U.S. & China GHG Emissions: Diverging Trends

Recently, the U.S. Energy Information Agency (EIA) released a report on energy-related carbon dioxide emissions in 2009. Carbon dioxide emissions from energy use make up over 80 percent of our country’s greenhouse gases. The report showed that last year the U.S. had its largest absolute and percentage decline since the EIA started keeping statistics in 1949. Carbon dioxide emissions declined by 7 percent - or 405 million metric tons.

The report cites three factors that led to the reduction in emissions: per capita gross domestic product (GDP which is economic output), energy intensity (the amount of energy consumed relative to total output or GDP) and carbon intensity (the amount of carbon produced per $1,000 of GDP). Although the economic downturn had been expected to lower emissions, the slowdown in economic growth only accounted for about a third of the reduction. The remainder was driven by greater energy efficiencies and less energy-intensive activities in our economy. Energy intensity has declined by an average of 2 percent from 2000 to 2008. Carbon intensity also decreased as the cheap price of natural gas caused many utilities to burn it for electricity generation instead of coal.

The U.S. performance stands in stark contrast to China's performance. The New York Times article below points out that China’s growing demand for power from oil and coal has led to the largest six-month increase in man-made greenhouse gases ever by a single country. Advocates of climate change legislation often cite the growth of renewable energy in China as a sign that they are doing more than the U.S. However, these advocates ignore the explosive growth in the consumption of energy from traditional sources that is dwarfing renewable energy use. Part of the reason for the increase, according to the article, is that China’s economy is shifting from light export industries to heavy industrial production - often heavy industrial production that used to be done in cleaner, better regulated western economies. The increase in energy-intensive industries and increased use of coal is making China’s overall economy less energy efficient, reversing a four-year trend of energy efficiency gains.

The lesson here is that growing energy efficiency and a decrease in carbon intensity is beginning to break the link between economic growth and carbon dioxide emissions in the U.S. Continuing that trend, largely driven by the market, is the way to reduce emissions without harming the economy, as opposed to adopting a large, bureaucratic cap-and-trade program. And these news items are a further reminder that developing countries with major economies are the current and future driver of man-made greenhouse gas emissions. Without action by them, what we do here in the U.S. will have little impact on the global climate, but a large impact on our economy.

“The Carbon Recession,” Wall Street Journal, May 10, 2010. http://online.wsj.com/article/SB20001424052748704370704575228311111072860.html

“China’s Energy Use Threatens Goals on Warming, New York Times, May 7, 2010. http://www.nytimes.com/2010/05/07/business/energy-environment/07energy.html?src=busln

EIA Emissions Report: http://www.eia.doe.gov/oiaf/environment/emissions/carbon/index.html

Mt. Eyjafjallajokull

Recently, I visited Mt. Eyjafjallajokull in Iceland to see this volcano firsthand and speak with scientists studying the eruption and its potential impact on our climate. Volcanoes are one of the sources of naturally occurring greenhouse gases and large eruptions in the past have impacted our climate.

During an eruption, volcanoes release a number of gases into the atmosphere. The most abundant gases typically released from volcanoes are water vapor, carbon dioxide and sulfur dioxide. Scientists have calculated that volcanoes emit between about 130-230 million metric tons of CO2 into the atmosphere every year.

While it is unclear at this time how much total CO2 is expected to be released from the current Mt. Eyjafjallajokull eruption, the 1991 eruption at Mt. Pinatubo in the Philippines was estimated to have released 42 million metric tons of CO2, roughly the same as the amount emitted by the state of Montana in 2005. The eruption at Mt. Pinatubo was one of the biggest volcanic eruptions in the 20th century, and Mt. Eyjafjallajokull is significantly smaller by comparison. Current estimates place CO2emissions from Mt. Eyjafjallajokull at 150,000 to 300,000 metric tons daily, but it is unclear how long these levels will be sustained.

But the effect of volcanoes on the Earth's climate goes beyond CO2. The sulfur dioxide emissions from volcanic eruptions are also thought to be responsible for the global cooling that has been observed for a few years after a major eruption. Emissions of SO2 from an active volcano can reach the stratosphere where they convert to tiny persistent sulfate particles. These sulfate particles reflect energy coming from the sun, which produces a widespread cooling effect by preventing the sun's rays from heating the Earth.

Mt. Eyjafjallajokull is a stark reminder of how powerful nature is and how little we can control it. This eruption grounded thousands of flights and stranded tens of thousands of travelers in Europe. Yet some people in the climate debate seem to think humans control everything. We need to set aside that hubris. Politicians who use science to push their agendas would be wise to learn from this event and understand that our current climate models have serious limitations. We would be better served in pursuing realistic solutions and not expending tremendous financial resources under the false assumption that we humans control everything.

“Volcano emitting tonnes of CO2 daily,” April 20, 2010 http://news.smh.com.au/breaking-news-world/volcano-emitting-tonnes-of-co2-daily-20100420-sppr.html

Video of Mt. Eyjafjallajokull erupting

I Told You So

Goldman Sachs: The beginning of "Truth Be Told..."

In several of my blogs I have mentioned how Goldman Sachs and Morgan Stanley, having destroyed the mortgage market and crashed the U.S. economy, have now moved their derivative trade to cap and trade where they will do it all over again.

It disgusts me to have my extreme cynicism proven correct -- politics has always been about moving money around -- rewarding those who help politicians get elected. Goldman Sachs and Morgan Stanley gave over $25m to politicians in the last election. Taxpayers bailed them out with TARP money costing billions.

Enough is enough. No business is too big to fail. Let 'em go down or put 'em down: Goldman or the politicians who support them. Time to punish (read regulate) those who cannot control their greedy impulses!

The Changing Climate Debate

It has been an eventful few months for people following the "settled" climate change debate. Last December began with the Climategate scandal involving emails that have raised questions about the data the International Governmental Panel on Climate Change (IPCC) has relied on to make its forecasts. That was followed by the spectacular failure at the Copenhagen Climate Change Conference. January brought an upset special election in Massachusetts that made already skittish moderate Democrats even less inclined to vote on a climate change bill. Then there was the discovery that some of the IPCC’s most extreme predictions about the impact of climate change were based not on peer-reviewed science but reports by environmental advocacy groups. And finally, the head of the U.N. Climate Change treaty process recently resigned and said that an international climate agreement was unlikely this year.

The momentum for passing climate change legislation that had been building over the last few years appears to be crumbling under the weight of misguided priorities. A healthy discussion about the science or realistic emission reduction goals was replaced by schemes to create a carbon market Wall Street could profit from and advocating an unprecedented level of government central planning.

All of these developments are a sign that the entire conversation needs to be changed. In many ways, the debate is stuck in the 1990s and needs to instead focus on the realities of today. Developed versus developing countries is becoming an irrelevant concept. Globalization has fueled the rapid economic growth of several Asian countries, and made it clear that emissions-dependent industry can rapidly shift operations to avoid regulation. The focus needs to be on all major economies, where the bulk of emissions are generated now or will be in the future. All major economies need to be on board if a global climate change solution is going to be effective.

Energy security needs to be a front and center concern. We cannot take our energy resources for granted. China sure isn't. China is investing all over the world in traditional and alternative forms of energy. They are investing in the Canadian oil sands, oil reserves in Africa, and produce 95 percent of the world’s rare earth elements that are essential to the manufacture of wind mills and hybrid car batteries. They are securing their energy future while we dither over policies that will do nothing to address global greenhouse gas emissions or energy security. We need to develop our domestic energy resources and tap into the resources of friendly trading partners like Canada and Mexico.

If we don’t change the conversation and our priorities, we will be less energy secure and will have done nothing to reduce global greenhouse gas emissions.

What Are We To Make of This?

For a little over two years, I have been fortunate enough to have had the time to carefully examine issues of public importance like global warming. The "science," as the proponents of global warming like to say, is a closed book and those who refuse to accept it are immediately labeled "deniers." Having read most of the "science," I was, until six months ago, mostly convinced that it was settled.

As I have stated in this space previously, I am concerned, and will remain so until convinced otherwise by observation, and the application of logic and reason, that the solutions to the greenhouse gas conundrum need to be carefully scrutinized so that they do not make matters worse rather than better.

So far, national cap and trade, regional cap and trade, and cap and trade, in general, make me nervous because I pride myself on not being fooled more than once. When Goldman Sachs, Morgan Stanley, and other "banks" are major supporters of this solution, like they were of making housing more affordable through the use of "derivatives" and other calculus (that is neither transparent nor particularly well understood 2.5 years into the housing catastrophe!), I remain highly skeptical of cap and trade, of any variety, period, and so should you.

However, putting the half-baked but lucrative for the banks and investors, cap and trade game aside for a minute, what are we to think of the March 5, 2010 SCIENCE article entitled,

"Contributions of Stratospheric Water Vapor to Decadal Changes in the Rate of Global Warming"?

Now this article really does confuse me since, if the "science" is settled, well, read the summary for yourself and, if you have the tenacity read the whole article, and you decide whether healthy skepticism is really denial or, in fact, highly rational and in the general public's best interest. Before we poor billions down the next "housing affordability-type" rat hole, "greenhouse gas amelioration," it would be highly logical if the most prestigious science publication could help us resolve the "science" of the issue more precisely and "permanently."

Originally published in Science Express on 28 January 2010 Science 5 March 2010: Vol. 327. no. 5970, pp. 1219 - 1223 DOI: 10.1126/science.1182488

RESEARCH ARTICLES

Contributions of Stratospheric Water Vapor to Decadal Changes in the Rate of Global Warming

Susan Solomon,¹ Karen H. Rosenlof,¹ Robert W. Portmann,¹ John S. Daniel,¹ Sean M. Davis,^1,2Todd J. Sanford,^1,2 Gian-Kasper Plattner³

Stratospheric water vapor concentrations decreased by about 10% after the year 2000. Here we show that this acted to slow the rate of increase in global surface temperature over 2000–2009 by about 25% compared to that which would have occurred due only to carbon dioxide and other greenhouse gases. More limited data suggest that stratospheric water vapor probably increased between 1980 and 2000, which would have enhanced the decadal rate of surface warming during the 1990s by about 30% as compared to estimates neglecting this change. These findings show that stratospheric water vapor is an important driver of decadal global surface climate change.

¹ National Oceanic and Atmospheric Administration (NOAA) Earth System Research Laboratory, Chemical Sciences Division, Boulder, CO, USA.
² Cooperative Institute for Research in Environmental Sciences, University of Colorado, Boulder, CO, USA.
³ Climate and Environmental Physics, Physics Institute, University of Bern, Sidlerstrasse 5, 3012 Bern, Switzerland.

Coming Soon to a State Capitol Near You: Climate Change

Having come up empty in Copenhagen and facing defeat in the U.S. Senate, advocates for climate change legislation are retreating to the states.

No meaningful progress on an international climate change treaty was made at the Copenhagen Climate Change Conference. Key members of the U.S. Senate now predict that cap and trade won't see the light of day this election year either. But in our state capitols, proponents of carbon regulation are plowing ahead.

At the end of 2009, 11 northeastern states committed to develop a low-carbon fuel standard (LCFS) for their region. These states make up the Regional Greenhouse Gas Initiative (RGGI), which has already imposed a cap-and-trade program for electric utilities. The result: these states have the highest retail electric rates in the country (http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html). Now they want to create an LCFS, which will drive up gasoline and diesel costs for consumers.

Not to be outdone, the Midwest Governors Association has made design recommendations for a cap-and-trade system and is preparing recommendations for an LCFS for the six states participating in its Greenhouse Gas Emissions Accord. Meanwhile, Minnesota and Michigan have introduced LCFS legislation, while Wisconsin is set to begin debating an omnibus climate change bill.

You won't be surprised to learn that western states are pursuing similar policies on a regional level and individually. Oregon passed LCFS legislation last year and now Washington is also considering establishing one.

And then there is California, the state responsible for developing these questionable policies. California’s LCFS goes into effect next year and its cap-and-trade program starts in 2012. Those two policies are the flagship programs for The Golden State’s climate change efforts and the success or failure of these actions in California will influence state-level activity across the country.

Other states should be wary of following California’s lead. California has proven to be a shining example of fiscal mismanagement, and is well on its way to legislating itself into junk bond status. Many of the impending climate regulations in that state are causing manufacturers to seriously consider closing shop for good or relocating their operations. In order to prevent further harm to the economy, one California state legislator is currently getting signatures to put an initiative on the ballot for the next election that would bar the state’s cap-and-trade program from going into effect until the state’s unemployment rate dips below 5.5 percent (the state’s unemployment rate is currently 12.3 percent, third highest in the country).

China and India made it clear in Copenhagen that they have no intention of committing to binding emission reductions. They would not even agree to international monitoring, reporting and verification of their emissions.

Most states are facing continued budget deficits and high unemployment. Climate policies that make businesses less competitive with other regions of the country and -- more importantly -- the world won’t help the situation. We need to make sure our state leaders understand that piecemeal policy is bad policy.

Copenhagen Update: What's Next?

What can we expect to happen next after the breakdown in Copenhagen? Considering that no deadline was put in place to reach an international accord, it seems safe to say that such an agreement is easily several years away, particularly in light of the great differences that exist on the major issues, like binding emission reductions.

The outcome in Copenhagen is also going to make it very hard for Senate Democrats, particularly those from Midwestern manufacturing states, to vote for anything that resembles the House bill. Considering China had little interest in even talking to our President in Copenhagen, those senators should be wary of voting for any bill that will send jobs in their states overseas. That is exactly what cap and trade will do.

Just as the Kyoto Accord should be torn up and a whole new approach developed, the same can be said of climate legislation before Congress. While we have been busy debating climate bills, China and India’s economies have continued to grow. China has spent the last year buying up energy and mineral resources around the world, including the Canadian oil sands. Meanwhile, we engage in a completely pointless either/or debate about energy. If we don’t wake up, we will find our energy security severely compromised in the not-to-distant future.

We need to refocus the U.S. debate so that it is about energy security and independence and how best to drive the technology needed to achieve both. The discussion needs to recognize the need for more nuclear power, the important role fossil fuels will continue to play, the need for economically sustainable renewable energy, and how to best drive energy efficiency. Greenhouse gas emission reductions will be a byproduct of this effort.

We will need all of these approaches to meet our future energy needs and increase our energy security. We cannot continue to delude ourselves into thinking one or two technologies alone will make the difference. The time to change the conversation is now, before it is too late.

Copenhagen Update: Broken Process

The U.N. Climate Change Conference in Copenhagen ended early this morning with delegates voting to “take note” of an agreement brokered by the U.S. that essentially establishes a system for third party verification of emissions and aid to developing countries. The final agreement did not establish binding emission reduction targets or even set a timeline for their completion. The vote to simply “take note of” – as opposed to approving – the agreement severely undercuts efforts by the Obama Administration to spin the agreement yesterday as unprecedented.

The Administration and other governments would be far better off being honest and admitting that the U.N. process is a failure that no amount of future talks can salvage. As noted in previous posts, the impasse is largely attributed to differences between developed and developing countries and the expectations for each under a new treaty. My main take away from this conference is that the U.N. process has simply become a forum for developing nations to extort money from developed nations under the guise of environmental protection and for traders who want to make millions of dollars in a new carbon market.

The President once again wasted an enormous amount of political capital for very little result. This agreement could have been hammered out by the Secretary of State and other foreign ministers while leaving the heads of state at home. Much of the stalemate came down to differences between the U.S. and China on issues like binding reductions, emissions verification and money. As this quote from the New York Times illustrates, the President is far more interested in a deal than the Chinese Premier: “Twice during the day, [Chinese Premier] Wen sent an underling to represent him at the meetings with Mr. Obama. To make things worse, each time it was a lower-level official.” The President needs to become a better negotiator with China on a whole range of issues.

The U.S. did float some interesting ideas over the two weeks to make China, India and other rapidly developing countries more accountable. One idea is to establish a new category of countries that captures this group and would not exempt them from making required reductions. This is crucial now that China is the largest emitter of greenhouse gas emissions. Another is to demand third party verification, which was part of the final agreement though questions remain as to whether it will have enough teeth to be effective.

The President interrupted a meeting of the leaders from China, India, Brazil and South Africa to finally get his audience with Mr. Wen. While it is embarrassing they started without him, this meeting may offer a path to a future agreement and exerting leadership. Ever since the Kyoto Protocol established different expectations for developed and developing countries, true progress on global greenhouse gas emissions reductions has been difficult. As I have said, Kyoto is broken and using its framework to craft a successor agreement will be a failure, as these talks have illustrated. It may make more sense for the leaders of the top ten emitting countries, which account for approximately 70 percent of global emissions, to work out an agreement.

A new direction is required for any international treaty to be effective. A new agreement has to recognize the changes that have taken place since 1997. With the United Nations predicting that two-thirds of the expected growth in emissions between now and 2030 will come from developing countries, exempting these countries from mandatory reductions makes no sense. And any agreement should be about the environment and not redistributing money to other countries and Wall Street.

Copenhagen update: no entry

The site of the Copenhagen climate negotiations – a conference center called Bella Center – is situated between busy roads and rail tracks south of town and is surprisingly isolated from the heart of the city.

Like the short leash they have given protesters here, security is paramount at the Bella Center. Your only chance to get within 1,000 yards of the facility is to hold a UN-issued badge. But sometimes that isn’t even good enough.

Would you believe that people who went through the rigors of getting entrance badges, traveling thousands of miles, and spending a fortune to attend have been turned away at the gates? As it turns out, thousands of badge-holders have been denied access to the climate change summit this past week, because over 40,000 badges were issued for a facility that holds only 15,000 people.

I personally know of visitors who spent hours in line never to be admitted to the Bella Center. Call me crazy, but I’m wondering how an organization that can’t even count heads for a conference is going to be able to orchestrate a complex international agreement involving nearly 200 countries?

Copenhagen update: It's about the money

Yesterday the International Herald Tribune reported that the African Union, fearing that they may be forced to return to Africa with no cash in their pockets, has returned to talks at Copenhagen with a new proposal: "Reflecting the gulf between north and south over money, the Ethiopian prime minister, Meles Zenawi, speaking on behalf of the African Union, offered to reduce to $100 billion a proposal for wealthy countries to provide energy and adaptation aid of $400 billion a year starting in 2020," the paper reported.

It is clear that the main objective of the African Union is to get payed. What's more, they feel they are entitled. Thanks to overblown reports of man's role in climate change, the feeling across Africa (and other developing areas) is that their environmental woes are being caused by "the north."

This is another unfortunate example of how these Copenhagen talks are about economics, not the environment. Perhaps the African Union should try listening to the wisdom held in the words of "The Gambler": "You never count your money, while you're sittin' at the table, there'll be time enough for countin' when the dealin's done."

Photos from Copenhagen

Denmark gets 20 percent of its power from wind, but it also still relies on traditional energy sources including coal.

Hopenhagen (billboard) is a grassroots movement urging world leaders at the U.N. Climate Change Conference to achieve meaningful outcomes that limit future carbon emissions, minimize the effects of climate change, and fuel a sustainable global economy. As the conference winds down, hopes are fading that an agreement can be reached.

This large white ball, located in City Square in Copenhagen, Denmark, lights up at night and has climate change information scrolling around it. This area is the center of activity in Copenhagen, where various energy and environmental displays have been featured during the U.N. Climate Change Conference.

Copenhagen update: the religion of climate change

One of the most striking things I saw on my first walk around Copenhagen should have been no surprise at all. It was a sign, about 20 x 20 (feet not meters!) that said "Stop Climate Change Now." It was just another of the many signs plastering the walls, hanging from buildings, and displayed on cars and sea faring vessels around Copenhagen. But after some of the recent research I have been doing, this one was particularly of interest. Because the climate is, and forever has been, changing, we cannot stop this change. You might as well display a sign saying "Stop the Earth Rotating on its Axis Now."

As more and more research is released about the dramatic and sometimes sudden changes the Earth's climate has experienced long before the Industrial Age, it has become clear that many of those who have gathered here have their climate belief system and they are unwilling to accept any challenges to it, and are not very interested in the realities of historical climatology. The blinders they have put on allow them to continue to pursue their goals with a religious fervor.

The choice of Denmark as the location of these historic talks is of interest as well. Denmark was home to many of the Vikings that built wealth in the Middle Ages through pillage, conquest, and the settling of new lands that became available because of a distinct and sudden warming pattern called the Medieval Warming Period. And yet Denmark is also home to multinational corporations and banks that have spent billions preparing to make billions more from the establishment of a cap and trade regime.

Denmark stands to lose if this new climate movement loses steam. The windmills that dot the skyline here are a testament not only to the dedication to the cause, but also the vast investment.

Windmills are good and we should invest in more and ensure they are part of our energy mix and energy solution. But we also need to look at affordable technology that is available and affordable now. The U.S. needs to get religion about energy security and reliability. Let's start looking realistically at the problem and we can take realistic action.

Copenhagen conference update

The U.N. Climate Change Conference in Copenhagen continues to be defined by the disagreements between developed and developing countries as the talks wind toward Friday’s conclusion. Not much progress has been made. Yesterday was marked by a day of protest by African countries, whose representatives walked out of the conference over draft language being discussed regarding the expectations and responsibilities of developed and developing countries when it comes to greenhouse gas emission reductions.

This display by developing countries gets to the heart of the major obstacle facing the climate negotiators, which is what exactly the role and responsibility is of developing and developed countries if a truly effective international agreement to reduce global greenhouse emissions is to be reached. Developing countries argue that historically the majority of emissions have come from developed countries as they industrialized their economies. Therefore, developed countries bear responsibility to more aggressively reduce their emissions. Further, there is an expectation that developed countries must financially assist developing countries in transitioning to low-carbon technology and mitigating the impacts of climate change.

Developed countries worry that since developing countries are expected to account for more than two-thirds of the emissions growth over the next 30 years, they must agree to binding reductions. The rift between the U.S. and China highlights this divide. The U.S. is demanding real reductions by China and third-party verification of its reductions. China is resisting both demands, as well as efforts to create a new status for emerging economies like those in India and China that would be separate from developing countries, opening the door to requiring mandatory reductions from them.

It is unlikely that these issues will be resolved when the negotiations conclude at the end of the week. The role of developed and developing countries is sure to dominate the legislative debate in the U.S. when Congress takes up climate change legislation again after the New Year.

Biodiesel mandate – at what cost?

The season’s first weather chill draws attention to another of Minnesota’s nation-leading energy mandates – and its resulting “cost.” We are the only state to require B5 – that all diesel fuel sold within our borders contains 5-percent biodiesel. By 2015, the mandate increases to B20. This fuel is made from renewable resources blended with petroleum diesel. In Minnesota, biodiesel is made primarily from soybean oil.

Other states have the biodiesel requirement, but Minnesota’s is easily the most aggressive. We are also the only cold-weather state to mandate B5, and that’s significant. Biodiesel often gels up during cold weather, thus hampering the performance of all diesel-fuel engines. The problem has flared up in recent winters with some school bus fleets.

Minnesota’s commissioner of commerce does have the ability to suspend the mandate when required by weather or supply issues. Still, the mandate forces diesel users in Minnesota to spend more money on fuel than states such as Wisconsin and Iowa without the mandate. The Minnesota Chamber of Commerce supports the development of renewable fuels, but mandates must be in tune with “real world” economics.

Live from Copenhagen

Next week, I will be in Copenhagen for the United Nations Climate Change Conference. I will post updates from the second week of the conference where delegates from over 190 countries are negotiating a successor agreement to the Kyoto Protocol. Check in to find out the latest developments from the negotiations, as well as activities happening outside of the conference.

In the run-up to Copenhagen, expectations have been lowered. Major players have acknowledged that it is very unlikely that a binding treaty can be agreed upon by the end of the conference. Instead, political commitments for reduction targets are expected, as well as efforts to agree on a level of funding that will be provided by developed countries to help developing countries address climate change. The head of the U.N. Climate Conference said last week that he hopes a binding agreement could be reached by June. Even that timeline may prove to be too ambitious.

The roadblock on the way to Copenhagen is the same one that has existed since the Kyoto Treaty: establishing different commitments for developed and developing countries. In the last two weeks, the Obama Administration pledged to reduce emissions by 17 percent by 2020, which is the target established in legislation passed by the House of Representatives last June. That announcement was followed up by a pledge from China to reduce its carbon intensity by 40 to 45 percent by 2020 and India which said it would reduce its carbon intensity by 20 to 25 percent by the same year. All three countries would use 2005 emissions as the baseline year.

By reducing carbon intensity, China and India will become more energy efficient (something that is happening already), but their overall emissions will still grow. With the U.S. pledging an absolute reduction, the risk of “carbon leakage”, or the migration of emissions from developed to developing countries, is still very real. The result: lost jobs in countries like the U.S. and increased global greenhouse gas emissions.

While Copenhagen may not produce a binding treaty as many had expected only a few months ago, there will undoubtedly be many interesting developments. Check back next week to find out what is happening in Copenhagen.

Cap-and-trade demands international solution

Any cap-and-trade policy must keep Minnesota businesses on a level playing field with their competitors in the national and global marketplaces. That’s why the Minnesota Chamber advocates a national program – but only if it is crafted within the context of an international agreement. That critical element is missing from the current debate in Congress. The proposed legislation is certain to result in higher energy prices that will be passed to ratepayers. Minnesota’s mining and forest products industries will particularly be hit hard. Overall, any product manufacturer with global sales will be less competitive if energy prices increase significantly.

This negative impact will be made worse by the proposed allocation of emission allowances for electric utilities, which penalizes utilities that are more coal dependent. Customers in Minnesota and the Midwest rely heavily on coal-powered electricity generation. As a result, they will be affected disproportionately compared with other regions, creating another competitive disadvantage for businesses.

The business community has a strong record of advancing initiatives that benefit the environment and the economy. But the federal legislation as currently framed – especially without an accompanying international agreement – won’t solve the problem, be efficient or cost effective.

The Senate Wants to Create Jobs: They Should Call Enbridge Pipeline for Advice

Sen. Jeff Bingaman (D-N.M.) wants to make sure that the upcoming "jobs bill" includes the energy sector. Creating jobs is the new political mantra. Most of us are for that since it actually helps people on Main Street rather than Wall Street. However, the private market money sources, lenders and venture capitalists are unlikely to take risks in the alternative energy sector right now. Smart money will stay close to traditional energy so long as we have a weak dollar. Just look at the performance of oil in the past several months for proof.

While oil itself has performed well, the real story in traditional energy is infrastructure. Enbridge Pipeline presents a great example of private sector job creation. Don't believe me, call the Bemidji/Grand Rapids and all in between Chambers of Commerce or read the MPR story below. These are not more government jobs, these are private sector welders, pipefitters, and hardware jobs. With the construction of the Alberta Clipper pipeline from Calgary to Superior, Wisconsin, reliable, friendly Canadian crude is brought to the upper Midwest energy consumer -- you and me. This crude is then refined at the Flint Hills Resources Refinery, just south of the Twin Cities and used by Minnesota outdoorsman in their snowmobiles, four wheelers, snowblowers, ice drills, chain saws, and cars and trucks as well as running Minnesota Main Street business. Minnesota receives approximately 80% of its oil from our Canadian neighbors.

As a result of the pipeline construction, there are no motel rooms available in Bemidji and the surrounding area, restaurants are packed, and food suppliers are running full time as are many ancillary businesses.

Want the real story about how private business is creating jobs and income and taxes right here in Minnesota. Read the details from Minnesota Public Radio at:

http://minnesota.publicradio.org/display/web/2009/09/15/alberta-clipper-pipeline/

Let's Trust Science to Fix Climate Change

Ask anyone who knows me and they will tell you that I am, generally, a skeptic/pessimist. Generally, I follow clear thinking, factual analyses of complex issues rather than the media talking heads and the fringe groups making the most noise on the marginal right and left.

So, imagine my surprise and excitement when I read Freeman Dyson's uplifting, optimistic view of climate change some years ago. I was reminded of this optimism last evening when I read "BRAVE THINKERS: A Retrospective," an article in the November issue of THE ATLANTIC MONTHLY.

Here is what was said verbatim:

http://www.theatlantic.com/

Name: Freeman Dyson

Job: Professor Emeritus, Institute for Advanced Study, Princeton
Why he’s brave: He’s taking a contrarian view on the Kyoto Protocol.
Quote: “I like to express heretical opinions. They might even happen to be true.”

---

Dyson, a renowned physicist and pioneer in quantum electrodynamics theory, has lately committed a heresy without equal in modern science: questioning climate change orthodoxy. Dyson doesn’t deny that excess carbon dioxide in the atmosphere is warming the planet. But he predicts that advances in bio-technology—especially the creation of genetically-engineered carbon-eating plants, which he foresees within two decades—will mitigate the damage with a minimum of economic and social disruption. In the meantime, he argues that large-scale carbon-restricting approaches like the Kyoto Protocol are ineffective and disproportionately hurt developing countries like China and India, where the potential to lift millions of people out of poverty now hinges on access to carbon-spewing industries. Such arguments have won him few friends; he describes the interaction between the majority of scientists holding conventional climate change views and the skeptical minority as a “dialogue of the deaf.” But in Dyson’s case, at least those arguments have evolved from a lifetime of scientific rigor and intellectual honesty.

So, Freeman Dyson, world-renowned physicist and rigorous intellectual contrarian, argues optimistically that carbon-eating plants will come to our rescue in the same way that oil-eating microbes have assisted us in cleaning up oil transport accidents, in the same way that science has assisted farmers in being more productive and less environmentally damaging. Of particular importance, it seems to me, is Dyson's concern that human-created scientific discovery and advancement will solve our greenhouse gas problems in the same way that Jonas Salk defeated polio. This optimistic, American can-do attitude brings with it the promise of enormous environmental benefit with a "minimum of social and economic impact."

Who do you trust more to solve our world's problems? Politicians and bureaucrats, or esteemed scientists like Freeman Dyson and the rigors of scientific inquiry?

Being a common sense person, like most people, I cast my vote for Freeman Dyson and science.

'Competitive edge’ big concern in climate change debate

President Obama delivered a clear message before the United Nations on climate change. But there’s a lot more ground to cover, and numerous specifics to flesh out. The Minnesota Chamber’s biggest concern is the impact of any legislation on the cost of energy. Minnesota historically has had competitive prices that in turn give our companies a competitive edge in the global marketplace. Whether we maintain that edge remains to be seen with any national or international agreement.

To be clear, Minnesota businesses are strong protectors of the environment. We’ve been major players in shaping state legislation to reduce smokestack emissions and increase the use of renewable energy resources. In the larger arena, from the standpoint of Minnesota businesses, we’ll lobby to make certain any cure is not costlier than the disease. To put the issue in perspective, emissions from Minnesota contribute only 0.37 percent of greenhouse gases worldwide, according to 2006 statistics. China and the United States each contribute about 20 percent. Minnesota businesses are first in line to advocate for policies that protect the environment and ensure a vital economy. But it’s shortsighted to adopt policies that threaten the livelihood of Minnesota employers and employees and do little or nothing to address climate change on the global scene.

Climate change most appropriately is addressed on the national and international levels. Even then, businesses must know the rules and the impact on their bottom lines. Minnesota’s laws on mercury reduction and renewables have been driving energy costs up in recent years. We need to play close attention to these rising costs if we are to maintain a healthy state economy.

LCFS: Part 1: Status Update Part 2: Analysis

Part 1: CURRENT STATUS OF LOW-CARBON FUEL STANDARD LEGISLATION

FEDERAL LEGISLATION:

According to the Congressional Research Service, the Low-Carbon Fuel Standard Act of 2009, introduced 3/30/2009, proposes the following:

• Amends the Clean Air Act to require the Administrator of the Environmental Protection Agency (EPA) to issue regulations that:

(1) determine the lifecycle greenhouse gas emissions of all transportation fuels;

(2) determine the fuel emission baseline (i.e., average lifecycle greenhouse gas emissions per unit of energy of all transportation fuels sold in the United States in 2005);

(3) apply to refineries, blenders, and importers of transportation fuels;

(4) ensure that, for 2014-2022, annual average lifecycle greenhouse gas emissions do not exceed the fuel emission baseline; and

(5) ensure that, for 2023 and thereafter, transportation fuel providers make specified reductions in the annual average lifecycle greenhouse gas emissions for transportation fuels sold in the United States.

• Grants the Administrator authority to waive emission reduction requirements of this Act to prevent economic or environmental harm.
• Requires the Administrator to study the environmental and resource conservation impacts of the regulations required by this Act and their effect on energy security.

STATE UPDATES:

On April 23, 2009, the California Air Resources Board (ARB/Board) approved the low-carbon fuel standard (LCFS) regulation. As part of the Board hearing, the Board approved Resolution 09-31 (Resolution). The Resolution includes a number of provisions related to ongoing work on the LCFS. One such provision relates to land use and indirect effect analysis of transportation fuels.

· The Board-approved Resolution reads: “BE IT FURTHER RESOLVED that the Board directs the Executive Officer to convene an expert workgroup to assist the Board in refining and improving the land use and indirect effect analysis of transportation fuels and return to the Board no later than January 1, 2011, with regulatory amendments or recommendations, if appropriate, on approaches to address issues identified."

· While California has adopted a low-carbon fuel standard, a number of Northeastern states are also looking at the idea, as is the Midwest. Several other states, including Minnesota and Wisconsin, are considering adopting a low-carbon fuel standard.

Part 2: ANALYSIS

· According to the hardly conservative New York Times, Green, Inc., "A low-carbon fuel standard is likely to do little to reduce global warming emissions and can even be counterproductive." This conclusion was based upon an academic paper entitled Greenhouse gas reductions under low-carbon fuel standards by Stephen Holland, Jonathan Hughes, and Christopher Knittel published in the highly-esteemed American Economic Journal: Economic Policy, 2009. The study found that the policy reduces consumption of high-carbon fuels like oil, but “increases low-carbon fuel production, possibly increasing net carbon emissions.”

· While a low-carbon fuel standard requires that the mix of transportation fuels sold to automobiles or trucks include only a limited percentage of carbon-intensive fuels, the idea is to cut carbon emissions from driving, since transportation accounts for more than a quarter of the country’s greenhouse gas emissions.

· The Holland, Hughes, Knittel Economic Journal article starkly concludes that a low-carbon fuel standard “cannot be efficient.”

· One problem with a low-carbon fuel standard is that it could be extremely costly. The research says that a 10 percent reduction in the carbon intensity of fuels could result in abatement costs ranging from $307 to $2,272 for each ton of carbon dioxide.

• That is roughly 100 to 700 times the price of carbon dioxide emissions allowances now traded in the Regional Greenhouse Gas Initiative, a program in 10 Northeastern states to combat global warming by cutting power plant emissions.

· A related problem is that rather than cutting fuel use across the board, such a fuel standard would encourage drivers to increase their consumption of “low-carbon fuels,” and thus theoretically increase the overall amount of fuel consumed.

· Stephen Holland, an assistant professor in the Department of Economics at the University of North Carolina at Greensboro and one of the study’s authors, cited an analogy of a child who eats two chocolate bars but no bananas, and is told he has to increase his banana consumption. The result is that he eats two bananas and two chocolate bars, which increases his overall calories.

· Similarly, the low-carbon fuel standard is “regulating the mix, but not the levels,” he said.

· The easiest way to cut carbon emissions from transportation is to cut the level and “not drive so much,” Mr. Holland said. “Carpool! Take public transportation! Leave the car at home.”

As has been publicly argued about for the past several years, the largest controversy surrounding low-carbon fuel standards involves ethanol, and in particular how to compute the carbon cost of corn ethanol (the issue at hand in California).

· Mr. Holland, who said that ethanol was the primary fuel involved in the study, said that he used a range of assumptions about ethanol, but that since the study had gone to press, he had taken the view that corn ethanol was more carbon-intensive than the paper had accounted for.

· Finally, a low-carbon fuel standard would disallow the importing of Canadian crude from Alberta, making Minnesota and much of the upper Midwest more dependent on crude from political enemies in the Middle East. With all the economic worries our globalized economy confronts each day, deriving oil from our friendly neighbor to the north seems both prudent and reliable.