The Unexpected Perspective
The Implications of Darwin and the Big Bang for Christians ... and Everyone Else


Artificial leaves hold great promise. Just how much is not yet known.

            We humans always seem to be searching for the Holy Grail, the "magic bullet" that will solve all of our problems, or at least some of them.  The funny thing is, in the case of one of our biggest problems today – climate change – we may be onto the path of finding it. 

            Don't get out the champagne yet, because there's still a huge amount of work to be done, and even if the work is done, there still is no guarantee.

            So just what is this veritable Holy Grail for greenhouse gas induced climate change?  An artificial leaf, which is being developed by a variety of scientific researchers.

            In a sense, we already have the Holy Grail for climate change. It's called photosynthesis.  Trees can take carbon dioxide and water and convert them into simple sugars and oxygen.  You might even recall the equation for this from high school biology or chemistry:

            6CO2 + 6H2O à   C6H12O6 + 6O2

A tree can take six molecules of carbon dioxide and combine these with six molecules of water to create one molecule of simple sugar plus six molecules of oxygen.    We humans, as well as other animals, expel carbon dioxide with each breath we take.   Trees recycle that into oxygen and sugar.

            For most of history that process has been in balance.  Unfortunately, with the Industrial Revolution the burning of fossil fuels such as oil and gas has thrown more carbon dioxide into the atmosphere than trees can recycle.  If we could plant enough trees and shrubs, in theory we could solve the greenhouse gas problem without changing our current fuel use habits.  Simon Lewis, a climate expert at the University of Leeds in the UK, observed in 2009 that "tropical forest trees are absorbing about 18% of the carbon dioxide added to the atmosphere each year from burning fossil fuels."

             Right now, worldwide we're generating about 40 billion tons of excess carbon dioxide.  How many trees would it take to absorb all of that?  The average mature tree can absorb about 48 pounds of CO2 each year, and a forest that covers one acre can absorb at 2.5 tons/year.  For those of you more familiar with the metric system, one acre is 4046.8 square meters.  Thus, if we could plant about 16 billion additional acres of trees, we could absorb the excess 40 billion tons of CO2 each year.  This, of course, assumes that we won't keep increasing the amount of carbon dioxide into the air each year.  That may be a bad assumption, at least at present, but let's be optimistic for a moment.  How much land area would it take to soak up the current 40 billion tons?

  • The total surface area of the Earth is 196.9 million square miles
  • There are 640 acres in a square mile, so there are 126.016 billion acres of land mass on the Earth
  • The required 16 billion additional acres of forest would cover about 12.7% of the Earth's surface.

That's an awful lot of surface area, but actually something that is feasible.  Just very unlikely!

            If we're not prepared or able to do that, there may a second Holy Grail in the works: the artificial tree mentioned before.  Now I'm not talking about the kind of tree many of us decorate for Christmas.  This would be a veritable "metallic cousin" to your artificial Christmas tree, just that it would have the amazing capacity to convert CO2 into something else.

            Scientists have been working on this technology for a number of years.  One place where such research has been underway is Harvard University.   In fact, Scientific American and the World Economic Forum named Harvard's artificial leaf as the breakthrough technology of 2017

            Harvard isn't only place where such research is being done.  Recently, scientists at the University of Illinois at Chicago (UIC) reported that they had developed an artificial leaf that has two very important characteristics:

  • It is about ten times more efficient than an ordinary tree at removing CO2 from the air
  • UIC's artificial leaf can absorb CO2 at the level of concentration typically found in the natural environment.  It didn't need to be highly concentrated, as for instance from an exhaust pipe of a process plant.

As reported by the University of Illinois at Chicago,  Meenesh Singh, assistant professor of chemistry, and his colleague Aditya Prajapati, a graduate student in his lab, proposed solving this problem by encapsulating a traditional artificial leaf inside a transparent capsule made of a semi-permeable membrane of quaternary ammonium resin and filled with water. The membrane allows water from inside to evaporate out when warmed by sunlight. As water passes out through the membrane, it selectively pulls in carbon dioxide from the air. The artificial photosynthetic unit inside the capsule is made up of a light absorber coated with catalysts that convert the carbon dioxide to carbon monoxide, which can be siphoned off and used as a basis for the creation of various synthetic fuels. Oxygen is also produced and can either be collected or released into the surrounding environment.

"By enveloping traditional artificial leaf technology inside this specialized membrane, the whole unit is able to function outside, like a natural leaf," Singh said.

According to their calculations, 360 leaves, each 1.7 meters long and 0.2 meters wide, would produce close to a half-ton of carbon monoxide per day that could be used as the basis for synthetic fuels. Three hundred and sixty of these artificial leaves covering a 500-meter square area would be able to reduce carbon dioxide levels by 10 percent in the surrounding air within 100 meters of the array in one day. 

            Of course, turning carbon dioxide into carbon monoxide is a "good news/bad news" proposition.  Getting rid of the carbon dioxide helps with the climate change problem, but carbon monoxide is bad news, too.  The UIC system will have to provide a way to turn that carbon monoxide into a usable fuel, otherwise it will need to be sequestered.  The UIC researchers seem to think it can be done.

            If the University of Illinois "artificial leaves" are ten times more efficient than natural trees at absorbing CO2, how many would it take to remove the 40 billion tons of excess CO2 presently being emitted each year?

  • As mentioned earlier, the UIC researchers reported that a single array of 360 leaves covering 500 square meters could remove about one half ton of CO2 daily, meaning about 180 tons/year
  • We would need 220 million such artificial leaf arrays to remove the 40 billion tons of excess CO2 each year (assuming each molecule of CO2 could be converted into one molecule of carbon monoxide (CO))
  • The surface area of the Earth is about 510.2 trillion square meters
  • The necessary arrays would cover a surface area of about 110 billion square meters, representing 0.02% of the surface area of the Earth.

If the UIC leaves are reportedly ten times more efficient than a natural tree, so it may take about ten times more of these arrays than the above calculations would suggest.  If the natural forests would require 12.7% of the land, the UIC artificial leaves may require 1 or 2% of the land.  Either way, that's a lot of surface area, but presumably substantially less than the area a natural forest would take to remove the comparable amount of CO2.

            Once again, a Holy Grail is possibly in sight, but not anytime soon when you consider what it would take to build all these "natural leaf" arrays.  The requisite land is one thing, but the capital cost would be another huge hurdle.  Not only that, there remains the problem of converting that carbon monoxide into a usable fuel.  This of course begs the big question, who is going to pay for this? 

            Economists will tell you that this is a perfect application of a carbon tax.  The proceeds from such a carbon tax could be used to acquire the necessary land, as well as to pay to construct the artificial leaves.

            Once again, don't get out the champagne. 

            So what conclusions can be drawn from this?  If there is no practical way either to get all those natural forests planted, or to get artificial leaf arrays constructed, why pay any attention?  The reason is because of the potential for additional research to produce even more efficient natural leaf arrays.

            The obvious analogy is to Moore's Law.  Back in the mid-1960's, Gordon Moore of Intel Corporation noted that the number of transistors that could be packed on a chip was doubling every 18 or so months.  Based upon that observation, made using only a handful of data points, Moore forecast the creation of vastly more powerful computers in just a few years.  Moore's Law has continued to work for 50 years!  Today's computers can do things only in the realm of science fiction when Gordon Moore first developed his "Law".  Moore's "Law" worked because of huge amounts of research done to pack ever more transistors onto a chip. 

            It seems reasonable to believe something similar could happen with respect to artificial leaves.  If the University of Chicago's artificial leaves can operate at ten times the efficiency of a natural tree, is it beyond the realm of possibility that could be increased another ten or twenty fold?  Following the logic of Moore's Law, a ten or twenty fold increase would be merely a "warm up".   If artificial leaves have a Moore's Law "encore", in about 10 years the artificial leaves developed by UIC will be about 120 times more efficient.  That doesn't mean you'd only need about 2 million arrays worldwide, because there's only so much CO2 any given array can pull out.  However, a much more efficient array might be able to pull out a high percentage of CO2 exhaust from a power plant.  As such, in 10 or 20 years it may be possible to have artificial leaves doing the bulk of removal of excess carbon dioxide.  The Holy Grail might then be within our grasp.

            Even if a "Moore's Law" solution can only make a given array capable of pulling only so much more CO2 out of the air, it might help reduce the capital cost of the array dramatically, making it much more practical to implement this solution.

            Once again, don't get out the champagne just yet.  Instead, this suggests that we should pursue a "portfolio approach" to CO2 removal.  The various parts of the "CO2 removal portfolio" would include the following:

  • More investment in alternative energy
  • Additional research into artificial leaf technology
  • Additional planting of natural forests
  • Additional research into CO2 sequestration technology
  • Additional investment in nuclear energy.

The latter has the problem of nuclear waste, so that portion of the "portfolio" might be a bit risky.  The key point to make, however, is that just as the pros tell us to make sure we have a diversified portfolio of investments to ensure financial security, we should have a diversified portfolio of investments to deal with the greenhouse gas problem.  Additional research into "artificial leaf" technology should be an integral component of the portfolio.

            The latest news out of the University of Illinois at Chicago is certainly encouraging.  However, the clock is continuing to tick.  We don't have enough time to go about the task of greenhouse gas removal at a leisurely pace.  Continued investment in alternative energy technology is extremely important.  The alternative leaf may be an unexpectedly valuable tool in the fight against greenhouse gases – maybe even a Holy Grail.

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The Green New Deal sounds great, but won't solve the problem. Here are seven steps to make it a great solution.

             What should be done to prevent potential catastrophic climate change?  Democratic Representatives Alexandria Ocasio-Cortez and Edward Markey are proposing a modern day version of Roosevelt's New Deal, this time to deal with climate change.

            Meantime, a significant percentage of Republicans continue to believe that the problem has been way overblown.   In their minds, enacting something like the proposed Green New Deal would be wasteful and ineffective, especially because many continue to doubt that humans are causing climate change.

            Greenhouse gas induced climate change is a very real problem that needs to be addressed.  Republicans are making a mistake by continuing to downplay it.  But at the same time, the Green New Deal as envisioned by Democrats isn't going to work.  It won't solve the problem.

            Action is extremely important, but it needs to be the right kind of action.  It will only work if the solution is truly bi-partisan.  All we have to do is look at the history of Obamacare to know why getting a truly bi-partisan solution important.   Thus, I offer a seven step strategy that I believe could create a real bi-partisan solution, one that both sides will like.  More importantly, I think it will work!

Step 1: Stop Acting in an Insane Manner

            You've probably heard the definition of insanity: doing the same thing over and over and expecting a different outcome.  By that definition, both Democrats and Republicans are insane when it comes to climate change:  Democrats, because they keep thinking that doomsday scenarios will scare everyone into acting on climate change; Republicans, because 20+ years of closing their eyes and hoping it will go away just hasn't worked.  The Republican strategy risks a repeat of Obamacare, but on a way, way bigger problem!

            Unfortunately, the "insane" behavior on each side is actually rooted in a false choice.  The false choice for the Democrats is, "you either believe in a nightmare scenario of global warming, or you're a climate science denier." 

The false choice for the Republicans is, "if we embrace climate science, it means more big taxes and big government, so the alternative is to deny the science; and eventually the issue will go away."

             If each side persists in framing the issue according to its respective false choice, neither will ever build the needed consensus for real action (or maybe "inaction" in the Republican case).  So what should each side do?  Consider step 2.

Step 2: Re-frame the Problem

            In order to stop behaving insanely, each side should attempt to re-frame the problem.  The funny thing is, I think it could be re-framed in a way that both sides will find acceptable, even likeable.  The greenhouse gas problem should be re-framed as, "how could carbon elimination be the next giant American industry, the next big way to make money?" 

             Re-frame it as a strategy for economic growth.  Focus on the economic side, not on preventing doomsday.  Yes, it should reduce the climate change risk, but do it because it could be so beneficial for the economy.  Instead of trying to drag Republicans kicking and screaming, frame the problem in a way that they'll want to participate.

            The funny thing is, there's a historical precedent for this, on a related issue.  Back in the 1970's when Congress was debating the Clean Air Act, the utility industry fought legislation to eliminate fly ash.  At the time, all they could think was that getting rid of fly ash would simply increase their costs.

            Then someone realized that fly ash could be useful in making concrete.  Suddenly, the fly ash became a resource that could be monetized.  It was and is to this day.  The challenge was to reframe the problem (getting rid of fly ash in the atmosphere) as a business opportunity.

Twenty years ago, the economics of carbon were very different, and Republicans had a good point: alternative energy would be more costly than conventional fuels.  Trying to solve the greenhouse gas problem through taxes and regulation wouldn't work very well.  Today, thanks to better technology and innovation, the economics have totally changed, and alternative energy has the better economics.

            Because the economics have changed so much, it really makes sense now to reframe the carbon problem as a business opportunity.  The problem of greenhouse gases can be solved without resorting to the kind of big tax/big regulation solutions that Republicans fear, even abhor.

             Two approaches come to mind.  First, what are the best ways to extract carbon from the atmosphere to create economic growth and, by the way, maybe save the planet?  Second, could energy be produced at lower cost by avoiding carbon altogether? 

            If you can re-frame the "carbon in the atmosphere" problem as a business opportunity,

and the role of the government is to encourage the development of that business opportunity, not impose a solution, Democrats could provide a way to get Republicans to get on board.

            That re-framing will definitely help, but there's a crucial second re-framing – step 3.  Let's now turn to that.

Step 3: Make a Carbon Dividend the Basis of Your Solution

            Economists have almost universally agreed that the first step in trying to get and keep carbon out of the atmosphere is to find a way to increase the cost of carbon emissions.  The generally agreed way to do that is to impose a tax on carbon emissions.

            A carbon tax, though, is dead on arrival because of Republican opposition.  However, there now is an excellent way to get around the problem, and it's actually a Republican idea.

            I've written previously ( see "When a Rose Is Not a Rose Is Not a Rose" ). Even better, check out Ted Halstead's TED Talk.  Halstead's brilliant solution is to pair a carbon tax with a carbon dividend: all of the money collected through the tax is then re-distributed to the population pro-rata.  It is progressive, not regressive, because lower income people will then to benefit more than the wealthier.  Republicans should find it acceptable because it isn't really a tax – it's a transfer pa.  It should be a cornerstone of any Green New Deal.

             Beyond Halstead's solution, the best thing the government could then do would be to help find ever better ways to reduce the cost of alternative energy, making it even easier for people to make money.  The best way to do that is to sponsor basic research and new technology.

Step 4: Focus Attention on Basic Research and New Technology

            The key to increasing adoption of alternative energy is improved technology, especially improving battery storage and the technology to capture sunlight and wind efficiently.  One of the very best things that could come from a Green New Deal is more funding of basic and applied research in alternative energy and carbon extraction.  Such research at major universities and research institutes, should result in the creation of new companies that can exploit technology that results from it.  It's already happening, it just needs to happen more rapidly, and on a bigger scale.  Any Green New Deal should emphasize this.

            Such research will also help to lead to step 5.

Step 5: Encourage Experimentation

            One of the best things the government might do is to encourage experimentation.  Two forms of experimentation come to mind.

            The first is what I call the X Prize strategy.  The original X Prize was created by entrepreneur Peter Diamandis to encourage the creation of a reusable space rocket.  To win the prize, one needed to send the same rocket into space within a two week period, a seemingly impossible task.  The impossible became possible, and the original $ 10 million prize has been awarded, as have prizes in numerous other comparable competitions.

            The government could encourage people like Diamandis to offer more prize competitions, for example, via tax credits, to create novel carbon capture technologies, or it could even sponsor such competitions itself through the Department of Energy, for example. 

            Such X Prize style competitions are already underway for carbon capture and elimination.  Consider, for example, the efforts of a company in Wyoming to win a $ 7.5 million prize.  The good news is, it is no longer necessary to prove that carbon capture or alternative energy are viable economic propositions.  That's already been done.  Now the only thing necessary is to create an environment that encourages even more creativity and experimentation.  Doing this won't require a huge bureaucracy, or lots of rules and regulations, just proper incentives.

            The other strategy is to encourage such experimentation at the state and local level.  A lot of that already is going on, but much more is possible.

            Further encouragement of entrepreneurs to develop novel solutions to carbon capture and alternative energy will keep the USA as the world leader in reduction of greenhouse gases, the position the USA has held for the past 20 years.

Step 6: Help Businesses Make the Transition

            Businesses both large and small now understand that alternative energy is a winning business proposition, and more and more new investments are underway.  The problem is the speed of eliminating older investments.  As an example, it would be great to eliminate all of the old coal burning electricity plants now and replace them with clean energy.  The electric utilities would definitely benefit because of the lower operational cost of alternative plants.  Who, however, is going to pay the cost of conversion?  Part of any Green New Deal should include incentives to retire older plants more quickly.  Lots of creative possibilities here.  A great thing a Green New Deal could do would be to help utilities develop and implement a cost effective strategy to eliminate all coal fired plants within 10 years.  Do it not by holding a gun to their heads, as regulations might do, but by creating the right economic incentives.

            What is often forgotten is that even with all of the foot dragging on climate change, the USA has been the world leader in eliminating carbon from the atmosphere over the past 25 years

            Which points to the Achilles Heel of the Green New Deal, and why it could have limited benefit.  The problem is that even if the USA is hugely successful in eliminating greenhouse gases, the real problem lies outside the USA, particularly in the developing world.  The only way the worldwide greenhouse gas problem can be solved is through step 7, which I turn to now.

Step 7: Export the Solution

            Somehow, someway, the rest of the world needs to succeed at carbon elimination. If the USA eliminates 100% of its human-caused  greenhouse gases, but the rest of the world stays on the same path, we won't solve the problem.  Somehow, any Green New Deal has to export its ideas to the rest of the world.

            For example, other countries need to adopt some type of carbon tax, too.  They should seriously consider Halstead's "carbon dividend" strategy.

            Besides "exporting" the carbon dividend solution, the best thing a Green New Deal could do would be to encourage future construction of clean energy overseas, as well as the replacement of existing facilities such as coal plants.  To accomplish that, the government might encourage the following:

  • US companies to develop ever better technology that could be exported;
  • Tax incentives to encourage Americans to invest in power generation facilities overseas;
  • Support for the World Bank to invest in alternative energy projects overseas.

Unfortunately, the level of control the USA has over foreign investment in

carbon elimination is problematic.  We cannot impose a solution on the rest of the world.  The best thing we could do, however, is invest in things that will continue to drive down the cost of alternative energy, then make that technology available around the world.  The more we can show the rest of the world how to make money by eliminating carbon, the more likely we are to succeed. 

            The greenhouse gas problem needs to be solved.  If we think we can do it by imposing taxes and regulation, we're fooling ourselves.  However, if we can show the world how to make money by getting carbon and keeping carbon out of the atmosphere, we have the basis for a winning solution.  Which choice will we make?

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Sometimes things just aren't quite what you think they are. Here's a great example.

            "A rose is a rose is a rose."  So wrote Gertrude Stein in her 1922 poem "Sweet Emily".  By this she in a more elegant way said, "it is what it is".  Sometimes, though they may be undesirable or unpleasant, things just are what they are.

            But sometimes they aren't.  In fact, sometimes you might say that "a rose isn't a rose isn't a rose".  Every once in a while, things just aren't what you think they are.

            The best example I can think of is a proposed carbon tax that really isn't a tax.

Economists of virtually every stripe – from diehard conservative to wildly progressive - have said that the best way to deal with the problem of greenhouse gases is to impose taxes on carbon.  As an example, each gallon of gas you would buy when you fill up your car would have an additional fee placed on it.  The idea is that the additional fee (a tax by any other name) would make the product more expensive, encouraging people to switch to other power sources.  In general, such taxes cause people to change behavior.  You probably recall that from Economics 101.

           The problem, of course, is that someone has to pay the tax, and nobody likes to pay taxes.  Least of all, Republicans.  As such, the idea of imposing new taxes – especially new taxes to deal with climate change, which many Republicans like to believe is a hoax – is a complete non-starter.  That's made carbon tax legislation "dead on arrival".

            Until now.  The funny thing is that the carbon tax proposal cited above is endorsed by a number of prominent Republicans – not just Republican economists, also Republican politicians.   On the face of it, this seems highly unusual, particularly because even though the word "tax" is only three letters, it is the equivalent to the most vulgar four letter word many, maybe most, Republicans can contemplate.  The fact that a number of prominent Republican economists and politicians can heartily endorse the idea of a carbon tax may suggest that there is something palpably different about this particular version of that three letter vulgarity.  In fact, there is.  You see, the carbon tax contemplated by these economists isn't really a tax, it's a gigantic transfer payment.

            A transfer payment is money transferred from one set of taxpayers to another.  Amongst the best examples of transfer payments are Social Security, Medicare and Medicaid.  Taxes are collected from one group of people, then payments of various sorts go to the recipients of these various social welfare programs.

            They may be referred to as transfer payments, ultimately, they are still taxes, and they have the effect of making certain groups a little bit poorer and making another group a little richer.  One can spend years and years of paying Social Security taxes without seeing a nickel of benefit.

           The carbon tax being proposed here, however, is fundamentally different.  That's because all of the money collected is then distributed equally to every American citizen.  Absolutely no current governmental tax regimes come even close to this. 
            The tax becomes a "carbon dividend".How much money would be involved?  A lot.  In one initial proposal, the carbon tax would be $ 38.00/ton of carbon dioxide generated.  It would be collected when the fuel is sold, meaning at the gas pump, or on electric utility bills.  Initial estimates are that a $ 38.00/ton of carbon will increase the cost of petroleum at the gas pump by 38 cents/gallon. The Energy Information Administration of the US Department of Energy says that the USA is emitting about 5 million kilotons of CO2 each year by the burning of fossil fuels
.  That's about 15.5 tons/person/year in the country.

            Of course, some greenhouse gas is emitted from other sources, and those wouldn't likely be covered by this carbon tax.    Assuming a price of $ 38/ton of CO2 emitted, users of fuel would collectively pay a tax of $ 190 billion USD in a year.  To put that in perspective, the US government currently collects about $ 3.5 trillion in taxes each year, so this would be equivalent to about a 4.8% tax increase. 

It would be a tax increase of about 4.8% overall IF the government collected it and then spent it, the thing so many Republicans fear.

            However, before you start howling at the tax increase, understand that the $ 190 billion would then be equally divided amongst every person in the USA, and a check would be sent out.  Using these numbers, the average person would receive a check for $ 594!  For the typical family of four persons, that would be $ 2,386, almost the same as the average tax refund from the IRS, which is reported to be $ 2,782/tax filer. 

            Here's the thing that makes this particularly enticing.  Obviously, not everyone consumes the same amount of fuel each year.  In fact, wealthier people to consume a good deal more.  That's because they are more likely to travel; have bigger houses that require more heating and cooling; and drive cars to consume more gasoline.  Other things being equal, that means wealthier people will pay more of this tax, but they will receive no more money than the poorest of the poor.  Conversely, the latter will receive the same checks as the wealthy, but they will clearly not be spending as much money on fuel.  The very definition of a progressive tax.  Some claim that the "carbon tax plus carbon dividend" proposal is regressive.  It would be regressive if the government kept the money and spent it on some program.  However, because it would distribute the dividend equally to everyone, a regressive tax actually turns into a progressive one!  In contrast, lotteries and sin taxes, tend to be regressive.  That's because poorer people tend to buy more lottery tickets, and smoke more cigarettes, than wealthier people.  The nice thing about lotteries and cigarette taxes is that you don't have to spend a nickel to benefit.  One can easily go through life never buying a lottery ticket or a pack of cigarettes, but enjoy all the benefits of the taxes collected.                   

            The proposed carbon tax flips this formulation on its head.  One can do everything possible to minimize expenditures on fuel, yet still expect a nice check from the US Treasury.  Which is precisely the objective.  Economists long ago demonstrated that as the price of a good goes up, it will be consumed less if there are substitute products.  There clearly are substitute products available, so the carbon tax should have the intended effect of reducing consumption of carbon.  

            That's especially true when you consider the second part of the plan.  That would be to increase the carbon tax each year.  Some proposals call for a $ 2.00 increase/year/ton emitted.  That means burning carbon will get increasingly expensive.  It will also mean, absent a reduction in demand, the average person will receive a bigger check each year.   Not only that, but the more the carbon tax increases, the more progressive it becomes. 

            Hopefully, the average person won't get a bigger check each year because the amount of carbon goes down – the real goal of the plan.  Sooner or later, as the carbon makes the cost of carbon-based fuels more expensive, consumers will select lower cost alternatives. 

            The plan could even be used to create an additional benefit, one not previously contemplated by its authors.  Let me now turn to that.  The recent government shutdown brought lots of attention to a terrible problem facing the average American family – an inability to save for a rainy day.  Every day during the recent 35 day government shutdown, lots of attention was paid to families and individuals in increasingly desperate situations.  The loss of a regular paycheck left them close to destitute. 

            Financial planners for years have been saying that the average person should have six months of savings for emergency situations.  An unfortunately large percentage of Americans don't have anywhere near that.  I'm confident if we polled the average person, he or she would readily acknowledge the importance of having emergency savings.  They'd also acknowledge that they should quit smoking and exercise.  Unfortunately, these things can be very difficult to do.  In fact, it may be more difficult for the average American to save emergency funds than to quit smoking or exercise on a regular basis. 

            What could be done?  Why not turn the carbon tax redistribution plan described above into an automatic savings plan?  When the checks are distributed to the average family or individual, the money could be put into a savings account.  If and when the person/family experiences an emergency, they could draw the money out. 

            Imagine such a plan had been in place for just one year when the latest Federal shutdown occurred.  The typical family of four would have had about $ 2,300 of savings in an emergency account.  That could have made life a lot easier for many of those people.  Imagine if that money could build up over time in an interest bearing account?  Ordinary Americans could build up significant savings. 

            Why would anyone want to stick their carbon dividend check into a savings account if they could just cash the check?  They might do it if it had features similar to a Roth IRA, where earnings could accumulate tax free. 

            This could potentially create a fairly significant source of savings.  Not only that, it provides something for both sides of the aisle.  It provides an excellent way to address the problem of greenhouse gases without really increasing government spending.  It also provides a way to create both emergency savings, as well as a way to accumulate savings not subject to taxes. 

            An obvious question to ask is, would it negatively affect payments into IRA's, 401k's, and 403b plans?  The think that's unlikely because the money in latter programs cannot be accessed easily, or without penalty, if someone is less than retirement age.   

            The proposed carbon tax would certainly not be a panacea.  It could, however, help reduce demand for greenhouse gases more effectively than any other method.  That's the reason practitioners of the "dismal science" like it so much.  The nice thing about this proposal is that the money collected from the tax would be distributed back to everyone.  In effect, it isn't a tax. 

            Not only that, as outlined above, it could provide a neat and convenient way to solve a huge problem facing ordinary Americans: the lack of emergency savings. 

At least in some cases, a rose is not a rose is not a rose.  Yet it could still be as sweet as Gertrude Stein's "Sweet Emily", wherein a rose is a rose is a rose.

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While he suffered a big defeat with the government shutdown, Donald Trump could actually turn things around, if he'll just remember some of the basics of good negotiation

            His political spin-meisters will doubtless try to do their best.  They'll get on the various political talk shows, and write various opinion pieces, all trying to say that Donald Trump didn't suffer a defeat at the hands of Nancy Pelosi and the Democrats over the 35 day governmental shutdown.

            They're wasting everybody's time.  Unquestionably, it was a disastrous outcome for the President.  He almost invariably describes things he does using superlatives.  This one was a superlative failure.

            But like so many times in life, an initial failure could turn into a triumph.  Not only that, it could be an even bigger triumph than the one he was hoping to get – building a $ 5.7 billion dollar concrete or steel wall along the US-Mexico border.  At the same time, it could actually be something that not only would his "base" like, it might even be something that Democrats, and independents like me, could really like.

            Let me explain how such a dramatic turn of events is possible. 

            It comes down to something really, really simple.  It has to do with one of the "basics" of dealmaking: good negotiating skills.

            Whether you like him or not, Donald Trump is a very good negotiator and dealmaker.  However, as experts sometimes do, he's forgotten some of the basics.

            How could a skilled person forget the basics?  It could be because he/she overfocuses on part of an issue and overlooks something else important.  Some people have joked that Donald Trump has an "Edifice Complex", as opposed to an "Oedipus Complex".  Trump seems to like edifices of all sorts, especially if they are big, shiny, and have his name on them, or at least associated with them.  In fact, he seems so pre-occupied with that objective, it might lead him to overlook something important.

            What he seems to have overlooked/forgotten is a basic principle of good negotiation: negotiate your "interest", not your "position"

            What do I mean when I say, negotiate your "interest", not your "position"?  Your "interest" is what you ultimately are trying to accomplish.  In contrast, your "position" is what you tell your negotiation partners, and third parties, you want.  They are oftentimes not exactly the same thing.  In the current case, Trump's "position" is crystal clear: we need to build an edifice, meaning a bigger physical wall on the southern border of the USA, and also fill in the gaps on the existing border wall.  Build something that looks like the border wall between Israel proper and the West Bank.

            The Democrats – Trump's negotiation partners – have rejected that out of hand.  Polls indicate the majority of Americans also reject this physical wall.  Most likely, so long as Trump insists on his "position" – getting his physical wall - he will continue to be rebuffed.  So what should he do?

            He could continue with his current strategy and try to push through his physical wall.  The chances of that succeeding, however, are the proverbial "slim" and "none".

            Instead, he could go back and see if he can modify his "position" in a way that will achieve his real "interest"

            What is Trump's real "interest"?  It's to have a secure southern border and a better immigration system.  The problem is that he has created a world with only two possibilities: a giant physical wall or an insecure border.  Unfortunately, that is what I call a false choice.  There are other ways to achieve a secure border without a bigger physical wall.  Thus, if he would be willing to abandon his "false choice" of a "physical wall or open border", he could begin to explore alternative ways to achieve his real interest – a secure southern border and better immigration system.

            Now even after his latest defeat, he may still think he can get his "edifice" built.  Not likely.

            So what are possible ways to achieve his "real interest" without getting his "edifice"?  One is to create an "electronic wall" using state of the art technology.  Another is to spend more money on the Border Patrol to help them do a better job.  Another is to change the immigration rules to reduce incentives for desperate Central Americans to apply for asylum.  Still another is to expand the E-Verify system, and enforce it more diligently, so that it is more difficult for undocumented people to work in the USA.  There are others, but these are some of the obvious ones.

            Once a good negotiator understands his "real interests", he/she needs to think about the real interests of the other side. Negotiation is often a process of trying to discern what those real interests are.  In the case of immigration, it could very well be that the Democrats and independents have the very same "real interest" of having a better immigration system.  For example, Democrats want to solve the Dreamer problem.  You'll recall, the Dreamers are the young people brought to the USA as children by their parents, but who are undocumented.  Besides the Dreamers, the Democrats want to do something about the eleven million undocumented people already in the country.

            But even if Republicans and Democrats don't have the exact same interest, there are some potential ones that might form the basis of a deal.  Two come to mind.  First, Democrats want a permanent solution to the Dreamer problem.  That permanent solution would be some pathway to citizenship, or at least permanent residency.  Second, a "real interest" is likely just to come up with some kind of solution to the immigration issue, if for no other reason than to permit everyone to move on to other issues.  How about health care, or infrastructure, or any number of other things? 

            Getting away from the current "position" on a wall, which is built upon the false choice described above, the President could try to create a deal that would achieve his "real interest" and get the other side to buy in because it could help them achieve some of their "real interests".  Let's try out some possibilities:

            Possibility #1: get funding to build an electronic wall plus more money for the Border Patrol in exchange for a permanent solution to the Dreamer problem.  An electronic wall could achieve the same things as a physical one, without creating a physical monstrosity.

            That could achieve Trump's real interest of securing the border, and also achieve the opposition's goal of a permanent solution to the Dreamer problem.

            Possibility #2: go even further than Possibility #1.  Besides the electronic wall, and more funding, but no physical wall, there could be reform of the asylum rules so it is harder to try to get asylum in the USA.  That would appeal to Trump's "base", and certainly would be in his interest.  But if he wants to do that, he'll have to make a bigger concession to the other side to fulfill some of their interests.  That might be changes that will permit lots more undocumented people in the USA to become normalized – maybe even a pathway to citizenship.

            Possibility #3: go even further than Possibility #2 by expanding the E-Verify system.  That system permits an employer to know whether his/her employees are legally able to work.  Put real teeth in the law with fines against employers who fail to follow the rules.  Seriously enforcing this could make it very difficult for undocumented people to work in the USA.  If they cannot work, they're likely to exit the country without even being asked.

            E-Verify is a pretty drastic solution.  But even that might be okay with Democrats if they're given something big enough in return.  How about a path to citizenship or legal residence for all, or nearly all, of the undocumented people in the USA who have not committed serious crimes?  Pretty drastic, but one possible deal would be to give the Republicans one pretty drastic thing they want in exchange for one pretty drastic thing that the Democrats want.  Just so long as one of the things isn't a physical wall.

            Just as badly as Donald Trump wants a physical wall, the Democrats want to avoid the wall.  As such, that actually creates a great negotiating opportunity for Trump.  He could tell Nancy Pelosi and Chuck Schumer, we won't build a physical wall, but in return for this concession, I want a gigantic increase in funding for the Border Patrol, and/or a change to merit based immigration system.

            These are but a few of the myriad possibilities.  Again, the only possibility he should take off the table is the physical wall because that has proven to be a non-starter.  Unfortunately, he won't likely take the physical wall off the table until he stops thinking in terms of the false choice of physical wall or unfettered immigration.

            So you may ask, if this is such a good idea, why hasn't Trump, the master negotiator, already done it?  I admit, it's a head-scratcher to me.  The funny thing is, as suggested earlier, good negotiators sometimes forget the "basics", forget to do the obvious.  I think this may be one of those cases. 

            Trump is actually in a great position to "reframe" the debate.  After all, he has demonstrated quite a knack for changing the subject when things aren't going his way.  Well, they're not going his way on the wall debate, but he could make a "change the subject" move by re-framing the issue from physical wall to something more generic, such as "fundamentally fix immigration".

            The crazy thing of all this is, Trump could actually achieve what he really wants: securing the southern border.  He just won't be able to do it quite the way he had in mind with the physical wall.  The even crazier thing is that Democrats and others might be happy, because as part of the bargain, they'll get things they want.  They've already hinted at possibilities.

            But nothing will happen until the President does two things.  First, stop thinking in terms of the "false choice" of "physical wall or open borders".  Realize there are alternative ways to achieve his real interest of a secure southern border.  Second, remember to negotiate your "interests", not your "position".

            I'm very confident that Nancy Pelosi hasn't forgotten this basic principle.

            Now some people are likely to say, taking the physical wall off the table would be caving in.  Not at all!  It's only a "cave in" if you embrace the false dichotomy of physical wall or unfettered immigration.  Trump can overcome this if he reframes the issue as "effective border security".  If he does that, it will be much more difficult for his opposition to dismiss the issue. 

            Many in Trump's "base" will claim that the Democrats have no interest in securing the southern border.  I disagree, because the Democrats have clearly indicated they want to come up with a permanent solution for the Dreamers, as well as a better way to handle asylum seekers.  There are other things.  These "interests" become the basis for forging an agreement with Trump, so long as Trump takes the "non-negotiable" physical wall off the table.         

            Yes, Trump still has a great opportunity to snatch victory from the jaws of defeat.  He still could end up being a hero to his base.  He even has the possibility of doing something in a bi-partisan manner, something that seems impossible.  All he has to do is eliminate the "false choice" of physical wall or unfettered immigration and negotiate his interests not his position.

            For the master dealmaker, it really shouldn't be that hard.  After all, sometimes truth is stranger than fiction.

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An amazing true story of intrigue that is both instructive, and cautionary

            It really is true.  Sometimes truth is stranger than fiction – maybe even dramatically stranger.  For evidence of this, one need only look at Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice, a book by William Browder, that I recently completed.

            I try to read a lot of books, and this was definitely one of the best I've encountered in recent memory.   The book's subtitle certainly is tempting.  After all, lots of us love good murder mysteries, and we quite often like to read heroic tales of people fighting for justice.  This book has both, and even throws in some high finance intrigue, without delving into "eye glazing" detail that would bore most people to tears.

            But the book really does more than simply weave all of these enticing elements together. 

            One thing that makes it such an interesting true story is three highly unexpected things the reader learns about the author, Bill Browder.  The first is that Browder is the grandson of Earl Browder, once the head of the American Communist Party.  Browder the author comes from a long and distinguished line of left-wingers.

            With such a pedigree, what's the most unexpected thing he might be or do?  Go to Stanford Business School, then launch a career as a very successful hedge fund manager.  The offspring of a bunch of leftwingers/communists becomes an uber-capitalist!

            How Browder became an uber-capitalist is the second truly unexpected thing.  As he points out, the logical career path for graduates of Stanford and other top level graduate schools of business is consulting, investment banking, or working for well known Fortune 500 firms such as Procter & Gamble and General Electric.  Browder, himself, begins with one such firm, but quickly heads off to do something else.

            His "something else" is to begin investing in Eastern Europe and Russia at the time of the fall of the Iron Curtain.  He was truly on the "frontier", and largely dismissed by his co-workers and superiors at the time.  Through perseverance, plus some timely good fortune, Browder created a very successful hedge fund in Russia.  He literally became the "go to" guy when everyone else discovered that Browder was on to something big.  Very big!  The unexpected outcome of all this was that Browder's Hermitage Capital turned into a billion dollar hedge fund at the turn of the 21st century, and Browder was well on his way to financial mogul-dom.

            Until he ran into trouble with the leadership of Russia.  I won't go into detail about this, other than to say that Browder was denied entry to Russia, and has been battling the Russian government since 2005, in the past few years fearing for his life.

            That battle has set the stage for the third highly unexpected thing about Browder.  He has gone from being the uber-capitalist head of a major hedge fund to being a major human rights advocate.  Besides his own problems with the Russian government, Browder's "conversion" to humans rights advocate is because of a Russian tax lawyer named Sergei Magnitsky.

            You might have heard of something called the Magnitsky Act.  The Magnitsky Act, passed by the US Congress and signed by President Barack Obama, places sanctions and travel restrictions on certain Russians deemed to violate a range of laws.  The Russian government, beginning with Vladimir Putin, absolutely hates it! 

            The driving force behind the Magnitsky Act was Bill Browder.   

            So what turned Browder from uber-capitalist into uber-human rights advocate?  The torture and death of Sergei Magnitsky at the hands of the Russian government.  Magnitsky's death so impacted Browder that his entire life has been transformed.  As such, he's joined the ranks of other ordinary people who have had life-altering, transformative experiences:

            Moses, who after an encounter with God (in the form of a burning bush), led the Israelites from captivity;

            Rosa Parks, who became a civil rights leader after failing to give up her seat on a segregated bus in Montgomery, Alabama in 1955;

            Candy Lightener, the woman who founded Mothers Against Drunk Driving (MADD) after her daughter was killed by a drunk driver;

            Malala Yousafzai, a Pakistani teenager who became a human rights advocate after an unsuccessful attempt on her life.

            Yes, Browder's life has totally been transformed by Magnitsky's death.  The Russian government is now going after Browder, himself.  Russia has asked Interpol, the international police agency, to issue what's called a Red Notice.  Browder, if he crosses an international border, runs the risk of being arrested and deported to Russia to stand trial.  But he also should be fearful, even if he doesn't cross an international border, when one considers what happened to Sergei Skripal and his daughter.  The two were poisoned by Russian agents in Salisbury, England.  The evidence suggests that the Russian government will stop at virtually nothing to eliminate its perceived enemies – and Browder is clearly in that elite circle.

            But, if anything, the danger merely makes Browder even more determined.  His book is his latest effort in his ongoing battle with the Russian government.

            Which leads to the final reason Red Notice ought to be of great interest.  That's because it touches upon the great question, what causes some people to embrace an idea, or a mission, in such a completely captivating way?  Leaders of businesses and other organizations often ponder the question, how do I motivate my people?  The conventional answers are more money and perks, and better working conditions.  These things are somewhat helpful, but no one develops the motivation of a Bill Browder because of money, perks, and working conditions! 

            Consider all of the people besides Browder I mentioned earlier – Moses, Rosa Parks, Candy Lightener, Malala Yousafzai.  What's motivated each of these people is a cause far greater than themselves.  Browder's cause – avenging Magnitsky, as well as exposing human rights abuses – is what animates him.

            Which points to an answer to the question, how do you truly motivate people?  The answer is, find a truly compelling idea, then enlist yourself and your people in its achievement. 

            Things like increasing your sales or profits by 20% won't inspire your people.  Great motivational talks aren't likely to do it either.  Instead, it's finding something truly inspiring, and far greater than any individual, that will provide the seeds for true inspiration, and truly compelling results.

            As with Moses, Rosa Parks, Candy Lightener, and Malala Yousafzai, Bill Browder's the truth of Bill Browder's compelling tale, Red Notice, is clearly stranger than fiction.          






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A major electric has made an environmental pledge that could well be a brilliant business decision

            It seems almost every day we wake up to Earth-shattering headlines.  The funny thing is that lots of really significant news gets lost amidst all the "Big Headlines".  A great example of this was the recent report that Xcel Energy, a major electric utility based in Minneapolis, MN, plans to become 100% carbon neutral by 2050, a mere three decades from now.

            This is big news because Xcel is the first major electric utility to pledge to become 100% carbon neutral, and, moreover, to provide a specific date.  Now 2050 is still three decades away, and a lot of greenhouse damage will occur in that time.  The other significant thing Xcel said is that within 15 years, it will reduce 80% of the carbon emissions it had in 2005.  As such, most of the reductions should come in the next 15 years.

            Another reason this is important is because Xcel is the kind of company most environmentalists love to hate.  It's a big company – actually a big company with three major operating divisions: Northern States Power, Public Service of Colorado, and Southwestern Public Service in Amarillo.  Altogether, it has about 3.3 million electric customers and 1.8 million natural gas customers.

            Let's focus on the greenhouse gas emissions of the company.  On the positive side, it operates 27 hydro plants and two nuclear plants.  Of course, many environmentalists will object to the environmental impact of hydro and nuclear, but at least in terms of greenhouse gases, these 29 plants don't spew anything into the air. 

            In the greenhouse gas department, however, Xcel presently operates 13 coal fired electric plants that generate a combined 7,697 megawatts of power.  More than enough greenhouse gases!

            Which brings me back to the "real news".  Xcel's management isn't going to eliminate all these coal fired plants because they want to be nice guys, even though they probably are.  They're going to do it because it will make good business sense.  Oh, I'm sure, management is presently being criticized by environmentalists, and much of that criticism is quite justified, as the utility industry has a very long history of ignoring environmentalists.

            Are they doing this because of stiffer regulations?  Pretty unlikely, especially given the Trump Administration's efforts to make life easier for the coal industry.

            Instead, it's because it's a smart business decision.  So let's look specifically at why getting rid of all these coal plants is a very smart business decision. 

            It get's back to the number one job of the management of a company: make money for the shareholders.  In the case of a publicly-owned company such as Xcel, that means figuring ways to maximize the stock price.  With that in mind, let's consider how the decision to get rid of coal could help Xcel's managements drive up the company's share price.

            Stock prices are influenced by three things: company fundamentals, technical factors, and market sentiment.  Let's consider each.  The important thing to realize is that of these three factors, the management of a company can only influence one of them: company fundamentals.

            Market sentiment is really an overall collective assessment the investing world makes.  It depends upon things such as expectations of what the Federal Reserve will do with interest rates; what overall government policy is doing; and things such as the balance of trade and what's happening in foreign markets.

            The important thing to realize is that the management of a company can't do anything about market sentiment.

            The same is true for technical factors.  These include things such as the level of inflation, substitute products, and demographics.  For example, imagine that someone creates a great way for everyone to generate their own power, so it isn't necessary to depend upon the electric utility?  Pretty much outside the control of the utility company.

Which leaves just one thing that management can do to affect stock prices – company fundamentals – something very much within the control of management.  The key things here are the present value of future earnings for the company, as well as what's referred to as "free cash flow". 

            The best way for management to increase the stock price is to focus on things that will increase the company's earnings and free cash flow.  Generally speaking, that comes down to doing the following three things: 1) generate more revenue; 2) reduce costs; and/or 3) increase productivity.

            Unlike other businesses, utilities cannot do a great deal about increasing the amount of "product" or "service" it sells.  Instead, the typical utility must simply be prepared to produce the kilowatt hours and cubic feet of natural gas that customers demand.   The only thing the utility can try to do is to increase the rates charged to customers.  That, however, is subject to government regulation. 

            The management of the typical utility works very hard to convince regulators to increase the rates charged to customers.  Of course, on the other side of the table are a whole bunch of interests trying to keep utility rates low.  It's a classic political process, and management can to some extent influence stock price by pushing hard to increase utility rates.

            That leaves two other ways for management to influence stock prices: reducing costs and increasing productivity.

            Here's where the real news is.  The cost of alternative energy has gone down so much that wind and solar are now amongst the lowest cost power sources.  New wind and solar installations can generate kilowatt hours at a lower marginal rate than can coal and natural gas.

            Which means that, other things being equal, the management of companies such as Xcel can make a higher profit/kilowatt hour generated by building wind and solar capacity than by coal and natural gas.

            As wind and solar technology continue to improve, that differential is probably only going to increase.  Not only that, it will increase to the extent that fossil fuel prices go up.

            All you have to do is have some supply disruption of oil and natural gas to have the prices of those fuels go up.  Same thing for coal.  In the case of coal, regulation could increase the cost of the input. 

            Utility plants typically have a 30 to 40 year lifespan, so when management contemplates building one, it has to consider not only current costs but the cost of operation over that lifespan.  Doubtless, at the present time, the management of Xcel projects that over the next 30 to 40 years, the cost of operating a coal plant can do nothing but increase.  Technology isn't likely to reduce the cost of generation.  Conversely, the cost of a wind or solar facility has a good chance of continuing to go down over the same time period.

            Which means that if the company wants to increase earnings and free cash flow, the better choice will be a zero carbon facility.  If it makes that choice, other things being equal, there's a better chance the stock price will go up.

            So if that's the case, why not just ditch all of the coal plants right now?  Two likely reasons.  One is that management believes it lacks the capital and the management time to make such a transition more quickly. 

            It would have to borrow too much money and couldn't afford the debt service.  That problem could be overcome, especially if government regulators provide some type of relief to the company.

            However, even if management could swap out all those plants, there is still the problem of spreading management too thin.  Building a whole bunch of new plants would tax any organization.

            There is a possible way around this problem.  That's to have the company purchase alternative energy from a third party and just ditch all of the coal plants.  If management could find alternative sources of power and purchase it, it could shut down all of those coal plants more quickly.  If it could purchase enough clean power at a low enough price, it would make sense to shut all of the coal plants down as quickly as possible.  There are, of course, some important caveats to doing this, but it could make good sense.

            Of course, shutting down all those plants might create other problems.  The most likely would be the economic impact in the towns where the coal plants are located. 

            This points the way to another great economic opportunity.  Third parties could build new wind and solar plants that would provide clean power at a lower cost than the old coal plants.  Xcel's management probably realizes this.

            So why not just get third parties to build all of this new zero emission capacity and get rid of all of the coal plants?  The short answer may be that government regulation has incentivized utilities to keep operating greenhouse gas polluting coal plants.  We'll consider that in the future.

            In the meantime, Xcel's management, in my mind, is making a brilliant business decision.  I expect other companies will reach the same conclusion, and start doing the same. Which reinforces the idea that if you really want to get rid of greenhouse gases, the best way is through economics and better technology, not politics and regulation.








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Lots of people have been worrying about rolling back environmental regulations. We may have been worrying about the wrong things.

            The things that keep me awake and worrying at night usually don't come to pass.  In the end, it's more needless worrying.  Instead, things that I never thought about, much less ever thought of worrying about, become my real life nightmares. 

            I know I'm not alone.  Unquestionably, sometimes truth is stranger than fiction.

            While it has nothing to do with me, a great example of this principle has been making headlines.  When Donald Trump was elected US President, then promised to roll back environmental regulations in order to bring back coal as a preeminent power source, lots of people besides me became very scared. 

            Surprisingly, and thankfully, we now know that much of that was needless worrying.  That's because of reports that more coal-fired power plants were de-commissioned during the first two years of Donald Trump's presidency than during the entire first term of President Barack Obama, an unabashed supporter of both greenhouse gas reduction and a cleaner environment.

            How could that have possibly happened?  How could President Trump have successfully rolled back a bunch of regulations on coal, and yet more coal capacity went offline?

            The short answer: in the big picture, it's not regulations that matter, it's technology!  Let me explain.

            The biggest single reason coal power is dying is the fracking revolution.  Fracking is the process of injecting water and chemicals into the ground in order to enhance the recovery of oil and gas previously unrecovered.  It has totally transformed the oil and gas business, not only in the USA but worldwide.  On a positive note, it has turned the USA once again into one of the top hydrocarbon producers in the world.  Besides this, it has resulted in two other very important things:

            Result #1: because of increased supply of oil and natural gas, the price of oil and gas worldwide has gone down dramatically from where it would have been otherwise;

            Result #2: the USA imports substantially less hydrocarbons than before, greatly improving the country's balance of payments.

            Result #2 is certainly important, but let's focus on result #1.  Greater hydrocarbon supply has reduced worldwide prices, making natural gas far more competitive than coal as a power source.  The key reason coal power plants are being retired, and very few new ones are being built, is the competitiveness of natural gas.

            Fracking, of course, is not without its problems.  Many environmentalists are concerned that it is damaging local environments in serious ways, and many environmental advocates have come to hate frackingIronically, the very thing many environmentalists have come to hate is also the very thing that is causing another hated thing – coal power plants – to be retired.

            It's a completely unexpected outcome.  However, let's not get too comfortable because some other unexpected outcomes may be on the horizon.  We probably should be worried, just not for the expected reasons.  Instead, we should actually be worried about fracking.  Not so much because of potential environmental concerns, rather because in the long run, fracking may just be un-economic.

            So why might fracking be un-economic?  It's because most fracking companies still haven't figured out a way to make real money.  Oh, they generate a lot of revenue from fracking, but upon closer examination, they haven't figured out a way to generate free cash flow from the practice.  Free cash flow equals operating cash minus operating expenses minus capital expenditures.  What it means is that fracking companies actually may be fooling themselves - and everyone else - about the real economics of the business. 

            So long as free cash flow is negative, fracking concerns need to borrow money.  They can get away with that if interest rates are low, as they have been for the past decade, but what happens when interest rates start going up, as they have been recently?  What happens when companies borrow too much and the debt load becomes unsustainable?  What happens when that becomes an industry-wide problem?

            In the long run, absent some big change, absent the typically fracking company generating free cash flow, the industry will be unsustainable.  If fracking is unsustainable, total oil and gas production will decline, the prices of oil and natural gas will go up, and other things being equal, coal will not be at such a disadvantage.  Bottom line, coal could again become competitive as a power generation source, at least compared to natural gas.

            When you and I are sleepless at night, worrying about things that could happen, we'll again be worrying about the wrong things. Rather, the things you never expected to happen could end up happening!

            But before you start worrying about coal making a resurgence, consider something else.  That "something else" is the declining cost of generating power from alternatives like wind and solar.  The other reason coal plants are being retired, and not replaced, is because wind and solar have become truly cost competitive. 

            Thus, even if fracking turns out to be uneconomic on a large scale, the declining cost of wind and solar will very likely keep utility companies retiring old coal plants.  Unlike fracking, wind and solar don't have a free cash flow problem.  Not only that, because of ever improving technology, the cost of industrial scale wind and solar keeps going down, making them ever more cost competitive with coal.

            The bottom line is that wind and solar will likely continue to displace coal plants.  They may even displace natural gas plants, too, if the price of natural gas increases, especially due to any future decline in fracking.

            Ironically, improvements in technology could also ultimately make both fracking and coal powered utility plants environmentally friendly, or at least friendlier. Technology to capture carbon emissions is under development.  If it could be perfected, and if carbon emissions could truly be captured – a very big if – coal might resume its place as a preeminent power source – and we probably wouldn't care.  Likewise, technology might eventually address the two big problems of fracking – environmental damage, and the problem of negative free cash flow – making it a truly good alternative to coal.

            At the end of the day, the key is technology, not politics or regulation.  Deregulation isn't making coal more competitive, and it won't in the future.  Instead, it's technology.  Likewise, what is making wind and solar realistic alternatives is improved technology.

            Bottom line, the key to solving the problem is technology.  The things that keep us awake at night so often don't come to pass, so we'd best not worry about them.  Instead, we need to worry about the things we haven't thought of, as that's what could really create problems for us.  Then we need to look for technological solutions that will help us deal with lots of those unexpected things that we never imagined could create problems.

            I probably will still periodically lay awake at night, worrying about something that could happen.  You probably will, too.  Again, what we'll worry about probably won't come to pass.  It will be the thing we failed to consider.  Alas, human nature probably won't change, but maybe some improved technology will help make it a little less painful.        









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It's the start of a new year. As we attempt to change different things in our lives, some thoughts on finding a way to change the climate "narrative".

            Happy New Year!  I hope that 2019 is off to a great start for you, your family, and those around you. 

            Chances are you have many hopes, plans, and aspirations for 2019.  Doubtless, you'd like some things to be different than they were in 2018 and before. 

            For many of us, a different narrative on "climate change" would be wonderful news.  Unless you've decided to swear off media, you likely feel bombarded with stories about impending environmental doom due to climate change.  Lots of scary scenarios are on the horizon.  While there is hope that environmental disaster can be avoided later in the 21st century, there is a great deal of fear that not enough is being done now to avoid future calamity.

            Which brings me back to the need for a "change of narrative".  In my mind, too much of the debate is focused on one of three topics: 1) international climate forums such as the recent talks in Poland; 2) impending climate catastrophe projections; or 3) climate change denial.  It's rare to find a story that doesn't somehow fit in one of those three "buckets".

            So here's a story about climate that doesn't fit any of the three conventional "climate change storylines".  Instead, it focuses on some of the practical, behind the scenes things being done to deal with the problem.  For me, a great "change of narrative" for 2019 would be to stop talking about the three "buckets" above and re-focus onto practical solutions. 

            My "practical" story is definitely about climate change (because it's real), but it isn't the usual narrative about what governments are doing.  In fact, some of the protagonists in this story are the last you'd ever think of in the climate change debate: Big Oil companies. 

            Please understand, this is not an apologetic about Big Oil, and it isn't about environmental "green washing".  Instead, I want to talk about some practical strategies being used to try to deal with the problem of greenhouse gas removal.  It fits into what you might call the "angel/venture capital investing" model.  It isn't a panacea, but it could provide a useful, if slightly unexpected, model of the "practical" variety.

            The common denominator is technology.  If you look back in history, there have been various predictions of environmental catastrophe, beginning with Thomas Malthus.  Malthus predicted that the Earth would be destroyed by overpopulation.  It never happened, and the reason it didn't was because technology changed. 

            The best chance we have of avoiding an environmental catastrophe due to greenhouse gas-induced climate change is new technology.  The good news is that a whole bunch of new technology has already emerged:

  • Better solar panels
  • Better wind turbines
  • Better battery storage.

These three technologies have made all electric vehicles, as well as solar and wind power, highly cost competitive, in a way hardly dreamed possible just 10 to 15 years ago.

            However, we're going to need even more technology, and we'll need it pretty quickly, especially in heavy industry, particularly to deal with greenhouse gas associated with things like cement and steel production. 

            One approach is to encourage university research, then get that research spun out into start up businesses.  This is a well known strategy employed by angel investors.  Exhibit A for this approach is a company C-Capture Technology.   The Chemistry Department at the University of Leeds in the United Kingdom sought to find a way to improve carbon capture technology.  The technology most recently available is very energy intensive, and it reduces the economic efficiency of any plant that adopts it. 

            The chemistry researchers at Leeds have developed a new technology they believe will significantly improve the process.  The technology has been spun out into C-Capture Technology.   C-Capture will try to commercialize technology.  If the company is successful, it will likely mean both a much better commercial method to capture carbon in an industrial plant, but it will also provide a large financial reward to the university, to be reinvested in the school.

            Lots of technology companies spin out of university-based research.  The challenge, then, is to commercialize that technology and create viable businesses.  It's one thing to build a company based upon software, but a very different thing to try to build a business that requires lots of assets.  Unfortunately, many technologies associated with greenhouse gas reduction require huge asset investments.  From where will that capital come?

            A four year old project called the Oil and Gas Climate Initiative provides an interesting approach.  The OGCI is a joint undertaking of a number of international oil and gas companies.  Members include ExxonMobil, Chevron, Occidental Petroleum, BP, Shell, and Total.  The companies have joined together to make investments in a variety of "green" technologies.

            This particular initiative is interesting for several reasons.  The first is that it points to the idea that major oil and gas companies are being pushed by their shareholders, as well as governments and other entities, to do something about greenhouse gas emissions.  Some think the companies are only doing this because they're being forced by public opinion. 

            I don't think so.  Instead, they're doing it because they perceive that greenhouse gas reduction is not just politically popular, it's a good business investment.  In my mind, these companies are making investments because they perceive a potentially huge payout. 

            The OGCI companies have already invested in seven companies that have developed "green" technologies.  Here's a quick rundown of the companies in which they've invested:

            Achates Power:           

Achates has developed high fuel efficiency piston engines.  The most obvious application is in aviation.

            Clarke Valve:              

Clarke has developed the world's first new valve in more than 50 years.  It's valves can be used in a broad range of industrial applications.  They're considerably more efficient than traditional designs.  (Full disclosure: I am an investor in this company)


Econic has developed catalysts that permit the incorporation of CO2 as a raw material in various plastics.  The idea is to take CO2 emissions and turn them into plastic, a fantastic recycling strategy if it can be commercialized!


GHGSat is developing a set of greenhouse gas monitoring devices and data services.    The need for such monitoring is quite evident, as the first step to reducing greenhouse gases is to identify where they're present, as well as their source.


WhiIe various organizations are trying to develop carbon capture technology, Inventys says it is trying to do it on the "gigatonne scale".

            Kairos Aerospace:      

Kairos is adapting aerospace technology to improve detection of methane gas, one of the most potent greenhouse gases.

            Solidia Tech:                

Solidia is developing improved technology for making cement.  Many if not most people don't realize that cement-making is a potent source of greenhouse gases.  The world would be hard pressed to do without cement, so developing better processes â€" especially ones that reduce greenhouse gases â€" is really important.

            These are OGCI's initial investments.  The experience of angel and venture capital investors suggests that OGCI will need to create a portfolio of at least 20, and preferable 30 or more, investments.  Most likely, for every 10 investments that OGCI makes, half will fail and another three will provide only a fairly small return.  The goal, however, is for one or two of every ten investments to be very successful.  If that happens, the investors will likely realize excellent returns.

            In this case, however, there should be an additional benefit: the successful companies will be successful because they've developed and commercialized an important technology that will help reduce greenhouse gases.  In that case, everyone will win!

            OGCI has made one other investment.  It is in an initiative to build the first natural gas plant that uses carbon capture and underground storage (CCUS) technology.  The plant is in Teeside in the United Kingdom.  If this investment is a success, the technology could be used to capture carbon in plants around the world.

            Policymakers around the world should be encouraging similar types of investment in new technology to reduce or eliminate carbon.  The examples above provide a useful template:

#1: Fund basic and applied research in universities to develop carbon capture or other carbon reduction/elimination technologies;

#2: Encourage universities to spin out promising technologies;

#3: Encourage angel and venture capital investors to focus attention on these new technologies;

#4: Encourage other industries to model what the OGCI has done.

            Much, if not most, attention has been focused on government-led initiatives to reduce carbon emissions.  The entire Paris Climate Treaty strategy is built upon this.  Unfortunately, governments are poorly equipped to carry out the four steps listed above.  The only way that government can be helpful is with #1 and, to some extent, #4.  Governments could, and should, invest more funds in research, especially through major research universities. 

            The other place government might have a positive influence is through the promotion of OGCI-style initiative in other industries.  Consider the example of cement-making cited earlier.  Greenhouse gas is a significant problem.  Governments might encourage companies in cement-making to establish pools of capital to invest in new technology.  Why not create a portfolio of companies developing new technology to improve the process?  On one level, this could be financially remunerative to the investor-owners.  More importantly, it could help build new technology that could benefit an entire industry, much less the planet as a whole.

            Please understand, none of this is a panacea.   None of the companies cited above are likely to create a "magic bullet" that will solve the carbon emissions problem.  But encouraging the development of new technology is likely the very best way we'll avoid the climate disaster that appears in the offing.

            Had technology not improved, Thomas Malthus probably would have been proved right, with disastrous consequences for the entire planet.  The same is likely true for us today, so we'd best do what we can to encourage the improvement of technology.   Doubtless, technology will get better in 2019.  We just need to find ways to channel that technology to create better solutions to things such as greenhouse gas emissions.  Governments, especially national ones, tend to be pretty ineffective in doing this, but there are ways to get the job done.  The examples I've cited above could provide a useful, practical model.

            May 2019 be the best year ever for you, your family, and those who surround you, and may you be showered with blessings.  May the "narratives" you hear be different â€" and better â€" than anything you thought possible.


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In the gift giving season of Christmas, here are four unexpected, no cost gifts you might want to consider

            Merry Christmas!  Wherever you live, and whatever your personal beliefs, I hope the Christmas season brings both good tidings and blessings to you and your family.

            Judging by the news, you probably feel very much in need of it.  Most everyone I talk with seems at least somewhat depressed.  While the reason for some is personal, familial circumstances, for the vast majority it is because of the seemingly endless stream of bad news: the stock market is cratering; Washington is in crisis; the Federal debt is exploding; and your data are probably being hacked as you read.  I could go on and on, and the troubles just seem to get worse and worse.

            Except that even though the headlines are bad, the world isn't imploding.  The Sun came up today, and it's pretty likely to come up tomorrow.  Most likely, you'll be here to see it come up tomorrow.

            So even though some things seem bad, it most likely isn't anywhere near as bad as it might seem in the moment.  We have lots of things about which to be happy, and to feel blessed. 

            Christmas is a time for gift giving.  In that spirit, I want to suggest four gifts that we can give, not only to others, but especially gifts we can give to ourselves.  These gifts will cost absolutely nothing, so you don't have to worry about depleting your bank account any more than you already have, but they could be some of the best ones you give and receive this year.  At first, you're likely to find these gifts to be highly unusual, but upon reflection, I think you'll see they are real gifts.

Gift #1: Stop Thinking That Facts Will Convince Others to Change Their Minds

            What's our natural reaction when we hear someone of a different political persuasion say something we don't like, or believe?  We start reciting our favorite facts that support our position.  We think our facts are persuasive, and we can't understand why they convince others to change their minds.

            So we think, when our facts don't persuade them to change their minds and see things our way, we conclude these people must be stupid, arrogant, or maybe even evil!

            Well, most likely, the people who disagree with us most likely are neither stupid, arrogant, nor evil, at least no more than we are.  Moreover, lots of evidence suggests that people in general, especially adults, don't easily change their minds.  Not only that, but people don't change their minds because they either learn that something they thought was true actually isn't, or that certain things they think are factual are actually incorrect.  In short, it is REALLY HARD to get people to change their minds about things, especially deeply held beliefs. 

            I personally like Politifact.  It takes statements made by public figures and evaluates their veracity.   They have a scale that ranges from "True", all the way to my favorite: "Pants on Fire".  Remember "Liar, liar, pants on fire!"?  The funny thing is, some research shows that not only does the Politifact strategy of "identifying errors, mistruths, and outright lies" not effective, it may even be counterproductive.  That's because some research shows that when a lie is repeated as part of an investigate into its truthfulness, the lie may become even more cemented as truth in the minds of many people.  Bottom line: Politifact is entertaining, but it fails to accomplish its goal of getting people to re-think untruths.

            So why, then, do we keep trying to throw our facts at others, then get frustrated when they don't "get in line" with our thinking?  It may be related to the endless efforts we take to get our spouses or other family members to change the things we find annoying about them.  Well, anyone who has ever been married knows that is a fool's errand.  Yet we keep trying to do it!

            So a great gift you could give yourself this Christmas is to stop doing this.  Stop thinking that you'll persuade others to change their minds by throwing facts at them.  Stop thinking they're stupid because they don't fall in line with your thinking.   The reduction in frustration will be a great gift for you.

            Now please understand, I'm not telling you to stop trying to be factual, just stop trying to use your facts as a weapon against others.

            Instead, go back and rediscover a gift you were given at birth, but which you probably have largely thrown in your pile of discarded toys.

            Rediscover your natural inquisitiveness.

Gift #2: Draw a Little Upon Your Natural Inquisitiveness

            Anyone who's ever been around children know they're naturally inquisitive.  Most likely, you once drove your parents nuts by all the questions you asked as a child. 

            We adults just somehow lose that capacity.  One of the best examples of how we've lost that is our general failure to inquire why people who think differently from us think the way they do.

            Ask yourself, when you hear someone express an opinion radically different from you, what was your natural reaction?

            They're ignorant, stupid fools!

            Liberals who can't understand why many conservatives have strong feelings about the Second Amendment, or are skeptical about climate change.

            Conservatives who can't understand why a high percentage of the population thinks the idea of building a 20 or 30 foot wall across the southern USA border is a really stupid idea.

            Instead of doing that, when we hear someone express a contrary viewpoint, why not revert to the inquisitiveness of our "inner child" and ask, why does the other person think the way he/she does?  Is there something I might be missing myself?  If so, what might that be?

            The funny thing is, when one stops and really thinks about contrary viewpoints, there are often "aha, I never thought of that" moments. 

            The gift of inquisitiveness often provides the dual rewards of new ideas and new perspectives.  It truly is a gift to any adult who rediscovers it.  And it doesn't cost anything!

            Now, of course, there is no assurance that even added insight will eliminate your sense of frustration at world events.  Which leads me to consider the third gift we can give ourselves.

Gift #3: Focus on the Things Within Your Control

            Doubtless, you've heard the Serenity Prayer: "God, grant me the serenity to accept the things that I cannot change/ Courage to change the things that I can/ And wisdom to know the difference."  It was composed by theologian Reinhold Niebuhr (1892-1971).  Technology developed over the past few hundred years has radically changed the world.  We've developed the ability to overcome nearly every obstacle imaginable.  Unfortunately, it has left too many of us with the idea that anything and everything is within our power.  Too bad that just isn't the case.  Intellectually, we know we ourselves can change only a few things, and we get frustrated when so many things seem beyond our grasp.

            Niebuhr's Serenity Prayer is appropriate for all such occasions.  Instead of getting frustrated by world, national, or even local events out of our individual control, let us take pause, and hopefully reduce our stress and frustration.

            Instead, we should focus our individual attention on the things we really can change.  For each of us, there are plenty of things we can and should change.  A great place to start is with how we treat our family, friends, and co-workers.  If you want change, let's start there, not with national and international matters largely beyond our immediate control.  Why not provide the gift of ourselves at our very best?  Our family, friends, and co-workers will doubtless love to see that.  Each of us will, too.

            Which leads me to a fourth and final gift we can each give to ourselves: the wisdom to realize the world is not composed of good and bad people, but people who are all simultaneously good and bad.

Gift #4: Try to Stop Dividing the World into Good People and Bad People

            The question of whether people are basically good or bad is a very old one.  Lots of traditional wisdom says, however, that individual people are neither basically good nor basically bad.  Instead, each of us possesses both good characteristics and bad characteristics.  We all have our flaws.  Even universally reviled mass murders such as Adolph Hitler had a good side.  Virtually none of us ever saw it, but it was very likely there.  Please understand, I'm not in the least trying to excuse the terrible things people like Hitler have done, merely to say that the world is composed of lots of good people, and a few very bad ones, is at best a caricature.

            The idea that people are basically good is a thoroughly modern one.  So what's wrong with this very widely held viewpoint?  The problem is that it simultaneously leads us to look for the evil in others and overlook the evil in our own hearts.  If we think, on balance, that we, our family, and our friends are all basically good people, it leads us to point the finger at others rather than point at ourselves. 

            Now I realize, very few people enjoy acknowledging their own shortcomings.  It's way easier, and more fun, to look for what's bad in others.  But if we want to get along with each other, far better first to consider our own shortcomings than point out those in others.  Not only that, but when we start thinking the world is composed of good people and bad people, we start trying to change, or get rid of, "the bad people".  As I recall, trying to rid the world of "the bad elements" (i.e., Jews, gypsies, and other so called "undesirables") was one of Hitler's major shortcomings. 

            But you don't have to be one of history's greatest mass murderers to believe that we should do something about "the bad people". 

            Instead, think of the world as composed of people all of whom have both good and bad characteristics.  Each of us has good characteristics, maybe even noble ones.  At the same time, we are each flawed in different ways.  While many religious traditions believe this, Christians in particular believe that because we are that way, God came to Earth in the form of a man to live, then die as an atonement for the shortcomings all of us have.  Christmas is a celebration of the first appearance of God on Earth.

If we think of ourselves as simultaneously good and bad, our outlook upon with world will truly be different.

            So how could this change in viewpoint be a gift?  If we stop thinking the world is composed of mostly good people and a few bad ones, we'll stop frustrating ourselves with fruitless efforts to "perfect" mankind on our own.  Apart from technological progress, attempts at "human progress" over the past few hundred years have done nothing but make us individually and collectively frustrated and angry.  If, instead, we adopt the traditional view that people are simultaneously good and bad, and we can't do too much about our bad sides by ourselves, we may afford ourselves the gift of a little less frustration and anger.

            When you think about it, these are just little bits of traditional wisdom.   You've probably heard every one of them before, and you probably think you're already following them.  I'd like to think I follow them regularly, too, but I know oftentimes don't, and need a reminder.

            While there's lots of bad news around, the world isn't coming to an end.  As you give and receive gifts this Christmas season, indulge yourself in the gifts I've described above.  They are freely available to each of us, and they could help make this Christmas, and the coming year, better than you ever thought. 

            In whatever way you celebrate Christmas, I truly hope it is a happy and joyous time for you, your family, and your friends.  I hope you derive joy from the gifts you give a receive.  I hope you'll consider the four gifts mentioned above.  They're freely available, and receiving them may just make your Christmas, and your coming year, a little bit better.

            Merry Christmas!

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New Evidence Suggests an Earlier Date for the First Appearance of Life on Earth

Our Earth is estimated to be about 4.4 billion years old. Over time, scientists have pushed the date of the earliest appearance of life on Earth farther and farther back. For the past two decades, the general consensus has been that life first appeared on Earth about 3.5 billion years ago, meaning that for the first billion years, Earth was "lifeless". Now a new study in Nature magazine suggests the date is much earlier.  The research is definitely controversial.  In fact, some critics of the new study have called the fossil evidence "dubio-fossils".  Obviously, it isn't just politics that's controversial today! Check out Oldest Bacteria.  

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Carl Treleaven is an entrepreneur, author, strong supporter of various non-profits, and committed Christian. He is CEO of Westlake Ventures, Inc., a company with diversified investments in printing and software.


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