Deutsche Bank is putting its interest in making money off climate change ahead of the facts

By David Henderson

As the Cancun post-mortems continue, one area that calls for attention is the questionable role of leading businesses. Recent episodes involving the Deutsche Bank Group are illustrative of a wider problem. They give grounds for serious concern.

In September a report entitled “Climate Change: Addressing the Major Skeptic Arguments,” was issued under the auspices of Deutsche Bank. It was published by DB ClimateChange Advisors, a unit described on the bank’s website as “the brand name for the institutional climate-change investment division of Deutsche Asset Management, the asset-management arm of Deutsche Bank AG in the U.S.” The report was co-authored by three climate scientists at the Columbia Climate Center at the Earth Institute of Columbia University.

As the title suggests, the authors’ avowed purpose in preparing the report was to demonstrate that the “major skeptic arguments,” and any conclusions based on them, are to be rejected. To quote the document’s introduction: “This study aims to respond to the most common misconceptions that are presented to challenge the position that [greenhouse gas] emissions are adversely impacting Earth’s climate and will continue to do so.”

In an editorial preface to the report, the Deutsche Bank global head of climate-change investment research, Mark Fulton, describes it as “a balanced, detailed and expert assessment of the scientific case for climate change that will help investors navigate these extremely complex issues.”

The document’s claims to balance, and to accuracy as a navigational guide, were promptly put in question by the Canadian economist Ross McKitrick of Guelph University, one of the “skeptics” supposedly disposed of within it. Prof. McKitrick’s critique, entitled “Response to Misinformation from Deutsche Bank,” is dated Sept. 13. It focuses on two central topics treated in the report, with the main emphasis on the well-publicized “hockey stick” controversy. In relation to these topics, it identifies and spells out an extended list of errors, misrepresentations and falsehoods.

In response, the authors of the document have put out a revised text which replaces the original. But to create this new version they have simply inserted at the end a three-page “Response to McKitrick.” In these pages they admit to a few ‘mischaracterizations’ and offer amended versions of three sentences that they acknowledge to have been misleading. However, the original wording of these confessedly faulty sentences survives, unchanged and unfootnoted, in an unaltered main text. McKitrick has described this behaviour on the authors’ part as “unsporting.” Others might characterize it as unprofessional. The Deutsche Bank sponsors of the study should not have sanctioned it.

In a second set of comments, dated Nov. 8 and entitled “Response to Revised Report from Deutsche Bank,” McKitrick has extended and reinforced his critique. Up to now, there has been no further response from the authors of the report or from Deutsche Bank.

Viewed together, McKitrick’s twin presentations appear as damning and unanswerable. As a guide to investors, or indeed for any other purpose, this Deutsche Bank/Earth Institute report is worthless.

The report’s deficiencies put in question the conduct of its sponsors within Deutsche Bank, as also the conduct of those whom they report to. It would be interesting to know whether the officials who commissioned and approved this deeply flawed initiative took the precaution of submitting a draft for expert review to competent persons not already firmly convinced that “the skeptics” have been refuted.

Looking at the list of members, it would seem that no such person is to be found among the eminent individuals who make up the Deutsche Bank’s high-level Climate Advisory Board: All of these appear as people who are (to quote a nice phrase from Clive Crook) “pre-committed to the urgency of the climate cause.” They include the chair of the Intergovernmental Panel on Climate Change, Dr. R.K. Pachauri, and a former executive director of the United Nations Environment Program, Klaus Topfer.

It is not clear whether the Climate Advisory Board saw a draft of this Earth Institute report, or indeed whether they were aware that it had been commissioned. A more representative Advisory Board, spanning a wider range of opinions, might have taken more trouble to ensure that it was kept fully informed, and that any published work on climate change issues put out by Deutsche Bank would measure up to professional standards.

The Deutsche Bank Group has also taken its climate-change involvement into the political sphere. In the recent Californian elections, voters were invited to accept or reject Proposition 23, which would have placed strict constraints on the state government’s plans to introduce further curbs on carbon dioxide emissions. A few days before the vote, the Financial Times reported that “Sixty-eight big investors, managing US$415-billion in assets, have united to urge Californians to vote against efforts to roll back the state’s carbon legislation… Signatories include...Deutsche Bank Climate Advisers...”

It would thus appear that its Climate Change Advisors, who are no more than “the climate-change investment division of Deutsche Asset Management,’ took a strong position on behalf of Deutsche Bank on a controversial political matter. If so, it would be interesting to know whether and to what extent this action, which appears as questionable in itself, was authorized and approved at higher levels within the bank.

As its website confirms, Deutsche Bank is fully committed to the doctrine, now widely endorsed by businesses and governments, of Corporate Social Responsibility (CSR). How far its current handling of climate-change issues can be viewed as responsible is clearly open to doubt.

For any organization of standing, not least a leading multinational company such as Deutsche Bank, an obvious aspect of responsible conduct is a demonstrated concern for accuracy and the truth. The bank’s management board could now manifest such a concern, first, by commissioning an independent and informed review of this report, and second, by withdrawing and repudiating the report if the review supports McKitrick’s analysis.

In the wider context, however, Deutsche Bank is one of many, while the report shares its faults with numerous cousins. Both are symptomatic.

Businesses across the world, and governments too, have made unqualified and uncritical commitments to the view that in relation to climate-change issues “the science” is “settled.” Within the business world, as in the case of Deutsche Bank, endorsing this received opinion forms a leading aspect of CSR and, for many companies, of corporate strategy.

Received opinion largely rests on a belief, reinforced by statements from leading science academies, that in relation to climate science the official expert advisory process as a whole, and the IPCC assessment reports in particular, are to be seen as reliable guides.

Increasingly in recent years, arguments and evidence to the contrary have been presented by informed critics, prominent among whom have been McKitrick and his fellow Canadian, Stephen McIntyre. In my view, these critics have made a powerful case. The IPCC process has been exposed as being far from a model of rigour, inclusiveness and impartiality, while influential publications on climate-change issues have been shown to be professionally flawed.

Neither businesses nor governments have given the critics due attention. But in the past year or so, new developments have cast further doubt on the claims to objectivity and competence of the official expert advisory process and its official sponsors. In particular, the so-called “Climategate” and “Glaciergate” episodes have exposed attitudes and practices which were clearly unprofessional.

In response to these embarrassing revelations, Dr. Pachauri and the UN Secretary-General asked the InterAcademy Council, a creation of science academies around the world, to appoint an expert independent review committee to report on the process and procedures of the IPCC.

The resulting report was published at the end of August. Because of its careful and qualified wording, both sides of the climate-change debate have been able to draw encouragement from it. I see the report as making a major contribution in two respects: First, it made numerous recommendations for improving the IPCC process; and second, it stressed the need to ensure that a full range of informed views is taken into account, thus confirming that “the science” is not “settled.”

These twin conclusions are subversive of received opinion. Hence the report could help pave the way for significant improvements in the handling of climate-change issues.

The main focus of improvement is clear. In an area of policy where so much is at stake, and so much remains uncertain and unsettled, policies should be evolutionary and adaptive, rather than presumptive as they are now; and their evolution should be linked to a process of inquiry and review that is more thorough, balanced, open and objective than has so far been the case.

Whether and how far a more judicious approach on these lines will gather momentum depends principally on governments, but businesses and business organizations could play a useful - and more responsible - part in raising the quality of debate. As the current example of Deutsche Bank confirms, there is a long way to go.

David Henderson was formerly head of the Economics and Statistics Department of the OECD. He is currently chairman of the Academic Advisory Council of the London-based Global Warming Policy Foundation. His latest publication on climate-change issues has just appeared in the quarterly Newsletter of the Royal Economic Society.

See also Financial Post’s Bank part of global corporate craze to cash in here. They conclude: “As Mr. Henderson puts it, the Deutsche report on climate skeptics has been rendered worthless as a guide to the science and for investors. It also betrays a larger issue, which is a corporate role on the part of Deutsche Bank that makes Exxon look like a Boy Scout.” Icecap note; it should be remembered that Lehman put together a detailed two volume report on climate change as a prospectus for the huge profits they would make in carbon trading and green investments. Like Deutsche bank, they used sources equally willing to prostitute themselves for the cause and dollars. It the process, they took their eyes off the ball of their business and incurred huge loses when the bubble burst and are no longer in business.

We are routinely urged to heed climate scientists who say the world is in peril and that humanity must mend its environmentally damaging ways. What we’re rarely told is that these scientists are part of a long tradition.

Four decades ago, in January 1972, the Ecologist magazine published a lengthy essay titled A Blueprint for Survival. Shortly afterward, the essay was re-packaged as a 140-page best-selling paperback. As the back cover of my edition explains, the book:

...offers radical proposals for immediate action...The Blueprint is supported by 34 distinguished biologists, ecologists, doctors and economists...[bold added, see list of names here and here]

On the front, in large type, is a quote from the Sunday Times:

Nightmarishly convincing...after reading it nothing seems quite the same any more.

Forty years ago, therefore, environmentalists, experts, and journalists were doing exactly what they do now. Brandishing impressive credentials, they were scolding us about our lifestyles and threatening dire consequences if their pessimistic pronouncements were ignored.

It is the proper role of scientists to collect and interpret data. They can then present their findings regarding what effect they believe we are having on the environment. But the question of how society should respond to their findings is a political matter. It involves debate and a careful weighing of competing approaches and interests. The decision must be made by those elected to govern us. This is because elected officials are accountable. If they introduce policies the public considers intolerable they’ll lose their jobs.

The 34 distinguished biologists, ecologists, doctors, and economists who endorsed the Blueprint are accountable to no one. If such people started making decisions regarding economics, public health, transportation, and other matters we’d be exchanging representative democracy for tyranny on the part of these select experts. We’d be saying that a small number of people know better than we do what is best for us and our children.

I think that’s bunk. I also think it’s important to note that some experts are drama queens. For them, the glass is always half empty and everything is always a crisis (rather than a manageable problem). Unfortunately, drama queens tend to attract media attention. We therefore need to start noticing that, no matter what the specific problem has been, drama queen scientists have been pushing the same unpalatable solutions for 40 years:  fewer humans, less consumption, less travel - and less freedom.

Let’s take a peek inside 1972’s Blueprint. According to the preface:

(1) “We should be concerned by “the extreme gravity of the global situation”

(2) “If current trends persist “the irreversible disruption of the life-support systems on this planet, possibly by the end of the [20th] century, certainly with the lifetimes of our children, are inevitable."”

(3) “Governments are refusing to face facts and therefore are failing to undertake necessary “corrective measures”

(4) “A self-appointed group of “scientists and industrialists...is currently trying to persuade governments, industrial leaders and trade unions throughout the world to face these facts and to take appropriate action while there is yet time.”

(5) “A new political movement is necessary; this movement must embrace “a new philosophy of life, whose goals can be achieved without destroying the environment”

It doesn’t get much clearer than that. Forty years ago some scientists used their respected place in society to advocate for a new political movement, a new philosophy of life. While scientists are entitled to their views, their expertise is not in political philosophy. This means their opinions regarding how the world should function deserve no more consideration than the opinions of a random nurse or taxi driver.

What else were they saying back in 1972? The first line of the Blueprint‘s introduction declares that an industrial way of life is “not sustainable.” We’re told humans are consuming too much, polluting too much, and having too many babies. We’re told economic growth is the enemy and that austerity is the answer. We’re warned that unless things change radically “a succession of famines, epidemics, social crises and wars” are inevitable.

Let’s think about that last point for a moment. For decades, people have wanted us to urgently and radically change our ways. Why? Because, in their opinion, bad things will happen if we don’t.

I’m happy to take my chances with the future, thanks. The past 40 years bear little resemblance to the horror story the drama queens were predicting back in 1972. Average people are now richer and healthier. They live longer lives and many enjoy access to more food, culture, and technology than did the princes of old. In much of the world the air and water is cleaner than it was in the 1970s, and the forests are larger. As books such as Matt Ridley’s Rational Optimist patiently explain, the planet is not headed to hell in a handcart. Things are far from perfect, but the current situation looks nothing like the collapse predicted by the Blueprint 40 years ago.

My personal view is that the future is going to be even better. I see human history as a narrative in which ever more people rise out of poverty, in which we become increasingly smarter about resource management, and in which game-changing ideas are merely a discovery away.

My version of the future is surely as likely to come true as is the drama queens’ version. It’s difficult to overstate this point. These gloomy people think we should all change our behaviour because they are incapable of seeing anything but catastrophe on the horizon. They think their guesswork about the future gives them the right to tell the rest of us how to live.

The Blueprint calls for the establishment of a “national population service.” One of its mandates would be to research “the subtle cultural controls” that would ensure people have fewer children. It calls for taxes on energy as well as on raw materials. It demands the “end of road building” and “restrictions on private transport.” The following passage provides a sample of the moralistic, utopian tone of this book:

...people use their cars for four main reasons; to go to work, to go to the countryside, to visit friends and relations, and to show off. In the stable [eco friendly] society, however, each community will provide its own jobs, there will be countryside around it, most friends and relations will be within it, and there will be much more reliable and satisfying ways of showing off.

Not only does the Blueprint envision redesigning society from top to bottom, it imagines that it’s possible to alter human nature - to orchestrate via bureaucratic fiat how, precisely, people will choose to show off. As any parent of a young man with a fetish for fast automobiles can tell you, such things are easier said than done.

When I read the Blueprint I’m reminded of Soviet Communist Party literature prior to the fall of the Berlin Wall. The Communists also thought they were building a better world. They thought they could alter human nature and that, if they only planned carefully enough, a prosperous and harmonious society would transpire. Communist party publications, I might add, were characterized by the same pompous, judgmental tone.

The Communist reality, however, was a disaster. Which means that before I’m willing to place my trust in anyone else’s utopian fantasies they’ll need to spend an awful lot of time explaining what they’ve learned not to do based on their careful study of the Soviet and Chinese debacles. Quick tip: let’s start with how many independent safeguards will ensure that millions of souls cannot be starved or murdered by their own government.

Drama queens inhabit a fear-filled world - one that’s dangerously unpredictable and in which some small matter can trigger the apocalypse. They have little faith in their own ability to cope, in humanity, or in the future. No matter how many good things have happened, they insist on identifying the flaw in every apple. They are a personality type - and they are a part of our collective humanity.

But a world that permits that part of us to determine the future is a world in which the future may, indeed, turn out to be bleak. See post and much more on Donna’s website here.
H/T Marc Morano.

Last year the Northern Hemispheric snowcover was the second highest in the NOAA snow history back to the mid 1960s. It trailed only the legendary 1977/78 winter. It fell just ahead of 2007/08, pushing it to third place. The winter of 2002/03 dropped to fourth place and the bitter winter of 1978/79 fifth.

Average winter snowfall anomalies for the top 12 snowiest winters - source Rutgers/NOAA. Enlarged here.

All through last winter the snowfall was above normal from the end of the first week of December through the third week of March.

Snow anomalies for the Northern Hemisphere for 2009/10 - source Hart FSU. Enlarged here.

The heavy snows in Europe and Asia and now beginning in North America have this year off to a good start again. See 33 stories of the cold start in the UK beginning with Snovember here.

Snow anomalies for the Northern Hemisphere - source Hart FSU. Enlarged here.

You can see the recent snow has the hemispheric snowcover above normal a few weeks earlier than last year.


Snow anomalies for the Northern Hemisphere this year through December 7, 2010 - source Hart FSU. Enlarged here.

The pattern will continue cold across the western parts of Canada, much of United States and across Eurasia. A strong blocking high pressure will push back from the North Atlantic to the Davis Straits. Snow will be heavy along the edges of the cold air and near the unfrozen Great Lakes where many feet will accumulate. More bitter arctic air - perhaps coldest since 1894 is forecast for the UK.

850 mb temperature anomalies (Degrees C) for the 11 to 15 day period centered on December 22, 2010. Enlarged here.

Looks like a White Christmas in many areas much like last year.

Enlarged here.

See PDF here. White Christmas forecast coming.

As your boiler breaks down, your pipes freeze, your car won’t start, your Ocado delivery fails to arrive, your train is cancelled, your neck is broken after slipping on black ice and you lie in an emergency ward waiting for a doctor to turn up only to learn that they’re all off today because of the weather, you might be forgiven for thinking that all this has something to do with global cooling, changes in the Pacific Decadal Oscillation, and the decline in sunspot activity perhaps auguring a new Maunder minimum.

But you couldn’t be more wrong.

“It’s all actually a sign that man made global warming is very much a live issue and that there’s more of it happening than ever,” says a top scientist, who holds the British record for securing grant-funding for global warming research projects so he must know what he’s talking about.

“Look at the Met office,” the scientist goes on. “They’ve just told us that 2010 is the hottest year since records began in 1850 and even though the stupid Central England Temperature record tells us something quite different and even though the year hasn’t actually finished yet they must know what they’re talking about and they definitely can’t have fiddled the data because the Met office is part of the government and they wouldn’t lie or get things wrong which is why that barbecue summer was such a scorcher.”

The big problem is, the scientist said, is that the public are really stupid. They think just because Dr David Viner of the Climatic Research Unit said in the Independent in 2000 that soon there’d be no snow because of global warming, when what he actually meant was that soon there’d be lots of snow and that this would be “proof” of global warming. The interviewer just missed out the word “proof” that’s all because journalists are lazy that way.

Then the scientist issued a cut-out-and-keep guide of Signs That Show Man Made Global Warming Is Definitely Still Happening And That Cancun Won’t Be An Almighty Flop.

1. Warm weather

2. Cold weather

3. In-between weather.

4. Dark skies at night

5. Light skies in the morning

6. An unpleasant moist/damp/wet sensation when it rains

7. Ice appearing when the temperature drops below zero

8. Clouds rolling across sky in all sorts of funny shapes, some days like cotton wool, other days in streaks, and on some days not there at all.

9. Ursine subarboreal toilet activity

10. Strong new evidence of ultramontane sympathies at the Vatican

Cancun, Mexico

I am in the plenary session hall at the Moon Palace, where diligent readers of this humble blog will recall that Ms. Figurehead, the president of the UN climate conference here in Cancun, opened these quaint proceedings last week with a prayer to the Moon Goddess of the ancient dwellers in what is now Mexico.

The vast, characterless session hall is known - appropriately enough - as the Cenote hall. Those familiar with the Spanish dialects of the New World will recognize the appropriateness of this designation. For a cenote is a sinkhole. Cenotes are widespread in the Mexican jungle, beneath great limestone caps. They were regarded as sacred by the “first nations”, as the indigenous peoples are now coyly called, and archaeologists have had much fun diving beneath the waters in the cenotes to recover all manner of pre-Columbian artefacts and assorted archaeological knick-knacks.

It is in the Sinkhole Hall that the President of Mexico, Senor Felipe Calderon, has just announced to admiring gasps from 1000 gaping enviro-zombs that he is to launch a Grand Initiative To Smash Global Warming And Make It Go Away, So There. And what, you may ask with a trembling frisson of salivating anticipation, was the President’s Grand Initiative?

Wait for it ... wait for it!

OK, I’ll tell you. El Presidente is - tell it not in Gash and Ashkelon - going to ban the use of proper light-bulbs throughout Mexico. Ban light-bulbs. Throughout Mexico. Really and truly. I kid you not. Gee wow golly gosh.

As I sat and listened to the President, who talks even faster than me, I wondered if there was anything else new in his speech. Most of it sounded not just old but stale - a kooky cookie of a speech, long past its sell-by date.

The worstest ever problem the world has ever faced. Heard that before somewhere. Rising temperature. Natch: yet Cancun this morning was so cold, at 54 Fahrenheit, that it set a new 100-year record low for this day of this month (but don’t expect to read about this in any of the mainstream media: it’s Off Message). Rising sea levels. Pull the other one, Excellencia: it’s got bells on. Melting glaciers. Been there, done that, got the T-shirt. Need for international co-operation, courage, vision, yada yada. Gimme the cash: huge amounts of money from Western nations in reparation for their “climate debt” to developing nations like - er - Mexico. And so, tediously, ramblingly, near-hysterically on.

I turned to the rather spectacular young lady on my left, from the Eco-Village Movement (83,000 self-sustaining villages and urban communities in 100 countries), and asked whether the President had said something interesting that my indifferent comprehension of Mexican Spanish had failed to catch. No, she said, with a shapely sigh. She rather wondered why she had come.

There was a question-and-answer session: the only moment in the entire two-week beano when us ordinary citizens were allowed a voice. I was called to speak, but could not because my microphone had somehow been disconnected. Funny, that. So I passed the opportunity to a Singaporean gentleman who, it turns out, has made a fortune peddling a fuel additive which, he told me enthusiastically, improved average gas mileage by 10-35%. The Duke of Wellington would have said, “Sir, if you will believe that, you will believe anything.”

To pass the time - policemen with guns were not allowing anyone to leave while the President was in the room - I decided to calculate just how much “global warming” his Grand Initiative would forestall. I have recently been preparing a learned paper for the Econometrics Journal on the so-far-unaddressed but surely not-unimportant question of how to determine the amount of “global warming” that might actually be prevented by any proposed strategy to mitigate future “global warming” by taxing or regulating carbon dioxide emissions, or by adopting alternative technologies. So all the relevant equations were to hand.

Here goes, then. Electricity accounts for 40% of global carbon dioxide emissions. Mexico accounts for 1% of world electricity consumption. Light-bulbs use at most 3% of that electricity. Mercury-vapor fluorescent bulbs reduce electricity consumption per candela by - at the very most - 33% compared with incandescent bulbs that one can actually read by. So, once the President’s Initiativo Grande has been put into full effect throughout Mexico, world carbon emissions will have fallen by 40% of 1% of 3% of 33%, or a dizzying 0.004%.

So far, so good. We shall generously assume that 0.004% of the entire manmade greenhouse-gas contribution since 1750 will be forestalled by the Grand Initiative. Now for the equation. The amount of CO2 concentration forestalled by, say, 2100, is in the present instance, 0.004% of the difference between the CO2 concentration predicted for that year, 836 parts per million by volume on the IPCC’s A2 emissions scenario, and the CO2 concentration of 278 ppmv which the IPCC thinks was present in 1750.

So we’re looking at 0.00004(836-278), or 0.0223 ppmv. Not a lot, really.

Now we calculate the “global warming” that will be forestalled by reducing carbon emissions by this amount. For this we need another equation: 88% of 5.35 times the natural logarithm of [836 / (836 - 0.0223)]. And the answer? A little over 0.0001 Celsius, or around one five-thousandth of a Fahrenheit degree. And only that much if the IPCC’s exaggerated estimate of future warming is correct. If not, make that well below one ten-thousandth of a Fahrenheit degree. Either way, extravagantly pointless.

In the UK, the Climate Change and National Economic Hara-Kiri department has already enthusiastically banned real light-bulbs in favor of the flickering, mercury-filled alternatives which - if the appropriate EU “Directive” is followed - require a specialist cleanup team at a cost of $3000 every time one of the wretched things gets smashed.

On my recent visit to the Department, formerly the down-to-earth Ministry of Agriculture and now the up-in-the-air Ministry of Fantastical Nonsense, I asked its chief number-cruncher whether he could show me his calculations demonstrating how much “global warming” the $1.2 trillion that the Ministry of Madness plans to spend over the next 40 years will forestall.

He harrumphed that he had done no such calculation, so I asked: “In that case, Professor, on what rational basis is any of this expenditure being made or proposed?” Red-faced with embarrassment, he couldn’t answer that one either. Neither can I, for only a fool hunts a reason for the doings of fools.

However, with my econometric equations I can now work out how much “global warming” the Ministry of Pointless Extravagance will forestall with its - well, with its pointless extravagance. We begin with two very generous assumptions: first, that the IPCC’s estimates of how much “global warming” CO2 causes are not absurd exaggerations; secondly, that the Ministry of Misplaced Munificence has not flagrantly underestimated the cost of shutting down 80% of the British carbon economy by 2050.

Once again, then, hold on to your sombreros, amigos. Using the same analysis as before, there will be 506 ppmv CO2 by 2050, or just 5 ppmv less if the Ministry of Mumbo-Jumbo gets its way. “Global warming” forestalled will be just 0.03 Celsius, or around a twentieth of a Fahrenheit degree. And the cost per Celsius degree of warming prevented? A mere $34 trillion, or seven years’ total worldwide gross domestic product.

And that is why, Mr. President, one is less than impressed by your Grand Initiative. Don’t you think it strange, gentle reader, that after 22 years of The Process the very first serious calculations indicating just how spectacularly, gloriously futile is every proposed strategy for curbing carbon emissions are those that will appear in my forthcoming paper? No one, as best I can discover, has ever attempted to do this essential math before. Why on Earth not? Because, of course, the climate extremists know perfectly well what the answer will be.

Must stop now: time to pray to the Moon Goddess. At least the moon is brighter than those miserable new light-bulbs.

See this post here. See prior post from Cancun The abdication of the West here.