Showing posts with label Carbon Credits. Show all posts
Showing posts with label Carbon Credits. Show all posts

Thursday, May 27, 2010

What is the Murkowski Resolution?

Through CARE’s Monthly Newsletter, The PowerLine, and through special e-mail alerts, we have been encouraging people to contact their Senators asking them to support the Murkowski Resolution. The Debate on the floor has been postponed until June 10. There is still time to push for approval of the “Resolution of disapproval.”

It is a complicated legislative process that is hard to fully comprehend. This posting by our friend from the Competitive Enterprise Institute, Marlo Lewis and Former Senator and Governor of Virginia, George Allen, offers the best overview we’ve seen. Please give it a read. If the EPA’s power grab alarms you, pass this link on to everyone you know and ask them to contact their senators too! Here’s a link to make sending your Senator a note asking him or her to support the Murkowski Resolution!




The EPA's Shocking Power Grab
The U.S. Environmental Protection Agency is carrying out one of the biggest power grabs in American history. The agency has positioned itself to regulate fuel economy, set climate policy for the nation and amend the Clean Air Act—powers never delegated to it by Congress. It has done this by declaring greenhouse gas emissions a danger to public health and welfare, in a proceeding known as the "endangerment finding."

On June 10 the U.S. Senate is scheduled to debate and vote on Alaska Sen. Lisa Murkowski's resolution of disapproval to overturn the endangerment finding. The resolution is absolutely necessary to restore democratic accountability in climate policymaking.

If allowed to stand, the EPA's endangerment finding will trigger a regulatory cascade through multiple provisions of the Act. America could be burdened with a regulatory regime more costly than any climate bill Congress has rejected or declined to pass, yet without the people's representatives ever voting on it.

Consider how the endangerment finding will expand the EPA's power beyond any plausible congressional mandate.

To begin with, the finding compels the EPA to establish greenhouse gas emission standards for new motor vehicles. About 95% of all vehicular greenhouse gas emissions are carbon dioxide (CO2) emissions from motor fuel combustion. Because there is no commercially proven technology to capture CO2 tailpipe emissions, the principal way to reduce the amount of CO2 emitted per mile is to reduce the amount of fuel consumed per mile. In other words, greenhouse gas emission standards for automobiles are basically fuel economy standards by another name. By empowering the EPA to set greenhouse gas emission standards, the endangerment finding also empowers the EPA to determine the stringency of fuel economy standards, even though the Clean Air Act gives the EPA no such authority.

Once the greenhouse gas emission standards go into effect, CO2 becomes a "regulated air pollutant" and, thus, automatically subject to additional regulation under the Act's Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program. Under the Act, a firm must obtain a PSD permit before it can build or modify a "major stationary source" of regulated air pollutants, and obtain a Title V permit before it can operate such a source. The problem is that an immense number and variety of previously non-regulated entities—big box stores, office buildings, apartment complexes, small manufacturers, even commercial kitchens—emit enough CO2 to qualify as "major" sources.

By the EPA's own admission, applying PSD and Title V to CO2 leads to "absurd results." The EPA and its state counterparts will have to process approximately 41,000 PSD permit applications per year (instead of 280), and 6.1 million Title V permit applications per year (instead of 14,700). Agencies' administrative resources will be overwhelmed, producing ever-growing backlogs that slam the brakes on new construction and force millions of firms to operate in legal limbo. A more potent anti-stimulus package would be hard to imagine.

To avert a red ink nightmare, the EPA proposes to "tailor" the permitting programs so that they exempt for six years all sources emitting less than 50,000 tons per year (TPY) of CO2-equivalent greenhouse gases. But the Act plainly states that a source is subject to PSD if it has the potential to emit 250 TPY of a regulated air pollutant and Title V if it has a potential to emit 100 TPY. In reality, the EPA proposes to amend the statute. This breach of the separation of powers only compounds the constitutional crisis inherent in the EPA's bid to hijack fuel economy regulation and climate policymaking.

Even if courts uphold EPA's tailoring rule, it's anybody's guess how many smaller sources EPA will try to regulate after 2016. Government burdens have a habit of ratcheting up over time.

The tailoring rule also provides no protection from the endangerment finding's most absurd result—rulemakings to establish National Ambient Air Quality Standards (NAAQS), set below current atmospheric concentrations, for greenhouse gases. Environmental litigation groups are only acting on the obvious implication of the EPA's assertion that the root cause of endangerment is the "elevated concentration" of greenhouse gases when they demand that the EPA initiate such rulemakings.
The economic consequences would be devastating. Even a global depression lasting several decades would not be enough to lower CO2 concentrations from today's level—roughly 390 parts per million—to 350 ppm, the new politically correct "stabilization" target advocated by former Vice President Al Gore, the Center for Biological Diversity and numerous other environmental groups. Yet under the Clean Air Act, states are obligated to attain NAAQS within five years or, at most, 10 years. The endangerment finding thus sets the stage for environmental activists to transform the Act into a deindustrialization mandate via litigation. The Murkowski resolution would nip all this mischief in the bud.

A strong case can be made that the EPA's endangerment finding is scientifically flawed. However, the Murkowski resolution is a referendum not about climate science but about the constitutional propriety of the EPA exercising powers not delegated by Congress. The resolution would overturn the "legal force and effect" of the EPA's endangerment finding, not the EPA's scientific reasoning or conclusions.

Who should make climate policy—the people's representatives or politically unaccountable bureaucrats, trial lawyers and unelected activist judges appointed for life? That is the sole question raised by the Murkowski resolution. The U.S. Constitution permits only one answer.

Sen. Barbara Boxer, D-Calif., warns that if the public has to wait for Congress to pass legislation to control greenhouse gas emissions, "that might not happen, in a year or two, or five or six or eight or 10." Yes, but that is representative democracy. And the democratic process is more valuable than any result that the EPA might obtain by doing an end run around it. Of all people, U.S. senators should understand this basic precept of our constitutional system.


George Allen is a former U.S. senator and governor from Virginia. He is also chairman of the American Energy Freedom Center. Marlo Lewis is a senior fellow in environmental policy at the Competitive Enterprise Institute.

Wednesday, March 10, 2010

The Cusp of Climate Crisis Solutions

Recently an e-mail from Al Gore landed in CARE’s in-box. It said, “I've been working on solutions to the climate crisis for a long time--and right now, we're on the cusp of what could be the biggest breakthrough in decades, with a bipartisan Senate clean energy and climate bill under negotiation right now.That's why this week, supporters like you have already made over 42,000 calls to your Senators to demand the strongest legislation possible.It's been one of the largest call-in campaigns in the history of our movement, and we've definitely got people's attention. But we have only one day left until our deadline tonight, and we need to demonstrate exactly how broad and deep this movement is.”

This caused a bit of panic in CARE’s Executive Director, Marita Noon. She thought, “Omigosh! How have I missed this? I better get a notice sent out encouraging people to call with the other side’s viewpoint.”

However, before taking drastic action, Marita checked with one of the members of our Energy Council who follows these things more closely: Myron Ebell—who was our Conference Call guest in January. He responded by sharing the content of this posting. Whew! No wonder we were not closely following this specific legislation.

The Mainstream Media’s New ‘Favorite Republican’
The mainstream media have been searching for a new favorite Republican ever since John McCain won the presidential nomination in the spring of 2008. Clearly, McCain couldn’t be allowed to continue in that role because of the risk that it might have helped him win the presidency.

Favorite Republican really shouldn’t be a hard spot to fill. The only qualifications required are an eagerness to abandon conservative principles in order to further fashionable liberal issues, and a general ineffectualness at pursuing conservative goals.

Several prominent Republicans come immediately to mind as being well qualified.

It’s taken awhile, but after a long audition, Senator Lindsey Graham of South Carolina has won the job. Increasing, as well as increasingly favorable, mainstream media attention culminated on Sunday when Thomas L. Friedman anointed Graham in his New York Times column. Friedman’s fawning interview is headlined: “How the GOP Goes Green.”

As often happens when the subject knows his interviewer is friendly, Graham lets down his guard and says several revealing things.

Most stunning is Senator Graham’s explanation of why he supports energy-rationing policies to address global warming: it’s so college students will like him. Should you think I’m fabricating this or exaggerating, let me quote Friedman’s column:

Look at how he is received in colleges today. “Instead of just being one more short, white Republican over 50,” says Graham, “I am now semi-cool. There is an awareness by young people that I am doing something different.”

If this makes Senator Graham sound like a nitwit, that could be misleading. Friedman also mentions that one major corporation is counting on Graham to bail them out. General Electric, which manufactures wind turbines in Greenville, South Carolina, has been one of the biggest corporate supporters of energy rationing legislation for a simple reason. Besides windmills, they make a bewildering variety of industrial and consumer products (including nuclear reactors) that will be in much higher demand if government artificially raises energy prices.

And there’s also Duke Energy, a large electric utility holding company with a branch in South Carolina. Duke’s Chairman James Rogers is an old Enron hand who has become the leading corporate lobbyist for cap-and-trade legislation. Rogers hopes to make billions in windfall profits if it is enacted.

Senator Graham would not seem to be Rogers’ man, since he has been quoted widely in the past several days saying that cap-and-trade is dead in the Senate. Instead, Graham is working on a more modest bipartisan compromise energy-rationing bill with Senators John Kerry (D-MA) and Joseph Lieberman (I-CT). The funny thing is that news stories report that their bill will contain a cap-and-trade program for electric utilities only. Graham, Kerry, and Lieberman just aren ‘t calling it cap-and-trade because the public have figured out that cap-and-trade is a sneaky name for an indirect tax that will transfer massive amounts of wealth from them to the federal government and its big business partners in crime.

The Graham-Kerry-Lieberman effort is going nowhere, but then the McCain-Lieberman and the Lieberman-John Warner (R-Va., now retired) cap-and-trade bills never went anywhere either. Senator McCain called what Graham, Kerry, and Lieberman are putting together “a joke.” That may be sour grapes coming from someone who is no longer favorite Republican, but it’s also a realistic assessment.

Senator Graham will not be favorite Republican solely on the global warming issue, however. Politico reported Monday on the cozy relationship between Graham and White House Chief of Staff Rahm Emanuel. They are working together on how to close down Guantanamo. And no doubt Graham will be there in the years to come on other major issues when the left really needs him.

There is a solution for Senator McCain. His name is J.D. Hayworth. (And even if Hayworth loses to McCain in Arizona’s primary election on August 14, his challenge is forcing McCain to act like a conservative for most of this legislative year.) Unfortunately, Senator Graham is not up for re-election until 2014. So a solution is four years away.

Until then, South Carolinians are doing what they can to push back against the attraction of being the darling of the New York Times. Three county Republican committees in the state have voted to censure him. And this past Saturday, a hundred protesters organized by Freedom Works demonstrated in front of the senior senator’s office in Greenville.

But I doubt that Senator Lindsey Graham is going to worry much about the ire of mere citizens, as long as the New York Times is singing his praises and big business executives are backing him. He appears to be settling comfortably into the role of the mainstream media’s favorite Republican.

Wednesday, March 3, 2010

Dodging Crucial Energy Choices

You know the adage, "Follow the money." When looking at energy issues, we like to pay attention to what the money people are saying--specifically the investment types. Their insights provide an interesting view into America’s energy situation.

Our favorite energy investment advisor is Byron King whose work is published in the Whiskey and Gunpowder Newsletter and the subscription newsletter he edits, Outstanding Investments. (If you have not read any of his previous postings here, we encourage you to check them out too.) For our purposes here, we have edited out all of Byron’s investment advice as we have no business offering such information. However, we do believe you will find his review of history and energy to be very helpful to your understanding of today’s energy situation.

This posting is a bit longer than what we typically post here. You may need to print it out to read at your leisure. Whether you read it here or on paper, we do hope you’ll post your responses. Do you agree with Byron’s assessments? Is his history correct? We always enjoy Byron’s input. We hope you do too!


Will Americans have to read by candlelight and bike to work?
We will if the country dodges crucial energy choices--and time is running out

Remember how President Obama bowed to King Abdullah of Saudi Arabia? That was bad enough. This is worse: Abdullah is playing Obama for a fool.

That bow Obama made to Abdullah at a summit in London says everything about how the Saudis have made us their oil slaves. Think about it, the American president, bowing and scraping to a foreign monarch--the king of a country where women can’t drive and criminals are beheaded in public. Worse, we’re becoming more dependent on the Saudis for energy, because Obama wants to close off even more of the USA to oil exploration.

If some well-informed experts are right, Saudi Arabia's oil reserves are a fraction of what they've been telling us. Why does it matter? Because everyone has believed for decades that Saudi Arabia's oil supply is virtually unlimited. That's what the Saudis have said over and over again for more than 30 years. If an oil shortage threatens to cause a recession or a market crash, we can count on the Saudis to come through. So people think. But one of America's top oil experts warned that the Saudis don't have anything near the oil reserves they claim. They already pump less oil than most "experts" think. Here's the real kicker, Saudi oil production is about to drop sharply. And it will keep going down for good. Other experts have analyzed the numbers and come to the same conclusions. If the charges are true--and I believe they are--we could be facing oil at $150 per barrel and gasoline at $6 a gallon or more. The oil is running out. It's as simple as that.

That's not what you hear from so-called experts. If you ask government officials, our intelligence agencies and even powerful Wall Street financiers, they tell you the opposite.
They say the Saudis could quickly double their oil production from the current level if they wanted to. And given a few years, they think the Saudis could produce four times as much oil as they do now.

The intelligence agencies and the conventional "experts" are dead wrong. The oil isn't there. The oil and gas shortages we've seen lately are nothing compared with what's on the way.
When the truth comes out, it will send shock waves through the world economy. Everyone will find out too late--when gasoline soars to $5 or $6 or more per gallon.

Americans used to run Aramco, the huge oil company that manages the Saudi fields. But in 1979, the Saudis booted us out and took over. And then a funny thing happened, The Saudis started keeping everything a secret. No one knows for sure how much oil they've got in the ground, or how much they produce each year or how much they could produce if they wanted to push it to the max. It's all secret. Experts try to figure out how much oil the Saudis sell by monitoring tanker traffic in and out of the world's ports. That's how little we know for sure.

After the Saudis took over, their figures for proven reserves kept going up and up and up--even though they didn't find any major new oil fields! In 1979, the Saudis adjusted proven reserves upward by 50 billion barrels. Then eight years after that, their proven reserves magically grew by another 100 billion barrels. Their estimated reserves increased by 150% in nine years--to a total of 260 billion barrels. And they didn't find a single major new oil field!

For 16 years, from 1979 through 2005, they've claimed they own 260 billion barrels of proven oil in the ground. The figure never goes down, even though they pumped out 46 billion barrels during that period. Let me see...260 minus 46 equals 260. Saudi math!

Based on these bogus figures, the Saudis claim they can produce as much oil as the world wants for the next 50 years. As recently as 2004, they claimed their reserve estimates are actually conservative. That's why most of the world's governments and intelligence services believe the Saudis could pump 20 million barrels of oil a day if they wanted to. Trouble is, we've got no proof except their say-so. If it were true, we wouldn't have a thing to worry about. But it's not.

Before Aramco's American owners were shown the door in 1979, they told Congress that Saudi Arabia had proven reserves of 110 billion barrels. There have been no major new discoveries, so 110 billion barrels was probably about right. And since then, about half of that has been used up. So why do the Saudis insist everything is just fine and they have 260 billion barrels of reserves? One reason is they wanted to discourage non-OPEC nations from looking for more oil or switching to alternatives. It was a devious plan, and it worked perfectly.

But that wasn't the only reason the Saudis lied about their reserves. They did it because everyone does it! Everyone in OPEC, that is. In the 1980s, OPEC's claim of total reserves magically leaped from 353 to 643 billion barrels without a single major discovery. Industry experts call it the quota war. You see, OPEC had to limit how much oil each member could sell, because prices were too low. The quotas were based on... each member's oil reserves!

That's right: The amount of oil OPEC would let a member pump depended on how much that member had in the ground. So it paid for OPEC members to claim the biggest reserves they could. And that's what they did.

The Saudis alone jacked up their estimate by about 100 billion. Kuwait added 50% to its reserves in one year, 1985. Venezuela doubled its reserves in 1987. Iraq and Iran doubled their estimates, too. What's more, OPEC members did like the Saudis and kept their reserve estimates the same year after year, as if no oil were being pumped out and sold. Everyone claimed to have a bottomless well.

Now, if you're like me, you believe America should base its energy decisions on the real world, not on a fantasy.

Let's Look at how Much Oil There Really Is
In the 1970s, when Western managers were still in charge, they believed for a time that Saudi output could reach 20 million barrels a day. But by the time the Americans lost control in 1979, they figured the peak would be 12 million. They also predicted that peak production would last only 15–20 years. 1979 plus 20 is 1999. We're past the peak, if these men were right. But we already know they were too optimistic. The truth is that Saudi production never got to 12 million. "In all probability, output peaked in 1981 at an unsustainable level of about 10.5 million barrels per day," according to Matthew R. Simmons, a leading oil industry authority.

In 2004, Saudi officials claimed they boosted production to 9.5 million barrels per day and maintained that level for five months. It's almost sure they were lying. The International Energy Agency is the group that keeps an eye on these things for the developed, oil-importing countries. The IEA could find no sign the Saudis were selling more oil. As far as anyone can tell, they pump only around five million barrels a day, and that's all they've pumped for years.

In spite of being lied to at least once, the IEA, the US Department of Energy and other forecasters believe the Saudi claims. ALL their projections of our energy future ALWAYS assume the Saudis could produce 15–20 million barrels a day.

The lies have worked. Not only do Western politicians believe them, but so do many oil industry experts and investors with huge amounts of money at stake. They've been had.

Our whole economy is at risk. America was so prosperous the last couple of decades, a lot of people forget what the energy crisis of the '70s was like. Let me remind you: The price of a barrel of oil shot up 400%. Long lines formed at gas stations practically overnight. Folks had to pay four times as much for a gallon of gas, and there came a week when one out of every five gas stations in the United States had no gas to sell at any price. The US had three major recessions within 10 years after the first oil crisis in 1973. And those recessions were deep, with double-digit unemployment, double-digit interest rates and double-digit inflation. Think 10–12% unemployment. Think 15–18% mortgage rates. Got the picture? That was the ‘70s. Not fun.

My take is that a similar crisis will rock the nation before we solve our problem with clean coal, liquefied natural gas, oil from tar sands, high-mileage cars and safe nuclear plants. More than likely, the politicians will quarrel for years before they do what has to be done.

The Great Coal Rush
While the oil runs out, there's still plenty of coal. The world has enough coal to last for 300 years at current rates. Coal already accounts for more than half of our electricity. But coal is dirty, right? And there's no way it can power cars, right? Wrong, and wrong again. Coal can be cleaned up AND it can power your SUV. However, it's not cheap to do. It's only worthwhile when a barrel of oil costs more than $30.

The US and China both have a growing problem with the price of oil and with the unstable countries they have to buy it from. Meanwhile, the US and China both have HUGE reserves of coal. Add in Australia and Canada and you've got four countries that you could call the OPEC of coal. They own just about all the coal there is.

The US alone has 254 billion tons of proven coal reserves, or about 25% of the world total. Compare that to Saudi Arabia, with 24% of the world's oil (if you believe it).
Meanwhile, the Chinese economy is doubling every 10 years and has a lion's appetite for electricity. The Chinese will have to give up that growth rate or build hundreds of new power plants, one or the other. They have no choice.

Electricity could be China's biggest roadblock to growth. Already, blackouts and brownouts happen every day all over the country. Factories by the thousand are forced to shut down from time to time. Many are allowed to operate only during off-peak hours. Children in some cities do their homework by candlelight. With an economy that grows 8% or 9% every year, and electric usage soaring at the same rate, the Chinese have no choice but to build hundreds of new power plants. And most of those plants are going to run on coal.

In the United States, we have a power crisis of our own. We're at the limit of our generating capacity. We have our own brownouts during peak-demand times. We, too, need to build hundreds of new power plants. Yet the public still doesn't want nuclear power.

You do the math: We face a crude oil shortage, nuclear power gives people the willies, we've got plenty of coal in the ground, we've got a choice between more power plants or deep recession and unemployment. Everything points to coal.

How Oil Could Go Beyond $150 in 24 Hours
If you want to bury your head in the sand and pretend Saudi Arabia has plenty of oil, be my guest. However, very shred of evidence points to no Saudi buffer for world oil markets. And that's a real problem because oil consumption soared from 52 million barrels a day to 82 million in the last 19 years, and it's expected to grow to 120 million in the next 20--if the oil can be found. Very doubtful.

There are three ways oil could race past $150 a barrel: It may get there gradually, or on a faster pace of a year or two, or overnight, literally within 24 hours. Pick any one of the three. No matter how you look at it, it's a sure thing the days of cheap oil are over. We're never going to see $30 oil again, and we may never even see $50 oil. Soon oil in the $100s may very well return to stay.

"You never really run out of oil," says a Houston energy consultant named Henry Groppe. "But many years ago we ran out of $2 a barrel oil, then we ran out of $25 oil, and now we're running out of $40 oil."

Saudi production could fall over a cliff almost overnight. There could be a deep, sharp reduction in Saudi oil production literally any day. It's guesswork, but energy expert Matthew Simmons says, "It will take energy forecasters and policymakers by total surprise. Not a single serious energy plan devised in the past three decades has envisioned such a scenario." He's told interviewers that Saudi output could drop 30–40% from the already low level of just 5 million barrels. Simmons doesn't claim to know for sure, but I believe he's right.

In the big oil crisis of 1973, oil went to $100 in current dollars. Back then, the problem was just political. Angered by US support for Israel, the Arab oil producers cut our supply. After things calmed down, there was plenty of oil. This time the problem is real and there's no quick fix. There's a sword hanging over our heads, and most people don't even know.

I've spotted three trends to watch that could crash markets and cause a recession.

Hurricanes
You already know that the 2005 hurricane season was the worst on record, and the one before that was almost as bad. In 2005, there were 27 tropical storms. Weather experts could hardly believe it, but the last one formed in December, a month after the "end" of the hurricane season. It's not as weird as a blizzard in July. But it's close. Worse, the storms are more powerful than ever before. It seems that a tropical storm is more likely now to become a deadly Category 4 or Category 5 hurricane.

Two reasons for the monster storms: The first reason is there's a normal cycle of low hurricane activity followed by a period of high hurricane activity. Each phase can last for several decades. Clearly, we're in the high phase, and it will probably go on for years. That's bad enough, but it's normal. But now you have to add the danger of climate change.

Bear in mind that climate change can be caused by either human activity or natural causes. And either way, the jury is still out. Despite what you may hear from the mainstream media, the case for global warming is far from closed. But global warming believers are already blaming the monster hurricanes on climate change. They may be right. The level of hurricane activity we're seeing has no precedent in the hundred years or so that scientists have been counting and categorizing storms. Meanwhile, a big chunk of our energy industry is located in the worst possible place.

Americans have largely banned oil and gas drilling and liquefied natural gas ports from the Atlantic and Pacific coasts. They don't like oil refineries, either. Plus, it's well known that the Gulf of Mexico is energy rich. So America ended up with a huge part of its energy infrastructure located on the Gulf Coast. A lot of it was knocked out by Katrina and Rita. As I write this, the Gulf coast energy industry is still not back to normal.

If there is a hurricane season like 2005, it could be the end of some 20% of America's oil and gas industry. And it could all happen in 24 hours.

It's hard to picture that oil companies are going to keep on investing in a region where they get knocked out every year. And the onshore plants can't be moved to Boston and San Francisco, where they're not wanted anyway. We could be staring at a permanent loss of a large part of our energy industry.

War and Revolution at the Chokepoints
World oil supplies are so tight the price could go through the roof if we lose just a couple of million barrels of daily production out of the world total of 82 million. Production is running full tilt and consumers snap up every barrel that comes out of the ground. There's no buffer (despite what the Saudis claim). A sudden leap to $150 a barrel, not to mention $150+, could tip us over the edge--and into a deeper recession. The immediate cause could be war or revolution in an oil-producing country.

Toss in another bad hurricane season at the same time and it could be the end of our way of life.

Saudi Arabia itself is a prime candidate for revolution. You might think al-Qaida's main target is the United States, but in fact the main target all along has been control of Saudi Arabia. The World Trade Center was just a stop on the road to Riyadh, as al-Qaida sees it.
But my own pick for disaster is Nigeria. This African country is the world's No. 12 oil producer, and a big supplier to the United States.

Nigeria is seething with revolution. The government--if you want to call it a government--admits that thieves steal as much as 200,000 barrels of oil a day and sell it on the black market. Off the record, experts put the bootleg oil as high as 650,000 barrels a day. That kind of oil generates huge sums of cash, and a lot of the money is plowed into arms for the rebels. There's no shortage of poor, hopeless young men willing to use the weapons. Three Nigerians out of five live in poverty.

Caught in the middle of all this are big oil companies like Shell and Chevron. In some parts of the country their facilities have been shut down and they've been kicked out. If you want to get punched in Nigeria, just tell a native you work for Shell.

Terrorism
You won't be surprised to learn terrorism is the third wild card that could create an instant crisis. In fact, a former CIA director recently joined some former oil executives and government experts in a risk-analysis exercise. They forecast three very likely events that could bring the roof down on our heads. One of them was civil war in Nigeria. The other two were both terror incidents.

Intelligence agencies know the terrorists have especially targeted oil facilities and infrastructure. It's an international game of cat and mouse in which the terrorists are looking for a weak point day and night, high and low, while we try to find them and stop them in time. It's only a matter of time until they succeed. It's like a thief checking every door in the neighborhood every night. One night, he'll find a door that's not locked.

Are you getting the picture? The good scenario is that the oil price will merely hover around $150 over the next few years. The worst scenario is that it will go there--then much higher--next week, or next month or next year.

The Natural Gas Bottleneck
When oil started getting pricey during the 1970s, America switched to natural gas in a big way. Natural gas now supplies about 24% of our total energy needs, including a big chunk of our electricity. The move made sense. We had plenty of natural gas, and what's more, it's a clean-burning fuel that cuts down on pollution. But like any kind of fossil fuel, there's only so much of it. Now we're running out.

After the big hurricanes of 2005, everyone can see the US is vulnerable. We didn't have the gas supplies we needed when we needed them. That was a cold, expensive winter for a lot of Americans.

America has placed vast areas off limits to drilling. Not only millions of acres of federal lands, but also most of the offshore areas on the Atlantic and Pacific coasts. These gas-rich regions are off-limits even though natural gas doesn't create spills. If there's an accident, it just escapes into the air. And drilling rigs are mostly out of sight of the resort properties on the beach. The regulations have left only the Gulf of Mexico, aka hurricane alley, for offshore drilling and natural gas production.

If you saw your heating bills shoot up this winter, you'll be frustrated to learn there's plenty of gas worldwide. It's a byproduct of oil wells, and if an oil field isn't close to a big population center or a pipeline, the gas is just flared off. The rest of the world burns off as much as 2.5 trillion cubic feet of what is called "stranded" natural gas. That's equivalent to 1.7 billion barrels of oil totally wasted every year! The problem is that gas, unlike oil, is hard to transport. You can't build pipelines across oceans. And big oceans separate North America from the cheap gas that's now going to waste.

Because of the bottleneck problem, the price of natural gas is much higher in North America than in the countries that are swimming in the stuff.

There's an easy solution to our natural gas shortage, and it's been around for years. It's called liquefied natural gas, or LNG. If you turn natural gas into a liquid by supercooling it, you can transport 600 times as much gas in the same space. One LNG tanker can carry as much as 600 ships hauling natural gas in vapor form. And despite what you may have heard, LNG is safe. With 40,000 LNG tanker voyages spanning the last 45 years and crossing 60 million miles of ocean, there hasn't been a single major accident. Not one. No explosions, no fireballs, no gruesome casualties. Sorry, Hollywood.

As things stand now, the US gets only 1.5% of its natural gas in the form of LNG, but with the energy crunch, things are going to change. The government's Energy Information Administration believes LNG will provide about 17% of our total gas supply by 2030. That means a 11-fold increase in LNG. Better yet, that's going to be a higher percentage of a bigger market, too. The EIA projects total gas consumption — LNG and vapor combined — will boom 30% in the next 10 years. And meanwhile, a fierce bidding war has broken out among Europe, Asia and the US for every available ounce of LNG.

The boom was actually under way before the current energy crunch hit. LNG trade soared 55% in the 10 years ending in 2004. This little market is growing like crazy. Some analysts even predict LNG will surpass King Crude to dominate the world's energy markets. The CEO of Shell says within 10 years, gas will be a bigger part of the company's business than oil. Natural gas is quickly becoming the energy of choice internationally. Natural gas demand will also become a cheaper and more viable energy source.

The Worldwide Boom in Nuclear Power
After a couple of freak accidents several decades ago, Americans decided they wanted nothing to do with nuclear power ever, anywhere. The accidents at Chernobyl and Three Mile Island killed nuclear power in the United States. We're just about the only people with that attitude. The rest of the world took a look at the safety problems, solved them and forged ahead. France now gets 77% of its electric power from nuclear plants. Japan and South Korea get 39%--and the two of them have more than 20 new plants on the way.

Belgium, Sweden, Finland--they've all gone nuclear. It seems like everyone but us is building nukes.

China plans to boost its nuclear power capacity by 500%. In fact, for the past 40 years, nuclear has been the fastest-growing power source in the world. And now it's really taking off. What's more, all the hundreds of plants worldwide have logged thousands of reactor years without a single accident. You see, Asians and Europeans have discovered something Americans refuse to see: Nuclear power is safer, cheaper and cleaner.

The Chinese are charging ahead with a new type of nuclear power plant. I predict utilities will build hundreds, and maybe thousands, of these new plants all over the globe. Electricity will become super-cheap. And eventually we'll see an economic boom worldwide like we've never seen before:
*The new plants will be walk-away safe. A meltdown is not just unlikely, it's impossible.
*There's no danger of radioactivity venting into air or water.
*There's no chain reaction involved.
*No need for huge cooling towers or water. No billion-dollar pressure dome.
*Almost no waste, and what waste there is can be stored safely on the premises.
*No need to fear a terrorist attack.

The technology uses an alternative way to harvest the energy of the atom--a way that Americans discovered and then rejected decades ago. The Chinese plan to mass-produce the reactors. The plants will be modular and factory made, built to last 40 years, ready to ship anywhere in the world and assembled like Legos. A Chinese scientist boasts, "Eventually these new reactors will compete strategically, and in the end, they will win. When that happens, it will leave traditional nuclear power in ruins." The man has reason to be cocky. They've already tested the prototype by turning off the coolant and letting the plant cool down by itself. That would be totally unthinkable with a conventional reactor.

Byron King earned his Juris Doctor from the University of Pittsburgh School of Law, graduated cum laude from Harvard University, served on the staff of the Chief of Naval Operations, and is a regulator contributor to the Whiskey and Gunpowder investment newsletter.

Thursday, December 10, 2009

Climategate's Lesson: Science Hasn’t Failed, Government Has

The recent revelations of the "Climategate" scandal raises concerns about the integirty of government and science in energy-related matters, so CARE decided to enlist the aid of Patrick Cox, a transformative technologies expert associated with the Whiskey and Gunpowder investment newsletter. He builds the case that even though some scientists intentionally concealed the Medieval Warm Period, manipulated data, attempted to redefine the peer-review process, and steamrolled over those that questioned the data; Climategate ultimately stands as a testament to the integrity of science and the failure of government. He points out that good men and women revealed the truth and are reevaluating the data at the CRU while the climatological-industrial complex is acting like Climategate never happened. Cap and trade is still being pushed and the Environmental Protection Agency is determined to put its recent declaration that greenhouse gases threaten human health and welfare into force of law. The chess pieces are set, they are moving across the international board, and the recent course of action shows us that Climategate stands as a testament to the failure of government rather than science. CARE is confident that this article will help change your understanding of whom is truly at fault here.


Climategate Update: Science Hasn’t Failed, Government Has
What a fascinating week. The leaked e-mails and computer code from the University of East Anglia’s Climatic Research Unit have become the greatest scientific scandal of our age. The head of the CRU has been forced to step down. Scientists who cooperated with the CRU in other locations, including the United States and New Zealand, are now under investigation.

I’ve been warned, incidentally, that any discussion of global warming will elicit complaints from one side or the other, so I would be better off not bringing it up. The notion that climatology is unacceptable in polite conversation is a huge problem. I’ve been following this debate for over 15 years and have worked with some of the important scientists who have advocated openness and more debate in climate research. Real scientists consider this a legitimate scientific issue, not a partisan one.

Moreover, the CRU scandal is enormously relevant to many investor issues. I’d rather lose readers who are offended than fail to keep the rest of you informed. If you’re getting your news from the mainstream media, you may not know yet how damaging this event has been to the credibility of the U.N. and those in the administration who support CO2 controls. (The Canadian press, however, is doing a far better job of covering the story.)

I told subscribers to my newsletter Breakthrough Technology Alert about a year ago, by the way, not to invest in so-called green technologies that rely on subsidies and regulatory interventions. That advice stands now more than ever. Polls show that about three-quarters of Americans consider the scientific theory of anthropogenic global warming false or even fraudulent. Given growing anger over deficits and terrible unemployment statistics, harmful environmental measures passed now are likely to be overturned or blocked after the 2010 election cycle.

I saw this coming for several reasons. One is that the lack of scientific ethics exposed by the CRU whistle-blower is not really news. It has been obvious to those of us who were paying attention for a very long time. The leaked documents make it clear, however, to those who don’t understand the mathematical subtleties of regression analysis or program in Fortran.

For the first time, the general public is learning that the CRU climate model, which the U.N. relies on, purposely hid the Medieval Warm Period (MWP). This obfuscation was necessary because the MWP was not just warmer than it is now; it had a generally positive impact on humans. The University of East Anglia now admits, in fact, that the CRU has no real evidence that the climate is warming and says it will take at least three years to recompile and analyze the data.

The climatological-industrial complex, however, is forging ahead as if nothing has happened. Supporters of an incredibly expensive cap-and-trade scheme, in the middle of the worst economic downturn in modern history, are undeterred. Even without the invention of Enron, cap and trade, the EPA is dead set on treating and regulating carbon dioxide as a pollutant.

You know that stuff you exhale in high concentrations: CO2? The EPA apparently thinks pollution results even with miniscule increases in the 0.038% trace levels of CO2 found in the atmosphere. Obviously, slightly elevated CO2 levels have never resulted in cataclysm before. So why does it say so now?

Its theory is that the planet’s ability to absorb CO2 is maxed out. Additional CO2, it says, will therefore result in skyrocketing CO2 levels. This theory, however, is completely unsupported by evidence. Dr. Wolfgang Knorr at the University of Bristol just published as study in Geophysical Research Letters showing that the portion of the atmospheric CO2 absorbed by plant life, mostly in the oceans, has remained stable since 1850.

In fact, it is the failure of the CRU model to properly address the role of the oceans that convinced me long ago that it’s fundamentally missed the boat. Only about 10% of the Earth’s heat storage is atmospheric. About 90% of the Earth’s energy storage takes place in the waters of the oceans. Water, after all, stores far more energy than air.

Furthermore, ocean temperatures are far easier to measure accurately. Many land-based temperature stations have been compromised due to changes in local conditions, mostly increased urbanization. This is not the case with oceans. NASA has more than 3,000 robotic buoys that dive and surface continually all over the world collecting ocean temperature data at different depths. This information has been transmitted via satellite to NASA since 2003. Compiled, it shows clearly that ocean temperatures are falling.

If the oceans were bleeding heat into the atmosphere, we would see higher air temperatures. The Climategate e-mail leak shows, however, that even CRU knows that atmospheric temperatures have fallen since the late ‘90s. This means, I believe, that we are in an extended period of global cooling, not a temporary turnaround. University of Rochester physicists have published recently data showing the historic and central role ocean temperatures play in climate and climate change.

The fact that the U.N.’s climate gurus have destroyed data, hid inconvenient truths and subverted the peer-review process is not, by the way, proof that anthropogenic global warming could not possibly occur. Nor does it prove we are not in a natural period of cooling caused by solar cycles. The only thing it does prove is that models are junk and that the most powerful government-anointed climate scientists have no idea what’s going on — as the leaked e-mails stated over and over again.

This is the big lesson. It isn’t science that has failed. Science isn’t dying, as Daniel Henninger said recently in The Wall Street Journal. Real science is a process of discovering the truth through transparency, experimentation and verification. Look around you. You can see the fruits of real science in the increased length and quality of life that we all enjoy. Science is alive and well in the private sector.

Climategate is a failure of politicians and bureaucrats involving over $90 billion in tax-funded research grants. It is complicated by passionately cheerleading environmentalists who have turned their movement into a kind of religion.

The corruption of scientists by government monies is by no means new. It won’t be the last time, either. Nevertheless, the courage of the CRU whistle-blower demonstrates the robustness of science. The truth has come out.

It remains to be seen if the political drive to control human activities and profit from political wealth transfers will prove more powerful, in the short run, than the truth contained in the leaked e-mails and computer code. In the long run, however, I have no doubt that those who embrace fraud will be outed, if not punished.

My focus is on identifying those transformational technologies with the greatest potential for profit and growth. Those opportunities will not go away even if the fraud inherent in the CRU’s sham models are used to hobble the American economy with destructive cap-and-trade taxation or onerous EPA regulation of CO2. India, Russia, China and many other countries have made it clear they will never adopt such economy-killing measures — especially during a period of economic downturn and high unemployment. They stand more than willing to host the revolutionary disruptive industries that are coming onto the scene today. Many of our top scientists and small caps are already being wooed to relocate elsewhere.

Fortunately, polls show that nearly three-quarters of the American people are extremely angry with the government right now. The old media, which are lobbying for some sort of bailout, will continue trying to cover it up. Having not only endorsed the concept of anthropogenic global warming, but attacked skeptics as subhuman, it is impossible for many to admit they were wrong. Science and technology, though, have already provided alternate avenues of information dissemination. The unwillingness of the old media to report one of the most important stories of this young century is evidence they deserve to fail.

The reversal on cap and trade by Australia, along with a likely change in the government, in large part because of Climategate, ought to act as a warning to the administration. If not, then the people will grow angrier yet and we’ll see another iteration of the revolution next year at the ballot boxes. Science cannot be stopped or even perverted for long.

Patrick Cox is a transformative technologies expert associated with the Whiskey and Gunpowder investment newsletter.

Monday, August 31, 2009

Colorado’s Conflicted U.S. Senator, Mark Udall

Two of Al Gore’s leading global warming suckers in the U.S. Senate are Mark Udall, D-Colo., and John McCain, R-Ariz.

To his credit, McCain has always been a nuclear energy advocate. Sen. Udall, true to his family’s tradition of being in lockstep with Big Enviro, hasn’t. But he’s beginning to give nuclear energy favorable lip service. Is Udall, like New Mexico Gov. Bill Richardson in his old days in Congress, talking out of both sides of his mouth?

Here is John Dendahl’s commentary with an open letter to Sen. Udall. If the Senator responds, we’ll be sure to let you know.



If Not to Speak Out of Both, Why Have Two Sides to One’s Mouth?
U.S. Sen. Mark Udall, D-Colo., is reported to be among those twisting arms for senate votes on the economically ruinous cap-and-trade scheme already passed in the U.S. House. Hollywood Henry Waxman’s is one of the names on the House bill, and few could name a Member of Congress who deserves more “credit” for laws burdening the U.S. economy and restricting the individual rights of U.S. citizens.
Members of Congress like Udall are exempt from mainstream media criticism for conflicts of interest. However, Udall has one here in spades. His wife, Maggie Fox, is CEO and president of something called Alliance for Climate Protection, founded by Al Gore with money from his global warming horror movie. Typical of Big Enviro’s big bucks “charitable” [i.e., organized under Sec. 501(c)(3) of the Internal Revenue Code] organizations, the Gore/Fox alliance has a companion lobbying organization, the Climate Protection Action Fund. Fox is CEO and president of that as well.

Gore is reported already to have amassed a huge fortune in a market for trading carbon credits, and that’s before any law has been enacted limiting carbon dioxide emissions. Meanwhile, the purported reason for any such limits--the claims that the climate is warming and that atmospheric concentration of carbon dioxide from human activities is the cause--has been reduced to pseudoscience making mischief comparable in scope to eugenics.

Just for the sake of changing the course of the argument, however, why not inquire of Udall and others in the global warming camp as to what sources of, say, electricity they propose as alternatives? “Renewables” like solar and wind is the stock answer. After decades of subsidies, and now laws mandating their use, these sources remain well under one percent of national electric output, and they obviously cannot run 24-7 even when they work.

The correct answer, of course, is nuclear. Udall has whispered that word somewhat approvingly. However, deep skepticism is warranted since most of Udall’s energy talk comes out of the Big Enviro side of his mouth. Despite its unequalled, half-century record for safety, Udall always raises that “issue” and can be expected to hide behind it when the chips are down and Big Enviro says, “No way, Mark.”

Click here for my op-ed on this subject as published in The Denver Post on July 27, and click here for the senator’s limp response.

It’s time, as they say, to get down to brass tacks, so here’s an open letter:


Dear Sen. Udall:

Many friends and I were happy to read your letter-to-the-editor in The Denver Post on July 29, responding to my op-ed published two days earlier. I had been attempting communication with your office for nearly eight weeks before I received two e-mails, slightly different but with substantially the same “boilerplate” I referred to in the op-ed.

It should surprise no one that you have supported WIPP. It commenced operations about two months after you took your seat in the U.S. House and now holds thousands of tons of TRU waste from your congressional district (Rocky Flats). My reference to Udall family complicity in delaying WIPP and adding huge sums to its cost was about events going back more than a decade before you were in Congress and needs no further elaboration here.

However, I’m reminded of the Nuclear Waste Policy Act of 1982. I find at this website that your father was a sponsor. That was 27 years ago. My understandings are that, under this legislation, utilities (read, ratepayers) have now remitted about $30 billion to the federal fund it created; about $10 billion of that has been spent, largely or entirely on the Yucca Mountain project in Nevada; not an ounce of spent fuel has left temporary storage; and Senate Majority Leader Harry Reid, D-Nev., now intends that the Yucca Mountain project be deep-sixed.

I reminded readers of my op-ed, “Preserving the myth that radioactive waste cannot be safely disposed has been a major goal of organized ‘environmentalists’ for decades.” An article in The Denver Post on August 25 quotes you on Yucca Mountain, “a dead project.” Have you just rolled over and died for Sen. Reid?

Your claims of concern about anthropogenic global warming are not credible without a great deal more support for expanded nuclear power than this from your l-t-e: “I am more than open to expanding our use of nuclear power and recently said so on the floor of the Senate.” Frankly, sir, that’s not even a starter. The aforementioned Denver Post article about the bipartisan photo-op you and Sen. McCain, R-Ariz., held in front of trees killed years ago by pine beetles has a terrific headline, “Udall, McCain united in call for nuclear power,” but I hope you’ll excuse my skepticism after experiencing a decade or more of safety-shrouded doublespeak on the subject by Bill Richardson.

Perhaps as a red herring, your letter raised cost as an issue unfavorable to nuclear power. Nuclear power plants are delivering electricity cheaper than any other source today. Your “cleaner sources,” solar and wind, are the choices that have failed for decades on account of cost whenever they aren’t underwritten by direct government subsidies and/or laws like Colorado’s essentially mandatingtheir use without regard to cost. Uncertainty associated with the licensing process, and “leadership” such as you are getting from Sen. Reid, are the primary reasons I’d suggest for any reluctance by utility company boards and executives to build nuclear power plants we need.

Lastly, about global warming. People chasing money mostly from government grants and agency appropriations have now spent many tens of billions on “proving” that global warming continues, is a very bad thing, and is largely the result of increased concentrations of atmospheric carbon dioxide produced by human activities. Others who simply observe the world around us shake our heads in disbelief, wondering what planet you and these researchers live on. The climate is cooling, not warming, and the researchers among the crowd laughably claiming consensus about warming can’t make their expensive, complicated--and might I also suggest falsified in some cases?--models jibe with real world measurements.

I believe global warming is to the late 20th and early 21st centuries what the pseudoscience eugenics was to the early 20th. For a cogent discussion of eugenics and the historic mischief of politicized science, look here.

Isn’t it well past time for you to level with the people you represent and tell them the truth? I wouldn’t suggest that’s a decision that can be reached and implemented easily. You have been prominent among global warming alarmists for a long time. Further, I acknowledge the awkwardness of, uh, breakfast table talk and all if this were juxtaposed against your wife’s prominent position in the propaganda end of Al Gore’s carbon-cap-and-trade crusade.

But wouldn’t a mind change now be better than having most of one’s constituents look back in a couple of years, wondering what kind of fool would defy what was so obvious and vote to accelerate his country’s economic tailspin? You got elected to lead us toward sound public policy. In my experience, that’s occasionally neither easy nor comfortable. Honesty, however, sure makes for better sleeping.

I look forward to receiving a reply that addresses directly what is said in this letter.

Respectfully,

s/ John Dendahl
John Dendahl, a Rocky Mountain Foundation senior fellow, is a retired business executive. He resides in Littleton, CO.

Monday, July 27, 2009

Wind Energy, Green Jobs “Sustainable” ?

Here at CARE, our primary role is public education on energy issues. We believe that all sources of energy—both green and traditional—will be needed to support America’s ever-growing energy needs. Because we also believe that energy is what makes America great, we do not want to sacrifice when it comes to energy; we do not want to take America back to the dark ages.

We as a country are in the process of potentially making major changes in energy production and delivery. So that we as citizens can make responsible choices we need to know the facts—not just feel good. We need to know the energy reality. (This was also addressed in CARE’s most recent op-ed which has been widely published throughout New Mexico.) It may seem that the choice is out of our hands as many of the elected officials in Washington DC appear to be bent on doing things the way want, not what their constituents want. But they’ll be home for “August recess;” they’ll be holding town-hall meetings. If you care about energy (no pun intended), go to the meetings and ask the hard questions.

Here from one of our Energy Counsel Members, Paul Driessen, are some “facts” to add into the “feel good.” We believe that if American citizens had straight talk instead of happy talk, they will make the right decisions for America.




Forests of concrete and steel
Boone Pickens, Nacel Energy, Vestas Iberia and others have been issuing statements and running ads, extolling the virtues of wind as an affordable, sustainable energy resource. Renewable energy reality is slowly taking hold, however.

Spain did increase its installed wind power capacity to 10% of its total electricity, although actual energy output is 10-30% of this, or 1-3% of total electricity, because the wind is intermittent and unreliable. However, Spain spent $3.7 billion on the program in 2007 alone, King Juan Carlos University economics professor Gabriel Calzada determined.

It created 50,000 jobs, mostly installing wind turbines, at $73,000 in annual subsidies per job – and 10,000 of these jobs have already been terminated. The subsidies have been slashed, due to Spain’s growing economic problems, putting the remaining 40,000 jobs at risk.

Meanwhile, the cost of subsidized wind energy and carbon dioxide emission permits sent electricity prices soaring for other businesses – causing 2.2 jobs to be lost for every “green” job created, says Calzada. Spain’s unemployment rate is now 17% and rising. That’s hardly the “success” story so often cited by Congress and the Obama Administration.

Across the Channel, Britain’s biggest wind-energy projects are in trouble. Just as the UK government announced its goal of creating 400,000 eco-jobs by 2015, major green energy employer Vestas UK is ending production. All 7,000 turbines that Downing Street just committed to installing over the next decade will be manufactured – not in Britain, but in Germany, Denmark and China.

For businesses, existing global warming policies have added 21% to industrial electricity bills since 2001, and this will rise to 55% by 2020, the UK government admits. Its latest renewable energy strategy will add another 15% – meaning the total impact on British industry will likely be a prohibitive 70% cost increase over two decades. This is the result of the government’s plans to cut carbon dioxide emissions 34% below 1990 levels by 2020, and increase the share of renewables, especially wind, from 6% to 31% of Britain’s electricity.

These cost hikes could make British manufacturers uncompetitive, and send thousands more jobs overseas, the Energy Intensive Users Group reports. English steel mills could become “unable to compete globally, even at current domestic energy prices,” says British journalist Dominic Lawson; “but deliberately to make them uncompetitive is industrial vandalism – and even madness … a futile gesture ... and immoral.”

On this side of the pond, President Obama and anti-hydrocarbon members of Congress are promoting “green” energy and jobs, via new mandates, standards, tax breaks and subsidies. However, the United States would need 180,000 1.5-megawatt wind turbines by 2020, just to generate the 600 billion kilowatt-hours of electricity that compliance with the narrowly passed Waxman-Markey global warming bill would necessitate, retired energy and nuclear engineering professor James Rust calculates.

This would require millions of acres of scenic, habitat and agricultural lands, and 126 million tons of concrete, steel, fiberglass and “rare earth” minerals for the turbines, at 700 tons per turbine; prodigious quantities of concrete, steel, copper and land for new transmission lines; and still more land, fuel and raw materials for backup gas-fired generators. America’s new national forests will apparently be made of concrete and steel.

Those miners and drillers would likely be reclassified as “green” workers, based on the intended purpose of their output. However, the raw materials will probably not be produced in the States, because so many lands, prospects and deposits are off limits – and NIMBY litigation will further hamper resource extraction.

Air quality laws and skyrocketing energy costs (due to carbon taxes and expensive renewable energy mandates) will make wind turbine (and solar panel) manufacturing in the USA equally improbable. Thus, manufacturing could well be in China or India, and most “green” jobs could be for installers, as Spain and Britain discovered.

Posturing has already collided with reality in Texas, the nation’s wind energy capital. Austin’s GreenChoice program cannot find buyers for electricity generated entirely from wind and solar power. Its latest sales scheme has been a massive flop: after seven months, 99% of its recent electricity offering remains unsold.

Austin officials admit that “times have changed,” and the recession and falling energy prices may make it impossible for the city to meet its lofty goals. The company’s renewable electricity now costs almost three times more than standard electricity, and even eco-conscious consumers care more about the color of their money than the hue of their purported ideology.

Even worse for global warming alarmists and renewable energy advocates and rent seekers, global warming patterns have reversed during the past decade. Satellite data reveal that the planet is cooling, despite steadily rising carbon dioxide levels, and summertime low temperature records are being broken all over the United States.

“You'd better hope global warming is caused by manmade CO2 if you're investing in [renewable] sectors,” says Daniel Rice, the past decade’s best-performing US equity fund manager (BlackRock Energy and Resources Fund). But evidence for manmade catastrophic global warming is dissipating faster than carbon dioxide from an open soda bottle on a hot summer day.

The crucial fact remains: wind and solar are simply not economical without major government subsidies or monstrous carbon taxes. Moreover, cap-and-tax legislation currently being promoted in the House and Senate is “not enough to do anything” about supposed global warming disasters notes Rice.

“All it does is provide Obama a pass to Copenhagen,” where the UN will host a climate change conference in December, Rice says. And those subsidies and taxes would drive energy prices still higher, killing jobs and skyrocketing the cost of everything we eat, drive, heat, cool, grow, make and do.

Congress and the Administration are dragging their feet on nuclear power, closing off access to more resource-rich lands, and imposing layers of new regulations on oil, gas and coal energy – denying Americans these vast stores of energy and hundreds of billions in revenue that developing them would generate. Meanwhile, slick wind turbine ad campaigns promote expensive, heavily subsidized, unreliable technologies that only climate activists and company lobbyists would describe as sustainable, affordable, eco-friendly or socially responsible.

The ads and lobbyists seek more mandates, tax breaks and subsidies. Wind promoters want to quiet opponents long enough to get energy and climate legislation enacted – before Americans realize how it would drive the price of energy still higher, kill jobs, curtail living standards and liberties, and raise the cost of everything we eat, drive, heat, cool, grow, make and do.


Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow and author of Eco-Imperialism: Green power – black death.

Tuesday, May 12, 2009

The Rush for Cap and Trade

With all that is going on Washington, one has to be a diligent news watcher to stay abreast of various energy policies that percolate to the top. Again, this is why CARE’s Blog is an important service. We search for both well-known and more-obscure sources for relevant and up-to-date information. Here we present you with insights from a new source that came our way. These Comments About Responsible Energy address Cap-and-Trade—which we believe to be a scary and just wrong approach to America’s energy usage. In a brief and concise way, this posting echoes previous statements made by some of our other experts. This position needs to be said loud and often. The massive spending plan cannot be funded on the backs of American consumer’s energy usage.



Not the Way to Go
President Obama, Governor Bill Richardson, and many state and federal government leaders seem to think that there is a solution to climate change called “cap-and-trade” – and that this plan will help increase investments in renewable technology companies.

This is not just a theoretical issue because top leaders in the U.S. House are busily trying to figure out how to enact a “cap-and-trade” plan--even bypassing one of their normal subcommittees if necessary.

Cap-and-trade is called that because it would put a “cap” on carbon emissions and then set up a system for trading carbon emissions “credits.”

However, in view of the program’s complexity and its potential for “gaming the system,” as well as downright corruption, the unintended consequences could well be economic damage at a time when the economy cannot sustain the burden.

Consider this excerpt from a recent article in the Houston Chronicle:
“(A market estimated to be valued at $3 trillion by 2020) could take on the same characteristics as the mortgage derivatives market if investors are allowed to securitize emissions credits without strong regulatory oversight and enforcement, said Michelle Chan, a senior policy analyst with the group Friends of the Earth and the author of the report. ‘If we aren’t careful, we could end up creating a massive, poorly regulated derivatives market that not only poses risks to the broader financial markets, but also undermines efforts to save the climate,’ Chan said.”

Indeed, cap-and-trade is similarly complex as the “derivatives” market that helped lead to a global economic meltdown, nor would it meet the desired quality of being “transparent.”

Given the fact that China is the largest emitter of CO2 in the world, and that many other nations such as India, Brazil, Indonesia and Russia use high-emission technologies, even if the U.S. were to adopt cap-and-trade so as to reduce our own emissions (doubtful given the European experience), any real solution has to be global--not just an ill-thought-out “feel-good” plan adopted by America.

There are more effective solutions than a go-it-alone cap-and-trade plan in this country.

California Senator Barbara Boxer, chair of the Senate Environment and Public Works Committee, was chided by The Washington Post recently for saying, " ‘We're willing to look at everything . . . .’ But she ended that declaration with ‘. . . but we believe cap-and-trade is the way to go.’” It behooves our own members of congress to not just take for granted that cap-and-trade is “the way to go.”


Bill McDonald, of Las Cruces, is a Ph.D. geophysicist whose experience includes managing a major National Science Foundation program on world ocean dynamics for the Scripps Oceanographic Institute.

Wednesday, May 6, 2009

Back to the “Good Old Days”

Many activists, bureaucrats, politicians and even some corporate executives present arbitrary CO2 reduction targets and timetables casually and with great fanfare--as though achieving them were simple, desirable and necessary.

In reality, reducing America’s carbon dioxide levels to 80% below 1990 levels would return the United States to emission levels last seen in 1905 … and that’s before accounting for changes in population and energy-based technology. The impact on our nation’s economy, employment, manufacturing, living standards and health would be profoundly negative.

And yet, there has been virtually no mention of this in Capitol Hill hearings or public policy discussions.

Here, regular contributor Paul Driessen seeks to bring these facts to light while presenting a fresh perspectives on cap-and-tax proposals, CO2 reductions, and wind energy “substitutes” for the hydrocarbons that make our modern lives possible.

US Energy And Climate Plans Would Drag Us Back To 1905--Or 1862
Think back to 1905.

The Wright brothers had just made history. Coal and wood heated homes. Few had telephones or electricity. AC units were handheld fans. Ice blocks cooled ice boxes. New York City collected 900,000 tons of vehicle emissions--horse manure--annually, and dumped it into local rivers. Lung and intestinal diseases were rampant. Life expectancy was 47.

Today, President Obama wants to prevent “runaway global warming,” by slashing US carbon dioxide emissions to 80% below 1990 levels by 2050. According to Oak Ridge National Laboratory data, this reduction would return the United States to emission levels last seen in those halcyon days of 1905!

But America’s 1905 population was 84 million, versus 308 million today. We didn’t drive or fly, or generate electricity for offices, factories, schools or hospitals. To account for those differences, we’d have to send CO2 emissions back to 1862 levels.

The Civil War was raging. Nine of ten Americans were farmers (versus 2% today). The industrial revolution was in its infancy. Malaria halted construction on the Washington, DC aqueduct. Typhus and cholera killed thousands more every year. Life expectancy was 40--half of what affordable hydrocarbon, hydroelectric and nuclear power helped make it today.

None of this seems to matter to the Obama Administration or liberal Democrats. The 648-page Waxman-Markey climate bill would compel an 80% CO2 reduction, by imposing punitive cap-and-tax restrictions on virtually every hydrocarbon-using business, motorist and family.
That’s making some legislators nervous, as they ponder the health, economic and employment effects of restricting energy supplies and driving up the cost of everything we eat, drink, make and do--especially in 20 states that get 60-98% of their electricity from coal.

So to prod Congress into action, or achieve the 80% target via regulatory edict, the Obama Environmental Protection Agency has decreed that natural, plant-enhancing, life-sustaining carbon dioxide “endangers human health and welfare.” The authoritarian actions it is contemplating would regulate cars, trains, boats and planes; pave the way for regulating farms and factories, hospitals, schools, malls and apartment buildings, computer servers and lawn mowers; and send energy prices skyrocketing.

It is astonishing how casually activists, bureaucrats, politicians and even some corporate executives advocate arbitrary CO2 reduction targets and timetables--as though they were possible, desirable or necessary.

The targets reflect worst-case scenarios generated by computer models. But the models assume human CO2 now drives climate changes that have been occurring for eons. They ignore many natural forces, and inadequately analyze incomplete data, based on our still limited grasp of complex climate processes.

They cannot accurately replicate last year’s regional climate shifts or predict changes even one year in the future. They ignore Earth’s history of repeated climate changes, and failed to anticipate the slowly declining global temperatures of 1995-2008.

Thousands of climate and other scientists say there is no climate crisis, and CO2 plays little or no substantive role in climate change. A new Rasmussen poll finds that 48% of registered American voters now believe climate change is caused by planetary and other natural forces. Only a third still believe it’s due mostly to humans.
Climate realists also recognize that, even if America eliminated all of its greenhouse gas emissions, increasing Chinese and Indian carbon dioxide emissions would promptly offset our draconian cuts.

This alarms Climate Armageddonites. They fear it’s now or never to wrest control over energy and the economic, manufacturing and transportation activities it fuels. Now or never to profit from cap-and-tax laws, renewable energy mandates, and a forced shift away from hydrocarbons that now provide 85% of US energy.

“Socially responsible” corporate groups like the Carbon Offset Providers Coalition are banking on passage of Waxman-Markey or similar legislation. They want to ensure that any CO2 regime is “rigorous and efficient,” to foster high carbon prices, maximum subsidies and strong profits.
President Obama says cap-and-trade will “raise” $656 billion over the next decade. The National Economic Council and other analysts put the tax bite at $1.3 to $3.0 trillion.
This is not monetary manna. The wealth will be extracted from every hydrocarbon-using business, motorist and family.

The intrusive energy rules and taxes will clobber households, manufacturers, farmers, truckers and airlines. The poorest families will get energy welfare, to offset part of their $500-3,000 increase in annual heating, cooling, transportation and food expenses. Everyone else will have to trim health, vacation, charity, college and retirement budgets to pay for energy.
Every increase in energy prices will result in more businesses laying off workers or closing their doors, more jobs sent overseas, more families forced into welfare, more school districts, hospitals and churches into whirlpools of red ink.

Exactly how will they, your family, your business eliminate 80% of CO2 emissions by 2050? Exactly how will you pay those skyrocketing fuel bills?

The Nature Conservancy predicts that, by 2030, “eco-friendly” wind, solar and biofuel projects will require extra land equivalent to Minnesota, to produce the energy we now get from oil, gas and coal. Interior Secretary Salazar’s proposal to have offshore wind turbines replace gas, coal and nuclear electricity generators would mean 336,000 3.25MW behemoths off our coasts--if they operate 24/7/365. Far more if they don’t.

Where exactly will we site those turbines--and get the billions of tons of concrete, steel, copper and fiberglass it will take to build and install the expensive, unreliable, subsidized monsters?
My grandmother used to say, The only good thing about the “good old days” is that they’re gone.
Few Americans will be enthralled by the prospect of returning to that era. Fewer will relish the hefty price tag--and damage to their freedoms, budgets, jobs and living standards.

The White House, EPA and Congress need a serious reality check.


Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow (http://www.cfact.org/) and author of Eco-Imperialism: Green power – black death.

Tuesday, April 14, 2009

Respect Those Who Seek the Truth, Be Wary of Those Who Claim to have Found It

You may well have already read this, as it has been circulating throughout the Internet. CARE has been sent several copies of this complete speech. However, if you have not read it, we encourage you to do so. It is an excellent primer on today’s overall energy scene--though it is a bit long. To be complete, it has to be. We suggest that you print it out and have a copy ready to pass around to others.

This speech was given by Questar Chairman, President and CEO Keith O. Rattie. It was given to college students at Utah Valley University and Brigham Young University. To make it an easier read, we have edited it slightly and removed the content about Questar that was relevant for that audience, but occupied unnecessary space for you. As you read, you’ll sense the young age of the intended audience, but we’ve removed the obvious inferences. You’ll also glean a slight bias toward natural gas--as Questar is a natural gas company. If you believe, as he implies, that climate change is not a crisis, than the advantages of clean, natural gas are less relevant.

With that said, CARE believes, as Rattie states in Reality 1: “America and the rest of the world will need all the energy that markets can deliver. We’re going to need it all--oil, natural gas, coal, nuclear, wind, solar, geothermal, biofuels.” It is all part of the complete energy picture. Read on!


Energy Myths and Realities
Thirty-three years ago I was trying to decide what to do with my career after graduating with my degree in Electrical Engineering. I made a decision to go to work for an oil company--Chevron--on what turns out to have been a false premise: I was convinced that by the time I reached the age I am today that America and the world would no longer be running on fossil fuels. Chevron was pouring lots of money into alternatives--and they had lots of money and the incentive to find alternatives--and I wanted to be part of the transition.

Fast forward 33 years. Today, we are being told that by the time today’s students are my age the world will no longer be running on fossil fuels.

I’m going to try to do something that seems impossible these days--and that’s have an honest conversation about energy policy, global warming and what it means for America’s energy future--and for you, the generation that will have to live with the consequences of the policy choices we make. My goal is to inform you with easily verifiable facts--not hyperbole and propaganda--and to appeal to your common sense.

There may be no greater challenge facing mankind today--and your generation in particular--than figuring out how we’re going to meet the energy needs of a planet that may have 10 billion people living on it by the middle of this century. The magnitude of that challenge becomes even more daunting when you consider that of the 6.2 billion people on the planet today, nearly two billion people don’t even have electricity--never flipped a light switch.

Now, when I started my career with Chevron in the mid-1970s the “consensus” at the time was that America and the world were running out of oil. Ironically, the media back then was also declaring a scientific consensus that the planet was cooling, fossil fuels were to blame, and we were all going to freeze to death unless we kicked our fossil fuel habit. We were told we needed to find alternatives to oil--fast. That task, we were told, was too important to leave to markets, so government needed to intervene with massive taxpayer subsidies for otherwise uneconomic forms of energy. That thinking led to the now infamous 1977 National Energy Plan, an experiment with central planning that failed miserably. Fast-forward to today, and: déjà vu. This time the fear is not so much that we’re running out of oil, but that we’re running out of time--the earth is getting hotter, humans are to blame, and we’re all doomed unless we find alternatives to oil, gas and coal--fast. Once again we’re being told that the job is too important to be left to markets.

Well, the doomsters of the 1970s turned out to be remarkably wrong. My bet is that today’s doomsters will be proven wrong. Over the past 33 years mankind has consumed more than three times the world’s known oil reserves in 1976--and today proven oil reserves are nearly double what they were before we started. The story with natural gas is even better--here and around the world enormous amounts of natural gas have been found. More will be found. And of course, the 30-year cooling trend that prompted the global cooling scare in the mid-70s abruptly ended in the late 70s, replaced by with a 20-year warming trend that peaked in 1998.

The lesson that we should’ve learned from the 1970s is that when it comes to deciding how much energy gets used, what types of energy get used, and where, how and by whom energy gets used--that job is too important not to be left to markets.

Now, I’d love to stand up here and debate the science of global warming. The mainstream media, of course long ago declared that debate over--global warming is a planetary emergency, we’ve got to change the way we live now. I’ve followed this debate closely for over 15 years. I read everything I can get my hands on. I’m an engineer, so I try to bypass the media’s penchant for alarmism--“World coming to an end--details at 11”-- and go straight to the actual science. My research convinces me that claims of a scientific consensus mislead the public and policy makers--and often reflect another agenda.

Yes, planet earth does appear to be warming--but by a not so unusual and not so alarming one degree over the past 100 years. Indeed, global average temperatures have increased by about one degree per century since the end of the so-called Little Ice Age 250 years ago. And, yes carbon dioxide concentration in the upper atmosphere has increased over the past 250 years from about 280 parts per million in 1750 to about 380 parts per million today--that’s .00038. What that number tells you is that carbon dioxide--the gas that everyone in this room exhales every three seconds or so, the gas that plants need to grow--is a trace gas, comprising just four out of every 10,000 molecules in the atmosphere. But it’s a very important trace gas--without CO2 in the atmosphere, the earth would be a lifeless ball covered with ice. And yes, most scientists believe that humans are responsible for much of that increase.

But that’s where the alleged consensus ends. Contrary to the righteous certitude we get from some, no one knows how much warming will occur in the future, nor how much of any warming that does occur will be due to man, and how much to nature. No one knows what the impact of warming will be, nor how easily people, plants and species will adapt to warming. When you hear someone claim they know, I suggest Mark Twain’s advice: respect those who seek the truth, be wary of those who claim to have found it.

My views on this issue changed dramatically about a decade ago when I looked at the inputs to one of the global circulation models (GCM) that had been built to predict warming over the next century. If the only input were carbon dioxide, the output would be simple--doubling of the concentration of CO2 in the atmosphere would result in only about a 1 degree increase in global average temperatures over the next 100 years. But the earth’s climate is what geek engineers refer to as a “non-linear, dynamic system.” There are dozens of inputs, and as I studied the model further I concluded that many of the inputs into these models are little more than the opinion of the scientist--in some cases, just a guess. For example, water vapor is the most important greenhouse gas--far more potent than CO2. I discovered that scientists do not agree on how to model water vapor, clouds, precipitation and evaporation. Some argue that clouds amplify CO2 forcing, others believe precipitation acts as the earth’s thermostat. The point is there’s no consensus this fundamental issue.

But the reality for American consumers is that whether you agree that the science is settled or not, the political science is settled. The new Congress has promised to “do something”. Carbon dioxide regulation is coming. Indeed, President Obama’s hope of shrinking the massive federal budget deficit depends on vast new carbon revenues from a tax on carbon energy--so called “cap and trade.” Senate Majority Leader Harry Reid has promised a bill by May.

Under cap-and-trade, the government would try to create a market for carbon dioxide by selling credits to companies that emit carbon dioxide. They would set a cap for the maximum amount of CO2 emissions. Over time, the cap would be lowered. In theory, this will induce companies to invest in lower-carbon technologies, thus reducing emissions to avoid the cost of buying credits from other companies that have already met their emissions goals. The costs of the credits would be passed on to consumers. Because virtually everything we do and consume in modern life has a carbon footprint, the cost of just about everything will go up. This in theory will cause each of us to choose products that have a lower-carbon footprint. Any way you slice it, cap and trade a tax on the way we live our lives--one that by design will produce a windfall for government.

Here’s the crucial point. The long term goal is ‘80 by 50’– an 80% reduction in carbon dioxide emissions by 2050.

Please indulge me as we do the math on what ‘80 by 50’ means, using Utah as an example. Utah’s carbon footprint today is about 66 MM tons per year. Our population is 2.6 MM. You divide those two numbers, and the average Utahan today has a carbon footprint of about 25 tons per year. An 80% reduction in Utah’s carbon footprint by 2050 implies a reduction from 66 MM tons today to about 13 MM tons per year by 2050. If Utah’s population continues to grow at 2% per year, by 2050 there will be about 6 MM people living in our state. So 13 MM tons divided by 6 MM people = 2.2 tons per person per year. Under 80 by 50 by the time you folks are about my age you will be required to have a carbon footprint of just 2.2 tons per year.

Q: when was the last time Utah’s carbon footprint was as low as 2.2 tons per person?

A: not since Brigham Young and the Mormon pioneers first entered the Wasatch Valley and declared “this is the place”.

You reach a similar conclusion when you do the math on ‘80 by 50’ for the entire country. ‘80 by 50’ would require a reduction in America’s carbon footprint from about 20 tons per person per year today, to less than 2 tons per person per year in 2050--again, a 90% reduction in per capita carbon footprint.

Q: when was America’s carbon footprint as low as 2 tons per person per year?

A: not since the Pilgrims arrived at Plymouth Rock in 1620.

In short, ‘80 by 50’ means that by the time you folks are my age, you won’t be allowed to use anything made with--or made possible by--fossil fuels.

So I want to focus today on this critical question: “How on God’s green earth--pun intended--are you going to do what my generation said we would do but didn’t: wean yourselves from fossil fuels in just four decades?” That’s a conversation that each of you, and indeed, all Americans need to engage in now -- because when it comes to “how” there clearly is no consensus. Simply put, with today’s energy technologies, we can’t get there from here.

The hallmark of this dilemma is our inability to reconcile our prosperity and our way of life with our environmental ideals. We Americans love our cars. We like the freedom to “move about the country”--to drive to work, fly to conferences, visit distant friends and family. We aspire to own the biggest house we can afford. We like to keep our homes and offices warm in the winter and cool in the summer. We like devices that use electricity--computers, flat screen TVs, cell phones, the Internet, and many other conveniences of modern life that come with a power cord. We want food that’s low cost, high quality, and free of bugs--which means farmers must use fertilizers and pesticides made from fossil fuels. We like things made of plastic and clothes made with synthetic fibers--and all of these things depend on abundant, affordable, growing supplies of energy.

And guess what? We share this planet with 5.9 billion other people who all want the same damn things.

America’s energy use has been growing at about 1.5 % per year, driven by population growth and prosperity. But while our way of life depends on ever-increasing amounts of energy, we’re downright schizophrenic when it comes to the things that energy companies must do to deliver the energy that makes modern life possible.

We want energy security--we don’t like being dependent on foreign oil. But we also don’t like drilling in the US. Millions of acres of prospective onshore public lands here in the Rockies plus the entire east and west coast of the US are off-limits to drilling for a variety of reasons, some legitimate, some not. We hate paying $2 per gallon for gasoline--but not as much as we hate the refineries that turn unusable crude oil into gasoline. We haven’t allowed anyone to build a new refinery in the US in over 30 years. We expect the lights to come on when we flip the switch, but we don’t like coal, the source of 40% of our electricity--it’s dirty and mining scars the earth. We also don’t like nuclear power, the source of nearly 20% of our electricity--it’s clean, but we’re afraid of it. Hydropower, the source of about 6% of our electricity is clean and renewable. But it has also been blacklisted--dams hurt fish.

We don’t want pollution of any kind, in any amount, but we also don’t want to be asked: “how much are we willing to pay for environmental perfection?” When it comes to global warming, Time magazine tells us to “be worried, be very worried”--and we say we are--but we don’t act that way.

Let me suggest that our conversation about how to reduce carbon dioxide emissions must begin with a few “inconvenient” realities.

Reality 1: America’s and the world’s demand for energy will grow by 30-50% over the next two decades--in fact it will more than double and could triple by the time you’re my age. Simply put, America and the rest of the world will need all the energy that markets can deliver. We’re going to need it all--oil, natural gas, coal, nuclear, wind, solar, geothermal, biofuels.

Reality 2: There are no near-term alternatives to oil, natural gas, and coal. Like it or not, the world runs on fossil fuels, and it will for decades to come. The US government’s own forecast shows that fossil fuels will supply about 85% of total world energy demand in 2030--roughly the same as today. Yes, someday we’ll find alternatives. But that day is still a long way off. It’s not about will. It’s not about who’s in the White House. It’s about thermodynamics and economics.

Now, I was told back in the 1970s the same that you’re being told today: that wind and solar power are ‘alternatives’ to fossil fuels. A more honest description would be ‘supplements’. Taken together, wind and solar power today account for just one-sixth of 1% of America’s annual energy consumption today. Let me repeat that statistic--one-sixth of one percent--.0016.

I’m holding a pie chart showing total US primary energy demand today. PowerPoint won’t even create a thin slice for wind and solar--it’s just a line.

Back when I was starting my career Jimmy Carter declared that America would be out of oil and gas by 1990, and declared alternative energy the “moral equivalent of war.” Thirty years and $30 billion in government subsidies and all we get for all the wind farms and all the solar electricity plants in operation in this country today is a thin line on a pie chart.

Undaunted by all of this, President Obama has proposed to double wind and solar power generation in this country by the end of his first term. I would first point out that the line on this pie chart will become a slightly thicker line by the end of his first term. I would also point out that wind and solar power doubled in just the last three years of the George W. Bush administration. I’ll grant you that W. started from a smaller baseline, so doubling again over the next four years will be a taller order. But if President Obama’s goal is achieved, wind and solar together will grow from one-sixth of one percent to a combined one-third of one percent of total primary energy use--and that assumes energy consumption remains stagnant, which of course it will not.

The problems with wind and solar power become apparent when you look at their footprint. To generate electricity comparable to a 1,000 MW gas-fired power plant you’d have to build a wind farm with at least 500 very tall windmills occupying 40,000 acres of land. What about solar power? Well, here’s a photo of “America’s most productive utility-scale solar electricity plant”. It has a capacity 8.2 MW, and it’s located on 82 acres of land in southwest Colorado. When you take into account the fact that the sun doesn’t always shine, you would need roughly 250 of these plants, occupying roughly 20,000 acres to replace a single 1,000 MW gas-fired power plant.

By comparison, a 1,000 MW gas-fired power plant can be built on about 10 -15 acres. (Another example, you’ll find a photo of Sempra energy’s El Dorado Solar near Las Vegas on their website. 10 MW--largest of its kind in North America--built next to a 500 MW gas-fired power plant. They plan to run the gas plant and “supplement” gas-power with solar when its available. This is the current state of the art).

The Salt Lake Tribune recently celebrated the planned startup of a 14 MW geothermal plant near Beaver, Utah. That’s wonderful! But the Tribune failed to put 14 MW into perspective. Utah has over 7,000 MW of installed generating capacity, primarily coal. America has one million MW of installed capacity. Because US demand for electricity has been growing at about 2% per year--we need to build 10-20,000 MW of new capacity every year to keep pace with growth. There’s a worldwide building boom in new coal-fired power plants--over 200,000 MW under construction, over 30,000 MW in China. In fact, there are 30 coal plants under construction in the US today that when complete will burn about 70 million tons of coal per year.

Why did my generation fail to develop wind and solar? Because our energy choices are ruthlessly ruled, not by political judgments, but by the immutable laws of thermodynamics. In engineer-speak, turning diffused sources of energy such as photons in sunlight or the kinetic energy in wind requires massive investment to concentrate that energy into a form that’s usable on any meaningful scale.

What’s more, the wind doesn’t always blow and the sun doesn’t always shine. Unless or until there’s significant breakthrough in high-density electricity storage--a problem that has confounded scientists for more than a century--wind and solar can never be relied upon to provide base load power.

But it’s not just thermodynamics. It’s economics. Over the past 150 years America has invested trillions of dollars in our existing energy systems--offshore platforms, power plants, the grid, steam and gas turbines, railroads, pipelines, distribution infrastructure, refineries, service stations, boilers, airplanes, cars, trucks, appliances, etc. Changing that infrastructure to a system based on renewable energy will take decades and massive new investment.

To be clear, we need all the wind and solar power the markets can deliver at prices we can afford. But please, let’s get real -- wind and solar are not “alternatives” to fossil fuels.

Reality 3: Carbon cap and trade regulation will drive the cost of energy painfully higher. Obama’s budget puts the cost at $650 MM over the next decade. Some believe that this estimate could be off by a factor of three--suggesting the true cost will approach $2 trillion over the next decade. As I mentioned, the businesses that are forced to buy credits will pass this cost on in the price of their goods--we’ll all pay for it.

Aside from the enormous cost, I hope you would ask: will cap and trade work? In my opinion the answer is no. It won’t work until we have viable alternatives to fossil fuels that can be delivered to markets at scale and at a cost that is politically and economically acceptable.

The European Union implemented a cap and trade scheme in an effort to meet their Kyoto commitments to reduce carbon emissions to below 1990 levels by 2012. There’s a reason why they’re failing: no country is willing to sacrifice their economy and their standard of living to do so. Europe’s cap and trade scheme was designed to fail--and it’s working as designed.

Let me do the math to explain why Kyoto would have failed in the US and why I think Obama’s cap and trade scheme will also fail.

Americans were responsible for about 5 billion metric tons of CO2 emissions in 1990. By 2005 that amount had risen to about 5.8 billion tons. Let’s suppose that the US had signed the Kyoto treaty back in 1997--incidentally, Bill Clinton was President and Al Gore was Vice President when the Senate voted 95-0 to reject Kyoto--the US would’ve committed to cut manmade CO2 emissions to 7% below that 1990 level--to about 4.6 billion tons, a 1.2 billion ton per year cut.

Q: what would it take to cut CO2 emissions by 1.2 billion tons per year by 2012?

A: a lot more sacrifice than just riding your Schwin to work or school, and changing light bulbs.

We could’ve outlawed gasoline. In 2005 gasoline use in America generated about 1.1 B tons of CO2. That would almost get us there. Or, we could shut down over half of the coal-fired power plants in this country--coal plants generated about 2 B tons of CO2 in 2005. Of course, before we did that we’d have to get about 60 MM Americans and a significant number of American businesses to volunteer to go without electricity.

This simple math is not friendly to those who demand that government to mandate sharp cuts in manmade carbon dioxide emissions--now.

Reality 4: Even if America does cut CO2 emissions, the same computer models that predict manmade warming over the next century also predict that Kyoto-type CO2 cuts will have no discernible effect on global average temperatures for decades, if at all. The models show that Kyoto reductions would prevent only a small fraction of one degree of warming over the next 50 years. When was the last time you read that in the paper? We’ve been told that Kyoto was “just a first step.” You may want to ask: “what’s the second step?”

That begs another question: “how much are Americans willing to pay for ‘a first step’ that has no discernible effect on global climate?”

The answer here in Utah is: not much, according to a public opinion poll conducted by Dan Jones and Associates published in the Deseret News. 63% of those surveyed said they’re worried about global warming. But when asked how much they’d be willing to see their electricity bills go up to help cut carbon dioxide emissions, only half were willing to pay more for electricity. Only 18% were willing to see their power bill go up by 10% or more. Only three percent were willing to see their power bill go up by 20%.

Here’s the rub: many Europeans today pay at least 20% more for electricity as a consequence of their (failed) efforts to severe the link between modern life and CO2 emissions.

If Americans aren’t willing to pay a lot more for their energy, how do we reduce CO2 emissions? Well, here are four things we can all agree on.

First, we need to improve energy efficiency.

Second, we need to stop wasting energy.

Third, we need to conserve energy.

Fourth, we need to rethink our irrational fear of nuclear power.

Fifth, we need to convert from higher-carbon coal and oil to low-carbon natural gas. The good news: we can now do so without driving the price of natural gas to unacceptable high levels.

Indeed, 2008 will be remembered in the energy industry as the year US natural gas producers changed the game for US energy policy. Smart people in my industry have ‘cracked the code’--we’ve figured out how to produce stunning amounts of natural gas from shale formations right here in the US As a result, we can now say with confidence that America and the world are “swimming” in natural gas. US onshore natural gas production has grown more than 20% over the past three years, a feat that most energy experts thought impossible a few years ago. America’s known natural gas resource base now exceeds 100 years of supply at current US consumption--and that number is sure to get bigger. Abundant supplies mean that natural gas prices over the next decade and beyond will likely be much lower than over the past five years. While prices may spike from time to time in response to sudden, unexpected changes in supply or demand--for example, hurricanes in the Gulf of Mexico or extreme cold or hot weather--these spikes will be temporary.

Greater use of natural gas produced in America--by American companies who pay American taxes--will help reduce oil imports. Unlike oil, 98% of America’s natural gas supply comes from North America.

What’s more, we don’t need massive new investment in gas-fired power plants to substitute gas for coal. I mentioned earlier that America has about one million MW of installed electric generation capacity. Forty percent of that capacity is built to run on natural gas--about 400,000 MW. That compares to just 312,000 MW of coal capacity. But unlike those coal plants, which run at an average load factor of about 75%, America’s existing, installed natural gas-fired power plants operate with an average load factor of less than 25%. Turns out that we’ve got a quick and easy way to cut carbon emissions without driving the price of electricity through the roof--use clean burning, low-carbon, American-made natural gas in our existing, underutilized gas-fired power plants.

Sixth, your generation needs to focus on new technology and not just assume it, as many in my generation did back in the 70s--and as many in Congress continue to do today.

For example, carbon capture and sequestration will be hugely expensive and it’ll take decades to implement on any meaningful scale. The high costs will be passed through in electricity rates to consumers. It’s not just the capture part--we’ll have to construct a massive pipeline grid comparable to our existing natural gas pipeline grid, and drill thousands of wells to transport and pump massive amounts of CO2 into the ground. The facilities required to do this will use huge amounts of energy--which most likely will come from fossil fuels, negating some of the carbon reduction benefits. We’re not sure where we’re going to put all this CO2. Questar is one of the largest owner-operators of underground natural gas storage. Gas storage is in high demand--we’re always looking for places to build cost-effective storage. But I can tell you that there aren’t many places left that are economic to develop. That will be the case with CO2 sequestration as well.

But the point is, R&D aimed at allowing us to continue to use fossil fuels while waiting for breakthroughs in other technologies seems a rational thing to do.

Seventh, it’s time to have an honest discussion about alternative responses to global warming than what will likely be a futile attempt to eliminate CO2 emissions related to fossil fuel use. In truth, while many scientists believe man’s use of fossil fuels is at least partly responsible for global warming, many also believe the amount of warming will be modest and the planet will easily adapt. Just about everyone agrees that a modest amount of warming won’t harm the planet. In fact, highly-respected scientists such as Harvard astrophysicist Willie Soon believe that added CO2 in the atmosphere may actually benefit mankind because more CO2 helps plants grow and increases biodiversity. When was the last time you read that in the paper?

You’ve no doubt heard the argument that even if global warming turns out not to be as bad as some are saying, we should still cut carbon emissions--as an insurance policy--the so-called precautionary principle. While appealing in its simplicity, there are three major problems with the precautionary principle.

First, none of us live our lives according to the precautionary principle. Let me give you just one example. Around the world about 1.2 million people die each year in car accidents--about 3,200 deaths a day. At that pace, 120 million people will die this century in a car wreck somewhere in the world. We could save the lives of 120 million people by banning cars and trucks, or by imposing a 5 mile per hour speed limit worldwide. How many of you can live with a 5 MPH speed limit to save 120 million lives? Of course we don’t--we accept trade-offs. We implicitly do a cost-benefit analysis and conclude that we’re not going to do without our cars, even if doing so would save 120 million lives. Don’t you think we should insist on an honest cost-benefit analysis for cap and trade regulation?

Second, the media dwells on the potential harm from global warming, but ignores the fact that the costs borne to address it will also harm us. We have a finite amount of wealth in the world. We have a long list of problems--hunger, poverty, malaria, nuclear proliferation just to name a few. Your generation should ask: how can we do the most good with our limited resources? The opportunity cost of diverting a large part of current wealth to solve a potential problem 50-100 years from now means we do “less good” dealing with these other problems.

Third, economists will tell you that the consequence of what is in effect a huge tax on the way we live our lives will be slower economic growth. Slower economic growth, compounded over several decades, means that we leave future generations with less wealth to deal with the consequences of global warming, whatever they may be.

In truth, mankind has proven to be remarkably adaptive. Humans live north of the Arctic Circle where temperatures are below zero most of the year. Roughly one-third of mankind today lives in tropical climates where temperatures often exceed 100 degrees. In fact, you can take every one of the potential problems caused by global warming and identify lower-cost ways to deal with that problem than rationing energy use. For example, if in fact melting arctic ice causes the sea level to rise, a wealthier world will adapt over time by moving away from the beach or building retaining walls to protect beachfront property. What about the polar bear? Polar bears have survived sometimes dramatic climate changes over thousands of years, most recently the so called “medieval warm period” of 1000-1300 A.D. in which large parts of the arctic glaciers disappeared and Greenland was truly “green”. It’s an established fact that more polar bears die each year from gunshot wounds than from drowning. The first thing we need to do to protect polar bears is to stop shooting them.

Let me close by returning to the lessons my generation learned from the 1970s energy crisis. We learned that energy choices favored by politicians but not confirmed by markets are destined to fail. If history has taught us anything it’s that we should let markets determine how much energy gets used, what types of energy get used, and where, how and by whom energy gets used. What’s more, no form of energy is perfect, thus only markets can weigh the advantages and disadvantages of different energy forms. Instead, government’s role is to set reasonable standards for environmental performance, and make sure markets work.

I’ve tried to cover a lot of ground this afternoon. I hope my comments provoke at least some of you to become engaged in the discussion about America’s energy future. Most of all I wish you freedom, prosperity--and abundant supplies of energy at prices you can afford.