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Sean Casten's Posts


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 …

Read more: Climate & Energy


So how much would a $20/ton carbon price really cost?

First I said that we shouldn't confuse wealth transfers with economic pain. Then I said that a $20/ton carbon price works out to a 1.4 cent/kWh rate increase. Astute readers may have noticed a disconnect. (Isn't 1.4 cents/kWh economic pain?) Which brings me to the third and final part of this little series. Carbon prices v. use of carbon proceeds Let's review the electric sector math. In 2006, the sector was responsible for some 2,784,805,000 tons of fossil fuel-derived CO2 emissions. If we had a carbon policy in place at that time charging $20/ton of emissions, electricity generators would have …


Do the math

Economic impacts of carbon pricing

Yesterday, I explained why we shouldn't confuse wealth transfers with taxes. Today, I fulfill my promise to follow up with math. (Contain your excitement!) On the theory that you should (a) stick with what you know and (b) avoid speculating on shoddy data, I'm limiting this math to the electric sector, but the conclusions are generalizable. How much does carbon pricing cost us on our electric bills? The surprising answer? Not much. In 2006, there was a total of 4,058,285,000 MWh of power generated in the US. 49% came from coal, 20% from natural gas, 19% from nuclear, 7% from …


Moving money from A to B does not cause it to disappear

Cap & trade: Carbon tax or wealth transfer?

It's an article of faith that cap-and-trade will raise our energy costs, but it's not necessarily true. The ubiquity of this faith makes clear that the Smart People who write, talk, and vote about CO2 policy don't really understand the issues. A quick discussion, and then some math to clarify. There are two core problems with the theory that carbon pricing schemes will raise energy costs: We habitually confuse sector-specific wealth transfers with economy-wide pain; the two are not necessarily the same. Rather than admit our failure to imagine how the world would adapt to carbon pricing, we tend to …


Lowered expectations

Coal + CCS: not as expensive as other things!

If I told you that my cross-over dribble was better than Stephen Hawking's, would you build an NBA franchise around me? If I told you I was better looking than Ernest Borgnine, would you pick me as the leading man for your movie? If I told you that my lifestyle makes Iggy Pop look like a heroin junkie, would you let me babysit your kids? Peabody Coal is hoping that all those arguments play in their new ad, trying to make the case that the public should support coal with CCS: Clean Green Coal (PDF), touted as "less expensive than …

Read more: Climate & Energy


Dream harder

Massive economic and policy reform: Easier than you think

It seems to me that we suffer from a failure of imagination. We dream of a low-carbon world, but can't quite fathom how to get around the massive lobbying clout (and inertia) of the coal lobby. We dream of a world with no more utility obstacles to energy efficiency, but can't imagine how to undo laws in fifty states (plus the feds) to undo utility disincentives. And we dream of a renewable future, but find it implausible that the tiny amount of solar currently on the grid can be scaled up to a level that matters in any reasonable time …


Bring out your nerds

CHP primer: Fun with thermodynamics

Those of us who believe (as I do) that there are massive opportunities to reduce US energy costs while simultaneously lowering our greenhouse gas footprint spend a lot of time getting into arguments with bad economists.  These folks remember just enough of freshman theory (supply, demand, price, blah blah blah) to assert confidently that if profitable opportunities existed of any consequence, they already would have been snatched up by our efficient markets.  Therefore, any change from our perfectly-balanced status quo must be economically detrimental.  If you believe this, there may be a job for you at the Cato Institute. There …

Read more: Climate & Energy