Jun 17 2016

Economics, Renewables, and Climate Change

Solar panel on a red roof reflecting the sun and the cloudless blue sky

The debate about anthropogenic global warming (AGW), in my opinion, is mostly silly. Most climate scientists are saying there is a 90-95% chance that human activity is driving global warming, and that this warming is likely to have some unwanted consequences, such as rising sea levels.

Phil Plait made an excellent analogy – what if the majority of the world’s astronomers said there was a 90-95% chance that an asteroid was going to strike the earth in 50 years? Hell, what if they said there was a 10% chance? How certain would we need to be before we decided to take action? Keep in mind, asteroids are easier to deflect the more time you have. The closer we get to the impact, the harder it is to avoid and at some point it becomes impossible.

Now imagine if one political party claimed that astronomers were exaggerating the risk to secure funding, that those who believed the astronomers were being “impact hysterics,” that asteroid impacts aren’t necessarily a bad thing, and there is probably nothing we can do about it anyway. An asteroid impact is more sudden and dramatic, but the effects of AGW could be comparable to a medium-sized impact in terms of the cost to civilization.

Acknowledging all the uncertainties, even taking the upper limit of uncertainties with AGW, it seems to me we are well over the line where it is reasonable to take action. This is especially true considering that any action to mitigate AGW needs to occur years or even decades before the worst outcomes manifest. We will have to act before we are absolutely certain.

This is a common situation in medicine – where we have to act before we are certain a patient has a disease because once we are certain, it’s too late.

The political debate should not be focused on whether or not to believe the scientists, but on what would be the best actions to take to reduce AGW and its effects. In fact, I think that conservatives are really missing the boat. They are wasting their time arguing against the reality of AGW when they should be using their time and political capital to propose conservative solutions to AGW.


While our dysfunctional legislature is caught largely in paralysis, economic and technological factors are having their own effects. I am probably too much of a techno-optimist. If anything, that is my bias. But it does seem to me that technological advancements and their effects on the energy economy are moving us in the right direction. The question is – will it be fast enough, and is there anything we can do to speed it along?

In the past decade solar energy has really come into its own. There haven’t been any dramatic breakthroughs, just incremental advances year after year. We are right now at the tipping point, where solar energy is becoming cost effective.

We are in the transition zone, where solar is cost effective depending on where you live, how much sun you get, and how expensive grid electricity is. Before long solar will be cost effective no matter where you live.

A recent BP report indicates that solar energy has increased by 60 fold in the last decade, doubling about every 20 months. Meanwhile, demand for coal and crude oil has declined (hence the low gas prices). Supply of natural gas has also been increasing, largely due to fracking, and this is partly the cause of the decline in other fossil fuels.

So while the silly debate about AGW has been raging, technology has slowly been advancing in the background and now renewable energies are ready to take off, significantly displacing fossil fuels.

Another technology that has been having an impact is LED lights. These are highly energy efficient, much more efficient than incandescent bulbs and even more efficient than CFLs. The US department of energy reports:

Widespread use of LED lighting has the greatest potential impact on energy savings in the United States. By 2027, widespread use of LEDs could save about 348 TWh (compared to no LED use) of electricity: This is the equivalent annual electrical output of 44 large electric power plants (1000 megawatts each), and a total savings of more than $30 billion at today’s electricity prices.

LED bulbs are great, they are a win-win. In fact, I think that incandescent bulbs and CFLs should be entirely phased out. It should not take us 11 more years to switch over to LEDs. LED’s, while a little more expensive up front, save the consumer money. Everybody wins.

One question I have, which I cannot find a definitive answer to, is this – if we optimally deployed current technology, what would be the impact on carbon emissions and ultimate AGW? Would it be enough? It might be, and the technology is only going to get better.

The limiting factor seems to be energy storage, such as battery technology. That too is advancing slowly and incrementally in the background, but I worry that it is not fast enough.

So what do we do?

I am increasingly compelled by arguments for a carbon tax. I know that “tax” is a bad word, but hear me out. It is a reasonable argument that burning fossil fuels are artificially cost effective because they are dumping carbon into the atmosphere for free. This is potentially a huge cost to society that companies do not have to pay. This would be like dumping their waste without having to pay for disposal, and shifting the cost to society.

If companies had to pay a tax to cover the cost of the carbon they are emitting, then this would further shift the cost effectiveness of energy production to renewable energies. The government would not have to pick technological winners and losers, they just shift the cost balance a bit and let the market sort out the optimal solutions.

The nuclear controversy is also interesting. I still think that nuclear energy will likely be necessary to get us through the next century. Nuclear power is on demand, and can therefore mitigate the need for massive energy storage. Next generation reactors can also burn the waste from older reactors.

The best argument I have heard against nuclear is that it is too expensive, and takes too long to build new reactors. However, those who make this argument never consider the full cost of implementing the widespread energy storage infrastructure that would be necessary to go entirely renewable. We can’t rely on wind and solar without massive energy storage. While we are developing that (which is unpredictable because it requires new technology), we should also develop our nuclear energy infrastructure. Just approve Yucca Mountain already to store the waste while we build reactors that can burn much of it.

So while I think that technology has to ultimately be the solution to AGW, by creating economic win-wins, we can put our thumb on the scale to make this happen sooner – because timing is important. The asteroid is coming.

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