Lisa Margonelli's got a great piece in The Nation on the potential for "Gray Power." The article makes the case for the Midwest to invest in waste heat recovery and other areas near and dear to my self-interested heart. She also puts out a pretty clever idea for a "Clean Power Authority." She describes it thus: ... a federal agency tasked with recycling energy in the South and Midwest--would work like a utility, buying power generated from recycled waste energy and using it to meet federal, state and local government needs. I like it. Power markets are broken. We've spent …

Discussions of CO2 reduction tend to start from a presumption of near-term economic disruption coupled to long-term investment in green technology. The presumption isn't right. The U.S. could reduce its total CO2 footprint by 14-20 percent tomorrow with no disruption in our access to energy services, without investing in any new infrastructure. The Waxman-Markey proposal to reduce CO2 emissions by 17 percent over 10 years is constrained only by its ambition. This near-term opportunity would be realized by ramping up our nation's generation of electricity from gas and ramping down our generation from coal, taking advantage only of existing assets. …

Earlier this month, the Department of Energy announced $155 million worth of grants to clean energy projects -- specifically targeted to CHP, waste heat recovery, and district energy. This was done as a part of the American Recovery and Reinvestment Act of 2009 (ARRA), and therefore had a very specific focus not just on clean energy, but also on so-called "shovel-ready" projects that would quickly stimulate further private sector investment and job creation. According to the DOE press release, those $155 million federal dollars will bring forth an additional $634 million of private capital and save 14 trillion Btus to …

Question: are there any examples of a completely free market inducing investment in mature, capital-intensive industries? I’m not sure there are. More problematically, I’m not sure that economists and policy makers appreciate this reality. The result is that we continue to create markets -- from electricity to CO2 -- that by design are incapable of rewarding or encouraging capital investment. In electricity markets, this has created a situation in which the wholesale prices are insufficient to encourage new investment and -- if left unchecked -- could lead to serious power supply shortfalls. In CO2 markets, this has the potential to …

Suppose you want to compete in the 100 meter dash. Your odds of breaking Usain Bolt's world record are pretty slim. So should you bother training? If you did train but ended up losing in the Olympic quarterfinals, would you take that as proof that training was a waste of time? Now consider that you are a legislator trying to reduce CO2 emissions as quickly and as cheaply as possible. Should you bother putting a price on pollution to discourage its release? Noting the extreme rarity of "perfect markets" and the recent spate of financial scandals, should you not instead …

Steven Hayward's OpEd in the Wall St. Journal this week ("No: Alternatives Simply Too Expensive") annoyed me the first time I read it. But on re-reading it today, I'm struck by two things: 1. First, what he gets right: CO2 is fundamentally different, and can't be treated in the same way we have dealt with other pollutants. 2. Second, what he gets wrong: Having started off well by questioning the conventional wisdom on CO2 regulation, he then builds his case on the flawed conventional wisdom of energy economics. What He Gets Right Hayward writes that: Greenhouse gas isn't a traditional …

We must save all the energy we can!At the broadest level, everything we can do to address climate change/national security/energy balance of trade and just about any other meaningful social question associated with our energy use falls into one of three categories: 1. Use less downstream energy.  Turn down the thermostat, ride your bike to work, move to a smaller home, etc. 2. Switch upstream fuels.  Favor coal in the name of national security.  Favor nuclear in the name of CO2.  Favor wind in the name of green jobs.  Etc. 3. Use less upstream energy.  Insulate your home, build CHP …

An observation on the greenhouse gas policy debate: Excluding those who question whether we need a GHG policy at all, the debate is fundamentally one about where certainty is most important.  Some think the most important thing is price certainty and argue for a tax.  Others think the most important thing is emissions certainty and argue for a cap.  Every lobbyist in Washington these days assures us that the most important thing is path certainty and argue for special diversions of resources to their pet cause. What all agree on is that uncertainty is unacceptable.  And so, not surprisingly, we …

"Deregulation shifts the major burden of consumer protection to the competitive market, and therefore, in important measure, to the enforcement of antitrust laws." - Alfred E. Kahn, Lessons for Deregulation: Telecommunications and Airlines after the Crunch. I've always found the above to be one of the wiser quotes about deregulation. (Kahn, for those who don't know him, was at the helm of the Civil Aviation Board when airlines were deregulated, and has since written some of the more insightful pieces on deregulatory processes in multiple industries.) What does this have to do with commodities and Senator Feinstein? Recently, she announced …

It was the best of half-centuries, it was the worst of half-centuries ... Broadly speaking, there are only three things we can do to lower CO2 emissions: switch fuels, use energy more efficiently, or use less energy (conserve). Our CO2 conversations too often focus on one of those three in isolation: Coal bad. Recycled waste heat good. Conservation isn't an energy policy. Each assertion is both narrowly true and broadly incorrect, to the extent that each simplifies three prongs into one. To understand why, try to answer a simple question: if we shifted our power generation fleet to preferentially dispatch …