Red Flag: Ontario’s Green Energy Debacle

Babatunde Williams writes at Spiked Ontario’s green-energy catastrophe.  Excerpts in italics with my bolds

A transition to renewables sent energy prices soaring, pushed thousands into poverty and fueled a populist backlash.

In February 2009, Ontario passed its Green Energy Act (GEA). It was signed a week after Obama’s Economic Recovery and Reinvestment Act in the US, following several months of slow and arduous negotiations. It also had grand plans to start a ‘green’ recovery following the financial crash – although on a more modest scale.

This was the plan: increased integration of wind and solar energy into Ontario’s electricity grid would shut down coal plants and create 50,000 green jobs in the first three years alone.

Additionally, First Nations communities would manage their own electricity supply and distribution – what observers would later call the ‘decolonisation’ of energy – empowering Canada’s indigenous communities who had been disenfranchised by historical trauma. Lawmakers promised that clean and sustainable energy provided by renewables would also reduce costs for poorer citizens. This won an endorsement from Ontario’s Low Income Energy Network – a group which campaigns for universal access to affordable energy.

But on 1 January, 2019, Ontario repealed the GEA, one month before its 10th anniversary. The 50,000 guaranteed jobs never materialised. The ‘decolonisation’ of energy didn’t work out, either. A third of indigenous Ontarians now live in energy poverty. Ontarians watched in dismay as their electricity bills more than doubled during the life of the GEA. Their electricity costs are now among the highest in North America.

To understand how the GEA went irreparably wrong, we must look at Ontario’s contracts with its green-energy suppliers. Today, Ontario’s contracts guarantee to electricity suppliers that they ‘will be paid for each kWh of electricity generated from the renewable energy project’, regardless of whether this electricity is consumed. As preposterous as this may seem, it’s actually an improvement on many of the original contracts the Ontario government locked itself into.

Earlier contracts guaranteed payments that benchmarked close to 100 per cent of the supplier’s capacity, rather than the electricity generated. So if a participating producer supplied only 33 per cent of its capacity in a given year, the state would still pay it as if it had produced 100 per cent.

This was especially alarming in context, as 97 per cent of the applicants to the GEA programme were using wind or solar energy. These are both intermittent forms of energy. In an hour, day or month with little wind or sun, wind and solar farms can’t supply the grid with electricity, and other sources are needed for back-up. As a result, wind and solar electricity providers can only supplement the grid but cannot replace consistently reliable power plants like gas or nuclear.

Many governments, including other Canadian provinces, have used subsidies of all hues to incentivise renewables. But Ontario put this strategy on steroids. For example, the Council for Clean and Reliable Energy found that ‘in 2015, Ontario’s wind farms operated at less than one-third capacity more than half (58 per cent) the time’. Regardless, Ontarians paid multiple contracts as if wind farms had operated at full capacity all year round. To add insult to injury, Ontario’s GEA contracts guaranteed exorbitant prices for renewable energy – often at up to 40 times the cost of conventional power for 20 years.

By 2015, Ontario’s auditor general, Bonnie Lysyk, concluded that citizens had paid ‘a total of $37 billion’ above the market rate for energy. They were even ‘expected to pay another $133 billion from 2015 to 2032’, again, ‘on top of market valuations’. (One steelmaker has taken the Ontarian government to court for these exorbitant energy costs.)

Today, this problem persists.  Furthermore, electricity demand from ratepayers declined between 2011 and 2015, and has continued to fall. Ontarians were forced to pay higher prices for new electricity capacity, even as their consumption was going down.

Ontario’s auditor general in 2015 stated that: ‘The implied cost of using non-hydro renewables to reduce carbon emissions in the electricity sector was quite high: approximately $257 million [£150million] for each megatonne of emissions reduced.’ Per tonne of carbon reduced, the Ontario scheme has cost 48 per cent more than Sweden’s carbon tax – the most expensive carbon tax in the world.

Clearly, bad policy has led to exorbitant waste. This wasn’t the result of corruption or conspiracy – it was sheer incompetence. It’s a meandering story of confusion and gross policy blunders that will fuel energy poverty in Ontario for at least another decade.

As democracies across the West respond to the coronavirus crisis with hastily prepared financial packages for a ‘green recovery’, they should consider the cautionary tale of Ontario.

The GEA’s stubborn defenders refuse to recognise that poor policy, even with the best intentions, discredits future efforts at cutting emissions. ‘Green New Deals’ for the post-pandemic recovery in the US and Europe should learn from the GEA. Clean energy at any cost will be rightfully short-lived and repealed, and its supporters will be unceremoniously booted out of power.

See Also:  Electrical Madness in Green Ontario

 

Conn AG Adds to Climate Lawsuit Dominos

Climate Dominos

William Allison reports at Energy In Depth Echoes of New York’s Failure:  Connecticut Files Climate Lawsuit.  Excerpts in italics with my bolds.

Four Years In The Making, But The Same Failed Arguments

Back in 2016, Tong’s predecessor, former Attorney General George Jespen, enlisted Connecticut to take part in former New York Attorney General’s Eric Schneiderman’s “AGs United for Clean Power” – a coalition of state attorneys general that aimed to investigate major energy companies over climate change. Not only did Jepsen participate in the March 2016 press conference announcing the coalition, he discussed how it’s formation allowed for easier collaboration between attorneys general.

While the coalition ultimately fell apart, following the withdrawal of several attorneys general and scrutiny over the political motivation behind its formation, the group’s demise (and even New York’s unsuccessful lawsuit) hasn’t stopped Tong. In fact, he’s using many of the same arguments that Schneiderman ineffectively deployed nearly five years ago.

In Monday’s press conference announcing the Connecticut lawsuit, AG Tong said:

“We tried to think long and hard about what our best and most impactful contribution would be. And what we settled on was a single defendant with a very simple claim: Exxon knew, and they lied.” (emphasis added)

Apparently Tong did not get the memo that “Exxon Knew” – the theory pushed by activists and lawyers that the company knew about climate change and hid that knowledge from the public – has been completely debunked. It was this theory that Schneiderman initially built his case against the company around, but he was forced to abandon it because the facts were not on his side. Indeed, after his successor was told to told “to put or shut up” on the accusations, the lawsuit was revised to remove these claims and instead focus on alleged accounting fraud. The case resulted in a resounding defeat for the New York attorney general, with State Supreme Court Justice Barry Ostrager calling the lawsuit “hyperbolic” and “without merit.”

The only other two climate lawsuits that have been decided on their merits were filed by San Francisco and Oakland and then New York City, both of which failed.

Connecticut Has Benefitted From The National Campaign

The Connecticut lawsuit isn’t a standalone effort, but part of a larger national campaign supported and funded by activist and wealthy donors to pursue climate litigation against energy companies.

Tong is still pursing the “Exxon Knew” angle that’s been developed by this campaign despite its previous losses and thinks his lawsuit is the strongest in the nation because Connecticut’s Connecticut Unfair Trade Practices Act doesn’t have a statute of limitations, allowing him to recall ExxonMobil documents from decades ago – even though the company already turned over 3 million documents as part of the New York Attorney General’s failed investigation.

Connecticut was also mentioned in the Pay Up Climate Polluters report, “Climate Costs 2040,” which seems to be a target list of cities to carry out potential litigation, as recent plaintiffs Hoboken, N.J. and Charleston, S.C. were also featured. Pay Up Climate Polluters is a campaign that promotes climate litigation that is sponsored by Center for Climate Integrity, which in turn is a project of Institute for Governance and Sustainable Development (IGSD), which, ironically enough, is paying for the outside counsel in Hoboken’s lawsuit.

IGSD also receives money from a network of Rockefeller groups, which with the help of wealthy donors and activists, have manufactured the entire climate litigation campaign. Tong even filed an amicus brief in support of the climate lawsuit filed by San Francisco and Oakland.

During his press conference, Tong even thanked 350.org and The Sunrise Movement, two other Rockefeller-supported groups that support and actively promote climate litigation.

Conclusion

The lawsuit filed by the Connecticut Attorney General is just the latest case to emerge in the broader, national campaign being pushed by weather donors and activist groups. But while a new lawsuit generates new headlines, it does nothing to change the fact that it’s based on another rehashing of the debunked “Exxon Knew” theory that failed in New York and will do nothing to address climate change.

Background from Previous Post:  Climate Lawsuit Dominos

Posted to Energy March 05, 2020 by Curt Levey writes at InsideSources Climate Change Lawsuits Collapsing Like Dominoes.  Excerpts in italics with my bolds.

Climate change activists went to court in California recently trying to halt a long losing streak in their quest to punish energy companies for aiding and abetting the world’s consumption of fossil fuels.

A handful of California cities — big consumers of fossil fuels themselves — asked the U.S. Court of Appeals for the Ninth Circuit to reverse the predictable dismissal of their public nuisance lawsuit seeking to pin the entire blame for global warming on five energy producers: BP, Chevron, ConocoPhillips, ExxonMobil and Royal Dutch Shell.

The cities hope to soak the companies for billions of dollars of damages, which they claim they’ll use to build sea walls, better sewer systems and the like in anticipation of rising seas and extreme weather that might result from climate change.

But no plaintiff has ever succeeded in bringing a public nuisance lawsuit based on climate change.

To the contrary, these lawsuits are beginning to collapse like dominoes as courts remind the plaintiffs that it is the legislative and executive branches — not the judicial branch — that have the authority and expertise to determine climate policy.

Climate change activists should have gotten the message in 2011 when the Supreme Court ruled against eight states and other plaintiffs who brought nuisance claims for the greenhouse gas emissions produced by electric power plants.

The Court ruled unanimously in American Electric Power v. Connecticut that the federal Clean Air Act, under which such emissions are subject to EPA regulation, preempts such lawsuits.

The Justices emphasized that “Congress designated an expert agency, here, EPA … [that] is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions” and better able to weigh “the environmental benefit potentially achievable [against] our Nation’s energy needs and the possibility of economic disruption.”

The Court noted that this was true of “questions of national or international policy” in general, reminding us why the larger trend of misusing public nuisance lawsuits is a problem.

The California cities, led by Oakland and San Francisco, tried to get around this Supreme Court precedent by focusing on the international nature of the emissions at issue.

But that approach backfired in 2018 when federal district judge William Alsup concluded that a worldwide problem “deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case.” Alsup, a liberal Clinton appointee, noted that “Without [fossil] fuels, virtually all of our monumental progress would have been impossible.”

In July 2018, a federal judge in Manhattan tossed out a nearly identical lawsuit by New York City on the same grounds. The city is appealing.

Meanwhile, climate lawfare is also being waged against energy companies by Rhode Island and a number of municipal governments, including Baltimore. Like the other failed cases, these governments seek billions of dollars.

Adding to the string of defeats was the Ninth Circuit’s rejection last month of the so-called “children’s” climate suit, which took a somewhat different approach by pitting a bunch of child plaintiffs against the federal government.

The children alleged “psychological harms, others impairment to recreational interests, others exacerbated medical conditions, and others damage to property” and sought an injunction forcing the executive branch to phase out fossil fuel emissions.

Judge Andrew Hurwitz, an Obama appointee, wrote for the majority that “such relief is beyond our constitutional power.” The case for redress, he said, “must be presented to the political branches of government.”

Yet another creative, if disingenuous, litigation strategy was attempted by New York State’s attorney general, who sued ExxonMobil for allegedly deceiving investors about the impact of future climate change regulations on profits by keeping two sets of books.

That lawsuit went down in flames in December when a New York court ruled that the state failed to prove any “material misstatements” to investors.

All these lawsuits fail because they are grounded in politics, virtue signaling and — in most cases — the hope of collecting billions from energy producers, rather than in sound legal theories or a genuine strategy for fighting climate change.

But in the unlikely event these plaintiffs prevail, would they use their billion dollar windfalls to help society cope with global warming?

It’s unlikely if past history is any indication.

State and local governments that have won large damage awards in successful non-climate-related public nuisance lawsuits — tobacco litigation is the most famous example — have notoriously blown most of the money on spending binges unrelated to the original lawsuit or on backfilling irresponsible budget deficits.

The question of what would happen to the award money will likely remain academic. Even sympathetic judges have repeatedly refused to be roped by weak public nuisance or other contorted legal theories into addressing a national or international policy issue — climate change — that is clearly better left to elected officials.

Like anything built on an unsound foundation, these climate lawsuits will continue to collapse.

Curt Levey is a constitutional law attorney and president of the Committee for Justice, a nonprofit organization dedicated to preserving the rule of law.

Update March 10

Honolulu joins the domino lineup with its own MeToo lawsuit: Honolulu Sues Petroleum Companies For Climate Change Damages to City

Honolulu city officials, lashing out at the fossil fuel industry in a climate change lawsuit filed Monday, accused oil producers of concealing the dangers that greenhouse gas emissions from petroleum products would create, while reaping billions in profits.

The lawsuit, against eight oil companies, says climate change already is having damaging effects on the city’s coastline, and lays out a litany of catastrophic public nuisances—including sea level rise, heat waves, flooding and drought caused by the burning of fossil fuels—that are costing the city billions, and putting its residents and property at risk.

“We are seeing in real time coastal erosion and the consequences,” Josh Stanbro, chief resilience officer and executive director for the City and County of Honolulu Office of Climate Change, Sustainability and Resiliency, told InsideClimate News. “It’s an existential threat for what the future looks like for islanders.”  [ I wonder if Stanbro’s salary matches the length of his job title, or if it is contingent on winning the case.]

Oil Demand No End in Sight

Your next car? NURPHOTO VIA GETTY IMAGES

Michael Lynch writes at Forbes  Peak Oil Demand! Again?  Excerpts in italics with my bolds.

Amid stubbornly low prices and lackluster demand we’re now seeing, on cue, a new round of predictions that oil demand has already or is about to peak (including even scenarios published by BP). These cannot be dismissed out of hand — as the peak oil supply arguments could, inasmuch as they were either based on bad math or represented assumptions that the industry couldn’t continue overcoming its age-old problems like depletion. (See my book The Peak Oil Scare if you want the full treatment.)

Now, the news is highlighting various predictions that the pandemic will accelerate the point at which global oil demand peaks, which is certainly much more sexy than business as usual. When groups like Greenpeace or the Sierra Club predict or advocate for peak oil demand, it doesn’t make much news: dog bites man. But, as the newspeople say, when man bites dog it is news. Thus, when oil company execs seem to believe peak oil demand is near, you get headlines like, “BP Says the Era of Oil Demand-Growth is Over,” The Guardian newspaper proclaiming that “Even the Oil Giants Can Now Foresee the End of the Oil Age,” and Reuters in July: “End game for oil? OPEC prepares for an age of dwindling demand.”

Anyone who is familiar with the oil industry knows that a peak in oil production has been predicted many times throughout the decades, never to come true (or deter future predictions of same). But few realize that the end of the industry has been repeatedly predicted as well, including both the demise of an old-fashioned business model, but also replacement of petroleum by newer, better technologies or fuels.

Until the 1970s, few saw an end to the oil business. The automobile boom created a seemingly insatiable demand for oil, one which has only slowed when prices rose and/or economic growth stalled, neither of which has ever proved permanent.

Yet there have been three particular apocalyptic threads put forward for the oil industry: the industry would spiral into decline, demand would peak, and/or a new fuel or technology would displace petroleum.

The oil industry’s business model was challenged as far back as 1977, when Mobil XOM +1.3% CEO Rawleigh Warner tried to diversify out of the oil business for fear that those who didn’t would “go the way of the buggy-whip makers.” Similarly, Mike Bowlin, ARCO’s CEO, declared in 1999 “We’ve embarked on the beginning of the last days of oil.” Enron’s Jeff Skilling (whatever happened to him?) said he “had little use for anything that smacked of a traditional energy company — calling companies like Exxon Mobil ‘dinosaurs’”

Vanishing demand has been another common motif for prognosticators, especially when high prices caused demand to slump. Exxon CEO Rex Tillerson (whatever happened to him?) thought in 2009, when gasoline prices were $4/gallon, that gasoline demand had peaked in 2007. (The figure below shows how that worked out.)

Gasoline demand peaks then recovers U.S. Gasoline Demand (tb/d) THE AUTHOR FROM EIA DATA.

Sheikh Yamani, the former Saudi Oil Minister, warned in 2000 that in thirty years there would be “no buyers” for oil, because fuel cell technology would be commercial by the end of that decade. (From 2000, oil demand increased by 20 mb/d before the pandemic.) The fabled Economist magazine agreed with Yamani in 2003, “Finally, advances in technology are beginning to offer a way for economies, especially those of the developed world, to diversify their supplies of energy and reduce their demand for petroleum…Hydrogen fuel cells and other ways of storing and distributing energy are no longer a distant dream but a foreseeable reality.”

They might have been echoing William Ford, CEO of Ford Motor Company F +0.6%, who said in 2000, “Fuel cells could be the predominant automotive power source in 25 years.” Twenty years later, they are insignificant.

Amory Lovins, whose has probably received more awards than Tom Hanks, has long argued that extremely efficient (and expensive) cars would reduce gasoline demand substantially, including in his (and co-authors) Winning the Oil Endgame, which argued that a combination of efficiency and celluslosic ethanol could replace our imports from the Persian Gulf (then about 2.5 mb/d). (They’ve been replaced, but by shale oil, and demand was unchanged since their prediction.)

He was hardly alone, with Richard Lugar and James Woolsey in a 1999 Foreign Affairs article calling cellulosic ethanol “The New Petroleum.” Perhaps they relied on a 1996 Atlantic article by Charles Curtis and Joseph Room (“Mideast Oil Forever”) which argued that cellulosic ethanol should see its cost fall to about $1/gallon (adjusted for inflation). (In 2017, the National Renewable Energy Laboratory put the cost at $5/gallon.)

One of my persistent themes has been that too much writing is not based on rigorous analysis but superficial ideas, a few anecdotes and footnotes, supposedly supporting Herculean changes.

(See Tom Nichols The Death of Expertise.) Peak oil demand is the flavor of the month and people are rushing to publish predictions, prescriptions, guidelines, and fantastical views of a fantastical future. But petroleum remains by far the fuel of choice in transportation and the pandemic seems unlikely to change that. Sexy should be left for HBO and not energy analysis.

There are many reasons the demand for fossil fuels is strong and growing.  

Footnote:  Shareholder activism against Big Oil is based on a cascade of unlikely suppositions including declining demand and stranded assets.  See: Behind the Alarmist Scene

 

 

ESG Investing Fails Both Activists and Pensioners

Robert Armstrong wrote at the Financial Times The Dubious Appeal Of ESG Investing Is For Dupes Only.  Excerpts in italics with my bolds.

Environmental, social and governance investing is ascendant. Its mirror image, stakeholder capitalism, is now the standard mantra on boards and in executive suites. This is not cause for celebration.

Both rest on weak conceptual foundations and should be viewed suspiciously by investors who seek adequate returns, and by citizens who want real rather than cosmetic change.

The business and financial establishments endorse the new consensus. BlackRock, the world’s largest asset manager, released an open letter warning companies that it would “be increasingly disposed” to vote against boards moving too slowly on sustainability. The World Economic Forum in Davos says that companies exist to create value not just for shareholders but “employees, customers, suppliers, local communities and society”. A letter from the Business Roundtable, signed by prominent chief executives, promised to “commit to deliver value to all” stakeholders.

Investors have responded. In the first half of 2020, net inflows into ESG funds hit $21bn, according to Morningstar, almost matching last year’s record total.

But behind ESG and stakeholderism lies a dangerous idea: that shareholders’ economic interests and the social good always harmonise over the long run.

It is true that when companies subordinate everything to maximisation of shareholder value, it backfires. When IBM, a company that long prioritised technological excellence, shifted its focus in 2012 to a target of hitting $20 in earnings per share a few years later, it was the beginning of the end for both IBM’s industry leadership and its rising share price. General Electric has never recovered from its decision to chase “easy” profits by turning into a finance company in the 1990s. The list goes on.  So ESG supporters are right that companies cannot always maximise long-term profit by aiming to do so.

They have to shoot instead to deliver excellent products, which creates profit as a side effect.

In many cases, excellence creates good stakeholder outcomes too, from investment in employees to lower carbon emissions. But this does not mean shareholder returns and the social good can always align. And there is one important way in which the two must come apart.

Part of the justification for ESG investing is that divesting from certain industries (fossil fuels or tobacco, say) creates economic pressure for change, in the way that boycotting a company’s products might. Divestment increases a company’s cost of capital: when fewer investors line up to buy its shares or bonds, it must sell them for less. This makes it more expensive for it to invest in socially destructive projects.

The necessary corollary? ESG-friendly companies’ cost of capital goes down, as dollars are channelled their way instead. Their shares and bonds become more expensive, meaning lower returns. If ESG investors’ returns are not lower, their choices have not affected corporate incentives.

Given that this is so, many ESG advocates take a different tack. They argue that the point is not to change corporate incentives but to invest in companies that will thrive financially precisely because they take ESG seriously.

There may be a distant and ideal future when this will be achieved. But even the best corporate leaders cannot look out to the end of days. They make choices about what they can foresee with a degree of confidence. At that range, it is obvious that shareholders’ and stakeholders’ interests can conflict. If they did not, there would be far fewer lay-offs announced and far fewer oil wells drilled. If stakeholder capitalism means anything, it is that corporate leaders must sometimes make choices that benefit stakeholders at the cost of shareholders.

The financial mandarins’ manifestos ignore such trade-offs, and say nothing about how they might be managed. They merely repeat that, in BlackRock’s phrase, social purpose “is the engine of long-term profitability”.

If corporate leaders are silent it is because they know how they will choose when such conflicts arise. They are paid in stock, and if monetary incentives are not enough, there are legal ones. Most US companies are incorporated in states where the law requires them to put shareholders first. Promises of virtue do not change this. As Aneesh Raghunandan and Shivaram Rajgopal of Columbia Business School point out, corporate signatories to the Business Roundtable letter have worse ESG records than industry peers.

Is the answer, then, a top-to-bottom change in executive pay packages, and indeed corporate law? No. Rewriting the internal rules of corporate capitalism would put at risk a system that has served us well in its remit: to create wealth. At the same time, do we want more of the power and responsibility for solving our most pressing problems, from inequality to climate change, to be pressed into the hands of corporations, which will still be run and owned by the richest among us? No again.

Shareholder capitalism is an excellent way to manage our corporate economy and we should stick with it.

We also have a very good, if presently neglected, set of tools to ensure that everyone shares in the fruits of economic progress. They are democratic action and the rule of law, which allow us to, for example, set minimum wages, tax carbon emissions and change campaign finance laws. Let’s use the right tools for the right purposes.

Anti-fossil fuel activists storm the bastion of Exxon Mobil, here seen without their shareholder disguises.

How Climatism Destroyed California

Ben Pile writes at Spiked The problem in California is poverty, not climate change. Excerpts in italics with my bolds.

The heatwaves and the fires are natural – the electricity blackouts are not.

Events leading up to today’s power cuts follow a bizarre history. The fact that advanced economies need a continuous supply of power is well understood. Yet for three decades, the political agenda, dominated by self-proclaimed ‘progressives’, has put lofty green idealism before security of supply and before the consumer’s interest in reasonable prices. Even if the heatwaves experienced by California were caused by climate change, are their direct effects worse than the loss of electricity supply?

California’s green and tech billionaires, and its business and political elites, certainly seem to think so. But they are largely protected from reality by vast wealth, private security, gated estates, and battery banks. The high cost of property in the state of California means that, despite being the fifth largest economy in the world, and with the sixth highest per capita income in the US, it is the worst US state for poverty. According to the US Census Bureau, around 18 per cent of Californians, some seven million people, lived in poverty between 2016 and 2018 – more than five per cent above the US average.

As well as being the greenest (and most poverty-stricken) state, California can also boast that it is the No1 state for homelessness.

According to the US Interagency Council on Homelessness, there are more than 151,000 homeless people in California – a rise of 28,000 since 2010. That figure is shocking enough, but it masks the reality of many thousands more moving in and out of homelessness. The same agency reports that more than a quarter of a million schoolchildren experienced homelessness over the 2017/18 school year.

It is degenerate politics, not climate change, that presses hardest on the millions of Californians who live in poverty, and the many millions more who live just above the poverty line. The problems of this degenerate politics are visible, on the street, chronic and desperate, whereas climate change, if it is a problem at all, is only detectable through questionable statistical techniques. Yet California’s charismatic governors, since Arnold Schwarzenegger, have made their mark on the global stage as environmental champions.

At the 2017 COP23 UNFCCC conference in Bonn, Germany, then governor Jerry Brown shared a platform with the green billionaire and former New York mayor, Mike Bloomberg, to announce ‘America’s Pledge on Climate’ – a commitment of states and cities to combat climate change – despite President Trump’s decision to withdraw the US from the Paris Agreement earlier that year.

But why not a pledge on homelessness? Why not a pledge to address the problem of property prices? Why not a pledge to tackle poverty? Why not a pledge to secure a supply of energy? The only conceivable answer is that environmentalism is a form of politics that is entirely disinterested in the lives of ordinary people, despite progressive politicians’ claims that environmental and social issues are linked. Clearly they are not in the slightest bit linked.

California was the experiment, and now it is the proof: environmentalism is worse for ‘social justice’ than any degree of climate change is.

What about the wildfires? Aren’t they proof of climate change? It is a constant motif of green histrionics that more warming means more fires. But as has been pointed out before on spiked and elsewhere, places like California have long suffered from huge fires; fire is a part of many types of forests’ natural lifecycle.

What California’s rolling blackouts and its uncontrolled fires tell us is that green politics is completely divorced from any kind of reality. Environmentalism is the indulgent fantasy of remote political elites and their self-serving business backers. If California doesn’t prove this, what would?

Footnote: Bjorn Lomborg tried in 2015 to reason with Arnie Arnold Schwarzenegger Is Wrong On Climate Change Excerpts in italics with my bolds.

But that makes it even more important that those of us talking about global warming and its policy responses are responsible about statistics and data. It’s not good enough to swagger around saying, “I think I’m right and I’m going to ignore the haters.” Schwarzenegger loses me when he declares, “every day, 19,000 people die from pollution from fossil fuels. Do you accept those deaths?”

It’s emotive, but it’s wrong to say that 19,000 people are killed by fossil fuels every day. About 11,000 of these people are killed by burning renewable energy – wood and cow dung mainly – inside their own homes. The actual number of people killed by fossil fuels each day is about 3,900.

This matters for two reasons. First, it is disingenuous to link the world’s biggest environmental problem of air pollution to climate. It is a question of poverty (most indoor air pollution) and lack of technology (scrubbing pollution from smokestacks and catalytic converters) – not about global warming and CO₂. Second, costs and benefits matter.[vi] Tackling indoor air pollution turns out to be very cheap and effective, whereas tackling outdoor air pollution is more expensive and less effective. Your favorite policy of cutting CO₂ is of course even more costly and has a tiny effect even in a hundred years.

Lomborg failed to change Schwarzenegger’s mind since Arnie was so enamored of being a global environmental star as a sequel to his Hollywood movie celebrity.

 

 

 

Cal Carbon Market Fails in Practice and in Theory

When secondary market prices dropped below minimum auction prices for a few different periods in 2016 and 2017, the state generated $10 million or less in three out of four auctions, as shown in Figure 1. In May 2020, the revenue was only $25M. Source: Cal LAO (Legislative Analyst’s Office)

Severin Borenstein explains at energypost.eu California learns even flexible Emissions Markets won’t guarantee price stability.  Despite the author’s belief in reducing CO2 emissions, cap and trade is failing to deliver.  Excerpts in italics with my bolds.

After California’s May allowance auction settled at the minimum price and generated almost no revenues for the state, the long knives are again out in Sacramento for the state’s cap and trade program. What’s the point of a carbon market, some are asking, if price and revenue volatility make planning nearly impossible?

The disappointing auction has caused proposals for stabilising the market price – such as those from the Independent Emissions Market Advisory Committee (IEMAC) in its 2019 report – to be taken more seriously, as they should be. But the tweaks suggested by the IEMAC and others aren’t likely to live up to the expectations of policymakers. That’s not because the proposed changes are unwise, but because the policymakers’ expectations are unrealistic.

Many California regulators and legislators want cap and trade to guarantee that the state reaches prescribed emissions targets by 2030, while at the same time maintaining a moderate allowance price, not at the floor, but not too high. Only by a stroke of pure luck could the program deliver on both. To see why, let’s revisit the design options for an emissions market.

Carbon prices can rise too high or fall too low

Cap and trade “classic” simply sets a cap on emissions and lets the price do all the work to get us there, with no restrictions. But if the demand for emitting the pollutant is high – which could be driven by a strong economy, cheap fossil fuels, and/or slow progress in low-emissions technologies – the price could spiral to astonishing levels. Cap and trade classic generally would get you to the emissions quantity, but possibly at an unacceptable economic or political cost.

And if the demand for emitting is low – such as results from an economic downturn, expensive fossil fuels, and/or competitive low-carbon alternatives – it is quite possible to end up with a price of zero and no further incentive to ratchet down emissions at all.

The price in cap and trade classic is hard to predict, because the future of the economy, fossil fuels, and emissions reduction technologies are hard to predict.

Emissions taxes: a fixed disincentive has its limitations too

Emissions tax “classic” does the opposite. It sets a fixed price, which establishes a constant incentive to reduce pollution regardless of how much is being emitted. But then polluters emit whatever quantity they choose as long as they are willing to pay the tax. If the demand for emitting is high, the outcome will be high levels of emissions.

In economic parlance, where cap and trade classic creates a vertical supply curve for emissions allowances (at a fixed quantity) and emissions tax classic creates a horizontal supply curve for allowances (at a fixed price), the new and improved cap and trade creates an upward sloping supply curve for allowances, restricting the quantity somewhat when demand and price are low, which prevents the price from going even lower, and expanding the quantity somewhat when they are high, preventing the price from going even higher.

What these modifications do is share the impact of unpredictable emissions demand between quantity adjustment and price adjustment, rather than putting the impact of demand uncertainty all on quantity (emissions tax classic) or all on price (cap and trade classic). What they don’t do is get us to the policymakers’ nirvana of predictable emissions quantity and price. Until someone figures out how to reliably predict both macroeconomic growth and technological progress that won’t be a realistic goal.

That’s not a flaw in emissions pricing. It’s a reality of any type of emissions control policies. Technology mandates – the alternatives to pricing – generally don’t ensure a total level of emissions (usually just emissions intensity), and never ensure the cost of achieving a given level of emissions.

A market based on the non-delivery of a non-good, What could go wrong?  Let us count the ways

Background from Previous Post

Climate stool

Context: As the image shows, alarmist/activists understand Climate Change (man made assumed) as a concept that depends on three assertions being true.  The first one is the science bit, being the unproven claim that humans make the planet warmer by burning fossil fuels. (See Global Warming Theory and the Tests It Fails)  The second one is the claim from billions of dollars invested into researching any and all negative effects from global warming, from Acne to Zika virus. The third and also necessary leg is the assertion that governments can act to prevent future warming.

From time to time it is instructive to hear from those who buy into the first two, but have lost confidence in the policies proposed as remedies. Jeffrey Ball writes at Science Direct, not questioning climate science or feared impacts, but distraught about the failed efforts to do something to reduce emissions.  His article is Hot Air Won’t Fly: The New Climate Consensus That Carbon Pricing Isn’t Cutting It Excerpts in italics with my bolds.

Jeffrey Ball, a writer whose work focuses on energy and the environment, is the scholar-in-residence at Stanford University’s Steyer-Taylor Center for Energy Policy and Finance and a lecturer at Stanford Law School. He also is a nonresident senior fellow at the Brookings Institution. His writing has appeared in Foreign Affairs, Fortune, Mother Jones, The Atlantic, New Republic, The New York Times, and The Wall Street Journal, among other publications. Ball, previously The Wall Street Journal’s environment editor, focuses his Stanford research on improving the effectiveness of clean-energy investment, particularly in China.

Carbon Pricing Isn’t Cutting It

In the history of climate change, 2018 will go down as a year when certain facts finally hit home, truths inconvenient for partisans on all sides. Those on the right, at least those who have been arguing that greenhouse-gas emissions aren’t a significant problem, were forced to recognize that those emissions are causing real harm to real people right now. Those on the left, at least those who have put their faith in the promise of renewable energy to cool the planet, had to reckon with the reality that, even as those technologies boomed, carbon emissions continued to grow. And those across the political spectrum who had been calling for what seemed in theory a sensible climate policy—putting a price on carbon emissions—had to concede that their supposed solution isn’t helping much at all.

(My comment: Like so many true believers, Ball casts climate change as a political issue between left and right wings.  Note he does think we can all agree that policies are not working.)

No single event can be attributed to climate change, but scientists cite a lengthening list of unfolding events, from wildfires in California to drought in Europe to rising waters along Bangladesh, as evidence of the effects of a warming world. Even the administration of US President Donald Trump, which has rolled back myriad climate policies, noted in a November report, the latest legally mandated US National Climate Assessment, that the effects of climate change “are already being felt in communities across the country”—from intensifying flooding in the nation’s northeast region, to worsening drought in the southwestern part of the country, to rising temperatures and erosion that are damaging buildings in Alaska.

(My comment:  Ball does not acknowledge rebuttals and challenges to the recent NCA document that merely repeated claims from previous editions, and echoed the feverish exhortations from IPCC SR15.  But this  paragraph was aimed at the skeptical on the right, while soothing the believers on the left.  Let’s now get into the meat of it: Is the government stopping it?)

Renewable energy isn’t stopping that. It represented 70% of net new power-generating capacity installed globally in 2017, a stunning share that reflects falling costs and rising penetration.  Yet for all that growth, renewable energy still provided only an estimated 14% of total global energy in 2017, up about 1 percentage point from its share in 2000, because fossil-fuel energy capacity also has been increasing. Indeed, even as renewable-energy capacity hit an all-time high, energy-related carbon emissions did too. They rose 1.6% in 2017, following three years in which they were flat, and they are expected to have risen further in 2018.

Emissions are increasing even though more governments than ever before have imposed prices on carbon emissions, either levying a carbon tax or instituting a cap-and-trade system of pollution permits so that those who emit greenhouse gases have a financial incentive to reduce them. That is little wonder, given that less than 1% of global carbon emissions are subject to a price that economists peg as high enough to meaningfully curb them.

This past June, in an essay in Foreign Affairs, “Why Carbon Pricing Isn’t Working,” I cataloged evidence that carbon pricing is failing to meaningfully reduce carbon emissions around the world—from Europe, where the policy took significant hold, to California, where leading policymakers have embraced it, to China, which is in the early stages of ramping up what will be by far the biggest carbon-pricing regime on the planet. I argued that, though in theory carbon pricing makes sense, in practice it is failing, for two reasons: structurally, carbon pricing tends to constrain emissions mostly in the electricity sector, leaving the transportation and building sectors largely unaffected; and politically, even those governments that have imposed carbon prices have lacked the fortitude to set them high enough to significantly curb even electricity emissions. As a result, I wrote, “a policy prescription widely billed as a panacea is acting as a narcotic. It’s giving politicians and the public the warm feeling that they’re fighting climate change even as the problem continues to grow.” Not just ineffective, carbon pricing is proving counterproductive, because “it is reducing the pressure to adopt other carbon-cutting measures, ones that would hit certain sectors harder and that would produce faster reductions.” Among those other needed measures: phasing out coal as a power source except where it is burned with carbon-capture- and -sequestration technology, which minimizes its emissions; maintaining, rather than closing, nuclear plants; making renewable energy cheaper; and mandating greater energy efficiency.

Would that the half year since that essay was published had proven its assessment too harsh. Unfortunately, recent events and analyses have only bolstered it. Since the summer, and in the lead-up to the latest global climate-policy conference, this month in Poland, studies exploring carbon pricing’s shortcomings have begun piling up. They now amount to a new and sobering climate-literature genre.

Belief in carbon pricing was strong in 2015, when policymakers from some 190 countries issued the Paris Agreement, calling for measures to keep the increase in the average global temperature “well below” 2°C above preindustrial levels and for “pursuing efforts” to keep the rise below 1.5°C.6 Unlike prior climate agreements, notably the Kyoto Protocol, which nearly two decades earlier had pressed for emission cuts only from developed countries, the Paris Agreement included specific emission-reduction pledges even by China, India, and other developing countries, which now produce the bulk of global emissions. But the pledges countries made in Paris were voluntary rather than mandatory, and most were relatively weak. Even if countries made good on them, it was clear, the world would not cut emissions anywhere near enough to avoid crashing through the 2°C threshold.

Coming out of Paris, carbon pricing was a presumption. In 2017, a group of leading economists backed by the World Bank and called the High-Level Commission on Carbon Prices announced that meeting the Paris temperature targets would require carbon prices of US$40 to $80 per metric ton of carbon dioxide by 2020 and of $50 to $100 per ton by 2030.  But in May the World Bank reported that, though the percentage of global greenhouse-gas emissions subject to carbon prices had risen to 20%, only 3% of those emissions were priced at or above the important $40 level.  In other words, fewer than 1% of all global greenhouse-gas emissions are priced at a level likely to constrain them.

Carbon-pricing regimes are spreading, and some are being toughened, but neither is happening quickly enough to make much environmental difference. The Organization for Economic Cooperation and Development (OECD), parsing the numbers somewhat differently than does the World Bank, calculates that 76.5% all energy-related carbon dioxide emissions in OECD and Group of 20 (G20) countries either aren’t priced at all or are priced below 30 euros per metric ton of carbon dioxide, a level the OECD calls “a low-end estimate of the damage that carbon emissions currently cause.” That “carbon gap,” in OECD parlance, has narrowed by just 1 percentage point in each of the past three years—hardly a relevant climate win.

It is against this backdrop that critiques of carbon pricing have begun to accumulate. One of the more notable was published in August by the International Monetary Fund (IMF), whose head, Christine Lagarde, has been an enthusiastic supporter of carbon pricing. She called in 2017 for this response to carbon dioxide: “Price it right, tax it smart, do it now.” As the IMF’s new working paper makes clear, most carbon prices thus far imposed haven’t been right, relying on carbon taxes hasn’t been terribly smart, and, if “it” means a serious response to climate change, the world isn’t doing it now.

The authors of the IMF study used a model to project how carbon prices at two levels by 2030—$35 per metric ton of carbon dioxide and $70 per ton—would affect emissions in the G20 economies. (Few countries have imposed a carbon price anywhere near even the lower of those numbers.) The IMF model clarifies why the world’s largest economies find it so economically and politically difficult to impose a robust price on carbon, just how inadequate were the pledges most countries made in Paris, and how wrenching it will likely be even for countries that made relatively significant Paris pledges to follow through on those promises.

Carbon pricing, as I noted in Foreign Affairs in June, “works well for industries that use a lot of fossil energy, that have technologies available to them to reduce that energy use, and that can’t easily relocate to places where energy is cheaper.” That is why it tends to bite first in the electricity sector. The IMF model underscores this, concluding that the major determinant of how significantly a given carbon price will curb emissions in a given country is the extent to which that country’s electricity sector relies on coal. A $70 carbon tax, the IMF model projects, would cut emissions by significantly more than 30% in coal-dependent China, India, and South Africa; by some 15%–25% in such countries as the United States, Canada, and the United Kingdom; and by less than 15% in coal-light France and Saudi Arabia.9 (That helps explain why, among all these countries, only France has imposed a carbon price above $40 per ton. And even France has difficulty raising the effective price on carbon, as the recent Yellow Vest protests, which led France to suspend a proposed fuel-tax increase, show.)

That carbon pricing hits hardest in coal-reliant places helps explain its political difficulties. The IMF’s modeled carbon tax is particularly regressive—meaning its cost falls particularly heavily on the poorest—in China and the United States, the world’s two top carbon emitters.  (Electricity access in these two coal-heavy nations is broad, meaning the poor there tend to spend a greater portion of their income on carbon-intense power than do the rich.) Although both countries are experimenting with carbon pricing, it is little surprise that the prices in both remain low. In California, carbon prices are higher than in other parts of the United States that have implemented them, but California gets only a small amount of its electricity from coal—and most of that is imported from other states—which bolsters the point. The IMF analysis also helps clarify why China, the world’s top coal burner, proffered a relatively weak Paris pledge. Some governments are trying to counteract the regressive nature of carbon pricing by layering on structures to return all or some of the resulting revenue to consumers—a worthwhile idea. But even those structures have faced opposition in coal-reliant jurisdictions.

Even some countries whose Paris pledges were more robust are likely to have difficulty following through on them. Those pledges “might imply increases in energy prices (and burdens on vulnerable groups) that push the bounds of political acceptability,” the IMF paper notes. A meaningful reduction in carbon emissions, the IMF concludes, would require backstopping countries’ Paris pledges in two ways: by imposing carbon-price floors—levels below which countries decree that their carbon prices will not fall—and by imposing policies other than carbon pricing that force deeper cuts. Inoffensive carbon pricing alone won’t cut it.

Even extraordinarily high carbon prices are failing in important ways to spur significant carbon cuts. A piece published in Energy Policy in late June by Endre Tvinnereim and Michael Mehling explores the uninspiring example of Sweden. The small Scandinavian country has, according to the World Bank, the highest carbon price in the world, at $126 per ton, based on current currency-exchange rates.4 Yet in the quarter century between 1990, when Sweden introduced its carbon tax, and 2015, carbon emissions from Swedish road transportation fell only 4%. Meanwhile, sales in Sweden of new internal-combustion vehicles continue to rise, imposing what the authors call “carbon lock-in” from vehicles likely to remain on the road a decade or more. What’s needed, they argue, are bans on the sale of new internal-combustion cars, bans of the sort that have been proposed in such countries as China, India, France, the United Kingdom, and Norway. Pricing carbon “is useful,” they write, “but far from sufficient to achieve deep decarbonization.”

The authors are right that policies beyond carbon pricing are needed. But clarity about the goal of such policies is key. Some recent critiques of carbon pricing, at least implicitly, construe success in fighting climate change as requiring the near-total replacement of fossil fuels with renewable energy. Plenty of evidence, however, suggests that structuring the climate fight primarily as a pursuit of renewables is neither realistic nor particularly smart.

The goal in fighting climate change is not to end the use of fossil fuels. The goal is to fuel the world while cutting carbon emissions essentially to zero. That will require dramatically lowering the cost and thus boosting the penetration of renewable and other non-fossil energy sources. It also will mean ensuring that the large quantities of fossil fuels that are all but certain to continue to be burned for decades to come are burned using technologies that slash the amount of carbon dioxide their combustion coughs into the atmosphere.

The policies necessary to achieve these twin ends will be complex. A meaningful carbon price would help them, but in most of the world there is little evidence policymakers have the stomach to impose one. Climate change is real. Fighting it demands—from everyone involved—more than rhetoric. That this message is getting across is a good sign.

My Concluding Comment

The graph illustrates the problem very clearly. Since 1994 there have been 24 Conferences of the Parties (COP), along with numerous other meetings. These UNFCCC discussions have utterly failed to reduce CO2 emissions. Yet from 2020, emissions have to drop dramatically, if we are to stand a chance of keeping global warming below 1.5°C.

According to IPCC SR15 this will require an annual average investment of around US$2.4 trillion (at 2010 prices) between 2016 and 2035, representing approximately 2.5% of global gross domestic product (GDP). The cost of inaction and delay, however, will be many times greater. (sic).  Note:  This is referring to increasing investments in renewable energy from current US$335B per year to $2.4T.  Present global spending on Climate Crisis Inc. is estimated at nearly US$2T, not limited to renewables.  So this would double the money wasted spent on this hypothetical problem.

cop planes

After reading Ball’s assessment it is obvious that carbon pricing will only reduce emissions by crashing national economies.  The fear of CO2 leads directly to discussion of stopping modern societies in their tracks.  Talking about policies that “bite” this or that sector equates to intentionally dictating economic decline, industry by industry.  And Ball suggests that ever more intrusive bans and regulations must be added on top of higher carbon prices in order to save the planet from our way of life.

This analysis has been preceded by numerous doomsday deadlines over the decades which we have passed and not suffered in the least.  Can we finally dismiss the illusion that we humans control the temperature of the planet?  Can we stop the crazy schemes to cut our CO2 emissions, and appreciate instead the greening of the biosphere?

Rational public policymakers can not presume the climate will be unchanging in the future.  Our experience teaches that there will be future periods both warmer and cooler than the present.  History also shows that cold periods are the greater threat to human health and prosperity.  Instead of wasting time and resources trying to control the future weather, we should be preparing to adapt to whatever nature brings.  The priorities should be to ensure affordable and reliable energy and robust infrastructure.

See Also IPCC Freakonomics

 

Stop Pension Funds Gambling on Energy Fads

Haley Zaremba writes at oilprice Will Trump’s Proposed ESG Regulation Help Big Oil? Excerpts in italics with my bolds.

The ESG Push to Gamble Pension Funds on Climate Concerns

Instead of joining the financial revolution geared toward environmental, social, and governance (ESG) that many experts believe is coming down the pike (with or without the cooperation of the United States) the Trump administration has actively fought against this likely inevitability. A new proposed regulation from the United States Department of Labor would explicitly bar the department from taking ESG into consideration in decision making concerning U.S. employer-provided pension funds. Ostensibly, this move is because the government doesn’t believe that the nation’s pension fund managers are doing a good job, but many critics see this as a blatant attempt to redirect investment dollars towards fossil fuels, which are increasingly falling out of favor with investors.

[Note: The author’s bias shows, favoring subsidized wind and solar enterprises over oil and gas companies that provide reliable energy powering modern civilization, reliable returns and tax revenues.]

This week Bloomberg Green reported that in this new proposed ruling, “the language reaffirms the standard interpretation of fiduciary guidelines that only financial risks and returns can be considered in the management of U.S. employer-provided pension funds; ‘non-pecuniary goals,’ for example relating to political or public policy, should not guide pension investments.” As Bloomberg Green points out in the report, “The timing is ironic, coming as the fossil fuel industry begins to confront existential questions about its near-term future. It would almost be amusing if it wasn’t for the fear, uncertainty, and doubt the proposal leaves in its wake.”

For Balance, Consider How Risky are Wind and Solar Investments

Paul Driessen writes at CFACT Reporting renewable energy risks.  Excerpts in italics with my bolds.

The whole thrust of the ESG campaign is to burden oil, gas and coal companies with additional reporting and scrutiny regarding hypothetical global warming impacts and to downgrade their worth in investors’ eyes.  Driessen correctly points to the risk of renewable energy projects collapsing when public support and tax dollars are withdrawn, as is already happening in some European countries.

If efficient energy companies must disclose climate-related financial risks, so should renewables.

Replacing coal, gas and nuclear electricity, internal combustion vehicles, gas for home heating, and coal and gas for factories – and using batteries as backup power for seven windless, sunless days – would require some 8.5 billion megawatts. Generating that much electricity would require some 75 billion solar panels … or 4.2 million 1.8-MW onshore wind turbines … or 320,000 10-MW offshore wind turbines … or a combination of those technologies … some 3.5 billion 100-kWh batteries … hundreds of new transmission lines – and mining and manufacturing on scales far beyond anything the world has ever seen.

That is not clean, green, renewable energy. It is ecologically destructive and completely unsustainable – financially, ecologically and politically. That means any company, community, bank, investor or pension fund venturing into “renewable energy” technologies would be taking enormous risks.

Once citizens, voters and investors begin to grasp:

  • (a) the quicksand foundations under alarmist climate models and forecasts;
  • (b) the fact that African, Asian and even some European countries will only increase their fossil fuel use for decades to come;
  • (c) the hundreds of millions of acres of US scenic and wildlife habitat lands that would be covered by turbines, panels, batteries, biofuel crops and forests clear cut to fuel “climate-friendly” biofuel power plants; and
  • (d) the bird, bat and other animal species that would disappear under this onslaught – they will rebel. Renewable energy markets will implode.

Growing outrage over child labor, near-slave labor, and minimal to nonexistent worker health and safety, pollution control and environmental reclamation regulations in foreign countries where materials are mined and “renewable” energy technologies manufactured will intensify the backlash and collapse. As the shift to GND energy systems brings increasing reliance on Chinese mining and manufacturing, sends electricity rates skyrocketing, kills millions of American jobs and causes US living standards to plummet, any remaining support for wind, solar and other “renewable” technologies will evaporate.

Pension funds and publicly owned companies should therefore be compelled to disclose the risks to their operations, supply chains, “renewable energy portfolio” mandates, subsidies, feed-in tariffs, profits, employees, valuation and very existence from embarking on or investing in renewable energy technologies or facilities. They should be compelled to fully analyze and report on every aspect of these risks.

The White House, Treasury Department, Securities and Exchange Commission, Federal Reserve, Committee on Financial Stability, Pension Benefit Guaranty Corporation and other relevant agencies should immediately require that publicly owned companies, corporate retirement plans and public pension funds evaluate and disclose at least the following fundamental aspects of “renewable” operations:

* How many wind turbines, solar panels, batteries, biofuel plants and miles of transmission lines will be required under various GND plans? Where? Whose scenic and wildlife areas will be impacted?

* How will rural and coastal communities react to being made energy colonies for major cities?

* How much concrete, steel, aluminum, copper, cobalt, lithium, rare earth elements and other material will be needed for every project and cumulatively – and where exactly will they come from?

* How many tons of overburden and ore will be removed and processed for every ton of metals and minerals required? How many injuries and deaths will occur in the mines, processing plants and factories?

* What per-project and cumulative fossil fuel use, CO2 and pollution emissions, land use impacts, water demands, family and community dislocations, and other impacts will result?

* What wages will be paid? How much child labor will be involved? What labor, workplace safety, pollution control and other laws, regulations, standards and practices will apply in each country?

* What human cancer and other disease incidents and deaths are likely? How many wildlife habitats will be destroyed? How many birds, bats and other wildlife displaced, killed or driven to extinction?

* For ethanol and biodiesel, how much acreage, water, fertilizer, pesticide and fossil fuel will be required? For power plant biofuel, how many acres of forest will be cut, and how long they will take to regrow?

* What “responsible sourcing” laws apply for all these materials, and how much will they raise costs?

* How will home, business, hospital, defense, factory, grid and other systems be protected against hacking and power disruptions caused by agents of overseas wind, solar and other manufacturers?

* What costs and materials are required to convert existing home and commercial heating systems to all-electricity, upgrade electrical grids and systems for rapid electric vehicle charging, and address the intermittent, unpredictable, weather-dependent realities of Green New Deal energy sources?

* What price increases per kWh per annum will families, businesses, offices, farms, factories, hospitals, schools and other consumers face, as state and national electrical systems are converted to GND sources?

* How many power interruptions will occur every year, how will they hurt families, factories and other users – and what will be the cumulative economic and productivity damage from those power outages?

* To what extent will policies, laws, regulations, court decisions, and citizen opposition, protests, legal actions and sabotage delay or block wind, solar, biofuel, battery, mining and transmission projects?

* How many solar panels, wind turbine blades, batteries and other components (numbers, tons and cubic feet) will have to be disposed of every year? How much landfill space and incineration will be required?

* How accurately are climate model predictions of temperatures, sea levels, tornadoes, hurricanes, floods, droughts and extreme weather events that are being used to justify renewable energy programs?

These issues (and many others) underscore the extremely high risks associated with Green New Deal energy programs – and why it is essential for lenders, investment companies, pension funds, manufacturers, utility companies and other industries to analyze, disclose and report renewable energy risks, with significant penalties for failing to do so or falsifying any pertinent information.

See Also Cutting Through the Fog of Renewable Power Costs

“Woke” Capitalists High on ESG

Rupert Darwall writes at The Hill BlackRock’s choice: Investment fiduciary or political activist? Excerpts in italics with my bolds.

Something more disruptive and longer lasting than COVID-19 is at work in BlackRock’s New York offices — and its implications may well extend beyond one financial firm and its shareholders.

Astonishingly, BlackRock now threatens to vote against directors who don’t incorporate its views on environmental and social issues, the “E” and the “S” in ESG social-investing criteria. (The “G” stands for “governance.”) BlackRock says it will take a “harsh view” of companies that fail to provide it with the hard data it demands, even though Fink himself tells corporate CEOs that such reporting requires “significant time, analysis and effort.” And it proposes to make good on its threat by aligning its proxy vote with single-issue activist campaigners when it judges a company is not effectively dealing with an issue it deems “material” or might not be dealing with ESG issues “appropriately.”

Unsurprisingly, BlackRock camouflages this shift with language about its fiduciary duty to its customers — American savers and investors. “BlackRock’s primary concern is the best long-term economic interest of shareholders,” its investment stewardship guidelines state. “We do not see it as our role to make social, ethical, or political judgments on behalf of clients.”

It’s hard keeping up the pretense, though — and sometimes the mask slips. The goal cannot be transparency for transparency’s sake, Fink says: “Disclosure should be a means to achieving a more sustainable and inclusive capitalism.” Companies must commit to serving all their stakeholders and embrace purpose, as distinct from profit. This goal is nothing if not controversial. It also is inherently political.

In their critique of the Business Roundtable’s recent adoption of such stakeholder capitalism, former Secretary of State George Shultz and his coauthors suggest that the demotion of profit and shareholder accountability should be seen as a response to a resurgence of a socialist impulse in American politics; it will result in decisions that sacrifice shareholder value and is a formula for endless legal wrangling and litigation. In a March 2020 working paper, “The Illusory Promise of Stakeholder Governance,” Harvard Law School’s Lucian Bebchuk and Roberto Tallarita conclude that the stakeholderism advocated by the Business Roundtable and BlackRock should be viewed “largely as a PR move.”  Yet, what may have started out as a sham, pain-free PR exercise to signal E&S virtue has morphed into something of a monster, with real-world consequences for BlackRock, the companies it invests in, its customers and for society in general.

This raises the question of the demarcation between the rightful domains of democratic politics and business.

BlackRock’s contention that its stewardship engagement is not about making political judgments on behalf of its clients falls apart when it comes to climate, reflecting its capitulation to shareholder activists. At a minimum, BlackRock is imposing its political judgment on companies about climate regulation that future presidents and future Congresses might or might not enact. Given the tortured political and judicial history of attempted climate legislation and regulation in the U.S., this is an unusually difficult call to make.

In fact, BlackRock goes much further. In January, BlackRock joined Climate Action 100+ (the clue’s in the name) to press companies to “take necessary action on climate change,” a formulation that dispenses with any pretense that BlackRock is doing anything but acting as a political activist with a $3 trillion equity portfolio.

Thus, BlackRock and its shareholder activists are using corporate governance statutes to usurp regulatory functions that properly belong to government. Whatever BlackRock’s motives in allowing itself to be strong-armed by shareholder activists – expediency, political benefit or poor judgment – the outcome is that BlackRock is subordinating its core responsibility as an investor fiduciary to political activism.

This incurs a double democratic deficit: The first is not formally soliciting its clients’ permission to use their money to advance BlackRock’s new political agenda; the second is bypassing the democratic process of electing officials to political positions to pass laws and appoint regulators. Whatever one’s views on climate change and ESG in general, the means used by shareholder activists and BlackRock’s capitulation to them amount to an abuse of corporate governance structures put in place to protect shareholders and not intended to be a channel for political campaigning by other means.

Addendum from the Financial Times

Excluding oil from the definition of fossil fuels is everything but straightforward,’ says MEP Paul Tang © Essam Al-Sudani/Reuters

Investors blast EU’s omission of oil from ESG disclosures

Under draft proposals for the EU’s sustainable disclosure regime, the European authorities responsible for banking, insurance and securities markets define fossil fuels as only applying to “solid” energy sources such as coal and lignite.

This means asset managers and other financial groups would have to follow tougher disclosure requirements for holdings in coal producers than for oil and gas company exposure.

The huge rise in popularity of ESG investing over the past decade has prompted regulators to take measures to confront the risk of greenwashing.

The latest EU proposals represent a significant watering down of its ambitious sustainable disclosure rules, which aim to give end investors clear information on the environmental, social and governance risks of their funds.

But critics also argue they risk undermining the EU’s commitment to becoming a world leader in sustainable finance, a key priority for the bloc as it seeks to tie the coronavirus recovery to creating a greener economy.

See also Financiers Failed Us: Focused on Fake Crisis

 

Coal Needed to Power Recovery

By Conor Bernstein explains at Real Clear Energy  For Energy, Affordability, Reliability, and Balance Matter More Now Than Ever.  Excerpts in italics with my bolds.

While we are still in the throes of the crisis, it’s essential we already plan for the recovery. Affordable, secure and reliable power will be all the more important as the nation tries to get back on its feet.

But, if we aren’t careful, near-term market conditions could accelerate retirements of additional well-operating coal plants, further eroding the balanced electricity mix that has long ensured affordable, reliable power in markets across the country.

Even before the onset of the COVID-19 crisis, cracks were emerging in regional grids where fuel security and balance have been traded for increased reliance on just-in-time fuel delivery. Shrinking reserve margins, flirtations with rolling blackouts and spiking wholesale electricity prices are becoming far too common for comfort.

Michigan offers the latest evidence of the challenges emerging from the pivot away from coal. Just a week ago, the region’s grid operator, MISO, reported that capacity prices for the Lower Peninsula maxed out in their annual capacity auction. With a shrinking reserve margin, clearing prices for the capacity auction jumped 10 times what they had been a year ago.

This comes as Michigan utilities have closed more than a dozen coal plants since 2016 and have more retirements scheduled.

Wholesale electricity prices are going up just when consumers and industry need support for economic recovery. The timing couldn’t be worse. Michigan is turning to costly energy imports to ensure reliability. The takeaway should be clear: the shift away from coal – often driven by state policy – is coming with real costs.

As policymakers, regulators and utilities grapple with the ramifications of the pandemic, pumping the brakes on further plant retirements is a logical step to hedge against uncertainty and to ensure our balanced, affordable and reliable electricity mix doesn’t become another victim of this unprecedented moment.

Indiana, even before the crisis, had already moved to require additional review of proposed retirements to ensure utilities weren’t passing unnecessary costs onto consumers while weakening the reliability of the grid. A thoughtful, do-no-harm approach to the electricity sector is exactly what’s needed across the country as we confront the uncertainty of the months ahead.

The past several years have seen a shift away from what we know works – balance, certainty, fuel security – to increased reliance on thinner margins, weather-dependent resources and the inherent vulnerability of just-in-time fuel delivery. With global supply chains turned upside down, with chaos wreaking havoc across the oil and gas sector, and the economy shaken to the core, the era of flying by the seat of our pants into the unknown and of utilities filing a record number of rate cases needs to end.

Time and again, grid operators overestimate capacity additions while underestimating retirements. That kind of miscalculation, in a perilous moment like this, could prove disastrous. Now, more than ever, we need smart policymaking that puts reliability, resilience and affordability first. Ensuring we maintain essential coal generating capacity and properly value the security and balance it brings to the grid must be a priority.

See Also New York Nukes Itself

Surprise! Carbon Fuels are Plentiful, not Scarce.

Brentan Alexander writes at Forbes $40 Oil Will Return: This Isn’t The End Of Fossil Fuels. Excerpts in italics with my bolds and images.

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Yesterday, May futures for WTI crude, a benchmark often used for U.S.-sourced oil, crashed into negative territory for the first time ever. It was the last day to trade a May contract, and with storage space filling up as oil demand craters, contract holders with nowhere to put the oil they were obligated to physically accept were forced to pay to have somebody take contracts off their hands. This moment represents a stunning new chapter in the ongoing oil crisis that has seen record drops for oil consumption and prices globally. Spot prices in May will remain depressed, and the June market is likely to be painful as well. It may seem like the days of $40 oil are behind us, and that we’re witnessing the beginning of the end for oil as the lifeblood of the global economy. We aren’t:

Oil will one day return to $40 a barrel, but the last few weeks have demonstrated in hyperdrive how the oil endgame will play out.

It seems that oil isn’t the precious commodity it has been made out to be. Much ink has been spilled on the concept of peak oil, wherein dwindling reserves of oil cause rising prices as the marketplace becomes more and more supply-constrained. In the endgame scenario, supply shocks send prices soaring to levels that force global economies to find alternative fuels, renewable energy, or otherwise. A key issue with the peak oil theory is that ‘reserves’ are only counted if they’re known to exist and can be extracted with current technology.

As prices soared to upwards of $100 a barrel around 2008, many wondered if the high prices were here to stay, and if peak oil was coming to pass. Instead, high prices were just the motivation needed to unlock a bit of American ingenuity. Within 10 years, new technology unlocked vast fields of oil and gas throughout Texas, Pennsylvania, and the Dakotas. The ‘reserves’ in the United States multiplied, oil prices dropped, and the United States regained its status as the world’s leading producer of oil.

Peak oil, it turns out, is a story of peak demand.

As some economies of the world begin to face the realities of climate change, new renewable and net-zero (or negative!) technologies have emerged and will emerge to supplant fossil oil. At first, these technologies require higher fossil prices, government programs, or both, to compete in the market. But as they mature and grow, prices come down. Demand for fossil will drop accordingly. And at some point, so little demand will exist for crude oil that producers will have to pay somebody to take if off their hands or stop producing it altogether.

This market conversion has already begun. Tesla has proven electric vehicles can out-perform and out-sexy the incumbents. Biorefineries are being built to turn household trash in to jet fuel. Governments are taking action to incentivize cleaner fuels. Nevertheless, action thus far has been spotty at best and despite the current market, peak oil demand has not yet come to pass.

The unprecedented demand destruction caused by COVID-19 will eventually subside as the threat of the pandemic wanes. The public will fly again, drive again, and buy plastic again; oil demand will ratchet up again. Shuttered wells won’t restart, stored oil will be drawn down, OPEC will maintain supply controls to balance government budgets, and prices will rise to $40 or more again. But someday, hopefully in the not too distant future, oil will again find itself in decline when a different (and more permanent) source of demand destruction weans the global economy off of fossil carbon for good.

Comment:

This article makes a distinction between short and long term energy supply and demand.  Thus the price drop yesterday signifies a present glut of carbon fuels.  Climate activists can not count on the supply of fossil fuels falling as long as they are plentiful and inexpensive.  For example, others note coal reserves exceed 100 years at current rates of consumption, and will remain attractive for electrical power production.  In the absence of economical substitute energy sources, modern societies for years to come will depend on companies providing carbon-based fuels.

As Bjorn Lomborg has long maintained, this is the time to invest in advanced energy technologies, including nuclear, to engineer price-competitive energy alternatives and achieve an orderly transition for future generations.  It is not a time for short-term bad bets on immature wind and solar tech that do not scale to societies’ need for reliable affordable energy.

BTW, Bill Gates also shares and funds this perspective: