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Are we all Bernie Madoffs, and what comes next?

Yes, homo "sapiens" sapiens have constructed the grandest of Ponzi schemes, whereby current generations have figured out how to live off the wealth of future generations. Yes, we are all in essence Madoffs (many wittingly, most not) or at least his most credulous clients. What comes next will be the subject of a multipart series.

I had been planning to write something on this for a while when NYT columnist Tom Friedman interviewed me for "The Inflection Is Near?" which appears in Saturday's New York Times:

"We created a way of raising standards of living that we can't possibly pass on to our children," said Joe Romm, a physicist and climate expert who writes the indispensable blog climateprogress.org. We have been getting rich by depleting all our natural stocks -- water, hydrocarbons, forests, rivers, fish and arable land -- and not by generating renewable flows.

"You can get this burst of wealth that we have created from this rapacious behavior," added Romm. "But it has to collapse, unless adults stand up and say, 'This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate ...' Real wealth is something you can pass on in a way that others can enjoy."

A few years ago I thought that aggressive action by governments around the world to push clean energy could spare the public dramatic lifestyle changes in the coming decades, but I have been convinced otherwise by

• the failure of U.S. leadership [thank you George W. Bush and the conservative movement stagnation]
• the remarkable shift in our understanding of climate science in the past two years
• China's decision to join the Ponzi scheme full throttle and emulate our rapaciousness (see here and here), and
• a recent, brilliant talk I heard (a teaser for a future post).

The adults, in short, are not standing up. Sadly, most haven't even taken the time to understand that they should.

And so every generation that comes after the Baby Boomers are poised to experience the dramatic changes in lifestyle that inevitably follow the collapse of any Ponzi scheme.

This global Ponzi scheme is not just a metaphor (see here), but for me a central organizing narrative of how to think about the fix we have put ourselves in.

What exactly is a Ponzi scheme? Wikipedia has a good entry:

A love of delicious farm votes beef crosses ideological boundaries

In December, ranchers fell into a panic over a nonexistent EPA proposal to tax methane emissions from cows. By February, panic was replaced by giggling: how could they every have worried over something so crazy as a "cow tax"? And now, to demonstrate how badly misplaced their fears were, a Democratic and Republican Senator have joined together to enshrine in law the sacred principle that American cows shall never be taxed. Smell the bipartisanship.

Including cattle in a cap-and-trade system is, of course, a fine idea. From an environmental perspective, cattle are a major source of a wide range of ills: methane emissions, land use changes, nitrous oxide emissions, ammonia emissions, etc. If you tally up the negative impacts of beef on human health and productivity, the societal cost of cows climbs even higher.

From an economic efficiency perspective, it generally doesn't make sense to exclude sectors from a carbon cap. We want emissions reductions to come from the fastest, lowest-cost sources available, and it's hard to imagine anything cheaper or lower-cost than reduced beef consumption. It takes decades to shut down a coal plant. It takes no time at all to not eat a strip steak. Moreover, energy is a primary input to just about every sector of the economy. The same can hardly be said for tender, delicious short ribs.

TVA: making Bozo look good

"Last week, I called TVA a bunch of arrogant Bozos. I guess I should have said arrogant clowns."

-- Sen. Tim Burchett, at a Congressional hearing on the Tenn. coal ash spill, explaining that he meant no offense to Bozo the Clown

Van Jones talks to Grist about his new job as Obama’s green jobs guru

It’s official: Van Jones is joining the Obama administration to be the voice of green jobs in the White House. “I’m honored and proud and humbled,” Jones told Grist on Tuesday, after the appointment became official. “Some of these ideas, we were kicking around in Oakland and the Bay Area for a long time; to […]

Envisioning a future without disposable hotel pens and Timex watches

You know that point when you realize that you just can't keep buying more crap? Many families call it "December 26." Thomas Friedman calls it the Great Disruption. Saul Griffith has a more compelling framing. A sustainable future society, he says, will be a Rolex and Mont Blanc society. That is, when you are born, you get a Rolex and a Mont Blanc pen. And that's it. No Swatches to match your outfit. No gimme-pens from the Holiday Inn. It's an appealing aesthetic.

Coal is the enemy of the human remains

"I wanted to secure in my mind that this cemetery was OK. I found out it wasn't OK. It was gone."

-- Walter Young, a resident of West Virginia whose great-grandmother's grave was moved, without his knowledge, by a coal mining company -- the company has no record of where they moved it

Why electric utilities like coupling

Writing from the Eco:nomics conference last week, David noted that at least one utility CEO is pretty down on decoupling:

Michael Morris, CEO of American Electric Power ... said "I'm not a decoupler. If my revenues go down, they go down."

David appropriately questioned whether AEP is really so agnostic with respect to falling revenues. But Morris does raise a larger, quite accurate point. Namely, many electric utilities aren't decouplers. Given the prominence that decoupling has come to play in many state and federal policies, it's worth taking the time to understand why.

Decoupling is often framed as a way to get rid of the utility disincentive created by energy efficiency. With large fixed costs, small reductions in revenue can have big impacts on equity returns. This has historically made many utilities work really hard to incentivize inefficient use of their services, from special all-electric rates to exit fees, declining-block pricing schedules, and standby tariffs. (Don't worry about the jargon -- the unifying feature of all of the above is that they penalize any customer who has the temerity to invest in energy efficiency.) It has also made the regulated electricity industry the biggest opponent of sensible energy use.

Eliminate the "coupling" of revenues and equity returns -- so the theory goes -- and you eliminate utility hostility to efficiency.

What year will coastal property values crash?

Coastal property values won't wait to (permanently) fall until sea levels have actually risen four or five feet, as they almost certainly will by the end this century on our current CO2 emissions path).

Coastal property values will crash when a large fraction of the financial community and of opinion-makers -- along with a smaller but substantial fraction of the public -- realize that it is too late for us to stop four to five feet of SLR. And remember, if we don't get on the sustainable sub-450-ppm path soon, then people will quickly come to understand that SLR won't stop in 2100. Seas will continue rising post-2100 perhaps 10 to 20 inches a decade (or more) for centuries until we are ice free and seas are 250 feet higher. And that makes protecting most coastal cities very, very difficult and expensive.

One of the points of my post "Ponzi, Part 1," of course, is that we haven't hit that critical mass of knowledge yet. If we had, the world would be engaged in a massive, desperate effort to avert catastrophe.

And so I pose the question in my talks: What year will coastal property values crash?

On energy, LCV tags Republicans as Limbaugh accolytes

LCV has their claws out! I love it.

Sustainable funding for sustainable infrastructure

This past Friday, Princeton University's PRIOR Center and New York University's Rudin Center convened a conference on what's next in transportation. The speakers, who included Mort Downey, former Deputy Secretary of Transportation and leader of the Obama transition team for transportation; Tony Shorris, former head of the New York and New Jersey Port Authority; current PA chairman Anthony Coscia; and others, agreed that we are at a crossroads in transportation policy.

On the one hand, there has never been more enthusiasm for new modes of transportation such as high-speed rail and new approaches such as vehicle mileage tolling and congestion pricing. Billions in the stimulus bill and the Obama budget for rail have set off a frenzy of excitement about building high-speed rail in the United States. At the same time, however, the old system of funding infrastructure, the Highway Trust Fund, fed by gas taxes, has never been under greater stress. With a new transportation authorization bill likely to move this year, we stand at a key juncture in U.S. transportation policy.

Transportation reform is vital to building a clean economy. Not surprisingly, therefore, much of the discussion at Princeton focused on the irony of trying to fund the reinvention of transportation out of a five-cents-per gallon gas tax -- at a time when reducing gas consumption has emerged as a national security, economic and environmental priority.

Currently, the Highway Trust Fund, built on nickel-a-gallon gas tax, accounts for the lion's share of infrastructure funding in the United States -- not only for roads, but for mass transit as well. But the fund is essentially depleted (having required a bailout last fall to stay solvent). Additionally, with construction prices higher but gas usage falling, the gas tax now provides only about half the purchasing power needed to sustain our current system, let alone make improvements.