Archive for the ‘Coal’ Category

Elinor Ostrom: Another Nobel Laureate jumps the climate shark (Proceed at Own Risk)

December 18th, 2009 No comments

On December 16, Spiegel Online ran the following interview with Elinor Ostrom, whose 2009 Nobel prize in economics (shared with Oliver Williamson), was widely applauded by Austrian economists (and whose work I have referred to any number of time previously).

Der Spiegel asked some good questions, and Ostrom provided interesting responses, though thoughtful readers of course are left asking for more.

I`ve tweaked the formatting, added my own emphasis, and interspersed a few bracketed comments of my own:


Nobel Laureate Elinor Ostrom

‘Climate Rules Set from the Top Are Not Enough`

The world is gathered in Copenhagen in an
effort to reach an agreement to slow global warming. Elinor Ostrom,
winner of this year’s Nobel prize for economics, spoke with SPIEGEL
ONLINE about shared ownership, local action and why we can’t sit around
waiting for politicians to act.


SPIEGEL ONLINE: The Copenhagen summit is about setting new
global rules for how we treat the Earth. But are people willing to
change their personal lives

Elinor Ostrom: Under the right circumstances, people are willing
to accept additional efforts and costs. It all depends on trust in the
fact that others will also act.
Humans have the capacity to engage and
see that their own long-term future is harmed if they don’t change
their lifestyles. Under the right circumstances they understand: It’s
not me against you. It’s all of us against ourselves, if we don’t act.
So trust really is the most important resource.

[The multi-decade, global trust-building exercise has made a great deal of progress, despite being hampered by gamesmanship, domestic rent-seeking, partisan mistrust, legitimate worries about abuse of government, and the difficulty we all face in actually agreeing there might be a problem (as opposed to a big scam/mass delusion).]

SPIEGEL ONLINE: How can we generate enough trust so that we all act in concert?

Ostrom: Rules set from the top are not enough. Successful
communities often have a few common design principles —
monitoring and
sanctioning of the participants, for example. They also have conflict
resolution mechanisms
in place and the people have some authority to
make their own rules
. Under those circumstances humans can develop some
trust in each other — faith that if they take a costly action that
benefits everybody in the long run, others will also invest.

[Yes, but does “community”-level action scale? How do we make a “community” with billions of people we have little interaction with? Is Ostrom suggesting we need more global-level “grassroots” community-building, in addition to leader-level trust-building?]

SPIEGEL ONLINE: Why is it less effective if governments establish strict rules from the top down?

Ostrom: Because people will not identify with it. My research
has shown that forests managed by local communities are in a far better
state than state-run parks, where locals feel left out and officials
can be bribed.
Let us imagine, we live in a village and have all agreed
that none of us is going to be in the forest on Saturday or Sunday, so
that we can give the forest time to recreate. If I then see you in the
forest when you’re not supposed to be, I will probably yell at you. If
only the state is in charge, I will just walk on past.

[Now she`s talking; libertarians and a host of others almost completely reject even climate “science” out of a reflexive but understandable concern that climate “policy” is or will be sufficiently corrupt as to vitiate any intended/purported gains. The same is true with many on environmentalists and others on the left, who feel that powerful corporate insiders will make climate policy ineffective.]

SPIEGEL ONLINE: In your research, you focused on local and
regional levels. What makes you think that your solutions would work
for the entire planet as well?

Ostrom: Indeed, the global scale is a challenge. Building that
kind of knowledge between the different parties is tricky. We need our
global leaders to take some of the decisions on a very big level.
at the summit, those guys are talking to each other and gaining some
trust because they meet face to face. But then they go home — and
that’s when the real action starts.

[It`s tricky, but much progress has been made; even Sen. Robert “Coal” Byrd is signalling that coal states need to change, and China abd India both concede change is needed – though naturally they make an equity argument that they have a right to catch up with out per capita CO2 emissons (which are four times theirs).]

SPIEGEL ONLINE: Can money help to build trust between developing nations and industrialized nations?

Ostrom: Maybe, and it is hard to see a climate deal without
serious financial commitments.
But at the same time, I am very worried
and nervous about corruption. If we pour money into a country in which
the corruption level is very high, we would be kidding ourselves not to
think that some of it will end up in the wrong pockets.
At first, a lot
of the proposals on the table sound great. But four to six years later,
you have a lot of politicians who have money in Swiss bank accounts.
What we need are tight rules and controls to ensure that the billions
that might be put on the table here are used correctly.

[Ostrom is absolutely right, if understated – perhaps most “development” aid has been disastrous. Still, it might make sense for some aid money to go to climate adaptation projects, and to allow offsets for preserving tropical forests – if the money goes to indigenous peoples, and not corrupt governments.]

SPIEGEL ONLINE: In other words, an anti-corruption task force
like the one that exists in Indonesia — might be the best
environmental protection agency?

Ostrom: Absolutely! If you look at the role corruption plays in
giving away forests to big corporations and in looking away if forest
protection rules are broken, you will see that bribery is one of the
main contributors to environmental destruction.

[A fruitful focus by libertarians and conservatives might be on simply helping to bolster law and order – including the property rights of locals – in developing nations.]

SPIEGEL ONLINE: Is it possible to save the climate with a single treaty?

Ostrom: One treaty will not solve the problem entirely. This is
why I propose a so-called polycentric approach to tackling climate
change. We need all levels of human society to work on this to be
effective in the long run. Cities, villages, communities and networks
of people have been neglected as players.

[I`m not sure I agree with Otrom here; there has been plenty of action on climate on individual, local, corporate and state levels, thanks in no small part to the stifling of climate policy at federal levels under the GWB/Cheney administrations. While such “thousand points of light” efforts may be bolstering mutual trust at various levels around the world, federal and international policy coordination is still needed, fraught with rent-seeking problems though it may be, ]

SPIEGEL ONLINE: What happens if there is no agreement?

Ostrom: We need to get away from the idea that there is only one
solution on the global scale. There are many, many levels in between.
So we need to take action on smaller levels. If the politicians do not
agree in Copenhagen, I would like to embarrass the hell out of them
getting some agreements going where people are doing something —
essentially saying: “We are tired of waiting for you.” The city of
Freiburg is a very good place to see what that actually means.

[Politicians don`t embarrasss so easily; rather they see opportunities to jump on and use band wagons to bolster their own careers and to steer favors to rent-seekers.]

SPIEGEL ONLINE: Why Freiburg of all places?

Ostrom: I spend quite a bit of time in Germany and I’m very
impressed by some of the local action I see. Local action cannot do it
fully, but just think about all the bicycle-paths that they have built
there. That is a case where the action of individuals is reducing
emissions. At the same time it is a very healthy thing. On Sundays
everybody is going to the woods and has a good time on their bikes —
and not in their cars. It’s good for your health and for the
environment. So everyone should ask himself: Why don’t I bike to work
and leave the damn car at home or get rid of it entirely?

SPIEGEL ONLINE: Still, such a decentralized approach sounds
painfully slow. We need rapid action if we wish to limit global warming
to 2 degrees Celsius.

Ostrom: If we sit here and twiddle our thumbs and wait for these
guys up there to make a decision — that is what I would call painfully
slow. Should we just blame the politicians? I am not saying that we can
solve it entirely, but we can make significant steps. To some extent we
can challenge them. Everyone can contact foolish politicians like some
US Congressmen who oppose climate change action by e-mail or phone and
let them know that they are acting irresponsibly.

[Unfortunately, Ostrom doesn`t address how we figure out how to trust our own government, and how to mitigate/manage the problem of rent-seeking. But I`ve tried to note the types of policies that libertarians cand – and should – support here. Some Austrians might even want to consider the root cause of rampant renk-seeking and fights over the wheel – the corporate risk-shifting juggernaut that has its genesis in the grant of limited liability]

SPIEGEL ONLINE: Why is the US so reluctant to fight climate change?

Ostrom: In the economic emergency we are experiencing, some
people think that we cannot afford it. I think it is the other way
around, if we don’t act now we will run into even greater economic
problems in the future. And of course we still have the bad legacy of
our previous president, George W. Bush.
For eight years, the White
House didn’t consider the issue to be important. We did not have
American leaders who understood that there is a scientific foundation.
Obama has a much higher chance of understanding the science. But even
for him it is just damn tough.

[It`s  even more complicated, obviously. The Bush administrtion actually DID work on building trust with China and India, supported the IPCC science process, etc. But they were also rather naked catering to coal and other fossil feul interests, while making political hay by labelling all concerned scare-mongering socialists. Not only is it extremely difficult to coordinate this issue globally, it`s also difficult politicaly to tell Americans that fossil-fuel-based energy is underpriced, to seek to undo public utility monopolies, or to address the favors to dirty coal in the Clean Air Act, or to streamline nuclear power licensing.]

SPIEGEL ONLINE: Worries about climate change have slowly
resulted in people seeing the Earth’s atmosphere as a common good that
we all must protect. Where is the next challenge?

Ostrom: The oceans! They are being threatened to an ever greater
degree. It is a disaster, a very difficult situation. The fish
resources are overexploited and waste, including CO2, is dumped in huge
quantities into the ocean. The law of the sea has not been effective at
all. A lot of fishing ships act like roving bandits. That’s why better
ocean governance is one of the top priorities for safeguarding the

Interview conducted by Christoph Seidler and Christian Schwägerl

I would be remiss if I did not point out that Ostrom recently elucidated her views on climate policy in much greater length in a paper that she prepared at the behest of the World Bank. Yes, Ostrom`s trying to give the Beast indigestion – from the Inside. 

Here`s the extract of her paper,  “A Polycentric Approach for Coping with Climate Change”:

Abstract: This paper
proposes an alternative approach to addressing the complex problems of
climate change caused by greenhouse gas emissions. The author, who won
the 2009 Nobel Prize in Economic Sciences, argues that single policies
adopted only at a global scale are unlikely to generate sufficient
trust among citizens and firms so that collective action can take place
in a comprehensive and transparent manner that will effectively reduce
global warming. Furthermore, simply recommending a single governmental
unit to solve global collective action problems is inherently weak
because of free-rider problems. For example, the Carbon Development
Mechanism (CDM) can be ‘gamed’ in ways that hike up prices of natural
resources and in some cases can lead to further natural resource
exploitation. Some flaws are also noticeable in the Reducing Emissions
from Deforestation and Forest Degradation in Developing Countries
(REDD) program. Both the CDM and REDD are vulnerable to the free-rider
problem. As an alternative, the paper proposes a polycentric approach
at various levels with active oversight of local, regional, and
national stakeholders. Efforts to reduce global greenhouse gas
emissions are a classic collective action problem that is best
addressed at multiple scales and levels.
Given the slowness and
conflict involved in achieving a global solution to climate change,
recognizing the potential for building a more effective way of reducing
green house gas emissions at multiple levels is an important step
forward. A polycentric approach has the main advantage of encouraging
experimental efforts at multiple levels, leading to the development of
methods for assessing the benefits and costs of particular strategies
adopted in one type of ecosystem and compared to results obtained in
other ecosystems. Building a strong commitment to find ways of reducing
individual emissions is an important element for coping with this
problem, and having others also take responsibility can be more
effectively undertaken in small- to medium-scale governance units that
are linked together through information networks and monitoring at all
levels. This paper was prepared as a background paper for the 2010
World Development Report on Climate Change

I left this earlier comment on the paper at the blog of libertarian-leaning water economist David Zetland:


David, I saw this elsewhere and read through this,but count me
unimpressed. It`s basically a recounting of what we already know – that
there are formidable barriers to reaching coordinated global decisions
on climate policies, that local, regional and efforts are proceeding
and will be needed in any event, both in mitigation and adaptation.

Nothing about whether local, regional and national efforts scale to the size of the problem.

Sen. Byrd – coal-hater and climate fanatic?

December 7th, 2009 No comments

It looks like Sen. Robert Byrd, a lifetime loyal supporter of the West Virginia coal industry (see his definitive biography, “Robert C. Byrd: Child of the Appalachian Coalfields”), stabbed Don Blankenship/Massey Coal and the rest of the W.Va. environmentally destructive “mountaintop mining” industry in the back last Thursday, in an op-ed in the West Virginia MetroNews entitled, “Coal Must Embrace the Future”.

I excerpt portions below (emphasis added):

For more than 100 years, coal has been the backbone of the Appalachian economy. Even today, the economies of more than 20 states depend to some degree on the mining of coal. About half of all the electricity generated in America and about one quarter of all the energy consumed globally is generated by coal.

Change is no stranger to the coal industry.  Think of the huge changes which came with the onset of the Machine Age in the late 1800’s.  Mechanization has increased coal production and revenues, but also has eliminated jobs, hurting the economies of coal communities. In 1979, there were 62,500 coal miners in the Mountain State. Today there are about 22,000. In recent years, West Virginia has seen record high coal production and record low coal employment.

increased use of mountaintop removal mining means that fewer miners are needed to meet company production goals. Meanwhile the Central Appalachian coal seams that remain to be mined are becoming thinner and more costly to mine. Mountaintop removal mining, a declining national demand for energy, rising mining costs and erratic spot market prices all add up to fewer jobs in the coal fields.

These are real problems. They affect real people. And West Virginia’s elected officials are rightly concerned about jobs and the economic impact on local communities.  I share those concerns.  But the time has come to have an open and honest dialogue about coal’s future in West Virginia.

Let’s speak the truth. The most important factor in maintaining coal-related jobs is demand for coal. Scapegoating and stoking fear among workers over the permitting process is counter-productive.

Coal companies want a large stockpile of permits in their back pockets because that implies stability to potential investors. But when coal industry representatives stir up public anger toward federal regulatory agencies, it can damage the state’s ability to work with those agencies to West Virginia’s benefit. This, in turn, may create the perception of ineffectiveness within the industry, which can drive potential investors away.

Let’s speak a little more truth here. No deliberate effort to do away with the coal industry could ever succeed in Washington because there is no available alternative energy supply that could immediately supplant the use of coal for base load power generation in America. That is a stubborn fact that vexes some in the environmental community, but it is reality.

It is also a reality that the practice of mountaintop removal mining has a diminishing constituency in Washington. It is not a widespread method of mining, with its use confined to only three states.  Most members of Congress, like most Americans, oppose the practice, and we may not yet fully understand the effects of mountaintop removal mining on the health of our citizens. West Virginians may demonstrate anger toward the Environmental Protection Agency (EPA) over mountaintop removal mining, but we risk the very probable consequence of shouting ourselves out of any productive dialogue with EPA and our adversaries in the Congress.

Some have even suggested that coal state representatives in Washington should block any advancement of national health care reform legislation until the coal industry’s demands are met by the EPA. I believe that the notion of holding the health care of over 300 million Americans hostage in exchange for a handful of coal permits is beyond foolish; it is morally indefensible.  It is a non-starter, and puts the entire state of West Virginia and the coal industry in a terrible light.

To be part of any solution, one must first acknowledge a problem. To deny the mounting science of climate change is to stick our heads in the sand and say “deal me out.” West Virginia would be much smarter to stay at the table.

The 20 coal-producing states together hold some powerful political cards. We can have a part in shaping energy policy, but we must be honest brokers if we have any prayer of influencing coal policy on looming issues important to the future of coal like hazardous air pollutants, climate change, and federal dollars for investments in clean coal technology.

Most people understand that America cannot meet its current energy needs without coal, but there is strong bi-partisan opposition in Congress to the mountaintop removal method of mining it. We have our work cut out for us in finding a prudent and profitable middle ground – but we will not reach it by using fear mongering, grandstanding and outrage as a strategy. As your United States Senator, I must represent the opinions and the best interests of the entire Mountain State, not just those of coal operators and southern coalfield residents who may be strident supporters of mountaintop removal mining.

I have spent the past six months working with a group of coal state Democrats in the Senate, led by West Virginia native Senator Tom Carper (D-Del.), drafting provisions to assist the coal industry in more easily transitioning to a lower-carbon economy. These include increasing funding for clean coal projects and easing emission standards and timelines, setting aside billions of dollars for coal plants that install new technology and continue using coal. These are among the achievable ways coal can continue its major role in our national energy portfolio. It is the best way to step up to the challenge and help lead change.

The truth is that some form of climate legislation will likely become public policy because most American voters want a healthier environment.  Major coal-fired power plants and coal operators operating in West Virginia have wisely already embraced this reality, and are making significant investments to prepare.

The future of coal and indeed of our total energy picture lies in change and innovation. In fact, the future of American industrial power and our economic ability to compete globally depends on our ability to advance energy technology.

The greatest threats to the future of coal do not come from possible constraints on mountaintop removal mining or other environmental regulations, but rather from rigid mindsets, depleting coal reserves, and the declining demand for coal as more power plants begin shifting to biomass and natural gas as a way to reduce emissions.

Fortunately, West Virginia has a running head-start as an innovator. Low-carbon and renewable energy projects are already under development in West Virginia, including:  America’s first integrated carbon capture and sequestration project on a conventional coal-fired power plant in Mason County; the largest wind power facility in the eastern United States; a bio-fuel refinery in Nitro; three large wood pellet plants in Fayette, Randolph, and Gilmer Counties; and major dams capable of generating substantial electricity.

Change has been a constant throughout the history of our coal industry. West Virginians can choose to anticipate change and adapt to it, or resist and be overrun by it. 
One thing is clear.  The time has arrived for the people of the Mountain State to think long and hard about which course they want to choose.

(Oops; looks like I “excerpted” the whole thing!)

Byrd looks like he`s ready to sign a climate bill and to see an end to future mountaintop mining permits, as long as he gets federal pork for carbon capture and storage, and maybe some “green” project financing. These together may boost jobs in his state.

I think he`s also fairly accurately noted that it is the coal industry itself, and not politicos/regulators in Washington, that are the chief threat to coal jobs and to the health of W.Va citizens.

It`s too bad that states like W.Va. are so beholden to coal revenues that it essential requires political decisions – as opposed to simply upholding the rights of property owners to be free from nuisance, intrusions and damages by others – to put an end to destructive mining practices.

“The Climes, They Are A-Changin`”!

Categories: climate change, Coal, Massey, Robert Byrd Tags:

"The Climes, They Are A-Changin`"; Or, Dylan Does Copenhagen

December 6th, 2009 No comments

Apologies, but I can`t resist:

I saw a news item earlier today – “Copenhagen climate summit borrows Dylan’s voice” – that indicates that the COP 15 organizers (the 15th Conference of the Parties to the UN Framework Convention on Climate Change, to which Pres. George H.W. Bush & Congress made US a party) are making informal use of Bob Dylan`s “A Hard Rain is Gonna Fall” as a conference theme (“UN to release ‘Hard Rain’ film with Bob Dylan tune on eve of climate talks | Spero News“). 

Well, a different Dylan song popped into my head; tweaked very slightly, it goes like this:

The Climes They Are A-Changin’

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the climes they are a-changin’.

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won’t come again
And don’t speak too soon
For the wheel’s still in spin
And there’s no tellin’ who
That it’s namin’.
For the loser now
Will be later to win
For the climes they are a-changin’.

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is
Rapidly agin’.
Please get out of the new one
If you can’t lend your hand
For the climes they are a-changin’.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin’.
And the first one now
Will later be last
For the climes they are a-changin’.

Dylan`s original, The Times They Are A-Changin` is here.

I intend no offense here to anyone; those with different predilections on climate and the problem of government and rent-seeking will see this and other Rorshach Blots differently.

But for readers that have made it this far, I note the following:

[update] Bob Murphy, Rob Bradley and the Austrian Road Not Taken on Climate by two fossil-fuels gunslingers

October 28th, 2009 No comments

[Update: I copy at bottom a follow-up exchange I had on Bob`s thread with another reader – radio silence from Bob.]

Bob Murphy has a new post up at his blog, “CBO Testimony Misleads on Cost of Cap-and-Trade“, that draws attention to a new blog post at the Institute of Energy Research that Bob says he “had a lot to do with”.

The IER post rightly criticizes some of the numbers that the Congressional Budget Office has released, but the IER is playing games itself.

I left the following note at Bob`s (now substantially goosed up for the benefit of readers):

TokyoTom said…

IER? Isn`t that the “free-market” blog that bans libertarians who are not on their pro-coal, pro-pollution wagon? [Oops, I confused this with Rob Bradley`s MasterResource blog; IER is different, in that IER is – much more clearly than MR – an active rent-seeking front for fossil fuel interests, which Exxon made clear last year when it publicly announced that it would no longer fund IER`s “unproductive”, climate-skeptic position.]

But while we`re on the subject, let`s not forget:

– Austrians` fundamental objections to cost-benefit analysis;

that the mining, transport and combustion of coal, in addition to whatever climate “cost” it
might have to various people whose preferences can`t be measured, have
very real and significant costs in terms of damage to persons and property;

that federal law authorizes this (via the “Clean Air Act”, surface mining laws and ownership of the TVA), and grandfathers the very worst
midwestern utilities, the oldest 10% of which (41 or so) are  estimated to be responsible for 43% of the
$62 billion in annual  damages (not including damages from harm to ecosystems, effects of some air pollutants such as mercury, or climate change)(according
to the latest NAS report on the indirect costs of fossil fuels);

– that our federal government and states own most of the coal deposits and are otherwise addicted to the royalty revenues and complicit in turning a blind eye to damages;

– the future “costs” that the IER analysis refers to (in 2050) are not discounted to present value;

that alternative policies – such as

are never advanced, much less their costs weighed [that is, no attempt is ever made to engage opponents in good faith or to seek mutual gains by working to resolve underlying problems];

– the costs/consequences/risks and equities of “do-nothing” policies are hardly considered, and when so are heavily discounted;

– that deliberate “geo-engineering” holds no promise as a panacea, and itself is fraught with issues about statism, preferences, risks and liaibility;

the need for investment in infrastructure and change in laws to adapt
(and foster adaptation) to very real ongoing climate changes are never
discussed; and

– no one at IER ever seems to question the
unstated presumption that utilities and our transportation industries
have somehow homesteaded an ownership right over the global atmosphere – or the massive role that our federal government and states play as coal and other energy resource owners),
so that it`s perfectly okay to dismiss the preferences of those who
have concerns at home [those “religious” nuts like Exxon, and our Academies of Science] and those abroad in the least developed countries
that are most vulnerable to damages (much less to suggest how those
injured should be aided).

In other words, those defending the
status quo seem to have abandoned any Austrian training (or to have no
familiarity with its concern for problem-solving and awareness that
[as Block points out] common law protection of private property rights was hijacked a century
ago, with massive pollution and rent-seeking problems being the result

ought to post a few of these thoughts over at IER; Rob Bradley somehow
finds comments of this type over fundamental principles to be “ad hominem” arguments [of the kind that very quickly tested his patience and got me banned, without any word to his co-bloggers, who found my comments worthy of considered response].

Sure, we should fight over policy, but let`s not ignore principles or put our heads in the sand.

October 28, 2009 10:10 AM

*  From the NAS report:

Coal accounts for about half the electricity produced in the U.S.  In
2005 the total annual external damages from sulfur dioxide, nitrogen
oxides, and particulate matter created by burning coal at 406
coal-fired power plants, which produce 95 percent of the nation’s
coal-generated electricity, were about $62 billion; these nonclimate
damages average about 3.2 cents for every kilowatt-hour (kwh)
of energy
produced.  A relatively small number of plants — 10 percent of the total number — accounted for 43 percent of the damages.  By 2030, nonclimate damages are estimated to fall to 1.7 cents per kwh.


Supporters of cap and trade always turn to the
argument that opponents are burying their heads in the sand. It’s not
true. This legislation won’t do anything to help the environment. It is
merely a front so that the administration and the Democrats can say
they did “something.” We don’t need legislation that is going to cost
every single American household and won’t even be able to achieve its
stated goals. Write your Congressmen at

[A], you`re missing my higher -level poinht, which is that IER is
rather apparently UNINTERESTED in engaging productively or on a
principled basis on this issue; rather, they are simply sniping (though
they make excellent points) at the cap-and-traders).

of course, from the view of those financing them, this form of
engagement may very well be “productive”, if it delays any action that
will lower returns to coal, rail or utility investors.

regrettable is that this obfuscation, which has been going on for
decades, is what is likely to saddle us with extremely costly, porky
and ineffective “climate change” policies.

Republicans (Sen. Lindsey Graham & others) give Dems a climate deal? In exchange for streamlining for nukes, "clean coal" subsidies, offshore drilling, carbon price ceiling & import taxes

October 12th, 2009 No comments

Senate Dems, who lack sufficient votes on their own to approve a cap-and-trade bill over a possible Republican fillibuster, have sought help from sympathetic Republicans, who have apparently used this leverage to broaden the bill and to extract key concessions on various issues; such  concessions are sure to please a wide range of lobbying groups, and it looks like there may be a good chance that they will be sufficient to slip a cap-and-trade bill past opposition from coal-producing and -burning states.

The framework of the bi-partisan package was spelled out on Sunday, October11, in a joint NYT op-ed, “Yes We Can (Pass Climate Change Legislation)”,  by liberal Senator John Kerry (D-Mass.) and conservative Senator Lindsey Graham (R-SC).

While details are sketchy (and details sure to still be fought over), it looks like Pres. Obama will have, if not final legislation, then at least high prospects for a cap-and-trade bill that he can use for the negotiations that will start in a few weeks in Copenhagen (over the shape of a global climate treaty to replace the expiring Kyoto Protocol).

Excerpts from the Kerry-Graham op-ed are here (emphasis added; with a few comments in brackets):

Many Democrats insist on tough new standards for curtailing the
carbon emissions
that cause global warming. Many Republicans remain
concerned about the cost to Americans relative to the environmental
benefit and are adamant about breaking our addiction to foreign sources
of oil
[Republicans are so easily jerked around over “energy security”].

However, we refuse to accept the argument that the
United States cannot lead the world in addressing global climate
change. [but do China, India and others want to follow?] We are also convinced that we have found both a framework for
climate legislation to pass Congress and the blueprint for a
clean-energy future that will revitalize our economy, protect current
jobs and create new ones, safeguard our national security and reduce
pollution. …

First, we agree that climate change is real and threatens our
economy and national security. That is why we are advocating aggressive
reductions in our emissions of the carbon gases
that cause climate
change. We will minimize the impact on major emitters through a
market-based system that will provide both flexibility and time for big
polluters to come into compliance without hindering global
competitiveness or driving more jobs overseas. [cap-and-trade]

Second, while we
invest in renewable energy sources like wind and solar, we must also
take advantage of nuclear power, our single largest contributor of
emissions-free power. Nuclear power needs to be a core component of
electricity generation if we are to meet our emission reduction
targets. We need to jettison cumbersome regulations that have stalled
the construction of nuclear plants in favor of a streamlined permit
that maintains vigorous safeguards while allowing utilities to
secure financing for more plants. We must also do more to encourage
serious investment in research and development to find solutions to our
nuclear waste problem

Third, climate change legislation is an
opportunity to get serious about breaking our dependence on foreign
. For too long, we have ignored potential energy sources off our
coasts and underground. Even as we increase renewable electricity
generation, we must recognize that for the foreseeable future we will
continue to burn fossil fuels. To meet our environmental goals, we must
do this as cleanly as possible. The United States should aim to become
the Saudi Arabia of clean coal.
For this reason, we need to provide new
financial incentives for companies that develop carbon capture and

In addition, we are committed to
seeking compromise on additional onshore and offshore oil and gas
— work that was started by a bipartisan group in the Senate
last Congress. Any exploration must be conducted in an environmentally
sensitive manner and protect the rights and interests of our coastal

Fourth, we cannot sacrifice another job to competitors
overseas. China and India are among the many countries investing
heavily in clean-energy technologies that will produce millions of
jobs. There is no reason we should surrender our marketplace to
countries that do not accept environmental standards. For this reason,
we should consider a border tax on items produced in countries that
avoid these standards
. This is consistent with our obligations under
the World Trade Organization and creates strong incentives for other
countries to adopt tough environmental protections
.[probably just a signal to China & India; any bill would have to leave flexibility to the Administration.]

Finally, we
will develop a mechanism to protect businesses — and ultimately
consumers — from increases in energy prices. The central element is the
establishment of a floor and a ceiling for the cost of emission
This will also safeguard important industries while they
make the investments necessary to join the clean-energy era. We
recognize there will be short-term transition costs associated with any
climate change legislation, costs that can be eased. But we also
believe strongly that the long-term gain will be enormous. …

If Congress does not pass legislation
dealing with climate change, the administration will use the
Environmental Protection Agency to impose new regulations. Imposed
regulations are likely to be tougher and they certainly will not
include the job protections and investment incentives we are proposing. 

The message to those who have stalled for years is clear:
killing a Senate bill is not success; indeed, given the threat of
agency regulation, those who have been content to make the legislative
process grind to a halt would later come running to Congress
in a panic
to secure the kinds of incentives and investments we can pass today.
Industry needs the certainty that comes with Congressional action.

Joe Romm on the left applauds the proposed deal (though there is sure to be disagreement about support for coal, nuclear power and offshore oil & gas exploration), and Bill Scher says “Sen. Lindsey Graham Crosses the Climate Rubicon” and thus “made a deal all but inevitable”.

On the right, Michelle Malkin reports that she was right to warn about Republican turn-coats, the National Review `s Gore-haters are dispirited, and MasterResource, the coal-funded “free market” energy blog by libertarian Rob Bradley, has nothing to say.

Political scientist Roger Pielke, Jr. notes the lack of precision and suggests that Republicans now have the upper hand in negotiating the bill.

More reaction and background that readers may find useful is here:

Let’s Try This Again: Are There GOP Senators Who Will Back The Climate Bill? (Bill Scher, Campaign for America`s Future, October 7, 2009)
Senators link drilling with cap-and-trade (Houston Chronicle, October 6, 2009)
Is Lieberman at it again? (Politico,


On the Climate Bill Fence: How Sen. Graham Got There by Bill Chameides (Dean of Duke U`s school of the environment) | Aug 27, 2009

– More on other senators by Bill Chameides

From a libertarian perspective, I ask other libertarians and those on the right whether it is not too late to get a leaner climate/energy bill, that would:
  • instead of a cap-and-trade program (that hands out emissions permits free to existing fossil fuel users, with costs being borne regressively by energy users), use upstream carbon taxes, with the revenues rebated per capita to all Americans;
  • allow limited use of offsets in lieu of taxes (effectiveness of eligible offsets to be insured for a period of 50 years) by Lloyd`s of London);
  • eliminate subsidies for all energy technologies (including ethanol and biofuels)
  • provide that at least half of all revenues taken in by the federal
    government and state government for offshore oil & gas leases and for coal leases will be paid per capita to citizens (and state residents);
  • allow nuclear fuel reprocessing and breeder plants, while eliminating federal insurance for nuke plants;
  • eliminate the grandfathering of dirty coal-burning plants under the Clean Air Act;
  • allow immediate tax deduction of a ll capital expenditures (eliminating multi-year amortization limits);
  • eliminate mandates that public utilities increase use of green, renewable fuels, in favor of the removal of antitrust protection for the grant of local monopolies (and other measure that introduce real competition into the retail power sector), and application of Commerce Clause protection to those who want to sell power out-of-state;
  • establishes energy efficiency targets, as opposed to mandates, with awards to category winners, and publishes results;
  • privatize the TVA (by distributing shares per capita to all who are served by TVA);
  • publish information on the locations of coal fly-ash storage sites;
  • make it clear that federal and state licenses for energy facilities and mines are not licenses to pollute, do not extend any immunity for actual damages caused, and do not prevent injunctions for facilities identified as causing particular damage; and
  • to dampen NIMBYism, establish compensation schedules for federally-licensed facilities, and encourage states to do the same (based on distance and like wind and water flow).

Google electrifies power consumers by pairing its free PowerMeter software with a power monitor provider; sideteps public utility monopolies

October 9th, 2009 No comments

“If you cannot measure it; You cannot improve it.”

— Lord Kelvin

I noted in February (“Empowering power consumers: Google beta tests software to give consumers real-time info“) that Google, whose climate change-related efforts I’ve blogged about previously,
has been beta testing a new “PowerMeter” software that – when coupled with a “Smart Meter” installed by the local utility – will help consumers to measure, track and compare their real-time
electric usage, thereby allowing them to make better choices as to when
and how they use electricity, and to better match such use
to the pricing programs of their utilities. Google testers
have found that the software allows them to relatively easily cut use
(by an average of 15%), and to save on their electricity bills by an
even greater percentage.

Google has just announced that it has side-stepped the need for consumers to wait for their utility to install a smart meter, by partnering directly with TED (“The Energy Detective“), the provider of the TED 5000 device, presently priced at about $200, that consumers can  have attached to their power supply.

More information is here (from The Energy Circle, which has been testing PowerMeter with an earlier TED device) and here (CNET).

Next up? Hope springs eternal that developments like this will remind policy makers, pundits, pressure groups (like the U.S. Chamber of Commerce and browbeating enviros like Joe Romm) that the real reason for the nasty public squabbling over “green” power mandates and subsidies (as I noted in a recent post about Steven Milloy`s railing about “evil” GE and federal stimulus
) is the fact that power markets are not free, but are burdened by sweet – and horrifically inefficient – cost+ deals to the public utilities. As I noted previously:

While there are plenty of root causes for the calls for legislative
and regulatory mandates in favor of clean / green / renewable power,
such as:

  • concerns about climate change,
  • the political deal in favor of dirty coal under the Clean Air Act, 
  • the enduring role of the federal and state governments in owning
    vast coal fields (the royalties from which it does not distribute to
    citizens but go into the General Pork Pool), 
  • the unwillingness of state courts, in the face of the political
    power of the mining industry, to protect persons and private from
    pollution and environmental disruption created by mining,
  • the deep involvement of the government in developing, encouraging and regulating nuclear power,

the most obvious and proximate root
cause is something that attracts far too little attention – the
frustration of consumer demand for green energy, and the inefficient
and inaccurate pricing and supply of electricity
.  It`s prettty clear that the
grant of public utility monopolies and the regulation of the pricing
and investments by utilities greatly restrict the freedom of power
markets, from the ability of consumers to choose their provider, to the
freedom of utilities to determine what infrastructure to invest in, to
even simple information
as to the cost of power as it varies by time of day and season, and the amount power consumers use by time of day or appliance.

With freer markets, we would see much more competition, better
pricing, much more cost-saving (and conservation), and more money
flowing into green power. So why is so little attention being paid to
all of the gains that could be achieved from less – and more rational –
power regulation?

Now Apple Computer leaves! One-track "King Coal" interests insist on steering the US Chamber of Commerce`s climate bus

October 6th, 2009 No comments

The intransigence of a core of coal interests, in the face of a rebellion by firms that support legislative action on climate change, is threatening the status of the US Chamber of Commerce as the premier business council in the US, as now Apple Computer has quit the US Chamber of Commerce.

Apple`s departure, announced  on October 5 and effective immediately, came on the heels of departures in the past two weeks by the utility companies Pacific Gas & Electric, PNM Resources and Exelon. In addition, Nike has quit the Chamber’s Board, and other members such as Johnson & Johnson have voiced strong opposition to the climate stance of the Chamber and asked that it not take public positions on this issue.

It`s not clear how closely the Chamber has polled all of its wide membership on climate issue, but it`s apparent that the Chamber`s rather hard-line stance is out of step with its Board members.  According to research by the NRDC (a mainline environmentalist group) in May:

the staff of the U.S. Chamber appears to be projecting the views
held by a tiny sliver of its board of directors – just four out of 122
members on the board.

The Chamber’s oft-stated views, which question the scientific
consensus on climate change and reject the need for federal regulation
to reduce global warming pollution, stand in sharp contrast to the
views expressed by 19 members of the Chamber’s board that support
federal regulations with goals to reduce total US global warming

You read that right: only 23 members of the U.S. Chamber’s board have a publicly stated position on climate change and more than 80 percent are not on board with the U.S. Chamber’s “Dr. No” position on climate policy action.

So who is in the minority that has shanghaied the U.S. Chamber of
Commerce on climate policy? Be prepared to be shocked!  Three of the
four climate are coal companies:  Peabody Energy, Massey Energy Corp.,
and CONSOL Energy.  (The fourth – Con-Way Inc. – is “a freight company and logistical services company.”)

As the WaPo noted, in response to prior defections,

Last week, the group’s president, Thomas J. Donohue, said in a
statement that his group supports “strong federal legislation” to
protect the climate. But he said legislation passed by the House of
Representatives — which would use a “cap and trade” system to lower
the cost of reducing emissions — was flawed because it does not
require other polluting countries to act and does too little to spur
U.S. investment in green technologies.

In response to Apple`s departure, a spokesman for the Chamber dissed the motives of the firms quitting the Chamber:

“While we’ll continue to represent the broad majority of our membership
on this goal, we recognize that there are some companies who stand to
gain more than others with the current options on the table.”

While this may be true for the utility companies, which are members of the USCAP organization and stand to gain free allocations of carbon allowances under the cap and trade bills under consideration, it is hardly so for Apple, Nike or Johnson & Johnson. And of course it distracts from the fact that the coal firms and their shippers – including Union Pacific, which richly compensates Union Pacific board member Tom Donohue, the President of the Chamber – benefit greatly from the status quo, to an extent and in a manner quite different from other Chamber members.

It will be interesting to see what will happen next at the Chamber of Commerce, and who will be next to leave.

Categories: chamber of commerce, Coal, rent-seeking Tags:

Bob Murphy spins shallow "Blockbuster study" by coal lobby on cap and trade bill

October 2nd, 2009 No comments

The coal- and utility-funded “free-market think tank” Institute of Energy Research has a just released another study that tells us the obvious about the regressive consequences of the Waxman-Markey cap-and-trade bill and the benefits likely to flow to its corporate supporters, while masking its own agenda. As an added benefit, the press release includes some one-sided and unsupportable over-statements by Bob Murphy.

A few points:

IER:  “cap-and-trade would precipitate a financial windfall for well-connected
special interests and politically-favored companies.”

me:  No dispute here. It`s perfectly fair to point out who will benefit from the cap-and-trade bills.  But let`s not ignore that coal investors have long benefitted from being able to shift pollution costs to people downstream, under the perverse “rights to pollute” enabled under the Clean Air Act, and under state and federal mining licenses that allow mining firms to force out local residents.

IER:  “The study … details how shareholders,
not ratepayers, will be the primary beneficiaries of cap-and-trade’s

me:  Sure, just like how it was shareholders in coal producers and utilities who are the primary beneficiaries of the externalities permitted by the status quo.

Bob Murphy[The] analysis … illustrates just how flawed and skewed this
legislation is toward rent-seeking special interests.

me:  Sure, but the interest of the coal lobby is that the legislation doesn`t benefit them enough. Do coal investors care MORE about what`s good for the average Joe than do other “rent-seeking special interests”?

Bob Murphy:  “secondly, and more important, [the analysis] shows that cap-and-trade, as
outlined in Waxman-Markey, is nothing more than a transfer of wealth
from the poorest to the richest among us.

me:  Oh really?  Does the analysis really conclude that Waxman-Markey does “nothing more” than transfer wealth? You mean Waxman-Markey wouldn`t actually raise prices of carbon-based energy or affect consumption and investment decisions by industry, businesses and consumers?

Bob Murphy:  “These new findings should send a clear message to the American people cap-and-trade helps the powerful and hurts the rest of us.

me: The message is fine and important. But are coal firms and investors “the rest of us”, not powerful and only concerned about the average Joe, or are they trying to protect their own privileged position? Further, are there any alternatives to cap-and-trade that coal investors support, such as carbon taxes, or even undoing their favored treatment under federal clean air laws and mining laws?

Bob Murphy:  And as Congress’ corporate allies receive the bulk of the benefits
Waxman-Markey has to offer, our environment, along with our struggling
economy, will suffer for years to come. Congress needs to get out of
the business of picking winners and losers and allow the market to
determine which energy and electricity sources should power our

me: Ahh yes, forgive me; I forgot that coal firms were a part of the enviro lobby!  But aside from that, I agree strongly that Waxman-Markey is poor policy.  Do coal investors agree with Exxon that rebated carbon taxes would keep Congress “out of the business of picking winners and losers and allow the market to determine which energy and electricity sources should power our economy”?

Thanks, IER for showing us how “political capitalism” works!


* “Political capitalism” is Rob Bradley`s term for “rent-seeking”

Bob Murphy on climate change at Antiwar Radio; a puppet for the "King Coal" hand that feeds him?

October 2nd, 2009 11 comments

The following is an email message that I sent to Scott Horton, host of Antiwar Radio, regarding his September 18 interview with Bob Murphy. The exchange regarding Bob`s thoughts on the cap and trade bill monstrosity appears at 24:14 to 29:47. (Minor edits and link added.)

Scott, I listened with interest to your interview with Bob Murphy
whom I generally like, but feel compelled to point out that Bob was
not being fully honest with you – on an important point – when he
discussed his role in studying and commenting on cap and trade and
energy policy as an economist at the “Institute for Energy Research”.
This group is a part of a lobbying front for big coal and the
utilities that rely on coal – not “big oil”, such as Exxon, which has
specifically stopped funding IER because of its anti-climate change
message and which now expressly supports carbon taxes!

More on IER and Murphy`s involvement with it here:

In other words, the legitimate criticisms that Murphy can make of cap
and trade (note that Exxon, Jim Hansen and most economists prefer rebated carbon
taxes) – such as existing bills are a way for government to give
favors to insiders – have to be balanced by an awareness that, for the
past few decades, government policy has been heavily skewed in favor
of investors in and consumers of fossil fuels. Murphy talks on this
topic only because he is paid to by the lobbying group that is getting
the shortest end of the stick – big coal.  If only he were honestly
even-handed, instead of in the pay of lobbyists, we might make some
progress in addressing a range of real problems in the energy sector.



Categories: Bob Murphy, cap and trade, Coal, IER, Scott Horton Tags:

Steve Milloy criticizes GE’s "smart-meter profiteering" via green mandates, but ignores state grants of "public utility" monopolies

October 2nd, 2009 No comments

Anti-enviro gadfly Steven Milloy has a new blog post up that rightly skewers the green mandates that are providing a taxpayer-funded stream of business and profits to GE.  Notes Milloy:

GE announced today that utility giant American Electric Power (AEP)
will purchase 110,000 smart meters from GE. And just how is AEP
managing to buy all these smart meters? President Obama and Congress
are making us pay for them.

On Sep. 1, AEP applied to the Department of Energy for $75 million in federal stimulus money for the smart meter purchase.

It’s a good thing that GE’s Immelt sits on Barack Obama’s Economic
Recovery Advisory Board — how else would the Department of Energy know
to direct smart meter purchases to GE?

Of course, AEP isn’t the only conduit for sending federal stimulus
money to GE. So far about 50 utilities have applied to DOE for a piece
of the almost $4 billion in stimulus money earmarked for smart meter

From an Austrian perspective, what`s wrong with this post? The simple fact that Milloy isn`t interested in problem-solving, but in bashing greens, Dems and GE. If he were a problem-solver, he would be a little less partisan and would devote a little more effort to throw light on some of the underlying factors that fuel green concerns and utility mandates, such a the little problem that states have prevented the development of free power markets by granting “public utility” monopoly status to local power providers, as I have noted in a number of posts.

A problem-solver might also devote some time to examining the entanglement of the state with other rent-seeking corporations, such as the coal producers; but those trapped in partisan, rent-seeking games are often good only at seeing the flaws of those whom they criticize, while ignoring the way that they themselves are co-opted by other rent-seekers.

I left Steven the following comment:

Steven I think your criticism of GE is fair, but it`s clearly lacking in context.

Where`s your post criticizing the states for their continuing grant
of monopoly status to “public utilities”, which is the chief reason why
there is no free market in providing power to consumers? With a free
markets, we`d have seen smart meters like GE`s years ago, and there
would be no basis for all of these “green power” mandates.