Monday, June 30, 2008

Citing Need for Assessments, U.S. Freezes Solar Energy Projects on public lands

The following article from the NYT is timely. There will impacts from solar facilities in the vast sun drenched landscape of the west. They take up space, habitat, etc. But how can this administration reach the conclusion that building a solar power facility needs two years of review, when at the same time they are allowing drilling and mining on public lands without such a review?

I think the brightside of all is that the solar industry will have to focus on the decentralized grid; panels for rooftops, otherwise wasted space. The future of this industry will have to rely on quality and efficient panels, not the luck-of-the-draw big contracts, like those usually overbudget and underperforming. On another front, maybe they should consider planning such solar fields in the sacrafice zones like Mercury, Nevada?

June 27, 2008

Citing Need for Assessments, U.S. Freezes Solar Energy Projects

DENVER — Faced with a surge in the number of proposed solar power plants, the federal government has placed a moratorium on new solar projects on public land until it studies their environmental impact, which is expected to take about two years.

The Bureau of Land Management says an extensive environmental study is needed to determine how large solar plants might affect millions of acres it oversees in six Western states — Arizona, California, Colorado, Nevada, New Mexico and Utah.

But the decision to freeze new solar proposals temporarily, reached late last month, has caused widespread concern in the alternative-energy industry, as fledgling solar companies must wait to see if they can realize their hopes of harnessing power from swaths of sun-baked public land, just as the demand for viable alternative energy is accelerating.

“It doesn’t make any sense,” said Holly Gordon, vice president for legislative and regulatory affairs for Ausra, a solar thermal energy company in Palo Alto, Calif. “The Bureau of Land Management land has some of the best solar resources in the world. This could completely stunt the growth of the industry.”

Much of the 119 million surface acres of federally administered land in the West is ideal for solar energy, particularly in Arizona, Nevada and Southern California, where sunlight drenches vast, flat desert tracts.

Galvanized by the national demand for clean energy development, solar companies have filed more than 130 proposals with the Bureau of Land Management since 2005. They center on the companies’ desires to lease public land to build solar plants and then sell the energy to utilities.

According to the bureau, the applications, which cover more than one million acres, are for projects that have the potential to power more than 20 million homes.

All involve two types of solar plants, concentrating and photovoltaic. Concentrating solar plants use mirrors to direct sunlight toward a synthetic fluid, which powers a steam turbine that produces electricity. Photovoltaic plants use solar panels to convert sunlight into electric energy.

Much progress has been made in the development of both types of solar technology in the last few years. Photovoltaic solar projects grew by 48 percent in 2007 compared with 2006. Eleven concentrating solar plants are operational in the United States, and 20 are in various stages of planning or permitting, according to the Solar Energy Industries Association.

The manager of the Bureau of Land Management’s environmental impact study, Linda Resseguie, said that many factors must be considered when deciding whether to allow solar projects on the scale being proposed, among them the impact of construction and transmission lines on native vegetation and wildlife. In California, for example, solar developers often hire environmental experts to assess the effects of construction on the desert tortoise and Mojave ground squirrel.

Water use can be a factor as well, especially in the parched areas where virtually all of the proposed plants would be built. Concentrating solar plants may require water to condense the steam used to power the turbine.

“Reclamation is another big issue,” Ms. Resseguie said. “These plants potentially have a 20- to 30-year life span. How to restore that land is a big question for us.”

Another benefit of the study will be a single set of environmental criteria to weigh future solar proposals, which will ultimately speed the application process, said the assistant Interior Department secretary for land and minerals management, C. Stephen Allred. The land agency’s manager of energy policy, Ray Brady, said the moratorium on new applications was necessary to “ensure that we are doing an adequate level of analysis of the impacts.”

In the meantime, bureau officials emphasized, they will continue processing the more than 130 applications received before May 29, measuring each one’s environmental impact.

While proponents of solar energy agree on the need for a sweeping environmental study, many believe that the freeze is unwarranted. Some, like Ms. Gordon, whose company has two pending proposals for solar plants on public land, say small solar energy businesses could suffer if they are forced to turn to more expensive private land for development.

The industry is already concerned over the fate of federal solar investment tax credits, which are set to expire at the end of the year unless Congress renews them. The moratorium, combined with an end to tax credits, would deal a double blow to an industry that, solar advocates say, has experienced significant growth without major environmental problems.

“The problem is that this is a very young industry, and the majority of us that are involved are young, struggling, hungry companies,” said Lee Wallach of Solel, a solar power company based in California that has filed numerous applications to build on public land and was considering filing more in the next two years. “This is a setback.”

At a public hearing in Golden, Colo., on Monday, one of a series by the Bureau of Land Management across the West, reaction to the moratorium was mixed.

Alex Daue, an outreach coordinator for the Wilderness Society, an environmental conservation group, praised the government for assessing the implications of large-scale solar development.

Others warned the bureau against becoming mired in its own bureaucratic processes on solar energy, while parts of the West are already humming with new oil and gas development.

Craig Cox, the executive director of the Interwest Energy Alliance, a renewable energy trade group, said he worried that the freeze would “throw a monkey wrench” into the solar energy industry at precisely the wrong time.

“I think it’s good to have a plan,” Mr. Cox said, “but I don’t think we need to stop development in its tracks.”

Sunday, June 29, 2008

$200 a-barrel oil?

posted by Dustin

Its too bad we were not able to properly invest in public sector research when oil prices were low and the Btu tax was first floated. But I cannot help but see the upside of high price oil when I read the LA Times article below. Think about the habits that high priced oil have change.

One less RV driving around in a national park or forest? Fine by me.

The price would go up for cosmetics? insecticide? shaving cream? food preservatives? I see this as a boon to public health.

A woman will have to reconsider her 170-mile round trip commute? Again, given the poor economy and the burst housing bubble where people are stuck in their houses and can't afford fuel, I am very sympathetic to the importance of maintaining good jobs wherever you can find them. Yet, no one should have to be subjected to that terrible drive everyday. Her lungs, back, family, and a whole lot more will improve if she can get rid of that commute.

Now if Harris Interactive said that 1/3 of people surveyed are "avoiding driving" because of high gas prices... How about the other 2/3?

Turns out that at $7 a gallon about 10 million cars would come off the road according to Jeff Rubin, chief economist at CIBC World Markets.

The article also makes me think about the inequality of it all. Surburban slums may come to fruition when "proximity" becomes more appealing, and gas prices keep people at bay.

Lets not forget about all that cheap stuff that comes here and the cheap food we ship out. The increased cost of trans-oceanic shipping is long overdue. The fact that a simple commodity can be assebled in so many different parts of the world, and the increased profitability from exploiting the differences in the cost of labor, has long hidden the secret to its success in the form of cheap oil. But now, the plain waste in the process is being exposed. And, wow, is it expensive to fill one of those up at the pump: $3.8 million!

telecommuting, video-conferencing, carpooling; all these are great ideas.

Its funny that these are all portrayed as downsides. For upsides the author points to the record setting number of well drilled this year.

All told, high prices have taken an economic toll, and benefited those less derserving, but at the same time has gotten us to chage some of our most egregious behaviors. Its just too bad Exxon-Mobil is benefiting from the high prices, not a renewbale energy budget.

Envisioning a world of $200-a-barrel oil

As forecasters take that possibility more seriously, they describe fundamental shifts in the way we work, where we live and how we spend our free time.
By Martin Zimmerman : times staff writer

June 28, 2008

The more expensive oil gets, the more Katherine Carver's life shrinks. She's given up RV trips. She stays home most weekends. She's scrapped her twice-a-month volunteer stint at a Malibu wildlife refuge -- the trek from her home in Palmdale just got too expensive.

How much higher would fuel prices have to go before she quit her job? Already, the 170-mile round-trip commute to her job with Los Angeles County Child Support Services in Commerce is costing her close to $1,000 a month -- a fifth of her salary. It's got the 55-year-old thinking about retirement.

"It's definitely pushing me to that point," Carver said.

The point could be closer than anyone thinks.

Three months ago, when oil was around $108 a barrel, a few Wall Street analysts began predicting that it could rise to $200. Many observers scoffed at the forecasts as sensational, or motivated by a desire among energy companies and investors to drive prices higher.

But with oil closing above $140 a barrel Friday, more experts are taking those predictions seriously -- and shuddering at the inflation-fueled chaos that $200-a-barrel crude could bring. They foresee fundamental shifts in the way we work, where we live and how we spend our free time.

"You'd have massive changes going on throughout the economy," said Robert Wescott, president of Keybridge Research, a Washington economic analysis firm. "Some activities are just plain going to be shut down."

Besides the obvious effect $7-a-gallon gasoline would have on commuters, automakers, airlines, truckers and shipping firms, $200 oil would drive up the price of a broad spectrum of products: Insecticides and hand lotions, cosmetics and food preservatives, shaving cream and rubber cement, plastic bottles and crayons -- all have ingredients derived from oil.

The pain would probably be particularly intense in Southern California, which is known for its long commutes and high cost of living.

"Throughout our history, we have grown on the assumption that energy costs would be low," said Michael Woo, a former Los Angeles city councilman and a current member of the city Planning Commission. "Now that those assumptions are shifting, it changes assumptions about housing, cars and how cities grow."

Push prices up fast enough, he said, and "it would be the urban-planning equivalent of an earthquake."


With every penny hike in the price of gas costing American consumers about $1 billion a year, sharply higher pump prices would lead to "significant bankruptcies and store closings," said Scott Hoyt, director of consumer economics at Moody's

Consumer spending has held up surprisingly well in the face of skyrocketing pump prices -- bolstered in part, perhaps, by federal tax rebates. But the same day the government reported a 0.8% rise in May consumer spending, a research firm said consumer confidence had plunged to its lowest level since 1980 -- hinting at the catastrophic effect another big gas price surge could have on retailers and customers.

"The purchasing power of the American people would be kicked in the teeth so darned hard by $200-a-barrel oil that they won't have the ability to buy much of anything," said S. David Freeman, president of the L.A. Board of Harbor Commissioners and author of the 2007 book "Winning Our Energy Independence."

BIGresearch of Worthington, Ohio, said more than half of Californians in a recent survey said they were driving less because of high gas prices. Almost 42% said they had reduced vacation travel and 40% said they were dining out less.

If any retailers would benefit, it would be those on the Internet. In a recent survey by Harris Interactive, one-third of adults said high gas prices had made them more likely to shop online to avoid driving.

Restaurant operators such as Brinker International, which owns the Chili's and Romano's Macaroni Grill chains, are suffering and are likely to struggle even more as consumers look for ways to reduce spending. Fast-food chains wouldn't be immune, experts say, although they might fare better as families downscale their dining choices.

Vehicle sales, too, would probably continue to tank. Sales of new cars, sport utility vehicles and light trucks fell more than 18% in California in the first quarter compared with a year earlier. Although some consumers have been shopping for smaller, more fuel-efficient vehicles, many dealers are demanding premiums for gas-sipping hybrids, wiping out much of the financial advantage of buying one.

Nationwide, $200 oil and $7 gasoline would force Americans to take 10 million vehicles off the roads over the next four years, Jeff Rubin, chief economist at CIBC World Markets, wrote in a recent report.

As for the state's beleaguered housing market, prices are falling faster in areas requiring long commutes -- such as Lancaster and Palmdale -- than in neighborhoods closer to job centers.

Sky-high gas prices "would basically reorient society to where proximity would be more valuable," said Tom Gilligan, finance professor at USC.

Americans may also feel the effects of a rise in energy-related crime. Ads for locking gas caps are becoming more prevalent. Restaurant owners are complaining that thieves are helping themselves to used barrels of cooking oil, which can be home-brewed into biodiesel fuel.


Workers stuck with long commutes and gas-guzzling cars would look increasingly to public transit, experts say.

Already Californians' mobility is being curbed. Traffic on the state's freeways fell almost 4% in April compared with a year earlier, and ridership on many subway and bus lines operated by the L.A. County Metropolitan Transportation Authority has risen in recent months.

But a huge influx of riders would strain aspects of the system, MTA says, noting that many buses are overcrowded at rush hour now.

Quickly adding capacity to meet demand from new riders wouldn't be easy, because new buses cost hundreds of thousands of dollars and take up to two years to deliver.

Transit advocate Kymberleigh Richards said new riders on popular routes such as Wilshire Boulevard, Vermont Avenue or Sherman Way in the San Fernando Valley "are going to have a bit of a culture shock. It's a different world to be using public transit when you're used to being in your own vehicle by yourself."

Just how many drivers would become public-transit riders if oil surges to $200 a barrel is hard to predict, but there's a big pool of potential customers. About 87% of Southern Californians commute by car, according to 2005 data from transportation expert Alan Pisarski. That compares with 63% in New York and its environs.

Travelers can also expect much fuller airplanes and much more expensive flights -- when they're available at all. Delta Air Lines Inc., for example, recently said it was cutting about 13% of its flights from Los Angeles International Airport to save fuel.

It also could mean shifting flights from outlying airports such as Ontario to LAX to cut overhead costs, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. Carriers probably would also trim flights in highly competitive air corridors such as L.A. to the San Francisco Bay Area.

Even the cost of getting away from it all on Santa Catalina Island would go up. Greg Bombard, president of the Catalina Express ferry service, has trimmed schedules, raised fares and reduced hiring to make up for fuel costs that have risen sevenfold since 2002. Another big increase and he says he'll have to ask state regulators, who control his rates, to OK another fare hike.


The fee increases on the ferry would be nothing compared with the added cost of transoceanic shipping if oil goes to $200. Some experts say high energy costs are altering global trade and slowing the pace of globalization.

It takes about 7,000 tons of bunker-fuel to fill the tanks of a 5,000-container cargo ship for a trip from Shanghai to Los Angeles. Over the last year and half, the cost of that fuel has jumped 87% to $552 a ton, according to the World Shipping Council, boosting the cost of a fill-up to more than $3.8 million.

"To put things in perspective, today's extra shipping cost from East Asia is the equivalent of imposing a 9% tariff on East Asian goods entering North America," said Rubin of CIBC World Markets. "At $200 per barrel, the tariff equivalent rate will rise to 15%."

If oil continues to rise from current levels, officials at the Port of Los Angeles believe West Coast ports would gain business because they are 10 to 12 days' sailing time from Asia, versus the 18-to-20-day route from Asia to the East Coast through the Panama Canal.

But local ports could lose business if shipping costs get so out of hand that companies begin shifting production back to North America from Asia -- something that's happening in the steel industry, Rubin said.

Local distribution patterns could change too. Stephen Gaddis, chief executive of Pacific Cheese Co., a Hayward, Calif., cheese processing and packaging firm, thinks high fuel prices will push restaurants, retailers and food manufacturers to look for suppliers closer to their operations.

"Local sourcing is ideal. You won't pay as much for freight, and when you use less fuel it's better for the environment," Gaddis said.

Soaring diesel prices will make companies rethink whether they should have large, centralized plants or build smaller ones around the country.

That's what Pacific Cheese is doing. It's building a packaging plant in Texas to be closer to one of its larger suppliers and expects to serve its Southwestern clients from there.

In the near future, however, consumers can expect to pay for the higher cost of producing food and moving it around the country, say food executives, farmers and economists. Even having a deep-dish pizza with extra cheese brought to your door costs more now that chains such as Pizza Hut are charging for delivery.

The workplace

Dramatically higher transportation costs would usher in an era of virtual mobility, or zero mobility, for many workers.

"We're seeing companies go to four-day workweeks, place increased emphasis on working at home, show bigger interest in setting up satellite offices -- anything that gets commute times down and gets people off the road," said analyst Rob Enderle of Enderle Group in San Jose.

Videoconferencing, touted as "the next big thing" for years, would finally have its day, thanks to improved technology and a desperation to cut corporate travel budgets.

Telecommuting, or working from home, is easier than ever because of the spread of high-speed Internet access, said Jonathan Spira, chief analyst at Basex Inc., a business research firm in New York. In particular, workers in "knowledge" jobs that can be performed with computers and phones would benefit.

But Gilligan of USC noted that lower-income workers tend to be in jobs that don't favor telecommuting, such as retail and food service.

"These are the same people who are already being creamed by the mortgage crisis," he said. "The impacts of energy price increases are highly disparate."

Although white-collar workers may be able to telecommute, they could also take a serious financial hit because soaring energy prices tend to wreak havoc on the stock market. The explosion of 401(k) plans and similar retirement accounts in the last few decades -- and the decline of traditional pensions with guaranteed payouts -- have tied workers' financial futures more closely to stocks than they were during the 1970s oil shocks. A prolonged Wall Street downturn could mean a no-frills retirement, or none at all.


It wouldn't all be bad, of course. Some industries could boom, providing jobs and tax dollars. California has seen a jump in drilling activity as oil companies try to extract more crude from the state's fields. Regulators expect a record 4,000 wells to be drilled in the state this year.

"Every rig and every crew that's available is working right now," said Hal Bopp, the state's oil and gas supervisor.

And as rising oil prices make alternative-fuel vehicles more cost-effective, California companies such as Tesla Motors Inc., which recently began production of a $100,000 all-electric sports car, could become important leaders in an emerging industry.

Tourist attractions may also see an upswing in local business as families look for less-expensive vacation alternatives close to home. A recent survey by travel insurer Access America found that 26% of Americans would cut back on recreational travel as a first response to higher gas prices.

In Southern California, with its many natural wonders, theme parks and other attractions, the prospect of a "staycation" may be less disappointing than for a resident of, say, Nebraska. And movies, a staple of the local economy, may prosper as Americans seek escapism and a (relatively) cheap night out.

And spending less time stuck in traffic on the 405? Priceless.

"More carpooling, fewer people on the freeways, more telecommuting -- in many ways, what would happen is what people have been trying to make happen for a long time," USC's Gilligan said.

Times staff writers Ken Bensinger, Leslie Earnest, Jerry Hirsch, Peter Pae and Ronald D. White contributed to this report.

Saturday, June 28, 2008

Enough with the speculators, already. It's our own fault.

posted by Ben

What are the big drivers of oil prices? As Paul Krugman lays it out here, it's not the speculators. Sure they may be contributing, but the big drivers are the obvious ones: reduced supply, increased demand. Increased demand from rapidly developing countries in Asia are a big part of it, but lets not forget that US demand is increasing, albeit at a slower rate than when gas prices were in the $2 range. If you want to see how big an impact conservation in the US would have take a look at this chart (source: CIA World Factbook, 14 June, 2007 via Nationmaster)
Even so, the rapid rise in oil prices, is at a rate greater than would be justified by the simple supply/demand fundamentals. A big chunk of the increase in price can be directly attributed to the bungling and malfeasance of the Bush administration on the international stage. They did this in several ways that effectively reduced available oil reserves. First, they essentially took Iraqi oil off the market. Next they rattled sabers toward Tehran. The constant threat of war or increased sanctions made even Russian investors leery of risking capital in improving Iranian oil fields. Iran's oil extraction industry is decades out of date due to international isolation. The same effect is felt in a number of other countries, primarily in the Middle East, where US bellicosity has increased the political risk price. For a great analysis of the role of political risk in asset pricing see this paper (pdf): Weiner, Robert J. and Click, Reid W., "Political Risk and Real-Asset Values: M&A Evidence" (January 2007). By getting so deeply in trouble in Iraq and screwing up totally in Afghanistan and Pakistan, the Saudis (who may or may not have the petroleum reserves that they claim) know that we need them more than they need us. That makes it hard to ask them to pump more oil and increase supply, thus reducing their profit per barrel of oil.

Another big influence on oil prices is the decline in value of the US dollar. Oil is traded in dollars. If the dollar goes down, the price of oil goes up. The Chinese are loving pointing this out (after we have given them so much grief about not floating their currency). The weak dollar, too, can be attributed to Bush administration policy. Had the US had a good regulatory regime in place, we might have avoided the mortgage-backed securities mess that triggered the current recession (yes, I called it). If we had not followed free-trade theology to its logical extreme, we might still have some jobs in the US that involve making things--perhaps even for export. If we had a culture of saving supported by the tax code (currently you are rewarded for speculating in the market, but punished for saving at the bank), we might have a lower current accounts deficit. But mostly, if we didn't have to borrow so much money to pay for the war in Iraq, the dollar would be worth a lot more. Ironically, what we knew all along is finally being confirmed (just before the Bush junta loses power-- see Dustin's post from June 22).

Thursday, June 26, 2008

Living on the Ice Shelf

Published on Thursday, June 26, 2008 by
Living on the Ice Shelf, Humanity's Meltdown

by Mike Davis

1. Farewell to the Holocene

Our world, our old world that we have inhabited for the last 12,000 years, has ended, even if no newspaper in North America or Europe has yet printed its scientific obituary.

This February, while cranes were hoisting cladding to the 141st floor of the Burj Dubai tower (which will soon be twice the height of the Empire State Building), the Stratigraphy Commission of the Geological Society of London was adding the newest and highest story to the geological column.

The London Society is the world's oldest association of Earth scientists, founded in 1807, and its Commission acts as a college of cardinals in the adjudication of the geological time-scale. Stratigraphers slice up Earth's history as preserved in sedimentary strata into hierarchies of eons, eras, periods, and epochs marked by the "golden spikes" of mass extinctions, speciation events, and abrupt changes in atmospheric chemistry.

In geology, as in biology or history, periodization is a complex, controversial art and the most bitter feud in nineteenth-century British science — still known as the "Great Devonian Controversy" — was fought over competing interpretations of homely Welsh Graywackes and English Old Red Sandstone. More recently, geologists have feuded over how to stratigraphically demarcate ice age oscillations over the last 2.8 million years. Some have never accepted that the most recent inter-glacial warm interval — the Holocene — should be distinguished as an "epoch" in its own right just because it encompasses the history of civilization.

As a result, contemporary stratigraphers have set extraordinarily rigorous standards for the beatification of any new geological divisions. Although the idea of the "Anthropocene" — an Earth epoch defined by the emergence of urban-industrial society as a geological force — has been long debated, stratigraphers have refused to acknowledge compelling evidence for its advent.

At least for the London Society, that position has now been revised.

To the question "Are we now living in the Anthropocene?" the 21 members of the Commission unanimously answer "yes." They adduce robust evidence that the Holocene epoch — the interglacial span of unusually stable climate that has allowed the rapid evolution of agriculture and urban civilization — has ended and that the Earth has entered "a stratigraphic interval without close parallel in the last several million years." In addition to the buildup of greenhouse gases, the stratigraphers cite human landscape transformation which "now exceeds [annual] natural sediment production by an order of magnitude," the ominous acidification of the oceans, and the relentless destruction of biota.

This new age, they explain, is defined both by the heating trend (whose closest analogue may be the catastrophe known as the Paleocene Eocene Thermal Maximum, 56 million years ago) and by the radical instability expected of future environments. In somber prose, they warn that "the combination of extinctions, global species migrations and the widespread replacement of natural vegetation with agricultural monocultures is producing a distinctive contemporary biostratigraphic signal. These effects are permanent, as future evolution will take place from surviving (and frequently anthropogenically relocated) stocks." Evolution itself, in other words, has been forced into a new trajectory.

2. Spontaneous Decarbonization?

The Commission's coronation of the Anthropocene coincides with growing scientific controversy over the 4th Assessment Report issued last year by the Intergovernmental Panel on Climate Change (IPCC). The IPCC is mandated to establish scientific baselines for international efforts to mitigate global warming, but some of the most prominent researchers in the field are now challenging its reference scenarios as overly optimistic, even pie-in-the-sky thinking.

The current scenarios were adopted by the IPCC in 2000 to model future global emissions based on different "storylines" about population growth as well as technological and economic development. Some of the Panel's major scenarios are well known to policymakers and greenhouse activists, but few outside the research community have actually read or understood the fine print, particularly the IPCC's confidence that greater energy efficiency will be an "automatic" byproduct of future economic development. Indeed all the scenarios, even the "business as usual" variants, assume that at least 60% of future carbon reduction will occur independently of greenhouse mitigation measures.

The Panel, in effect, has bet the ranch, or rather the planet, on unplanned, market-driven progress toward a post-carbon world economy, a transition that implicitly requires wealth generated from higher energy prices ultimately finding its way to new technologies and renewable energy. (The International Energy Agency recently estimated that it would cost $45 trillion to halve greenhouse gas emissions by 2050.) Kyoto-type accords and carbon markets are designed — almost as an analogue to Keynesian "pump-priming" — to bridge the shortfall between spontaneous decarbonization and the emissions targets required by each scenario. Serendipitously, this reduces the costs of mitigating global warming to levels that align with what seems, at least theoretically, to be politically possible, as expounded in the British Stern Review on the Economics of Climate Change of 2006 and other such reports.

Critics argue, however, that this represents a heroic leap of faith that radically understates the economic costs, technological hurdles, and social changes required to tame the growth of greenhouse gases. European carbon emissions, for example, are still rising (dramatically in some sectors) despite the European Union's much praised adoption of a cap-and-trade system in 2005. Likewise there has been little evidence in recent years of the automatic progress in energy efficiency that is the sine qua non of the IPCC scenarios. Although The Economist characteristically begs to differ, most energy researchers believe that, since 2000, energy intensity has actually risen; that is, global carbon dioxide emissions have kept pace with, or even grown marginally faster than, energy use.

Coal production, especially, is undergoing a dramatic renaissance, as the nineteenth century has returned to haunt the twenty-first century. Hundreds of thousands of miners are now working under conditions that would have appalled Charles Dickens, extracting the dirty mineral that allows China to open two new coal-fueled power stations every week. Meanwhile, the total consumption of fossil fuels is predicted to increase at least 55% over the next generation, with international oil exports doubling in volume.

The United Nations Development Program, which has made its own study of sustainable energy goals, warns that it will require "a 50 percent cut in greenhouse gas emissions worldwide by 2050 against 1990 levels" to keep humanity outside the red zone of runaway warming (usually defined as a greater than two degrees centigrade increase this century). Yet the International Energy Agency predicts that, in all likelihood, such emissions will actually increase in this period by nearly 100% — enough greenhouse gas to propel us past several critical tipping points.

Even while higher energy prices are pushing SUVs towards extinction and attracting more venture capital to renewable energy, they are also opening the Pandora's box of the crudest of crude oil production from Canadian tar sands and Venezuelan heavy oil. As one British scientist has warned, the very last thing we should wish for (under the false slogan of "energy independence") is new frontiers in hydrocarbon production that advance "humankind's ability to accelerate global warming" and slow the urgent transition to "non-carbon or closed-carbon energy cycles."

3. Fin-du-Monde Boom

What confidence should we place in the capacity of markets to reallocate investment from old to new energy or, say, from arms expenditures to sustainable agriculture? We are propagandized incessantly (especially on public television) about how giant companies like Chevron, Pfizer Inc., and Archer Daniels Midland are hard at work saving the planet by plowing profits back into the kinds of research and exploration that will ensure low-carbon fuels, new vaccines, and more drought-resistant crops.

As the current ethanol-from-corn boom, which has diverted 100 million tons of grain from human diets mainly to American car engines, so appallingly demonstrates, "biofuel" may be a euphemism for subsidies to the rich and starvation for the poor. Likewise "clean coal," despite a vigorous endorsement from Senator Barack Obama (who also champions ethanol), is, at present, simply a huge deception: a $40 million advertising and lobbying campaign for a hypothetical technology that BusinessWeek has characterized as "being decades away from commercial viability."

Moreover there are disturbing signs that energy companies and utilities are reneging on their public commitments to the development of carbon-capture and alternative energy technologies. The Bush administration's "marquee demonstration project," FutureGen, was scrapped this year after the coal industry refused to pay its share of the public-private "partnership"; similarly, most U.S. private-sector carbon-sequestration initiatives have recently been cancelled. In the United Kingdom, meanwhile, Shell has just pulled out of the world's largest wind-energy project, the London Array. Despite heroic levels of advertising, energy corporations, like pharmaceutical companies, prefer to overgraze the commons, while letting taxes, not profits, pay for whatever urgent, long-overdue research is actually undertaken.

On the other hand, the spoils from high energy prices continue to gush into real estate, skyscrapers, and financial assets. Whether or not we are actually at the summit of Hubbert's Peak — that peak oil moment — whether or not the oil-price bubble finally bursts, what we are probably witnessing is the largest transfer of wealth in modern history.

An eminent Wall Street oracle, McKinsey Global Institute, predicts that if crude oil prices remain above $100 per barrel — they are, at the moment, approaching $140 a barrel — the six countries of the Gulf Cooperation Council alone will "reap a cumulative windfall of almost $9 trillion by 2020." As in the 1970s, Saudi Arabia and its Gulf neighbors, whose total gross domestic product has almost doubled in just three years, are awash in liquidity: $2.4 trillion in banks and investment funds according to a recent estimate by The Economist. Regardless of price trends, the International Energy Agency predicts, "more and more oil will come from fewer and fewer countries, primarily the Middle East members of OPEC [The Organization of the Petroleum Exporting Countries]."

Dubai, which has little oil income of its own, has become the regional financial hub for this vast pool of wealth, with ambitions to eventually compete with Wall Street and the City of London. During the first oil shock in the 1970s, much of OPEC's surplus was recycled through military purchases in the United States and Europe, or parked in foreign banks to become the "subprime" loans that eventually devastated Latin America. In the wake of the attacks of 9/11, the Gulf states became far more cautious about entrusting their wealth to countries, like the United States, governed by religious fanatics. This time around, they are using "sovereign wealth funds" to achieve a more active ownership in foreign financial institutions, while investing fabulous amounts of oil revenue to transform Arabia's sands into hyperbolic cities, shopping paradises, and private islands for British rock stars and Russian gangsters.

Two years ago, when oil prices were less than half of the current level, The Financial Times estimated that planned new construction in Saudi Arabia and the emirates already exceeded $1 trillion dollars. Today, it may be closer to $1.5 trillion, considerably more than the total value of world trade in agricultural products. Most of the Gulf city-states are building hallucinatory skylines — and, among them, Dubai is the unquestionable superstar. In a little more than a decade, it has erected 500 skyscrapers, and currently leases one-quarter of all the high-rise cranes in the world.

This super-charged Gulf boom, which celebrity architect Rem Koolhaas claims is "reconfiguring the world," has led Dubai developers to proclaim the advent of a "supreme lifestyle" represented by seven-star hotels, private islands, and J-class yachts. Not surprisingly, then, the United Arab Emirates and its neighbors have the biggest per capita ecological footprints on the planet. Meanwhile, the rightful owners of Arab oil wealth, the masses crammed into the angry tenements of Baghdad, Cairo, Amman, and Khartoum, have little more to show for it than a trickle-down of oil-field jobs and Saudi-subsidized madrassas. While guests enjoy the $5,000 per night rooms in Burj Al-Arab, Dubai's celebrated sail-shaped hotel, working-class Cairenes riot in the streets over the unaffordable price of bread.

4. Can Markets Enfranchise the Poor?

Emissions optimists, of course, will smile at all the gloom-and-doom and evoke the coming miracle of carbon trading. What they discount is the real possibility that a sprawling carbon-offset market may emerge, just as predicted, yet produce only minimal improvement in the global carbon balance sheet, as long as there is no mechanism for enforcing real net reductions in fossil fuel use.

In popular discussions of emissions-rights trading systems, it is common to mistake the smokestacks for the trees. For example, the wealthy oil enclave of Abu Dhabi (like Dubai, a partner in the United Arab Emirates) brags that it has planted more than 130 million trees — each of which does its duty in absorbing carbon dioxide from the atmosphere. However, this artificial forest in the desert also consumes huge quantities of irrigation water produced, or recycled, from expensive desalination plants. The trees may allow Sheik Khalifa bin Zayed to wear a halo at international meetings, but the rude fact is that they are an energy-intensive beauty strip, like most of so-called green capitalism.

And, while we're at it, let's just ask: What if the buying and selling of carbon credits and pollution offsets fails to turn down the thermostat? What exactly will motivate governments and global industries then to join hands in a crusade to reduce emissions through regulation and taxation?

Kyoto-type climate diplomacy assumes that all the major actors, once they have accepted the science in the IPCC reports, will recognize an overriding common interest in gaining control over the runaway greenhouse effect. But global warming is not War of the Worlds, where invading Martians are dedicated to annihilating all of humanity without distinction. Climate change, instead, will initially produce dramatically unequal impacts across regions and social classes. It will reinforce, not diminish, geopolitical inequality and conflict.

As the United Nations Development Program emphasized in its report last year, global warming is above all a threat to the poor and the unborn, the "two constituencies with little or no political voice." Coordinated global action on their behalf thus presupposes either their revolutionary empowerment (a scenario not considered by the IPCC) or the transmutation of the self-interest of rich countries and classes into an enlightened "solidarity" without precedent in history. From a rational-actor perspective, the latter outcome only seems realistic if it can be shown that privileged groups possess no preferential "exit" option, that internationalist public opinion drives policymaking in key countries, and that greenhouse gas mitigation could be achieved without major sacrifices in upscale Northern Hemispheric standards of living — none of which seems highly likely.

And what if growing environmental and social turbulence, instead of galvanizing heroic innovation and international cooperation, simply drive elite publics into even more frenzied attempts to wall themselves off from the rest of humanity? Global mitigation, in this unexplored but not improbable scenario, would be tacitly abandoned (as, to some extent, it already has been) in favor of accelerated investment in selective adaptation for Earth's first-class passengers. We're talking here of the prospect of creating green and gated oases of permanent affluence on an otherwise stricken planet.

Of course, there will still be treaties, carbon credits, famine relief, humanitarian acrobatics, and perhaps the full-scale conversion of some European cities and small countries to alternative energy. But the shift to low, or zero, emission lifestyles would be almost unimaginably expensive. (In Britain, it currently costs $200,000 more to build a zero-carbon, "level 6″ eco-home than a standard unit of the same area.) And this will certainly become even more unimaginable after perhaps 2030, when the convergent impacts of climate change, peak oil, peak water, and an additional 1.5 billion people on the planet may begin to seriously throttle growth.

5. The North's Ecological Debt

The real question is this: Will rich counties ever mobilize the political will and economic resources to actually achieve IPCC targets or, for that matter, to help poorer countries adapt to the inevitable, already "committed" quotient of warming now working its way toward us through the slow circulation of the world ocean?

To be more vivid: Will the electorates of the wealthy nations shed their current bigotry and walled borders to admit refugees from predicted epicenters of drought and desertification like the Maghreb, Mexico, Ethiopia, and Pakistan? Will Americans, the most miserly people when measured by per capita foreign aid, be willing to tax themselves to help relocate the millions likely to be flooded out of densely settled, mega-delta regions like Bangladesh?

Market-oriented optimists, once again, will point to carbon offset programs like the Clean Development Mechanism which, they claim, will allow green capital to flow to the Third World. Most of the Third World, however, probably prefers for the First World to acknowledge the environmental mess it has created and take responsibility for cleaning it up. They rightly rail against the notion that the greatest burden of adjustment to the Anthropocene epoch should fall on those who have contributed least to carbon emissions and drawn the slightest benefits from 200 years of industrialization.

In a sobering study recently published in the Proceedings of the [U.S.] National Academy of Science, a research team has attempted to calculate the environmental costs of economic globalization since 1961 as expressed in deforestation, climate change, over-fishing, ozone depletion, mangrove conversion, and agricultural expansion. After making adjustments for relative cost burdens, they found that the richest countries, by their activities, had generated 42% of environmental degradation across the world, while shouldering only 3% of the resulting costs.

The radicals of the South will rightly point to another debt as well. For 30 years, cities in the developing world have grown at breakneck speed without any equivalent public investment in infrastructure services, housing, or public health. In large part this has been the result of foreign debts contracted by dictators, payments enforced by the International Monetary Fund, and public sectors wrecked by the World Bank's "structural adjustment" agreements.

This planetary deficit of opportunity and social justice is captured in the fact that more than one billion people, according to UN-Habitat, currently live in slums and that their number is expected to double by 2030. An equal number, or more, forage in the so-called informal sector (a first-world euphemism for mass unemployment). Sheer demographic momentum, meanwhile, will increase the world's urban population by 3 billion people over the next 40 years (90% of them in poor cities), and no one — absolutely no one — has a clue how a planet of slums, with growing food and energy crises, will accommodate their biological survival, much less their inevitable aspirations to basic happiness and dignity.

If this seems unduly apocalyptic, consider that most climate models project impacts that will uncannily reinforce the present geography of inequality. One of the pioneer analysts of the economics of global warming, Petersen Institute fellow William R. Cline, recently published a country-by-country study of the likely effects of climate change on agriculture by the later decades of this century. Even in the most optimistic simulations, the agricultural systems of Pakistan (a 20% decrease from current farm output predicted) and Northwestern India (a 30% decrease) are likely to be devastated, along with much of the Middle East, the Maghreb, the Sahel belt, Southern Africa, the Caribbean, and Mexico. Twenty-nine developing countries will lose 20% or more of their current farm output to global warming, while agriculture in the already rich north is likely to receive, on average, an 8% boost.

In light of such studies, the current ruthless competition between energy and food markets, amplified by international speculation in commodities and agricultural land, is only a modest portent of the chaos that could soon grow exponentially from the convergence of resource depletion, intractable inequality, and climate change. The real danger is that human solidarity itself, like a West Antarctic ice shelf, will suddenly fracture and shatter into a thousand shards.

Mike Davis is the author of In Praise of Barbarians: Essays against Empire (Haymarket Books, 2008) and Buda's Wagon: A Brief History of the Car Bomb (Verso, 2007). He is currently working on a book about cities, poverty, and global change.

[Note for TomDispatch readers: Those of you who are environmentally minded and interested in pursuing such matters further might consider spending some time at the superb website of Grist Magazine and visiting, as well, an interesting and provocative new online magazine/website, Environment 360. Tom]

Copyright 2008 Mike Davis

Another Inconvenient Truth: How biofuel policies are deepening poverty and accelerating climate change

posted by Dustin

A report by Oxfam today argues that biofuel policies contribute to as much as 30% of the food price spike, an assertion that supports the number suggested by the International Monetary Fund.

Another Inconvenient Truth: How biofuel policies are deepening poverty and accelerating climate change

Biofuels are presented in rich countries as a solution to two crises: the climate crisis and the oil crisis. But they may not be a solution to either, and instead are contributing to a third: the current food crisis. Meanwhile the danger is that they allow rich-country governments to avoid difficult but urgent decisions about how to reduce consumption of oil, while offering new avenues to continue expensive support to agriculture at the cost of taxpayers. In the meantime, the most serious costs of these policies – deepening poverty and hunger, environmental degradation, and accelerating climate change – are being 'dumped' on developing countries.


Biofuel farming accused of driving up food prices
Updated Wed Jun 25, 2008 1:26pm AEST
Oxfam says the competition between fuel and food is dragging more than 30 million people into poverty.

Oxfam says the competition between fuel and food is dragging more than 30 million people into poverty. (user submitted: Greg O'Brien)

Biofuels were supposed to make up a big part of the answer to two of the great challenges of our age: climate change and energy security.

To many governments grappling with soaring oil prices and growing fears about climate change, tailoring incentives to engineer a switch from oil-based fuels to those made from food seemed like a good idea.

But increasingly, there are fears that biofuels may be creating as many problems as they solve.

Oxfam says the renewable fuels are not as climate-friendly as first thought.

The international aid agency blames the biofuel policies of developed countries for a 30 per cent spike in food prices which are dragging more than 30 million extra people into poverty.

"As more science has come to light and as people have looked at this issue more carefully, I think our conclusion is that changing to biofuels in transport in countries like Australia, Europe, America is not good for the planet," says Oxfam Australia's Jeff Atkinson.

In its global report, Another Inconvenient Truth, Oxfam argues the benefits to the climate of using biofuels have been overstated.

It says many farmers have cleared further into forests and wetlands to accommodate the crops, and others have moved out of food production to make room for biofuel feedstock.

"Of course changing from petrol to biofuels in one's car is going to reduce greenhouse gas emissions but to look at the whole picture you have to look at how these biofuels are produced and where they are produced and many of them are produced in developing countries of course," Mr Atkinson said.

"But what's happening is that there is competition between fuel and food."

"Take the corn crop in the US for example, which would normally be grown for food, a lot of that is now being grown for fuel instead and factors like this of course are driving up food prices."

That rise is as much as 30 per cent, Oxfam says.

But Bob Gordon from Renewable Fuels Australia rejects the notion that biofuels are entirely responsible for the global food shortage.

"It is oil that is the primary driver and you'll find that the United States, you'll find that the European governments and everybody accepts that," Mr Gordon says.

"The issue with biofuels is that we have to play it carefully if we're going to use biofuels as a fuel alternative, and only one fuel alternative."

He says the current crop of biofuels is just the first step in the transition from an oil-based economy.

"Biofuels do require land use. We need to be careful about that," Mr Gordon says.

-Adapted from a report by Ashley Hall for AM

California renews climate battle

New rules to curb emissions call for a 30 percent cut by 2020.
By Jim Downing -
Published 12:15 am PDT Thursday, June 26, 2008

California's next great experiment starts today.

The state Air Resources Board will outline this morning a plan to slash greenhouse gas emissions 30 percent by 2020 and prepare the state for much deeper cuts in the years beyond.

The bottom line for consumers, according to the agency's analysis: Electricity and fuel prices will rise.

But improvements in efficiency should, on average, result in a net savings on household fuel and energy bills will drop.

"It's a plan that we believe will make our state more efficient in ways that will also help us grow," said Mary Nichols, chairman of the Air Resources Board.

The cuts to climate-warming emissions are required under Assembly Bill 32, a state law passed in 2006 that committed California to the nation's most aggressive global warming strategy. The air board's proposals are being watched closely around the country.

The release of the plan launches what is likely to be many months of haggling among state officials and dozens of environmental groups, utilities and businesses, including automakers, oil companies, appliance manufacturers and builders.

While the air board is required to adopt an outline of its emissions-cutting strategy by the end of the year, it has until the end of 2010 to finalize the policy details.

This week, both industry and environmental representatives expressed general support for the emissions-cutting plan – though rifts are already developing over parts of the plan industry groups say would dramatically drive up the cost of doing business.

"It takes away capital from what you want to do – including investing in ways to reduce greenhouse gas emissions," said Shelly Sullivan, executive director of the AB 32 Implementation Group, a coalition of businesses.

Jim Shetler, assistant general manager for energy supplies for the Sacramento Municipal Utility District, said the plan puts an undue burden on the electricity sector.

While power plants account for only 25 percent of the state's greenhouse gas emissions, the plan counts on energy suppliers to make 35 percent to 40 percent of the pollution reductions, he said.

"We are being asked to contribute more than we are imposing on the environment," Shetland said.

The air board's mission may already have been made easier by changes in the economy. Today's high energy prices are driving many of the sorts of emissions-cutting changes called for under the plan.

Sales of fuel-efficient cars are up, transit ridership is breaking records and businesses are investing in ways to save fuel and electricity.

But officials and energy experts say regulations are needed to keep those trends going should fuel prices drop. The new standards should also help drive investment in green technology, they said.

"The California plan will make the low-carbon energy market grow faster than it would on its own," said Bob Epstein, a venture capitalist who has advised the air board on the financial aspects of climate regulation. "When investors know there is going to be a regulatory limit on something, they can target that and not just wait until there's a price increase."

The core of the air board's plan – amounting to about 80 percent of the required cuts – is a suite of regulations, including some programs already under way.

Some of the biggest sources of emissions cuts:

• Electric utilities would by 2020 provide a third of their power from renewable sources like wind, solar and geothermal – compared with current levels of around 11 percent.

• Automakers would be required to curb emissions of greenhouse gases from new California vehicles more quickly than required under federal mileage standards – a proposal currently blocked by the Bush administration.

• The average energy efficiency of the state's buildings would improve by 25 percent through stricter rules on new construction and new efforts to retrofit existing structures.

To get the last 20 percent of the emissions cuts, the board has called for the creation of a market that would put a price on the right to produce greenhouse gases.

The "cap and trade" system, set to begin in 2012, would allow firms to buy and sell emissions permits. The state would control the volume of permits available, and ratchet down the supply over time. Economists say such a system should help minimize the overall cost of cutting emissions.

California is designing its trading rules to be consistent with those being developed by six other Western states and three Canadian provinces.

In the long run, the system may plug into a nationwide market, which Congress is considering.

Enlarging the trading market will benefit California industry by reducing the price of the greenhouse gas pollution credits and will reduce the chance of companies avoiding pollution control costs by relocating facilities to states without greenhouse gas limits, said Michael Gibbs, assistant secretary for climate change at the California Environmental Protection Agency.

Business and environmental groups disagree on key details of how the cap and trade system ought to work, such as whether the emissions permits should be auctioned off or given away for free.

Industry groups argue auctioning the permits amounts to a heavy tax that will hurt businesses and increase prices for consumers.

Environmental groups say granting the valuable credits amounts to a gift to industry.

"We don't think there's any justification for giving away any emissions credits to polluters," said Bill Magavern, director of Sierra Club California.

The air board, Nichols said, is trying to split the difference – auctioning only a few permits at first, and more in future years.

Wednesday, June 25, 2008

Salon's "How the World Works" columnist pretty much sums up the import of this election

Slick John McCain and the offshore oil ruse

The safety and economics of offshore drilling are distractions from the much larger challenges that humanity faces: Climate change and peak oil.

By Andrew Leonard

AP Photo
Oil leaks from a tank in the aftermath of Hurricane Rita on Sept. 25, 2005, in southwestern Louisiana.

June 25, 2008 | An example of leadership or reckless chutzpah? On Monday, John McCain visited Santa Barbara, the scene of one of the great environmental disasters in American history, and proceeded to downplay the potential consequences of lifting the federal moratorium on new offshore drilling. Modern drilling technology is environmentally safe, he told the audience. According to the Associated Press, McCain "cited the examples of Louisiana and Texas, noting they have allowed drilling and weathered two devastating hurricanes with minimal or no oil spills."

McCain exaggerated. A 2007 report by the U.S. Minerals Management Service unearthed by Outside the Beltway documented the damage caused in the Gulf of Mexico by Hurricanes Katrina and Rita: "124 spills were reported with a total volume of roughly 17,700 barrels of total petroleum products."

Now, 17,700 barrels of oil equals 743,400 gallons. Whether you consider that a lot or a little depends on your perspective. Compared with the 1.5 million barrels pumped out of the Gulf every day, it is a trivial amount. But it's also within shouting distance of the 3 million gallons of oil spilled in the Santa Barbara offshore oil disaster of 1969.

That spill is considered the "environmental shot heard 'round the world." The catastrophe crystallized the environmental movement into a potent political force, resulting in the quick passage of the National Environmental Protection Act later that year, the creation of the EPA in 1970 and, ultimately, the ban on new offshore drilling.

But the safety of offshore drilling is a distraction from what's really at issue in the current tussle over energy policy. An oil spill here or there is irrelevant to the much larger challenges that humanity faces: climate change and peak oil.

The truth is, we can probably make offshore drilling as safe as we reasonably want it to be. Norway, with its environmentally aware citizenry and tight coordination between a watchful government and a state-oil owned company, has been drilling for decades in the North Sea with reasonably good environmental results (notwithstanding the spillage of 24,000 barrels of oil just last December). Then again, for an example of how it can all go terribly wrong, visit Nigeria, where lax environmental controls have resulted in a huge mess in the Niger Delta, and where rebel forces attacked an offshore oil platform just this week.

But drilling practices and technology have improved. With the appropriate government oversight and regulation, it may be possible to drill off the coasts of Florida and California without covering the beaches with sludge and killing thousands of seabirds. Provided we acknowledge, of course, that a few nasty hurricanes in Florida will make at least a little bit of mess, and an earthquake in the wrong spot in California could be a slight problem. And provided we are capable of following the example of Norway, where the government and the people tell the oil company what to do, rather than the example set by the current Bush administration, where the energy industry is in charge of policymaking.

But drilling for more oil in the United States will not lower the price of gas in the short term -- even McCain admitted as much when he said on Monday, "I don't see an immediate relief, [but] the fact that we are exploiting those reserves would have psychological impact that I think is beneficial." Bush's own Department of Energy concluded in 2004 that the long-term impact of lifting the moratorium on offshore drilling on oil prices would be "insignificant." The only way that expanded drilling, offshore and in ANWR, could make a difference at the pump is if global production of oil started significantly outpacing the growth of global demand. Which would probably require that Saudi Arabia crank open the spigot and China, India, and the rest of the world's rapidly emerging economies start to lose their enormous thirst.

In other words, not only is it unlikely, it is completely out of our hands.

For those who accept that burning fossil fuels is contributing to climate change and that there are finite limits to the amount of inexpensive oil that can be pumped out of the earth, a new offshore oil rush is a psychological and practical disaster. It would accelerate climate change and, in the unlikely scenario that new drilling even momentarily slowed down global oil price appreciation, would still postpone that inevitable day of reckoning with the even higher fossil fuel energy prices sure to arrive.

The longer we wait to deal with either problem, the more painful and expensive our options for coping with these challenges will become and the more constrained our maneuvering room will be. The sorry truth is that from the perspective of grappling with climate change, and encouraging investment into alternative energy technologies, expensive gas now is far preferable to even more expensive gas later.

Of course, there are plenty of people, mostly on the right-wing of the political spectrum in the United States, who do not accept that climate change is real or caused by human industrial activity, and who believe there are no real constraints to the global oil supply. They'd prefer to blame environmental activists, present-day descendants of the rabid left-wing commies who exploited the Santa Barbara spill to pursue their anti-business agenda, for today's "high" gas prices.

Such accusations are the stuff of daily grandstanding rhetoric from Congressional Republicans and constitute a major, longstanding front in the culture wars.

There's a large contingent of Americans who do acknowledge that global warming is real and that it would be smart to consume less oil. But the prospect of $5 gasoline tends to reduce their focus from the long term to the here-and-now. The oceans haven't flooded their homes just yet, but their pocketbooks are hurting today.

And there's an election campaign going on.

In Las Vegas on Tuesday, Barack Obama delivered a significant speech on energy issues. He criticized McCain's proposal for new offshore drilling and commented that McCain's reference to "psychological impact" is "Washington-speak for 'It polls well.'" No joke.

In Santa Barbara, McCain attempted to assuage Californian sensitivities by saying that his real position on the moratorium on offshore drilling is that it should fall under the rubric of "state's rights" -- meaning that if Californians want to keep their coastline pristine, they will have the power to do so under a McCain administration. But McCain knows he's not going to win California, so it doesn't matter what he says in Santa Barbara. The offshore oil ploy is a calculated gambit aimed at cashing in on the pain that economically stressed voters in swing states far from the coast (as well as Florida, where environmental sensitivities seem to be on less solid ground than in California) are feeling. In Ohio and Michigan, the ugliness of oil derricks blotting out the sunset isn't a number one problem on anyone's priority list.

McCain's goal is to marry the anti-environmentalist Republican base with the I-like-the-environment-but-am-economically-hurting moderates. Call it the coalition of the unwilling to pay high gas prices.

In his speech, Obama set forth a pretty straightforward platform of vastly increased investment in renewable energy, conservation and efficiency, and proposed to ease the pain of working-class Americans with an economic stimulus plan. One can question how he would end up paying for his proposals or whether he will succeed in steering them through Congress, but one thing that must be conceded is that his approach represents a clear difference from McCain.

Suppose that McCain's strategy works. Suppose voters in enough swing states decide that the pain of high gas prices is so great that they will go with the candidate who is promising them the easy way out -- the gas tax holiday and offshore drilling and a nuclear power plant in every pot. What will that tell us about the American ability to suck it up and face down the challenges of the future?

Easy. It will tell us that we've lost the battle before we've hardly begun to fight. It will tell us that the environment is toast. We will have established that we, the citizens of the richest and most powerful country on the earth, are unwilling to pay the price necessary for embarking on a long-term ecologically sustainable path for existence on the planet. If $4 gasoline is enough incentive to lift the moratorium on offshore drilling, then $10-a-gallon gasoline will inspire even more drastic consequences. We will drill for every drop of oil, we will dig up every ounce of coal, we will sacrifice every environmental regulation, because we just can't take the heat. And then we'll fry.

It will also tell us that the environmental movement that took so much power from the Santa Barbara oil spill of 1969 has failed. That sustainability and conservation were luxuries we decided we could not afford.

Climate change will likely have dramtic impacts on California flora and fauna

A paper by Duke and UCB scientists suggest that climate change will have negative effects on endemic plants and plant communities in California.

Another potentially catastrophic consequences of the fossil fuel addiction. While I think these studies are very important, there is too much uncertainty in the models to really characterize impact. For example, this study did not include any changes in the fog regime along coastal California. This is obviously an enormous variable as the fog and marine layer provide California with its cool and wet summer along the immediate coast, making life possible for numerous species including the coastal redwoods. That critique aside, these studies are important windows into possible future climate scenarios about how we should expect ecological systems to evolve over the next 100 years. Rather than test whether or not they pan out, we should tack this on to all the other negative consequences of our fossil fuel diet, and roll out the post-carbon economy.

Monday, June 23, 2008

McCain's great battery bakeoff

posted by Dustin

John McCain today said that he plans to offer $300 million dollars for a new auto battery that is more efficient than today's technology for electric and hybrid cars. While I like the idea of a competition toward some common technological goal (it really does sound like a fun science fair-like event), this is a very shallow response to the energy challenge.

In a remarkable fate of chance, it happens that Exxon Mobil recently made a technological breakthrough with Lithium Ion batteries. So rather then a bakeoff, where I can bring my best brownies, this energy policy is a selloff and a further subsidy Exxon Mobil, a firm that has posted records profits almost every quarter for several years now, and posted a record setting $11.7 billion dollar profit last quarter alone (about $1,300 per second).

EXXON DOES NOT NEED GOVERNMENT SUBSIDIES. It would be better if its profits were invested in CLEAN RENEWABLE ENERGY. Or, profits should be subject to a windfall profits tax that fund more competition for renewable technologies. This is a perspective that even many Rockefeller trustees are putting forward in internal discussions of the board at Exxon Mobil.

A meaningful energy policy needs to hold multiple technological contests, heavy investment at the national renewable energy laboratories and a more "Apollo-like" response, policies that stabilize renewable energy prices and incentives, conservation, and full cost accounting of fossil fuels. The dividends will be far greater the more we put upfront.

Of course, John McCain will not be able to raise the government revenues to pay for anything greater than this trifling battery bakeoff. McCain would rather spend greater than $400 billion dollars on military excursions in distant oil fields, and making the world a more dangerous place by breaking ground on 45 new nuclear power plants and "drive-by nation-building."

It sounds like they are also cynical over at Climate Progress...

Sunday, June 22, 2008

Windfall profit tax on big oil should help pay for Iraq war costs

If you read the article below you will learn that what the big oil companies are doing is essentially decoupling the value of the dollar from the value of oil. Payments will not be in cash, but in oil. So it is even more apparent that strengthening the global power of big oil does not translate to better standards of living for Americans.

This appeared on the 11PM PST, Wed night edition. It was buried in the "World" section by the morning.

June 19, 2008
Deals With Iraq Are Set to Bring Oil Giants Back

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies, speaking only on the condition that they not be identified, said they were helping Iraq rebuild its decrepit oil industry.

For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity.

While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world’s oil patch becomes off limits. Governments in countries like Bolivia and Venezuela are nationalizing their oil industries or seeking a larger share of the record profits for their national budgets. Russia and Kazakhstan have forced the major companies to renegotiate contracts.

The Iraqi government’s stated goal in inviting back the major companies is to increase oil production by half a million barrels per day by attracting modern technology and expertise to oil fields now desperately short of both. The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.

For the American government, increasing output in Iraq, as elsewhere, serves the foreign policy goal of increasing oil production globally to alleviate the exceptionally tight supply that is a cause of soaring prices.

The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.

It said the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and because these companies had the needed technology.

A Shell spokeswoman hinted at the kind of work the companies might be engaged in. “We can confirm that we have submitted a conceptual proposal to the Iraqi authorities to minimize current and future gas flaring in the south through gas gathering and utilization,” said the spokeswoman, Marnie Funk. “The contents of the proposal are confidential.”

While small, the deals hold great promise for the companies.

“The bigger prize everybody is waiting for is development of the giant new fields,” Leila Benali, an authority on Middle East oil at Cambridge Energy Research Associates, said in a telephone interview from the firm’s Paris office. The current contracts, she said, are a “foothold” in Iraq for companies striving for these longer-term deals.

Any Western oil official who comes to Iraq would require heavy security, exposing the companies to all the same logistical nightmares that have hampered previous attempts, often undertaken at huge cost, to rebuild Iraq’s oil infrastructure.

And work in the deserts and swamps that contain much of Iraq’s oil reserves would be virtually impossible unless carried out solely by Iraqi subcontractors, who would likely be threatened by insurgents for cooperating with Western companies.

Yet at today’s oil prices, there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.

David Fyfe, a Middle East analyst at the International Energy Agency, a Paris-based group that monitors oil production for the developed countries, said he believed that Iraq’s output could increase to about 3 million barrels a day from its current 2.5 million, though it would probably take longer than the six months the Oil Ministry estimated.

Mr. Fyfe’s organization estimated that repair work on existing fields could bring Iraq’s output up to roughly four million barrels per day within several years. After new fields are tapped, Iraq is expected to reach a plateau of about six million barrels per day, Mr. Fyfe said, which could suppress current world oil prices.

The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.

A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts.

The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.

The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

“These are not actually service contracts,” Ms. Benali said. “They were designed to circumvent the legislative stalemate” and bring Western companies with experience managing large projects into Iraq before the passage of the oil law.

A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms.

Assem Jihad, the Oil Ministry spokesman, said the ministry chose companies it was comfortable working with under the charitable memorandum of understanding agreements, and for their technical prowess. “Because of that, they got the priority,” he said.

In all cases but one, the same company that had provided free advice to the ministry for work on a specific field was offered the technical support contract for that field, one of the companies’ officials said.

The exception is the West Qurna field in southern Iraq, outside Basra. There, the Russian company Lukoil, which claims a Hussein-era contract for the field, had been providing free training to Iraqi engineers, but a consortium of Chevron and Total, a French company, was offered the contract. A spokesman for Lukoil declined to comment.

Charles Ries, the chief economic official in the American Embassy in Baghdad, described the no-bid contracts as a bridging mechanism to bring modern technology into the fields before the oil law was passed, and as an extension of the earlier work without charge.

To be sure, these are not the first foreign oil contracts in Iraq, and all have proved contentious.

The Kurdistan regional government, which in many respects functions as an independent entity in northern Iraq, has concluded a number of deals. Hunt Oil Company of Dallas, for example, signed a production-sharing agreement with the regional government last fall, though its legality is questioned by the central Iraqi government. The technical support agreements, however, are the first commercial work by the major oil companies in Iraq.

The impact, experts say, could be remarkable increases in Iraqi oil output.

While the current contracts are unrelated to the companies’ previous work in Iraq, in a twist of corporate history for some of the world’s largest companies, all four oil majors that had lost their concessions in Iraq are now back.

But a spokesman for Exxon said the company’s approach to Iraq was no different from its work elsewhere.

“Consistent with our longstanding, global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate,” the spokesman, Len D’Eramo, said in an e-mailed statement.

But the company is clearly aware of the history. In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”

James Glanz and Jad Mouawad contributed reporting from New York.