Sean Casten

Sean Casten is president & CEO of Recycled Energy Development, LLC, a company devoted to profitably reducing greenhouse emissions.

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 …

Still fallacious

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 …

Hayward J'Buzzoff

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 …

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 …

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 …

Yes, we Kahn

Carbon trading: Worthy of Feinstein’s ire?

“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 …

A tale of two emissions factors

How much CO2 do our nation’s coal and gas plants actually produce?

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 …

Breaching the dams

How fast can the U.S. electric sector reform?

Is the electric sector capable of rapid, large scale reform? Many policies implicitly assume the answer to that question is No, especially when it comes to greenhouse gas (GHG) emission control. The result is a policy conversation that hinges on the assumption that it is hard to change. How much must we spend to accelerate new technology? How many decades should we allow for a phase-in of new regulations? As it turns out, the industry can change — and indeed, has changed — at a much faster pace than you might think. Contrary to conventional wisdom, it turns out to …

T Boone's gonna love this

How to shut down 93% of coal without building new plants or reducing power supply

Two interesting observations: 50% of U.S. power generation (in MWh) comes from coal, while only 20% comes from natural gas. 32% of total U.S. power generation capacity (in MW) is coal-fired, while 42% is gas-fired. When it runs, the natural gas fleet emits just 50% of the CO2 of the coal fleet, which raises a rather interesting question: what would we have to do to make it run harder? And how big a difference would that make in our national CO2 footprint? MW vs. MWh So why, if we have more natural gas generation capacity, do we get more of …

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