What to do about jobs in the US here and now

As millions of people suffer from unemployment, it amazes me how reluctant so many "experts" in the US are to think out of the box. People doing "creative" thinking about jobs in the US still mainly assume that $1 of government funds buys x jobs, if it's spending, and y jobs, if it's a tax cut, period. Why don't we have the sense to ask what KINDS of activities generate much higher x and y? In Japan, by contrast,

(http://www5.cao.go.jp/keizai1/2009/1208_taisaku.pdf) people have carefully tabulated the initial economic stimulus (prior to multiplier effects) versus government expenditure by type of activity. The "three pillars of eco-friendly..." activity was well designed to generate three times the stimulus as ordinary government spending or tax breaks for the same deficit effect. The multiplier effects would also be better than they are for "cash for caulkers" and the like, because the stimulus is all focused on sectors (automobile, construction, steel) where spending generates employment rather than inflation or imports, much more than random spending would achieve. If we really cared about jobs here and now, we would put almost all our new jobs effort into our own version of the "three pillars program" -- perhaps paid for by a gasoline tax, whose effect on US jobs would be far less. One pillar should be: $3000 per car "cash for independence" , for buyers of qualified cars to stay in effect until quarterly data show US car sales back above the rate of 13 million per year; a "qualified car" should be defined as qualified for a credit under section 30B of the IRS code as amended by the proposal at www.werbos.com/oil.htm.

It's important to note that mpg as such is not the best measure of PROGRESS towards the goal of OECD becoming independent of OPEC. In technical terms, a "U" function is not a "J" function; as another example of this principle, the rational market price of oil is not just the marginal cost, because there is a "Hotelling rent" term reflecting the reality that the oil market is not a static system. Like the Japanese, we would also be wise to fund the two other pillars (incentives to encourage purchase of eco-friendly new buildings and appliances).

But -- this is not an endorsement of other aspects of the Japan stimulus package.

=============================

Further details: the distinction between U and J is very fundamental in dynamic systems theory, in "ADP" and

in the field of intelligent systems. For some tutorials and citations, see www.werbos.com/Mind.htm.

Perhaps I will someday post the Japanese web site as amended to include some English translation,

at www.werbos.com/energy.htm.

Copenhagen -- the morning after

Mice learn from their mistakes -- but do humans? The follow on

from Copenhagen will be an interesting test case, with ramifications far beyond

CO2.

In the animal kingdom on earth, humans have a unique ability to say to

themselves "the operation was a success but the patient died." I see

a WHOLE lot of that kind of thinking, in various disguises, in the wake

of Copenhagen. Lots of people who are firm in their convictions that THEY at least

did the right thing, whatever the outcome may have been. But someone

once said: "By their fruits you will know them." Our best hope for gaining from this experience would

be if ALL the major players thought twice about what THEY THEMSELVES could have done better.

Can we remove the beam form our own eye? Are any of us really justified in feeling we did the right thing, after this outcome?

I can imagine Senator Inhofe raising his hand, saying he got exactly what he wanted.

(Putting the kabosh on the whole thing.) But he certainly can't take all or even most of the credit

for the outcome. And does he really believe that the WHOLE reality we now face -- with

serious but unpredictable EPA regulation required by court order, wth a hodgepodge of state regulations, and

an ever less predictable international situation -- is the best outcome we could get here?

Again, even for him, is it not a case where the operation was a success but the patient is dying?

According to the Financial Times yesterday, the head of Shell Oil was very upset at the outcome

in Copenhagen, and very very vocal about that. Shell and BP were supporters of the US

Climate Action Partnership program, which is basically a bit too far to the left for my tastes --

but, like them, I agree it is a great tragedy that the world is basically doing nothing coherent to discourage CO2

emissions as such, and that the failures in Copenhagen and in Washington have left all kinds

of confusion in their wake which get in the way of actions on oil dependency (a far more urgent

threat to the world economy) and investments in electric power and other sectors (important to jobs,

among other things).

Not only Shell and BP, but heads of the largest electric utilities have testified over and over again

that we need some resolution and some action on this issue.

But: did they not all shoot themselves in the foot, to cause this situation?

There are two main problems here -- the problem in the US Senate, and the problem in the

international negotiations. Even the most optimistic gameplan of the international Bali team

required that the US Senate pass a cap-and-trade law before an international treaty could be signed;

thus the Senate side requires analysis first.

Shell and BP SAID that they wanted this certainty here, and some action on a problem they

agree is real... (and maintaining EU-US trade and cooperatoin is also of some importance to them)...

so why the API ads every night telling people to "oppose the tax"? Why do people hear only

one voice from the oil industry? That voice, direct to the voters, had a chilling effect on any

more efficient and more rational response to this issue.

Likewise -- why the threat from the the electric distribution companies that they get their hundreds of billions

of dollars sent direct to pay them off, as part of the deal, or else they run the same kind of ads?

If anyone thinks that that kind of gigantic payoff scheme doesn't lose them a few votes from folks

who remember their principles at least a little... what can one say? There are times when I wonder whether

Exelon is really a member of EEI.

Why is industry channeling so much money to certain integrated campaign funds which turn around

and demand total adherence to extreme ideological positions, positions which are a major source of

the big mess here? (Lack of bipartisan evolution of more moderate ideas on climate is not

ONLY the fault of the Democratic leadership here.)

----------------------------

Roughly speaking, I see four clusters of ideas floating around in the Senate.

There is the ideological right, which holds that it's best to just say no in the purest, most extreme terms --

even if that means nothing rational gets passed at all, and we're stuck with the hodgepodges.

There is the position... I can't help saying Defenders of the Integrity of the Caps (DICs).

That's a lot more precise than the term "ideological left," because it is 'way off to portray

the Natural Resources Defense Council (NRDC) as being to the left of Friends of the Earth (FOE).

There is the highly rational moderate Democratic position, exemplified by Senator Cantwell,

who has (says the press) recently introduced an alternative cap and trade bill, about one twentieth the length

of the Kerry-Boxer or the Waxman bills. I haven't checked to see whether she included a narrow

price collar, as FOE has righly recommended. I haven't checked to see whether her way of sending dividend checks back to ordinary households would include the kind of statistical formula that would exactly compensate for

different impacts on energy bills. (That's easy for people who know algorithms, but not everyone does up there.)

I haven't checked to see whether it would order the executive branch to compute border adjustment taxes

as exactly as possible to maintain a level playing field with producers in natoins with none or much lower

fees for CO2 emissions. I would go to http:/thomas.loc.gov to check right now, if that were still within the scope of my job... But in any case, the Cantwell bill is certainly a much more promising start than Kerry-Boxer, and these

three crucial features would not require 100 pages to add. None of them is a crass payoff, like most of the

free allowances in the older bills; they are all principled ways to maintain some equity and predictability here.

Our best hope to move forward, in my view, would be more support for that kind of moderate position,

from both sides of the aisle, with industry pushing hard to call off their most extreme dogs in both parties.

If I were the President, instead of trying for a rerun of the health care political mess under less advantageous

conditions, I'd be working hard from all sides to try to create advantageous conditions for this best case realistic outcome. I would hope that the unpleasant experience of Copenhagen would help him realize that just going along with an unrealistic game plan does not lead to the best achievable outcome in the end. And I'd certainly

be thinking a whole lot about Senator Baucus... who is not entirely a stranger to Senator Cantwell.

But I'd work hard to keep it balanced, to open the door to principled mainstream Republicans like Murkowski

and Lugar early in the game.

In my view, a rational Republican response would actually be more rational and better than the Cantwell

bill -- in its own right. But the Cantwell bill would be easier to pass (passing a bill IS the only

alternative to all kinds of awful stuff, which I learned more about in my last month up there),

and it would make it easier to ratify a new and better treaty down the pike, if we ever get that far.

What is the rational Republican response? If I were working for a Republican office on the Hill

(as I actually was for a few months at the start of 2009), I would now look to Senator Murkowski as the Great White

Hope. Or else find someone else willing to make similar points.

Murkowski has said many rational things in hearings. She also introduced an amendment to try to eliminate EPA's authority to regulate greenhouse gas emissions from stationary sources. That amendment failed -- as I would

have expected -- because it was too far to the right; it would have required 51 senators -- including many Democrats --

to take a position which would be rightly seen as opposing greenhouse gas control in general.

But what about the alternative here:

http://www.werbos.com/E/EPA_limitation.pdf ??

This kind of amendment -- like Murkowski's original amendment -- ought to be

a clear step up for any principled Republican in the Senate (given that not

a one of them would vote for Kerry-Boxer). If any Republican wanted to maximize the probability of no federal

discouragement of CO2 emission whatsoever, this bill would give him that. In a way, it is an agreement to

a kind of FAIR COMPETITION -- a Congressional vote on just how high the user fee should be allowed to go,

as an alternative to a murky and less honorable process. And it would be guaranteed to be simpler than Cantwell in any case. I do hope there would be at least ten principled Democrats who would be willing to vote for it too,

since it provides a more efficient market-based discouragement of CO2 than even the Cantwell bill.

But of course, the question is: WHEN? If a Cantwell type bill got to the Senate floor, and did not pass,

that would be the right time for a bipartisan group to put this forward as an alternagtive either to nothing or to even more time spent on this issue (with even more confusion and uncertainty and delay).

---------

In actuality -- neither a Cantwell type resolution or a Murkowski type resolution

will ever be possible in the real world if the groundwork is not well prepared

for them.

===========

AFTER one or the other passes, the best hope for international carbon discouragement

would be a straight US-China treaty, negotiated bilaterally, with provisions to

let others sign on when and as they choose, and pro visions intended to encourage

others to join -- to a REASONAble degree. It would be a simple carbon price to

replace the existing law, and nullify border adjustments between the signatories.

Big parties in Copenhagen DON'T WORK. As predicted.

But must run. Maybe it's premature to say too much right now about realistic

treaty efforts.

Best of luck to us all,

Paul

final inputs to Senate climate bill

Tomorrow (Thursday) will be the last day of fact-finding hearings at the Senate

Environment and Public Works, which will then proceed to debate and vote the

first really official climate change bill from the US Senate.

Today and yesterday, I heard about 40 people (including about a dozen senators) give

their views of all these issues. So many things to think about!

A few days ago, I posted a message "climate deniers and Adam and Eve."

One of you quietly noted that there are true believers on the left, not just the right.

That is absolutely true. I have spent a lot of time on the delusions which threaten useful action from well-meaning people concerned about global warming. I felt I needed to say something about other delusions, simply as a matter of balance.

Should I say that the crazy left is just as much a threat to competent action as the crazy right?

It is not quite so simple. After all, is the Natural Resources Defense Council (NRDC) to the left of the Friends of the Earth (FOE)? Many of my friends would be horrified to hear -- I actually feel more in harmony with the recent actions of Friends of the Earth than of NRDC, on the climate change bills. When Lord Monckton and FOE agree on the need to try to prevent dangerous financial manipulation, who is left and who is right?

==============================

I have been pleased to see that more people in Washington understand a key point I have been trying to make:

NET JOB creation in the next 1-3 years depends a whole lot on how much money gets spent on investment in the electric

power sector. That, in turn, depends a lot on CERTAINTY. I have worked with electric power people involved in planning decisions; bnefore making big investments, they have simple models, which lay out future streams of costs and revenues.

IF THEY DON'T KNOW what the numbers are, or what the best technologies are, it's hard to invest. The basic theme seems to be that the greatest job creation would be with a DEFINITE carbon price (combined with eliminating

other EPA and state regulation of CO2); next best a simple cap-and-trade with a narrow hard price collar; worst of all,

nothing passes at all in the Senate this year.

Regarding the collar...

I've had a chance to think still more.

There is still a lot of debate about "technology." To cut CO2 by 80% in electric power and manufacturing (let alone transportation), does the technology exist today to do it, at no more than $30-50? The EPA forecasts basically say no;

they predict that CO2 porices have to rise to $177 per ton by 2050 to meet the targets. I am far more optimistic.

In particular -- I have seen technology from new companies like Calera and Aurotra, which I have great faith in (even being a VERY tough skeptic on unproven individual new technologies, as trained by NSF and sad experience) which could

recycle ALL of our flue gas within the $30-50 rpice range.

IF SO -- why would I support a hard price collar so much?

Several reasons.

One is "political" -- an honest kind of politics where we respect teh fact that other people have other knowledge bases, and we have some obligation to consider their viewpoint/base -- especially when we need their votes. If we can do the job within $30 or $40, why not simmply have a firm permanent simple cap on allowance prices at that level?

(Shoud it be $30 or $40? I hope.. an unconventional idea... that the majority leader could

get unanimous consent to vote on the bill first, and let majority rule choose betwen two collar ranges.

BUt if $30 is all we can get, why not? NOT TO RISE in future, except maybe to $40 over 20 years.)

We lose nothing in the real market... but we suddenly are able to place simple hard upper bounds on the total cost of the

system, which people can verify in simple arithmetic. Baucus yesterday said "we need to limit the potential damage of

global warnming, but also the potential damage of the bill itslef." Exactly. Why not, when we have every reason to believe that $30 or $40 is enough to do the job -- in industry and electric power? (In tranbsportation, even Waxman would not be enough to do much, which is why we need to get past this stuff and move on to www.werbos.com/oil.htm as soon as we can.

Or, better, find a way to do it in parallel.)

There is another reason.

The sad fact is that unbounded government programs have a tendency to create "Jurassic Park" inefficient

systems, which get in the way of the new efficient ways of doing things. And even big companies will often go for

big obsolete nonsense, if hey've been too close to the government trough, if the the nonsense is at least well known,

and if they can get someone else to pay for it. If we don't have a price collar, it may limit the growth of the low-cost safer new alternatives, which we really need to take over the entire market here. Especially if we want China to

have reduced emissions too. Without that, any pretense of sincere environmentalism is phony.

It's not phony to pass a US law, but it is phony to design US actions and international negotiations without

aiming as hard as we can for a situation where US and China pay teh same carbon price, and small efficient US

companies help China process its flue gas inexpensively, far better than our government-based fat cats could ever do.

==========

Dan Reicher of Google testified today that we need BOTH a clear, simple carbon price (worldwide as soon as possible),

ALONG WITH "sectoral measures." I'm glad that that message has been more and more understood and respected.

The kind of "sectoral measures" which make most sense are efficiency standards and such,

special encouragement of renewables (most notably R&D), and really effective action on transportation.

For transportation, Google praised the kind of MPG standards EPA is now putting through... and the cap-and-trade bill..

but said we need new action on (1) incentives; (2) battery research; and (3) smart grid, so that new plug-ins can

interface well with the grid.

Google doesn't know all the most cutting edge technologies I have seen at NSF and such... but they are a whole lot closer to reality than some of the things we hear in Washington! At www.werbos.com/oil.htm, I do include exactly the kinds of incentives which Toyota and flexible vehicle people have asked for. I was glad to hear google and others try to explain

to Washington -- tax incentives renewed every other year simply don't cut it, when it's industry whose investments you are trying to stimulate. IF oil gets permanent incentives, why not the stuff we need most to get new action on?

As a long-time IEEE guy, who worked hard to get the message on plug-ins to DC many years ago...

iI find it embarrasing when people say "why don't we just go all-electric, and make life simple?

Don't you respect those electrical engineers?" That's a weird accusation for an IEEE guy to try to

cope with .. and it really is embarrassing when electrical people, like conservatives and leftists, have to contend with people

out of touch with reality even within our community. We all have to control our true believers.. for even OUR truth can bnecome a lie when it is pushed too far.

In my view, electricity really will take over 75-100% of the market for miles, in time, if we just have a level playing field.

So why fight for a level playing field? Why give equal play and encouragement to biofuels, to shale gas... and even

such odd things as hydrogen fuel cell cars and new coal liquids (the latter subject to some constraints)?

Several reasons.

First, there is some honest politics. Not the politics of a coalition of robbers, trying to divvy up taxpayer money to give gifts to preferred groups. More like a coalition of knights of the Round Table, who support an honest, chivalrous competitoin, where "may the best man win" -- each believing they can prove they are the best man or woman.

Second -- to get the most security and environmental benefit for whatever economic price we pay...

the optimal trajectory between now and 2050 or 2100 is actually quite complex. In a century,

the US shale gas will run out... but in the meantime, it can hjelp us a whole lot to do better with our problems

with the Middle East and the risks of $4 or $8 gasoline. A well-designed market can calculate that trajectory better than even the best of us algorithm people could. Picking JUST ELECTRICITY starting nw is almost certainly not

the optimal trajectory. Energy markets have always been complex ecologies, with many niches, and that's what we should expect EVEN IF we go full speed ahead to minimize OPEC dependency.

Likewise with nuclear, wind and solar.

==============

There was a WHOLE lot more said.. worthy of further comment...

but it's been a long day, and tomorrow will be long too. And who reads this far anyway?

Best of luck,

Paul

P.S. www.werbos.com/oil.htm DOESN'T say much about Google's intelligent grid point...

but it gives a link to a paper which goes 'way beyond what Google is doing there.

But that requires a totally different kind of action. If we can get a carbon price, AND do what's in oil.htm,

maybe then we'd be ready for the totally new set of regrouping and surge needed to reach what we

need in the brain-like intelligent grid area. Not this year, sadly... except for some background engineering eforts and some related prerequisites which are far from sufficient.

Peter Brehm of Infinia had a genuinely interesting talk on the most important source of renewable electricity -- solar thermal using "dish" reflectors and Stirling engines to convert heat to electricity. www.werbos.com/energy.htm has some further information about this technology, which has more hope than anything else to really beat small natural gas units for the daytime peak power market worldwide. I did have some contact with the NASA Glenn people he got teh Stirling from... but I wonder if he knows about the patents out there for preventing hydrogen embrittlement in the engine, key to using new materials to double the efficiency of the Stirling itself and cut costs in half yet again? Sandia claims that their 30.1 percent efficiency in a Stirling is the world's record for solar, so I would imagine we could still benefit from getting it up to 55.

Could Terminator II come true? A true story

Background: a friend on a listserv suggested I should really collect my curious life stories in a book some time. I said I had thought about it, and decided against, in part because no one would believe it anyway...

He asked why, and I replied with an example:

==================================================

===========================================

Thanks much for the flattering comparison, Bob!

But no, I wasn't really thinking about Da Vinci. I was thinking about

hundreds of implausible stories.

So I should give you an amusing example. This story is one I **HAVE**

told to a number of people; it is more normal and mundane than most. But

even so, some would object, and I tend to doubt whether it belongs in

print. (I will not name names, but could. The naming of names is part of

the problem.)

I call it my "Terminator" story.

====================

Circa 1991, the International Joint Conference on Neural Networks

(IJCNN) was held in Seattle. Boeing was a major player,

so they arranged a couple of VIP tours of their aircraft plant with

lunch in the executive dining room.

Prior to that lunch, I was alert for any opportunity to really push

forward the neural network field.

I was delighted when I met a guy from McDonnell-Douglas who was

wrestling with the very tough problem of

how to assign missile interceptors to incoming missiles when there might

be hundreds of both. This was a problem that none of the usual baby

shortcuts could solve... so I spent a few minutes happily showing him

the flowcharts for how it

could really be addressed effectively, and planned to get back to him. I

was also delighted when I met a youngish Afro-American

researcher highly credible in neuroscience, tryuing to make connections

that would help him find real functional explanations of how things work

in the brain; I pointed him towards a new engineering research group I

planned to fund, and again intended to follow up.

Then at lunch -- one of the Boeing guys said: "There have been so many

of these new emerghing technologies like neural

networks down through the years. Someone really ought to do some kind of

study to help us predict which ones will really pan out and deliver and

which ones won't." As it happens -- back in those days I was Program

Director for two areas at NSF, neural networks and Emerging Technologies

Initiation (ETI). So I couldn't help repeating what I had heard from a

previous ETI program director: "Actually, we have done several studies

like that at NSF. One of them found a number of important predictors.

Some were things you would have expected -- like fields based on a new

breakthrough, or new crossdisciplinary connections. But some were a

little surprising -- for example, science fiction. Technologies subject

to good science fiction somehow mysteriously prospered more than you

would have expected. Bad science fiction predicts a strange withering.

By 'good' and 'bad,' I don't measn quality of writing; I mean whether it

is depicted as something good or bad."

Suddenly a loud groan came from one of the Boeing people. Me: "Why did

you just say... UUUUUGGGGHHHH?"

Him: "Talk about bad science fiction... have you seen Terminator II?"

Me: "Not really." (The title didn't sound like my kind of thing.)

Him: "Well, you have to. After what you just said, and what you are

doing, you really have to. It is your professional obligation."

Me: "Well, OK.".... (Then discussion of Star Trek and Data and other

subjects..)

Back in the office on Monday, I was very pleased to start the week by

signing off on an SBIR grant which basically started/created a new

company called "Neurodyne," which would finally create the first firm

base for a new stream of neural network technology, using a robot arm,

as the initial testbed application. And on Tuesday night I saw the movie.

As I saw the movie... it began as the human race was about to be

exterminated all because some yoyo told the missile defense people about

how to use intelligent decision-making neutral networks. Oops. The evil

robot about to destroy our last hope looked like a 50-50 morph between

me and the guy who really set up Neurodyne. Oops. Interesting to see

such a nice familiar face in a different role. And the key Afro-American

scientist working with Neurodyne in the movie was a dead ringer for the

guy I was just putting in touch with them. And it all started with a

ronot arm and a chip, and I just signed off on the robot arm the day before.

One person I told this to last week asked: "Didn't you wonder right then

whether someone was spying on you? It's so improbable?" My reply: "Maybe

for a millisecond.. but of course the movie had to be made long before

the actual events. Yet another major part of the movie was information

being sent back through time, and a woman who had access from the future...

and as soon as I put THAT part together, I really became creeped out."

I was well and truly shaken up for a few days, but gradually calmed

down. I told myself: "There is no way that computers could outsmart

humans to that extent, even using my new designs and methodologies,

without a really huge amount of sheer computing power. Von Neumann

estimated that brains operate at something like 10**15 or 10**18, and it

now looks more like something on the high end. We are 'way away from

that kind of horsepower know, especially when you think of the extra

horspepower needed to emulate variable connectivity." It really would

require a new chip as well as the robot arm project. So I calmed down...

to some degree.

Until about Thursday. On Thursday, I picked up the phone... and heard a

thick Germanic voice which really did sound just like Schwartzenegger.

"Hello, Paul!" (Picture the Schwartzenegger tone of voice.) "I am

calling from LA to tell you some good news.

We have this great new chip, and we are working with Neurodyne. We would

like to come and brief you on the new chip."

I probably need to start censoring at this point, even though it really

becomes much more entertaining and improbable after this point. It's

probably safe to say that I pushed hard for a new effort which funded

this extremely competent group to develop a new more near-term chip, for

use in solving air quality problems in cars, which was almost widely

deployed... until the Bush Administration got rid of the new air quality

regs which drove it. I later ran across a guy from the ballistic missile

defense organization, once by accident while riding the Metro and once

by accident in Circuit City, who happened to have a laptop handy with

powerpoint and video of how they were planning to use the more powerful

chip and showed it to me impromptu

right then and there. (But what I am leaving out...! And how many of

you have been innocently riding a Metro, a bit tired,

on a routine day to work, suddenly seeing a tall guy in a blue uniform

who could be right out of the movie, suddenly pop up a laptop and show

you real world terminator movies there in public?)

By the way, many years later, the guy who really started Neurodyne told

me that they actually intended to name the company "Cyberdyne," but

changed their minds after they saw the movie.

Last I checked, the uberchip and its use in missile defense are all gone

now, and the key guy doesn't even work

for the Air Force any more. Space-based missile defense is itself on a

very far back burner, apparently impossible for economic reasons if

nothing else. I used to think Sarah Connor reminded me a bit of my wife

in some ways... but really, my wife

is far more competent in military matters and training and sheer sanity

and willpower than Sarah Connor.. though I'm not sure how much that

helps. So far as I know, Neurodyne is defunct, with all its principals

scattered to the winds (though doing fine, no

one hurt).

And yet... this week... when I see very, very vividly and directly how

unlikely it is that humans will be able to get their act together on

issues like CO2 (due in great part to sheer mental deficiencies)... or

the threat that some of our cures just might be far worse than CO2

itself... while I see renewed powerful trends that could bring us to

even more powerful uberchips, and resurrect our technical capacity for

space-based missile defense... and all the cyber vulnerabilities

depicted in the final scene of Terminator 3 do seem quite real... as

missile defense people both in the US and China are fully aware of

one-on-one missile interception technology more advanced than what

Neurodyne intended to do with the robot arm (and more advanced than what

computatoinal neuroscience would dare to consider in most cases, with a

couple of possible exceptions in southern California)..

not taught or even hinted at in any computer science program anywhere so

far as I know... there is still some

reason to think that certain possibilities are not entirely off the table.

I don't know whether Dubai's nanoneuro chip program survived the drop in

oil prices. But cheer up, oil prices are well on course to come back...

Even so, my intuition tells me that new nuclear explosions killing lots

of people pose a bigger threat of

human extinction.

------------------------------

Anyway, enough old stories. If you don't believe it... well, you can

understand why I hesitate to consider

throwing in less believeable stories. What good would it do? I wonder.

Best of luck,

Paul

space crises now and in the past

I have heard a lot of people trying, and failing, to "sell space" this past month.
In situations where even if they "succeeded," they would have failed to really advance the cause of human
settlement of space. This reminds me of another life story. Ken Cox has urged me to write up
at least a few of the wild personal experiences which have influenced my life and plans... so OK..
maybe just one more. It's just my point of view of what I experienced.... and then I'll mention
how it shapes my views of where we are today. Please forgive if your experience has been different.

THE SIMPLIFIED VERSION

What I tell children...

(1): NASA once decided it would build the fastest airplane ever in history -- Mach 6 in
a true airplane. But how? One man, who ran an engine department, proposed that we build an engine without a body.
A woman, who ran a body department, proposed that we build a body without an engine. A friend of mine,
whom many called "the last technical guy in NASA headquarters," suggested the esoteric idea that maybe we need an engine and a body both.
Congress chewed him out for trying to micromanage the fine people in the NASA labs, and had him purged.
Then the woman with the body won, and....

(2) At the big AIAA conference on hypersonics, in Chattanooga that year, there was a large but closed meeting
in which the leaders of all the world's hypersonic development programs presented their progress. Most of the national representatives,
like the Germans and French, were very upset that all they had to offer were paper studies or limited experiments; no one had funding still to
actually build an airplane. The great exceptions were the US and Japan. Representing the US was a small local company which
had got started on funding from me at NSF, which had a flyable Mach 6 body -- but no engine. Representing Japan was the "Atrex" engine,
designed by a visiting Russian guy to go from Mach 0 to Mach 6 IN ONE ENGINE. The Japanese in their talk stated that their number
one problem now was: "How to test the engine. Do we put on top of a railroad car, or shoot it out somehow, or put it on a fast moving string?
If anyone has ideas, please tell us; it is a big problem." The US team said: "We have a real problem here with how to test this Mach 6 airframe.
We have found a place in Oshkosh which makes small engines for lawn mowers and model aircraft. We can use it to test stability
and control at low speeds, which is really a central issue with this kind of body, but the special Mach 6 capability is hard to test right now."

So -- sitting in the back of the room, I summoned up the courage to raise my hand: "Please excuse me... I am not an aerospace engineer, but I have a question.
If YOUR big problem (pointing to Japanese) is how to test your engine, and YOUR biggest problem is how to test your body at Mach 6... has anyone
considered putting the engine in the body to test them both?" What a breakthrough! What out of the box thinking! Great excitement in the room.
Everyone adjourns, with some joy, to the restaurant, where members of the Japanese and US teams and I sat in the tables in the front area...
But then, the lead public relations guy for the (then defunct) NASP program strode in with a military bearing and looked down on us all and said...
"You all have been engaging in SPECULATION." (People started visibly squirming and twitching. It reminded me of the Congressman who won an election once by
accusing his opponent of matriculation.) "How do you even know whether this engine would even fit in that body? Until that issue
has been proven, anyone who even talks about this is engaging in SPECULATION, and you know what happens to people who do that..."
(People started looking really terrified, and edged away from me, and looked at me with expressions saying: "Why did you do this to us? We are in trouble...")
Since people were looking at me, I replied: "There is no real need for you to just speculate about this. You say you want to know whether the engine
fits in the body or not. Didn't I just see some exact blueprints, showing just how big the airframe and the engine are supposed to be? Wouldn't it
be posisble just to compare the blueprints, to see if there would be a fit? Don't you have them right here?" Wow -- another breakthrough, and
more excitement. Especially more excitement when it turned out that it would be an exact fit, between the full-scale 23 foot version of the body
and the engine. It would take maybe $3 million, they said, to make the full-scale 23 foot metal version of the airframe (I can't help thinking $30 million
really) ... and then we could have real flights at Mach 6, maybe within a year or two... still in the twentieth century. The Japanese and the SAir Force started to discuss scheduling details to
get this started.

But then another guy stood up... not so military, cooler and suaver, with darker flashing eyes... "Hold on a minute here. You guys are engaging
in international negotiations on a matter of top level importance. You know what that means, don't you? As it happens, I am a Friend of Bill.
The White House is very, very concerned about making sure that we don't just sell our shirt in deals with Japan. In any case, you wouldn't want
to be caught making deals with Japan that haven't gone through White House approval, would you? Before you do anything at all
related to this, you need to wait until we have a meeting at OSTP. And no one (he looks at me) will be invited except at White House choice."
(No red herrings like this to be introduced from outsiders like me. No out of the box thinking allowed.) Out of the closed door
meeting came the verdict -- to use a Japanese engine would be an insult to the fine aerospace companies we have in the US. We will do the project, eventually...
but we will wait for the US companies to develop their own Mach 6 engine. And of course we are basically still waiting....
we successfully defended ourselves against the threat from Japan (??)...

Children wonder: "How could grown adults think it's weird or complicated to put an engine into a body? How could
they miss something so obvious?" Well, folks, I don't see that adults are any more sane today than they were then.

BEYOND THE CHILDREN'S VERSION

Of course, I have left out a lot of details and names here. I don't want to cause more
embarrassment than necessary, and I don't want to bore you with a huge volume of details.
I should note that the Japanese did not have enough knowledge of advanced control to be able to
actually run the Russian design beyond Mach 4; using our technology, we could have run it at Mach 6, but instead they
redesigned it (after the Russian guy left) to run at Mach 4, with their technology. DARPA did have a program to try to get to Mach 6 another way,
but recently cancelled it. The airframe did perform well at low speeds; the control demo was a kind of landmark,
and key technologies developed by that company are playing a major role, quietly, in some operational missions.
The researcher we funded who developed the ideas behind the airframe has done quite well in the meantime -- but more
so last year than this year. The guy who got purged may have been the only front-line serious engineer in HIS DIRECTORATE
at NASA HQ; he still has a job, hundreds of miles away... migrating from bodies to engines...

Earlier, in the early 1990's, I had a lot of contact with the NASP people, and the people working on NASP.
For example, the Handbook of Intelligent Control was edited by two people working at McDonnell Douglas;
see http://www.werbos.com/Mind.htm#mouse. I couldn't post their chapters, by copyright law. One of the areas they studied
was Thermal Protection Systems (TPS). If NASP had lived up to initial hopes, it would have been been a real breakthrough in the cost of access to earth orbit;
however, it never "worked" even in simulation. It failed to "close on mass" because of realistic assessments of the weight of active thermal protection systems.
(NASP planned to use TPS to keep the craft from melting at Mach 20 -- a key issue.)
My friends, White and Sofge, quietly showed how they could solve this problem, by using intelligent control to manage
a lighter weight TPS, with more advanced valves. But the program got cancelled before it was possible to really explore such things,
and White found a better paying job in the microchip industry. Lightweight TPS remains an unproven idea, beyond the reach of the more usual technologies,
and would have posed problems with robustness in any case.

At the two AIAA hypersonics meetings I went to, I also did what I could to scout out who knows what. (For NSF, it is especially important
to know who would be a truly expert reviewer... and of course, it's nice to know where the new ideas can be trusted. And to inform people
of funding opportunities.) At one of these meetings, I met Ramon Chase, who emerged as perhaps the very top thinker in the network
of really serious thinkers... connected, of course, to friends who themselves are important thought-leaders and creative real-world engineers.
Ironically, at our first meeting, he warned me to be on guard with respect to women like a certain woman I was then beginning to
get close to... who is now my wife. That's a fun story too, but neither here nor there. It reminds me that we can disagree with someone on one issue,
without losing general respect or respect for their skills in other areas. (By the way, the Friend of Bill warned me too. "You could have a great job
in our White House group, if you would just give up on her." They even introduced me to a certain beautiful conservative woman in Alaska...)

WHERE WE ARE NOW

We are still stuck with "engines without bodies" and "bodies without engines" even today. Short of hope for "divine intervention," it now looks
more than 90% likely to me now that humans will never be able to settle any part of space because of what this does to us.

Bernard Shaw once said: "The reasonable man adapts to his environment. The unreasonable man adapts his environment to him. Therefore, all progress depends
on the unreasonable men." Our best remaining hope for humans to ever settle space lies in that small minority who would be willing to buck the
flow of local social pressures (pressures WITHIN the space community) to try to sell engines without bodies and so on. The rational man, unlike the reasonable man,
maximizes the probability that we get where we really need to go, even though it's a lot easier, socially, to join the lemmings headed over the cliff..

Ironically, the real problem is with the bodies.

Folks like SpaceX and Kistler (what's left of them) understand that re-usability is essential to whatever hope we have of getting the cost
of access to Low Eearth Orbit (LEO) down to $200 per pound, without which we simply won't have economically sustainable large-scale
energy from space. If we get all excited and psychopathic, and try to sell the lie that Space BS can be a meaningful part of the world energy economy
based on what we can do with heavy lift expendable rockets alone, we won't get anywhere. Energy economics is not like some kind of Adam and Eve cult.
They know how to do arithmetic. If large parts of the community get great visibility as a kind of Adam and Eve cult... well, I saw what forces led people
to coin the term "space cadet," and it won't do us any good at all to get that term re-invented!!!

But re-usuability and COTs are a great step up from 100% reliance on rockets which have no hope of ever getting us to the price points we need.
George Muller's classic NASA reports from the 1960's remain valid even today... maybe even more valid now than they were then...

The hypersonics community did a whole lot better than the space community in recent years in getting more funding. Mach 6, perhaps a little more
that mach 6, is possible without TPS and without the "hot structures" we need to get to escape velocity (in reusable rockets or airplanes).
But even Mach 6 programs have died ... of political mismanagement and "greedy darts" people outsmarting themselves?
The great white hope and justification for hypersonics remains the hope of really high speeds.. which is impossible without
the advanced type of TPS ('way beyond what they are able to achieve, and risky in any case) or the very best of the old hot structures technology.
In sum -- they are actively selling engines without bodies, and getting away with it in the corrupt world we seem to live in...
even as we are very close to losing BOTH of the two hopes for having the kind of body we would need for fully reusable
airbreathers or rockets.

I am tempted to say more... the present situation also has some comic aspects... but I will refrain at least for now,
until and unless a certain kind of nonconstructive feedback appears...

The weird esoteric concepts we must learn to understand today are just as simple as the idea that we need to
have an engine in the body. We need to understand that energy from space has no hope of being "real" in the mainstream market
if it costs $1 per kilowatt hour. The only halfway serious lifecycle cost estimates say that we can get to the right neighborhood only if access to LKEO
gets to $200 per pound. We need to understand that if we crash out vehicle after just one flight, it can't ever be cheap,
any more than crashing a car after every commuite to work. We need to understand that we can't reuse a rocket or an airplane if it just melts
every time we use it. We need to understand that it WILL melt, if we do not cool it or use a body which can survive at high termpertaure ("hot structures.").

But of course... there are clever industry lobbyists looking for any angle who will try to claim they have it, who don't. The Aerospace Corporation work, for CIA,
which really tested the three leading US candiadtes for full-up hot structures -- in work which Ray Chase had 100% access to --
found that only the Boeing test article really passed all the tests. Ever. And the Wright-Patterson center (the only US place which has full testing
capabilities) confirms what Chase has told me about this. If we lose this Boeing technology -- as we are likely to VERY soon and might have already done --
and if we don't revive the POSSIBILITY of the high-risk advanced lightweight TPS --

then we melt.

And we are already far along with melting... every day that goes by...

If we win the political wars in ten years, and have no physical way to implement what we won in Congress...
we still get nowhere.

All the quantum metallurgy in the world will not help us, if we don't have the structures, and if we lose
the basic foundation which cost us billions upon billions of dollars to get. MANY billions of dollars worth of new 6-1 reserach could get us back..
if the people were honest, competent and motivated enough... but that seems much less likely right now than our remianing hopes
of reviving the Boeing hot structures technology. Not to mention the systems level technology in high-speed aerospace design,
inherited from the successful old black programs, which is also crucial even to reuasble rocketplanes. In my view, reusable
rocketplanes are basically a PREREQUISITE to any hope of reusable airbreathers. (Data and experience turn out to
be important, especially in real-world airfarme design.) And low-cost access to space is probably a prerequisite
to any real hope of (massive) "space elevators" and such.

Best of luck to us all...


=================

Let me add that low-cost responsive space lift requires the same technology...

as does any realistic hope for human activity in space large enough to permit a real economic "takeoff effect." If the US doesn't do it.. India has the most vision of other nations here, but they can't even replicate what White and Sofge did with C-C materials, let alone the advanced Boeing technology

climate deniers and Adam and Eve

In reply to a posting from someone else the other day, I noted quickly at the end that I view climate denial as something basically similar to defending the idea that we are all descendants of Adam and Eve.

That was too strong in some ways, so maybe I'd better explain what I had in mind.

First -- I do have respected friends and even close family in both of those two camps.

Second, I have seen much higher levels of awareness of science and the scientific method among climate

deniers than among folks who defined the idea that we are descendants of Adam and Eve.

Nevertheless, there is some similar sociology and psychology here. Both on the left and on the right, the scientific method often gets overwhelmed by people trying to find arguments for believing what they want not believe. And sometimes they stretch a lot.

Many climate deniers, being part of a minority, have had the virtue of being able to view the majority community

from a greater distance, which lets them observe valid and important problems. For example, Lord Monckton,

the most prominent of the climate deniers, argues that the pressure for climate laws owes a lot to big bankers who expect to make lots and lots of money, effetively ripping off the public, through unnecessary complexity. That is a valid concern. The Friends of the Earth, among others, have listened to that concern because they, too, are not so bound by

the usual political correctness. I was at a briefing they arranged about a month or two ago, where the head of the "White Knight" investment fund explained in detail just how teh Waxman Act would lead to gross manipulation, causing the price emission allowances to gyrate even more than the world oil price. With world oil, such gyrations and uncertainties are hard to avoid (but posisble -- see www.werbos.com/oil.htm); with emission allowances,

they are basically silly and unnecessary, in my view. In fact, at that very briefing I noticed the Friends of the Earth talking to Senator Cantwell's people -- and this past week, Senator Cantwell announced quite proudly that her new bill

will contain restrictions on trading like what White Knight proposed. So in the end, we can still learn some important things from the climate deniers, even if the hypothesis they are arguing for is highly improbable.

The climate deniers have also said some very valid things about groupthink in science and the need to work hard

to make sure that minority views are treated with full respect. In the past, in EVERY field of science where I

have looked really deeply into what we know, and engaged in real independent thinking -- I have always found

the kind of problem which the sophisticated climate deniers claim ... real aberrations in conventional wisdom,

due to some kind of sociology such as the desire of an ingroup to get more money. If you look at www.werbos.com, you will see that I have different views from conventional wisdom across many, many areas...

informed minority views which have passed peer review, and occasionally perturbed the mainstream a bit...

But it's really true, when I started working on climate change issues seriously just this year, I began by

re-examining the conventional wisdom about global warming. I was fully prepared to come out totally against that idea, if the logic of the critics would justify such a position.

There was a time for just about two days, after reading a paper by Happer and hearing of one guy from MIT,

when I was working for a Republican senator, when I actually thought I might go into the deniers camp... but after decent due diligence, I couldn't. (Happer is head of the Marshall Institute, a professor at Princeton, and perhaps the most officially credible US climate denier. The Republicans on the Environment and Public Works -- EPW committee of the Senate chose him as their one best witness early this year on a hearing on the impacts of climate change.)

Happer made two claims in criticism of the mainstream -- a claim about how the models oversimplify the treatment of different frequencies of light getting into the atmosphere, and a claim about the treatment of water vapor.

To evaluate the claim about frequencies, one needs to know what is actually IN the models. To do due diligence

(a key part of real scientific thinking!), I contacted a person I met at a conference on mathematical algorithms

in 2004. (AD2004 -- you can see a citation posted at http://www.werbos.com/Mind.htm#mouse if you are a perfectionist.) This guy is a strong independent contrarian thinker, who appeared in the video attacking Al Gore's video,

and he had his hands on the real codes. Turns out -- the codes really do distinguish between different frequencies,

and are based on careful analysis of the saturation effects Happer suggests they ignore. They have also considered all sides of the water vapor issue for decades.

Of course anyone who hears even the most baby debates about global warming has heard statements like

"ten of the twelve hottest years on record have been in the last twelve years," "the average temperature has actually been going down on average over the past ten years" and "sea level has been rising even faster than the most pessimistic models predicted." People making those statements often make it sound as if it is a startling thing which invalidates the IPCC study or which heralds the end of the world. However, even the executive summary of the IPCC report STARTS OUT by enumerating these kinds of data, and then asking how we can make sense of them and what we can learn from them. I do not endorse all the public statements made by people who worked on the IPCC report,

but the report itself is a remarkable and unique example of showing real respect for diverse views, far more than I usually see in science.

On this list last week, we were asked our views of a climate denying piece posted earlier by an EPA worker.

It turns out that that worker was the subject of a kind of minor but loud scandal a few weeks ago. Republican senators at several hearing showed it was proof that EPA was not living up the standards of science which it claims to uphold.

It's an interesting story.

As best I recall, the mainstream EPA's bureaucracy really had repressed this guy -- as bureaucratic systems have often done, in many agencies, under both political parties. The new head of EPA intervened to get much closer to

a more proper treatment, aftger the fact. **I STRONGLY AGREED** with thjose folks who said that we need to work a whole lot harder to ensure proper treatment of minority views, and engender more of a true "free marketplace of ideas" ala John Stuart Mill, even for federal employees. Back when I worked for DOE, I saw some standard procedures

on the discussion of ideas which are very, very damaging to the process of honest dialogue and discovery. We need to

remember to fully respect the rights of those we disagree with -- and we need to work hard to really live up to this principle, even when it may be difficult.

On the other hand, as part of that process, I put in several very intense hours actually studying that paper in detail.

I can understand how people well-versed in the basic results of climate science, but not in the scientific method (or perhaps overly dependent on bureaucratic corporate culture) would have overreacted. I have a long analysis of the paper back in my files at work... but maybe you do not want to hear more.

Aside from citations to other stuff (like what I previously looked at or like manifestos at conventions of climate deniers),

and aside from general rhetoric, the paper mainly gives details about the water vapor issue. It does go beyond Happer's testimony on that point. The one section which uses peer-reviewed work focuses on "eta," a relative humidity parameter. As best I recall (it's been a few eekks..) -- it stresses that the models assume an eta of one, but that at suffiently high altitudes eta is less than one. However, in most of the atmosphere, it is more than one. It suggests that if eta were slightly less than one, the implications would be huge... but that's silly. The rhetoric implicitly assumes the usual definition of eta in its reference to the literature, but assumes a completely different definition (absolute rather than relative humidity) when it deduces "the implications." Using two different definitions of the same variable or word in different contexts is one of the very most common forms of human psychopathology.

Now in all fairness -- life has taught me to be very careful here. There are many times when two opposing cultures, A and B, each put forward their "ten best papers" or "ten top experts," when those from A are many times better than all

of those form B... but B turns out to be right. I have seen that often enough. Sometimes A simply has more money to work out the details. Sometimes the B culture has its own high priests which do not do real justice to what science says objectively about their position. Sometimes irrational personality effects cause a division type A people and type B people, when objective reality doesn't fit the psychological categories. But in this case, with climate change...

the paper from EPA and the reports by Happer certainly tend to reduce what little probability I would ascribe to their position. What's more, I have seen valid efforts by IPCC people to actually ESTIMATE what the probability might be,

after the fact, that human actions have no significant effect on climate; they do not say it's an impossible position, but only that the probability is no more than 5% that the denier position could be right. Since all probabilities are conditional, in the end, I find myself simply agreeing with IPCC on this.

By the way, that same IPCC presentation also said that "extreme climate damage" is also in the 5-20% probability range. The normal estimate is about 5% damage to world GNP by 2100. That's about as bad as the present recession -- which is bad enough. And there is that high end risk. It calls for rational action, but not hysteria.

It IS hysteria when, on occasion, certain environmental lobbyists (not Friends of the Earth!) get paranoid about eocnomists trying to have a voice on climate change. FOR A GIVEN COST TO SOCIETY, the benefits to

the environment are MAXIMIZED if laws and treaties are "Pareto optimal," if they create an efficient balance between

economic and environmental goals. No one in this world has infinite money. For those of us who recognize that there are budget limits out there, at some level or another... those who oopose Pareto optimal arrangements are not true environmentalists, because they are blocking the possibility of arrangements which maximize the benefits to the environment in the real world. A market-based approach to carbon regulation, relying on a simple carbon pollution fee,

is part of a Pareto optimal response... though cap-and-trade with a narrow collar (advocated by Friends of the Earth!) is almost as good, for that part. "Sectoral measures" which address multiple objectives and market imperfections

(like oil monopoly) are also important.

Best of luck,

Paul

climate talks moving towards trainwreck & way out

Hi, Marc!

I have spent more time on this carbon issue than on anything else this year, here at the Hart building.
It's pretty complicated, and I don't represent anyone but myself on this, but I agree with you that it's important.

As well as frustrating.

Not long ago, I heard that the chief negotiator for China said in the Bangkok negotiations (then the latest prep for Copenhagen) that we are on course for a 'trainwreck." The Carnegie endowment had an open discussion between major participants a week ago -- and they made it clear than no one expects to see the kind of binding treaty they once hoped for. It's now all damage control and PR.

Discussions of Copenhagen always remind me of something Bernard Shaw once said:
"The reasonable man adapts to his environment. The unreasonable man tries to adapts his environment to him. Therefore all progress depends on the unreasonable man." (That was in his Revolutionists Handbook, though after 40 years I might have mixedyup a word or two in memory.)

Reasonable negotiators are all trying to fit within the Bali framework. But in my view the Bali framework was fundamentally flawed. The framework itself is responsible for the near-impossibility of useful progress right now.

What would it take to get real progress?

A few of the negotiators are arguing that we could at least aim right now for concrete "sectoral' arrangements on energy efficiency, renewables and carbon sequestration. That's not bad, but I would replace "carbon sequestration"
with transportation fuel, and go for new national laws or agreements like what I propose at
www.werbos.com/oil.htm.

BUT MORE THAN THAT -- for the international negotiations on carbon control as such, we need to make a paradigm shift from Q to P (or from x to lambda).

In ordinary language -- we should give up trying to negotiate separate binding quotas or targets for individual nations.
That won't work, for many reasons. It's like the old command-and-control quotas for separate companies or states, which were thankfully replaced by a cross-cutting market systems WITHIN the US for acid rain and such.
EVEN to get to first base, and develop a workable foundation for future negotiations if necessary, we should be aimed
at an international agreement on PRICE, NOT QUANTITY. Some environmentalists say we need to focus on quantity "results' -- but right now, they are on course to getting no useful results at all from the negotiations on carbon control as such.

It may be hard... but I could envision a very simple treaty in which all ratifiers agree to pay a common carbon price,
meeting the minimum standards in the one-page attachment here. If the **US** climate bill included these kinds of standards, it would be easier to actually get to such a treaty. (Likewise, there should be no US aid to
other countries under cap and trade EXCEPT as contingent upon ratification of such a treaty.)

China might possibly agree, because $20 per ton would not hurt them nearly as much as not signing,
under these conditions. But would China change emissions much at $20 per ton? IN my view, they would, even though they don't realize it themselves. The carbon capture and geologic sequestration technologies are NOT likely to come on line at $20 per ton, and they also entail some very big possible risks to the environment so far as we know at present.
But if they persuade Congress to give billions of dollars to EPA to upgrade China's technology, it won't help China so much as their negotiators seem to imagine. On the other hand, a $20 carbon fee in China would give great incentive for
certain new, more advanced and aggressive high-tech companies to pay more attention to
the market in China, and help China clean up at a price they didn't realize was possible.

In sum... the situation for international carbon control now looks impossible, but there is some hope ouot there if only
people could be "unreasonable" and get out of the Bali box. If people really believed their lives were at stake, they would
not hesitate to stick out their necks and do just that.

Best regards,

Paul

P.S. There is some technical game theory implicit in what I am saying here. Focus on what teh common price should actually be changes the incentives dramatically, compared with a game of posturing.

More on oil dependency -- confession about a possible zinger

Buried deep in my proposed bill, in the bottom paragraph of www.werbos.com/energy.htm, is a proposal
for a $75 per barrel support price for "crude oil" made from coal, so long as the CO2 emissions during the making
of the fuel do not exceed 20% of those embedded in the fuel itself.

As with many sentences in the proposal, there is a whole lot of thought behind it (unlike some other bills
where the pages per thought are greater).

One key thought -- there is a company in Pennsylvania, CoalStar, which has developed a very credible breakthrough technology,
to produce four barrels of crude oil per ton of coal (about twice its best OECD competitor, and much better than China's
best). Having studied the matter in some detail, I believe their claim that they would most likely be able to
produce oil at break-even at $50 per barrel, in their first large-scale commercial plant funded by normal private venture capital,
after an initial $10 million demo plant to test it out.

What would happen if the US reserves of coal instantly became fungible to crude oil at $50 per barrel?

The truth is, I felt a moral duty here to tell the one engineer I know at Exxon federal relations about this,
because it's a HUGE investment opportunity, and it could have huge benefits in helping us survive the next few very difficult decades.
It would be a huge help, in parallel with natural gas busses and trucks, plug-in hybrid cars and biofuels, in minimizing the delay time
between now and the time when we simply do not need to import oil any more.

I was disappointed that the engineer could not get anywhere within his company. Probably it was hard to argue for "coal to liquids,' when many
people without an engineering background think "been there, done that" -- when it was a case decades ago of inflated claims for
technologies producing less than half the amount of oil from the same coal! It requires some understanding of (or respect for) engineering
and technology to detect when things change, AS THEY DO OFTEN ENOUGH, even though most claims of breakthrough do turn out to be bogus.
I did do due diligence on this one. If they can risk hundreds of millions of dollars on a 50-50 drilling exercise that
would only offer hope of six months worth of US oil demand... why not $10 million on years and years worth of crude oil supply, right
here in the US, where we don't need to send the money to madresas or apparatchiks?

But $75 is in the bill.

Most likely, oil will be getting up to $75 ANYWAY by the time a new big plant could be built. But that may not be obvious to the financial people,
and the elimination of that risk could be a huge boost to getting this technology started.

It is GOOD to get this started?

In the first place, regarding CO2, it would be about the same as the OPEC oil it wuold displace on the world market. No gain
on CO2, but no loss either, at least not until we get to zero world use of fossil oil. That isn't exactly tomorrow.

In the second place, if this were PART of a larger energy independence bill, that ALSO accelerated the longer-term sustainable alternatives and strengthened the US economy in general (to make it more capable of the many tasks it is called on for), the net long-term value would still be very positive.

If it allows the oil companies more time to make a more successful transition to being sustainable energy companies...
that would be great.

Quakers worry about slavery, but they also try to find win-win solutions or Pareto optima whenever there is any hope
at all of doing so. If progress can be made without the world falling into war, that is much the preferred way.
It is a strong commitment to find that kind of solution, when at all possible.

I wonder whether CoalStar will end up in Poland? Or in Dubai? It's a shame that Exxon did not recognize a huge possible lifeline when
it was up for grabs...

Best of luck,

Paul

P.S. Again, of course, this does not represent the views of any of the organizations I have been working with.
I am TRYING to follow through on Quaker values as best I can...

follow on to oil dependency - Brazil find and siddhis

Good morning, Arnoldo!

It is always especially pleasant for me to hear from you and Rosa, because of your great and unique efforts to be in touch with socioeconomic reality and spiritual reality, at the same time, with the same intensity.

Your thoughts deserve much more detail than I can afford this morning. But some quick thoughts, first on the

Brazil oil find --

-- The Financial Times ran a story a few weeks ago about the Iraqi who saved Norway. Having seen how much other nations were damaged by the discovery of oil in their land, he worked hard to create at least one example of how a nation and people can do it right, to avoid that damage. Maybe he is the person who should be invited to speak to

the top levels of Brazil today. (I shudder to think what could happen if Brazil grew its own Cheney.

It reminds me of FGeneral (Florio?) of Florianpolis, and the analogy between Brazil's old south and the USA's old north.)

And then an X-rated section which I ask people to please ignore if they have strong idoelogies...

=========================

Arnoldo:

Dear Paul,

It is really interessting to disgress about what type of " natural " resources come related to what type of develoment. I guess this also happens in other dimensions. Seeking Siddhis or pschyic power were considered as risky and wrong approach for spiritual development. The cas I remmember now is Devadtta in the time of Buddha who wanted to be his sucessor by all means ( being his cousin ) and for that , he asked some of The Arahats around Buddha to teach him some siddhis. He lost himself again. The same happen during the Mahabarata when some teachers were using their powers to gain control , but could´nt overcome Krishna´s Pandavas team.

" ..You are the Salt of The Earth, The Light of The World "( Mt5, 15-16 )

Many people in the global dialogue need to remember that "money economies" are not a synonym for "capitalism."

Money has been a near-universal phenomenon in human society for millenia now. Thus there are many concepts

in mathematical economics which can HELP us understand aspects of history which go far beond capitalism.

In fact, when organization X gets Y dollars revenues, and spend Ys dollars of that money either to buy and control slaves, or to buy and control oil-rich land or government official... that isn't exactly what Adam Smith or Marx or Walras had in mind in defining "capitalism." Also -- the AMOUNT of money going to control land or government officials (or OTHER government officials) has a decisive effect here; the GROWTH in slavder circa 1800, and the growth in real oil

prices, can convert a major political problem into an overwhelming tyranny, if it is not prevented. The proposed measures in the last paragraph of www.werbos.com/energy.htm are intended to put a cap on that growth before it is too late.

The flow of money is actually just ONE EXAMPLE of what we sometimes call a "credit assignment system," in the study of intelligent systems. There is a kind of more universal mathematics at work here, of which mathematical economics is just one branch or subset.

At the end of the day, life experience has taught me that there is a lot of truth in some form of the "Gaia hypothesis"

or the "omega hypothesis," that there is a kind of 'invisible' system of intelligence on this planet of which we all are part. (If Hazel's old friend, Barbara Hubbard, were on this list, I would expect her to elaborate.). Instead of flows

of money, it is based on another kind of flow, which people all over the world have groped to name and explain.

I have seen such words as "prana," "grace," "charisma," "qi," "tao," "karma," "luck," "tama" and "stuff"..

and "jing" and "shen"... used to name this flow, or the various branches or "currencies" of it.

(Added later: and "mana" and "the light" and some extensions of "cathexis" and "catharsis.")

As with the money economy, the flow of credit can be misdirected, for a variety of reasons, but on the whole it seems to be far less vulnerable to the sorts of gross manipulation and monopoly and theft effects we see with money

(native American myths notwithstanding). The main source of misdirection is simply a lack of understanding.

If we believe that A causes B, and it doesn't, our sincere belief may nonetheless cause credit (or blame) signals

to flow from B back to A, until or unless we or others learn better.

The case of siddhis is especially tricky. Actually, the part of www.werbos.com which deals with world religions has sections on Marxism and on Buddhism, and a page on siddhis, which relate to some of the details. The exploration of siddhis is a rightful and important part of the process of LEARNING, which is as fundamental and as positive as things can get. Societies which try to prevent the growth of all human capabilities are as perverted and unnatural as those which tied up the feet of Chinese women in past centuries. And nature will not abide such things lightly. A lot

of the excess materialism in the world today is a natural human spiritual reaction to the excesses of some religions... and vice-versa. At the same time, however, misunderstanding can lead to bad objective results in the world when

learning proceeds in the wrong order; it is like the old story of letting toddlers run across a crowded street before

they understand the dangers. And of course, misunderstanding of the nature of siddhis can lead to the most common risk, the risk of getting nowhere and learning nothing but psychopathic illusions.

(Added later: while many "Christian" churches warn against developing talents, Jesus was quite clear on that subject, and on opposing the oppression of women in general. And he warned how those with other motives might twist his words. He who has an ear, let him hear.)

All for now. Must now go buy food for the family after an unusual week...

Best regards,

Paul

oil dependency -- analogy to slavery versus salt

Every once in a while, when dialogue becomes real and deep enough, true feelings and thoughts

emerge more clearly. Sometimes that happens over beer after a long meeting, but it can happen

even in serious public discussion.

The other week, at the National Defense University conference on energy and security, some

of that happened.

How I really think about this oil dependency problem:

1. The most important problem, even more than the revenue transfer now and in the future from

nonOPEC nations to OPEC nations, even more than resource exhaustion and worst-case scenarios,

is the large-scale political implications of humanity's dependence on fossil oil in the ground.

2. There are some really deep reasons for these problems. Anne has given us some colorful examples of where

your gasoline money goes, financing oppression of women which in turn tends to create nations full of rootless

unemployed young males with nothing better to do than join Al Qaida. The editor of Foreign Policy magazine had a very solid long article recently showing how oil money has more and more hurt the nations receiving it (perhaps with the single exception of Norway, which is now under pressures

of its own to lose its advantages). The underlying problem is that a larger and larger input requirement for crude oil

has involved activities to control the people and land where the oil in the ground is located; more and more money flows

into the function of control over people and land, as opposed to productive functions like refining and distribution and biofuel production,

where human empowerment and creativity are more essential factors of production. That's true, regardless of who performs the direct control function.

3. Historical analogies are really important here. In my view, our dependence on fossil oil is similar in many, many ways

to the economic dependence on slavery as it was growing circa 1800. The economic role of slavery once overshadowed everything else.

Those who tried to do good by simply ignoring it were in many ways simply ignoring reality. By ignoring the chief obstacle to

progress in their time, they were basically ignoring reality. As a Quaker, I empathize more with that example (and know much more about it) than

I do about the "salt industry" example that Anne and Gal's new book talks about (though perhaps I really ought to study that book -- Turning Oil Into Salt -- to learn more).

There was a recent movie on Wilberforce and the Quakers who were successful in getting slavery abolished in the UK long before

it was abolished in many other places -- but that only happened after many, many years of effort and a lot of public ridicule, funded

of course by the vested interests. Those interests worked very hard to mobilize their power and money against the core threat to

their control, by spreading the idea that it was not "realistic" or "practical" to abolish slavery, or that it would be a huge threat to the economy of the UK.

ONLY AFTER NATIONAL SECURITY ISSUES came center stage, did the final breakthrough occur, within UK itself. But even so,

the UK ended up doing quite well.... The US did less well; the power of the Southern states made it harder to abolish slavery, and we ended up

with a vey costly, bloody civil war. I occasionally tell my friends from old Southern families: if the South had won, you would

now be as well off today as the Dominican Republic and Haiti; there are times when "winning" is "losing." The same things goes with dependenvcy

on oil in the ground.

I really wish I could put more energy into issues OTHER than dependency on oil in the ground. There are plenty of

other life and death issues, where I personally have greater comparative advantage. One of the big problems with oil dependeny is that if we take too long (and waste too much resources) in doing what we have to do, to get to sustainability in that area, we may simply blow it on other issues. And, no,

I am not talking about issues where government control is the main issue. I am thinking more about things like technology, science and

fundamental understanding... But if we don't move faster on oil dependency, the rest may be for naught.

------------

Regarding salt... 90% of what I know about historical salt industry... is the kind of thing you can learn wandering around the Yew Gardens in Shanghai.

They were built by a guy who may have been the greatest salt magnate ever (depending on your metric). But the vibes were not at all

like those of Halliburton apparatchiks or of a fundamentalist madressa. They were more like a cross between GE (with a long history of its own)

and the more positive-thinking early settlers of Philadelphia... salt, like tea, was used in part by China to buy some horses it needed,

but it seemed to be a progressive kind of activity, so far as I could tell... again, in limited experience.

I am NOT proposing that we talk more about slavery than about salt, since it may upset some people. But I do think the analogy feels more exact.

Best of luck to us all,

Paul

How to get energy breakthroughs which change the game

DOE has recently issued a "request for information" which basically asks:

"How could new research from our new agency, ARPA-E, have the maximum benefit to larger national goals,

including energy security, greenhouse gas reduction, and prosperity in general?"

This is an extremely important question, because -- as Secretary Chu recently told us -- new technology has the potential to change the game here far more than all the rest of what people are doing. Thus I worked pretty hard to condense and put together

all the best of what I know about the answer, relatively briefly. For a brief summary, and links

to the details (including the request itself), see:

http://www.werbos.com/E/breakthrough_energy_research.htm

I did want to list DOD as a potential partner to DOE and NSF in the specific new activities, but

certain colleagues (NOT AT NSF) asked me not to name any other agencies until and unless they express interest.

setting carbon price to avoid gross manipulation and risk

At 11AM last Friday, there was a public briefing at the Senate Visitors' Center with three speakers – Michelle Chan of Friends of Earth (FOE),

Tyson Slocum of Public Citizen (and an advisor of sorts to the Commodities Futures Trading Commission, CFTC), and Adam White of Wall Street (head of http://whiteknightfxi.com/system.html) . They addressed the same issues of market manipulation with allowances and offsets that the Energy Committee discussed, but arrived at different conclusions.

White said: under Waxman-Markey, allowances prices would be guaranteed to rise at least 5% in value every year, and would be bankable forever. Under those conditions, Wall Street is guaranteed to flood the market with far more money than the core emitters provide, and create incredible volatility. There is some analogy to oil – but it would be far better if price discovery for present allowance prices were not perturbed by Wall Street, and if Wall Street were limited to two functions: (1) providing finance for actual clean energy projects; (2) creating a futures market outside of the allowance market per se, regulated by CFTC, and largely restricted to trades over exchanges.

All three speakers called for narrow price collars, to prevent speculation, and avoid the situation in Europe where excessive volatility made it hard to get the needed real-world investments. Strictly speaking, narrow price collars could be adapted, perhaps by a formula which raises them when the US is behind its reduction targets, and lowers them when we are ahead.

All three said we should limit banking to a year or two, because the net effect of banking is to increase speculation and volatility. The speakers have all worked on regulatory issues surrounding world oil prices – but they say that even the best regulatory solutions for the price of oil as such are of limited power, and that we are better off simply avoiding volatility altogether in the price of allowances as such. They also recommended adding one critical word in Waxman Markey: instead of saying allowance trading is open to folks who are NOT covered entities, make it covered entities only.

They said that the acid rain cap-and-trade system did not include offsets and had no significant involvement by noncovered entities.

Chan repeated FOE’s position that offsets – at least international offsets – should be reduced as much as possible, or,

better, eliminated. Under the projects-based approach to offsets, a project is a PROMISE – a kind of derivative, with all the risks that trading in derivatives implies. Credit Suisse has already started to package POSSIBLE offset projects in a bundle,

before any approval, using the same risky procedures that were used with mortgages, leading to last year’s economic meltdown.

White cited a recent Goldman-Sachs analysis of Waxman which pointed to four really big winners:

(1) Exelon and Entergy, because of their heavy nuclear portfolio and the way the allowances are written;

(2) Chicago Mercantile Exchange (CME) and ICE international exchange… because of the large volume of speculative trading expected. But, he said, there would be three other big winners they chose not to report – Goldman Sachs itself, J.P. Morgan and Morgan Stanley, because those banks would run the unregulated over-the-counter trades where most of the money would change hands, and where their insider information would let them get a big edge.

Everyone agreed that Wall Street is like a “Houdini,” that could not be kept out in any case. Chan: if we can’t keep them from the party, we can at least make the party (allowance price setting as such) less attractive to manipulation and fraud,

by making it AS SIMPLE AS POSSIBLE with the minimum possible insider aspects. She praised the Cantwell bill.

White noted a lot of internal conflicts of interest getting in the way of a rational market (especially at the five big winners),

and noted that a lot of the people who used to work for Enron have moved to those companies, taking similar business plans, discussed in recent conferences he cited.

Slocum of Public Citizen said we really should never lose sight of the really important milestone which matters here –

setting a global price for carbon.

White then said that preventing manipulation and fraud for a truly global cap-and-trade system would be nearly impossible, as their recent experience with the world oil market has taught them. He would prefer a global price set by some other process. To reduce problems in the futures markets, he likes a bill by Wyden – not the energy storage bill, but another bill to cut out inappropriate tax breaks for trading in futures markets which provide perverse incentives amplifying speculation.

They also discussed examples of past manipulation and fraud in energy markets, who is investing where and why,

and what kind of people are being hired.

==================================

So far as I know, there is no nation of earth which is really including these issues/possibilities

in preparations for Copenhagen. I have asked many of the people who work on "border adjustments" for the US about putting in EXIT CRITERIA. They all say: "We just want to use judgment about what is or is no comparable."

I would say: "When you go to a store to offer to buy something, do you say 'Give it to me,

and I'll use my judgment what to pay'? The international carbon price is what matters here, and to get to the kind of treaty we need, any US law must be clear and straightforward

about a simple way to turn off these border adjustments (by treaty)." And then... there are crucial details, but not any conversations yet allowing discussion of them!

Could salmon at costco be the best hope for the coal industry?

Seriously.

As some form of carbon fee or price takes hold, many believe that carbon capture and sequestration

(which SOME think is the same as "clean coal") is the best hope to continue the coal industry,

and delay the shutdown of coal-fired powerplants which now provide half

of our electricity. But it basically does not compute. A mere $30 per ton carbon price is not nearly enough to pay for what is $60-$100 per ton in the real world. That's why the folks who really want to do CCS

want a complex system of "free allowances" (unlike the President, who has called for no free allowances),

in order to provide the kind of double-payment needed to fund that kind of technology.

But in the meantime... what might happen at a mere $20-30 per ton? It would be worth finding out,

before we too far overboard. We should be open to the possibility that a lot

may happen, even without those kinds of side payments to selected "winners."

Among the obvious new alternatives... are the technologies exemplified by two California companies, Calera and Aurora, who have come to the Senate several times to testify, with well-deserved blessings from Senator Boxer. (Calera has links to Stanford, and Aurora to Berkeley, but they are basically neighbors.)

Calera is relatively straightforward. They convert CO2 in flue gas to building materials, and expect they could

profitably dispose of about half the flue gas from coal plants in the US if carbon prices are in the range $20-30. Conservatively.

But Aurora is a bit trickier. They use algae to convert CO2 to hydrocarbons, which can be used as a barrel-for-barrel substitute for crude oil. There has been growing (legitimate) enthusiasm about algae for fuel,

not only for CO2 reduction but for energy security. But the fine points are important.

One fine point I did not know about... only about 35-40% of the CO2 gets into biocrude.

That's a fine point that got missed in the House Act; I thought the House Act gave fair (if grumbly) accounting to algae fuel, but apparently not. It seems that about 60% goes to...

fish food. High-protein stuff. It sounds as if this could be used to support a higher level of aquaculture,

such as the salmon fish farming which leads to relatively low salmon prices at Costco and other places.

And so... I just now checked page 581 of HR 2998, the House Act (just prior to the last minute additions).

It does offer people a choice -- either to cover ALL the CO2 input to the algae (which would be unfair I claim),

or to cover just the CO2 associated with combustion of the fuel produced from algae (which would be fair, and much much less). The point is that fish, unlike cars, are not mobile emitters of CO2 to the atmosphere.

In fact, if EPA were consistent... if it somehow charges "land use penalties" for biofuel production "which encourages people to grow more corn and emit more CO2 in other nations," perhaps it should

offer land-use payments to these fish farmers, who reduce fish sequestration in other nations.

But realistically, maybe all these land use leakage measures should be politely dropped at this time.

Another interesting aspect is that Aurora is using open ponds, unlike some of their competitors,

who use bioreactors. In effect, they are inputting solar energy through the back door, to enhance the fuel.

That's basically a good thing... but it tends to push them towards sunny climates, like Florida, not

cloudy areas where it's more expensive. HOWEVER, that implies a kind of natural complementarity

between Aurora and Calera; Calera could fill in in regions where Aurora is less viable. The bioreactors

may or may not be less far along... but we should be prepared to see more from them as times goes on,

if a decent level of R&D is carried out.

Of course, there are a lot of potential benefits to such technologies all over the world.

China, for example, could use a new low-cost supply of building materials and of protein food.

But I doubt that the Asia-Pacific Partnership will be stressing this kind of technology,

or that these companies would accept the very limited guarantees that companies like

GE have accepted in APPA.

=============

After this posting, someone said that salmon form fish farms has unacceptable levels of PCB.

"Stop buying that stuff from Costco or you will be poisoned." I wonder what Costco would say about that. I don't plan to change... yet. BUt I may ask. HOWEVER: where would PCBs come from? From impure fish food? (I doubt they have old leaky transformers in fishponds.)

If so, this new organic fish food might solve the problem...

preventing Enron disaster in new carbon markets

Many serious people worry that the new carbon markets that would

be created by the Waxman-Markey Act would lead to trading disasters like what caused

last year's economic collapse. The Senate Energy Committee held a hearing on this recently,

but last Friday (September 18) there was a public briefing at the Senate which got a bit deeper into the risk, and what we could do to prevent it. Here is my personal view of what I heard and what it means:

=================================================================

At 11AM today, there was a public briefing at the Senate Visitors' Center with three speakers – Michelle Chan of Friends of Earth (FOE),

Tyson Slocum of Public Citizen (and an advisor of sorts to the Commodities Futures Trading Commission, CFTC), and Adam White of Wall Street (head of http://whiteknightfxi.com/system.html) . They addressed the same issues of market manipulation with allowances and offsets that the Energy Committee discussed, but arrived at different conclusions.

White said: under Waxman-Markey, allowances prices would be guaranteed to rise at least 5% in value every year, and would be bankable forever. Under those conditions, Wall Street is guaranteed to flood the market with far more money than the core emitters provide, and create incredible volatility. There is some analogy to oil – but it would be far better if price discovery for present allowance prices were not perturbed by Wall Street, and if Wall Street were limited to two functions: (1) providing finance for actual clean energy projects; (2) creating a futures market outside of the allowance market per se, regulated by CFTC, and largely restricted to trades over exchanges.

All three speakers called for narrow price collars, to prevent speculation, and avoid the situation in Europe where excessive volatility made it hard to get the needed real-world investments. Strictly speaking, narrow price collars could be adapted, perhaps by a formula which raises them when the US is behind its reduction targets, and lowers them when we are ahead.

All three said we should limit banking to a year or two, because the net effect of banking is to increase speculation and volatility. The speakers have all worked on regulatory issues surrounding world oil prices – but they say that even the best regulatory solutions for the price of oil as such are of limited power, and that we are better off simply avoiding volatility altogether in the price of allowances as such. They also recommended adding one critical word in Waxman Markey: instead of saying allowance trading is open to folks who are NOT covered entities, make it covered entities only.

They said that the acid rain cap-and-trade system did not include offsets and was not open to noncovered entities.

Chan repeated FOE’s position that offsets – at least international offsets – should be reduced as much as possible, or,

better, eliminated. Under the projects-based approach to offsets, a project is a PROMISE – a kind of derivative, with all the risks that trading in derivatives implies. Credit Suisse has already started to package POSSIBLE offset projects in a bundle,

before any approval, using the same risky procedures that were used with mortgages, leading to last year’s economic meltdown.

White cited a recent Goldman-Sachs analysis of Waxman which pointed to four really big winners:

(1) Exelon and Entergy, because of their heavy nuclear portfolio and the way the allowances are written;

(2) Chicago Mercantile Exchange (CME) and ICE international exchange… because of the large volume of speculative trading expected. But, he said, there would be three other big winners they chose not to report – Goldman Sachs itself, J.P. Morgan and Morgan Stanley, because those banks would run the unregulated over-the-counter trades where most of the money would change hands, and where their insider information would let them get a big edge.

Everyone agreed that Wall Street is like a “Houdini,” that could not be kept out in any case. Chan: if we can’t keep them from the party, we can at least make the party (allowance price setting as such) less attractive to manipulation and fraud,

by making it AS SIMPLE AS POSSIBLE with the minimum possible insider aspects. She praised the Cantwell bill.

White noted a lot of internal conflicts of interest getting in the way of a rational market (especially at the five big winners),

and noted that a lot of the people who used to work for Enron have moved to those companies, taking similar business plans, discussed in recent conferences he cited.

Slocum of Public Citizen said we really should never lose sight of the really important milestone which matters here –

setting a global price for carbon.

White then said that preventing manipulation and fraud for a truly global cap-and-trade system would be nearly impossible, as their recent experience with the world oil market has taught them. He would prefer a global price set by some other process. To reduce problems in the futures markets, he likes a bill by Wyden – not the energy storage bill, but another bill to cut out inappropriate tax breaks for trading in futures markets which provide perverse incentives amplifying speculation.

They also discussed examples of past manipulation and fraud in energy markets, who is investing where and why,

and what kind of people are being hired.

==================================

So far as I know, there is no nation of earth which is really including these issues/possibilities

in preparations for Copenhagen. I have asked many of the people who work on "border adjustments" for the US about putting in EXIT CRITERIA. They all say: "We just want to use judgment about what is or is no comparable."

I would say: "When you go to a store to offer to buy something, do you say 'Give it to me,

and I'll use my judgment what to pay'? The international carbon price is what matters here, and to get to the kind of treaty we need, any US law must be clear and straightforward

about a simple way to turn off these border adjustments." And then... there are crucial details, but not any conversations yet allowing discussion of them!