The Daily Bulletin
TODAY'S TAKEAWAY: IS KLEINER PERKINS SORRY IT EVER MET AL GORE?
It was the biggest story in energy six years ago. Former Vice President Al Gore sitting in the Kleiner Perkins board room, making quick calls to Washington and piloting Silicon Valley's leading venture capital firm into the Next Big Thing - clean energy! Well the dust has cleared and KP is now, as The New York Times puts it, "humbled." Gore didn't make out badly as a senior partner. Recent reports said his net worth increased by $100 million from his various energy investments. But today's Times story from Randall Smith says that Kleiner Perkins' turn to clean energy has produced a net loss of 1.9 percent annually from 2000-2010 after racking up annual returns of 35.7 percent in the previous decade. You could have predicted it all a decade ago. The venture into green energy was premised on finding some "Moore's Law" that would make solar energy improve at the same rate computers have done since the 1960s. But energy isn't information. It's not subject to the same exponential improvements. Consequently KP has gotten stuck backing a lot of start-ups whose promise is to improve solar output by 5-10 percent. That's not the stuff of Apple and Intel. And the worst is yet to come, as KP still stands to lose $100 million on Fisker's collapse. It all goes to show that even the investment gurus of Silicon Valley can be swept away by energy fads.
SO DOES THIS MAKE BARACK OBAMA THE ENVIRONMENTAL PRESIDENT?
That's what John Chait tells us in New York magazine this week. It seems that Gore has been taking potshots at Obama for failing to pass a climate bill and halt the rise of the oceans as promised in his original 2008 campaign. This has set off a bit of a spitting fight in the precincts of Manhattan as to who is The Man as far as carbon emissions go. Nicholas LeMann of The New Yorker recently wrote an obituary for the environmental movement, saying Obama's failure to shepherd cap-and-trade through Congress was the equivalent of the Ottoman Empire's failure to take Vienna in 1683. But now Chait is coming to the President' rescue. He finds a silver lining in this State-of-the-Union promise: "I will direct my Cabinet, to come up with executive actions we can take now and in the future to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy." "It sounded a little vague," writes Chait, "[b]ut a handful of environmental wonks had a fairly strong grasp of the project he had committed himself to, and they understood that it was very, very real and very, very doable. If they were to have summarized the news, the headline would have been OBAMA TO SAVE PLANET." It's a long, tendentious artile but worth a read if you're interested in this sort of thing.
AND NOW THE REAL STORY: AMERICAN OIL PRODUCTION SURGES
Who knows? In ten years President Obama may be remembered as the Chief Executive who ended three decades of decline in American oil production and put us on the road to energy independence. That's what's happening on his watch in any case and if the President wants to take credit, why not? (He certainly didn't mind during the campaign.) CNBC reports that US oil production is now at a 21-year peak and crude supplies are at an 82-year high. Domestic production has just about pulled even with imports. "I think we could go to parity by the end of the year," John Kilduff of Again Capital tells CNBC. "The logistics and the rejiggering of the supply distribution system is really remarkable. By the end of the year, on top of all the pipeline efforts, we're going to have about 1.2 million barrels of oil riding the rails." Isn't it wonderful to have an Administration that is so supportive of fossil fuels?
NOT ONLY THAT, NOW THEY'RE TRYING TO SELL US ON CARBON DIOXIDE
It's bad enough that traditional energy sources are proving to be much more productive and reliable than the "renewable" kind. Now former astronaut and U.S. Senator Harrison Schmitt and Princeton physics professor William Happer are arguing that carbon dioxide is actually good for the planet! It's a very sophisticated argument perhaps only accessible to plant biologists, but they argue that there's a trade-off between a plant's need for water and CO2. Because CO2 levels have risen in recent decades, plants have now become more drought-resistant: "Crop yields in recent dry years were less affected by drought than crops of the dust-bowl droughts of the 1930s, when there was less carbon dioxide. Nowadays, in an age of rising population and scarcities of food and water in some regions, it's a wonder that humanitarians aren't clamoring for more atmospheric carbon dioxide. Instead, some are denouncing it." It's an argument that hasn't been heard to date and certain to put global warming concerns in a new perspective. In today's Wall Street Journal.
HAS SEQUESTRATION BEEN GOOD FOR THE ENVIRONMENT?
And while we're on the subject of paradoxes, Todd Woody on Quartz comes up with the unorthodox proposal that the Sequestration has actually been good for the environment! This counters the convention wisdom that the government's 4 percent cutback in spending has been the greatest national disaster since Pearl Harbor. (The New York Times recently ran a tear-jerker that made you think there must be a market in selling "I Survived Sequestration" t-shirts.) "The mandatory US federal budget cuts known as sequestration may seem like bad news for environmental programs," writes Woody. "But there's a green lining to government dysfunction: less money to carry out environmentally damaging policies. Case in point: Citing the sequester, the US Bureau of Land Management (BLM) has postponed pending lease sales for oil and gas exploration in California until at least October, when the new fiscal year begins. Those leases include 1,278 acres (517 hectares) of government land sitting atop the Monterey Shale, a vast geological formation that holds the US's largest reserve of shale oil, an estimated 15.4 billion barrels." So if Big Government hasn't been able to prevent the development of US oil resources, maybe Smaller Government can do the trick! An interesting thought there.
DOES TURNING OUT SOLAR PANELS COMPENSATE FOR BEING THE WORLD'S LEADER IN SMOG?
Finally, Ramez Naam on Slate has another interesting contrarians idea. China's cities may be choked in air pollution so that there is a huge brown cloud visible from space hanging over the entire nation. But there's actually "the World Leader in Fighting Climate Change." The reason? There are seven, actually, but here are a few: 1) China turns out more solar panels, 2) China has cap-and-trade, 2) "China loves wind more than coal." Then there's this: "China's leaders are not like America's. There's a preponderance of scientists and engineers among China's rulers. New President Xi Jinping was trained as a chemical engineer. His predecessor, Hu Jintao, earned a degree in hydraulic engineering. His predecessor, Jiang Zemin, held a degree in electrical engineering." Now why didn't President Obama skip that stint in law school and go for a chemical engineering degree? In fact, China and India's increases in carbon emissions are completely wiping out any gains that are being made in the developing nations, where emissions have been declining for some time. It's not their fault - they've got huge populations to feed and coal is all that's available right now. But the important less is this: When it comes to pleasing climate warriors, it's the thought, not the results, that count.
