Frank N Laird’s Recent Comments

• Click here to view comment in original post

  Need for greater investment in energy technologies

      I've been in touch with Ted Nordhaus and Michael Shellenberger for the past year as they've done their research into energy sciences and policy.  They have combined their extensive research, including consultations with many different experts, with important insights into the political nature of global warming and the problems that poses for environmental politics.  Their result is compelling.  

      Dave Hawkins's posting criticizing Shellenberger and Nordhaus's recent article contains a reasonable-sounding argument but one with false premises.  When one corrects those premises, the argument as a whole falls apart.  It is not Shellenberger and Nordhaus who are naïve or misinformed.  

      Hawkins's first mistaken premise is that the technologies we need already exist.  Certainly wind and photovoltaics have made huge strides in the last couple of decades, with declining prices and growing markets.  Both industries have posted double-digit annual growth for more than decade.  Indeed, prices for both technologies have gone up in the last year due to their success: demand is growing faster than production capacity.  But even all that success has left renewables with a small part of the electricity market, just 0.8% for wind in the United States at the end of 2006, and considerably less for PV.  Even Germany, a country with much stronger policies supporting wind and much higher prices for fossil fuels, only gets 7% of its electricity from wind.  (A great summary of wind is in the Department of Energy's Annual Report on the U.S. Wind Power Installation, Cost, and Performance Trends: 2006, available at www.nrel.gov/docs/fy07osti/41435.pdf).  

      No doubt these technologies can continue to grow and their potential in terms of wind and solar resources is immense.  But their prices need to come down further.  More importantly, the industry needs dramatic innovation in energy storage to get wind and PV to be more than 15-20 % of the grid.  

      All of this takes lots of R&D money and R&D spending on renewables, private and public alike, is tiny compared to the challenges it faces.  Where is that money going to come from?  Much of this research is long-term and highly uncertain in its payoff.  Historically, governments have made those sorts of investments.  In industries where private firms make big investments in R&D, government is right there making them as well (think biotech and IT).  Indeed, in the area of renewable energy with the most technological ferment in the private sector, biofuels from environmentally benign sources, those firms are benefiting directly from government-supported R&D in molecular biology, a field in which the federal government has spent generously for decades, with current budgets in the tens of billions of dollars.  

      Hawkins's second premise is that consistent policies demanding reductions in greenhouse gas emissions will create an incentive for firms to create the needed technologies.  The problem is that no such policies exist and no one knows how to create them.  There are two approaches (with many variations) to such regulations.  Traditional command and control regulations impose quantitative limits on how much greenhouse gas any emitter can put into the atmosphere.  Such regulations work only when the regulations directly affect a small number of players and the costs they impose don't become overly burdensome.  So the EPA can require catalytic converters on every car in the United States because they only have to monitor a half-dozen automobile manufacturers and force them to comply.  Greenhouse gas emissions are different.  To reduce them, you need to monitor and enforce, for example, not only the mileage that 300 million cars get (which depends in part on how people drive them) but also how many miles people drive.  That would be an administrative and political nightmare.  

      The alternative is market-based regulation, which means trade-able permits for large stationary emitters like power plants and higher (much higher) prices for fuels for cars, homes, office buildings, etc.  But this confronts the problem that Shellenberger and Nordhaus depict so clearly:  make the price high enough and governments will encounter political backlash.  

      No doubt the United States could and should do more to improve energy efficiency and internalize the environmental costs of energy into its market price.  But a look around the world suggests the limits of that approach absent an aggressive effort to develop better technology.  Dozens of countries have adopted and ratified the Kyoto Protocol, yet only three of them, Russia, Germany, and Britain, have any hope of complying with it, and only because the treaty choose the base year of 1990.  It turns out that 1990 was a peak year for greenhouse gas emissions for those three countries for reasons particular to each of them.  So mandating a reduction of emissions from a baseline of 1990, instead of 1997 when the treaty was negotiated, makes it relatively easy for those countries to comply, and even at that it will be nip and tuck for Germany and Britain to comply.  If the Kyoto negotiators had set the base year at 1997, no one would be in compliance.  

      Think about it.  Even a casual look around Europe shows countries with small cars, small houses, compact land use, high-quality mass transit, and very expensive energy thanks to steep taxes.  And yet, almost none of them will comply with Kyoto, which requires modest cuts in greenhouse gas emissions compared to the sorts of cuts the IPCC says the planet needs to avoid severe global warming.  I admire greatly what the Europeans do, but they don't have the solution to global warming either.  

      All this calls for a serious initiative in developing new and improved renewable energy technologies.  Certainly that is not enough, as Shellenberger and Nordhaus point out, and regulations have their place.  But we have been trying to solve global warming on the cheap and have failed environmentally and politically.  It's time to get serious about policies that can actually make a difference.  On A response to Shellenberger & Nordhaus from David Hawkins of NRDC posted 2 years, 1 month ago 6 Responses