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By Robert Rapier on Oct 10, 2011 with 57 responses

Why the Debate Over Global Warming is Academic

Steeling Myself For Inevitable Controversy

I am currently in the middle of writing a chapter on global warming for my book. This actually marks the deepest I have ever delved into the science of global warming. My approach is to explain the science behind global warming; explain which parts of the science are definitely settled, but then also explain why some people have doubts.

Of course this debate is so bitter on both sides that merely explaining why some people have doubts is bound to be characterized negatively by some who insist that there can be no doubts. But I can’t overly concern myself about that. I realize that my position is bound to be misrepresented by some. All I can try to do is clarify it as well as I can. My goal is to present information, not try to argue whether global warming is a clear and present danger or an overblown myth.

As I wrote the chapter, I created my own graphics. Some of them are quite eye-opening, and I want to share one of those here. The graphic below shows why I characterize the debate as academic.

Percentage of Global Carbon Dioxide Emissions from the U.S., EU, and the Asia Pacific Region

Developing World Will Dictate Global CO2 Emissions

The U.S. and EU have reduced their global share of carbon emissions as well as their overall amount of carbon emissions over the past decade. There are several reasons for that, but the demand drop due to rising oil prices played a big role. However, the reductions have been totally swamped by increases in the Asia Pacific region. That same trend holds true for Africa, the Middle East, and Central and South America (and I have created a graphic that details the carbon dioxide emission growth for each region). The Western world can debate and discuss all we want, but carbon dioxide emissions are going to be dictated by the developing world. In fact, all carbon dioxide emissions from the U.S. and EU could go to zero, and it would only take us back to where emissions were in 1994 — and they would still be rapidly increasing.

Carbon emissions are declining across the developed world, but most of the world’s population resides in the developing world. Overall carbon dioxide emissions in developing countries are already higher than in the developed world, but per capita energy usage is very low. Thus, it is extremely hard to imagine any scenario other than carbon dioxide emissions that continue to increase at least until fossil fuels simply become scarce/unaffordable. This will largely be driven by countries like China and India that have huge populations who crave better living standards. Try to convince India that they have to reduce their carbon emissions when the average Indian consumes a fraction of the energy of the average Westerner, and they will probably laugh at you.

The Goal Of My Book: A Real-World Assessment

What I am doing with the book is trying to explain why things are the way they are, and predict where I think things are going. This is very different than presenting an idealistic version of how things could be in the future (there are plenty of books that do that), or speculating on far-reaching protocols or renewable energy breakthroughs that reverse the increases in the developing world. The latter is the approach many authors take, and yet for all the idealism not only are carbon dioxide emissions increasing, they are accelerating. My goal is to accurately predict the future. Whether that future is desirable is another matter entirely.

By characterizing the debate as academic, I don’t mean to suggest that the situation is in any way unimportant. I certainly think it’s possible that there will be devastating consequences as global carbon dioxide emissions continue to rise. But the reason I think it’s academic is that regardless of how much we debate it, global carbon dioxide emissions will continue to rise for reasons I lay out in the book, and that are evident in the graphic above. I view the debate over carbon emissions as akin to debating how to stop the arrival of an impending hurricane. We won’t in fact stop that hurricane because that is beyond our control, so what we really have to do is plan on how to ride it out and deal with the aftermath. I would argue that global carbon emissions are also beyond our control because they are being driven by individuals who use very little energy (although they collectively use a lot), but who will use a lot more if given the opportunity. That is the reason those emissions will continue to rise.

Note: This week I am attending the 2011 Gasification Technologies Conference in San Francisco. Next week I will be presenting at a conference in Brasilia, Brazil, and the first week of November I will be speaking at the 2011 ASPO-USA Conference in Washington, D.C. If any readers happen to be attending these conferences, please look me up.

  1. By Walt on October 10, 2011 at 4:58 am

     

    I think you should make a graph showing the Happiness and Misery flowchart like Goldman Sachs does on the upcoming EU collapse/bailout using some sort of carbon currency as the global tax needed to save the world.

     

    http://www.zerohedge.com/sites…..wchart.jpg

     

    http://www.telegraph.co.uk/com…..-risk.html

     

    http://www.dailyrecord.co.uk/n…..-23472410/

     

    Now this does make any sense to those who watch Washington politics….is Germany asking banks to go find private money before government just writes the checks on the backs of their citizens?  I don’t understand why bankers should be required to look for private capital when a couple fine dinners with the powerbrokers in government should not get them a check…saves time and often the terms are so sweet that nobody in the private sector would EVER take that type of haircut.  Plus, it goes like this…Mr. Senator, we will give you $5 million for your re-election campaign, and you give us $500 billion to cover our losses for our brilliant trading losses!!!  Sounds like a good deal to the Senator…how about you?  Germany is not yet ready to take this hair cut over Greece, Spain, Italy, France and the rest of the collapsing markets/banks in EU.

     

    ———————–

    Merkel said a recapitalization, if necessary, will have to follow a
    clear “hierarchy,” with banks being pushed first to seek fresh private
    investment. Governments, in turn, would have to rely on their own
    resources before turning to the eurozone’s bailout fund, the European
    Financial Stability Facility.

    “First the banks have to try
    themselves to get capital. If that approach fails, then the member
    states’ government institutions will take action, just as we have done
    in 2008, 2009,” she said in a reference to the capital injection some
    banks received during the financial crisis.

    “And only then, when a
    country can’t manage this on its own, may the EFSF facility be used,”
    she added, saying that any assistance from the euro440 billion ($590
    billion) EFSF would only be granted with tough strings attached.

    http://finance.yahoo.com/news/…..44903.html

    ———————–

    Sorry, I know this is not on topic, but when I read this comment by Robert I thought about man made hurricane’s coming,

    “I view the debate over carbon emissions as akin to debating how to stop
    the arrival of an impending hurricane. We won’t in fact stop that
    hurricane because that is beyond our control, so what we really have to
    do is plan on how to ride it out and deal with the aftermath. I would
    argue that global carbon emissions are also beyond our control because
    they are being driven by individuals who use very little energy
    (although they collectively use a lot), but who will use a lot more if
    given the opportunity.”

     

    The global carbon markets are becoming more defined and will likely see some sort of carbon currency/carbon tax used to help stabilize world uncertainity and the hurricane.  I’m not entirely sure how it will unfold, but likely through a crisis of some form to get everyone agreed.  We definitely live in interesting times.  At least the Bank of England and IMF have gone on record to announce the hurricane coming. Expect more before the G20 meetings (if not a crisis) that can be solved with all the powerbrokers (politicians and bankers) in the room kissing cheeks (and butts…opps, sorry).

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  2. By Anonymouse on October 10, 2011 at 7:33 am

    “The U.S. and EU have reduced their global share of carbon emissions as well as their overall amount of carbon emissions over the past decade. There are several reasons for that, but the demand drop due to rising oil prices played a big role.”

    It’s an illusory reduction, the emissions have merely been “outsourced” to developing world countries where most of the crap we consume is actually made. While the relative weight of emissions of the “first world” has almost certainly declined in the past decades, the absolute amount has increased regardless if we use fair accounting.

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  3. By Kit P on October 10, 2011 at 8:33 am

    “My goal is to accurately predict the future. ”

     

    Gosh I hope RR does not hurt his back with all that heavy lifting!

     

    Of course the heavy lifting is determining the impact of emissions. So we have just one more article on AGW that fails to mention any actual numbers for warming. The reason is that number is very small and less than the uncertainties in the model. So if you tell me that temperature is going to change 2 degrees F + 4 degrees in the next century, I am not going to get to excited.

     

    Not one doomer prediction has come true during my lifetime. We are living longer and healthier than ever before. No mass die off from testing nuke weapons. No WWIII! No new ice age! No mass starvation because we can not grow enough food. No pandemics!

     

    “I would argue that global carbon emissions are also beyond our control because they are being driven by individuals who use very little energy …”

     

    I also take issue with this. Cutting ghg emissions is not that hard of an engineering task. SUVs that can hold 9 adults only have a driver. People concerned running out of oil are going to use an incredible amount to attend what has got to be the dumbest conference on record in SC.

     

    Sorry calling ASPO the dumbest is a little strong. Annually AGW crowd gather to a media frenzy.

     

    My point here is that when the concerned about a problem can justify making the problem worse for their own self indulgence, it is going to be hard to get a waitress in Iowa to care.

     

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  4. By rrapier on October 10, 2011 at 11:19 am

    Kit P said:

    So we have just one more article on AGW that fails to mention any actual numbers for warming. The reason is that number is very small and less than the uncertainties in the model. So if you tell me that temperature is going to change 2 degrees F + 4 degrees in the next century, I am not going to get to excited.


     

    It’s covered in the book.

    Not one doomer prediction has come true during my lifetime.

    I don’t make doomer predictions. But most of the predictions I have made over the course of this blog have come true. Look at the ones I make at the beginning of each year. Further, I think you fail to appreciate the overall state of the economy, which can be hard to really understand for those who have stable jobs. High energy prices have been a heavy burden for many.

    I also take issue with this. Cutting ghg emissions is not that hard of an engineering task. SUVs that can hold 9 adults only have a driver. People concerned running out of oil are going to use an incredible amount to attend what has got to be the dumbest conference on record in SC.

    If you read what I wrote, you would see that this isn’t the problem. You could stop all emissions from the U.S. and the EU and still have a problem.

    My job is a bit harder than yours. I don’t just get to throw stones. I have to actually explain both sides. I can’t say “Here’s one side and the other side is stupid.” You can write that book.

    RR

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  5. By Rufus on October 10, 2011 at 11:35 am

    Non-U.S. Auto Sales will be well over 60 Million this year.

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  6. By Conrad Dunkerson on October 10, 2011 at 11:40 am

    While your assessment of the current situation is essentially correct, your conclusion that it makes the impact of CO2 emissions an academic point is not. You don’t seem to even consider the possibility of converting to forms of energy generation which do not emit CO2.

    Is it not possible that the developed world could find ways to reduce the cost of electricity generation from solar / wind / hydro / geothermal / nuclear / et cetera power below the (ever increasing) cost of fossil fuel power?

    If that IS possible then your arguments about convincing the developing world to use less energy (or pay more for it) go out the window. They could continue increasing their energy consumption without the corresponding increase in atmospheric CO2 levels.

    Indeed, when ‘external costs’ are taken into account fossil fuels ALREADY cost far more than renewable power sources. Meanwhile solar and wind power generation costs are plummeting as the technologies mature while fossil fuel costs are rising as the quantity and ease of extraction decrease. Most projections put even the global average nominal cost, without externalities, of solar dropping below fossil fuel in the next 10 to 20 years. In some parts of the world it already has.

    So yes, if fossil fuel costs remain cheaper than other forms of power generation SOMEONE will continue to use fossil fuel… even though it means environmental, health care, and other costs will be increased by much more than the ‘savings’ on power generation. However, that is NOT the foregone conclusion you seem to make it. Indeed, cheaper renewable power seems inevitable within a few decades at this point… and could come much sooner if developing it were made a priority.

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  7. By Rufus on October 10, 2011 at 11:41 am

    The Largest Sales Year for any country in the history of the World is

    China – 2011

    17.7 Million Units

    Coal? China? – You don’t even want to think about it.

    Probably the truest thing you’ve ever written is the statement that “Whatever Fossil Fuels exist, We Will Use.”

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  8. By rrapier on October 10, 2011 at 11:48 am

    Conrad Dunkerson said:

    While your assessment of the current situation is essentially correct, your conclusion that it makes the impact of CO2 emissions an academic point is not. You don’t seem to even consider the possibility of converting to forms of energy generation which do not emit CO2.


     

    I don’t consider it here, but I do consider it in the book. We heavily subsidize those forms of energy in the U.S. because they are more expensive. Developing countries will gravitate toward the cheapest sources of energy they can find. Unless we come up with liquid fuels that can compete on price and scale with petroleum — and I don’t believe that’s likely — then we can expect the developing world to continue on their fossil fuel spree until prices are much higher than they are now. In any case, there is’t anything like that on the horizon now. Emissions will rise for the next decade, and most likely for decades.

    Incidentally, part of this essay is intended to gauge and understand possible arguments that I have failed to consider in the book chapter. I think your comment here is good, and I should probably strengthen this section in the book. Yours will be a common objection if I don’t.

    RR

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  9. By Hengist McStone on October 10, 2011 at 12:02 pm

    You suggest we should “plan on how to ride it out and deal with the aftermath” but where did the idea that there would be an aftermath come from? No one is saying the effects of AGW are going to be temporary, that the sea will rise then fall like the tide. If you have read any climate science you will know that climate scientists are saying we could at some point be be crossing a tipping point.

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  10. By Conrad Dunkerson on October 10, 2011 at 12:31 pm

    The only chance I see of most countries starting to switch over to non-fossil fuels in a significant way prior to the nominal price inversion would be some kind of agreement by the major powers to include externalities in the cost of fossil fuels and impose economic sanctions on those who don’t. There have been some efforts along those lines, but obviously they haven’t gone anywhere yet.

    On “liquid fuels” I agree that we aren’t likely to develop a viable alternative liquid fuel any time soon… but not that a failure to do so will mean a continued increase in CO2 emissions from petroleum.

    Setting aside electric vehicles, which will certainly take decades to become ‘standard’ but could start cutting into emissions almost immediately, where is the extra petroleum to sustain this continued growth going to come from?

    The IEA estimates of petroleum production (which many consider unduly optimistic) hold that we will continue to develop new extraction technologies (e.g. tar sands, shale oil, et cetera) and discover new sources (e.g. deep sea, Arctic, et cetera) sufficient to allow petroleum production to PLATEAU at current levels for the next several decades. So the optimistic estimate is that we’ll be able to maintain the current level of petroleum use… but giving everyone in China and India a car would require vastly MORE petroleum production. So where is this petroleum going to come from? Or how are they going to build a modern technological society without petroleum powered transportation?

    Their only options are going to be; somehow find and extract petroleum at a faster rate than is currently believed to be possible, ‘take’ petroleum previously used by the developed world (which means paying more for it than they would), or use some power source other than petroleum.

    ‘Plateau oil’ of the sort now being claimed would be fine for maintaining the status quo… but faces all the same problems as ‘peak oil’ if developing countries continue to require increasing supplies.

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  11. By rrapier on October 10, 2011 at 1:05 pm

    Hengist McStone said:

    You suggest we should “plan on how to ride it out and deal with the aftermath” but where did the idea that there would be an aftermath come from? No one is saying the effects of AGW are going to be temporary, that the sea will rise then fall like the tide. If you have read any climate science you will know that climate scientists are saying we could at some point be be crossing a tipping point.


     

    That’s not what I am saying, but I don’t believe it is going to destroy all human life on earth if that’s what you are getting it. I think there will be climatic shifts leading to droughts, flooding, tropical diseases moving into new areas, loss of coastal habitats, etc. But I don’t subscribe to a runaway greenhouse effect that roasts the earth. In any case, I do think a lot of people may die.

    However, regardless of the impact, I just don’t see a viable mechanism for preventing it. Saying “we have to have carbon-free energy” is one of those idealistic scenarios I mentioned. That’s great in principle, but we don’t have that and that’s why fossil fuel consumption in those developing countries is increasing so rapidly.

    RR

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  12. By perry1961 on October 10, 2011 at 1:46 pm

    With any luck, global warming will negate the next little ice age, due about 90 years from now. A little ice age at this point in time would likely be a near extinction event for humanity. We simply can’t feed 9 billion people without food grown in current temperate zones.

    “The model shows a slight cooling during A.D. 2000–2100, possibly leading to more severe droughts in the African Sahel than were seen in the minor global cooling that occurred in the 1970s. The following three centuries (A.D. 2100–2400) show a gradual temperature decrease toward another little ice age.”

    http://www.ncbi.nlm.nih.gov/pm…../PMC18780/

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  13. By Doggydogworld on October 10, 2011 at 2:02 pm

    It’s true, absent a renewable energy cost breakthrough CO2 emission growth in the developing world will more than offset cuts by western nations. Environmentalists see the graphs, but feel a political solution is possible. Their plan is to first put the western world on a low-carbon diet to show how it’s done, then threaten to cut off access to western markets unless China, India and others follow suit. I say economics overrides politics, but time will tell.

    I look forward to reading your AGW theory overview. Almost everything I’ve read on the topic is severely slanted one way or the other. A solid discussion of the problems with AGW theory that doesn’t lapse into silly denialism would be a refreshing change of pace.

     

     

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  14. By rrapier on October 10, 2011 at 2:10 pm

    Doggydogworld said:

    It’s true, absent a renewable energy cost breakthrough CO2 emission growth in the developing world will more than offset cuts by western nations. Environmentalists see the graphs, but feel a political solution is possible. Their plan is to first put the western world on a low-carbon diet to show how it’s done, then threaten to cut off access to western markets unless China, India and others follow suit. I say economics overrides politics, but time will tell.


     

    The main problem with that is that there is a vast gulf between what the west uses and what India uses, for instance. We can’t possibly drop to Indian levels to show them how it’s done.

    I look forward to reading your AGW theory overview. Almost everything I’ve read on the topic is severely slanted one way or the other. A solid discussion of the problems with AGW theory that doesn’t lapse into silly denialism would be a refreshing change of pace.

    Mine won’t be slanted. Both sides will say “OK, that makes sense.” They may disagree with their opponent’s position, but I am trying to explain why they are taking that position. In general, I am explaining the arguments and counterarguments — without trying to argue that one or the other is correct.

    RR

     

     

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  15. By Hengist McStone on October 10, 2011 at 2:38 pm

    Where did I suggest it would “destroy all human life on earth ” I didnt come close to that.
    Where I do agree with you is that the developing world is going to want to increase CO2 emissions to chase better living standards. That’s why we in the west must lead the way , look at our way of life and ask ourselves whether we can justify it knowing the probable cost in the future. I live in a city that will probably be flooded in a few centuries and abandoned, that saddens me. This is about so much more than living standards.

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  16. By Chuck on October 10, 2011 at 3:17 pm

    1) “Whatever Fossil Fuels exist, We Will Use.”

    Critics of biochar say it’s stupid to burn a renewable energy source, then bury the remaining charcoal in the ground, when that charcoal could be used to replace FF energy. This is a fallacy. By offering a new energy source, you just made FF energy a little cheaper for everyone who wants to burn more energy.

    2) “Whatever Fossil Fuels exist, We Will Use.”

    I would add: You are NOT helping avert climate change by consuming less FF energy. Peak Oil ensures that your demand for energy only causes it to be a little more expensive. Your demand will not cause more to be used.

    Therefore, solutions for carbon sequestration shouldn’t have to be carbon neutral. If I release 20 lbs of FF carbon in order to sequester 10 lbs of carbon (terribly inefficient), this is still a net good, because that 20lbs of FF carbon will will be burned and released anyway (likely by something pointless like driving to the store for a candy bar).

    Admittedly, on a large scale this would not be good for the economy, but an economy based on perpetual growth – it’s days are numbered.

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  17. By Doggydogworld on October 10, 2011 at 3:35 pm

    Robert Rapier said:

    We can’t possibly drop to Indian levels to show them how it’s done. 


     

    What we would “show them” is how to have a first world, high standard of living economy with low carbon usage. Not a third-world economy with low carbon usage, they obviously already know how to do that.

    Global per capita CO2 emissions are around 4.5 tonnes. Europe is still above this at 7 tonnes, but not so far above that they aren’t starting to plan for the day when they can assert moral leadership on the issue. France and Spain are already below China on a per capita basis. Europe is not far from being able to threaten an “embedded carbon tax” or similar on Chinese imports. Protectionism in the name of environmentalism could be very popular with voters. If Europe can browbeat China, South Korea and Russia and coax the other large emitters (e.g. US, Canada) to get onboard, the thinking goes, they’ll be able to put global CO2 on a downward path while enhancing their own global stature.

    BTW, the goal for India is not reduction from 1+ tonne/capita, but to target their growth toward a future global standard of 1.5-2.0 tonnes or so instead of the current 4.5 tonnes.

    Please understand that none of the above represents my plan, just my best summary of “their” plan.

    I disagree a bit when you call the AGW argument “academic”. Political approaches to CO2 reduction will not, IMHO, have a dramatic effect on the emission numbers themselves but could have dramatic effects on global living standards. Some schemes implemented to date have been raw wealth transfers from Europe to developing countries, where the money is then squandered or stolen. On a large scale such schemes could result in significant levels of wealth destruction.

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  18. By Wendell Mercantile on October 10, 2011 at 3:52 pm

    Why the Debate Over Global Warming is Academic

    It’s academic because there is not a thing we can do to stop, modify, or alter the natural trajectory of the earth’s climate. The earth’s climate is dynamic and driven by natural forces we may not even yet understand. We may as well decide we want to stop the tides, or stop the earth in its orbit around the Sun.

    The climate of the earth has always been changing, and it always will. It has been both hotter and colder in the past than it is now. It will be both hotter and colder in the future than it is now; regardless of our feeble attempts to make the earth’s changing climate stop in its tracks.

    An here’s the big secret: The human race is headed for extinction anyway. The march of earth’s dynamic climate change will continue long after humans have been snuffed out by an asteroid or comet strike; the eruption of a mega-volcano; or after the Sun burps and emits a coronal mass ejection that overwhelms the protection we receive from the earth’s magnetic field.

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  19. By Kit P on October 10, 2011 at 3:56 pm

    “I don’t make doomer predictions.”

    Did not say you did RR. I was referring to those who call AGW a crisis and demand actions that will destroy the US economy.

    “I don’t just get to throw stones.”

    Not throwing stones just disagreeing. Still disagree. Reducing ghg emissions is not a difficult engineering task. China, India, and Brazil have aggressive new build nuclear programs. Developing countries do not have to depend on coal. A similar point to what Conrad made.

    “We heavily subsidize those forms of energy in the U.S. because they are more expensive.”

    Again that is not necessarily true. Capital cost for renewable energy and nukes are higher. There is was thing certain about NG. Fuel costs are high. No worry just pass the cost along to the consumer.

    Perry writes,

    “With any luck, global warming will negate the next little ice age, due about 90 years from now.”

    It is fairly certain that we will have died of old aged by then if we are lucky.

    “A little ice age at this point in time would likely be a near extinction event for humanity.”

    The last dozen were not ‘near extinction events’ so while will the next be worse? If we have a 600,000 years super eruption near Yellowstone or a large meteor strike maybe but those movies have been made.

    “that saddens me. This is about so much more than living standards.”

    It makes me angry. More than a billion children do not have clean drinking water today and will likely die before learning to read about how sad AGW is. It is about living standards. After people have minimum living standards then they start thinking about a better environment.

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  20. By rrapier on October 10, 2011 at 4:03 pm

    Hengist McStone said:

    Where did I suggest it would “destroy all human life on earth “ 


     

    You mentioned a tipping point, and I can only speculate on what you think the results of that will be. In any case, my hurricane analogy is not meant to convey that the growth of carbon emissions is something where we will hunker down, weather, and then adjust. It is meant to convey a force that is unstoppable with the tools we have available.

    RR

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  21. By rrapier on October 10, 2011 at 4:06 pm

    Doggydogworld said:

    I disagree a bit when you call the AGW argument “academic”. Political approaches to CO2 reduction will not, IMHO, have a dramatic effect on the emission numbers themselves but could have dramatic effects on global living standards. Some schemes implemented to date have been raw wealth transfers from Europe to developing countries, where the money is then squandered or stolen. On a large scale such schemes could result in significant levels of wealth destruction.


     

    I searched for a more appropriate word because I was afraid “academic” would imply to people that the debate doesn’t matter. That’s not what I am trying to convey. What I am trying to convey is that our options for bringing carbon dioxide emissions under control is severely limited because of why/where they are increasing. I simply see no mechanism (and I cover the political angles in the book) by which we get it done. There are lots of theoretical mechanisms, but none that I think are politically viable.

    RR

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  22. By Hengist McStone on October 10, 2011 at 4:28 pm

    You don’t need to speculate on what I think that means , tipping point is a phrase common in textbooks and the MSM . It means a point that the planet’s climate would pass but not return from. Please , dont misrepresent me.

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  23. By rrapier on October 10, 2011 at 4:46 pm

    Hengist McStone said:

    You don’t need to speculate on what I think that means , tipping point is a phrase common in textbooks and the MSM . It means a point that the planet’s climate would pass but not return from. Please , dont misrepresent me.


     

    Whoa, there. Nobody is trying to misrepresent you. I know what a tipping point means, but I don’t know what you think the consequences might be. You asked why I think there would be an aftermath. I was trying to clarify what you meant by that comment. That’s why I wrote “if that’s where you are going.” Of course there will be an aftermath — even if it’s ongoing.

    RR

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  24. By Hengist McStone on October 10, 2011 at 4:58 pm

    OK point taken. Its getting late here, goodnight :-)

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  25. By Walt on October 10, 2011 at 4:58 pm

    Robert Rapier said:

    I simply see no mechanism (and I cover the political angles in the book) by which we get it done. There are lots of theoretical mechanisms, but none that I think are politically viable.
    RR


     

    This is exactly correct and right to the heart of the matter.

     

    The carbon and financial mechanisms have heartly failed to deliver incentives to tackle the problem.  I am in the heart of discussions with people who have put projects to the meth panel for approval from all over the world, and had the rejected over and over and over again.  Of course there are some successes in forestry projects, but there are a lot more CO2 and methane emissions reduction projects more important being denied.

     

    Hopefully soon we will submit a revised version of AM0037 that will clear the meth panel and be a “model” project for flare reductions.  If it is rejected then I’m few will try again.  It takes a lot of time, costs a lot of man resources and money, and the carbon value is less than 5% of the potential project revenues…all the while fighting the additionality rules to prove without that 5% the project will not move forward.  The reality is the mechanisms are broken/not working correctly, refused to be corrected/fixed timely and don’t give much incentive to lower emissions.

     

    My experience is that our EPA, globlal DOE’s and other worldwide regulators can threaten fines and penalties, but industry can always work around them politically (either with clean or dirty politics).  What I see (like in the clean fuels program in America) is government and the UN pick the winners and losers to give incentives.  Everyone else is struggling to comply.  Once all those mandates are met (and everyone pockets money in those sectors politically) then a whole new set of different mechanism are redefined and more liberalized.  Hundreds of millions (in some cases billions) are pledged to solve the problem, and all the grants go to researchers to study the problem…not solve the problem.

     

    That’s my two sense.  I’m no expert in this sector, but after 5 years of working on one aspect of it I see the incentives are weak, and the screaming to fix the problem is loud and growing.  I don’t think a carbon tax will work like Exxon says it will, but it certainly will be much simplier than jumping through all these hoops with no chance of being approved.  Like our American winner Ethanol…which takes home the gold in mandates and funding…other solutions to the problem get ignored or blocked all together.  Carbon is largely no different than the clean fuel sector.

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  26. By rate-crimes on October 10, 2011 at 5:35 pm

    “We are living longer and healthier than ever before.” – Kit P

    Please be more specific.  You must define, at least, “we”.  Here is some counter evidence to your claim:

    Poverty Is A Death Sentence – Cuts 6.5 Years Off Life Expectancy

    U.S. Life Expectancy Lags, Slips in Women

    http://earlywarn.blogspot.com/…..world.html

    “The US has unusually low life expectancy for its income level: this is a less desirable aspect of “American exceptionalism”, with most developed countries having 1-5 years more life than Americans, on average.”

    Smoking, Obesity Slowing U.S. Life Expectancy, Report Finds

    [link]      
  27. By A. Colin Flood on October 10, 2011 at 7:51 pm

    The title says “Global Warming is Academic,” but the evidence supplied is for CO2 emissions. Where is the chart shown that global warming is linked to CO2 emissions and not something else, like methane, solar activity or youthful protests?

    [link]      
  28. By rrapier on October 10, 2011 at 8:07 pm

    A. Colin Flood said:

    The title says “Global Warming is Academic,” but the evidence supplied is for CO2 emissions.


     

    As far as I am concerned (and I walk through this in the book), there is zero debate that increasing concentrations of CO2 in the atmosphere will cause some level of warming. We do understand why there is a greenhouse effect. The debate would be about the extent of the warming. Global warming skeptics would argue that the contribution from CO2 is minimal, while proponents would say that the feedback mechanisms could make it severe. Those are the issues that I work through in the book; this essay was just a snippet and a graph that I thought would probably be surprising to most people.

    RR

    [link]      
  29. By Kit P on October 10, 2011 at 8:51 pm

    “You must define, at least, “we”.  Here is some counter evidence to your claim: ”

     

    RC you have to do more than just post provocative headlines. The content of the articles actually supports that we are collectively living longer and healthier. So lets look at who is not in that group.

     

    The most dangerous occupation is being unemployed.

     

    Risks in Perspective

    Bernard L. Cohen, Ph.D.

     

    http://www.jpands.org/vol8no2/cohen.pdf

     

    When burdensome regulation put people out of work, there is an impact.

     

    From RC’s second link:

    “Overall, U.S. women’s life expectancy at birth was 81.3 years in 2007,

     

    American men’s average life expectancy at birth in 2007 was 76.7 years, ”

     

    When my parents were born life expectancy at birth was 59 years. So, yes we are living longer.

     

    If there is a general theme to RC links it is class warfare. It is a little silly really. Every child in the US has access to clean water, vaccines and antibiotics. This greatly increases life expectancy. Fear of polio was real when I was a kid.

     

    What are the causal factors to reducing life expectancy. Eating too much, smoking too much, drinking too much, recreational drugs. It is like the folks with the SUV and McMansion griping about the cost of energy. I thinking personal choices have more to do with than anything we can change in the world.

     

    [link]      
  30. By don on October 11, 2011 at 1:19 am

    “. . . tremendous growth in market share that coal has already achieved in the past decade. From 1998 to 2008, coal’s share of global primary energy consumption soared from over 25% to over 29%. Yes, at the world scale, that is a huge change.”

    http://gregor.us/

    [link]      
  31. By Benny BND Cole on October 11, 2011 at 1:27 am

    Actually, we can cool off the Earth rather inexpensively by shooting soot into the upper atmosphere. This happens naturally after volcanic eruptions, if they are large enough (Krakatoa and Mt. Pinotubo). I imagine we could also insert umbrellas or screens between the earth and the Sun, maybe even with louvers.

    Higher CO2 levels are boosting crop yields.

    I am with RR on this. All the sermonettes in the world are not going to stop poor people from wanting to be middle-class, or from elites wanting to get even richer. Ergo, we are going to use fossil fuel. We can explore ways to cool the Earth down, if need b.

    [link]      
  32. By tennie davis on October 11, 2011 at 2:19 am

    Watching an hour or two of Hans Rosling’s presentations at gapminder.org might be enlightening to some of you doomers/malthusians.
    I recommend his work because I suspect he is somewhat of a lib (albeit a positive one) and if I recommended Julian Simon’s work I would be dismissed by some as a biased conservative.
    Statistics and history show that things are getting better, not worse.
    Through the miracle of technology and free markets, things like climate change,peak oil, population growth/stabilization will be minor events that we will adapt to.
    Wendall says it well, its the big things like sun burps that scare me.

    [link]      
  33. By rate-crimes on October 11, 2011 at 11:00 am

    “When burdensome regulation put people out of work, there is an impact.” – Kit P

    “Burdensome regulation” . . . just what one should most fear hearing from a self-proclaimed “nuclear safety expert”.

    [link]      
  34. By rate-crimes on October 11, 2011 at 11:08 am

    “Every child in the US has access to clean water, vaccines and antibiotics.” – Kit P

    The State of America’s Children 2011 Report

    CDF’s new report The State of America’s Children 2011 finds children have fallen further behind in many of the leading indicators over the past year as the country slowly climbs out of the recession. This is a comprehensive compilation and analysis of the most recent and reliable national and state-by-state data on population, poverty, family structure, family income, health, nutrition, early childhood development, education, child welfare, juvenile justice, and gun violence. The report provides key child data showing alarming numbers of children at risk: children are the poorest age group with 15.5 million children—one in every five children in America—living in poverty, and more than 60 percent of fourth, eighth and 12th grade public school students are reading or doing math below grade level.

    [link]      
  35. By Wendell Mercantile on October 11, 2011 at 12:11 pm

    CDF’s new report The State of America’s Children 2011 finds children have fallen further behind in many of the leading indicators…

    Aw, geez. I thought all our kids were above average.

    [link]      
  36. By Ben on October 11, 2011 at 1:24 pm

    No need to explain “academic,” as the ongoing debate clearly is academic even as it necessarily plays out socially/politically in a million ways in communities/nations across the globe.

    Rapier appears to simply offer readers access to some data that describes the horns of the dilemma of modern economic man’s making. To the extent that thispalys out in ways that pinch our sensibilities, well, that is quite likely inevitable. The author’s points about how the lesser developed economies will disproportionately impact the well-being of the global population seems accurate, ironic and, arguably, poetic, given the history of the past few centuries and the rise of the modern industrial state. We should find little surprise that we are presently confounded in our own collective wisdom. We are reminded that technology ought to serve man even as we subordinate appetites to the requirements of sustainability in its all its practical forms. The price mechanism will remain a significant, if not the final, arbiter as we evaluate public policy and market options. Those disinclined to acknowledge the constraints of consensus politics and the marketplace of consumer preferences (liberty loosely defined) will increasingly marginalize their advocacy (which is arguably not an entirely unwelcome development).

    I’m reminded of the definition of zealot. We might do well to recall the circumstances of its orginal useage while we ask: our we Rome or are
    we the occupied?

    Thanks for this constructive forum and the opportunity to make a modest observation.

    Ben G

    [link]      
  37. By Steve Funk on October 11, 2011 at 1:27 pm

    Robert Rubin’s idea, in “Why your world is about to get a whole lot smaller,” is to combine a domestic carbon tax with an in-lieu carbon tax on all imports.  As the leading market, the US could have a substantial influence in this way.   Right now a domestic carbon tax seems undoable, but this might change, and an import carbon tax would definitely be doable if a domestic tax is enacted. 

     

    Beyond that, there is the unthinkable.  Clausewitz said that war is the continuation of politics by other means.  The only kind of war that would reduce the world’s use of fossil fuels would be one using large quantities of weapons that kill people without destroying infrastructure.

     

    When the book comes out, I want to order three copies–one for myself, one for the library, and one for my daughter, a middle school science teacher.

    [link]      
  38. By Wendell Mercantile on October 11, 2011 at 2:05 pm

    All the sermonettes in the world are not going to stop poor people from wanting to be middle-class, or from elites wanting to get even richer. Ergo, we are going to use fossil fuel.

    Benny~

    You’re right. What moral authority do we have to tell the billions of poor in the world they have no right to want to improve their quality of life and move into the middle-class?

    And who knows? One of the unintended consequences of anthropogenic climate change may be to delay the onset of the next ice age. Our ancestors of 10,000 years in the future may actually end up thanking us.

    It takes a lot of hubris for us to think we can do the kind of long-range planning that will decide what is best for those who will be living on the earth 10,000 or 100,000 years in the future.*

    ———–
    * When you think about it, isn’t that a pretty compelling reason to think that time travel is not possible? If it were, wouldn’t someone from the future be here now telling us what we need to do to get our act in order?

    [link]      
  39. By Doug on October 11, 2011 at 3:11 pm

    Robert, I think your graph may mislead some people unintentionally. Would it be better to show a stacked bar graph of total emissions, to show how the fraction of world emissions from Asia/Pacific is growing? Because the chart you have, which shows percentages, might cause some readers to mistakenly think emissions in the rest of the world are dropping faster than they actually are. I also echo the thoughts regarding the embedded emissions in products that are ultimately consumed in the developed world – it’s not clear to me that  developed-world emissions have actually dropped, rather than simply been outsourced. What might be fair to claim is that the developed world has reduced emissions per unit of GDP, but certainly no one in the developed world would want to live without manufactured goods, so the idea that emissions per unit of GDP could be reduced globally if everyone followed their example is questionable.

    [link]      
  40. By John Howley on October 11, 2011 at 3:40 pm

    There seems to be an assumption underlying your post and many of the comments that development is not possible without GHG emissions. Not sure I agree. The Philippines (the 12th largest country in the world by population, and growing) gets fully half of its electricity from renewables (and geothermal and hydro) and lower emission fossil fuels (natural gas). Why? Because, when you do not have significant sunk costs in plants using dirty fuels, the economics of renewables are actually pretty good. You see, in the more developed world, we have significant sunk costs in coal. So when we compare the cost of renewables (high up front costs, followed by zero fuel costs) with the current cost of producing electricity from coal (low up front costs because of all the sunk costs already there, plus fuel costs stretched out over time), it looks like renewables are more expensive than coal. But when there are few sunk costs, and you put a coal-fired plant head-to-head with a wind, solar, geothermal, hydro, or biomass plant, the delta between construction costs is actually reasonable, and the 10 – 20 year cash flows make renewables look like good investments if you can structure the financing properly.

    [link]      
  41. By rrapier on October 11, 2011 at 3:58 pm

    Steve Funk said:

    Robert Rubin’s idea, in “Why your world is about to get a whole lot smaller,” is to combine a domestic carbon tax with an in-lieu carbon tax on all imports. 


     

    I was intrigued by (Jeff) Rubin’s idea; I actually mentioned it in my review of his book:

     

    “While I still think carbon dioxide emissions will continue to rise until we simply run out of fossil fuels, Rubin provided an interesting argument that caused me to think that a different approach might work. Rubin argues that if we put a price on carbon emissions in the U.S., Canada, Europe, and other developed countries – we can apply a carbon tariff on imports to level the playing field. Rubin states that energy usage per GDP in China is four times that of the U.S. economy. By putting a carbon tariff on Chinese steel, for instance, two things are accomplished. First, the Chinese then have a much greater incentive to become more efficient. Second, domestic energy intensive industries (like steel production) suddenly become much more competitive. The flip-side of course is that it makes energy-intensive products more expensive.”

    Beyond that, there is the unthinkable.  Clausewitz said that war is the continuation of politics by other means.  The only kind of war that would reduce the world’s use of fossil fuels would be one using large quantities of weapons that kill people without destroying infrastructure.

    Ironically, I said that to someone this morning. They said “So what can we do?” I said “Short of going to war and preventing the developing world from developing, I don’t think there’s much we can do.”

    RR

    [link]      
  42. By rrapier on October 11, 2011 at 4:02 pm

    Doug said:

    Robert, I think your graph may mislead some people unintentionally. Would it be better to show a stacked bar graph of total emissions, to show how the fraction of world emissions from Asia/Pacific is growing?


     

    I have created about half a dozen graphics for the book chapter. It takes several to really put everything in perspective. I have bar graphs of CO2 emissions and emissions growth for several regions, and then another graph like this one that shows growth in CO2 emissions for various countries. It doesn’t look a whole lot different than the above. Instead of declining, North America and the EU are pretty flat.

    RR

    [link]      
  43. By rrapier on October 11, 2011 at 4:08 pm

    John Howley said:

    There seems to be an assumption underlying your post and many of the comments that development is not possible without GHG emissions. Not sure I agree. The Philippines (the 12th largest country in the world by population, and growing) gets fully half of its electricity from renewables (and geothermal and hydro) and lower emission fossil fuels (natural gas). Why? Because, when you do not have significant sunk costs in plants using dirty fuels, the economics of renewables are actually pretty good.


     

    The Philippines is not a good example, because they sit on top of a geothermal resource unavailable to most of the rest of the world. For those who have access to geothermal, it is certainly one of the most cost effective and lowest emissions sources of power out there — but limited in application. But despite this, carbon dioxide emissions in the Philippines still grew over the past decade by 14%. That is lower than the rest of Asia Pacific, but higher than for developed countries.

    But when there are few sunk costs, and you put a coal-fired plant head-to-head with a wind, solar, geothermal, hydro, or biomass plant, the delta between construction costs is actually reasonable, and the 10 – 20 year cash flows make renewables look like good investments if you can structure the financing properly.

    Yet China is still building coal-fired power plants as quickly as they can. They have clearly decided that they can’t meet the demands with just renewables, and I think most other developing countries are going to conclude the same.

    At the end of the day, the question is not “Can a country develop without burning fossil fuels?” — it is “What is most likely to happen?” What I think is most likely is the same trend we have seen over the past decade. Keep in mind, that’s not just growth in fossil fuel consumption, it is acceleration.

    RR

    [link]      
  44. By Walt on October 11, 2011 at 5:38 pm

    Steve Funk said:

    Robert Rubin’s idea, in “Why your world is about to get a whole lot smaller,” is to combine a domestic carbon tax with an in-lieu carbon tax on all imports.  As the leading market, the US could have a substantial influence in this way.   Right now a domestic carbon tax seems undoable, but this might change, and an import carbon tax would definitely be doable if a domestic tax is enacted. 


     

    I am aware of the person doing the calculations on carbon taxes for all crude oil to be imported into the country from their source fields.  This is being considered worldwide to generate global revenue to help governments support more money to bankers who are suffering.  Think well-to-wheel in the future as the taxes move down the value chain.

     

    Governments need money worldwide to bail out more and more banker mistakes managing their investments, and that MUST come largely from tax revenues as governments are feeling the pinch by bankers who have been loosing money on their off-balance sheet (off-budget) investments.   Unless you own a national oil and gas company to generate revenues, the need for higher taxes (carbon) is coming to a country near you.

    [link]      
  45. By Walt on October 11, 2011 at 7:51 pm

     

    OSLO - UN chief Ban Ki-moon, who himself studied by candlelight as a
    child, pleaded Monday for universal access to clean energy, a privilege
    denied to more than half the world population.

    “We need an energy revolution,” Ban said at an energy conference in Oslo.

    “We need energy not only to be universal, we need it to be clean and sustainable as well,” he added.

    …..

    About 1.3 billion of the world’s seven billion people have no access to
    energy, while another 2.7 billion are without clean cooking facilities,
    using coal and wood for domestic tasks, according to a study published
    Monday by the International Energy Agency (IEA).

    “For me, this is anything but academic. It is how I grew up in Korea. I
    studied by candlelight. Refrigerators, air-conditioning or a simple fan
    were just a far-off luxury that didn’t touch our lives,” Ban, 67, said.

     

    http://www.globalenergywatch.c…..techno.com

    [link]      
  46. By Kit P on October 11, 2011 at 9:48 pm

     

    Ban Ki-moon may have been born and grew up in one of the poorest countries but now South Korea is an economic power house unlike North Korea that got the energy resources. South Korea gets 31% of it’s electricity from nukes and pushing for 60%. South Korea is also building 4 reactors in UAE.

     

    [link]      
  47. By Walt on October 12, 2011 at 8:11 am

    Kit P said:

     

    Ban Ki-moon may have been born and grew up in one of the poorest countries but now South Korea is an economic power house unlike North Korea that got the energy resources. South Korea gets 31% of it’s electricity from nukes and pushing for 60%. South Korea is also building 4 reactors in UAE.

     


     

    I don’t know about what South Korea is doing for power generation…it is outside my scope of interest.  What I am interested in at the conference is what the Prime Minister of Norway said yesterday addressing the audience, and announcing the new Energy+ program. 

    http://www.regjeringen.no/en/d…..?id=660292

     

    Like some, I am a bit exhausted at watching all the money going into forestry projects benefiting a handful of people.  I think this new program is much wiser, but I like many need to know what is the carbon price.

     

    ———————-

    Last year I had the pleasure of co-chairing, together with prime minister Meles, the UN Secretary General`s Advisory Group on Finance.

    Our
    task was to make recommendations on how to mobilize 100 billion US
    dollars per year for climate finance in developing countries by 2020,
    from a variety of sources.

    Since we delivered our report many developed countries have faced, and are facing, even more serious fiscal constraints.

    A key conclusion in the report is even more important today;

    Without a carbon price, the goal can’t be met. By putting a price on carbon we can achieve three objectives at the same time:

     

    We will reduce carbon emissions.

    We will raise revenue for climate action.

    And we will promote the development of sustainable and clean energy sources.

    http://www.regjeringen.no/en/d…..?id=660288

    ————————–

     

    I cannot find any interest in methanol in America so the only choice I have is China or the rest of the world where the ethanol lobby and silicon valley do not have control over the political establishment in DC.

     

    Did you see this article on these costs???…shameful it gets so much money, value generation and attention.  Here is the point he makes, “But the point is that KIOR’s present fair value is less than 10% of the current market valuation.”

     

    —————————-

    http://seekingalpha.com/articl…..no-revenue

    For argument sake, let’s make the unprecedented assumption that there
    are no snafu’s in moving from a small pilot plant in Texas, to five
    large production plants in the US by 2015. These plants have a planned
    aggregate capacity of 6500 bone dry tons (BDT)/day
    of dried-out wood chips. Assuming a conversion rate of 68 gallons of
    gasoline/BDT, KiOR would produce 161M gallons per year (68 x 6500 x
    365). 161.33M x the current wholesale gas price (crude oil plus refiner
    margin) of $2.95 equates to $476M in revenue in 2016 if all plants are
    running at full capacity. Over the long run, management hopes to
    increase the conversion rate to 92 gallons/BDT, but is initially
    targeting 68. So, maybe revenue could eventually hit $643M assuming the
    same number of production plants.

    The combined average EBITDA margins of companies like oil refiner Valero (VLO) and agro processor Archer Daniels Midland (ADM)
    range from 4% to 5%. So using a 5% long-term EBITDA margin x $643M
    yields $32M in annual EBITDA starting in 2016 in the most optimistic
    scenario.

    A production plant costs $350M to build. Five production
    plants would cost $1.75B. So, even if by some miracle KiOR overcomes
    the above-mentioned technology issues, obtains very competitive yields
    and production costs, and achieves this $32M EBITDA, the payback period
    is quite long. Holding pricing constant, the only other way to increase
    revenue and EBITDA, and shorten the payback, would be to add capacity,
    but that costs $350M with a similar long payback.

    In the meantime, KiOR will burn a lot of cash over the next few years. Consensus analyst estimates are:

    KIOR $,M 2010 2011 2012 2013
    Revenue -0-
    -0-
    23.5 92.0
    EBITDA -30.1 -53.2
    -58.7
    -19.0
    EPS -$0.62
    -$0.72 -$0.70 -$0.78

    Viewed
    another way, over the past year VLO has traded on average at 0.2x
    revenue and about 5x EBITDA and ADM has traded at 0.4x revenue and 7x
    EBITDA (both have lower multiples currently). KiOR is entering a
    non-glamorous cyclical business with high fixed costs and corresponding
    modest valuations. 7 x best-case 2016 EBITDA is a $224M valuation, and
    0.4 x best-case 2016 revenue is a $257M valuation. Discount that back to
    today at a 10% to 15% discount rate, and we come to a present fair
    valuation of $120M to $150M in the best-case scenario, versus the
    current $1.7B valuation. In fact, we can even make a case for an even
    lower fair value given the negative cash flows in the next few years. But the point is that KIOR’s present fair value is less than 10% of the current market valuation.

    [link]      
  48. By Walt on October 12, 2011 at 8:19 am

    I would ask EVERYONE to watch this very carefully…just to see how much these VC’s really believe in the technology vs. the exit strategy they create.

     

    ———————–

    The float is only about 10% and shrinking. Rumors are that Artis
    Capital Management, the second largest owner of KiOR after Khosla, has
    been buying up the float since late August. I don’t know if this rumor
    is true, but the price action sure suggests something strange is going
    on. While we are short the shares, they have become very hard to borrow,
    and we have had the manipulated forced buy-in behavior that is usually
    reserved for OTCBB stocks (KIOR is Nasdaq quoted). Specifically, the
    last hour of trading before the next-morning’s forced buy-in, the shares
    are ramped on low volume. We still have managed to hold onto half of
    our short position with the help of our prime broker.

    While this
    goes against the Artis rumor, I have to believe that at least Khosla
    Ventures will be unloading some of its low-cost shares when the lock-up
    expires in late December, pulling down the share price. Longer term,
    KiOR will have to issue more shares to help finance expansion plans. I
    don’t think that the US government will make attractive loans for over
    $1B to one company after the Solyndra debacle. But who am I to predict
    what the Federal government will do?

    http://seekingalpha.com/articl…..no-revenue

    ————————

     

    I know it is off topic, but so many out there are slamming methanol…I just want to see how great all this VC money really is at creating technologies with revenues from government grants, loans from government and the glorious IPO strategies they talk up and down!

    [link]      
  49. By Walt on October 12, 2011 at 10:11 am

    Walt said:

    I would ask EVERYONE to watch this very carefully…just to see how much these VC’s really believe in the technology vs. the exit strategy they create.

     

    ———————–

    The float is only about 10% and shrinking. Rumors are that Artis

    Capital Management, the second largest owner of KiOR after Khosla, has

    been buying up the float since late August. I don’t know if this rumor

    is true, but the price action sure suggests something strange is going

    on. While we are short the shares, they have become very hard to borrow,

    and we have had the manipulated forced buy-in behavior that is usually

    reserved for OTCBB stocks (KIOR is Nasdaq quoted). Specifically, the

    last hour of trading before the next-morning’s forced buy-in, the shares

    are ramped on low volume. We still have managed to hold onto half of

    our short position with the help of our prime broker.

    While this

    goes against the Artis rumor, I have to believe that at least Khosla

    Ventures will be unloading some of its low-cost shares when the lock-up

    expires in late December, pulling down the share price. Longer term,

    KiOR will have to issue more shares to help finance expansion plans. I

    don’t think that the US government will make attractive loans for over

    $1B to one company after the Solyndra debacle. But who am I to predict

    what the Federal government will do?

    http://seekingalpha.com/articl…..no-revenue

    ————————

     

    I know it is off topic, but so many out there are slamming methanol…I just want to see how great all this VC money really is at creating technologies with revenues from government grants, loans from government and the glorious IPO strategies they talk up and down!


     

    You know what would be interesting.  Find the exact date that the hold expires and see how soon after that date key founders/investors sell their stock.  If someone keeps pushing it up and up till December, and then it drops like a rock after the expiration, it will be an excellent example of how to make money in the VC world of clean tech fuels.  I remember RR saying somewhere that it would take several years before people saw the financial weakness of some of these companies, and my observation is by then the key players will get most of their money back out.

     

    In reading some of these S-1 filings it is very interesting how many loans are paid off with proceeds on the equity IPO round, and how many management teams walk with lots of hard earned bonuses.  It reads like this…with my skepticism.

     

    Management is key to the success of the company.  They have gone beyond all expectations to build one of the most promising technologies in the world of clean tech and been forced to sacrifice their wage earning potential at $270,000 and $250,000 for CEO & CTO salaries, respectfully.  Due to their gifts and talent as clean tech leaders they could have made so much more so to retain them we need to give them each a reasonable bonus of $xxx,xxx.xx dollars each, plus a new salary of $400,000 and $375,000, respectfully….bla, bla, bla

     

    I’m not opposed to making money…far from it…and I am certain some of these technologies will really make it in the long run.  MY POINT is that assume everything above is far and reasonable…I’ll grant it for now.  What I would like to see what happens when their stock hold expires.  If they sell a little that is reasonable, but let’s just see.  These are long-term investments for certain.  I just wonder from the comments above if they can hold the stock price really high until December, and take a boat load full of more money, and let it crash so they have nothing to loose.

     

    I ask as I was one of the suckers who (on my brokers advice one time) bought a bunch of shares in a similar hyped stock, and only months later realized management made a killing, a few traders made a killing and the rest of us got blind sided.  My broker could only say I told you it was risky.  What he did not tell me however is how the IPO game works…and who always wins and who often loses…taking the risk! :)   Like most, I prefer calculated risks with the facts…and fortunately when I broker calls me to sell all these clean tech stocks for “fuels” and “chemicals” they end up realizing they have no idea what they are selling.  Making billion dollar IPO’s is sold to the public on the “technology” is the greatest, but in the real world of VC land the technology means nothing stupid.  It is the process that is the name of the game!..as well as the names of the players.

     

    I know I’m going to get in trouble on this blog for constantly being critical…but in December I will have a better observation how it all works.  After that I will (hopefully, I know) shut-up and go away!  Enough complaining already.

    [link]      
  50. By rate-crimes on October 12, 2011 at 10:46 am

    “Ban Ki-moon may have been born and grew up in one of the poorest countries but now South Korea is an economic power house unlike North Korea that got the energy resources. South Korea gets 31% of it’s electricity from nukes and pushing for 60%. South Korea is also building 4 reactors in UAE.” – Kit P 

    How Japan’s Fukushima crisis will affect Asia’s No. 2 nuclear power: South Korea

     

    South Korea – Environment

    During the first 20 years of South Korea’s growth surge, little effort was made to preserve the environment. Unchecked industrialization and urban development have resulted in deforestation and the ongoing destruction of wetlands such as the Songdo Tidal Flat. However, there have been recent efforts to balance these problems, including a government run $84 billion five-year green growth project that aims to boost energy efficiency and green technology.

    The green-based economic strategy is a comprehensive overhaul of South Korea’s economy, utilizing nearly two percent of the national GDP. The greening initiative includes such efforts as a nationwide bike network, solar and wind energy, lowering oil dependent vehicles, backing daylight savings and extensive usage of environmentally friendly technologies such as LEDs in electronics and lighting. The country – already the world’s most wired – plans to build a nationwide next-generation network which will be 10 times faster than broadband facilities in order to reduce energy usage.

    [link]      
  51. By Kit P on October 12, 2011 at 1:17 pm

    “I don’t know about what South Korea is doing for power generation…it is outside my scope of interest. ”

    Just responded to the information you presented Walt. If you are interested in how poor countries with little energy resources become rich ones, maybe you should study South Korea.

    “What I am interested in at the conference is what the Prime Minister of Norway said …”

    Sounds like a good way to fail. Rich politicians in the EU really do not know much about solving problems.

    “How Japan’s Fukushima crisis will affect Asia’s No. 2 nuclear power: South Korea”

    Thanks RC for the link to an article in March. It is now October and we know that events in Japan have not affected nuclear plants in South Korea. Not that I would have expected to.

    “This is 29.5% of South Korea’s total electrical generation capacity, but 45% of total electrical consumption. The South Korean nuclear power sector maintains capacity factors of over 95%.”

    South Korea nukes have a good safety record and operational excellence.

    [link]      
  52. By rrapier on October 12, 2011 at 1:23 pm

    Walt said:

    Management is key to the success of the company.  They have gone beyond all expectations to build one of the most promising technologies in the world of clean tech and been forced to sacrifice their wage earning potential at $270,000 and $250,000 for CEO & CTO salaries, respectfully.  Due to their gifts and talent as clean tech leaders they could have made so much more so to retain them we need to give them each a reasonable bonus of $xxx,xxx.xx dollars each, plus a new salary of $400,000 and $375,000, respectfully….bla, bla, bla


     

    That is exactly what is going on in so many of these companies, and our system of grants and loan guarantees just exacerbates this. People overpay themselves, hype their technology like mad, IPO it, and then everyone gets rich off of taxpayers without ever having to deliver anything. That’s not the way Bill Gates, Paul Allen, or Steve Jobs did it, and they built companies that actually delivered. They had to be frugal with their cash, and that’s the model these cleantech companies should follow.

    RR

    [link]      
  53. By Walt on October 12, 2011 at 3:01 pm

    Robert Rapier said:

    Walt said:

    Management is key to the success of the company.  They have gone beyond all expectations to build one of the most promising technologies in the world of clean tech and been forced to sacrifice their wage earning potential at $270,000 and $250,000 for CEO & CTO salaries, respectfully.  Due to their gifts and talent as clean tech leaders they could have made so much more so to retain them we need to give them each a reasonable bonus of $xxx,xxx.xx dollars each, plus a new salary of $400,000 and $375,000, respectfully….bla, bla, bla


     

    That is exactly what is going on in so many of these companies, and our system of grants and loan guarantees just exacerbates this. People overpay themselves, hype their technology like mad, IPO it, and then everyone gets rich off of taxpayers without ever having to deliver anything. That’s not the way Bill Gates, Paul Allen, or Steve Jobs did it, and they built companies that actually delivered. They had to be frugal with their cash, and that’s the model these cleantech companies should follow.

    RR


     

    Notice how those names were out front and center on their technologies…but today who is always front and center.  Only the VC names.  Half these companies I don’t even know the technologist name, or the CEO/founder, but you sure know who are the investor VC’s involved.

     

    The most frustrating thing talking with VC’s in 2011 is they really don’t care about the technology numbers or the value over competitors.  They give you about 15 to 45 minutes to pitch the deal, make it sound like it is going to the moon and then disclose your shareholders and who is in control.  What round are you in?  A, B, C, D, etc.  How much have you raised and at what terms?  Have you been diluted as CEO down to near nothing where the money people can get in and out as quick as possible?  All VC’s are not like this of course, but that is why I would really like to see what happens in December what these founders/Khosla do with their stock that is restricted at present.

     

    When the guy shorting the stock actually is struggling to hold onto the shorts because it keeps rising in value knowing the company has no revenues and when it works out the business economic model it is not going to make much money unless the government bails them out with another $1 billion in guarantees or grants, then it really makes you wonder.

     

    I think what some of us know about the technology costs (capex, opex, cost of production), merits, revenue drivers and key supply chains and whether these will survive through commercialization scale-up, the IPO investors are finally starting to see the numbers.  When he compared it to ADM and Valero I thought…ok, here is a good valuation metric to use…then when I saw what you get for $350 million per plant, I was real concerned.  I thought, “Gasoline yields at those CAPEX numbers…I hope the feedstock is free or they are getting paid to take them at the door.”

     

    Almost a $2 billion valuation…really just amazing.  Could you imagine if it got pushed up to $3 billion by December, exit key players (not like Gates or Jobs but the VC/DC ‘game changers’) and then it crashed?  I used to think the technology was the ‘game changer’, but now I know the playbook designed by VC/DC architects it makes it all that much more interesting that I did not take a penny from them.  If I sink it will be the good old fashion way…like a farmer with several years of bad crops…working tirelessly to bring in the harvest one day at a time.  If they do exit in December at high valuations, and the stock tanks, I will have lost all faith in our economy model.  I knew the game in 1999…but they never used taxpayer money…just suckers who bought all the garage stock in the market.  This is even worse when their revenues are grants, their loans are guaranteed by the taxpayer, it is always the same companies behind the companies, and if they all exit knowing the thing is going to crash…I hope someone calls them to task in the future.

     

    I hope some investigative reporter gets this story like this video just published on the criminal bankers have not been prosectued.  Notice how she compares 1,100 prosecutions of bankers in the Savings & Loan crisis and 800 convictions.  How many bankers since 2008?  ZERO.  Listen to the reason why?

    Financial Crisis: Are The Executives Too Big to Prosecute?

    http://www.youtube.com/watch?v…..e=youtu.be

     

    Louise Story: Wall Street Execs Escape Prosecution

    http://video.pbs.org/video/1903025078

    [link]      
  54. By russ-finley on October 12, 2011 at 9:17 pm

    It’s academic alright, unless something comes along that’s cheaper than fossil fuels.

    If the United States were to reduce fossil fuel use as shown in the above chart I proffered in a recent article, Electrification Nation–Why Natural Gas Won’t Save Our A** we would have a glut of oil, coal, and natural gas. Just as we export coal and corn ethanol today,  we would likely export our oil, coal, and natural gas. There would be a lot of money made but no progress on global warming if countries like China burn all that we do not. What politician has the power to tell profit seeking power brokers they must leave all of that wealth in the ground?

     

    The asinine idea that our military should go green and use biofuels to kill people would also go away because they would have all the oil they need to fight any just or unjust wars with.

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  55. By Walt on October 13, 2011 at 10:22 pm

     

     

    http://www.wnd.com/index.php?f…..eId=354433

    The sister-in-law of John Podesta, President Obama’s influential White
    House transition director, served as the lobbyist for a wind power firm
    that was just awarded a $135.8 million loan guarantee from the
    Department of Energy.

     

    Heather Podesta and her husband this past July topped the FEC’s
    lobbyist bundler database, raising more money in the six months prior
    than any other lobbyist by far. Their fund raising was largely for
    Democrats.

    According to White House visitor logs, Heather Podesta visited the White House eight times in Obama’s first six months alone.

    [link]      
  56. By Amy McCullough on November 8, 2011 at 12:34 pm

    I look forward to reading your book. When’s it coming out?

    [link]      
  57. By rrapier on November 8, 2011 at 1:02 pm

    Amy McCullough said:

    I look forward to reading your book. When’s it coming out?


     

    Hi Amy,

    The schedule is for me to finish the draft by year end, and then publish by mid-year or so next year. But I really don’t know how long these things take. The book chapters I did in the past took a lot longer than that after I had submitted my chapter.

    RR

    [link]      
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