The tax code seems to foster one boondoggle after another. The ones getting my attention this week are the alternative fuel tax credits enacted in the 2005 highway bill. This was intended as a credit to encourage the development of alternative fuels for vehicles to cut our reliance on global warming-causing fossil fuels. See Natural Gas Vehicles for America, "Regulatory Summary: Alternative Fuel Credit-IRS Notice 2006-92" (Sept. 30, 2006) (discussing the alternative fuel credit of 50 cents a gallon under section 11113 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users). But it was modified in 2007 , and as a result the paper mills discovered a credit for a process the industry had been using since the 1930s --it just had to add (in some cases) enough diesel fuel to qualify.

The paper industry essentially cooks wood pulp to turn it into paper, and a byproduct of that process is a dark sludge called "black liquor". The companies use the black liquor as a fuel to generate steam for electricity. And by adding just a small amount of real diesel fuel to the mix, they qualify for the alternative fuel mixture tax credit. And, not surprisingly, they love the "extra cash flow and income." See Sharon, Paper Industry: Don't Kill Fuel Credit, NPR (June 6, 2009) (reporting a $10 million savings from the credit in the past year for one company).

Sen. Bingaman suggested that the paper industries discovery of this black gold hasn't got much to do with the development of alternative fuels.

The alternative fuel mixture credit was originally intended to encourage
the development and use of alternative fuels as a way to decrease global warming
pollution. But by adding fossil fuel to their black liquor mix, Bingaman
says, paper companies are rewarded 50 cents a gallon for doing the
opposite. Id.

Bingaman wasn't the only critic. Canada joined with other countries to demand that the US end the paper industry subsidy, threatening a trade action because of the way the credit had distorted global pulp markets. Schott's Vocab: Black Liquor, NY Times, June 11, 2009.

Some companies had in fact used diesel all along in their effort to burn their own byproduct to produce energy, while others had changed the fuel blend to benefit from the tax credit. Companies claimed that they are doing exactly what the law intended. The Natural Resources Defense Council disagreed, calling it a "travesty" because it has meant reduced reliance on biomass fuels and increased consumption of fossil fuels "in order to rip off the American taxpayer." Lawmakers May Limt Paper Mills' Windfall, NY Times (Apr. 17, 2009).

This particular credit is supposed to sunset at the end of 2009, but companies wanted it continued. Let's face it, few corporations that have found a piece of corporate welfare in the Code are interested at all in seeing that "entitlement" turned off. The amounts are significant--for International Paper, $71.6 million for just one month from mid-November to mid-December last year. See Papermakers Dig Deep in Highway Bill to Hit Gold, Washington Post, Mar. 28, 2009. Not surprisingly, representatives of pulp mill states seem to think the credit is great--Republican Olympia Snowe called it a "critical lifeline to thousands of paper mills". Snowe, What the Black Liquor Tax Credit Means for Maine, Apr. 25, 2009.

The Obama administration wanted to stop the billions flowing under this provision to the paper industry, we were told in May. See Obama Seeks to Halt Alternative Fuel Tax Credit for Paper Industry, Washington Post, May 9, 2006. At $6 billion a year, eliminating the credit--even retroactively for 2009 (it expires in December, unless extended)-- for the paper industry could generate some revenue and at least some in Congress were considering just that. See Black Liquor Tax Credits: A Closing Loophole for the Pulp & Paper Industries, Accuval, Sept. 2009. Of course, the companies lobbied for maintaining it through 2009 and in fact for extending it for at least three years. See Appleton Papers et al, Comments to the Senate Finance Committee on the Alternative Fuel Mixture Tax Credit (July 9, 2009).

Now, it turns out that there is another biofuel tax credit that already extends through 2013, passed as part of the 2008 Farm Bill. See Voegele, IRS: Cellulosic biofuels are eligible for tax credit, BioMass Magazine (Dec. 29, 2008) (describing Notice 2008-110, which describes the tax credits under sections 40A, 6426, and 6427(e) for biodiesel and cellulosic biofuels, enacted in the 2008 Farm Bill for the years 2010-2013). See Committee on Finance, Finance Committee Leaders Detail Elements of Farm Bill Tax Package, page 3, Apr. 14, 2008.

Black Liquor is certainly cellulosic, so the mills may have something even better to replace the expiring black liquor alternative fuels tax credit--instead of 50 cents a gallon, they may qualify for the cellulosic biofuel credit amounting to $1.01 a gallon! Let's see. That'd apparently mean a subsidy double the current one invested in "incentivizing" paper mills into doing what they've already been doing since 1930--converting wood waste into a source of energy to power the mills. See Donville, U.S. Paper Makers' Black-Liquor Tax Break May Reach $25 Billion, Bloomburg.com (Oct. 15, 2009) (quoting Mark Connelly that we should "Think of this as a potential black-liquor II" and Marty Sullivan as forecasting "$25 billion in tax reductions for pulp producers claiming the cellulosic biofuel tax credit over the next three years").

This credit for the paper industry is of slightly smaller magnitude than the bailout we gave the auto industry. In both cases, the argument is that these industries employ many who would otherwise lose their jobs, and who but the government will be willing to help them through these extraordinarily tough times. Yet both industries produce a product that we ought to learn to do without--the gas guzzlers that Detroit was producing pollute the air, require the destruction of vast land for roads, and use enormous amounts of energy in the process, while pulp mills chew up world forests at a frightening rate producing tons of waste that must be absorbed.

I wish it were as easy to get Congress to increase the taxes owed by the superrich as it is to get them to add boondoggles for one industry or another in the form of a tax break in the tax code. I want to see alternative energy succeed, but I'm not sure these tax credits are targeted sufficiently at the new technologies that we should be encouraging.

Once of the things that was clear at CGI this week is that the power companies that have looked into alternative energy sources have quickly realised they are not only good publicity but profitable (i.e., lower cost when used to scale). Florida Power & Light (discussed here) expanded an already major commitment, mostly in FL and CA. Jim Rogers of Duke Energy—a man who, since at least 2001 at Cinergy, has been going around saying things like "I cause 1% of the carbon put into the atmosphere. What are we going to do about that?" (It's much more since Duke Energy acquired Cinergy) and therefore is described in the business press as eco-friendly. (See here or here, for example.)&mash;was all over the place, announcing commitments and partnerships. And those are just the CEOs who were most visible at CGI this week, even ignoring the ExxonMobil people. (I looked for BP, but didn't see anyone. Probably next year.)

It should come as little surprise that the energy and power companies want to do something about Anthropogenic Global Warming: they went through the spike in oil prices a couple of years ago as well, and saw the customer reaction. If there was any doubt that it's not just a good idea but good business as well, $150/barrel and home heating oil spikes that flood the complaint lines and see the orders decline only solidified the idea. (Not to mention that they employ many of the people who will be leading the R&D of those alternative sources, from OTEC to solar to the newer, safer generation of nuclear plants.)

And now, we have utility companies making a sane decision: don't work with people who actively work against you. As Buphonia notes, Pacific Gas & Electric and PNM Resources of New Mexico have both decided to pull out of the U.S. Chamber of Commerce.

PG&E:

We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored. In our opinion, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disingenuous attempts to diminish or distort the reality of these challenges are quite another.

PNM Resources:

"At PNM Resources, we see climate change as the most pressing environmental and economic issue of our time. Given that view, and a natural limit on both company time and resources, we have decided that we can be most productive by working with organizations that share our view on the need for thoughtful, reasonable climate change legislation and want to push that agenda forward in Congress.

As a result, we have decided to let our membership in the U.S. Chamber lapse when it expires at the end of this year."

Somebody tell Joe Conanson. For an Aussie Conservative perspective, see here.

This one’s going to be long because a lot of general themes get presented. Those looking for the shorter version may want to just go to the website and watch the videos.*

William Jefferson Clinton (WJC) introduces the proceedings by giving a background on the Clinton Global Initiative (CGI). CGI began in 2005, and required each participant to make a specific, measurable commitment. (This statement is followed by shot of Jessica Alba and Cash Warren, possibly because they started dating that year, but probably just because the director liked the shot.) Almost all commitments that were made then were multi-year (generally 3- to 5-year commitments). Five years into the CGI, about one-fourth of the commitments made have been fully completed. The CGI has, for instance, given 48 million people better access to health care. (Isn’t that just about what National Health Insurance would do for the US alone? Still, it’s 48 million people who are often ignored.)

There have also been "unvaluable but invaluable" effort at reconciliations. (I checked this; "unvaluable" is indeed a word.) Unlike other conferences, attendees will receive only a gift bag—the gift to participants is "only a bag."** Each attendee (not certain if this includes the press, but I assume not) has been allocated 200 “points” that can be used at the “Giving Back Center.” For instance, one can donate “a P&G water filtration system” for 10 points.

I should mention that the organizers and donors to the conference are the clearest indication of the payoff from WJC’s “third way” efforts: Tom Golisano, for instance, is cited as a founding and continuing sponsor. Other major sponsors and donors to the conference include P&G, ExxonMobil, and APCO Worldwide (who are providing Wi-Fi access). I half expected to see ADM listed. (Matt Damon’s appearance sponsored by?)

(That ExxonMobil is a major sponsor of a conference that is placing Climate Change front and center in its discussions [see below] is a sign of either encouragement or a coming paradigm shift. Perhaps both.



WJC noted that Participants not invited back unless they do something toward their commitment during the year. However, due to the Global Financial Crisis, several previously-made commitments have had to be extended. (Three-year goals have become five-year goals, fives have become seven. This mirrors the year in which I expect to be solvent again.)

And then WJC talks about what WJC is best at talking about: po9litics. He notes that there are two questions that are asked in any political discussion: 1) What are you going to do? 2) How much money are you going to spend on it? Politicians almost never discuss how to do it to maximize positive impact in other people’s life. And it is that discussion that the CGI is all about.

He proceeds then to introduce a pairing that was made possible by last year’s CGI: Gary White and Matt Damon of water.org. The statistics flow from his (WJC’s) tongue: one billion people lack water, and 2.5 billion lack sanitation facilities. He loves this, and it's somewhat infectious.

Water.org is an outgrowth, I gather, work that Gary White has been doing since 1990. Mr.White describes the economy before Watercredit was founded, where people paid 25% of their gross income for clean water, or had to borrow money from loan sharks at 125% interest rates to install toilets. By combining microfinance with technology transfer, water credit was able to ameliorate this situation in many areas—and its loans are repaid 97% of the time. I can think of several mortgage lenders who would like that repayment ratio.

Matt Damon then announced a new commitment for water.org, in that they are extending their efforts into Haiti, where 51% of the rural population lacks clean drinking water and 29% of the urban population lacks proper sanitation facilities. They are able to do this in part due to a generous commitment from the Ex;it Foundation. Many organizations are getting some good, useful publicity here.

The next presenter is Linda Lockhart of Global Give Back Circle, whose group is devoted to Educational Progress in Kenya for girls. Again, the source for this group was through CGI Connect. (Ms. Lockhart claims to have been surprised when she entered the keywords for her group’s goal [education, women] and immediately received multiple responses from organizations. (We clearly do not travel in the same circles.) The group’s efforts were rewarded when they discovered one of the root causes of women dropping out: lack of shoes. Teaming up with, among others, Microsoft, they presented the feel-good moment of the Opening Ceremonies with three Kenyan girls speaking--often in unison, sometimes sotto voce—about the good that Global Giveback Circle did for them.

At this point, the Plenary Session begins. WJC introduces Muhtar Kent, President and CEO of Coke. Mr. Kent speaks how Equal allocation of resources in Sub-Saharan Africa would, in and of itself, increase production 10-20%. In the current situation, women’s mobility is severely more restricted than men’s, of course. Kent, too, seems amazed to have learned this.

Kent is followed by Michelle Bachelet, current President of Chile and also, the first female defense minister in Latin America. Being a female politician, she not only has noticed but also has a strong interest in “soft” issues.

Mike Duke, the current CEO of Wal-Mart (WMT), ran the International Division before ascending to the chairmanship. WJC notes that WMT now offers health insurance to its employees, as well as having made a major effort to reduce its greenhouse gas emissions. (WJC stated, I believe, that WMT’s stock began rallying only when they announced their “global warming initiative.” I cannot find the evidence of this, though I didn’t do a thorough search.) Duke notes that a 5% reduction in their packaging alone was the equivalent of taking 210,000 diesel trucks off road. (And it saved them money. This theme will recur throughout from the CEOs.)

After this, WJC introduces Australian Prime Minister Kevin Rudd, describing him as having spoken about climate change in “excruciating detail,” which may well be the first time someone has done that to WJC instead of the reverse. Rudd notes that Australia is the country that has been the hardest hit by Anthropogenic Global Warming, and is the leading proponent of the other first-day theme: the G-8 giving way to G-20.

The particpants's discussion on a Rock Following.


*If they post them; let me know in comments if you can find the video on the site and I'll add a direct link.

**Compare with most conferences, where you get a bag and almost enough "swag" to cover the retail cost of the membership (which, for attendees, was $1,000 minimum).

I'm staring at my car, which survived the past six NJ winters without looking much the worse for wear.

At least compared to today.

Data research question of the Day: Any way to get data on the number of car washes done in the winter in, say, the latitude of the lower Rustbelt over the past thirty years?

I would give odds that the milder winters have driven the number down, even adjusted for income changes, etc.

I'm staring at my car, which survived the past six NJ winters without looking much the worse for wear.

At least compared to today.

Data research question of the Day: Any way to get data on the number of car washes done in the winter in, say, the latitude of the lower Rustbelt over the past thirty years?

I would give odds that the milder winters have driven the number down, even adjusted for income changes, etc.

by Tom Bozzo

I took a gander at the Prometheus blog post by Roger Pielke, Jr. [*], mentioned by reader CoRev in yesterday's guest post. Recall that the core of Pielke's argument is that if we assume a "fixed technology baseline," then a lot of "automatic decarbonization" doesn't happen and the associated cost of reducing CO2 emissions skyrockets. Now, you might ask (as I did), what do the terms in quotes mean?

"Automatic decarbonization" results from autonomous processes by which economies become more energy-efficient and/or carbon-efficient per unit of output. So while the carbon emissions from world final energy use increased roughly 25% from 1990 to 2005, according to the IEA's Worldwide Trends in Energy Use and Efficiency — from 17 to 21.5 billion tons (Gt) — the world economy expanded by roughly 66% over the same time according to the IMF. Had those emissions simply expanded with the world economy, 2005 emissions would have been some 6.7Gt (30%) greater than they actually were.

Pielke's "fixed technology baseline" assumes the carbon intensity of the economy will not autonomously decline. In this regard, "fixed technology" is something of a misnomer; it's more accurately termed a fixed carbon intensity baseline. [Added: Pielke notes in the comments that it's most accurately termed "fixed energy intensity." -TB] One argument for it is that there was a latent demand to emit that extra 6.7Gt in 2005, and the actual emissions result involved some net improvements in energy efficiency that are unavailable for additional improvements on the margin. Alternatively, it might be thought of as a variation on "past performance does not guarantee future returns." Some of the risks along those lines are clear, for instance the Chinese and Indian economies could backslide in carbon intensity with growth of private automobile use that could swamp efficiency improvements in the US and EU.

However, as a practical matter, it's worth keeping in mind that the recent history involved a fair amount of "automatic decarbonization" despite the bulk of the period being notable for historically cheap fossil fuels. The obvious economic implication is that there were technically feasible fuel efficiency (and by extension decarbonization) improvements that went unimplemented for being too costly at prevailing fuel prices. So the question is less whether, but how large, the autonomous reductions will be. Indeed the IEA's energy use report totals up a few Gt of emissions reductions that could be obtained currently by propagating current "best practices" throughout the industrial and household sectors.

The fixed carbon intensity baseline raises its own nontrivial questions, namely just where the fossil fuels would come from to increase CO2 emissions by a factor of five over the next 45 years, since the scenario assumes fossil-fuel production is unit elastic with respect to output. The Peak Oil community would surely beg to differ. Saudi Arabia hopes to add a couple percent to world oil production in the next couple years. Iraq, un-CF'ed, might become more of a Saudi Arabia than, well, an Iraq. The problem is that we'd need dozens of new Saudi Arabias, and lots of new Powder River Basins, and so on, to be in a position to emit that much carbon even if for some reason we wanted to. Perhaps not surprisingly, one of the non-flood-related business stories of the week around here concerned a big order for wind-turbine parts destined for 10GW of new wind power generation in China.

There is also a conceptual problem with Pielke's costing the entire decarbonization effort from the fixed carbon intensity baseline, at marginal costs of hundreds of dollars per ton. The autonomic emissions reductions are inherently the low-hanging fruit: stuff that pays off for other reasons and has carbon emissions reduction as side-effects costs nothing or less per avoided ton of carbon.

So Pielke's upper figure of around 13% of world gross product really assumes that sources of CO2 emissions reduction that we know to be essentially free now and moreover are pretty big deals (e.g. efficiency improvements in the household, service, and non-household transportation sectors) actually don't exist or are costly. You might call it an upper bound, but there are reasons to prefer least upper bounds, and this is not such an example. Is the cost of decarbonization sensitive to the amount of autonomous reduction? Sure. But Pielke's bigger figures are on their face throwing off more heat than light.


[*] Note that Roger Pielke, Sr., is an atmospheric scientist; Pielke, Jr., is a political scientist.

by Tom Bozzo

I took a gander at the Prometheus blog post by Roger Pielke, Jr. [*], mentioned by reader CoRev in yesterday's guest post. Recall that the core of Pielke's argument is that if we assume a "fixed technology baseline," then a lot of "automatic decarbonization" doesn't happen and the associated cost of reducing CO2 emissions skyrockets. Now, you might ask (as I did), what do the terms in quotes mean?

"Automatic decarbonization" results from autonomous processes by which economies become more energy-efficient and/or carbon-efficient per unit of output. So while the carbon emissions from world final energy use increased roughly 25% from 1990 to 2005, according to the IEA's Worldwide Trends in Energy Use and Efficiency — from 17 to 21.5 billion tons (Gt) — the world economy expanded by roughly 66% over the same time according to the IMF. Had those emissions simply expanded with the world economy, 2005 emissions would have been some 6.7Gt (30%) greater than they actually were.

Pielke's "fixed technology baseline" assumes the carbon intensity of the economy will not autonomously decline. In this regard, "fixed technology" is something of a misnomer; it's more accurately termed a fixed carbon intensity baseline. [Added: Pielke notes in the comments that it's most accurately termed "fixed energy intensity." -TB] One argument for it is that there was a latent demand to emit that extra 6.7Gt in 2005, and the actual emissions result involved some net improvements in energy efficiency that are unavailable for additional improvements on the margin. Alternatively, it might be thought of as a variation on "past performance does not guarantee future returns." Some of the risks along those lines are clear, for instance the Chinese and Indian economies could backslide in carbon intensity with growth of private automobile use that could swamp efficiency improvements in the US and EU.

However, as a practical matter, it's worth keeping in mind that the recent history involved a fair amount of "automatic decarbonization" despite the bulk of the period being notable for historically cheap fossil fuels. The obvious economic implication is that there were technically feasible fuel efficiency (and by extension decarbonization) improvements that went unimplemented for being too costly at prevailing fuel prices. So the question is less whether, but how large, the autonomous reductions will be. Indeed the IEA's energy use report totals up a few Gt of emissions reductions that could be obtained currently by propagating current "best practices" throughout the industrial and household sectors.

The fixed carbon intensity baseline raises its own nontrivial questions, namely just where the fossil fuels would come from to increase CO2 emissions by a factor of five over the next 45 years, since the scenario assumes fossil-fuel production is unit elastic with respect to output. The Peak Oil community would surely beg to differ. Saudi Arabia hopes to add a couple percent to world oil production in the next couple years. Iraq, un-CF'ed, might become more of a Saudi Arabia than, well, an Iraq. The problem is that we'd need dozens of new Saudi Arabias, and lots of new Powder River Basins, and so on, to be in a position to emit that much carbon even if for some reason we wanted to. Perhaps not surprisingly, one of the non-flood-related business stories of the week around here concerned a big order for wind-turbine parts destined for 10GW of new wind power generation in China.

There is also a conceptual problem with Pielke's costing the entire decarbonization effort from the fixed carbon intensity baseline, at marginal costs of hundreds of dollars per ton. The autonomic emissions reductions are inherently the low-hanging fruit: stuff that pays off for other reasons and has carbon emissions reduction as side-effects costs nothing or less per avoided ton of carbon.

So Pielke's upper figure of around 13% of world gross product really assumes that sources of CO2 emissions reduction that we know to be essentially free now and moreover are pretty big deals (e.g. efficiency improvements in the household, service, and non-household transportation sectors) actually don't exist or are costly. You might call it an upper bound, but there are reasons to prefer least upper bounds, and this is not such an example. Is the cost of decarbonization sensitive to the amount of autonomous reduction? Sure. But Pielke's bigger figures are on their face throwing off more heat than light.


[*] Note that Roger Pielke, Sr., is an atmospheric scientist; Pielke, Jr., is a political scientist.

Building a New Blog

One of my interests is Global Warming. While visiting the many global warming sites I noticed that many of the questions had to do with finding the latest data and comments. Googling I found that there appeared to be very few sites that consolidate this kind of information. So, in an effort to help solve this problem I am starting Global Warming Clearinghouse.

If you have any suggestions, recommendations or preferred sources leave a comment at corev@comcast.net or GWC.
........


rdan here - This is a daunting task both from the variety of sciences involved, old versus new data, hyperbole written to date, and deciding what is "balanced". However, it appeared it could be a way to start on a site dedicated to the topic. I had thoughts but will leave them in comments.

Update: Courtesy change of verb in second sentence.

Building a New Blog

One of my interests is Global Warming. While visiting the many global warming sites I noticed that many of the questions had to do with finding the latest data and comments. Googling I found that there appeared to be very few sites that consolidate this kind of information. So, in an effort to help solve this problem I am starting Global Warming Clearinghouse.

If you have any suggestions, recommendations or preferred sources leave a comment at corev@comcast.net or GWC.
........


rdan here - This is a daunting task both from the variety of sciences involved, old versus new data, hyperbole written to date, and deciding what is "balanced". However, it appeared it could be a way to start on a site dedicated to the topic. I had thoughts but will leave them in comments.

Update: Courtesy change of verb in second sentence.