Recently in Energy Policy Category

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.

Perhaps the most distinctive and broadly-observable change in the public-policy milieu as we enter 2009, is this: America has a new faith in the power of experts to cure whatever ails us.

It's a season not only for big ideas (very few of them new) in public policy. It's also a season in which we'll try out a lot of them, in the naive hope that society will become a much better place as a result.

Why is this a naive hope? Because the most recent episodes of grand faith in technocracy (the New Deal and the Great Society) produced results that, while sometimes interesting, were always supremely costly. It takes a hubristic government, infatuated with its own capabilities, to spend the kind of dollar amounts that are simply beyond comprehension. The current debate over fiscal stimulus proves that yet again.

The other way for society to innovate, of course, is through private enterprise. This never goes out of style, although government has very effective tools at its disposal for weakening and defunding it. When allowed to work, however, it always produces results that are very interesting and economically very efficient.

We can see this dichotomy yet again in one of the most important items that we'll all be discussing for the next few years: how to encourage a green/hybrid economy in the US.

With characteristic hubris, the New Technocrats who are coming to power in Washington refer not to encouraging green technology, but indeed of transforming the whole US economy to a green/hybrid one.

What can this mean? To judge from past statements by such as Rahm Emanuel, the objective is for the US to consume one half as much gasoline ten years from now as we do today.

That's it in a nutshell. We'll know we have a green/hybrid economy when we stop using gasoline. Let's unpack this along a few dimensions.