Next Generation Energy is managed and written entirely by Seed editors and expert guest bloggers. Read more about them This week we're considering the ability of the average consumer to think in the long term by asking "Will even a temporary reduction in prices take voters' minds off energy issues in the upcoming election?" The question assumes that energy prices are near to the top of voters' list of concerns, which I am not convinced they are or ever were, no matter how much drivers gripe at the pumps. Even if it's true, though, when was the last time your typical quasi-post-industrial citizen demonstrated an interest in looking past the here and now?
Pollster John Zogby says he thinks there are optimistic signs. His latest survey numbers suggest 'the swift rise in fuel prices earlier this year had fundamentally changed U.S. consumer behavior, and a pullback below $115 per barrel was not sufficient to alter that." That may be true, although I would argue the numbers he's drawing on are hardly dramatic enough to warrant such a conclusion.
Again, even if there has been some kind of fundamental shift in consumer behavior, the really important question is whether that will translate into political action. It's good that, as Zogby points out, "the lines are not forming to buy Hummers," but that sort of thing is only the tip of the transformational iceberg needed to forestall the the double-whammy that will come when peak oil really hits the marketplace and catastrophic climate change from rising fossil-fuel emissions triggers an ecological tipping point or two. Americans must be willing to make much more significant changes if they want to avoid going broke getting to work.
Sunday night I listened to a repeat broadcast of an interview with Al Gore from late 2006. In the wake of the success of An Inconvenient Truth, he was waxing optimistic about the inspirational message audiences were taking home from the documentary. But in the two years since then, the only consequential change in America on the energy-consumption front is Congress finally passed an update to the automobile CAFE standards, raising them by a meager 40 percent by 2020. That still leaves the United States near the bottom of the industrial world.
One could argue that not much gets done in the final two years of the second term of a presidency. But I also don't see much in the way of progress in society as whole when it comes to preparing for what James Kunstler calls "the long emergency." No, I'm afraid my definition of a "fundamental change" is quite different from Zogby's.
What we need is a national dialogue on what both presidential candidates say they want to introduce: a cap and trade system for greenhouse gases. For starters, we need to know whether Obama and McCain actually understand what that would mean for the economy. Then the public has to get its collective mind around the consequences of a social-engineering tool that will, if it is properly designed, make conventional fuels and electricity sources much more expensive than they are today while it spurs research and investment in, and deployment of, clean alternatives.
Only when everyone realizes just how radical a transformation is necessary will the shit hit the fan.
So what kind of numbers are we talking about? Ted Nordhaus, Michael Shellenberger and other analysts at the Breakthrough Institute produced some interesting numbers in a paper, Fast, Clean, & Cheap: Cutting Global Warming's Gordian Knot they had published earlier this year in the Harvard Law and Policy Review, (January 2008). In order to make any cap and trade system accomplish anything useful, the right to emit a tonne of carbon (or carbon dioxide) will have to be high enough to make clean technologies at least a cheap as coal.
According to the Breakthrough gang, which used data from the U.S. Energy Information Administration, to make solar photovoltaics competitive with coal we'd have to make a tonne of carbon cost $807. Hydrogen fuel cells would need a price of $481, and solar thermal $337. Compare those numbers with what happened in the ETS, the world's first operating cap and trade system, in Europe. There the price of carbon started out at 30 Euros/tonne, and quickly plummeted to close to nothing. That was because the initial "pollution rights" were handed out for free, among other reasons, instead of being auctioned off. Since then things have improved, and a review by the Pew Center on Global Climate Change concluded that it has "performed surprisingly well."
But at its best the ETS is only operating on prices that are a fraction of what the Breakthrough Institute says are necessary to do the trick. (Except for wind, which is already competitive. The BI calculated that wind only needs a price of $47 a tonne.)
I don't think things are quite that bleak, though. For one thing, the Breakthrough numbers use the cost of producing electricity instead of the market price, to compare. This is a common problem. An individual homeowner will start saving money when his or her solar array or wind turbine beats what the utility is charging for electricity, not what it costs the utility to produce it. In the case of coal, that's 4.84 cents per kilowatt in costs — half what it charges typical customers.
So in some cases, effective carbon trading prices may be significantly lower than the scary numbers from the Breakthrough gang, which, it should be noted, has long been making the case that we need massive investment in new energy technologies before a cap and trade system can work. (Fellow energy blogger Joe Romm disagrees strongly with this axiom and believes that we can start deploying existing technologies without breaking the bank. And he makes a compelling case.)
But even with the best spin possible, there's no getting around the fact that capping total greenhouse gas emissions and trading the rights to emit an ever-dwindling total tonnage will mean more expensive gasoline and electricity. Much more expensive.
And it will be significantly more expensive until the economies of scale and research on clean technologies pay off and bring down the cost of clean alternatives. So the sooner we start talking about the real costs of capping our emissions, the better. It's going to take time to swallow the truth. Time that we don't have.
Technology
Comments
I think its not quite as bad as is presented in the table. The cost of new coal generation has gone up quite a bit, this seems to be related to the cost of steel and other industrial commodities. Also the cost of coal has risen dramatically (faster than oil in fact), so the moving target is getting easier to hit. Also the cost of PV needs to be qualified. What sort of PV technology (silicon, thinfilm, or concentrated)? Is it an industrial scale project, which should enjoy significant scaling advantages over a homeowner installation. Is it is a favorable climate? If the baseline is fossil fuel generated electricity, what are the expected effects of rising fuel prices, five, ten, and twenty years from now?
Posted by: bigTom | August 25, 2008 6:08 PM
Those figures from Breakthrough seem much too high. For one thing, carbon taxes aren't going to go higher than what it costs to remove a ton of carbon directly from the atmosphere. Estimates vary, but it may cost less than $100 a ton. In addition, in Australia it has been estimated that solar will start to become competitive with coal and gas with a cost of $10 a ton on carbon, and will be cheaper than coal with a cost of $40 a ton of carbon. This means that if it costs $40 to emit a ton of carbon into the atmosphere, no new coal plants will be built and old ones will be gradually phased out. Now these figures may be different in places that aren't as sunny as Australia, but as the price of solar and other sources of renewable power are expected to continue to drop in the future, it might not be long until this is the case in the rest of the world.
Posted by: Ronald Brak | August 25, 2008 10:59 PM
I suggest 4th generation fuel production utilizing methanogenesis. CO2 can be turned into natural gas biologically. The limitation is that the CO2 level in the air is too low for efficient biological production of methane, so compressed CO2 would have to be used. Imagine turning a dirty coal-fired power plant into a producer of both electricity and natural gas! Watch this link: http://video.google.com/videoplay?docid=-5801438373594244040&q=Craig+Venter+4th+generation&ei=jIKJSIqaAYS64gKz6qX_Bw&hl=en
By the way, There is a very inexpensive simple way to immediately cool the Earth: just put a small amount of aerosol into the air to dim the sun. We won't be able to stop rapid ecosystem collapse without geoengineering, buying us time to retool our energy infrastructure.
Posted by: Brad Arnold | August 26, 2008 1:57 AM
James, thanks for your interest in "Fast Clean Cheap." Just to clarify, the prices you've listed are dollars per ton of carbon, not carbon dioxide (most people are more familiar with $/tCO2). This data was projected by the EIA for levelized electricity generation costs in 2010, though they probably don't reflect the recent trend toward higher coal-generated electricity prices. Nevertheless, it is clear that pricing our way to massive deployment of clean energy is nearly impossible. The most important thing we can do on energy and climate is to make a set of strategic and large-scale public investments -- funds that could be raised by a modest carbon price -- to reduce the price of clean energy as quickly as possible.
Posted by: Teryn Norris | August 26, 2008 2:07 AM
It was at exactly the same time that a monkey let go of a handful of rice in order to escape a hunter's trap.
Posted by: Dunc | August 26, 2008 6:08 AM