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Weekend Reading 3/25/16

Margaret

A friend of mine has just been priced out of her long-time apartment in Capitol Hill. After close to a decade in the neighborhood, this year’s rent hike was too much for the family budget. She’ll be moving to Lake Forest Park in a few weeks, taking on a longer commute, which will leave her less time to spend with her family.

Last week Dupre+Scott, a local research team focused on apartment and housing issues in Puget Sound, made a presentation to Seattle’s City Council. The duo parsed out the region’s housing trends behind this all-too-common story. Their presentation slides, available here, are info-packed graphics that put Seattle’s housing crunch in perspective, both historically and geographically. One slide showed that rent hikes across Puget Sound last year were among the highest of the last 25 years.

Much of their presentation centered on a remedy to the housing squeeze: focused growth in Seattle’s housing stock over the next four years. Most interesting to me: the region’s two previous building booms, in the late 60s and late 80s, both surpassed existing plans for new building, when adjusted for the size of the economy during each period.

Capitol Hill, you are losing a great community member. Let’s hope this new housing push will keep you from losing many more.

Kristin

Happy people aren’t blind to bad things; they are attuned to good things.

I liked these behavioral science tips for eating better.

And these tips for surviving and thriving in midlife.

Why should people in Rutland, Vermont get four times as much taxpayer money as people next door in Washington County, NY? Because the US Senate is one of the most undemocratic institutions in the world. The Senate gives disproportionate power to people in small states, and they gleefully wield that power to take a disproportionate share of taxpayer money and to unfairly block policies that the majority of Americans want.

Is the 2016 presidential election season getting you down? It’s not just you: America’s two-party system is less democratic, and our mental health is worse, than countries with more effective, more representative, multi-party systems.

Tarika

The Harvard Business Review published findings this week indicating that white women and people of color are penalized for promoting diversity within their organizations. Authors Stefanie Johnson and David Hekman surveyed 350 executives on “diversity-valuing behaviors” including whether they respected cultural, religious, gender, and racial differences; valued working with a diverse group of people; and felt comfortable managing people from different racial or cultural backgrounds. Johnson and Hekman found that “[white] women and nonwhite executives who were reported as frequently engaging in [diversity-valuing] behaviors were rated much worse by their bosses, in terms of competence and performance ratings, than their female and nonwhite counterparts who did not actively promote balance.” Further, they found that “white and male executives aren’t rewarded, career-wise, for engaging in diversity-valuing behavior, and nonwhite and female executives actually get punished for it.” Johnson and Hekman then asked 307 working adults to review a hiring decision made by a fictitious manager, and showed them a picture of the manager. The participants rated nonwhite managers and white female managers as less effective if they hired a nonwhite or white female job candidate instead of a white male candidate. The participants also judged a manager harshly if they hired someone who looked like them, except for when white male managers hired another white male.

Another Harvard study confirmed this week what some scientists have been saying for years: that natural gas infrastructure is leaking massive amounts of methane into the air, increasing the impact of global warming by actually trapping heat in the atmosphere much more efficiently than CO2. The data, collected by both satellite and ground observations, shows that US methane emissions increased by more than 30 percent between 2002 and 2014, “accounting for 30 to 60 percent of an enormous spike in methane in the entire planet’s atmosphere.” Bill McKibben summarizes the findings in an article for The Nation, explaining why natural gas is merely a clean energy illusion. The facts show that if natural gas is the “bridge fuel” to a sustainable energy future, then it is a bridge to nowhere.

Serena

The New Yorker’s Comma Queen discusses gender-neutral pronouns and how to use them, her bottom line being, “I think you should call people what they want to be called… period.”

The Atlantic is taking a new strategic tack in addressing controversial issues like climate change, gun violence, and immigration: asking more questions.

Too Soon to Celebrate the Demise of Jordan Cove LNG

Editor’s note: This article originally appeared on Oil Check Northwest. It it reprinted here with permission.

Earlier this month, in a decision that caught everyone from activists to the Governor’s office by surprise, the Federal Energy Regulatory Commission (FERC) rejected plans to build a massive liquefied natural gas (LNG) export terminal, known as Jordan Cove, in Coos Bay, Oregon. The project also would build a pipeline cutting across more than half the state.

“Because the record does not support a finding that the public benefits of the Pacific Connector Pipeline outweigh the adverse effects on landowners, we deny Pacific Connector’s request…to construct and operate the pipeline,” the FERC order read. FERC’s permit denial meant that project backers—Veresen, Inc., a Canadian energy company, and pipeline operator, the Williams Partners—would not be able to begin construction of the Jordan Cove Energy Project.

FERC’s judgment was heralded as a long-awaited victory by those who have been fighting the project for more than a decade. Lost in the headlines, however, was its window for the project still to be built.

Opposition to Jordan Cove LNG

Leading up to FERC’s decision, it had not been an easy road for Jordan Cove. Its two backing companies failed to negotiate deals with 90% of residents along the 232-mile pipeline path and would likely have relied heavily on federal eminent domain law. This practice of seizing private land (and compensating owners accordingly) for a project deemed in the public interest is a controversial legal tool, and one that is especially reviled in rural Oregon.

Residents of Coos Bay and the surrounding region also raised serious concerns. The small city would see up to two massive oceangoing vessels per week carrying LNG to Asia, raising the risk of spills and increasing traffic for the trade dependent region. Jordan Cove would be Oregon’s single largest source of pollution, fostering both local and global concerns. Furthermore, natural gas pipeline leaks recently have become a terrifying prospect for many after California’s Porter Ranch disaster. Outside Los Angeles, a well couldn’t be capped for 4 months, and after locals became sick in droves, all 11,000 residents of nearby Porter Ranch had to be evacuated.

The decision against Jordan Cove was an important  victory, but developments this week show that project backer Veresen is gearing up for another fight.

How the project has already come crawling back

Jordan Cove’s LNG would be shipped entirely to Asia, where demand has been notoriously volatile. FERC’s decision made it clear that because demand for LNG in places like China, Japan, and Korea has been so unstable, the project’s viability was in question. FERC made it clear that demand for LNG wasn’t strong enough, and therefore, the project’s benefits did not outweigh impacts to landowners and the environment.

But FERC left Veresen a chance to reapply for permits if the company could prove significant demand for LNG. Unfortunately for concerned Oregonians, that’s exactly what happened this week.

On Tuesday, March 22, Japan-based Jera Co., Inc., signed an agreement with Veresen to purchase 1.5 million of the facility’s estimated 6 million tons of annual LNG capacity. While details of the proposal are still being finalized, this announcement puts Jordan Cove right back into the mix.

Big hurdles remain. Oregonians still have the same concerns, and opposition against the project and pipeline remain fierce. Backers will have to undergo what is likely to be a contentious permitting process, and FERC still could deny the project based on previously cited concerns. Veresen will also likely seek more agreements to solidify its position that the project is financially viable, but the deal with Jera alone gives this project new life.

In short, we have to rewrite some headlines: Jordan Cove is anything but dead.

Learn more about the Jordan Cove export project.

The Last and Largest Northwest Coal Export Schemes Would Bury Portland

In 2016, the Northwest public will have a chance to voice its views on the two remaining coal export terminals proposed for Washington state. These projects would be the first and second largest coal terminals in North America, weighing in at 48 million tons per year (in Whatcom County) and 44 million tons annually (in Longview).

That sounds like a lot of coal… because it is.

All of that coal would be delivered by trains traveling through the scenic Columbia River Gorge and near Portland, Oregon, on their way to the planned terminals. So for comparison purposes, here’s how one year’s worth of coal would dwarf the biggest buildings in Portland:

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

 

Even considering just the smaller of the two projects alone, the sheer quantity of coal is staggering:

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

 

Here’s how that coal would look stack up in the Columbia River Gorge:

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

 

And here’s how just one of the two projects would look:

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

In the last several years, the Northwest’s “Thin Green Line” of resistance successfully halted four of the six coal export projects originally proposed for the region. As the public evaluates these final—and by far largest—two coal schemes, it’s useful to remember just how big the coal industry’s ambitions are.

 

Sightline thanks Devin Porter at Goodmeasures.biz for designing these graphics.

Nine Reasons to Support a Housing Levy in a Hot Housing Market

Cascadia’s cities face a growing shortage of affordable housing, to which they are responding with a variety of policies. But Seattle stands out for the successful use of one tool in particular: property tax levies to subsidize housing. Since 1986 Seattle voters have consistently approved four such levies, creating the city’s biggest local funding source for affordable housing.

As the affordability squeeze has tightened over recent years, other Cascadian cities have been seeking to emulate Seattle’s success. In 2012, Bellingham became the second major city in Cascadia to adopt a property tax levy to support affordable housing, and Portland and several cities in Washington State are currently considering similar levies.

Advancing a key recommendation of Seattle’s Housing Affordability and Livability Agenda, Mayor Ed Murray has proposed doubling the current housing levy, set to expire this year. Although voters have been generous in the past, this expanded levy renewal comes on the heels of two even larger Seattle property tax levies for parks and transportation, raising concerns that “tax fatigue” could jeopardize success at the ballot box this August. The elected King County Assessor himself recently opined that property taxes have gone too far.

To help Seattle—as well as other cities hoping to follow the same path—overcome anti-tax sentiment and win voter approval of affordable housing property tax levies, here are nine reasons why renewing the Seattle housing levy is not just the right thing to do, but also the smart thing to do as Cascadian cities continue to grow and prosper.

1. Seattle’s housing levy works—really well.

To date, Seattle’s housing levy has enabled the construction of 12,500 apartments with below-market rents available only to low-income households. That’s close to half the city’s total of 26,000 “rent-restricted” housing units. By comparison, the Seattle Housing Authority, which relies primarily on federal funding, supplies 5,000 units of the city’s rent-restricted inventory. The levy has also cumulatively provided emergency rental assistance to 6,500 households and down-payment loans to 800 first-time homebuyers.

The housing levy plays a particularly important role in providing for the low end of the income spectrum. A recent example of a levy-supported project is the 108-unit Mercy Othello Plaza, offering rents as low as $450 per month, affordable to a household earning just $18,000 per year.

2. Seattle’s property tax rate is low.

In a 2013 study ranking the effective property tax rates of 51 major US cities, Seattle came in 37th (Portland was 26th). In 2015, the owner of a median-priced $480,000 home paid about $5,000 in property taxes, a rate of 1.04 percent. The national average for property tax is 1.19%, and it runs as high as 2.20 percent in New Jersey.

3. The proposed housing levy is small.

The proposed housing levy would cost the owner of a $480,000 home a total of $122 per year—about as much as a subscription to Netflix. That’s equivalent to only 2.4 percent of the property tax paid by Seattle property owners, and would raise the rate paid in 2015 to 1.05 percent, which is still significantly below the national average.

4. The proposed housing levy would capture only about five percent of Seattle’s property tax revenue, and would rank as the city’s third-largest special-purpose levy.

Of the total tax collected on property within Seattle city limits, the City of Seattle and Seattle School District typically receive about 30 percent and 25 percent, respectively. State, county, and other local tax districts collect the remainder. Of the city’s portion, about 60 percent is general fund revenue that requires no voter approval, and the rest comes from voter-approved levies (see the pie chart below for an estimated breakdown of Seattle’s property taxes).

The housing levy would collect $41 million per year, compared with $95 million a year for the city’s 2015 transportation levy and $48 million per year for the 2014 Seattle Park District levy. Considering the scale and gravity of Seattle’s affordable housing challenges, if anything, the expanded housing levy looks relatively small.

Original Sightline Institute graphic, available under our free use policy.

Original Sightline Institute graphic, available under our free use policy.

5. Property value appreciation dwarfs the proposed housing levy tax increase.

In 2015, Seattle home values rose by 13 percent, or $61,000 for a $480,000 home. That one year of appreciation alone would cover more than 400 years of the extra tax owed under the proposed housing levy.

Of course, not all years are so hot as 2015. Over the 16 years since 2000—including the declines of the Great Recession—Seattle’s median home sales price increased a total of 120 percent. That’s equivalent to an average annual appreciation of 5 percent… which is still about 200 times greater than the added annual tax amount the levy would impose.

6. State law limits property tax increases.

Washington state law prevents cities from enlarging their property tax revenue by more than one percent annually without voter approval. Thus, if property values appreciate by more than one percent, the base property tax rate must be correspondingly lowered so that the tax revenue does not increase by more than one percent (excepting new construction). When annual appreciation significantly exceeds one percent—as it certainly has in Seattle in recent years—this cap shields owners from being taxed on most of their property’s added value. That is, state law mandates a tax break for property owners in cities with fast-rising real-estate values. The bigger the windfall, the bigger the tax break—and that applies to everything from houses to high-rise office buildings.

Voter-authorized “levy lid lifts” allow cities to counteract the State-imposed tax block on rapidly appreciating property. For example, if property value in Seattle appreciated by five percent in one year, the base property tax rate would have to be lowered from 1.04 percent to 1.00 percent, such that effectively only one fifth of an owner’s property value gain would be taxed. The proposed housing levy would recapture some, though not all, of that tax rate reduction, pushing the rate back up to 1.02 percent.

Want more? Here's how rising home values are pushing up rents and pricing people out.

7. No, the proposed housing levy will not force people on fixed incomes out of their homes.

This is a favorite claim of anti-levy campaigners, but it doesn’t hold up to scrutiny. First, Seattle low-income households may qualify for an exemption from paying the roughly 90 percent of their property tax bill that is not associated with levy lifts. The exemption is currently available to homeowners with incomes of $40,000 per year or less or who are 61 years of age or older, disabled and unable to work, or veterans with service-related disabilities.

Second, the robust, long-term appreciation of homes in Seattle gives homeowners with limited means the option of borrowing against their equity to cover unanticipated expenses. Home equity can be converted to cash through refinancing, a home equity line of credit, or a reverse mortgage. The cost of the levy is so paltry compared to Seattle’s historic home value appreciation that a very modest loan would cover it, and ongoing equity gains would provide a long-term cushion to pay back loans.

In fact, this equity resource could be leveraged to easily cover a typical homeowner’s entire property tax bill. Remember: Seattle’s 16-year average annual home price gain was roughly five times the total property tax paid over those same years. So over that period, the typical Seattle homeowner could have extracted her entire annual property tax bill out of equity from appreciation and still been left with a net gain of over 80 percent on her home value. And while taking this sort of loan to pay taxes is surely not the most palatable idea to most people, it is a realistic solution that means no one ever need be taxed out of her home.

8. The housing levy fairly spreads the cost of affordable housing subsidies.

First and foremost, owners of the most valuable properties would pay the most tax. The state of Washington’s property tax is a residue of the state’s long-ago embrace of wealth taxes, the fairest of all taxation systems.

All in all, a property tax is the most practical, equitable option for most cities to self-fund affordable housing.
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In addition, because every property owner throughout the city pays property tax, the impact is relatively small on each individual property owner. In contrast, developer fees for affordable housing are assessed only on the small fraction of the city’s properties that get redeveloped. With developer fees, owners of high-value properties that won’t be redeveloped for decades—the $700 million, 76-story Columbia Center, for example—contribute nothing toward affordable housing.

One potential unintended consequence of the housing levy is that it could compel apartment building owners to compensate by raising rents, which would disproportionately impact the lower-income households that tend to live in apartments. The portion of a tax that landlords can pass on to renters depends on local market conditions. In any case, for the housing levy the effect is likely to be minimal, because not only is it a tiny tax increment to begin with, but the majority of the tax is collected from property types other than apartments (mainly commercial buildings and single-family homes).

9. The housing levy helps correct for the inequities of an inflating housing market.

Seattle’s housing shortage is driving up both home prices and rents, a circumstance that benefits existing property owners but creates hardships for renters and those who want to buy their first homes. Seen through that lens, a property tax is an apt choice for funding affordable housing, because targeting the tax on property owners helps compensate for the unequal advantage enjoyed by incumbent owners in an inflating real estate market.

Just ask yourself whose shoes you would rather be in: my Seattle renter friend who recently opened her mail to find notice of a 41 percent rent hike, or my Seattle homeowner friend who was just hit with an $800 property tax increase—roughly half of which is for the new transportation levy—on a bungalow that is worth $115,000 more than it was last year.

Let’s Do This, Cascadia

All in all, a property tax is the most feasible, equitable option for most cities to self-fund affordable housing. (A land-value tax would be even better, but that’s another story.) The points enumerated above are most relevant to Cascadia’s other two largest cities—Vancouver and Portland—because they have similarly hot housing markets. But in general, the case for a property tax to subsidize affordability is also strong in smaller cities and towns.

In high-demand cities where housing prices are rising fast, a property tax is especially defensible, as it asks property owners to share a small portion of their good fortune—their unearned gain from real-estate appreciation—with their neighbors not lucky enough to own property.

For Seattle, then, the only question is: why not make the housing levy even bigger?  As for the rest of Cascadia, what are you waiting for?

Arch Coal’s Executives Gave Themselves $8 Million… for Failing

The executives of bankrupt coal industry giant Arch Coal, which declared itself insolvent back in February, apparently were quite proud of themselves for driving their company into the ditch. So proud, in fact, that they decided to give themselves $8 million in bonuses right before filing bankruptcy paperwork.

Arch Coal Inc. paid its top executives more than $8 million in bonuses the business day before the company filed for bankruptcy in January, according to U.S. Bankruptcy Court for the Eastern District of Missouri filings published last week.

Bonuses on Friday, bankruptcy on Monday! You’d almost have to admire the chutzpah, if it weren’t for the fact that the bankruptcy process has squeezed retirees and shortchanged mine cleanup responsibilities. And what makes the self-serving bonuses even more galling is that they’re a drop in the bucket, considering that Arch’s corporate insiders paid themselves more than $29 million in the year leading up to bankruptcy.

Arch, along with many of its peers in the coal industry, simply choked on the overconfidence and incompetence of its own executives.
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Now that the major players in the coal industry—not just Arch, but also Alpha, Peabody, Foresight, Murray Energy, and nearly 50 other coal companies—have descended into insolvency, it’s important to remember that most of them are victims of their executives’ own hubris. The coal industry likes to blame its financial collapse on Obama’s alleged “war on coal.” But mostly they’re just drowning in the debts their senior corporate officers took on at the very height of the international coal bubble—when coal industry executives flat-out misread global economic trends and assumed that coal’s best days were ahead of it.

In Arch’s case, the company’s real undoing was its multi-billion-dollar acquisition of International Coal Group, which was essentially a high-stakes bet that China’s consumption of high-value metallurgical coal would continue its meteoric rise for years. Like many of the coal majors, Arch got that bet dead wrong: they bought ICG close to the peak in the market, acquiring enormous and unsustainable debts for assets that ultimately were worth only a fraction of the purchase price. At the same time, technological shifts in natural gas and renewable energy left Arch’s portfolio of “thermal” coal (the kind used in power plants) increasingly uneconomic, reinforcing Arch executives’ folly in taking on so much debt.

So in the end, the so-called “war on coal”—which was mostly just a belated effort to bring coal power plants up to twentieth-century health and safety standards—was almost irrelevant to the industry’s demise. Arch, along with many of its peers in the coal industry, simply choked on the overconfidence and incompetence of its own executives.

Soon after the bankruptcy filing we flagged the issue of executive compensation—i.e., how much coal-industry executives would pay themselves for destroying the wealth of their investors, the security of their retirees, and the integrity of the communities where they operate—as the #1 issue to watch in the Arch coal bankruptcy. Now we have a good idea of how that has played out: Arch’s top brass decided to make themselves obscenely wealthy for being supremely incompetent.

Like what you're reading? More Arch Coal news here.

Weekend Reading: 3/18/16

Eric

Are some babies just easier than others? I wish we could all acknowledge that the answer is yes:

Within the range of developmentally normal children, some parents have a much, much harder job than others: more drudge work, less gratification, more public shaming. It sometimes feels like the great undiscussed secret of pediatrics—and of parenting. Babies and children are different, assignments are different, and we spend a lot of time patting ourselves on the back—as parents and as pediatricians—when the easy babies and toddlers behave like themselves, and a lot of time agonizing and assigning blame when the more difficult kids run true to form.

Is Seattle’s new electrical substation in South Lake Union just about the grooviest and most beautiful one of its kind? Maybe.

What’s wrong with Seattle’s big tunneling project, and why do megaprojects so often go so wrong? Michael Hobbes has a six-minute video with all the answers.

What’s it like to be an environmental activist on the high seas? Alec Connon, a Scotsman-in-the-Northwest I’ve had the pleasure of getting to know while fighting fossil fuel projects, explores the idea in his new novel, The Activist. It’s getting great reviews.

Keiko

Tomorrow is the launch day for Seattle’s new light rail stations, and I can’t wait!! Check out all of the opening festivities here (including Giant Jenga, free bike tune-ups, live music, and free light rail rides).

How do you get students to stay in school and graduate on time? Get them outside. Sightline fellow Ted Wolf explains how hands-on outdoor education and better school buildings boosts attendance. Oregonians, keep an eye out for a ballot initiative to fund healthier schools in May!

Your break from politics: watch a bald eagle being hatched. Happy Friday!

Serena

Jill Lepore has a (characteristically brilliant) article on our current political moment’s relationship—or lack of which—to truth, including a wistful nod to climate change’s poor public fate. Don’t miss it.

Could Europe’s beautiful zero-waste grocery stores hop the pond? Apparently, Denver is about to find out.

And in your wildlife moment of zen this week, an adorbs Australian cop is reverse-adopted by a baby kangaroo.

Anna

I’m sorry to convey some very sad news, impacting what’s probably been the best climate reporting in the world:The Guardian is cutting a hundred editorial jobs.

Better news: public opinion among US voters is ticking up steadily on a range of climate questions, including a record number (65 percent) who blame human activity and a 12-point increase among Independents on this question.

In the new issue of Democracy, Lydia Bean and Steven Teles give us a fascinating (and sobering) chronicle of how “liberal greens tried—and failed—to make common cause with the Christian Right in the fight against climate change.”

And (Happy St. Patrick’s Day), are the Irish really Celtic? Maybe not.

Dan

Remember the big news last December that rents in Seattle “are still rising but not nearly as fast?” Well, turns out that was just a blip. Take it away, Tom Cain of Apartment Insights:

Last quarter we expressed concern about where the market might be headed in light of a surprising decrease of rents in the high-priced submarkets. In light of what has happened this quarter, our concern has been assuaged.

Concern, that is, for apartment owners and developers, not tenants.

Yep, Seattle’s off-the-charts job growth is still outpacing housing production. But there’s still hope, as Cain predicts 2016 will be a record-breaking year for new housing, with over 12,500 units currently under construction in Seattle. Then again, Amazon alone has already leased enough office space to eventually hold 65,000 employees in downtown Seattle . . . .

 

Peabody Energy on Bankruptcy Watch

The market is pounding yet another nail into King Coal’s coffin.

Peabody Energy, which touts itself as the world’s largest private sector coal company, announced yesterday morning that it is teetering on the brink of bankruptcy. The company skipped two bond payments totaling $71 million, triggering a 30-day grace period before the company goes into default. And in its annual “10-K” form submitted to US Securities and Exchange Commission, Peabody gave a brutal assessment of its own finances:

The Company incurred a substantial loss from operations and had negative cash flows from operating activities for the year… [and] it will continue to incur losses from operations and generate negative cash flows from operating activities…. If we are not able to timely, successfully, or efficiently implement the strategies that we are pursuing to improve our operating performance and financial position, obtain alternative sources of capital, or otherwise meet our liquidity needs, we may need to voluntarily seek protection under Chapter 11 of the U.S. Bankruptcy Code.

In short, Peabody admitted that it losing money fast, and that unless the company pulls off a financial miracle, management will have no choice but to seek the protective embrace of federal bankruptcy courts.

Peabody’s dismal news set off a flurry of press stories—including coverage by The New York Times, Reuters, Bloomberg, and more—showing that Big Coal’s downfall is still big news. Peabody has served as the exemplar of the coal industry in the public mind. After all, were there any other coal companies that incurred folk singers’ wrath? But with yesterday’s news, the company that once played the role of Machiavelli in King Coal’s Court is now playing the fool.

What doomed Peabody was its own hubris and optimism. In 2010, the company argued that the global coal industry was in the early stages of a “super-cycle” of high prices and rising demand. Taking a deep drink of its own Kool-Aid, the company took on massive debts to complete a $5.1 billion purchase of an Australian coal mining company, with which Peabody hoped to take advantage of rising Pacific Rim demand. But the market quickly proved that Peabody’s hype about a coal “super-cycle” was simply hot air: international coal prices peaked in 2011, and Asian demand for imported coal started to fall in 2014. As the international coal market cooled, Peabody’s new mines turned out to be worth just a fraction of what the company had paid for them.

More than anything else, it’s the debt from Peabody’s Australian deal that’s pulling the company into insolvency. After all, the company claims that most of its mines are still profitable. The problem is that those shrinking profits aren’t nearly enough to service the company’s massive debts.

Peabody’s bankruptcy will obviously echo throughout coal country, but it could have a significant impact in the Northwest as well. In early 2011, the company announced an agreement to ship 24 million tons of coal per year through the proposed Gateway Pacific coal export terminal near Bellingham, Washington. But as we’ve argued many times, Peabody would lose money hand over fist if it tried to export coal at the prices of the last few years. Bankruptcy courts allow companies to void unprofitable contracts; when Arch Coal filed bankruptcy, the courts almost immediately canceled some money-losing shipping contracts. So there’s a good chance that any agreement between Peabody and Gateway wouldn’t survive a bankruptcy filing. If that happens, Peabody bankruptcy would expose not only the company’s own financial overreach, but also the overreach of the companies that are backing the massive coal export schemes in the Pacific Northwest.

 

Weekend Reading: 3/11/16

Alan

Over Our Heads, cover photo by Gary Braasch

Over Our Heads, cover photo by Gary Braasch

Gary Braasch: Brother, it’s been years since we schemed of a photo book to lay bare the consequences of American consumerism and since you donated a cover photo for the first-ever book on climate change in Cascadia. Now, before we could scheme and collaborate again, you’re gone. Gary, your deep passion for this planet and the ache in your eyes to capture transcendent light were a gift to us all. Until we meet again . . . .

Eric

As the Northwest weighs whether to permit a trio of huge methanol refineries backed by the Chinese government, here are a couple of recent examinations that may help inform the debate. First, Reuters has a long-form investigate series, “The Long Arm of China,” that examines the various ways that China exerts influence far beyond its borders. Second, the New York Times took a thoughtful look at the data showing that China’s economy is slowing.

At Vox, writer Amanda Taub has maybe the single best treatment of Donald Trump’s popularity that I’ve seen. She links his rise to a nasty strain of authoritarianism that runs through the American electorate and that has been largely overlooked by political reporting to date.

At E&E News, reporter David Ferris pulls back the curtain on energy firm NRG to show how it failed to transform itself into a green and renewable company.

Kristin

Why is Trump winning? Linguistics expert George Lakoff lists the groups Trump appeals to: conservatives who believe in hierarchy where a strong, rich, white, man is on top; conservatives who relate to direct causation more than systemic causation; white men who see themselves as superior to nonwhites, women, and gays and are tired of being told their beliefs are not “politically correct.”

“[T]he trick for a party and a candidate [to win elections] is to maintain a base of heterogeneous special interests, while still appearing to be the champion of the ordinary American.” Yikes!

Where Do Canadians Stand on Climate?

Editor’s Note October 3, 2016: Did you hear the news? Canadian Prime Minister Justin Trudeau announced today that every Canadian province will have until 2018 to adopt a carbon pricing plan. To celebrate this key step forward in climate action, we are reviving this piece from earlier this year on Canadian perceptions of climate change. Now let’s hope that the United States can learn from Canada’s climate success and move forward on climate policy.

Prime Minister Justin Trudeau took provinces by surprise Monday by announcing they have until 2018 to adopt a carbon pricing scheme, or the federal government will step in and impose a price for them.

Majorities in every Canadian electoral district support emissions trading.
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When it comes to climate change, Justin Trudeau, Canada’s new prime minister, seems to want a clean break from his Conservative predecessor, Stephen Harper. (As the Guardian reports, Harper has been accused of “muzzling government scientists and backtracking on climate promises.”)

Canada’s new Liberal government is talking of plans to price and cap carbon emissions. Provincial elections in 2015, including a new left-leaning government in Alberta which has already announced a carbon tax plan, may also boost the chances for Canadian climate solutions.

This month, Trudeau’s government held a National Climate Meeting in Vancouver with First Ministers and Indigenous leaders to develop a national climate policy framework for Canada. And just this week, four months after Trudeau’s election and eleven months before a new US president takes office, Trudeau and Barack Obama committed to work together on climate protections. They are expected to announce a series of common measures including a 45 percent cut in methane emissions from the oil and gas industry—a greenhouse gas that is roughly 80 times more potent than carbon dioxide—and protections for the Arctic (where scientists are now tracking the mildest winter ever recorded.)

With this window cracked open to North American cooperation and Canadian action, where do Canadians stand on climate issues?

Right on cue, the Yale Project on Climate Change Communications has mapped how Canadian perceptions of climate change, as well as support for carbon taxes and cap and trade, are distributed across the country, including projections by province and federal electoral district (or riding). (See also: Yale’s meta-analysis and interactive mapping of US climate opinions at the state, Congressional district, and county level.)

Here are some highlights:

  • At the national level, 79 percent of Canadian voters acknowledge climate change is happening. (Compare that to 63 percent of US voters.) Quebec has the highest proportion of adults (85 percent) who say it’s happening, but even in Alberta, where belief is lowest, 67 percent understand climate change is happening.
  • Local variation in Canada is significant. In Nova Scotia, for example, 87 percent say it’s happening, while only 66 percent in Saskatchewan agree; 56 percent say climate change is happening in the Souris-Moose Mountain riding in Saskatchewan compared to 91 percent in the riding of Halifax, Nova Scotia.
  • Belief that the problem is real is lower in rural Canada, particularly across the Prairies. As the researchers point out, “The strongest levels of climate change belief exist in coastal BC, Quebec, Nova Scotia, and in urban areas across the country.” At the extreme, belief in climate change exceeds 90 percent of the public in the Quebec district of Laurier-Sainte-Marie, the district of Vancouver East, and the district of Halifax. That’s high! Yale mapping in the US tops out around 80 percent.
  • Overall, belief in climate change is higher in Canada than in the US (as measured by Yale’s estimates for 2014). The low end of variation in Canadian beliefs map onto the middle of US variation.
  • However, nationally, only 44 percent of Canadians think the cause is mostly human activities. US voters squeak ahead on this one, at 48 percent. It is in the six largest urban areas of Canada where people are most likely to see humans as the main cause. Notably, in Canada, belief that climate change is human-caused is lowest in the more greenhouse gas intensive parts of the country. “In other words, places that are more significantly contributing to climate change show lower beliefs that humans are the cause.” However, urban districts in Alberta show public opinion on this question closer to that of Ontario, Quebec, or BC.
  • Despite these variations in core beliefs about the issue, there is widespread public support for climate policies. Majorities of the public in every federal electoral district (riding) support an emissions trading scheme. Support for emissions trading is highest in Quebec—71 percent—where a cap and trade system was implemented in 2013.
  • Support for carbon taxes is more geographically differentiated, at 49 percent nationally (with opposition at 44 percent), but ranging from a low of 35 percent in the Northern Alberta riding of Fort-McMurray-Cold Lake to a high of 70 percent in the Montreal-area riding of Outremont. Support for carbon taxes is concentrated in  urban Canada and British Columbia (where there is a carbon tax shift in effect).
  • Support for carbon pricing policies is higher in provinces that have already implemented these policies. In other words, there is no evidence of a popular backlash against carbon pricing in places where people are experiencing them.

Canadians have lots of progress yet to make on attitudes and policy. But with the election of Justin Trudeau and like-minded leaders across Canada, the world’s climate may get a breath of fresh air.

Event: The Facts about Tacoma’s Proposed Methanol Plant

Next Wednesday, join Sightline policy director Eric de Place to learn what the proposed methanol plant would mean for Tacoma and beyond. Eric will sit on a panel with speakers from Northwest Innovation Works, Citizens for a Healthy Bay, and the Environmental Protection Agency. Tacoma City Club will host this luncheon and panel discussion.

  • What: Luncheon: Tacoma’s Proposed Methanol Plant
  • When: Wednesday, March 16, 2016, 11:30 am – 1:30 pm
  • Where: Tacoma Landmark Catering & Convention Center (map)
  • RSVP: Tickets are available here
  • Hosted by: City Club of Tacoma

    Moderator

    Matt Driscoll: metro columnist, Tacoma News Tribune

    Panelists:

    Eric de Place: policy director, Sightline Institute
    Murray Vic Godley: president, Northwest Innovation Works
    Melissa Malott: executive director, Citizens for a Healthy Bay
    Jim Tiger: former specialist, Environmental Protection Agency

Your three-minute introduction to methanol in the Northwest.