Climategate Anniversary

It’s been nearly two years since the “Climategate” scandal, an episode I have analyzed in-depth with Raghu Garud.

On the heels of the controversy, Richard Muller, a Berkeley physicist and self-proclaimed climate skeptic, launched the Berkeley Earth Surface Temperature (BEST) project to review for himself the temperature data underpinning climate change concerns. A major sponsor of Muller’s study was the Charles G. Koch Foundation (of California Prop 23 fame).

This week Muller announced the results of his project in an op-ed in a Wall Street Journal article entitled: “The Case Against Global-Warming Skepticism.” The piece is subtitled: “There were good reasons to doubt, until now.” As part of the announcement, Muller’s research group released four papers, which collectively corroborate the climate consensus:

The group estimates that over the past 50 years the land surface warmed by 0.911°C: a mere 2% less than NOAA’s estimate.

Although Muller’s study is one more vindication of the science, it is hardly good news for humanity. Moreover, as Jon Stewart points out, Muller’s study isn’t getting nearly the coverage that Climategate did. Perhaps it’s because when it comes to policy decisions facts are so, well, unnecessary.

For further coverage, see the Economist.

Prop 23 and Out of State Interests

Thomas Friedman’s latest column on “The Terminator vs. Big Oil” adds another dimension to the rampant campaign finance conflicts of interest inherent in our political system.

In particular, Friedman shines a spotlight on California Prop 23, which “proposes to suspend implementation of A.B. 32 until California achieves four consecutive quarters of unemployment below 5.5 percent. It is currently above 12 percent.” A.B. 32, or California’s Global Warming Solutions Act of 2006, was designed to put California on a path to reducing greenhouse gases in its air to 1990 levels by 2020, and at the time it was enacted had the support “of Republicans, Democrats, businesses and environmentalists.”

But now, according to Governor Schwarzenegger, speaking at an energy forum last week in Sacramento:

“It is very clear that the oil companies from outside the state that are trying to take out A.B. 32, and trying to take out our environmental laws, have no interest in suspending it, but just to get rid of it… They want to kill A.B. 32. Otherwise they wouldn’t put this provision in there about the 5.5 percent unemployment rate. It’s very rare that California in the last 40 years had an unemployment rate of below 5.5 percent for four consecutive quarters. They’re not interested in our environment; they are only interested in greed and filling their pockets with more money… And they are very deceptive when they say they want to go and create more jobs in California… Since when has [an] oil company ever been interested in jobs? Let’s be honest. If they really are interested in jobs, they would want to protect A.B. 32, because actually it’s green technology that is creating the most jobs right now in California, 10 times more than any other sector.”

In particular, Texas oil companies Valero and Tesoro “have led the charge against the landmark climate law, along with Koch Industries, the giant oil conglomerate owned by right-wing megafunders Charles and David Koch. Koch recently donated $1 million to the effort and has been supporting front groups involved in the campaign.”

For me, this raises some interesting questions. At the federal level, foreign interests are technically prohibited from making political contributions (although there is reason to suspect they are being circumvented and not adequately enforced). Why don’t states adopt similar regulations with regard to out of state interests — corporate or otherwise? After all, why should the citizens of a state be held hostage to outside interests of any kind? It seems that residents of a state should have more say over their own governance than a couple of businesses who happen to have facilities located there. Of course, the same goes for other activists.

Certainty and Solar Power

In today’s New York Times, Thomas L. Friedman’s “Have a Nice Day” column highlights quite nicely the connection between uncertainty and the adoption of renewable technologies — in this case the adoption of solar energy technologies.

In particular, he argues that the solar panel industry is thriving in countries whose governments that have enacted policies aimed at overcoming the triple uncertainty threat:

  1. Regulatory uncertainty — “[A]ny business or homeowner can generate solar energy.”
  2. Connectivity uncertainty — “[I]f they decide to do so, the power utility has to connect them to the grid.”
  3. Price uncertainty — “[T]he utility has to buy the power for a predictable period at a price that is a no-brainer good deal for the family or business.”

Friedman reached these conclusions, in part, after touring the Applied Materials solar panel “war room” in Silicon Valley, from which it maintains “real-time global interaction with all 14 solar panel factories it’s built around the world in the last two years.”  According to Mike Splinter, CEO of Applied Materials, “We are seeing the industrialization of the solar business. In the last 12 months, it has brought us $1.3 billion in revenues. It is hard to build a billion-dollar business.”

And yet because U.S. policies have not adequately addressed regulatory, connectivity and price uncertainties, all 14 factories of these solar panel factories have been built outside the U.S.  As a result “[R]ight now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.”

Interestingly, Friedman points out that the debate over U.S. energy policies need not depend on competing beliefs about global warming.  “[S]o, you don’t believe global warming is real. I do, but let’s assume it’s not. Here is what is indisputable: The world is on track to add another 2.5 billion people by 2050, and many will be aspiring to live American-like, high-energy lifestyles. In such a world, renewable energy — where the variable cost of your fuel, sun or wind, is zero — will be in huge demand.”

His point is worth exploring.  To understand the magnitude involved in supplying electricity to 2.5 billion more people AND supplying them with more electricity per person, consider that in 2007 the world consumed 18,187 terawatt hours (TWh; 1 terawatt hour = 1 trillion watt hours) of electricity.  That represented consumption of approximately 2,752 kWh for each of the world’s 6.6 billion people.  However, consumption is far from evenly distributed.  For example, OECD countries consumed an average of 8,477 kWh per capita, while China only consumed 2,346 kWh.  Meanwhile in the U.S., average electricity consumption was 13,616 kWh per capita.

All of this means that electricity demand by 2030 is expected to increase nearly 50%.  Perhaps not surprisingly, some have described energy as “the biggest challenge of the twenty-first century.”  But those challenges also may make energy — already an estimated $6 trillion dollar industry worth about 1/10th of the world’s economic output — the “largest economic opportunity in the twenty-first century.”