December 15, 2009
XTO and Exxon
XTO has just been taken over by Exxon in an agreed bid. But I'm not sure that people have really understood what this means.
For example, it makes a great difference to those climate change talks going on in Copenhagen.
You see, XTO is the specialist in this new technique of extracting natural gas through fracking. This means that there's a huge amount more gas around than anyone thoguht only a couple of years ago. That in turn means that we can replace a lot of our current coal fired generating with gas fired: and halve carbon emissions in the process.
Now, if we can halve carbon emissions by building cheaper plants and using a less expoensive fuel, then this rather changes eeverything about climate change, doesn't it?
That's the basics of how the numbers for emissions which the climate scientists plug into their models are created. However, those emissions paths, the possible technologies, were created some years ago, back in the late 1990s in fact. And there are emissions paths where we begin to run out of oil and go back to using hugely more polluting coal. There are paths where we gradually and generally bring down our emissions.
But none of the paths includes the possibility that we use less coal and less oil and use more natural gas instead. For we didn't think there was any more natural gas that we could use. Remember here that natural gas has much lower emissions than either oil or coal. So much lower in fact that if we replaced coal fired power generation with gas fired generation we would be cutting greenhouse gas emissions by 50% from this sector.
January 09, 2008
A quadrillion has been claimed as damages for the Federal Government's failures in dealing with, or preventing, the damages from Hurricane Katrina.
Claims against the U.S. Army Corps of Engineers arising from the collapse of the levees in New Orleans have reportedly broken the $3 quadrillion barrier.
This is definitely into "snigger" territory.
Hurricane Katrina's victims are looking to be compensated for their suffering, to the tune of three quadrillion dollars. That's the total amount of damages sought from some 489,000 claims filed against the federal government over the disaster. An economist says the high number reveals a strategy by plaintiffs to "aim high and negotiate down."
So errr, why does quadrillion engender a snigger? If a quadrillion of damage has been done, surely the victims should get a quadrillion of recompense, yes?
Well, actually, that quadrillion is from one claim alone:
The figure - $US3,014,170,389,176,410 ($A3.44 thousand trillion) - represents a fraction of the roughly 489,000 claims that residents and business owners filed against the federal government over damage from the failure of levees and flood walls following the devastating hurricane that hit the US Gulf Coast on August 29, 2005.
The US Army Corps of Engineers says it has received 247 claims for at least $US1 billion ($A1.14 billion) apiece, including one for an even $US3 quadrillion ($A3.43 quadrillion).
And here's the problem. Sure, when people screw up there is a legal right to get damages from the harm their screw up has caused. Good thing, too.
But a quadrillion dollars? Umm, no. The entire wealth ever created by the entire human race, all through the history of time, is less than a quadrillion. The total output of the USA is some $14 or so trillion, of the whole global economy is around $50 trillion a year. We ain't got to the point where there is a quadrillion (1,000 trillion) of wealth existing, ever, in total, everywhere, so it cannot have been destroyed by one storm in one place.
Lawyers, I blame lawyers.
September 19, 2007
Well, yes, this is indeed the logic:
If, for argument's sake, you accept Sir Nicholas Stern's estimate that the environmental cost of each tonne of CO2 we emit should be priced at $85 (£45), then you can start to put a sensible environmental price on aviation. Therefore, one London-Miami return flight emitting broadly two tonnes of CO2 per passenger would need to add £90 to the current price - a hike that would surely make many passengers rethink the need to do that journey.
Crucially, I think that any revenue raised should be ring-fenced for environmentally positive initiatives such as grants for improving the energy efficiency of your home, or simply lead to tax cuts elsewhere so that green taxes are seen as "revenue neutral".
The latter: hypothecation is not a good idea. But the crucial point is that, having included the true cost of flying into the decision of whether to fly or not, that's all you do. No other action is either necessary or desirable. For once everyone is indeed paying the true costs of their actions then we'll get the socially optimal outcome. Reducing airport expansion plans, for example, is entirely unneccessary, providing taxation is at the appropriate level.
As, for argument's sake, (using the above numbers) it already is for short haul flights within Europe.
Indian Wheat Yields
Just a little comment here by Dr. Pachauri, head of the IPCC process:
Rajendra Pachauri, chairman of the IPCC, said: "Wheat production in India is already in decline, for no other reason than climate change. Everyone thought we didn't have to worry about Indian agriculture for several decades. Now we know it's being affected now." There are signs a similar shift is under way in China, he added.
And I thought, that's a little odd. Climate change is going to happen and furthermore it already has...which could indeed be true. But that specific piece of evidence of linkage to Indian wheat yields. Hmm.
Phalaris minor too
came with the wheat consignments from the United States. This weed, already
resistant to chemicals in the US and Australia, has established itself as a
strong competitor of wheat in India. The weed has also become resistant to
chemicals in India and is responsible for reducing wheat yields by an estimated
25 per cent.
Could it be weed infestation? Hmm.
While the wheat yield in Punjab has fallen by about 22 per cent over the last five years,(...) Chief Agriculture Officer, Patiala, Balwinder Singh Sohal said sustainability of wheat production in Punjab has become difficult due to “alarming depletion of micro-nutrients in the soil and continuous fall in groundwater level”.
Insufficient fertilisation and the mining of fossil water? Hmm.
And the news comes at a time when the country's most widely grown wheat variety, PBW 343, has shown susceptibility to a new race of yellow rust fungus. Cultivated in six million hectares of the wheat area in Punjab, Haryana and western Uttar Pradesh, yield losses of anywhere between 20--30 per cent have been predicted for the present.
Obviously, I don't have enough information to judge whether the Good Doctor is correct or not, but I'm still left with the suspicion that he's pointing to something which is undoubtedly happening, falling Indian wheat yields, and claiming that this is a result of climate change...when there are other possible reasons for that fall.
September 16, 2007
Emissions Tax Idiocy
Grr. I do wish people would think a little more about these things.
MOTORISTS are facing a fresh squeeze from Alistair Darling, the chancellor, with a one-off £2,000 tax on 4x4s and the most polluting cars, a leaked Treasury paper has revealed.
The new “purchase tax” would have to be paid when a luxury car, such as a Range Rover or top-of-the-range BMW, is bought at the showroom. In subsequent years owners would pay the top rate for their road tax disc, which is also set for big rises under the confidential plans.
The aim is to reduce emissions. Thus the tax should be as closely associated with emissions as possible. That means on petrol, not on the sunk cost of the car itself.
However, the report goes on to admit that “under any option emission reductions are small”.
See! Even the Treasury doesn't think it's very sensible.
September 13, 2007
Someone's been letting the teenagers suggest policy again.
Motorists who buy environmentally unfriendly "gas guzzling" cars would be hit by a new batch of green "supertaxes" that would add thousands of pounds to the final bill under plans to be announced by David Cameron's advisers.
What is it that we're actually worried about here? Emissions, isn't it? Great. So, we should be taxing emissions. No, not the potential to emit...we're entirely indifferent to a gas guzzler doing 5 k miles a year as against a petrol sipper with a tenth of the emissions per mile doing 50 k miles per year. Taxing the actual emissions is really very tough indeed but we've got a good proxy: petrol. More petrol used, more emissions, less petrol used, fewer.
Good, so we should be taxing petrol, not cars.
We can go further and ask what that level of taxation should be. As the Stern Review tells us, $85 per tonne CO2. That's around 10 pence per litre of petrol. Current fuel duty is of the order of 50 pence per litre.
My, my. Looks as if we shouldn't be taxing petrol any more than we already do. Perhaps, to get to the socially optimal outcome, less than we do already.
So, when do the adults get to start making policy suggestions?
September 12, 2007
What Excellent News!
Apparently there's something that we've not been told:
However, VW's overall message was that power, glory and passion still matter. It was as if the German carmaker was ignoring the speech delivered only two hours earlier in the nearby Jahrhunderthalle by Carlos Ghosn, head of Renault and Nissan. He said that climate change posed the biggest technical and financial challenge for the global car industry in the 21st century (when the oil runs out midway through the century and the internal combustion engine is replaced by hydrogen fuel cells).
So, the oil runs out in 2050 and we all use hydrogen. Great! That's climate change solved then. Next problem please!
September 09, 2007
John Gummer on the Environment
Oh dear, oh dear, oh dear. If this is going to be the quality of the arguments in the upcoming paper on the environment the Tories are going to be in deep doo doo.
Nor can Britain stand on the sidelines, reminding the world that the US produces 25 per cent of the world's pollution with less than 5 per cent of its population.
No, we shouldn't stand on the sides. We should remind people that the US creates 25% of the world's pollution because they create 25% of the world's stuff.
The UK has a huge carbon footprint. It's our historic pollution that is causing much of today's climate chaos. If you count the pollution caused by the worldwide companies listed in London...
Hunh? Because a company is listed in London we're responsible for their emissions? You mean those Russian resources companies? If we just threw them off the London markets then somehow emissions would fall?
This is no quick fix but a concerted, consistent and continuous transformation to a low-carbon economy. Rising energy prices make energy efficiency and energy saving increasingly worthwhile.
OK, prices will drive people to doing this anyway, so we don't need a plan. Very Conservative view, that.
Ahh, but we have a plan anyway, one that we don't need. Hmmm.
Localism is also about local food and local provision, it's about post offices and farm shops, it's about food miles and local amenities. Climate change puts a new cost on carbon and therefore changes the economic balance that, for too long, has driven us away from localism towards central control.
Ah, so they're ignoring the fact that food miles don't measure anything useful then. That it's CO2 e emissions from the whole process which are, not miles of transport per se. In fact, that tomatoes in winter, lamb year round, are better imported than grown "locally"?
Looks like Zac has had more input into that report than is good for the Tories or us.
September 03, 2007
Green Taxes Already Too High
Or so says the Taxpayer's Alliance.
I wouldn't want to have to defend each and everyone of their calculations, although they seem reasonable enough to make their point.
For example, in their discussion of fuel duty they take off the cost of providing roads and then assign the rest of the money raised to CO2....when there's also congestion, particularates, noise and so on which are externalities which should also be paid for. But they're absoultely right that if fuel duty were indeed determined purely on environmental grounds then it should be lower than it is now (a point I've myself made elsewhere).
One thing the report does show up is that by using both the Nordhaus and the Stern numbers on the costs of CO2 there's an emphasis on the fact that quite what is the right level of CO2 taxation is as yet unknown. There's a huge variation between the two numbers and, as ever in such discussions, only the higher set are being used when calculating taxes.
Even if you use Stern's higher numbers, looking at the current level of green taxes as against the social costs of CO2 there's only another £ 9 billion to be raised from further green taxes. A pittance when compared with the £550 billion or so of the current budget.
I think they've missed a trick with the climate change levy....isn't that still charged on nuclear power? Showing up that silliness would be valuable.
They've also missed something very important about the landfill tax. Yes, they're right, methane is the only externality being paid for through this tax. But they're assuming that all of it is actually flared. We've already got a law in place which states that this must be collected, which in modern landfills it is, and used to produce energy. So the landfill tax is in fact being charged on an externality which no longer exists (or, if you prefer, given that energy production converts from methane to CO2, exists at one / 21 of the extent that the tax assumes). It's thus grossly too high, not merely slightly, as they say.
On the EUTS I would have emphasised the most important point, that allocations are given, not auctioned. Thus the whole scheme is in fact corporate subsidy to those favoured with large allocations.
But putting aside these nitpicks, there's one hugely valuable point that they're making and one which the political classes don't really seem to have grasped yet.
Yes, we all agree, we should be taxing pollution: whether you want to justify it through Pigou, or just to say that obviously we should tax the things we don't want rather than the things we do, doesn't matter. But the whole set of calculations and assumptions that lead to green taxes lead to an optimal level of taxation. Not simply to one higher than now (nor even to one lower than now) but to a perfect one.
That optimal level is decided by whose estimates we believe for the social costs of a tonne of CO2 e emissions. We obviously get different numbers dependent upon whether we use the Nordhaus, Toll or Stern numbers. But we do still get to optimal numbers. And as the report shows, with some taxes we are already above them and even at the top end of the estimates we've not got too far to go.
As far as those who want to raise taxes go this is bad news of course. But that's always the problem with any logical exercise that leads to the perfect level of taxation: you might find out that it's lower than what you're already charging, as is currently true in parts, or that it's lower than what you want to charge, which is even more so.
And the very worst of such logical exercises is that once you have got that perfect or optimal level of taxation, that's all you have to do. For the very same logic that leads to the taxation also says that the taxation is the only thing you need to do. That's a lesson I'm certain that many really haven't grasped yet: even if we took Stern's numbers and raised another £ 9 billion in green taxes...that's it, problem solved, we ca all go back to sleep again. Then what will people use to keep us awake at night?
August 18, 2007
Readers (yes, that's you lot out there...perhaps I should modify that, you participants in my ongoing education) will know that I've not got a lot of faith in the ability of politics and politicians to solve problems like climate change.
Today we have another quite wonderful example.
The DfT paper considers ways for aviation to meet its "full climate change costs".
It says: "Putting an appropriate price on carbon, through taxes, trading or regulation, means that people are faced with the full social cost of their actions. In the case of aviation, this means reflecting climate change costs in the price of air travel.
"If this is not done, prices will be too low and hence demand for a good or service too high to achieve a long-term sustainable outcome."
Yes, this is absolutely correct. An excellent summation of the argument.
Underpinning the prospect of yet more aviation taxes are two Government reports, the Stern review on climate change and Sir Rod Eddington's transport study. Both argued that the travelling public should pay the full environmental cost of their journeys.
Indeed, correct. And from the Stern Review we also get a price for each tonne of CO2 emitted. $85. There are those who think it is much less (Nordhaus, for example) but let0s stick with Stern shall we? That report is indeed the one being used as justification here.
A spokesman for Virgin Atlantic said: "Air passenger duty more than covers the cost of CO2 emissions already....
Indeed, it does. It's a trivial exercise to plug distance flown into an emissions calculator, to multiply that by our $85 a tonne and come up with what the correct level of taxation. Which is indeed, as mentioned, just around and about the amount currently charged.
Despite the doubling of Air Passenger Duty, government calculations suggest that the gap between the tax paid by passengers and the cost of climate change could be as much as £1.6 billion a year, a gap that could be bridged with a £13.50 levy on every flight.
So what are these idiots doing then? See, you simply can't trust the political process to get these things right.