Guest blog by S. A. Shelley: If the world wants to move quickly to a lot of renewable energy, then maybe money laundering is the key to getting it done.
It’s been well known for some time that money laundering is a significant driver in real estate ( see theweek.com and boingboing.net) Such shenanigans with real estate began way back in the 1980s in Florida, with cocaine cowboys literally knocking on home-owners’ doors and offering cash for homes at above market value. From there, it moved to California, Hong Kong and Dubai, Vancouver, and of course London…until a large chunk of high-end real estate was infected somewhat by illicit money. There are of course other means to launder money. Cash flow businesses such as restaurants or car washes have also been havens, i.e., anything that can provide a large, difficult to trace production output and revenues versus costs and volumes of input: Was that 1lb of pasta used to make 5 dishes or 6?
Unfortunately financial regulators and the law are getting better at stopping traditional means of money laundering. For a while it looked like crypto-currency, being beyond the control of nation-states, was going to save money laundering, but crypto-currencies have their drawbacks too, including fluctuating values and, of course, limited means to pass through the large volumes of money, around $10 trillion per year, that sustain the illicit economies in the world. Furthermore, as some governments begin moving towards digital currencies themselves, and removing large denomination bills from circulation, money laundering will have additional challenges in the near future. After real estates, there are diamonds, gold and high value art or collectibles, but those, too, are coming under increasing scrutiny, and there are only so many Picassos or Rembrandts to go around.
So where can ill-gotten gains be laundered? What industry is there that offers huge production volumes with some variant transparency? Renewable energy. That’s right, I’m proposing that renewable energy is a great way for elites of dubious background to transform money, makes even more money and at the same time help the earth.
Consider a 1 GW solar plant. Did it produce or 1.0 GW that day or was it 1.05 GW? Or an EV battery: did it discharge 10 MWH or 11? Those variable margins are a great place for money launderers to sneak in and clean up while helping the earth clean up its emissions mess. It’s not quite that simple, but it’s appealing and probably best to get into the business at the outset, when regulations and laws are still poorly defined. Get in very early in the development phase and there are probably government incentives that are also available to guarantee a certain cash flow, payback or tax credit for a time. The argument for laundering through real estate is that people need a roof over their heads and will pay dearly to have it. The same argument can be applied to energy in that people need to stay warm and need to be able to move about to their job and such, and thus will always pay for some form of energy.
Investing in renewables at the outset also avoids the problem of investing in legacy coal or oil industries, namely any forthcoming liabilities for past externalities.
Years and years ago, I had an interesting chat with a business professor about investing. He candidly suggested to follow the Mob. “The Mob hires the best and brightest from Harvard, Stanford and the like. Invest in what the Mob invests.” It remains to be seen whether Harvard and Stanford whizzes are encouraging investments in renewables. I’m all for this, because at this time, if it takes a deal with the devil to save the earth, then let’s worry about the details later.
Vive l’Alberta Libre!
With the news that this past July was the hottest month on earth since record keeping 140 years ago, satellite images of the Amazon and State of California burning, the most powerful hurricane ever measured in the Atlantic Ocean east of Florida, carbon dioxide emissions to the atmosphere rising again to near record levels after a brief leveling, and Swedish teenager Greta Thunberg’s stirring call to action while staring down both Donald Trump and Vladimir Putin, climate change has been a hot topic in 2019. While the scientific community remains nearly 100% aligned that global warming is driven by the burning of fossil fuels, a relatively small, yet powerful, group of naysayers fights the science. Who are these very powerful people, and why do they fight? One common characteristic – they are mostly baby boomers = the generation of Americans with an insatiable appetite for consumption and a strong resistance to change.(more…)
Guest Blog by S. A. Shelley: In the matter of the transition to renewable energy, there are some nations and governments which do it quite well, e.g., Denmark, some that don’t appear to care, e.g. the US, and then there’s Canada. Canada claims to be very concerned about the environment and about the need to dramatically cut carbon emissions and transition quickly to a fossil-fuel-free economy. However, it has failed on a number of fronts and will most likely continue to fail.(more…)
Every week seems to bring another attack by the Trump Administration against laws and regulations that have been instituted by prior administrations to protect the environment and fight climate change. The most recent is the campaign to deny California the right to set stricter automobile emissions standards than federal limits. It has caused yet another uproar among environmentalists and liberals and glee among climate change deniers and conservatives and will undoubtedly lead to many years of legal battles. But what is reality? In fact, this move, and all the others, are just meaningless actions that do little more than pander to the Administration’s fossil fuel campaign contributors and excite the hardcore Republican base ahead of the upcoming elections. The reality is that technology and market forces are driving the world inexorably and at an increasing pace toward a renewable energy future, despite the last-ditch efforts of the President and his supporters. Let’s look at some of the higher profile actions.(more…)
Guest blog by SA Shelley: No doubt about it, the world runs on energy (and money). Nearly 80% of all the world’s energy is still provided by coal, oil and gas though this fossil fuel proportion of the energy mix is now shrinking and in just under 10 years, the world’s energy mix will look markedly different. I hope that in addition to coal, oil and gas the OWOE reader is familiar with some of the other large energy sources such as nuclear, wind, solar, hydro and wave. Here at OWOE we try to bring useful and relevant knowledge and ideas about energy to the reader, and one big potential and virtually zero carbon energy source that has been overlooked by a lot of people including the OWOE bloggers is geothermal energy. Well no more. After a bit of research this OWOE blogger has gone gung-ho for geo for good reason.(more…)
Guest blog by SA Shelley: The amount of energy consumed to light our modern civilization would surprise most people. In the not too distant past, residential and commercial lighting consumed about 20% of all electricity produced. Basically, every fifth coal, nuclear or gas turbine power plant built was used to just to light cities, factories and homes. However, since the advent of the LED, there has been a remarkable drop in the amount of electrical power required to light our modern world. Depending upon where you live and work, recent data suggests that residential and commercial lighting now consumes only between 7% to 12.5% of all the electricity produced. That’s a drop in energy consumption for lighting by almost 1% per year over the last 10 years. The good news is that the energy for lighting continues to decline and will only get better as more LED lighting replaces inefficient technologies (see Fig. 1 and Fig. 2).(more…)
Guest blog by SA Shelley: I try to avoid writing about oil too often for three reasons: 1) the oil markets are well observed by more than enough highly paid analysts, 2) the changes in energy technology and distribution are more interesting (and still largely misunderstood by highly paid analysts) and 3) I try to build anticipation for my oil industry supply and demand blog in January of each year. But because of some recent peculiarities that have arisen in the oil markets, a short blog about oil now seems warranted.(more…)
SA Shelley, WH Luyties: OWOE is a small site, with just a few dedicated and experienced staff who follow energy technologies, economics and policies. Occasionally, OWOE bloggers dare to forecast energy developments that tend to be contrarian, and, much to everyone’s surprise, they have been very good at forecasting trends correctly and ahead of much larger analytical organizations. Are we that good at more quickly analyzing publicly available information along with some insight and soft analysis? Or do we have access to the dark arts such as whiskey and voodoo?(more…)
Guest blog by S. A. Shelley: In the past few months, a lot of people around the world have probably wondered about why oil prices have again quickly and significantly fallen. I’ve argued in a prior blog at the beginning of this year that the world is awash in oil supply. Even though oil production is collapsing in places like Venezuela, Iran and Mexico, is in danger of collapsing in more places like Angola and Libya, and is politically constrained in places like North Venezuela (Canada), there still is plenty of oil to supply most global markets. The plentiful supply of course comes from surging production in the U.S., ample production in Russia and new offshore fields coming on stream in places like Guyana and Brazil. If you couple increasing supply with softening global demand for oil, you get such downward pressure on oil prices. So what’s with this nonsensical sport of shooting tankers in the Gulf of Oman?(more…)
I live in California. That gives me a front seat to virtually every new initiative and trend related to saving the planet, whether it is about turtles and plastic straws, banning single-use plastic bags, electric vehicles, or green energy. Although not the first state to adopt a Renewable Portfolio Standard (RPS), California has been one of the most aggressive in its timetable for replacing fossil fuel based electricity with carbon-free. In 2018, California updated its RPS to the requirement to achieve 60% of electricity sales from renewable sources by 2030 and 100% by 2045. Of course, California’s aggressive push toward renewables has triggered a wide range of reactions. For example, Michael Shellenberger of Environmental Progress has been pushing the idea that California’s electricity rates are significantly higher than the rest of the US (see Figure 1) and rising significantly faster because of its dependence on renewables. His culprit is renewable energy and his solution is to keep nuclear plants open. In contrast, Roger Sowell, who blogs about renewable energy issues, argues that California’s unique climate, geography, and large population make such differences to be expected.(more…)