We're used to thinking of "green energy" as a solution to the problem of energy independence, and to the problem of global warming (which, since the earth isn't demonstrably warming, now goes by other names, like "climate change").
Energy independence has been urgent because the high cost of fossil fuels results in a massive transfer of wealth from consumers to producers.
But today, fossil fuel prices are extremely low. And the bien pensant assume that by his very presence in the White House, Barack Obama will bring world peace. Thus, energy independence as a driver for green energy is attenuated.
Global warming, on the other hand, has attained to the status of a religion, with benefits that are taken as moral absolutes, and not subject to comparisons of relative utility. We're told that we should substitute wind and solar power for oil, gas and nuclear not because it makes economic sense (it doesn't), but because it's the right thing to do.
Fair enough. This debate ended when Americans elected their current leadership, for whom there's no question that we should proceed to green energy.
But a quite different line of thought has come to the fore: the idea that green energy, in and of itself, can be a driver for economic growth. This idea is at work when you hear people calling not for green energy, but rather for a green economy.
Yet anyone who can do simple arithmetic knows this is economic nonsense.
Energy independence has been urgent because the high cost of fossil fuels results in a massive transfer of wealth from consumers to producers.
But today, fossil fuel prices are extremely low. And the bien pensant assume that by his very presence in the White House, Barack Obama will bring world peace. Thus, energy independence as a driver for green energy is attenuated.
Global warming, on the other hand, has attained to the status of a religion, with benefits that are taken as moral absolutes, and not subject to comparisons of relative utility. We're told that we should substitute wind and solar power for oil, gas and nuclear not because it makes economic sense (it doesn't), but because it's the right thing to do.
Fair enough. This debate ended when Americans elected their current leadership, for whom there's no question that we should proceed to green energy.
But a quite different line of thought has come to the fore: the idea that green energy, in and of itself, can be a driver for economic growth. This idea is at work when you hear people calling not for green energy, but rather for a green economy.
Yet anyone who can do simple arithmetic knows this is economic nonsense.
We all learned in sixth-grade thermodynamics that the usage of fossil
fuels leverages the prehistoric time during which solar energy was
fixed in the fuel. Compared to fossil use, it's facially inefficient to
try to collect and use energy in current time and in a way that doesn't
change atmospheric carbon levels.
That means that to construct a green economy will necessarily involve the displacement of economic resources from other current uses, or (through borrowing) from the future. Green energy is expensive.
Now keep in mind that the abatement of global warming is a religion. To its adherents (who now dominate America's political elite), it's worth paying any economic price to secure its benefits.
Given therefore that a green economy is coming whether we like it or not, it's worth asking what we can do to afford it.
There is always the serendipitous possibility of currently-unforeseen breakthroughs in basic science and technology. It would be completely transformative if someone were to discover a new process for converting incident solar energy to electricity that was two or more orders of magnitude more efficient than the solar panels we use now. Likewise if we found a way of storing electricity with the energy-density, light weight and room-temperature stability of gasoline.
Over time, these breakthroughs will probably come. Until they do, however, it's not economically efficient to go whole-hog into a national program of wind and solar development, as the new President has promised.
As always, the free market (which is to say, the aggregate actions of people acting in their self-interest) will find a way to manage the economic inefficiency. How might that happen?
Well, first the government must solve the problem of low current prices for fossil fuels. It's taken for granted by nearly everyone that this is a temporary phenomenon, and crude oil prices will roar back to their recent highs and well beyond as soon as the global economy recovers.
But the global economy won't recover quickly. Prices for carbon-based fossil fuels will remain low at least until inflation returns, and even then they may remain low because of poor demand.
The government can and will solve this problem quite easily by imposing prohibitively high taxes on the use of petroleum-based motor fuels (as Energy Secretary Chu has long advocated), and by restricting coal usage for power generation via stricter environment regulations.
So this gives us a structural incentive to develop and use green energy sources, by artificially making fossil fuels too expensive. But it does nothing to change the fact that green energy is really (not artificially) too expensive.
It would be a lot cheaper and less destructive of existing consumption and investment to just keep using fossil fuels. That indeed might be the outcome, if America decides on a political basis that it can't afford to convert to the religion of global warming.
If not, however, then we have to figure out how to afford the moral goodness of green energy. And until the breakthroughs come, the answer will be as follows:
We will develop and put into widespread use, new business and industrial processes that are radically more energy-efficient than current processes.
That's the answer to the conundrum. Americans will seek and find ways to use less energy at every step in daily life and in industrial production. Energy will become constrained rather than abundant. In ordinary times, such radical transformations of life would be very hard to accomplish.
But in the coming economic lean years, radical cost-cutting will become a primary focus (perhaps the primary focus) of business and economic life. Finding ways not to use light and heat and to avoid driving cars will become second nature to many people anyway.
This isn't necessarily a bad outcome. It will be highly disruptive, but radical change always is. We've been through such episodes before, however, and we're very adaptable.
That means that to construct a green economy will necessarily involve the displacement of economic resources from other current uses, or (through borrowing) from the future. Green energy is expensive.
Now keep in mind that the abatement of global warming is a religion. To its adherents (who now dominate America's political elite), it's worth paying any economic price to secure its benefits.
Given therefore that a green economy is coming whether we like it or not, it's worth asking what we can do to afford it.
There is always the serendipitous possibility of currently-unforeseen breakthroughs in basic science and technology. It would be completely transformative if someone were to discover a new process for converting incident solar energy to electricity that was two or more orders of magnitude more efficient than the solar panels we use now. Likewise if we found a way of storing electricity with the energy-density, light weight and room-temperature stability of gasoline.
Over time, these breakthroughs will probably come. Until they do, however, it's not economically efficient to go whole-hog into a national program of wind and solar development, as the new President has promised.
As always, the free market (which is to say, the aggregate actions of people acting in their self-interest) will find a way to manage the economic inefficiency. How might that happen?
Well, first the government must solve the problem of low current prices for fossil fuels. It's taken for granted by nearly everyone that this is a temporary phenomenon, and crude oil prices will roar back to their recent highs and well beyond as soon as the global economy recovers.
But the global economy won't recover quickly. Prices for carbon-based fossil fuels will remain low at least until inflation returns, and even then they may remain low because of poor demand.
The government can and will solve this problem quite easily by imposing prohibitively high taxes on the use of petroleum-based motor fuels (as Energy Secretary Chu has long advocated), and by restricting coal usage for power generation via stricter environment regulations.
So this gives us a structural incentive to develop and use green energy sources, by artificially making fossil fuels too expensive. But it does nothing to change the fact that green energy is really (not artificially) too expensive.
It would be a lot cheaper and less destructive of existing consumption and investment to just keep using fossil fuels. That indeed might be the outcome, if America decides on a political basis that it can't afford to convert to the religion of global warming.
If not, however, then we have to figure out how to afford the moral goodness of green energy. And until the breakthroughs come, the answer will be as follows:
We will develop and put into widespread use, new business and industrial processes that are radically more energy-efficient than current processes.
That's the answer to the conundrum. Americans will seek and find ways to use less energy at every step in daily life and in industrial production. Energy will become constrained rather than abundant. In ordinary times, such radical transformations of life would be very hard to accomplish.
But in the coming economic lean years, radical cost-cutting will become a primary focus (perhaps the primary focus) of business and economic life. Finding ways not to use light and heat and to avoid driving cars will become second nature to many people anyway.
This isn't necessarily a bad outcome. It will be highly disruptive, but radical change always is. We've been through such episodes before, however, and we're very adaptable.
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