Friday, June 26, 2009

The Devil In The Climate Bill's Details


Yesterday's post was a summary of the so-called American Clean Energy and Security Act of 2009. Very soon, the House of Representatives, most of whom are at least superficially familiar with its provision, will be voting on this catastrophe-in-waiting.

The promoters of this monstrosity hail it as the way to America's energy independence and avoidance of global warming [now couched in the term "change"]. Behind the scenes is a massive effort to bring all aspects of energy, commerce, and individual decisions under the scrutiny and limitations of the Federal government and its bureaucratic minions. Career bureaucrats who have never held private-sector jobs will dictate how the marketplace should work.

An example:

Policies Act of 1978 (PURPA) to establish a combined efficiency and renewable electricity standard that
requires utilities to supply an increasing percentage of their demand from a combination of energy efficiency savings and renewable energy (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in 2021-2039).
Provides for: (1) issuing, trading, banking, retiring, and verifying renewable electricity credits; and (2) prescribing standards to define and measure electricity savings from energy efficiency and energy conservation measures.
Let's look at the March, 2009 baseline:
Figure 2: Net Generation Shares by Energy Source:
Total (All Sectors), Year-to-Date through March, 2009
Figure 2: Net Generation Shares by Energy Source: Total (All Sectors), Year-to-Date through March, 2009
"...other renewables (biomass, geothermal, solar, and wind) and other miscellaneous energy sources generated the remaining 3.9 percent of electric power (Figure 2)."
It is completely unclear how utilities will improve the "energy efficiency" portion of mandate... just as it is unclear how automotive companies will the achieve 30 mpg mandate for trucks by 2016. So, the real change has to be in how the 4% combined biomass, geothermal, solar, and wind becomes 6% ... a 50% increase ... in just 2-1/2 years! It really doesn't matter how, does it? The government's wish is our command.
Obviously, the simplest way to achieve this mix of energy sources is to reduce the other sources.
While this example shows the extent of how government wants to dictate the marketplace and the real possibility of major increases in our cost of purchasing electricity, the result is less onerous than the next provision:
Amends the Clean Air Act (CAA) to require the Administrator of the Environmental Protection Agency (EPA) to: (1) set forth a national strategy to address barriers to the commercial-scale deployment of carbon capture and sequestration; (2) establish an approach to certify and permit geologic sequestration; and (3) promulgate regulations to minimize the risk of escape to the atmosphere of carbon dioxide injected for purposes of geological sequestration. Amends the Safe Drinking Water Act to require the Administrator to promulgate regulations for sequestration wells.
This section is nothing more than pumping taxpayer and business dollars into the ground. There is no scientific or economic or environmental benefit from this provision. It is a complete governmental boondoggle. It is the same wrong-minded thinking that will pay farmers to not plant crops because the production of crops requires use of fuel that emits CO2... totally disregarding the fact that crops absorb CO2 to grow. There is no benefit. There is cost with no return.

This bill is an Orwellian nightmare and must be soundly defeated before the shit that is hitting the fan covers us all.


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CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)