Matt Yglesias

Frum on Nuclear Socialism

I was saying this morning that I thought conservative affection for nuclear power was a bit odd in light of the fact that only massive socialism seems capable of financing nuclear power plants. David Frum has a post in response that I don’t totally understand:

Nor is it true, as Matt contends, that only an active state can deliver nuclear power. The United States already draws 20% of its power from nuclear. Until recently, it’s true, the stock market has preferred utility companies that generate their power from coal. Coal is cheap and reliable. But if a carbon tax increased the price of coal, nuclear would come back into vogue – and the regulatory changes needed to facilitate that shift would not have to be very dramatic. Probably more important would be mergers in the utility industry. The rule of thumb in the industry is that a new nuclear plant would cost some $10 billion and start yielding revenue only after 5 to 7 years. That’s a big check to write when the largest utility in the United States, Exelon, has a market capitalization of only $35 billion. Electricite de France by contrast has a market cap of some $85 billion.

We seem to me to be in agreement here. Even though carbon pricing ought to make nuclear power profitable on an operating cost basis, it would be prohibitively expensive to raise the capital necessary to construct nuclear plants. I think you could resolve this by having the state step in and do the financing. He thinks, I guess, that some counterfactual private utility could do it if it were far larger than any existing utility. But how would you make these mergers happen? That sounds to me like you need an active state.

Note that many of these same considerations apply to windmills. They generate electricity quite cheaply on an operating cost basis, the problem is building the windmills. But the scale of the investment in a windmill is much smaller, so it’s easier for the private sector to mobilize the risk-bearing capacity necessary to build one. That said, obviously you need a certain amount electricity that can be relied upon irrespective of how windy it is or whether the sun is shining. So I’d happily see the nuclear share of the pie grow at the expense of coal and oil as the provider of that baseload electricity. But from where I sit, making it happen requires a pretty forceful state intervention. Or perhaps what I should say is that the cleanest way to make it happen would be to bite the bullet and engage in forceful state intervention. I’m afraid that what we’re going to do instead is try to subsidize the operating profits of nuclear power to such a sky-high level that the private sector can’t help but jump in with the financing even though the deadweight loss of doing it that way will wind up being a lot higher.

Nuclear Socialism

Brad Plumer has an interesting piece about the American right’s strangely passionate love affair with nuclear power and the impact it’s having on the climate debate in congress. What I find especially odd about it is that it’s so at odds with American conservatives’ ardor for the free market. You see this mismatch in a small sense in that their nuclear agenda in congress consists basically of asking for subsidies. But in a larger sense the issue is that the big example one can find of a country living the nuclear dream is . . . France. And it’s not just an irony or a funny coincidence, nuclear power in France is deeply tied to the genuinely socialistic (i.e., not just high taxes and a generous welfare state) aspects of the French economy.

When the French nuclear network was being built out Éléctricité de France was wholly owned by the French state and had a statutory monopoly on the distribution of electrical power. What’s more, of the different kinds of French state-owned companies (yes, there are several) it was an Établissement Public à Charactère Industriels et commercial (EPIC) which meant it was fully guaranteed by the state and could, in effect, raise capital at a sovereign rate. This solves the big economic problem with nuclear power. The projects are so big, so long-term, so risky, and have such high up-front costs that financing the construction of these things is a nightmare. As the MIT interdisciplinary project on the future of nuclear power wrote in its 2009 update:

While the U.S. nuclear industry has continued to demonstrate improved operating performance, there remains significant uncertainty about the capital costs, and the cost of its financing, which are the main components of the cost of electricity from new nuclear plants.

The nuclear industry is eager to find ways for the US government to intervene in the market to resolve these issues, but the easiest way to do that is to actually have it undertaken by a publicly owned company.

These days EDF has been “privatized” in the kind of only-in-France way that many large French firms are private—it’s a standard Société Anonyme with shareholders, but the majority of shares are owned by the state. Areva, the engineering company that does the actual building, is also owned by the state. In Finland, there’s a somewhat problematic big nuclear project underway and the utility doing it Teollisuuden Voima Oy, also involves a hefty share of public ownership. In the United States, too, we used to build nuclear plants back when our economy was much more dirigiste.

At any rate, I have fairly equivocal views as to whether this is a good idea or not. But I think it should be seen for what it is. If you’re interested in reading more on the subject of nuclear power, I recommend the MIT interdisciplinary study on The Future of Nuclear Power.

Global Cooling Debunk Belongs in Politics Sections of Newspapers

Seth Borenstein of the AP has a pretty great piece knocking down all the nonsense about “global cooling” that the Washington Post op-ed page and others have been pressing:

Have you heard that the world is now cooling instead of warming? You may have seen some news reports on the Internet or heard about it from a provocative new book. Only one problem: It’s not true, according to an analysis of the numbers done by several independent statisticians for The Associated Press. [...] In a blind test, the AP gave temperature data to four independent statisticians and asked them to look for trends, without telling them what the numbers represented. The experts found no true temperature declines over time.

[...] Statisticians who analyzed the data found a distinct decades-long upward trend in the numbers, but could not find a significant drop in the past 10 years in either data set. The ups and downs during the last decade repeat random variability in data as far back as 1880.

Unfortunately, I see the piece bylined as “By SETH BORENSTEIN, AP Science Writer” which makes me worry it’ll be buried in newspapers’ science sections (or not seen at all since lots of papers barely do science coverage at all these days) rather than front-and-center in politics sections where it belongs. This story is about a key piece of propaganda being put out by political actors in order to win a political fight. It’s a political story.

Carbon Pricing Would Help With This

Grist has, alongside its environmental policy news and commentary, a running feature called “Ask Umbra” in which people ask for advice on ecologically responsible consumption. The answer almost invariably turns out to be “this hinges on an impossibly complicated set of considerations.” For example, is it better to buy frozen vegetables or steamed ones:

Grade A frozen foods are harvested when ripe and quickly taken to the freezing plant, where they are (even more quickly) flash frozen at extremely low temperatures. The modern industrial freezing process retains almost all the original nutritional value of the food (according to nutrition guru Marion Nestle’s helpful book What to Eat). Good to go on the nutrition angle. But it’s important to have an efficient freezer. One study using 1970s data found that the longer frozen foods sit in the freezer, i.e., are using energy in storage, the more they fall behind canned goods in the efficiency smackdown.

The canned goods are a bit less nutritious, but a study that looked closely at this issue found the differences between frozen and canned carrots to be insignificant. Carrots in syrup, or whatever they might put carrots in, would of course fall in to the category of dessert or a processed food, and cannot be favorably compared to fresh. As you know, the ecological issue with canned carrots is the steel can itself, which has high embodied energy costs. If a study assumes the recycling of the steel can, then canned vegetables can compete favorably with frozen vegetables on the sustainability index.

From a political perspective, this sort of thing underscores the need for collective action in the form of public policy that will put a price on greenhouse gas pollution. To realistically assess the total environmental impact of the choice between frozen carrots and canned carrots, you’d also want to know something about the land-use impact of your decisions, the transportation of the goods, the energy costs of keeping frozen food frozen in the supermarket, etc. You can’t really do this sort of thing through back-of-the-envelop calculations.

Epistemology With James Inhofe

Pew reports that the right is having a great deal of success in trying to mislead people about climate change. The header Pew put on the graphic notes that the decline is “across party lines.” But you should look at the magnitudes—the Republican line has fallen way further, and from a lower base, than the Democratic line. This is probably a rationalizing voter example where increased salience of the issue is bringing more Republicans into line with the beliefs espoused by their party’s leaders.

Meanwhile, James Inhofe says:

Perhaps the most interesting finding in this poll aside from the precipitous drop in the number of Independents who believe global warming is a problem, is that the more Americans learn about cap-and-trade, the more they oppose cap-and-trade. And this explains quite clearly why Democrats don’t want the public to know about it.

These are curious uses of the terms “know” and “learn” which are generally reserved for instances in which people form true beliefs. On the specific issue of cap and trade, the evidence has always been that the term “cap and trade” is barely in circulation outside the Beltway. Public support for clean energy legislation under different descriptions tends to be high. You can get poll results as good at 72 percent in favor of the American Clean Energy and Security Act under one favorable description.

Myhrvold on Solar: Blue is a Kind of Black

Superfreakonomics contains a number of significant misleading claims about climate change and clean energy, but the one I found most shocking was the contention that solar panels actually make the world warmer because they’re black. Solar panels are not black. They’re usually blue. This is an easily verifiable fact. This is a photo of a company I visited in Dresden where they manufacture solar panels. Their office is covered in solar panels. Blue solar panels:

They wouldn’t let us take pictures inside their factory so as to discourage industrial espionage by the Chinese (or so they said), but I can assure you that what they were manufacturing was blue solar panels. But if you look at their website you can clearly see that they’re blue. During the tour someone even asked why the solar panels are blue. We were told that you can make them any color if there’s some particular desire for funny-colored ones, but they determined that this particular shade of blue is the most efficient one to use. And that’s why most solar panels are blue.

So two quick takeaway lessons from that chat. One is that solar panels are usually blue. The other is that contra Levitt, Dubner, and Nathan Myhrvold the guys who build solar panels aren’t idiots who’ve never considered the fact that different colored material has different light-absorption properties.

Remarkably, however, Levitt and Dubner choose not to simply admit that quoting Myhrvold as saying that solar panels are black was a sloppy error that they’ll correct in the future. Instead, they had him write a post on their blog in which he digs in his heels on the black point, insisting (really) that blue solar panels are in some sense really black so his statement that “[t]he problem with solar cells is that they’re black” was accurate even though it’s not, in fact, true that solar cells are black. Then as Nicholas Weaver points out he adds new errors:

He compares the cost of running a coal plant with the cost of building a solar plant, neglecting that we need to construct vastly more power plants to both meet growing demand and to deal with end-of-life on old, inefficient plants. Even then, the break even point is less than 3 years, by his inflate-the-cost of solar figure!

This is really insane. The obvious problem with solar power is that it doesn’t work when the sun isn’t shining. Thus barring some really miraculous developments in energy storage, we’re going to need a lot of non-solar power. But that still leaves plenty of room for the deployment of solar panels, especially in places that tend to be sunny. Germany uses a lot more solar power than we do, despite being a very non-sunny country, and nonetheless manages to exist as an advanced industrial society. There are limits to what can be realistically done in this regard, but we’re not currently pushing up against them. There’s no reason for this to be controversial and certainly no reason for people to be making ludicrous claims about the color of objects.

Carbon Pricing is the Best Path to Realistic Technological Solutions for Climate Change

A non-artificial tree

Will Wilkinson and Ryan Avent further bat around the geo-engineering subject, with Wilkinson in comments mentioning super-carbon-eating trees as the kind of technological fix to which he thinks environmentalists are giving short shrift. For basically Popperian reasons I don’t think it makes sense for political pundits to spend a lot of time debating the relative difficulty of developing different hypothetical future technologies. Instead, I would just say that the best way to find out whether human ingenuity is better at keeping atmospheric CO2 concentrations at a sustainable level by developing artificial trees or by developing better windmills is to . . . implement a binding emissions reduction scheme that puts a price on CO2 emissions.

This isn’t, in other words, an either/or choice. If you had a cap-and-trade system in place, that would put a range of modalities—better efficiency, more clean energy production, more trees & algae, and carbon-scrubbing machines—in a competitive framework. One assumes we’d be looking at some kind of mix. But defining the correct mix in advance seems very hard. Hence the appeal of a basically market-esque mechanism that creates incentives to work on these various ideas without unduly prejudging the appropriate level of investment in speculative technology.

What I think is remarkable is the extent to which people on the right, in their zeal to avoid a market mechanism that the business establishment happens to hate, have a tendency to talk up what instead amounts to a kind of Five Year Plan approach. Instead of regulating carbon, let’s just direct scientists of invent miracle trees! Let’s turn the sky red! The greenhouse gas problem is one of the largest political crises the liberal/democratic/capitalist order has ever faced, but unlike something like Hitler the basic shape of the problem is something we’ve seen and dealt with before. The whole “sometimes there are negative externalities and you need to charge people for them” thing is in basic textbooks. Maybe the result of such a scheme will be a technological miracle, or maybe not but the shape of the policy environment that will let us find out isn’t mysterious.

Conservatism in the UK

Guess who said this?:

We have a vision of a different America. It is a vision of an America in which our cars run on electricity; high speed trains whisk us from North to South in less time than it takes to get across greater New York; we produce much more but use much less energy to do it; our power suppliers no longer depend to any great extent on imported oil and gas; our homes require less energy, produce far more of their own energy and are heated by gas we produce from our own agricultural and domestic waste.

It is a vision of a United States which leads the world in new green technologies. Secured against interruptions of supply and volatile prices, our industry can plan for growth. Our national security is guaranteed, regardless of decisions by volatile governments elsewhere to close pipelines or restrict supply. It is a decentralized vision rather than one in which all decisions about our energy future are vested in the government. Through it we play our full part in protecting our planet against the effects of man-made climate change.

Well, nobody said it. Instead I changed the words “Britain” and “centralised” to “America” and “centralized.” But it comes from the UK Conservative Party’s low-carbon economy white paper.

I mention this because David Brooks has a pretty good column urging Republicans to learn from David Cameron that, disappointingly, doesn’t mention anything about climate and energy issues. But if you want to make the point that at the moment European center-right parties are both much more politically successful than the GOP and also much more substantively sensible, then climate and energy is probably the topic where you’ll find the biggest contrast. After all, it’s not just that the Conservatives’ climate and energy issues page looks very different from the Republican one—the Republicans don’t have one at all.

Obama Administration Looking to Curb Fossil Fuel Giveaways

Oil shale (National Archives photo)

One of the odder things about the tendency of politicians who like to espouse free market principles to oppose efforts to reduce American dependence on dirty energy sources is that the way the status quo works is that fossil fuel producers are actually pretty heavily subsidized. And, naturally, it got worse while George W. Bush was in office. Jim Tankersley and Josh Meyer report for the LA Times:

The Obama Interior Department is reviewing a decision made by the Bush administration in its final days that attempted to lock in lucrative royalty rates and favorable regulations for oil companies holding leases for oil-shale development on public lands.

The decision, which came in the form of amendments to existing leases, drew little public notice at the end of the Bush administration in January. But since then, congressional watchdogs, environmental groups and state officials in Colorado, where most of the leases are located, have denounced the amendments as a massive giveaway to the oil industry.

Any time you talk about oil shale it’s also a reminder that though messages about “energy independence” tend to poll well, it can be a risky gambit for clean energy advocates to rely too heavily on talking points that can also support very dirty undertakings.

Climate Security Arguments Making Some Gains

I have slightly mixed feelings about some of the national security arguments that I’ve heard advanced about the need to prevent catastrophic climate change (I have my own national security arguments that I like better). But you evaluate a political strategy based on how well it actually works, not on how you feel about it personally. And via Brad Plumer, Darren Samuelson suggests that these arguments played a big role in persuading Lindsey Graham (R-SC) that it made sense for him to start wading into the issue.

That’s a big win. And Operation Free, the veterans-oriented coalition group that’s been set up to push precisely this argument, is really just getting up and running this month.

Blog Action Day: Mitigating Climate Change With Complementary Policies

Burning methane gas is a relatively clean way of generating power compared to other fossil fuel options. But directly releasing methane gas into the atmosphere is a climate catastrophe. Methane packs far more greenhouse punch per unit than does the better known carbon dioxide. Thus, as Andrew Revkin and Clifford Kraus write in The New York Times plugging various kinds of leaks in our infrastructure for storing and transportation methane is a highly effective way of mitigating climate change. What’s interesting, as they also observe, is that in many cases this isn’t just cost-effective, it directly saves money. The cost of the leaks, in other words, is higher than the cost of plugging them.

In addition to illustrating the specific point, that kind of thing highlights the efficacy of so-called “complementary policies” alongside a hoped-for basic mechanism of putting a price on greenhouse gas pollution. In a kind of black box rational agent model, the price mechanism alone should provide all the incentive people need. In practice, agents with a limited amount of time and attention can often find themselves neglecting small problems with large cumulative impact. Methane leakage is a striking example, but home insulation is probably a more broadly applicable one. Normal people simply don’t take the time to do a cost-benefit analysis on investing in better-insulating their homes and the problem of attenuated attention to this issue gets even worse when you consider things like rental apartments and office space. Under the circumstances it makes a lot of sense to try to push the level of evaluation up to a more macro scale and then hand down new building codes and direct financial incentives for retrofitting. Over the long term, there’s no substitute for carbon pricing to create incentives for both efficiency, innovation, and investment in existing clean energy technology. But in the short-term, our best bet is almost certainly the efficiency-enhancing properties of these kind of complementary policies.

At any rate, today is Blog Action Day and the issue is climate change. Tell your friends! When people look back one or two hundred years from now on American politics in the early 21st century, they’re probably not going to care about the ups-and-downs of health care policy or derivatives regulatives. They are going to care about what we did or didn’t do to forestall an ecological catastrophe.

Planning in the Climate Bill

Elana Schor has a helpful roundup of a recent Brookings event on improving federal support for Metropolitan Planning Organizations and, even more important, improving the extent to which the federal relationship with MPOs actually supports good planning. This is an important element of dealing with the climate issue. The built environment evolves slowly over time so it’s difficult to get large short-term emissions reductions through better land use, but by the same token it’s absolutely essential to meeting long-term targets in an economically viable way.

Michael McKeever, executive director of the SACOG, and Peter McLaughlin, a commissioner of Minnesota’s Hennepin County, agreed that the upcoming congressional climate change bill is essential to achieving land use reform.

If the climate bill “does some fairly simple things and requires … high quality [MPO planning] to be done as a pre-condition of getting federal funds,” local development can become a more transparent and rational process, McKeever said.

Legislators, recognizing this, included language to that effect in the original Waxman-Markey bill. But it wound up getting stripped out. Now it’s back in the Kerry-Boxer draft, but the U.S. Senate is generally less friendly than the House to sound urban planning and land use policy so one should be nervous that it will be removed again. However, with these kind of relatively low-profile issues things like preference intensity make a great deal of difference. If Senators get word that their offices are being contacted by people who are interested in something as obscure as MPO planning, that would get noticed. Of course as a DC resident I’m not allowed to be represented in the governing bodies of the United States of America so I can’t contact anyone.

Annals of the Improbable

This has got to be some kind of postmodern performance art right?

Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.

It’s interesting to look at the range of policy responses different countries have had to oil wealth. Norway has been incredibly far-sighted, while Abu Dhabi and Qatar also score quite well. All the way on the other end of the spectrum are Nigeria and Equatorial Guinea. And then there’s Saudi Arabia, kind of the oil exporters and apparently world champions in chutzpah.

Who Would Pay a Carbon Tariff?

There are a bunch of indications that one of the things that may have to be done to get a climate bill through the senate is the inclusion of some kind of “carbon tariff” to prevent a cap-and-trade program from disadvantaging US-based manufacturers vis-à-vis their developing world rivals. In theory, the carbon border adjustment idea makes a lot of sense, but almost everyone I speak to is skeptical that it would actually work correctly in practice as opposed to becoming a venue for a lot of gamesmanship.

One reason for skepticism is that I’m actually skeptical that a properly implemented set of worldwide carbon border adjustments would actually achieve its intended purpose of boosting American manufacturing. After all, despite all the China hype we do much more trade with developed countries—countries with considerably less carbon-intense economies. Combining data from here and here I present the following chart of leading trade partners:

The EU, Canada, and Japan are in the aggregate much more significant trade partners than China/Mexico/Brazil. And the case for them charging us carbon tariffs seems about as good as the case for us charging the Chinese.

Green Conservatism

Connie Hedegaard (photo by Kate Sheppard)

Kate Sheppard was on the same trip to Denmark as I was, and wrote up this post about our conversation with Connie Hedegaard, Folketing member for the Conservative People’s Party and Minister for Climate and Energy in the current Liberal-CPP coalition government:

“It’s at the core of conservatism to take care of the environment, to protect nature, to use resources responsibly,” said Hedegaard. “I can think of nothing that’s more conservative than that.”

Her priority, she said, is that their policies be vehicles for economic growth. The export of clean tech increased 19 percent last year, triple what it was ten years ago. Just recently it passed pork as the country’s leading export product.

“I have tried to turn this into a growth agenda. It is not an anti-growth agenda,” she said. “Often back in the ’70s for the left, socialists and liberals, it was an anti-growth agenda. In a world where we’re going to become 9 billion people by the middle of this century, we must have growth. The challenge is to make this growth more green, to make it sustainable.”

This is basically a Teddy Roosevelt kind of view that from time to time has been espoused by John McCain here in the United States. Starting in the waning days of the Presidential campaign, and continuing for most of the Obama administration, this strain of green conservatism seems to have largely vanished. It recently got a bit of a boost, however, in the form of a joint op-ed by John Kerry and Lindsay Graham. Still, one strains to come up with an example of a right-of-center American politician whose level of commitment to the climate change issue would be recognizable by a Hedegaard or an Angela Merkel or a Nicholas Sarkozy. In part that reflects interest-group politics—the United States is a significant producer of fossil fuels in a way that only Norway is in Europe. But in large part I do think it reflects a kind of failure of intellect and imagination that American politicians have occasionally flirted with transcending, usually only to return to orthodoxy soon enough.

As Long As You’re Going to Be in Scandinavia…

I have no idea if this influenced the Nobel Committee’s decision-making, but it’s worth noting that one thing I’ve heard a lot about in Europe is disquiet over Barack Obama’s failure to commit to personally attending the COP15 conference on climate change in December. There’s a lot of sentiment that the president putting his personal credibility on the line could be an important factor.

The conference is being held in Copenhagen and it starts on December 7 but runs for a couple of weeks. Interestingly enough, the Nobel Prize is going to be handed out in Oslo on December 10. In other words, in the middle of the conference. And Oslo is pretty close to Copenhagen. And Obama will be in Oslo to accept the award. Under the circumstances, it will be hard for the White House to come up with a good reason why it’s impossible for Obama to pop by Copenhagen.

What American Wind Needs

We met yesterday with the top communications guy from Vestas, a Danish company that’s the world’s number one maker of wind turbines. I found myself a bit surprised by the pristine simplicity of what he was saying—he didn’t talk about the need to price carbon, he wasn’t asking for feed-in tariffs, didn’t say much about renewable energy portfolio regulations, didn’t say much about utility regulations, indeed didn’t say much about much of anything. He was, instead, just extremely bullish on the US as a market. He thinks it’s completely feasible to bring large-scale commercially viable wind power to the United States on the basis of large wind farms based in the “wind corridor” running through the middle of the country:

This of course raises the one real problem he cited. You need a modern electrical grid that can move the power from where the wind is to where the cities are. And he didn’t really see any technical challenges to doing this. He said Denmark has a grid that’s just fine and we could build one in America to if the money and political will existed. Indeed, despite Denmark’s heavy use of wind power he seemed to view us as having a more promising set of fundamentals—basically large amounts of empty space where there’s wind and you could put up wind turbines.

When Life Gives You Excrement, Make Fuel?

Via Ezra Klein, The New Scientist observes that “A kilogram of beef is responsible for more greenhouse gas emissions and other pollution than driving for 3 hours while leaving all the lights on back home.”

People tend not to understand this very well because the tendency is to use the term “carbon dioxide” as a shorthand for “greenhouse gasses.” But though CO2 is the most common greenhouse gas, it’s far from the most potent. And livestock create huge amounts of methane both from their farts (yes, really, this is a real problem) and from the decomposition of their manure. The good news, as the good people at the Danish Biogass Association were eager to explain to me yesterday, is that there’s a way to deal with the manure side of this. Methane, in addition to being terrible for the environment when released directly into the air, is also usable as fuel (”natural gas”) and when used as fuel it’s relatively clean-burning compared to coal or oil. What they do at biogas plants is basically gather up a huge stinking pile of shit which is submitted to anaerobic digestion. This leaves you with, on the one hand, some digested manure that can be used as an effective and non-emissions-producing fertilizer and on the other hand some methane gas you can use to heat homes or generate electricity.

The biogas itself involves some CO2 emissions, so this isn’t a perfectly green technology. But making the biogas is much cleaner than not making the biogas if we assume that the quantity of animal excrement produced is independent of the existence of the biogas facilities. In other words, if the demand for meat is determining the quantity of cow and pig shit, then biogas plants count as very clean. They sharply reduce the quantity of methane put into the air, and can substitute for other dirtier fuels like coal or oil. If biogas were to actually become such big business that people started raising pigs specifically for the purpose of turning their shit into home heating fuel, then that wouldn’t work ecologically at all.

Currently, though, biogas requires substantial subsidy (in the form of a feed-in tariff) to be viable. So the smart green move is to subsidize biogas production enough to clean up the excrement we have, but not so much as to encourage the creation of additional livestock. In principle, it would probably make sense to have some kind of tax on meat that could be used to raise revenue to defray the cost of biogas subsidies.

Life in a Small House

As everyone emphasizes, the cheapest form of renewable energy is really energy efficiency—just not wasting as much energy. A cousin of this point, however, is that the truly cheapest thing of all is to just do with less. So for example, American houses actually use slightly less heat energy per square meter than do European houses. But since American houses are much bigger than European houses, we use far more energy in home heating than do Europeans. The Danes are substantially more efficient than the average Europeans, so they use less energy per square meter than we do despite living in a much colder climate. But on top of that, the average Danish house is about half the size of the average American house.

Since home-related energy use is a big deal and housing is a big component of household finances, the large size of American houses is a really important aspect of the American way of life. And it is worth asking how valuable our super-sized homes really are. It’s definitely a good thing that our modern houses are much bigger than houses were circa 1900. That brought about substantial reductions in overcrowding and real benefits in human welfare. It seems to be the case, however, that we’ve crossed over into territory where further increases in house size are driven by positional arms races. People aren’t looking for bigger houses, in other words, they’re looking for houses bigger than their friends’ houses in a way that’s not producing much of any net gains in welfare.

If that’s right, then we’re really wasting a disturbing quantity of resources not only building the very large homes but also heating them. Housing spending has the long duration properties of investment goods, but it’s not really productive the way a factory or an office building is. It’s just a very big, very expensive, very durable consumer good. Which is fine, insofar as it’s really leading to satisfied consumers. But it seems that it isn’t and if we all crowded into Danish-sized houses we’d quickly adjust, feel just as good about ourselves, and then go buy more non-housing stuff (or if we actually moved to Denmark, spend the money we’re saving on housing paying very high taxes in exchange for generous public services).

Climate and Collective Action

Yesterday’s complaints aside, by far the biggest problem with David Brooks’ proposal to “just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution” is that our energy use is inextricably bound up with collective decision-making about infrastructure.

That’s people taking the bus in Stockholm. Their decision to take the bus, like my own, was of course influences in part by individual calculation about the costs and benefits of different courses of action. But it was also heavily influenced by someone’s decision about where to put the bus stops, where to make the routes go, how frequently to run the buses, and other aspects of Stockholm’s bus-related infrastructure. Stockholm bus ridership is also influenced by the relative paucity of parking spaces in the city, which in turn relates to public policy decisions about minimum parking regulations, maximum allowable density and so forth. Similarly, in Washington DC at one point they wanted to build more urban freeways cutting through the city. But people protested and instead they wound up building the Metro. Lots of people take the Metro, but that’s only because they built it. And lots of people drive on the urban freeways they did build, but nobody drives on freeways that weren’t built anymore than anyone rides subways that don’t exist.

Similarly, whether or not putting a solar panel on your roof makes economic sense depends in part on whether you can sell energy to the grid during surplus periods. But that’s a political/regulatory issue. And whether or not it makes sense to build a huge wind warm in Kansas depends on whether you have a grid robust enough to transmit that energy to population centers, which again is a political/regulatory issue.

We also have regulatory issues limiting our ability to innovate. If we raise the price of carbon emissions, one thing that will happen is that we’ll see innovations around finding more efficient ways to heat buildings. One thing we already know is that multi-family structures are more efficient to heat than are detached houses (it’s a surface area to volume thing) but in many places it’s illegal to build a multi-family structure. So if what you want to do is leave this up to the market, you need to take active legislative steps, not just impose a price and say we’ll let the chips fall where they may.

The Need for Carbon Pricing

Yesterday we saw a presentation from the Danish company Rockwool International A/S that makes a high-end insulation product. It’s not only a good insulator, but it offers excellent fire protection and sound insulation. Basically asbestos without the cancer. And in their presentation they did a good job of making the case that efficiency-emphasizing building codes and incentives for retrofitting of houses is an absolutely essential complement to carbon pricing. You don’t need to make any strong assumptions about rationality to see that things like the long-term energy costs of slight drafts are the sort of things consumers tend to overlook. In this regard, people don’t live up to a neoclassical definition of “rationality” but rather than say people are being irrational, I prefer to say that it would actually be totally irrational for people to waste their time becoming extremely well-informed about the decades-long financial costs of living in a house that’s not as well-insulated as it could be.

One way or another, surveys indicate that people massively overrate the proportion of their energy usage that goes to appliances and gadgets and underrate the amount going to heating and cooling the home. Mandates and incentives for better insulation can save tons of energy and tons of money to boot.

That said, the presentation also brought home to me the vital importance of pricing. Rockwool says a form of mineral wool—it’s something they make by melting rocks at extremely high temperatures and then “spinning” the molten rock into wool-like substances of various density. This is a pretty energy intensive process. And there are other kinds of insulators out there. But energy is involved in producing all of them as well. And then you also need to factor in transportation of raw materials, the lifespan of the product, and a million other things. In fact, you probably need to factor in more things than anyone really can factor in. But if you put a price on carbon emissions, then that price will be reflected in the end-price of the product. If the result is some large relative change in the price of fiberglass versus mineral wool, that will tell us something important. Alternatively, it might remain the case that both products cost a similar amount, in which case people will choose on the basis of other things.

Chamber Defections

I largely agree with Josh Marshall’s take on the recent defections from the US Chamber of Commerce:

It’s still only a handful, of course. But it’s an interesting illustration of the different dynamics of the global warming issue than say health care or other regulatory policy issues or labor relations — particularly for companies in the energy field and those involved in mass consumer marketing.

It’s not hard for instance to understand why a company like Nike, which markets overwhelmingly to a younger demographic and to some degree is in the business of marketing cool, would not like to be associated with anti-climate change science extremism. Similar things could be said about Apple, which markets to generally wealthier, more educated and I suspect — though I don’t know this specifically — generally more progressive people.

There’s simply mass awareness and politicization on this issue in a way there’s not about most high stakes political questions. I also wonder whether some companies may not be sensitive to the impact on their reputation on an international trade, those doing a substantial amount of international trade. But the mass politicization and company’s sensitivity to domestic brand damage strikes me as the key takeaway for now.

But I do think it’s worth taking this further. The fundamental problem the Chamber of Commerce is going to have on this is that they’re really really wrong. Not like how they’re morally wrong about, say, labor rights or workplace safety rules. They’re analytically mistaken about the interests of the United States business community. If we take action to avert ecological catastrophe, economic growth will still happen. Capitalism will march on. Big companies will be big, and people will earn lots of money managing them. Yes, the present-day owners of coal companies or manufacturers specifically wedded to unusually energy-intensive processes will be in trouble. But “business” in a broad and general sense will keep on keeping on. People will still want gadgets and furniture, will shop at stores, will buy and sell, and generally keep being customers for business.

The real risk is being run by doing nothing. It’s doing nothing that might end the party, and lead to various kinds of nightmare scenarios. And over time, more and more firms are going to see that they have no particular stake in underpricing pollution. One maybe of the Chamber board is a guy from Anheuser-Busch. A serious climate bill’s not going to put him out of business. Nor, to just pick board affiliated companies whose lines of business I recognize, is it going to put State Farm Insurance or IBM or AT&T or Pfizer or Accenture out of business. But the executives at those companies and their kids and their customers are all going to face all the problems caused by untrammeled climate change. And why, genuinely, should a pharmaceutical company or a telecom company be fighting to stop people from stopping an ecological disaster? It genuinely doesn’t make sense.

Samsø: Land of Wind and Expensive Potatoes

Photo courtesy of Samsø Energy Academy

My group spent the day today visiting (and, actually, taking the rather long trip to and from) the island of Samsø. It’s not just an opportunity to figure out the right key combination to produce the “o”-with-a-line-through-it letter, it’s an interesting example of a community that starting in 1997 undertook a ten year project to fuel itself entirely with renewable energy. That, in turn, is interesting in part because they couldn’t literally get the job done. But whereas the island used to be heated almost entirely by oil-burning furnaces, now 70 percent of households (we’re only talking about 4,200 people in the community) get heat from a municipal heat distribution grid based on four heat production centers that burn surplus straw from the local farms. And their set of land- and sea-based windmills produces much more electricity than the town consumers.

But here’s where the “couldn’t literally get the job done” part comes in. You can build all the windmills you like, and that doesn’t change the fact that no wind equals no wind power. Conversely, most of the time the island is producing more electricity than it needs. Those times it sends electricity to the mainland and when there’s no wind on the island, mainland electricity gets sent back to Samsø. What’s more, one small island community can’t single-handedly call an electric car industry into existence so obviously they’re importing fuel to run their vehicles. They consider themselves to have achieved their 100% renewable goal because the net amount of wind power exported exceeds the quantity of oil imported for cars, for the ferry, and for the 30 percent of houses still on oil heaters.

One can judge for oneself whether or not that counts as cheating. The real lesson, I would say, is about the power of a well-functioning market to make clean energy reasonably efficient. Trying to make Samsø literally 100 percent free of fossil fuels turns out to be much more costly than making Samsø a community that uses no net fossil fuel when considered as a part of a larger system (indeed, it’s fossil fuel negative on net). But for that to work you need, among other things, the kind of smart grid that can manage the flow of renewable power on and off.

The other thing about Samsø is that they’ve somehow managed to convince people to pay about a hundred British pounds per pound of potato for their “first potatoes” come harvest time. Nobody fed us any so I can’t report on whether that’s as much of a triumph of marketing over common sense as it sounds like.

Green Tax Shift in Denmark

On the Wikipedia page for Danish Prime Minister Lars Løkke Rasmussen, who currently leads a center-right (by Danish standards) coalition, I read the following about his time as Finance Minister before Anders Fogh Rasmussen stepped down as PM to be the top civilian official in NATO:

In February 2009, Lars Løkke Rasmussen was the chief negotiator in the political agreement behind a major tax reform, implementing the government’s ambition of reducing income tax and increasing taxes on pollution. The reform was, according to Lars Løkke Rasmussen, the biggest reduction of the marginal tax rate since the introduction of the income tax in 1903. The opposition accused it of being historically skewed in favouring those with high-income jobs and giving very little to those with low-income jobs.

You can read Google’s translation of Danish newspaper articles about this here and here. Relative to the tax agenda pursued by George W. Bush, Rasmussen’s approach:

1. Achieves the U.S. right-wing’s core policy objective of reducing taxes on rich people.
2. Also contributes to solving a bona fide public policy problem.
3. Does a much better job relative to the budget deficit, an issue the U.S. right-wing at least claims to care about.
4. Would have screwed around with the Democratic Party’s political coalition by attracting support from green groups and from upscale liberal voters.

That seems like a lot to like had a more serious, thoughtful, and courageous group of people been in power. Obviously the interest-group politics is totally different in Denmark where there are substantial industries around wind power and efficiency and basically no fossil fuel production. They use coal and oil, in other words, but don’t produce much of any so there’s not the same kind of pro-pollution constituency. That accounts for part of the difference. But much of the rest of the difference seems like a lack of imagination combined with a lack of good sense and a lack of morality.

All About Climate Policy

Two important posts yesterday from Brad Johnson at the Wonk Room that you should check out. The first is an analysis of the EPA’s plan to begin regulating greenhouse gasses in 2010 if congress doesn’t act, and the other is an analysis of the proposed Kerry-Boxer clean energy bill in the Senate. The EPA is looking at tougher measures than I would have thought the Obama administration is prepared to get behind, and Kerry-Boxer is a somewhat stronger and better measure than the American Climate and Energy Security bill that passed the House. But of course ACES passed the House whereas Kerry-Boxer will doubtless be changed many, many times.

For more, see Brad Plumer and Kate Sheppard on Kerry-Boxer and Dave Roberts on the EPA.