By Larry Marsh, Kansas City Star Midwest Voices columnist 2009
Should we let Nancy Pelosi and Harry Reid pick the next big thing in alternative energy? Will their pet projects save the day, or turn out to be losers that crash and burn?
Perhaps there’s a better way. The fundamental problem is our failure to account for unwanted side effects which economists call negative externalities such as pollution and our dependence on fossil fuels and foreign oil imports. We all pay a price for these negative externalities through the inefficient allocation of our resources.
For a product to be produced efficiently, the full social cost of producing it must exactly match the private cost the firm uses to calculate its profits. Otherwise, the firm will overproduce and generate negative externalities or underproduce and generate positive externalities. An example of a positive externality would be the protection your friends and colleagues get when you get vaccinated for a readily-transmitted disease which is why most societies subsidize vaccinations to some extent.
Economists are not against pollution. Pollution is fine as long as it is at its optimal level. The problem is that the current level of pollution is way above its optimal level. Consequently, we need to bring down the pollution level.
Environmental and geo-political negative externalities mean that the social cost is often considerably higher than the private cost (the price we now pay). You probably feel that we are already paying too much at the pump. Unfortunately, if the true social costs were covered, the pump price would be even higher.
There are two possible approaches to solving this problem. The first approach calls for adding just enough tax to bring the private cost up to the social cost. This first approach would account for the environmental and national security damage caused by buying oil from our adversaries by imposing a tax such as that proposed under the carbon-credit-trading tax system. Alternatively, a second approach brings the social cost down by subsidizing some environmentally friendly form of alternative energy that either we produce or is produced by our geo-political friends.
While this second approach seems less painful, it is also a lot more dangerous. The first approach handicaps carbon polluting forms of energy, and creates a level playing field for alternative energy solutions, making them all considerably more profitable than they are today. The second approach requires that we pick a winner or some subset of possible winners. But how do we choose? What if we are wrong?
Until the late 1700’s, the British (and others) suffered severely from not being able to calculate longitude at sea. Ships that used dead-reckoning (straight point-to-point sailing) were attacked by pirates while those deviating from these sea lanes got lost at sea. The solution that paved the way for the British Empire was not discovered by the usual suspects at Oxford or Cambridge. Instead, a peasant in the British countryside with almost no formal education solved the problem. He had never even been to sea before devising his solution!
Some think the solution to our energy problem is wind or solar. But wait, maybe there’s something better just around the corner. Yes, there’s a newly fashionable geothermal, heat-pump-like solution based on ammonia which has a much lower boiling point than water. Should we bet our chips on this seemingly cheap solution or is there a fatal flaw or a better method or combination of methods waiting in the wings?
Instead, why don’t we take the first approach and let the free market sort this all out to find the most cost effective solution? Mistakes will be made, but at private expense. Before long, true winners will emerge.
Perhaps we should stop screwing around, and just take our carbon tax medicine. Otherwise, we could be sick for quite some time.
. . .
Also see:
Define energy independence in terms of both oil price and quantity
A Gas Plan for Congress: A dynamic self-adjusting price floor for gasoline
Deprive petro-dictators of oil money with a price floor on crude oil imports
Law professors propose new gas tax with categorical tax rebates
. . .
Follow Larry on Twitter.
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Interface - I want to know the viable stable energy alternatives
It's not a trick question. You spout the party line, and I just want to know what your buddies have planned for our utility companies that are coal-fired based.
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You always have a slick response for everything else - come on, inquiring minds want to know.
Twas....
Don't hold your breath on this question.
Nuclear is the only option for replacing coal, as the French have done, and flop and his lib ecofreaks are not going to allow that. They will try to do a cap and tax and then bemoan how corporations are "exporting" jobs, when, in fact, they will have caused it. You won't see them admit it however.
It is going to be really interesting to see how Ms. McCaskill votes on cap and tax...
Interface - now that we know you are there
please respond to my question.
He's waiting
He's asked NASA what to say and is waiting for them to get back to him.
Kcgrh -
Even though I'm not a McCaskill fan, she has at times shown that she can think for herself. If she does that, she will realize that voting for Cap & Tax will sign a death sentence for her state's utility companies, or if they are able to pass it on immediately, her constituents who will be hit with big-time increases in energy costs.
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And yes, Interface's silence is his answer.
If I'm Not Mistaken
The French generate almost all of their power through nuclear plants, and I believe they do recycle their waste and re-use it in the generators. I am a little bit cautious about going quite so "whole hog" about nuclear power here, but I see nothing wrong with building nuclear plants in preference to coal-burning plants. The big problem we have here is that we neither recycle nuclear waste nor store it properly. Due to the ridiculous NIMBY politics that has stymied the Yucca Mountain site, our existing nuclear utilities now simply store their waste "on site," which is neither safe nor secure. Yucca Mountain may not be perfect, but it's a giant step forward over where we are now, and if there is a breakthrough in technology in the future, the waste could always be moved out of Yucca Mountain sometime in the future.
This is not the way to bring about changes..
If this bill is passed by the Senate, it is unlikely that it will have the effect that progressives in Congress and Obama want you to believe it will have. The intent is not to lower carbon emission beause of 'global warming'. Even if passed as is, this bill will account for a projected by the bill decrease in temperature will be one tenth of one degree celsius over the next 100 years. In return we as Americans will be strangling our own economy and significantly lowering our standard of living. At current levels of technology wind and solar power are not commercially viable products in many areas of the country. If they were, there would be no need for progressives to try to shove them down our throats.
Much of the purpose of this bill is to put in place regulations that will allow congress to control every aspect of how we live our lives. Are you aware that there is language in this bill that will force you to have an 'energy use' inspection of your home if it is more than 10 years old and if you want to sell it? This regulation will not just require that this information be disclosed to the buyer, it will REQUIRE the home owner to make those changes BEFORE the home can be sold, to anyone. God help anybody whose house is 100 years old that hasn't had Bob Villa gut it and rebuild it. This is just ONE example of what is in this bill that will allow congress to try to control your life.
What we need instead of more government control, and forced moves to types of energy that are not commercially viable is innovation. We need people figuring out how to make wind and solar work more efficiently where they make sense, people figuring out the best way to make the most of what we have, coal, natural gas, nuclear, and people working on coming up with new ideas for the future - things none of us have even thought of. To do that, congress cannot continue with their vendetta against private companies making a profit. People willing to dedicate years of their lives working on new technology need to know that when they come up with something that is commercially viable that they will be able to be rewarded for their efforts. The companies that fund the experimentation and provide financing to help develop new technology also need to know that when they come up with a workable product that they will be able to recoup their investment, plus a profit. Shareholders need the same assurance, that if they buy shares in xyz company that is working on new technology that they believe in, that when it becomes commercially viable they will get a decent return on their investment.
In recent months we have seen every progressive including Obama, Pelosi, and Reid expounding against companies making a profit as though it were something evil. It's NOT. If you want to get all those geeks who are hanging out in somebody's garage working on whatever their ideas for new energy sources are moving, offer a cash reward, a big one, for ideas that turn out to be commercially viable. It doesn't even need to be government funded, set it up as a non-profit or something and let individuals and companies donate. It's a heck of a lot better use of our resources than setting up the Federal Bureau of Window, Door, and Insulation Police.
hyperbole and balderdash
Rush, is that you?
Interface
Responses like that are not helpful. If you've got nothing (seems so), then no response is the best response.
You haven't answered my questions either.
Yeh, but
But many utilities are monopolies. I don't know about you, but where I live I have one choice for electricity, one for gas, etc. I don't get to pick, and I think almost everyone is in that boat. So not sure how the competition really works there. Also, most of the less polluting types of power production are more expensive, which will also raise power bills as well. BTW, higher utility prices is not considered a boon for most economies, even with the democrats fable of "green jobs being created" put into play.
I think some of the dems wish we would live in caves, rely on just windmills, solar and geothermal for electricity (along with our bicycyle powered generators) and only use electricity for maybe 6 hours a day. We could return to the productivity levels of say, 1930! Ahhh, progress!
bigalsbeans - you should talk to the wall
You'll get about the same response. I remember when our presidents (including Clinton) bragged about our vast supply of coal for centuries of power generation. Utilities that were situated near the coal deposits developed and constructed new coal-fired plants. Utilities that were near natural gas supplies built gas-fired plants, and so on.
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Now coal is the devil! The areas of the country where utilities generate from coal will have to pay more.
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But the Democrats see that crisis as an opportunity. They've yet to explain how, but it sounds real good for the lemmings.
false dichotomy
It's not a choice between coal or nothing. New technology and continuing innovations in energy are expanding the choices. As energy companies start to have to bear the costs of their pollution, they will turn their sights to other, cleaner, cheaper alternatives.
Interface - please explain
how a utility who has 90% of their generation in coal-fired plants can "turn their sights to other, cleaner, cheaper alternatives".
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I don't understand how they stay in business without passing the additional costs (tax) on.
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Who pays for the tearing down coal-fired plants and new construction of, what? (I still don't know what stable alternative you are talking about).
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flop....
Please quit talking about "energy companies start to have to bear the costs of their pollution,". We are not soooooooooo stupid as to realize this is just another increased cost of living being mandated on the rest of the people. Private business will merely try to pass costs along, and in the case of public utilities, this will be done dollar for dollar plus a profit margin. Maybe the big 0, the messiah, will want to take them over next. I am sure govt. could run power companies too...
Until you libs LOUDLY PROMOTE nuclear energy, you are just for increasing the cost of living and dooming America to being uncompetitive with your global warming, sorry, CLIMATE CHANGE, legislation...
To correct you Interface
Interface, I need to correct something in one of your posts. In your words : "about how a law that will force polluters to pay the costs of the mess they're making so that we, the taxpaying American public won't have to bear the costs of their messes". Exactly whom do you think will pay the costs of cap and tax with respect to manufacturers and especially utilities? Their customers will pay in the long run. Do you really think that a utility company that has to pay this will not pass it on to consumers? Do they have any other choice?
Last time I checked, virtually every American uses electricity, much of it coal generated, especially in the midwest, how is this not a tax increase? Yes, the utiity is the middleman, but its still a tax in all but name.
Its a good thing we have Al "I invented the internet" Gore to lead us on this issue!
heh
your logic fails to note that different energy sources have different levels of emissions. Once they're required to pay for their messes, the heavy polluters will lose business to those that emit fewer pollutants.
Currently, the playing field is tilted towards the heavy polluters, precisely because we don't make them shoulder the costs of their pollutants. That needs to change.
Increasing evidence hampers "the movement"
Currently, the playing field is tilted towards the heavy polluters, precisely because we don't make them shoulder the costs of their pollutants. That needs to change.
Rhetorical camouflage blather, interface. A transparently ideological posit that self annoints who the winners and losers are....what the "costs" will be ....what constitutes a "mess"....with no consideration for the fact that the payor is, was, and always will be you and me.
Your solution is to invest heavily in an ideology driven leap of developmental faith while burdening the existing producers to offset the imbalances that naturally exist.
All of that predicated on the paper mache rock of AGW........in spite of the growing evidence of the folly....and increases in the evidence of AGW issues and decisions being made politically within our own EPA.
A very interesting report that was hushed but found its way into the public arena yesterday makes a transparent statement about the absence of transparency in The Obama's EPA. A great read.
http://cei.org/cei_files/fm/active/0/DOC062509-004.pdf
excellent point, chazzy
The payor is indeed you and me -- and all the bill does is put the cost on the front end rather than the back end, so that instead of paying to deal with the messes after they're made, there will be a built in incentive to reduce the mess on the front end.
Currently the system's tilted towards retaining the status quo, essentially subsidizing continued pollution and underwriting the polluters profits while letting them avoid the costs of the pollution they generate. We need to shift the center of gravity away from ongoing pollution and prioritize a move to alternative forms of energy that will reduce not only carbon pollution, but also the many other nasty chemicals and particulates that are spewed into our air and over our land by fossil fuel burning energy producers.
We will likely never agree Interface ......what a surprise!
The payor is indeed you and me -- and all the bill does is put the cost on the front end rather than the back end, so that instead of paying to deal with the messes after they're made, there will be a built in incentive to reduce the mess on the front end.....
Non quantified costs of multiple fishing expeditions for multiple unidentified species of fish, which may or may not be ingestible or digestible must be born by all those who eat....whether or not you like or eat fish at all........Gee seems fair and logical to me......and you support this proudly ...are you serious ?
B) There is already a natural incentive worldwide for alternative energy source development.
C) The system is not "currently tilted" towards retaining the status quo. The "system" has been beaten to death for 35 years by the enviro nazis who made it impossible to 1) build refineries 2)drill for known abundant reserves 3)even consider the cleanest and most cost effective form of energy(nuclear). So the "system" has been tilted in favor of the activists for over a third of a century. The amazing technological improvements in Nuke, refining, drilling and exploring are never given any credence in any evaluation.
Now, with the economic future of our country in the balance they want the blanket authority to go fish for all of us in an as yet unidentified body of water...with no known fishing tools, without any cost considerations, without access to known food reserves, without any open dialogue regarding the underlying motive for the action, AGW........which has the undeniable potential of turning Madoff into a piker in the ponzi scheme rankings.
Yet, you audaciously suggest that this profound lack of logic is NOT ideologically driven? Please.
hmm
1) The presence or absence of oil refineries have little to no impact on coal-fired power plants. In 2002, only 2.45% of the electricity produced in the US was produced by using oil.
http://www.eia.doe.gov/cneaf/electricity/epa/epa_sprdshts.html
2) See #1. Also consider environmental impact of coal mining and use:
http://www.ucsusa.org/clean_energy/coalvswind/c02a.html
3) Nuclear shouldn't be off the table, but neither is it a cure-all. It produces radioactive waste as a byproduct, waste that can't be recycled and that no one wants to have to deal with. Nuclear also has significant security concerns that other alternatives don't have. The clincher, though, is that the energy source for nuclear energy is Uranium. Uranium is a scarce resource, its supply is estimated to last only for the next 30 to 60 years depending on the actual demand.
http://timeforchange.org/pros-and-cons-of-nuclear-power-and-sustainability
Can't recycle nuclear waste?
Can't recycle? Really?
DID YOU KNOW?
After one use in a reactor, about 95% of the material in nuclear fuel still contains energy value. Government and industry are evaluating advanced methods for recycling used fuel in a "closed" fuel cycle.
http://www.nei.org/keyissues/nuclearwastedisposal/recyclingusednuclearfuel/
you don't seem to grasp
the definition of waste.
Ah but I do
I read it here often.
Interface -
I'm waiting to hear from you the viable stable alternatives to coal-fired power plants.
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Is it because you've got nothin?
Interface - you still haven't supplied the alternatives
but are ready to throw coal-fired out.
And you must have Googled until you found an article that fit your needs, because I found two articles very quickly that disputes your pro-GW website calculations:
http://www.scientificamerican.com/article.cfm?id=how-long-will-global-uranium-deposits-last
http://www.cfr.org/publication/14705/global_uranium_supply_and_demand.html
The first one is 200 years. The second one is 70 years for plants with current technology and 2000 years for fast-reactor technology.
You should give it up. All you are doing is taking your party's agenda and trying to mold information/speculation that fits your needs. Neither you, nor your party has explained to the American people how the Cap and Trade will actually work, and how it will affect existing electricity generating companies, but hey, Just Do IT!
Chazzykc-
Everything is so easy in Interface's world. He must have the Staple's "Easy Button".
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He won't respond to me with an answer about how a KCPL or Westar is to be able to switch their existing coal-fired generators over to the yet undetermined alternative. But that's not his problem - JUST DO IT!
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They have tens of billions (at least) tied up in existing coal-fired generating stations that, "sorry, you must pay" is the only solution.
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But never let sensible/realistic ideas get in the way of the Global Warming (oops - it's Global Climate Change) movement.
carbon tax
Bravo and Amen. I certainly hope that Congress figures it out before it's too late.
Unless
Unless this "medicine" is really poison.
another silly post
come on, now. All I've seen over the past couple of days is hyperventilating hyperbole by the Chicken Littles of the right wing about how a law that will force polluters to pay the costs of the mess they're making so that we, the taxpaying American public won't have to bear the costs of their messes, will somehow be the end of western civilization as we know it.
Silliness.
Interface - corporations (in the end) don't pay taxes
Interface said:
.....a law that will force polluters to pay the costs of the mess they're making so that we, the taxpaying American public won't have to bear the costs of their messes...
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So let me get this straight - let's say KCPL is hit with a new carbon tax that, when calculated down to the average household, represents, say $50 per month. So, Interface, in his infinite wisdom, doesn't think that KCPL will petition the PSC for a rate increase?
And, assuming you believe they will just "eat" the tax, what happens when, in a few years, KCPL files for bankruptcy?
Is everything OK with Interface as long as, when he flips the light switch, everything comes on?
You must remember that KCPL played by the rules and built power plants to make sure your light switch worked. Now, Al Gore says carbon dioxide is a pollutant and switched the game. In the meantime, China is building one dirty coal plant each four days, and WE are the problem!
game switching
I'm certain that scientists are the ones documenting the negative impact of CO2 on our environment, much like they documented the negative impact of lead in paint (resulting in the game-changing removal of lead from paint), and the negative impact of DDT, PCBs and Dioxins on animals (resulting in other game-changing regulatory moves).
"But China still gets to do it" seems a poor excuse for us to continue pumping known pollutants into our atmosphere. Time was when the U.S. was proud to be a leader on multinational issues, and we still should be.
Kcpunky
"But China still gets to do it" seems a poor excuse for us to continue pumping known pollutants into our atmosphere.
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It is relevant, because the fact that "China gets to do it" puts our corporations (and country) at a disadvantage WITH A COMPETITOR.
And that competitor doesn't have the same game rules. We are hoping that, after we've taxed our corporations to death for a carbon tax, that China will do the right thing. So while our economy is in the sh*tter, China can continue to call the shots around the world.
It's like Coke telling Pepsi "here is the recipe for our cola, but we will continue to make it and beat your pants off"
Well Said, Twas
"But China still gets to do it" seems a poor excuse for us to continue pumping known pollutants into our atmosphere.
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It is relevant, because the fact that "China gets to do it" puts our corporations (and country) at a disadvantage WITH A COMPETITOR.
And that competitor doesn't have the same game rules. We are hoping that, after we've taxed our corporations to death for a carbon tax, that China will do the right thing. So while our economy is in the sh*tter, China can continue to call the shots around the world.
It's like Coke telling Pepsi "here is the recipe for our cola, but we will continue to make it and beat your pants off"
Couldn't have said this better myself. Personally I think it's a good idea to limit CO2 emissions, but everybody has to do so or it won't work. It hardly does the world any good for us to cut the throat of our own business (what's left of it) while China continues to pump out more and more unrestricted pollution. If all we are doing is something symbolic, then go plant a tree. When China plays by the same rules, then I'll get interested in these restrictions.
Known pollutants?
[quote=kcpunky"But China still gets to do it" seems a poor excuse for us to continue pumping known pollutants into our atmosphere. Time was when the U.S. was proud to be a leader on multinational issues, and we still should be.
Known pollutants?
Another Kool Aid drinker
Silliness.
Glug, glug, glug, Interface. Keep drinking.