Wind waltzes across Texas

Relatively unknown to many Anericans is the rapidly growing success of renewable energy in America. California is the significant leader in solar energy and Texas is the predominant wind energy state.

As reported on CBS Morning News this week, there are 24,000 renewable energy jobs in Texas mostly in the wind sector. That is more than 1/3 of coal jobs in the whole country. Further, over 16% of the electricity produced in Texas comes from wind energy at the end of 2017.

What may be surprising is former Republican Governor Rick Perry deserves credit for pushing a bill to expand the electric grid to draw power from the wind turbines. This action is vital as to power cities, the electricity has to be transferred from the plains areas where wind blows so strongly.

This makes Perry’s relative silence on the subject frustrating in his role as the director of the Department of Energy. He is doing the heavy lifting for the President as he pushes for more coal use. With the renewable energy jobs growing at double-digit per annum clip, one would think Perry might want to talk about expanding the nationwide grid.

Let me close with a reminder of the town of Georgetown, TX that is 100% powered by renewable energy. Republican Mayor Dale Ross noted in the CBS news interview that he is a Reagan Republucan, but breaks with his party on climate change. Ross, a CPA, wants to meet with the President as his Town Council voted to select the lesser and more predictable cost model for energy which is renewable energy.

Too many people debate renewable energy as a jobs vs. environment issue. This is an old argument and is no longer true. The market forces and development have made renewable energy more affordable. As a result, the jobs are growing. Just think of the wind waltzing across Texas.

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Pope is at it again

Last week, Pope Francis again revealed why he is a global leader. Leveraging the biblical teachings that God wants us to take care of our environment, he reiterated his concerns on climate change to oil executives. Per a Wall Street Journal article called “Pope Francis Criticizes Continued Search for Fossil Fuels at Meeting with Oil Executives,” he encouraged oil executives to find ways to leave fossil fuel energy in the ground. Per the WSJ article:

“’Civilization requires energy, but energy use must not destroy civilization!’ he said at a Vatican climate change conference attended by top executives including Exxon Mobil Corp. Chief Executive Darren Woods, BP PLC Chief Executive Bob Dudley and BlackRock Inc. Chief Executive Laurence Fink.

At the conference, co-sponsored by the University of Notre Dame and featuring nearly 20 speakers Friday and Saturday, the pope said that an estimated 1 billion people still lack electricity and noted that access to energy is an essential resource for escaping poverty. But he warned that a failure to reduce the use of fossil fuels would lead to a ‘spiral of extreme climate changes due to a catastrophic rise in global temperatures, harsher environments and increased levels of poverty.’

The poor ‘suffer most from the ravages of global warming,’ he said, through water shortages and extreme weather which in turn drive mass migration, among other ways.
Pope Francis commended oil and gas companies for adopting policies that account for ‘assessment of climate risk’ and he encouraged the practice of environmentally sensitive ‘green finance’ investment strategies. But he warned that ‘markets and technology’ wouldn’t be sufficient to stop climate change, since our ‘current economic system thrives on ever-increasing extraction, consumption and waste.’

Earlier this year, BlackRock’s Mr. Fink in a letter urged chief executives at global companies to ‘make a positive contribution to society.’ The world’s largest asset manager has played a key role behind the scenes in insisting that companies take action to respond to climate change.

Pope Francis’ meeting with oil executives and investors comes almost exactly three years after the publication of his encyclical Laudato Si’, in which he called global warming a major threat to life on the planet and said it is mainly caused by human activity. In that document, which as an encyclical ranks among the highest levels of papal teaching, the pope blamed special interests for blocking policy responses and indicted the market economy for plundering the Earth at the expense of the poor and future generations.”

With the US President announcing his intention to leave the Paris Climate Change Accord, other global leaders, like Pope Francis are continuing the push. Ironically, Exxon Mobil’s shareholders voted (the day before Trump’s announcement to leave the Accord) to obligate the company leadership to inform them of what they are doing to address climate change. Fortunately, US cities, states and businesses are picking up the baton dropped by the President. The US has passed the tipping point on renewable energy, in spite of the President and his EPA head’s efforts.

Pope Francis should be commended for leading the charge. Taking care of the least of us has been a mantra of this leader. I recognize he is not perfect, but is concern for people and the environment is meritorious. And, unlike Messrs. Trump and Pruitt, the pope is a scientist, with a Masters in Chemistry and has worked as a chemist.

Messers. Trump and Pruitt – it is the Environmental Protection Agency

Almost one year ago, the President of the United States announced a plan to withdraw from the Paris Climate Change Accord making the US a very isolated country on the world stage. That announcement both betrays and galvanizes further the significant efforts and science behind America’s push toward renewable energy and conservation.

Yet, that is only part of the attack by this administration on our home planet. Under the tutelage of Scott Pruitt, the Environmental Protection Agency, has decided to have an all out war on science and the environment. The orchestrated removal of climate change science data accessible by the EPA website and the repositioning, demotion or firing of some scientists, is indicative of a parent wanting to mask the fact they do drugs from their kids.

Pruitt has also tried successfully and unsuccessfully to let companies pollute waterways and the environment with fewer repercussions. The fact we have a global water shortage is irrelevant. He has also championed the ability for industry to question the EPA’s data. That may sound good, but industry has challenged data for years and, as a country, we do not adhere to the Precautionary Principle.

This principle states that if it is believed an industry is polluting the environment, then they must prove they are not before going further. In the US, industry has to be proven they wronged people many years after the fact. The reason Erin Brockovich is so famous is it is rare to win against industry. The sad part is people have died or been made ill by then. The Pruitt change is to let industry cherry pick data more easily. I should note the flame retardant industry used a study that had nothing to do with that issue to show the retardants were safe – it was proven they cause cancer in firefighters, toddlers and mothers.

Last week, a new report came out that noted the Outer Banks of North Carolina will be the hardest hit region by rising tides by the end of the century. Yet, the report eliminated any reference to man’s influence of climate change. It should be noted a few years earlier, the NC General Assembly refused to accept a similar finding, but paid for a report that used the past 100 years sea level increase as a guide for the future showing an increase of 8 inches versus 39 inches per the scientists. Apparently, that report has been proven faulty.

Finally, a report by the United Nations has estimated the failure to address climate change will cost the world $100 trillion in US dollars. Some have cried foul over this number, but I would add a study sanctioned by the world’s largest pension scheme (plan) investors in 2010 estimated the cost of repairing climate change problems in the $10 trillion to $20 trillion range. The key word in both is trillion.

We should recognize these numbers are guesses backed by science and some rationale. I would quibble less if the numbers are toward either end and focus on the observation that doing nothing will cost money and a lot of it. Hurricanes are more severe now when they hit shore from elevated sea levels. The costs to fix the damage run in the tens to hundreds of billions range. When you multiple just the hurricanes by these cost fixes, then one can see how the numbers can rise.

If that does not scare, there is a new term that should called “sunny day flooding.” These are days when high tides flood the streets of coastal cities when no storm is present. These days are increasing significantly in places like Miami, Hampton Roads, Charleston, New Orleans, etc. In the next fifteen to twenty years, some of these cities may have fewer non-flooding days than flooding ones.

So, Messers. Trump and Pruitt, you can choose to play ostrich all you want, but the people that care about our home need to move forward. It would be nice if you were an enabler rather than a blocker.

Sustainability

Sustainability is an underappreciated word. It is essential to most aspects of life, such as exercise, relationships, saving, or business or governmental decisions.

Beginning with exercise as an example, you need to start out like you can put out. Think what you are trying to accomplish and do sustainable exercises. I used to jog often, but my efforts would wane and I would need to start again.

Now, I exercise daily after I shower for about fifteen minutes altering the routines each day. They are a series of Yoga, Pilates, isometrics and light weightlifting. I balance that with 2 to 3 mile walks or hikes and yard work. My goal at age 59 is to be flexible and toned able to get around on my own for the rest of my life.

The same holds true with financial decisions. A word of advice is pay over time what your budget can support. Save with each paycheck to create a dollar averaging effect that is not hinged on stock market rises and falls. Be wary of buying on ego – buy on sustainability (master bedroom downstairs will become a must at some point and most cars and SUVs look similar no matter the price).

Our government could learn this as well. We are borrowing from our future to make a long running pretty good economy a better one. We are on an unsustainable path toward debt and we have exhausted a few measures that would let us recover from the inevitable fall.

We are reversing a trend of treating our environment better by removing some needed regulations and allowing polluters to pollute more. We are peeing in our own swimming pool. At some point, there is a financial and health reckoning with these environmental degradations.

Sustainability is the key. It may be a boring word, but it is an essential one. Start out like you can put out.

Headwinds and Tailwinds to the Economy

Presidents get too much credit and blame for the economy. They can provide headwinds and tailwinds, but global market forces tend to control what happens. By headwinds, I mean the wind is against the economic growth, with tailwinds aiding economic growth.

In the US, we are under the third longest economic growth period in our measured history with 103 consecutive months of growth. We have also had seven consecutive years of 2 million plus jobs created. And, the stock market more than doubled under Obama and continues its rise under Trump. These are great numbers. But, before we pat ourselves on the back too much, not everyone has benefitted and wealth disparity among economic classes has been widening for the past thirty-five years.

Economists I have watched project the good news to continue for the year, but several have cautioned about the future and if we don’t address the inequity, we will have major problems on top of other concerns.

On the tailwinds ledger, the global economy continues to grow and the World Economic Forum projects a 3.9% increase for the year. In the US, the cut back on regulations, plus the reduction in new ones over the rates of the past, have given more confidence to businesses (more on this later). Plus, the reduction in corporate tax rates will help fuel some growth, provided these companies who are sitting on cash, choose to invest it in their people and business. And, with more money in many people’s pockets, this will add some fuel.

On the headwinds ledger, several economists have noted we are robbing Peter to pay Paul, leveraging our future with even more debt. Not only did we not address the expected increase in debt taking it from $20 trillion to $30 trillion in 2027, the tax law will increase it by $1.5 trillion. The interest cost thereon will take a greater bite out of our budget. But, other headwinds are of concern. Retrenching from global markets and trade agreements replacing them with binary ones, will be dilutive to growth. Not investing as much in science and innovation is a major concern to Joseph Stiglitz, a Nobel laureate in economics.

This will be heightened if we restrict immigration. What seems to get lost in the argument where some have become too cold-hearted in my view, is immigration is accretive to the US economy. Plus, the people immigrating tend to be more entrepreneurial and better educated, in many cases. These sh**hole countries that someone demeaned are sending us more educated people than reside here in the states, on average.

We should not fail to remember that “innovation is portable” so says David Smick, an economic advisor to Ronald Reagan, Bill Clinton and Jack Kemp, one of the smartest Congresspersons who considered a run for President. If we do not provide an inviting place, innovation may be hindered. I should note that Steve Jobs was born to Syrian immigrants to the US. What if they had been denied entry? Apple might not have ever come to fruition.

Finally, not all regulations are bad, so restricting regulations may cause headwinds down the road especially with more freedoms given to pollute the environment and take advantage of customers. This is a developers mindset. Remove obstacles to build, but leave the clean up for others. Unfortunately, we taxpayers are the others. We citizens, that must drink and breathe more polluted waters and air and realize the impact of climate change, are the others. As coal ash deposits have taught us, there is a cost to environmental degradation.

So, we need to be mindful of what we are facing. I have communicated with numerous Congresspersons, Senators and the President, that we are avoiding some elephants in the room – debt, climate change, water crisis and income inequity. In my view as an Independent voter, passing a tax law that increases the debt was extremely poor stewardship, as we cannot cut our way out of this problem. The math won’t work.

 

Good energy news on this cold, snowy day

Global citizens are rightfully concerned the US President is pulling the US out of the Paris Climate Change Accord, but progress continues as “we are passed the tipping point on renewable energy.” Even the US pullout cannot stop the train, as states, cities, businesses and other countries continue the push. It just means the President and his team will not be at the adult table on this issue and may not be invited at all.

Here are a few miscellaneous energy tidbits that should offer encouragement.

Per the UK Based organization Carbon Tracker, here are a few highlights from the past year:

  • more than 1/2 of the US coal plants in existence in 2010 have been closed;
  • more than 1/2 of the remaining coal plants in Europe are losing money;
  • the UK has slashed electricity from coal usage from 40% to 2% in the last five years; and
  • there have been big strides in China and Australia on reducing coal usage.

Per the Federal Energy Regulatory Commission, the five member, Republican dominated agency denied the request by Department of Energy Secretary Rick Perry to fund the building of more coal-fired and nuclear plants. This was a surprise move given the make-up of the committee. I would call this decision as not wanting to throw good money after bad.

It should be noted, it is not just coal that is giving the FERC commissioners pause. The US division of Westinghouse Electric Company had to declare bankruptcy for cost overruns on a new nuclear power plant for SCANA, the South Carolina utility. As a result, the new plant is being shuttered and SCANA is being sold to Dominion Resources, so as not to overburden SC citizens with the cost of the lost investment.

The International Energy Agency in their 2017 Energy Outlook notes the cost of new solar photovoltaic electricity has declined by 70% and wind energy has fallen 25% since 2010. It should be noted the IEA has tended to favor fossil fuel energy in past releases. China, the new country leader in the climate change fight, will be investing US$360 billion more in renewable energy by 2020. Plus, the price of solar has fallen so much in places like Zambia, Saudi Arabia and Mexico, it has won bidding contests against fossil fuel energy sources for projects.

Finally, any discussion on future energy cannot exclude the declining cost and increasing capacity in battery storage. Per Bloomberg New Energy Financials, energy storage will double six times between 2016 and 2030. Elon Musk just helped southern Australia go live with a major battery installation and 21 states in the US have planned projects on energy storage.

All of the above stories are important because it has always been a financial argument to combat the environmental concerns, whose long term costs have been undervalued. Now, the financials are favoring the renewable energy engine, so market forces will continue to force the ultimate demise of coal-fired energy, which started with the lower cost of natural gas. If a company can find a clean energy source which is cheaper and more predictable long term, that is easily the better path forward. If you don’t believe me, just ask companies like Google, Facebook, Walmart and IKEA to name only a few.

 

 

The biggest global risk to the west

Ian Bremmer, the President of the Eurasia Group and a CBS News Correspondent cited his group’s report on CBS This Morning regarding the greatest global risk. In essence, he said the number one risk is an emergent China filling the void being left by a retrenching US from the global leadership stage. Here is what Bremmer said in the interview about China.

“They  have the strongest leader in Xi Jinping they’ve had at least since Mao [Zedong]. And because the United States is America first, it’s transactional. It’s unilateral. It’s undermining a lot of alliances. You put those things together and suddenly you actually have a China that is willing to engage in what is increasingly a geopolitical vacuum,” Bremmer told “CBS This Morning” on Tuesday.

“In other words, this is the first time we’ve ever seen as U.S. leadership erodes, no one else has been standing up. Now the leader of China is saying we’re prepared to stand up whether it’s on climate or the global economy, you know, regional security, you name it, that’s a big change for the world.”

Bremmer cited an easy example. The US President said he is going to cut funding to Pakistan as they are not doing enough to combat terrorism. The sad truth is it really does not matter that much, as China supports Pakistan more than we do and will step up. I mentioned in a recent post that twice now, Xi Jingping followed the US President at two world events in Davos and Vietnam. The Chinese leader gave the speech the US President usually gives regarding working together globally. Trump spoke of maximizing only American interests.

Not only is this counterproductive, it will actually hurt our share of the global pie making us less relevant.There are two things to note. First, the position that Xi is advocating used to be a foundation of the US Republican Party. The party sold its soul to support the short-sighted and bullying President who gives the illusion of being a populist.

Second, the US cannot shrink to greatness. We are actually doing pretty well as a country and were so when Trump took office. It is the distribution of wealth that is the problem and this President has done very little to resolve that problem. Lessening our global position not only will hurt our economy, it will make us less safe.

If Trump continues in office through one term, this period will be viewed by historians when the US made an unforced error and ceded its global leadership position. This is the exact opposite of what the President should be doing.