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The goal of climate policy is not high GHG prices

There's an implicit assumption in much of the climate policy debate that to meaningfully lower greenhouse-gas emissions, we need a high price on carbon. The assumption is wrong.

Economics 101

In a market setting, price is a function of supply and demand. For a given commodity, prices will be high when demand outpaces supply and low when supply outpaces demand. Thus oil, for instance, is expensive. And autographed copies of my pen and ink cartoons are cheap (in spite of their rarity, I might add).

A cap-and-trade system is an attempt to create a market around a particular commodity, namely GHG emissions. The same dynamic will apply: if demand for GHG reduction outpaces supply, the price of GHG reduction will be high; if supply of GHG reduction outpaces demand, the price will be low.

If we pass a cap-and-trade policy that yields sustained high prices for GHG emissions, it will not be a sign of a successful policy. Quite the opposite: it will mean that the supply of GHG reduction is insufficient to meet the demand.

CEI deniers praise Andy Revkin, diss Tiger Woods

I'd like to thank the Competitive Enterprise Institute for publishing such an unintentionally informative and amusing newsletter. Rarely has the anti-scientific nature of global warming denial been so well stated in a mere two sentences:

A scientist who says that the atmosphere is warming, and cites certain physical processes, is still a scientist. A scientist who argues that people must take certain acts to avoid disaster has become a priest.

In other words, "A doctor who diagnoses your diabetes using medical tests is still a doctor. A doctor who tells you to exercise, change your diet, monitor glucose levels, and/or take insulin to avoid acute complications has become a priest."

EIA: Making the same mistake again and again

If you believe the Energy Information Administration, U.S. gas prices will peak at $4.15 per gallon in August.

Whew. That's a suprise for most Americans, 86 percent of whom believe that prices will top $5 by the end of the year. We can be confident that the EIA -- the agency that does the country's official projection of oil prices -- knows what they're talking about. Yessiree.

If you detect a note of sarcasm in my post maybe that's because the EIA has a hilarious record of forecasting world oil prices. And even when it comes to domestic gasoline prices, it's as if their forecasts are completely impervious to reality. To wit:

Toyota and Honda could sure learn something from Chevy!

“I don’t have to tell you how sexy the [Chevy] Volt is. The Japanese and Chinese couldn’t possibly put out something that appealing to middle America.” — Andy Karsner, Assistant Secretary for Energy Efficiency and Renewable Energy at the Department of Energy

The Clorox Co. leverages sustainability for growth

More green biz reporting from the Sustainable Brands ’08 Conference. Even the Clorox Company, with $4.8 billion in sales last year, has set out to get a piece of the proverbial green apple pie that the conscious American consumer is becoming. Recognizing that sustainable products are no longer a wee e-niche market, Bill Morrissey, VP […]

Nuclear power is expensive

In mid-2007, a Keystone Center nuclear report (PDF), funded in part by the nuclear industry estimated capital costs for nuclear of $3600 to $4000/kW including interest. The report notes, "the power isn't cheap: 8.3 to 11.1 cents per kilo-watt hour." In December 2007, retail electricity prices in this country averaged 8.9 cents per kwh.

Mid-2007 has already become the good old days for affordable nuclear power. Jim Harding, who was on the Keystone Center panel and was responsible for its economic analysis, e-mailed me in May that his current "reasonable estimate for levelized cost range ... is 12 to 17 cents per kilowatt hour lifetime, and 1.7 times that number [20 to 29 cents per kilowatt-hour] in first year of commercial operation."

At the end of August, 2007 Tulsa World reported that American Electric Power Co. CEO Michael Morris was not planning to build any new nuclear power plants. He was quoted as saying, "I'm not convinced we'll see a new nuclear station before probably the 2020 timeline," citing "realistic" costs of about $4,000 per kilowatt.

So much for being a near-term, cost-effective solution to our climate problem. But if $4,000 per kilowatt was starting to price nuclear out of the marketplace, imagine what prices 50 percent to 100 percent higher will do.

Critic bashes new eco-tainment network

I imagine some folks over at Planet Green are seeing red right about now. You would be too if someone suggested your new eco-cable network “embarrasses the Earth.” It’s the first really negative review of Planet Green I’ve seen, and it was penned by Slate television critic Troy Patterson. The entire review can pretty much […]

Snippets from the news

• Endangered turtles show up in Texas. • International talks in Bonn end with, as usual, scant progress. • Bank of America donates $1 million to Conservation International. • Exxon quits the gas business. • Lions at Kenya park at risk of extinction. • Ron Paul drops out.

Hot plans rile the Chicago waterfront

Two curious things going on along the waterfront in Chicago, which Mayor Richard Daley envisions as the “greenest city in America”: a brouhaha over plans to relocate the children’s museum to Grant Park, and a billion-dollar dream of a semicircular Eco-Bridge in the same area. A mock-up of the Eco-Bridge. Photo: Chicago Tribune. The $100 […]

Wal-Mart truck fleet on track to meet fuel-efficiency goals

Wal-Mart has improved the fuel efficiency of its 7,000-truck fleet by 20 percent since Oct. 2005 and is on track to meet its goal of a 25 percent improvement by the end of 2008, a Wal-Mart executive said Friday. Having already downsized its diesel tanks and started rolling on more efficient tires, the company also […]