Ecuador’s proven oil reserves grew recently with the announcement by Vice-President Jorge Glas that Block 43 in the Amazonian province of Orellana counts on 1,672 million barrels of oil, an increase of 82 percent over previous findings.
U.S. oil engineering company Ryder Scott conducted an evaluation and confirmed the amount of proven reserves. The new certification means that the country as a whole now has nearly 4 billion barrels in proven reserves.
At current prices, the additional reserves will translate into US$19.5 billion in revenue.
Block 43 is one of Ecuador’s key oil deposits in the Amazon and oil extraction there has been the subject of controversy as the block is located inside the Yasuni National Park, considered one of the most biodiverse areas on the planet.
Ecuador originally proposed keeping the oil in the ground but an appeal to the international community for contributions to prevent extraction failed after donors pledged a small fraction of the amount needed.
In late 2013, the government opened a small portion of the Amazon to oil extraction with a commitment to minimize any environmental consequences.
The state oil company Petroamazonas is tasked with the project and has committed to extracting in a responsible manner. The company won an environmental prize last year over from London’s Energy Institute for its efforts to mitigate the environmental impact of oil extraction in the Ecuadorean Amazon.
The license for oil exploration specifies that less than 1 percent of the total area of the Yasuni National Park will be affected.
The government of President Rafael Correa has been subject to criticisms from some environmental groups for its decision to open a portion of the Yasuni National Park for oil exploration. However, many of the criticisms come from organizations and politicians openly opposed to the Correa government.
As an oil-exporting country, the income derived from oil extraction is a critical component of the national budget.
President Correa celebrated the news of additional oil reserves on his official Twitter account, reaffirming his opinion that the decision to open up Yasuni to oil extraction was the correct one.
Under the Correa government, the income generated from oil extraction has been reinvested in the country through the construction of schools, hospitals, and roads. Ecuadorean law demands that 12 percent of the revenues stay within the affected zone, in an effort to benefit the surrounding communities.
The sharp drop in the price of oil has impacted government revenue, however, yet the price of oil is expected to stabilize at US$50 this year. The ITT region of the Yasuni National Park encompassing Ishpingo, Tambococha and Tiputini is expected to produce 20,000 barrels a day by year’s end.
Japan is continuing preparations for an unofficial visit of Japanese Prime Minister Shinzo Abe to Russia, secretary general of the Japanese government Yoshihide Suga said. In an exclusive interview with Sputnik, former Russian Ambassador to Japan Alexander Panov clarified Japan’s intentions and explained its “disobedience” to Washington.
Earlier, during a telephone conversation with Abe, US President Barack Obama asked him to refrain from visiting Russia in May, but the Japanese politician has refused his advice. In some media, this move has almost been regarded as a sign of a Japanese rebellion against the dictatorship of the United States.
However, according to Panov, Japanese authorities on the contrary stick to a very “balanced” position. On the one hand, they are planning Abe’s trip to Russia, and on the other they are coordinating their efforts with the US and other Western countries.
“On the one hand, Abe is preparing for his visit to Moscow, on the other he is trying to sooth his partners saying that it [the visit] won’t cause serious damage to a common position of G7, especially regarding Ukraine,” the expert said.
Panov argued that Abe’s visit to Russia is most likely to take place as planned. According to him, both parties may be interested in discussing bilateral economic cooperation.
“Maybe it is not a coincidence that the restrictions on the acquisition of controlling stakes in a number of Russian hydrocarbon deposits by Japanese companies are announced to be removed,” the expert said.
“Japan asked for this for a long time, but Russia did not go for it and made exceptions only for China. Now it will be possible to find a formula of Japanese participation in such projects, in spite of the sanctions,” Panov explained.
Regarding the resolution of a long-standing dispute between Russia and Japan over four Pacific Ocean islands, the expert, however, remained skeptical.
“The parties stick to the same positions. The Russian side proceeds from the fact that the ball is on the Japanese side, and Japan should offer some sort of compromise,” the expert concluded.
By M. David |Counter Current News | January 15, 2016
It took decades of protests and petitioning the government, but after being continuously ignored, African American activists took over a federal wildlife refuge.
While sites are drawn up in the debate over who is right or wrong in the Bundy militia stand off in Oregon today, it is worth noting that this group of activists did the same thing, decades ago, in a protest against what they considered an unjust land grab by the U.S. government.
The armed protesters today occupying the Malheur National Wildlife Refuge in Burns was not the first of its kind, but it has had a very different response from law enforcement when compared to the very similar standoff 39 years ago in Harris Neck, Georgia.
The Harris Neck protesters were mostly displaced descendants of West African slaves. The FBI described them as “squatters” – even though they stated from the outset that their intentions were very much political in nature.
The group was called the People Organized for Equal Rights. They set up camp much like the Occupy Wall Street movement later would.
The encampment was on a patch of land stolen by the federal government south of Savannah, back on April 30, 1979.
The group of prominent civil rights leaders, and other activists brought concrete blocks and bags of mortar to build new homes, but they were unarmed.
The Oregonian summarizes that “following the Civil War, a white plantation owner deeded the land on the Georgia coast to a former slave. In the decades that followed, the descendants of slaves moved to Harris Neck to build houses, factories and boats. They fished, hunted for oysters and grazed cattle.”
In time, “Harris Neck evolved into a thriving community. Its members were recognized as a culturally unique group of African Americans called Gullah.”
Finally, in 1942, the U.S. military told Harris Neck residents that they had only three weeks to vacate the land. They cited eminent domain laws, and ordered residents to leave their property so they “could construct an airbase for training pilots and conducting anti-submarine flights.”
African American residents were given an insulting $26.90 per acre. Caucasian residents were given $37.31 for the same amount of land.
“Residents were paid only for the unimproved value of their land, receiving nothing more for houses, barns, or crops in the field, all of which were bulldozed or burned,” The New American reported in 2010.
After World War II, the government held onto the land – never giving it back. They eventually turned it into the 2,762-acre Harris Neck National Wildlife Refuge.
According to the Oregonian, on May 2, 1979, U.S. deputy marshals “forcibly removed” the men. “‘Their bodies taut and motionless,’ the men were dragged out of their tent, handcuffed and hoisted into a waiting van.”
The men were all sentenced to jail, and two years later, in 1981, “a fire destroyed county records with details on the original home sites.”
What do you think accounts for the difference between how both groups were treated when they took over federal wildlife sanctuaries? Is it racism? Or was the fact that the 1979 activists were unarmed the deciding factor law enforcement standing down?
Here Are the Lessons of History the Press Ignores
“You cannot hope to bribe or twist – thank God! – the British journalist. But, seeing what the man will do unbribed, there’s no occasion to.”
So wrote the witty early twentieth century British man of letters Humbert Wolfe. His assessment of American journalists isn’t recorded but, where pivotal issues are concerned, they have probably proved even more naïve lately than their British counterparts.
American journalistic naïveté has rarely been more embarrassingly on display than in recent coverage of the Chinese economy.
Here is probably the most successful export economy in world history, yet American journalists have somehow been persuaded that it is in such terrible shape that it needs a devaluation. CNBC, for instance, reported the other day that “most experts” believe the yuan is overvalued by fully 10 percent. This despite the fact that the Chinese currency has already dropped more than 8 percent against the U.S. dollar in the last two years.
True China’s export performance has been lackluster lately – exports were down 3.7 percent in yuan in November, for instance, and the drop was considerably greater in dollars. What is rarely mentioned, however, is that China’s exports are one of the most volatile series in global economics. Short-term setbacks of as much as 20 percent or more are common and bespeak remarkably little about China’s underlying economic health. What matters is the long-term trend, a rate of growth in dollar-denominated export revenues that has averaged more than 17 percent a year in the last fifteen years. That is a truly sensational number and its accuracy is attested by other nations’ imports.
It hardly needs to be said that, pace what the press’s “expert” sources say, the case for devaluation does not stand up to even cursory examination. After all, the point of exchange rates is to ensure that trade is conducted on fair and mutually advantageous terms. Yet for a generation now the yuan has been so undervalued that it has wreaked havoc on what little has remained of America’s once superlative industrial base.
The result as of 2014 was that America’s bilateral trade deficit with China totalled $348 billion. This accounted for the vast bulk of the entire U.S. current account deficit with the world as a whole, which totalled $389 billion (the current account is the widest and most meaningful measure of a nation’s trade). Meanwhile China enjoyed a current account surplus of $220 billion.
Even in the face of figures like this, the press has often put a distinctly negative spin on Chinese economic news. Indeed many journalists have gone so far as to entertain suggestions – emanating ultimately from Sinology’s lunatic fringe – that the Chinese economic miracle is just smoke and mirrors and that in reality China is teetering on the brink of economic or political disaster, or both.
The political consequences are hard to exaggerate. Reports of economic trouble in China not only pander to wishful thinking among ordinary Americans but provide U.S. policymakers with an excuse to procrastinate on long-overdue measures to crack down on China’s trade cheating. Meanwhile the ground is cut from under economic hawks like Donald Trump who want to get tough with China.
In the circumstances the Beijing authorities could hardly be better served and it seems clear that for many years they have been quietly promoting a “bad news” propaganda agenda. (Japan does so as well, but that is a story for another day.)
The root of the press’s problem is a poor choice of sources. Instead of proactively seeking out trustworthy, independent sources, journalists too often sit around passively heeding whomsoever happens to be within earshot. Far too often this means listening to sources artfully placed in prominent positions by the China lobby.
What is clear is that many of the top academic Sinologists seem to be congenitally pro-Beijing. Others are merely ambitious, and know that to land a big job in a future presidential administration, they have to avoid saying things that might discomfit the China lobby. That lobby is largely funded by major U.S. corporations that do much of their manufacturing in China. One of the lobby’s most obvious objectives has been to keep the yuan low, with all that has implied for the future of America’s manufacturing base. As the lobby controls large tranches of China-studies money, it has had little difficulty ensuring that America’s most frequently quoted Sinologists are on message.
As for other key sources, China-watching securities analysts and bank economists are generally even less reliable than university-based Sinologists. They are clearly constrained by a need to please their most profitable and demanding customers, among whom various financial arms of the Chinese system have long taken pride of place. (China is now a vast exporter of capital, which is, of course, great news for those Wall Street firms who find favor in Beijing.)
Of course, some frequently quoted sources undoubtedly do believe what they are saying. In particular there is a minority of far-right China-watchers who love to preach textbook American laissez-faire to an apparently benighted Beijing. This is the “Tea Party” wing of American Sinology. Its members seem to be particularly lacking in the listening skills that are essential to understanding a place like China (basically you have to listen to the unsaid – something that Tea Party types probably consider an oxymoron). Of course, precisely because such Sinologists are so often wrong, they are viewed in Beijing as useful idiots who work wonders in keeping Americans confused and disunited.
While we can rarely say for sure whether any particular China watcher is in Beijing’s pocket, most undoubtedly are. Though they would be horrified to be so identified, their agenda is pretty obvious in the way they censor themselves. Instead of speaking out on China’s trade barriers, intellectual property theft, and the undervalued yuan, they typically tiptoe away from frank discussions of such matters.
Let’s take a closer look at some of Sinology’s more problematic figures. It takes no more than a cursory internet search to turn up countless China watchers who have vainly predicted the Middle Kingdom’s eclipse, if not collapse, over the years. In a moment we’ll look at Gordon Chang, who ranks as the king of the “collapsing China” crowd, but first let’s consider a few pretenders to the throne.
One often quoted source is the Beijing-based professor and analyst Michael Pettis. Though the tenor of Pettis’s comments varies, he has often come across as a super-bear.
Here, for instance, is how he described the Chinese economy to the Associated Press in 2007: “Right now, we’re in a sweet spot. Everything is as good as it can get…. You can make a very plausible case that we have all the conditions for a serious crisis when there’s an adverse shock. There’s a lot more debt out there than we think.”
Any U.S. policymaker who was persuaded by this would have been blindsided by subsequent events. China’s exports, for instance, multiplied more than three-fold in dollar terms in the next seven years.
Among China super-bears, few are more outspoken than Arthur Waldron, a professor at the University of Pennsylvania and a member of the Council on Foreign Relations. As far back as 2002, he claimed that Chinese economic growth was make-believe. Writing in the Washington Post, he backed a madcap theory that instead of growing at about 6 percent, as officially stated, the Chinese economy had actually been contracting for the previous four years. He concluded that China’s industrial policy was “a recipe not for growth but for economic collapse.”
Another Sinologist who has played an outsize role in confusing American opinion is Susan Shirk. As the Ho Miu Lam Professor of China and Pacific Relations at the University of California, San Diego, Shirk remains what she has long been: a notable “friend of China.” An early indication of her style came in 1994 when she published How China Opened Its Door: The Political Success of the PRC’s Foreign Trade and Investment Reform. She went on as Deputy Assistant Secretary of State in the Clinton administration to play a key role in negotiations that led to China receiving Most Favored Nation trade status.
Her claim to fame as a China super-bear is based largely on her 2007 book, China: Fragile Superpower: How China’s Internal Politics Could Derail Its Peaceful Rise. The book postulated a supposedly serious risk that the Chinese regime would be overthrown in a popular revolution. The consequences, she suggested, could be devastating not only for China but for the West. She urged the West not only to accord Chinese leaders exaggerated respect but to adopt an explicit policy of keeping them in power. Among other measures that presumably meant holding back on complaints about China’s trade policies.
Virtually every aspect of her analysis can be debunked but a full rebuttal would require more space than I have here. The first thing to note is that she claimed her analysis was based on conversations with numerous top Chinese leaders. That may well be so – but she evidently didn’t ask herself what was in it for them. After all they have made a fine art of keeping things secret from their own people. Why would they pour their hearts out to a mere gweilo (and a gormless one, by the sound of it)?
For now let’s simply note that for millenia, Chinese leaders have generally shown themselves uncommonly adept at nipping in the bud any signs of incipient revolution. Supreme leader Deng Xiaoping perpetuated the tradition by so brutally breaking up the Tiananmen protests in 1989. Today’s leaders moreover seem more secure than their predecessors in that they are equipped with modern methods of electronic surveillance that can provide a much earlier warning of incipient trouble than in the past.
Now let’s consider David Shambaugh, a political scientist at George Washington University. Long noted for suggestions that the People’s Liberation Army is a paper tiger, he has become outspokenly pessimistic about China’s political system in recent years. One recent essay, published in the National Interest in 2014, was headed “The Illusion of Chinese Power.”
Then in March 2015 he persuaded the editors of the Wall Street Journal to publish a commentary headed “The Coming Chinese Crackup.”
He wrote: “The endgame of Chinese communist rule has now begun, I believe, and it has progressed further than many think.” Referring to Communist Party rule, he added: “Its demise is likely to be protracted, messy and violent. I wouldn’t rule out the possibility that Mr. Xi will be deposed in a power struggle or coup d’état.”
His analysis was so melodramatically worded that it attracted considerable criticism, not least a point-by-point rebuttal from Forbes.com commentator Stephen Harner (who, unlike Shambaugh, can claim to have spent much of his career in China).
Shambaugh’s central point was a surmise that Chinese president Xi Jinping’s efforts to curb corruption had dangerously ruffled the feathers of power rivals.
As a measure of Xi’s allegedly weakening grip, Shambaugh mentioned that on a recent visit to a Chinese campus bookstore, he noticed that a pile of pamphlets by Xi didn’t seem to be moving. This, of course, is broadly as fatuous as an illiterate Chinese visitor judging Hillary Clinton’s presidential prospects from the height of a pile of pamphlets at Columbia University.
Shambaugh also noted that an increasing number of Chinese students have been studying abroad lately. This, he suggested, stemmed mainly from a morbid fear of political instability at home. He did not seem to wonder whether less sensational explanations might suffice. After all, on the latest figures, Koreans are proportionately nearly seven times more likely than the Chinese to study in the United States – and the Taiwanese are more than four times more likely. Are we to believe that the danger of “crackup” is even greater in South Korea and Taiwan than in China? The truth is that East Asian students study abroad for a variety of rather mundane reasons, most notably the chance to improve their English. The trend has been powerfully stimulated not only by East Asia’s increasing wealth but by the same advances in air travel and communications that have been generally promoting globalization.
Perhaps Shambaugh’s most important point was that many super-rich Chinese families have been buying homes overseas. But, as Stephen Harner pointed out, this is hardly news. The Chinese have been doing so for generations. The only difference these days is that they have so much more money to spend. This, of course, attracts notice and even gets written about in the press.
Probably the single most widely publicized member of the “collapsing China” club is Gordon Chang, a Chinese-American lawyer. Since he published The Coming Collapse of China in 2001, he hasn’t had a good word to say about China’s prospects. Yet between 2001 and 2014, China boosted its exports from $267 billion to $2,331 billion – a more than eight-fold rise and a compound annual growth rate of an almost unbelievable 18.1 percent. This signified a rate of sustained productivity growth that few, if any, other nations have ever matched.
Contacted recently, Chang professed to be still a convinced China super-bear. But if China managed to escape economic Armageddon in the wake of his book’s publication fourteen years ago, what’s different today? In its latest reformulation, Chang’s argument is that China is facing devastating new competition from India. Just as a rising China wreaked havoc on the U.S. economy, a rising India supposedly poses a similar threat to the Chinese economy.
To a non-economist, especially one who is not familiar with Asia, this might not seem entirely implausible. In reality Chang’s argument is based on one of the most elementary fallacies in economics, the idea that success is a zero-sum game. His implicit assumption is that for some nations to win, others necessarily have to lose. This is Malthusianism and it overlooks the fact that in normal modern conditions economic growth is an expanding universe. Think, for instance, of the rise of Scandinavia. Though Norway, Sweden and Denmark now rank near or at the top of the world income league, this has hardly on balance posed a problem for a nation like Germany.
What Chang seems to be implying is that India will be accorded carte blanche to use the same super-aggressive methods on the Chinese industrial base that China has used on the American industrial base. He fails to note, however, that Washington has been asleep at the switch, with the result that China has been allowed to get away with the economic equivalent of murder. In particular China has extorted a cornucopia of advanced production technologies from America. U.S. corporations have been told that to sell their products in China they must manufacture there and bring their best technologies. To say the least, such diktats ride roughshod over China’s obligations under international trade agreements. India is unlikely to be permitted to use similar extortion techniques against China.
In truth about the only thing India and China have in common is an Asian address. In economic and political fundamentals, they are chalk and cheese. In trade, for instance, India remains a negligible force, despite many years of bullish econobabble in the West. At last count it was not only being out-exported nine to one by China but China seemed to be lengthening its lead. (Measured since 2006, India’s exports have hardly doubled, whereas China’s have more than quadrupled.)
Crucially the Indian savings rate runs little more than half of China’s. Worse, the Indian authorities seem to lack the authoritarian tools necessary to boost it. (In In the Jaws of the Dragon, a book I published in 2008, I showed how China uses authoritarian controls to suppress consumption, thereby automatically and powerfully boosting the savings rate.)
Another key distinction is that whereas China has run huge current account surpluses for decades, the Indian balance of payments remains stubbornly in the red.
A second strand in Chang’s argument is that capital flight threatens to destroy the Chinese economy. Though this again may impress a non-economist, there is again a lot less here than meets the eye. For a start, China is necessarily a huge capital exporter as a result of its current account surpluses (as a matter of simple arithmetic, every dollar of surplus represents a dollar of capital that will willy-nilly be exported).
To be sure Chinese leaders have often talked as if they are worried about capital flight. The point of such talk, however, would appear to be merely to deflect attention from the People’s Bank of China’s market interventions to keep the yuan undervalued.
What is clear is that if the Beijing authorities can control the internet and the press, a fortiori they can control capital flight (which requires mainly just a firm grip on a mere handful of major banks, most of which are, in China’s case, state-owned). What we know for sure is that historically other nations with a far more liberal tradition – the United Kingdom in the mid-twentieth century, for instance – have had little trouble maintaining effective capital controls. Moreover the investment case for the British getting their money out in those days was far greater than for the Chinese today. After all Britain’s economic performance was persistently anemic, whereas China’s current growth rate, at around 6 percent, remains one of the world’s highest. In the unlikely event that Chinese capital flight really becomes a problem, the authorities have a host of remedies available, not least an Orwellian system of electronic snooping far more intrusive than anything known in the West today, let alone in the United Kingdom of the 1960s.
So what are we left with? It is past time the American press remembered its traditional commitment to balance – and recovered its commonsense. Hearteningly, not all members of the press are incapable of learning from experience.
I will leave the last word to Gideon Rachman of the Financial Times. He cut to the core of the matter in a well-balanced commentary in 2012.
It is clearly true that China has enormous political and economic challenges ahead. Yet future instability is highly unlikely to derail the rise of China. Whatever the wishful thinking of some in the west, we are not suddenly going to wake up and discover that the Chinese miracle was, in fact, a mirage.
“My own scepticism about China is tempered by the knowledge that analysts in the west have been predicting the end of the Chinese boom almost since it began. In the mid-1990s, as the Asia editor of The Economist, I was perpetually running stories about the inherent instability of China – whether it was dire predictions about the fragility of the banking system, or reports of savage infighting at the top of the Communist party. In 2003, I purchased a much-acclaimed book, Gordon Chang’s, The Coming Collapse of China – which predicted that the Chinese miracle had five years to run, at most. So now, when I read that China’s banks are near collapse, that the countryside is in a ferment of unrest, that the cities are on the brink of environmental disaster and that the middle-classes are in revolt, I am tempted to yawn and turn the page. I really have heard it all before.
Eamonn Fingleton reported on East Asian economics and finance from a base in Tokyo for 27 years. He met China’s supreme leader Deng Xiaoping in 1986 and predicted the Japanese stock market and real estate crashes in a major article in Euromoney in September 1987. He is the author of Unsustainable: How Economic Dogma Is Destroying American Prosperity (New York: Nation Books, 2003).
While India has embarked on an ambitious renewable energy pathway, coal is likely to remain its primary source of energy for the next couple of decades at least.
India will not agree to any proposal at the climate change negotiations that will seek to restrict the use of coal as a source of energy in the near term, a key member of the country’s negotiating team said on Wednesday.
More than 190 countries will gather in Paris later this month for a two-week annual climate change conference that is expected to deliver a global agreement this year.
“We cannot agree to any proposal that will restrict our ability to generate energy from coal or inhibit our efforts to ensure energy access to all our people in an accelerated manner,” Ajay Mathur, director general of Bureau of Energy Efficiency, told The Indian Express.
While India has embarked on an ambitious renewable energy pathway, coal is likely to remain its primary source of energy for the next couple of decades at least.
In a recent projection, the government had said it hoped to bring down its dependence on coal for electricity production from the current 61 per cent to 57 per cent by 2031-32. By that year, the contribution of renewable energy — solar, wind and biogas — in total electricity generation was projected to grow to 29 per cent from the current 12 per cent.
“There is no looking away from it. Coal is going to remain India’s primary source of electricity generation for some time. We cannot agree to anything that restrains us from using coal,” he said.
Mathur said that in Paris, India will ask for a more stringent international mechanism to ensure that the developed countries deliver on the commitments they have made to reduce their greenhouse gas emissions. In the last few months, countries have submitted their climate action plans — steps that they intend to take to deal with climate change — up to the year 2032. There is debate over the mechanism to be adopted to assess whether all the actions are consistent with the objective of keeping the rise of global average temperatures within 2 degree celsius compared to pre-industrial times.
The climate change negotiations accept a principle of differentiation in the responsibilities of developed and developing countries in dealing with climate change. Mathur said this differentiation must extend to the compliance process as well.
“The assessment of the developed countries’ actions must be subjected to a stronger review as compared to other countries,” Mathur said.
… Internationally, many oil and gas majors which need higher energy prices have rallied around the implementation of a carbon tax. Recently, managements of Total, Shell, BP, BG Group, Repsol, Eni, and other state-run firms called for a carbon tax at a climate change conference in Paris.
While a New York Times editorial has suggested that these companies are finally experiencing the global awakening of the collective environmental consciousness, this move is patently self-serving to higher-cost producers who are struggling and will continue to struggle under a lower commodity price regime.
A tax on carbon emissions would incent utilities to shift from coal toward natural gas, thereby providing price uplift to these companies’ products. Also, such a tax would not likely cost the industry anything since regulatory costs would be passed to consumers. However, it would likely require hosts of compliance specialists, placing a disproportionate amount of stress on smaller, more thinly capitalized endeavors. Driving smaller players out of the business with increased regulation would serve two purposes: it allows the larger players to capture market share; and, it would put upward pressure on energy prices as supply would be driven out. … Full article
Far from the expected development, forestry plantations and other carbon market initiatives in Uganda have severely compromised ecologies and livelihoods of the local people.
By Kristen Lyons and Peter Westoby · The Conversation · September 19, 2015
In recent years there has been significant movement toward land acquisition in developing countries to establish forestry plantations for offsetting carbon pollution elsewhere in the world. This is often referred to as land grabbing.
These carbon trading initiatives work on the basis that forestry plantations absorb carbon dioxide and other polluting greenhouse gases. This helps to undo the environmental damage associated with modern western lifestyles.
Carbon markets are championed as offering solutions to climate change while delivering positive development outcomes to local communities. Heavy polluters, among them the airline and energy sectors, buy carbon credits and thereby pay local communities, companies and governments to protect forests and establish plantations.
But are carbon markets – and the feel good stories that have sprung up around them – all just a bit too good to be true?
There is mounting evidence that forestry plantations and other carbon market initiatives severely compromise livelihoods and ecologies at a local level. The corporate land grabs they rely on also tend to affect the world’s most vulnerable people – those living in rural areas.
But such adverse impacts are often written out of the carbon market ledger. Sometimes they are simply justified as ‘externalities’ that must be accepted as part of ensuring we avoid climate apocalypse.
Green Resources is one of a number of large-scale plantation forestry and carbon offset corporations operating on the continent. Its activities are having a profound impact on the livelihoods of a growing number of people. Norwegian-registered, the company produces saw log timber and charcoal in Mozambique, Tanzania and Uganda. It receives carbon revenue from its plantation forestry operations.
In Uganda, the focus of our research, Green Resources holds two licenses over 11,864 hectares of government-owned, ‘degraded’ Central Forest Reserve. Historically, villagers could access this land to grow food, graze animals and engage in cultural practices.
Under the licensed land agreement between Uganda’s government and Green Resources, more than 8,000 people face profound disruptions to their livelihoods. Many are experiencing forced evictions as a direct result of the company’s take over of the land.
Carbon violence on local villagers
Villagers across Green Resources’ two acquisitions in Uganda report being denied access to land vital for growing food and grazing livestock. These are at Bukaleba and Kachung Central Forest Reserves. They also cannot collect forest resources. Many say they are denied access to sites of cultural significance and to resources vital to their livelihoods.
There are also many stories about land and waterways that have been polluted by agrichemicals the company uses in its forestry plantations. This has caused crop losses and livestock deaths.
Many of those evicted, as well as those seeking to use land licensed to Green Resources, have also experienced physical violence at the hands of police and private security forces tied to the arrival of the company. Some villagers have been imprisoned or criminalised for trespass.
These diverse forms violence are directly tied to the company’s participation in the carbon economy. Thus Green Resources’ plantation forestry and carbon market activities are inflicting ‘carbon violence’ on local villagers.
Green Resources appears to be continuing to tighten the perimeter of its plantation operations as part of ensuring compliance with regulations and certifications required for entry into carbon markets. This further entrenches these diverse forms of violence. In short, subsistence farmers and poor communities are carrying heavy costs associated with the expansion of forestry plantations and global carbon markets.
Green Resources does engage in some community development activities, but these are largely disconnected from local villagers’ needs and aspirations. Interviews with 152 affected villagers across the two sites highlight that access to land to produce food is the most pressing issue. This is an issue that Green Resources has done little to address.
The loss of access to land and sustainable livelihoods for vulnerable populations is unjust and unacceptable, particularly when rural people in Uganda contribute little to carbon pollution.
In 2014 the Oakland Institute, an independent policy think tank based in California, US, published its report on Green Resources. The company has responded, most notably in a strong letter from the CEO. While he sought to discredit the researchers and the report, he failed to engage with substantial issues of concern arising from the research.
At least one company board member has publicly acknowledged problems in company relations with affected communities, especially at the Bukaleba site. These are issues raised by a number of other researchers over a number of years.
The company has not publicly articulated what it is doing to address the social and environmental problems associated with its corporate practices. Green Resources must demonstrate how it is seeking to deal with the substantial adverse impacts associated with its activities.
It’s not just about money
More broadly, there are increasing calls for reform of global plantation forestry and carbon markets to alleviate the burden subsistence farmers carry alongside their expansion. Similarly, there are calls for reform to corporate practices, including community development initiatives and employment practices.
We would suggest that such reforms should be directed towards reducing the gap between the winners and losers in global carbon markets. There must be recognition of common property rights and access and use rights of local people in license areas. This must be done alongside valuing indigenous and local people’s knowledge of forests and ecosystem management.
There are also stronger calls from climate movements for the transformation of global energy futures. Those include the support for renewable energy to reduce global greenhouse gas emissions and the subsequent reliance on offset initiatives.
Movements for climate justice in Africa and elsewhere demonstrate the growing resistance to market based and techno fixes as the means to avert climate change. These calls for justice challenge change agents to move beyond simply tweaking at the edges of carbon markets.
They need to imagine a future where social and environmental justice – not money and markets – are at the centre of thinking and planning.
Crises ‘solutions’ to advance global agenda behind closed doors
Lana and Andy Wachowski’s classic 1999 film, “The Matrix”, introduced viewers to the wonderfully fascinating question of how systems of domination and control reproduce themselves. In the film, we learn that the matrix periodically re-boots itself. Most often the reload is so seamless that it is unnoticed by the masses oblivious to the system of power that constitutes their reality. Sometimes, however, a “glitch” in power’s reproduction temporarily reveals the system to humanity, making for a moment of awareness that leads to a potential escape from the matrix. At the United Nation’s General Assembly the matrix was re-loaded on Sept. 25 with the passing of the Sustainable Development Goals (SDGs).
The SDGs are a set of 17 goals with 169 targets that carry an ambitious agenda for eliminating deeply rooted global inequities and inequalities, including the end of poverty. The agenda is to be accomplished by 2030. The SDG’s also aim to be sustainable for the planetary eco-system. The SDGs replace the Millennium Development Goals (MDGs), and are the outcome of the Rio+20 meeting in 2012, which began the global discussions about the post-2015 global agenda. Post-2015 refers to a grander re-loading of the development agenda by U.N. agencies, such as the renegotiation of the Hyogo Framework for disaster risk reduction in Spring 2015 and the upcoming re-booting of U.N. Habitat’s urban agenda, which will happen with the launch of Habitat III in Quito, Ecuador, in October 2015.
Collectively, the post-2015 agenda defines how the global community will respond to major issues such as food security, climate change, public health, urbanization, gender inequality and poverty. It sets the normative framework for how our key institutions will address the most pressing issues of the 21st Century. These institutions include the core global power brokers in the world of development, such as The World Bank, the Rockefeller Foundation, or USAID. But, it also includes the wide range of NGOs, such as Oxfam or World Resources Institute, along with an even wider range of consultancy companies that contribute to policy formulation and implementation. Of course, the private sector is present as major stakeholders in how development will solve 21st Century crises. Taken together these actors constitute a development complex of interconnected interests and agendas fundamental to how power functions globally. With the SDGs, these power brokers have reproduced their position as the creators of the agenda as well as the actors who implement the agenda.
A key to the power elite’s reproduction of their capacity to define the agenda for what will become 9 billion people is the seamless transition they executed in New York City on Sept. 25. Amazingly, 193 nations signed onto the agenda, “Transforming Our World: The 2030 Agenda for Sustainable Development.” Their signatures resulted from a process of closed-door meetings that created the core agenda before the illusion of consultation was created through a series of engagements with organizations that ostensibly represented civil society. The making of the SDGs largely focused on responding to the criticisms of the MDGs, which complained of inadequate benchmarks for any honest assessment that could determine the success or failure of the development goals. Hence, the SDGs give us a bewildering list of 169 targets to be met in accomplishing the goals. Additionally, growing concerns about the deepening planetary ecological crisis, especially in its climate change articulation, brought the power brokers to the point of needing to include sustainability within the development agenda. To use “The Matrix” metaphor, all of this work happened without a “glitch to the system” as it rebooted. Hardly anyone took notice, scarce was the debate, and few have asked questions about the fundamental premises of what is now called “sustainable development.”
Like lipstick on a pig, the SDGs are a continuation of the thinking within the MDGs approach to global poverty offering nothing more than a cosmetic makeover. The thinking goes by the name “development,” which itself is a continuation of the modernization paradigm which was the neo-colonialist attempt in the 1950s and 1960s at putting lipstick on the pig of colonialism. The MDG’s brand of lipstick attempted to lift people out of poverty by promoting economic growth, while refusing to acknowledge that this capitalist cure was the cause of the ill it created in the first place. The SDG’s retain the growth paradigm, while tinting the lipstick’s color with “sustainability.” In the seamless reloading of the matrix, the making of the SDGs advanced the argument that the MDGs were, for the greater part, successful in the goal of reducing global poverty by half. However, that thesis depends on how poverty is measured. If we keep an absurdly low metric of US$1-2 dollars per day, then the MDGs succeeded. But, if the global elite, those who create the parameters of success behind closed-door meetings used humane measurements for a dignified life, then the MDGs were an unquestionable failure. … Full article
“Global Goals” Is Lavishly-Funded Public Relations Endeavor “We the People” Never Voted For
This month delegates to the United Nations ratified the so-called “Global Goals For Sustainable Development.” This will involve a radical, far-reaching social and economic transformation of everyday life that has been in the works for decades.
In true Hegelian dialectic style, the program is taking place as various black swans linger on the economic horizon, while some of the very interests involved in the “Global Goals” are likewise putting the finishing touches on the Trans-Pacific trade agreement, designed to (not coincidentally) crush the nation state.
Such an ambitious program will cost, by the UN’s own estimate, as much as $5 trillion annually. A social makeover of this scale requires enlistment of ideologically-motivated shock troops from all walks of life to act as change agents in their own spheres. Thus a portion of such finances will be apportioned to thought and behavioral modification toward ideational acceptance of continued corporate ascendance, wealth and resource redistribution, and the breakdown of traditional borders that for better or worse have defined the human condition since the feudal era–from gender and common morality to the nation state. As the “Global Goals” website declares, “We are not a generation of bystanders. We are global citizens.”
Below is the campaign’s slickly produced promotional video.
Truthstream Media has developed a clever interpretation of the UN’s “Global Goals.” Unfortunately, these are by no means exaggerations but rather illustrate the hypocrisy of this campaign, which in reality involves an accelerated privatization of the commons and even our own bodies combined with elaborate psychological warfare to disguise such endeavors as social activism.
What’s that you say? You’re not on board? See you in the gulag, comrade.
Goal 1: End poverty in all its forms everywhere
Translation: Centralized banks, IMF, World Bank, Fed to control all finances, digital one world currency in a cashless society
Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Goal 3: Ensure healthy lives and promote well-being for all at all ages
Translation: Mass vaccination, Codex Alimentarius
Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Translation: UN propaganda, brainwashing through compulsory education from cradle to grave
Goal 5: Achieve gender equality and empower all women and girls
Translation: Population control through forced “Family Planning”
Goal 6: Ensure availability and sustainable management of water and sanitation for all
Translation: Privatize all water sources, don’t forget to add fluoride
Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all
Translation: Smart grid with smart meters on everything, peak pricing
Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Translation: TPP, free trade zones that favor megacorporate interests
Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Translation: Toll roads, push public transit, remove free travel, environmental restrictions
Goal 10: Reduce inequality within and among countries
Translation: Even more regional government bureaucracy like a mutant octopus
Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable
Translation: Big brother big data surveillance state
Goal 12: Ensure sustainable consumption and production patterns
Translation: Forced austerity
Goal 13: Take urgent action to combat climate change and its impacts*
Translation: Cap and Trade, carbon taxes/credits, footprint taxes
Goal 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Translation: Environmental restrictions, control all oceans including mineral rights from ocean floors
Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
Translation: More environmental restrictions, more controlling resources and mineral rights
Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Translation: UN “peacekeeping” missions (ex 1, ex 2), the International Court of (blind) Justice, force people together via fake refugee crises and then mediate with more “UN peacekeeping” when tension breaks out to gain more control over a region, remove 2nd Amendment in USA
Goal 17: Strengthen the means of implementation and revitalize the global partnership for sustainable development
Translation: Remove national sovereignty worldwide, promote globalism under the “authority” and bloated, Orwellian bureaucracy of the UN
You have signed the death warrant for science. – Peter Webster
In case you don’t know what RICO is (Wikipedia):
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them, closing a perceived loophole that allowed a person who instructed someone else to, for example, murder, to be exempt from the trial because he did not actually commit the crime personally.
RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 While its original use in the 1970s was to prosecute the Mafia as well as others who were actively engaged in organized crime, its later application has been more widespread.
Senator Whitehouse has proposed to use RICO laws against climate change skeptics and fossil fuel companies, in a WaPo article The fossil fuel industry’s campaign to mislead the American public. Excerpts:
The Big Tobacco playbook looked something like this: (1) pay scientists to produce studies defending your product; (2) develop an intricate web of PR experts and front groups to spread doubt about the real science; (3) relentlessly attack your opponents.
In the case of fossil fuels, just as with tobacco, the industry joined together in a common enterprise and coordinated strategy.
The tobacco industry was proved to have conducted research that showed the direct opposite of what the industry stated publicly — namely, that tobacco use had serious health effects. Civil discovery would reveal whether and to what extent the fossil fuel industry has crossed this same line. We do know that it has funded research that — to its benefit — directly contradicts the vast majority of peer-reviewed climate science. One scientist who consistently published papers downplaying the role of carbon emissions in climate change, Willie Soon, reportedly received more than half of his funding from oil and electric utility interests: more than $1.2 million.
The Weekly Standard has a hard hitting article: Senator Whitehouse: Use RICO laws to prosecute climate skeptics. Excerpts:
Obviously, there’s a lot of money hanging in the balance with regard to energy policy. But when does coordinating “a wide range of activities, including political lobbying, contributions to political candidates, and a large number of communication and media efforts” go from basic First Amendment expression to racketeering? The tobacco analogy is inappropriate in regards to how direct the link between smoking and cancer is. Even among those who do agree that global warming is a problem, there’s a tremendously wide variety of opinions about the practical effects. Who gets to decide whether someone is “downplaying the role of carbon emissions in climate change” relative to the consensus? If message coordination and lobbying on controversial scientific and political issues can be declared racketeering because the people funding such efforts have a financial interest in a predetermined outcome, we’re just going to have to outlaw everything that goes on in Washington, D.C.
In February, Rep. Raul Grijalva, D-Ariz., attempted a McCarthyite witch hunt against climate scientists he found disagreeable. And Sheldon Whitehouse is sitting U.S. Senator. He’s now publicly encouraging legal persecution of people who conduct scientific research and/or those that have opinions about it he disagrees with. He wrote this opinion in the Washington Post on Friday, and no one much noticed or batted an eye at the consequences of what he’s advocating here. Such calls for draconian restrictions on speech are becoming alarmingly regular. And if more people don’t start speaking out against it, sooner or later we’re actually going to end up in a place where people are being hauled into court for having an opinion that differs from politicians such as Senator Whitehouse.
20 U.S. climate scientists
When I first spotted this, I rolled my eyes – another day, more insane U.S. climate politics. What really motivated this post is the following letter, from 20 U.S. climate scientists. Letter reproduced in full [link]:
Letter to President Obama, Attorney General Lynch, and OSTP Director Holdren
September 1, 2015
Dear President Obama, Attorney General Lynch, and OSTP Director Holdren,
As you know, an overwhelming majority of climate scientists are convinced about the potentially serious adverse effects of human-induced climate change on human health, agriculture, and biodiversity. We applaud your efforts to regulate emissions and the other steps you are taking. Nonetheless, as climate scientists we are exceedingly concerned that America’s response to climate change – indeed, the world’s response to climate change – is insufficient. The risks posed by climate change, including increasing extreme weather events, rising sea levels, and increasing ocean acidity – and potential strategies for addressing them – are detailed in the Third National Climate Assessment (2014), Climate Change Impacts in the United States. The stability of the Earth’s climate over the past ten thousand years contributed to the growth of agriculture and therefore, a thriving human civilization. We are now at high risk of seriously destabilizing the Earth’s climate and irreparably harming people around the world, especially the world’s poorest people.
We appreciate that you are making aggressive and imaginative use of the limited tools available to you in the face of a recalcitrant Congress. One additional tool – recently proposed by Senator Sheldon Whitehouse – is a RICO (Racketeer Influenced and Corrupt Organizations Act) investigation of corporations and other organizations that have knowingly deceived the American people about the risks of climate change, as a means to forestall America’s response to climate change. The actions of these organizations have been extensively documented in peerreviewed academic research (Brulle, 2013) and in recent books including: Doubt is their Product (Michaels, 2008), Climate Cover-Up (Hoggan & Littlemore, 2009), Merchants of Doubt (Oreskes & Conway, 2010), The Climate War (Pooley, 2010), and in The Climate Deception Dossiers (Union of Concerned Scientists, 2015). We strongly endorse Senator Whitehouse’s call for a RICO investigation.
The methods of these organizations are quite similar to those used earlier by the tobacco industry. A RICO investigation (1999 to 2006) played an important role in stopping the tobacco industry from continuing to deceive the American people about the dangers of smoking. If corporations in the fossil fuel industry and their supporters are guilty of the misdeeds that have been documented in books and journal articles, it is imperative that these misdeeds be stopped as soon as possible so that America and the world can get on with the critically important business of finding effective ways to restabilize the Earth’s climate, before even more lasting damage is done.
Jagadish Shukla, George Mason University, Fairfax, VA
Edward Maibach, George Mason University, Fairfax, VA
Paul Dirmeyer, George Mason University, Fairfax, VA
Barry Klinger, George Mason University, Fairfax, VA
Paul Schopf, George Mason University, Fairfax, VA
David Straus, George Mason University, Fairfax, VA
Edward Sarachik, University of Washington, Seattle, WA
Michael Wallace, University of Washington, Seattle, WA
Alan Robock, Rutgers University, New Brunswick, NJ
Eugenia Kalnay, University of Maryland, College Park, MD
William Lau, University of Maryland, College Park, MD
Kevin Trenberth, National Center for Atmospheric Research, Boulder, CO
T.N. Krishnamurti, Florida State University, Tallahassee, FL
Vasu Misra, Florida State University, Tallahassee, FL
Ben Kirtman, University of Miami, Miami, FL
Robert Dickinson, University of Texas, Austin, TX
Michela Biasutti, Earth Institute, Columbia University, New York, NY
Mark Cane, Columbia University, New York, NY
Lisa Goddard, Earth Institute, Columbia University, New York, NY
Alan Betts, Atmospheric Research, Pittsford, VT
I am familiar with all of these names, and know a few of them fairly well. The list includes several members of the National Academy of Science, and numerous IPCC authors. Apart from Trenberth and Robock, as far as I know, none of these individuals have made previous public/political statements about climate change. In fact, one of them told me (say a decade ago), that he had worked hard to keep his head below the radar and stay out of all the politics and the fighting. Another (Mike Wallace) wrote a jacket blurb for Roger Pielke Jr’s latest book The Rightful Place of Science: Disasters and Climate Change (note: Pielke Jr was one of the Grijalvi 7).
My first reaction was that this was some kind of joke, or that some of these individuals didn’t know what they were signing. The document originated from the Institute of Global Environment and Society, of which Jagadish Shukla is President (and first signatory, and presumably the instigator). So it seems that at least the 6 individuals associated with the IGES knew what they were signing.
The quote from Peter Webster at the start of this post was included in an email that he sent to one of the signatories. The (anonymous) response:
After reading Senator Whitehouse op ed in the Washington Post, I thought the senator should be supported by the scientific community. Similarities with the tobacco industry are compelling. This is just a small step for me to get engaged with social/policy relevant issues.
Forgive them (?)
Well, that letter reflects, at best, a great deal of naiveté by the signatory. Perhaps some of them had their arm twisted by the instigators/advocates, and were just trying to be collegial.
To paraphrase the other JC:
Forgive them, for they know not what they do.
Dear signatories of this letter:
I will try to clarify here what you have done, and why it is wrong.
First, you have been duped by the Merchants of Doubt book/movie. See my previous blog post Bankruptcy of the ‘merchants of doubt’ meme, which includes reviews by other social scientists.
Second, the consensus on human caused climate change is not as overwhelming as you seem to think. See my recent blog post The conceits of consensus, which includes a detailed analysis of an extensive survey of climate scientists (not to mention extensive critiques of the Cook et al. analysis).
Third, the source of funding is not the only bias in research, and the greatest bias does not necessarily come from industry funding, see these posts:
- Conflicts of interest in climate science
- Is federal funding biasing research?
- Industry funding and bias
- Industry funding: witch hunts
- Scientific integrity versus ideologically fueled research
Fourth, scientists disagree about the causes of climate change for the following reasons:
- Insufficient observational evidence
- Disagreement about the value of different classes of evidence (e.g. models)
- Disagreement about the appropriate logical framework for linking and assessing the evidence
- Assessments of areas of ambiguity and ignorance
- Belief polarization as a result of politicization of the science
The biggest disagreement however is about whether warming is ‘dangerous’ (values) and whether we can/should do something about it (politics). Why do you think your opinion, as scientists, matters on values and politics?
Fifth, what you have done with this letter is advocacy. This is a very dicey role for a scientist to play, fraught with reputational and ethical land mines. Here are several essays on this topic, written from a range of perspectives:
- (Ir)responsible advocacy by scientists
- Ins and outs of the ivory tower
- The adversarial method versus Feynman integrity
- Advocacy science and decision making
- Too much advocacy?
- Refocusing debate about advocacy
- Rethinking climate advocacy
- Ethics of communicating scientific uncertainty
- Tamsin on scientists and policy advocacy
- Mann on advocacy and responsibility
- Climate scientists joining advocacy groups
- Science, uncertainty and advocacy
What you have done with your letter is the worst kind of irresponsible advocacy, which is to attempt to silence scientists that disagree with you by invoking RICO. It is bad enough that politicians such as Whitehouse and Grijalvi are playing this sort of political game with science and scientists, but I regard it as highly unethical for scientists to support defeating scientists with whom you disagree by such methods. Since I was one of the scientists called out in Grijalvi’s witch hunts, I can only infer that I am one of the scientists you are seeking to silence.
Peter Webster did not exaggerate when he wrote:
You have signed the death warrant for science.
On August 3, President Obama declared that “under the Clean Power Plan, by 2030, renewables will account for 28% of our capacity,” and “will save the average American family nearly $85 on their annual energy bill in 2030.”
In the accompanying EPA rule, the word renewables is not used consistently. Sometimes it includes hydroelectric power, sometimes not. Sometimes the focus is on wind and solar power, sometimes it is broader. As the readers are aware, capacity is not the same thing as generation, and for generation, prices vary widely during the day. This makes it unclear how we get from a 28% capacity to $85 in annual savings. It is common for energy analysts to use levelized costs to compare different sources, but a residential consumer is paying for 24/7 access to a working grid, not for electricity from individual sources.
Without any enabling legislation, President Obama plans to force the United States to make an enormous capital investment, of the order of a trillion dollars, in wind and solar power and the associated grid infrastructure. Politicians often talk about investments when they mean forced transfers, but this really would be an investment, and the goal of this post is to estimate the return for the consumer. The post was inspired by a post by Willis Eschenbach at What’s Up With That. I will not consider the health and climate impacts of the plan. Judy Curry started the discussion of these in her August 3 post.
If the residential electricity bills actually do go down $85 a year as President Obama promised, then that $85 would be the return on our investment. To evaluate an investment, we divide it by the annual return to get a payback time. The situation is different if the electricity bills go up. The return is negative. We are never paid back and we have also lost our investment. One can still calculate a payback time using the same formula but we get a negative payback time, which is worse than any investment with a positive payback time. The readers who are scientists and engineers may appreciate the analogy to negative-temperature systems that are hotter than any system with a positive temperature. Among those awful investments with negative payback times, the smaller the negative payback time the worse the investment.
One complication in assessing a return on wind and solar investments is that the primary subsidies for renewables in the United States are the 30% federal tax credit and the 2.2¢/kWh producer tax credit for wind. These subsidies are effectively paid for by the people who pay income taxes. The toll falls heavily on the upper 1% in income who pay 46% of net US income taxes. Another problem in assessing a possible return is that the US has not gotten very far in wind and solar power. They accounted for only 4% of the electricity generation in 2013.
Europe is a better place to evaluate an investment in wind and solar power. The primary subsidy in Europe is a feed-in-tariff. Who pays in the end is different from the US. The people who are well off enough to buy solar arrays effectively are paid by the people who are not well off enough to buy solar arrays. I will leave the question of whether this is good social policy or not to the Europeans, but for this post it is useful because it means that the residential electricity bills reflect the wind and solar installation costs. It also helps that Europe has installed more than twice as much wind and solar capacity as the US.
Our starting point is Figure 1, which shows a plot of residential electricity prices compared with the residential component of wind and solar capacity for OECD-Europe countries. The data and the figures for this post are available as an Excel file. Willis Eschenbach and Jonathan Drake also made price plots for EU countries. Our emphasis will be on the higher-income European countries that are members of the OECD. Some countries, like Norway and Switzerland, are in OECD Europe but not the EU, while Romania is in the EU, but not the OECD. BP deems that Estonia, Iceland, Luxembourg, and Slovenia are not significant enough to include in their electricity spreadsheets, and I omitted them also.
The residential component of the wind and solar capacity is calculated from the residential share of the final consumption reported by the IEA. At 15¢/kWh, Norway is an outlier, well below the other countries. It has a very large per-person residential consumption of electricity generated by hydroelectric power. Norway also provides profitable balancing services to the continent, consuming wind and solar electricity when the price is low and providing hydroelectric power when the price is high. Roger Andrews has an excellent post on this balancing. The trend line is calculated without Norway. Incidentally, the US residential price is 12¢/kWh, even lower than Norway. The US has low-cost natural gas and coal and the US emphasizes tax credits rather than feed-in-tariffs to subsidize wind and solar power. As Willis noted, higher wind and solar capacities are associated with higher prices. For European consumers the return on their wind and solar investment is negative.
Figure 1. Residential electricity prices vs the residential component of the per-person wind and solar capacity for OECD Europe Countries. The electricity prices are taken from the IEA, the capacities from BP, and the populations from the UN. Data are for 2013, except for the Spanish price, where I filled from 2011. The IEA prices are converted at the market exchange rates.
How negative is the return? I propose that we interpret the y-intercept of the trend line, 18.8¢/kWh, as the price of electricity without any wind or solar capacity. As a check, in Germany in 2000, when the wind and solar capacity were negligible, the price was 16.3¢/kWh, expressed in 2013 dollars with BP’s deflator. The difference between the actual price and the zero-wind-and-solar price becomes a per kWh surcharge for the wind and solar capacity.
If we multiply this by the annual residential consumption we get an annual per-person wind and solar surcharge. These are shown in Figure 2. Again there is a clear trend. More capacity is associated with a greater surcharge. The slope of the trend line in the figure is $1.14/y/W. If we divide this by the average cost of the cumulative wind and solar capacity, we get the return on the investment, which will be negative. I will take the average cost to be $4/W. Expressed as a negative payback time, this is 3.5 years. Expressed as a negative return, it is 29% per year.
Figure 2. Calculated annual per-person wind and solar surcharge vs the residential component of per-person wind and solar capacity for OECD Europe Countries. Hungary (11W/p, –$7/p/y) is omitted from the graph, but included in the trend calculation. The trend is constrained to go through the origin.
As investments, these are inconceivably bad and we would expect large opportunity costs at the national level. It is interesting that if we start on the right in our graphs and move left past Denmark and Germany, the big spenders are the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) that have been in the financial doghouse in recent years.
For consumers, the high electricity prices discourage the use of electricity for increasing safety. During the great European Heat Wave of 2003, 70,000 people died, most of them indoors. This is a horrible way to die. The people who were indoors could have been saved by a $140 Frigidaire window unit, but only if they could afford to pay for the electricity.
Dave Rutledge is the Tomayasu Professor of Electrical Engineering at the California Institute of Technology.