Articles by Gar Lipow

They affect consumers the same either way, and upstream is simpler and more transparent

In his post on conservatives and carbon taxes, David said:

First, we have to remember all the places the price signal created by an upstream tax can be diluted or stymied on the way to consumers -- i.e., those who can change their behavior in response to prices. Not every industry or business will pass an increase in operating costs directly on to the next link in the chain. Information failures and split incentives abound. Price signals that begin strong, catholic, and clear become fragmented and faint downstream. For all the hype, an upstream carbon price will deliver fairly little incentive to where the carbon is used.

There are two problems with this: It is overstated, and it places blame in the wrong place, i.e., the fact that the tax is levied upstream.

An open reply to James Hansen's open letter

Dear Dr. Hansen:

An old engineer's dictum says "fast, cheap, good: pick two." Unfortunately, and I'm sure completely contrary to your intention, your solution to global warming favors "cheap" over fast.

Energy efficiency, renewable energies, and a "smart grid" deserve first priority in our effort to reduce carbon emissions. With a rising carbon price, renewable energy can perhaps handle all of our needs. However, most experts believe that making such presumption probably would leave us in 25 years with still a large contingent of coal-fired power plants worldwide. Such a result would be disastrous for the planet, humanity, and nature.

Fourth generation nuclear power (4th GNP) and coal-fired power plants with carbon capture and sequestration (CCS) at present are the best candidates to provide large baseload nearly carbon-free power (in case renewable energies cannot do the entire job).

OK, this begs the question of why depending on efficiency, carbon negative forestry and agriculture, and renewables would leave us "in 25 years with still a large contingent of coal-fired power plants worldwide."

We certainly have the physical capacity to build wind and solar generators that could provide all our power. Archer and Jacobson, perhaps the world's leading experts on wind potential, estimate that wind energy at 80 meters in commercially developable sites alone could could supply [PDF] five times the world's current energy demand. Note the emphasis: That is not five times world's current electricity consumption, but five times total world energy consumption, including cars and factories and non-electric heating¹. Similarly, solar thermal power plants of the type already running in U.S. deserts² can provide the world's entire energy needs [PDF] from less than 1 percent of total desert land³. Those are only two possibilities, albeit the ones with the biggest potential with today's technology.

With heat pumps, smart cooperation is as important as technology

Commenter Pangolin made a point about the cost of ground source heat pumps, an energy-saving technology, in his comment about Hansen's open letter: "If I cluster installation of my geo-exchange systems (4 homes) I can realize significant savings in the greatest cost of the system, the drilling for the ground loop. If I bundle systems into neighborhood or block thermal-service units unit costs go down again."

Just so. To take an extreme example, a neighbor of mine had a ground source heat pump installed for $15,000 in a single-family residence (her home was ideal for the technology in a number of ways). Normally such systems run $20,000-$40,000. However, that cost can drastically be altered when shared. In 1992, a HUD Oklahoma apartment complex, Park Chase Apartments [PDF], installed heat pumps for 348 units for a cost of around $6,800 per unit -- about $10,000 per unit in 2009 dollars.

Even on the four-unit basis Pangolin mentions, the price could be lowered not only by a shared ground loop, but by shared pumps, and by timing installation to coincide with road repair, and placing the loop under the street. I suspect that done on the block level or even along a single street the length of a block, this could lower costs to $15,000 per unit.

This is not a technological change in the usual sense. But it makes use of smart cooperation to use technology more effectively. And this is only one of many cases where we can use cooperation to drastically lower the cost of the investments we need to make to replace fossil fuels. You can look at it as a form of technology if you want to. Certainly it is innovation -- an innovation in social relations rather than machines.

Regulation and public investment are more efficient means to reduce GHGs than emissions pricing

When I sat down to write about why so-called "command and control" methods are often the most effective and efficient means of fighting climate chaos, I found that Kevin Drum had posted exactly the argument I wanted to refute.

After conceding that it will take more than emissions pricing to lower greenhouse gas emissions, and that response to price signals tends to be small and slow, Drum argues that a price mechanism should be the primary means to fight climate chaos: "Still, generally speaking, taxes and carbon trading are more efficient regulatory mechanisms than command and control, so the more you can rely on them the better."

I think this default conventional wisdom is just plain wrong. Not only is elasticity low, but there are also simple standards by which we can measure energy and greenhouse-gas efficiency. Further, suitable means for increasing efficiency and lowering emissions are known. Given these three conditions, price is not the most efficient way to change behavior.

As examples, consider weather and duct sealing. It's widely acknowledged that sealing buildings yields fast paybacks -- two years or less. Yet most buildings remain under-sealed, with leaky frames and ducts. How do we change this? Well, we can raise the price of energy until people become desperate and seek out contractors. But since we already have quick paybacks, any amount we raise the price is far beyond the cost of saving the energy.

If, as I have suggested in surveys of the literature, demand response to price increases is around -.5, that means it will require $200 in emissions charges to motivate each $100 of consumer investment in energy efficiency. In contrast, investing public funds could insure that a nice woman working for an energy-efficiency utility could seal your home for around $100, plus a bit for administration. Even if that $100+ came from regressive taxation, it would still cost consumers less than a primarily price-driven policy. And if the payback is really two years or less, the government could use its ability to borrow to provide low interest financing, thus bringing the cost to consumers down below the business-as-usual price.