Section 526 Dodged

Sometimes regulators come up with brainstorms that appear simple yet end up kicking over the whole ant hill. Properly applied this piece of nonsense would shut down the coal industry. In this case it promised to close of the one source of oil the is effectively domestic and promises to carry the US through the transition to alternative energy. And where do you think that they buy all that heavy equipment?

The oilsands happens to be the biggest capital goods market in NAFTA right now and we should shut it down?
Anyway, common sense struck and the offending clause was deftly circumvented and made inoperative very quietly.

The last drop of oil ever used in the USA will likely come from the oilsands.

Of course the so called climate bill will also be dancing around this minefield. All law makers want to be seen doing something, but even the dumbest knows that his political career will not long survive a stupid jump in the price of gasoline at the pump brought on by some bright new tax.


Section 526

Section 526 of the Energy Independence and Security Act of 2007 had some strong implications for the Canadian oil sands. Section 526 targeted unconventional petroleum sources with greenhouse gas emissions greater than conventional sources. In other words, Section 526 prohibits the government from purchasing fuels with a higher carbon intensity than gasoline.

On June 17, the U.S. Senate Energy and Natural Resources Committee voted for a bill that could put the oil sands back in our good graces. One amendment passed by a voice vote stated U.S. refiners would not be in violation of Section 526 by buying crude oil produced from Canadian oil sands.

With oil prices on their way to $80 per barrel, any weakening of Section 526 will undoubtedly boost oil sands activity. And I expect those smaller companies developing new in-situ recovery methods will come out on top in the next round of oil sands' profits.

Until next time,
Keith Kohl

Lula on DOHA

Lula has become an influential voice on the world stage and he needs to be listened to.

Most Americans, unless they are directly affected, leave the niceties of international agreements and international behavior to whoever has the job and ignore it totally with the belief that it does not affect them in any way.

Yet as USA direct economic interest as a percentage of the global economy wanes and that is not a bad thing because the global economy is not a zero sum game, it has a residual influence far in excess of its direct hitting power.

Yet it also has a political culture that horse trades on every little issue that permits nationally and internationally damaging policy to be imposed as capriciously as any despotic royal lunatic.

The sheer size of the USA economy has massively shielded the USA from unintentional blowback. We have now entered a period were there is serious risk of blowback mistakes been made. Is our present government up to not letting it happen?

More importantly, is Hillary up to the challenge? I think so and certainly hope so. There is no area of the present regime more in need of an overhaul than the area of trade liberalization and rationalization. There are hundreds of stakeholders all grasping for petty advantage, yet not effectively trading them off.

My personal pet peeve is the outrageous agricultural market distortion that has been imposed by all developed countries of their own economies. That everyone is massively subsidizing this situation in a perverted race to the bottom is gross folly that is in fact inducing poverty world wide.

It is easily solved by a ten year withdrawal program as was established on the implementation of NAFTA. All that has to happen is for NAFTA and the EU to sit down and decide unilaterally to set a start day and establish a dispute mechanism to strong arm anyone trying to game the system inside and out.

Today, twenty years on, NAFTA has almost completely faded as a source of conflict, because it works and everyone’s pie is hugely bigger.



SAO PAULO (Reuters) - Brazil's President Luiz Inacio Lula da Silva urged leading economies to complete stalled global trade talks, warning on Monday that protectionism could tip the economic crisis into chaos.

"If the United States, Europe, Brazil close themselves, the crisis could become much bigger and produce chaos instead of a solution," Lula told industry leaders in Sao Paulo during a visit by Jan Peter Balkenende, the prime minister of the Netherlands.

Brazil said last month it may challenge the legality of a "Buy American" clause in the U.S. economic stimulus package at the World Trade Organization, or WTO.

Lula also intends to speak against global protectionism and for the completion of the WTO's Doha round at the Group of 20 meeting of leading economies in London next month.

"The Doha round was almost finished but we had elections in the United States and then India and politics dominated. Now, nothing stands in the way," said Lula. "The Doha round is more of a political than a financial decision."

The seven-year-old talks intended to further global free trade collapsed in July over differences between India and the United States on safeguards to protect farmers from a flood of food imports.

As a major commodities exporter, Brazil has been a key player in the Doha round and had hoped the G20 would honor a November pledge in Washington to avoid protectionism.

The United States Trade Representative warned on Monday there would be no agreement on the Doha round until other countries made stronger commitments to open their markets to U.S. goods.

Lula frequently urges other countries to pour cash into anti-cyclical measures to help keep their economies afloat amid the global crisis but has himself refrained from massive public spending plans at home that would increase government debt.

"The solution to this crisis is more (free) market, more free trade and more competition -- like the developed world always said over the past 30 years," Lula said.

(Reporting by Carmen Munari; Writing by Raymond Colitt; Editing by John O'Callaghan)

EPA Demonstrates Common Sense

It is good to see the EPA demonstrating common sense, hard as that is to believe. Particularly after watching Al Gore push tortured analogies decrying the opponents of the global warming ideology. I am getting disturbed that some of this bone headed thinking will work itself into the global economic system.

The worst idea that I heard recently was that the developed world, after shipping our polluting industries offshore, should turn around and slap on a carbon tax on all imports. We really need to turn the current financial panic into a true depression.

I have rarely seen such a lack of economic leadership in the political world. Both Democratic candidates sound hopeless on the issue, although perhaps you can trust Hillary to actually do nothing as her husband had the good sense to do in a different time and place. Of course, if you live in Pennsylvania, you may think she means it about NAFTA, and if you live anywhere else, you sure as hell hope she doesn’t. Obama however, seems to be a follower of ideas that may betray him and he has not come out with a strong convincing economic position. Unfortunately, we can say the same thing about John McCain. He however, appears most likely to recognize and follow good advice. I am personally impressed by his support of the Iraqi surge and he is certainly the best option for wriggling out of there.

We have been blessed for the past forty years, to have had strong voices who have positively influenced economic policy and have benefited with a full twenty five years of solid economic expansion that reinvigorated both Europe and Japan and ignited the emergence of both China and India as viable economic powers.

Yet we always hear the voices of the economically ignorant who desperately want to promote state power in the naïve belief that this can work. How many Katrinas do we need? Human greed will trump good intentions every time.

That is the elephant at the party in China today. And it is starting to rumble. The only escape hatch for the Chinese political leadership with their loot is in fact to start a program of free elections, starting at the local level and quickly moving to the higher stages in two year steps. It could have been done slower, but I do not think that they have that much time left. Heaven no longer needs them.

The truth is that global warming was likely never tied to CO2 production as we have investigated this past year. But CO2 production without paying attention to CO2 offsets is just bad husbandry unless you think throwing night soil out the window is a sustainable practice. CO2 management is not about not burning fossil fuels – they will all one day be burned – it is about using good husbandry to maximize CO2 sequestration in the soils every way we can.

It struck me today that terra preta soil culture will permit the maximization of soil nutrient content. This means that no food crop should be ever nutrient deficient which is the holy grail of organic farmers. At this point, this is only my hypothesis, supported by a scattering of evidence. I suspect that it is both possible and sustainable.

Recall that in 10,000 years, that agricultural man has never had a way to create fertile soil easily if in fact at all in many circumstances. Corn culture terra preta does just that in just a few years. The resultant soil is a nutrient sponge.

EPA Signals Caution on Global Warming

By H. JOSEF HEBERT – 3 days ago

WASHINGTON (AP) — The government made clear on Thursday it will not be rushed into deciding whether to regulate emissions linked to global warming, as the Supreme Court directed nearly a year ago.

Such action "could affect many (emission) sources beyond just cars and trucks" and needs to be examined broadly as to other impacts, the head of the Environmental Protection Agency wrote lawmakers.

Stephen Johnson said he has decided to begin the process by seeking public comment on the implications of regulating carbon dioxide, a leading greenhouse gas, on other agency rules that cover everything from power plants and factories to schools and small businesses.

That process could take months and led some of his critics to suggest he was shunting the sensitive issue to the next administration.

"This is the latest quack from a lame-duck EPA intent on running out the clock ... without doing a thing to combat global warming," said Rep. Edward Markey, D-Mass. He is chairman of the House Select Committee on Energy Independence and Global Warming.

The Supreme Court said in April 2007 that carbon dioxide from burning fossil fuels is a pollutant subject to the Clean Air Act. The court directed the EPA to determine if CO2 emissions, linked to global warming, endanger public health and welfare.

If that is the case, the court said, the EPA must regulate the emissions.

The ruling, in a lawsuit by Massachusetts against the EPA, dealt only with pollution from cars and trucks.

Johnson said Thursday that if CO2 is found to endangered public health and welfare, the agency probably would have to curtail such emissions from other sources as well. That could affect a range of air pollution, from cement factories, refineries and power plants to cars, aircraft, schools and off-road vehicles.

"Rather than rushing to judgment on a single issue, this approach allows us to examine all the potential effects of a decision with the benefit of the public insight," Johnson wrote the leaders of the House and Senate environment committees.

Sen. Barbara Boxer, who heads the Senate Environment and Public Works Committee, noted that Johnson has had nearly a year to respond to the court but "now, instead of action, we get more foot-dragging."

"Time is not on our side when it comes to avoiding dangerous climate change. This letter makes it clear that Mr. Johnson and the Bush administration are not on our side, either," Boxer, D-Calif., said in a statement.

Senior EPA employees have told congressional investigators in the House about a tentative finding from early December that CO2 posed a danger because of its climate impact. They said a draft regulation was distributed to the Transportation Department and the White House.

The EPA officials, in interviews with the House Oversight and Government Reform Committee, said those findings were put on hold abruptly. Johnson has said that enacting tougher automobile mileage requirements in December meant that the issue had to be re-examined.

Johnson said a requirement for greater use of renewable fuels such as ethanol changed the landscape when it comes to CO2 regulation.

"It does not change EPA's obligation to provide a response to the Supreme Court decision," Johnson wrote Congress.

Environmentalists said Johnson's approach seemed to signal no meaningful action on climate change.

"EPA has offered a laundry list of reasons not to regulate," said Vickie Patton, a lawyer for Environmental Defense.

Frank O'Donnell, president of Clean Air Watch, an advocacy group, added, "This means any real action is going to come in the next administration."

But lawyer Chet Thompson, a former EPA deputy general counsel, said Johnson's approach was "very responsible given the numerous issues raised" and ramifications of regulating carbon dioxide.

Carbon Credits

The one aspect of the so called global effort to tackle global warming that I find most disturbing is the stumbling initiative to establish a carbon credit market. The concept is very laudable. We can all grasp that a transfer of money from those dumping CO2 into the atmosphere to those taking it out would go a long way to both measure the size of the problem and to also ameliorate it.

What I have yet to see in the press is a credible explanation of the mechanics. And my own efforts were rewarded with a maybe next year response and that was two years ago. What am I missing? I suspect something is clearly wrong and the most likely reason is that the approach to date is simply wrong headed.

It seems too easy for participants to rig a green wash rather than a working solution when there is no particularly clear market mechanism and reporting system.

If we return to the efforts spurred by the Kyoto accord, we immediately discover one primary flaw. It is the lack of equality among the participants. The accord was patched together by a group of folks all trying to protect their short term interests every way they could. It was not an accord so much as an effort to preserve the status quo and assign blame when it fell apart.

The only system that will ever actually work is one that treats everyone equally, with at most a negotiated transition for those facing immediate hurt. The only way that this can be implemented is by assessing a direct transfer credit against every barrel of oil produced and every ton of coal mined globally. It is simple and the producers are then stuck with the very real task of actually spending those credits efficiently.

The present attempt is already a hodge podge of gerrymandering and special interest manipulation which will actually raise the cost of business and create huge imbalances deleterious to the global economy.

The UN can find itself in a management role of enforcing compliance. This will be as simple as cutting off the right to export and transferring the credit obligation to the receiving refinery. The audit process can actually catch it all and the cost of non compliance will actually lose access to a profitable side line for the producers.

In the meantime, it is outrageous that industrial carbon obligations have been outsourced to China and India who have no need to meet these obligations. If the system is not universal, we will be treated to the charade of the worst and dirtiest industries been bounced around the globe every twenty years until they have a final home in Tongo Tongo.

A universal credit system stems the incipient fraud and deceit we are already been exposed to. We already have the word 'greenwash' joining the lexicon.

An universally clear global carbon credit or defacto global carbon currency is a fantastic way to establish a proper global financial system because it is directly tied to the life blood of the global economy and will be forever in some form or the other.

It then makes it easy to monetize the establishment of terra preta soils worldwide since that is the one certain method of sequestering carbon in the long term. The carbon sequestered in the Amazon two thousand years ago is still there and still supporting excellent farming.

Slight changes in tillage, although helpful, actually does little more than perhaps prevent further loss of carbon which is actually not good enough.

Without question, it is necessary to call another global conference and use that conference to impose the carbon credit obligation on the producers and empower the UN to police the system. It will still take time to sort out, but it will sort itself out. Let us do it right this time.

When NAFTA was imposed, the transition was implemented in small steps over ten years. We should do the exact same thing here.