Renewables Rent-Seekers Reel as Trump Defies Climate-Cult & Delivers Fatal Blow to Paris Agreement

Donald Trump continues to infuriate the intelligentsia by delivering on the things he promised to deliver when he ran for President (how dare he!?!). They collectively dismissed him as a presidential hopeful and are still seething at the fact that they failed to predict his triumph; or, rather, to have guaranteed his defeat.

Where the media class took him literally, but not seriously; the American voting public took him seriously, but not literally. Now the American President has given his critics even more reason to fume.

On Friday, Trump delivered on his promise to withdraw from the Paris climate change agreement. That move makes perfect economic sense: reliable and affordable energy brings with it jobs, prosperity and wealth.

Except for those rent seekers who depend for their very existence upon the government mandates and subsidies that deem wind and solar power to be the only ‘solution’ to an overhyped ‘problem’.

Investors in wind and solar power outfits are about to lose their shirts; and yet continue to hold hands and chant ‘Kumbaya’, as if watching the world’s largest economy withdraw from an economic suicide pact will have no bearing on their investments.

The Australian’s Alan Kohler is a case in point (for just that reason Alan gets a mention in Terry McCrann’s article below).

Despite professed and public wishful thinking, those in the know are not apparently willing to place much faith in the survival of Australia’s Large-Scale Renewable Energy Target.

The health and longevity of the greatest single industry subsidy scheme in the history the Commonwealth can be measured by the future price for Large-Scale Generation Certificates ‘LGCs’ (aka RECs).

The LGC price would be $93 by now, had the market been functioning as intended. The LRET requires the annual production and delivery of a total of 33,000GWh of renewable energy between 2020 and 2031 (or, more accurately, the annual delivery of 33,000,000 LGCs – 1 is required to be surrendered by retailers for each MWh set by the target).

This year the target is 26,000GWh. On present estimates (much depends on the weather, of course) there will be a shortfall of somewhere between 7,000-10,000 GWh, triggering the imposition of the shortfall charge: a $65 per MWh fine on retailers for failing to meet the target. That shortfall will cost power consumers between $650 and $930 million, added to their retail power bills.

Because the shortfall charge is a ‘fine’ (rather than an ‘expense’) it is not tax-deductible, whereas the cost to retailers of the LGC is. This means that the true cost of the shortfall charge to retail power consumers (who will end up paying the full cost of the penalty) is around $93 (assuming a 30% corporate tax rate). That relationship means that LGCs should be worth $93 each: the surrender of an LGC avoids the imposition of the shortfall charge and therefore a total cost of $93.

With an increasing margin in the shortfall between the production and delivery of renewable energy and the rising target set by the LRET, the LGC price should be approaching $93. Moreover, several retailers have already started paying the shortfall charge because they had elected not to purchase LGCs but to pay the fine instead: ERM Power stumped up $123 million back in January, for what is a ‘stealth tax’ on all Australian power consumers (see our post here).

Back in January when that story broke, as far as the LGC price was concerned, all appeared to be going to plan – here is the LGC forward price as it was on 21 January 2017:

Now, here’s the same story as it reads on 3 June 2017 – note the collapse in the forward price from ‘Cal 19’ – which starts on 1 February 2020:

Something must have spooked retailers and/or LGC speculators … we wonder what that might have been?

Don’t get hysterical over Trump’s Paris pullout
The Australian
Terry McCrann
3 June 2017

It is in fact a statement in favour of sanity

Good. Or great. Either will do.

That’s the first and most basic thing to be said about President Trump’s decision to take the US out of the so-called Paris Climate Accord — more accurately titled, the Fake Paris Climate Accord.

Why “fake”? Because it’s got absolutely nothing to do with doing anything to the climate, if indeed that was even possible.

It was at best an exercise in pretending to do something — for those who’ve been listening to the madness over the years, a desperate attempt to recover from and to avoid another Copenhagen debacle.

Remember (very chilly) Copenhagen? Back in 2009 when a former prime minister named Kevin joined thousands of true believers spewing carbon dioxide flying into “Hopenhagen” only to slink away, spewing yet more CO2, from “Copenfloppen”?

Even one of the original promoters and most fervent believers in the whole global warming/climate change claim — indeed arguably the promoter/believer — James Hansen, has called the Paris Accord a “fraud”.

So fake or fraud, and indeed both, it was also an exercise in transferring hundreds of billions of dollars from the developed world to the developing world, and then back into Swiss bank accounts.

It was also designed to keep the great climate change boondoggle gravy train rolling on through wind and solar farms and Tesla-inspired batteries (and pumped hydro?) to the next CO2-belching climate conference.

So at its most basic and its most valuable, President Trump was making a statement in favour of sanity. He was also making a statement against fraudulence, hypocrisy, dishonesty and waste, stupidity and pointless US (and indeed global) economic impoverishment.

To my mind that’s a pretty good statement to be made.

So what does that say about our Prime Minister’s response, his “Singapore Sling”, that for him and Australia, we at least would always have Paris?

You could not have asked for a more straightforward announcement of total unfitness for the office: a PM making a statement in favour of insanity; in favour of fraudulence, hypocrisy, dishonesty and waste, stupidity and pointless Australian impoverishment.

It was also a proud, if utterly clueless, restatement of Turnbull’s “Trump Denialism”, that we have a PM who refuses to accept the reality of a Trump presidency. That in the bizarre cognitive dissonance that appears to be Turnbull’s brain we will live in a world of a Clinton presidency.

Another of those — a lengthening queue — who can no longer ever be PM, Environment and Energy Minister Josh Frydenberg, actually made Turnbull’s Trump Denialism official with his emphasis yesterday that we had gone out of our way to publicly sign on to Paris the day after Trump won the election.

Yes, Josh, we did, in stunning unnecessary stupidity. Forget the climate change argument, denying the more basic reality of a Trump presidency and a Trump administration is not a very sensible policy foundation for a PM, government and individual ministers to adopt.

It should be instructive to the (quivering) vegetables (reference: the late Maggie Thatcher) around PM and E & E minister on the front bench and behind them on the backbench. What more evidence do they need of the total hopelessness of Turnbull? That he has to go and go quickly?

That if they won’t re-embrace Tony Abbott, on the basis of abandoning either Paris or Australia’s punitive pointless CO2 emission cuts — yes, signed up to, but not formally committed to, by Abbott as PM — that they must go back to a Peter Costello future?

The reality — not the opinion, not the hope, not the real denialism that sees China’s coal-fired power stations being turned into wind and solar farms and batteries by some 21st century version of turning water into wine — is that we have the two biggest CO2 emitters now effectively out of Paris.

The US emits around 20 per cent of global emissions. China, which emits closer to 30 per cent, is allowed to keep increasing its emissions on a totally uncapped basis through 2030 inside Paris.

But surely, China says, hand on collective heart: trust us, we might even start cutting them. Indeed, we are making huge, huge investments in wind turbines and solar panels.

Yes, China is; in an impressive inversion of Lenin’s observation that the Western democracies would sell the Soviet Union the rope with which it would hang them, China is more than happy to enrich itself by selling us the turbines and solar panels to impoverish ourselves.

And this, of course, is before mentioning that none of the Paris commitments or non-commitments are binding anyway. After Copenfloppen, which tried to make them binding, this was the only way anyone would have Paris.

But I have to say I am at a loss to understand why anyone needs Paris? We are told, most immediately by Alan Kohler in this paper, that: “solar and wind power costs are at the point of becoming cheaper than coal and gas, without the RET, and in some places already are, and battery prices are collapsing”.

So why won’t the CO2 emissions, for purposes of discussion, “problem” solve itself?

If wind and solar are going to be cheaper than coal, why won’t the good old profit motive ensure that all new power generation, again for purposes of discussion, is wind and solar?

If we are all going to be driving electric cars, plugged into wind turbines and solar panels, demand for oil, coal and even gas will evaporate.

So why this insistence we must have mandatory targets for wind and solar? Why does anyone need to commit to CO2 emission reductions; they are going to plunge anyway?

Why the frenzy of hysteria in the wake of Trump’s announcement, that as a consequence it won’t just be Watts LA that burns, baby, burns, but the entire planet?

Somehow I am unconvinced that in fact, if the future is South Australia, we are going back to a 19th century future.

President Trump wants to keep the US in the 21st century. Do we want to stay there too?
The Australian

We’ll always have Adelaide (Australia’s wind ‘powered’ Capital).