July 2011 Climate Change Summary Report

California Cap and Trade Plan Cleared by Court

July 1, 2011: The San Francisco Chronicle reports: “An appellate court is allowing California to go ahead with a market-oriented cap-and-trade system of pollution credits to combat global warming while state officials appeal a judge’s order to look harder at alternatives that some environmentalists prefer, such as a tax on carbon fuels. The order by the state’s First District Court of Appeal in San Francisco was a victory for the California Air Resources Board, which says it needs to keep planning in order to put cap and trade into effect by January as scheduled. On Wednesday, however, the board said it was delaying enforcement against polluters until January 2013 to allow more time for preparation and fine-tuning. The case arises from a dispute between state regulators and some environmentalists and antipoverty activists over how to implement California’s global warming law, AB32. … On May 20, Judge Ernest Goldsmith of San Francisco Superior Court issued an injunction requiring the state board to stop its implementation of cap and trade until it conducts an environmental review of other options. But the appeals court suspended his injunction June 3 and issued another order Friday that continues the stay while the case is before the court. … The stay will probably last at least a year, Brent Newell, a lawyer for the environmentalist plaintiffs, said Wednesday. … He declined to say whether the plaintiffs would ask the state Supreme Court to intervene. The air board has continued its work on cap and trade without interruption. A spokesman, Stanley Young, said Wednesday that the board has prepared analyses of the alternatives to cap and trade and is seeking public comments, which it will review at a meeting Aug. 24.”

DOE Expects to Sell All 30 Million Barrels from SPR

July 2, 2011: Reutersreports: “The government expects it will have no problems finding buyers for all 30 million barrels of oil it auctioned as part of a global effort to address high oil prices, an Obama administration official said on Thursday. Oil buyers have expressed strong interest in the crude that the United States is selling from its emergency reserves, the U.S. Energy Department said, calling the oil sale ‘substantially oversubscribed.’ The sale represents half of the 60 million barrels that industrialized nations are releasing jointly to fill a gap in supply caused by political strife in Libya. Analysts have said the global release has been disorganized and has the potential to backfire. The Obama administration was slammed for its decision last week to tap the Strategic Petroleum Reserve (SPR) by the oil industry lobby and other critics, who said there was already plenty of oil supplies in the United States and cast the move as a political tactic. ‘The oversubscription of the (U.S.) SPR auction indicates both that supply disruption is a factor and that we will be able to place all 30 million barrels into the market,’ an administration official said. Almost a dozen oil companies and trading firms sought more information about the opportunity on a conference call earlier this week, and the Energy Department said it received more than 90 offers for its 30.2 million barrels of SPR crude. The administration also expects help from Saudi Arabia, the world’s largest oil producer, which has committed to produce more oil to address the supply shortage, the official said. ‘We will continue to monitor the adequacy of oil supply and are prepared to act further if necessary,’ the official said. But the U.S. also needs to invest in long-term fixes to high energy prices, like cars that use less fossil fuel, Energy Secretary Steven Chu said on Thursday. … Chu did not indicate what the criteria would be for deciding whether to dip into the reserve again. … The government will provide an initial list of buyers on July 5, the official said, and final contracts with the prices paid for the oil will be announced by July 11.”

“High Gasoline Prices Boost Talk of Carbon Tax”

July 2, 2011: ClimateWire reports:“Lingering proposals for a carbon tax are creeping back into policy discussions about how to cut industrial carbon emissions. Slapping a tax on coal-burning power plants and the oil-guzzling transportation sector to encourage the use of cleaner energy sources and technology development is still politically treacherous. But according to a paper by a team led by Trevor Houser, visiting fellow at the Peterson Institute for International Economics and a partner at the Rhodium Group, a carbon tax could serve both polar sides of the energy debate. ‘A carbon tax is the only policy that did well on both counts, both increasing domestic [oil] production and decreasing domestic demand,’ Houser said at forum rolling out the Peterson Institute paper yesterday. … To the Peterson Institute, the logic is in the modeling of data related to global oil supply and American demand. To the American Enterprise Institute (AEI), a carbon tax would mean significant revenue to help bring down the U.S. debt and deficit, and is an alternative to what economists there see as onerous U.S. EPA greenhouse gas regulations. … The oil production increase comes in the form of natural gas liquids. Those are gas byproducts such as ethane, butane and propane that are used as substitutes for crude oil. For its part, natural gas production will increase as electric utilities switch from coal to gas in order to cut taxable carbon emissions. And as producers go after the gas, they’ll produce more of the oily gas liquids. ‘Taken together, the decline in consumption and increase in production resulting from a carbon tax shave 663,000 barrels per day, or $32 billion per year, off the U.S. oil import bill between 2011 and 2035,’ said the report.”

“Judge Upholds ‘Threatened’Listing for Polar Bear”

Greenwirereported yesterday: “A federal judge today upheld the George W. Bush administration’s decision to list the polar bear as threatened under the Endangered Species Act. The ruling is a blow to environmental groups that wanted the bear listed as endangered, thereby giving it more protections, and industry groups and others that don’t want it listed at all. U.S. District Judge Emmet Sullivan of the District of Columbia issued a 116-page opinion explaining why he granted the federal government’s motion for summary judgment.… Hanging over the matter is the issue of global warming and its potential effect on the polar bear’s habitat. Environmentalists argue that greenhouse gases are to blame and that the ESA could be used to help regulate emissions, an approach the Obama administration opposes. Sullivan has yet to rule on that question, which is in many ways the key issue in the case. In today’s ruling, Sullivan stressed how constricted judges are when it comes to second-guessing a federal agency’s determination. … Ultimately, the various parties challenging the listing from both sides constituted ‘nothing more than competing views about policy and science,’ Sullivan noted. As a federal judge Sullivan said he ‘is not empowered to choose among these competing views. Instead, this court is bound to uphold the agency’s determination that the polar bear is a threatened species as long as it is reasonable, regardless of whether there may be other reasonable, or even more reasonable, views.’ Initially, Sullivan was not entirely satisfied with the government’s explanation as to why the polar bear should be listed as threatened. … Sullivan’s ruling today did not address what he himself described at a hearing in April as the ‘elephant in the room’ — the special rule that accompanied the listing that limits the use of the threatened listing to tackle greenhouse gas emissions.”

“Overcaffeinated CAFE”

July 6, 2011: From a Wall Street Journal column by Holman W. Jenkins, Jr.: “Praying for the insanity to blow over is the auto industry’s strategy for dealing with the Obama administration latest urge to double down on fuel economy mandates. Auto makers, wishing to appear deferential to the government that bailed them out, only plead that any new targets be ratcheted up slowly so future administrations will have plenty of chance to repeal the rules before they take effect. … Economies around the world are foundering from an accumulation of policy excesses produced by the sort of straight-line, robotic thinking he’s applying to so-called corporate average fuel economy rules. … If forcing auto makers to build cars that deliver an average of 35.5 mpg is good, believes Mr. Obama, forcing them to deliver 56.2 is even better. Engineering is absent. Any appreciation of the law of diminishing returns is absent. Sean McAlinden of the authoritative Center for Automotive Research recently pointed out that many of the materials needed for ultra-high-mileage vehicles would outstrip current world production several times over. Asking consumers, meanwhile, to bear the cost of fuel-economy improvement they don’t value will cause them to keep their old cars on the road longer. And in pursuit of what benefits? If we junked every gasoline-powered car and truck in America, it would have no appreciable impact on global carbon dioxide. If, as Mr. Obama intends, we switch to electric cars, those cars would be powered by coal, so the alleged atmospheric dividend will be doubly elusive.

The idea that we would save money by not buying oil, even if the alternative energy is more expensive, is the protectionist fallacy in modern cloak. The idea that we’d save money on wars and military adventures is the kind of Hollywood oversimplification that history can be counted on promptly to gut. If his goals were rational and important, Mr. Obama would pursue them rationally—asking Americans for permission to tax gasoline to incentivize purchase of high mileage cars. He does not. … Mr. Obama has said consistently foolish things about fuel economy standards. Last week at an aluminum plant he suggested that new CAFE rules were a matter of helping the auto makers ‘compete.’ This delusion is not new. … Whatever the merits of CAFE, the urge of auto makers to build cars their customers want is not the source of their problems. … Japanese auto makers certainly aren’t deluded that consumers want smaller, slower cars: The latest Honda Civic is 42% heavier than the 1990 model and has nearly twice the horsepower. … If there’s a vision, he hasn’t said what it is, though you can draw your own conclusions from his regular panegyrics on high-speed rail, as empty a liberal chestnut as can be found. But that’s a subject for another day.”

“Climate Talks Put Heat on Obama”

July 6, 2011: Politico reports: “President Barack Obama faces several big green tests over the next year on the international stage. Environmentalists and foreign allies are clamoring for U.S. leadership from the Nobel Prize winner on a pair of upcoming summits focused on global warming, sustainable development and biodiversity. But the White House will need to temper expectations on its foreign policy as it fends off Republicans eager to keep Obama from winning a second term. U.S. officials say a presidential trip to Rio de Janeiro for the 20th anniversary of the Earth Summit in June 2012 isn’t on his schedule right now, although they can expect the drumbeat to grow for Obama to change those plans as the U.N.-sponsored conference gets closer. … On the other hand, conservatives are giddy at the idea of Obama jetting to a South American seaside capital in the middle of his reelection campaign. … Republicans also carry big doubts about the climate science at the center of the international talks and question why a debt-strapped United States should spend any money abroad on environmental issues. … The White House and State Department are already leading an internal working group on the Rio conference with about 15 agencies, including the EPA, the Energy and Commerce departments, the U.S. Trade Representative and the U.S. Agency for International Development. … Roundtable talks will focus on getting individual countries to merge green issues with their economic development. There are also sure to be discussions about ocean acidification, protecting dwindling fisheries and cleaning up manufacturing supply chains. … Two years after the Copenhagen conference fizzled, talks are set to resume in November in Durban, South Africa. Calls for a new pact to succeed the 1997 Kyoto Protocol have hit a wall as developed and developing countries square off over how big of a commitment each should make, whether it should be mandatory and how to connect financial aid to the whole package.”

“America’s Newfound Energy”

July 6, 2011: The Wall Street Journal reports: “For all the talk of Uncle Sam being past his prime, he’s surprisingly sprightly when it comes to one thing: energy production. Amazingly, Rystad Energy, a Norwegian consultancy that analyzes field data, foresees U.S. combined oil and gas output actually surpassing its prior 1972 peak in the early 2020s. Long-term declines in natural gas and oil output have reversed in recent years. … With regards to gas, the current controversy about hydraulic fracturing of shale gas will prompt tougher regulation. But gas’s combination of cleaner emissions relative to coal and low cost makes a broad ban highly unlikely. Last week, New York state’s top environmental official recommended allowing hydraulic fracturing to go ahead, albeit with some restrictions. Huge new shale gas reserves, creating excess supply, have kept U.S. prices stuck at less than half the level being paid in Europe and Asia. … As and when this happens, it should serve to both raise U.S. gas prices to the benefit of producers and further globalize gas flows. That will put pressure on producers that historically enjoyed dominance in captive markets, such as Russia’s Gazprom. …. It should also present a significant challenge to more expensive, less reliable low carbon technologies such as solar power. And it provides U.S. manufacturing with a cost advantage relative to other regions: Witness the revival of chemicals production by the likes of Dow Chemical utilizing cheaper natural gas liquids.

Similar to what’s happened with shale gas, shale oil output from areas like the Bakken formation stretching beneath North Dakota and Montana is rising quickly. Rystad expects U.S. oil production, which bottomed out at 5.4 million barrels per day in 2008, to reach 7.4 million barrels per day by the end of the decade. This won’t win the U.S. independence from oil imports. But it is good news for U.S. refiners in the Midwest like newly listed Marathon Petroleum Corp. They have been enjoying the benefits of refining North American crude oils like West Texas Intermediate trading at discounts to foreign grades like Brent because, similar to gas, there isn’t enough pipeline capacity to get it quickly to world markets. Extra domestic oil should bolster this trend until new pipelines are built. Shifts in America’s relative energy dependence tend to have far-reaching consequences: It’s no coincidence that U.S. oil output peaked in the early 1970s, just before prices went haywire. The resurgence in Uncle Sam’s energy output will also serve to shake up companies, markets and their investors.”

Obama Pushes Advanced Biofuels

July 7, 2011: E&E News PM reported yesterday: “President Obama said today that the domestic biofuel industry’s corn-first mentality is causing the United States to fall behind foreign competitors such as Brazil. ‘I’m a big supporter of biofuels. But one of the things that’s become clear is, is that we need to accelerate our basic research in ethanol and other biofuels that are made from things like wood chips and algae as opposed to just focusing on corn, which is probably the least efficient energy producer of these various other approaches,’ Obama said during a wide-ranging Twitter town hall event held at the White House. Obama’s comments came just weeks after the Senate voted overwhelmingly to end tax credits for ethanol and remove import tariffs on the alternative fuel in a debate that pitted farm-state supporters against members of Congress who view the subsidies as a waste of taxpayer money at a time of steep government deficits. The president today did not condemn that vote, as Agriculture Secretary Tom Vilsack did when he called the Senate’s move ‘ill advised’ and alleged it would cost jobs. Instead, Obama questioned whether the U.S. biofuel industry was doing enough to stay ahead of the biofuel approaches that have, for example, allowed Brazil to create a sugar cane-based biofuel that is more efficient than corn. …

After taking a question from the Twitter account of House Speaker John Boehner (R-Ohio) about the country’s rising debt and lack of jobs, Obama called on congressional leaders to set aside their ‘dogma’and ‘sacred cows’and come to an agreement before the threat of a default begins to take its toll on U.S. and worldwide markets. ‘The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars because the price of gasoline has gone up so high,’ the president said. Obama said he was particularly concerned about the rhetoric he continues to hear from Capitol Hill on domestic oil production. ‘Most of the rhetoric has been about “Let’s produce more,”‘ the president said. But he argued that the United States cannot‘drill its way out of the problem’ when it owns 3 percent of the world’s oil but consumes 25 percent of its global reserves. Obama touted efforts by his administration to increase fuel efficiency standards on cars and promote electric vehicles as a way to save millions of barrels of oil. … But he said addressing the country’s dependence on oil will still take years and require continued investments in alternative energy, even as the country looks to make deep cuts to federal spending.”

“Obama: Congress Lacks ‘Urgency’ on Energy Bill”

July 7, 2011: The Hill reports: “President Obama on Wednesday knocked Capitol Hill inaction on legislation to curb oil use and called on lawmakers to send him a ‘robust’ plan. House Republicans – with limited Democratic backing – have passed several bills to speed up and expand offshore drilling, and Senate GOP lawmakers have called for similar measures. But Obama criticized what he called a lack of focus on weaning the nation off oil. ‘Unfortunately we have not seen a sense of urgency coming out of Congress over the last several months on this issue. Most of the rhetoric has been about, “let’s produce more”‘Obama said during the White House’s ‘Twitter Town Hall’event. ‘Well, we can produce more, and I am committed to that, but the fact is we only have 2 to 3 percent of the world’s oil reserves, we use 25 percent of the world’s oil. We can’t drill our way out of this problem,’ Obama said at the White House social media event. Obama touted increased fuel economy standards and other steps the administration has taken using its existing authorities. But the White House is also seeking Capitol Hill action on several measures, even though a major energy bill faces tough odds in a divided Congress. Administration energy goals include $7,500 rebates for purchasing electric vehicles. More broadly, a top White House energy adviser recently suggested that legislation aimed at spurring deployment of electric cars could form the basis for a bipartisan energy compromise. ‘I’d like to see robust legislation in Congress that actually took some steps to reduce oil dependency,’Obama said, although he did not provide specifics. He said oil will remain a major energy source for some time even with a ‘full throttle’ push for clean energy, but added that reducing reliance will have major benefits. … The White House is also pushing for expanded green energy R&D funding, and a ‘clean energy standard’that would mandate a major increase in low-carbon power supplies from utilities (a measure that faces especially steep hurdles).”

USDA: Biofuels Push Played Role in Spiking Food Prices

July 11, 2011: E&E News PM reported Friday: “Growing use of biofuels played a major role to a food price spike in 2005 and likely contributed to the 2008 spike, Agriculture Department economists say in a new analysis. USDA’s Economic Research Service identified biofuels production as a contributor to a trend of generally increasing food commodity prices over the years 2002 through 2008 and called it a ‘primary factor affecting crop prices’ during 2005 and 2006. ‘Globally, the 2002-08 increase in biofuel production — ethanol in the United States and Brazil and biodiesel production in the EU, Argentina, and Brazil — played a role in raising prices for corn, sugar, rapeseed, and soybeans, as well as for other crops,’ says the assessment, which was released late last month. ‘Attributing most of the rise in food commodity prices to biofuel production, however, seems unrealistic.’ The analysis notes that prices of not just agricultural products but nearly all commodities sharply fell between highs reached in 2008 and a current return to high levels, with the low period between coinciding with the global recession. That indicates the important roles of factors like general economic growth, crude oil prices and fluctuations in the value of the U.S. dollar in both food and non-food products, the report says. But the link between biofuels and general food prices during the 2008 run-up is complex, the assessment argues, noting that biofuel production grew in 2008 while crop prices fell.”

“The Ethanol Two-Step”

July 11, 2011: From a Wall Street Journal editorial: “The ethanol lobby has filched taxpayers for so long that it’s only natural that the Senate’s move this week toward rationalizing the industry’s subsidies would be described as a ‘momentous shift away from federal assistance,’ as the Des Moines Register put it. But please don’t believe that the government is about to ‘drastically cut the financial support’ for corn ethanol, as another newspaper reported. Under the compromise brokered by Minnesota Democrat Amy Klobuchar and South Dakota Republican John Thune, both farm-state Senators, the 45-cent per gallon tax credit for blending ethanol into gas would expire this month. … California’s Dianne Feinstein, who was also in on the talks, succeeded in striking the import tariff—54 cents a gallon—on foreign ethanol. Assuming the deal clears the House, about two-thirds of the $2 billion the government would have otherwise spent will instead be applied to the deficit. The $668 million balance will flow into new industrial policy programs, such as the special pumps and tanks necessary for filling stations to sell higher ethanol-gas concentrations and even more support for noncorn cellulosic fuels, which still aren’t close to commercial-scale development despite years of promises and subsidies.

It’s delightful that the ethanol lobby has lost for once in Washington. … But the industry will still enjoy a mandate that consumers buy its product every time they pull up to the pump. … Meanwhile, both the Renewable Fuels Association and Iowa Corn Growers Association came out cautiously in favor of the Senate deal. And might there be a reason that Iowa Senators Chuck Grassley and Tom Harkin are also in favor? … Their obvious political calculation is that the $668 million gratuity the Senators felt they owed this ward of the state will become as inviolable as the tariff and blenders credit were until now, and grow over time. We’ll take this offering to St. Jude, the patron saint of lost causes we’ve invoked for over 30 years in opposition to ethanol. We hope it’s a down payment on a non-insane U.S. energy policy.”

OPEC: World Oil Demand Will Increase at Slower Pace in 2012

July 12, 2011, Bloombergreports: “The Organization of Petroleum Exporting Countries forecast world oil demand will grow at a slower pace for a second year in 2012 as consumption declines in Europe and slows in other industrialized nations. Global demand will average 89.5 million barrels a day in 2012, the group’s Vienna-based secretariat said today in its monthly report, giving its first forecast for next year. That’s up 1.3 million barrels, or 1.5 percent, on this year’s estimate. Crude oil consumption has been rising since the last quarter of 2009, driven by demand in emerging markets including China, according to OPEC. Chinese demand will rise by 500,000 barrels a day next year compared with a gain of 150,000 barrels a day in North America. European use will decline, it said. ‘An unsteady world economy is negatively affecting the oil market and imposing a high range of uncertainty for the short term,’ the organization said in the report. … Demand for OPEC oil will climb to 30.3 million barrels a day in 2012, an increase of 300,000 barrels on this year, the report showed. The producer group, which accounts for about 40 percent of global supply, expects crude use of 88.1 million barrels a day this year, up by 1.4 million barrels on last year. OPEC’s output rose to 29.6 million barrels a day last month, the report said.”

US Ethanol Refiners Use 40% of Corn Crop

July 13, 2011: The Financial Times reports: “US ethanol refiners are consuming more domestic corn than livestock and poultry farmers for the first time, underscoring how a government-supported biofuels industry has contributed to surging grain demand. The US Department of Agriculture estimated that in the year to August 31 ethanol producers will have consumed 5.05bn bushels of corn, or more than 40 per cent of last year’s harvest. Animal feed and residual demand accounted for 5bn bushels. The figures, from the world’s largest corn producer and exporter, come amid growing scrutiny of the biofuels sector and mounting concern over food inflation. Last month the G20 group of leading nations, in its first communiqué on agriculture, decided against calling for reduced biofuel use. In the US, key senators have reached a preliminary agreement to kill off tax and tariff support for the domestic ethanol industry though mandates requiring ethanol blending with petrol remain. ‘It’s a tipping point,’ said Luke Chandler, Rabobank global head of agricultural research. Next year USDA expects ethanol groups will use another 100m bushels. The department cut its estimate of feed and residual demand for corn by 150m bushels, while raising its ethanol demand figure by 50m bushels as ‘margins have improved for producers’, said Jerry Norton, USDA grains analyst. … Despite corn prices that are 90 per cent higher than a year ago, US ethanol production is expected to reach a record 13.7bn gallons this year, exceeding mandated levels by 1bn gallons, the Renewable Fuels Association said. Extra output has been exported abroad, including to Brazil, a leading sugar-based ethanol producer.”

Report: 2.7 Million Americans Hold Green Jobs

July 13, 2011: From Time Magazine’s Ecocentric blog: “…We know green jobs are important, that they’re the key to a cleaner economy—and that they may be the best way to sell a sometimes skeptical American public on the pressing need for energy and climate legislation. But no one can agree on what a green job really is. … The Brookings Institution—a progressive think tank in Washington—and the Battelle Technology Partnership Practice have collaborated on the first comprehensive accounting of the nation’s clean economy and green jobs on a city by city basis. They found that 2.7 million Americans are employed in the clean economy—more than the number who work in the fossil fuel industry and twice as many who work in biotech. And the clean energy sector in particular is growing very quickly: it grew by 8.3% between 2003 and 2010, nearly twice as fast as the overall economy during those years. …. The most common green job? Try waste management and treatment, which employs nearly 400,000 workers—14% of all green jobs. And the single biggest employer in the clean economy isn’t a sexy startup like First Solar, or even a giant like GE’s wind division. It’s the U.S. Bureau of Reclamation, followed by the waste management and water treatment operations of the city of Los Angeles and New York. … As it turns out, more than 90% of the clean economy by Brookings and Battelle’s accounting lie in older segments that provide basic services—mass transit—or fight long-existing environmental problems like polluted air and water. … Instead of subsidizing existing technologies indefinitely—like the $1 to $1.50 per gallon subsidy corn ethanol producers enjoy—the government should focus its resources on the sort of radical ideas that the market is too willing to let die.”

“Cellulosic Ethanol and Unicorns”

July 15, 2011: From a Wall Street Journal editorial: “Today’s pop quiz: What happens if the government mandates the consumption of a product that doesn’t exist? Naturally, the Environmental Protection Agency has decided to punish the gasoline refiners because they can’t buy a type of alternative fuel that no one is making. Consumers will be punished too. The 2007 energy bill vastly increased the volume of corn ethanol that must be blended into gasoline, though it also included mandates for cellulosic ethanol. … At the time, no such fuels were being produced on a commercial scale, but cellulosic producers and the green lobby assured Congress they were just about to turn the corner, and both the Bush and Obama Administration furnished handsome subsidies. … Reality hasn’t cooperated. Zero gallons have been produced in the last six months and the corner isn’t visible over the next six months either. The EPA has only approved a single plant to sell the stuff, operated by Range Fuels near Soperton, Georgia. … In its wisdom, Congress decided that some companies should be penalized if the targets aren’t met. But they’re not the companies that importuned the government for mandates and corporate welfare. They’re the U.S. oil refiners that make gasoline, which will end up buying six million cellulosic waivers by year’s end at $1.13 a pop. That’s $6.78 million in higher costs at the pump, in return for nothing. That might not be much in the scheme of things, though late last month the EPA proposed a 2012 mandate that will fall somewhere between 3.55 million and 15.7 million gallons. Barring a miracle, cellulosic producers won’t hit even the lower end, refiners and the driving public will continue to pay for the mistake, and the mandate will continue to ratchet up annually. Perhaps the EPA can also find someone to tax for the lack of unicorns.”

General Mills Lashes Out on Ethanol Subsidies

July 18, 2011: The Financial Times reports: “General Mills hit out at ethanol subsidies as a driver of rising food prices in the US, arguing that they needlessly fuel inflation. ‘We’re driving up food prices unnecessarily,’ Ken Powell, chief executive of General Mills, said in an interview with the Financial Times. ‘If corn prices go up, wheat goes up. It’s all linked.’General Mills, which makes Cheerios cereal, Progresso soup and Häagen-Dazs ice-cream, is the world’s sixth-largest food company by revenues. It said last month that it expects its input costs to increase up to 11 per cent next year as it lowered its earnings forecast on inflation fears. Mr Powell said that the company had had to pay twice as much as last year for wheat and that costs of corn and oats are up 30 to 40 per cent. General Mills has absorbed much of these increases but has also had to pass some of them on to consumers. The comments come at a time when ethanol subsidies have been a subject of intense debate in the US amid ongoing negotiations to shrink swollen budget deficits. … Biofuels and ethanol consume 40 per cent of the US corn crop, and according to the Center for Agricultural and Rural Development at Iowa State University, half of the rise in corn prices from 2004 to 2009 is due to ethanol expansion. Earlier this week, the US Department of Agriculture said that US ethanol refiners are consuming more domestic corn than livestock and poultry farmers for the first time. The Grocery Manufacturers Association has been pushing aggressively to end ethanol subsidies. … Mr Powell said other factors are also pushing food prices higher.”

More corn now goes to Ethanol than anything else

From a Washington Examiner column by Timothy P. Carney: “Amid all the talk of budgets, tax laws, and debt last week, one telling nugget of government data went unnoticed: The Agriculture Department last week estimated that this year, for the first time ever, America will use more corn for ethanol than for any other purpose. Congressmen of both parties are putting on a show of rolling back federal subsidies for this alcohol fuel, but these proposals have the backing of the ethanol industry because they would actually increase taxpayer support for ethanol. … A bipartisan coalition has produced a plan that pretends to scale back those subsidies. Last month, South Dakota Sen. John Thune, R., and Minnesota Sen. Amy Klobuchar, D., proposed the Ethanol Reform and Deficit Reduction Act. The bill ends the most famous ethanol subsidy, a handout to ethanol blenders called the ‘Volumetric Ethanol Excise Tax Incentive.’ … The 2007 energy bill expanded the mandate, and in 2011, refiners are required to use 13 billion gallons of ethanol. This mandate now sets demand, with the tax credit having little or no effect. …

Unintended consequences — in this case, accomplishing the opposite of what subsidy proponents promised — are the whole story of ethanol subsidies. Government support for ethanol has wreaked environmental damage (massive water use, dangerous fertilizer runoff), economic damage (higher gasoline prices, at times), and hurt some farmers (those who use grain as feed). … But Thune and Klobuchar’s bill takes the tax revenue gained from ending the VEETC (which, again, doesn’t help ethanol producers), and dedicates most of the money to other ethanol subsidies, such as tax credits for small ethanol producers and for ethanol blender pumps to be installed at gas stations. The bill, of course, leaves in place the mandate, which is by far the biggest ethanol subsidy.”

“56 MPG Could Be A Bridge Too Far”

July 20, 2011: From a USA Today editorial: “Have you ever done the financial calculations on whether to buy the hybrid version of a car or its conventionally powered twin? It’s hard to justify the investment. If the gas-sipping hybrid costs about $4,000 more, which is typical, you’ll have to drive about 80,000 miles at current gas prices before the purchase starts saving you money. … It turns out that people do a pretty good job of deciding what’s best for them, and automakers are just as good at making the types of cars people want to buy. But now the Obama administration wants to alter the calculus. … It has floated the figure of 56.2 miles per gallon in 2025, up from the 2016 standard of 34.1 mpg. That’s a big number — a 65% increase that would greatly reduce U.S. dependency on increasingly scarce foreign oil. But it’s a far less effective way of achieving that goal than the politically fraught approach of raising gasoline taxes, which would drive other great strides in conservation and help solve the nation’s debt problems for good measure. … The second, more difficult question, is whether consumers would want to buy these vehicles. That’s questionable until rising gas prices, driven by market forces or taxes, make the cars pay for themselves more quickly. … Even without mileage mandates, automakers are already scrambling to develop cars that are safe, comfortable, affordable and highly fuel efficient. Such vehicles are guaranteed best-sellers. But overly ambitious standards ensure that automakers will look for, and probably find, ways around the regulations, as they have done adroitly in the past. … Another idea is to return to differing standards for cars and light trucks, with the latter’s mileage requirements growing at a slower rate.”

“Raise Standard to 60 MPG”

July 20, 2011: From a USA Today op-ed by Ann Mesnikoff, the Sierra Club’s director of green transportation: “America’s oil addiction is putting our wallets at the mercy of Big Oil and volatile foreign countries. As high gas prices continue to burn through Americans’ paychecks, it is clear that cutting our country’s dangerous addiction to oil will require building better, more fuel-efficient cars and trucks. President Obama has a historic opportunity before him to move America beyond oil by proposing new fuel-efficiency and tailpipe-pollution standards for cars and light trucks. By setting a standard of at least 60 miles per gallon for vehicles made in 2025, the president can slash the amount of gas our new vehicles will need in half by 2025, providing real savings for American families at the gas pump and put us on the road to energy security. … American carmakers have the technology today to get to at least 60 mpg, but European carmakers are already outpacing us — they’re set to reach a standard of 60 mpg by 2020. … Eighty-three percent of Americans support 60 mpg cars, according to a poll by the Mellman Group, and increased consumer demand for more efficient vehicles fueled Ford’s largest first quarter profits in more than a decade. Better fleet-wide fuel-efficiency standards will raise the efficiency of all new vehicles, providing safer, better and plentiful choices to consumers. The choice is whether we spend our dollars on technology and in our economy or send them overseas for oil. We need a 60 mile per gallon standard that will put American innovation and technology to work, saving families billions at the pump and creating jobs while cutting pollution and improving energy security.”

“EPA’s Upcoming Vehicle GHG Rule May Delay Emissions Limits for EVs”

July 20, 2011: Inside EPA reports: “The Obama administration is considering delaying for several more years an accounting for the indirect greenhouse gas (GHG) emissions from electric vehicles (EVs), as part of upcoming vehicle fuel efficiency and emissions rules that could require consideration of the environmental impacts from charging of electric vehicles, sources say. The approach would appear to represent a middle ground between automaker arguments that the sector should not be held responsible for stationary source emissions that result from producing electricity for the vehicles, and concerns that failure to account for emissions from charging the vehicles would open a major loophole in the regulations. … According to several sources, the issue of how to take vehicle-charging emissions into account has become one of several bargaining chips in negotiations among the administration, environmentalists, states and the auto sector over the next round of the vehicle rules for MY 2017-2025. … Efforts to account for EVs’ upstream CO2 emissions are complicated by questions such as regional differences in the carbon profile of the electricity grid, how to mesh any CO2 accounting system with DOT’s fuel economy authority, and how to credit the manufacture of the vehicles toward meeting the standards. According to one source, the administration is considering at least one approach that would allow the zero emissions assumption for EVs to continue for a time, but it would be phased out, perhaps around 2020, with a new accounting system for charging-related emissions. More broadly, the source adds that there has been a tentative meeting of the minds between EPA and DOT on how one might do an accounting system for the indirect emissions, but not a final decision from the administration or whether to do so.”

UN Scientist: Act Now on Climate

July 20, 2011: AFPreports: “The key facts on global warming are already known and leaders should not wait for the next edition of the UN climate panel’s report to step up action, the body’s top scientist told AFP. The 4th Intergovernmental Panel on Climate Change (IPCC) report, released in 2007, ‘is very clear,’ Rajendra Pachauri said Monday in Paris, ahead of a five-day meeting of the body in Brest, France. The fifth multi-volume assessment, which summarizes peer-reviewed science to help policy makers make decisions, is due out in 2013-2014. ‘We have enough evidence, enough scientific findings which should convince people that action has to be taken,’ he said after a round-table discussion with France’s environment minister, Nathalie Kosciusko-Morizet. … Pachauri, whose organisation shared the Nobel Peace prize in 2007 with former US vice president Al Gore, announced that a special IPCC report on the relation of extreme weather events and disasters to climate change, and how to adapt to them, would be released on November 19. The much anticipated report will review efforts by scientists to connect the dots between well identified long-term climate change trends and short-term weather patterns. While scientists agree that the risk of more violent storms and flooding will rise over time, it remains difficult to attribute any single weather event to climate change, they say. Pachauri cautioned that the widely accepted goal of preventing average global temperatures from increasing by more than 2.0 Celsius (3.6 degrees Fahrenheit) compared to preindustrial times is fast slipping beyond reach. To achieve that goal in a cost-effective manner ‘concentration of greenhouse gases [in the atmosphere] must peak not later than 2015,’ he said.”

U.S. Urges U.N. Security Council to Make ‘Climate Change’ A Priority

July 21, 2011:  CNSNews.com – For the first time in four years, the U.N. Security Council debated Wednesday whether climate change should be considered a priority worthy of the council’s attention, but it failed to reach agreement on the politically charged issue.

Also addressing the council, UNEP Executive Director Achim Steiner conceded that “the world does not have perfect knowledge on current or future climate change” and said it was a challenge to determine what contributions greenhouse gas emissions were making to events like the severe drought now affecting the Horn of Africa.

“But human beings have never planned strategies or responses based on 100 per cent certainty,” he continued. “Rather we make decisions based on risk assessments …”

After Climate Bill Death, Key Players Moved On

July 23, 2011: Politico reports: “One year ago Friday, Senate Majority Leader Harry Reid ended the climate bill’s misery. … Here’s an update on where some of the people and issues at the center of the climate debate stand now: Lindsey Graham: … But Graham put a major dagger into the climate proposal when he abandoned talks with Lieberman and Sen. John Kerry (D-Mass.) in April 2010, just days before they were to release a compromise bill that had support from both industry and environmental groups. … Eventually, Graham thinks, Congress will get another swing at comprehensive energy and climate change legislation because of inevitable outside forces. … Graham also needs to mind his home state’s political scene. … Carol Browner: Obama’s energy and climate czar stood grim-faced next to Reid when he announced he was pulling the plug on the cap-and-trade bill. Browner lingered in the White House for another half-year before making a beeline for the private sector this spring. … And she’s at the heart of the 2012 Democratic political machine, serving on the board of directors at the League of Conservation Voters and as a senior fellow and board member at the Center for American Progress. … Rick Boucher: More than most other House Democrats, the Virginia congressman stuck his neck out when he entered into negotiations on the House’s cap-and-trade bill. … History didn’t work out so well on the House bill, of course, and Democrats like Boucher were swept out of office by the Republicans’ November 2010 tidal wave. … Still, Boucher said he’s tracking the EPA’s efforts on greenhouse gases and more traditional air pollutants. And he’s not giving up on Congress — eventually —returning to climate change.”

Report Says Benefits from Captured Carbon Far Off

July 23, 2011: ClimateWire reports: “Turning waste carbon into plastics and fertilizer may be many years away from a payoff, according to a report released yesterday. Lucrative functions for carbon dioxide (CO2), a greenhouse gas and a byproduct of burning fossil fuels, have been developed, such as using it for growing crops and producing materials. This prospect is more appealing for governments and energy companies than an alternative proposal, carbon capture and storage (CCS), which is aimed at trapping waste gases and stowing them underground, the report contends. However, reusing carbon is expensive and requires specialized infrastructure to deliver the gas, it says. Peter Styring, a professor at the University of Sheffield and one of the report’s authors, observed some of the current weaknesses in repurposing carbon emissions. ‘At the moment, it’s a relatively new technology in the shadows of CCS,’ he said. The report, from the Center for Low Carbon Futures in the United Kingdom, is titled ‘Carbon Capture and Utilization in the Green Economy.’ The report examined projects that used waste CO2 for purposes like manufacturing synthetic fuels and forming building materials, as well as stimulating photosynthesis in algae to make oil. These applications, however, require large cuts in production costs in order to compete with existing goods. The reductions will have to come from a substantial increase in volume, the report says. Nonetheless, reusing carbon may be viable at smaller scales, it concludes.”

“Changing Course”

July 25, 2011: From a New York Times editorial: “The International Maritime Organization, an agency of the United Nations, has introduced important, if still too limited, rules to reduce emissions from large cargo ships. Tankers, container ships and other freighters, most of which burn a coarse petroleum sludge called bunker fuel, now contribute about 3.3 percent of global carbon dioxide emissions, though some analysts argue the figure may be considerably higher. Without new restrictions, emissions from increased shipping could nearly triple by 2050. The I.M.O.’s new regulations mandate gradual increases in fuel efficiency — 10 percent for new ships built between 2015 and 2019, 20 percent for those built between 2020 and 2024, and 30 percent thereafter. … After intense lobbying, a waiver was created for developing countries, including China, Brazil, Saudi Arabia and South Africa. Their new ships will not have to begin meeting emissions standards until 2019. That exemption is a huge loophole because there is nothing to prevent corporations from having their ships built and officially registered in countries that enjoy a waiver. Since the efficiency standards do not apply to old ships, changing the course of shipping emissions will be about as gradual as turning a mammoth container ship. These new rules will not bring about a net reduction in emissions but will only slow their growth. Still, after a decade of negotiations, the agreement is a good step forward.”

Joule secures 2 key patents for ethanol-producing method
July 27, 2011: Joule Unlimited said that it has received two key patents for its technology, which uses microorganisms to convert sunlight and carbon dioxide into ethanol. The U.S. patents will permit Joule to enhance the microorganisms’ productivity, the company said. “What’s exciting about this technology is that it’s leaps and bounds ahead of what can be produced from biomass — including corn and cellulose,” said spokeswoman Felicia Spagnoli. The Boston Globe/Business Updates blog (free registration) (7/26)

Automakers, Administration Agree on 54.5 MPG Fuel Efficiency Standards

July 28, 2011: The Washington Post reports: “The Obama administration and major auto manufacturers have reached a deal to raise fuel efficiency standards for cars and light trucks between 2017 and 2025, resolving a contentious negotiation over how to cut vehicles’ greenhouse gas emissions. The agreement would require U.S. vehicle fleets to average 54.5 miles per gallon or 163 grams per mile of carbon dioxide equivalent by 2025, which represents a 50 percent cut in greenhouse gases and a 40 percent reduction in fuel consumption compared with today’s vehicles, according to sources briefed on the matter. …  It would require a 5 percent annual improvement rate for cars between 2017 and 2025. Light trucks would be required to have a 3.5 percent yearly efficiency improvement between 2017 and 2021, rising to 5 percent between 2022 and 2025, according to the sources, who asked not to be named because the details have not been announced publicly. …  The White House press office issued a statement Wednesday saying the president would unveil the details of the program Friday at the Walter E. Washington Convention Center. … … The White House originally pushed for a 56.2-mpg standard, but automakers demanded a carve-out for pickup trucks, which continue to rank among their top annual sellers. That provision lowered the average fuel efficiency gains to 54.5 mpg and won the support of Chrysler, Ford, General Motors, Honda and Hyundai. … The White House agreed to provide credits for hybrid pickup trucks and for technologies that are not accounted for in testing that determines compliance with federal standards, such as louvered grilles, solar roof cells and thermoelectric waste exhaust.  The deal also includes a midterm review by the spring of 2018 that will address whether standards for 2022 to 2025 are on track.”