There's a big problem facing climate and energy advocates, one they seem to be more or less shutting their eyes to at the moment, hoping it will go away: regulations capping carbon and mandating emissions cuts are likely to raise energy prices for consumers in the short term. This is a problem because polls and surveys show fairly consistently that consumers are extremely sensitive to these prices.
I think it's going to be frighteningly easy for right-wing demagogues to pull on climate legislation the same thing they did on healthcare legislation back in the early '90s: tell consumers that Democrats are going to raise their prices and leave them shivering in the dark.
What can be done about this? In an important article over on American Prospect, Peter Teague and Jeff Navin argue that greens need to pay proportionate attention to public investment.
Their negative case -- the peril of regulation-based legislation -- is strong, based on recent survey data from American Environics (PDF). It's the positive case I have questions about.
They argue fairly convincingly that targets and market mechanisms won't be enough to generate the sustained, long-term investments we'll need to transition to a green energy economy. (I'm somewhat ambivalent on this point -- maybe Sean Casten will drop by to shoot it down.)
They hold up Mayor Bloomberg's PlaNYC -- which mixes cuts in greenhouse gas emissions with a package of investments in parks, housing, clean air, etc. -- as a model. And indeed, if somebody could pull off something similar at the federal level, I'd be the first to celebrate.
But federal legislating is a messy and compromised business. "Investment" is frequently, nay, usually code for nothing more than huge corporate subsidies. How can we create a large fund that makes wise investments rather than making the problem worse?
For instance, Hillary proposes to create a $50 billion Strategic Energy Fund, paid for with taxes on oil companies, that would be used to invest in new energy solutions. Sounds great, right? But if you watch her speeches, what she talks about investing in are ethanol and coal. Suffice to say, I think that blows as a climate change solution, and I'm not convinced it would be all that advantageous politically either.
So how can we design policy that invests in the transition to a new energy economy, in a way that tangibly benefits (or at least impresses) voters, without it becoming nothing more than corporate welfare?
On that, Teague and Navin are silent. I'd sure love to hear what they have to say about it.
‘Copenhagen Diagnosis’ offers a grim update to the IPCC’s climate science
Make the kids pay: The economic effects of climate change on future generations
Ask Umbra on bike helmets
Comments
View as Threaded
sunflower Posted 1:13 am
29 Jun 2007
Today's renewable energy new technology companies are still coasting on 1970s public research, like old trough solar power plants. Solar industrial process heat has disappeared altogether.
The leadership from President Carter was based on national security risks from the OPEC oil embargo, not on campaign contributions from pork barrel industrial private projects.
Giving money to private deployments does not result in the public publishing of research, engineering, and performance studies.
The national security risks from global warming today should be adequate motivation to restore substantial funding of public research by thousands of scientists and engineers at our national laboratories and universities.
This link is an example of valuable Carter era engineering I can use today. Note the bibliography dates (at the end of the chapter) reflect individual programs funded and managed by the government for the public good.
Heliostats
Permalink
Delay And Deny Posted 1:16 am
29 Jun 2007
http://www.ameshistoricalsociety.org/exhibits/events/rati ...
By the end of 1942, half of U.S automobiles were issued an 'A' sticker which allowed 4 gallons of fuel per week. That sticker was issued to owners whose use of their cars was nonessential. Hand the pump jockey your Mileage Ration Book coupons and cash, and she (yes, female service station attendants because the guys were over there) could sell you three or four gallons a week, no more. For nearly a year, A-stickered cars were not to be driven for pleasure at all.
Sounds like Grist and the government are inventing a whole lot of rigmaroles just to say that people need to cut back.
John Bailo
You Read It Here First
Permalink
Jon Rynn Posted 1:25 am
29 Jun 2007
Permalink
Jon Rynn Posted 1:49 am
29 Jun 2007
The kinds of large-scale, long-term investments that were instrumental in producing the Internet, the interstate highway system, and the biotech revolution came from government, and for a reason: Private capital won't stay in the game long enough, and the benefits of private investment are likely to be largely private.
Exactly, which is why it's weird, as the authors state, that environmentalists are so hesitant to just come out and talk about government investment:
Strangely, environmentalists are more quiet on the need for investment, preferring to argue that regulation will drive innovation, which will in turn create jobs and economic opportunity. To the extent that public investment in innovation is mentioned (a survey of environmental web sites and public statements found little on the subject), it seems to be regarded as a hoped-for by-product of the regulatory scheme rather than its core intention.
The market got us into this mess, and the market will not get us out of it. The authors go on to say that even "Reagan Democrats" were supportive of spending huge amounts of money on a new energy infrastructure. Solar panels on every rooftop! Light rail stops near every home! Wind farms in every neighborhood! Or as I saw in the model train exhibit at the Museum of Science and Industry here in Chicago, two little figures holding up a banner, "high speed rail now!"
Permalink
Pangolin Posted 3:15 am
29 Jun 2007
Sure some people will go to Vegas and others will buy new Hummers but the majority will find some way to make somebody else be the sucker who pays more than he gets back.
Give the carbon tax proceeds to the government and they will use it to finance stupid wars in countries with more carbon to burn. Congress at the moment is showing an IQ of an Alzhiemers patient on this issue. We'll get lots of biofuel subsidies and "clean coal" plants and they'll outlaw wind power.
The best government money can buy.
Put the Carbon Back
Permalink
Laurence Aurbach Posted 4:06 am
29 Jun 2007
Ped Shed Blog
Permalink
Sean Casten Posted 6:51 am
29 Jun 2007
Well, if you call my name, I must respond. Two general thoughts, for what they're worth.
One, there is clearly a place for government investment, but I'm not sure it's the list of things outlined in some of the comments (nor in the stuff that actually gets public dollars). The private sector is generally very good at deploying capital with the potential for near term gain. Government, by contrast is really bad at this, both because political pressures encourage pork and because Karl Marx was wrong (e.g., a small group of regulators, no matter how enlightened will never deploy capital as efficiently as the many actors of an unfettered market).
By contrast, the private sector in today's economy is much less adept at long-term, higher risk investments. Government however can do this, and can tolerate much bigger risks. The internet is often used as the example, but is deceptive in the sense that it starts from the presumption that all those investments are successful. The whole reason the private sector doesn't do fundamental research as well is because most of it fails. If the initial goal was to enable us to colonize space and/or create a business case to do so, the Apollo program is a colossal failure. But if we simply say that the goal was research for research's sake, with the hope - but not the promise - that something good will result (think fuel cells, microwaves, etc.) than it's not so bad. And I'm not even suggesting that the financial value from microwaves is sufficient to justify the money spent on Apollo - simply that big, high-risk low-probability-of-success investments have always been the way that technology moves forward. The price of admission is what it is, but there's no other way in the door.
So in this vein, I think there is a critical place for government investment in early stage investment, exploring ideas and doing the fundamental science and conjecturing that is critical to long-term progress. The challenge in doing this right is what a friend at the National Renewable Energy Labs once described to me as the "valley of death", where a technology is too close to market to obtain congressional funding, but too far from market to encourage private sector uptake. Lots of DOE (and related) efforts to to tech-transfer and try to bridge this gap, and most are horribly inefficient in my experience. But we may just have to accept this until someone can come up with a better way.
All of which brings me to my second point - and your bait - about whether market mechanisms alone will be sufficient. My simple response is that until we've tried, we shouldn't speculate. As I've ranted elsewhere, we don't pay anywhere near the true price for energy. I don't think anyone would argue that markets won't respond to price, so asserting that market-mechanisms alone won't be sufficient is essentially a claim that the price won't be high enough - or that the potential for existing technology isn't large enough. To which I say pshaw. There are tons of technologies out there that are kept out of market only by virtue of subsidies to the current status quo. In power alone, we've already identified opportunities to deploy technologies that are twice as efficient or better than the national average, which would displace 20% of US power generation - but for the inability of those plants to get a fair price for their power.
Note that I am not suggesting that prices will be high enough to stimulate sufficient early stages R&D to bring every immature technology to market, but rather that prices could be restructured (not necessarily as net increase) to bring lots of existing technologies into play that are currently blocked by bad market signals. So I guess I agree that markets alone couldn't do all the R&D, but not with the implicit assumption that "sufficient" carbon reductions cannot be realized without new technology.
And by the way - I am in violent agreement with your larger point. Too much of the environmentalist movement unwittingly presents itself as hostile to economic gain. It's time to get over this false conflict.
Permalink
GreenEngineer Posted 7:30 am
29 Jun 2007
Fund demand-side solutions, rather than supply-side solutions. Demand reduction measures are necessarily more distributed, so the benefits (both the energy savings, and the taxpayer largess) get spread around more.
Permalink
JMG Posted 7:34 am
29 Jun 2007
Hmmmmmm ...
*Discovery and understanding of the elements
*Theory of evolution
*James Watt's steam engine
*Jacquard loom
*McCormick's reaper
*Whitney's gin
*Charles Babbage's engine
*Otto's engine
*Remington's rifle
*Louis Pasteur's work on vaccinations
*Wright Bros.
*Fulton's steamship
*Marconi's radio
*Tesla's work
*Edison's work
Save the world: Reduce greenhouse gas emissions 5% annually.
Permalink
Jon Rynn Posted 7:44 am
29 Jun 2007
The private sector is generally very good at deploying capital with the potential for near term gain. Government, by contrast is really bad at this...By contrast, the private sector in today's economy is much less adept at long-term, higher risk investments. Government however can do this, and can tolerate much bigger risks
which I agree with, more or less, and is a very nice summation of a problem. But, unfortunately, since the huge global crises we face, global warming and the destruction of ecosystems (and maybe I can slip in peak oil, which really is technically an ecosystem problem), are very long-term, then it would seem to indicate that the government will have to be very much involved.
The problems that you face can be termed sclerosis, that is, the political system has become set in a very anti-productive structure (you might want to check out Mancur Olson's classic on this, "the logic of collective action", as well as "the rise and decline of nations"). But we also face that problem when it comes to carbon taxes or anything else that raises prices for consumers, which is what the original article Dave posted was talking about. People will resist change if it comes out of their pocket -- which is why, as the authors point out, it may be an easier sell to actually have the government spend a lot of money building thins.
So we've got some huge, well, to use a Marxian term, contradictions on our hands, only they aren't only social, they are ecological, that is, unless we clear this logjam the planet will fry.
As you point out, which is important, the government will do some very sloppy things when it does do things, but something is better than nothing, in the long-term. So the government can be an important way to jumpstart the process -- as it did, by the way, with the internet by building the first parts of it, or the interstate highway system by basically building it. If they can do that, why not an interstate railway system? Or even building mixed use neighborhoods? These can all be done with private firms, but to restructure society in the long-term is something the market cannot handle, especially when it needs to "jump" over a hurdle -- and using the government (at all levels, not just federal) just seems practical.
Permalink
GreenEngineer Posted 8:11 am
29 Jun 2007
In reality (as I suspect we all already know), the goal of the Apollo program was none of the above: it was to beat the USSR and establish American dominance.
What is less well known is that the Apollo program not only failed to establish a business case for space exploration, it actually damaged that possibility. NASA was working on a reusable spaceplane that, had it succeeded, would have established the first critical precondition for space development: cheap access to orbit. But there was no way that it was going to come together in time to win the "space race". So that approach was dropped (with the X-15 being the last major project in that direction), in favor of big, dumb, throwaway boosters. (Which are, incidentally, great for launching warheads, but lousy for cheap space access.) NASA got an enormous infusion of resources and became huge overnight. But when the race was run and Apollo was shut down, NASA became a huge bureaucracy with no clear mission, except to perpetuate its own existence. And American rocket engineers were left with this huge body of experience with throwaway rockets, rather than reusable spaceplanes.
I mention this because it illustrates one of the potential dangers of government intervention, and particularly crash programs. Of course, the program did what it was supposed to do, but it severely retarded our long-term prospects in space.
It makes me wonder what the unintended consequences would be if the Apollo Alliance does succeed in motivating a program of similar magnitude...
Permalink
GreenEngineer Posted 8:39 am
29 Jun 2007
Most of your counterexamples are, in fact, technological developments. The scientific advancements on your list were, for the most part, accomplished back in the day of the gentleman scientist, which unfortunately no longer really exists.
Permalink
sunflower Posted 8:52 am
29 Jun 2007
Permalink
JMG Posted 9:42 am
29 Jun 2007
Save the world: Reduce greenhouse gas emissions 5% annually.
Permalink
planetthoughts Posted 3:43 am
30 Jun 2007
So, are we afraid to say to the sleeping masses, "No, government CAN be the best answer to certain problems, those that are very large, that require endurance, that affect the weak or outnumbered, and simply that benefit the public without necessarily being profitable. The government's job is to protect both the greater good, and the neglected individual".
Are we afraid to say this? If so, let's change that and see how we go from there.
I will also use the "B" word: let's get Backbones and stand straight and
David Alexander
PlanetThoughts.org
Love your Planet.
Permalink
Colin Wright Posted 5:11 am
30 Jun 2007
Therefore we need to make sure anti-corruption measures are implemented along with the new investment. Public financing of elections would certainly help. As would promoting a regionalization of the economy, whereby local firms are chosen as much as possible for the reconstruction. Much of the money could be dispersed as block grants, whereby communities could decide for themselves where to put new light-rail and transit-oriented-developments.
On the other hand, one could envision a National Energy Corps to tackle projects which cross state lines (say, a new grid). No one could argue with the construction quality of the New Deal WPA projects. With good project mangement and oversight, there is no implicit reason why government can't work in the public interest.
Permalink
Delay And Deny Posted 10:38 am
30 Jun 2007
Energy crises? Need for alternatives? Government investment?
How about the year 1976, post-gasoline shortages and President Carter enacted broad legislation to push for the development and expansion of alternative energy technology.
<SARCASM>
And look at how well it worked...I mean, look at all the alternative energy that was ready and waiting, 30 years later, now that global heating is taking it's toll and gas prices are again climbing.
</SARCASM>
John Bailo
You Read It Here First
Permalink
naturescene Posted 10:41 pm
01 Jul 2007
Dave, you're all right too.
On Jon's comment:
"People will resist change if it comes out of their pocket -- which is why, as the authors point out, it may be an easier sell to actually have the government spend a lot of money building thins."
And where exactly do you think government funds come from? Oh yeah, the citizens!
Either way you look at it, the people are going to be paying for these investments (I for one would rather pay directly, so I know what my money is going towards.). And though, like Sean said, there is a place for governments, nothing/no one makes use of capital better than the millions of actors in a decentralized market.
Permalink
odograph Posted 11:08 pm
01 Jul 2007
I think it's important to note that in the first two things were started very slowly, tested with smaller scales over decades, and only "built out" when proven.
We are not at a stage to build out proven energy winners. We still have too many contenders. Will solar exceed wind? The next 10 years might tell.
The third (biotech) actually is a messy example of government investment in basic science and industrial competition for "intellectual property" in parallel. Often, government investment were converted in to "private property" in this process.
I would not really like to see government energy research follow that last model.
Permalink