A high carbon tax is wrong

* This is my article in BusinessWorld last October 19, 2017.

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Political science masquerading as climate science insist that the gas that we humans and our animals exhale, the gas that is used by trees, flowers, fruits and other crops to grow and feed the world — carbon dioxide or CO2 — is a pollutant that must be over-taxed and over-regulated.

Far from the truth. CO2 is a useful gas, not a pollutant.

Since it is useful, the optimal carbon tax for coal in particular is not P10/ton, not P20, not P600, but zero. However, a zero tax on coal is unpopular from the world of climate alarmism, so we classify these tax rates as follows: P0 tax is optimal, P10/ton is rational, P20/ton is compromise, P600 is irrational.

Recently, eminent economist Dr. Ciel Habito made a follow-up paper, “The case for the carbon tax” and insist that the carbon tax for coal should be raised from the current P10/ton to P600/ton.

To support his claim, he used some ridiculous numbers that are peddled by the watermelon (green outside, red inside) movement. Here are two:

(1) “Dominated by CO2 (72%), GHGs trap heat… .”

Wrong. CO2 is 400 ppm or only 0.04% of all greenhouse gases (GHGs). About 95% of GHGs is water vapor — the clouds, evaporation from the seas, oceans, lakes, rivers, stomata of leaves, etc. The remaining 4%+ are methane, nitrous oxide, others.

(2) “CO2 averaged about 280 parts per million (ppm) for the last 10,000 years…In 2015… 400 ppm for the first time…. now triggering much more frequent extreme weather events.”

This is perhaps 5% geological science and 95% politics.

The Minoan, Roman, and Medieval Warm Periods (when there were no SUVs, no coal plants, no airplanes) were much warmer than the Modern Warm Period (mid-1800s to roughly 2000). There were wild swings in global warming and global cooling cycles regardless of the CO2 level. How would one call this — “much less frequent extreme weather events than today?” Garbage.

Climate change (CC) is true. All skeptics recognize climate change, recognize global warming. Planet Earth is 4.6 billion years old and there were climate change all those years because climate change is cyclical (warming-cooling-warming-cooling…) and natural. Global warming is true, and so is global cooling.

It is political science that masquerades as climate science to say that there is no climate cycle, that there is no global cooling that takes place after global warming.

BACK TO COAL POWER.

From the recent energy and economic experience of our neighbors in Asia and some industrial countries in the world, the hard lessons are these: (a) Countries that have coal consumption of at least 2.1x expansion over the past two decades are also those that experienced fast GDP growth of at least 3x expansion.

Prominent examples are China, India, South Korea, Indonesia, Vietnam, Malaysia, Philippines, and even Pakistan. And (b) Philippines’ coal consumption is small compared to its neighbors; its 2016 use is just nearly 1/2 of Malaysia and Vietnam’s, just 1/3 of Taiwan’s and almost 1/5 of Indonesia’s, 1/6 of South Korea’s, 1/9 of Japan’s. (see table)

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A high carbon tax is irrationalI have repeatedly argued that CO2 is a useful gas. For those who insist that CO2 is a pollutant, they can certainly help curb further CO2 emission even without legislation and carbon taxation through the following:

  • Stop breathing too often; more exhalation means more CO2 emission.
  • Stop adopting pets (if any), stop eating chicken, pork, meat because these animals exhale CO2.
  • Stop using their cars, not even jeepneys or buses, they emit CO2; skateboards and bicycles only.
  • Stop riding airplanes and motorized boats, they emit CO2; solar planes or big kites and sailboats only.
  • Stop connecting from the grid and from Meralco because 48% of nationwide electricity generation comes from coal; no gensets either. Use only solar-wind-biomass + candles at home.
  • Tell their friends, business associates, family members, to do the same so that there will be more people emitting less CO2.

The Habito proposal of more expensive electricity via P600/ton carbon tax on coal is dangerous because while the Senate version of TRAIN adopts a P20/ton excise tax, the P600 can spring up somewhere during the final and Bicameral Committee meeting. The proposal should be exposed as based on political science, not geological or climate science.

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Cheaper LPG means more trees saved

 

Reposting my informal notes and chat with a friend this afternoon. Raw posts here….
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From Bjorn Lomborg’s article below, wind + solar is only 0.7% of global energy supply. Kahit ano’ng gawin dyan, di talaga pwede pang modernization. Energy robbery lang pwede.

Solar-wind in remote and small islands may be possible but not 24/7 electricity. Kung gusto ng mga tao 24/7, fossil fuels or nuke plants lang pwede. Dispatchable upon demand, not dependent on the weather.

People will need 24/7 electricity otherwise they will buy gensets, the poor will use candles.  More candles, more fires. More gensets, more noise and air pollution.

Once people in remote islands experience the convenience of electricity, they will desire a 24/7 supply. Their extra food need refrigeration; they will need even an electric fan at day time. They have nice beaches or rivers and mountains, tourists will come but the hotels will need 24/7 electricity.

Fishermen will need electricity to preserve their fish catch, otherwise they will buy ice from neighboring islands even if the cost of ice is expensive. Their fish catch in the morning will be spoiled or rotten by afternoon if there is no ice. They will have zero surplus. There are days they cannot go to the sea, like bad weather for several days.

Non-use of LPG, the use of firewood-charcoal/biomass, a major cause of indoor pollution worse than smoking. High incidence of respiratory and lungs problem of the people. Bjorn Lomborg said it’s the #1 killer in poor countries, then the anti-fossil fuel, pro-biomass “planet saviours” just do frequent global junkets.

This illustration from SPECIAL REPORT : Crisis as 71pc of households use firewood in Tanzania, April 30, 2017.
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Also from The Express Tribune, Pakistan, December 5, 2013: Chilly weather: Firewood price jumps, fuelled by high LPG rates.

Nang nagmura gasolina and LPG, thousands of trees were saved — the price of charcoal is low, tinamad magputol ng kahoy ang ibang tao kasi konti bumibili. Even the poor could afford LPG, many trees were saved.

 

Pag magmahal ulit gasoline, LPG, no thanks to Du30 TRAIN on higher excise tax for petrol products, ayan, babalik sa uling at firewood mga tao. Kaliwa-kanan ang putulan ng kahoy nyan. Some P60-P100 per LPG tank ang itataas ng TRAIN ni Du30.

Now global oil prices are inching up from $40+ a barrel a few months ago to current  $50+ per barrel now. More expensive LPG, more trees will be cut, legally or illegally.

Energy 101, Disinformation and fake stories by the watermelon movement

Fake stories and disinformation can be rampant in the energy sector because of the climate alarmism drama and renewables cronyism agenda. A recent example is one published in BWorld last Thursday, The Philippines’ Ill-Advised P1 Trillion New Coal Gamble, October 20, 2017 By Sara Jane Ahmed.

The lady seems to be ignorant of many data before writing their anti-coal drama. Some things she wrote:

  1. “High electricity prices are driven by imported fuel and subsidies; electricity surcharges…”

à Wrong. Check Meralco website for customer charges, http://www.meralco.com.ph/consumer-information/rates-archive. Here, October 2017 charges, if one consumes up to 300 kWh, he would pay a total of P2,880, one-half of which is for generation charges and the other half for 11 other charges including taxes and FIT subsidy for mostly wind-solar.

meralco bill

From the generation charge, about half of which are from Malampaya natgas-using plants in Batangas; there are hydr0, geothermal, coal could be about 40% of Meralco energy mix.

  1. “Diesel dependence, much like our growing national coal dependence, is a result of subsidies…”

à Wrong, diesel has no subsidy, or maybe she refers to the current zero excise tax for diesel but under Duterte TRAIN, it will soon be slapped with P6/liter excise tax.

  1. “Coal subsidies assure the private sector guaranteed returns…”

à Wrong. Currently coal excise tax is P10/ton but under TRAIN, to rise to P20/ton. Now Dr. Ciel Habito proposes a P600/ton excise and carbon tax for coal. I criticized his proposal here, http://bworldonline.com/carbon-tax-wrong/

  1. “Meralco is currently underwriting a solar power supply deal for 85 megawatts (MW) at P2.99 per kWh.”

à True, and that’s the exception, from Solar Philippines of Leandro Leviste, son of Sen. Loren Legarda. Many solar farms here are given the cronyist FIT or guaranteed price for 20 years of P8.69 to P10+/kWh.

  1. “Philippine’s financial sector as massively exposed now to the eventual stranding proposed new coal fleet to the tune of more than 10,000 MW in overcapacity and P1.05 trillion in financial risk”.

-> See this: “Countries that have coal consumption of at least 2.1x expansion over the past two decades are also those that experienced fast GDP growth of at least 3x expansion. Prominent examples are China, India, South Korea, Indonesia, Vietnam, Malaysia, Philippines, and even Pakistan.” http://bworldonline.com/high-carbon-tax-irrational/

Finally, the lady is highly disoriented, talking about diesel and coal subsidies when there is none. Yet silent on renewables subsidies, haha. P10B in 2015, P18.5B in 2016, P24.4B this 2017, and P26B next year. The main recipients of this renewables cronyism are the wind farms of the Lopezes/EDC, Ayalas’ Caparispisan and Bangui, Phinma, Alternergy/Vince Perez, etc. http://www.bworldonline.com/content.php?section=Opinion&title=why-the-fit-all-is-a-burden-to-consumers&id=145326
The “planet saviours”, the renewable cronyism lobbyists, they want more government intervention — in arm-twisting the consumers to pay higher electricity to subsidize renewables; in coercing the grid to prioritize the intermittent, unstable, unreliable, non-dispatchable energy sources; in choking and even killing stable, reliable, dispatchable 24/7 sources like coal, gas and nuke. Watermelons — green outside, red inside.

Alex Magno on FIT and renewables

Reposting an article today by Alex Magno in Philippine Star.

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A businessman-friend sent me a message the other day, railing about how the P18 billion raised through Feed-in Tariffs (FIT) charged electricity consumers could have been used to build a chain of recharging stations in the metropolitan area. Instead, as intended by our corrupt policies, FIT collections went to political cronies who claim they are saving the environment by investing in renewable energy.

With a chain of recharging stations in place, we could leapfrog the jeepney modernization program to use electric, not just Euro-4 compliant, vehicles. The technology is there. The recharging stations are not.

The environmental impact of clearing out the dirty diesel engines and putting in electric vehicles will be dramatic. The death toll from polluted air should drop remarkably.

FIT collects billions from consumers, keeping our power price regime high therefore depleting our manufacturing. In 2015, total FIT collections amounted to P10.22 billion. In 2016, with adjustments in the FIT rate, total collections ballooned to P18.54 billion. Estimated FIT collections for 2017 is placed at P24.44 billion.

Not a single peso from FIT collections goes to improvement of infrastructure. All the billions shelled out by poor electricity consumers via FIT go to offsetting business risks and ensuring profits for those who set up renewable energy facilities. The cronies who benefit from this have pulled off a massive scam by wrapping their enterprise with the cloak of political correctness.

It is not too late to scuttle this scam. We have much to learn from the experience of Australia on this matter.

As demand nears supply, Australians now realize that renewable energy is not a dependable source. It cannot provide the baseload capacity an economy needs to achieve energy security. Subsidizing renewable energy merely raises electricity prices, undercutting an economy’s ability to compete.

Renewable energy is well and good if consumers are not forced to subside them. In our case, the subsidies are better used to modernize mass transport systems.

Our backward and inefficient public transport system is, after all, the biggest contributor to the degradation of air quality in the urban centers where most of our people now live.

The cult of political correctness has misled many environmental activists otherwise acting in good faith. They ended up justifying FIT subsidies and, at the behest of cronies, demonizing coal power generation. They gloss over the fact that new technologies for coal power generation have made the iconic black smokestacks a thing of the past.

Those who make profits without assuming business risks by using FIT had the gall to demand even higher rates of subsidies from consumers. Fortunately, Energy Secretary Al Cusi has a clearer grasp of things. He rejected demands to further raise FIT rates.

Bjorn Lomborg on World energy mix

I am reposting here a post by Bjørn Lomborg in his fb wall early today. Thanks for this great piece, Bjorn.
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The world is mostly run on fossil fuels (81.4%). Nuclear makes up 5% with 13.6% from renewables. Solar panels and wind turbines contribute less than 0.7%.

When you hear 13.6% renewables, you will likely think ‘wow, things are going pretty well with the change-over to renewables’. But these are not the ones you hear about. The biggest contributor is wood, used in the poor world to cook and keep warm. This leads to terrible indoor air pollution – it is actually the world’s deadliest environmental problem, killing some 4.3 million people each year. We should definitely hope the poor will have to use *less* polluting wood in the future.

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The other main contributors of renewables are biofuels (e.g. the American forests, cut down and shipped across the Atlantic to be burnt in European power plants to be called green and CO₂ neutral) and hydropower. In total, that makes up 12.1%. The last 1.5% comes mostly from geothermal energy (0.54%) and wind turbines (0.53%) along with solar heaters in China, tidal power etc. (0.29%) and solar panels (0.13%).

Contrary to the weight of news stories on how solar and wind is taking over the world, solar panels and wind turbines really make up a very small part of the global energy mix. (I started out coloring solar panels yellow, but the thin sliver at the top became invisible.)

Sources: The International Energy Agency has released their latest Renewable Energy Information 2017, http://www.oecd-ilibrary.org/…/renewables-information…. It contains 488 pages of data, with preliminary data for the rich world for 2016, but for the entire world for 2015. Unfortunately, the data is not free.

Since solar PV constitutes such a small part of the energy supply, the International Energy Agency combines it with tidal, solar CSP and solar thermal (the water heaters on rooftops for direct hot water). In 2014, the split was 34% for solar PV, 0% for tidal, 6% for CSP and 60% for thermal, so I applied the same split to the data for 2015.

All data is Total Primary Energy Supply, which is the International Energy Agency’s own main measure, also used in all their graphs for global energy balances.

Why a carbon tax is wrong

* This is my article in BusinessWorld last week.

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Coal power produced nearly 48% of Philippines’ actual electricity generation in 2016 despite having only 34.6% share in the country’s installed power capacity of 21,400 MW or 21.4 GW, Department of Energy (DoE) figures show.

Renewables (hydro, geothermal, wind, solar, biomass) produced 24.2% of total power generation in 2016 despite having 32.5% of installed power capacity. In particular, wind + solar combined contributed a small 2.3% of total power generation.

At a forum organized by the Energy Policy Development Program (EPDP) at the UP School of Economics last Oct. 5, the speaker Dr. Francisco Viray, former DoE secretary and now president and CEO of PhinMa Energy Corp., showed in his presentation a screen shot of Dr. Ciel Habito’s article, “Let’s get the carbon tax right.” Ciel was arguing among others, that the carbon tax for coal power should be raised from the current P10/ton to P600/ton and not P20/ton as contained in Senate bill No. 1592 of Sen. Angara.

I commented during the open forum that Ciel’s article in reality has a wrong title, it should have been “A carbon tax is wrong.” And here are the reasons why.

One, as mentioned above, coal power was responsible for nearly 48% of total electricity generation nationwide in 2016 and it is wrong to restrict its supply and/or make its price become more expensive. Kill coal or even drastic cut in coal power would mean massive, large-scale, and nationwide blackouts for several hours a day, something that consumers wouldn’t want to endure. After all, even a one minute brownout can already cause widespread disappointment.

Two, the Philippines’ overall coal consumption – in absolute amount and in per capita level – is small compared to the consumption of its neighbors in Asia (see table).

My-Cup-of-Liberty-101117

The Philippines has only 100 kilos or 0.1 ton per head per year of coal, the smallest in the region. There is no basis to suggest restricting further coal use given the fast demand for electricity nationwide.

Three, it is wrong to advocate more expensive electricity via high carbon tax given that subsidies to renewables via feed-in-tariff (FiT), among others, are already adding upward price pressure. A higher carbon tax may be more acceptable to the consumers if the FiT scheme is discontinued and ultimately abolished. If this is not done, better to keep coal excise tax as low as possible.

The proposed P600/ton excise tax on coal power would translate to P0.24/kWh hike in power generation charge. Using Ciel’s numbers, one ton of coal can generate 2,519 kWh electricity on average. So P600/2,519 kWh = P0.24/kWh. That is equivalent to FiT-Allowance that each electricity consumer from Luzon to Mindanao must pay monthly for many years to come.

Four, it is wrong to demonize and over-regulate carbon dioxide (CO2) as a pollutant because it is not. CO2 is invisible, colorless, and odorless unlike those dark smoke coming from vehicles and chimneys of old manufacturing plants.

CO2 is the gas that humans and animals exhale, the gas that flowers, trees, rice and other crops use to produce their own food via photosynthesis. More CO2 means more plant growth, faster greening of the planet. CO2 therefore is a useful gas, not a pollutant gas that the UN, Al Gore, and other groups and individuals would portray it.

While the hike in coal excise tax from P10 to P20/ton as contained in the Senate version is somehow acceptable, there is danger that the P600/ton proposal will spring out of nowhere during the bicameral meeting of the House and Senate leaders. This should not be allowed to happen.

Continued demonization of coal and rising favoritism of variable renewables like wind-solar would mean more expensive electricity, more unstable grid, and darker streets at night. Dark streets would mean more road accidents, more robbery, more abduction and rapes, more murders as criminals benefit from anonymity provided by darkness.

Energy irrationality can kill more people today, not 40 or 100 years from now. The irrationality and insensitivity of rising government taxes should be restricted and limited.

Germany’s FDP questioning or ditching Energiewende

I like this man, head of German liberals Free Democratic Party (FDP), Christian Lindner. The man mainly responsible for the FDP resurgence in the German Bundestag elections last September 24.

“The project of the century Energiewende [transition to green energies] has failed. None of the agreed targets will be reached. Climate protection is stalled, energy prices are rising and they are burdening us as electricity consumers, just as they are the industry and middle class. And not least of all it is becoming increasingly difficult to guarantee a secure power supply during the winter months.” — Christian Lindner.

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Source: No Tricks Zone, Germany’s Green Energy Project Close To Death: “EEG Feed-In Act Has Failed …Has To Go!” (29 September 2017)

Merkel’s CDU/CSU needs an ally to retain the majority. Almost impossible to ally with 3rd place AfD, 2nd place SPD already broke up with them. Merkel definitely needs 4th place FDP and very likely 5th place Greens but the FDP and Greens are now poles apart in energy policy. The latter wants Germany’s expensive, unstable energy to become even more expensive, even more unstable because of their kill-coal, subsidize-endlessly-wind+solar policies.

Here’s a possible opposition Watermelon (green outside, red inside) coalition:  SPD + Greens + Linke. All of them have the same hatred of fossil fuels, they just differ on the degree of their hatred, and all of them are users of fossil fuels — in electricity, cars/inland mobility, planes and long distance trips.

I think Mr. Lindner is now asserting the liberal position of market competition, less government intervention. In particular, energy competition. Focus on price and power stability, a very important factor for industrial Germany producing world-class cars, robots, monster machines, etc. Energiewende is killing energy competition. Only wind + solar + biomass, hydro, others should be prioritized by govt energy central planning. The rest — coal, nuke, gas — decimate if not kill them. FDP now under Lindner is reasserting the classical liberal, freedom-oriented public policies.

FDP leadership is right and correct in moving into energy realism and competition and away from watermelon movement and energy leftism-cronyism.

A German friend noted that “there are contractual and legal obligations to be honored and rule of law in place. Dismantling the energy turnaround can only be a step by step process if the government wants to avoid massive amounts of litigation, much of which will be successful. this is the most problematical aspect of the turnaround: its partial irreversibility.”

Good points, and its good that the FDP will try to stop these economic and energy lunacy of glorifying expensive, intermittent, unstable energy sources in an energy-intensive industralized econ like Germany.

Also the reason why Trump is leaving the Paris agreement, to help avoid possible multi trillion $ lawsuits from crony renewables, crony Tesla and related industries and firms.

Other related recent papers from NTZ:

Germany’s Energiewende “An Economic, Social and Ecological Disaster”, Writes Top German Socialist! 19 May 2017

Leading German Economics Professor Calls Germany’s Energiewende An Energy Policy Calamity, 3 October 2017.