Climate Change under President Obama – worth getting heated about?

The Obama administration is keeping quiet about climate policy leading up to the election, refusing to answer whether it will pursue a cap and trade policy if re-elected and remaining startlingly silent about global climate change.  The Romney campaign believes that actions by President Obama have slowed economic growth, is not certain “what the nature of the threat of climate change is” and claims that energy efficiency is a clever ploy by the Democrats to enact expensive policy.  I’ll leave it to the reader to decide, but I think it’s worth talking about what climate policy we do have and how the standards for both stationary and mobile sources came about in Washington.

To take a step back and put the recent rulings and debate in the context of the United States climate policy, I am going to provide a bit of history, a brief lesson in congressional legislation, and some personal commentary about what it all means.  I welcome your opinions, feedback, and questions about this discussion in the comments section of this post.

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Energy Independent by 2020?

If you’re anything like me, you may find that the claims made in an election year start to get a bit irrational by this point.  Still, they give us an opportunity to do a self-check on what is feasible and what is impractical.  Romney’s energy plan, released yesterday, aims to make the United States energy independent by 2020.  He proposes to do this with the following:

  • Streamline the regulatory procedures for coal-fired power plants to facilitate approval and recommissioning.
  • Explore and develop US oil and gas reserves to bring lower energy prices, greater reliability of supply, and jobs.
  • Reform nuclear regulation to issue more permits, begin construction on new plants, and add to existing infrastructure.
  • Overhaul the Clean Air Act and Clean Water Act such that domestic energy companies are less burdened.
  • Invest in Canadian and Mexican sources of oil and gas.
  • Redirect clean energy funding towards basic energy research.

To say nothing of the fact that Canada and Mexico are not technically part of the United States, and to spare you some political rhetoric, I give you the following facts.

First, the United States imported 11.4 million barrels of oil per day in 2011 (EIA 2012).  Despite impressive advancements in technology and cost reductions for oil and gas extraction, can the Shale Gas Revolution really reverse the import trend shown below in as few as eight years?

US Imports of Crude Oil and Petroleum Products (thousand barrels). Source: EIA 2012

For more charts like these, visit the US Energy Information Administration’s website.

And second, there is an element of economics that is often forgotten when discussing oil prices, national security, and energy imports:  the price of oil is set in global markets.  Although increasing domestic production increases supply (and similarly, reducing dependence of oil by using domestically produced natural gas reduces demand), thereby having some impact on prices, the United States is still subject to global price fluctuations that are affected by both friendly and unfriendly countries restricting production or flooding the market.  At the end of the day, being one hundred percent energy independent can help, but is not guaranteed to eliminate the risk of price volatility because the United States is only producing a fraction of the world’s oil supply.

Oil production by region (MT). Source: 2012 BP Statistical Review

For more charts like this one, see the BP Statistical Review.

The United States accounted for just 8.8% of the world’s oil production in 2011.  The total North American oil production was about twice that, at 16.8%.  By contrast, the Middle East accounted for the greatest percentage of global oil production at 32.6%.  Furthermore, although the United States increased its oil production by 3% from 2010 to 2011, the countries in the Middle East increased oil production by 9.3% (BP Statistical Review 2012).  Remember this reality the next time you hear that domestic energy is a silver bullet solution to high energy prices, price volatility, and national security.

Next week, I will do a reality-check on the Obama energy proposal, both present and future.

The Cost Of Nuclear Weapons: Economics of Armageddon

Reducing the number of nuclear weapons in the world is about more than just avoiding Armageddon. With the US federal government ramping up trillions of dollars in debt and an unemployment rate that shows only weak signs of decreasing, reducing our stockpiles of nuclear warheads has become equally as much about ensuring our fiscal future as our military future. Nuclear weapons are incredibly expensive to maintain and, given that the US has enough nuclear warheads to destroy the world three times over, the discussion of how many nuclear weapons we really need is worth having.

The world currently spends $105 billion annually on the construction of nuclear weapons, their delivery systems, and their maintenance. This should be a matter of concern to an economy still struggling to recover from the greatest recessions since the 1930s. According to Global Zero, an organization advocating for the reduction and eventual elimination of nuclear weapons, the cumulative cost of a decade of nuclear weapons now exceeds $1 trillion. It should be no surprise that the United States currently spends more than any other country combined at $60 billion annually.

With eminent sequestration or severe budget cuts, the high cost of nuclear weapons has risen to prominence. Faced with tight budgets it is time to make tough decisions about where tax-payers money should be spent in the future. How can a Department of Energy bring new and cleaner forms of energy into practice when it must devote two thirds of its decreasing budget to nuclear weapons-related programs? Case in point: over 5000 nuclear weapons are waiting to be dismantled as a result of weapon stockpile reductions mandated by the Strategic Arms Reduction Treaty (START). With the dismantlement budget decreasing from $186 million in 2009 to $58 million in 2011 these nuclear weapons will take over 20 years to disappear. The longer time for dismantlement means that the government will have to spend even more money to maintain these weapons over the 20 years than it takes to dismantle them.

This post is not meant to necessarily advocate for or against nuclear weapon spending but rather to begin a discussion on this important topic. Alternative uses for these funds are too numerous to count. Other than reducing the deficit, they could include increasing (or in the very least, maintaining) the levels of science and research funding, expand training for math and science teachers in public schools or even increasing the allocation to foreign aid.

Since nuclear weapons are not likely to disappear immediately, what can the United States do to limit its spending on these weapons of mass destruction? The New York Times has recently reported that Gen. James E. Cartwright, the retired vice chairman of the Joint Chiefs of Staff and a former commander of the United States’ nuclear forces, has released a report with Global Zero arguing that the United States’ nuclear deterrence could be guaranteed with a total arsenal of 900 warheads. This report also states that only half of these weapons would need to be deployed. Dropping from the 1,550 nukes required by START to 900 could definitely help a struggling economy while maintaining a temporary nuclear deterrence.

While some may advocate for the use of nuclear weapons the cost of these Cold War relics should be considered. $60 billion may be an unreasonably high price to pay for maintaining the ability to annihilate mankind.

US Places Tariffs on Chinese Solar Panels

In response to significant subsidies to domestic solar panel makers from the Chinese government, the US has imposed small tariffs on solar panels imports from China. Although this decision is seen as a small victory for domestic solar panel manufacturers, cheap panels are the foundation of the US’ large investment in renewable solar energy.

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