How will Britons ever afford £50,000 per household for Net Zero by 2050?
In this newsletter:
1) Green Europe: Record-breaking European gas and carbon prices signal an expensive winter for consumers
Reuters, 7 July 2021
2) Energy inflation gathers pace as EU gas, power prices surge to new record
Bloomberg, 1 July 2021
3) Green Europe: EU to exempt private jets and ‘pleasure flights’ from climate tax on jet fuel
Argus Media, 6 July 2021
5) Charlotte Gill: Does the Climate Change Committee have too much power?
Conservative Home, 7 July 2021
6) How will Sun readers ever afford £50,000 per household for Net Zero by 2050?
The Sun, 7 July 2021
8) Tilak Doshi: Covid And Climate: A Tale Of Two Hysterias Part Two
Forbes, 5 July 2021
Bloomberg, 1 July 2021
3) Green Europe: EU to exempt private jets and ‘pleasure flights’ from climate tax on jet fuel
Argus Media, 6 July 2021
4) EU carbon border tax will raise nearly €10bn annually. Officials confident nobody will take retaliatory action
https://www.ft.com/content/7a812f4d-a093-4f1a-9a2f-877c41811486?
https://www.ft.com/content/7a812f4d-a093-4f1a-9a2f-877c41811486?
5) Charlotte Gill: Does the Climate Change Committee have too much power?
Conservative Home, 7 July 2021
6) How will Sun readers ever afford £50,000 per household for Net Zero by 2050?
The Sun, 7 July 2021
7) Editorial: OPEC, Biden and Gas Prices
The Wall Street Journal, 6 July 2021
The Wall Street Journal, 6 July 2021
8) Tilak Doshi: Covid And Climate: A Tale Of Two Hysterias Part Two
Forbes, 5 July 2021
Full details:
1) Green Europe: Record-breaking European gas and carbon prices signal an expensive winter for consumers
Reuters, 7 July 2021
LONDON, July 7 (Reuters) - European gas prices vaulted to record highs this summer, driven by factors ranging from low inventories and outages to an Asian buying spree, and signalling further rises in coming months that could mean higher household bills this winter.
The front month contract at the Dutch TTF hub , a key European benchmark, hit 38.65 euros ($45.77) per megawatt hour on Tuesday, its highest since Refinitiv Eikon records began. The British front month contract reached a record 93.35 pence per therm on Monday.
"A confluence of factors occurring at the same time has caused the recent bull run with record low gas storage, outages, continual/prolonged production issues and active Asian buying," said Nick Campbell, a director at consultancy Inspired Energy.
A cold winter at the beginning of this year prompted large drawdowns in storage stocks, which would usually be replenished during summer months when demand tends to be weaker.
But a series of unexpected supply disruptions, coupled with a rebound in demand as economies recover from COVID-19 restrictions, has led to a scarcity of gas.
Data from the IEA published last week showed European gas consumption rose by an estimated 25% in the second quarter of 2021, its largest year-on-year quarterly increase since at least 1985.
"This exceptionally strong recovery has been driven by the combination of an extended heating season due to lower than average temperatures, higher gas burn in the power sector and economic activity recovering to close to pre-COVID-19 level,” the IEA said in its latest gas report.
Maintenance in Norway has curbed exports from its gas fields and Russia's Gazprom has held off booking additional capacity for gas supplies to meet demand, a sign that it is waiting for the commissioning of the Nord Stream 2 pipeline, which runs from Russia to Europe.
Prices of liquefied natural gas (LNG) have also soared in Asia as buyers in the region sought to replenish stocks before winter. Although European prices are high, the spread has not been high enough to attract tankers to Europe.
"The Japan-Korea-Marker (JKM) price for LNG will continue to drive the TTF higher but the TTF needs to rally much faster than the JKM (to attract LNG to Europe)," said Samer Mosis, team leader of global LNG analytics at S&P Global Platts.
"The general theme that Europe has to fight with Asia for LNG will stay for the next three years," he said.
Gas scarcity this summer is already affecting winter gas contracts. Britain's winter 2021 contract hit 100 pence per therm on Tuesday, the highest for that contract since Refinitiv Eikon records began.
Price spikes in the wholesale gas market, if prolonged, can drive up retail gas prices for households. In Britain, wholesale prices make up around a third of consumer energy bills.
A cap on the most widely used British electricity and gas tariffs rose in a review in April and is expected to rise further in the next review this autumn as wholesale prices rise.
"A rise in gas and power retail tariffs will come as a shock to users this winter. Wholesale prices are still rising along with other generating fuels globally so there is no clear end in sight yet," said Glenn Rickson, head of European power analysis at S&P Global Platts.
Reuters, 7 July 2021
LONDON, July 7 (Reuters) - European gas prices vaulted to record highs this summer, driven by factors ranging from low inventories and outages to an Asian buying spree, and signalling further rises in coming months that could mean higher household bills this winter.
The front month contract at the Dutch TTF hub , a key European benchmark, hit 38.65 euros ($45.77) per megawatt hour on Tuesday, its highest since Refinitiv Eikon records began. The British front month contract reached a record 93.35 pence per therm on Monday.
"A confluence of factors occurring at the same time has caused the recent bull run with record low gas storage, outages, continual/prolonged production issues and active Asian buying," said Nick Campbell, a director at consultancy Inspired Energy.
A cold winter at the beginning of this year prompted large drawdowns in storage stocks, which would usually be replenished during summer months when demand tends to be weaker.
But a series of unexpected supply disruptions, coupled with a rebound in demand as economies recover from COVID-19 restrictions, has led to a scarcity of gas.
Data from the IEA published last week showed European gas consumption rose by an estimated 25% in the second quarter of 2021, its largest year-on-year quarterly increase since at least 1985.
"This exceptionally strong recovery has been driven by the combination of an extended heating season due to lower than average temperatures, higher gas burn in the power sector and economic activity recovering to close to pre-COVID-19 level,” the IEA said in its latest gas report.
Maintenance in Norway has curbed exports from its gas fields and Russia's Gazprom has held off booking additional capacity for gas supplies to meet demand, a sign that it is waiting for the commissioning of the Nord Stream 2 pipeline, which runs from Russia to Europe.
Prices of liquefied natural gas (LNG) have also soared in Asia as buyers in the region sought to replenish stocks before winter. Although European prices are high, the spread has not been high enough to attract tankers to Europe.
"The Japan-Korea-Marker (JKM) price for LNG will continue to drive the TTF higher but the TTF needs to rally much faster than the JKM (to attract LNG to Europe)," said Samer Mosis, team leader of global LNG analytics at S&P Global Platts.
"The general theme that Europe has to fight with Asia for LNG will stay for the next three years," he said.
Gas scarcity this summer is already affecting winter gas contracts. Britain's winter 2021 contract hit 100 pence per therm on Tuesday, the highest for that contract since Refinitiv Eikon records began.
Price spikes in the wholesale gas market, if prolonged, can drive up retail gas prices for households. In Britain, wholesale prices make up around a third of consumer energy bills.
A cap on the most widely used British electricity and gas tariffs rose in a review in April and is expected to rise further in the next review this autumn as wholesale prices rise.
"A rise in gas and power retail tariffs will come as a shock to users this winter. Wholesale prices are still rising along with other generating fuels globally so there is no clear end in sight yet," said Glenn Rickson, head of European power analysis at S&P Global Platts.
2) Energy inflation gathers pace as EU gas, power prices surge to new record
Bloomberg, 1 July 2021
European natural gas and power prices climbed to an all-time high on Thursday, as did the cost of carbon credits
Consumers are set to face higher energy bills this winter
Energy inflation is gathering pace in Europe, with the price of everything from gas to electricity surging to records, fueling concerns about costs to consumers as the world emerges from the global pandemic.
European natural gas and power prices climbed to an all-time high on Thursday, as did the cost of pollution permits. Energy demand is rebounding just as Europe plans to expand and impose tougher limits on emitters later this month, a move that’s helping boost energy costs in the region.
Energy prices are soaring from the U.S. to Asia as economies recover and more people get vaccinated. Consumers are set to face hefty bills this coming winter, with countries like the U.K. raising the cap on how much utilities can charge consumers and Spain moving to cut energy taxes.
Europe is facing a severe gas supply crunch, with prices jumping almost 90% this year after a colder- and longer-than usual winter left storage sites depleted. And supply isn’t rising fast enough, with Russia flowing less gas to Europe through Ukraine -- a key transit route -- and Asia scooping up cargoes of the liquefied fuel as intense heat boosts demand for cooling.
“European gas prices there have surged in recent weeks amid supply constraints, with Russia holding back exports to Western Europe despite strong demand,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. “The region is still recovering from the harsh winter’s drain on inventories.”
With gas so expensive, Europe needs to use more coal to keep the lights on as output from renewable sources remains low. That means that if the price of carbon gains, gas had to follow suit to ensure coal is the cheapest feedstock to make electricity, said Bjarne Schieldrop, chief commodities analyst at SEB AB.
“European gas and coal prices are driven by low renewable output that makes fossil fuels more attractive,” Swedish utility Bixia said in emailed report. “It is more attractive to generate coal than gas power in some cases.”
Full story
3) Green Europe: EU to exempt private jets and ‘pleasure flights’ from climate tax on jet fuel
Argus Media, 6 July 2021
The European Commission has proposed exempting private jets and cargo flights from the planned EU jet fuel tax. A draft indicates that the tax would be phased-in for passenger flights, including ones that carry cargo.
Bloomberg, 1 July 2021
European natural gas and power prices climbed to an all-time high on Thursday, as did the cost of carbon credits
Consumers are set to face higher energy bills this winter
Energy inflation is gathering pace in Europe, with the price of everything from gas to electricity surging to records, fueling concerns about costs to consumers as the world emerges from the global pandemic.
European natural gas and power prices climbed to an all-time high on Thursday, as did the cost of pollution permits. Energy demand is rebounding just as Europe plans to expand and impose tougher limits on emitters later this month, a move that’s helping boost energy costs in the region.
Energy prices are soaring from the U.S. to Asia as economies recover and more people get vaccinated. Consumers are set to face hefty bills this coming winter, with countries like the U.K. raising the cap on how much utilities can charge consumers and Spain moving to cut energy taxes.
Europe is facing a severe gas supply crunch, with prices jumping almost 90% this year after a colder- and longer-than usual winter left storage sites depleted. And supply isn’t rising fast enough, with Russia flowing less gas to Europe through Ukraine -- a key transit route -- and Asia scooping up cargoes of the liquefied fuel as intense heat boosts demand for cooling.
“European gas prices there have surged in recent weeks amid supply constraints, with Russia holding back exports to Western Europe despite strong demand,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. “The region is still recovering from the harsh winter’s drain on inventories.”
With gas so expensive, Europe needs to use more coal to keep the lights on as output from renewable sources remains low. That means that if the price of carbon gains, gas had to follow suit to ensure coal is the cheapest feedstock to make electricity, said Bjarne Schieldrop, chief commodities analyst at SEB AB.
“European gas and coal prices are driven by low renewable output that makes fossil fuels more attractive,” Swedish utility Bixia said in emailed report. “It is more attractive to generate coal than gas power in some cases.”
Full story
3) Green Europe: EU to exempt private jets and ‘pleasure flights’ from climate tax on jet fuel
Argus Media, 6 July 2021
The European Commission has proposed exempting private jets and cargo flights from the planned EU jet fuel tax. A draft indicates that the tax would be phased-in for passenger flights, including ones that carry cargo.
The draft, which the commission will on 14 July present with its proposed revisions to the bloc’s 2003 energy-taxation directive, indicates there could be an exemption from taxation for energy products and electricity used for intra-EU air navigation of cargo-only flights. It proposes allowing EU states to only tax such flights either domestically or by virtue of bilateral or multilateral agreements with other member states.
The commission is worried that taxing fuel for cargo-only flights would adversely affect EU carriers. Third-country carriers, also with a significant share of the intra-EU cargo market, have to be exempted from taxation due to aviation services agreements, the commission argues.
Private jets will enjoy an exemption through classification of “business aviation” as the use of aircraft by firms for carriage of passengers or goods as an “aid to the conduct of their business”, if generally considered not for public hire. A further exemption is given for “pleasure” flights whereby an aircraft is used for “personal or recreational” purposes not associated with a business or professional use….
The commission wants to align energy taxation with EU climate goals, meaning that taxes should be based on the net calorific value of the energy products and electricity and that minimum levels of taxation across the EU would be set out according to environmental performance and expressed in €/GJ.
Full story
5) Charlotte Gill: Does the Climate Change Committee have too much power?
Conservative Home, 7 July 2021
Last month, it was reported that “Ministers ‘should urge public to eat less meat’’. Such is the view of the Climate Change Committee (CCC) – which has advised people to consume less dairy and meat in order to help the UK meet its environmental targets.
For many Brits, the very existence of the CCC will come as a surprise – never mind that it is now offering guidance on what to eat. But the public is likely to become much more aware of it, and its recommendations, because of the Government’s desire to meet its Net Zero targets (set by the CCC), and the publicity about their costs
The CCC has also had some high profile critics, such as Nigel Lawson. In a letter to Parliament in 2019, he claimed that the CCC’s recommendations were not accurate and reliable and, furthermore, that “it is essential that Parliament has time to scrutinise new laws that are likely to result in astronomical costs.” Did he have a point?
First of all, it’s worth explaining the CCC – and its history. The body was established under the Climate Change Act 2008, which legally binds the Government to reducing UK carbon dioxide emission “by at least 80 per cent by 2050, compared to 1990 levels”.
It stipulates that the Government must create a committee in order to achieve this – hence the CCC. The CCC website says it’s an “independent, statutory body” that aims to “report to Parliament on progress made in reducing greenhouse gas emissions and preparing for and adapting to the impacts of climate change.”
As of 2017, Lord Deben has been Chair of the CCC. He was previously the Conservative MP for Suffolk Coastal and now holds a series of roles, such as Chairman for Sancroft International (a sustainability consultancy) and Valpak (a leading provider of environmental compliance).
Other Committee members include a behavioural scientist, Director of the Priestley International Centre for Climate and an environmental economist. One member has recently had to step down because of a potential conflict of interest (more here).
While the CCC has kept quite a low profile, it has provoked mixed reactions – with some sharing Lawson’s cynicism about its role. Ben Pile is the author of the Climate Resistance blog and sceptical about the costs of Net Zero.
He tells me that in the era the CCC was created, “there was a tendency towards technocracies (such as Tony Blair’s decision to grant the Bank of England independence) and to push important decisions to those.” He calls this “the post-democratic model of politics”.
Pile adds that parliament, unsure of how to reach its own environmental targets, “essentially gave all of its power in this domain to the CCC”. The problem with this, however, is that “when there are debates about climate change and targets, no one votes against anything.” He adds that “they might as well not have a debate”, even when discussing trillions of pounds, and pushing an agenda that the “public just aren’t interested in.”
Andrew Montford is Deputy Director of the Global Warming Policy Foundation, an all-party and non-party think tank, “which, while open-minded on the contested science of global warming, is deeply concerned about the costs and other implications of many of the policies currently being advocated.”
I ask Montford if the CCC has become too powerful, but he says it’s more about influence. “Their word is in the UK taken as gospel, and if they say we need to move faster, then the Government tends to just say, well we need to do something,” he says. “They are in a position where they can bully governments into moving faster than perhaps governments would like.”
He agrees that there is “very little democratic oversight of what they do” and “they have pushed very hard on renewables… and there are other views”. Furthermore, Montford says “The committee’s got to be much more balanced… The whole thing is built around the idea that the general public’s interests revolve around the climate in 2050, and actually people have more immediate concerns, and those angles aren’t really addressed.”
Sam Hall, Director of the Conservative Environment Network, on the other hand, is more positive about the CCC. For starters, he says that David Cameron was an initial supporter of the Climate Change Act, which led to its inception, and that “as Conservatives, we should feel some ownership over this framework”.
Full post
6) How will Sun readers ever afford £50,000 per household for Net Zero by 2050?
The Sun, 7 July 2021
8) Tilak Doshi: Covid And Climate: A Tale Of Two Hysterias Part Two
Forbes, 5 July 2021
Just over a year ago, I wrote in these pages an article noting the remarkable similarities in government policy responses to the impacts of the global Covid-19 pandemic and to those of climate change. Developments over the past year have only served to emphasize the resilient nature of these similarities.
The striking parallels in government policy to mitigate perceived “existential threats” to humanity have become even more notable. They betray a range of critical defects in policy making, from an inordinate dependence on speculative models to the lack of transparency and the ideological corruption of science, selective reporting and group think, and the suppression of sceptics.
Let’s revisit some of these parallels in government policy towards the Covid pandemic and climate change.
Two Recent Events
On the Covid-19 front, the most explosive development relates to the increasing plausibility of the view that the Sars-Cov-2 virus was leaked from the Wuhan Institute of Virology. This occurred after over a year of outright denials by Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases (NIAID) and the chief medical advisor to the president. This was accompanied by an onslaught of supportive articles by the mainstream media and the demonization of Senator Tom Cotton as a ‘conspiracy theorist’. He was among the first to raise the likelihood about the lab-release of the corona virus from the Wuhan institute. Newly released emails from Dr. Fauci now suggest that that he may have known that the Chinese research institute was carrying out dangerous gain-of-function research.
In the climate change wars, perhaps an equally important development is associated with the publication of Steve Koonin’s book “Unsettled: What Climate Science Tells Us, What It Doesn't, and Why It Matters”. Professor Koonin is a leading climate scientist with degrees from Caltech and MIT with over 200 academic papers. He was previously provost at Caltech and chief scientist for BP. Most importantly, he was former President Obama’s science advisor who “takes an axe” to the “climate emergency” narrative after leaving his government job and re-joining academia. Despite his unimpeachable scientific credentials and his previous position with a Democrat administration, there have been no lack of attempts to ‘cancel’ Koonin and hatchet jobs on his book are rife (here, here and here).
The Use and Abuse of Models
The use of predictive models, often with highly disputed assumptions, has played an out-sized role in guiding government responses. In my previous article, I already pointed out how the not-fit-for-purpose model of Professor Neil Ferguson of Imperial College, London panicked governments in the UK and the US into severe economic and social lockdowns with incalculable collateral damage on the lives and livelihoods of entire populations in many countries. This could be compared, as I previously pointed out, to the alarmist “hockey stick” global warming chart adopted by climate activists, mass media and politicians since its publication in 1999. This led to vast public resources being spent on subsidies and mandates over the past two decades in the US and Western Europe to push expensive and unreliable “renewable energy” technologies, ultimately with little impact on global dependence on fossil fuels.
My previous article suggested that lockdown policies are to the pandemic what decarbonization (“net zero by 2050”) is to climate change. There has been an increasing body of research that lockdowns – people forced to stay at home, small and medium-sized businesses forced to shut down – don’t work. There is no correlation between the severity of lockdowns and Covid mortality. A paper published last month by the NBER found no beneficial effect of “shelter in place” or lockdown policies on excess mortality. The effect of lockdown orders was assessed in 43 countries and all 50 US states. The key finding was that shelter-in-place orders not only did not reduce excess deaths but in fact led to excess deaths from all causes. Well documented collateral damage of lockdowns include widespread poverty, depression, bankruptcy, and unemployment (here, here and here). It has become increasingly apparent that the lockdowns had little basis in scientific research, and hysteria and groupthink were largely responsible for their adoption. The folly and hubris of central planners and favoured technocrats were on full display.
The Supreme Court's Pipeline Decision Shows DC Still Has Adults In The Room
The inordinate costs of “decarbonization” policies pursued in many countries have also been well documented. The German Federal Audit Office warned in a recent report that the drive to “net zero” has turned into an existential threat to the economy. The government auditor sees “sees the danger that the energy transition in this form will endanger Germany as a business location and overwhelm the financial strength of electricity-consuming companies and private households”. The report finds that decarbonization with escalating energy costs not only threatens the country with de-industrialization but it also sees an alarming threat to the country’s security of energy supply. California, with aggressive decarbonization policies akin to Germany’s, now face looming blackouts as electricity costs “explode”.
The path to “net zero by 2050”, pushed by the International Energy Agency, the European Union, and the UK and US governments, now threatens global inflation according to Roger Bootle, founder of Capital Economics Ltd and author of the 1996 book `The Death of Inflation’. He stated that “If I had to put my money on a single factor that was going to push up costs in the years to come, I would say it was the environmental emphasis and in particular the drive towards net zero... I think this is going to lead to a whole series of costs and price increases across the [global] economy.”
“Following the Science”
The “following the science” mantra endlessly cited by politicians to justify draconian lockdown and decarbonization policies has been used to exempt themselves from democratic constraints and the duty to exercise judgement. Relying on “The Science” is both foolish and dangerous, for science is neither consensual nor the “final answer” to any policy debate. Which scientists do you listen to? Science is a methodology constantly striving at plausible answers consistent with empirically-validated models, not some abstract end-state to ‘known knowns’. Epidemiological and climate models employed to predict outcomes of highly uncertain and only partially understood processes often yields results which are “sociological”, tuned to getting politically correct answers. These abstract predictive models, untethered to empirical validation, may well be “worse than nothing”.
Appeals to science and predictive models have dominated the advocacy of policies by the power triumvirate – lawmakers, bureaucrats and the mainstream media — to mitigate perceived threats to human welfare, be it the Covid pandemic or climate change. Yet such appeals are ultimately political. Perhaps the last word lies best with the towering American essayist H. L. Mencken, who wrote that “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, most of them imaginary”.
The commission is worried that taxing fuel for cargo-only flights would adversely affect EU carriers. Third-country carriers, also with a significant share of the intra-EU cargo market, have to be exempted from taxation due to aviation services agreements, the commission argues.
Private jets will enjoy an exemption through classification of “business aviation” as the use of aircraft by firms for carriage of passengers or goods as an “aid to the conduct of their business”, if generally considered not for public hire. A further exemption is given for “pleasure” flights whereby an aircraft is used for “personal or recreational” purposes not associated with a business or professional use….
The commission wants to align energy taxation with EU climate goals, meaning that taxes should be based on the net calorific value of the energy products and electricity and that minimum levels of taxation across the EU would be set out according to environmental performance and expressed in €/GJ.
Full story
4) EU carbon border tax will raise nearly €10bn annually. Officials confident nobody will take retaliatory action
https://www.ft.com/content/7a812f4d-a093-4f1a-9a2f-877c41811486?
Revenue raised by the green policy will be used to help repay €750bn in pandemic recovery debt
https://www.ft.com/content/7a812f4d-a093-4f1a-9a2f-877c41811486?
Revenue raised by the green policy will be used to help repay €750bn in pandemic recovery debt
Brussels expects to raise nearly €10bn a year from a carbon tax on imports as part of its effort to tackle global warming and will use the money to repay hundreds of billions in EU joint recovery debt.
Details of the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) laid out in a legal text, seen by the Financial Times, reveals how the system will work. The so-called carbon border tax forms the cornerstone of Brussels’ attempt to protect European industry from foreign competitors that are not subject to the bloc’s stringent climate targets.
The documents show the mechanism will raise an estimated €9bn a year in revenues once it is fully up and running by 2030. The European Commission intends to introduce the tax gradually starting in 2023 to allow businesses a “transitional” period to adjust and ensure “the least burden possible on trade flows and trade operators”, the text noted.
European industry, particularly steelmakers, want the tool to come into force as soon as possible so they do not have to shoulder the burden of paying a rising EU carbon price while competitors outside the bloc do not.
The European Commission will next Wednesday unveil measures to help meet its goal of reducing average EU carbon emissions by 55 per cent in 2030, compared to 1990 levels. Alongside the CBAM, it includes a revamp of the EU’s carbon market, tougher CO2 emissions standards for cars, and proposals for an EU-wide kerosene tax.
Yet it is the CBAM that has provoked the most concern from the EU’s trading partners led by Russia which fear they will be worst hit.
The CBAM revenues have been earmarked to help cover the cost of the EU’s €750bn recovery fund, money Brussels has borrowed to support its members states to boost their economies in the wake of the pandemic.
Although a relatively modest amount, the money has been championed by the European Parliament and countries such as France which want Brussels to generate its “own resources” to repay the recovery fund debt over the coming decades.
The money is likely to take on additional significance after the European Commission’s plans for an EU digital tax have been delayed because of concern from Washington that the levy is incompatible with ongoing negotiations for a global tax deal.
The CBAM has been championed as a way to prevent so-called “carbon leakage” where companies can move their operations outside the EU to avoid stiff climate regulations.
The tax would initially target a limited number of imports including iron, steel, cement and fertilisers. According to internal EU estimates, Russian businesses will make up a bulk of the revenues because of the high carbon intensity of their imports.
“As the EU increases its climate ambitions, the divergence with third countries’ level of climate action is expected to widen, with an increased risk of carbon leakage for the EU,” says the text.
Europe’s trading partners have warned the mechanism must not fall foul of World Trade Organization rules. EU officials say they are confident the tool will not risk retaliatory action as it is designed to target companies not countries and will only apply to nations that do not have equivalent carbon pricing systems.
The CBAM is also designed to complement a revamp of the EU’s Emissions Trading Scheme (ETS) where European industry pays a market-driven carbon price to cover the cost of their emissions. The commission has said it will phase out free carbon credits in the ETS for sectors such as aviation and then introduce the CBAM to protect businesses from rising costs and competition.
Officials said the final text is subject to change before it is adopted by the commission next week.
Details of the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) laid out in a legal text, seen by the Financial Times, reveals how the system will work. The so-called carbon border tax forms the cornerstone of Brussels’ attempt to protect European industry from foreign competitors that are not subject to the bloc’s stringent climate targets.
The documents show the mechanism will raise an estimated €9bn a year in revenues once it is fully up and running by 2030. The European Commission intends to introduce the tax gradually starting in 2023 to allow businesses a “transitional” period to adjust and ensure “the least burden possible on trade flows and trade operators”, the text noted.
European industry, particularly steelmakers, want the tool to come into force as soon as possible so they do not have to shoulder the burden of paying a rising EU carbon price while competitors outside the bloc do not.
The European Commission will next Wednesday unveil measures to help meet its goal of reducing average EU carbon emissions by 55 per cent in 2030, compared to 1990 levels. Alongside the CBAM, it includes a revamp of the EU’s carbon market, tougher CO2 emissions standards for cars, and proposals for an EU-wide kerosene tax.
Yet it is the CBAM that has provoked the most concern from the EU’s trading partners led by Russia which fear they will be worst hit.
The CBAM revenues have been earmarked to help cover the cost of the EU’s €750bn recovery fund, money Brussels has borrowed to support its members states to boost their economies in the wake of the pandemic.
Although a relatively modest amount, the money has been championed by the European Parliament and countries such as France which want Brussels to generate its “own resources” to repay the recovery fund debt over the coming decades.
The money is likely to take on additional significance after the European Commission’s plans for an EU digital tax have been delayed because of concern from Washington that the levy is incompatible with ongoing negotiations for a global tax deal.
The CBAM has been championed as a way to prevent so-called “carbon leakage” where companies can move their operations outside the EU to avoid stiff climate regulations.
The tax would initially target a limited number of imports including iron, steel, cement and fertilisers. According to internal EU estimates, Russian businesses will make up a bulk of the revenues because of the high carbon intensity of their imports.
“As the EU increases its climate ambitions, the divergence with third countries’ level of climate action is expected to widen, with an increased risk of carbon leakage for the EU,” says the text.
Europe’s trading partners have warned the mechanism must not fall foul of World Trade Organization rules. EU officials say they are confident the tool will not risk retaliatory action as it is designed to target companies not countries and will only apply to nations that do not have equivalent carbon pricing systems.
The CBAM is also designed to complement a revamp of the EU’s Emissions Trading Scheme (ETS) where European industry pays a market-driven carbon price to cover the cost of their emissions. The commission has said it will phase out free carbon credits in the ETS for sectors such as aviation and then introduce the CBAM to protect businesses from rising costs and competition.
Officials said the final text is subject to change before it is adopted by the commission next week.
5) Charlotte Gill: Does the Climate Change Committee have too much power?
Conservative Home, 7 July 2021
Last month, it was reported that “Ministers ‘should urge public to eat less meat’’. Such is the view of the Climate Change Committee (CCC) – which has advised people to consume less dairy and meat in order to help the UK meet its environmental targets.
For many Brits, the very existence of the CCC will come as a surprise – never mind that it is now offering guidance on what to eat. But the public is likely to become much more aware of it, and its recommendations, because of the Government’s desire to meet its Net Zero targets (set by the CCC), and the publicity about their costs
The CCC has also had some high profile critics, such as Nigel Lawson. In a letter to Parliament in 2019, he claimed that the CCC’s recommendations were not accurate and reliable and, furthermore, that “it is essential that Parliament has time to scrutinise new laws that are likely to result in astronomical costs.” Did he have a point?
First of all, it’s worth explaining the CCC – and its history. The body was established under the Climate Change Act 2008, which legally binds the Government to reducing UK carbon dioxide emission “by at least 80 per cent by 2050, compared to 1990 levels”.
It stipulates that the Government must create a committee in order to achieve this – hence the CCC. The CCC website says it’s an “independent, statutory body” that aims to “report to Parliament on progress made in reducing greenhouse gas emissions and preparing for and adapting to the impacts of climate change.”
As of 2017, Lord Deben has been Chair of the CCC. He was previously the Conservative MP for Suffolk Coastal and now holds a series of roles, such as Chairman for Sancroft International (a sustainability consultancy) and Valpak (a leading provider of environmental compliance).
Other Committee members include a behavioural scientist, Director of the Priestley International Centre for Climate and an environmental economist. One member has recently had to step down because of a potential conflict of interest (more here).
While the CCC has kept quite a low profile, it has provoked mixed reactions – with some sharing Lawson’s cynicism about its role. Ben Pile is the author of the Climate Resistance blog and sceptical about the costs of Net Zero.
He tells me that in the era the CCC was created, “there was a tendency towards technocracies (such as Tony Blair’s decision to grant the Bank of England independence) and to push important decisions to those.” He calls this “the post-democratic model of politics”.
Pile adds that parliament, unsure of how to reach its own environmental targets, “essentially gave all of its power in this domain to the CCC”. The problem with this, however, is that “when there are debates about climate change and targets, no one votes against anything.” He adds that “they might as well not have a debate”, even when discussing trillions of pounds, and pushing an agenda that the “public just aren’t interested in.”
Andrew Montford is Deputy Director of the Global Warming Policy Foundation, an all-party and non-party think tank, “which, while open-minded on the contested science of global warming, is deeply concerned about the costs and other implications of many of the policies currently being advocated.”
I ask Montford if the CCC has become too powerful, but he says it’s more about influence. “Their word is in the UK taken as gospel, and if they say we need to move faster, then the Government tends to just say, well we need to do something,” he says. “They are in a position where they can bully governments into moving faster than perhaps governments would like.”
He agrees that there is “very little democratic oversight of what they do” and “they have pushed very hard on renewables… and there are other views”. Furthermore, Montford says “The committee’s got to be much more balanced… The whole thing is built around the idea that the general public’s interests revolve around the climate in 2050, and actually people have more immediate concerns, and those angles aren’t really addressed.”
Sam Hall, Director of the Conservative Environment Network, on the other hand, is more positive about the CCC. For starters, he says that David Cameron was an initial supporter of the Climate Change Act, which led to its inception, and that “as Conservatives, we should feel some ownership over this framework”.
Full post
6) How will Sun readers ever afford £50,000 per household for Net Zero by 2050?
The Sun, 7 July 2021
NO wonder the Government kept quiet. The bill for Boris Johnson’s “Net Zero by 2050” pledge will be £1.4trillion That’s equivalent to £50,000 per household.
The Sun also wants a cleaner, greener future. But while politicians can afford such sums, especially over time, millions not on £82,000 a year can’t.
Officials say greater energy efficiency will save us money.
Fine, except they also plan a new tax on top of the pricey electric cars and heat pumps we’ll need.
Even then, our efforts will remain globally insignificant while China keeps building or funding a new coal-fired power plant each WEEK.
The Government must be upfront. Our Covid debt is vast. Now we face higher taxes and massive Net Zero bills.
How will Sun readers ever afford it?
The Sun also wants a cleaner, greener future. But while politicians can afford such sums, especially over time, millions not on £82,000 a year can’t.
Officials say greater energy efficiency will save us money.
Fine, except they also plan a new tax on top of the pricey electric cars and heat pumps we’ll need.
Even then, our efforts will remain globally insignificant while China keeps building or funding a new coal-fired power plant each WEEK.
The Government must be upfront. Our Covid debt is vast. Now we face higher taxes and massive Net Zero bills.
How will Sun readers ever afford it?
7) Editorial: OPEC, Biden and Gas Prices
The Wall Street Journal, 6 July 2021
Biden’s climate contradiction: He wants OPEC to pump more oil to reduce U.S. gas prices even as he tries to restrict U.S. oil and gas production.
As cognitive dissonance goes, this is a classic. President Biden’s explicit policy goal is to reduce U.S. oil and gas production, limiting the global supply of fossil fuels in the name of fighting climate change. Yet his Administration is now imploring the OPEC oil cartel to pump more oil so U.S. gasoline prices don’t rise more than they already have on Mr. Biden’s watch.
Oil prices climbed to a six-year high on Tuesday after the Organization of the Petroleum Exporting Countries and Russia failed to agree on increasing production quotas. Last spring OPEC slashed production quotas after crude prices plunged to $20 per barrel amid economic lockdowns and a price war between Saudi Arabia and Russia.
But energy demand has snapped back in much of the world as Covid-19 vaccines roll out, govern-ments ease lockdowns, and freight shipments surge. U.S. petroleum consump-tion is now roughly where it was at this time in 2019. OPEC estimates that oil demand in industrialized countries will increase by 2.7 million barrels a day this year.
In early June OPEC modestly raised production quotas, but demand is still rebounding faster than supply. The upshot is that crude prices are averaging around $74 a barrel, up 45% or so this year. OPEC countries naturally want to take advantage of the pandemic recovery to boost production and generate more petrodollars to fund their governments.
But a squabble between Saudi Arabia and the United Arab Emirates over quotas is blocking an agreement, sending U.S. gasoline prices to a near seven-year high. Enter the Biden Administration. A White House spokesperson on Monday said it is urging OPEC and its allies to quickly come up with a compromise “that will allow proposed production increases to move for-ward.”
The Administration is worried that higher gas prices could undermine Mr. Biden’s climate agenda and spending plans. Republi-cans have been linking his veto of the Keystone XL pipeline with higher gas prices. The two aren’t directly related. But no Keystone does mean that more crude from Canada and the northern Bakken Shale will have to move by rail to U.S. refiners.
This is contributing to higher freight demand and prices, as well as supply-chain bottlenecks, all of which are adding to infla-tionary pressure. Con-sumers feel the pain at the pump and on their utility bills as natural gas and propane prices have also surged. Rising energy costs are also feeding into the higher price of goods more broadly.
Mr. Biden knows surg-ing prices for gas and other goods hurt middle-class Americans and could undermine his Presidency. This is one reason he refused a proposal to pay for the Senate’s bipartisan infrastructure deal by increasing the gas tax.
But note the irony that Mr. Biden is now urging OPEC to open its taps even while his Administration is pursuing policies with the goal of shutting down U.S. oil and natural gas produc-tion. His Administration has sought to halt new leases on federal land, suspended leases in Alas-ka’s Arctic National Wildlife Refuge, and is expanding endangered-species protec-tions to limit oil production on private land, among other policies designed to punish fossil fuels.
But reducing U.S. pro-duction means reduced global supply even as demand surges. This means more pricing leverage for OPEC and Russia—and for Iran if Mr. Biden lets Tehran escape sanctions on its oil exports as part of a re-newed nuclear deal. So Russia and Iran will benefit from Mr. Biden’s fossil-fuel disarmament while Ameri-cans pay more for energy.
The way out of such contradictions would be to let U.S. producers respond to higher prices without new political obstacles. He can tell the climate lobby it beats political defeat.
The Wall Street Journal, 6 July 2021
Biden’s climate contradiction: He wants OPEC to pump more oil to reduce U.S. gas prices even as he tries to restrict U.S. oil and gas production.
As cognitive dissonance goes, this is a classic. President Biden’s explicit policy goal is to reduce U.S. oil and gas production, limiting the global supply of fossil fuels in the name of fighting climate change. Yet his Administration is now imploring the OPEC oil cartel to pump more oil so U.S. gasoline prices don’t rise more than they already have on Mr. Biden’s watch.
Oil prices climbed to a six-year high on Tuesday after the Organization of the Petroleum Exporting Countries and Russia failed to agree on increasing production quotas. Last spring OPEC slashed production quotas after crude prices plunged to $20 per barrel amid economic lockdowns and a price war between Saudi Arabia and Russia.
But energy demand has snapped back in much of the world as Covid-19 vaccines roll out, govern-ments ease lockdowns, and freight shipments surge. U.S. petroleum consump-tion is now roughly where it was at this time in 2019. OPEC estimates that oil demand in industrialized countries will increase by 2.7 million barrels a day this year.
In early June OPEC modestly raised production quotas, but demand is still rebounding faster than supply. The upshot is that crude prices are averaging around $74 a barrel, up 45% or so this year. OPEC countries naturally want to take advantage of the pandemic recovery to boost production and generate more petrodollars to fund their governments.
But a squabble between Saudi Arabia and the United Arab Emirates over quotas is blocking an agreement, sending U.S. gasoline prices to a near seven-year high. Enter the Biden Administration. A White House spokesperson on Monday said it is urging OPEC and its allies to quickly come up with a compromise “that will allow proposed production increases to move for-ward.”
The Administration is worried that higher gas prices could undermine Mr. Biden’s climate agenda and spending plans. Republi-cans have been linking his veto of the Keystone XL pipeline with higher gas prices. The two aren’t directly related. But no Keystone does mean that more crude from Canada and the northern Bakken Shale will have to move by rail to U.S. refiners.
This is contributing to higher freight demand and prices, as well as supply-chain bottlenecks, all of which are adding to infla-tionary pressure. Con-sumers feel the pain at the pump and on their utility bills as natural gas and propane prices have also surged. Rising energy costs are also feeding into the higher price of goods more broadly.
Mr. Biden knows surg-ing prices for gas and other goods hurt middle-class Americans and could undermine his Presidency. This is one reason he refused a proposal to pay for the Senate’s bipartisan infrastructure deal by increasing the gas tax.
But note the irony that Mr. Biden is now urging OPEC to open its taps even while his Administration is pursuing policies with the goal of shutting down U.S. oil and natural gas produc-tion. His Administration has sought to halt new leases on federal land, suspended leases in Alas-ka’s Arctic National Wildlife Refuge, and is expanding endangered-species protec-tions to limit oil production on private land, among other policies designed to punish fossil fuels.
But reducing U.S. pro-duction means reduced global supply even as demand surges. This means more pricing leverage for OPEC and Russia—and for Iran if Mr. Biden lets Tehran escape sanctions on its oil exports as part of a re-newed nuclear deal. So Russia and Iran will benefit from Mr. Biden’s fossil-fuel disarmament while Ameri-cans pay more for energy.
The way out of such contradictions would be to let U.S. producers respond to higher prices without new political obstacles. He can tell the climate lobby it beats political defeat.
Forbes, 5 July 2021
Just over a year ago, I wrote in these pages an article noting the remarkable similarities in government policy responses to the impacts of the global Covid-19 pandemic and to those of climate change. Developments over the past year have only served to emphasize the resilient nature of these similarities.
The striking parallels in government policy to mitigate perceived “existential threats” to humanity have become even more notable. They betray a range of critical defects in policy making, from an inordinate dependence on speculative models to the lack of transparency and the ideological corruption of science, selective reporting and group think, and the suppression of sceptics.
Let’s revisit some of these parallels in government policy towards the Covid pandemic and climate change.
Two Recent Events
On the Covid-19 front, the most explosive development relates to the increasing plausibility of the view that the Sars-Cov-2 virus was leaked from the Wuhan Institute of Virology. This occurred after over a year of outright denials by Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases (NIAID) and the chief medical advisor to the president. This was accompanied by an onslaught of supportive articles by the mainstream media and the demonization of Senator Tom Cotton as a ‘conspiracy theorist’. He was among the first to raise the likelihood about the lab-release of the corona virus from the Wuhan institute. Newly released emails from Dr. Fauci now suggest that that he may have known that the Chinese research institute was carrying out dangerous gain-of-function research.
In the climate change wars, perhaps an equally important development is associated with the publication of Steve Koonin’s book “Unsettled: What Climate Science Tells Us, What It Doesn't, and Why It Matters”. Professor Koonin is a leading climate scientist with degrees from Caltech and MIT with over 200 academic papers. He was previously provost at Caltech and chief scientist for BP. Most importantly, he was former President Obama’s science advisor who “takes an axe” to the “climate emergency” narrative after leaving his government job and re-joining academia. Despite his unimpeachable scientific credentials and his previous position with a Democrat administration, there have been no lack of attempts to ‘cancel’ Koonin and hatchet jobs on his book are rife (here, here and here).
The Use and Abuse of Models
The use of predictive models, often with highly disputed assumptions, has played an out-sized role in guiding government responses. In my previous article, I already pointed out how the not-fit-for-purpose model of Professor Neil Ferguson of Imperial College, London panicked governments in the UK and the US into severe economic and social lockdowns with incalculable collateral damage on the lives and livelihoods of entire populations in many countries. This could be compared, as I previously pointed out, to the alarmist “hockey stick” global warming chart adopted by climate activists, mass media and politicians since its publication in 1999. This led to vast public resources being spent on subsidies and mandates over the past two decades in the US and Western Europe to push expensive and unreliable “renewable energy” technologies, ultimately with little impact on global dependence on fossil fuels.
My previous article suggested that lockdown policies are to the pandemic what decarbonization (“net zero by 2050”) is to climate change. There has been an increasing body of research that lockdowns – people forced to stay at home, small and medium-sized businesses forced to shut down – don’t work. There is no correlation between the severity of lockdowns and Covid mortality. A paper published last month by the NBER found no beneficial effect of “shelter in place” or lockdown policies on excess mortality. The effect of lockdown orders was assessed in 43 countries and all 50 US states. The key finding was that shelter-in-place orders not only did not reduce excess deaths but in fact led to excess deaths from all causes. Well documented collateral damage of lockdowns include widespread poverty, depression, bankruptcy, and unemployment (here, here and here). It has become increasingly apparent that the lockdowns had little basis in scientific research, and hysteria and groupthink were largely responsible for their adoption. The folly and hubris of central planners and favoured technocrats were on full display.
The Supreme Court's Pipeline Decision Shows DC Still Has Adults In The Room
The inordinate costs of “decarbonization” policies pursued in many countries have also been well documented. The German Federal Audit Office warned in a recent report that the drive to “net zero” has turned into an existential threat to the economy. The government auditor sees “sees the danger that the energy transition in this form will endanger Germany as a business location and overwhelm the financial strength of electricity-consuming companies and private households”. The report finds that decarbonization with escalating energy costs not only threatens the country with de-industrialization but it also sees an alarming threat to the country’s security of energy supply. California, with aggressive decarbonization policies akin to Germany’s, now face looming blackouts as electricity costs “explode”.
The path to “net zero by 2050”, pushed by the International Energy Agency, the European Union, and the UK and US governments, now threatens global inflation according to Roger Bootle, founder of Capital Economics Ltd and author of the 1996 book `The Death of Inflation’. He stated that “If I had to put my money on a single factor that was going to push up costs in the years to come, I would say it was the environmental emphasis and in particular the drive towards net zero... I think this is going to lead to a whole series of costs and price increases across the [global] economy.”
“Following the Science”
The “following the science” mantra endlessly cited by politicians to justify draconian lockdown and decarbonization policies has been used to exempt themselves from democratic constraints and the duty to exercise judgement. Relying on “The Science” is both foolish and dangerous, for science is neither consensual nor the “final answer” to any policy debate. Which scientists do you listen to? Science is a methodology constantly striving at plausible answers consistent with empirically-validated models, not some abstract end-state to ‘known knowns’. Epidemiological and climate models employed to predict outcomes of highly uncertain and only partially understood processes often yields results which are “sociological”, tuned to getting politically correct answers. These abstract predictive models, untethered to empirical validation, may well be “worse than nothing”.
Appeals to science and predictive models have dominated the advocacy of policies by the power triumvirate – lawmakers, bureaucrats and the mainstream media — to mitigate perceived threats to human welfare, be it the Covid pandemic or climate change. Yet such appeals are ultimately political. Perhaps the last word lies best with the towering American essayist H. L. Mencken, who wrote that “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, most of them imaginary”.
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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