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Carbon Credits and Green Bonds Are Largely Fake

06 Monday Mar 2023

Posted by Nuetzel in Climate, Environment

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Blake Lovewall, Carbon Credits, Carbon Offsets, Caveat Emptor, Climate Change Opportunism, Deforestation, Die Zeit, Environmental Committments, ESG Scores, Fiduciary Duty, Green Bonds, Green Investing, greenfraud.blogspot.com, Greenwashing, Net Zero, Paris Climate Accords, Recycling Mandates, REDD, SourceMaterial, The Guardian

It doesn’t take much due diligence to reveal that certain green “commitments” are flimsy gestures at best. I discussed the poor economics of recycling mandates in a post a few days ago. Here I discuss two other prominent examples of fake virtue: so-called carbon offsets and green bonds. These are devices often utilized by private actors to assuage activists, gain favor with public policymakers., or simply to claim and promote themselves as “zero-footprint”. No doubt many well-intentioned people believe in the goodness of these instruments, blissfully ignorant of the underlying fakery. Of course, this is dwarfed by the broad flimsiness (and cost implications) of claims about climate catastrophe, which is what motivates carbon credits and most green bonds in the first place. The includes “commitments” made by various nations under the Paris Climate Accords, but that is a subject for another day.

Climate Credits

I mentioned Blake Lovewall’s interesting commentary on carbon credits recently. Purchasing these credits is a way of “greenwashing” activities that emit carbon dioxide. Also known as carbon offsets, this is a $2 billion market with growth fueled by a desire by businesses to appeal to environmental activists and “green” investors, and to boost their ESG scores. I’ll quote here from my own piece, which had as it’s main thrust the waste inherent in wind and solar projects (Lovewall quotes are in blue type):

“The resulting carbon emissions are, in reality, unlikely to be offset by any quantity of carbon credits these firms might purchase, which allow them to claim a ‘zero footprint’. Blake Lovewall describes the sham in play here:

‘The biggest and most common Carbon offset schemes are simply forests. Most of the offerings in Carbon marketplaces are forests, particularly in East Asian, African and South American nations. …

The only value being packaged and sold on these marketplaces is not cutting down the trees. Therefore, by not cutting down a forest, the company is maintaining a ‘Carbon sink’ …. One is paying the landowner for doing nothing. This logic has an acronym, and it is slapped all over these heralded offset projects: REDD. That is a UN scheme called “Reduce Emissions from Deforestation and Forest Degradation”. I would re-name it to, “Sell off indigenous forests to global investors”.’

Lovewall goes on to explain that these carbon offset investments do not ensure that forests remain pristine by any stretch of the imagination. For one thing, the requirements for managing these ‘preserves’ are often subject to manipulation by investors working with government; as such, the credits are often vehicles for graft. In Indonesia, for example, carbon credited forests have been converted to palm oil plantations without any loss of value to the credits! Lovewall also cites a story about carbon offset investments in Brazil, where the credits provided capital for a massive dam in the middle of the rainforest. This had severe environmental and social consequences for indigenous peoples. It’s also worth noting that planting trees, wherever that might occur under carbon credits, takes many years to become a real carbon sink.”

Lovewall makes a strong case that carbon credits are a huge fraud. This was reinforced by a recent investigation conducted by the Guardian, Die Zeit and SourceMaterial, a “non-profit investigative journalism organization”, according to the Guardian. The investigation was based on independent research studies as well as interviews with various parties. They found that at least 90% of “rainforest credits” do not represent carbon reductions. Two studies found no abatement whatsoever in deforestation under the credits. Furthermore, the deforestation threats (absent credits) had been overstated by some 400%. The investigation also noted serious human rights violations associated with the offset projects. Rainforest credits are only one kind of carbon offset, but similar problems plague other types of credits as well, such as those earned by shuttering fossil fuel plants in developing countries desperately short on power generation.

That so much of the carbon credit market is fraudulent should infuriate climate change radicals. The findings also are a disgrace to participants in these markets, revealing that much of the “net zero” propaganda trumpeted by corporate PR organizations is a charade. Regrettably, it is motivated by an unnecessary panic over carbon dioxide emissions and their presumed role in global warming. Spending on environmental initiatives should be a warning flag for investors. The resources firms dedicate to those credits deserve careful scrutiny. The fascination with ESG scores is another sign that corporate managers have lost sight of their fundamental mission: to maximize shareholder value by serving their customers well.

Green Bonds

Another suspicious form of “commitment” is embodied in the issuance of so-called “green bonds” to raise funds for environmental initiatives. This form of investing is so ostensibly “virtuous” that these bonds are demanded even with specific commitments that are quite “soft”. This just released study finds that green bonds offer little assurance of any positive environmental impact:

“… we find a concerning lack of enforceability of green promises. Moreover, these promises have been getting weaker over time. Green bonds often make vague commitments, exclude failures to live up to those commitments from default events, and disclaim an obligation to perform in other parts of the document. These shortcomings are known to market participants. Yet, demand for these instruments has been growing. We ask why green bond promises are so weak, while the same investors demand strong promises from the same issuers in other settings.”

Green bonds are “virtue ornaments” typically purchased by institutional investors with some sort of environmental or ESG objective. Apparently, earning returns is an afterthought. Unfortunately, these funds managers are usually investing on behalf of other people. While some of those clients might wholly support the environmental objectives, many others have no clue.

Fortunately, there are alternatives, and I’m tempted to say caveat emptor applies here. However, it really is a remarkable breach of fiduciary duty to manage funds based on objectives other than maximizing expected returns, or to in any way sacrifice returns in favor of “green” objectives. That is happening before our very eyes. Even clients who wish to invest funds for green objectives are being shaken down here. According to the research cited above, the green bond “commitments” are hardly worth the paper they’re written on.

Institutional investors go right along, scrambling to add green bonds to their portfolios. This helps drive down the effective cost of funds to the green bond issuers. Thus, highly speculative climate or environmental initiatives can be funded on the cheap. They do, however, produce lucrative opportunities for the climate crisis industry.

One More Time

People save to build wealth, typically for their retirement years. If that’s your objective, you probably shouldn’t invest in firms expending their resources on carbon credits. At best, the credits are a buy-off to activists. who are just as ignorant of the whole sham.

One might plausibly ask whether I should love carbon credits because they allow, at least, certain forms of beneficial economic activity to avoid challenge by crazies. Perhaps that’s true taking the world as it is, but my hope is that exposing various layers of climate hysteria and craziness is one way to change the world. The whole carbon credit enterprise enables extraction of still greater rents by climate change opportunists, to say nothing of human rights abuses taking place under the guise of these credits.

Like carbon offsets, green bonds promote fictitious virtue, They are another way in which green profiteers extract rents from well-meaning savers and investors, some of whom are unaware that ESG objectives are undermining their returns. Even if investors prefer to sacrifice returns in the pursuit of green goals, the initiatives thus funded often have no environmental merit, particularly when it comes to reducing carbon emissions. Despite the efforts of these bonds issuers to convince us of their green bona fides, their “commitments” to green results are usually flimsy.

HT: Green Fraud blog for the image above.

.

Wind and Solar Power: Brittle, Inefficient, and Destructive

03 Thursday Nov 2022

Posted by Nuetzel in Environment, Nuclear power, Renewable Energy, Uncategorized

≈ 1 Comment

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@MartialData1, @Mining_Atoms, B. F. Randall, Baseload Power, Blake Lovewall, Carbon Credits, Carbon Sink, Dispatchable Power, Fossil fuels, Greenwashing, Grid Stability, Intermittency, Land Use, Martian Data, Nuclear power, Plant Life Cycle, Polysilicons, Renewable energy, Solar Power, Turbine Blades, Wind Power, Zero-Carbon

Just how renewable is “renewable” energy, or more specifically solar and wind power? Intermittent though they are, the wind will always blow and the sun will shine (well, half a day with no clouds). So the possibility of harvesting energy from these sources is truly inexhaustible. Obviously, it also takes man-made hardware to extract electric power from sunshine and wind — physical capital— and it is quite costly in several respects, though taxpayer subsidies might make it appear cheaper to investors and (ultimately) users. Man-made hardware is damaged, wears out, malfunctions, or simply fails for all sorts of reasons, and it must be replaced from time to time. Furthermore, man-made hardware such as solar panels, wind turbines, and the expansions to the electric grid needed to bring the power to users requires vast resources and not a little in the way of fossil fuels. The word “renewable” is therefore something of a misnomer when it comes to solar and wind facilities.

Solar Plant

B. F. Randall (@Mining_Atoms) has a Twitter thread on this topic, or actually several threads (see below). The first thing he notes is that solar panels require polysilicon, which not recyclable. Disposal presents severe hazards of its own, and to replace old solar panels, polysilicon must be produced. For that, Randall says you need high-purity silica from quartzite rock, high-purity coking coal, diesel fuel, and large flows of dispatchable (not intermittent) electric power. To get quartzite, you need carbide drilling tools, which are not renewable. You also need to blast rock using ammonium nitrate fuel oil derived from fossil fuels. Then the rock must be crushed and often milled into fine sand, which requires continuous power. The high temperatures required to create silicon are achieved with coking coal, which is also used in iron and steel making, but coking coal is non-renewable. The whole process requires massive amounts of electricity generated with fossil fuels. Randall calls polysilicon production “an electricity beast”.

Greenwashing

The resulting carbon emissions are, in reality, unlikely to be offset by any quantity of carbon credits these firms might purchase, which allow them to claim a “zero footprint”. Blake Lovewall describes the sham in play here:

“The biggest and most common Carbon offset schemes are simply forests. Most of the offerings in Carbon marketplaces are forests, particularly in East Asian, African and South American nations. …

The only value being packaged and sold on these marketplaces is not cutting down the trees. Therefore, by not cutting down a forest, the company is maintaining a ‘Carbon sink’ …. One is paying the landowner for doing nothing. This logic has an acronym, and it is slapped all over these heralded offset projects: REDD. That is a UN scheme called ‘Reduce Emissions from Deforestation and Forest Degradation’. I would re-name it to, ‘Sell off indigenous forests to global investors’.”

Lovewall goes on to explain that these carbon offset investments do not ensure that forests remain pristine by any stretch of the imagination. For one thing, the requirements for managing these “preserves” are often subject to manipulation by investors working with government; as such, the credits are often vehicle for graft. In Indonesia, for example, carbon credited forests have been converted to palm oil plantations without any loss of value to the credits! Lovewall also cites a story about carbon offset investments in Brazil, where the credits provided capital for a massive dam in the middle of the rainforest. This had severe environmental and social consequences for indigenous peoples. It’s also worth noting that planting trees, wherever that might occur under carbon credits, takes many years to become a real carbon sink.

While I can’t endorse all of Lovewall’s points of view, he makes a strong case that carbon credits are a huge fraud. They do little to offset carbon generated by entities that purchase them as offsets. Again, the credits are very popular with the manufacturers and miners who participate in the fabrication of physical capital for renewable energy installations who wish to “greenwash” their activities.

Wind Plant

Randall discusses the non-renewability of wind turbines in a separate thread. Turbine blades, he writes, are made from epoxy resins, balsa wood, and thermoplastics. They wear out, along with gears and other internal parts, and must be replaced. Land disposal is safe and cheap, but recycling is costly and requires even greater energy input than the use of virgin feedstocks. Randall’s thread on turbines raised some hackles among wind energy defenders and even a few detractors, and Randall might have overstated his case in one instance, but the main thrust of his argument is irrefutable: it’s very costly to recycle these components into other usable products. Entrepreneurs are still trying to work out processes for doing so. It’s not clear that recycling the blades into other products is more efficient than sending them to landfills, as the recycling processes are resource intensive.

But even then, the turbines must be replaced. Recycling the old blades into crates and flooring and what have you, and producing new wind turbines, requires lots of power. And as Randall says, replacement turbines require huge ongoing quantities of zinc, copper, cement, and fossil fuel feedstocks.

The Non-Renewability of Plant

It shouldn’t be too surprising that renewable power machinery is not “renewable” in any sense, despite the best efforts of advocates to convince us of their ecological neutrality. Furthermore, the idea that the production of this machinery will be “zero carbon” any time in the foreseeable future is absurd. In that respect, this is about like the ridiculous claim that electric vehicles (EVs) are “zero emission”, or the fallacy that we can achieve a zero carbon world based on renewable power.

It’s time the public came to grips with the reality that our heavy investments in renewables are not “renewable” in the ecological sense. Those investments, and reinvestments, merely buy us what Randall calls “garbage energy”, by which he means that it cannot be relied upon. Burning garbage to create steam is actually a more reliable power source.

Highly Variable With Low Utilization

Randall links to information provided by Martian Data (@MartianManiac1) on Europe’s wind energy generation as of September 22, 2022 (see the tweet for Martian Data’s sources):

“Hourly wind generation in Europe for past 6 months:
Max: 122GW
Min: 10.2GW
Mean: 41.0
Installed capacity: ~236GW
”

That’s a whopping 17.4% utilization factor! That’s pathetic, and it means the effective cost is quintuple the value at nameplate capacity. Take a look at this chart comparing the levels and variations in European power demand, nuclear generation, and wind generation over the six months ending September 22nd (if you have trouble zooming in here, try going to the thread):

The various colors represent different countries. Here’s a larger view of the wind component:

A stable power grid cannot be built upon this kind of intermittency. Here is another comparison that includes solar power. This chart is daily covering 2021 through about May 26, 2022.

As for solar capacity utilization, it too is unimpressive. Here is Martian Data’s note on this point, followed by a chart of solar generation over the course of a few days in June:

“so ~15% solar capacity is whole year average. ~5% winter ~20% summer. And solar is brief in summer too…, it misses both both morning and evening peaks in demand.”

Like wind, the intermittency of solar power makes it an impractical substitute for traditional power sources. Check out Martian Data’s Twitter feed for updates and charts from other parts of the world.

Nuclear Efficiency

Nuclear power generation is an excellent source of baseload power. It is dispatchable and zero carbon except at plant construction. It also has an excellent safety record, and newer, modular reactor technologies are safer yet. It is cheaper in terms of generating capacity and it is more flexible than renewables. In fact, in terms of the resource costs of nuclear power vs. renewables over plant cycles, it’s not even close. Here’s a chart recently posted by Randall showing input quantities per megawatt hour produced over the expected life of each kind of power facility (different power sources are labeled at bottom, where PV = photovoltaic (solar)):

In fairness, I’m not completely satisfied with these comparisons. They should be stated in terms of current dollar costs, which would neutralize differences in input densities and reflect relative scarcities. Nevertheless, the differences in the chart are stark. Nuclear produces cheap, reliable power.

The Real Dirt

Solar and wind power are low utilization power sources and they are intermittent. Heavy reliance on these sources creates an extremely brittle power grid. Also, we should be mindful of the vast environmental degradation caused by the mining of minerals needed to produce solar panels and wind turbines, including their inevitable replacements, not to mention the massive land use requirements of wind and solar power. Also disturbing is the hazardous dumping of old solar panels from the “first world” now taking place in less developed countries. These so-called clean-energy sources are anything but clean or efficient.

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Ominous The Spirit is an artist that makes music, paints, and creates photography. He donates 100% of profits to charity.

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