Where Obama Is Wrong on Coal

Coal Use

Update! While Environmental Organizations are outraged, the recent Budget Bill in Congress rescinded the Obama Administration's banning of the Export-Import Bank to finance any coal power plants.

Coal Use in Developing Countries: As part of it's policy initiatives to reduce global carbon emissions, the U.S. is ending support for new coal-fired plants around the world. Except in "rare" situations of poverty (whatever that means), the U.S. will no longer contribute to coal projects financed by the World Bank and other international development banks.

Like other top-down attempts by governments to control carbon emissions (taxes, treaties), this U.S. "no new coal" policy uses an incorrect paradigm, and will not result in meaningful and needed global reductions.

A correct approach must always balance present humanitarian and economic needs with long-term climate science objectives -- utilizing a bottom-up model, tailored to provide multiple pathways to develop and sustain individual economies with needed lower carbon standards.

The Other Inconvenient Truth: While the below facts are on India (EIA data), these harsh realities are found throughout the developing world where poverty is common, not rare (e.g., India, Asia, Indonesia, Africa).

India suffers from severe shortages of electricity, where only 60% of rural households have access to electricity. Rural areas rely on traditional biomass for cooking, heating, and lighting because they lack access to other energy supplies. The biomass used in "open burning" is 62.5% from firewood, 12.3% from agricultural wastes, and 12.3% from animal dung.

Nearly one-fifth of today�s global population � 1.2 billion people � lives without access to electricity. Two-fifths of the population � 2.8 billion people � still relies on solid fuel such as wood, charcoal, cow dung, and coal in low-tech cooking and heating.

Often, it seems as though Industrialized Nations and Environmental Organizations become so overwhelmed by the specifics of Climate Change science (e.g., CO² PPM) that they lose focus on people -- where 35% of the Earth's population (2.5 billion people) don�t even have access to a basic human need of having a toilet.

A correct paradigm recognizes that reducing global carbon emissions is intrinsically linked to reducing world poverty. Addressing this just isn't about industrialized countries providing direct financial aid, but includes issues such as international trade and technology transfers to developing countries.

Size of World If Scaled by Poverty:(43% of the world population lives on $2 a day or less.)

World Coal Use: In writing this blog, the issue of "tone" is always important. Criticism of the U.S. No-Coal Policy is not saying that world coal use isn't a major concern (where 43% of current CO² emissions from fuel combustion are from coal). The problem is the rigidity of a "One Size Fits All" Policy for every developing economy.

A chart from the latest U.S. Department of Energy's (EIA) International Energy Outlook to 2040 illustrates this point. The future global Climate Change problem with coal use is overwhelmingly from China, not "all" developing countries.

For example, while coal use in India and the U.S. is projected to be approximately equal, India has 4 times the U.S. population (~1.2 billion versus ~300 million people) -- resulting in much lower emissions per-capita (per person).

Carbon Emissions Per Capita: The disparity in carbon emissions per-capita between industrialized countries versus developing economies has and will continue to be a major stumbling block in achieving any consensus on needed global actions. In the U.S., carbon emissions are currently over 19 tons per person -- a consumption rate over 17 times that of India (~1 ton per person).

Can International Treaties Ever Work?: At the latest U.N. sponsored conference on Climate Change in Warsaw, three events continue to raise "red flags" on the potential effectiveness of making international treaties the "centerpiece" in efforts to reduce global carbon emissions.

(1) The Double Standard Argument: There is increasing skepticism whether "any" meaningful agreement between industrialized and developing countries can ever be reached. Brazil's recent proposal (supported by 130 developing countries) would use carbon emission levels dating back to the industrial revolution to set limits on future emissions. Not surprisingly, the U.S. and EU rejected this proposal.

(Nations Scaled By Cumulative Emissions)

Developing countries argue that because Western industrialized nations have been emitting tremendous volumes of greenhouse gases for over 200 years, they must bear the most responsibility to rein in greenhouse gas emissions.

(2) Can Treaties Really Ever Be Binding?: Japan (the world's fifth largest greenhouse gas emitter) announced a scale-back in its plans to reduce carbon emissions from 25% to just 3.8% (which is actually a ~3% increase from 1990 levels). While Japan's action is certainly understandable resulting from the 2011 tsunami and earthquakes -- this raises a question whether any international treaty could ever be truly binding. Exceptions, ranging from natural disasters (as again recently demonstrated in the Philippines with typhoon Haiyan) to economic hardships will always be present.

(3) Money, Money, Money: As in prior Climate Change conferences, the critical issue of "who pays for necessary actions" was again never seriously addressed (with political reality). The general number tossed around is needed financial support (direct aid, loan guarantees) from industrialized to developing countries of $100 (�73) billion per year.

When Rigid Ideologies Drive Policy: While most environmental groups are applauding this U.S. "no new coal" policy, both they and the Obama Administration are wrong in the paradigm they have created. This policy action is yet another example of the rigid ideological polarization that divides America on so many things today -- where issues are routinely defined (and demonized) in terms of a black-or-white (either/or) paradigm with no gray area that could lead to positive and productive compromise.

The U.S. "no new coal" policy exemplifies this polarization of black/white ideology in solving complex problems. While coal use is clearly a problem, it isn't "the only major" problem. Not only is this U.S. Policy position laden with hypocrisy (coal use per capita in the U.S. economy), it defies the reality that coal will continue to be a major energy resource in the developing world.

Size of World if Scaled by Coal Use: A constructive approach is how to make coal use more efficient, where a multitude of technology options exist. Especially in manufacturing, production efficiency gains can be much more than marginal improvements.

(No unilateral U.S. action will achieve major global reductions in coal use.)	(A "My Way or the Highway" approach isn't pragmatic or productive.)

The Case For Different Pathways: Perhaps the best illustration of providing flexibility through "multiple pathways" to lower carbon emissions is Germany, which is:
-- Dramatically transitioning their energy sector to renewable energy.
-- Investing heavily in energy efficiency ("Smart Grid" infrastructure).
-- Achieving high economic growth.
-- Sizeably reducing carbon emissions
-- Also bringing new coal-fired generation on-line.

Germany's share of electricity produced from renewables has increased from 6.3% to over 25% since 2000. Relative to 1990, Germany has also reduced its carbon emissions by 25%.

However, contradictory to the U.S. "no new coal policy", Germany is currently implementing its biggest new-build program for coal stations in over a decade -- increasing its coal-fired generation capacity by 33%.

Is this a picture of a vase or two people looking at each other, or both?

The Need For A Mental Reboot: Just because a view doesn't "fit" or "appears" contradictory to a established paradigm/model doesn't necessarily mean its wrong. There's usually always more than just one way in viewing and solving complex problems. The goal is to achieve a productive "end-result" -- not ideologically pure ways (e.g., no new coal) of how to get there.

Moving Forward: To achieve meaningful and sustainable reductions in global carbon emissions a major "paradigm shift" is needed -- moving away from rigid black/white ideologies (which the U.S. no coal policy represents) to a lower carbon standard (LCS) model (a comprehensive approach as being used in Germany).

As stated in previous blogs, it is strongly believed that international trade should be the centerpiece of this new paradigm. A good starting point is to create the equivalent of "Enterprise Zones" within developing countries (especially free markets economies of India and Indonesia) providing: (1) significant and unprecedented new trade incentives into U.S. and European markets for manufactured products using a "Low Carbon Standard" (LCS); (2) Significant transfers (including financial assistance and less restrictive patent protection) of advanced energy and manufacturing technology into these Enterprise Zones.

Sometimes the pathway in developing countries may look like what has been accomplished in Western Industrialized Economies -- sometimes it may not. Most often, a LCS pathway in developing economies will require a "bridge approach" (with definitive benchmarks that must be achieved to keep new trade incentives) in transforming to the LCS objective.

An example of needing a "bridge approach" is the argument that scaling up renewable energy technologies (intermittent wind, solar) have been demonstrated to be competitive with base load fossil fuel generation. What this argument fails to mention is that this competitiveness is highly dependent on having an advanced large (national, regional) transmission "Smart Grid" (which does not yet exist in developing countries).

Liberal versus Conservative?: Only by using bedrock conservative principles of de-centralization and free markets will the prize of sustainable reductions in carbon emissions be attained.

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Additional Stories:
In War on Coal, Coal is Winning (C.S. Monitor)
Kenya postpones Wind and Solar Energy Projects because of high costs.
Geothermal energy crippled in Philippines from Typhoon Haiyan.
World Coal Consumption To Surpass Oil By 2020
NY Times Op/Ed: Coal use in developing countries
More opinions on poverty and coal use in developing countries
Trade/Climate Change Policy: U.S. Liquid Natural Gas Exports?
U.S. Hypocrisy to Undermine EU LCS Standards on Tar Sands Exports
Public Opinion Polls: Views on Global Warming -- U.S. Versus World
Germany set records in coal use.
Wall St. Investment Firm Backs Away From Major Coal Export Project
Solar and Wind Vs. Coal in South Africa
U.S. Regulators Struggle on Writing New Coal Regulations
Climate Change Can't Be Solved on Backs of the World's Poor.

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Global Warming & International Trade -- the Elephant in the Room.

Global Warming

Update! In a new Stanford University Survey a majority of Americans believe man-made Global Warming is occurring, but do not support a Carbon Tax.

The Global Greenhouse Gas Conundrum: In BP's Annual Energy Outlook to 2030, World carbon emissions from energy use are projected to increase by 26% by 2030. This increase will primarily come from developing countries (e.g., China, India) as they industrialize their economies (as Western economies did during their Industrial Revolution, called the Kuznets Curve).

The primary fuel source for powering Asian industrialization will be their vast natural resources of coal, where coal prices are currently about one-third of Liquefied Natural Gas (LNG) and about half of natural gas.

The biggest carbon emitters among developing nations have made clear that while they are prepared to improve the energy efficiencies of their economies, they have no interest in capping carbon emissions that restrict economic development.

The Politics of Climate Science in U.S.: Many Conservatives twist valid science uncertainties of Climate Change/Global Warming (e.g., Dr. Judith Curry) to become "Deniers" -- arguing that no economic policy actions (e.g., Carbon Tax) are needed. Conversely, Liberals often use a message of apocalyptic doom/gloom to advance climate policy actions. But for most Moderates/Centralists, they just don't "easily fit" in either of these highly polarized groups.

Question: What happens if you (A) Believe in the science of Global Warming, but (B) Disagree with a U.S. Carbon Tax Policy? Answer: You find yourself in the middle of Red State vs. Blue State, Conservative vs. Liberal, Culture and Political Ideology Wars.

The Mind of "Sympathetic Greens": While Moderates/Centralists are concerned about Climate Change, a major roadblock in their supporting U.S. policy actions is the conundrum of carbon emissions from industrialization in the World's developing economies. These "Sympathetic Greens" recognize a fundamental reality: The U.S. alone (or even the developed world as a whole) can not reduce global CO² concentrations. Unilateral U.S. actions may be admirable (lead by example), but are quixotic.

While a Carbon Tax would undeniably reduce energy consumption in the U.S. (especially among poorer Americans as a regressive tax), how would this impact total Global emission levels? Could an unintended outcome be even more "outsourcing" of greenhouse gas emissions from the U.S. to developing countries? (increasing the already huge U.S. Trade Deficit). Liberals never really address these type questions.

Growth Rates in CO² Emissions A New Path: A Policy option that just might get us out of this ideological mess and also actually achieve meaningful reductions in global greenhouse gas emissions is by thinking "outside the current box" -- Using international trade agreements between the U.S./EU and developing countries.

The below chart illustrates the global CO² impact of international trade where the flow of emissions are allocated to the locations where global goods and services are produced and then consumed -- where Chinese exports to the U.S. and the EU clearly dominate.

Major Global Flows of CO² From Production to Consumption:Start of Arrow: Fossil Fuel Consumption (Production)End of Arrow: Goods and Services Consumption

Responsibility of the U.S. and EU: To be successful, using international trade to sizably reduce Global CO² emissions must be a constructive two-way-street with shared responsibility and recognizable benefits -- not driven by parochial interests leading to confrontation (use of free/liberalized trade agreements versus unilateral tariffs/sanctions resulting in trade wars).

As the World's largest economies, Western industrialized countries must recognize, accept, and act on their unique responsibility:

Since a significant percentage of CO2 emissions likely remains in Earth's atmosphere for thousands of years, the bulk (perhaps up to 80%) of current CO2 PPM levels (with a man-made footprint) comes from Western industrialization which began in the 18th century.

Underlying Principle of Free Trade: The U.S. has advocated free-trade policies for decades, but it also has spent considerable effort and diplomatic capital in creating both global and regional trade rules/standards (WTO, NAFTA) -- based on the acceptance and implementation of trade policies by other members (with verifiable actions).

If Climate Change is to be truly treated as serious on a global stage, pragmatic lessons must be drawn from international trade -- where reciprocity reigns supreme. No country eliminates its trade barriers without reciprocal and meaningful concessions from trading partners.

Its ironic that ultimate success in addressing Climate Change will depend as much on social sciences of "human nature" rather than just the physical sciences in resolving climate uncertainties. A good analogy is why young people still smoke, given the overwhelming medical evidence that it's harmful -- The difficulty of making a lifestyle change today to avoid the consequences in 20, 30, 40 years. People also need near-term positive incentives -- like wanting to go out with that "Hot Girl or Guy" who only dates non-smokers.

International Trade Incentives: As the World's largest economies, the U.S. and EU have the ability, opportunity, and responsibility to provide needed positive incentives to developing countries. An illustration of a "concept framework" of trade incentives is California's Low Carbon Fuel Standard.

Applied to international trade, specific products from developing countries meeting a "Low Carbon Standard" (LCS) would be given greater/favored trade access into U.S./EU markets (achieving a competitive advantage over other countries that don't participate in LCS Free/Liberalized Trade).

Correcting a Major Policy Mistake on Climate Change: After the Kyoto Protocol in the late 1990's, a major policy error was the missed opportunity to create "Idea Incubators" with developing countries in existing Free Trade areas (especially India and the Philippines). Such an effort could have created "Success Stories", developing and demonstrating a "Model" for specific multi-lateral trade actions and collaborative cooperation (Western technology transfers and financial assistance) that could be then scaled up to sizably reduce CO² emissions in developing countries.

It's not too late to correct this mistake, it just will take political resolve by Western industrialized nations to do not just the "right thing as to responsibility" but the "smart thing".

Multi-Lateral Free Trade Areas(Below Countries in Red)The following is a conceptual framework of beneficial trade reciprocity between industrialized and developing countries (Wins/Wins) to reduce global CO² emissions.

Industrialized Nations High Tech Energy Efficient Goods and Services (Including U.S. natural gas exports)

Developing Economies "Low Carbon Standard" Products (With favored US/EU Trade Status)

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Additional News Stories:
Views on Global Trade by Country -- (Pew Research).
In War on Coal, Coal is Winning (C.S. Monitor)
China's Coal Demand Set to Double.
Emerging Economies Nearing One-Half of Global CO2 Emissions.
Argument that U.S. Carbon Tax Would Have Minimal Impact (0.1�C ).
Dramatic Decrease in Carbon Intensity in U.S. Economy
Why A Carbon Tax Will Not Work -- and What Will.
U.S. to Help Ukraine with Natural Gas Development

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