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Sorting Out the Climate-Change Claims

03/20/2010 — Dr. Redmond Clark, The Lipper Current

Currently CEO of an integrated environmental manufacturing and services company, Dr. Redmond (Red) Clark has testified before Congress on issues including climate change, energy and global trade.

The recent climate change summit in Copenhagen was - by many accounts - a bust. As the meetings approached, there were expectations that the world would reach a meaningful global accord to limit the release of greenhouse gasses and slow the projected rise in future world temperatures. This reduction in emissions was going to be achieved in part through a gradual, world-wide cessation in carbon fuel use. This accord went on the rocks when developing nations refused to sign on to an agreement that would bind them to limiting fuel consumption. Led by China and India, the developed nations refused binding greenhouse gas emission requirements for one reason: no one knows how to rapidly develop an economy without access to plentiful, cheap sources of energy, and in today’s world, plentiful, cheap energy is synonymous with carbon fuels. When you have hundreds of millions of people living in abject poverty, it is all but politically impossible to say no to economic development. It should come as no surprise to discover that the fastest growth in greenhouse gas emissions can be found in those developing nations. The next best hope for climate change appears to be a nation-by-nation effort to reduce carbon fuel use.

Here in the US, the current administration is attempting to develop a comprehensive strategy to combat climate change. That effort may include the development of renewable energy resources, expanded energy conservation efforts, expansion of nuclear power generation and a gradual reduction in availability/ increase in the price of carbon fuels. Like Copenhagen, that agenda is in jeopardy. Recent Gallup polling clearly indicates weakening public belief in the science behind global warming and slipping public support for government programs designed to combat the threats implicit in climate change. At this moment in the US, climate change believers and skeptics are about evenly balanced, but the trend favors the skeptics. Other polling and testing suggests that the public “support” for funding climate change management efforts begins to fall apart when personal costs (like carbon taxes, conservation efforts and industry regulation) approach $20 per month. In short, the domestic support for climate change regulation might be a hundred yards wide, but it is still an inch deep. Why is that so?

There are a lot of reasons, but some of the lead issues include the recent recession and high unemployment rates (jobs first, environmental issues second), poor media reporting on the issue and a growing public mistrust of government and the scientific community. In that regard, we share something in common with the developing nations: right now, economy first, environment second. But our reluctance to embrace climate change runs deeper than that. The scientific community has done a poor job of communicating where we have rock-solid knowledge and where we are guessing on climate change. Both the scientific community and the federal government have been even less effective in communicating just what is actually at stake from an economic point of view. If you ask 100 scientists or bureaucrats what it will cost to address climate change, what it will cost if we do nothing, and when the economic effects might be felt, you will get 100 different answers.

Here is a recipe for political inaction: identify a major crisis that might be 100 years in the future, offer no timeline or cost estimates for impacts, offer no meaningful cost estimates for crisis management, show a fundamental inability to cost-effectively solve the problem with today’s science and technology, demonstrate a global lack of agreement on both the problem and the solution, tell people that the fix will likely cost a lot more than the status quo, and mandate the solution during a severe, global recession. If the electorate expresses confusion, indecision and/or resistance, the reactions flow from the problems enumerated above.

But all may not be lost, because climate change may not be the right problem. More to the point, perhaps climate change is a symptom of a different problem with alternative solutions. Although this could be laid out in volumes, consider some additional economic and resource management realities:

    • In late 2009, the International Energy Agency acknowledged that world oil production is expected to peak and begin a long decline, possibly in as little as five years (or less if war or political instability impact oil producers)
    • The energy industry forecasts an annual investment requirement of $1.2 Trillion annually just to keep world oil production at current levels.
    • More and more oil supply will come from dirtier and more expensive sources, including very heavy, sour crude oils, deepwater drilling and tar sands.
    • The EIA (US Department of Energy) is now forecasting oil prices to exceed $220 per bbl within the next 20 years.
    • New technology is allowing exploitation of vast natural gas reserves, but spillover demand for gas (in place of oil and coal) suggest that medium-term gas supplies will also come under pressure as oil prices rise and as more attention is paid to greenhouse gas emission rates (gas emits about half the CO2 of oil and gas per unit of energy consumed).

We aren’t running out of energy per se, but the cost per btu is going to rise over time simply because we are exploiting finite carbon fuel resources at progressively faster rates. Is that statement accurate? As they say, follow the money. In the past year, China has purchased long-term rights to about 20% of the world’s excess oil production capacity, China is buying into unconventional liquids (tar sands), China is buy up corporations and assets in order to expand their oil exploration and acquisition activities, China is constructing a network of pipelines for the transfer of natural gas into China, and China is making massive, long-term coal purchases beyond their own domestic production capabilities. Finally, China holds a near monopoly in fifteen strategic metals that are key elements within the global alternative energy manufacturing supply chain. China knows what is coming, both in terms of vast increases in domestic energy demand and growing competition for the global resources required to fuel their economic growth. Their preparation process is first focused on ensuring supply, then worrying about use efficiency.

Globalization has brought a natural resources gold rush of sorts, and the high ground or mother lode – at least for the next three or four decades – is energy access. Access to cheap energy will fuel economic development, and lower, long-term prices will also translate into national competitive advantage. As competition for these resources heats up, corporate and national energy policies should follow the twin paths of energy efficiency/conservation and shifts towards alternative energy resources. The energy supply/price issues discussed above will be upon us long before the full effects of climate change will arrive. If you accept the climate change argument or if you focus on energy market supply and price concerns alone, the answers will be similar in structure: use less energy and find non-carbon energy alternatives. The real differences are timing and focus.

The current federal administration has embraced the science of climate change, but the policy path they have chosen – internal inconsistencies aside – appears to be biased towards proscription: in time, you will not be allowed to use carbon fuels, and pricing will be set both by the markets and by governmental fiat. As a young man, I remember the electric impact President Kennedy created when he stated our national intention to put a man on the moon. We did not have the means to get there, but our national will and resources were focused on a specific goal, and we achieved that end in a decade. Today, we have been given another goal: save the planet and civilization from climate change. The differences between those goals are apparent: today, we don’t fully understand the problem, we don’t have a clear goal (how safe is safe enough?), we do not have a political and scientific consensus and most importantly, our nation cannot solve the problem on its own. Nevertheless, this administration proposed a heavily regulated path to a low carbon future that is generally indifferent to the economic fabric of the global marketplace.

In this author’s book, the first asteroid scheduled to hit the planet is always the top priority. In the case of the global economy and environment, the first asteroid heading our way is energy supply, not energy use impacts. Solve the first problem, and we will have defined an economic development methodology that is free from the constraints of carbon fuel access and economics. If we succeed, then we are not prisoner to the climate problem, we are not subject to the whims of other nations, and we compel other economies to follow our free market based path to a newer, greener future.

Redmond (Red) Clark earned both his Masters and Doctorate in Climate Change impacts, at a time when public and some scientific opinion leaned toward the belief that the planet was cooling. He managed the Massachusetts Department of Environmental Management's Hazardous Waste Management Program prior to becoming EVP for national hazardous waste recycling, cleanup and safety firm eventually sold to Waste Management, Inc. He continued his career as an entrepreneur, investor and owner of an Illinois based waste management firm. (Full disclosure: Dr. Clark invested in, managed, attracted investors and recessitated a troubled company in which the Iowa Seed Capital had invested. I was the State's representative). Currently CEO of an integrated environmental manufacturing and services company, Dr. Clark writes and speaks on a range of global environmental and economic issues. He has testified before Congress on issues including climate change, energy and global trade.