Third World US and Europe

Arriving at an agreement on limiting carbon emissions was never going to be easy but when one looks a little more closely at the lobbying going on in the US it is no surprise that the average American is skeptical about the whole global warming "scare".

The following article goes straight for the emotional jugular. "Jobs, revenue and modern living standards". These are all in danger - why? Because of the scare-mongering "warmists" and environmental regulations.

This article and others like it reveal clearly why the planet is ultimately doomed.

The solution? Move to a high place and either buy or sell oil stocks.

Welcome to the Third World [No pain, no gain]

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Welcome to the Third World, Europeans, where costly electricity is available only from time to time, at unexpected hours, depending on bureaucratic whims and how much power wind turbines and other “environment-friendly” generators can muster.

Is the USA next in line? The United States is reaping imaginary bounties from its $814-billion “stimulus” spending orgy. It hemorrhaged $223 billion in red ink during February alone – on its way to a projected 2011 deficit of $1.5 trillion, the Congressional Budget Office reports.

Over 13.7 million Americans remain unemployed; another 8.3 million are involuntarily employed only part-time; black unemployment stands at 15.3 percent; and gasoline prices have hit $4 per gallon, foretelling more rough waters ahead for the still fragile US economy.

America depends on abundant, reliable, affordable energy – 85% of it hydrocarbons. Coal generates half of all US electricity, and up to 90% in its manufacturing heartland – versus 1% from wind and solar. Newfound natural gas supplies promise a sea change in US energy supplies and electricity generation. However, oil still powers transportation, shipping and petrochemicals – and in 2010 the United States exported $337 billion to import 61% of this precious liquid fuel.

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Unlocking America’s still abundant hydrocarbon resources and unleashing our innovative, hard-driving free enterprise system would generate hundreds of billions of dollars in leasing, royalty and tax revenues for federal, state and local governments. It would put millions back to work … help stanch the flow of red ink … keep tens of billions of crude oil spending and investment in America … and create enormous new wealth, instead of redistributing a dwindling pool of old wealth.

We must drill safely, use fuel more efficiently in vehicles and power plants, and get more from every underground reservoir. And we could do so, if government would allow it.

Just consider the incredible revolution that the genius of American capitalists has presented the world: hydraulic fracturing or “fracking” to tap previously inaccessible oil and gas deposits. This technology has turned “depletion” and “sustainability” claims upside down. It has already doubled US natural gas reserves and given North America over a century of recoverable gas, at current consumption rates.

It is also unlocking oil wealth in the vast Bakken shale formation of Montana, North Dakota and Saskatchewan. Oil production there has already soared from 3,000 barrels a day five years ago to over 225,000 today. The US Energy Information Administration says it could reach 350,000 barrels a day by 2035; industry sources say it could top a million barrels by 2020. Related oilfield employment has soared from 5,000 to over 18,000 in the same five-year period, and could eventually reach 100,000 jobs. At $100 a barrel, even 350,000 barrels a day could mean $1.6 billion in annual royalties, from Bakken oil alone.

The new Made in America technology is already changing energy, economic and political landscapes in Europe, and will soon do so across the globe. It is a technologically possible and economically affordable solution that generates bountiful jobs and revenues – as opposed to pixie dust solutions that require perpetual subsidies and address speculative problems. Offshore and ANWR drilling could do likewise.

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President Obama wants oil, gas, coal and electricity prices to “skyrocket,” to make “green” energy appear more attractive. Energy Secretary Steven Chu wants to “boost the price of gasoline to levels in Europe” – over $8 per gallon! Most of all, these anti-hydrocarbon politicians want a self-sustaining political-environmentalist-industrial-public sector union complex based on government subsidies to favored industries and companies, in exchange for campaign contributions that will keep them in power.

This palpable, intolerable insanity must end. It’s time to tell Congress (and the European Commission) we need real energy for real jobs, real revenues and a revitalized economy. And we need it now.

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Krugman on Hotelling and the 40% rule

Paul Krugman has a neat piece in the NY times reminiscing about his time as a research assistant for Nordhaus when the latter formualated the hotelling rule of non-renewable resource extraction.

Having seen Marty Weitzman recently present at the World Congress last year I can perfectly imagine how he came up with his 40% rule.

What is the 40% rule you ask?

What was wrong with those circulars? They were much too optimistic about the costs of alternative energy sources, especially alternatives to oil. Basically, the engineers were understating the difficulties involved. Later Marty Weitzman would formulate a law on this: the cost of alternatives to crude oil is 40% above the current price — whatever the current price is.

This is the sort of rule I like. Simple but also entirely doom-laden.

It is almost poetic. My guess is that our increased knowledge and technical expertise will have reduced the 40% rule to somewhere around 20-30%. Can I make a claim to have invented the "approximately 25% rule"?

The links in the Krugman article are worth following. Here is a taster.

The Answer, My Friend [NY Times]

And shining in the sun, too — or so say two papers cited by Brad Plumer, arguing that we can have a fully renewable-based, nuclear-free economy by 2050. And I’m sure that’s right — but I’m a bit skeptical about the cost estimates, for reasons having to do with personal career history.

The story: I effectively began my career as a professional economist way back in the summer of 1973, working as a research assistant for Bill Nordhaus. Nordhaus was in the early stages of a long and highly successful run of research into resource economics, and was trying to come up with a way to estimate “appropriate” energy prices. And he had come up with a wonderfully elegant approach, building off the classic Hotelling model of exhaustible resource pricing.

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China's environmental growth pains

I continue to do a lot of work on China and its environment because "this is where the action is" and where academic work had have a greater impact.

The news from PlanetArk this morning comes as no surprise.

As I have posted before, growth comes first and central to that growth is the burning of fossil fuels and most importantly coal. Whilst China has the will and the funds to make changes it is fighting against a tide of growth that will overwhelm any investment in wind (currently has the largest installed base of wind) and other green investments.

China Says Environment Still Suffering Growth Pains [PlanetArk]

China's fight against chronic pollution is faltering in the face of urbanization and rapid growth, though the last five years have seen some progress, the country's environment ministry said on Saturday.

China was still producing more "traditional pollutants" than it could bear, but new industries were also creating torrents of dangerous chemicals and mountains of electronic waste, said Zhang Lijun, vice-minister of environmental protection.

"We're still a developing country -- the standard of living is still not high, employment trends are serious and each level of government is paying attention to economic growth," he said.

China's consumption of coal -- the dirtiest of fossil fuels and a major source of acid rain, water pollution and climate change -- rose around 1 billion tons in the five years from 2006, and could rise another billion in the next five, he said.

"In this kind of territory, if we add emissions from another 1 billion tons of coal, how big will the impact be on our environment?" Zhang told reporters.

TACKLING CARBON

China plans to cut its levels of carbon intensity -- the amount of carbon dioxide produced per unit of GDP -- by 17 percent by the end of 2015. Zhang said individual regions had already been set targets.

China's climate change measures have normally been the responsibility of the growth-focused National Development and Reform Commission, with the environment ministry taking on more immediate threats such as acid rain-inducing sulphur dioxide and nitrogen oxides, as well as water and soil contamination.

But environment minister Zhou Shengxian said last month the ministry would include CO2 emissions in the environmental impact assessments of major projects.

Zhang said the ministry would only approve individual projects that fit in with regional greenhouse gas targets, and the NDRC would still play the leading role in China's climate change efforts.

GROWTH VS POLLUTION

The ministry was upgraded from a lower-level "bureau" just three years ago, and fears remain that China will continue to give priority to economic growth, especially in poorer regions.

The ministry has not been involved in climate change discussions, and environmental activists say it has been frozen out of policy debates about the development of hydropower -- seen as a key part of China's "low-carbon" strategy over the next decade.

Zhang said it would be "very easy" to sacrifice the economy for the environment, but the crucial issue for local governments was greener growth, and China already had systems to ensure regions meet their duty to both create jobs and protect health.

China aims to keep annual growth at around 7 percent in the next five years, but Zhao Hualin, head of the ministry's pollution control office, told reporters the GDP target was only for "guidance" and would not supersede environmental goals.

China will publish its detailed "five-year plan" for the environment after it has been approved by the State Council, the country's cabinet. It has already announced that sulphur dioxide and chemical oxygen demand will be cut by a further 8 percent in the next five years, and nitrogen oxide and ammonium nitrate will also be cut by 8 to 10 percent.

Zhang said nitrogen oxide represented the biggest challenge, and China should consider imposing car ownership curbs in its largest cities and also cap coal consumption in built-up regions such as the Pearl and Yangtze river deltas.

Responding to the closure of three nuclear power plants in Japan following the country's biggest ever earthquake on Friday, Zhang said Beijing would keep a close eye on the situation.

"We have already begun monitoring coastal cities to test whether Japan's nuclear leaks will affect China but up to now everything is normal."

He said radioactive emissions standards around China's 13 existing reactors were actually higher than international norms.

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Is "degrowth" the future?

The "strategy of “degrowth” has appeared as an alternative to the paradigm of economic growth."

That makes logical sense but if a government were to pursue an active policy of "degrowth" we had better nail down exactly what it means.

Luckily the latest issue of Ecological Economics (a post-normal science journal) has the answer.

It appears to be that "a-growth" is better than degrowth. Now I need to find out exactly how to define "a-growth".

Environment versus growth — A criticism of “degrowth” and a plea for “a-growth”

Jeroen C.J.M. van den Berghlow

Abstract

In recent debates on environmental problems and policies, the strategy of “degrowth” has appeared as an alternative to the paradigm of economic growth. This new notion is critically evaluated by considering five common interpretations of it. One conclusion is that these multiple interpretations make it an ambiguous and rather confusing concept. Another is that degrowth may not be an effective, let alone an efficient strategy to reduce environmental pressure. It is subsequently argued that “a-growth,” i.e. being indifferent about growth, is a more logical social aim to substitute for the current goal of economic growth, given that GDP (per capita) is a very imperfect indicator of social welfare. In addition, focusing ex ante on public policy is considered to be a strategy which ultimately is more likely to obtain the necessary democratic–political support than an ex ante, explicit degrowth strategy. In line with this, a policy package is proposed which consists of six elements, some of which relate to concerns raised by degrowth supporters.

In defence of "degrowth" we have the following paper which makes it clear that degrowth is a "a radical political project that offers a new story and a rallying slogan for a social coalition built around the aspiration to construct a society that lives better with less."

Sounds great. Count me in.

In defence of degrowth

Giorgos Kallis

Abstract

This article defends the proposal of sustainable degrowth. A starting premise is that resource and CO2 limits render further growth of the economy unsustainable. If degrowth is inevitable, the question is how it can become socially sustainable, i.e. a prosperous and stable, rather than a catastrophic, descent. Pricing mechanisms alone are unlikely to secure smooth adaptation; a full ensemble of environmental and redistributive policies is required, including – among others – policies for a basic income, reduction of working hours, environmental and consumption taxes and controls on advertising. Policies like these, that threaten to “harm” the economy, are less and less likely to be implemented within existing market economies, whose basic institutions (financial, property, political, and redistributive) depend on and mandate continuous economic growth. An intertwined cultural and political change is needed that will embrace degrowth as a positive social development and reform those institutions that make growth an imperative. Sustainable degrowth is therefore not just a structuring concept; it is a radical political project that offers a new story and a rallying slogan for a social coalition built around the aspiration to construct a society that lives better with less.

Water and CO2 - the future for China's 5-year plan

In what appears to be great timing the Chinese government has just announced that water and CO2 will be priorities for the next 5 year plan.

This matches perfectly with news this week that a one-day workshop sponsored by EDF on "The Global Impact of China's Energy Demand" has been confirmed to be run in Paris in June.

More details to come but it promises to be an interesting session.

Apologies for posting the whole article but (1) it is an excellent summary and (2) I will need to refer to it on a regular basis and what better way to record the text than to blog it here.

Water, CO2 The Priorities For China's 5-Year Plan [Planet Ark]

Tackling environmental problems from carbon emissions to water pollution will be a key focus of a new five-year plan that China will launch during its annual parliament session starting on Saturday.

The plan for 2011-2015 will include new directives aimed at reversing the damage done by 30 years of untrammeled growth, and it will also aim to give a fillip to clean and renewable energy.

The challenges were put in stark focus in an essay by environment minister Zhou Shengxian on Monday.

"The depletion, deterioration and exhaustion of resources and the deterioration of the environment have become serious bottlenecks constraining economic and social development," he wrote.

China, the world's biggest source of climate change-inducing greenhouse gases, will put the reduction of carbon dioxide emissions at the top of its agenda.

But those same commitments could also spell bad news for China's vulnerable river systems with hydropower capacity set to surge by 140 gigawatts by 2015. That's nearly three times Australia's total power generation capacity.

Beijing has already pledged to reduce carbon intensity -- the amount of CO2 produced per unit of economic growth -- by 40-45 percent by 2020 from 2005 levels.

It also aims to raise the share of renewables to 15 percent of the country's total energy mix.

"The targets will not be as ambitious as we hoped, because the 2020 targets aren't that ambitious," said Ailun Yang, China campaign manager with Greenpeace.

"I would put much more emphasis on the detailed measures, which are much more important than the targets themselves."

Detailed targets will emerge in the coming months as individual industries issue their own five-year plans.

The government wants to clean up heavy industries such as steel and aluminum, encourage non-fossil fuels, cut nitrogen oxide emissions and improve water and air quality.

BUSINESS AS USUAL?

Enforcing new restrictions and targets, especially for CO2 emissions, will test the central government's clout.

Premier Wen Jiabao said last month China would cut energy and carbon intensity by 16-17 percent over the 2011-2015 period, less of a challenge than the 17.3 percent figure suggested last year.

Experts say energy intensity -- the amount used per unit of GDP -- needs to fall by 20 percent to achieve an 18 percent cut in CO2 intensity, but Wen did not make the distinction.

Yang Fuqiang, director of global climate solutions at the Worldwide Fund for Nature, said cutting CO2 intensity by less than 17 percent was little more than "business as usual."

"There is a game being played by the central and local governments, and if the central government adopts 16 percent they will lose their authority because it shows that 'government orders don't go beyond Zhongnanhai'," he said, referring to the Chinese Communist Party headquarters in Beijing.

Yang said a 16 percent cut could allow China to hit the 40 percent carbon intensity goal by 2020, while an 18 percent cut would take it toward the higher 45 percent target.

A commitment to use market mechanisms in the fight against climate change is also expected, with a number of provinces keen to launch pilot emissions trading programs. Detailed plans will emerge later this year.

Analysts have said China might consider an absolute energy consumption cap over the 2011-2015 period, and draft policies to restrict coal production to 3.6-3.8 billion tons by 2015 have also been leaked to the local press. Provinces such as Guangdong might impose their own energy caps to stimulate city-to-city emission trading, but government researchers have dismissed the idea of a national limit.

"There are no such plans," said Zheng Shuai, researcher at the Energy Research Institute of the National Development and Reform Commission, but added some academics have proposed Beijing implement a limit on fossil fuel use without imposing an overall cap on energy use.

"This is more realistic because it will allow and encourage the use of renewable energy," Zheng said.

DAM NATION

China is desperate to improve its depleted, contaminated rivers, which have been blighted by a spate of burst tailings dams, untreated chemical discharges and plant explosions in the past five years.

In 2009, nearly 20 percent of the length of China's major rivers and lakes were judged unfit even for irrigating crops, according to government figures.

Environment minister Zhou said Beijing will aim to cut 2007 levels of heavy metal discharges in key regions and industries by 15 percent in the next five years.

"We understand thousands of key heavy metal polluters will be put under tightened monitoring and this is important," said Ma Jun of the Institute of Public and Environmental Affairs, a non-government organization that monitors water pollution.

"But there is a lack of transparency and we believe public scrutiny could generate the motivation to cut their emissions."

China will also push for more water conservation, imposing stricter water consumption standards heavy industry.

"We expect to see more action on that but I still believe that the first step is pollution," said Ma.

"The huge volume of wastewater discharge is destroying our very limited clean water resources and if we continue to allow that we cannot talk about recycling and conservation."

But the commitment to cleaning up rivers could be undermined if binding carbon targets lead to a renewed drive for large hydropower dams and reservoirs throughout China.

The five-year energy sector plan is expected to back controversial hydropower plants on China's Nu River, also known as the Salween. Previously untouched rivers in Tibet may be next.

"We need to realize that large hydro by itself has such a large environmental impact that it shouldn't be considered a renewable energy," said Ma.

"In 2004, China overtook the United States as the world's largest hydropower capacity but the plan is to more than triple that by 2020 -- that means in many of our rivers there won't be running water.

Is ecological economics becoming a "post-normal" science

Some paper titles cannot be ignored especially when I am not entirely clear what it means. The title suggests that ecological economics is (1) a science and (2) normal.

So far so good. Ecological economics is a normal science (not a social science?).

However, now we have to worry that it is becoming post-normal or perhaps that is a good thing. It appears to hinge on the empirical content of the paper. A regression in a paper appears to be post-normal.

In that case, all my EE papers have contributed to this big push into post-normality and now I feel a little guilty. In fact my et al. from the previous post is an EE paper.

Time to investigate further.

A bibliometric account of the evolution of EE in the last two decades: Is ecological economics (becoming) a post-normal science?

Manuela Castro e Silvaa and Aurora A.C. Teixeira

Abstract

In ecological economics the debate on formalism and formalization has been addressed in the context of a lively discussion on ecological economics as a ‘post-normal’ (versus ‘normal’) science. Using ecological economics (EE) as a ‘seed’ journal and applying bibliometric techniques to all (2533) the articles published in EE from January 1989 to December 2009, we analyze the evolution of the field of ecological economics aiming to shed light on this debate. We observe the predominance (and increased relevance) of certain research topics: ‘Methodological issues’, ‘Policies, governance and institutions’ and ‘Valuation’. Moreover, ‘Collective action’, ‘Technical change and the environment’ and ‘Values’ stand as emergent themes of research. Finally, we note that ecological economics experienced an ‘empirical turn’ reflected in a shift away from exclusively formalized papers towards exclusively empirical and, to a larger extent, ‘formal and empirical’ ones. The combination of the prominent and emergent topics and the ‘empirical turn’ mirrors the increasing awareness among researchers in the field of the need to address a key specificity of ecological economics — the interdependence of the economic, biophysical and social spheres. On this basis, we argue that at least through the lens of EE, ecological economics has evolved towards a post-normal science.

Keywords: Ecological economics; Bibliometrics; Research trends; Methodology; Post-normal science

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"Environmental Substance Abuse"

A truly astonishing piece of work in which the author Mark Atlas proceeds to do a pretty convincing hatchet job on a very large number of applied "environmental economics" papers (550) including one of mine :-( (I am part of an et al).

It is hard to argue with much in the 715 pages (and over 4,000 footnotes) from what I have read so far.

Anyone doing applied environmental economics has to at least attempt to read some of this report.

Thanks to Aquanomics (a very fine new "...nomics" to add to my collection) for the hat tip.

The Aquanomics article on this topic is certainly worth a read for its "academic bun fight" report.

It is very impressive that Atlas went to the lengths he has gone to in this paper (and his post reported in Aquanomics). This paper deserves to be read by anyone purporting to be an environmental economist.

Back to the report......where does something like this get published? A little long for JEEM unfortunately.

My papers will never be the same again...

Environmental Substance Abuse: The Substantive Competence of Social Science Empirical Environmental Policy Research[LARGE PDF]

Mark K. Atlas
affiliation not provided to SSRN
December 22, 2010

Abstract:
In a 2002 article, social science scholars criticized legal scholars for violating empirical analysis principles in law review articles. Their review of hundreds of empirical law review articles led to a pervasively grim assessment of these articles and their authors, concluding that empirical legal scholarship was deeply flawed, with serious problems of inference and methodology everywhere. In essence, the 2002 article argued that although legal scholars’ articles might be substantively competent (i.e., knowledgeable about the law and facts), they were, at best, methodologically incompetent.

This Report reverses the 2002 article’s focus, assessing the substantive competence of social science empirical research articles, ignoring their methodological competence. This Report focuses on about 550 social science articles from peer-reviewed journals since the 1960’s that used quantitative research to study United States domestic environmental policies and practices. The 2002 article examined aspects of law review articles at which legal researchers might be deficient but at which social science researchers should be competent. This Report does the opposite by focusing on what legal researchers should be most expert – determining the relevant laws, government policies, and facts. Consequently, just as the 2002 article evaluated whether law review articles violated empirical research rules, this Report evaluates whether social science environmental policy articles were incorrect or incomplete about the relevant laws, government policies, or facts.

Although the 2002 article concluded that every empirical law review article was fatally flawed methodologically, this Report does not conclude that every social science environmental policy article was fatally flawed substantively. However, the overwhelming majority of those articles were substantively uninformed, amateurish, shoddy, and/or deceptive. Anyone with a basic understanding of the environmental laws, policies, facts, and/or data relevant to any particular article would conclude after only a brief review that the article was seriously flawed. Unfortunately, social science journals publishing environmental policy articles have been like runaway trains of invalid research that keep picking up new passengers. This Report explains in detail the substantive problems with each of these articles.

JEL Classifications: K23, K32, K41, K42, Q25, Q28
Working Paper Series

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