Tuesday, January 19, 2010

shifting to energy policy

Perhaps now with the collapse of the Copenhagen talks, the revelations of abuse from Climategate and the knowledge that the Himalayas are not going to disappear in the immediate future, we can turn our attention to the real issue of cheaper future fuel options, particularly for developing nations.

As is often the case, the template for discussion has been established by another article by the excellent Nordhaus and Shellenberger:

  • In the end, whether or not the Senate passes a cap-in-name-only climate bill, the long-term failure of Kyoto and all other efforts to establish binding emissions caps is virtually assured and is a function of a basic technological problem. We simply do not have low-carbon technologies today that can at large scale replace fossil fuels at a cost that any political economy in the world is willing to impose upon itself. There will be no political solution to climate change, no binding international agreement to substantially reduce emissions, and no effective domestic carbon cap until low-carbon technologies are much cheaper than they are today. 
  • ...Obama was following two decades of magical thinking among both greens and liberal Democrats about energy technology. In this view, energy efficiency pays for itself, solar and wind power are already nearly cost competitive with fossil fuels, and both can quickly and cheaply reduce emissions. This Pollyanna view of fossil fuel alternatives and efficiency, which makes going green seem cheap and easy -- little more than the cost of "a postage stamp a day" -- has provided the justification for green-policy advocacy that has overwhelmingly focused on pollution regulations and carbon pricing while ignoring serious investment in energy research and development. 
  • Incumbent energy interests had, in short, hijacked magical climate thinking for their own uses. They took cap-and-trade legislation and turned it into an opportunity for them to raise energy prices on consumers, invest a fraction of the higher revenues in clean energy, remove existing regulatory obstacles to the construction of coal plants, and lock in their competitive advantage while crowding out energy newcomers, including clean energy firms, for decades to come. 
  • Solving the technology challenge will not be easy, but in terms of our collective wealth and knowledge we are in a better position today than at any other point in our history. In the end, global efforts to address the climate challenge, if they are to succeed, must centrally focus upon the creation of a new and extraordinarily important global public good: the development of low-carbon energy technologies that are cheap, clean, and abundant. After two decades of domestic and international failure to take real action on climate change, it is time for the purveyors of magical thinking to take their exit so that the main act can begin. 
I am still far more optimistic about a free market approach to this solution than Nordhaus and Shellenberger, who prefer a contemporary Manhattan Project investment by government, but I can agree with their analysis of the the overall policy objective: eventually, we will need alternate cheap, energy sources.  Where we differ is both the approach to this resolution (free market or government directive) and the time scale.  

The role of climate alarmism has been to present the immediate need for collective de-carbonisation.  Absent of that alarmism, the developed world has substantial low cost energy sources and no real incentive to push the kind of technological advancement Nordhaus and Shellenberger identify.  The need today is for low cost energy sources to fuel developing countries: nations that also lack the capacity to independently initiate the type of technological advances cheap alternate energy requires.

So the real issue is: do we wish to view ourselves as a sustainable global community?  As much as Nordhaus and Shellenberger correctly identify the need for new energy technology, the most pressing barrier to future prosperity remains our need to reconcile the social imperative for sustainability: 
  • expanding and improving our notions of community
  • decreasing the specter of fear and its grip on public policy, and
  • recognition that what differentiates us need not divide us.

Free market or state intervention is irrelevant until such time as we view our collective interest as our own self-interest.