Arguments
2013 SkS Weekly News Roundup #29B
Posted on 20 July 2013 by John Hartz
- "A world that we have to avoid at all costs"
- Acid test: rising CO2 levels killing ocean life
- Democrats building support for new climate change action
- Divert $600-bln fossil fuel subsidy to climate aid
- Getting the U.S.-China climate partnership right
- Globally, June was second warmest on record per NASA
- Insurance industry, Republicans split on climate change
- Obama finds unlikely climate change partner
- Record heat in June extends globe’s streak to 340 months
- "Scientists are cajoled into developing...politically palatable messages"
- Stunning photos of glaciers in retreat
- Wretched week for a typical trio of climate contrarians
"A world that we have to avoid at all costs"
This is a guest post by Gabriel Levy and was originally published on the blog People and Nature. This post is Part 2 of a two-part interview with Kevin Anderson of the Tyndall Centre for Climate Change Research.
"A World That We Have to Avoid At All Costs" by Gabriel Levy, DeSmog Canada, July 17, 2013
Acid test: rising CO2 levels killing ocean life
The ocean absorbs approximately one-third of all human-caused carbon dioxide emissions at a rate of 300 tons per second, which helps slow global climate change. But, due to that carbon dioxide absorption, the ocean is now 30 percent more acidic than before the Industrial Revolution, and the rate of change in ocean pH, called ocean acidification, is likely unparalleled in Earth’s history.
With today’s levels of atmospheric carbon dioxide so high, the ocean’s help comes at a cost to marine life and the millions of people who depend on healthy oceans .
Acid Test: Rising CO2 Levels Killing Ocean Life, Op-ed by Matt Huelsenbeck, Oceana, LiveScience, July 16, 2013
Democrats building support for new climate change action
Democrats on Capitol Hill sought to move climate change back to the front of the congressional agenda Thursday morning, after a long period of inaction.
But the testy back-and-forth at a hearing of the Senate’s Environment and Public Works Committee, chaired by Sen.Barbara Boxer (D-Calif.), suggests that Congress is still paralyzed on global warming, even as many states aggressively enact their own policies.
Boxer and fellow Democrats are hoping to build momentum on President Obama’s release of a “Climate Action Plan” last month. The plan is a series of executive actions the administration is taking to nudge the country toward increased use of renewable energy.
Democrats looking to build support for new climate change action by Evan Halper, Los Angeles Times, July 18, 2013
Divert $600-bln fossil fuel subsidy to climate aid
Diverting cash used to subsidise fossil fuel production and consumption could raise up to $600 billion a year to fund cuts in greenhouse gas emissions and help poor countries adapt to the effect of a warmer planet, delegates at U.N. talks were told in the Philippines this week.
Industrialised nations plough $600 billion a year to subside coal, oil and gas activity.
Dr Mattia Romani, Deputy Director General at the Global Green Growth Institute said in a presentation at the talks that this instead could be used to fill the U.N.’s Green Climate Fund.
“Removing these subsidies could lead to a 13 percent decline in CO2 emissions,” he said.
Divert $600-bln fossil fuel subsidy to climate aid by Susanna Twidale, Reuters Point Carbon, July 18, 2013
Getting the U.S.-China climate partnership right
President Nixon once changed the world with a single handshake on a Beijing tarmac, beginning a new relationship with China.
Today, it’s not just our geopolitics that are changing — it’s the earth itself. And it requires a new partnership with China to meet the challenge.
Nothing less than a complete and collaborative transformation of the way we use and produce energy will be enough to tackle the urgent threat of climate change.
Getting The U.S.-China Climate Partnership Right by John Kerry, U.S. Secretary of State, Energy Education Foundation, July 20, 2013
Globally, June was second warmest on record per NASA
How hot was it in June? So hot that NASA reports the only warmer June in the global temperature record was 1998, a year juiced by both global warming and a super El Niño.
By contrast, 2013 has been hovering between a weak La Niña and ENSO-neutral conditions — which would normally mean below-average global average temperatures — if it weren’t for that pesky accumulation of heat-trapping greenhouse gases.
NASA: Globally, June Was Second Warmest On Record, Energy Education Foundation, July 19, 2013
Insurance industry, Republicans split on climate change
The U.S. insurance industry told Senators that a surge in weather-related catastrophes has forced billions of dollars in payouts, offering an assessment at odds with Republicans who have expressed doubt about global warming.
The Reinsurance Association of America, which represents companies such as Swiss Re Ltd. (SREN) and Munich Re, today urged Congress to have federal agencies consider climate risk in project reviews, and offer tax incentives to help homeowners prepare for severe hurricanes, floods, droughts and fires.
“The industry is at great financial peril if it does not understand global and regional climate impacts, variability and developing scientific assessment of a changing climate,” Franklin Nutter, president of the association, said in testimony to the Senate Environment and Public Works committee. “We are committed to work with you to address the exposure of citizens and their property to extreme weather risk.”
Insurance Industry, Republicans Split on Climate Change by Mark Drajem, Bloomberg. July 18, 2013
Obama finds unlikely climate change partner
President Barack Obama has stumbled on an unusual partner in his quest to combat climate change: China.
The world’s two biggest emitters of heat-trapping greenhouse gases are finding common cause in efforts to reduce global warming, cooperation the U.S. says could clear the way for other developing nations like India and Brazil to get on board, too.
Obama finds unlikely climate change partner in major polluter China, AP/Washington Post, July 18, 2013
Record heat in June extends globe’s streak to 340 months
June was one of the hottest such months on record globally, based on newly released data from NASA and the National Oceanic and Atmospheric Administration (NOAA). The month extended the unbroken string of warmer-than-average months to 340, or a stretch of more than 28 years. That means that no one under the age of 28 has ever experienced a month in which global average temperatures were cooler than average (based on the 20th century average).
Record Heat in June Extends Globe’s Streak to 340 Months by Andrew Freedman, Climate Central, July 18, 2013
"Scientists are cajoled into developing...politically palatable messages"
This is a guest post by Gabriel Levy and was originally published on the blog People and Nature. This post is Part 1 of a two-part interview with Kevin Anderson of the Tyndall Centre.
"Scientists are Cajoled into Developing...Politically Palatable Messages" on Climate by Gabriel Levy, DeSmog Canada, July 17, 2013
Stunning photos of glaciers in retreat
Seventeen years.
That's about how long the glaciers that give Montana's Glacier National Park its name have before they disappear completely, scientists who study the park's snow and ice say.
By 2030 or even sooner -- perhaps even by the end of this decade -- most or all of the park's remaining 25 or so glaciers will be gone forever, according to Dan Fagre, a U.S. Geological Survey ecologist and glacial expert.
Stunning photos of glaciers in retreat by Terrell Johnson, The Weather Channel, July 19, 2013
Wretched week for a typical trio of climate contrarians
Last week was a rough one for climate contrarians Matt Ridley, Patrick Michaels, and Murry Salby.
Wretched week for a typical trio of climate contrarians by Dana Nuccitelli, Climate Consensus-97%, The Guardian, July 19, 2013
JvD,
Here we agree: you should give up and go somewhere else. You have completely copmpromised your position here by making false statements (like the one above where you claim supporters of renewable energy do not discuss grid upgrades) and refusing to provide data to support your wild claims. You insist that your unsupported opinion is more accurate than others supported opinions. Good luck finding people who agree with you.
Just to underline the obvious, Dr. Romani is really saying that countries like Saudi Arabia and other (poor) oil producing countries should raise 600% taxes on domestic oil, and then send that money into the UN's Green Climate Fund!?
So the poor are going to be financing the UN's Green Climate Fund?!?!
(- snip -). It simply makes the chance of avoiding the worst effects of climate change even lower than it already is. Very depressing.
[DB] sloganeering and inflammatory snipped.
JvD,
There is no 'price support' in Saudi Arabia, or other oil producting countries. Since the oil age began, they have been supplying their populations with energy at the cost of production. Should they now choose to add 600% domestic taxes to that energy, - in order to equal the international market price of energy - this will reduce co2 emissions only to the degree that their citizens become unable to obtain energy.
Supplying their populations with energy at the cost of production instead of market prices is "price support".
They don't need to add "600% domestic taxes", they just need to let the oil companies sell the oil at the going market rate. Saudi citizens could then buy the oil they want on that same market.
Do BHP Billiton and Rio Tinto have to sell the iron ore they mine to Australian citizens at below market rates? No. Do Australian steel mills have to compete with Chinese steel mills for access to the iron ore mined in Australia? Yes. Australian citizens get what they are "owed" as original owners of the resource thanks to royalties that are levied on resources extracted from Australia, not preferential access to the result. Those royalties go into general revenue, reducing the amount of tax we would otherwise have to pay.
As I understand it, the Saudi oil companies are state-owned, so all of the extra profit derived from selling all of the oil at market rates will flow into the state's coffers, rather than some going into shareholder's pockets.
The benefit of doing so is that the extra money raised can then be targetted where it is needed the most. It could go into tax breaks, it could go into welfare programs, it could go into health and education, whatever; the point is that at the moment that same money is going into the pockets of those who can afford to buy oil and its derivatives, and the more they buy, the greater the percentage of that money they get! In other words, not only is it forcing market-priced renewable technology to compete with non-market-priced oil, but it's creating a perverse incentive whereby the more wasteful an individual or organisation is, the greater the benefit they derive — the larger their share of the pie — from the reduction in price of the oil compared to the going market rate.
If you don't want to call that "price support", then all you're really doing is redefining terms to mean something other than what everyone else means by those terms, and then calling those people "deliberate liars" for using those terms in conflict with your personal definitions. If people already understand what "price support" means in the Saudi context — i.e. selling oil domestically at below-market rates — then framing your argument as one about terminology rather than the practice itself isn't going to convince anyone. Your argument ought to be why it's better for Saudi's to sell oil domestically at below market rates thereby foregoing the revenue that would otherwise accrue if that's what you believe rather than call people liars because they describe that as an oil subsidy.
[moderation complaint snipped]
JasonB writes:
No, it isn't. "price support" entails supplying energy below the cost of production, which is what Feed-in tariffs do for example.
Keeping this distinction is very important, because otherwise we will not understand the real comparative cost of renewables versus fossil fuels, which means we will develop inappropriate expectations about their real global competitiveness, which poses a grave risk to our ability to make effective energy policy.
Your analogy concerning the Australian iron ore is not helpfull. Iron ore is not a scarce resource, so the market price is very close to the production price. A better analogy - IMHO - can be construed using water, as a hypothetical international commodity. For example:
In my country (the Netherlands), potable water is cheap, because of the geology we have. Now lets imagine that - perhaps due to increasing water supply stress due to climate change around the world - water becomes an internationally traded commodity and its international market price settles at 700% of the cost of potable water production in my country. Now someone like Dr. Romani gets up in front of the United Nations and claims the following:
"The Dutch and other water-rich countries pay far less for their water than than the international market price! This is a subsidy! We could use that subsidy to pay for water desalinisation plants, aquaducts and water-efficiency technology! Therefore, the subsidy ploughed into potable water in those countries should be transferred to the UN Green Water Growth fund!"
Do you now see how sick and misguided such a proposal would be? Let other countries pay for their water technologies with their own money! Let them not bother the Dutch, who have their own problems! The Dutch cannot pay to solve the world's water problems, just like the people in oil producing countries cannot pay to solve the worlds oil problems!
[JH] You are skating on the thin ice of sloganeering and excessive repetition, both of which are banned by this site's comment policy. Please cease and desist, or face the consequences.
[Dikran Marsupial] Also comments about moderation are off-topic. I have snipped this time, next time I will delete.
JvD - it is hard to have an argument with someone who believes they are free to define words as they like. You might like to look at how this price support is actually defined by say WTO as well how defined in the primary sources.
Critical to the concept of subsidy is action or policy that results in the price below market value. The price of water isnt cheaper in Netherlands due to government policy (as far as I know) but because it makes no economic sense to export water to dry countries. There is no option to get more money by selling overseas rather than local consumers. My country (NZ) is big milk producer. You would be sadly disappointed if you expected milk to be cheap because local market has to compete with international demand. Likewise in Saudi Arabia and other oil producers - the state oil company could earn considerably more money if it instead exported for market rate what it sells at cost to locals. Governments have many ways to aid their citizens but consumption subsidies should not be one of them.
I note that you have failed to provide any evidence to support your earlier assertions in which case perhaps you should apologize for the smear. I also note that you continue to duck the question of whether making oil producer citizens pay market price will reduce consumption and thus emissions.
And before claiming that "the poor" would be financing the Green fund, have a look at the graph of who is getting the subsidy (bottom 20% compared to top 80%) from IEA data shown here.
scaddenp @56, based on the IEA map of the location of energy subsidies, they come predominantly from fossil fuel rich nations, or middle income nations such as China and India:
The same impression is given by the chart of the top15 providers of subsidies, with the only OECD nation among them being Mexico (13th).
I assume, therefore, you are drawing attention to the chart of the benefit recieved from the subsidy by income group,showing that the bottom 20% by income tend to recieve just 5-15% (8.5% mean) of the benefit depending on the fossil fuel subsidized. That does show that the poor are not well targeted by the benefits. Given the nations concerned, far more than just the bottom 20% of income in some of the nations could be considered poor by world standards, and in all those nations by western standards. Consequently a more usefull chart would be one showing the benefit gained by the top 20% by income in each nation. As it is, suggesting that the gains in reduced emissions from eliminating these subsidies would be paid by the (moderately) poor is not unreasonable.
It is likely, however, that the societies in question would benefit from eliminating the subsidies and redirecting the money saved within country. By doing so they would be able to reduce overall taxation, and at the same time better target aid the the poorest in their nations. It is also quite reasonable to claim, however, as does Faith Birol that the elimination of the subsidies would see a large reduction in CO2 emissions.
Returning to JvD's comment @4, "industrialized nations" has frequently been used a name of a group of nations including the OECD plus Warsaw Pact nations. On that basis only six industrialized nations contribute to the subsidy (5 warsaw pact plus Mexico). However, I do not think it reasonable to currently describe South Korea, India, China and Indonesia as not industrialized. So, approximately a third of the nations involved are industrialized, but less than a third of the subsidies are from industrialized nations. Consequently, I agree that the statement by the reporter (and not Dr Romani) that, "Industrialised nations plough $600 billion a year to subside coal, oil and gas activity" has to be considered inaccurate at best.
JvD,
Your analogy concerning the Australian iron ore is not helpfull. Iron ore is not a scarce resource, so the market price is very close to the production price.
How do you expect your arguments to be taken seriously when they are full of such obvious errors? (There's a phrase that you like to throw around that I'm more reluctant to use, so I'll stick with "errors".)
From page 51 of Rio Tinto's investor chartbook, their 2012 cash cost of iron ore was US$23.50/tonne. The all-in cost to deliver to China including royalties, shipping, and underlying capital costs was $US47/tonne.
The market price peaked at $US191.90/tonne in 2011.
Mark ups on iron ore for global miners BHP Billiton and Rio Tinto are now at a staggering 160 per cent, with profit margins at 62 per cent, nearly double that of the world's most valuable tech company, Apple Inc., as of June 30, 2013.
[...]
Iron ore rose from less than $US20 a tonne in 2000 to a record in 2011 near $US200, before levelling off.
In comparison, oil, the only traded commodity market larger than iron ore, rose only half as quickly when it hit an all-time high above $US147 a barrel in 2008 from about $30 in 2000. (Source)
If iron ore is not a "scarce" resource, perhaps you can explain why just two countries (China and Australia) account for over 60% of the world's production? (Source) Add in Brazil and you've got 73%; add India and it's 81.5% in just four countries. In comparison, oil is positively ubiquitous, with the top two producers accounting for just 26% of world production and the top four barely cracking 40%. (Source)
So not only was my analogy helpful, it turns out to be even more exaggerated in the characterists that define the oil industry. Yet Australian's don't get to buy iron ore at $23.50/tonne from Rio Tinto, nor do we get to buy it at $47/tonne [*]; we have to pay whatever the going rate is for it on the world market. Any requirement otherwise would amount to price support and a subsidy on the Australian consumption of iron ore.
[*] This gets back to the point I made earlier - just what is the "cost" of Saudi oil that you're referring to? Does it include amortisation of capital expenses, or just the marginal cost of extracting an extra barrel? I'd be surprised if the "true cost" is even publicly known, yet you've been asserting repeatedly that the Saudi's are selling it at that price with no references to support that that I've seen. Not that it actually matters to the argument, because either way it's still below market price, but I'm disinclined to take your word for it given the egregious errors you've made in areas that I am familiar with.
The discussion on what constitutes a subsidy is or is not seems unnecessarily heated to me. At the risk of throwing fuel on the fire, consider the following:
if a dairy farmer provides milk directly to his family, rather tha buying it in a shop, is he or she subsidizing consumption?
Imagine a renewable energy co-operative. If the co-op sells electricity to its members at less than the grid market price (or the feed-in tarriff) is it subsidizing its members' consumption?
Andy. His family benefit from cheap milk but they would also benefit from him selling the milk at market prices. As son of a dairy farmer, I can tell you that there is no way we would have enjoyed inch-thick whipped cream on scones etc if we were making rational economic decision. Ditto the cooperative.
I would say both case represent consumption subsidies. Consumption would be lower if price was rational.
Andy, I agree with scaddenp, and these aren't even close to being as tricky as some countries get when trying to avoid the label.
We also had a dairy cow when I was a kid and, just like any subsidised consumption, we certainly drank a lot more milk than we would have otherwise.
If a child (citizen) puts milk in the cart and takes it to the checkout, and the father (government) whips out his wallet and pays for the milk, then that is clearly the normal case when people think of the word "subsidy". But the net effect is the same if the father is a farmer who foregoes the income he would have received from selling that milk and gives the milk to the child directly. Milk becomes an artifically cheap commodity, and is over-consumed relative to what its level of consumption would have been had the milk been sold and the money then used to buy whatever was desired at market rates.
Anyway, the WTO document scaddenp previously linked to clearly states:
Secondly, the government may provide goods or services at no cost or below market price, such as university education, public transport or food stamps. Such transfers also involve expenses for the government, with the difference being that beneficiaries receive in-kind contributions as opposed to funds they can freely dispose of.
as one of the three categories of subsidies and it also says that the WTO definition of subsidy includes:
(ii) foregone revenues that are otherwise due
To me, this would clearly include Saudi oil. And, has been noted multiple times already, the Saudi government itself considers this to be a subsidy.
I can think of other examples that are similar and nobody seems to have problems calling them subsidies. In Australia we have subsidised medicine, subsidised health care, subsidised education, and subsidised housing for the poor. In each case the question is simply whether the cost to the end user is below market rates, not how much it cost nor which country it originated in.
Consider a drug on the PBS (which Wikipedia calls a program "that provides subsidised prescription drugs to residents of Australia") for example; it's considered "subsidised" if I can buy it at the standard rate of $36.10 but the normal market price was higher than that. (If it was lower, it wouldn't be on the PBS — not all drugs are.) It doesn't matter what the actual cost of production of that drug is (which, in general, will be substantially lower, as evidenced by the massive price drop when patent protection expires and competitors start producing it), and it doesn't matter what country that drug was produced in (so if the pharmaceutical company happened to be Australian, then, just like the Saudi oil, we'd be buying our own drugs at below-market rates, and it would still be a subsidy).
I don't know why Saudi oil being subsidised should be a controversial claim. If BHPB and Rio Tinto were forced to sell iron ore to Australians for $23.50/tonne rather than the going market rate, wouldn't that be a subsidy? (BTW, it's funny how weird that idea sounds, and what an uproar it would provoke about "Sovereign risk" if the government were to try to impose a rule guaranteeing Australian citizens unlimited consumption of iron ore at extraction costs! I suspect the WTO would also take an interest on the effect it would have on the competitiveness of the Australian steel industry.)
Andy @59, the analogies are poorly designed for your purpose. When I buy milk for my children, nobody calls that a subsidy because it is just part of my parental responsibility. In contrast, if the government were to buy milk for my children (at school, for example), there would be no question that that would be a subsidy. Consequently the entire force of your first analogy depends on a context in which talk of subsidy is simply inappropriate, and has no bearing on the issue at hand.
With the renewable energy cooperative, the question arises as to the purpose for which the cooperative was established. If it is to generate energy for sale as a source of income, then there is no question that the below market cost energy is subsidized. More properly, it means taking profits in the form of cheaper energy rather than in cash payments; and if the result is a different distribution of receipts, it means the cheap energy is subsidizing some members of the cooperative at the expense of the others.
More commonly, however, renewable energy cooperatives are founded for the primary purpose of providing the members with cheap renewable energy. In that case it is not a subsidy, but only because the cooperative is fulfilling the purpose for which it was formed, and for which its members paid.
In either case your analogy is inaccurate. In the first because it is genuinely a subsidy. In the second because the constitutional arrangements make specific talk of a subsidy inaccurate.
As I am sure we will all agree that the Saudi Government was not formed for the purpose of providing cheap oil to Saudi citizens, neither of the analogies shed any light on the issue.