point that all food can be profitably grown in greenhouses and everybody has a nicely insulated abode to live in. This is one of the reasons why one must be so careful about implementing policies that are certain to retard economic growth and capital accumulation.

The list of Obama's likely climate related initiatives Klein supplies in his article unfortunately indicates that the implementation of such policies is precisely what is going to happen.

Fuel Economy Standards

Stricter fuel-economy standards are here to stay.´In his acceptance speech, Obama promised to work with Congress on “freeing ourselves from foreign oil.” Yet his most ambitious move on this front won’t require Congress at all. His administration has already set new rules requiring new passenger vehicles sold in the United States to average 54.5 miles per gallon by 2025, up from 29 miles per gallon today.“

It should be pointed out here that every single president since the 1970s has promised to "free us from the dependence on foreign oil." This is simply economic nonsense. If oil can be produced competitively elsewhere, why should one not buy it? As it were, market forces and human ingenuity are already at work to reverse the decline in domestic U.S. oil output, which has been rising quite strongly of late – in fact, it has reached an 18-year high. And no, the government did "not build that."

(Click charts to enlarge)

Click to enlarge

Daily U.S. oil production in 1,000ds of bbl. – rising strongly to an 18 year high

Click to enlarge

Monthly domestic U.S. crude oil production

As the “Post Libertarian” blog wrote on the fuel efficiency standards and the way they were sold to the public (the entire post is well worth reading as it were):

“The Corporate Average Fuel Economy (NYSEARCA:CAFE) program always felt like an amusingly bureaucratic invention to me. First you have to quantify “average miles per gallon” for a single vehicle that varies significantly by highway or city and various driving conditions. Then you have to quantify that average across an entire manufacturer’s fleet (is it by number of vehicles sold? is it by number of models?). Additionally, a mandate based on miles per gallon is built on an assumption that the MPG is fairly constant regardless of trip length, but hybrid and electric vehicles break that assumption. Now you have to forcibly quantify into your old system a vehicle that uses no gas for X miles and then either uses Y mpg after that or can’t go anywhere at all. Finally, once you assume you can quantify everything satisfactorily, you build a new assumption that future technology will be able to meet an arbitrary number sometime in the future.

Another suspicious aspect about the mandates is that most of the major auto manufacturers “welcomed the standards.” Industry support for regulation is often used as proof that the regulation is good, but if you’re familiar with economics you know that established big businesses tend to support regulation because it increases costs they can handle while raising barriers to entry that protect them from new competition, which ultimately hurts consumers with higher costs and less innovation.

They say these mandates are supported by 13 manufacturers that make up 90% of the market, and there’s still plenty of competition between them, but I don’t understand the alleged reason for manufacturer support: it gives them “the certainty they need to make manufacturing plans far into the future.” If consumers already want better mileage, and they think they can handle it, why do they need a mandate to do it? Why don’t they just supply it already? It’s supposed to be a win for consumers because now they’ll get better gas mileage, but the whole thing feels to me like a bizarro paradigm where The White House sets the Reality of What Is Possible To Make. Consumers can’t demand and manufacturers can’t supply better cars until the Voice of the Executive Branch speaks, but once it speaks, suddenly it’s possible for more efficient vehicles to roll off the assembly lines. (Why doesn’t the Voice speak an even higher number?)”

(emphasis added)

EPA Regulation of Coal Plants

Klein informs us further:

The Environmental Protection Agency’s existing rules on coal plants will survive. In Obama’s first term, the EPA set strict limits on mercury pollution from coal-fired plants and put an upper limit on the amount of carbon dioxide that could be emitted from any new power plant built in the United States. Combine those EPA rules with cheap natural gas and rising mining costs, and coal is in trouble.”

(emphasis added)

Coal was already in trouble before these rules were established, as the market found ways to vastly increase the production of natural gas by employing new drilling and extraction methods. Of course natural gas is not going to stay that cheap if coal fired plants are shut down. And it appears the plan is precisely to wage a war on coal that will end with the industry's destruction. It will also cost the economy a fortune and hit numerous poor communities especially hard. According to the non-partisan Manhattan Institute, the cost could amount to $700 billion. Writes the institute:

On March 27, the EPA proposed what it calls the first “Clean Air Act standard for carbon pollution for new power plants.”[1] The proposal, if enacted, will effectively outlaw the construction of new coal-fired power plants in the United States. It is one of a myriad of rules leading to what some have called the “regulatory death” of domestic coal-fired electricity production. Shortly after the EPA announcement, Democratic Senator Joe Manchin of West Virginia said the move shows that the EPA is engaged “in a war on coal.”

There’s no denying that coal has earned its reputation as a relatively dirty fuel. Generating electricity by burning coal results in higher levels of carbon emissions than does burning oil or natural gas. But the EPA should not prohibit the use of coal based on its carbon dioxide emissions. Doing so ignores modern advances in plant design and construction that have steadily improved air quality. But more to the point, prohibiting coal will increase the cost of producing electricity—a cost which will ultimately be paid by consumers—while doing almost nothing to reduce global carbon-dioxide emissions.

Despite its drawbacks, coal remains a cheap, easily accessed, and abundant domestic fuel source. In other words, there is still a case for coal. The EPA should revisit its proposed ban on new coal-fired power plants. It is bad policy for several reasons:

1.The anti-coal regulatory regime reduces access to a vital source of energy.

2.Electricity producers need to retain a balanced fuel mix. Prohibiting a specific fuel has been tried in the past by regulators.

3.The newest coal plants are clean by traditional EPA measures.

4.Prohibiting construction of new coal-fired generation units won’t do anything to achieve the EPA’s stated purpose of reducing global carbon dioxide emissions.

(emphasis added)

We would add to this that it isn't even clear to us why carbon dioxide emissions are considered bad. There is plenty of evidence from ice cores that suggests that the link between global warming and carbon dioxide in the atmosphere works exactly the other way around from that claimed by the "climate consensus." This is to say, increases of CO2 in the atmosphere appear to follow temperature increases with a considerable lag. A recent paper suggests that this lag effect (which has to do with the release of CO2 from the oceans) is even observable in much smaller time frames, which strongly supports the ice core evidence. One of the most important highlights of said paper is the following point:

CO2 released from use of fossil fuels have little influence on the observed changes in the amount of atmospheric CO2, and changes in atmospheric CO2 are not tracking changes in human emissions.

And of course it is known from the ice cores that atmospheric carbon dioxide concentrations in the past were often orders of magnitude higher than today's, long before human civilization could possibly be fingered as the culprit. Lastly, why care about CO2 anyway? 95% of the greenhouse gas effects, respectively feedback loops, are due to water vapor!

Even More New Regulations

Klein continues:

The EPA could also set new rules on polluters. There are plenty of unfinished EPA rules on the horizon, all technically mandated by the Clean Air Act. The agency has to figure out how to regulate carbon dioxide from existing power plants, refineries, cement plants, and so forth. There are standards for ground-level ozone pollution (smog) that still need to be revamped. And the EPA faces a choice on how to regulate toxic coal ash waste from power plants.

Naturally, no-one is in favor of pollution. In nations where the State once controlled all the means of production, i.e., in the former communist bloc, an absolute wasteland was left behind by the socialist managers of the economy, who allowed pollution to get completely out of hand. Why is it so important to point that out? Because it is a big hint as to what the most effective protection against pollution is: strictly enforced, strong private property rights.

Problems like industrial pollution and overfishing are typical 'tragedy of the commons' type problems. As Murray Rothbard showed in the seminal treatise "Law, Property Rights and Air Pollution," strong property rights are the best defense against pollution, as polluters transgress the property rights of others. It is important to note that enforcement of property rights does not require a State and 'regulators' at all. This article is not the place to go into the details of how the anarcho-capitalist society would work, but there exists a considerable body of work on the topic (we will on occasion post a comprehensive list of links to relevant articles and books).

New Regulations on Natural Gas Drilling

Klein further:

Natural gas drilling could face tighter regulation. The natural gas boom in the United States, driven by new drilling techniques known as fracking, has upended the energy industry. But fracking also brings with it plenty of concerns — from air pollution to potential water contamination. So far, the states have been regulating the drilling boom. But federal officials have signaled that they may increase oversight in some areas, such as developing national standards for waste water disposal.

The previously feared "end of natural gas" in the U.S. has been transformed into a surprising "abundance of natural gas" by the application of new technologies, creating a veritable cornucopia of the very fuel that is widely acknowledged to provide the "cleanest" fossil fuel type energy. And just as that happens, new ways and means are explored to make it more expensive again and restrict the supply? In parallel, mind, with restricting the supply of coal-fired energy. You couldn't make this up.

More Subsidies for 'Green Energy' Failures

Klein lets us know that forms of energy generation that have consistently failed the market test will likely receive more subsidies again.

Wind power could get more subsidies. At the end of 2012, a federal tax credit for wind power is set to expire, which is already leading to layoffs in the wind industry. Obama wants an extension of the credit, Romney was opposed. This one is really up to Congress, although if the credit does expire, it would slow down a remarkable seven-year boom for wind power, which currently makes up roughly one-third of all new generation in the United States.

(emphasis added)

What the above means, in economic terms, is: there would be no 'wind industry' without subsidies. 'Wind energy' is ipso facto a malinvestment of scarce capital that could be put to better uses that would actually serve to satisfy the desires of consumers. In other words, consumers are forced into accepting a state of affairs that is against their express wishes and will lower their standard of living. The 'reason' forwarded for forcing this and similar boondoggles (like making fuel from corn) on tax payers and consumers is of course also, you guessed it, 'global warming'. There are by now plenty of vested interests that are congregated at the public funding trough and want to keep the gravy train going. We are sure these vested interests have found numerous ways and means to contribute to political campaign coffers.

We are not opposed to 'wind energy' as such. But the fact that it fails the market test is not something to be lightly dismissed, even if one believes that the government should be involved in 'planet saving' activities. It seems rather likely that if wind energy is not economical, that it costs in fact more net energy to build these ugly wind turbine eyesores than they can ever produce in their life time. After all, the materials and manufacturing processes that go into making these infernal gadgets do not just appear out of nowhere. They all involve expenditures, and a lot of energy is used in the associated processes.

A Few Things

Klein continues:

Carbon emissions could keep falling — though that’s not assured. A recent analysis by Resources for the Future found that the United States is on pace to cut carbon emissions 16.3 percent by 2020. That’s roughly in line with what Obama has promised in international climate negotiations.

But meeting that target depends on a few things. States would have to continue to promote renewable power. California would have to get its cap-and-trade system working. Natural gas would have to stay cheap. And the EPA would have to strengthen its rules on carbon dioxide from power plants and keep the fuel-economy rules in place.”

(emphasis added)

To these few things (leaving aside for the moment whether reductions in carbon dioxide emissions are even desirable or useful):

Regarding the 'promotion' of renewable power, see our comments on wind energy above. It just makes no economic sense, and very likely therefore also makes no environmental sense. It merely lines the pockets of vested interests. 'Cap-and-trade' is a major boondoggle that has so far been failing spectacularly wherever it has been tried. The artificial 'carbon markets' have collapsed. But the vested interests, represented by professional climate alarmists in most cases, have made off with hundreds of millions in tax payer funds in the process. No wonder there is 'interest' in reviving this mad idea.

'Natural gas would have to stay cheap' – is this some kind of joke? Two paragraphs further above Klein has just explained why it cannot possibly stay cheap if the president and the environmental bureaucracy have their way.

As to 'strengthening the rules on carbon dioxide from power plants', see the discussion above. It can be done, but at great cost to the economy and consumers, especially the poorest strata of society, for whom energy costs represent a very large portion of their income and spending (the authoritarian left rarely mentions such things, so we feel compelled to spell them out).

A Number of Proposals Won't Fly – We Hope

Klein then concludes wistfully:

Bigger action on climate will require Congress. Obama has signaled at many points that he would be open to more sweeping action to tackle global warming. He has proposed a clean energy standard that would require utilities to get a greater portion of their electricity from renewables. Joseph Aldy, a former White House official, has hinted that Obama would be open to a carbon tax if Republicans were willing to negotiate.

But Obama would have to get those proposals through Congress first. And, after that, he’d then have to revive international climate talks with countries like China and India, which have been flagging of late. We’re still a long, long ways off from a world “that isn’t threatened by the destructive power of a warming planet.” By itself, Obama’s re-election can’t change that.

Obama would be "open to a carbon tax"? That sounds almost as though he were reluctantly weighing the pros and cons of such a step. Why not admit that he's practically chomping at the bit to impose one?

Anyway, this final paragraph leaves one with a small modicum of hope that the most radical proposals simply won't fly, as neither the Republican controlled Congress, nor China or India seem overly eager to sacrifice the economy on the altar of climate alarmism. As it were, we have more faith in China and India in that regard than in Congress, where such issues are often decided through the influence wielded by lobbyists.

Meanwhile, we are writing this post from a place that has lately been bitter cold and could really use a good dose of warming. Where the hell is it? Twenty years ago we were fervently hoping that we might live to see better (and especially much warmer) weather in these here parts. No such luck so far.

Charts by: AEI and skepticalscience.com