The Week That Was: August 14, 2016 – Brought to You by www.SEPP.org
By Ken Haapala, President, Science and Environmental Policy Project
Climate Fears and Finance: [One] of the difficulties SEPP has had in updating its analysis of the importance of government funding in climate science is the lack of recent reports from the Government Accountability Office (GAO), Congressional Research Service (CRS), or the White House covering the extent of US government financing of climate science. Roughly, the detailed reports stopped in Fiscal Year (FY) 2014 (September 30, 2014). Thus, SEPP continued estimates of expenditures of climate science, alone, based on the budgets of the US Global Change Research Program (USGCRP), alone.
TWTW reader Timothy Wise supplied a link to a GAO report that covers FY 2014, and has key information, not financial, on 2015. The report states:
“Federal funding for climate change research, technology, international assistance, and adaptation has increased from $2.4 billion in 1993 to $11.6 billion in 2014, with an additional $26.1 billion for climate change programs and activities provided by the American Recovery and Reinvestment Act in 2009. As shown in figure 1, the Office of Management and Budget (OMB) has reported federal climate change funding in three main categories since 1993:
- technology to reduce emissions,
- science to better understand climate change, and
- international assistance for developing countries.
Note: OMB has also reported on federal funding for wildlife and natural resource adaptation since 2010. However, the data the agency reports in the adaptation category does not fully represent adaptation funding as it only includes data from the Department of Interior. OMB reports Department of Interior funding for adaptation (adjusted for inflation) as follows: 2010 $71 million, 2011 $37 million, 2012 $92 million, 2013 $98 million, 2014 $112 million.”
With government funding of climate change of $11.6 Billion in 2014, and given the lack of Federal budgets and government entities auditing of budgets, the funding has probably increased since 2014. Financial irresponsibility is a characteristic of many agencies in the current government.
Further, as cited elsewhere in TWTW, according to other government reports, the US government is the largest funder of the UN effort to control the use of fossil fuels, under what is called International Assistance. For some reason, the politicians who are so concerned that Exxon, and others, are exerting undue influence on climate science are not concerned that $11.6 billion a year from the federal government may be exerting undue influence on climate science.
As an example of federal expenditures other than actual cash on technology to reduce emissions, The Department of Energy has a web site describing the corporate tax credit called the “Renewable Electricity Production Tax Credit (PTC)”, which applies for the first 10 years of operation, with the credits continuing through the start of construction in 2019; but, the web site does not give the annual or total credits granted. Further, under maximum rebate the web site states “None specified.”
Such tax credits are classified as tax expenditures in the Federal government tax accounting. They are the primary reason for the growth of wind power in the US, and will continue to be a burden on tax payers for years to come. Ironically, under the title “Savings Category” the web site lists: Geothermal Electric; Wind (All); Biomass; Hydroelectric; Municipal Solid Waste; Landfill Gas; Tidal; Wave; Ocean Thermal; Wind (Small); and Hydroelectric (Small).
Since the nation has vast resources for producing reliable electricity; coal, natural gas, nuclear, and hydro; there is no economic justification for giving tax subsidies to producers of unreliable electricity, such as wind and solar. See links under Funding Issues and http://energy.gov/savings/renewable-electricity-production-tax-credit-ptc
Quote of the Week… “A wise man is more powerful than a strong man, and a man of knowledge than a man of might.”– Proverbs 24:5 – [H/t William Readdy]
Number of the Week: 4,000 Days?
Bureaucratic Science: The GAO report is illuminating for reasons beyond the scope of federal funding – the extent of White House influence on federal entities supposedly conducting objective climate science. The influence on many levels of government occurs from three White House entities: 1) Executive Office of the President; 2) Office of Science and Technology Policy; and 3) Council of Environmental Quality.
Executive Office of the President is headed by Misters Obama and Biden and includes the Council of Economic Advisers; Council on Environmental Quality (CEQ); National Security Council; Office of Administration; Office of Management and Budget; Office of National Drug Control Policy; and Office of Science and Technology Policy (OSTC). [Boldface added]
Office of Science and Technology Policy is directed by John Holdren, According to its web site:
“The mission of the Office of Science and Technology Policy is threefold; first, to provide the President and his senior staff with accurate, relevant, and timely scientific and technical advice on all matters of consequence; second, to ensure that the policies of the Executive Branch are informed by sound science; and third, to ensure that the scientific and technical work of the Executive Branch is properly coordinated so as to provide the greatest benefit to society.”
According to its web site, the President’s Advisor, Christy Goldfuss heads the Council of Environmental Quality which “coordinates Federal environmental efforts and works closely with agencies and other White House offices in the development of environmental policies and initiatives. CEQ was established within the Executive Office of the President by Congress as part of the National Environmental Policy Act of 1969 (NEPA) and additional responsibilities were provided by the Environmental Quality Improvement Act of 1970.”
Almost ironically, the GAO report introduces the multi-layering of White House influence on government climate science as:
“As illustrated in figure 2, many federal entities manage programs and activities related to climate change. Each of these federal departments and agencies is operating under its own set of authorities and responsibilities and addresses climate change in ways relevant to its mission. In the context of providing climate-related information, the National Research Council observed that no single government agency or centralized unit could perform all the required functions, and that coordination of agency roles and regional activities is a necessity.”
“Figure 2: Selected Coordination Mechanisms for Federal Climate Change Activities”
The coordination discussed and shown in figure 2 is by the White House and it is a mechanism of exercising political influence and control.
Way down on the list under the “Committee on Environment, Natural Resources, and Sustainability” chaired by the OSTP, NOAA, and EPA, one finds the Subcommittee on Global Change Research, chaired by NOAA, and then the US Global Change Research Program and the National Climate Assessment. As pointed out in previous TWTWs, the National Climate Assessment mimics the UN Intergovernmental Panel on Climate Change (ICCC), except it attempts to make local and regional forecasts of future climate by using global models that have never been validated – compounding erroneous approaches. According to its web site the mission of the USGCRP is to “assist the Nation and the world to understand, assess, predict, and respond to human-induced and natural processes of global change.” [Boldface added.] Yet, the natural processes are ignored or minimized.
Those familiar with reading tables of organization of entities considered authoritarian may recognize the multi-layering of political influence on multiple levels. The purpose is to achieve conformity. Independent analysis or insight is lost. This insistence on conformity separates policy-oriented cultures, even though they may be called scientific, from results-oriented science and engineering cultures that insist on repeated testing of assumptions and models.
In sum, these bureaucracies advocate a science based on ignorance. Ignorance of historic climate change. Ignorance of the fact that the greenhouse effect takes place in the atmosphere, not at or near the surface or under the seas. Ignorance of atmospheric temperatures. And, ignorance of natural events that occasionally warm the globe, such as the El Niño-Southern Oscillation (ENSO). Their products are not empirical science, based on observations and experiment, but are best described as bureaucratic science. See links under Defend the Orthodoxy, and Funding Issues.
Capital Costs: One of the great difficulties in analyzing various types of electricity generation is the treatment of capital costs. A system producing reliable electricity, called dispatchable, is often treated as inferior to a system producing un-reliable electricity, called non-dispatchable. Dispatchable can be considered as the ability to be adjusted as needed. From a logical standpoint, [treating] non-dispatchable electricity as preferred to dispatchable, makes no sense. Yet politicians pass legislation subsidizing the capital costs of unreliable systems, while ignoring reliable systems. This illogical political preference is compounded in that most “alternative” systems such as wind and solar have high capital costs, but low operating costs. Thus, when they can produce, they can undercut the operating costs of reliable systems as well as the capital costs of providing a reliable system. At this time, there appears to be no effective pricing mechanism which includes the cost of having a reliable system available, when needed. The effect can be quite devastating as seen with the experience of the German utility firm E.ON.
Another issue arises when considering the costs of different sources with far different lifetimes. A wind farm may last 20 to 25 years. A nuclear or modern coal plant may last 50 years. Further, if one is proposing a wind farm to replace electricity from an existing coal or nuclear plant in which the capital costs is already amortized, the capital costs of the existing plant may be essentially zero. Unfortunately, some analysts who evaluate power systems fail to recognize these issues and apply EIA levelized costs incorrectly. See Article # 3 and links under Questioning Green Elsewhere and Alternative, Green (“Clean”) Solar and Wind.
Number of the Week: 4,000 Days? The US has not been hit by a major hurricane since Hurricane Wilma made landfall on October 24, 2005. A major hurricane is category 3 or higher with wind speeds above 111 mph (178 km/h). Sandy was a very large storm, amplified by a nor’easter, which received great press. When it made landfall, the wind speeds were about 74 mph (119 km/h). Some politicians who were screaming about hurricanes intensifying due to carbon dioxide (CO2) caused global warming, also worked quietly to have the strength of Sandy’s winds reduced so that their constituents could collect insurance benefits from policies that excluded hurricanes.
Roy Spencer asks if we will have 4,000 days without a major hurricane strike which will be on October 6, 2016. Strangely, none of those who immediately blame CO2 for bad weather events are thanking CO2 for good weather non-events. See links under Changing Weather and http://www.nhc.noaa.gov/aboutsshws.php
1. The All-Time Regulation Record
Team Obama has hit 600 major rules, and 50 more may follow.
Editorial, WSJ, Aug 5, 2016
SUMMARY: The editorial states: “The progressive explanation for the slowest economic recovery in nearly 70 years is that expansions after financial crises are always like this. There appears to be no statute of limitations on this excuse, which is especially convenient every four years. But those who want more than a political rationalization might look to the all-time presidential record of costly regulation set by the Obama Administration.
That’s the news from a report to be released soon showing that President Obama’s regulators have completed their 600th major rule. A major rule imposes costs of more than $100 million. For those keeping score, that’s an average of 81 big ones a year, or roughly one every three days the government is open. Who says our bureaucracies are inefficient?
The two George W. Bush terms were no deregulatory prize, contrary to progressive myth, having pushed out 496 major rules. These included such charms as rules to implement Sarbanes-Oxley and the expansion of Medicare. But Team Obama has already exceeded that by 20%, with 100 new major rules in the last year, and this crowd still has six long months to go.
Sam Batkins of the American Action Forum, who did the study, calculates that the economic cost of all this adds up to $743 billion, based on data provided by federal agencies. Mr. Batkins doesn’t say this, but that estimate is almost surely an understatement because agencies routinely low-ball the costs and overestimate the benefits of the rules they propose.
Mr. Batkins offers some comparative cost perspective: $743 billion is larger than the GDP of Norway and Israel combined, and it amounts to a regulatory tax of $2,294 on every American. This eventually shows up in higher prices, or fewer jobs created, or reduced profits and wages.
Such rules are good for lawyers and compliance officers, however. The report figures that compliance requires 194 million hours a year of shuffling paper. Imagine the entire population of Albany, N.Y. (roughly 100,000) working full-time on following government orders.
The regulatory crush isn’t over. Mr. Batkins says the Administration has already issued 40 major rules in 2016 and it may have as many as 50 more in the pipeline. In only the past few months the Administration has issued major rules on drones ($2.6 billion); a fiduciary rule for retirement savings ($31.5 billion); and new rules on Arctic drilling ($2.1 billion).
Going forward, the Administration plans to finish up greenhouse gas standards for heavy-duty trucks ($31 billion), efficiency rules for manufactured housing ($4.1 billion), and more. Two-term Presidents often rush out rules in the lame duck months after the election, and Mr. Obama could do so without fear of political override if Hillary Clinton wins the election. She’d surely veto any bill Congress passed under the Congressional Review Act.
The larger story here is that progressive economists talk and behave as if none of this affects economic growth. They focus on macroeconomic matters of taxes, spending and monetary policy, while treating microeconomic policy as an afterthought. Yet any entrepreneur or CEO will tell you that the expanding web of federal rules is a major preoccupation. Meanwhile, the regulatory onslaught continues—and so does 1%-2% growth.”
2. Chevron Shakedown Rout
Steven Donziger suffers another legal humiliation.
Editorial, WSJ, Aug 8, 2016
The editorial states: “One of the most egregious legal frauds in history may finally be over. On Monday a unanimous three-judge panel of the Second Circuit Court of Appeals ruled that an Ecuadorian judgment against Chevron was the product of fraud, coercion and bribery and couldn’t be enforced.
In a 127-page opinion, Judge Amalya Kearse said the court “found no basis for dismissal or reversal” of a lower court’s decision and called lawyer Steven Donziger’s conduct in pursuit of Chevron “corrupt” and a fiasco of legal terrorism and ransom at the highest level. “Donziger hoped for an astronomic estimate that would have an in terrorem effect,” the court wrote, “impelling Chevron to agree to a settlement.”
That’s an understatement. Readers will recall the parade of malfeasance perpetrated by Mr. Donziger as he pursued a $113 billion case for what he claimed were oil pits left by Texaco (now merged with Chevron) in the 1970s. Texaco’s pits had long been cleaned up and the company had been released from liability by Ecuador’s government, but Mr. Donziger lined up environmentalists and even actress Daryl Hannah to create a media circus that would force the company to settle.
He took his show to a court in Ecuador, where he conspired with an environmental firm to falsify expert testimony, bribed a judge to get a $9.5 billion verdict against the company and then ghostwrote the judge’s opinion. He even participated in a documentary film about the exploitation, aptly titled “Crude.” Much of the U.S. media played along.
In a 485-page decision in March 2014, federal district judge Lewis Kaplan found that Mr. Donziger had committed acts that would qualify as violations of the federal Racketeer Influence and Corrupt Organizations Act and nearly every standard of decent professional behavior. The lawyer’s suit was an exercise in pure extortion, Judge Kaplan wrote, noting that the episode was “offensive to the laws of any nation that aspires to the rule of law, including Ecuador.”
Faced with an activist-trial-lawyer-media blitz, most companies capitulate and settle to avoid the huge potential costs of litigation and the risk of unpredictable verdicts. Mr. Donziger may appeal to the Supreme Court, but the Second Circuit is hardly a conservative venue. Chevron’s vindication looks to be final.
3. Germany’s E.ON Tumbles to Loss on More Write-Downs
Power utility books charges on fossil-fuel generation and storage assets
By Monica Houston-Waesch, WSJ, Aug 10, 2016
The article highlights the plight of utilities providing reliable electricity when faced with unreliable sources given preference. “German electricity utility E.ON SE swung to a first-half net loss after writing down the value of assets held by its conventional power unit Uniper. [It] fell to a net loss of €3.03 billion ($3.38 billion) in the six months to end-June from profit of €1.15 billion from the same period last year.
The utility said it took an impairment charge of €3.8 billion for Uniper, including €2.9 billion in write-downs on power stations and gas storage facilities, as well as €900 million in provisions.
Revenue also declined, falling 11% to €20.25 billion.
E.ON, like other utilities in Germany and other parts of Europe, has been plagued by dramatically low wholesale electricity prices amid a power glut spawned by a rise in renewable energy and low commodity prices.
In June, E.ON won shareholder approval for a plan to spin off conventional energy and trading activities into a new company, Uniper, and to list around 53% of the new unit by year’s end.
E.ON said net debt came to €24.8 billion at end June, up from €21.3 billion at the end of 2015.
E.ON backed guidance for the full year, excluding Uniper’s operations, for adjusted earnings before interest and taxes of €2.7 billion to €3.1 billion and adjusted after-tax income of €600 million to €1 billion.”