I hope investment managers read some of this, beginning with the scientific basis for abandoning climate change alarmism, which leads to a more rational investment and economic understanding. It is all integrated and all makes sense once you reach a good understanding of the science and where the knowledge system has gone astray.
This week in science I feature data showing that arctic sea ice is at its highest in 21 years, and in the US hurricane damage per GDP is on a long-term decline as we gain mastery over the weather.
In the category of Investment/economics I have articles explaining how
• ESG policies are harming the most vulnerable,
• the complete failure of wind and solar in the recent Alberta cold snap,
• how renewable diesel is a fantasy,
• how fossil fuels dominate despite trillions spent on alternatives,
• why net metering is nonsense,
• the decline of offshore wind,
• how green energy is causing the decline of the mighty German industries,
• how Hertz is getting rid of many of its electric cars,
• and how the EV backlash is building.
Finally, in the Absurdity category, I return to the crazy situation of Alberta, which has as much energy available in the ground as anywhere on Earth, yet almost has a grid failure because of the wind and solar capacity forced on them by government policies.
Arctic Sea Ice Soars to Highest Level for 21 Years Despite the contestable claims of the ‘hottest year ever’ (and even hotter in 2024), Arctic sea ice on January 8th stood at its highest level in 21 years. Last December, the U.S.-based National Snow and Ice Data Centre (NSIDC) revealed that sea ice recorded its third highest monthly gain in the modern 45-year record. According to the science blog No Tricks Zone, the reading up to January 8th has now far exceeded the average for the years 2011-2020. It also exceeds the average for the years 2001-2010, and points directly upwards with regard to the average for the years 1991-2000. The graph shows the scale of the recovery compared to all the years tracked in the modern satellite record.
Scientific Integrity and US "Billion Dollar Disasters" - The first independent evaluation of NOAA's "billion dollar disasters." Also read the author's commentary about the paper titled
An Egregious Failure of Scientific Integrity.
"NOAA’s claims to have achieved detection and attribution are not supported by any scientific analysis that it has performed. Given the importance and influence of the dataset in science and policy, NOAA should act quickly to address this scientific integrity shortfall.
"Consider the case of Hurricane Idalia, which made landfall in the Big Bend Region of Florida in late September 2023. Initial catastrophe model estimates suggested insured losses of $2.5 to 5 billion.16 The initial NOAA estimate reported on its billion dollar disaster website in the immediate aftermath of the storm was $2.5 billion. However, actual insured losses have been far less than was estimated in the storm's aftermath, totaling officially about $310 million through mid-November 2023.17 The historical practice of NOAA's National Hurricane Center for estimating total direct hurricane damage was to double insured losses to arrive at an estimate of total direct losses (see Weinkle et al. 2018 for discussion). Even accounting for some additional insurance claims to be made, it is unlikely that Idalia would reach $1 billion in total direct losses under the NHC methodology. Yet by December 2023 NOAA had increased its loss estimate for Idalia to $3.6 billion. What is the basis for NOAA's estimate of Idalia's total losses being —12 times insured losses? That is unknown."
The National Hurricane Center estimates losses due to hurricanes and as in the example above, NOAA does the same. If NOAA is being objective about reporting, the two should be similar, or at least their differences should average out over time. Yet, the table below shows that in 89% of the cases NOAA's estimate was higher or much higher than the NHC's. Do you think there might be some bias in NOAA's reporting when their leaders make statements like "Climate change is supercharging many of these extremes that can lead to billion-dollar disasters" and "Climate change is creating more and more intense extreme events that cause significant damage"?
There is a better way to assess hurricane damage than the inflation-adjusted dollar amount. Inflation is important, but it does not measure economic activity or assets at risk. What if we considered damages as a percentage of everything produced in the US - the GDP? The graph below shows that over the period 1980-2022 the trend line is downward. If you think of the country as if it was a large department store, then losses as a percentage of sales are going down, down down and the business leaders and shareholders are happy.
A Short ESG Guide: Economic Problems "One of the ironies behind the economic costs of moving to renewable energy (and products), is that poor countries are often hurt the most because they can least afford to pay unnecessarily high prices for energy and everything else. The current approach to mitigating climate change — government subsidies, tax credits, and mandates — guarantees inefficiency and waste. No one knows which technologies and which companies will be most effective. As a result, government subsidies are just as likely to go to “bad apples” as to good ones. Not only that, but feedback on the productivity and effectiveness of recipients of government largess will be slow and convoluted — allowing unproductive companies to continue operating for years. In a competitive free-market system, prices, profit, and loss would cause the most productive firms to receive more dollars while unproductive firms go out of business."
Disappearing wind turbines almost leaves Alberta, Canada in the dark "If our leadership was paying attention, this wind disaster in Alberta should put a serious chill on pushing wind power as a viable solution, not if you want to see a resilient grid that is able to withstand extreme winter temperatures. Cold weather can kill, and it’s when people need a grid to be the most reliable. Yet as we’re watching in real time in Alberta, the only reason the province isn’t literally freezing to death is because the province still has a massive amount of gas power plants, some hydro and coal, and enough transmission connections to keep the lights on.
"According to the Alberta Electricity System Operator on 1/12/2024 at 2115hrs natural gas produced at ~84% of its capacity, coal was running at 99%, hydro at ~35%, solar 0%, and wind…at 0.3% of nameplate capacity." That zero solar and 0.3% wind - they cannot deliver exactly when most desperately needed.
Renewable diesel plans unrealistic: analyst "...there is a “yawning gap” between biodiesel and conventional diesel prices. Biodiesel sells at a premium that averages between US$1.50 and $2 per gallon." "That gap has been as high as $5 per gallon recently and it is even greater when comparing renewable diesel prices to conventional diesel. Biodiesel and renewable diesel are simply uncompetitive fuels if regular market forces were at work. It is a market solely driven by government policy and that policy is dictating no more than four to 4.5 billion gallons of annual demand by 2025. “That is what all the investment bankers missed,” said Irwin."
The world still depends on fossil fuels despite trillions for clean energy "...according to the IEA numbers, from 2015 to 2023, governments and industry worldwide have spent $11.7 trillion (inflation-adjusted) on clean energy. For context, this is basically the equivalent of all the goods and services produced in Germany, Japan and the United Kingdom combined in 2023. Simply put, an extraordinary amount of money and resources have been allocated to the transition away from fossil fuels for the better part of three decades."
"So, what’s the return on this investment? According to data from the Statistical Review of World Energy, from 1995 to 2022, the amount of fossil fuels (oil, gas and coal) consumed worldwide actually increased by 58.6 per cent. Specifically, oil consumption increased by 34.2 per cent, natural gas by 86.7 per cent and coal by 72.7 per cent. There was, however, a small decline in the share of total energy provided by oil, gas and coal during that time period, falling from 85.6 per cent of total energy use in 1995 to 81.8 per cent in 2022. In other words, after tens of trillions of dollars spent on the transition away from fossil fuels, consumption declined by 3.8 percentage points as a share of total global energy."
Net metering nonsense "When you buy a plane ticket the day before a trip, do you feel it should cost the same as when you buy it a month in advance? When you order an Uber during a hurricane, do you feel it should cost the same as when you order it on a sunny day? If you say yes to these questions, you don’t understand Economics 101 – and you may be a fan of net metering. What these scenarios have in common is tightness in supply. Under normal market circumstances, restrictions in supply lead to higher prices. Price changes provide an efficient mechanism to eventually have more supply available – unless someone, usually the government, messes with the market. My expectation is that California will ultimately not buy back anyone’s solar power during the times it is worthless. They will also have to build reliables to lower electricity prices during the evening crunch. What do you think?"
How Germany's Government Is Forcing That Country's Industrial Decline Through Energy Policy "Incredible: German electricity demand has fallen to the lowest levels since before reunification in 1990, as its economy falters. Germany intentionally turned off its extraordinarily cheap and reliable baseload nuclear power, rapidly, during a generational energy crisis. Putin didn't make them do it. America didn't make them do it. Even German public opinion has turned dramatically back in favor of nuclear. German leaders made this choice, to turn them off and keep them off. Look at these graphs of annual electricity. It's like Germany is committing WW2-style bombing raids against its own infrastructure."
Alberta Premier Blames Renewables and
How did Alberta wind up facing blackouts in the extreme cold? Alberta is facing blackouts in the extreme cold "...we’ve had reduced imports and very little wind. And of course, when we get into the peak period from 4-7 p.m., at this time of year, we don’t have any solar power." So, in a province that has such an enormous amount of energy stored in the ground as fossil fuels, they barely escaped a blackout because the unreliable and intermittent wind and solar power forced onto their grid cannot deliver when most needed.
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