Topic: Energy and Environment

Keystone XL Pipeline: “No Material Impact” on U.S. Carbon Dioxide Emissions

President Obama has a ticklish situation on his hands with the Keystone XL pipeline—one long on symbolism but short on practical impacts.

He took a few minutes out of his June 25th speech unveiling his Climate Action Plan to specifically address the pipeline issue:

Now, I know there’s been, for example, a lot of controversy surrounding the proposal to build a pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf. And the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done. But I do want to be clear:  Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.

The president is balancing “our national interest” in the pipeline—which surely includes factors (or, at least, the perception of factors) like growing the economy, adding jobs, and increasing our energy security—with the pipeline’s (perceived) impacts on the climate via the carbon dioxide emissions (which he oddly terms “carbon pollution”) associated with the oil it will carry.

When it comes to growing the economy, adding jobs, and/or increasing our energy security, the estimates of the impact of the Keystone XL pipeline are all over the place—but all positive. The more level-headed analyses generally indicate the gains will probably be rather small in the overall sense.

When it comes to affecting the climate, again, the estimates are all over the place, and largely depend on assumptions as to how much leverage the Keystone XL pipeline will have on opening up the Canadian tar sands to further development. Folks who claim that the pipeline’s approval would mean “game over” for the climate assume that the pipeline is the key to opening up the 1.7+ trillion barrels of oil that are estimated to be contained in the Canadian tar sands formation. More sober analyses argue that market demands are such that the oil will be brought to market with or without the Keystone XL pipeline and, as such, the pipeline itself will have virtually no impact on carbon dioxide emissions and, by extension, climate change.

Climate Rehash

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

Yesterday, the National Oceanic and Atmospheric Administration (NOAA) issued a press release announcing the publication of its “State of the Climate 2012” report. The global media, predictably, are all over it, loving the gloomsaying.

None of it is new. The NOAA report is simply a collection of rehashed stories that have already had their 15 minutes of fame, stories that we (and others) have already commented on, put into perspective, or debunked.

Usually, “Year in Review” type of stories are saved up until the end of the year, but when it comes to climate change—an issue for which the president has declared “we need to act”—once a year is apparently not enough.  So, NOAA’s “Year in Review” comes out at the end of December and then is rerun like old Seinfeld episodes the next summer.

The NOAA press release contains this manner of introduction from its acting head, Kathryn Sullivan:

“Many of the events that made 2012 such an interesting year are part of the long-term trends we see in a changing and varying climate—carbon levels are climbing, sea levels are rising, Arctic sea ice is melting, and our planet as a whole is becoming a warmer place,” said acting NOAA Administrator Kathryn D. Sullivan, Ph.D. “This annual report is well-researched, well-respected, and well-used; it is a superb example of the timely, actionable climate information that people need from NOAA to help prepare for extremes in our ever-changing environment.”

It is interesting that she terms the information contained in the report as “timely.”

Below is a list of our comments, each made at least several months ago, on the topics highlighted in her statement.

Another Bust: Precipitation Forecasts Come A-Cropper

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

When people think about the weather, two variables are first to come to mind—temperature and precipitation. Unless it’s sunny when it’s not supposed to be (or vice-versa), near-term temperature forecasts tend to be pretty good.  What messes up your day is when it rains when it’s  not supposed to, and what really screws things up is when there is a significant unforecast snow, or a lot more (or less) than there was supposed to be. If whatever oracle you consistently consult, like The Weather Channel or Channel 9, consistently blows the precipitation forecast, you’ll soon be looking elsewhere for your forecast, and if changing forecasters doesn’t help, you’re going to sour on the whole weather forecasting business

Climate forecasts made by climate models running under scenarios of increasing human emissions of greenhouse gases are blowing both their  temperature and precipitation prognostications. They tend to predict far more warming to be taking place than is actually occurring, and when it comes to precipitation, the projections are all over the place—a characteristic dislexically summed up in the Second Assessment Report from the U.N.’s Intergovernmental Panel on Climate Change (IPCC)

Warmer temperatures will lead to a more vigorous hydrological cycle; this translates into prospects for more severe droughts and/or floods in some places and less severe droughts and/or floods in other places.

So, according to the IPCC, whatever happens to precipitation will have been correctly forecast!

In some areas of the U.S., it is actually possible to pin down specific climate model expectations for precipitation changes. Unfortunately (for the models), the actual observations show little if any correspondence to the magnitude, or even direction, of the modeled changes.

A Closer Look at the Government’s Determination of the Social Costs of Carbon

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

 

We and our apparently few friends tend to shriek with horror when governments try to centrally plan economies because, of course, planning places arbitrary prices on things and dictates how much of what will be made during the next five years.  But we should be equally horrified when government tries to invent costs and then impose them upon us.

Such is the case with the “social cost of carbon” (SCC), a completely mis-named concept which purports to accurately estimate damages associated with global warming caused by pernicious fossil fuel-fired economic activity.

First of all, “carbon” has nothing to do with global warming. In its purest crystalline form, a gram will set you back about $50,000—a.k.a. a 5-carat diamond. Other allotropes include graphite and buckyballs–geodesic-dome like molecules composed of 60 carbon atoms. Combusted (oxidized) carbon-containing compounds are the materials that produce carbon dioxide (CO2). Uncombusted methane (CH4) along with carbon dioxide can slightly enhance the earth’s natural greenhouse effect. 

Further, there are two sides to the industrial coin, not just negativity (i.e., social costs). It’s obvious that the combustion of carbon-containing compounds has driven a lot of civilization—a byproduct is the fact that you aren’t dead yet (life expectancy, pre-industrial revolution in Europe was around 35) and the fact that—in real dollars—you’re about ten times richer than your great-grandparents were.

So, what the government (e.g., the EPA) is really talking about is “The One-Tailed Effect of Oxidizing Carbon-Containing Compounds,” acronymed OTEOCCC, which just isn’t as catchy as SCC, which sounds like a Division I Football conference.

Currently, there are several proposed legislative amendments floating around Congress that are aimed to limit how the EPA can use the government’s assessment of the social costs of carbon.

Limiting the EPA’s use of the SCC in considering regulations would be a wise move since the government’s SCC calculations are incomplete, subjective, and seriously lagging the science of climate change.

Sprawl Does Not Reduce Economic Mobility

For the second time in a week, Paul Krugman has castigated urban sprawl. First, he blamed Detroit’s bankruptcy on “job sprawl,” when in fact many other factors are to blame and Krugman got his numbers wrong. Now he says Atlanta’s entrenched poverty is due to urban sprawl. “The city may just be too spread out,” he says, “so that job opportunities are literally out of reach for people stranded in the wrong neighborhoods.”

Krugman quotes the Equality of Opportunity Project, whose research found that one of many factors correlated with lower social mobility was “areas in which low income individuals were residentially segregated from middle income individuals.” But income segregation is very different from sprawl, and can take place in communities of any density. New York City, for example, has pretty high economic segregation.

Krugman adds that Atlanta’s sprawl “would make an effective public transportation system nearly impossible to operate even if politicians were willing to pay for it, which they aren’t.” He obviously doesn’t know the history of mass transit in Atlanta, which had a great transit system until regional leaders decided to build an expensive rail transit system. Since they aimed the rail lines at suburbanites and sacrificed bus service to inner-city neighborhoods to pay for rail construction, transit’s share of commuting has fallen by more than 60 percent and per capita transit ridership has fallen by more than two thirds.

Only 7 percent of Atlanta households lack a motor vehicle, and only 3.7 percent of Atlanta-area workers live in households that lack cars, which are both less than the national average. So jobs are not really out of reach to most people regardless of income. Krugman might argue that low-income people in Atlanta are forced to own cars because of sprawl, but for most people cars cost less and provide far better mobility than transit, so this is irrelevant.

The Equality of Opportunity Project found that economic mobility is low throughout the South (except Texas), not just in Atlanta. But the differences in the unit measured—the percentage of children in the bottom fifth of incomes who end up in the top fifth–are small, ranging from 4 percent in Atlanta to 11 percent in San Jose. Moreover, what differences there are appear to be unrelated to sprawl: Chicago, a fairly dense area, is almost as low as Atlanta, while Pittsburgh, a fairly low-density area, is almost as high as San Jose.

The study lists a lot of factors that seem to correlate with low economic mobility, but none of them are related to population density or sprawl. The most important factors appear to be tax rates, racial residential segregation, K-12 school quality, and the percentage of single-parent families. The South scores particularly high on racial residential segregation and low on K-12 schools, which together go much further toward explaining its relatively low economic mobility than urban sprawl.

Residential income segregation, which Krugman focuses on, is only one of several other factors mentioned by the study, and far from the most important one. Even if sprawl were one of the factors, the study itself notes that “all of the findings in this study are correlational and cannot be interpreted as causal effects.” By blaming low economic mobility on sprawl, Krugman is relying on fabricated evidence while ignoring the real problems.

As it happens, the Daily Beast has just published a report by Joel Kotkin and Wendell Cox on Aspirational Cities, which they describe as cities with economic growth and a high quality of life. The majority of cities on their list are in the South, where people are moving to take advantage of new economic opportunities.

It is sad that some local residents, who may be victims of historic racial segregation, poor schools, and one-parent families, aren’t able to take advantage of these opportunities. But these problems did not result from urban sprawl. On the other hand, the factors that Kotkin & Cox say provide a higher quality of life and economic growth–minimal land-use regulation, low traffic congestion, and high housing affordability–are in fact positively correlated with sprawl.

Why is Krugman suddenly pandering to the anti-sprawl community? Back in 2005, Krugman correctly identified anti-sprawl policies as the cause of the housing bubble. He must be aware of research showing that minority homeownership rates are higher in sprawling regions than compact ones (mainly because housing is more affordable in the former than the latter). All else being equal, including quality of schools and racial segregation, sprawling areas are likely to have more social mobility than more expensive, compact areas.

The IPCC AR5 Is in Real Trouble

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

The United Nations Intergovernmental Panel on Climate Change (IPCC) is in the midst of finishing its Fifth Assessment Report (AR5) on the topic. Based on a series of content leaks, it seems as if the AR5 has so much internal inconsistency that releasing it in its current form will be a major fiasco.

The  central issue of climate change science is the earth’s equilibrium climate sensitivity (ECS)—that is, how much the earth’s average surface temperature will increase as a result of a doubling the atmospheric carbon dioxide concentration. New and mutually consistent re-assessments of this important parameter are appearing in the scientific literature faster than the slow and arduous IPCC assessment process can digest them (presuming it even wants to—given that they are making the current AR5 look pretty bad).

Further, even if the IPCC is able to do an adequate job of assimilating this evolving and quite convincing science, the vast majority of the rest of the IPCC’s report will also have to be changed as it is highly dependent on the magnitude of the climate sensitivity. 

By now, though, it’s too late in the game (the final report is due out in early  2014)—the  cows have all left the IPCC’s barn on these subjects and it’s too late to round them all up and rebrand them.

Feds and the States Tag-Teaming on Corporate Welfare

In a recent op-ed for the Indianapolis Star I discussed the symbiotic relationship between federal and state government when it comes to doling out corporate welfare subsidies. The focus was primarily on Indiana, but the issue is a national concern. 

A good example is the $2 billion Shepherd’s Flat wind farm in Oregon that was largely financed with federal and state taxpayer support. Ted Sickinger, a reporter for the Oregonian, has done an excellent job of digging into details behind the project (see here then here then here) and it appears that Shepherd’s Flat was one big taxpayer handout. In fact, the Obama administration signed off on the federal government’s share of the subsidies even though it knew the project didn’t need any support from taxpayers: 

In 2010, Shepherd’s Flat attracted national notoriety for its subsidies. In a briefing memo for the President leaked to the media, Obama’s top advisors worried that the U.S. Department of Energy’s loan guarantee program was subsidizing projects that didn’t need it. 

Shepherd’s Flat was their case in point. 

Treasury Secretary Larry Summers, energy czar Carol Browner, and Vice President Joe Biden’s chief of staff Ron Klain said Shepherd’s Flat was “double-dipping” on $1.2 billion in federal and state subsidies – 65 percent of its projected cost. The incentives included a $500 million federal grant, $200 million in federal and state tax benefits from accelerated depreciation, $220 million in premium power prices attributed to state renewable energy mandates, and a $1 billion loan guarantee with a value of $300 million to the developers. 

They concluded that Caithness has “little skin in the game” – about 10 percent of the project’s cost – but stood to earn a 30 percent return on its investment. It also speculated that Shepherd’s Flat would likely go ahead without the federal loan guarantee because “the economics are favorable for wind investment given tax credits and state renewable energy standards.” 

Caithness Energy is the wind farm’s owner and operator. General Electric supplied the wind turbines (a $1.4 billion contract with Caithness) and part of the financing – financing backed by the federal loan guarantee. Both companies made sure they had Washington’s attention: 

Nationally, powerful interests were pushing in the same direction. A new president’s desire to build environmental credibility became an economic keystone to restore the collapsed economy. The Obama administration fast tracked loan guarantees to pump stimulus money into job-generating projects. Meanwhile, deep-pocketed companies with powerful lobbying arms were busy greasing the skids. 

The political action committee, employees and affiliates of General Electric - Shepherds Flat’s turbine supplier and an equity investor - gave more than a half million dollars to Obama’s 2008 campaign. The PACs for both GE and Caithness also have sprinkled sprinkled money among Oregon’s congressional delegation during the last five years, including Sens. Ron Wyden and Jeff Merkley, Reps. Earl Blumenauer, Greg Walden and Peter DeFazio. 

According to e-mails released by the House Oversight Committee investigating federal subsidies after the bankruptcy of solar startup Solyndra, the Obama administration pushed hard on incentives for Shepherds Flat. Months before officials at the U.S. Department of Energy approved a loan guarantee for the project, General Electric was being told it was a done deal. 

In April 2010, Kevin Walsh, managing director of GE’s renewables business, emailed the director of the U.S. DOE’s loan program: “We have been advised by the White House and other sources that we are likely to get the “green light” this week to move forward with the Shepherds Flat wind project…Les Gelber (a partner at Caithness Energy) and I will be in DC tomorrow and would like to stop by any time between noon and 2pm to briefly discuss.” 

The deal took more time to fully bake. Four months later, DOE Loan Program Office Credit Advisor Jim McCrea emailed a contractor: “Pressure is on real heavy on SF due to interest from VP.” 

Later that day, McCrea sent staff an all points bulletin to promptly provide answers on Shepherds Flat: “To do otherwise would leave us firmly on the political path and give agencies an opportunity to blame us when they are pressures (sic) to make decisions. As you all know, the pressures to make decisions on this transaction are high so speed is of the essence.” 

But the shenanigans don’t stop at the federal level. 

Even though the wind farm is clearly a single entity, it somehow managed to qualify for three separate $10 million state tax credits after the Oregon Department of Energy (ODOE) agreed with Caithness’s claim that Shepherd’s Flat was three separate entities. According to Sickinger, the ODOE’s decision was bogus: 

Yet limited and often non-responsive information about the review provided to The Oregonian suggests it was neither rigorous nor consistent with state rules governing tax credits. In its review, ODOE ignored clear evidence in its own files and additional records identified by The Oregonian that should have disqualified $20 million of the $30 million in tax credits. It failed to ask for contracts or other documentation to answer fundamental questions that state rules pose about ownership, financing, construction, operation and maintenance.

Instead, ODOE made assumptions, relied again on statements made by developers before the project was built, and reversed its own analysts’ earlier conclusions. Its review apparently tapped only one new source: a report by ODOE’s own staff for an entirely different purpose and largely irrelevant regarding tax credit eligibility. In the end, ODOE failed to apply its rules on separate and distinct facilities to Shepherd’s Flat. 

The result: “free” money for Caithness: 

The company, like many other tax credit recipients, received approval to sell the credit in exchange for cash. The pass-through option will net Caithness $20 million, but leave the state’s general fund out the full $30 million. 

There are more stories like the crony Shepherd’s Flat deal out there waiting to be uncovered. More state and local reporters should follow Sickinger’s example and start digging into these shady government-private collaborations that politicians and the financially-benefitting interests want the public to believe are so critical for “creating jobs.”