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ACC PM 03/09/18
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Brazil Court Overturns Ban on Weed-Killer Glyphosate
Sep 3, 2018 | Reuters (In The New York Times)
By Ricado Brito, Ana Mano and Jake Spring
A Brazilian court on Monday overturned an injunction banning products containing the popular weed-killer glyphosate, knocking down a previous ruling that had been set to disrupt the soy planting season set to begin this month. -
Fracking As The Next Financial Meltdown (Or Not)
Sep 3, 2018 | Forbes
By Michael Lynch
It seems fracking is the “Jews” of the 21st century. -
Europe's Carbon Market Starts Doing Its Job Of Cutting Emissions - A Decade Late
Sep 3, 2018 | Forbes
By Mike Scott
More than a decade after it was created, the European Union’s Emissions Trading Scheme (EU ETS) is finally starting to bite and will start to accelerate the closure of old coal-fired power plants across Europe as soon as 2021, new analysis shows.
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Brazil Court Overturns Ban on Weed-Killer Glyphosate
Sep 3, 2018 | Reuters (In The New York Times)
By Ricado Brito, Ana Mano and Jake Spring
A Brazilian court on Monday overturned an injunction banning products containing the popular weed-killer glyphosate, knocking down a previous ruling that had been set to disrupt the soy planting season set to begin this month.
A Brazilian judge ruled last month to halt the registration of new glyphosate-based products in the country and to suspend existing registrations after 30 days, until health agency Anvisa issues a pending ruling on its safety.
That 30-day deadline had been due to pass on Monday, just as the first month of soy planting gets under way. The injunction and the subsequent reversal also applied to insecticide abamectin and fungicide thiram.
Judge Kássio Marques, of the regional federal court of the first district in Brasilia, based the ruling suspending the injunction on the government's argument that banning glyphosate and the other two agrochemicals could harm the country's economy.
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Marques said in the decision "nothing justifies the suspension and abrupt removal of registrations of products containing glyphosate, abamectin and thiram as active ingredients without an analysis of the serious impacts on the country's economy and population in general."
Brazil is the world's largest exporter of soybeans and relies heavily on the agrochemical, with Bayer AG's Monsanto SA the biggest seller of glyphosate products in the country.
"This ruling is very good news for Brazilian growers, who count on glyphosate-based herbicides to control weeds and grow their crops safely and effectively," Bayer crop science chief Liam Condon said in a statement.
Anvisa, which has been reviewing glyphosate's safety since 2008 without issuing a decision, said it was aware of Monday's ruling and would take the necessary legal and technical steps in response.
Federal prosecutors brought the lawsuit to pressure Anvisa to make a decision, saying glyphosate and the other chemicals deserved to be reevaluated based on new evidence that has come to light on their safety. The prosecutor's office did not immediately respond to request for comment on Monday's ruling.EDITORS’ PICKSOpinionMake Your Daughter Practice Math. She’ll Thank You Later.This Is the Way Paul Ryan’s Speakership EndsThe Pope’s Accuser: A Keeper of the Faith, or a Keeper of Grudges?
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Hundreds of lawsuits alleging Monsanto's glyphosate products cause cancer are making their way through U.S. courts. A 2015 study conducted by an arm of the World Health Organization classified glyphosate as probably carcinogenic to humans.
Bayer and Monsanto say decades of use and numerous reviews of glyphosate show the chemical to be safe.
https://www.nytimes.com/reuters/2018/09/03/business/03reuters-brazil-agriculture.html
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Fracking As The Next Financial Meltdown (Or Not)
Sep 3, 2018 | Forbes
By Michael Lynch
It seems fracking is the “Jews” of the 21st century. (Walter Scott in Ivanhoe remarks“…for except perhaps for the flying fish, there was no race existing on the earth, in the air, on the waters, who were the object of such unintermitting, general and relentless persecution as the Jews of this period.” No, I have no idea what he meant by that, at least the flying fish part.) The persecution of fracking appears unrelenting (which is perhaps what unintermitting means), and seems to start from, “I think fracking is bad, let’s find an excuse.”
Shale fracking carries a political odor all its own, just as food whose genes were modified by primitive people is more acceptable that food modified—gasp—by scientists. As an example, the Massachusetts Sierra Club opposes gas pipeline expansion because “The pipelines are being built to take fracked gas to off-shore facilities in the US and Canada for export.” Like many gas pipeline opponents, they apparently think that natural gas is homeopathic, that is, the methane molecules have a memory of how they were produced.
Two new books attack fracking from different perspectives, Amity and Prosperity by Eliza Griswold and Saudi America: The Truth about Fracking and how it’s Changing America by Bethany MacLean. The first discusses the health and environmental problems in a small town where fracking is being done, the latter argues that “Fracking is such a fragile industry that it is not hard to make it go bust.” (I have ordered but not read both books, and am basing this on two book reviews of the former and an opinion piece written by the author of the latter.)
The first book appears to do little more than relate specific instances of contamination and health problems, apparently taking a human approach rather than an epidemiological one. Possibly it does more than that, but the table of contents doesn’t show a list of figures or tables with graphs. I have no doubt that the family’s travails described in the book are real, but it is not clear (at this point) if the author has proven their causes nor shown their broader relevance. Any number of books can be written about the horrors of living near a pig farm, a daycare center, or a cookie factory, but until I read this, I can’t say if this goes beyond that level of rational analysis. Stay tuned.
The second book, by Bethany McLean needs to be taken seriously, given the author’s track record of exposing the Enron scandal. One would like to think that it is much more analytical, but since it hasn’t been published yet (although Amazon says it’s a bestseller! Kudos), that can’t be judged. On the other hand, the arguments made in her Sunday NYT piece give me cause for concern.MORE FROM FORBESUNICEF USA BRANDVOICEMothers and Children Inside A Mexican ShelterGrads of Life BRANDVOICECan Next-Gen Staffing Agencies Close The Skills Gap?
Without a doubt, large amounts of money was poured into the shale industry, a good portion of it without due diligence. However, I have several times listened to financial analysts argue, in the most extreme case, that not a single fracked well is profitable, while industry executives counter that their profits are very large.
Further analysis is needed to parse the dispute, but recall that many in the industry insisted that $80 or $100 a barrel was needed for oil production generally to be profitable, yet lower prices haven’t stopped production expansion from Brazil to Russia. (In 2012, I was called an idiot by a CEO for suggesting the long-term sustainable price was close to $50 than $100 because the latter was the marginal cost of production. About an hour into this video.) And when oil was dropping below $100/barrel in 2014, one prominent bank argued that "[O]n a reserve weighted basis, the average breakeven for unconventional plays in the US is $76- 77/bbl, at an asset level."
The price crash did cause shale oil production to slow, but it has since recovered and is growing rapidly at prices below $70.
The same was true for shale gas. I reviewed a number of estimates for shale gas breakeven costs made before 2014, and the lowest was $4/Mcf. (See figure.) Yet the price has not been above $4 since July 2014, and production has continued to expand. Needless to say, the issue is more complex than can be dealt with in a post, but there is no question that broad brush financial analyses have often missed the target and by a very wide margin.
Pre-2014 Estimates of Shale Gas Breakeven CostsTHE AUTHOR
The point is that production costs can be devilish things. It is all too easy to underestimate or overestimate them, for example, by including the cost of debt taken on to lease unused acreage or by excluding administrative costs. More important, costs are both flexible and cyclical and lower levels of activity usually mean lower per-unit costs as industry inflation declines, while new approaches, such as shale fracking, typically see significant improvements in methods in the early stages.
McLean makes another point that many find appealing, namely that shale wells decline rapidly, but she mistakes this as explaining the “terrible financial results.” The glass half-full observers will note that a rapid decline rate means a rapid extraction of reserves and thus faster reception of revenue. Money soon is better than money later, all else being equal.
One suggestive factor: decline rates is one of those mystical things that peak oil advocates trotted out for years, knowing that most in the audience would not be familiar with them and leave any assertion unquestioned. But the rate of decline in production is only one input in the equation and relying on that as suggestive of future difficulties is like arguing that consumption of oxygen by humans will deplete the Earth’s resources—if you ignore molecular oxygen produced by plants. (I did the calculation, there’s 5.45 million years’ worth at current consumption.)
The decline rate issue is a combination of an omitted variable problem—including that the industry offsets decline with new drilling—and historical ignorance—being unaware of the fact that the argument has been around for decades, but never actually proved very relevant. The figure below shows the number of rigs drilling in Appalachia (primarily the Marcellus shale basin), and although activity collapsed in 2015, production growth continued unabated, high decline rates notwithstanding.
Marcellus/Utica Drilling and ProductionTHE AUTHOR FROM EIA DATA.
That any given shale producer might not be a good investment might certainly be true, but the issue is a complex one, which appears to require much more in-depth analysis than provided by these books. And the possibility that the books are off-base shouldn’t be a surprise, given the long history of energy writers being led astray by simplistic arguments. Earlier I described how two Nobel-prize winning economists made seemingly logical but incorrect arguments about petroleum, a field in which they were not actually expert.
Any number of books were written about peak oil which simply parroted arguments about the Hubbert Curve, low discovery rates, and yes, the threat of high depletion rates (also known as “the Red Queen’s Curse”), but most of which didn’t examine any of those arguments in detail, as my book on the subject did. (The Peak Oil Scare) Of course, the detail I provided in lieu of alarmist warnings ($20 a Gallon!) and inflammatory titles (Peak Oil Survival: Preparation for Life after Gridcrash) is probably why my book sales didn’t reach four figures. (Assume sad emojicon) I guess being interesting is better than being right.
https://www.forbes.com/sites/michaellynch/2018/09/03/fracking-as-the-next-financial-meltdown-or-not/#c4290e4ebe24
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Europe's Carbon Market Starts Doing Its Job Of Cutting Emissions - A Decade Late
Sep 3, 2018 | Forbes
By Mike Scott
More than a decade after it was created, the European Union’s Emissions Trading Scheme (EU ETS) is finally starting to bite and will start to accelerate the closure of old coal-fired power plants across Europe as soon as 2021, new analysis shows.
Research from Carbon Tracker, a financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality, suggests that EU carbon prices could reach an average of €35-€40 per tonne in the 2019-2023 period, speeding up a switch from less efficient and more polluting coal plants to cleaner gas-fired facilities and reducing greenhouse gas emissions.
Recent reforms to the EU ETS have already seen the price of carbon allowances more than quadruple, from a low of €4.38 per tonne in May 2017 to €18.28 per tonne in August 2018. In a new report, Carbon Countdown – Prices and Politics in the EU-ETS, Carbon Tracker says that EU carbon prices will hit €25 per tonne by year end 2018 after the price recently breached €20 for the first time in a decade.
The price of the carbon allowances given to heavily-polluting facilities such as power stations, cement and steelworks, has risen because the EU’s Market Stability Reserve mechanism withdraws 1.7 billion tonnes of surplus allowances from the market. From January 2019 the mechanism will cancel 24% of the surplus each year up to 2023 and 12% thereafter.
The report finds that this will leave the power and aviation sectors with a deficit of around 1.4bn tonnes of carbon. To reduce this deficit, power generators will need to bid up carbon allowance prices to (i) facilitate their own transition from coal to gas so they need fewer allowances, and (ii) incentivise the sale of surplus carbon allowances currently held by industry and speculators.MORE FROM FORBESCivic Nation BRANDVOICEStudents Helping Students To Alleviate The Hidden Costs Of CollegeGrads of Life BRANDVOICELabor Day: Celebrating Our WorkforceUNICEF USA BRANDVOICEGrowing Up Surrounded By Violence In Central America
Mark Lewis, author of the report and Head of Research at Carbon Tracker said: “In order to achieve the level of fuel-switching required to eliminate the carbon deficit over 2019-23 it will be necessary for combined-cycle gas-turbine plants (CCGTs) with a thermal efficiency rate of 45% and above to displace coal plants with thermal efficiencies of 38% and below. With the fuel-switching price very sensitive to efficiency rates, this will require higher allowance prices than we were previously assuming.”
Carbon Tracker believes that carbon prices could go as high as €50 per tonne for limited periods during the winters of 2020/21 and 2021/22 thanks to seasonally high gas prices during winter.
However, Lewis said that political realities will effectively cap prices at €50. “Bullish as the outlook for prices looks to us, it is important to remember that the EU-ETS is ultimately a political construct,” he pointed out. “In our view, if prices were to exceed €50/t for more than a couple of months at any point within the next two to three years this would likely lead to pressure for countervailing measures, especially in Eastern Europe.”
Switching is most likely in Germany, Italy, the Netherlands and Spain , the report says, as a result of their coal-fired power production capacity, the amount of gas-fired power plants and the average efficiency rates of their power plants.
This fuel-switching, alongside efficiency savings accounting for a third of total reductions, could reduce CO2 emissions by up to 60 Mt in 2019, 90Mt a year between 2020-2022, and 70Mt in 2023.
The think tank is less confident about the picture from 2024 onwards. The cost of both renewable energy and energy storage are set to fall dramatically over the next decade, and there are uncertainties about how quickly coal phase-out policies across the EU will come into force, especially in Germany.
“We think it is an open question as to whether or not fuel switching will actually be required over the second half of Phase 4 at all given that these trends will lead to a structural decline in the power sector’s emissions in any case. This raises difficult questions about the visibility of EUA prices beyond 2024, which in turn explains why debate over a carbon-price floor is unlikely to go away,” Lewis said.
The EU-ETS is a cap-and-trade system, covering energy intensive industries responsible for half the EU’s emissions as well as aviation. It sets a cap on carbon emissions which is reduced over time.
Companies receive allowances to cover their carbon emissions, which they can also buy and sell. As the number of allowances is reduced over time, either demand must fall, or prices must rise in order incentivise action to cut emissions and switch to cleaner fuels.
Aviation will play a major part in driving up prices as, with no technology available to meaningfully reduce its emissions, it has no alternative to buying carbon allowances.
https://www.forbes.com/sites/mikescott/2018/09/03/europes-carbon-market-starts-doing-its-job-of-cutting-emissions-a-decade-late/#357cac7b2171
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