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Gene Ellis

Fear of Fracking by Jeffrey Frankel - Project Syndicate - 0 views

www.project-syndicate.org/...o-shale-gas-by-jeffrey-frankel

fracking

shared by Gene Ellis on 19 Apr 13 - No Cached
  • CAMBRIDGE – Against all expectations, US emissions of carbon dioxide into the atmosphere, since peaking in 2007, have fallen by 12% as of 2012, back to 1995 levels. The primary reason, in a word, is “fracking.”
  • Just ten years ago, the natural-gas industry was so sure that domestic production was reaching its limit that it made large investments in terminals to import liquefied natural gas (LNG). Yet fracking has increased supply so rapidly that these facilities are now being converted to export LNG.
  • Natural gas emits only half as much CO2 as coal, and occupies a rapidly increasing share of electricity generation – up 37% since 2007, while coal’s share has plummeted by 25%.
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  • Meanwhile, the share of coal – the dirtiest fuel – has been rising, not falling, in the rest of the world’s energy mix.
  • Moving beyond economics, America’s reduction in net energy imports – which have already fallen by one-half since 2007 – means that its foreign policy will be less constrained by events in the Middle East. In Europe, the new technology could similarly break Russia’s politically troublesome stranglehold on natural-gas supplies.
  • Put differently, if the world continues to build coal-fired power plants at the current rate, those plants will still be around in 2050, regardless of what other technologies become viable in the meantime.
  • Even a serious fracking mishap would be unlikely to cause as much damage as the Deepwater Horizon oil spill in 2010, the Fukushima nuclear catastrophe in 2011, or coal-mining tragedies that play out dramatically in frequent explosions and collapses (and more insidiously in the form of lung disease, water pollution, and soil erosion).
Gene Ellis

"Which Eurobonds?" by Jeffrey Frankel | Project Syndicate - 0 views

www.project-syndicate.org/...which-eurobonds-

jeffrey project syndicate

shared by Gene Ellis on 16 Jun 12 - No Cached
  • Any solution to the eurozone crisis must meet a short-run objective and a long-run goal. Unfortunately, the two tend to conflict.Illustration by Paul LachineCommentsView/Create comment on this paragraphThe short-run objective is to return Greece, Portugal, and other troubled countries to a sustainable debt path (that is, a declining debt/GDP ratio). Austerity has raised debt/GDP ratios, but a debt write-down or bigger bailouts would undermine the long-term goal of minimizing the risk of similar debt crises in the future.CommentsView/Create comment on this paragraph
  • it is hard to commit today to practice fiscal rectitude tomorrow. Official debt caps, such as the Maastricht fiscal criteria and the Stability and Growth Pact (SGP), failed because they were unenforceable.
  • The introduction of Eurobonds – joint, aggregate eurozone liabilities – could be part of the solution, if designed properly. There is certainly demand for them in China and other major emerging countries, which are desperate for an alternative to low-yielding US government securities.
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  • But Germany remains opposed on moral-hazard grounds: a joint guarantee of Eurozone members’ liabilities would strengthen individual national governments’ incentive to spend beyond their means.
  • The German Council of Economic Experts has proposed a European Redemption Fund (ERF). The plan would convert into de facto 25-year Eurobonds the existing sovereign debt of member countries in excess of 60% of GDP, the threshold specified by the Maastricht criteria and the SGP.
  • But this seems upside down.
  • it offers absolution precisely on the 60%-of-GDP margin where countries will have the most trouble resisting temptation.
  • the main explanation for the absence of US moral hazard is that the right precedent was set in 1841, when the federal government let eight states and the Territory of Florida default.
  • Ever since 1841, the market requires that US states running up questionable levels of debt pay an interest-rate premium to compensate for the default risk.
  • Had the ECB operated from the outset under a rule prohibiting it from accepting SGP-noncompliant countries’ debt as collateral, the entire eurozone sovereign-debt problem might have been avoided.
  • the expansion in the US took place at the federal level, where spending today amounts to 24% of GDP, compared to just 1.2% of GDP for the European Union budget.
  • The version of Eurobonds that might work as the missing long-term enforcement mechanism is almost the reverse of the Germans’ ERF proposal: the “blue bonds” proposed two years ago by Jacques Delpla and Jakob von Weizsäcker. Under this plan, only debt issued by national authorities below the 60%-of-GDP threshold could receive eurozone backing and seniority. When a country issued debt above the threshold, the resulting “red bonds” would lose this status.
  • The point is that the enforcement mechanism would be truly automatic: market interest rates would provide the discipline that bureaucrats in Brussels cannot.
  • Of course, the eurozone cannot establish a blue-bond regime without first solving the problems of debt overhang and troubled banks. Otherwise, the plan itself would be destabilizing, because almost all countries would immediately be in the red.
  • But one thing seems clear. German taxpayers, whose longstanding suspicion of profligate Mediterranean euro members has been vindicated, will not be happy when asked to pay still more for the cause of European integration. At a minimum, they will need some credible reason to believe that 20 years of false assurances have come to an end – that this is the last bailout.
Gene Ellis

Shipping Costs Start to Crimp Globalization - NYTimes.com - 0 views

www.nytimes.com/...03global.html

Business globalization economics shipping ocsts

shared by Gene Ellis on 15 Jan 14 - Cached
  • The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.
  • Jeffrey E. Garten, the author of “World View: Global Strategies for the New Economy” and a former dean of the Yale School of Management, said that companies “cannot take a risk that the just-in-time system won’t function, because the whole global trading system is based on that notion.” As a result, he said, “they are going to have to have redundancies in the supply chain, like more warehousing and multiple sources of supply and even production.”
  • In a more regionalized trading world, economists say, China would probably end up buying more of the iron ore it needs from Australia and less from Brazil, and farming out an even greater proportion of its manufacturing work to places like Vietnam and Thailand.
Gene Ellis

Blueprints for Taming the Climate Crisis - NYTimes.com - 0 views

www.nytimes.com/...taming-the-climate-crisis.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Blueprints for Taming the Climate Crisis
  • Within about 15 years every new car sold in the United States will be electric. In fact, by midcentury more than half of the American economy will run on electricity. Up to 60 percent of power might come from nuclear sources. And coal’s footprint will shrink drastically, perhaps even disappear from the power supply.
  • “This will require a heroic cooperative effort,” said Jeffrey D. Sachs, the Columbia University economist who directs the Sustainable Development Solutions Network at the United Nations,
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  • The teams, one in each of the 15 countries, looked at what would be necessary to keep the atmosphere from warming more than 2 degrees Celsius, 3.6 degrees Fahrenheit, above the preindustrial average of the late 19th century, a target that most of the world committed to at the climate summit meeting in Copenhagen five years ago.
  • To do so, CO2 emissions from industry and energy use would have to fall to at most 1.6 tons a year for every person on the planet by midcentury.
  • That is less than a tenth of annual American emissions per person today and less than a third of the world average
  • Lacking any understanding of the feasibility of the exercise, governments postured and jockeyed over which country should be responsible for what
  • This is not achievable by going after low-hanging fruit, such as replacing coal with natural gas in power plants.
  • The decarbonization paths rely on aggressive assumptions about our ability to deploy new technologies on a commercial scale economically.
  • Russia, for instance, hit the target. But Oleg Lugovoy of the Environmental Defense Fund, who worked on the Russian plan, observed that “if we don’t have carbon capture and storage we would have to reconsider.”
  • it does not do away with the main hitch that has stumped progress for decades: How much will this all cost and who will pay for it?
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