The Catastrophic Economic Impact of Cap and Trade

Cheeky Bastard's picture

Here on Zerohedge the main goal is to present the readers with facts that remain hidden under the radar of the traditional ( soon to be dead ) information providers. Also, we try to provide information which is useful to our readers, and from which our readers can learn something new.

So i decided to present to you a specialist view on the economic impact of Cap and Trade legislation. Based on scientific facts which are, at least, contingent in their nature, this legislature will not only impact every single part of your life, it will also limit your basic freedoms, and not only that; it will put a price on that which makes you a human being, which makes you a living organism. I will not give my personal opinion on this topic, but i think that the article which i will post here will give you a clear picture of what my opinion on this matter is.



Testimony before
The Energy and Commerce Committee
U.S House of Representatives

April 22, 2009

My name is David Kreutzer. I am the Senior Policy Analyst in Energy Economics and Climate Change at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

I want to thank the members of the Energy and Commerce Committee for this opportunity to address you concerning the economic impacts of cap-and-trade policies.


What Is the Problem with Carbon Dioxide (CO2)?

Carbon dioxide is not a toxin, is not directly harmful to human health, and is not projected to become so--even without legislative or regulatory action. CO2 is fundamental to all known forms of life. Indeed, studies show that increased CO2 levels are beneficial for crop production.

Nevertheless, driven by concern that increasing levels of CO2 (and other greenhouse gasses) will lead to a warmer world and cause environmental damage, there have been calls to significantly restrict emissions of all greenhouse gasses, but especially CO2. Among the proposals to reduce CO2 levels are carbon taxes and cap and trade.


The Costs

The typical cap-and-trade proposal seeks to reduce CO2 emissions by 60 percent to 80 percent by 2050 where the comparison year is usually 2005. The Center for Data Analysis at The Heritage Foundation did an analysis of the costs of meeting the goals of the Lieberman-Warner bill, S. 2191, last spring. The report on this analysis is attached.

Our analytical models are not suited to making projections beyond 2030. Nevertheless, the economic impacts of this cap-and-trade program in just the first two decades were extraordinary. The estimated aggregate losses to Gross Domestic Product (GDP), adjusted for inflation, are $4.8 trillion. By 2029 the job losses in the manufacturing sector will be nearly 3 million. This is over and above the nearly one million manufacturing job losses that most economists predict will occur even in the absence of global-warming legislation.

The manufacturing job losses are shown in an attached chart taken from a study of an EPA mandated 70 percent cut in CO2. Also attached is a map showing the relative importance of manufacturing to a state's economy.

Some of the workers forced out of manufacturing will find employment in the service sector, but overall, the economy loses jobs. In some years, this overall job loss exceeds 800,000.

Note: Current law already has many provisions for curtailing CO2 emissions. They range from local renewable-portfolio mandates to increased nationwide Corporate Average Fuel Economy (CAFE) standards to subsidies for ethanol production. While the reductions in CO2 emissions are included for the purposes of meeting the emissions targets, the considerable cost of these programs is not included in our analysis. This is because the costs are attributable to existing legislation and will occur even without additional laws or regulations. Of course, if they were included, job and GDP loss totals would be even higher.


Why Is It So Costly?

Eighty-five percent of our energy use today is based on CO2-emitting fossil fuels. The ability to switch to non-CO2-emitting energy sources over the next 20 years is limited and expensive. Therefore, significant cuts in CO2 emissions require significant cuts in energy use. The energy cuts, in turn, reduce economic activity, shrink GDP, and destroy jobs.

The cap-and-trade schemes, as well as more straight-forward carbon taxes, limit emissions by making energy sufficiently more expensive that they cut their energy use. In addition to the direct impact on consumers' budgets for electricity, gasoline, heating oil, and natural gas, these higher energy costs force cutbacks on the production side of the economy and lead to lower output, employment, and income.

It is important to note that these losses occur after consumers, workers, and businesses have adjusted as well as they can to the higher energy costs. After adjusting for inflation, household energy prices will rise 29 percent above the business as usual prices, even though consumers will have switched to smaller cars, moved into more energy efficient houses, and made greater use of public transit. The lost comfort, convenience, and satisfaction of making these changes are not included in our calculation of economic impacts, though the costs would be very real.


Green Stimulus?

Production drops even though firms will have adopted more energy efficient technologies and processes. To reiterate, the trillions of dollars of lost GDP and the hundreds of thousands of lost jobs occur even after homes and businesses have made the switch to greener methods. The hoped-for green-job gain is a mirage.

Attached is a copy of a page from a 1945 issue of Mechanix Illustrated. It shows a cyclist pedaling a jerry-built generator to power hair dryers in a Parisian beauty salon. Though not the sort of green job that is currently talked about, this human-powered generator illustrates why costly energy policies are not a stimulus.

A person on a bicycle generator would do very well to average 150 watts of output during a day. At this level, a modern-day cyclist/generator could produce electricity worth 10-15 cents per day at retail prices. With sufficient subsidies, people could be induced to power such generators and the proponents could then point to the "green" jobs that have been "created." What is not seen is the value of the cyclists' forgone output elsewhere. Even at minimum wage, the value of the labor is $52.40 per day. So each human-powered generator would shrink the economy by over $50 per day. This is not an economic stimulus.

Alternative energy schemes that require subsidies or that require protection from competing with conventional sources of power cannot be economic stimuli--their output is worth less than their inputs. An industry whose inputs cost more than its output is making the economy smaller and will necessarily reduce overall income.


The Tax

Implementing a cap-and-trade program to cut emissions by 70 percent creates a transfer within the United States that is equivalent to taxes on the order of $250 billion to $300 billion per year, just for the years 2012 to 2030. The combined transfer is about $5 trillion in just the first 20 years. This takes the purchasing power from the households and turns it over to the federal government or to whomever the government assigns the rights to the permits for emissions (allowances). This would be one of the largest taxes in the economy--almost twice as large as the highway use taxes.

Because the transfer, in this case, is similar in magnitude to the lost GDP, we need to be clear on the distinction. A cap-and-trade program with an emissions reduction profile similar to that of last year's Lieberman-Warner bill, will cause an aggregate $5 trillion of transfers after it destroys $4.8 trillion of national income (GDP).

In colloquial terms, the pie gets smaller by nearly $5 trillion and then a $5 trillion piece is cut out and redistributed.

Back-Door Protectionism

Cap-and-trade programs frequently include provisions to protect domestic industries from competition with firms in countries that have not adopted similarly costly mechanisms for reducing CO2. While the intent is certainly understandable, the provisions create the possibility of a protectionist wolf in global-warming clothes.

Putting these protectionist policies into operation is a bureaucratic nightmare. Every product from every country will need to be judged to determine the level of advantage it may have due to different carbon-cutting regimes. Since different countries can have different approaches and since different manufacturers can use different technologies and processes, assigning an offsetting CO2 tariff will necessarily involve arbitrary decisions. The potential for a trade war is very real.


The Gain

Analysis by the Environmental Protection Agency (EPA) shows that a 60 percent reduction in CO2 emissions by 2050 will reduce CO2 concentrations by only 25 ppm in 2095. This reduction would affect world temperatures by 0.1 to 0.2 degrees C. In other words, it makes virtually no difference.


The Center for Data Analysis at The Heritage Foundation analyzed a proposal to cut CO2 emissions by 70 percent. Such a cut would have little impact on global temperatures. At best, the trade-off is trillions of dollars in lost income and hundreds of thousands of lost jobs versus a fraction of a degree change in average world temperature 85 years from now.


Call your congressman, and DEMAND of him to vote NO. Also, you can use this post as a thread where you can discuss Cap and Trade, Chicago Climate exchange and all other, topic related, issues. I will post the links for the graphs mentioned in the above article, as they are to big for me to post them here. 



Manufacturing job losses 

State-by-state Manufacturing Intensity  


EDIT: here is a presentation given by Lord Monckton, a former advisor to Margaret Thatcher. It is 1hr 35min long, but worth a watch.


Thank you for reading 


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Anonymous's picture

Us here in the United States would hope President Obama is not stupid enough to sign the Copenhagen treaty. This whole treaty is a scam designed to suck money from the US taxpayer and redistribute the wealth to overseas scum.

We have enough problems in the US without trying to support 3rd world lowlifes. Global warming is a lie created by some to control the many. I say fuck those who would try to control us in the USA. China steals our technology and it seems many are trying to get a leg up on the US. This treaty is unfair to 30 US citizens.

Anonymous's picture

Consider this.

for 10,000 years of base history, our economics have been simple. Cultivate the land or starve. Risk/Reward. Cause/Effect. Input/Output. Action/Consequence.

Very matter-of-fact.

It is only since the great war (the first one) that our acceleration away from this tendency has become parabolic.

Sumeria lost favor with the land. Mesopotamia. Maya. Rome. Assyria. Persia. Egypt. The misinterpretation of a changing climate brought each of them to their knees.

There is not a relevant example in history in which a failure to manage our natural resources effectively did not play a critical role in the collapse of established social power.

How many more times will we repeat the cycle?

bjennings's picture

In practice I'm firmly against cap 'n' trade.  In theory I'm not.  The simple fact is we must conserve the planet's resources and ultimately conservation goes counter to GDP growth.  Who has brainwashed us to think that GDP growth is a must to maintain a healthy quality of life.  Why is this so?  Would we cease to exist?

In my senior year we had 3.3B on the planet.  Today, 20 or so years later we have 6.5B on the planet.  At what point do we have too many people.  You know yeast in a bottle of fermenting wine has the greatest population explosion just before the sugar is depleted.  The quick die off of all the yeast follows.


time123's picture

It all has to do with new taxes. It is a way to raise revenues.


Anonymous's picture

Cheekster, you Bohemian Jug Fucker you, other blogs are even picking up your post.

Anonymous's picture

Great Post, here is another related article worth reading about how China is capitalizing on our self inflicted economic suicide to save the planet (based on unproven and corrupted science, prove null hypothosis first you a-holes).

Deficient Market's picture

First let me start by saying that I've always appreceated your posts and comments CB, and I most often find myself strongly agreeing with them, and the issue of Cap-and-trade is also one that I agree with you. However, I wish people would distinguish between climate change and cap-and-trade. The two issues have absolutely nothing in common. Climate change is based on facts and requires action, while cap-and-trade is nothing more than a political/favoritism/campaign tool that uses climate change as an excuse. Seems that everyone that speaks out against cap-and-trade also tries to find cracks in the facts behind climate change resulting from CO2. Considering the amount of money out there that stands to be lost to cap and trade, there are plenty of pre-packaged statements available to use for this purpose. Unfortunately even Mr Kreutzer who otherwise sounds like a reasonable and educated person is either willingly or unwillingly succumbing to this need to try and discredit climate change in order to discredit cap-and-trade. His starting comment stands to lose a lot of his audience as it is one of the standard prepackaged statements in favor of increased CO2 levels based on them not being toxic and "good for plants". That is the easiest way to discredit oneself, as all I need to do is put that person in a room of pure oxygen (or even 10% higher than normal would suffice), which is also "non-toxic" and essential for our well-being, and we will see how that person prospers (there's limits to everything).

For anyone that still wants to go and say there are no facts to support the warming climate, here you go - This year the arctic ice sheet shrunk by 1/3rd more than the yearly norm that's been recorded since satelites were first used to measure it more than 3 decades ago. This is the also the first year in modern human history that both the northwest and northeast passage have been free of ice - Russian shipping companies are already making good use of this to avoid the Panama canal (wish I could short it). Therefore those that think that the same film crew that was used to fake the moon landing is now spreading images of drowning polar bears are wrong. The fact that for the first time ever we're starting to see new species of bears that are hybrids between polar bears and grizzlies speaks a lot for the timeframe since such an event was last seen.

For anyone that believes that we are in a cooling period because their local temperatures have decreased or the really cool summer we had this year in the US, here is a little lesson on physics: as CO2 gas becomes dissolved into our atomosphere, it increases it's density. Increased density means increased heat transmission (this is why water is a poor insulator, while vacuum is the opposite). This means that the global temperatures across the earth become more balanced - i.e. cooler towards the equator, warmer towards the poles - exactly what we are seeing. If you think to yourself "what's so bad about that?" you need to remember what keeps the majority of our weather system going - it is these very temperature differences that drive everything from the gulfstream to the colder oceans in the summers that then result in cloud formations and hence rain for those plants that will supposedly make farmers fat from increased CO2. When you start playing with the balance of these differences, whether it be by equalizing temperatures across the globe to increasing the global temperature by fractions of a degree (which has already occured over the past 50 years regardless of whether that was due to the solar cycle or not) you start messing up the balance of weather across the globe, and that is exactly what is happening right now. Adding another 0.1 to 0.2 degrees across the globe can have catastrophic consequences that will make Katrina look like a pimple on an elephant's ass.

Another effect of all these extra particles in the atmosphere is that they create more points for condensation. This means clouds will form and discharge faster than before - lots of rain near the coast lines, less rain inland. All those farmers in the breadbowl hoping to make an extra buck from their over-CO2'ed plants will find out that they kind of need water for that... Oh and guess what, they are already seeing more sunshine in recent years and keep drilling deeper wells to get the water they used to have at the surface. Sure, that last part is probably also in part due to their higher crop density, shorter lifecycle, etc, but we do not yet have the technology to measure the actual effect of less rain.

So in summary, if you happen to find any evidence that counters any of these (new laws of physics have been discovered before), then please post them. However don't post if it is just a statement that "so-and-so said the warming climate is not true, due to a reference statement from so-and-so saying it is not true". Such statements are all I've seen so far, and they are not helping the case against cap-and-trade any more than tin-foil wearers help in exposing real conspiracies.

Therefore please don't try to use climate change to argue against cap-and-trade, it is detrimental to the remainder of your arguments, which are otherwise very valid. There's enough wrong with the idea of cap-and-trade and the way it is being put together that you don't need to try and fit a square peg in a round hole.

Anonymous's picture

Climate change denialists never seem to have a working understanding of chemistry or physics. You simply cannot continuously dump millions of metric tons of greenhouse gasses into the atmosphere without consequences. Cause and effect. Not really that complicated at the end of the day.

tip e. canoe's picture

thanks for sharing this as well.  props to you & the poster above for finding a middle way. 

Anonymous's picture

While I agree wholeheartedly that this is indeed a scam that is many orders of magnitude above and beyond the last, most recent financial bailout scam - some of the numbers and arguments made are very narrow-minded and quite irresponsible.

"schemes that require subsidies or that require protection from competing with conventional sources of power cannot be economic stimuli--their output is worth less than their inputs."

I call bull. Nearly every industry has been incubated (in one way or another) until it could stand on its own two feet. Many mature industries (such as fricking oil and agriculture) are still incubated.

Without such behavior, no industry would get off the ground, as inherent natural protectionism in a legacy system and abusive, legal, anti-competitive practices by that system's operators mitigate any attempts to breach the status quo.

We're driving cars instead of horses for this very reason (among others). And we're driving cars instead of riding trains for the same. There are very few products developed which exploit an unrecognized virgin need, or even organically develop to satisfy an existing one better.

Success must be tied to the product, not the individual selling it.

While this initiative is obviously a scam, cost is a relative perception. It will always be cheaper or "more profitable" in the short-term to maintain our legacy infrastructure. Sometimes this is the prudent decision.

As investors, or financially astute individuals, we should all realize such dynamics are contingent on behaviors and preferences of a functioning trade system or market (consensus on a standard of contract, i.e. money and the informed assessment of risk/reward).

If consumers demanded recycling, recycling is a hot and profitable commodity. The value or utility associated is entirely subjective and has no bearing on absolute costs, except in hindsight. Then it is a feedback loop.

Furthermore, such initiatives cannot be measured in the traditional sense of the "next-best-foregone-alternative" or opportunity cost since that is a subjective measure as well.

At some point, we have to have an absolute in the equation which marks a definable reference point. None exist because they cannot be measured proactively. We do not recognize the implications of decisions until they pass, and simply estimate them by measuring the interactions of subjective variables against other subjectives (looking for the driving mechanism).

Recycling is a perfect example. No one cares, because we don't feel the effects. While this bill would certainly make people feel the effects - it is not an absolute. It is a manufactured relative position, orchestrated by some committee who is unqualified to weigh the costs and benefits for all of us, and likely stands to "profit" substantially from it.

A real absolute effect (in energy) would be more akin to mandated monthly caps on output and orchestrated rolling brown-outs (or ending current subsidies which depress true costs). That would get a solar panel on every roof in two seconds.

While brownouts are still a stupid idea (since it is again manufacturing a fake demand), it is less stupid than creating an opaque faux market, driven by favoritism. Such direct and forceful actions though, will garnish a direct and forceful populous response, provided they are not unfairly attributed to specific individuals based on discriminating characteristics.

We cannot force behavior change, we can only persuade it, forcefully.

I know this probably makes little sense to most. But the point is that Cap n Trade is aptly called cap n tax, and it is just another perverted attempt to transfer wealth and control. It cannot work. For the reasons above, it is a false market with absolutely no means of incubation or perceptible benefit to preserving real social order. It is another attempt to skirt the real issue (of cleaning up the damn environment) and pass the responsibility off onto someone else, while collecting a fat paycheck.

That being said. We must meet these 50-70% reduction targets in that time frame. Whether you believe in AGW or not is irrelevant. This problem is much bigger than some cosmopolitan mathematics churned out of a meteorologist's rectum. We're talking about the whole kit-n-caboodle.

"Profit" in industry is a mirage. It is impossible to make more than 1-2% off of anything but dedicated, diligent and industrious, VALUE-ADDED hard work - unless you are skimming off the top. We have to fully account for the variables and make their effects tangible to those who make decisions to get real progress. They'll NEVER go for it.

If we accounted for the full costs (and not just those convenient to ourselves, our markets, and our customers) of mining, producing, and distributing - there would be no profit, or very little. How much $$ would an already leveraged farmer make if he or she had to pay to clean pesticides form the water rushed downstream?

What about our multinational conglomerates? Would Exxon be one of the most profitable companies (ha!) in the world if they had to put everything back the way the found it after they took all the oil? What about if they even just had to pay for the mining and exploration costs themselves?

Just like banks/speculators cash out on their unsuspecting customers, seeking rent without providing a tangible benefit, we are doing the same to our immediate ecosystems. It is the exact same scam, perpetrated on a world-wide level. There is room for feedback and resistance in the system, but once you skin the sheep, it's done.

If government wants to curb emission, do it. Don't fuck around creating some bs market. Repeal the incubations we have in place and recognize the true cost of fossil fuels. Break the monopolies. Build a damn rail system. Make waste disposal a per-unit cost. etc. etc. etc.

These are very simply and effective solutions to seemingly (and falsely) complex problems.

How do you curb the rising costs of transportation and food? Build a community garden down the block.

We're not talking Quantum Chromodynamics here, but it does take a significant behavior change at the individual level to put the pressure on.

We have utility monopolies in 55 of the 47 states (China has a lienhold against California and Florida). We have centralized transmission and antiquated equipment that was paid for at taxpayer expense while these companies have been reaping profit for nearly a century. Same with the fucking railroads. They have not spent a dime because they have absolutely no incentive to improve service. No competition. No skin in the game. Nothing on the line. No accountability.

Return competition, REAL competition to power generation and transmission and let the market forces determine the best technology and the base costs.

Only with a fundamentally balanced system, could we ever have hope of success in incubating a worthy replacement for a specific component or leaning on a variable to produce a desired result. There are many paths but only one way. We exist in pursuit of perpetual equilibrium. The system must be balanced, and it will be balanced, by one means or another. It can only be be manipulated so far.

We have to embrace competition, or be wiped out. Such is the way of every species or ecosystem we have observed.

Sorry for the flagrant rant. Wait. No I'm not.

Call your senators and reps. Twice weekly. Stop this cap n trade fiasco.

Sternly written letters on business stock, delivered by courier speak volumes. Media mail is $2.28. How much is a gallon of gas goona be when this thing passes?

In fact. As a rule of thumb, stand against any bill that is longer than 20 pages. If they can't fit the purpose in 20 pages, in plain English - they're hiding something.

tip e. canoe's picture

don't be sorry, it was quite brilliant actually.  never read a more cogent argument in favor of gaia and against this current charade.

thanks for sharing. 

fyi -- someone here shared this last week with me in reference to Henry George.  thought you'd might find it interesting as well:

Anonymous's picture

Thanks for the kind words and the interesting link. I'll certainly check it out.

As I said, none of this is rocket science. A few basic principles, which conform to the nature of the universe - and are applied unilaterally can have a tremendous positive net effect on our perceived utility.

The problem is, that we have to share and play nice with others. Most of us missed that day in kindergarten.

Einstein may not have had relativity entirely right - but one thing is certain - we have never observed energy being created or destroyed, in aggregate. That being said, what makes us think we can do it with "wealth" or "Value"?

Economics follows the same principles as elementary particle physics. It is subjected to the same mechanisms of energy conservation, thermodynamics, entropy, and applied forces over a measured displacement - when it is even remotely honest.

When we deny that irrefutable nature, we're living in a fantasy world.

Anonymous's picture

a commentary by Perry Arnett – 18 April 2007

1) most members of Western Industrial Civilization are about to enter a ‘Bottleneck’ of historical magnitude and significance;
2) a confluence of various events is acting to cause the Bottleneck;
3) some of those events are: the peaking of production and ultimate decline of cheap, readily available exosomatic energy resources; the economic bankruptcy of nations; the depletion of water, soil, critical minerals, sea life; etc.
3.1) The entire basis upon which Western Industrial Civilization is built, — growth, and ‘Capitalism’, as a form of political economy, is based on the theoretical construct of ‘perpetual resource discovery, acquisition, development and exploitation’; and thus, as finite resources decline and ultimately deplete — as they must, capitalism and perpetual growth must decline and ultimately cease also!
4) humans are but one of numerous life forms and follow the same biological laws as do those other life forms;
5) humans thus, have no more probability for ‘perpetual existence’ than do other life forms;
6) the central banks of numerous nations have run the printing presses so fast and so long of late, that the world is awash with ‘liquidity’ (some 18-24% increase globally during 2003/2006), such that it allows false price-sensing for things like stocks and real estate; but few realize that the more dollars they hold the less they are worth; thus, there exists an intellectual disconnect for many between one’s real economic status/lifestyle, and one’s perceived economic status/lifestyle. This makes global economic collapse more probable than most realize.
7) “international resource wars” — wars fought to secure for the victor natural recourses — have begun in earnest, and the preemptive subjugation of weaker nations by other nations is now part of the permanent natural resource acquisition and exploitation scenario;
8) since some categories of weapons are so cheap (for their perceived ‘benefit’), these wars will be fought with ANY weapons available, including nuclear, chemical and biological weapons, and the prospect for Nuclear, Chemical or Biological ‘Winter’ is more imminent than ever before;
9) while some individual humans will of course pass through the Bottleneck, most humans, and their highly complex cultures, civilizations and societies will not;
The quality of water, food, crops, soil, air, have all deteriorated during the past 50 years or so and at such a rate, that many parents are today, probably more well nourished than are their kids, and they are probably more well nourished than are their kids!; so that the diminution, and lack of general intellect, self-discipline, will power, delayed gratification, and the increase of antisocial and criminal behaviors, diseases-of-civilization, etc., — all are probably due to fossil-fueled exponential population increase, and the consequent disastrous effects of those populations on the environment.
Those best equipped to survive the coming collapse are those with ‘mongrel genes’, hardiness to disease, and ruggedness of constitution; — NOT the rich, the privileged, the educated, the well to do! Some few will make it — most will not!
There will be a vast reduction of human populations from present numbers down to something FAR BELOW ‘carrying capacity’, i.e. LESS than 50 million or so globally, before population numbers begin to rise again to “optimal carrying capacity”.
Lifestyle standards are devolving NOW (as they have for most since ~1979), and they will continue to devolve until within say, five to seven years (2012/2014), when life will be much different for most from what it is today.

Two Key Premises Regarding the Immediate Future
a) the “effective” rate of depletion of “all [petroleum] liquids + NG” [natural gas] will continue to RISE in such a manner that end users, will, this year or next, see effective world “all liquids + NG” depletion rates running at ~15% per annum or more; and,
b) as a corollary and consequence, the severe reduction and loss of grid-supplied electricity to industrialized nations will bring down most all world telecom, banking, credit, governance, etc.; thus, ALL aspects of THIS Industrial Civilization as we know it, will severely decline, and (for all intents and purposes) will stop within a very few years.

Analysis and Proofs:
1) Current “all liquids + NG” depletion rates running at 15% per annum (or more) means the effective end of the ready availability of cheap fossil-fueled energy resources (except some coal) in seven years or so, i.e. ~2014!
2) The loss of liquid fossil fuels will contemporaneously cause the loss of coal also. Think ‘trains’:
Coal-hauling trains (in the U.S.) run on diesel fuel (not coal — or anything else).
Trains haul coal from the mines to coal-fired electrical generating plants, in many cases, hundreds of miles from the mine mouth.
Depleting oil production means less diesel fuel with which to run coal-hauling trains.
Fewer coal trains running means less coal delivered to coal-fired electrical generating plants — per unit of time. [There is only so much rail trackage and coal-loadout infrastructure currently available. What prudent investor wants to build more?]
Coal-fired electrical generating plants produce ~54% of the electricity in the U.S.
Less coal delivered to those generating plants means less electricity generated and fewer oil refineries operating, thus producing even LESS diesel fuel!
Less electricity generated means less electricity available for use and consumption by industry and individuals.
The same principle applies also to coal-hauling trucks and river barges.
Per-capita energy use defines a civilization. Thus, as Richard Duncan suggests, electrical blackouts and brownouts will occur, having been DIRECTLY caused by declining oil production.
Thus, per-capita energy use must continue to decline as it has since ~1979.
«Other factors remaining constant, culture evolves as the amount of energy harnessed per capita per year is increased, or as the efficiency of the instrumental means of putting the energy to work is increased. … We may now sketch the history of cultural development from this standpoint.» — Leslie White, “White’s Law,” 1949
3) A projected depletion rate of ~15% per annum equals ~seven years [1/15 = 6.6], or year 2014/2015 for year 2007 lifestyles to devolve back to ca. 1886 or before lifestyles. Circa ~1886 is an arbitrary date chosen to represent the time at which liquid fossil fuels generally began to create ‘modern’ Western lifestyles, and to allow the creation of this Industrial Civilization. When liquid fossil fuels are gone, lifestyles must of necessity, retrograde back to that of a prior time fueled by something other than liquid fossil fuels.
One can have his “time-to-collapse” interval however he wants it! That is:
An annual depletion rate of 2% allows roughly 50 years for all of a resource to deplete, (and for one to get one’s mind around the concept of the import of that event.) An annual depletion rate of 3% gives one 33 years.
4% gives one 25 years.
5% gives one 20 years.
6% gives one 16 years.
7% gives one 14 years.
8% gives one 12 years.
9% gives one 11 years.
10 % gives one 10 years.
11% gives one 9 years.
12% gives one 8 years.
13% gives one 7.6 years.
14% gives one 7 years; and,
An annual resource depletion rate of 15% gives one just ~6.6 years until the energy resource is, for all practical purposes, GONE! We must remember that we are talking here about the continuance or the cessation of this fossil-fueled Industrial Civilization — NOT patching joints on sailing boats on the shores of the Black Sea.
We should also remember, that as more liquid fossil fuels are depleted, the depletion rate per annum will continue to INCREASE to 50% and higher in the final years, until the resource is ultimately (for all practical considerations) 100% depleted, thus ANY time period one chooses will be drastically shortened as it approaches its own end.
Pick a number! YOU pick the period of time that you would like to give yourself for accepting reality, and realizing the inevitability of the event. One can pick a false low depletion rate and attempt to fool oneself into denying the inevitability, or one can pick a depletion rate that is at or near the ACTUAL, EFFECTIVE depletion rate, and accept the consequences. We all have that choice.

The most probable, critical sequence time-line:
1979 US per capita energy use peaked; still floundering on a plateau in 2006, but ready to fall precipitously (‘cliff’) at any time
2005 World crude oil probably peaked; still on an undulating plateau in 2007; starts off the ‘cliff’ ~2010-2012 or before
2005 World food production (grains) peaked
2008 World Natural Gas peaks (or sooner)
2010 NG ‘cliff’ arrives (or sooner)
2012 US electricity blackouts and brownouts become the norm (or sooner)
2012 US potable, available water peak and ‘cliff’; shortages and waterborne diseases increase
2015 US Health Care System in complete chaos, breakdown and failure; sanitation, drugs, return of communicable diseases, poorer nutrition, etc.
2015 World “Dieoff” begins in earnest; largely starvation, disease and poor healthcare caused
2030 US per-capita energy consumption hits the “30% mark-AFTER peak”, equaling year 1930 lifestyles again (probably much sooner than 2030)
4) With available electricity having declined to less than ~11% or so of current production in the next few years due to the non-delivery of oil, coal and NG to electrical generating plants, and due to poor maintenance of the grids, electrical brownouts and blackouts will begin to be the ‘normal’ case, much of the time, by 2014/2015, seven years hence.
5) Thus, even though the decline toward collapse will be ‘gradual’, and insidious, and steep, year 2007 lifestyles will be thrust back to the equivalent of at least year 1886-, or even to year 1,200 AD-lifestyles, by the years 2014 to 2020. [Hard to imagine? Yes it is!]
6) There will be little difference between living at an 1886-lifestyle, or a 1,200 AD-lifestyle, or a 10,000 BC-lifestyle; that is, once the Collapse and Devolution begins in earnest (which, due to current world events, I believe has already begun), there will be no turning back, and the only difference in per-capita energy lifestyles will be by small matters of degree, measured in most cases by the gross daily caloric nutritional intake available for individual humans: YOU may have 1,000 calories available today, while your neighbor has only 400. ‘Collapse’ will happen fast enough for most, that some individuals, depending upon where they are and how well they are situated, may pass through several arbitrary ‘devolution checkpoints’ or ‘Bottlenecks’, in as little as a day or a week. For others, it may take as long as a few months.
[One might ask here: What is ‘progress’? How do we define that term? How many TV’s can one watch at one time? How much ‘labor-saving’ provided by technical devices is enough to warrant their manufacture and use? How much progress is desired or even wanted? Though relevant, those are topics for another time.]
7) Some Practical Lifestyle Comparisons:
Year 2007 lifestyle: electrically-powered double stacked washer and drier; electrically pumped, in some cases for hundreds of miles, gravity fed, chlorinated and fluoridated water from the tap; switch operated, under-sink garbage disposer; indoor plumbing with unlimited soft toilet paper; “flush a pint of pee to the ocean with 5 gallons of fresh water”!
Year 1930 lifestyle: gas engine-driven wringer washing machine (if lucky); bathe on Saturdays; hand well-water pump near the kitchen sink; slop bucket under the sink drain; pit-dug outhouse WITH a Sears Catalogue
Year 1886 lifestyle: wash board and tub; water drawn from a well; outhouse with NO Sears Catalogue; corn cobs, if lucky
Year 1,200 AD lifestyle: constantly dirty clothes, well water within a mile or so — if safe; bathe once a year; pee in the garden (humanure)
Year 10,000 BC lifestyle — the “Olduvai”: leather clothes; no need for a washing machine!; drink from a spring or stream; pee in the bushes;
8) Opponents of this ‘devolution timing thesis’ may argue with the first premise of cited depletion rates. But a thorough analysis of very recently published data will confirm that Cantarell, North Sea, Ghawar and Canada are all declining at published rates of at least 8% (Ghawar), to 12% (North Sea), 20% (Canadian NG), and 25% ! (Cantarell); and that ~64 oil — or NG — producing nations have already peaked, and only ~36 remain to peak. So by [admittedly] loose averaging, and adding in the inevitable effects of extraneous greed, graft, corruption, bribery, theft, loss, diversion, hiding, rationing, military use, military destruction, hoarding, chaos, inefficiencies, leakage, etc. of energy resources, (overwhich no one has any control!), any “published rates of depletion” are more probably actually at 13-15% average decline rates currently, to the end user, than they are at, say, 2% decline — as opponents might argue.
[And while I cannot offer much proof at the moment of the following thesis, I submit that the recent ~18-24% INCREASE in world financial (fiat) liquidity, is a ‘tightly-coupled proxy’ for, and a derivative of a markedly similar DECREASE in available exosomatic energy resources. That is, I suspect the mechanism is such that since central bankers and other power brokers in governments are fully aware of Resource Depletion Theory, and Oil Depletion in particular, they have created for themselves an ‘ad hoc race’ to see who can drive the other guy into national bankruptcy first(!); ‘money’, in this case, serving as a last ditch GDP proxy tool replacing ‘real’ oil that no longer exists for ‘real’ wealth generation; sort of like playing King-of-the-Mountain. This suggests that as oil depletes further, fiat liquidity will continue to rise in similarly corresponding amounts.]
So while the ‘actual geological depletion rate per annum’ for a field might be only 6%, it will probably be reported as being only ~3.5%(!), yet when the extraneous factors cited above are added in, and are compounded with the actual depletion rate, the ‘effective depletion rate to end users’, (like farmers, grain millers, bread makers, and ultimately consumers), may be easily 15% or more. It is this “effective depletion rate to end users” that must concern us, NOT the ‘reported’, nor the ‘geological’ rate of depletion. It is the number of fewer loaves of bread on YOUR shelf, in YOUR store, on YOUR corner, in YOUR town, TODAY, that matters. Little else! All other depletion numbers are ‘interesting’, but functionally of less value! There are a myriad of ways by which a resource can be ‘effectively depleted’ even though it may not yet be ‘geologically depleted’.
A prioi ‘geological depletion’ has already started the ball rolling, but it’s all the other extraneous factors added to that, that will keep depletion rolling until there is no more oil left! Yes, anyone who argues we are ‘not running out of oil’ is silly; that was settled long ago with the old song: “Yes, we have no banana’s today”! Some will be ‘priced’ out of the oil market; others will be kept out by ‘actual depletion unavailability’, but in the end, ALL, will at some time, find that oil depletion has affected their life in one way or another — some sooner, some later. ‘The Donald’ and Ted Turner may be fighting over that last barrel of crude, but only one can win! Like polio and TB, this imminent regression back to the New Stone Age is no ‘respector of persons’.
9) Thus, the Duncan-forecasted ‘energy cliff of 2012’ should be well started by at least 2012 or before; and the 30% per-capita-energy demarcation point signaling the retrograde back to year 1930 lifestyles should occur by at least year 2014 or before. (I cannot see how it can be delayed until 2030 as Duncan suggests!)
10) There is a human need to tend to diminish and to underreport bad news! Many will thus, take issue with the depletion rates used here. The depletion rates cited are what are currently reported, even though most would rather ‘believe’ depletion rates are in the 2% range or so, thus giving themselves ~50 years or more to face the problem, rather than the 6 to 12 years we may really, only have!
However, as a seasoned inventor and machine designer, I have devoted most of my life to trying to define reality to three-decimal-places. Thus, I have to look at the numbers from the worst case perspective. That is, if, e.g., a machine design can cause harm to others, one must know all the ways in which that potential harm can occur, and all the types of harm that can be inflicted, in order to be able to mitigate those potential worst case events, if possible. In this case, there is no mitigation for the ultimate decline and total effective depletion of finite natural energy resources. So reality must be accepted and reported, and be used in calculating future lifestyle possibilities for potential Collapse survivors.
We know that all natural resources are finite, and that (if exploited) they deplete over time. We can measure how much depletion has occurred in the past so we can reliably estimate how much of the resource is left to be depleted in the future. We can measure depletion rates in real time. We can extrapolate those real time depletion rates into future depletion rates.
The nature of depletion of natural resources per the Hubbert Theorem suggests that the rate of depletion accelerates AFTER the peak of production has been reached (since the easiest resource to extract is taken first), and since it appears from all indications that the peak of “all liquids” has already passed, (or is ‘in-plateau’ at the present time), it seems most logical to use worst-case numbers rather than best-case-numbers when attempting to assess the probable effects of world energy resource depletion on one’s life and on the lives of those one cares about. The Cornucopian-techno-optimist-Pollyanna-denier mindset will NOT serve one well in attempting to glimpse at what the future may hold. Assessing, and facing reality will!
When a resource has depleted to the point that it is either ‘actually unavailable’ or is ‘effectively unavailable’ for an individual, one can say without question that for that individual, that resource does not exist, and is effectively GONE. So, contrary to what the Cornucopian-optimist-denier-obfuscators would like to call it, WE ARE, in fact, “RUNNING OUT OF OIL”! Call it by any other name, but ‘effective unavailability’ is for those who do not have it, the same as ‘NON-availability’. Unavailable oil left in the ground is of no more value to one than is no oil at all!
11) Those who live past the Bottleneck will always be exploiters of exosomatic energy resources; as that is one definition of what it is “to be alive”.
The life contest is primarily a competition for available energy. — Ludwig Boltzman, Physicist (1886)
Thus, per-capita energy use will always RISE to the theoretical limit of available supply, and will consume ALL the energy resource available, if possible.
Secondly, human populations will continue to rampantly INCREASE until a sufficient Die-off-event reduces the need for further population DECREASE. Then populations will resume their biologically-mandated INCREASE.
Thus, the depletion curve for energy resources will NOT be flattened nor mitigated on the back side due to either population decrease, nor due to reduction in per-capita energy use, [as so many Cornucopian-optimists suggest], since, to accomplish either, would require one to change human nature, and that is not possible, now, nor after having passed through the Bottleneck.
«Do you believe,» said Candide, «that men have always massacred one another as they do today, that they have always been liars, cheats, traitors, ingrates, brigands, idiots, thieves, scoundrels, gluttons, drunkards, misers, envious, ambitious, bloody-minded, calumniators, debauchees, fanatics, hypocrites and fools?»
«Do you believe,» said Martin, «that hawks have always eaten pigeons when they have found them?»
«Without doubt,» said Candide.
«Well then,» said Martin, «if hawks have always had the same character, why should you imagine that men have changed theirs?»
«Oh!» Said Candide, «there is a vast deal of difference, for free will—»
Candide, Voltaire
The depletion curve will be ‘flattened’ only AFTER the world human population has fallen so far below the energy resources available for exploitation at that time, that (for our purposes and lifetimes) it won’t matter then whether the depletion curve is flat or not!
12) With the exception of some few individual survival ‘lifeboats’ and ‘retreats’ that may provide some temporary comfort for some few individuals and families for some limited period of time, the “high tech-low EROEI” alternative energy ‘solutions’ propounded by some are NO solution to the macro-decline of fossil fuels, and they will thus, NOT save Industrial Civilization from its Imminent Collapse. There is NO so-called “prosperous way down”! “Powering Down” is not an option. The Road to the Olduvai and the New Stone Age beckons us all!
13) For so long as there are people who have babies, in the macro-sense, there will NEVER be any “destruction of demand” for oil. Thus, the long term trend is for oil to become always LESS available, and for its relative cost to always go HIGHER.
However, some limited “demand destruction” of fossil fuel use WILL occur as population numbers decline aggressively, stretching out the future (back) side of the depletion curve a bit, but significantly, whatever demand is ‘destructed’, will accrue beneficially ONLY to governments and their military forces, who will by that time have total control of all energy resources. Thus, planning for the future lifestyles of individuals and family units ought therefore, NOT be based on ‘demand destruction’ to forestall or influence their devolution back to the Olduvai!
14) The above thesis does NOT include the very high probability of global nuclear, biological, or chemical Resource Wars, and consequent Nuclear, Biological or Chemical ‘Winter’ in the next few years — which will only change things for the worse; time-to-total-collapse will be compressed, and living conditions equating to former times will devolve for most, far more rapidly than otherwise. Die-off of world human populations could reach ~99% by 2030 or before, from numerous causes like typhus, cholera, ebola, sars, unsafe water, no normal medical care, plague, bio-warfare, contagious diseases, etc.
15) Obviously, assumed by all this, is the collapse of the global stock markets, transportation, trade, commerce, mega-food production and delivery, medical care and drugs availability, etc.
Thus, most ALL parts of this fossil-fueled Industrial Civilization will ALL come down in quick succession, at or near the same time; — and it can happen at ANY time.
cf.: Ubiquity, Why Catastrophes Happen, Mark Buchanan

What to do?
Don’t believe ME! Do your own homework; run the numbers for yourself. (If I can find the data, you surely can! I’ve given a few sources, but most are now readily available in the public domain.) Then (if you agree), recognize the inevitability of it all. Entropy reigns! And accept the fact that humans are as prone to Die-off as are other species; accept that we blew it when some of us thought that Cornucopian-growth could last forever, and we burned up all the crude, and polluted the air, the water, and the top soil; and accept that we have no claim to any more longevity than do other living things.
16) Consider this little observation also: that from this point on, NOTHING is going to get any better! That’s right, nothing in your material life surely, and most things in the rest of your life will never get better than they are right now! (…traffic will get worse; taxes will go higher, political corruption will get worse; wars will become only more horrendous and more frequent; individual liberties will be steadily eaten away; food will get more expensive, more scarce and more dangerous; the quality of medical care will steadily decline; your job will only get worse; your commute will get longer; your boss will get crabbier; toilet paper will get rougher; the Internet will get slower; … you get the picture)
BECAUSE of the decline, and ultimate depletion of finite fossil fuels, NOTHING that any of us alive today, touch today, that we consider to be a ‘problem’, will get better in the future, nor will the problems be lessened — that is, until AFTER the Peak Oil-caused world human population Die-off. Then none of those problems will be problems! And they won’t matter anyway. The insane exploitation of fossil fuels created and gave us the civilization and culture we have today; only the depletion of those fossil fuels will ‘solve’ those same civilization — and culture — caused problems. The worse it gets, the worse it WILL get!
17) One might consider thus, that the real meaning of the concept of “Peak Oil”, is simply that when oil peaked, it represented the ‘highest point’ of this energy-driven civilization and culture; the highest potential level of almost EVERYTHING! And consequently, AFTER oil has peaked, that same civilization can only go into irreversible decline. ALL that we have and all that we are essentially, was given to us by, or through cheap, readily available energy resources; take those away and you take away from us ALL that we have and most all that we are!
[cf. again: Helmholtz above]
THIS is the concept to get a handle on: — that human life is little different from other life — unless we exploit energy resources better than other life forms do (we don’t). When we consume to the ultimate depletion of a resource (as we have), then we destroy our own livelihood and civilization. No, humans are NOT “smarter than yeast”!
So, Peak Oil is not just about OIL — it’s about EVERYTHING with which humans interact.
This is the mother of all concepts and events relating to humanity on this earth. It is one of the few “mega-wholistic a prioi” concepts. We ARE carbonaceous life forms ourselves, and we are exploiters, consumers, depletors, and destroyers of carbon-based energy resources. When OIL goes — WE (most of us) will go with it! — and everything that we have, that we are, that we’ve created, that is uniquely ‘human’ goes too.
The realization of the fullness of this concept of the all-encompassing nature of Peak Oil is numbing — but necessary, for one to make peace with what is headed our way.
Example: There will be fewer Steinway grand pianos after Peak; there will be fewer Stradivarius violins after Peak; there will be fewer Rembrant’s after Peak ; — there will be NO 110 piece symphony orchestras after Peak; no 500,000 strong Woodstock’s after Peak; NOTHING that stratospheric oil profits allowed industrialists to use to fund the arts, the sciences, the humanities, literature, research, medicine and the like. That will all be gone very quickly. As oil profits disappear, so will the benefits of those profits. Oil energy, and oil profits provided a ‘scale’ to human existence that will soon disappear and which will be replaced by a new scale, orders of magnitude SMALLER (or lower) in size, scope, breadth, complexity and impact than the present.
Except for those few that may be secretly preserved somewhere, Steinway’s, Rembrant’s and Strad’s will be burned for their heat value(!), NOT saved for their beauty! [Recall the sacking of the Iraqi National Museum at the onset of the current war. The supposed strongest nation on earth could not (or would not) secure those priceless treasures; you think things will be any LESS horrendous in the future?!] Art and music will not go away, however; they will, like everything else, just be down-sized to their proper “carrying capacity” and ‘place’. [Carnegie Hall will soon become a somewhat functional, though unheated, homeless shelter, for a while, rather than remain a hall of (sophisticated) culture.]
Yes, there were Strad’s, Steinways, Rembrant’s, La Scala and ‘rock’ concerts PRIOR to ~1886. However, like the insidious disastrous compounding effects of the cross-cascading defaults of fractional reserve debt, when this oil-created civilization goes, it will take not only what was made available to us BY oil, but it will also take with it most everything that was created ‘BEFORE oil’. [This connection is subtle, I realize, but it is sure.] That is, the culture cannot just devolve back to a prior point in time and take with it the ‘good stuff’ that exists now (as so many hope to do!). It will devolve back to at least ~10,000 BC or so ultimately, and most everything that we know of, that was created between then and now will be gone TOO. It cannot be any other way! [Why? See the following]
Just as when you jump from the high board into a pool, you dive to a deeper level below the water’s surface than you do if you had dived from the low board; so it is that since this oil-driven Industrial Civilization became the high point of human existence (in many ways), it therefore has the farthest distance to fall. So all of humankind, and all our trinkets, or possessions, and ‘cargo’ will not fall to just some arbitrary ‘zero line’, but we will have to fall far below the zero line, and then will have to slowly climb back up to get to the zero line at some time far into the future.
I lived in Las Vegas from 1954 until 1972. There was a “culture of excellence” on the Strip at the time that easily surpassed the best of anything from Hollywood, Broadway, or Paris. Gambling profits were sufficient to fund ANYTHING! And they did! Food, drinks, beauty, art, music — you name it. Imagine this: You are a Musical Director for a major Strip Hotel, and you’ve been given the charge to create a special concert starring say, Barbara Streisand, or Sinatra, Andrea Bocelli, or…?
First, you will have almost unlimited funds at your disposal. Sure, there is a ‘budget’, but what a budget! Secondly, you will have the intangible Streisand and Las Vegas ‘culture of excellence’ reputations to uphold. So, you can hire the very best musicians in the world, bar none! Composers, arrangers, writers, copyists, conductors, instrumentalists, sound engineers, lighting engineers, — and stage techs all over the place. But only the very BEST!
You want to create a “lush string sound”? Hire those crotchety old farts that’ve been playing cello for 50 years and who know everything there is to know about the cello, AND who can sight-read anything you can put in front them producing world-class performance at a first reading! …the best ‘screech’ trumpeters in the world? You can have ANY that you want — take your pick! Of the best trombonists in the world, hire any FIVE! Fly them in from wherever, doesn’t matter. With unlimited money one can buy or create unlimited quality, and with unlimited quality one can produce events of unprecedented excellence. [Only if you’ve been there, and have been associated with that culture to any degree, can you appreciate what I’m trying to refer to here.]
Now, imagine taking away all that: the money, the reputation, the culture, the musicians, their instruments, the intangible concept of what it is to be, or to exhibit “the best”, and — take away the reason for the special concert itself.
That’s what I’m trying to describe here with the demise of Oil. This oil-created civilization was for a while, the “Top of the Mark”, for all intents and purposes. Now it is coming down, and with it will come down ALL that it was. Las Vegas will soon return to being the little oasis [“The Meadows”] in the blow-sand desert that it was in the 1850’s, — as will this current Industrial Civilization with it.
This seems to be the concept least understood by so many; the easiest way to say it is: “the bigger they are, the harder (the farther) they fall”.
18) So, what now?
What to save? What to store? What to procure? What to hoard? HOW to survive?
Understand the difference first, between ‘short term’ survival and ‘long term’ survival:
Short term survival: you won’t have nearly enough of ANYTHING to get yourself through the neck of the bottle!
Long term survival: NONE of what you have will be of any value WHATSOEVER after having gotten yourself through the bottle’s neck!
POINT: What you prep with may get you from THIS current level, to the next lower level of devolution, but the farther down the Olduvai Road you travel, the less ‘stuff’ that will be relevant, and thus, the less ‘stuff’ you will need. The main obstacle to your survival thus, is getting through the “transition period” [the neck of the bottle] between NOW and THEN, and your main priority is, getting yourself from HERE, to the on-ramp that leads to the Olduvai Road. Once on it, you’ll be discarding ‘stuff’ with each foot step taken.
So, do what YOU are comfortable doing; make choices that follow YOUR own definition of “prudence”; if you like, max out those credit cards; re-fi your house; buy all the ‘stuff’ you can possibly imagine having a need or use for. (After all, its only money, remember!?) Realize, however, that it is all expendable; and that NOTHING has any intrinsic value; that all the ‘stuff’ you may acquire now is but a means to a very immediate end; that being, your individual quest for survival from here, to the next level down the devolution ladder.
19) Timing the future:
Take your best shot; I’ve given you my thoughts and timelines; I may be too grave — or not grave enough! Generate your own! However, better to be 10 years early than 10 minutes late.
The Transition Period between NOW and The Immediate Future is what one can prep for. The aftermath of that will come naturally — if we live through it!
After all, it’s only YOUR life!
We are all guests here together — if we can survive what’s coming! Few of us will, surely, and for those who do, life will be vastly different from what it is now. For them, it will truly be “the end of the world — as THEY know it”.
«It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.» — Charles Darwin
Why all this? Knowledge is power — to those who possess it. The cheapest commodity on earth is the produce of another man’s mind.
Perry Arnett

© 2007 Perry Arnett
(May be freely transmitted with proper attribution)

Anonymous's picture

CB, Im embarrassed for you.

If nothing else be consistent. Don't get me wrong. I like reading your articles and enjoy your opinions. I hope (and know) you will continue to write great articles and synopsis.

You claim that this is based on scientific fact in your opening paragraph. Hmmmm...Interesting...

Convieniently, for me, your specialist opinion breaks the subject down into key points.

1. Cost - which is using estimates. You call it fact. The truth is no one can say with certainty. But you (your guest) cleaverly present with certainty.

2. Why is it Costly - your guest goes on to state how costly it will be in the future. Is that in terms of today's dollars? How does he know? Can I peer through his crystal ball? I know your aware of many technologies that were thought to be hocus pocus and too expensive for mainstream deployment. Your typing on one.

3. Green Stimulus? - once again, your guest is looking into a crystal ball and telling us, with certainty that it won't happen. (by the way... a truly rediculous example... im not supprised that he was chosen to present to the most powerful government of the free world... just like Paulson and Bernanke)

4. The Tax - Where are the facts? How does he know? what is he using for his estimates. How can anyone possibly refute when there is nothing scientific presented?

5. Back door protectionism - what! you mean like what the energy sector currently gets. Oil subsidies, exploration subsidies, army protection subsidies? I will agree that protectionism is offensive, but every single major sector in the US ecomomy has protectionist policies, back room deals, and subsidies. But lets tar and feather new technologies.

6. The Gain - once again. Estimates.

As I understand, since the combustion engine, there is no need to improve on technology. That human ingenuity is tapped out. We have nothing further to contribute. Your generation is the pinnicle and we lowly decendents will just sit, stare and look mystified while you tell us how great America is.

Fear Change!!!

Cheeky Bastard's picture

Based on scientific facts which are, at least, contingent in their nature, this legislature will not only impact every single part of your life, it will also limit your basic freedoms, and not only that; it will put a price on that which makes you a human being, which makes you a living organism

Anonymous's picture

And what do you have to say to the unseen costs of no regulation. The fact that my taxes pay for water purification. Health care for increasing asthma. whatever.

Don't get me wrong. Im no militant, and am not a perfect individual when it comes to environmental stewardship. But something is needed to factor in those costs. The old adage, don't shit in your own backyard is true... for all species. But with our expanding population, anywhere we shit is someones backyard. Eventually, someone has to do something about it. While you sit and refute with 'facts', nothing gets done. (do you want a job in the Canadian government - cuz your method is a page out of their handbook. delay delay delay) Every single profiteer on this site, every "Austrian", will tell you that investing in water will be a great investment in the future as it will become a scarce resource. Yet not a single Austrian will admit, the fundamentals behind why. Perhaps because they stand to make money off its scarcity? Im not sure why

Anonymous's picture

Hmmm...too much anonymity! That last post from Mr. Anonymous raises some interesting points, but as the previous writer (in anonymity), I feel obliged to reply to Scuzzbucket (or whatever they called themselves)'s defence of the article that you hereby post.

Only to add that, contrary to Scuzzbucket's mis-understanding, my post is not an attack on CB or his article. My comment simply raises the point that there is a lot of hot air spoken about climate change. It is a subject rife with mis-information. We should approach this subject with due diligence and with open minds.

CB's article questions the potential administration of a Cap and Trade scheme and the financial implications of transition to alternative energy. It does not question the reasons for, or the science behind, climate change.

I justed wanted to point out how important it is for all nations to work together to sort out such an important issue...and some are rather obviously doing less than others.

ft65's picture

>> Eco-Nuts Out to Destroy Life As We Know It

Unfortunately we have done it to ourselves, and we are still in denial. The CO2 debate and climate change are just covers to force the masses back down to a far lower standard of living. The system of usury has collapsed, money has gravitated to the very few (as in the dark ages). It is time for us to go back to our place of servitude.

Our planet can not continue with exponential growth (including population) on a planet with finite resources. The oligarchs are now making their move. You have been duped, and it is far to late to do anything other than to start wars (as we are seeing!)


Anonymous's picture

I pity the average reader who posts on this site. Zerohedge used to be informed and discursive, but has now become the playground of conspiracy theorists and propagandists.

Quite often the answer to a riddle is presented when we ask ourselves "what is the motive?" So let's ask the question, who benefits from continued oil-pumping/ fossil fuel consumption? Answer: The relevant multi-nationals. Who would benefit from a reduction in fossil fuel use? Answer: You and I; Joe public. Who will benefit from discrediting global temperature rises. Answer: The relevant multi-nationals. Who will be compromised by changing weather patterns, death of coral reefs, collapse of ecosystems and food-chains? Answer: You and I; the public.

I don't think anyone on this site disagrees that global temperatures are rising (whilst we might all have different opinions as to why).

CB's post questions who should profit from cap and trade. And whilst the multi-nationals might well be vying for the cash, good governance should ensure that any related "tax" would be directed towards relevant mitigation.

Global temperature rises are an international issue and its resolution requires a commitment from every Country. Whilst I agree that you should ensure that any related tax is well-managed, as a nation you should also be pulling your finger out of your arse and leading by example!

Apocalypse Now's picture

Your avatar should be Mr. T.

Mr. T, if I may call you that-

Perhaps you can't read, most posts here stated we do dispute global temperatures are rising, why?  Because they are falling, and that seems logical to me to look at the data (after the NASA errors were taken out that accidentally made projected temperatures look like a hockey stick graph)

If you want to run around the block with your hair on fire shrieking that we're all going to die while most locations are experiencing record cold temperatures, be my guest - only I pity the fool that can be so manipulated into believing something that someone tells them while their own eyes show them something different (like an economic recovery).

Falling temperatures is inconvenient for the global warming propagandists (cycle with low sun spot activity), so they changed it from global warming to climate change - did you miss that memo, they had to change it because we are cooling?  You may be surprised to learn that the polar ice caps have been expanding - the ice is expanding not contracting, so no worries the polar bears will have someplace to land with all their swimming (assuming you are a climate expert now after watching Al Gore's horror flick).

Your data is wrong - you have to start with the facts on temperature and then from that premise come to a conclusion.  I am embarassed for you because frankly you are not informed on the facts.  Your argument is illogical and an appeal to emotion since you have no facts to support your poorly constructed argument.  Who benefits when we have cheap energy costs? We do - with wage deflation we don't need another tax, it shows up in the prices of products. 

This is just another banker tax (GS), you pay interest and taxes to the same entity and this group wants to grind the middle class down between inflation and high taxes - this is marxist/stalinist thinking.  You see, most people don't understand that the elites push socialism because it makes it easy for them to rule, with little funds any resistance or rebellion is futile - peasants have little political power.  Don't enable their stealing.

Cheeky Bastard's picture


Yes, i am a lobbyist for a Big Oil company and all your oxygen and oil ARE belong to us.

Get real man, I don't give a shit about the climate, or whether the temperatures rise or fall ( actually, historically, they are on the downfall, update your info with something else besides " The Inconvenient Truth " DVD ). The only thing this article is trying to do is to show the economic, social and political devastation IF the PROJECTIONS of the Climate change " science " become a legislative argumentation and foundation. The climate is a dynamic/stochastic system, not a determined set of future conditions.


chunkylover42's picture

My only comment on your ad hominem attack on the messenger is that it's a straw man argument.  You don't know what Cheeky's background is or for whom (if anyone) he speaks.  So to insinuate otherwise makes you look silly.  Further, even if he was the president of Exxon, does that necessarily mean he's wrong?  This site is all about information, as opposed to your little trick of killing the messenger (I don't blame you for that, it's a widely used tactic to diminish the credibility of those with whom we disagree that deflects the discussion.  If your argument is strong enough to stand on it's own, say so, instead of smearing someone you don't know).  I strongly suggest you read the manifesto.

That aside, I think you are missing the point of the post.  As with any decision this large, we should not make iit n a vaccuum.  That is, we must consider the costs and benefits and weigh them in some fashion.  The speaker that Cheeky cited simply points out that based on the evidence we have in front of us, the costs are potentially enormous for very little benefit.


Cheeky, I know you don't need me to defend you, but I can't resist calling bullshit when I see it.  ;-)

Anonymous's picture

huh, I thought most people on here for free-marketers? So why knocking down a new market that will create new jobs that could actualyl go to some of you! If cap-n-trade is so bad for economies, what does one make of the European Union, which has been under a cap-n-trade system for years now. Some of you unemployed folks would be pretty happy if you could get a carbon sales job so don't knock the hustle.

chunkylover42's picture

If cap-n-trade is so bad for economies, what does one make of the European Union, which has been under a cap-n-trade system for years now.

I make an economy that has had persistently slower growth rates than the U.S., a lower standard of living, and structurally higher unemployment.  Further, mass transit is more feasible in the EU because of the higher density of the cities and smaller overall land area.

Nice argument, try again.

anynonmous's picture
Eco-Nuts Out to Destroy Life As We Know It

“You have destroyed nature with your industrial waste and gases more than any other nation in history. Despite this, you refuse to sign the Kyoto agreement so that you can secure the profit of your greedy companies and industries.”

and for further reading (way down the rabbit hole)

Margin Call's picture

For those who want to reduce government expenditures, how about starting with the billions fobbed off onto the fossil fuel industry in subsidies, tax breaks, the works? It frankly surprises me to see such a shill piece on ZH for one of the biggest "regulatory captors" of them all- the fossil energy industry.

"The ability to switch to non-CO2-emitting energy sources over the next 20 years is limited and expensive"

This one always gives me a good laugh. The logic driving this seems to be the following: "Fossil fuels will still dominate the mix in decades. Renewables won't be competitive. Therefore, we shouldn't invest in renewables". Self-fulfilling prophecies are great, aren't they? So is the ability to predict technological advances decades ahead. I wish I had it!

Sort of reminds of me a recent pronouncement by the Canadian Minister of the Oil Sands (oops, I mean Environment) which basically said: "we can't have a national emissions policy until there is an international emissions treaty. But we don't think there will be an agreement at the international level." Oh, and why would that be? Perhaps because Canada is actively trying to block one and doing nothing domestically!

Energy is not, and never has been, a "free" market. Our global energy mix is the result of decades of highly political decisions. So let's stop pretending that renewables are somehow the odd man out because they are subsidized.

Anyways, I digress. Apocalypse Now made some good points about natural gas a few comments prior- it should definitely start booting coal out of the electricity fuel mix and is a decent short-term alternative. But really, I'm surprised at the tone of the political right in the US regarding renewables- perhaps I'm crazy but I see a quite natural fit. Consider this:

If renewables really get going, they could provide the possibility of a re-democratization of infrastructure to the citizen/consumer level. If you get most of your electricity from panels on your OWN home, heating and cooling needs for a geo-exchange system under your OWN land, how is that not decreased dependence on bigger government and corporate control that so many here on ZH decry? How is being utterly dependent on distant utilities, massive pipeline infrastructures and the necessity of constant war on several continents consider a higher degree of "freedom" from government? Our dependence on massive, centralized energy infrastructure is the other side of the coin of our hopeless dependence on big finance- we are at the mercy of centralized power/control surviving only by making the next bill. Think the financial oligarchy in the US needs to be busted up? How about the energy oligarchy? They both feed on the same thing: an immense centralized scale in which citizens are little more than blind consumers who have no ability to provide for themselves (we need either money from a banker or energy from a huge power plant for our very survival).

I think one of the ultimate outcomes of the growth in decentralized, renewable energy will be an increase in personal and political freedom, and Al Gore and Goldman Sachs will have nothing to do with it. So cap and trade may be a political mess, but if it is even the first infant steps towards allowing the sort of world where energy production becomes a local, even individual building-level affair, then I'm all for it. 

tip e. canoe's picture

"If renewables really get going, they could provide the possibility of a re-democratization of infrastructure to the citizen/consumer level."

absolutely agreed.  but here's the rub:  all current subsidies given by the states are for 'grid-based' systems ONLY.   and that's not going to change anytime soon.

the current loophole is the feds are giving a 30% tax-based rebate on any solar-powered products, so if anyone wishes to go that route and start working on freeing themselves from the grid, should go buy a DiY kit and start experimenting.  once you get the basic system (battery, inverter, charge controller, etc), you can start building your own panels cheaply by using 'damaged' solar cells.

however, cap-&-trade is nothing but trying to control that evolution.  they see the future & are doing their darnedest to get their greasy grips around it before the general public truly understands the potential.

the only thing you can hope for in your scenario is that people start taking advantage of this en-masse and so much power is flowing through the grid in both directions that it fries.  then people will be forced to figure out that they can collect energy for themselves and will have the means to do it.

Anonymous's picture

Agreed cap/trade will just prove anther ATM for GS to the detriment of the US, but the rest of article is bunk.

may I sell you a ham sandwich to go with your kool-aid?

ft65's picture

Here in the UK, people are finally waking up to the fact that main stream media have been lying to us. The BBC now OPENLY contradicts itself on climate change. They see the can of worms being opened by those using the term "Climate Change Deniers" (the label “denier” always being reserved for despicable people who question any of WWII Jewish history.)


We just need to wait for a critical mass, before the lies about climate change are blown out of the water. At some stage the agenda will be switched to over population, the end of cheap energy (and the greed of a very few people). Unfortunately there are just not enough caves to go back to.


Here in the UK, as with the US, we have no manufacturing left. Manufacturing is not going to return until our wages are the same as China and India. In the mean time we are both reliant on foreign energy, the cost of which is about to sky-rocket. To misquote Captian Kirk. We are going boldly where no man has gone before. (at least in our collective memory).


Cap and Trade is DOA whether the bill is passed or not. 


Anonymous's picture

Below is a link to a reasoned discussion of alternative energy and costs.

Anonymous's picture

imagine what happens when solar panels and inverters end up on home depot shelves sometime next year. i guarantee they won't be made in the us or europe.

Anonymous's picture


1. recent installations by fslr in california are priced at ~9c. after this installation occurred, fslr started reducing prices even further due to competition with the chinese

2. solarbuzz is not where you want to get solar pricing. solarbuzz is a euro company part of the euro establishment that has not quite come to terms with the fact that chinese module prices are almost an order of magnitude lower than anything the euros sell.

3. check out wind and solar growth in china itself. granted these are off very low numbers, but the m/m and y/y growth in %terms is outrageous - and the chinese are not paying 43c to get it done

Anonymous's picture

1954 world population 3.7 Billion
2009 world population 6.7 Billion

Even thinking in terms of sustainability is ridiculous let alone '..getting the economy going..' In short we are F----d. Some people understand the implications and are planing accordingly (CM for instance); most don't.

No point in argument however, as it is a self correcting problem.

Gordon_Gekko's picture

I think this cap-n-trade nonsense is the parting shot of a dying system. After the Greater Depression has run it's course, there won't be enough economic activity left for regular taxes much less nonsense like this. Our ruling oligarchs have completely lost it. They're now killing the goose that lays the golden eggs. BTW, I haven't done enough research yet to determine whether global warming is for real or not, but even if it is I'm pretty sure that this cap-n-trade business is pure horse-shit and another wealth transfer mechanism. Fear not ye cap-n-trade haters, the Greater Depression is coming to yer rescue!

Lndmvr's picture

Guess the Beatles were right. Best we can do is continually play Taxman for months before an election.

Apocalypse Now's picture

OK, here are the facts and my thoughts:

  • We are entering an ice age, climate change is natural and caused by sunspot cycles
    • Greenland, ancient tree samples, and atoll clay sediment samples prove this
  • Gore will not debate anyone on the science - UK court found 9 movie items incorrect
    • He, Kenneth Lay (in prison Enron), and GS set up carbon credits, billions in profit
    • When asked about his conflict of interest - he stammered like Paulson hearing!
  • This is an agenda that is being pushed by major media sources - why address facts?
  • The controlled media is told what agenda to promote, total blackout on the science
  • The only man made climate change would be state sponsored use of HAARP
  • Successful levels of hysteria from media hype illustrates an easily manipulated public

The natural evolution of US energy is from solid (coal) to liquid (oil) to gas.  We need to transition to natural gas since we have a 200 year supply in the US and it is extremely cheap.  One of the problems is companies that have invested in infrastructure for making money on oil or coal sabotaging new developments or buying new technologies and idling them like the Carlyle group. 

With our own supply of energy and substituting natural gas for oil & coal where possible (need to convert machines) as well as solar, geo-thermal & wind turbine, we wouldn't need to wage war in the middle east (let's just be honest for a moment).  How important is energy - as important as mass and light, more energy provides more mass (stuff) in the equation. 

If instead this was a stealth tariff to support domestic manufacturing, stop real pollution, and an attempt to use the funds to help convert our infrastructure to convert oil usage to natural gas and alternatives, I would be more supportive.  However, I am skeptical and have concern that it will just line Al and GS pockets, create another tax, drive up costs, create a non-segregated gov slush fund for whatever (FDIC, SS, etc), and kill industry)

How about cutting government spending and using the savings to pay for the infrastructure to convert along with incentives?


ft65's picture

Renewable (solar, wind and wave) power would be totally insufficient for the way we use energy now. Nuclear is hellishly expensive, and what do we do with all those obsolete radioactive piles in 30 years time. How can we stop Iran and North Vietnam developing their nuclear industries, if we insist in building them. CO2 is the least of our problems, as is a warming planet (if true!).

The fact is we're f***ed, and what's worse we have an aging demographic to deal with in the next 20-50 years. Who is going to look after all the old folk?

But something is sure to come along and get us out of the s**t death is one thing that springs to mind!


Gordon_Gekko's picture

"...the traditional ( soon to be dead ) information providers."

Amen. NY Times firing like a 100 people is the single most piece of good news I have heard in a while.

Anonymous's picture

Having waded through a swag of "we love you, Cheeky" comments and psychophantic rhetoric, I thought I would try and address the kernel that is this issue.

Global temperatures have increased annually for the last decade and beyond. The reason is our excessive use of fossil fuels and high global population. Our world is at stake. So what is your solution?

The only solution I can see is to reduce fossil fuel consumption, but that ain't popular with the multi-nationals and commodity countries who benefit from selling this stuff. So, I ask you Cheeky, have you fallen into their trap and are now infact, talking up their proverbial book on their behalf?

ps. I do not agree with a tax which benefits multi-nationals at the expense of the people. But here is a difference between the need for a system to reduce reliance on fossil fuels and the methods for its implementation.

ft65's picture

The science has not by any means been proved, in fact the numbers and computer models are closely guarded secrets. Just to disagree with "climate change" is professional suicide for any scientist, so they all keep their trap shut on the subject.

Cap and Trade, Global Warming, Climate Change is just a rouse to force us into servitude to the oligarchs, who will not have to change their lifestyle.


The best thing we can hope for is a painless mass extinction of the human race, as the European Bubonic Plague. This is what brought us into the modern world (after about a 30% reduction in population). Nothing else is going to fix the problems we are heading for, not even 100% tax! (and you can't get much more than that)  

Pondmaster's picture

What can one say but " we are SOOOOOOO screwed" . Tax the air we breath . Water tax next , coming to a legislative/ dictatorship  branch  near you . Uh.. that would be the US Congress and Senate . How long can American Idol junkies stand by and let this happen . Too late to change any of this crap?

If we want hell then hell's what we'll have . We are nearly there .



Anonymous's picture

Why would anyone with even half a brain listen to anything from the Heritage Foundation? They are amoing the most completely bought & paid for "rsearch" organizations out there.

The article is riddled with gaping holes in logic & simplistic declarations as opposed to either solid science or economics.

For example,he uses only US reductions on his 2095 temperature scenario, as if we are the only participants (a typically myopic US-centric view). While I agree the current billand approach is near-useless (huge $$ to big interests with marginal reductions in emissions) that does not mean a solid, credible plan was not possible or doable. It just means Congress has again been bought.

The other contention, that this (or even a truly effective bill) will cost $10 trillion assumes, in essence, that all creative, innovative & dynamic elements of the US (and capitalism, for that matter) simply go into a collective funk - we all just stand there and say "Gee, nobody ever told me I might ever have to adapt to something".

Give us all a break. Big eneergy/$$ interest have spent billions trying to throttle an effort by the best independent brains in the world to save our skins for the 30 years it's been since they first sounded the alarm.

The policy response has been hi-jacked as per the WallStreet Regulatory Capture Handbook. Follow the overwhelming science supporting man-made Climate Change & the money deployed to discredit it.

In other words, let's see just a modicum of sophistication here, OK?

nevket240's picture


scroll down to the article. Its th sun, not man

the Old marijuana marxist hippie trash are having a real dip with the CO2 scam.

Gore only wants to be a new energy Rockefeller.


Woodshedder's picture

Thank you very much Cheeky.

delacroix's picture   sorry I'm a novice, don't know how to make a link in blue    yet.

defender's picture

You got it, it is just that links that you have already visited show up as grey.  I have had thought the same thing a couple of times.

delacroix's picture

the sad part is this would make the trucks emission compliant, and then some.

delacroix's picture

engine continues to use 30% diesel 70% CNG. kits can be installed by any qualified mechanic. the rub is there was a law passed, making it very expensive for a commercial operation to purchase a license to do the conversions as a business. (big oil lobbying)

Anonymous's picture

How about instead of Cap and Trade a $2 tax on gasoline
and use that to pay for health care.

Anonymous's picture

The Heritage Foundation...they don't have an agenda, do they? Surely not.