A Climate of Catastrophe
The Editorial Board, The Wall Street Journal, August 9, 2021
The facts in the new U.N. report aren’t as dire as its advertising.
The world awoke Monday after a logy August weekend to some alarming news: The climate Apocalypse is nigh, humanity is to blame, and unless the world remakes the global economy, havoc and death are inevitable. Repent of your sins all ye who enter here.
That’s only a mild overstatement of the media’s fire-and-brimstone accounts of the latest report by the United Nations Intergovernmental Panel on Climate Change (IPCC), a collection of scientists and politicians who purport to offer the best evidence on climate change. Prepare for days of reading what a terrible person you are for using a natural gas stove.
The gargantuan report will take time to plow through, but a read of the 41-page “summary for policymakers” and perusal of the rest suggests that there is no good reason to sacrifice your life, or even your standard of living, to the climate gods. Hot rhetoric aside, the report doesn’t tell us much that’s new since its last report in 2013, and some of that is less dire.
“It is unequivocal that human influence has warmed the atmosphere, ocean and land,” says the report in its lead conclusion. But no one denies that the climate has been warming, and no one serious argues that humans play no role. How could eight billion people not? Adding the adjective “unequivocal” adds emphasis but not context.
The report says the Earth has warmed by 1.1 degree Celsius since the last half of the 19th century, which is 0.1 degree warmer than its last estimate. This is not apocalyptic. The five-alarm headlines arise from the predictions of future temperature increases if greenhouse gas emissions, especially CO2, continue to increase.
Yet the report’s estimate of “climate sensitivity”—its response to a doubling of CO2—has moderated at the top end. The likely sensitivity range, says the report, is 2.5 to 4 degrees Celsius higher than in the late 1800s. The likely range was 1.5 to 4.5 in the 2013 report.
The new report offers five climate scenarios based on estimates of CO2 emissions. The intermediate scenario’s “best estimate” is a 1.5 degree increase by 2040 and a range of 2.1 to 3.5 by 2100. This is a highly speculative estimate on which to bet the U.S. economy.
The biggest difference is the new report’s direct linkage of warming to catastrophic weather events such as hurricanes, severe heat waves or rain events, drought and so on. The summary says this is based on “new methodology” and evidence, which means computer models. We await what independent climate experts say as they dig into these models.
But we know climate models are far from perfect, which explains the varying “confidence” levels attached to the report’s predictions. Steven Koonin, the scientist, and former Obama official, devotes an illuminating chapter to “many muddled models” in his recent book about climate science, “Unsettled.”
The report also downplays some of the disaster scenarios you read about. It has “low confidence” that the Antarctic Sea ice will melt. It says it is likely that tropical cyclones have increased around the world, but there is “low confidence in long-term (multi-decadal to centennial) trends in the frequency of all-category tropical cyclones.” Keep that in mind when the next hurricane becomes proof in the press of climate catastrophe.
Even the report’s prediction that warming oceans will melt Arctic Sea ice doesn’t sound like a scene from “Waterworld.” The “Arctic is likely to be practically sea ice free in September at least once before 2050” under the five scenarios. Only once in 29 years, and not the rest of the fall and winter? Further thawing of the permafrost is said to be likely but how much or to what effect is uncertain.
Keep in mind that the IPCC report is a political document. It is intended to scare the public and motivate politicians to reduce CO2 emissions no matter the cost, which by the way the report summary never mentions. No less than Al Gore admitted this on PBS in October 2018 when the IPCC issued an interim report: “The language the IPCC used in presenting it was torqued up a little bit, appropriately. How do they get the attention of policymakers around the world?”
Torqued up is right. The U.N. Secretary-General called the new report a “code red for humanity.” And someone at Reuters actually wrote this sentence: “Further warming could mean that in some places, people could die just from going outside.”
If they really believe this, the policy response has failed miserably. Politicians have spent trillions of dollars subsidizing renewable energy with no effect on climate. Nuclear power, which would sharply reduce CO2, is taboo among the greens. Innovation in developing low-cost natural gas, which substitutes for coal, may have done more than any government policy to reduce U.S. emissions. Yet President Biden wants to crush the gas industry with regulation.
The IPCC report doesn’t justify putting the U.S. economy into the hands of government. A sensible climate policy will continue to monitor trends, while allowing a free economy to find solutions and build the wealth that will allow for adaptation and amelioration if the worst happens. This lacks the drama of the Apocalypse, but it will better serve the world.
Offshore acreage dominates 2021 licensing rounds worldwide
World Oil, August 10, 2021
Over 35% of the acreage available in licensing rounds that are either open or scheduled to close in H2 2021 are located in shallow water, while ultra-deep water and deepwater acreage account for 24% and 19%, respectively, according to GlobalData, a leading data and analytics company.
The company’s report, ‘H2 2021 Global Bid Round Outlook – Licensing Rounds in 2021 Remain Low Due to the Impact of COVID-19, Although Expectations have Grown for the Coming Years’, reveals that in H2 2021, 16 licensing rounds that are currently open are expected to close by the end of the year. Asia is hosting the largest number of licensing rounds in H2 2021 with six, followed by South America with three.
Among the rounds which are scheduled to close in H2 2021, Malaysia is offering the largest volume of acreage in the PETRONAS Licensing Round 2021 (MBR 2021), which will be held in August 2021. Malaysia is followed by the 2021 Offshore Acreage Release Round in Australia, and the International Bid Round 2021 in Egypt.
Nikolas Pachipis, Oil & Gas Analyst at GlobalData, comments: “Ongoing financial discipline and cuts in the exploration budget by many upstream companies could push exploration activities toward mature basins and areas with existing infrastructure. Companies with high capital availability in the current environment may be in an advantageous position to participate in licensing rounds and capitalize on reduced service costs and competition.”
Among countries, Australia, Brazil, Canada, India, and Indonesia are expected to host a major portion of the licensing round activity that is scheduled to close in H2 2021.
THE HIDDEN COSTS OF A VIRGINIA NATURAL GAS BAN
Consumer Energy Alliance, August 2021
Across the U.S., local governments have proposed measures to ban or discourage the use of natural gas hookups for new homes and businesses. Some have even gone so far as to push for a complete phase-out of services to existing customers that rely on natural gas or propane.
The consequences of these policies that prohibit access to affordable energy jeopardize those who can least afford it. These developments are especially troubling as the nation grapples with the COVID-19 pandemic recovery.
When Texas faced power reliability challenges earlier this year, it became evident that consumers need always-on options like natural gas to balance the grid and ensure they have the power and heat they need during extreme weather events, and for everyday service as well.
Using open-source consumer data, CEA developed a cost calculator to provide an estimate of what a typical household in Richmond, Virginia, could expect to pay if policies to ban natural gas service and usage are put into place.
If forced onto families, the cost would be astronomical. An energy ban could cost as much as $26,132 for a Richmond household to retrofit existing appliances. depending on the appliance models, home configuration, labor, and reliance on natural gas.
These findings dovetail with previous CEA research that found that the cost to replace major gas appliances in homes nationwide would be more than $258 billion.
Further, as the report shows, a tremendous amount of new transmission infrastructure will need to be built at significant cost to Virginians to meet the demands to “electrify everything.” While CEA supports voluntary efforts by consumers to use the types of appliances and services they prefer, the cost of forcing actions onto them must be balanced against costs to households and real-world, practical considerations.
Byproducts pay for silver at Greens Creek
Shane Lasley, North of 60 Mining News, August 5, 2021
Hecla Mining Company Aug. 5 reported that the gold, zinc, and lead produced at Greens Creek generated more than enough cash to pay the costs to produce the 5.14 million ounces of silver during the first six months of 2021.
After calculating in byproduct credits, the cash cost to produce an ounce of silver at Greens Creek during the first half of the year was negative $1.65. This means that every ounce of silver produced at the underground mine earned Hecla $28.10, which includes the average price the company received for the silver it sold plus the extra credits for the other metals.
The all-in sustaining costs per ounce of silver produced at Greens Creek, a more comprehensive measure that includes sustaining costs such as exploration and underground development, was $1.14 after byproduct credits.
This low cost to produce silver at Greens Creek is due to the increases in the prices for the 26,125 oz of gold, 27,964 tons of zinc, and 10,551 tons of lead also produced at the mine.
Hecla’s realized price for gold during the first half of this year is up 8%, zinc jumped by more than 50%, and lead increased by nearly 39%, compared to the first six months of 2020.
With Hecla’s realized silver price also increasing by 59% compared to the first half of last year, the Greens Creek mine helped to drive strong revenues for the Idaho-based miner.
In fact, the second quarter is the company’s second best in terms of revenues, gross profit, and cash generated by its five North American operations.
“Despite the continuing pandemic, Hecla had near-record results across a number of metrics improving on the consistent performance of the past two years,” said Hecla Mining President and CEO Phillips Baker, Jr. “We generated over $54 million of free cash flow due to a combination of lower treatment charges, increasing throughput and recoveries, and higher prices. Our American silver mines produce more than 40% of all the silver mined in the United States and with silver being important for the transformation to renewable energy, electric vehicles and 5G, Hecla’s growing silver production and low costs make it well-positioned for even better results in the future.”
Accounting for more than 70% of the silver coming out of Hecla’s mines, Greens Creek is a significant contributor of this American silver and is expected to be a major beneficiary of the growing need for silver in green energy, transportation, and modern communications.
Hecla continues to forecast that Greens Creek will produce 9.5 million to 10.2 million oz of silver this year and has increased its gold production guidance for the Southeast Alaska mine to 43,000 to 45,000 oz, from its previous 2021 guidance of 40,000 to 43,000 oz. The estimate for 2021 cost of sales has been updated to $222 million. Due to lower expected capital costs and higher byproduct credits, Hecla has adjusted the estimated cash cost to produce an ounce of silver at Greens Creek this year to around zero and all-in sustain costs to roughly $3.65.
Energy winners and losers in the bipartisan infrastructure package
George Cahlink, Jeremy Dillon, ENERGYWIRE, August 10, 2021
The largest infrastructure bill in the nation’s history that passed the Senate over the weekend is being hailed as a bipartisan breakthrough with $550 billion in new spending.
Energy advocates and some green groups have found much to like in the deal — including major investments in clean energy research and the nuclear industry. But they also are concerned over its lack of a broad tax title focused on renewables and worry that some of the bill’s pay-fors will have adverse impacts on oil and consumer prices.
Here’s a look at the winners and losers in the mammoth, more than 2,700-page bill that is headed to the House in the coming weeks.
The most unexpected victory for greens may have come with the revival of the Superfund excise tax that was killed off by Republicans during Bill Clinton’s presidency.
The deal would reinstate a tax on chemical production with those dollars then directed toward Superfund projects. It’s expected to generate $14.4 billion over 10 years.
Backers of the proposal, including Energy and Commerce Chair Frank Pallone (D-N.J.), are credited with introducing the tax return late in the talks when industry groups had little time to oppose it and lawmakers were desperate to cover the bill’s cost (E&E Daily, Aug. 9).
The return of the fee is likely to reverse a slump in Superfund cleanup work. Thirty-four Superfund projects lacked funding to get started in 2020, according to an analysis by the Public Interest Research Group, which rallied greens behind reviving the tax.
The leading opponent of the plan, the American Chemistry Council, has warned the new tax would lead to higher prices for consumer goods.
Loser: Electric vehicles
The bill may fall short of the infrastructure required to meet President Biden’s recent goal that half of all cars sold in the U.S. in 2030 be electric (Energywire, Aug. 6).
Biden had promised to build 500,000 electric vehicle charging stations, but the White House started downplaying that commitment after money was cut from the bipartisan infrastructure deal (Climatewire, July 8).
The spending package would provide $7.5 billion for EV chargers. That’s half of what the administration had planned for, though some officials think it’s still enough to hit Biden’s charger goal.
Greens were also not pleased with how the legislation doles out $7.5 billion in transit funds for clean buses and ferries. They say the bill is written in a way that would allow some of those dollars to go toward vehicles powered by fossil fuels as well.
Of the total, $2.5 billion would go to zero-emissions buses, $2.5 billion would go to ferries and $2.5 billion would go to low-emissions buses — allowing for the continued use of fossil fuels.
Democrats are likely to push for more charging stations and more dollars for zero-emissions public transit in the pending budget reconciliation package.
Winner: Shaheen-Portman energy efficiency bill
After a decade of false starts and near misses, Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio) may have finally found a landing zone for their energy efficiency package.
“This historic infrastructure legislation is a once-in-a-generation opportunity to rehabilitate our electric grid, transportation and infrastructure networks with an eye toward building a more sustainable future,” Shaheen said in a statement. “I’m glad that key provisions of our energy efficiency legislation played an important role in that effort and will continue to work across the aisle to push it forward.”
Among its provisions, the measure would authorize a $45 million annual grant program over the next five years to implement cost-effective building codes for efficiency and resilience as well as $120 million for centers that identify efficiency opportunities in manufacturing and industrial facilities.
Residential and commercial buildings make up approximately 40% of all energy use in the United States. The legislation had multiple chances of passage in the past, but opposition has found ways to sink it each time (E&E News PM, July 17, 2019).
In 2014, a fight over Obamacare doomed its floor consideration. Its inclusion in a failed 2016 energy bill was among the reasons House Republicans scuttled the package. Parts of the 2016 energy bill were included in last year’s successful Energy Act of 2020.
The Senate’s commitments appear ironclad this time. The Senate voted down an amendment from Sen. John Barrasso (R-Wyo.) that would have stripped from the bill provisions related to building code efficiency improvements.
Loser: Strategic Petroleum Reserve
Long seen as Congress’ piggy bank, the Strategic Petroleum Reserve may be reaching its limit as an offset for congressional spending.
The infrastructure package includes a provision mandating the sale of $6 billion in crude oil from the nation’s emergency stockpile to help pay for the bill, amounting to approximately 87.6 million barrels.
Combined with previous congressionally mandated drawdowns used to pay for previous budget agreements, health care spending and highway bills, DOE has a responsibility to sell 359 million barrels of crude oil over the next decade from the SPR.
Its current inventory sits at 621 million barrels, as of the end of July, according to the U.S. Energy Information Administration. In total, those mandated sales will cut the reserve in half and represent inventory that’s approximately 36% of its total storage capacity.
Originally founded in the aftermath of the 1973-74 Arab oil embargo, the reserve has been meant to hold crude oil in case of a global supply disruption that would send oil prices skyrocketing. In recent years, the reserve has largely been used in the aftermath of destructive hurricanes in the Gulf of Mexico.
Per international agreements, the reserve is supposed to hold at least 90 days of the previous year’s net imports, according to the Congressional Research Service. The U.S. was a net exporter of crude oil last year, which opens the pathway to additional drawdowns and a shrinking of the reserve, but without much consequence.
The Trump administration sought a $3 billion infusion in 2020 to help refill the reserve as global oil prices tanked amid the pandemic and a Saudi/Russia price war. Congress ignored that request (Greenwire, April 21, 2020).
Winner: Nuclear industry
Earlier this year, the nuclear industry’s top trade association, the Nuclear Energy Institute, outlined a pair of proposals it said were needed to help nuclear energy survive and thrive in order to bolster the Biden administration’s clean energy goals (E&E News PM, May 6).
One of those goals — a credit program to save at-risk reactors from prematurely shutting down — is included in the infrastructure package. The second, a clean energy standard, is looking likely for the Democrats’ reconciliation package.
Such victories may make the nuclear industry one of the biggest winners under the Democratic Congress.
The credit program would set aside $6 billion over the next five years for reactors in wholesale markets that are struggling to keep up with cheap natural gas and more flexible renewable energy deployment. Combined with flat electricity demand in those markets, reactors across the Midwest and eastern United States have shut down over the past decade, taking carbon-free electricity with them.
The credit program should help reactors weather the initial onslaught of other power sources as states and the nation at large move toward clean energy mandates.
On top of that new program, advanced reactors got some certainty, as the package would fully fund a pair of demonstration projects first authorized by the Energy Act of 2020. That guarantee should help the next generation of reactor technology chart a path toward commercialization.
Loser: Clean energy taxes
Many environmental groups are taking a wait-and-see approach on a hoped-for expansion of renewable and energy efficiency taxes favored by the White House.
Major energy tax code changes were not included in the infrastructure deal, although there are expectations those revisions will be a major focus of the $3.5 trillion budget reconciliation package Senate Democrats are expected to unveil this week.
Lisa Frank, executive director for the Washington legislative office of Environment America, said the infrastructure bill’s major new investments in the grid will make it easier to transmit renewable energy. But, she said, it was a “missed opportunity” that tax incentives for solar, wind, energy efficiency and EVs were not paired with the new spending.
“Clean energy taxes are one of the top pieces that we’re still urging Congress to get done this year,” Frank said.
Sarah Ladislaw, managing director for RMI, said making the existing investment tax credit and production tax credit for renewables refundable and transferable would also have a “huge impact” in long-term clean energy deployment. She said it should be a top priority in the expected tax title in the budget legislation.
A range of tax proposals remain in play.
Senate Finance Committee Democrats passed a partisan clean energy tax plan, S. 1298, in May, offered by Finance Chair Ron Wyden (D-Ore.), to consolidate dozens of energy tax breaks into three technology-neutral categories (E&E Daily, May 27).
A separate, bipartisan plan recently floated in the Senate, S. 2475, would offer a PTC worth up to 60% or an ITC worth
From the Washington Examiner, Daily on Energy:
SCOOP…REPUBLICANS CALL ON BIDEN TO OPPOSE EUROPEAN UNION CARBON TARIFFS: A group of 19 Senate Republicans is calling on President Joe Biden to “safeguard” U.S. commercial interests and oppose the European Union’s plan to impose “carbon tariffs” against countries that lack aggressive emissions-reduction policies.
The EU last month unveiled a carbon border adjustment proposal as a way to prevent domestic industries from moving overseas in order to escape the bloc’s aggressive plans to raise the price of using fossil fuels.
The long-anticipated move inaugurated a new form of protectionist trade policy linked to addressing climate change.
Senate Republicans led by Sen. Kevin Cramer of North Dakota wrote a letter to Biden, exclusively shared with me, warning the EU’s plan is “unfair to the U.S.” and would harm small manufacturers of products targeted by the scheme, such as steel, aluminum, cement, electricity, and fertilizer.
They called it a “guise to promote green protectionism.”
“Instead of punishing U.S. imports, our European allies should work with us to advance a common approach in curbing overseas emissions, particularly those from China,” wrote the Republicans, who also include Dan Sullivan of Alaska, Marco Rubio of Florida, John Barrasso of Wyoming, Tim Scott of South Carolina, John Cornyn of Texas, and more.
Yeah, but: The Senate Republicans did not comment in the letter on a similar proposal by Senate Democrats as part of a sprawling $3.5 trillion infrastructure and climate spending package to impose a “polluter import fee” on exporters of carbon-intensive goods, though it is far less detailed than the EU’s plan.