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Losing Earth: The Decade We Almost Stopped Climate Change - The New York Times - 0 views

  • As Malcolm Forbes Baldwin, the acting chairman of the president’s Council for Environmental Quality, told industry executives in 1981, “There can be no more important or conservative concern than the protection of the globe itself.”
  • Among those who called for urgent, immediate and far-reaching climate policy were Senators John Chafee, Robert Stafford and David Durenberger; the E.P.A. administrator, William K. Reilly; and, during his campaign for president, George H.W. Bush.
  • It was understood that action would have to come immediately. At the start of the 1980s, scientists within the federal government predicted that conclusive evidence of warming would appear on the global temperature record by the end of the decade, at which point it would be too late to avoid disaster.
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  • If the world had adopted the proposal widely endorsed at the end of the ’80s — a freezing of carbon emissions, with a reduction of 20 percent by 2005 — warming could have been held to less than 1.5 degrees.
  • Action had to be taken, and the United States would need to lead. It didn’t.
  • There can be no understanding of our current and future predicament without understanding why we failed to solve this problem when we had the chance.
  • The first suggestion to Rafe Pomerance that humankind was destroying the conditions necessary for its own survival came on Page 66 of the government publication EPA-600/7-78-019. It was a technical report about coal
  • ‘This Is the Whole Banana’ Spring 1979
  • here was an urgent problem that demanded their attention, MacDonald believed, because human civilization faced an existential crisis. In “How to Wreck the Environment,” a 1968 essay published while he was a science adviser to Lyndon Johnson, MacDonald predicted a near future in which “nuclear weapons were effectively banned and the weapons of mass destruction were those of environmental catastrophe.” One of the most potentially devastating such weapons, he believed, was the gas that we exhaled with every breath: carbon dioxide. By vastly increasing carbon emissions, the world’s most advanced militaries could alter weather patterns and wreak famine, drought and economic collapse.
  • the Jasons. They were like one of those teams of superheroes with complementary powers that join forces in times of galactic crisis. They had been brought together by federal agencies, including the C.I.A, to devise scientific solutions to national-security problems: how to detect an incoming missile; how to predict fallout from a nuclear bomb; how to develop unconventional weapons, like plague-infested rats.
  • Agle pointed to an article about a prominent geophysicist named Gordon MacDonald, who was conducting a study on climate change with the Jasons, the mysterious coterie of elite scientists to which he belonged
  • During the spring of 1977 and the summer of 1978, the Jasons met to determine what would happen once the concentration of carbon dioxide in the atmosphere doubled from pre-Industrial Revolution levels. It was an arbitrary milestone, the doubling, but a useful one, as its inevitability was not in question; the threshold would most likely be breached by 2035.
  • The Jasons’ report to the Department of Energy, “The Long-Term Impact of Atmospheric Carbon Dioxide on Climate,” was written in an understated tone that only enhanced its nightmarish findings: Global temperatures would increase by an average of two to three degrees Celsius; Dust Bowl conditions would “threaten large areas of North America, Asia and Africa”; access to drinking water and agricultural production would fall, triggering mass migration on an unprecedented scale. “Perhaps the most ominous feature,” however, was the effect of a changing climate on the poles. Even a minimal warming “could lead to rapid melting” of the West Antarctic ice sheet. The ice sheet contained enough water to raise the level of the oceans 16 feet.
  • MacDonald explained that he first studied the carbon-dioxide issue when he was about Pomerance’s age — in 1961, when he served as an adviser to John F. Kennedy. Pomerance pieced together that MacDonald, in his youth, had been something of a prodigy: In his 20s, he advised Dwight D. Eisenhower on space exploration; at 32, he became a member of the National Academy of Sciences; at 40, he was appointed to the inaugural Council on Environmental Quality, where he advised Richard Nixon on the environmental dangers of burning coal. He monitored the carbon-dioxide problem the whole time, with increasing alarm.
  • They were surprised to learn how few senior officials were familiar with the Jasons’ findings, let alone understood the ramifications of global warming. At last, having worked their way up the federal hierarchy, the two went to see the president’s top scientist, Frank Press.
  • Thus began the Gordon and Rafe carbon-dioxide roadshow. Beginning in the spring of 1979, Pomerance arranged informal briefings with the E.P.A., the National Security Council, The New York Times, the Council on Environmental Quality and the Energy Department, which, Pomerance learned, had established an Office of Carbon Dioxide Effects two years earlier at MacDonald’s urging
  • . Out of respect for MacDonald, Press had summoned to their meeting what seemed to be the entire senior staff of the president’s Office of Science and Technology Policy — the officials consulted on every critical matter of energy and national security. What Pomerance had expected to be yet another casual briefing assumed the character of a high-level national-security meeting.
  • MacDonald would begin his presentation by going back more than a century to John Tyndall — an Irish physicist who was an early champion of Charles Darwin’s work and died after being accidentally poisoned by his wife. In 1859, Tyndall found that carbon dioxide absorbed heat and that variations in the composition of the atmosphere could create changes in climate. These findings inspired Svante Arrhenius, a Swedish chemist and future Nobel laureate, to deduce in 1896 that the combustion of coal and petroleum could raise global temperatures. This warming would become noticeable in a few centuries, Arrhenius calculated, or sooner if consumption of fossil fuels continued to increase.
  • Four decades later, a British steam engineer named Guy Stewart Callendar discovered that, at the weather stations he observed, the previous five years were the hottest in recorded history. Humankind, he wrote in a paper, had become “able to speed up the processes of Nature.” That was in 1939.
  • MacDonald’s history concluded with Roger Revelle, perhaps the most distinguished of the priestly caste of government scientists who, since the Manhattan Project, advised every president on major policy; he had been a close colleague of MacDonald and Press since they served together under Kennedy. In a 1957 paper written with Hans Suess, Revelle concluded that “human beings are now carrying out a large-scale geophysical experiment of a kind that could not have happened in the past nor be reproduced in the future.” Revelle helped the Weather Bureau establish a continuous measurement of atmospheric carbon dioxide at a site perched near the summit of Mauna Loa on the Big Island of Hawaii, 11,500 feet above the sea — a rare pristine natural laboratory on a planet blanketed by fossil-fuel emissions.
  • After nearly a decade of observation, Revelle had shared his concerns with Lyndon Johnson, who included them in a special message to Congress two weeks after his inauguration. Johnson explained that his generation had “altered the composition of the atmosphere on a global scale” through the burning of fossil fuels, and his administration commissioned a study of the subject by his Science Advisory Committee. Revelle was its chairman, and its 1965 executive report on carbon dioxide warned of the rapid melting of Antarctica, rising seas, increased acidity of fresh waters — changes that would require no less than a coordinated global effort to forestall.Yet emissions continued to rise, and at this rate, MacDonald warned, they could see a snowless New England, the swamping of major coastal cities, as much as a 40 percent decline in national wheat production, the forced migration of about one-quarter of the world’s population. Not within centuries — within their own lifetimes.
  • On May 22, Press wrote a letter to the president of the National Academy of Sciences requesting a full assessment of the carbon-dioxide issue. Jule Charney, the father of modern meteorology, would gather the nation’s top oceanographers, atmospheric scientists and climate modelers to judge whether MacDonald’s alarm was justified — whether the world was, in fact, headed to cataclysm.
  • If Charney’s group confirmed that the world was careering toward an existential crisis, the president would be forced to act.
  • Hansen turned from the moon to Venus. Why, he tried to determine, was its surface so hot? In 1967, a Soviet satellite beamed back the answer: The planet’s atmosphere was mainly carbon dioxide. Though once it may have had habitable temperatures, it was believed to have succumbed to a runaway greenhouse effect: As the sun grew brighter, Venus’s ocean began to evaporate, thickening the atmosphere, which forced yet greater evaporation — a self-perpetuating cycle that finally boiled off the ocean entirely and heated the planet’s surface to more than 800 degrees Fahrenheit
  • At the other extreme, Mars’s thin atmosphere had insufficient carbon dioxide to trap much heat at all, leaving it about 900 degrees colder. Earth lay in the middle, its Goldilocks greenhouse effect just strong enough to support life.
  • We want to learn more about Earth’s climate, Jim told Anniek — and how humanity can influence it. He would use giant new supercomputers to map the planet’s atmosphere. They would create Mirror Worlds: parallel realities that mimicked our own. These digital simulacra, technically called “general circulation models,” combined the mathematical formulas that governed the behavior of the sea, land and sky into a single computer model. Unlike the real world, they could be sped forward to reveal the future.
  • The government officials, many of them scientists themselves, tried to suppress their awe of the legends in their presence: Henry Stommel, the world’s leading oceanographer; his protégé, Carl Wunsch, a Jason; the Manhattan Project alumnus Cecil Leith; the Harvard planetary physicist Richard Goody. These were the men who, in the last three decades, had discovered foundational principles underlying the relationships among sun, atmosphere, land and ocean — which is to say, the climate.
  • When, at Charney’s request, Hansen programmed his model to consider a future of doubled carbon dioxide, it predicted a temperature increase of four degrees Celsius. That was twice as much warming as the prediction made by the most prominent climate modeler, Syukuro Manabe, whose government lab at Princeton was the first to model the greenhouse effect. The difference between the two predictions — between warming of two degrees Celsius and four degrees Celsius — was the difference between damaged coral reefs and no reefs whatsoever, between thinning forests and forests enveloped by desert, between catastrophe and chaos.
  • The discrepancy between the models, Arakawa concluded, came down to ice and snow. The whiteness of the world’s snowfields reflected light; if snow melted in a warmer climate, less radiation would escape the atmosphere, leading to even greater warming. Shortly before dawn, Arakawa concluded that Manabe had given too little weight to the influence of melting sea ice, while Hansen had overemphasized it. The best estimate lay in between. Which meant that the Jasons’ calculation was too optimistic. When carbon dioxide doubled in 2035 or thereabouts, global temperatures would increase between 1.5 and 4.5 degrees Celsius, with the most likely outcome a warming of three degrees.
  • within the highest levels of the federal government, the scientific community and the oil-and-gas industry — within the commonwealth of people who had begun to concern themselves with the future habitability of the planet — the Charney report would come to have the authority of settled fact. It was the summation of all the predictions that had come before, and it would withstand the scrutiny of the decades that followed it. Charney’s group had considered everything known about ocean, sun, sea, air and fossil fuels and had distilled it to a single number: three. When the doubling threshold was broached, as appeared inevitable, the world would warm three degrees Celsius
  • The last time the world was three degrees warmer was during the Pliocene, three million years ago, when beech trees grew in Antarctica, the seas were 80 feet higher and horses galloped across the Canadian coast of the Arctic Ocean.
  • After the publication of the Charney report, Exxon decided to create its own dedicated carbon-dioxide research program, with an annual budget of $600,000. Only Exxon was asking a slightly different question than Jule Charney. Exxon didn’t concern itself primarily with how much the world would warm. It wanted to know how much of the warming Exxon could be blamed for.
  • “It behooves us to start a very aggressive defensive program,” Shaw wrote in a memo to a manager, “because there is a good probability that legislation affecting our business will be passed.”
  • Shaw turned to Wallace Broecker, a Columbia University oceanographer who was the second author of Roger Revelle’s 1965 carbon-dioxide report for Lyndon Johnson. In 1977, in a presentation at the American Geophysical Union, Broecker predicted that fossil fuels would have to be restricted, whether by taxation or fiat. More recently, he had testified before Congress, calling carbon dioxide “the No.1 long-term environmental problem.” If presidents and senators trusted Broecker to tell them the bad news, he was good enough for Exxon.
  • The company had been studying the carbon-dioxide problem for decades, since before it changed its name to Exxon. In 1957, scientists from Humble Oil published a study tracking “the enormous quantity of carbon dioxide” contributed to the atmosphere since the Industrial Revolution “from the combustion of fossil fuels.” Even then, the observation that burning fossil fuels had increased the concentration of carbon in the atmosphere was well understood and accepted by Humble’s scientists.
  • The American Petroleum Institute, the industry’s largest trade association, asked the same question in 1958 through its air-pollution study group and replicated the findings made by Humble Oil. So did another A.P.I. study conducted by the Stanford Research Institute a decade later, in 1968, which concluded that the burning of fossil fuels would bring “significant temperature changes” by the year 2000 and ultimately “serious worldwide environmental changes,” including the melting of the Antarctic ice cap and rising seas.
  • The ritual repeated itself every few years. Industry scientists, at the behest of their corporate bosses, reviewed the problem and found good reasons for alarm and better excuses to do nothing. Why should they act when almost nobody within the United States government — nor, for that matter, within the environmental movement — seemed worried?
  • Why take on an intractable problem that would not be detected until this generation of employees was safely retired? Worse, the solutions seemed more punitive than the problem itself. Historically, energy use had correlated to economic growth — the more fossil fuels we burned, the better our lives became. Why mess with that?
  • That June, Jimmy Carter signed the Energy Security Act of 1980, which directed the National Academy of Sciences to start a multiyear, comprehensive study, to be called “Changing Climate,” that would analyze social and economic effects of climate change. More urgent, the National Commission on Air Quality, at the request of Congress, invited two dozen experts, including Henry Shaw himself, to a meeting in Florida to propose climate policy.
  • On April 3, 1980, Senator Paul Tsongas, a Massachusetts Democrat, held the first congressional hearing on carbon-dioxide buildup in the atmosphere. Gordon MacDonald testified that the United States should “take the initiative” and develop, through the United Nations, a way to coordinate every nation’s energy policies to address the problem.
  • During the expansion of the Clean Air Act, he pushed for the creation of the National Commission on Air Quality, charged with ensuring that the goals of the act were being met. One such goal was a stable global climate. The Charney report had made clear that goal was not being met, and now the commission wanted to hear proposals for legislation. It was a profound responsibility, and the two dozen experts invited to the Pink Palace — policy gurus, deep thinkers, an industry scientist and an environmental activist — had only three days to achieve it, but the utopian setting made everything seem possible
  • We have less time than we realize, said an M.I.T. nuclear engineer named David Rose, who studied how civilizations responded to large technological crises. “People leave their problems until the 11th hour, the 59th minute,” he said. “And then: ‘Eloi, Eloi, Lama Sabachthani?’ ” — “My God, my God, why hast thou forsaken me?”
  • The attendees seemed to share a sincere interest in finding solutions. They agreed that some kind of international treaty would ultimately be needed to keep atmospheric carbon dioxide at a safe level. But nobody could agree on what that level was.
  • William Elliott, a NOAA scientist, introduced some hard facts: If the United States stopped burning carbon that year, it would delay the arrival of the doubling threshold by only five years. If Western nations somehow managed to stabilize emissions, it would forestall the inevitable by only eight years. The only way to avoid the worst was to stop burning coal. Yet China, the Soviet Union and the United States, by far the world’s three largest coal producers, were frantically accelerating extraction.
  • “Do we have a problem?” asked Anthony Scoville, a congressional science consultant. “We do, but it is not the atmospheric problem. It is the political problem.” He doubted that any scientific report, no matter how ominous its predictions, would persuade politicians to act.
  • The talk of ending oil production stirred for the first time the gentleman from Exxon. “I think there is a transition period,” Henry Shaw said. “We are not going to stop burning fossil fuels and start looking toward solar or nuclear fusion and so on. We are going to have a very orderly transition from fossil fuels to renewable energy sources.”
  • What if the problem was that they were thinking of it as a problem? “What I am saying,” Scoville continued, “is that in a sense we are making a transition not only in energy but the economy as a whole.” Even if the coal and oil industries collapsed, renewable technologies like solar energy would take their place. Jimmy Carter was planning to invest $80 billion in synthetic fuel. “My God,” Scoville said, “with $80 billion, you could have a photovoltaics industry going that would obviate the need for synfuels forever!”
  • nobody could agree what to do. John Perry, a meteorologist who had worked as a staff member on the Charney report, suggested that American energy policy merely “take into account” the risks of global warming, though he acknowledged that a nonbinding measure might seem “intolerably stodgy.” “It is so weak,” Pomerance said, the air seeping out of him, “as to not get us anywhere.”
  • Scoville pointed out that the United States was responsible for the largest share of global carbon emissions. But not for long. “If we’re going to exercise leadership,” he said, “the opportunity is now.
  • One way to lead, he proposed, would be to classify carbon dioxide as a pollutant under the Clean Air Act and regulate it as such. This was received by the room like a belch. By Scoville’s logic, every sigh was an act of pollution. Did the science really support such an extreme measure? The Charney report did exactly that, Pomerance said.
  • Slade, the director of the Energy Department’s carbon-dioxide program, considered the lag a saving grace. If changes did not occur for a decade or more, he said, those in the room couldn’t be blamed for failing to prevent them. So what was the problem?
  • “Call it whatever.” Besides, Pomerance added, they didn’t have to ban coal tomorrow. A pair of modest steps could be taken immediately to show the world that the United States was serious: the implementation of a carbon tax and increased investment in renewable energy. Then the United States could organize an international summit meeting to address climate change
  • these two dozen experts, who agreed on the major points and had made a commitment to Congress, could not draft a single paragraph. Hours passed in a hell of fruitless negotiation, self-defeating proposals and impulsive speechifying. Pomerance and Scoville pushed to include a statement calling for the United States to “sharply accelerate international dialogue,” but they were sunk by objections and caveats.
  • They never got to policy proposals. They never got to the second paragraph. The final statement was signed by only the moderator, who phrased it more weakly than the declaration calling for the workshop in the first place. “The guide I would suggest,” Jorling wrote, “is whether we know enough not to recommend changes in existing policy.”
  • Pomerance had seen enough. A consensus-based strategy would not work — could not work — without American leadership. And the United States wouldn’t act unless a strong leader persuaded it to do so — someone who would speak with authority about the science, demand action from those in power and risk everything in pursuit of justice.
  • The meeting ended Friday morning. On Tuesday, four days later, Ronald Reagan was elected president.
  • ‘Otherwise, They’ll Gurgle’ November 1980-September 1981
  • In the midst of this carnage, the Council on Environmental Quality submitted a report to the White House warning that fossil fuels could “permanently and disastrously” alter Earth’s atmosphere, leading to “a warming of the Earth, possibly with very serious effects.” Reagan did not act on the council’s advice. Instead, his administration considered eliminating the council.
  • After the election, Reagan considered plans to close the Energy Department, increase coal production on federal land and deregulate surface coal mining. Once in office, he appointed James Watt, the president of a legal firm that fought to open public lands to mining and drilling, to run the Interior Department. “We’re deliriously happy,” the president of the National Coal Association was reported to have said. Reagan preserved the E.P.A. but named as its administrator Anne Gorsuch, an anti-regulation zealot who proceeded to cut the agency’s staff and budget by about a quarter
  • Reagan “has declared open war on solar energy,” the director of the nation’s lead solar-energy research agency said, after he was asked to resign). Reagan appeared determined to reverse the environmental achievements of Jimmy Carter, before undoing those of Richard Nixon, Lyndon Johnson, John F. Kennedy and, if he could get away with it, Theodore Roosevelt.
  • When Reagan considered closing the Council on Environmental Quality, its acting chairman, Malcolm Forbes Baldwin, wrote to the vice president and the White House chief of staff begging them to reconsider; in a major speech the same week, “A Conservative’s Program for the Environment,” Baldwin argued that it was “time for today’s conservatives explicitly to embrace environmentalism.” Environmental protection was not only good sense. It was good business. What could be more conservative than an efficient use of resources that led to fewer federal subsidies?
  • Meanwhile the Charney report continued to vibrate at the periphery of public consciousness. Its conclusions were confirmed by major studies from the Aspen Institute, the International Institute for Applied Systems Analysis near Vienna and the American Association for the Advancement of Science. Every month or so, nationally syndicated articles appeared summoning apocalypse: “Another Warning on ‘Greenhouse Effect,’ ” “Global Warming Trend ‘Beyond Human Experience,’ ” “Warming Trend Could ‘Pit Nation Against Nation.’
  • Pomerance read on the front page of The New York Times on Aug. 22, 1981, about a forthcoming paper in Science by a team of seven NASA scientists. They had found that the world had already warmed in the past century. Temperatures hadn’t increased beyond the range of historical averages, but the scientists predicted that the warming signal would emerge from the noise of routine weather fluctuations much sooner than previously expected. Most unusual of all, the paper ended with a policy recommendation: In the coming decades, the authors wrote, humankind should develop alternative sources of energy and use fossil fuels only “as necessary.” The lead author was James Hansen.
  • Pomerance listened and watched. He understood Hansen’s basic findings well enough: Earth had been warming since 1880, and the warming would reach “almost unprecedented magnitude” in the next century, leading to the familiar suite of terrors, including the flooding of a 10th of New Jersey and a quarter of Louisiana and Florida. But Pomerance was excited to find that Hansen could translate the complexities of atmospheric science into plain English.
  • 7. ‘We’re All Going to Be the Victims’ March 1982
  • Gore had learned about climate change a dozen years earlier as an undergraduate at Harvard, when he took a class taught by Roger Revelle. Humankind was on the brink of radically transforming the global atmosphere, Revelle explained, drawing Keeling’s rising zigzag on the blackboard, and risked bringing about the collapse of civilization. Gore was stunned: Why wasn’t anyone talking about this?
  • Most in Congress considered the science committee a legislative backwater, if they considered it at all; this made Gore’s subcommittee, which had no legislative authority, an afterthought to an afterthought. That, Gore vowed, would change. Environmental and health stories had all the elements of narrative drama: villains, victims and heroes. In a hearing, you could summon all three, with the chairman serving as narrator, chorus and moral authority. He told his staff director that he wanted to hold a hearing every week.
  • The Revelle hearing went as Grumbly had predicted. The urgency of the issue was lost on Gore’s older colleagues, who drifted in and out while the witnesses testified. There were few people left by the time the Brookings Institution economist Lester Lave warned that humankind’s profligate exploitation of fossil fuels posed an existential test to human nature. “Carbon dioxide stands as a symbol now of our willingness to confront the future,” he said. “It will be a sad day when we decide that we just don’t have the time or thoughtfulness to address those issues.”
  • That night, the news programs featured the resolution of the baseball strike, the ongoing budgetary debate and the national surplus of butter.
  • There emerged, despite the general comity, a partisan divide. Unlike the Democrats, the Republicans demanded action. “Today I have a sense of déjà vu,” said Robert Walker, a Republican from Pennsylvania. In each of the last five years, he said, “we have been told and told and told that there is a problem with the increasing carbon dioxide in the atmosphere. We all accept that fact, and we realize that the potential consequences are certainly major in their impact on mankind.” Yet they had failed to propose a single law. “Now is the time,” he said. “The research is clear. It is up to us now to summon the political will.”
  • Hansen flew to Washington to testify on March 25, 1982, performing before a gallery even more thinly populated than at Gore’s first hearing on the greenhouse effect. Gore began by attacking the Reagan administration for cutting funding for carbon-dioxide research despite the “broad consensus in the scientific community that the greenhouse effect is a reality.” William Carney, a Republican from New York, bemoaned the burning of fossil fuels and argued passionately that science should serve as the basis for legislative policy
  • the experts invited by Gore agreed with the Republicans: The science was certain enough. Melvin Calvin, a Berkeley chemist who won the Nobel Prize for his work on the carbon cycle, said that it was useless to wait for stronger evidence of warming. “You cannot do a thing about it when the signals are so big that they come out of the noise,” he said. “You have to look for early warning signs.”
  • Hansen’s job was to share the warning signs, to translate the data into plain English. He explained a few discoveries that his team had made — not with computer models but in libraries. By analyzing records from hundreds of weather stations, he found that the surface temperature of the planet had already increased four-tenths of a degree Celsius in the previous century. Data from several hundred tide-gauge stations showed that the oceans had risen four inches since the 1880s
  • It occurred to Hansen that this was the only political question that mattered: How long until the worst began? It was not a question on which geophysicists expended much effort; the difference between five years and 50 years in the future was meaningless in geologic time. Politicians were capable of thinking only in terms of electoral time: six years, four years, two years. But when it came to the carbon problem, the two time schemes were converging.
  • “Within 10 or 20 years,” Hansen said, “we will see climate changes which are clearly larger than the natural variability.” James Scheuer wanted to make sure he understood this correctly. No one else had predicted that the signal would emerge that quickly. “If it were one or two degrees per century,” he said, “that would be within the range of human adaptability. But we are pushing beyond the range of human adaptability.” “Yes,” Hansen said.
  • How soon, Scheuer asked, would they have to change the national model of energy production? Hansen hesitated — it wasn’t a scientific question. But he couldn’t help himself. He had been irritated, during the hearing, by all the ludicrous talk about the possibility of growing more trees to offset emissions. False hopes were worse than no hope at all: They undermined the prospect of developing real solutions. “That time is very soon,” Hansen said finally. “My opinion is that it is past,” Calvin said, but he was not heard because he spoke from his seat. He was told to speak into the microphone. “It is already later,” Calvin said, “than you think.”
  • From Gore’s perspective, the hearing was an unequivocal success. That night Dan Rather devoted three minutes of “CBS Evening News” to the greenhouse effect. A correspondent explained that temperatures had increased over the previous century, great sheets of pack ice in Antarctica were rapidly melting, the seas were rising; Calvin said that “the trend is all in the direction of an impending catastrophe”; and Gore mocked Reagan for his shortsightedness. Later, Gore could take credit for protecting the Energy Department’s carbon-dioxide program, which in the end was largely preserved.
  • 8. ‘The Direction of an Impending Catastrophe’ 1982
  • Following Henry Shaw’s recommendation to establish credibility ahead of any future legislative battles, Exxon had begun to spend conspicuously on global-warming research. It donated tens of thousands of dollars to some of the most prominent research efforts, including one at Woods Hole led by the ecologist George Woodwell, who had been calling for major climate policy as early as the mid-1970s, and an international effort coordinated by the United Nations. Now Shaw offered to fund the October 1982 symposium on climate change at Columbia’s Lamont-Doherty campus.
  • David boasted that Exxon would usher in a new global energy system to save the planet from the ravages of climate change. He went so far as to argue that capitalism’s blind faith in the wisdom of the free market was “less than satisfying” when it came to the greenhouse effect. Ethical considerations were necessary, too. He pledged that Exxon would revise its corporate strategy to account for climate change, even if it were not “fashionable” to do so. As Exxon had already made heavy investments in nuclear and solar technology, he was “generally upbeat” that Exxon would “invent” a future of renewable energy.
  • Hansen had reason to feel upbeat himself. If the world’s largest oil-and-gas company supported a new national energy model, the White House would not stand in its way. The Reagan administration was hostile to change from within its ranks. But it couldn’t be hostile to Exxon.
  • The carbon-dioxide issue was beginning to receive major national attention — Hansen’s own findings had become front-page news, after all. What started as a scientific story was turning into a political story.
  • The political realm was itself a kind of Mirror World, a parallel reality that crudely mimicked our own. It shared many of our most fundamental laws, like the laws of gravity and inertia and publicity. And if you applied enough pressure, the Mirror World of politics could be sped forward to reveal a new future. Hansen was beginning to understand that too.
  • 1. ‘Caution, Not Panic’ 1983-1984
  • in the fall of 1983, the climate issue entered an especially long, dark winter. And all because of a single report that had done nothing to change the state of climate science but transformed the state of climate politics.
  • After the publication of the Charney report in 1979, Jimmy Carter had directed the National Academy of Sciences to prepare a comprehensive, $1 million analysis of the carbon-dioxide problem: a Warren Commission for the greenhouse effect. A team of scientist-dignitaries — among them Revelle, the Princeton modeler Syukuro Manabe and the Harvard political economist Thomas Schelling, one of the intellectual architects of Cold War game theory — would review the literature, evaluate the consequences of global warming for the world order and propose remedies
  • Then Reagan won the White House.
  • the incipient report served as the Reagan administration’s answer to every question on the subject. There could be no climate policy, Fred Koomanoff and his associates said, until the academy ruled. In the Mirror World of the Reagan administration, the warming problem hadn’t been abandoned at all. A careful, comprehensive solution was being devised. Everyone just had to wait for the academy’s elders to explain what it was.
  • The committee’s chairman, William Nierenberg — a Jason, presidential adviser and director of Scripps, the nation’s pre-eminent oceanographic institution — argued that action had to be taken immediately, before all the details could be known with certainty, or else it would be too late.
  • Better to bet on American ingenuity to save the day. Major interventions in national energy policy, taken immediately, might end up being more expensive, and less effective, than actions taken decades in the future, after more was understood about the economic and social consequences of a warmer planet. Yes, the climate would change, mostly for the worst, but future generations would be better equipped to change with it.
  • Government officials who knew Nierenberg were not surprised by his conclusions: He was an optimist by training and experience, a devout believer in the doctrine of American exceptionalism, one of the elite class of scientists who had helped the nation win a global war, invent the most deadly weapon conceivable and create the booming aerospace and computer industries. America had solved every existential problem it had confronted over the previous generation; it would not be daunted by an excess of carbon dioxide. Nierenberg had also served on Reagan’s transition team. Nobody believed that he had been directly influenced by his political connections, but his views — optimistic about the saving graces of market forces, pessimistic about the value of government regulation — reflected all the ardor of his party.
  • That’s what Nierenberg wrote in “Changing Climate.” But it’s not what he said in the press interviews that followed. He argued the opposite: There was no urgent need for action. The public should not entertain the most “extreme negative speculations” about climate change (despite the fact that many of those speculations appeared in his report). Though “Changing Climate” urged an accelerated transition to renewable fuels, noting that it would take thousands of years for the atmosphere to recover from the damage of the last century, Nierenberg recommended “caution, not panic.” Better to wait and see
  • The damage of “Changing Climate” was squared by the amount of attention it received. Nierenberg’s speech in the Great Hall, being one-500th the length of the actual assessment, received 500 times the press coverage. As The Wall Street Journal put it, in a line echoed by trade journals across the nation: “A panel of top scientists has some advice for people worried about the much-publicized warming of the Earth’s climate: You can cope.”
  • On “CBS Evening News,” Dan Rather said the academy had given “a cold shoulder” to a grim, 200-page E.P.A. assessment published earlier that week (titled “Can We Delay a Greenhouse Warming?”; the E.P.A.’s answer, reduced to a word, was no). The Washington Post described the two reports, taken together, as “clarion calls to inaction.
  • George Keyworth II, Reagan’s science adviser. Keyworth used Nierenberg’s optimism as reason to discount the E.P.A.’s “unwarranted and unnecessarily alarmist” report and warned against taking any “near-term corrective action” on global warming. Just in case it wasn’t clear, Keyworth added, “there are no actions recommended other than continued research.”
  • Edward David Jr., two years removed from boasting of Exxon’s commitment to transforming global energy policy, told Science that the corporation had reconsidered. “Exxon has reverted to being mainly a supplier of conventional hydrocarbon fuels — petroleum products, natural gas and steam coal,” David said. The American Petroleum Institute canceled its own carbon-dioxide research program, too.
  • Exxon soon revised its position on climate-change research. In a presentation at an industry conference, Henry Shaw cited “Changing Climate” as evidence that “the general consensus is that society has sufficient time to technologically adapt to a CO₂ greenhouse effect.” If the academy had concluded that regulations were not a serious option, why should Exxon protest
  • 2. ‘You Scientists Win’ 1985
  • 3. The Size of The Human Imagination Spring-Summer 1986
  • Curtis Moore’s proposal: Use ozone to revive climate. The ozone hole had a solution — an international treaty, already in negotiation. Why not hitch the milk wagon to the bullet train? Pomerance was skeptical. The problems were related, sure: Without a reduction in CFC emissions, you didn’t have a chance of averting cataclysmic global warming. But it had been difficult enough to explain the carbon issue to politicians and journalists; why complicate the sales pitch? Then again, he didn’t see what choice he had. The Republicans controlled the Senate, and Moore was his connection to the Senate’s environmental committee.
  • Pomerance met with Senator John Chafee, a Republican from Rhode Island, and helped persuade him to hold a double-barreled hearing on the twin problems of ozone and carbon dioxide on June 10 and 11, 1986
  • F.Sherwood Rowland, Robert Watson, a NASA scientist, and Richard Benedick, the administration’s lead representative in international ozone negotiations, would discuss ozone; James Hansen, Al Gore, the ecologist George Woodwell and Carl Wunsch, a veteran of the Charney group, would testify about climate change.
  • As Pomerance had hoped, fear about the ozone layer ensured a bounty of press coverage for the climate-change testimony. But as he had feared, it caused many people to conflate the two crises. One was Peter Jennings, who aired the video on ABC’s “World News Tonight,” warning that the ozone hole “could lead to flooding all over the world, also to drought and to famine.”
  • The confusion helped: For the first time since the “Changing Climate” report, global-warming headlines appeared by the dozen. William Nierenberg’s “caution, not panic” line was inverted. It was all panic without a hint of caution: “A Dire Forecast for ‘Greenhouse’ Earth” (the front page of The Washington Post); “Scientists Predict Catastrophes in Growing Global Heat Wave” (Chicago Tribune); “Swifter Warming of Globe Foreseen” (The New York Times).
  • After three years of backsliding and silence, Pomerance was exhilarated to see interest in the issue spike overnight. Not only that: A solution materialized, and a moral argument was passionately articulated — by Rhode Island’s Republican senator no less. “Ozone depletion and the greenhouse effect can no longer be treated solely as important scientific questions,” Chafee said. “They must be seen as critical problems facing the nations of the world, and they are problems that demand solutions.”
  • The old canard about the need for more research was roundly mocked — by Woodwell, by a W.R.I. colleague named Andrew Maguire, by Senator George Mitchell, a Democrat from Maine. “Scientists are never 100 percent certain,” the Princeton historian Theodore Rabb testified. “That notion of total certainty is something too elusive ever to be sought.” As Pomerance had been saying since 1979, it was past time to act. Only now the argument was so broadly accepted that nobody dared object.
  • The ozone hole, Pomerance realized, had moved the public because, though it was no more visible than global warming, people could be made to see it. They could watch it grow on video. Its metaphors were emotionally wrought: Instead of summoning a glass building that sheltered plants from chilly weather (“Everything seems to flourish in there”), the hole evoked a violent rending of the firmament, inviting deathly radiation. Americans felt that their lives were in danger. An abstract, atmospheric problem had been reduced to the size of the human imagination. It had been made just small enough, and just large enough, to break through.
  • Four years after “Changing Climate,” two years after a hole had torn open the firmament and a month after the United States and more than three dozen other nations signed a treaty to limit use of CFCs, the climate-change corps was ready to celebrate. It had become conventional wisdom that climate change would follow ozone’s trajectory. Reagan’s E.P.A. administrator, Lee M. Thomas, said as much the day he signed the Montreal Protocol on Substances That Deplete the Ozone Layer (the successor to the Vienna Convention), telling reporters that global warming was likely to be the subject of a future international agreement
  • Congress had already begun to consider policy — in 1987 alone, there were eight days of climate hearings, in three committees, across both chambers of Congress; Senator Joe Biden, a Delaware Democrat, had introduced legislation to establish a national climate-change strategy. And so it was that Jim Hansen found himself on Oct. 27 in the not especially distinguished ballroom of the Quality Inn on New Jersey Avenue, a block from the Capitol, at “Preparing for Climate Change,” which was technically a conference but felt more like a wedding.
  • John Topping was an old-line Rockefeller Republican, a Commerce Department lawyer under Nixon and an E.P.A. official under Reagan. He first heard about the climate problem in the halls of the E.P.A. in 1982 and sought out Hansen, who gave him a personal tutorial. Topping was amazed to discover that out of the E.P.A.’s 13,000-person staff, only seven people, by his count, were assigned to work on climate, though he figured it was more important to the long-term security of the nation than every other environmental issue combined.
  • Glancing around the room, Jim Hansen could chart, like an arborist counting rings on a stump, the growth of the climate issue over the decade. Veterans like Gordon MacDonald, George Woodwell and the environmental biologist Stephen Schneider stood at the center of things. Former and current staff members from the congressional science committees (Tom Grumbly, Curtis Moore, Anthony Scoville) made introductions to the congressmen they advised. Hansen’s owlish nemesis Fred Koomanoff was present, as were his counterparts from the Soviet Union and Western Europe. Rafe Pomerance’s cranium could be seen above the crowd, but unusually he was surrounded by colleagues from other environmental organizations that until now had shown little interest in a diffuse problem with no proven fund-raising record. The party’s most conspicuous newcomers, however, the outermost ring, were the oil-and-gas executives.
  • That evening, as a storm spat and coughed outside, Rafe Pomerance gave one of his exhortative speeches urging cooperation among the various factions, and John Chafee and Roger Revelle received awards; introductions were made and business cards earnestly exchanged. Not even a presentation by Hansen of his research could sour the mood. The next night, on Oct. 28, at a high-spirited dinner party in Topping’s townhouse on Capitol Hill, the oil-and-gas men joked with the environmentalists, the trade-group representatives chatted up the regulators and the academics got merrily drunk. Mikhail Budyko, the don of the Soviet climatologists, settled into an extended conversation about global warming with Topping’s 10-year-old son. It all seemed like the start of a grand bargain, a uniting of factions — a solution.
  • Hansen was accustomed to the bureaucratic nuisances that attended testifying before Congress; before a hearing, he had to send his formal statement to NASA headquarters, which forwarded it to the White House’s Office of Management and Budget for approval. “Major greenhouse climate changes are a certainty,” he had written. “By the 2010s [in every scenario], essentially the entire globe has very substantial warming.”
  • By all appearances, plans for major policy continued to advance rapidly. After the Johnston hearing, Timothy Wirth, a freshman Democratic senator from Colorado on the energy committee, began to plan a comprehensive package of climate-change legislation — a New Deal for global warming. Wirth asked a legislative assistant, David Harwood, to consult with experts on the issue, beginning with Rafe Pomerance, in the hope of converting the science of climate change into a new national energy policy.
  • In March 1988, Wirth joined 41 other senators, nearly half of them Republicans, to demand that Reagan call for an international treaty modeled after the ozone agreement. Because the United States and the Soviet Union were the world’s two largest contributors of carbon emissions, responsible for about one-third of the world total, they should lead the negotiations. Reagan agreed. In May, he signed a joint statement with Mikhail Gorbachev that included a pledge to cooperate on global warming.
  • Al Gore himself had, for the moment, withdrawn his political claim to the issue. In 1987, at the age of 39, Gore announced that he was running for president, in part to bring attention to global warming, but he stopped emphasizing it after the subject failed to captivate New Hampshire primary voters.
  • 5. ‘You Will See Things That You Shall Believe’ Summer 1988
  • It was the hottest and driest summer in history. Everywhere you looked, something was bursting into flames. Two million acres in Alaska incinerated, and dozens of major fires scored the West. Yellowstone National Park lost nearly one million acres. Smoke was visible from Chicago, 1,600 miles away.
  • In Nebraska, suffering its worst drought since the Dust Bowl, there were days when every weather station registered temperatures above 100 degrees. The director of the Kansas Department of Health and Environment warned that the drought might be the dawning of a climatic change that within a half century could turn the state into a desert.
  • On June 22 in Washington, where it hit 100 degrees, Rafe Pomerance received a call from Jim Hansen, who was scheduled to testify the following morning at a Senate hearing called by Timothy Wirth. “I hope we have good media coverage tomorrow,” Hansen said.
  • Hansen had just received the most recent global temperature data. Just over halfway into the year, 1988 was setting records. Already it had nearly clinched the hottest year in history. Ahead of schedule, the signal was emerging from the noise. “I’m going to make a pretty strong statement,” Hansen said.
  • Hansen returned to his testimony. He wrote: “The global warming is now large enough that we can ascribe with a high degree of confidence a cause-and-effect relationship to the greenhouse effect.” He wrote: “1988 so far is so much warmer than 1987, that barring a remarkable and improbable cooling, 1988 will be the warmest year on record.” He wrote: “The greenhouse effect has been detected, and it is changing our climate now.”
  • “We have only one planet,” Senator Bennett Johnston intoned. “If we screw it up, we have no place to go.” Senator Max Baucus, a Democrat from Montana, called for the United Nations Environment Program to begin preparing a global remedy to the carbon-dioxide problem. Senator Dale Bumpers, a Democrat of Arkansas, previewed Hansen’s testimony, saying that it “ought to be cause for headlines in every newspaper in America tomorrow morning.” The coverage, Bumpers emphasized, was a necessary precursor to policy. “Nobody wants to take on any of the industries that produce the things that we throw up into the atmosphere,” he said. “But what you have are all these competing interests pitted against our very survival.”
  • Hansen, wiping his brow, spoke without affect, his eyes rarely rising from his notes. The warming trend could be detected “with 99 percent confidence,” he said. “It is changing our climate now.” But he saved his strongest comment for after the hearing, when he was encircled in the hallway by reporters. “It is time to stop waffling so much,” he said, “and say that the evidence is pretty strong that the greenhouse effect is here.”
  • The press followed Bumpers’s advice. Hansen’s testimony prompted headlines in dozens of newspapers across the country, including The New York Times, which announced, across the top of its front page: “Global Warming Has Begun, Expert Tells Senate.”
  • Rafe Pomerance called his allies on Capitol Hill, the young staff members who advised politicians, organized hearings, wrote legislation. We need to finalize a number, he told them, a specific target, in order to move the issue — to turn all this publicity into policy. The Montreal Protocol had called for a 50 percent reduction in CFC emissions by 1998. What was the right target for carbon emissions? It wasn’t enough to exhort nations to do better. That kind of talk might sound noble, but it didn’t change investments or laws. They needed a hard goal — something ambitious but reasonable. And they needed it soon: Just four days after Hansen’s star turn, politicians from 46 nations and more than 300 scientists would convene in Toronto at the World Conference on the Changing Atmosphere, an event described by Philip Shabecoff of The New York Times as “Woodstock for climate change.”
  • Pomerance had a proposal: a 20 percent reduction in carbon emissions by 2000. Ambitious, Harwood said. In all his work planning climate policy, he had seen no assurance that such a steep drop in emissions was possible. Then again, 2000 was more than a decade off, so it allowed for some flexibility.
  • Mintzer pointed out that a 20 percent reduction was consistent with the academic literature on energy efficiency. Various studies over the years had shown that you could improve efficiency in most energy systems by roughly 20 percent if you adopted best practices.
  • Of course, with any target, you had to take into account the fact that the developing world would inevitably consume much larger quantities of fossil fuels by 2000. But those gains could be offset by a wider propagation of the renewable technologies already at hand — solar, wind, geothermal. It was not a rigorous scientific analysis, Mintzer granted, but 20 percent sounded plausible. We wouldn’t need to solve cold fusion or ask Congress to repeal the law of gravity. We could manage it with the knowledge and technology we already had.
  • Besides, Pomerance said, 20 by 2000 sounds good.
  • The conference’s final statement, signed by all 400 scientists and politicians in attendance, repeated the demand with a slight variation: a 20 percent reduction in carbon emissions by 2005. Just like that, Pomerance’s best guess became global diplomatic policy.
  • Hansen, emerging from Anniek’s successful cancer surgery, took it upon himself to start a one-man public information campaign. He gave news conferences and was quoted in seemingly every article about the issue; he even appeared on television with homemade props. Like an entrant at an elementary-school science fair, he made “loaded dice” out of sections of cardboard and colored paper to illustrate the increased likelihood of hotter weather in a warmer climate. Public awareness of the greenhouse effect reached a new high of 68 percent
  • global warming became a major subject of the presidential campaign. While Michael Dukakis proposed tax incentives to encourage domestic oil production and boasted that coal could satisfy the nation’s energy needs for the next three centuries, George Bush took advantage. “I am an environmentalist,” he declared on the shore of Lake Erie, the first stop on a five-state environmental tour that would take him to Boston Harbor, Dukakis’s home turf. “Those who think we are powerless to do anything about the greenhouse effect,” he said, “are forgetting about the White House effect.”
  • His running mate emphasized the ticket’s commitment to the issue at the vice-presidential debate. “The greenhouse effect is an important environmental issue,” Dan Quayle said. “We need to get on with it. And in a George Bush administration, you can bet that we will.”
  • This kind of talk roused the oil-and-gas men. “A lot of people on the Hill see the greenhouse effect as the issue of the 1990s,” a gas lobbyist told Oil & Gas Journal. Before a meeting of oil executives shortly after the “environmentalist” candidate won the election, Representative Dick Cheney, a Wyoming Republican, warned, “It’s going to be very difficult to fend off some kind of gasoline tax.” The coal industry, which had the most to lose from restrictions on carbon emissions, had moved beyond denial to resignation. A spokesman for the National Coal Association acknowledged that the greenhouse effect was no longer “an emerging issue. It is here already, and we’ll be hearing more and more about it.”
  • By the end of the year, 32 climate bills had been introduced in Congress, led by Wirth’s omnibus National Energy Policy Act of 1988. Co-sponsored by 13 Democrats and five Republicans, it established as a national goal an “International Global Agreement on the Atmosphere by 1992,” ordered the Energy Department to submit to Congress a plan to reduce energy use by at least 2 percent a year through 2005 and directed the Congressional Budget Office to calculate the feasibility of a carbon tax. A lawyer for the Senate energy committee told an industry journal that lawmakers were “frightened” by the issue and predicted that Congress would eventually pass significant legislation after Bush took office
  • The other great powers refused to wait. The German Parliament created a special commission on climate change, which concluded that action had to be taken immediately, “irrespective of any need for further research,” and that the Toronto goal was inadequate; it recommended a 30 percent reduction of carbon emissions
  • Margaret Thatcher, who had studied chemistry at Oxford, warned in a speech to the Royal Society that global warming could “greatly exceed the capacity of our natural habitat to cope” and that “the health of the economy and the health of our environment are totally dependent upon each other.”
  • The prime ministers of Canada and Norway called for a binding international treaty on the atmosphere; Sweden’s Parliament went further, announcing a national strategy to stabilize emissions at the 1988 level and eventually imposing a carbon tax
  • the United Nations unanimously endorsed the establishment, by the World Meteorological Organization and the United Nations Environment Program, of an Intergovernmental Panel on Climate Change, composed of scientists and policymakers, to conduct scientific assessments and develop global climate policy.
  • One of the I.P.C.C.’s first sessions to plan an international treaty was hosted by the State Department, 10 days after Bush’s inauguration. James Baker chose the occasion to make his first speech as secretary of state. “We can probably not afford to wait until all of the uncertainties about global climate change have been resolved,” he said. “Time will not make the problem go away.”
  • : On April 14, 1989, a bipartisan group of 24 senators, led by the majority leader, George Mitchell, requested that Bush cut emissions in the United States even before the I.P.C.C.’s working group made its recommendation. “We cannot afford the long lead times associated with a comprehensive global agreement,” the senators wrote. Bush had promised to combat the greenhouse effect with the White House effect. The self-proclaimed environmentalist was now seated in the Oval Office. It was time.
  • 8. ‘You Never Beat The White House’ April 1989
  • After Jim Baker gave his boisterous address to the I.P.C.C. working group at the State Department, he received a visit from John Sununu, Bush’s chief of staff. Leave the science to the scientists, Sununu told Baker. Stay clear of this greenhouse-effect nonsense. You don’t know what you’re talking about. Baker, who had served as Reagan’s chief of staff, didn’t speak about the subject again.
  • despite his reputation as a political wolf, he still thought of himself as a scientist — an “old engineer,” as he was fond of putting it, having earned a Ph.D. in mechanical engineering from M.I.T. decades earlier. He lacked the reflexive deference that so many of his political generation reserved for the class of elite government scientists.
  • Since World War II, he believed, conspiratorial forces had used the imprimatur of scientific knowledge to advance an “anti-growth” doctrine. He reserved particular disdain for Paul Ehrlich’s “The Population Bomb,” which prophesied that hundreds of millions of people would starve to death if the world took no step to curb population growth; the Club of Rome, an organization of European scientists, heads of state and economists, which similarly warned that the world would run out of natural resources; and as recently as the mid-’70s, the hypothesis advanced by some of the nation’s most celebrated scientists — including Carl Sagan, Stephen Schneider and Ichtiaque Rasool — that a new ice age was dawning, thanks to the proliferation of man-made aerosols. All were theories of questionable scientific merit, portending vast, authoritarian remedies to halt economic progress.
  • When Mead talked about “far-reaching” decisions and “long-term consequences,” Sununu heard the marching of jackboots.
  • Sununu had suspected that the greenhouse effect belonged to this nefarious cabal since 1975, when the anthropologist Margaret Mead convened a symposium on the subject at the National Institute of Environmental Health Sciences.
  • While Sununu and Darman reviewed Hansen’s statements, the E.P.A. administrator, William K. Reilly, took a new proposal to the White House. The next meeting of the I.P.C.C.’s working group was scheduled for Geneva the following month, in May; it was the perfect occasion, Reilly argued, to take a stronger stand on climate change. Bush should demand a global treaty to reduce carbon emissions.
  • Sununu wouldn’t budge. He ordered the American delegates not to make any commitment in Geneva. Very soon after that, someone leaked the exchange to the press.
  • A deputy of Jim Baker pulled Reilly aside. He said he had a message from Baker, who had observed Reilly’s infighting with Sununu. “In the long run,” the deputy warned Reilly, “you never beat the White House.”
  • 9. ‘A Form of Science Fraud’ May 1989
  • The cameras followed Hansen and Gore into the marbled hallway. Hansen insisted that he wanted to focus on the science. Gore focused on the politics. “I think they’re scared of the truth,” he said. “They’re scared that Hansen and the other scientists are right and that some dramatic policy changes are going to be needed, and they don’t want to face up to it.”
  • The censorship did more to publicize Hansen’s testimony and the dangers of global warming than anything he could have possibly said. At the White House briefing later that morning, Press Secretary Marlin Fitzwater admitted that Hansen’s statement had been changed. He blamed an official “five levels down from the top” and promised that there would be no retaliation. Hansen, he added, was “an outstanding and distinguished scientist” and was “doing a great job.”
  • 10. The White House Effect Fall 1989
  • The Los Angeles Times called the censorship “an outrageous assault.” The Chicago Tribune said it was the beginning of “a cold war on global warming,” and The New York Times warned that the White House’s “heavy-handed intervention sends the signal that Washington wants to go slow on addressing the greenhouse problem.”
  • Darman went to see Sununu. He didn’t like being accused of censoring scientists. They needed to issue some kind of response. Sununu called Reilly to ask if he had any ideas. We could start, Reilly said, by recommitting to a global climate treaty. The United States was the only Western nation on record as opposing negotiations.
  • Sununu sent a telegram to Geneva endorsing a plan “to develop full international consensus on necessary steps to prepare for a formal treaty-negotiating process. The scope and importance of this issue are so great that it is essential for the U.S. to exercise leadership.”
  • Sununu seethed at any mention of the subject. He had taken it upon himself to study more deeply the greenhouse effect; he would have a rudimentary, one-dimensional general circulation model installed on his personal desktop computer. He decided that the models promoted by Jim Hansen were a lot of bunk. They were horribly imprecise in scale and underestimated the ocean’s ability to mitigate warming. Sununu complained about Hansen to D. Allan Bromley, a nuclear physicist from Yale who, at Sununu’s recommendation, was named Bush’s science adviser. Hansen’s findings were “technical poppycock” that didn’t begin to justify such wild-eyed pronouncements that “the greenhouse effect is here” or that the 1988 heat waves could be attributed to global warming, let alone serve as the basis for national economic policy.
  • When a junior staff member in the Energy Department, in a meeting at the White House with Sununu and Reilly, mentioned an initiative to reduce fossil-fuel use, Sununu interrupted her. “Why in the world would you need to reduce fossil-fuel use?” he asked. “Because of climate change,” the young woman replied. “I don’t want anyone in this administration without a scientific background using ‘climate change’ or ‘global warming’ ever again,” he said. “If you don’t have a technical basis for policy, don’t run around making decisions on the basis of newspaper headlines.” After the meeting, Reilly caught up to the staff member in the hallway. She was shaken. Don’t take it personally, Reilly told her. Sununu might have been looking at you, but that was directed at me.
  • Reilly, for his part, didn’t entirely blame Sununu for Bush’s indecision on the prospect of a climate treaty. The president had never taken a vigorous interest in global warming and was mainly briefed about it by nonscientists. Bush had brought up the subject on the campaign trail, in his speech about the White House effect, after leafing through a briefing booklet for a new issue that might generate some positive press. When Reilly tried in person to persuade him to take action, Bush deferred to Sununu and Baker. Why don’t the three of you work it out, he said. Let me know when you decide
  • Relations between Sununu and Reilly became openly adversarial. Reilly, Sununu thought, was a creature of the environmental lobby. He was trying to impress his friends at the E.P.A. without having a basic grasp of the science himself.
  • Pomerance had the sinking feeling that the momentum of the previous year was beginning to flag. The censoring of Hansen’s testimony and the inexplicably strident opposition from John Sununu were ominous signs. So were the findings of a report Pomerance had commissioned, published in September by the World Resources Institute, tracking global greenhouse-gas emissions. The United States was the largest contributor by far, producing nearly a quarter of the world’s carbon emissions, and its contribution was growing faster than that of every other country. Bush’s indecision, or perhaps inattention, had already managed to delay the negotiation of a global climate treaty until 1990 at the earliest, perhaps even 1991. By then, Pomerance worried, it would be too late.
  • Pomerance tried to be more diplomatic. “The president made a commitment to the American people to deal with global warming,” he told The Washington Post, “and he hasn’t followed it up.” He didn’t want to sound defeated. “There are some good building blocks here,” Pomerance said, and he meant it. The Montreal Protocol on CFCs wasn’t perfect at first, either — it had huge loopholes and weak restrictions. Once in place, however, the restrictions could be tightened. Perhaps the same could happen with climate change. Perhaps. Pomerance was not one for pessimism. As William Reilly told reporters, dutifully defending the official position forced upon him, it was the first time that the United States had formally endorsed the concept of an emissions limit. Pomerance wanted to believe that this was progress.
  • All week in Noordwijk, Becker couldn’t stop talking about what he had seen in Zeeland. After a flood in 1953, when the sea swallowed much of the region, killing more than 2,000 people, the Dutch began to build the Delta Works, a vast concrete-and-steel fortress of movable barriers, dams and sluice gates — a masterpiece of human engineering. The whole system could be locked into place within 90 minutes, defending the land against storm surge. It reduced the country’s exposure to the sea by 700 kilometers, Becker explained. The United States coastline was about 153,000 kilometers long. How long, he asked, was the entire terrestrial coastline? Because the whole world was going to need this. In Zeeland, he said, he had seen the future.
  • Ken Caldeira, a climate scientist at the Carnegie Institution for Science in Stanford, Calif., has a habit of asking new graduate students to name the largest fundamental breakthrough in climate physics since 1979. It’s a trick question. There has been no breakthrough. As with any mature scientific discipline, there is only refinement. The computer models grow more precise; the regional analyses sharpen; estimates solidify into observational data. Where there have been inaccuracies, they have tended to be in the direction of understatement.
  • More carbon has been released into the atmosphere since the final day of the Noordwijk conference, Nov. 7, 1989, than in the entire history of civilization preceding it
  • Despite every action taken since the Charney report — the billions of dollars invested in research, the nonbinding treaties, the investments in renewable energy — the only number that counts, the total quantity of global greenhouse gas emitted per year, has continued its inexorable rise.
  • When it comes to our own nation, which has failed to make any binding commitments whatsoever, the dominant narrative for the last quarter century has concerned the efforts of the fossil-fuel industries to suppress science, confuse public knowledge and bribe politicians.
  • The mustache-twirling depravity of these campaigns has left the impression that the oil-and-gas industry always operated thus; while the Exxon scientists and American Petroleum Institute clerics of the ’70s and ’80s were hardly good Samaritans, they did not start multimillion-dollar disinformation campaigns, pay scientists to distort the truth or try to brainwash children in elementary schools, as their successors would.
  • It was James Hansen’s testimony before Congress in 1988 that, for the first time since the “Changing Climate” report, made oil-and-gas executives begin to consider the issue’s potential to hurt their profits. Exxon, as ever, led the field. Six weeks after Hansen’s testimony, Exxon’s manager of science and strategy development, Duane LeVine, prepared an internal strategy paper urging the company to “emphasize the uncertainty in scientific conclusions.” This shortly became the default position of the entire sector. LeVine, it so happened, served as chairman of the global petroleum industry’s Working Group on Global Climate Change, created the same year, which adopted Exxon’s position as its own
  • The American Petroleum Institute, after holding a series of internal briefings on the subject in the fall and winter of 1988, including one for the chief executives of the dozen or so largest oil companies, took a similar, if slightly more diplomatic, line. It set aside money for carbon-dioxide policy — about $100,000, a fraction of the millions it was spending on the health effects of benzene, but enough to establish a lobbying organization called, in an admirable flourish of newspeak, the Global Climate Coalition.
  • The G.C.C. was conceived as a reactive body, to share news of any proposed regulations, but on a whim, it added a press campaign, to be coordinated mainly by the A.P.I. It gave briefings to politicians known to be friendly to the industry and approached scientists who professed skepticism about global warming. The A.P.I.’s payment for an original op-ed was $2,000.
  • It was joined by the U.S. Chamber of Commerce and 14 other trade associations, including those representing the coal, electric-grid and automobile industries
  • In October 1989, scientists allied with the G.C.C. began to be quoted in national publications, giving an issue that lacked controversy a convenient fulcrum. “Many respected scientists say the available evidence doesn’t warrant the doomsday warnings,” was the caveat that began to appear in articles on climate change.
  • The following year, when President Bill Clinton proposed an energy tax in the hope of meeting the goals of the Rio treaty, the A.P.I. invested $1.8 million in a G.C.C. disinformation campaign. Senate Democrats from oil-and-coal states joined Republicans to defeat the tax proposal, which later contributed to the Republicans’ rout of Democrats in the midterm congressional elections in 1994 — the first time the Republican Party had won control of both houses in 40 years
  • The G.C.C. spent $13 million on a single ad campaign intended to weaken support for the 1997 Kyoto Protocol, which committed its parties to reducing greenhouse-gas emissions by 5 percent relative to 1990 levels. The Senate, which would have had to ratify the agreement, took a pre-emptive vote declaring its opposition; the resolution passed 95-0. There has never been another serious effort to negotiate a binding global climate treaty.
  • . This has made the corporation an especially vulnerable target for the wave of compensatory litigation that began in earnest in the last three years and may last a generation. Tort lawsuits have become possible only in recent years, as scientists have begun more precisely to attribute regional effects to global emission levels. This is one subfield of climate science that has advanced significantly sin
  • Pomerance had not been among the 400 delegates invited to Noordwijk. But together with three young activists — Daniel Becker of the Sierra Club, Alden Meyer of the Union of Concerned Scientists and Stewart Boyle from Friends of the Earth — he had formed his own impromptu delegation. Their constituency, they liked to say, was the climate itself. Their mission was to pressure the delegates to include in the final conference statement, which would be used as the basis for a global treaty, the target proposed in Toronto: a 20 percent reduction of greenhouse-gas combustion by 2005. It was the only measure that mattered, the amount of emissions reductions, and the Toronto number was the strongest global target yet proposed.
  • The delegations would review the progress made by the I.P.C.C. and decide whether to endorse a framework for a global treaty. There was a general sense among the delegates that they would, at minimum, agree to the target proposed by the host, the Dutch environmental minister, more modest than the Toronto number: a freezing of greenhouse-gas emissions at 1990 levels by 2000. Some believed that if the meeting was a success, it would encourage the I.P.C.C. to accelerate its negotiations and reach a decision about a treaty sooner. But at the very least, the world’s environmental ministers should sign a statement endorsing a hard, binding target of emissions reductions. The mood among the delegates was electric, nearly giddy — after more than a decade of fruitless international meetings, they could finally sign an agreement that meant something.
  • 11. ‘The Skunks at The Garden Party’ November 1989
  • It was nearly freezing — Nov. 6, 1989, on the coast of the North Sea in the Dutch resort town of Noordwijk
  • Losing Earth: The Decade WeAlmost Stopped Climate Change We knew everything we needed to know, and nothing stood in our way. Nothing, that is, except ourselves. A tragedy in two acts. By Nathaniel RichPhotographs and Videos by George Steinmetz AUG. 1, 2018
Javier E

Opinion | The Green Transition Is Happening Fast. The Climate Bill Will Only Speed It Up. - The New York Times - 0 views

  • Among the first things you likely heard about the Inflation Reduction Act was its size.The bill, signed into law by President Biden on Tuesday, makes $369 billion in climate and energy investments — by far the largest such investment in American history.
  • But there are several ways to measure the size of a bill, and given how high the country’s emissions targets are, even many of the I.R.A.’s supporters will openly concede that it is, on its own, inadequate
  • it is ultimately how much carbon we put into the atmosphere and not how much solar power we produce that determines the future of warming. But the power of carrots also just reflects some new realities: To simplify radically, a 90 percent reduction in the cost of solar power over the last decade means that the same amount of money now goes ten times as far.
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  • the broader economic and cultural landscape is so different now than it was just a few years ago that public investments of even this somewhat smaller scale appear poised to make an enormous difference.
  • That’s because those public investments are being made not against dirty-energy headwinds but with the support of much broader tailwinds
  • Thanks to technological change and the plunging cost of renewables, a growing political and cultural focus on decarbonization and increasing awareness of the public health costs of pollution and market trends for things like electric vehicles and heat pumps, it’s genuinely a whole new world out there. Not that long ago, the upfront cost of a green transition looked almost incalculably large. Today it seems plausible that quite dramatic emissions gains can be achieved for just, say, $369 billion
  • For 90 percent of the world, clean energy is now cheaper than dirty alternatives, and while countries like Spain are boasting about more than tripling solar power capacity by 2030, in Texas, solar output has grown 39-fold in just six years. Globally, renewable output has grown fourfold in the past decade
  • Ten years ago, when the United States endeavored to tackle the problem of climate change, it tried to do so largely by punishing the cost of dirty energy with a cap-and-trade system. This time, it’s giving a kick-start, or a boost of momentum, to an already ongoing green transition.
  • this strategic choice of carrots rather than sticks has received some deserved praise: It’s better and more popular to subsidize cheap, clean energy than it is to make the bad stuff more expensive
  • A “fair share” analysis suggests the United States — today the world’s second largest emitter, and historically the largest by far — should be moving faster than any nation in the world.
  • The models may ultimately prove optimistic, given the complications of infrastructure build-out
  • it is fair to wonder about the uncertain economics of some of the bill’s technological bets, like carbon capture and storage, which could allow emissions from industry and power generation to be trapped and sequestered, and which some climate activists and environmental justice advocates distrust
  • Jesse Jenkins, who leads the REPEAT Project, says he believes that the tech problems of C.C.S. have been solved and that, with tax credits, the bill will address its cost problem, leading to a dramatic scale-up in use. Julio Friedmann, a former Obama-era Energy Department official turned carbon removal advocate, says that a rapid scale-up of C.C.S. would be, while miraculous, also plausible.
  • the fact that this much climate progress appears even remotely possible for less than the annualized budget of the State Department, as Ben Dreyfuss recently put it, is a remarkable reflection of the state of green energy today, even without the new law. When it comes to emissions, we are no longer fighting an uphill battle, at least in the United States and many other countries like it. We are deciding how quickly to race downhill.
  • at the risk of playing Pollyanna, I think it is also possible to see the size of the bill — its relative smallness — as at least a mark of good news
  • The headline projection of the I.R.A. impact appears, if inadequate by the standards of the Paris agreement, nevertheless impressive: a 40 percent reduction in just eight years
  • already today the United States has reduced emissions 20 percent from 2005 levels, and was projected to reduce them further even without the benefit of the I.R.A. As recently as a few weeks ago, before the bill was revived, it might have felt like the United States was permanently stalled on climate action, but in fact the country was already moving to decarbonize, if not fast enough.
  • peed really matters; as the writer and activist Bill McKibben put it, when it comes to warming, “winning slowly is the same as losing.” Simply moving in the right direction isn’t enough, and too much time has been squandered — within the United States and globally — to avoid what was once described as a catastrophic climate future.
  • If the United States achieves that 40 percent reduction, that’s still well short of the country’s target of a 50-52 percent reduction by 2030. The gap may seem relatively small, but it represents more than half a billion tons of carbon each year. That’s a lot.
  • the I.R.A. is a compromise, obviously and outwardly, tying new leases for wind power development to new ones for oil and gas, only moderately reducing the country’s demand for oil and gas over the next decade and investing less in environmental justice measures than Biden himself promised not too long ago
  • But its basic bet — that many of these markets and technologies are close enough to tipping points that relatively small public support can get them racing toward inevitability — also means the ultimate impacts could be larger and far-reaching.
  • The effects on prices and markets could make state and local action cheaper and easier, and even federal regulation more palatable
  • the bill includes some unheralded provisions to help retire coal power more quickly, as Keane Bhatt, the policy director for the Progressive Caucus, has pointed out, as well as an under-discussed “stick” in the form of a fee for methane
  • The impact of its “green bank” and Energy Department loans could be quite large — some estimates have suggested they could run into the hundreds of billions, and the $27 billion handed to the Green Bank could catalyze ten times as much private capital
  • because much of the I.R.A.’s top-line “investment” comes in the form of tax credits, its outlays — and impacts — could ultimately grow substantially if certain sectors (wind, solar and C.C.S., for instance) really do take off.
  • This might not ultimately be just a $369 billion package, in other words, but something quite a bit bigger. Enough to get us to 50 percent by 2030? “I think we have a pretty good chance,” Jenkins says.
  • it is striking that, given where we were not that long ago, such a proposition seems credible at all. Here’s hoping.
  • The provisions tying future auctions for wind power to leases for oil and gas development have been called “poison pills,” because they appear to lock in future emissions. But the ultimate impact is likely to be quite small. (Energy Innovation estimates at most 50 million tons of additional annual carbon emissions, compared with a billion in reductions from other measures in the bill.)
Javier E

No Rich Child Left Behind - NYTimes.com - 0 views

  • In the 1980s, on an 800-point SAT-type test scale, the average difference in test scores between two such children would have been about 90 points; today it is 125 points. This is almost twice as large as the 70-point test score gap between white and black children. Family income is now a better predictor of children’s success in school than race.
  • e proportion of students from upper-income families who earn a ba
  • chelor’s degree has increased by 18 percentage points over a 20-year period, while the completion rate of poor students has grown by only 4 points.
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  • new research by the Harvard political scientist Robert D. Putnam and his colleagues shows that the rich-poor gaps in student participation in sports, extracurricular activities, volunteer work and church attendance have grown sharply as well.
  • average test scores on the National Assessment of Educational Progress, the so-called Nation’s Report Card, have been rising — substantially in math and very slowly in reading — since the 1970s.
  • The most potent development over the past three decades is that the test scores of children from high-income families have increased very rapidly.
  • the rich now outperform the middle class by as much as the middle class outperform the poor. Just as the incomes of the affluent have grown much more rapidly than those of the middle class over the last few decades, so, too, have most of the gains in educational success accrued to the children of the rich.
  • For the past few years, alongside other scholars, I have been digging into historical data to understand
  • It’s not just that the rich have more money than they used to, it’s that they are using it differently. This is where things get really interesting.
  • The widening income disparity in academic achievement is not a result of widening racial gaps in achievement, either. The achievement gaps between blacks and whites, and Hispanic and non-Hispanic whites have been narrowing slowly over the last two decade
  • schools don’t seem to produce much of the disparity in test scores between high- and low-income students.
  • That isn’t to say that there aren’t important differences in quality between schools serving low- and high-income students — there certainly are — but they appear to do less to reinforce the trends than conventional wisdom would have us believe.
  • The academic gap is widening because rich students are increasingly entering kindergarten much better prepared to succeed in school than middle-class students. This difference in preparation persists through elementary and high school.
  • one part of the explanation for this is rising income inequality
  • the incomes of the rich have grown faster over the last 30 years than the incomes of the middle class and the poor. Money helps families provide cognitively stimulating experiences for their young children because it provides more stable home environments, more time for parents to read to their children, access to higher-quality child care and preschool
  • The average 9-year-old today has math skills equal to those her parents had at age 11, a two-year improvement in a single generation. The gains are not as large in reading and they are not as large for older students, but there is no evidence that average test scores have declined over the last three decades for any age or economic group.
  • High-income families are increasingly focusing their resources — their money, time and knowledge of what it takes to be successful in school — on their children’s cognitive development and educational success. They are doing this because educational success is much more important than it used to be, even for the rich.
  • even though middle-class and poor families are also increasing the time and money they invest in their children, they are not doing so as quickly or as deeply as the rich.
  • from 1972 to 2006 high-income families increased the amount they spent on enrichment activities for their children by 150 percent, while the spending of low-income families grew by 57 percent over the same time period
  • the amount of time parents spend with their children has grown twice as fast since 1975 among college-educated parents as it has among less-educated parents.
  • much of our public conversation about education is focused on the wrong culprits: we blame failing schools and the behavior of the poor for trends that are really the result of deepening income inequality and the behavior of the rich.
  • not only are the children of the rich doing better in school than even the children of the middle class, but the changing economy means that school success is increasingly necessary to future economic success, a worrisome mutual reinforcement of trends that is making our society more socially and economically immobile.
  • the rapid growth in the rich-poor educational gap provides a ray of hope: if the relationship between family income and educational success can change this rapidly, then it is not an immutable, inevitable pattern. What changed once can change again. Policy choices matter more than we have recently been taught to think.
  • how can we move toward a society in which educational success is not so strongly linked to family background? Maybe we should take a lesson from the rich and invest much more heavily as a society in our children’s educational opportunities from the day they are born. Investments in early-childhood education pay very high societal dividends. That means investing in developing high-quality child care and preschool that is available to poor and middle-class children. It also means recruiting and training a cadre of skilled preschool teachers and child care providers.
  • improving the quality of our parenting and of our children’s earliest environments may be even more important. Let’s invest in parents so they can better invest in their children.
  • Fundamentally, it means rethinking our still-persistent notion that educational problems should be solved by schools alone.
Javier E

The Entitled Generation - NYTimes.com - 0 views

  • Third Way, the centrist Democratic think tank
  • The authors examined two categories of federal spending over the past 50 years, representing two of government’s fundamental missions. One was “investments,” which includes maintaining our national infrastructure, keeping our military equipped, helping assure that our work force is educated to a high standard, and underwriting the kind of basic scientific research that is too risky or long-term to attract private money. The report calls this the legacy of President Kennedy’s New Frontier, though the largest infrastructure project in our history, the interstate highway system, was Eisenhower’s baby, a reminder of the days when Republicans still believed in that stuff. The other category was “entitlements,” a catchall word for the safety-net programs that provide a measure of economic stability for the aging and poor: Social Security, Medicare, Medicaid, etc. You will not be surprised to hear that the red line tracking entitlements goes up while the blue line reflecting investments goes down.
  • In 1962, we were laying down the foundations of prosperity. About 32 cents of every federal dollar, excluding interest payments, was spent on investments, only 14 percent on entitlements. In the mid-70s the lines crossed. Today we spend less than 15 cents on investment and 46 cents on entitlements. And it gets worse. By 2030, when the last of us boomers have surged onto the Social Security rolls, entitlements will consume 61 cents of every federal dollar, starving our already neglected investment
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  • “We’ve reached the point where our working-age population over the next 30 years grows by one-fifth, and our elderly population grows 100 percent,” said Jim Kessler, the senior vice president for policy at Third Way.
  • So the question is not whether entitlements have to be brought under control, but how
  • At least the Republicans have a plan. The Democrats generally recoil from the subject of entitlements. Centrists like those at Third Way and the bipartisan authors of the Simpson-Bowles report endorse a menu of incremental cuts and reforms that would bring down costs without hitting the needy or snatching away the security blanket from those nearing retirement.
Javier E

Give Malta Your Tired and Huddled, and Rich - NYTimes.com - 0 views

  • Motivated in part by economic stress, and in part by what some call crass opportunism, the idyllic island 50 miles south of Sicily is selling citizenship for $880,000 in cash and $677,000 in property and investments to applicants 18 or older willing to pay the price.
  • the program, which is aimed at attracting well-heeled residents from abroad, could bring in $1.35 billion in the next five years, providing welcome financing for schools, health care and jobs.
  • Being a citizen of Malta, which is part of the European Union’s passport-free zone, will confer the right to travel among the union’s 27 other member states without border formalities. A newly minted Maltese citizen will also be able to live and work in another European Union country, and will gain the right to visa-free travel to 69 non-European Union countries, including the United States.
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  • Under pressure from European Union officials in Brussels, Malta this week agreed to require foreigners seeking to buy Maltese passports to be residents for at least one year. It has also vowed to carefully vet applicants. Yet initial plans to limit to 1,800 the number of passports granted have been scrapped.
  • Cyprus recently slashed the amount of investment required to be eligible for citizenship, to $4.06 million from $13.5 million. It is also offering citizenship to foreigners who lost at least €3 million during the recent bailout crisis.
  • The Caribbean island federation of St. Kitts and Nevis offers citizenship for those who can invest $250,000
  • Portugal and Belgium offer residency permits leading to citizenship in exchange for big investments.
  • Crisis-hit Spain offers residency permits to foreigners who buy homes worth more than $260,000, with the aim of drawing Chinese and Russian investment.
Javier E

Silicon Valley Powered American Tech Dominance-Now It Has a Challenger - WSJ - 0 views

  • Asian investors directed nearly as much money into startups last year as American investors did—40% of the record $154 billion in global venture financing versus 44%,
  • Asia’s share is up from less than 5% just 10 years ago.
  • That tidal wave of cash into promising young firms could herald a shift in who controls the world’s technological innovation and its economic fruits, from artificial intelligence to self-driving cars.
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  • The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.
  • The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications.
  • . “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”
  • Although one of the biggest Asian investors is Japan’s SoftBank Group Corp. , which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.
  • China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few year
  • Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period
  • Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the Yelp equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.
  • Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,
  • Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.
  • One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.
  • China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030
  • Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of Alphabet Inc.’s Google and Facebook for dominance in markets outside the English-speaking world and Western Europe.
  • “All the rest of the world will basically be a land grab between the U.S. and China,
  • “The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”
  • Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.
  • In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China
  • Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors
  • “Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chessboard and surround your opponent.”
Javier E

Can We Be Brutally Honest About Investment Returns? - MoneyBeat - WSJ - 0 views

  • Pension funds have fantastical expectations of the market
  • With U.S. stocks at all-time highs, it’s more important than ever that investors be brutally realistic about future returns.
  • You can learn a lot from these folks — if you listen to them and then do the opposite.
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  • A new study by finance professors Aleksandar Andonov of Erasmus University Rotterdam and Joshua Rauh of Stanford University looks at expected returns among more than 230 public pension plans with more than $2.8 trillion in combined assets.
  • For their portfolios, generally consisting of cash, U.S. and international bonds and stocks, real estate, hedge funds and private-equity or buyout funds, these pension plans report that they will earn an average of 7.6% annually over the long term. (That’s 4.8% after their estimates of inflation.) These funds often define “long term” as between 10 and 30 years.
  • Based on how they divvy up their money, how much are these pension funds assuming specific assets will earn?
  • They expect cash to return an average of 3.2% annually over the long run; bonds, 4.9%; such “real assets” as commodities and real estate, 7.7%; hedge funds, 6.9%; publicly traded stocks, 8.7%; private-equity funds, 10.3%.
  • consider bonds. The simplest reliable indicator of how much you will earn from a portfolio of bonds in the future is their yield to maturity in the present. With 10-year Treasurys yielding 2.6% and investment-grade corporate bonds averaging under 3.7%, it would take a near-miracle today to get anything close to 4% out of a high-quality fixed-income portfolio.
  • That’s below the U.S. average of 10.2% annually over the past 90 years. But stocks were far cheaper over most of that period than they are today, so their returns were naturally higher.
  • stocks aren’t likely to earn more than an average of 5.9% annually over the long run from today’s lofty prices.
  • Among those, the least implausible scenario is higher inflation. So the pension funds could hit their 8.7% stock return that way — but such a surge in the cost of living would crimp their bond returns. What they would gain on their stocks they would lose on their bonds.
  • the new study of estimated returns finds that the older a pension fund’s holdings of private equity are, the more likely its officials are to extrapolate those returns — as if the good times of the early 2000s, when deals abounded and buyouts were cheaper, were still rolling.
  • Why do expectations among pension plans run so high? Because they have to, the chief investment officer of a large public pension plan tells me. State laws guarantee generous retirement benefits for millions of current and former government employees. To appear as if they can meet those obligations, the pension plans have no choice but to set their expected returns higher than reality is likely to deliver.
  • That’s the exact opposite of what the rest of us should do. Sooner or later, investors who build their expectations on hope rather than on arithmetic end up sorry.
Javier E

How China's Tencent Avoided an Antitrust Push, For Now. - The New York Times - 0 views

  • There’s no company in the world like Tencent. It’s a true monopoly on many levels. It wields the kind of influence in China that Facebook, Amazon, Apple and Google can only aspire to.
  • Tencent is a mega entertainment platform. It is the world’s largest online game company, owning stakes in Riot Games and Epic Games. It owns China’s biggest online video, music and online literature businesses, too.
  • Tencent is a venture capital investor. In 2020, it lagged only Sequoia Capital, the Silicon Valley investment firm, in terms of the number of unicorns — start-ups valued at over $1 billion — it has invested in, according to the Hurun Report, a Shanghai research firm.
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  • it has invested in more than 800 companies, including a 12 percent stake in Snap and 5 percent in Tesla. By comparison, GV, formerly Google Ventures and the most active corporate venture capital arm in the United States, has invested in more than 500 companies.
  • Most important, Tencent is a platform operator. It runs WeChat, a mobile messaging app with social media and financial services abilities.
  • WeChat needs other companies to keep its one billion users glued to the app. An operating system and an app store in its own right, WeChat allows users to run miniprograms created and run by other companie
  • Those users can make purchases using WeChat’s payment system. Tesla, Airbnb and Starbucks all have their own WeChat miniprograms. So do most of major Chinese websites — barring those that WeChat forbids.
  • Friendly companies build miniprograms for WeChat. Tencent invested in China’s ride-sharing and bike-sharing companies because their users pay frequently, and Tencent wanted them to use WeChat Pay.
  • No matter how decent or humble Tencent may act, it’s a giant conglomerate with $24 billion in profit last year and spends much of it on investment. It picks winners and losers, but the winners won’t always be the best out there, thus harming innovation and efficiency.
  • It limits user access to other products and services. Its WeChat app doesn’t allow users to share links for merchandise on Alibaba’s Taobao online marketplace or for short videos on Douyin, TikTok’s Chinese sister company.
  • Tencent doesn’t just court the industry. It has also long tried to get close to the government. Compared with the sometimes defiant Alibaba, Tencent has long publicly underscored its willingness to comply fully with rules and regulations.
  • In April, the company said it would spend $7.8 billion on green energy, education, village revitalization and other pet topics of President Xi Jinping. In the view of Hong Bo, an internet commentator, Tencent is acting for self-preservation.
Javier E

Hank Paulson to Run Climate-Focused Fund at TPG - The New York Times - 0 views

  • Mr. Paulson, who intends to devote at least 50 percent of his time to his new role, plans to leverage his relationships around the globe to work with governments and industry to raise money and find investments.
  • The early returns from TPG’s existing Rise funds — $2 billion of which are in climate-related investments — appear to suggest that socially responsible investing can be just as profitable as other approaches. Mr. Coulter said that with the reduction in the cost of solar energy — for example, bringing it to parity with the cost of building a new gas plant in some places in the United States — the opportunity to make attractive new investments has fundamentally changed.
  • He said he was seeing similar opportunities in electric vehicles and the energy grid that powers them, in agriculture and in consumer packaged goods.
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  • In the public markets, investors are throwing money at companies like Tesla and others that have positive environmental, social and governance models. However, there is not enough of a pipeline of climate-focused businesses ready to go public, Mr. Paulson said: “We need more high-quality investment opportunities from private equity investments that have the potential to become scalable public companies.”
Javier E

American travelers are buying foreign passports amid coronavirus pandemic - The Washington Post - 0 views

  • travel restrictions are producing an emerging trend among some wealthy Americans: buying a second passport.
  • “This limitation of mobility has made more people aware of ... the benefits of having more than one passport,”
  • Arton says his firm has seen a 30 to 40 percent increase, year to date, in demand for services that help clients obtain citizenship in a sovereign state through financial means. The price tag for these services varies, ranging from $100,000 for some Caribbean options to more than $2 million for European ones.
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  • mid-pandemic, motivations have shifted. Some of Arton Capital’s American clients are in mixed-nationality relationships where couples have been separated because of pandemic travel bans. Others are worried about the impact of U.S. politics on their passport’s global standing.
  • “We’ve had Americans contacting us and saying, ‘Listen, I cannot believe that my American super passport cannot get me into as many countries as it used to before. What can I do?’ ” Arton says. “That was never the case for us before.”
  • Arton’s new clients fear that if the pandemic carries on for another year or two, they will be trapped by their U.S. passports, so they’re seeking out second passports from countries with investment migration programs.
  • The concept is about 35 years old, Arton says. Today there are approximately 25 countries, including Portugal, Dominica and the United Kingdom, that offer forms of residency or citizenship-by-investment programs as a revenue source.
  • The United States was an early adopter of the program. In 1990, the government created the EB-5 Immigrant Investor Visa Program, which has received nearly 80,000 applicants since. However, Arton says interest in the investment migration program has decreased drastically because of a recent cost increase, the program’s long approval process and the U.S. government’s fluctuating immigration legislation.
  • investment migration “is a way for sovereign states to raise debt-free capital and also to drive further foreign direct investment — and combine these programs with other policy areas — to really enhance investment in certain industries.”
  • The application takes months, if not years, to process, and it includes a thorough investigation into a person’s private and financial life.
  • On occasion, they may find incriminating information during an investigation, and advisers will contact a client to say, “‘Never, ever walk through our doors again. We’re burning all these files.’
  • part of the reason for the St. Lucia program’s intense vetting is to uphold the value of the country’s passport. It’s in St. Lucia’s best interest to stay in good standing with the 146 countries that allow St. Lucian passport holders visa-free travel.
Javier E

Why Uber's business model is doomed | Employment | The Guardian - 0 views

  • The truth is that Uber and Lyft exist largely as the embodiments of Wall Street-funded bets on automation, which have failed to come to fruition. These companies are trying to survive legal challenges to their illegal hiring practices, while waiting for driverless-car technologies to improve. The advent of the autonomous car would allow Uber and Lyft to fire their drivers.
  • Having already acquired a position of dominance with the rideshare market, these companies would then reap major monopoly profits. There is simply no world in which paying drivers a living wage would become part of Uber and Lyft’s long-term business plans.
  • Only in a world where more profitable opportunities for investment are sorely lacking can such wild bets on far-flung futuristic technologies become massive multinational companies. Corporations and wealthy individuals have accumulated huge sums of money and cannot figure out where to put it because returns on investments are extremely low
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  • The flip side of falling rates of business investment is a slackening pace of economic growth, which economists have termed “secular stagnation.” It’s this decades-long slowdown that has generated the insecure labour force on which Uber and Lyft rely.
  • This fight for workers’ rights is grounded in a growing recognition that the expansion of the digital economy does not simply reflect the triumph of an unstoppable technological change. Behind Silicon Valley rhetoric, much of what appears to be technological innovation turns out to be a means of circumventing legal regulations, including minimum wage laws
  • That governments turned a blind eye to Uber and Lyft’s misbehaviour for so long is no surprise. Governments are complicit in making workers more vulnerable. Facing persistently slow economic growth and high rates of unemployment, governments have spent decades trying to coax companies to invest by making it easier to deny workers’ benefits and to avoid paying taxes.
  • Capitalist economies have been able to extend security to widening circles of workers only in periods of rapid economic growth, when low rates of unemployment made it possible for more and more workers to demand better wages and working conditions.
  • High rates of economic growth in the mid-20th century – the reference point for any politics that seeks to restore economic growth in the present – were premised on a historically exceptional period. The restoration of stable international trade following two world wars made possible the largest growth of economic productive capacity in human history, not just in Europe and the United States, but worldwide
  • By the 1970s, rapid expansion had given way to worsening global overcapacity, resulting in rising competition and falling rates of investment in internationally traded goods. People were left scrambling for work in the growing service sector, where the potential for labour productivity growth, and hence economic growth, is significantly lower.
  • By misclassifying its workers, Uber avoided paying hundreds of millions of dollars into US state unemployment insurance schemes. Yet during the Covid-19 economic crisis, Uber lobbied the federal government to step in and pay its drivers’ unemployment benefits anyway.
  • this bid to restore conditions of rapid economic growth, much like supply-side and trickle-down solutions that failed to produce generalised prosperity, was a failure. The Covid crisis has only made economic prospects less auspicious.
  • People need security that is not tied to their job. The pandemic has revealed this imperative more than ever before. In a world that is as wealthy as ours, and given the technologies we have already produced – even without the realisation of the dreams of automation – everyone should have access to food, energy, housing and healthcare
  • The owners of Uber and Lyft know that their business is predicated on a world in which they get to make the key decisions that shape our futures, without our input. The world of work is going to have to be democratised. They are just delaying what should be inevitable.
Javier E

Peter Thiel Is Taking a Break From Democracy - The Atlantic - 0 views

  • Thiel’s unique role in the American political ecosystem. He is the techiest of tech evangelists, the purest distillation of Silicon Valley’s reigning ethos. As such, he has become the embodiment of a strain of thinking that is pronounced—and growing—among tech founders.
  • why does he want to cut off politicians
  • But the days when great men could achieve great things in government are gone, Thiel believes. He disdains what the federal apparatus has become: rule-bound, stifling of innovation, a “senile, central-left regime.”
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  • Peter Thiel has lost interest in democracy.
  • Thiel has cultivated an image as a man of ideas, an intellectual who studied philosophy with René Girard and owns first editions of Leo Strauss in English and German. Trump quite obviously did not share these interests, or Thiel’s libertarian principles.
  • For years, Thiel had been saying that he generally favored the more pessimistic candidate in any presidential race because “if you’re too optimistic, it just shows you’re out of touch.” He scorned the rote optimism of politicians who, echoing Ronald Reagan, portrayed America as a shining city on a hill. Trump’s America, by contrast, was a broken landscape, under siege.
  • Thiel is not against government in principle, his friend Auren Hoffman (who is no relation to Reid) says. “The ’30s, ’40s, and ’50s—which had massive, crazy amounts of power—he admires because it was effective. We built the Hoover Dam. We did the Manhattan Project,” Hoffman told me. “We started the space program.”
  • Their failure to make the world conform to his vision has soured him on the entire enterprise—to the point where he no longer thinks it matters very much who wins the next election.
  • His libertarian critique of American government has curdled into an almost nihilistic impulse to demolish it.
  • “Voting for Trump was like a not very articulate scream for help,” Thiel told me. He fantasized that Trump’s election would somehow force a national reckoning. He believed somebody needed to tear things down—slash regulations, crush the administrative state—before the country could rebuild.
  • He admits now that it was a bad bet.
  • “There are a lot of things I got wrong,” he said. “It was crazier than I thought. It was more dangerous than I thought. They couldn’t get the most basic pieces of the government to work. So that was—I think that part was maybe worse than even my low expectations.”
  • eid Hoffman, who has known Thiel since college, long ago noticed a pattern in his old friend’s way of thinking. Time after time, Thiel would espouse grandiose, utopian hopes that failed to materialize, leaving him “kind of furious or angry” about the world’s unwillingness to bend to whatever vision was possessing him at the moment
  • Thiel. He is worth between $4 billion and $9 billion. He lives with his husband and two children in a glass palace in Bel Air that has nine bedrooms and a 90-foot infinity pool. He is a titan of Silicon Valley and a conservative kingmaker.
  • “Peter tends to be not ‘glass is half empty’ but ‘glass is fully empty,’” Hoffman told me.
  • he tells the story of his life as a series of disheartening setbacks.
  • He met Mark Zuckerberg, liked what he heard, and became Facebook’s first outside investor. Half a million dollars bought him 10 percent of the company, most of which he cashed out for about $1 billion in 2012.
  • Thiel made some poor investments, losing enormous sums by going long on the stock market in 2008, when it nose-dived, and then shorting the market in 2009, when it rallied
  • on the whole, he has done exceptionally well. Alex Karp, his Palantir co-founder, who agrees with Thiel on very little other than business, calls him “the world’s best venture investor.”
  • Thiel told me this is indeed his ambition, and he hinted that he may have achieved it.
  • He longs for radical new technologies and scientific advances on a scale most of us can hardly imagine
  • He longs for a world in which great men are free to work their will on society, unconstrained by government or regulation or “redistributionist economics” that would impinge on their wealth and power—or any obligation, really, to the rest of humanity
  • Did his dream of eternal life trace to The Lord of the Rings?
  • He takes for granted that this kind of progress will redound to the benefit of society at large.
  • More than anything, he longs to live forever.
  • Calling death a law of nature is, in his view, just an excuse for giving up. “It’s something we are told that demotivates us from trying harder,”
  • Thiel grew up reading a great deal of science fiction and fantasy—Heinlein, Asimov, Clarke. But especially Tolkien; he has said that he read the Lord of the Rings trilogy at least 10 times. Tolkien’s influence on his worldview is obvious: Middle-earth is an arena of struggle for ultimate power, largely without government, where extraordinary individuals rise to fulfill their destinies. Also, there are immortal elves who live apart from men in a magical sheltered valley.
  • But his dreams have always been much, much bigger than that.
  • Yes, Thiel said, perking up. “There are all these ways where trying to live unnaturally long goes haywire” in Tolkien’s works. But you also have the elves.
  • How are the elves different from the humans in Tolkien? And they’re basically—I think the main difference is just, they’re humans that don’t die.”
  • During college, he co-founded The Stanford Review, gleefully throwing bombs at identity politics and the university’s diversity-minded reform of the curriculum. He co-wrote The Diversity Myth in 1995, a treatise against what he recently called the “craziness and silliness and stupidity and wickedness” of the left.
  • Thiel laid out a plan, for himself and others, “to find an escape from politics in all its forms.” He wanted to create new spaces for personal freedom that governments could not reach
  • But something changed for Thiel in 2009
  • he people, he concluded, could not be trusted with important decisions. “I no longer believe that freedom and democracy are compatible,” he wrote.
  • ven more notable one followed: “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women—two constituencies that are notoriously tough for libertarians—have rendered the notion of ‘capitalist democracy’ into an oxymoron.”
  • By 2015, six years after declaring his intent to change the world from the private sector, Thiel began having second thoughts. He cut off funding for the Seasteading Institute—years of talk had yielded no practical progress–and turned to other forms of escape
  • The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom,” he wrote. His manifesto has since become legendary in Silicon Valley, where his worldview is shared by other powerful men (and men hoping to be Peter Thiel).
  • Thiel’s investment in cryptocurrencies, like his founding vision at PayPal, aimed to foster a new kind of money “free from all government control and dilution
  • His decision to rescue Elon Musk’s struggling SpaceX in 2008—with a $20 million infusion that kept the company alive after three botched rocket launches—came with aspirations to promote space as an open frontier with “limitless possibility for escape from world politics
  • It was seasteading that became Thiel’s great philanthropic cause in the late aughts and early 2010s. The idea was to create autonomous microstates on platforms in international waters.
  • “There’s zero chance Peter Thiel would live on Sealand,” he said, noting that Thiel likes his comforts too much. (Thiel has mansions around the world and a private jet. Seal performed at his 2017 wedding, at the Belvedere Museum in Vienna.)
  • As he built his companies and grew rich, he began pouring money into political causes and candidates—libertarian groups such as the Endorse Liberty super PAC, in addition to a wide range of conservative Republicans, including Senators Orrin Hatch and Ted Cruz
  • Sam Altman, the former venture capitalist and now CEO of OpenAI, revealed in 2016 that in the event of global catastrophe, he and Thiel planned to wait it out in Thiel’s New Zealand hideaway.
  • When I asked Thiel about that scenario, he seemed embarrassed and deflected the question. He did not remember the arrangement as Altman did, he said. “Even framing it that way, though, makes it sound so ridiculous,” he told me. “If there is a real end of the world, there is no place to go.”
  • You’d have eco farming. You’d turn the deserts into arable land. There were sort of all these incredible things that people thought would happen in the ’50s and ’60s and they would sort of transform the world.”
  • None of that came to pass. Even science fiction turned hopeless—nowadays, you get nothing but dystopias
  • He hungered for advances in the world of atoms, not the world of bits.
  • Founders Fund, the venture-capital firm he established in 200
  • The fund, therefore, would invest in smart people solving hard problems “that really have the potential to change the world.”
  • This was not what Thiel wanted to be doing with his time. Bodegas and dog food were making him money, apparently, but he had set out to invest in transformational technology that would advance the state of human civilization.
  • He told me that he no longer dwells on democracy’s flaws, because he believes we Americans don’t have one. “We are not a democracy; we’re a republic,” he said. “We’re not even a republic; we’re a constitutional republic.”
  • “It was harder than it looked,” Thiel said. “I’m not actually involved in enough companies that are growing a lot, that are taking our civilization to the next level.”
  • Founders Fund has holdings in artificial intelligence, biotech, space exploration, and other cutting-edge fields. What bothers Thiel is that his companies are not taking enough big swings at big problems, or that they are striking out.
  • In at least 20 hours of logged face-to-face meetings with Buma, Thiel reported on what he believed to be a Chinese effort to take over a large venture-capital firm, discussed Russian involvement in Silicon Valley, and suggested that Jeffrey Epstein—a man he had met several times—was an Israeli intelligence operative. (Thiel told me he thinks Epstein “was probably entangled with Israeli military intelligence” but was more involved with “the U.S. deep state.”)
  • Buma, according to a source who has seen his reports, once asked Thiel why some of the extremely rich seemed so open to contacts with foreign governments. “And he said that they’re bored,” this source said. “‘They’re bored.’ And I actually believe it. I think it’s that simple. I think they’re just bored billionaires.”
  • he has a sculpture that resembles a three-dimensional game board. Ascent: Above the Nation State Board Game Display Prototype is the New Zealander artist Simon Denny’s attempt to map Thiel’s ideological universe. The board features a landscape in the aesthetic of Dungeons & Dragons, thick with monsters and knights and castles. The monsters include an ogre labeled “Monetary Policy.” Near the center is a hero figure, recognizable as Thiel. He tilts against a lion and a dragon, holding a shield and longbow. The lion is labeled “Fair Elections.” The dragon is labeled “Democracy.” The Thiel figure is trying to kill them.
  • When I asked Thiel to explain his views on democracy, he dodged the question. “I always wonder whether people like you … use the word democracy when you like the results people have and use the word populism when you don’t like the results,” he told me. “If I’m characterized as more pro-populist than the elitist Atlantic is, then, in that sense, I’m more pro-democratic.”
  • “I couldn’t find them,” he said. “I couldn’t get enough of them to work.
  • He said he has no wish to change the American form of government, and then amended himself: “Or, you know, I don’t think it’s realistic for it to be radically changed.” Which is not at all the same thing.
  • When I asked what he thinks of Yarvin’s autocratic agenda, Thiel offered objections that sounded not so much principled as practical.
  • “I don’t think it’s going to work. I think it will look like Xi in China or Putin in Russia,” Thiel said, meaning a malign dictatorship. “It ultimately I don’t think will even be accelerationist on the science and technology side, to say nothing of what it will do for individual rights, civil liberties, things of that sort.”
  • Still, Thiel considers Yarvin an “interesting and powerful” historian
  • he always talks about is the New Deal and FDR in the 1930s and 1940s,” Thiel said. “And the heterodox take is that it was sort of a light form of fascism in the United States.”
  • Yarvin, Thiel said, argues that “you should embrace this sort of light form of fascism, and we should have a president who’s like FDR again.”
  • Did Thiel agree with Yarvin’s vision of fascism as a desirable governing model? Again, he dodged the question.
  • “That’s not a realistic political program,” he said, refusing to be drawn any further.
  • ooking back on Trump’s years in office, Thiel walked a careful line.
  • A number of things were said and done that Thiel did not approve of. Mistakes were made. But Thiel was not going to refashion himself a Never Trumper in retrospect.
  • “I have to somehow give the exact right answer, where it’s like, ‘Yeah, I’m somewhat disenchanted,’” he told me. “But throwing him totally under the bus? That’s like, you know—I’ll get yelled at by Mr. Trump. And if I don’t throw him under the bus, that’s—but—somehow, I have to get the tone exactly right.”
  • Thiel knew, because he had read some of my previous work, that I think Trump’s gravest offense against the republic was his attempt to overthrow the election. I asked how he thought about it.
  • “Look, I don’t think the election was stolen,” he said. But then he tried to turn the discussion to past elections that might have been wrongly decided. Bush-Gore in 2000, for instanc
  • He came back to Trump’s attempt to prevent the transfer of power. “I’ll agree with you that it was not helpful,” he said.
  • there is another piece of the story, which Thiel reluctantly agreed to discuss
  • Puck reported that Democratic operatives had been digging for dirt on Thiel since before the 2022 midterm elections, conducting opposition research into his personal life with the express purpose of driving him out of politic
  • Among other things, the operatives are said to have interviewed a young model named Jeff Thomas, who told them he was having an affair with Thiel, and encouraged Thomas to talk to Ryan Grim, a reporter for The Intercept. Grim did not publish a story during election season, as the opposition researchers hoped he would, but he wrote about Thiel’s affair in March, after Thomas died by suicide.
  • He deplored the dirt-digging operation, telling me in an email that “the nihilism afflicting American politics is even deeper than I knew.”
  • He also seemed bewildered by the passions he arouses on the left. “I don’t think they should hate me this much,”
  • he spoke at the closed-press event with a lot less nuance than he had in our interviews. His after-dinner remarks were full of easy applause lines and in-jokes mocking the left. Universities had become intellectual wastelands, obsessed with a meaningless quest for diversity, he told the crowd. The humanities writ large are “transparently ridiculous,” said the onetime philosophy major, and “there’s no real science going on” in the sciences, which have devolved into “the enforcement of very curious dogmas.”
  • “Diversity—it’s not enough to just hire the extras from the space-cantina scene in Star Wars,” he said, prompting laughter.
  • Nor did Thiel say what genuine diversity would mean. The quest for it, he said, is “very evil and it’s very silly.”
  • “the silliness is distracting us from very important things,” such as the threat to U.S. interests posed by the Chinese Communist Party.
  • “Whenever someone says ‘DEI,’” he exhorted the crowd, “just think ‘CCP.’”
  • Somebody asked, in the Q&A portion of the evening, whether Thiel thought the woke left was deliberately advancing Chinese Communist interests
  • “It’s always the difference between an agent and asset,” he said. “And an agent is someone who is working for the enemy in full mens rea. An asset is a useful idiot. So even if you ask the question ‘Is Bill Gates China’s top agent, or top asset, in the U.S.?’”—here the crowd started roaring—“does it really make a difference?”
  • About 10 years ago, Thiel told me, a fellow venture capitalist called to broach the question. Vinod Khosla, a co-founder of Sun Microsystems, had made the Giving Pledge a couple of years before. Would Thiel be willing to talk with Gates about doing the same?
  • Thiel feels that giving his billions away would be too much like admitting he had done something wrong to acquire them
  • He also lacked sympathy for the impulse to spread resources from the privileged to those in need. When I mentioned the terrible poverty and inequality around the world, he said, “I think there are enough people working on that.”
  • besides, a different cause moves him far more.
  • Should Thiel happen to die one day, best efforts notwithstanding, his arrangements with Alcor provide that a cryonics team will be standing by.
  • Then his body will be cooled to –196 degrees Celsius, the temperature of liquid nitrogen. After slipping into a double-walled, vacuum-insulated metal coffin, alongside (so far) 222 other corpsicles, “the patient is now protected from deterioration for theoretically thousands of years,” Alcor literature explains.
  • All that will be left for Thiel to do, entombed in this vault, is await the emergence of some future society that has the wherewithal and inclination to revive him. And then make his way in a world in which his skills and education and fabulous wealth may be worth nothing at all.
  • I wondered how much Thiel had thought through the implications for society of extreme longevity. The population would grow exponentially. Resources would not. Where would everyone live? What would they do for work? What would they eat and drink? Or—let’s face it—would a thousand-year life span be limited to men and women of extreme wealth?
  • “Well, I maybe self-serve,” he said, perhaps understating the point, “but I worry more about stagnation than about inequality.”
  • Thiel is not alone among his Silicon Valley peers in his obsession with immortality. Oracle’s Larry Ellison has described mortality as “incomprehensible.” Google’s Sergey Brin aspires to “cure death.” Dmitry Itskov, a leading tech entrepreneur in Russia, has said he hopes to live to 10,000.
  • . “I should be investing way more money into this stuff,” he told me. “I should be spending way more time on this.”
  • You haven’t told your husband? Wouldn’t you want him to sign up alongside you?“I mean, I will think about that,” he said, sounding rattled. “I will think—I have not thought about that.”
  • No matter how fervent his desire, Thiel’s extraordinary resources still can’t buy him the kind of “super-duper medical treatments” that would let him slip the grasp of death. It is, perhaps, his ultimate disappointment.
  • There are all these things I can’t do with my money,” Thiel said.
Javier E

Opinion | China's Economy Is in Serious Trouble - The New York Times - 0 views

  • Some analysts expected the Chinese economy to boom after it lifted the draconian “zero Covid” measures it had adopted to contain the pandemic. Instead, China has underperformed by just about every economic indicator other than official G.D.P., which supposedly grew by 5.2 percent.
  • the Chinese economy seems to be stumbling. Even the official statistics say that China is experiencing Japan-style deflation and high youth unemployment. It’s not a full-blown crisis, at least not yet, but there’s reason to believe that China is entering an era of stagnation and disappointment.
  • Why is China’s economy, which only a few years ago seemed headed for world domination, in trouble?
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  • With consumers buying so little, at least relative to the Chinese economy’s productive capacity, how can the nation generate enough demand to keep that capacity in use? The main answer, as Michael Pettis points out, has been to promote extremely high rates of investment, more than 40 percent of G.D.P. The trouble is that it’s hard to invest that much money without running into severely diminishing returns.
  • financial repression — paying low interest on savings and making cheap loans to favored borrowers — that holds down household income and diverts it to government-controlled investment, a weak social safety net that causes families to accumulate savings to deal with possible emergencies, and more.
  • Part of the answer is bad leadership. President Xi Jinping is starting to look like a poor economic manager, whose propensity for arbitrary interventions — which is something autocrats tend to do — has stifled private initiative.
  • very high rates of investment may be sustainable if, like China in the early 2000s, you have a rapidly growing work force and high productivity growth as you catch up with Western economies
  • But China’s working-age population peaked around 2010 and has been declining ever since. While China has shown impressive technological capacity in some areas, its overall productivity also appears to be stagnating.
  • This, in short, isn’t a nation that can productively invest 40 percent of G.D.P. Something has to give.
  • the government was able to mask the problem of inadequate consumer spending for a number of years by promoting a gigantic real estate bubble. In fact, China’s real estate sector became insanely large by international standards.
  • what China must do seems straightforward: end financial repression and allow more of the economy’s income to flow through to households, and strengthen the social safety net so that consumers don’t feel the need to hoard cash. And as it does this it can ramp down its unsustainable investment spending.
  • But there are powerful players, especially state-owned enterprises, that benefit from financial repression
  • And when it comes to strengthening the safety net, the leader of this supposedly communist regime sounds a bit like the governor of Mississippi, denouncing “welfarism” that creates “lazy people.”
  • Japan ended up managing its downshifting well. It avoided mass unemployment, it never lost social and political cohesion, and real G.D.P. per working-age adult actually rose 50 percent over the next three decades, not far short of growth in the United States.
  • My great concern is that China may not respond nearly as well. How cohesive will China be in the face of economic trouble? Will it try to prop up its economy with an export surge that will run headlong into Western efforts to promote green technologies? Scariest of all, will it try to distract from domestic difficulties by engaging in military adventurism?
Javier E

Nobel laureates have figured out the eight investments that will help the planet most. No. 1: micronutrients. - By Bjørn Lomborg - Slate Magazine - 0 views

  • In 2008, the Copenhagen Consensus Center, which I direct, asked a group of the world's top economists to identify the "investments" that could best help the planet.
  • the best investments: those for which relatively tiny amounts of money could generate significant returns in terms of health, prosperity, and community advantages. These included: increased immunization coverage, initiatives to reduce school dropout rates, community-based nutrition promotion, and micronutrient
  • supplementation.
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  • the Copenhagen Consensus Center releases the Guide to Giving, so that those of us without a government treasury or charitable foundation at our disposal can also consider how to use the experts' lessons. (Read here about the eight initiatives where the Nobel laureates believe that very small investments could achieve significant benefits.)
  • By putting all benefits to individuals, communities, and countries in monetary terms, we can compare the two options. Expert researchers for the Copenhagen Consensus found that carbon offsets are a relatively ineffective way of reining in global warming and reducing its effects—$10 would avoid about $3 of damage from climate change. By contrast, $10 spent on Vitamin A supplements would achieve more than $170 of benefits in health and long-term prosperity.
Javier E

The Tiny Swiss Company That Thinks It Can Help Stop Climate Change - The New York Times - 0 views

  • The scientist and historian Vaclav Smil called Haber-Bosch “the most important technical invention of the 20th century.” Bosch had effectively removed the historical bounds on crop yields, so much so that he was widely credited with making “bread from air.” By some estimates, Bosch’s work made possible the lives of more than two billion human beings over the last 100 years.
  • They depend on electric fans to pull air into the ducts and over a special material, known as a sorbent, laced with granules that chemically bind with CO₂; periodic blasts of heat then release the captured gas from the sorbent, with customized software managing the whole catch-and-release cycle.
  • “The first thing they said was: ‘This will never work technically.’ And finally in 2017 we convinced them it works technically, since we built the big plant in Hinwil. But once we convinced them that it works technically, they would say, ‘Well, it will never work economically.’ ”For the moment, skeptics of Climeworks’s business plan are correct: The company is not turning a profit.
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  • it faces the same daunting task that confronted Carl Bosch a century ago: How much can it bring costs down? And how fast can it scale up
  • They believe that over the next seven years they can bring expenses down to a level that would enable them to sell CO₂ into more lucrative markets. Air-captured CO₂ can be combined with hydrogen and then fashioned into any kind of fossil-fuel substitute you want. Instead of making bread from air, you can make fuels from air.
  • What Gebald and Wurzbacher really want to do is to pull vast amounts of CO₂ out of the atmosphere and bury it, forever, deep underground, and sell that service as an offset
  • companies like Climeworks face a quandary: How do you sell something that never existed before, something that may never be cheap, into a market that is not yet real?
  • It’s arguably the case, in fact, that when it comes to reducing our carbon emissions, direct air capture will be seen as an option that’s too expensive and too modest in impact. “The only way that direct air capture becomes meaningful is if we do all the other things we need to do promptly,” Hal Harvey, a California energy analyst who studies climate-friendly technologies and policies, told me
  • In short, the best way to start making progress toward a decarbonized world is not to rev up millions of air capture machines right now. It’s to stop putting CO₂ in the atmosphere in the first place.
  • If the nations of the world were to continue on the current track, it would be impossible to meet the objectives of the 2016 Paris Agreement, which set a goal limiting warming to 2 degrees Celsius or, ideally, 1.5 degrees. And it would usher in a world of misery and economic hardship. Already, temperatures in some regions have climbed more than 1 degree Celsius, as a report by the Intergovernmental Panel on Climate Change noted last October. These temperature increases have led to an increase in droughts, heat waves, floods and biodiversity losses and make the chaos of 2 or 3 degrees’ additional warming seem inconceivable
  • A further problem is that maintaining today’s emissions path for too long runs the risk of doing irreparable damage to the earth’s ecosystems — causing harm that no amount of technological innovation can make right. “There is no reverse gear for natural systems,” Harvey says. “If they go, they go. If we defrost the tundra, it’s game over.” The same might be said for the Greenland and West Antarctic ice sheets, or our coral reefs. Such resources have an asymmetry in their natural architectures: They can take thousands or millions of years to form, but could reach conditions of catastrophic decline in just a few decades.
  • To have a shot at maintaining a climate suitable for humans, the world’s nations most likely have to reduce CO₂ emissions drastically from the current level — to perhaps 15 billion or 20 billion metric tons per year by 2030; then, through some kind of unprecedented political and industrial effort, we need to bring carbon emissions to zero by around 2050
  • To preserve a livable environment we may also need to extract CO₂ from the atmosphere. As Wurzbacher put it, “if you take all these numbers from the I.P.C.C., you end up with something like eight to 10 billion tons — gigatons — of CO₂ that need to be removed from the air every year, if we are serious about 1.5 or 2 degrees.
  • Through photosynthesis, our forests take extraordinary amounts of carbon dioxide from the atmosphere, and if we were to magnify efforts to reforest clear-cut areas — or plant new groves, a process known as afforestation — we could absorb billions more metric tons of carbon in future years.
  • we could grow crops specifically to absorb CO₂ and then burn them for power generation, with the intention of capturing the power-plant emissions and pumping them underground, a process known as bioenergy with carbon capture and storage, or BECCS
  • Ever since the Industrial Revolution, human societies have produced an excess of CO₂, by taking carbon stores from deep inside the earth — in the form of coal, oil and gas — and from stores aboveground (mostly wood), then putting it into the atmosphere by burning it. It has become imperative to reverse the process — that is, take CO₂ out of the air and either restore it deep inside the earth or contain it within new surface ecosystems.
  • “It’s not about saying, ‘I want to plant a tree.’ It’s about saying, ‘We want to plant a billion trees.’
  • “We have to come to grips with the fact that we waited too long and that we took some options off the table,” Michael Oppenheimer, a Princeton scientist who studies climate and policy, told me. As a result, NETs no longer seem to be just interesting ideas; they look like necessities. And as it happens, the Climeworks machines on the rooftop do the work each year of about 36,000 trees.
  • air capture could likewise help counter the impact of several vital industries. “There are process emissions that come from producing iron and steel, cement and glass,” she says, “and any time you make these materials, there’s a chemical reaction that emits CO₂.” Direct air capture could even lessen the impacts of the Haber-Bosch processes for making fertilizer; by some estimates, that industry now accounts for 3 percent of all CO₂ emissions.
  • Wind and solar are now the cheapest forms of energy in the right locations,” Pacala says. “The return on those investments, if you calculated it, would blow the doors off anything in your portfolio. It’s like investing in early Apple. So it’s a spectacular story of success. And direct air capture is precisely the same kind of problem, in which the only barrier is that it’s too costly.”
  • what all the founders have in common is a belief that the cost of capturing a ton of carbon will soon drop sharply.
  • M.I.T.’s Howard Herzog, for instance, an engineer who has spent years looking at the potential for these machines, told me that he thinks the costs will remain between $600 and $1,000 per metric ton
  • He points out that because direct-air-capture machines have to move tremendous amounts of air through a filter or solution to glean a ton of CO₂ — the gas, for all its global impact, makes up only about 0.04 percent of our atmosphere — the process necessitates large expenditures for energy and big equipment. What he has likewise observed, in analyzing similar industries that separate gases, suggests that translating spreadsheet projections for capturing CO₂ into real-world applications will reveal hidden costs. “I think there has been a lot of hype about this, and it’s not going to revolutionize anything,
  • Climeworks’s current goal is to remove 1 percent of the world’s annual CO₂ emissions by the mid 2020s.
  • “Basically, we have a road map — $600, down to $400, down to $300 and $200 a ton,” Wurzbacher said. “This is over the next five years. Down to $200 we know quite well what we’re doing.” And beyond $200, Wurzbacher suggested, things get murkier.
  • To actually capture 1 percent of the world’s carbon emissions by 2025 would, by Gebald’s calculations, require that Climeworks build 250,000 carbon-capture plants like the ones on the roof at Hinwil. That adds up to about 4.5 million carbon collectors
  • The Climeworks founders therefore try to think of their product as the automotive industry might — a piece of mass-produced technology and metal, not the carbon they hope to sequester.
  • “Every CO₂ collector has about the same weight and dimensions of a car — roughly two tons, and roughly 2 meters by 2 meters by 2 meters,” Gebald said. “And all the methods used to produce the CO₂ collectors could be well automated. So we have the automotive industry as a model for how to produce things in large quantities for low cost.
  • n 1954, the economist Paul Samuelson put forward a theory that made a distinction between “private-consumption goods” — bread, cars, houses and the like — and commodities that existed apart from the usual laws of supply and demand.
  • the other type of commodity Samuelson was describing is something now known as a “public good,” which benefits everyone but is not bought, sold or consumed the same way
  • direct air capture’s success would be limited to the size of the market for private goods — soda fizz, greenhouse gas — unless governments decided to intervene and help fund the equivalent of several million (or more) lighthouses.
  • An intervention could take a variety of forms. It could be large grants for research to find better sorbent materials, for instance, which would be similar to government investments that long ago helped nurture the solar- and wind-power industries. But help could also come by expanding regulations that already exist.
  • The Climeworks founders told me they don’t believe their company will succeed on what they call “climate impact” scales unless the world puts significant prices on emissions, in the form of a carbon tax or carbon fee.
  • “Our goal is to make it possible to capture CO₂ from the air for below $100 per ton,” Wurzbacher says. “No one owns a crystal ball, but we think — and we’re quite confident — that by something like 2030 we’ll have a global average price on carbon in the range of $100 to $150 a ton.” There is optimism in this thinking
  • A company that sells a product or uses a process that creates high emissions — an airline, for instance, or a steel maker — could be required to pay carbon-removal companies $100 per metric ton or more to offset their CO₂ output. Or a government might use carbon-tax proceeds to directly pay businesses to collect and bury CO₂.
  • “It doesn’t cost too much to pump CO₂ underground,” Stanford’s Sally Benson says. Companies already sequester about 34 million metric tons of CO₂ in the ground every year, at a number of sites around the world, usually to enhance the oil-drilling process. “The costs range from $2 to $15 per ton. So the bigger cost in all of this is the cost of carbon capture.”
  • The weekend before, Gutknecht told me, he received 900 unsolicited inquiries by email. Many were from potential customers who wanted to know how soon Climeworks could bury their CO₂ emissions, or how much a machine might cost them.
  • A Climeworks app could be installed on my smartphone, he explained. It could then be activated by my handset’s location services. “You fly over here to Europe,” he explained, “and the app tells you that you have just burned 1.7 tons of CO₂. Do you want to remove that? Well, Climeworks can remove it for you. Click here. We’ll charge your credit card.
  • The vast and constant market demand for fuel is why Carbon Engineering has staked its future on synthetics. The world currently burns about 100 million barrels of oil a day.
  • “So let’s say you’d have to supply something like 50 million barrels a day in 2050 of fuels,” he said. “That’s still a monster market.”
  • Carbon Engineering’s chief executive, added that direct-air-capture synthetics have an advantage over traditional fossil fuels: They won’t have to spend a dime on exploration
  • our plants, you can build it right in the middle of California, wherever you have air and water.” He told me that the company’s first large-scale facility should be up and running by 2022, and will turn out at least 500 barrels a day of fuel feedstock — the raw material sent to refineries.
  • Climeworks recently joined a consortium of European countries to produce synthetic methane that will be used by a local trucking fleet. With different tweaks and refinements, the process could be adapted for diesel, gasoline, jet fuel — or it could be piped directly to local neighborhoods as fuel for home furnaces.
  • the new fuels are not necessarily cheaper. Carbon Engineering aspires to deliver its product at an ultimate retail price of about $1 per liter, or $3.75 per gallon. What would make the product competitive are regulations in California that now require fuel sellers to produce fuels of lower “carbon intensity.” To date this has meant blending gas and diesel with biofuels like ethanol, but it could soon mean carbon-capture synthetics too.
  • Since they’re made from airborne CO₂ and hydrogen and could be manufactured just about anywhere, they could rearrange the geopolitical order — tempering the power of a handful of countries that now control natural-gas and oil markets.
  • From an environmental standpoint, air-capture fuels are not a utopian solution. Such fuels are carbon neutral, not carbon negative. They can’t take CO₂ from our industrial past and put it back into the earth
  • Even so, these fuels could present an enormous improvement. Transportation — currently the most significant source of emissions by sector in the United States — could cease to be a net emitter of CO₂
  • “If you can do one carbon-capture facility, where Carbon Engineering or Climeworks can build a big plant, great. You need to do that 5,000 times. And to capture a million tons of CO₂ with direct air capture, you need a small power plant just to run that facility. So if you’re going to build one direct-air-capture facility every day for the next 30 years to get to some of these scenarios, then in addition, we have to build a new mini power plant every day as well.
  • It’s also the case that you have to address two extraordinary problems at the same time, Peters added. “To reach 1.5 degrees, we need to halve emissions every decade,” he said. That would mean persuading entire nations, like China and the United States, to switch from burning coal to using renewables at precisely the same time that we make immense investments in negative-emission technologies.
  • this would need to be done even as governments choose among competing priorities:
  • “The idea of bringing direct air capture up to 10 billion tons by the middle or later part of the century is such a herculean task it would require an industrial scale-up the likes of which the world has never seen,”
  • Pacala wasn’t pessimistic about making a start. He seemed to think it was necessary for the federal government to begin with significant research and investments in the technology — to see how far and fast it could move forward, so that it’s ready as soon as possible
  • Gebald and Wurzbacher seemed to regard the climate challenge in mathematical terms. How many gigatons needed to be removed? How much would it cost per ton? How many Climeworks machines were required? Even if the figures were enormous, even if they appeared impossible, to see the future their way was to redefine the problem, to move away from the narrative of loss, to forget the multiplying stories of dying reefs and threatened coastlines — and to begin to imagine other possibilities.
Javier E

It May Be the Biggest Tax Heist Ever. And Europe Wants Justice. - The New York Times - 0 views

  • “the robbery of the century,” and what one academic declared “the biggest tax theft in the history of Europe.” From 2006 to 2011, these two and hundreds of bankers, lawyers and investors made off with a staggering $60 billion, all of it siphoned from the state coffers of European countries.
  • The scheme was built around “cum-ex trading” (from the Latin for “with-without”): a monetary maneuver to avoid double taxation of investment profits that plays out like high finance’s answer to a David Copperfield stage illusion. Through careful timing, and the coordination of a dozen different transactions, cum-ex trades produced two refunds for dividend tax paid on one basket of stocks.
  • One basket of stocks. Abracadabra. Two refunds
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  • The process was repeated over and over, as word of cum-ex spread like a quiet contagion. Germany was hardest hit, with an estimated $30 billion in losses, followed by France, taken for about $17 billion. Smaller sums were drained away from Spain, Italy, Belgium, Austria, Norway, Finland, Poland and others
  • Outrage in these countries has focused on the City of London, Britain’s answer to Wall Street. Less scrutinized has been the role played by Americans, both individual investors and branches of United States investment banks in London, including Morgan Stanley, JPMorgan Chase and Merrill Lynch Bank of America.
  • American bankers didn’t try cum-ex at home because they feared domestic regulators. So they moved operations to London and treated the rest of Europe as an anything-goes frontier
  • ”There was this culture in London, and it really came from New York,” he said. “These guys were either from New York or trained in London at New York banks, and they looked at Europe as their playground. People at the highest levels were collaborating to rip off countries.”
  • uffice it to say, the goal was to fool the financial system so that two investors could claim refunds for dividend taxes that were paid just once.
  • the presiding judge issued a preliminary ruling that, for the first time, declared cum-ex a felony, calling it a “collective grab in the treasury.”
  • German prosecutors say they will now pursue 400 other suspects, unearthed in 56 investigations. Banks large and small will be ordered to hand over cum-ex profits, which could have serious consequences for some. Two have already gone bust.
  • officials in Germany say the trade was a form of theft, one so obviously illicit that forbidding it — which was tried twice, with ineffectively worded laws — was hardly necessary.
  • Precisely who invented cum-ex trading, and when, are mysteries, but ground zero for this scandal may have been the London branch of Merrill Lynch.
  • At Merrill, Mr. Shields’s job was to identify “tax-attractive trades,” as he put it in his testimony. He had joined one of the least visible sectors of the financial world, which pokes at the seams of international finance law, looking for ways to reduce clients’ tax bills.
  • When he pointed this out to management, the policy was tweaked.“They said, ‘You can answer a call on your mobile, but you need to immediately move off the floor,’” he recalled. “So these guys would get up from their desks, start walking toward the edge of the floor, send a text message and then walk back. It was a joke.”
  • The trade was pure theater and required a huge cast: stock lenders, prime brokers, custodians, accounting firms, asset managers and inter-dealer brokers. It also required vast quantities of stock, most of which was sourced from American shareholders.
  • A lawyer who worked at the firm Dr. Berger founded in 2010, and who under German law can’t be identified by the media, described for the Bonn court a memorable meeting at the office.
  • Sensitive types, Dr. Berger told his underlings that day, should find other jobs.“Whoever has a problem with the fact that because of our work there are fewer kindergartens being built,” Dr. Berger reportedly said, “here’s the door.”
  • Seemingly risk-free profits poured in, and over the years a mini-industry thrived, one that a former participant labeled “the devil’s machine.”
  • When Mr. Tibo tried to signal his concern to executives at UniCredit, the bank’s Italian owner, they didn’t seem to care, he said
  • “There were big profits coming out of HypoVereinsbank, and most of it was from the investment banking section,” Mr. Tibo said. “The Italians quickly made up their minds: ‘We want to make money.’ No one gave us any internal support, because they didn’t want us to learn anything.”
  • By then, Mr. Mora and Mr. Shields were long gone from the London branch. Tired of niggling questions and feeling underpaid, they had left in 2008 to open Ballance Capital, one of the first full-service, one-stop cum-ex trading shops.
  • Dozens of German banks participated in cum-ex deals, too, gobbling up German taxpayer money at the same time they received a rescue package worth more than $500 billion.
  • Last year, the lawyer who testified anonymously at the Bonn trial described the culture of the cum-ex world to Oliver Schröm and Christian Salewski, two reporters on the German television show “Panorama,” under disguising makeup. It was a realm beyond morality, he said: all male, supremely arrogant, and guided by the conviction that the German state is an enemy and German taxpayers are suckers.
  • “That was the normal world to which we no longer belonged,” he told the reporters. “We looked out the window from up there, and we thought, ‘We’re the cleverest of all, geniuses, and you’re all stupid.’”
  • a former Merrill Lynch investment banker sat in a London restaurant near the Thames and described what had turned him into a whistle-blower. In the years after the financial crisis, he said, he noticed that a handful of colleagues on the company’s trading floor were using their personal mobile phones, a breach of company policy. All communication was supposed to be tracked and recorded. These guys were sending self-deleting texts on Snapchat.“Obviously, they were circumventing controls,”
  • Worried about the growing pileup of tax-withholding credits on the books, Frank Tibo, the bank’s chief tax officer, flew to London in May 2007. He spent the day grilling Mr. Mora
  • The complaint lays out, in painstaking detail, how the trades were confected, who executed them and which questions should be asked by investigators to uncover the “sham.” It states that Merrill Lynch earned hundreds of millions of dollars over the previous seven years from cum-ex trades.
  • “Anyone who stood in the way of this trade was swept aside, and those who enabled it were promoted,” the whistle-blower said in a follow-up phone call. “But it was widely regarded as insanity inside the bank for it to be extracting money from sovereign treasuries, particularly after the entire sector had been supported by the public purse.
  • American banks conducted their cum-ex trades overseas, rather than at home, out of fear, the whistle-blower said. Specifically, he mentioned a 2008 Senate investigation into “dividend tax abuse” that found it was depriving the Treasury of $100 billion every year. The report led to a ban on dividend arbitrage tied to stock in United States corporations.
  • But nothing prevented American bankers from conducting such trades with foreign companies on foreign soil.
  • German efforts to stamp out cum-ex with legislation, in 2007 and 2009, left holes through which certain types of financial players could still crawl. This included private pension plans in the United States, a niche financial product for wealthy people who want the kind of privacy, and exotic investment options, that Fidelity doesn’t offer.
  • Investors will have problems of their own. Many have said they had no idea how cum-ex traders returned such dazzling profits. That defense became less plausible in 2012, after the German government spent millions of dollars to buy 11 hard drives from industry insiders. The hard drives were filled with marketing fliers, written by bankers, who sold cum-ex with an antigovernment pitch.
  • “We learned that it was very common for these bankers to have conversations over coffee with clients about cum-ex,” said Norbert Walter-Borjans, a former minister of finance for North Rhine-Westphalia. “They would say, ‘If you have a problem with how your hard-earned money is being spent in taxes, we’ve got an idea for you.’”
  • Authorities across Europe are said to be waiting for a resolution of the Bonn trial to move ahead with their own. Many are livid that Germany didn’t alert them sooner about the perils of cum-ex. The failure, say lawyers, stems from a Europe-wide hypersensitivity about privacy, which is especially acute when it comes to taxes.
  • In 2012, soon after Germany shut down its cum-ex problem, a London trader began a cum-ex scheme that fleeced the Danish tax authority of $2 billion, officials there say. The trader, Sanjay Shah, who now lives in Dubai, denies wrongdoing but has never been shy about the source of his wealth.When he bought a $1.3 million yacht a few years ago, he found the perfect name: Cum-Ex.
Javier E

Wind and Solar Power Advance, but Carbon Refuses to Retreat - The New York Times - 0 views

  • carbon intensity of energy. Advertisement Continue reading the main story The term refers to a measure of the amount of CO2 spewed into the air for each unit of energy consumed. It offers some bad news: It has not budged since that chilly autumn day in Kyoto 20 years ago.
  • Even among the highly industrialized nations in the Organization for Economic Cooperation and Development, the carbon intensity of energy has declined by a paltry 4 percent since then
  • Perhaps renewables are not the answer.
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  • Over the past 10 years, governments and private investors have collectively spent $2 trillion on infrastructure to draw electricity from the wind and the sun,
  • Capacity from renewable sources has grown by leaps and bounds, outpacing growth from all other sources — including coal, natural gas and nuclear power — in recent years. Solar and wind capacity installed in 2015 was more than 10 times what the International Energy Agency had forecast a decade before.
  • Still, except for very limited exceptions, all this wind and sun has not brought about much decarbonization. Indeed, it has not added much clean power to the grid.
  • Environmental Progress performed an analysis of the evolution of the carbon intensity of energy in 68 countries since 1965. It found no correlation between the additions of solar and wind power and the carbon intensity of energy: Despite additions of renewable capacity, carbon intensity remained flat.
  • Integrating renewable sources requires vast investments in electricity transmission — to move power from intermittently windy and sunny places to places where power is consumed. It requires maintaining a backstop of idle plants that burn fossil fuel, for the times when there is no wind or sun to be had. It requires investing in power-storage systems at a large scale.
  • These costs will ultimately be reflected in power prices. One concern is that by raising the retail cost of electricity they will discourage electrification, encouraging consumers to rely on alternative energy sources like gas — and pushing CO2 emissions up.
  • Another concern is that they will drive wholesale energy prices down too far. Because they produce the most energy when the sun is up and the wind is blowing, renewable generators can flood the grid at critical times of the day, slashing the price of power. This not only threatens the solvency of nuclear reactors, which cannot shut down on a dime and must therefore pay for the grid to accept their power, but also reduces the return on additional investment in renewables.
  • there is some evidence that among investors, at least, the excitement may be waning. After half a decade of sustained increases, investment in solar and wind energy has been fairly flat since 2010, at around $250 billion per year. While that is a lot of money, it is nowhere near enough.
  • “We will need twice as much investment over a sustained period of time to get anywhere close to achieving 2 degrees,”
  • I would suggest that the challenge is not just to raise more money. Building a zero-carbon energy system requires broader thinking about the technological mix.
Javier E

Natural Gas, America's No. 1 Power Source, Already Has a New Challenger: Batteries - WSJ - 0 views

  • Vistra Corp. owns 36 natural-gas power plants, one of America’s largest fleets. It doesn’t plan to buy or build any more. Instead, Vistra intends to invest more than $1 billion in solar farms and battery storage units in Texas and California as it tries to transform its business to survive in an electricity industry being reshaped by new technology.
  • A decade ago, natural gas displaced coal as America’s top electric-power source, as fracking unlocked cheap quantities of the fuel. Now, in quick succession, natural gas finds itself threatened with the same kind of disruption, only this time from cost-effective batteries charged with wind and solar energy.
  • Natural-gas-fired electricity represented 38% of U.S. generation in 2019
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  • Wind and solar generators have gained substantial market share, and as battery costs fall, batteries paired with that green power are beginning to step into those roles by storing inexpensive green energy and discharging it after the sun falls or the wind dies.
  • President Biden is proposing to extend renewable-energy tax credits to stand-alone battery projects—installations that aren’t part of a generating facility—as part of his $2.3 trillion infrastructure plan, which could add fuel to an already booming market for energy storage.
  • renewables have become increasingly cost-competitive without subsidies in recent years, spurring more companies to voluntarily cut carbon emissions by investing in wind and solar power at the expense of that generated from fossil fuels.
  • the specter of more state and federal regulations to address climate change is accelerating the trend.
  • the combination of batteries and renewable energy is threatening to upend billions of dollars in natural-gas investments, raising concerns about whether power plants built in the past 10 years—financed with the expectation that they would run for decades—will become “stranded assets,” facilities that retire before they pay for themselves.
  • as batteries help wind and solar displace traditional power sources, some investors view the projects with caution, noting that they, too, could become victims of disruption in coming years, if still-other technological advances yield better ways to store energy.
  • most current batteries can deliver power only for several hours before needing to recharge. That makes them nearly useless during extended outages.
  • Duke Energy Corp. , a utility company based in Charlotte, N.C., that supplies electricity and natural gas in parts of seven states, is still looking to build additional gas-fired power plants. But it has started to rethink its financial calculus to reflect that the plants might need to pay for themselves sooner, because they might not be able to operate for as long.
  • To remedy that, Duke in public filings said it is considering shortening the plants’ expected lifespan from about 40 years to 25 years and recouping costs using accelerated depreciation, an accounting measure that would let the company write off more expenses earlier in the plants’ lives
  • It may also consider eventually converting the plants to run on hydrogen, which doesn’t result in carbon emissions when burned.
  • Much of the nation’s gas fleet, on the other hand, is relatively young, increasing the potential for stranded costs if widespread closures occur within the next two decades.
  • Gas plants that supply power throughout the day face the biggest risk of displacement. Such “baseload” plants typically need to run at 60% to 80% capacity to be economically viable, making them vulnerable as batteries help fill gaps in power supplied by solar and wind farms.
  • Today, such plants average 60% capacity in the U.S., according to IHS Markit, a data and analytics firm. By the end of the decade, the firm expects that average to fall to 50%, raising the prospect of bankruptcy and restructuring for the lowest performers.
  • “It’s just coal repeating itself.”
  • It took only a few years for inexpensive fracked gas to begin displacing coal used in power generation. Between 2011, shortly after the start of the fracking boom, and 2020, more than 100 coal plants with 95,000 megawatts of capacity were closed or converted to run on gas, according to the EIA. An additional 25,000 megawatts are slated to close by 2025.
  • Batteries are most often paired with solar farms, rather than wind farms, because of their power’s predictability and because it is easier to secure federal tax credits for that pairing.
  • Already, the cost of discharging a 100-megawatt battery with a two-hour power supply is roughly on par with the cost of generating electricity from the special power plants that operate during peak hours. Such batteries can discharge for as little as $140 a megawatt-hour, while the lowest-cost “peaker” plants—which fire up on demand when supplies are scarce—generate at $151 a megawatt-hour, according to investment bank Lazard.
  • Solar farms paired with batteries, meanwhile, are becoming competitive with gas plants that run all the time. Those types of projects can produce power for as little as $81 a megawatt-hour, according to Lazard, while the priciest of gas plants average $73 a megawatt-hour
  • Even in Texas, a state with a fiercely competitive power market and no emissions mandates, scarcely any gas plants are under construction, while solar farms and batteries are growing fast. Companies are considering nearly 88,900 megawatts of solar, 23,860 megawatts of wind and 30,300 megawatts of battery storage capacity in the state, according to the Electric Reliability Council of Texas. By comparison, only 7,900 megawatts of new gas-fired capacity is under consideration.
  • California last summer experienced the consequences of quickly reducing its reliance on gas plants. In August, during an intense heat wave that swept the West, the California grid operator resorted to rolling blackouts to ease a supply crunch when demand skyrocketed. In a postmortem published jointly with the California Public Utilities Commission and the California Energy Commission, the operator identified the rapid shift to solar and wind power as one of several contributing factors.
  • Mr. Morgan, who has closed a number of Vistra’s coal-fired and gas-fired plants since becoming CEO in 2016, said he anticipates most of the company’s remaining gas plants to operate for the next 20 years.
  • Quantum Energy Partners, a Houston-based private-equity firm, in the last several years sold a portfolio of six gas plants in Texas and three other states upon seeing just how competitive renewable energy was becoming. It is now working to develop more than 8,000 megawatts of wind, solar and battery projects in 10 states.
  • “We pivoted,” said Sean O’Donnell, a partner in the firm who helps oversee the firm’s power investments. “Everything that we had on the conventional power side, we decided to sell, given our outlook of increasing competition and diminishing returns.”
Javier E

Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower alleges - The Washington Post - 0 views

  • His estimate of $7 billion in annual revenue points to a relatively high rate of contributions from the 15 million members. By comparison, the Catholic church in the United States was reported in 2005 to receive $8 billion in annual tithes from 170 million members.
  • These documents were sent to the IRS whistleblower office in Ogden, Utah, together with a thumb drive containing digital versions of documents and emails that Nielsen collected during his time at Ensign, the complaint says. He also provided information on Ensign’s bank accounts and a list of employees whom officials should contact.
  • The complaint describes an aggressive guarding of information by leaders at Ensign. Ensign employees “are trained to be especially sensitive” about data flowing outside the corporation, the complaint states. “Of course, all corporations need to guard their information, but the lengths that [Ensign] goes to borders on paranoia.”
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  • Only four senior Ensign executives are permitted to see the company’s full financial statements, according to the complaint, and investment staff members may access information only on the Ensign assets relating to their own area of work.
  • The company files abbreviated annual tax returns that report the taxes it paid on the small fraction of its investment activity that is taxable. The returns, which are publicly available, show that in some recent years, the company has reported losses of millions of dollars — a period in which, according to the complaint, a fuller accounting of its operations would have shown billions of dollars in profits.
  • This limited type of tax return requires Ensign to disclose the total value of its holdings, which the complaint asserts, has for years run to tens of billions of dollars. On those returns, Ensign has sometimes stated that it held $1 million, other times “more than $1,000,000,” and it once left this section of the paperwork unfilled.
mattrenz16

With Concessions and Deals, China's Leader Tries to Box Out Biden - The New York Times - 0 views

  • A trade pact with 14 other Asian nations. A pledge to join other countries in reducing carbon emissions to fight global warming. Now, an investment agreement with the European Union.
  • In doing so, he has underlined how difficult it will be for President-elect Joseph R. Biden Jr. to forge a united front with allies against China’s authoritarian policies and trade practices, a central focus of the new administration’s plan to compete with Beijing and check its rising power.
  • China agreed, at least on paper, to loosen many of the restrictions imposed on European companies working in China, open up China to European banks and observe international standards on forced labor.
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  • Noah Barkin, a China expert in Berlin with the Rhodium Group, called the investment agreement in particular “a geopolitical coup for China.”
  • He said China could serve as a model and as a partner in cooperation, and suggested that Europe could play a moderating role between China and the United States.
  • “The values we all cherish in our Sunday sermons must be adhered to if we are not to fall victim to a new systemic rival,” said Reinhard Bütikofer, a German member of the European Parliament who has spoken out against the European investment agreement with China.
  • China’s overtures will not end the anger over its repressive policies, including its documented use of forced labor.
  • The Europeans finalized the investment agreement, for example, a day after the European Union publicly criticized the harsh prison sentence handed down to a Chinese lawyer who reported on the initial coronavirus outbreak in the city of Wuhan.
  • Over the long term, it remains to be seen how significantly China’s pacts and pledges will improve its international image, which plummeted this past year because of its obfuscation over the coronavirus outbreak in Wuhan.
  • A survey by the Pew Research Center in October found that in 14 economically advanced countries, unfavorable attitudes toward China had reached their highest levels in more than a decade. A median of 78 percent of those surveyed said they had little or no confidence that Mr. Xi would do the right thing in world affairs. (One upside for Mr. Xi: 89 percent felt the same way about Mr. Trump.)
  • Mr. Xi’s pledges to accelerate China’s reduction of carbon emissions, which he began making in September, have won international plaudits, even if the government has yet to detail how it will wean itself from coal and other heavily polluting industries.
  • Mr. Trump showed disdain for America’s traditional allies in Europe and Asia, but Mr. Biden has pledged to galvanize a coalition to confront the economic, diplomatic and military challenges that China poses.
  • Mr. Biden’s incoming national security adviser, Jake Sullivan, took to Twitter to hint strongly that Europe should first wait for consultations with the new administration — to no avail.
  • They said the agreement failed to do enough to address China’s abuses of human rights, including labor rights.
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