Carbon Caps & Demand Reductions vs. Better Technology:

Today there is another Twitter discussion featuring “We need carbon limits and demand reduction” vs. “Better technology to improve rate of decarbonization”. My thumbnail summary is the result of “Caps and Limits”, in particular Kyoto which Feels Good while fossil continues to dominate:

 

And this is the result of better technology (France decarbonizing electrical generation via nuclear in 20 years):

Why this is true is explored in depth by the Hartwell Paper and Kyoto Wrong Trousers.

James Hansen calls out “Big Green” (Part 2)

James Hansen

More disconcerting is the pressure from environmental organizations and the liberal media.

A year ago James Hansen published a “draft opinion” on the Columbia University website: Renewable Energy, Nuclear Power and Galileo: Do Scientists Have a Duty to Expose Popular Misconceptions? The PDF received surprisingly little attention considering the importance of the issues covered. I found the piece when I was researching thinking on how we could dramatically increase China US Nuclear Cooperation.

Here I’ll just highlight some of Dr. Hansen’s remarks on the how he sees the workings of the anti-nuclear lobby. In his closing paragraphs What Can the Public and Scientists Do? he writes

(…snip…) I also recommend that the public stop providing funds to anti nuke environmental groups. Send a letter saying why you are withdrawing your support. Their position is based partly on fear of losing support from anti-nuke donors, and they are not likely to listen to anything other than financial pressure. If they are allowed to continue to spread misinformation about nuclear power, it is unlikely that we can stop expanded hydro-fracking, continued destructive coal mining, and irreversible climate change.

(…snip…) The public is unaware of pressure put on scientists to be silent about nuclear power. After I mention nuclear power I receive numerous messages, often heart-breaking in their sincerity as they repeat Caldicott-like unfounded assertions and beg me not to mention nuclear power. More disconcerting is the pressure from environmental organizations and the liberal media. Each large environmental organization has a nuclear “expert” (often a lawyer, not a physicist) with a well- developed script to respond to any positive statement about nuclear power. Liberal media follow precisely the “merchants of doubt” approach that the right-wing media use to block action on climate change; raising fears about nuclear power is enough to stymie support. The liberal media employ not only environmental organization “experts”, but former heads of the Nuclear Regulatory Commission (NRC) appointed during Democratic Administrations.

These NRC talking heads are well-spoken professionals with a spiel that has been honed over years. And they have a track record. The NRC, despite its many dedicated capable employees, has been converted from the top into a lawyer-laden organization that can take many months or years to approve even simple adjustments to plans. It is almost impossible to build a nuclear power plant in the United States in less than 10 years, and this is not because an American worker cannot lay one brick on top of another as fast as a Chinese worker. Anti-nukes know that the best way to kill nuclear power is to make it more expensive.

Given this situation, my suggestion to other scientists, when they are queried, is to point the public toward valid scientific information, such as the “radiation 101” page written by Bob Hargraves. “Sustainable Energy – Without the Hot Air” by David MacKay lets the public understand calculations as in the footnote above, thus helping the public to choose between renewables and nuclear power in any given situation – there is a role for both.

James Hansen calls out “Big Green”, its the money that drives their anti-nuclear dogma

James Hansen

It is not always easy to speak truth to power, but all citizens have the opportunity if they choose. I have one minor, easy suggestion for you to consider, and another requiring more effort.

The first concerns “Big Green,” the large environmental organizations, which have become one of the biggest obstacles to solving the climate problem. After I joined other scientists in requesting the leaders of Big Green to reconsider their adamant opposition to nuclear power, and was rebuffed, I learned from discussions with them the major reason: They feared losing donor support. Money, it seems, is the language they understand. Thus my suggestion: The next time you receive a donation request, doubtless accompanied with a photo of a cuddly bear or the like, toss it in the waste bin and return a note saying that you will consider a donation in the future, if they objectively evaluate the best interests of young people and nature. — James Hansen October 11, 2014

If you think about this a bit, isn’t it obvious that the leaders of “Big Green” are driven by the same motivations as politicians — Power. Power is increased by raising more money every year. That is their goal. It is that simple. I’m talking about the rich and famous NGOs: Greenpeace, Sierra Club, Friends of the Earth, National Resources Defense Council, Union of Concerned Scientists, and so forth. 

 Please don’t let your friends donate to Big Green! If you’ve not read ‘To Those Influencing Environmental Policy But Opposed to Nuclear Power‘ this would be a fine time.

A Global Quorum for Fee & Dividend?

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I felt more optimistic for a few seconds after reading James Hansen’s latest Assuring Real Progress on Climate. I won’t spoil your Holiday Spirit by enumerating the reasons my optimism quickly faded. Hopefully you will come back with compelling arguments why this time is different: multi-national negotiations will produce a binding commitment to Fee & Dividend. The main argument:

Alternative 2: Courageous leadership emerges. In this scenario, actions proposed in Lima are adopted, but also plans for a rising carbon fee to come into force once approved back home by a quorum of nations. Quorum is defined so that Protocol initiation practically requires acceptance by either the United States or the European Union and either China or a combination of nations such as India and Brazil. The gradually rising carbon fee would be accompanied by border duties on products from non-participating nations, collected by the importing country, unless the exporting country shows that no fossil fuel carbon was emitted in production of the product.

In Alternative 2 no single nation can blackmail humanity. Once a quorum is achieved, there is a huge incentive for other nations to join, to avoid economic disadvantage and enjoy the economic stimulation. A carbon fee, which would be collected at domestic mines and ports of entry, spurs an economy if the funds are fully distributed to the public. However, the fee becomes a tax and a drag on the economy if a government keeps the funds to expand its programs. Governments are prohibited from returning the funds to the fossil fuel industry as subsidies. Otherwise specific use of the fee is a national prerogative. However, it is noted that equal division of funds among residents tends to address income disparities, providing opportunities for low income people, while spurring essential efforts in conservation, energy efficiency and clean no-carbon energies. Alternative 2 is a challenge, but one that we must fight for with all our strength and intelligence.

I think the economic outcome will be net-positive over a couple of decades. I’m not confident the near term jobs & incomes data will be comforting to politicians who find themselves out of work after implementing a binding form of Alternative 2. What is our best evidence that Fee & Dividend will boost GDP per capita? Over what time frame?

PWC: Heading for 4°C, pledging for 3°C, talking about 2°C


Globally we are out of time – now need to increase decarbonization rate by factor of five. From PWC: Low Carbon Economy Index 2014 | 2 degrees of separation: ambition and reality

The PWC 6th annual Low Carbon Economy Index 2014 (LCEI) tracks the rate that G20 countries are decarbonizing their economies. Globally we are achieving only 1% pa vs. the 6.2% pa we need to meet the 50% chance of 2°C or less. PWC has published an important contribution, very well-explained and illustrated. If you are in a big hurry, then at least look at the 2.7 minute video (with transcript).

Who Pollutes Most? Surprises in a New US Database

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 “If the US were to put a carbon tax in place, it’s not the case right off the bat that the members of one party would be disadvantaged relative to the other,” Kevin says.

“The difference in political rhetoric is far greater than the difference in environmental reality,” he adds. “The rhetoric should be: Why are we taxing things we want more of, like income, instead of things we want less of, like pollution?”

The Center for Global Development has a couple of new papers out. Both contribute to the political context of possible carbon fees. And there’s a new podcast interview with researcher Kevin Ummel. Lawrence MacDonald:

Pollution has no respect for party lines. In the US, Republican and Democratic districts may differ in many ways but when comes to the carbon emissions heating our planet the differences are much smaller than you might expect. This is one of the most surprising and important findings in a remarkable new working paper from CGD visiting senior associate Kevin Ummel. I’m so excited about this paper I took a short break from my new job at the World Resources Institute to discuss with Kevin the far-reaching implications of his work for the design and politics of US carbon pollution fees.

Kevin’s paper, Who Pollutes? A Household-Level Database of America’s Greenhouse Gas Footprint, is a slender 23 pages that sits on the brawny shoulders of a fresh approach to available data and an muscular number crunching exercise to estimate the greenhouse gas emissions of households all across America.

Kevin tells me that he set out to study the consumption habits of American households based on the recognition that “every kilogram of human-caused emissions can be traced to a consumptive choice on the part of an individual, a household, or in some cases, a government.”

Kevin used data from two massive surveys (the Consumer Expenditure Survey and the American Community Survey) to determine what American households buy with their money. He then combined this survey data with data from the environmental sciences to “translate how people spend their money into an estimate of how much [carbon] pollution they are producing.”

One surprise: the high degree of what Kevin calls “pollution inequality”—the top 10 percent of US polluters are responsible for 25 percent of the country’s carbon footprint, while the least-polluting 40 percent of Americans account for just 20 percent.

Who pollutes most? Low-density, affluent suburbs, where the lifestyle includes big homes, big cars, long commutes and plenty of international air travel. Many of these people also recycle and opt for local produce to reduce their carbon footprint! (Sound like anybody you know?)

High-density cities have the lowest household carbon footprint—especially the poorer neighborhoods that tend to vote for Democrats. More surprisingly, less affluent rural communities that tend to vote Republican also have small carbon footprints.

The new data show that these geographical distinctions are much starker than the differences between the carbon footprints of Republican and Democratic districts, which tend to be “very, very small,” Kevin says.

More at the CGD source.

 

China Studying Carbon and Coal Caps for Next Five-Year Plan

I’m seeing increasing optimism that China’s leaders are incrementally implementing climate-positive policies. These are policies that violate Roger Pielke Jr.’s “Iron Law”. While I’m reading the current 5 Year Plan, and going through my notes on policy hints, I found this June Bloomberg piece which closes with these comments on possible carbon taxes as well as coal and carbon caps.

At the moment, while the ETS is being piloted, the Ministry of Finance (MOF) is also studying the possible implementation of carbon taxes. Yang Fuqiang said the National Development and Reform Commission favors the ETS system and the MOF the tax system, but it is uncertain which will be the leading policy in the end.

According to the CNS report, He also said nonfossil-fuel-based sources are expected to reach 15 percent in 2020, to reach 20 percent to 25 percent in 2030, and to hit 33 percent to 50 percent of the energy mix by 2050 in China.

Text of a speech by He given at a Low Carbon Development Forum at Tsinghua University in March shows he is in favor of setting caps on coal consumption and carbon emissions beyond the carbon intensity targets that have already been set, to “give stronger binding targets to promote the transformation of the current economic growth model,” but He did not suggest any policies had officially been set by the central government for the next planning period.

How did Climate Change become a US partisan fight?

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I don’t have a solid answer to the captioned question. Survey data I’ve examined indicates the liberal/conservative split on climate is something new — since roughly the 1997 Kyoto Treaty.

My simplistic answer is:

  1. Kyoto was divisive because implementation fit very naturally with Democrat values emphasizing top-down control of the economy and international cooperation. Opposition fit naturally with Republican small-government values where Kyoto was seen as a path to larger, more intrusive government; and probably to slower growth.
  2. Kyoto was promoted by Al Gore. That was not a good choice for winning bipartisan support.
  3. Because Gore was pro-Kyoto, GW Bush had to be anti-Kyoto. Both those men affected the opposing party like fingernails on a chalkboard.
  4. The deflection around 2007 in above chart seems to support my last speculation: while both Obama and McCain proposed positive GHG action, the Kyoto concept was identified with Obama. That association was similar to the “Al Gore effect”.
  5. Gradually values-based disagreement over what-to-do-about-GHG was turned into a division over “The Science” and denialism was born. I don’t know why that happened.

For a more thoughtful analysis, there is the 2012 piece by Andrew Hoffman in Stanford Social Innovation Review Climate Science as Culture War. Andrew also examines ways to reach a negotiated social consensus. 

(…snip…)Climate change has become enmeshed in the so-called culture wars. Acceptance of the scientific consensus is now seen as an alignment with liberal views consistent with other “cultural” issues that divide the country (abortion, gun control, health care, and evolution). This partisan divide on climate change was not the case in the 1990s. It is a recent phenomenon, following in the wake of the 1997 Kyoto Treaty that threatened the material interests of powerful economic and political interests, particularly members of the fossil fuel industry.3 The great danger of a protracted partisan divide is that the debate will take the form of what I call a “logic schism,” a breakdown in debate in which opposing sides are talking about completely different cultural issues.4

This article seeks to delve into the climate change debate through the lens of the social sciences. I take this approach not because the physical sciences have become less relevant, but because we need to understand the social and psychological processes by which people receive and understand the science of global warming. I explain the cultural dimensions of the climate debate as it is currently configured, outline three possible paths by which the debate can progress, and describe specific techniques that can drive that debate toward broader consensus. This goal is imperative, for without a broader consensus on climate change in the United States, Americans and people around the globe will be unable to formulate effective social, political, and economic solutions to the changing circumstances of our planet.

One of the best qualified to comment on the partisan development is Roger Pielke Jr — for example, his 2007 blog post Why is Climate Change a Partisan Issue in the United States? I don’t wish to simplify Roger’s analysis, but will just note that he begins with the conflict between Al Gore and George W. Bush.

Discounting and costs (Part 2): IPCC WGIII report on mitigation

This is a guest post by physicist Jani-Petri Martikainen @jpjmarti, proprietor of PassiiviIdentiteetti
(This post first appeared on Passiiviidentiteetti April 22, 2014)
 

rightwrongIn an earlier post I briefly discussed the scale of the challenge. In this one I discuss briefly how the report discusses ethical issues surrounding responsibilities towards future generations, with a special focus on discounting and how it relates to cost estimates of various energy options.

The use of a temporal discount rate has a crucial impact on the evaluation of mitigation policies and measures. The social discount rate is the minimum rate of expected social return that compensates for the increased intergenerational inequalities and the potential increased collective risk that an action generates. Even with disagreement on the level of the discount rate, a consensus favours using declining risk‐free discount rates over longer time horizons (high confidence).

An appropriate social risk‐free discount rate for consumption is between one and three times the anticipated growth rate in real per capita consumption (medium confidence). This judgement is based on an application of the Ramsey rule using typical values in the literature of normative parameters in the rule. Ultimately, however, these are normative choices.” IPCC WGIII Chapter 3

 “A simple arbitrage argument favours using the interest rate as the discount rate for climate policy decisions: if one reallocates capital from a safe but marginal project (whose return must be equal to the interest rate) to a safe project with the same maturity whose return is smaller than the interest rate, the net impact is null for the current generation, and is negative for future generations. Thus, when projects are financed by a reallocation of capital rather than an increase in aggregate saving (reducing consumption), the discount rate should be equal to the shadow cost of capital.

This descriptive approach to the discount rate has many drawbacks. First, we should not expect markets to aggregate preferences efficiently when some agents are not able to trade, as is the case for future generations (Diamond, 1977). Second, current interest rates are driven by the potentially impatient attitude of current consumers towards transferring their own consumption to the future. But climate change is about transferring consumption across different people and generations, so that determining the appropriate social discount rate is mostly a normative problem. Thirdly, we do not observe safe assets with maturities similar to those of climate impacts, so the arbitrage argument cannot be applied.”  IPCC WGIII Chapter 3

This discussion on discount rates is in my opinion very important since discount rates capture lots of the ethical underpinnings of our responsibilities to future generations. Discount rates tell about our time horizons and about how patient we are in waiting for gains. If you are offered money right now and twice as much at a later date, how long are you willing to wait? If the discount rate is 10%, you might be ready to wait for about 7 years and if it is 5% you wait for 14 years. Stern review used a rate of 1.4% for climate change damages in which case you are ready to wait for 50 years. In this case the time horizon is truly inter-generational. As explained by the WGIII, how to discount is in the end of the day a normative choice. However, it is a choice whose impact should be openly discussed and a choice that should be reasonably defended. In general I found the Chapter 3 Social, Economic and Ethical Concepts and Methods” interesting and I have to read it more carefully later. I recommend that authors of WGIII Chapter 7  “Energy Systems” also read it.

WGIII gives the levelized cost of energy for different energy sources in Figure 7.7 of Chapter 7. If you look at figure 7.7 (below) carefully you will perhaps notice something funny. In the 4th assessment report at 2007 the costs were given as shown in Figure 4.27 (see copy here). It is not the most beautiful of figures, but clear enough.

Figure 7.7 from IPCC WGIII Chapter 7 (2014)

Figure 7.7 from IPCC WGIII Chapter 7 (2014)

Fig 4.27 from WGIII 2007

Fig 4.27 from WGIII 2007

It shows the results at two different discount rates with coal, gas, and nuclear as the lowest cost options. Somebody was clearly not happy with this and wanted to change the figure into Fig. 7.7 of the new report. As I glanced at the figure first I naturally choose to compare “red” bars with red bars and blue ones with blue. After all we shouldn’t compare apples and oranges. Maybe you did the same? However, I then noticed that red color assumed “high full load hours”. What does that actually mean? In order to figure out, one has to read the annex III for detailed assumptions (how many are going to do that?). For nuclear power “high full load hours” meant a capacity factor of 84 %, for onshore wind 40%, and 27% for solar PV. For nuclear power this a typical capacity factor (although many reactors do better), but for wind and solar power those capacity factors are very atypical. So the figure is constructed in such away that uninformed reader is likely to make incorrect comparisons. In fact, WGIII concludes the caption of Fig. 7.7 (its on the next page and likely to be missed) by saying “Note: The inter-comparability of LCOE is limited. For details on general methodological issues and interpretation see Annexes as mentioned above. ” Indeed. Given that comparisons cannot really be made, why was this approach chosen in the first place? If you can come up with a charitable explanation I am all ears, but to me this seems like authors of Chapter 7 were actively working to make comparisons hard.

How did the authors of Chapter 7 approach the discounting? Let us guess that economic growth in the future is around 2%. In this case the Ramsey rule mentioned by the IPCC in Chapter 3 suggests a discount rate in the range of 2-6%. What discount rate is used in chapter 7 to compare levelized cost of energy (LCOE) for different energy sources? That would be 10%! Authors of WGIII decided not only to use very high discount rate, but also not to give their results at different discount rates so that the effects of this assumption could be observed. Considering that authors of Chapter 3 specifically emphasized how crucial this issue is in evaluating mitigation policies, the approach in Chapter 7 seems indefensible. At minimum one would expect them to show results over broad range of discount rates, but this they decided not to do. Since they refused to do it,  I will quickly do it here and see what difference it makes. (Note that some results with 5% discount rate are hidden in annex III, but these are only for the high FLH case so no honest comparison is possible.) In order to make sure that I know what I am doing I try to reproduce typical LCOE figures for WGIII high FLH case. I copy typical numbers from the annex III and this is what I get.

LCOE $(2010)/MWh comparison based on WGIII high FLH case (warning: misleading comparison!):

 Technology LCOE 10% high FLH (IPCC median) My result
Nuclear 99 97
Coal PC 78 78
Wind onshore 84 85
Solar PV (rooftop) 220 220
CCS-coal-PC 130 123

OK, the numbers are not exactly the same, but close enough for me. I am not sure how WGIII defined the median here. Also, maybe there is some index inconsistency somewhere in the summations…who knows. Basic point is that I can reproduce the WGIII values reasonably well and I am on the same map as WGIII. We are ready to go! So let me then look at the things WGIII decided not to show. I will now compute typical LCOE for few technologies at 10%, 5% and 1.4% discount rates. It turns out that as discount rate is lowered the LCOE for nuclear power drops from 97$/MWh to 62$/MWh, and finally to 42$/MWh. I will summarize the rest of the results by giving the costs relative to nuclear power. The values colored green are higher than the LCOE of nuclear while red is lower.

Difference to the cost of nuclear (go right if you prefer responsible long term thinking): 

 Technology 10% discount rate 5% discount rate 1.4% discount rate
Nuclear 0% 0% 0%
Coal PC -18% +5% +34%
Wind onshore +40% +57% +77%
Solar PV (rooftop) +190% +210% +230%
CCS-coal-PC +27% +63% +110%
(Main assumptions: Most numbers are copied from annex III of WGIII and I just list the differences here.I choose the capacity factor for wind power as 25% which is higher than European or Chinese average, but somewhat less than US average. Most of the wind power capacity in the world does worse than this. I choose the wind turbine lifetime as 20 years as opposed to WGIII value of 25 years, since 20 year lifetime is given by wind turbine manufacturers. This doesn’t change anything of relevance though. I choose PV capacity factor as 15%. In good locations capacity factor can be higher than this, but for example in Germany it is around 10%. Therefore 15% seems fair. I assumed PV capital costs as 3000 $/kW which is substantially less than the WGIII median value of 4400 $/kW. You can check the calculations and assumptions from these Matlab files LCOE_IPCC.mIPCC_Compare.m, and CompareForReal.m. In combination with annex III files should be quite self-explanatory and not too difficult to translate to other number crunching tools.)

As you can see green dominates and with the possible exception of hydro power in good locations, nuclear power is the lowest cost zero carbon source of electricity no matter what discount rate was used.  At 10% discount rate it has difficulty at competing with coal, but at 5% it becomes cheaper than coal. As discount rate is lowered the cost advantage of nuclear relative to other low carbon energy sources is rapidly increased. With 1.4% discount rate and a time horizon extending across generations nuclear power is cheaper than other options by a very large margin.  These results are based on the WGIII numbers and the only changes are those listed above to mainly account for differences in capacity factors. We could make the above table all green by adding a carbon price of only around 20 $/tCO2.

Maybe this discussion on the role of discount rates is simply too radical and WGIII is just following conventions? Well, not really. It is certainly not too radical for WGIII since in its 2011 SSREN report focusing on renewables WGIII gave precisely this type of comparison with 10%, 7%, and 3% discount rates (Fig 10.29 p. 844 in Chapter 10). Some of its authors were even authors of this report. Of course from SSREN report nuclear power was purged at the outset and results which might give readers funny ideas did not have to be shown. Absurdly the discussion on discount rates in this context is far more extensive in SSREN while in this report it has been brushed aside contrary to the emphasis by the authors of Chapter 3 of WGIII. We can only speculate as to why.

To me it seems that on this issue the authors of Chapter 7 were working hard to make sure that uninformed would remain uninformed while giving a chance to say to informed ones: “We are not lying! We are open about the methodology…see annex III etc. Yeah, maybe figure 7.7 is not as clear as it could be. Thanks for the tip! Clear communication is super important and we will keep it in mind for the next assessment report! Blaah blaah blaah…” IPCC should be an expert body giving accurate evidence based material for policy discussions. Sadly in this case WGIII decided not to give this material and compromised its supposed “policy-neutrality”. In plain english, authors of Chapter 7 decided not to do their jobs since doing it would have provided facts suggesting that some mitigation policies are likely to be more effective than others. But this is what they should do! If people decide to brush the cost differences aside, that is their choice, but it is not the role of an expert to fudge figures in such a way that implications of different policy choices are hidden.

Authors of Chapter 7 did what?

Authors of Chapter 7 did what?

While the WGIII messed up the presentation of the costs that we are in a position to know fairly well, it spends a lot of time in speculating about long term costs using integrated assessment models. Since we are not able to predict the future of mankind, I do not think that these games are much more than computer generated guesses based on the preferences of whoever is doing the modeling. I think we are better of in focusing on issues that we can actually control at least to some degree. The Economists was also not very impressed about this:

The IPCC still thinks it might be possible to hit the emissions target by tripling, to 80%, the share of low-carbon energy sources, such as solar, wind and nuclear power, used in electricity generation. It reckons this would require investment in such energy to go up by $147 billion a year until 2030 (and for investment in conventional carbon-producing power generation to be cut by $30 billion a year). In total, the panel says, the world could keep carbon concentrations to the requisite level by actions that would reduce annual economic growth by a mere 0.06 percentage points in 2100.

These numbers look preposterous. Germany and Spain have gone further than most in using public subsidies to boost the share of renewable energy (though to nothing like 80%) and their bills have been enormous: 0.6% of GDP a year in Germany and 0.8% in Spain. The costs of emission-reduction measures have routinely proved much higher than expected.

Moreover, the assumptions used to calculate long-term costs in the models are, as Robert Pindyck of the National Bureau of Economic Research, in Cambridge, Massachusetts, put it, “completely made up”. In such circumstances, estimates of the costs and benefits of climate change in 2100 are next to useless. Of the IPCC’s three recent reports, the first two (on the natural science and on adapting to global warming) were valuable. This one isn’t.The Economist. While I think the report has some interesting things as well, when it comes to cost estimates I tend to agree with The Economists.

Finally, in my opinion the fact that companies use the short time horizons implied by 10% (or higher) discount rates is a clear indication of a market failure. Climate change requires longer term decisions and if such decisions cannot be delivered by current markets, those markets need to change. Either the state with a longer time horizon must become more active or appropriate sticks and carrots should be developed to discourage short term profit taking and promote longer term visions.