Archive for June 2009

Written by fatih al-farahat in


CBS news flagrantly suppressed actual climate science when "reporting" on the supposedly suppressed EPA document

Reporting on possibly "suppressed" EPA document, CBSNews.com suppressed actual climate science

From mediamatters.org, June 29, 2009 8:29 pm ET

SUMMARY: CBSNews.com uncritically reported an internal EPA document's false claim that "global temperatures have declined for 11 years."

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In a June 26, 2009, CBSNews.com article reporting that the Environmental Protection Agency "may have suppressed" an internal report on climate change, senior correspondent Declan McCullagh uncritically reported the document's false claim that, in the article's words, "global temperatures have declined for 11 years." McCullagh identified that claim as one of "a number of recent developments [one of the document's authors, EPA researcher Alan Carlin] said the EPA did not consider" before it submitted a key finding that could lead to EPA regulation of carbon dioxide. In fact, the claim that "global temperatures have declined for 11 years" is simply not true. Annual global average temperatures have both risen and fallen over the past 11 years, and while there have been some relatively cooler years during that period -- including a decline in each of the past three relative to the year before -- climate scientists reject the idea that those temperatures are any indication that global warming is slowing or does not exist. Scientists have identified a long-term warming trend spanning several decades that is independent from the normal climate variability -- which includes relatively short-term changes in climate due to events like El Niño and La Niña -- to which they attribute the recent relatively cooler temperatures.

In a February 11, 2009, Guardian op-ed, Vicky Pope, the head of climate change advice at the U.K. Met Office Hadley Centre, wrote that claims about the pace of global warming based only on developments in the past 10 years or in the 1990s are not valid, "since natural variations always occur on this timescale." She continued, "1998 was a record-breaking warm year as long-term man-made warming combined with a naturally occurring strong El Niño. In contrast, 2008 was slightly cooler than previous years partly because of a La Niña. Despite this, it was still the 10th warmest on record." According to the Met Office, "Over the last ten years, global temperatures have warmed more slowly than the long-term trend. But this does not mean that global warming has slowed down or even stopped. It is entirely consistent with our understanding of natural fluctuations of the climate within a trend of continued long-term warming."

As this graph of annual global average temperatures from the U.K. Met Office Hadley Centre shows, the claim in the internal EPA document that, in the words of CBS, "global temperatures have declined for 11 years" is simply not true:

According to the Met Office website, the World Meteorological Organization "requires the calculation of averages for consecutive periods of 30 years," which was chosen "as a period long enough to eliminate year-to-year variations."

Moreover, McCullagh's article did not provide scientists' assessments of the validity of the EPA document's scientific claims. Rather, he quoted Competitive Enterprise Institute (CEI) general counsel Sam Kazman and Reps. Joe Barton (R-TX) and James Sensenbrenner (R-WI). McCullagh noted that the CEI released the allegedly "suppressed" document and "has been skeptical of new laws or regulations relating to global warming," while Sensenbrenner was quoted as saying "the repression of this important study casts doubts on EPA's finding, and frankly, on other analysis EPA has conducted on climate issues."

By contrast, Gavin Schmidt, a climate modeler at the NASA Goddard Institute for Space Studies, wrote in a June 26, 2009, RealClimate.org post that in reading the internal EPA document, "[o]ne can see a number of basic flaws [in its main points]; the complete lack of appreciation of the importance of natural variability on short time scales, the common but erroneous belief that any attribution of past climate change to solar or other forcing means that CO2 has no radiative effect, and a hopeless lack of familiarity of the basic science of detection and attribution." From Schmidt's post:

Some parts of the blogosphere, headed up by CEI ("CO2: They call it pollution, we call it life!"), are all a-twitter over an apparently "suppressed" document that supposedly undermines the EPA Endangerment finding about human emissions of carbon dioxide and a basket of other greenhouse gases. Well a draft of this "suppressed" document has been released and we can now all read this allegedly devastating critique of the EPA science. Let's take a look...

[...]

Their [the document authors'] main points are nicely summarised thus: a) the science is so rapidly evolving that IPCC [International Panel on Climate Change] (2007) and CCSP (2009) reports are already out of date, b) the globe is cooling!, c) the consensus on hurricane/global warming connections has moved from uncertain to ambiguous, d) Greenland is not losing mass, no sirree..., e) the recession will save us!, f) water vapour feedback is negative!, and g) Scafetta and West's statistical fit of temperature to an obsolete solar forcing curve means that all other detection and attribution work is wrong. From this "evidence", they then claim that all variations in climate are internal variability, except for the warming trend which is caused by the sun, oh and by the way the globe is cooling.

Devastating eh?

One can see a number of basic flaws here; the complete lack of appreciation of the importance of natural variability on short time scales, the common but erroneous belief that any attribution of past climate change to solar or other forcing means that CO2 has no radiative effect, and a hopeless lack of familiarity of the basic science of detection and attribution.

But it gets worse, what solid peer-reviewed science do they cite for support? A heavily criticised blog posting showing that there are bi-decadal periods in climate data and that this proves it was the sun wot done it. The work of an award-winning astrologer (one Theodor Landscheidt, who also thought that the rise of Hilter and Stalin were due to cosmic cycles), a classic Courtillot paper we've discussed before, the aforementioned FoS [Friends of Science] web page, another web page run by Doug Hoyt, a paper by Garth Paltridge reporting on artifacts in the NCEP reanalysis of water vapour that are in contradiction to every other reanalysis, direct observations and satellite data, a complete reprint of another un-peer reviewed paper by William Gray, a nonsense paper by Miskolczi, etc., etc. I'm not quite sure how this is supposed to compete with the four rounds of international scientific and governmental review of the IPCC or the rounds of review of the CCSP reports....

They don't even notice the contradictions in their own cites. For instance, they show a figure that demonstrates that galactic cosmic ray and solar trends are non-existent from 1957 on, and yet cheerfully quote Scafetta and West who claim that almost all of the recent trend is solar driven! They claim that climate sensitivity is very small, while failing to realise that this implies that solar variability can't have any effect either. They claim that GCM simulations produced trends over the twentieth century of 1.6-3.74 ºC -- which is simply (and bizarrely) wrong (though with all due respect, that one seems to come directly from Mr. Gregory). Even more curious, Carlin appears to be a big fan of geo-engineering, but how this squares with his apparent belief that we know nothing about what drives climate, is puzzling. A sine qua non of geo-engineering is that we need models to be able to predict what is likely to happen, and if you think they are all wrong, how could you have any faith that you could effectively manage a geo-engineering approach?

Finally, they end up with the oddest claim in the submission: That because human welfare has increased over the twentieth century at a time when CO2 was increasing, this somehow implies that no amount of CO2 increases can ever cause a danger to human society. This is just boneheadly stupid.

From McCullagh's June 26, 2009, CBSNews.com article:

The Environmental Protection Agency may have suppressed an internal report that was skeptical of claims about global warming, including whether carbon dioxide must be strictly regulated by the federal government, according to a series of newly disclosed e-mail messages.

Less than two weeks before the agency formally submitted its pro-regulation recommendation to the White House, an EPA center director quashed a 98-page report that warned against making hasty "decisions based on a scientific hypothesis that does not appear to explain most of the available data."

[...]

After reviewing the scientific literature that the EPA is relying on, Carlin said, he concluded that it was at least three years out of date and did not reflect the latest research. "My personal view is that there is not currently any reason to regulate (carbon dioxide)," he said. "There may be in the future. But global temperatures are roughly where they were in the mid-20th century. They're not going up, and if anything they're going down."

Carlin's report listed a number of recent developments he said the EPA did not consider, including that global temperatures have declined for 11 years; that new research predicts Atlantic hurricanes will be unaffected; that there's "little evidence" that Greenland is shedding ice at expected levels; and that solar radiation has the largest single effect on the earth's temperature.

Link to post: http://mediamatters.org/research/200906290049

Written by fatih al-farahat in , ,


Climate Pinata

This particular blogger has a few comments on the so called climate bill passed through the house this past week. I cannot get too worked up about it since I am sure this stack of self serving political hooey will never get past the Senate and is really no more than a ham fisted effort to score political points.

The goofs who pieced this together will likely attempt Das Kapital as an encore.

I am no longer sure what possesses these people. They are political animals, yet the polls regarding climate change are becoming progressively more negative. When that happens, you take the problem quietly off the table and send it back to committee to be chewed on until the next election. There is no win here. In fact there is ample opportunity to create multiple fiascos with democrat written all over it.

There is also no conceivable gain unless you are a crook feeding off government largesse.

All this is taking place while we all twiddle our thumbs and run an interesting economic experiment to discover if our Band-Aids will be sufficient to hold off a full blown depression. Right now we are getting the onslaught of a full blown recession

I suspect that the main reason this nonsense was passed was to educate the radical naïve left about the realities of creating good legislation. A hand on walk through the meat grinder for the rookies allows their experienced compatriots to hand off the task of education to the other side of the floor. It really does feel like a freshman effort.

Most disturbing is that the democrats seem locked away somewhere outside of history and that most are so ignorant that they are even determined to repeat the simplest blunders of the past, because they have the apparent power to do so.

It is as if they want to roll back the reforms of Reagan and reintroduce the economic skill and foreign policy genius of Carter. In the meantime they exhaust themselves with trifles such as this bill.

Has nothing been learned by these people? We had twenty years of economic success, upon which a Clinton presidency threw off the economic governors and a gob smacked Bush did not reassert control when it became clear that something was amiss. The 2000 dot-com bust was not a crisis in capitalism but a brisk change in direction to correct excess. The credit bust is a crisis in capitalism brought on by easy leveraging and secrecy.

Saturday, June 27, 2009.

When I returned home last night, I have been watching CSPAN-1 for many hours. The discussions about the Waxman-Markey "climate bill" were just a stunning experience.

H.R. 2454: the 1092-page version
H.R. 2454: the 932-page version
I can't find the 1201-page version anywhere.

First, a comparison. The proceedings in the Czech Parliament are often a farce. Deputies attack each other personally and they often (but not always) speak about off-topic issues. And yes, I often enjoy these exchanges, too - although they can be too much of a good thing. From this point of view, the members of the U.S. Congress (from both parties) are true professionals, relatively speaking. They're better rhetors who always try to focus on the topic.

However, do these superficial differences matter for the outcome of key votes such as the Waxman-Markey bill - and the results of their work are the only thing that a citizen really cares about (or should care about)? The result showed that they don't: the mad document has narrowly passed, 219:212. As the numbers show, the "victory" would be impossible without these 8 traitors (omitted)

The bill has 1201 pages, although this full version is nowhere to be found. About 300 pages were added yesterday at 3:09 am. Hillary may have received a call at 3 am, with a big threat to the U.S. Did she manage to save her country? No, she didn't.It became extremely clear from the proceedings that virtually no one has read the bill, especially not the brand new 300-page amendment. No one in the U.S. House actually owned a copy of this amendment during the proceedings. John Boehner, the GOP minority leader, is close to an exception and we will discuss some of his findings below.

The supporters have uniformly been delusional imbeciles, talking about a shiny future, added jobs, reduced deficits, and saving the world. They have clearly no idea what's written in the bill and even if you told them, they wouldn't understand what it would mean. They're not capable of an elementary mental activity.

They're apparently not even supposed to be thinking: they are just paid to raise their hand in favor of any stupidity that their bosses ask them to support. They're individually irresponsible appendices of a filthy octopus. I just felt terrible for the U.S. when I saw e.g. those congresswomen who were manifestly included in the House because they were black, female, and simple-minded enough to blindly approve anything recommended by their white male "leaders".

BillLet me tell start somewhere. The very size of the bill, 1201 pages, means that most people - and even most "local experts" - have absolutely no chance to understand all of its glitches. (I offer USD 5 to the first person who shows some evidence that he or she has read the full text.) So this bill is, first of all, a stunning document transferring an immense amount of power to a few selected people who will know how to master the bill and benefit from its details.

For a comparison, a pretty good bill called the U.S. Constitution originally had four pages and it allowed a great country to work well for 230+ years. Those four pages are somewhat less than 1201 pages whose only purpose is to allow one particular green tumor to thrive for a few years, before it dies of hunger.

John Boehner has read most of it. He showed a graph of a hundred of institutions that are expected to "conspire" to make this newly planned huge sector of the grey economy thrive. Many of these institutions are new and their name is composed out of approximately 10 words each.

The bill allows the new octopus to infiltrate the life of all the individuals, force them to look for expert opinions about all kinds of things before very basic transactions, order even villages (which often can't afford to hire anyone) to employ useless green staff that is a part of this new mafia, force them to have power outlets (or expensive devices to sequester CO2, a harmless gas that we call life) at all conceivable and inconceivable, mostly useless places, and so on. In other words, you won't be able and your community or company won't be able to live normally without paying attention to the new mechanism and you won't be able to rely on having resources because you can always be ordered to waste them for nonsensical expenses dictated by the bill.

This bill is trying to distort ways how energy is used. Now, what activities depend on energy? It's impossible not to think about the crazy physics textbook that once made Richard Feynman so angry. The answer to all questions was "Energy makes it go". Feynman explained that children didn't learn anything, it was just an indoctrination by a vacuous cliché, and energy makes everything go but also stop. In fact, it is conserved, just being converted from one form to another. Sadly enough, the sentence "Energy makes everything go" is no longer vacuous with this bill because the bill implies that "Everything must be regulated".

Meanwhile, the bill is doing nothing measurable to actually help America become energy-independent: it does nothing to help nuclear energy, the realistic domestic sources of energy are being suppressed, and the currently unrealistic domestic sources of energy will probably remain unrealistic. Moreover, the bill depends on hundreds of technicalities reflecting the current details about existing technologies such as fuel cells. If there's any significant technological progress, which is the only hope to realize some dreams proclaimed by the bill, all these things will be getting obsolete and hundreds of pages will have to be modified and added (to describe the bureaucratic treatment of the new technologies) almost every year.

There are many regulations that imply that new billions of dollars will be moved from one place to another. However, the algorithms how to exactly calculate these billions and how to determine where they're moved are never well-defined, as Boehner has found out: the bill was clearly written by a few random sloppy amateurs-become-professionals - or the vagueness may have been either unavoidable or deliberate.

So whatever the reason is behind the vagueness, the bill will give an immense power to those who will be able to take over this gigantic new machinery and move billions to their preferred locations (and order such transfers) - a situation that is likely to attract huge corruption and make Saddam Hussein a modest, wise, and fair manager in comparison.

The extra expenses needed for this gigantic new structure to operate are going to be paid by the "polluters". That's very interesting because the same bill argues that there won't be any polluters in a near future. So who will pay for all these new green jobs at that time? Of course, this question is rhetorical because the U.S. will never get there.Amazingly enough, this nearly unprecedented communist-bureaucratic revolution is being justified mostly by "climate change".

The whole industrial activity of the U.S. since 1776 may have (temporarily) added something between 0.05 and 0.2 °C to the global temperatures (would you prefer to sacrifice the U.S. to avoid this "serious" change?), and the business-as-usual in the U.S. would contribute an additional 0.1 - 0.5 °C per the 21th century - i.e. until the year 2100 which is so far that almost none of us will be here to see it. I am convinced that even the IPCC will agree about the figures. The greenhouse warming is small, the U.S. only influence a small part of it, and the growth will naturally decrease in a few decades or a century because of decreasing fossil fuel reserves, anyway.

The unmeasurably small cooling to be achieved by a century of this new system - which will surely be lost in local and global fluctuations and many other effects influencing the temperature - must be a really valuable thing because the U.S. House is not only ready to add trillions of new debt but also willing to transform their previously great country to a tyranny where energy-dependent jobs will be escaping to more friendly countries, where elementary business and human acts - and indeed, even manifestations of life - will need a bureaucratic stamp and approval (by bureaucrats whose number will have to be so large that they will de facto cover every piece of the country), a nation that is going to plan a rationally unmotivated global trade war with all countries in the world that are gonna realize that similar bills are a road to hell (the U.S. want to become a bigger version of North Korea, a rogue state that must bugger everyone else about its insane ideological viewpoints, in order to mask its own self-imposed internal problems).

You know, the Bolsheviks decided to transform the Russian society in a similar radical way back in 1917. At least, the champions of the existing regime together with the blue-dog Mensheviks of that time had the guts to try to stop the spreading Bolshevik cancer. At the end, they failed, and Russia was decimated by the Bolsheviks for more than 70 years, suffering from the economic decline, tens of millions of murdered people, and bringing the world to the verge of a nuclear holocaust. When the Bolsheviks got settled, they had all kinds of peaceful plans, and virtually all of them turned out to be nothing else than a wishful thinking: the real progress in the economy doesn't come from plans of a few mediocre officials who declared themselves as being important, without having passed any tests showing that they're talented.
The Waxman-Markey method to build new things in the economy is structurally analogous to the Lenin-Stalin method.

Is there someone in the U.S. today who will at least try to stop these blinded loons? At least the U.S. Senate? Well, I actually guess that the U.S. Senate will stop this looming storm. Meanwhile, we should better check that nothing like that will happen in Europe or at least not in the Czech Republic.

Written by fatih al-farahat in , ,


Waste Water Concerns

A lot has been said of safe waste water disposal and recently I have seen more items in which annoying organics have slipped through and affected fish populations. The reality is that we lack a bullet proof system.

The difficulty starts with the fact that all water treatment usually ends with a water product that is dumped back into the environment improved but not necessarily truly purified. My question is whether we can do something that is cost effective and actually may solve the problem.

The biggest single such problem is actually agricultural. The advent of the use of soluble chemicals on our fields over the past century has loaded our hydraulic system with these nutrients and these have over loaded specific environments causing the like of enlarged dead zones in the ocean.

The only viable solution to that problem is the advent of producing and adding biochar to soils. The free carbon sharply reduces application of nutrients and actually retains those in place. I suspect that this will emerge as a complete solution.

Then we turn to the municipal waste stream. Eliminating particulates is fairly easy, but eliminating solubles is quite another trick altogether. We now get reports on the deleterious effects of estrogens and other trace compounds affecting the receiving eco logy. In short, we do only a middling job before we send a concentrated stream of such solutes downstream.

I personally think that the best promise comes from cattail paddies. It is no trick to divert the treated sewage outflow through a large paddy and to allow enough dwell time for the water to seep through the root system. It can even be set up in strips through which the water is made to flow in a cross wise direction through the strips The only question is whether or not the plants will in fact absorb a wide range of soluables. Most important is that the cattails provide enough ready capacity to make it practical if it happens to work.

This is all new research. The industrial applications themselves are potentially endless.

One of my favorites happens to be the Alberta oil sands. There they use process water several times and then place if forever in a retaining pond. At least they did that twenty years ago. It is sufficiently saline or whatever, that it cannot be sent down the Mackenzie drainage to the Arctic Ocean. If cattails could filter out the solubles then the problem gets solved. And yes I confirmed that they grow even there.

The good thing about cattails is that most of the biomass is soluble starch which can be easily separated and converted into ethanol. The remainder can then be processed as a cellulose feedstock and this will again separate out most of the remaining organics for conversion also to ethanol. Left behind hopefully will be sludge holding most of the nasties.

So if we can so harness cattails like this, it is plausible that waste water treatment can become almost bullet proof. My sense so far is that the plants will come close without us been overly clever. Plant modification could solve the rest.

It is too bad that we cannot create a plant able to produce isolated mineral holding nodes or nodules. However solving even half the problem is better than the present.

It’s Time to Learn From Frogs

Some of the first eerie signs of a potential health catastrophe came as bizarre deformities in water animals, often in their sexual organs.

Nicholas D. Kristof

Frogs, salamanders and other amphibians began to sprout extra legs. In heavily polluted Lake Apopka, one of the largest lakes in Florida, male alligators developed stunted genitals.

In the Potomac watershed near Washington, male smallmouth bass have rapidly transformed into “intersex fish” that display female characteristics. This was discovered only in 2003, but the latest survey found that more than 80 percent of the male smallmouth bass in the Potomac are producing eggs.

Now scientists are connecting the dots with evidence of increasing abnormalities among humans, particularly large increases in numbers of genital deformities among newborn boys. For example, up to 7 percent of boys are now born with undescended testicles, although this often self-corrects over time. And up to 1 percent of boys in the United States are now born with hypospadias, in which the urethra exits the penis improperly, such as at the base rather than the tip.

Apprehension is growing among many scientists that the cause of all this may be a class of chemicals called endocrine disruptors. They are very widely used in agriculture, industry and consumer products. Some also enter the water supply when estrogens in human urine — compounded when a woman is on the pill — pass through sewage systems and then through water treatment plants.

These endocrine disruptors have complex effects on the human body, particularly during fetal development of males.
“A lot of these compounds act as weak estrogen, so that’s why developing males — whether smallmouth bass or humans — tend to be more sensitive,” said Robert Lawrence, a professor of environmental health sciences at the Johns Hopkins Bloomberg School of Public Health. “It’s scary, very scary.”

The scientific case is still far from proven, as chemical companies emphasize, and the uncertainties for humans are vast. But there is accumulating evidence that male sperm count is dropping and that genital abnormalities in newborn boys are increasing. Some studies show correlations between these abnormalities and mothers who have greater exposure to these chemicals during pregnancy, through everything from hair spray to the water they drink.

Endocrine disruptors also affect females. It is now well established that DES, a synthetic estrogen given to many pregnant women from the 1930s to the 1970s to prevent miscarriages, caused abnormalities in the children. They seemed fine at birth, but girls born to those women have been more likely to develop misshaped sexual organs and cancer.

There is also some evidence from both humans and monkeys that endometriosis, a gynecological disorder, is linked to exposure to endocrine disruptors. Researchers also suspect that the disruptors can cause early puberty in girls.

A rush of new research has also tied endocrine disruptors to obesity, insulin resistance and diabetes, in both animals and humans. For example, mice exposed in utero even to low doses of endocrine disruptors appear normal at first but develop excess abdominal body fat as adults.

Among some scientists, there is real apprehension at the new findings — nothing is more terrifying than reading The Journal of Pediatric Urology — but there hasn’t been much public notice or government action.

This month, the Endocrine Society, an organization of scientists specializing in this field, issued a landmark 50-page statement. It should be a wake-up call.

“We present the evidence that endocrine disruptors have effects on male and female reproduction, breast development and cancer, prostate cancer, neuroendocrinology, thyroid, metabolism and obesity, and cardiovascular endocrinology,” the society declared.

“The rise in the incidence in obesity,” it added, “matches the rise in the use and distribution of industrial chemicals that may be playing a role in generation of obesity.”

The Environmental Protection Agency is moving toward screening endocrine disrupting chemicals, but at a glacial pace. For now, these chemicals continue to be widely used in agricultural pesticides and industrial compounds. Everybody is exposed.

“We should be concerned,” said Dr. Ted Schettler of the Science and Environmental Health Network. “This can influence brain development, sperm counts or susceptibility to cancer, even where the animal at birth seems perfectly normal.”

The most notorious example of water pollution occurred in 1969, when the Cuyahoga River in Ohio caught fire and helped shock America into adopting the Clean Water Act. Since then, complacency has taken hold.

Those deformed frogs and intersex fish — not to mention the growing number of deformities in newborn boys — should jolt us once again.

Written by fatih al-farahat in , ,


Depression Looms

What is disheartening here is that this could be fixed, perhaps even today by the method I proposed back in September.

When a market that operates on margin which is certainly the housing market enters a collapse mode, the big and immediate losers are the borrowers. The problem is to avoid having those borrowers folding their positions and walking away because there is never a sufficient ready market available to absorb the inventory. After all, everyone who could be persuaded to buy got sold an over priced property already.

You must return to the borrowers and make it worthwhile for them to support the house. What is more, it must be done universally so all distressed inventory exits the market at roughly the same time. That results in a rapidly improving market that stimulates new building.

This way we will have lenders running around converting their problems into government bailouts while beggaring their neighbor through ongoing property sales even when the land value is driven to zero and the bid price is less than replacement. The inventory is so huge that it must drag on for years.

As a result it will be decades before housing is considered a store of wealth again and consumer liquidity will remain suppressed since they have no other easy mechanism to release capital.

Further on we face the additional reality that the job market has been hurt badly and no government program ever did much to turn that around. It takes growing companies to do that with ready access to fresh capital.

The most probable scenario, unless Obama surprises, is a continuing erosion of housing prices over several years as the inventory is slowly worked off. This also implies an ongoing diversion of consumer’s cash into that market in order to preserve capital. The impact of this is to make it difficult for the consumer to prosper at all. During this period, we can expect credit card debt to contract also. This hardly is a recipe for a buoyant economy.

While demand is been suppressed by financial failure, we will experience a grinding dragged out recession that will surpass previous records. It does not need to be this way, but I see little to cheer about.


June 26, 2009, 11:02 AM ET

When Is It Cheaper to Ditch a Home Than Pay?

Foreclosures aren’t only due to homeowners facing a cash crunch. One out of four defaults on mortgage loans is “strategic,” a new study says, due to a mortgage’s value exceeding the value of a house even if the homeowner can afford to pay.

Strategic default is most likely when home values have fallen by more than 15%, according to the study by authors of the Financial Trust Index, a joint project of the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management. (Read the paper here by authors Northwestern’s Paola Sapienza, Chicago’s Luigi Zingales and Luigi Guiso of the European University Institute.)

The researchers found that homeowners start to default once their negative equity passes 10% of the home’s value. After that, they “walk away massively” after decreases of 15%. About 17% of households would default — even if they could pay the mortgage — when the equity shortfall hits 50% of the house’s value, they found.

“Housing policy under the current administration has focused on reducing households’ cash flow problems in response to the housing crisis, but no one has addressed the negative equity issue as part of public policy regarding housing,” Sapienza said.

The research is based on homeowner surveys, which also considered moral and social factors involved. People who said it was immoral to default were 77% less likely to declare their intention to do so, the authors write, while those who know someone who defaulted were 82% more likely to say they would default themselves.

“Our research showed there is a multiplication effect, where the social pressure not to default is weakened when homeowners live in areas of high frequency of foreclosures or know others who defaulted strategically,” Zingales said. “The predisposition to default increases with the number of foreclosures in the same ZIP code.”

Among the other findings:

People under 35 years and over 65 said were less likely to say it was morally wrong to default, compared to middle-aged respondents.

People with a higher education and African-Americans are less likely to think it’s morally wrong to default, while respondents with higher incomes were more likely to think it’s morally wrong.

Republicans and Democrats showed little difference in moral views of strategic default, while independents were less likely to say defaulting is immoral.

People who supported government intervention to help homeowners were 12 percentage points less likely to say strategic default is immoral, the authors found.

Wage and salary income, which is key for consumer spending, fell… While lower taxes and one time checks from the government are obviously a net positive for the consumer, they tend to have a short-lived effect on spending growth as they only affect the rate of change in disposable income when they are implemented or shortly thereafter. Of more importance to ongoing spending growth is the rate of growth in wages and salaries and other continuing sources of income flow. –Joshua Shapiro, MFR Inc.

The lion’s share (94.3%) of the increase in income came from one-time increases of $250 per eligible recipient of social security, supplemental security, veterans benefits, and railroad retirement benefits. The $13.1 billion of these transfers boosted May income by about $158 billion (annualized). These transfers are not recurring so incomes will fall by a like amount in June. Spending from this actual $13.1 billion is likely to be spread out over several months or even years if recipients use the proceeds to increase saving or reduce debt. The key fundamental driver of spending — wage and salary income — fell 0.1% after a slightly smaller advance in April. –Nomura Global Economics

Today’s data does not particularly change the view in any way. We know that the consumer remains backed into a corner, and any ‘green shoots’ of improvement will be tempered by the fundamentals at play, including an increasing unemployment rate, and an overall negative wealth effect (primarily coming from loss in home values). As such, we don’t suspect future gains of this magnitude will be sustainable outside of the influence of government stimulus. However, at the end of the day this is a better than expected report regardless of the one-off factors that are giving the data a beauty makeover. –Ian Pollick, TD Securities

Almost all the jump in incomes reflects the impact of the stimulus package, which gave $250 one-time payments to people receiving a variety of social security benefits. By contrast, wage and salary income fell 0.1%. It will continue falling as wage gains slow and payrolls fall. Most of the stimulus money was not immediately spent, so the saving rate jumped to a 16-year high of 6.9%. It has further to go… Not a green shoot, in our book. –Ian Shepherdson, High Frequency Economics

Real consumption has struggled to increase so far despite a torrent of government income support: real PCE has fallen 0.4% annualized over the last three months despite a 11.9% annualized increase in real disposable income. It is important to keep this in mind as we go into the second half of the year, when income support will unwind some. With households smoothing their consumption, a drop in second half real disposable income need not necessarily lead to a drop in spending, though this is naturally something we will watch closely. –Abiel Reinhart, J.P. Morgan

I have argued for months that it would be the consumer who would lead the way out of this mess and that is starting to happen. Consumer spending rose at a moderate rate in May as people bought more durable goods and soft goods. Interestingly, demand for services, which had been holding in, was essentially flat. So far this quarter household spending has been essentially flat compare to the first quarter. That is not as strong as had been hoped given the stimulus bill. Indeed, it appears that so far the stimulus money has gone more to savings than spending. –Naroff Economic Advisors

Reduced wealth, high debt, tight credit, and a weakening labor market are all weighing on consumers. Wages and salaries were down in May, and have fallen in four out of five months this year. And higher gasoline prices are biting into spending power… Looking forward, we expect consumers to stay cautious. But we do expect spending to creep slowly higher in the second half of the year as the labor market deterioration becomes less severe. –Nigel Gault, IHS Global Insight

As an indication of how weak labor market conditions have become — recall it is not only significant job losses but also declining aggregate hours worked amongst those with jobs — yesterday’s revised GDP data show that during the first quarter, aggregate wage and salary disbursements fell on a year-over-year basis. While this may not seem much of a surprise, this is the first over-the-year decline in wage and salary disbursements since the second quarter of 1958. While the rate of job losses appears to have moderated, employment is nonetheless still declining, as are aggregate hours and aggregate labor earnings. Throw in the significant decline in household net worth over recent quarters and restricted access to credit, and it is no surprise that consumers remain cautious in their spending behavior and continue to add to household savings. –Richard F. Moody, Forward Capital

Written by fatih al-farahat in , , , ,


Joseph Romm: George Will and WattsUpWithThat embrace a proud former shill for Ken Lay of Enron, a man convicted of fraud and conspiracy charges

George Will and WattsUpWithThat embrace a proud former shill for a man convicted on fraud and conspiracy charges

by Joseph Romm, Climate Progress, June 28th, 2009

Denial makes strange bedfellows.

Two of the leading sources of anti-scientific disinformation on global warming — George Will and Anthony Watts’ blog WattsUpWithThat — have embraced a man, Robert Bradley, who proudly shilled for Enron CEO Ken Lay, who was convicted on fraud and conspiracy charges in 2006.

Watts and I, you may recall, got into a tiny dustup a couple weeks ago (see Exclusive: New NSIDC director Serreze explains the “death spiral” of Arctic ice, brushes off the “breathtaking ignorance” of blogs like WattsUpWithThat and here). Since then, Watts has been throwing everything at me including the kitchen stink, with four full posts attacking me this month. I was planning to ignore him, until two things happened.

First, Watts ran a truly nonsensical piece (here) by Bradley, who is now President of the Institute for Energy Research, which “has received $307,000 from ExxonMobil since 1998.” Bradley is one of the Denier-Industrial-Complex Kooks (DICKs) — see, for instance, “Mysterious industry front-group affiliated with Ken Lay’s former speechwriter launches anti-Waxman-Markey ads with phony MIT cost figures.”

Second, George Will published a piece, “Tilting at Green Windmills” in which he uses a discredited Spanish “study” to claim clean energy investments don’t create jobs (for debunking by CP and the Regional Minister of Innovation, Enterprise and Employment for the Government of Navarre, see here and here and here). Will’s piece is noteworthy for this remarkable admission:

[This] study was supported by a like-minded U.S. think tank (the Institute for Energy Research, for which this columnist has given a paid speech.

That’s right, George Will published an entire piece based on disinformation bought and paid for by a think tank that is bought and paid for by ExxonMobil and run by Ken Lay’s former top shill — and Will also took money from that think tank. At least editorial page editor Fred Hiatt required that much in return for letting Will publish his umpteenth article full of misleading and inaccurate statements.

Now you may say, wait a minute, Joe, sure Bradley served as Director of Public Policy Analysis at Enron, where he was a speechwriter for CEO Kenneth Lay,” who was “convicted on fraud and conspiracy charges on May 25, 2006″ — but how can you say he proudly shilled for Lay when he has wiped any trace of his connection to Enron from his IER bio here?

Well, I have had the misfortune of knowing Bradley for a long time, since Enron Energy Services (EES) reached out to many leading experts on energy efficiency, and they really liked by book, Cool Companies. Certainly none of the energy efficiency folks were aware of what Enron was doing or they would have quit immediately. I don’t even know if anyone in EES management knew what Ken Lay and his buddies in top management were doing to fraudulently rip-off the public.

And I have no idea whether Bradley knew of the fraudulent activity, but he certainly knew what kind of company he was working for. Over the past several months, Bradley has bombarded me with requests to publish articles about the disinformation he and his IER buddies have written. Just last month he wrote to me and James Hansen:

I wish you (and him) could have been in the Enron government affairs meetings on CO2 trading–we were going to game it to death and make money coming and going. And no one was quaking about the future of global climate.

and before that he wrote to us:

We were going to laugh all the way to the bank with our CO2 trading until the banks said no more laughing–you’re broke. Keep trying Joe–Enron Lives!

As the Biblical Proverb says, “Pride goeth before destruction, and an haughty spirit before a fall.”

Enron does live in on the likes of people like Bradley. That’s why Waxman-Markey has put in many safeguards to protect the public from fraud in the CO2 trading.

Does that mean the system will be free from fraud? Of course not. You can write all the laws you want against fraud and robbery and other crimes, and greedy people who think they are smarter than everyone else will still break the law. The same is true of the tax code — people try to cheat it all the time and some succeed.

But one thing you can certainly say about CO2 trading: The overwhelming majority of CO2 emissions come from the combustion of fossil fuels, and flows of natural gas, oil, and coal are very closely tracked in this country, both sales and purchases. So it would be quite hard to engage in significant fraud of the kind that would lead to, say, much higher actual emissions than were being measured and regulated. And as for cornering the market and running up the price of a tradable commodity, an Enron specialty, again, W-M has multiple safeguards to prevent that outcome.

I am not going to waste time here debunking the latest Bradley-Watts attack on me since I have dealt with almost every point in previous posts. It is 100% nonsense, which is it no surprise since it is largely an excerpt from something Roger Pielke, Jr. wrote. But it does contain one unintentionally humorous attack I will address in a later post.

The point is that one shouldn’t have to debunk anything Bradley writes — or anything the Institute for Energy Research has published or supported, including George Will. You just need to consider the source.

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34 Responses to “George Will and WattsUpWithThat embrace a proud former shill for a man convicted on fraud and conspiracy charges”

  1. ken levenson Says:
    June 28th, 2009 at 3:04 pm

    the right-wingers self-delusion is mercifully loosening its grip on the wider public. how nice to see the climate bill pass -- hopefully we can now ramp-up action fast enough to actually avoid catastrophic climate change.

    I’m beginning to think that the deniers are becoming more irrelevant -- like when all the tabacco executives testified/lied to congress…the game was over.

    Now the issue is that people don’t understand that the horrible effects are not going to wait for generations down the line but are happening here and now and by 2050 we are in for a world of pain.

    And on this point, the paper we love to hate has done it again!!!!!
    With an article on forest fires and beetle destruction…It even had this money quote:

    “But scientists say that recent winters have also lacked the stretches of deep cold — 20 to 40 degrees below zero — that can check the insects’ spread.”

    YET the article never mentions climate change!!!!!! I’m not a conspiracy theorist but I’m starting to wonder….

    http://www.nytimes.com/ 2009/ 06/ 28/ us/ 28wildfires.html?_r=1&ref=us

    [JR: Good catch. I'll blog on this Monday.]

Link to Joseph Romm's blog post: http://climateprogress.org/2009/06/28/george-will-wattsupwiththat-robert-bradley-ken-lay-enron/

Written by fatih al-farahat in ,


Paul Krugman: Treason Against the Planet

Betraying the Planet

by PAUL KRUGMAN, New York Times, June 28, 2009
Credit: Fred R. Conrad/The New York Times

So the House passed the Waxman-Markey climate-change bill. In political terms, it was a remarkable achievement.

But 212 representatives voted no. A handful of these no votes came from representatives who considered the bill too weak, but most rejected the bill because they rejected the whole notion that we have to do something about greenhouse gases.

And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.

To fully appreciate the irresponsibility and immorality of climate-change denial, you need to know about the grim turn taken by the latest climate research.

The fact is that the planet is changing faster than even pessimists expected: ice caps are shrinking, arid zones spreading, at a terrifying rate. And according to a number of recent studies, catastrophe — a rise in temperature so large as to be almost unthinkable — can no longer be considered a mere possibility. It is, instead, the most likely outcome if we continue along our present course.

Thus researchers at M.I.T., who were previously predicting a temperature rise of a little more than 4 °F by the end of this century, are now predicting a rise of more than 9 °F. Why? Global greenhouse gas emissions are rising faster than expected; some mitigating factors, like absorption of carbon dioxide by the oceans, are turning out to be weaker than hoped; and there’s growing evidence that climate change is self-reinforcing — that, for example, rising temperatures will cause some arctic tundra to defrost, releasing even more carbon dioxide into the atmosphere.

Temperature increases on the scale predicted by the M.I.T. researchers and others would create huge disruptions in our lives and our economy. As a recent authoritative U.S. government report points out, by the end of this century New Hampshire may well have the climate of North Carolina today, Illinois may have the climate of East Texas, and across the country extreme, deadly heat waves — the kind that traditionally occur only once in a generation — may become annual or biannual events.

In other words, we’re facing a clear and present danger to our way of life, perhaps even to civilization itself. How can anyone justify failing to act?

Well, sometimes even the most authoritative analyses get things wrong. And if dissenting opinion-makers and politicians based their dissent on hard work and hard thinking — if they had carefully studied the issue, consulted with experts and concluded that the overwhelming scientific consensus was misguided — they could at least claim to be acting responsibly.

But if you watched the debate on Friday, you didn’t see people who’ve thought hard about a crucial issue, and are trying to do the right thing. What you saw, instead, were people who show no sign of being interested in the truth. They don’t like the political and policy implications of climate change, so they’ve decided not to believe in it — and they’ll grab any argument, no matter how disreputable, that feeds their denial.

Indeed, if there was a defining moment in Friday’s debate, it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a “hoax” that has been “perpetrated out of the scientific community.” I’d call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists — a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.

Yet Mr. Broun’s declaration was met with applause.

Given this contempt for hard science, I’m almost reluctant to mention the deniers’ dishonesty on matters economic. But in addition to rejecting climate science, the opponents of the climate bill made a point of misrepresenting the results of studies of the bill’s economic impact, which all suggest that the cost will be relatively low.

Still, is it fair to call climate denial a form of treason? Isn’t it politics as usual?

Yes, it is — and that’s why it’s unforgivable.

Do you remember the days when Bush administration officials claimed that terrorism posed an “existential threat” to America, a threat in whose face normal rules no longer applied? That was hyperbole — but the existential threat from climate change is all too real.

Yet the deniers are choosing, willfully, to ignore that threat, placing future generations of Americans in grave danger, simply because it’s in their political interest to pretend that there’s nothing to worry about. If that’s not betrayal, I don’t know what is.

Link to article: http://www.nytimes.com/2009/06/29/opinion/29krugman.html

Written by fatih al-farahat in , ,


Opening Obama's Eyes

This is a commentary on Obama’s handling of the Iranian situation It is hard to fault the comments and he is showing little leadership on the issue at this time. Whether that is good or bad remains to be seen. My problem here is that we are been confronted with a clear moral choice, however earned. The Iranian government is notionally putting down the will of the people whenever it displeases them and the external world has almost no leverage to affect it.

Obama’s efforts to open the door to reconciliation have been thrown on the floor as if they are of no consequence and that should have been expected anyway. A simple reading of the history of this conflict should have informed Obama of this. The original hostage crisis was a deliberate breach exploited by the Iranians and used to humiliate Carter. It presently serves their interest to humiliate Obama because it may restore street credit in the Arab street and aid in keeping their own citizens under control.

The proper response is a modest slap down to remind them that bad behavior has consequences. Except that the Bush administration did not have the answer to that either. And we are all getting tired of sanctions.

The current internal turmoil may resolve this now or later anyway. The country is financially strained and must continue to underperform. The fault is very much at the foot of the mullahs. Maybe we should cease all offshore bank accounts held by any mullah and his family. Even if they do not exist, it at least puts them on the defensive. We would certainly do that if actual war broke out.

The Obama reality is that he is naturally weak on both the economic file and the foreign file and must be dependent on his advisors. This was also George Bush’s flaw. You simply do not have the real world knowledge to discern when it is not working and mistakes are easily entered into if your advisors are biased in any way. It cost Bush two years in Iraq until he replaced Rumsfield who was too committed to a minimal strength approach long after it had clearly failed.

His feel good foreign initiative at least created a break and an opening. It had to be responded to by the dance partner. Failure to respond needed to be briskly rebuked. We all know who the rogues are, and by briefly opening the door, you reassure all your allies that you are not unreasonable at all and you can then task them with the job of changing all that.

The real bottom line is that we will be slowly returning to business as usual and with the State department perhaps taking a larger role. That will relieve Obama of much of this file that has had far too much presidential participation in the past decade. I am not sure what is worse; Clinton’s absenteeism which helped set up the 9/11 scenario (I am sorry, but if a nut bar publically goes around blowing up US assets and promises worse, then a declaration of war is the only correct answer), or Bush’s nation at war approach in which all the worst practices of military thinking is introduced. At least we have now returned to the proper approach and are optimizing resources to resolve it all.

Iran and North Korea are both determined to promote disaster in order to extract leverage. Both are economically crumbling and surely can not hold out much longer. Just ignoring them may well be the best policy.

I think that a deal is now available with Cuba that will ease the transition coming over the winding down of Castro’s regime. It is likely too much to expect real concessions, but establishment of friendly discussions is very appropriate so it becomes easy when the time arrives. I think Cuba’s transition to a modern economy will be breath taking



The Education of Barack Obama

FrontPageMagazine.com Friday, June 26, 2009

One June 12, Iran’s population headed to the polls; over the next few days, an unexpected Green Revolution erupted, as millions took to the streets in protest to a vote that many say was a blatant fraud. The protesters faced incredible adversity; opposition leaders were jailed, cell phones and Internet services were cut off, independent journalists were banished and the regime’s police and militias beat and shot its own citizens.

It was not until Tuesday, June 23rd until President Barack Obama made a stern rebuke of the tactics of Supreme Leader Ali Khamenei and presumptive President Mahmoud Ahmadinejad. At a press conference, Obama said that he was “appalled and outrage” at the brutality but added that there was still a “peaceful path” that Iran’s government could take to resolve this crisis.

Under most circumstances, a president making tough remarks in reference to street-fighting after a corrupt election would not be seen out of the ordinary. However, Obama’s Tuesday press conference was an about face from his previous attitudes on Iran’s tumult.

For several days, Obama had been criticized by many for not taking a tougher stance on Iran. Senators John McCain and Lindsay Graham both said Obama was “timid” and “weak” in his initial response. Many pundits made mention of how European Union leaders, in particular French President Nicolas Sarkozy, condemned the Iranian government’s actions while Obama stood off to the side. Many Congressional Democrats broke ranks with the President and his “measured response” and voted to support resolutions that reaffirmed America’s support of Iranians seeking basic human rights and freedoms, while also blasting Iran’s censorship of opposition leaders and media.

Did Obama become tougher on Iran’s leadership due to the increased political scrutiny? When asked by a member of the media if McCain’s criticism forced him to change his stance, Obama responded by rhetorically asking, “What do you think?”

The past few weeks have taught Obama a tough lesson, one of his own doing.

Since his ascent to the presidency, Obama has tried to warm ties with Iran in hopes to bring it to the nuclear arms negotiation table. However, it was clear to many that this was doomed to failure from the start. Since his election, Iran has shown no interest in Obama’s invitation; in many ways, the regime only increased its belligerence.

One example of this comes from April’s U.N. Conference on Racism, held in Geneva. Ahmadinejad used his bully pulpit at this forum to make anti-Semitic and anti-Israeli comments; in response, dozens of delegates walked off as he spoke, one protester even threw a rubber clown nose at Iran’s president. America’s deputy ambassador to the United Nations panned Ahmadinejad’s speech. Al-Jazeera’s Tehran correspondent said that it did not play well at home.

But, still, the Obama administration said it wanted to continue its attempts to keep an open dialogue with Tehran. And, according to both The Guardian and the Washington Times, Obama personally reached out to Khamenei in early May, writing a letter to him delivered through back channels. Details of this letter have yet to be made public; however, sources said that the letter “laid out the prospect of cooperation in regional and bilateral relations” while also touching on the nuclear weapons issue. It is not known if Iran responded.

In early June, Obama made his famed “Cairo” speech. During this speech, Obama strikes a conciliatory tone while addressing America’s involvement in the 1958 coup that brought the Shah to power. He also said that Iran had a right to pursue nuclear power, as long as it fell under the rules of the non-proliferation treaty. But, perhaps most importantly, he says:

It will be hard to overcome decades of mistrust, but we will proceed with courage, rectitude and resolve. There will be many issues to discuss between our two countries, and we are willing to move forward without preconditions on the basis of mutual respect.

Despite Obama’s many overtures, not once did Iran respond. And Iran’s continued cold-shoulder came well before the June 12 election, when Khamenei’s and Ahmadinejad’s grip on the nation was firm and unquestioned.

It should have become clear by then that Iran had no interest in Obama’s Sunshine Policy; this was a regime that was hell bent on gaining regional hegemony by any means necessary and had no plans of ending its pursuit of nuclear weapons. The last thing it ever intended was to make amends with The Great Satan or “the Zionists.” In the few months of his presidency, this should have become clear to Obama. His desire to become friendly with Iran was a one-sided goal that never had any realistic chance of happening.

The aftermath of June 12 should have been a signal for the Obama administration to change its path immediately. Many pundits had predicted that Mir Hossein Mousavi had a chance at winning the election; he was seen as a “reformist” who, while not being particularly open to friendly ties with America, did want to focus on domestic issues while giving more rights to Iran’s citizenry.

As it became more and more clear that, most likely, Khamenei and Ahmadinejad perpetrated a huge electoral fraud, hundreds of thousands took to the streets. In response, the regime booted out journalists, shut down cell phone and Internet communication, arrested opposition leaders, and had its forces start to beat protestors and literally chase them into their home. Ahmadinejad referred to them as “dust.”

Four days after the election, Obama made his first public comments about Iran. When being interviewed on CNBC, he said that the difference between Mousavi and Ahmadinejad “may not be as great as advertised.” Later on, at a press conference, Obama said he did not want to be seen as “meddling” in Iran’s affairs. These statements came despite the millions who flooded Tehran’s streets in protest, literally putting their lives in danger in order to show their support for Mousavi.

Obama and his team continued to keep a low-profile during the week; however, Iran found itself embroiled in more unrest. During this tumult, Khameini sermonized at Friday prayers about the election’s aftermath, promising to crackdown on any protesters. And, despite Obama’s insistence on not placing America in the center of Iran’s electoral situation, the Ayotollah cast blame for the entire uprising on American/British/Zionist interests, which many pundits felt inevitable. Obama’s response to this was once again non-committal, saying that “the world is watching.”

The world was indeed watching as Tehran erupted into utter chaos; videos of Basiji militia members attacking citizens were widely available on YouTube. By far, the most well-known one showed the death of Neda Agha Soltan, a young girl who was repeatedly shot by a Basiji.

On Tuesday, Obama mentioned “Neda,” as she has become known throughout the world. Perhaps this was the breaking point for him; his silence didn’t prevent the grotesque actions of Iran’s government, and there’s no way to ever know what would have happened if he took a strong stance in support of The Sea of Green as soon as the uprisings began.

It’s clear, however, that Obama has had a crash course on Iran. Has he learned that kind gestures to this regime go unanswered? Has he learned that being silent when a dictatorship is oppressing its citizenry is the same as compliance? The education of Barack Obama continues.

Written by fatih al-farahat in , ,


Chris Nelder on Seven Energy Futures

Chris Nelder outlines his take on our options for energy production and conversion over the next few years. Take a look at the chart linked a couple of paragraphs into the article.

However we wish it to be anything but, that is the shape of global fossil fuel utilization over the next century. It really cannot be postponed.

Let me make this as stark as possible. If we lost several millions of barrels of production tomorrow, were do we get it from? The immediate answer is nowhere. We have reached the point in which replacement is not an option. We have actually been there for a long time.

Thirty years ago. We had the Saudi Safety Cushion. It is no longer an option.

The market is responding by releasing a torrent of money on the wind and Solar industries and yes even the nuclear industry. It needs a torrent of money.

Those that have read my many posts on this subject know that I am not despairing and that many options are been explored that will respond well to capital. I personally like the use of cattails for ethanol in particular manly because it employs farming and promises to employ millions throughout the world, even if ethanol is used mostly for transportation fuel.

Chris makes the point that core to our future is for renewables to grow from the present two percent to 86% of the global energy system. This sounds daunting, however present capacity can be doubled every five years of so. What this means is that we will reach 4% in 2015 and 8% in 2020. Yet this also means 16% in 2015, 32% in 2025, and 64% by 2030. This is no trick. Renewables are not limited by fuel availability, and the sheer demand for power makes this technology the easiest to finance business in the world.

Early modest returns that discipline capital spending are eventually replaced by decades of free cash flow against no debt.

The other point that I just made is that every operating facility can replicate itself every five years or so. This gives us the benefit of redoubling. This is not possible with Nuclear so far because we quickly hit the limits of our uranium supply.


7 Paths to Our Energy Future

By Chris Nelder Friday, June 26th, 2009

http://www.energyandcapital.com/newsletter.php?roi=echo3-4306473423-3175351-0d0756612326b6cce8863c3353aea5cf&date=2009-06-26ve

I have dished out a healthy share of criticism about the paths we are taking into the energy future, so perhaps it's time I offered some paths of my own. I will outline them as simply as possible, since the data and thinking behind them could fill a book.

First we must know where we're going.

Credible models show that by the end of this century, essentially all of the fossil fuels on earth will be consumed—oil, natural gas, and coal. Presumably, whatever fuels do remain at that point will be reserved for their highest and most valuable purposes like making crude oil into plastics and pharmaceuticals, not burning it in 15% efficient internal combustion engines.

Consider the following world model for all fossil fuels:

http://images.angelpub.com/2009/26/2401/6-26-09-nelder-chart-1.jpg


Source: "Olduvai Revisited 2008," The Oil Drum, by Luís de Sousa and Euan Mearns. Cumulative peak is Data sources: Jean Laherrère for natural gas, Energy Watch Group for coal and The Oil Drum for oil.
[This is an exceptional study and I recommend it to my readers!]

By the end of this century then, a mere 90 years from now, we'll need to have an infrastructure that runs exclusively on renewably generated electricity, biofuels, and possibly nuclear energy. That's where we're going.

Fortunately, there is more than enough available renewable energy to meet all of our needs, if we can harness it. Unfortunately, we're starting from a point at which less than 2% of the world's energy comes from renewables like wind, solar and geothermal.

Hydro provides about 6%, and nuclear about 6%, but for reasons too numerous to get into here, some of which my longtime readers have already heard, I don't believe either source will increase much in the future, and both could actually decline.

Our challenge then is to make that 2% fraction grow to replace about 86% of the world's current primary energy, in 90 years or less.

We are currently at peak oil, a short, roughly 5-year plateau which goes into terminal decline around 2012. All fossil fuel energy combined peaks around 2018, less than a decade from now.

All strategies for accommodating the fossil fuel decline require decades to have any significant effect. The now-iconic study "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management" (Hirsch et al., 2005) demonstrated that it would take at least 20 years of intensive, crash-program mitigation efforts to meet the peak oil challenge gracefully. Another study, "Primary Energy Substitution Models: On the Interaction between Energy and Society," (C. Marchetti, 1977) showed that it generally takes decades to substitute one form of primary energy for another, and 100 years for a given source of energy to achieve 50% market penetration.

Therefore, we are going to have to accomplish most of the renewable energy revolution in a scenario of ever-declining fuel supply. In just 50 years, we'll be working with about half our current energy budget. So in fact we may only have about 50 years to build most of the new renewable energy and efficiency capacity we will need to get us through the end of the century.

Another important factor is that exports will fall off much faster than total supply. (See my article on the oil export crisis from last year.) Foucher and Brown (2008) have shown that the world's top five oil exporters could approach zero net oil exports by around 2031. Net energy importers like the US could be increasingly starved for fuel as decline sets in and accelerates, and net energy exporters could wind up shouldering much of the burden of new manufacturing. This factor means that we will have to front-load as much of our development as possible.

The final and most important factor is population. The few population models that actually take fossil fuel depletion into account assume that global population increases roughly out to the global fuel peak, and then stabilizes at that level or declines naturally while economic development promotes lower fertility rates and renewables and energy efficiency increase to fill the gap of declining fossil energy. I understand why this assumption is made—because the alternative is too ghastly to contemplate—and for the immediate purpose of this article I will go along with it. I will note however that history and scientific observation of populations suggest some sharp episodes of decline are more likely, and in my estimation we will end this century with a considerably smaller population than anyone forecasts, at some level well below today's.

How, then, can we replace or offset through efficiency at least 40% of our current energy supply with renewables in the next 50 years, while fuel prices are rising and the global economy is flat or shrinking due to a lack of fuel?

Seven Paths to Our Energy Future

A proper model for achieving this goal would be a very large undertaking, the sort of thing that should be done by a team of experts with a budget. (Is anybody at the Department of Energy listening?) But I can identify some key pathways that are, in my estimation, no-brainers. Because the solutions going forward will be quite different for each country, I will limit my recommendations to the US.

1: Rail. Rail should be Priority 1, and should be granted the largest portion of public funding. We should begin as quickly as possible with light urban rail, and work over the next 40 years to build a comprehensive high-speed long-distance rail system.

Rail is by far the most efficient form of overland transportation we know, and moving people out of their cars and freight off the roads will yield real and immediate savings in liquid fuel consumption. Not only will this help alleviate America's need for rapidly declining oil exports, it is a proven, fairly low-tech, sustainable and workable solution that would allow renewably generated electricity to be phased in over time with minimal disruption.

2: Rooftop Solar PV. Utility scale projects like giant solar farms in the desert and giant wind farms in the Midwest (or offshore) all face serious hurdles in siting, permitting, environmental impact, and transmission capability. Rooftop photovoltaic (PV) solar systems face no such issues and can be deployed right now, building capacity incrementally over time. PV has been proven in the field commercially for over 30 years and, speaking as a former residential and small commercial solar designer, I know that it can provide 50-100% of the needs of most small buildings.

Rooftop PV also has a capital advantage. Whereas utility-scale solar and wind projects need to secure large power purchase agreements in order to raise enormous amounts of capital that will be tied up for decades, small rooftop PV systems are purchased outright by the end-users, assisted by ratepayer-funded incentive systems. Simply getting projects done is considerably easier.

From a funding perspective, rooftop PV is arguably one of the easiest sources we can develop, and options are proliferating. Cities like Berkeley and San Jose are offering municipal bonds to finance local projects, which keeps the financing small, local, and low-risk. Third-party financing companies are springing up all over the country, making it possible for home and business owners to put solar on their roofs with no out-of-pocket expenses and pay them off at the same rates or less than they're already paying to utilities, with nearly zero risk to all parties. End-users enjoy an additional benefit of having a known, fixed cost for their future power, even as fossil fuel prices skyrocket.

Another very important advantage is that rooftop PV is distributed, which contributes to the resiliency and robustness of the grid. In most modern neighborhoods, no grid upgrading is needed to support rooftop solar systems. More distributed power generation also means fewer points of failure: a cloud over here is compensated by clear sky one mile away. It also enables micro-islanding, which would allow most of the grid to stay up when there is an outage, instead of taking vast chunks of the country's grid down along with it as we have seen in the recent past.

Utilities also win with rooftop PV, because it means they don't have to spend an enormous amount of effort and money in search of enough clean, green kilowatt-hours to meet their renewable portfolio standards, nor spend it on beefing up their grids. It essentially costs utilities zero to take up energy produced this way; in fact it can be a net benefit to them because the homeowner ends up paying for the new smart meters they plan to deploy across their grids anyway (at a cost of tens of millions of dollars).

Feed-in tariffs (FiTs) that pay a premium for kilowatt-hours generated by rooftop PV have been employed with great and immediate success in Germany and Japan, to the point where both programs will be largely phased out within the first decade. Support for a national FiT in the US is still weak, but I believe it could become a reality if the public were educated about the success it has enjoyed elsewhere in the world.

3: Alternative Vehicles. Since reconfiguring our urban topology around transit and deploying light rail will take decades, we will need some transitional solutions that still allow us to get around in cars for a good many years. All-electric and plug-in hybrid electric vehicles are a two-fer: They can take advantage of growing renewable electricity supply, and they can function as a giant, distributed battery for intermittent renewable sources using vehicle-to-grid (V2G) technology. In time, V2G could provide the final link that allows renewable energy to fully displace fossil fuels.

We will need to begin building the electric vehicle charging infrastructure as quickly as possible to accommodate these new vehicles, but it needn't be any more complicated than deploying a new row of parking meters. This I think is a good and proper use of public funding. The automakers themselves should be able to find adequate funding via the private sector, with perhaps a modicum of federal support for research to jump start next-generation development of batteries and propulsion systems.

Compressed natural gas vehicles are another transitional solution that would take advantage of domestic gas supply while cutting demand for imported crude.

Biofuels may also play a role, although I continue to be skeptical about how much they can truly achieve once net energy (EROI) and food-vs.-fuel tradeoffs are taken into account. Corn ethanol fails these tests, but to the extent that cellulosic biofuels pass them, they could take a substantial bite out of our demand for petroleum. Still, it will take a decade or more to scale it up to significant levels.

Before the global economic downturn, our replacement rate was about 14 million new cars and light trucks per year. We have about 250 million such vehicles now. At that rate (we're well down from it now), it would take 18 years to replace the fleet, but we probably won't maintain that rate while the economy shrinks and fuel prices rise. Therefore we should concentrate on a rapid, near term deployment of alternative vehicles, before it gets prohibitively expensive and difficult to do so, even if they wind up having all the sex appeal of a mass produced WWII Jeep.

Ideally, we will only have to replace a fraction of the current fleet, with the rest of the traffic having been moved to rail.

4: Efficiency. Most of the efficiency gains we can make are thermal: reducing the energy it takes to heat and cool buildings. These gains ultimately translate into less coal and natural gas demand, so they will do little to reduce our demand for oil, which must be our first priority. In the long run however, efficiency must make up for any shortfall in renewable energy production, so it must be pursued continually over many decades.

More efficient regular gasoline and diesel vehicles also belong in this category, and may reduce our dependence on oil if they are sufficiently efficient and the gains aren't nullified by the Jevons paradox. In my view, anything under 25 MPG is simply pathetic at this point, and undeserving of any federal support. Incentives for more efficient ICE vehicles should be geared to produce the greatest possible gains in fuel economy, not the watered-down "Cash for Clunkers" bill we got, which will ensure another several years' worth of inefficient SUV production.

5: Utility Scale Renewables. Rooftop PV may be able to fill the short-term supply gap if aggressively pursued, but in the long term we'll need every renewable kilowatt-hour we can get. We'll need large solar plants across the Southwest, and huge wind farms in the Midwest and offshore. Geothermal and marine power can also make major contributions in time, but they're babies now, and will need public guarantees and funding to reach the level where they are commercially viable technologies.

6: A Beefier, Smarter Grid. In order to carry all the new renewable power, we're going to need a bigger, more resilient, and smarter grid. The good news is that we already have most of the technologies we need in this area. All that we lack is the will and the funding to put it in place. In the same way that it took federal funding and initiative to create the interstate highway system, the grid will also probably need to be nationalized and its enhancement funded publicly in order to meet this challenge.

A key element of the new grid will be long-distance high-voltage direct current (HVDC) power lines to transmit the power from the large utility scale projects to the cities where it's needed. This must be on the short- to medium-term agenda since it must be ready to take on real capacity within 20 years and be nearly full-blown within 40 years.

7: Keep Drilling. If we back off too much too soon from oil and gas production, it could leave us without adequate or reasonably priced fuel to accomplish this transformation, and sink the entire effort. I think we'll need as much oil and gas (and to a lesser extent, coal) as we can possibly produce in order to pull it off. Just imagine how difficult it will be to produce a solar panel or a large wind turbine using only renewably generated electricity to mine the raw ores, crush them, transport them, smelt them down and turn them into stock, transport them again and turn them into end-products, then transport them a final time and install them. I think it's safe to say that we have no idea how to do all that without liquid petroleum fuels.

The twilight years of hydrocarbon fuels are essentially upon us, but we'll need them more than ever as they peak out and decline. We will have to keep drilling, and the oil business will have to be able to turn a fair profit.

At the same time, I have long maintained that after a nearly a century of commercial operation, the petroleum businesses should be able to get by on its own, without public subsidies of any kind. If that means the price of fuels goes up, then so be it. We're going to have to start paying a fair value for those finite, rapidly disappearing resources some day, and price increases will only encourage efficiency and alternatives.

Just Do It

Turning these conceptual pathways into action will not be easy, and we may be forced into action before we have perfect clarity about where we're going and what it's all going to cost. Yet I have no doubt that if we move on these seven pathways as quickly as possible, we will make progress in the right direction. There will be time to fine-tune it later.

Over the long term, the economics of energy are clearly in favor of renewables. The costs of producing and burning fossil fuels can only increase, and the costs of renewable energy will fall for decades before stabilizing.

Finding the money to rebuild so much of our infrastructure will no doubt be a challenge. But if we're willing to put a $2.5 trillion debt burden on the future to bail out the financial system, and untold trillions more to provide military protection for the oil resources that remain, perhaps it's just a question of priorities. I have no doubt that the money would be better spent on building an energy infrastructure that will actually sustain us.

The successful pathways are the profitable pathways. Think rail, small solar PV, alt vehicles, efficiency, utility renewables, grid, and drill, baby, drill.

Until next time,
Chris