Climate Progress

One of my New Year’s resolutions is to blog more about the general lameness of the economics profession when it comes to energy and climate issues [Note to self: How about losing a few pounds?].

I was in the midst of putting this resolution off for a few weeks when I saw a quote by Robert Stavins that seemed to sum up the value-subtracted that economists bring to the world.

In an otherwise excellent New Yorker article on Van Jones’ efforts to push a green jobs agenda, which I will blog on separately, Elizabeth Kolbert feels compelled to “balance” Jones with some people who don’t think it’s a good idea to simultaneously address the climate problem and the poverty/jobs problem. Who else could a respectable journalist turn to than an economist, a profession that arguably has cost the country and the world more jobs than any other?

Indeed, I remember Bill Clinton opining at a Georgetown conference in 1997 on why he ignored the advice of Administration economists, like Larry Summers, who urged him not to adopt a serious greenhouse gas emissions target at Kyoto. Clinton said his economic team had assured him that his balanced budget plan would be a job killer, so he pretty much took everything they said from that point on it with a grain of salt. But I digress.

Kolbert manages to elicit this amazing response from one of our leading economists:

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[I will post the details of how Obama will achieve this remarkable goal when they become available. But clues can no doubt be found in his August energy plan, “Breaking news — A real energy plan for America: Efficiency now, 10% renewables by 2012, and one million plug-in hybrids by 2015,” where he pledges to “Require 10 Percent of Electricity to Come from Renewable Sources by 2012″ and 25 percent by 2025.]

In his big economic speech today at George Mason University, Obama pledged to jumpstart job creation and long-term growth by:

• Doubling the production of alternative energy in the next three years.
• Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills.
• Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.
• Equipping tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries.
• Expanding broadband across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.
• Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.

His full remarks as prepared for delivery are below:

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Part 1 presented a new study by power plant cost expert Craig Severance that puts the generation costs for power from new nuclear plants at from 25 to 30 cents per kilowatt-hour — triple current U.S. electricity rates!

Those ideologically promiscuous folks at the Heritage Foundation have replied with “New Study on Staggering Cost of Nuclear Energy, Staggeringly Pessimistic.” Craig’s point by point response follows a few of my comments.

Heritage is a leader of the conservative movement stagnation. They have written “the only thing a green ‘New Deal’ will do is lead us down a Green Road to Serfdom,” comparing such a policy to “collectivism in the Soviet Union and Nazi Germany,” and their Senior Policy Analyst in Energy Economics and Climate Change is quite confused about both of the subjects he analyzes (see “Heritage even opposes energy efficiency“).

The key paragraph in Heritage’s new critique is:

Aside from the cherry-picking of data and its clear tilt toward Big Green (the vast industrial complex and lobbying machine being built around global warming alarmism), its conclusions are potentially not that far off.

Yes Heritage is among those pushing the grand climate conspiracy, whereby the world’s National Academies of Science (including ours), the American Geophysical Union, the American Association for the Advancement of Science, every major government in the world, and the leading science journals are conspiring to deceive the public — see Diagnosing a victim of anti-science syndrome (ASS).

[Note to Heritage: ‘Big’ Green is a “Vast industrial complex”? The nuclear and fossil fuel industries have maybe 50 times the revenues of the cleantech industry. So what does that make them — gargantuan? Try not to be so paranoid — For 30 years now (100 years?), your guys have had the ball and written the rules.]

And still, they can’t really dispute the conclusions. They can only try to blame environmentalists (i.e. the public) for supposedly slowing down the construction of nuclear power plants and running up the costs. But given that the public is assuming most of the liability of any major nuclear accident and given that the public is now assuming most of the economic risk of new nuclear plants with major loan guarantees (see “Nuclear energy revival may cost $315 billion, with taxpayers’ risking over $100B“), it is hard to argue against the public weighing in to ensure that the plants are built and run safely and affordably!

Indeed, to support the public taking all the risk of new plants while opposing the public having any say in the licensing process is some strange combination of socialism and totalitarianism. Hmm. Could that be Soviet collectism? Nah.

The Heritage critique notes, “As one who believes in the value of nuclear energy, I am fully supportive of removing all the subsidies and government preferences and allowing the market to decide. If Big Green is so confident, then they should be prepared to do the same.”

If the government removed all subsidies and preferences for nuclear, we probably wouldn’t build another nuke. They simply couldn’t get insured or financed. I support removing subsidies and preferences for any power source that has more than a 5% market share. Nuclear is a mature technology and has seen vastly more subsidies than renewables, whereas many renewables are still coming down the cost curve and deserve government support (see “Nuclear Pork — Enough is Enough“).

That said, once we have correctly priced carbon dioxide to reflect its full harm to our health and well-being, then I would certainly be for removing virtually all subsidies and preferences for existing energy sources (though technologies with less than, say 1% marketshare could still get temporary support).

Finally, in Part 1, I wrote “So feel free to criticize the analysis, but anyone offering different all-in cost estimates for power from new nuclear plants should detail their own assumptions and calculation.” Heritage did not do that, so no one should take their critique too seriously. Nonetheless, here is Craig Severance’s detailed response:

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[I am reprinting a Dave Roberts story first posted on Grist.]

With Markey in place, the House is geared for ambition on climate and energy

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[In his famous essay, “Politics and the English Language,” George Orwell wrote: “The English language … becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.” He warns that “Political language … is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.” The importance of language and rhetoric is a subject near to my heart (see Why scientists aren’t more persuasive, Part 2: Why deniers out-debate “smart talkers” and Part 1.]

Washington, D.C., is to the English language what Paris is to fashion. Every season, perfectly good words go out of style and new ones are trotted out on the national runway of rhetoric. Some words are considered so worn out, politically incorrect or laden with baggage that they can no longer be used in public discourse. When that happens, people like me find ourselves scrambling for suitable synonyms.

That was the case a few years ago with “sustainable development.” I operated the Center of Excellence for Sustainable Development at the U.S. Department of Energy, helping communities understand and apply the practice. Before long, signals came down from Capitol Hill that the words “sustainable development” had become the kiss of death for any program that used them. The term “smart growth” was invented to take “sustainability’s” place.

More recently, Congress has avoided using the word “climate” in legislation that clearly is meant in part to mitigate greenhouse gas emissions — legislation such as the “Energy Security and Independence Act of 2007″. The Bush people call torture “enhanced interrogation” and call kidnapping “rendition.” Healthy Forests and Clear Skies became the titles of the Bush Administration’s programs to cut trees and pollute the air, respectively.

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If the American Enterprise Institute (AEI) starts acknowledging that residential energy efficiency has a “positive rate of return” — and advocating federal support to capture the full energy savings possible — perhaps the world is changing.

Then again, it may just be temporary institutional schizophrenia, since others in AEI continue to assert (without any supporting evidence), “No matter what you’ve been told, the technology to significantly reduce emissions is decades away and extremely costly” (see “AEI: Still crazy with denial and delay after all these years“).

Kevin Hassett, AEI’s director of economic-policy studies, has a Bloomberg News column I am excerpting below, because of its surprising degree of common sense — and because he cites actual research:

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Part 1 presented a new study that puts the generation costs for power from new nuclear plants at from 25 to 30 cents per kilowatt-hour — triple current U.S. electricity rates!

Nuclear plants with such incredibly expensive electricity and “out of control” capital costs, as Time put it, obviously create large risks for utilities, their investors, and, ultimately taxpayers. Congress extended huge loan guarantees to new nukes in 2005, and the American people will be stuck with another huge bill if those plants join the growing rank of troubled assets (see “Nuclear energy revival may cost $315 billion, with taxpayers’ risking over $100B“).

The risk to utilities who start down the new nuke path is also great. A June 2008 report by Moody’s Investor Services Global Credit Research, “New Nuclear Generating Capacity: Potential Credit Implications for U.S. Investor Owned Utilities” (PR here), warned that “nuclear plant construction poses risks to credit metrics, ratings,” concluding:

The cost and complexity of building a new nuclear power plant could weaken the credit metrics of an electric utility and potentially pressure its credit ratings several years into the project, according to a new report from Moody’s Investors Service….

Moody’s suggests that a utility that builds a new nuclear power plant may experience an approximately 25% to 30% deterioration in cash-flow-related credit metrics.

And this would likely result in a sharp downgrading of the utility’s credit rating.

The application by Florida Power & Light (FPL) for a large nuclear plant came in at a stunning $12 to $18 billion, and the utility concedes that new reactors present “unique risks and uncertainties,” with “every six-month delay adding as much as $500 million in interest costs.”

The report Climate Progress published this week, Business Risks and Costs of New Nuclear Power by power-plant cost expert Craig Severance, has an extended discussion of the business risks to utilities and hence investors:

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The imminent reality of peak oil production should be clear to all by now (see “Normally staid IEA says oil will peak in 2020“).

Now some very serious people are suggesting that there is a lot less accessible coal out there than most folks believe. If we are nearing peak coal (and peak oil), then we would need to embrace the rapid transition to a clean energy economy almost as urgently as we need to embrace it to avoid destroying the climate.

Let’s start with the U.S. Geological Survey’s stunning 131-page analysis from December, “Assessment of Coal Geology, Resources, and Reserves in the Gillette Coalfield, Powder River Basin, Wyoming” [big PDF]:

The Gillette coalfield, within the Powder River Basin in east-central Wyoming, is the most prolific coalfield in the United States. In 2006, production from the coalfield totaled over 431 million short tons of coal, which represented over 37 percent of the Nation’s total yearly production.

The “total original coal resource in the Gillette coalfield” without applying any restrictions, “was calculated to be 201 billion short tons.” Then USGS subtracts out the inaccessible coal, and then mining and processing losses, which leaves 77 billion tons, and finally:

Coal reserves are the portion of the recoverable coal that can be mined, processed, and marketed at a profit at the time of the economic evaluation. With a discounted cash flow at 8 percent rate of return, the coal reserves estimate for the Gillette coalfield is 10.1 billion short tons of coal (6 percent of the original resource total) for the 6 coal beds evaluated.

Ouch! And this analysis was done at a time of soaring coal prices.

The National Research Council’s Committee on Coal Research, Technology, and Resource Assessments to Inform Energy Policy wrote in a 2007 report:

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Part I introduced urban heat island mitigation (UHIM). It discussed how lighter colored (or reflective) roofs and pavement, plus urban trees, can save energy, cut CO2 emissions, cool a city, and reduce smog.

But a global “cool roofs” strategy can achieve far bigger benefits — the equivalent of several trillion dollars worth of CO2 reductions — since it can increase the albedo (reflectivity) of the planet, thereby directly reducing the absorption of incoming solar radiation and hence planetary warming. The strategy proposed below “is equivalent to taking the world’s approximately 600 million cars off the road for 18 years.”

[100 m2 (~1000 ft2) of a white roof, replacing a dark roof, offsets the emission of 10 tonnes of CO2.]

This is technically geoengineering, although I’d call it geoengineering light or geo-reverse-engineering, since we are mostly undoing the albedo decrease caused by all the dark roofs and dark pavement we have covered the planet with.

A forthcoming article in Climatic Change, “Global Cooling: Increasing World-wide Urban Albedos to Offset CO2,” provides the detailed calculations. A two-page non-technical summary, “White Roofs Cool the World, Directly Offset CO2 and
Delay Global Warming,” has been written by two of the country’s leading UHIM experts: Lawrence Berkeley National Laboratory’s Hashem Akbari and California Energy Commissioner Arthur Rosenfeld (coauthors with me on “Paint the Town White–and Green“). I reprint it below:

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[I am reprinting a post from the excellent blog Solve Climate on one individual who is trying to make a difference in a rather unusual way.]

On December 24th we [Solve Climate] carried a report about Tim DeChristopher’s heroic act of civil disobedience: he went to an auction of public lands and outbid oil and gas companies for 22,500 acres of land — in order to protect it from fossil fuel development. The price? A whopping $1.8 million the University of Utah student doesn’t have.

The downpayment is due on January 9th, a mere $45,000, and on the advice of the legal team working to protect him and keep him out of jail, DeChristopher is trying to raise the money. So far, he’s got $18,000 in hand, and a campaign that’s gaining steam.

Below is DeChristopher’s appeal letter, and the link for making a contribution is here.

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