Friday
Apr192013
by 
Bishop Hill
Bishop Hill Far fetched and fatuous
Apr 19, 2013 Economics Lord Stern's latest wheeze is the startlingly fatuous idea that we are in the midst of a carbon bubble. The argument goes that markets are overvaluing fossil fuel assets which are worthless because they will have to remain under the ground so we can meet our emissions targets.
The market's valuation of fossil fuel assets seems to me to be a rather rational recognition that we need fossil fuels in order to keep the lights on. The idea that politicians will choose to let the lights go out in preference to burning gas and coal seems just a tad farfetched to me. They might try it but any that did try it would not be around for long, I would say.
Richard Tol describes Stern's ideas as "far-fetched fiction". That sounds about right.
Reader Comments (48)
Verging on the unbelievable, this concept. Yet I have seen it aired elsewhere in the columns of the Guardian. Stark staring bonkers.
Have to hand it to the Guardian, they're aren't going down without a fright!
Grrr grammar, needed 1 more preview.
With the crash in carbon credits, any bubble about to burst is the Green Energy one.
Sir Nick Stern became Lord Brentford.
Brentford is where most of Robert Rankin's books are set. Rankin refers to his work as "far-fetched fiction". Rankin's books are about as credible as the later works of Stern, but a lot funnier.
- Wow The BBC's Roger Harrabin agrees with your logic and he is NOT on the BBC news now hyping up this "Global warming Scare Story OF The Day" making emphatic weighty statements like "Like scientists say if we are stop Climate Change much of these reserves can never be burnt !.. yes there is carbon capture & storage, but mumble, mumble doesn't work"
.. well in a parallel RATIONAL universe
..So I switched off the radio and came here for santiy.
- CO2 LIMITS Of course the whole premise is "fantasy island" cos most of the world never signed up to binding CO2 targets ..some signed up, but fudge the data & only a few nutcase countries actually adhere to any targets & they are offshoring their industry to countries that don't like China, Russia etc.
Stern is clearly barking.
As an aside I wrote to him (recorded delivery), detailing why his graph for decreased crop production was misleading see below.
Needless to say the arrogant nutter did not respond.
Lord Stern of Brentford
House of Lords
London SW1A 0PW.
25th April, 2012.
Dear Lord Stern.
Your Review on the Economics of Climate Change (2006) concluded that the benefits of strong, early action on climate change far outweigh the costs of not acting. In particular your Review points to the potential negative impacts of climate change on water resources, food production, health, and the environment. Not surprisingly it has had a profound effect on Government Policy since.
As a plant physiologist I am particularly interested in your conclusion that high temperatures impact adversely on agricultural production. As an example you show how high temperatures result in marked reductions in yield on cool-season crops. This is illustrated in Figure 3.4 of your Review.
This figure is quoted as been taken from Wheeler et al. (1996). However on reading this paper it is apparent that Figure 3.4 is not a full description of the findings which are presented in Fig. 11 of Wheeler’s paper.
This figure shows the relationship between the number of grains per ear, and the maximum half-hourly temperature in the 5-day period ending at anthesis for crops grown at current, 380-390 umol.mol-1 CO2, (open triangles) and elevated, 684-713 umol.mol-1 CO2 (filled triangles)
It is clear from the original figure that any adverse effect of elevated temperature is entirely compensated for when accompanied by elevated CO2. Exactly the conditions which are projected in the future. Data that is missing from the figure in your Review.
Do you not agree that removal of this data paints a misleading and overly pessimistic picture of future agricultural productivity?
I await your comments with interest.
Yours sincerely,
Dr. Don Keiller (MA, PhD, Cantab).
Good letter, Don.
The idea that politicians will choose to let the lights go out in preference to burning gas and coal seems just a tad farfetched to me.
Why? How do you think we got into the present mess?
It is through guff like this that these green whack jobs truly earn and deserve the title of ecofascists.
Consider - totalitarianism is the belief that the state should control all aspects of public life, so that no goals matter but the state's.
Here we have Stern arguing that fossil fuel companies are overvalued because their resrves will never be extracted. This can happen, however, only if individuals' goals of being able to afford not to freeze to death count for nothing, and if companies' goals of being able to operate their workplace using affordable heat and light likewise count for nothing. This would only occur if the only goal permissible were the state's, so that the state forbade the use of fossil resources.
Stern is thus assuming a priori that the state agenda of managing the sky, regardless of cost or impact on individuals, is the one that will be implemented. This assumes some form of totalitarianism.
Look also at the EU vote on rigging the carbon market earlier this week. In this Telegraph article (http://www.telegraph.co.uk/finance/newsbysector/energy/9997868/EU-climate-change-policy-in-crisis-after-MEPs-vote-against-high-CO2-prices.html), someone called Julia Michalak of something called "Climate Action Network Europe" angrily declared: "Its outrageous that parliament seems to value polluting industry more than Europe's green future. "
Are we paying attention here? People's actual lives and livelihoods matter less than something totally abstract - the state of sky in 100 years' time - and failure to see this makes Julia is very angry. There should be one goal, the state's goal, and nothing should stand in its way. Julia Michalak's seems to me to be the very cynosure of a fascist attitude.
I Googled Climate Action Network, and sure enough, its funding shows it has received millions - mostly from the European serf (http://www.climnet.org/about-us/caneuropesfundings).
When a government funds groups to lobby itself, and those lobby groups have a totalitarian anti-individual anti-company pro-state agenda, how is that not an emerging tyranny?
This is pretty much the line ("asset stranding" as a business threat) that Lord Deben took at his recent Oxford Seminar. Then Dieter Helm tore him into tiny pieces in the questions.
I'm pleased that most of you are catching up with reality.....
The Stern Report had the same credence level and the same purpose as the WMD Dossier.
BTW what is the "right to pollute" price of "carbon" these days ?
have we seen a massive rise indicating that the market thinks Stern is right ?
It's an upside down hockey stick !
a $50 price was predicted, but actually it's $3.55 : see the Andrew Bolt Story
1. Nobody notices typos (hardly anyone, anyway)
2. Your posting was better with the error, witty even.
http://www.speakers.co.uk/our-speakers/profile/nicholas_stern
You can book Lord Nickolas Stern for After Dinner and Motivational speaking Engagements.
Scrapping the Barrel Nick .Think the Green Eco Bubble may have burst for him.
Applicable to such classes as road sweepers, shelf stackers and sewer cleaners, perhaps it should also apply to politicians:
"In tort law, a duty of care is a legal obligation which is imposed on an individual requiring that they adhere to a standard of reasonable care while performing any acts that could foreseeably harm others."
BBC News 24 "Papers" last night (23:30-23:45) mentioned this. One journo, from the Sun, reckoned that nobody cares any more about climate change since 2008, as economic problems are more immediate.
The other journo, who's name I forget, was a lifelong freind of Stern and his summary was that if Stern says it, then it must be true, 'cos he is so brill, etc. Totally unsceptical viewpoint from a professional journalist, but to be expected, I guess.
Is there going to be a Hutton enquiry to whitewash Stern?
Here's an edited version of my comment on Unthreaded earlier this morning:
The Guardian's absurdly scary story, “Carbon bubble will plunge the world into another financial crisis”, is based on a report by a group of “leading economists” headed by Nicholas Stern claiming that fossil fuel reserves are grossly overvalued by stock markets. This is so, it says, because
It goes on to observe that
So far, so scary. There are, however, a couple of problems. First the reference to “internationally agreed targets” is linked (by the Guardian!) to a report about the outcome of the Copenhagen conference in 2009, a conference universally acknowledged to have been a failure, leaving, as the link says, “months of tough negotiations to come” – months that have turned into years without any discernable outcome. And second, the statement “if these agreements hold” and the picture caption reference to “legally binding carbon emission targets” are utter nonsense: there are no such agreements as the Guardian’s own link demonstrates.
It seems those stock markets have got it right.
I keep hoping we've reached Peak-Stupid but the vertnumists keep outdoing themselves.
When will economists stop believing they are real scientists? Stern is getting as deluded as Hansen.
"The idea that politicians will choose to let the lights go out in preference to burning gas and coal seems just a tad farfetched to me.
Why? How do you think we got into the present mess?"
Apr 19, 2013 at 9:54 AM | Unregistered Commenter Roy
One of the big problems with our system of government is that you don't need a brain to be a politician.
Just realised this is just a re-heated story.
http://www.guardian.co.uk/environment/2012/jan/19/fossil-fuels-sub-prime-mervyn-king
So that's last January, with a headline of
Somewhat misleading working, IMHO, as it sounds a bit like a warning from the BofE, whereas it's actually to it. Guess who from?
Follow the links and you get to:
"The Carbon Tracker initiative is the first project of Investor Watch, a non-profit company established by its directors to align the capital markets with efforts to tackle climate change. The board of Investor Watch includes Mark Campanale and Jeremy Leggett."
Jeremy Leggett has done very well out of AGW, from his early time with Greenpeace, he has written a couple of books and hit the jackpot with Solar Century: http://www.solarcentury.co.uk/about-us/company-profile/. A perfect FIT for Lord Stern and his carbon trading consultancy: http://www.ideaglobal.com/corporate/sir_nicholas_stern.html
It's probably a good thing I'm persona non grata on the Graun these days: I think it's reached the stage where the only rational response to their idiotic naivety and scaremongering is to point and laugh. Still, I'd like to be able to log on just once more, when the whole AGW edifice crumbles, to say "I told you so".
There is an interesting arcticle here, challenging the idea of carbon offsets. When greens fall out....
http://www.redd-monitor.org/2012/10/02/why-does-ideacarbon-believe-that-carbon-offsets-reduce-emissions/
"IDEAcarbon presents itself as a serious company. “We are at the cutting-edge of policy and market intelligence,” states the company’s website. IDEAcarbon was founded in 2007, by Shandi Modi (an economist) and Ian Johnson (former Vice President of the World Bank). Lord Nicolas Stern took part in the launch of the company. Stern is vice-president of IDEAcarbon’s parent company, IDEAglobal, and he’s on the advisory board of IDEAcarbon."
@Turning Tide
When that moment comes...I shall cheerfully pass the message on from you. I take it you have had your posting privileges suspended at the Grun. I am in danger of the same no matter how carefully I try and tread. Anything seriously challenging the alarmist view is still liable to disappear without trace. You are not alone in giving up the unequal struggle...but the comments section is a very different place to where it was a few years ago thanks to your and others efforts.
We are still all in the pay of Big Oil , of course.
Pointing and laughing is VERY DEFINITELY STILL NOT ALLOWED.
(Sorry this is off topic, Bish, and please censor if you must. I would just like to take this opportunity of thanking Turning Tide for his efforts over the last few years at the Grun. I have enjoyed them even if many ueber-alarmist loons in the comments section of the Guardian have not.)
Buying opportunity.
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Heh, TT, I swore years ago that I'd dodge out before schadenfreude struck, but now I believe I'll have to put that off until the next existence.
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Perhaps we should be very concerned. These AGW bloviators want to destroy the value of carbon based fuels by assigning costs and taxes to their use that make them worthless.
These powerful people, from the American President who is on record wanting to bankrupt the coal industry, to the con-artists making phony claims about fracking, want us to be forced to leave these resources in the ground, never to be used.
Crazy? Clearly. Dangerous? Without a doubt. Self serving? Look at the evidence. Deceptive. so it seems.
But be warned: They want us to leave the tech age, while they lord it over us.
So - how is the world supposed to keep the lights on if we don't burn fossil fuels..?
Here's an idea - let's use wind.
Yesterday's contribution to UK electricity demand (VERY windy) - 12%.
Today's contribution to UK electricity demand (high pressure in control) - 1%.
Oh - and this is UK government policy, is it..?
Got any more daft ideas, Mr Davey..?
"at least two-thirds of these reserves will have to remain underground"
Why? They weren't there to begin with.
Marginally O/T.
Today on the Daily Politics show, Andrew Neil interviewed a labour MP and a conservative MEP. He was taling about the European Carbon Credit market and how recently the EU Parliament had not supported a floor price for carbon credits whereas at the beginning of the month the UK Parliament had introduced a floor price for carbon credits.
Andrew Neil was concerned that UK industry was at a disadvantage due to the minimym price that UK industry has to pay for carbon credits when compared to their European counterparts (not to mention the developing world where there is no carbon tax).
The ignorance of the conservative MEP was startling. He either did not understand the very valid point that Mr Neil was making, or he did not consider it to be a problem. He seemed completely unconcerned that UK companies have to pay about an extra £13 per tonne compared to EU companies, nor that the UK government had put in place an escalator which over the next 7 years may well double that additional expense. The MEP seemed unconcerned that this may make UK industry uncompetitive and may cause them to downscale, or relocate abroad with loss of jobs.
At least the labour MP did recognise the problem. Her response was that perhaps it would be necessary to place a carbon tax on imported goods. Hey ho, one can see a trade war developing with that proposal. Further, it only addresses part of the problem. Whilst theoretically such a tax would level the playing field within the UK market place, it would do nothing to promote the competitiveness of UK exports. If in developing countries their industries operate without the encumbrance of a carbon tax, whereas UK industry has to bear that tax, UK industry will not be able to manufacture at a cost which would compete in foreign markets with goods manufactured in countries that either impose no carbon tax, or reduced carbon tax (eg., EU companies that are being taxed at only about €3 per tonne of carbon).
It is not surprising that governments (and hence their citizens) are in such difficulties if the interlectual capacity of the MEP and MP interviewed are typical of the ruling class. it would appear that Lord Stern share's their infliction. A warmer UK would be nothing but a god send for its citizens, industry and agriculture. Unfortunately, although global warming may have stalled, for the UK temperatures are dropping. CET since 2000 shows a drop of some 0.5degC. More worrying is that for the winter months, the drop in temperature since 2000 is some 1.5degC. the Uk is getting colder and this has significant adverse consequences.
What we need is the production of energy at as cheap a price as is possible to provide stable and plentiful supply. The cost of energy has a knock on effect in all walks of life and the cheaper that it is, the better..
@Jack Savage
Thanks for your kind comments.
I don't think I've just been suspended: I think I've been booted out permanently. I haven't been informed about what I did that was apparently so heinous, and the mods do not reply to emails - even politely worded ones just asking whether I'm going to be allowed to post again. Naturally, I signed on again using a string of "turn"-related alter egos (so they'd know it was me), all of which were similarly summarily banned (Dick Whittington was going to be my next one).
If they boot out all the sceptics, I suppose it enables the usual suspects to maintain their belief that the public at large at clamouring for action on AGW: it reminds me of that old joke about the Catholics thinking they're the only ones in heaven!
Richard V...how ironic that a group of Conservative MEPs made up about half of the margin in the EU vote against propping up the carbon market. Further more they were defying party orders in doing so.
Turning Tide:
A bit OT, but they are probably blocking you by IP address - if you force your router to generate a new one (google for the steps to take) you may be able to register a new name (so they say).
I too have stopped posting, as it became tedious replying to those who believe "there is no evidence (TM)" to refute CAGW, along with those who abandon the scientific method by shrieking " THE ICE IS MELTING - WHAT ELSE CAN IT BE!!!!!!"
richard verney
"At least the labour MP did recognise the problem. Her response was that perhaps it would be necessary to place a carbon tax on imported goods. Hey ho, one can see a trade war developing with that proposal."
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I can't. Right off the bat I'd say, it's illegal under EU law for trade within the EU (interfering with the single market) therefore involving EU fines. Also probably out of the question for trade outside the EU which is mostly conducted under treaties negotiated by the EU.
A special tax of that sort sounds like a complete non-starter. I'm surprised the Conservative MEP didn't know that and point it out.
@Mr Bliss
Thanks - I suspected it was IP blocking, though I think it's probably done manually rather than automatically (new personas get to make a few post before they get banned).
I note that the BBC web coverage of this has dredged up the notorious coloured-in photo of water vapour coming out of the Eggborough chimney again - I complained about this the last time they used it, but no reply.
Apr 19, 2013 at 5:00 PM | cosmic
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I think that the labour MP was suggesting a carbon tax be put on goods imported from non EU countries, eg. those imported from China, Asia, India, Latin America, Central America, USA etc. The idea being that that tax would help level the playing field for UK industry that has to pay the carbon tax introduced this April.
The irony is that we close down our Aluminium and Steel Industries and relocate these to places like India to meet UK emission target/regulations and then we import back steel sheet, rolls, rods, wire, aluminimum products etc, and then (it is suggested that) we impose an extra import levy, namely a carbon tax on the material being imported. This then means that for example our car industry will have to pay more for their raw materials. This is a doubly whammy since they will be paying a UK carbon tax on the energy used in the UK, and a carbon tax on the raw materials imported. This will place them at an even greater disadvantage compared to the European Motor manufacturers who only pay a nominal EU carbon credit price of about £2.50 (and falling) and nothing on the raw materials that they import when producing their European cars.
It appears that the UK is going alone. The EU has all but abandoned the EU carbon credit scheme, but the UK has set a very high minimum floor price on the UK equivalent. This is completely out of kilter with the rest of Europe. In todays economic crisis, the last think industry needs is an extra tax that will make it even less competitive. The chancellor was hoping for an export led recovery. That has not happened, but the prospects of exports contributing significantly to the recovery of the UK economy has been dealt a very large body blow. The introduction of this minimum floor price on April 1st, was no April fools joke, but it is the result of the action of a fool. that is the major problem facing the world today. Government is led by fools who have no experience of running a business in the real world, and there is a chasm between the day to day lifes and experiences of the political class and those of the ordinary citizen.
The trade war I was talking about was between the UK and hina, Asia, India, Latin America, Central America, USA etc , not that with the EU (since as you quite correctly state, the UK could not impose an additional import tax on EU manufactured goods).
The Beeb is deliberately misleading readers with the image which implies alarmist smoke emissions from a UK chimney.
Any reasonably competent Environmental Correspondent would know that the Clean Air Act 1993 prohibits the emission of "Dark smoke "
http://www.legislation.gov.uk/ukpga/1993/11/section/1
If Stern is so clever why doesn't he short sell Big Oil stocks? He could make a killing and save the planet at the same time. What could possibly go wrong?
Apr 19, 2013 at 8:25 PM richard verney,
"I think that the labour MP was suggesting a carbon tax be put on goods imported from non EU countries, eg. those imported from China, Asia, India, Latin America, Central America, USA etc."
I doubt even that's legal. It might attract retribution against the EU as a whole being in defiance of agreements negotiated on the UK's behalf, and Westminster has made itself only the EU regional assembly. In any case, import the goods into say Holland, whereupon they become goods legally held and taxed in the EU with duties paid, and erecting tariff barriers against imports from another EU country takes us back to obstructing the single market and heavy fines. I suppose there's the counter example of alcohol and tobacco duties, but I suggest they were sorted out long ago, and this was not.
"It appears that the UK is going alone. The EU has all but abandoned the EU carbon credit scheme, but the UK has set a very high minimum floor price on the UK equivalent."
Yes.
Westminster has obviously prided itself on saving the planet and hoped to take a moral lead. There was also the idea that this was going to amount to stealing a march, The City would be set up to make a mint from carbon trading, and the new green economy would take off with dirty fossil fuels dumped and a green economic miracle, with the Cameron government the acknowledged heroes.
It involved two inapplicable assumptions:
The major economies would accept this and operate in lockstep to save the planet, thereby supporting a rigged and artifical market.
The dreams of decarbonising the economuy, windmills, energy efficiency, electric cars and all the rest ot it, were remotely practical.
The answers are:
They do not.
and
They are not.
Now Westminster, collectively, has gone off, and dragged us off, down a major blind alley, worse, a mire, at vast expense. Oh shit, oh dear! What to do? You can hardly admit a mess up on that scale. Best to blag it out and hope something turns up, and if it doesn't, WTSHTF, it's no worse for you than fessing up now. The faecal material might impinge on the rotary ventilation equipment on the other lot's watch, whereupon you can pop up and say, "They messed it up, we never had any time for this rubbish".
But basically, as soon as the Chicago Carbon Exchange collapsed, the EU was kidding itself that it could take such a route alone, and if the UK government thinks it can go it alone with the EU backing away, they don't have subsidised bars in the HoC, they have a free crack house.
To be a bubble it needs the public mood to be the sole driver pushing the price higher.
The truth is that carbon prices are dropping despite the fact that many of media still maintain that "we have to decarbonise the economy".
Lord Stern is Far fetched and Fatuous but still very dangerous. Let us hope that the Green Bubble breaks first.
Stern is employed by $100 billion carbon trading specialist hedge fund owner Jeremy Grantham. Said it 100 times. Don't let me put off any loonies from calling him a communist or an environmentalist.
cosmic
Thanks. Some common sense in a sea of madness. However the insurance industry still loves climate change.
Lord Stern's ... argument goes that markets are overvaluing fossil fuel assets which are worthless because they will have to remain under the ground so we can meet our emissions targets.
So has the good Lord put his own money where is mouth is and shorted fossil stocks ? Or this another of his alternative-orifice, political correctness outbursts ?