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Sean Casten's Posts

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Policy fixes to unleash clean energy

Suppose you became King tomorrow and your first order of  business was to modernize the U.S. energy system -- make it cleaner, cheaper, more reliable and more sustainable. What would you do? Now suppose you’re the King’s subjects, and he has just announced his plan per the above. What will you learn? Clearly, you’ll learn something about the King’s understanding of the energy system, his political courage, and his view of government’s role in society. Whether you learn anything about how to reform our energy system though depends largely on whether you happen to agree with all those underlying beliefs, …

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Bill Gates thinks about energy innovation

Bill Gates has written on his blog that we need "innovation, not just insulation" in order to reduce CO2 to manageable levels. His motivation is robust, but his thinking is ... far from clear. Because he's Bill Gates, this is sure to attract attention, but even if he weren't, this is worth talking about. It illustrates the deep misunderstandings that most of us have about the energy sector, the possibilities for reform, and -- at a much larger level -- how our economy works. What Gates gets right Let's start with his core thesis: Gates argues that while we might …

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The Nation’s idea for a Clean Power Agency

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 …

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Natural gas as a near-term CO2 mitigation strategy

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. …

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Clean energy opportunities

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 …

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Can perfect markets induce capital investment?

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 …

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The perfect market fallacy

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 …

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The problem with unspoken assumptions

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 …

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How much energy does the U.S. waste?

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 …

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Why CO2 regulation will lead to lower electricity prices

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 …

Read more: Climate & Energy