June 30, 2006

Senator Obama on Health Care for Hybrids

Facing continued deterioration in the American automakers financial picture and lack of improvement in the fuel-efficiency of the U.S. auto fleet, Senator Obama has made persuasive arguments for the Health Care for Hybrids initiative in remarks to the Governor's Ethanol Summit in February 2006 "Energy Security is National Security."

"So here's the deal we can make with the auto companies. It's a piece of legislation I introduced called 'Health Care for Hybrids,' and it would allow the federal government to pick up part of the tab for the auto companies' retiree health care costs. In exchange, the auto companies would then use some of that savings to build and invest in more fuel-efficient cars. It's a win-win proposal for the industry - their retirees will be taken care of, they'll save money on health care, and they'll be free to invest in the kind of fuel-efficient cars that are the key to their competitive future."

Senator Obama goes on to propose federal investment incentives for home-grown biofuels: "But the challenge we face with these biofuels is getting them out of the labs, out of the farms, and onto the wider commercial market. Every scientific study in the world could sing the praises of biofuels, but you might still be hard-pressed to find an investor willing to take the risk on a cellulosic ethanol plant or a brand-name petroleum company willing to build an E85 fueling station."

"The federal government can help * * *. [W]e can reduce the risk of investing. * * * By developing an Energy Technology Program at the Defense Department, we can provide loan guarantees and venture capital to those with the best plans to develop and sell biofuels on a commercial market. The Defense Department will also hold a competition where private corporations get funding to see who can build the best new alternative-fuel plant. The Department can then use these new technologies to improve the energy security of our own military."

* * *

He closes with an appeal to American values and spirit of independence:
"This is our chance to step up and serve. The war against international terrorism has pitted us against a new kind of enemy that wages terror in new and unconventional ways. At home, fighting that enemy won't require us to build the massive war machine that Franklin Roosevelt called for so many years ago, but it will require us to harness our own renewable forms of energy so that oil can never be used as a weapon against America. From farmers and scientists to entrepreneurs and governors, everyone has a role to play in this effort. In fact, this afternoon I'm sitting down with business and military leaders to discuss this very topic."


Posted by dougsimpson at 12:36 PM | Comments (0)

June 29, 2006

Flood Insurance Managers Facing Inconvenient Truth

Insurance Managers face the inconvenient truth that global warming will continue driving increased rainfall in interior of the Eastern United States, as well as stronger and more frequent tropical windstorms hitting coastal regions. National Resources Defense Council - Global Warming Fact Sheet See also the EPA's fact sheet on global warming impact on North America.

The National Flood Insurance Program is already financially exhausted due to the combination of Hurricane Katrina and Congressional decisions to subsidize coastal and floodplain development by providing below-cost insurance guaranteed by the taxpayer. "NFIP current financial condition unsustainable: CBO", Unintended Consequences (June 6, 2006). See also "GAO re Katrina: 1993 Andrew Advice Still Holds; NFIP 'essentially bankrupt'", Unintended Consequences March 8, 2006.

Congress is now considering program changes that will raise premiums, increase deductibles and make coastal development and post-Katrina rebuilding more expensive. According to the Washington Post, "The House voted 416-4 Tuesday [June 27) to phase out subsidies on some vacation homes and commercial property and raise premiums at a faster rate. The bill also increases the amount of coverage a property owner can buy and boosts fines for mortgage lenders who don't tell customers they have to buy flood insurance."

Back in the 1920's, it was not coastal storms that caused the biggest natural disaster ever experienced by the United States. It was an unrelenting series of interior rainstorms that persisted month after month, saturating the Mississippi River basin and finally overtopping levees, sending an inland sea throughout the Delta. This led to uncounted deaths, mostly of rural poor blacks, untold human misery and massive relocation of the population of the lower Delta to northern cities. John M. Barry's book "Rising Tide: The Great Mississippi Flood of 1927 and How It Changed America (1998) documents this nation-changing event. See New Orleans lawyer-blogger Ernest Svenson'scomparison of the Great Flood of 1927 to Katrina in the "Ernie the Attorney"

No one can say for sure that the inland storms and flooding that have hit the Northeast in the last few months (New England in the Fall of 2005 and the record-breaking MD-PA-NJ-NY inland rainstorm of June 2006) are caused by global warming. The consensus of climatologists is that the likelihood of such climate chaos is increased by rising ocean temperatures and the resulting increase in atmospheric moisture.

Insurance managers and legislatures must consider that the actuarial costs of windstorm and flood insurance are likely to increase, not diminish, that the recent disasters may not be "outliers" but rather fore-runners of worse to come. They must decide whether to price private and government programs realistically or to cave to market and political forces to take the cheap solution.

Private managers have the discipline of the private reinsurance market and shareholders to keep them rational. We already are seeing the effects of that as private windstorm insurance becomes more expensive and harder to get, with fewer providers.

Government programs have only the discipline of the ballot box, which is dependent on the electorate. We will see if the political will exists to accept the inconvenient truth that subsidizing those who build on sand has longterm unintended consequences.


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Posted by dougsimpson at 11:56 AM | Comments (0)

June 24, 2006

National Academies PR and link to Full Report

National Academies of Science released its scientific review of controversial studies indicating global warming accelerating in recent decades. The press release includes a link to the 155 page report.

Quoting: "There is sufficient evidence from tree rings, boreholes, retreating glaciers, and other "proxies" of past surface temperatures to say with a high level of confidence that the last few decades of the 20th century were warmer than any comparable period in the last 400 years, according to a new report from the National Research Council." High Confidence That Planet Is Warmest in 400 Years (June 22, 2006)

Full report: Surface Temperature Reconstructions for the Last 2,000 Years

This report was requested by Congress due to controversy over a study by climatologists including Michael Mann that introduced the "hockey stick" projection.

See also comments on the report and announcement from RealClimate.com RealClimate » National Academies Synthesis Report (June 22, 2006)


Posted by dougsimpson at 07:21 AM

June 23, 2006

Goodell: Coal reserves feed a "dangerous fantasy"

Jeff Goodell contends that easy decisions to turn to coal fuel sources preserve the illusion that we can "drill and burn our way to prosperity" instead of pushing to the new, disruptive technologies of solar, biofuels and other renewable resources: "The biggest problem with our bounty of coal is not what it does to our mountains or the atmosphere, but what it does to our minds. It preserves the illusion that we don't have to change our lives. Given the profound challenges we face with the end of cheap oil and the arrival of global warming, this is a dangerous fantasy." Jeff Goodell - Our Black Future - New York Times (June 23, 2006)


Posted by dougsimpson at 05:47 AM

June 22, 2006

CO2 impact of "cheaper" electricity

Energy related emissions of carbon dioxide will increase 71% during the next 25 years, as cheaper coal replaces expensive oil and overall energy demand climbs, according to Chapter 7 of the U.S. Energy Information Administration's International Energy Outlook 2006 - Energy-Related Carbon Dioxide Emissions (June 2006).

Most climatologists have agreed for some time that the average temperature of the earth is rising, that most of it is the result of human activities, mostly burning fossil fuels and clearing land, both of which release CO2. Mastrandrea, Michael D., and Stephen H. Schneider. "Global warming." World Book Online Reference Center. 2005. World Book, Inc. http://www.worldbookonline.com/wb/Article?id=ar226310.
The Antarctic ice shelf is melting and shrinking, releasing huge amounts of water into the oceans.

Thousands of icebergs float off the coast of the Antarctic Peninsula after 1,250 square miles (3,240 square kilometers) of the Larsen B ice shelf disintegrated in 2002. The area of the ice was larger than the state of Rhode Island or the nation of Luxembourg. Antarctic ice shelves have been shrinking since the early 1970's because of climate warming in the region. Image credit: NASA/Earth Observatory
According to the Environmental Protection Agency, "increasing concentrations of greenhouse gases are likely to accelerate the rate of climate change. Scientists expect that the average global surface temperature could rise 1-4.5°F (0.6-2.5°C) in the next fifty years, and 2.2-10°F (1.4-5.8°C) in the next century, with significant regional variation. Evaporation will increase as the climate warms, which will increase average global precipitation. Soil moisture is likely to decline in many regions, and intense rainstorms are likely to become more frequent. Sea level is likely to rise two feet along most of the U.S. coast." This continues a trend that dates back to the late 19th century.
Source of quote and image: EPA : Global Warming : Climate

Like many other regions, my own state of Connecticut faces increasing demand for energy while costs are driven up by rising oil prices. State officials are considering a proposal by NRG Energy, Inc. to invest up to $2 billion to build new coal-buring generation plants in Connecticut to replace older, "Sooty Six" plants and increase supply. A $1.5 billion coal gasification power plant is included in the proposal. Coal was selected for the fuel source because its price is lower and more stable than natural gas, according to local news reports, despite its greater CO2 emissions. courant.com | NRG Unveils Huge Project (Hartford Courant, June 22, 2006)

Connecticut Attorney General Blumenthal is examining the plan, while continuing to advocate a Connecticut Energy Authority to address what he calls a "fundamentally flawed market." Local environmental groups are objecting to the characterization of the new plant as "clean" when it will put more CO2 into the air than a comparable natural gas fired plant. Ibid.

Others in the state are looking at proposals to reverse the 1998 decision to sever generation and delivery in order to stimulate more competition in power generation. Energy Legal Blog : Back to the Vertically Integrated Electric Utility

We'll watch for some process to "internalize" the external cost of global warming into the cost/benefit calculation of new generation capacity and choice of fuels.
Querie: Would leaving power generation open to unbridled competition drive generators in a "race to the bottom," allowing more CO2 emissions in order to meet price competition?
Querie: Can politically influenced state regulators do a better job of voting for higher prices in order to reduce greenhouse gases?

Tough questions. Your emails to doug "at" dougsimpson.com with pointers to thoughts and sources would be welcome. Comments and TB are off because of spam.


Posted by dougsimpson at 10:06 PM

June 21, 2006

Safe Climate Act HR 5642

Congress can act against global warming by enacting the Safe Climate Act of 2006 (H.R. 5642) introduced by Congressman Waxman of California. According to the summary linked to, the Act would freeze US greenhouse gas emissions in 2010 and mandate cutting emissions annually thereafter. By 2050, emissions will be 80% lower than in 1990, according to the Congressman's summary. It includes action assignments for the US Department of Energy and the US Department of Environmental Protection. It also directs the National Academy of Sciences and the National Research Council to review progress toward avoiding dangerous climate change and identify reductions needs.

The bill would set up a system for buying and selling emissions allowances, with auction proceeds placed into a Climate Reinvestment Fund that will support technology R&D, and fund various forms of public protections from energy price increases and natural disaster preparedness.

Rep. Waxman is joined by twelve other Representatives in introducing this bill. According to his press release, “Global warming is the greatest environmental challenge of our time, and we have a short window in which to act to prevent profound changes to the climate system,” said Rep. Waxman. “My legislation reflects what the science says we need to do to protect our children and grandchildren from disastrous climate changes.” June 20, 2006 Press Release

Full Text of H.R. 5642 (PDF)

Section-by-Section Summary of the Safe Climate Act

Thanks to beSpacific.com

Posted by dougsimpson at 10:34 AM

June 06, 2006

NFIP current financial condition unsustainable: CBO

Acting Director of the Congressional Budget Office Donald B. Marron told the Chair of the Senate Committee on the Budget that the National Flood Insurance Program financial condition is "unsustainable," that it presently subsidizes at-risk property owners at the rate of $1.3 billion each and every year, and that it lacks resources to ever pay off the debt it has incurred to pay Hurricane Katrina claims. NFIP letter to Senator Judd Gregg dated May 31, 2006.

Forgiving the nearly $24 billion debt NFIP will have run up to pay 2005 Gulf Coast storm claims would allow NFIP to continue has it had before ... remaining actuarially unsound and costing the Treasury $10 billion to $15 billion over the next ten years, said the Director.

read more below

In January 2006, CBO testified before a Senate Committee about the results of its study of the National Flood Insurance Program (NFIP) in light of the experience of Hurricand Katrina and the other 2005 Gulf Coast storms. They calculated the explicit subsidy for policyholders in at-risk locations, resulting from premiums being deliberately set below an actuarially sound value in order to encourage people to buy insurance instead of relying on disaster relief. The estimated subsidy totaled $1.3 billion each and every year.

In the January report, the CBO analyzed likely effects on demand from eliminating or reducing the subsidy. The CBO pointed out the limitations of the cash basis accounting for flood insurance in the NFIP, as simple but not providing an accurate picture of expected long-term costs. The CBO recommended a subsidy-cost basis as an alternative to cash basis accounting, to provide "a clear display of the average expected cost of the program."

The study includes some useful charts and tables illustrating the historical cash flow of NFIP and the calculation of the overall federal subsidies for homeowners and commercial property owners who choose to develop coastal areas, river flood plains and other flood-prone locations. The Budgetary Treatment of Subsidies in the National Flood Insurance Program -- CBO Testimony -- January 25, 2006


Posted by dougsimpson at 08:27 PM

Anticipate Dozens of Insurers Failing When $100B Hurricane Hits East Coast

Cat 3, 4 or 5 hurricanes hitting highly developed east coast areas could result in $100 billion in insured losses, bankrupting 20 to 50 insurance companies, according to a new A.M. Best study. After Hurricane Andrew hit Florida in 1992, multiple insurers concentrated in the Florida market failed; their failures triggered a cash crisis in the insurance guaranty fund that back up failed insurers. The impact of a big storm hitting highly developed areas today would be four times that of Hurricane Andrew.

The new studies combined risk modelling tools, data about the build-up of property values along areas such as Florida and the Jersey Shore-Hudson River area and interviews with insurance leaders to develop models of the impact of a major storm that hit such areas. A major hurricane landfall in the U.S. has been estimated by some climatologists as 55% above average for the hurricane season about to start. "Thinking the Unthinkable: How 'Mega-Cats' May Bruise Insurers," A.M.Best, (May, 2006).

See also: A.M. Best: A 'Mega-Cat' Hurricane Would Be Fatal to Some Insurers, Insurance Journal (June 1, 2006).

Thanks to Specialty Insurance Blog: AM Best Hurricane Study (June 4, 2006)


Posted by dougsimpson at 05:53 AM

June 01, 2006

If Artic was "balmy," how hot was equitorial Africa and India?

Yale University geologists report that new studies of borings from the floor of the Artic Ocean reveal remains of plant life indicating a long period of temperatures above 70 degrees during the warmest time interval, the Paleocene Eocene Thermal Maximum (PETM), Today, the Artic's mean temperature is below zero.

Yale Geology Prof. Mark Pagani and Utrecht Univ. biologist Henk Brinkhuis
wrote the article in the June 1, 2006 issue of Nature reporting the findings. "Many argue whether or not rising carbon dioxide concentrations will cause global warming. But, those of us who study Earth history know that there is a direct link between Earth's temperature and carbon dioxide," said Pagani. "The PETM represents the clearest evidence for carbon dioxide-induced global warming in the geologic record."

ScienceDaily: North Pole's Ancient Past Holds Lessons For Future Global Warming


Posted by dougsimpson at 12:53 PM