Articles by Sean Casten

Pro-business vs. pro-market

Much of the debate around the big issues of our day -- from energy to healthcare -- hinges on whether one is "pro-market" or "pro-government," with Cato and the Wall Street Journal op-ed page lining up on one side and any number of PIRGs on the other.

Unfortunately, neither side appears to understand the pro-market position. Herewith, my attempt to add a bit more rigor to the debate.

So what does a market look like? At the most basic level, a market is defined by its characteristics. There are various definitions out there, but they all come down to the same basic tests:

1. No barriers to entry
2. No barriers to exit
3. Price transparency (e.g., prices reflect costs)
4. No participants can independently affect price

Meet these tests and Adam Smith's magic starts to work, whereby the self-interest of each participant leads to social benefit for all in the form of better products and services, at lower prices. Why? Because life in a perfect market sucks! If you're running a firm in a market as defined above, you don't sleep well at night. New entrants keep cropping up. If you can't stay competitive, you're going to lose your money. Tiny changes in raw material costs have big impacts on your profits, which you are completely powerless to change. This causes you to do two things:

RED positioned to fund $1.5 billion of recycled energy projects

While humility makes it awkward for me to be posting this, David said it would be OK. (I swear!)

More seriously, this is a day of great pride at RED and I wanted to share a bit with you -- and perhaps explain the lack of time I've had for more insightful posts lately.

We've just completed a pretty substantial equity raise, with funds available to invest in recycled energy projects that convert waste heat to power. The target for our investments are places where we can simultaneously generate profits, lower energy costs, and reduce greenhouse-gas emissions - in other words, all the things I've blogged about here before. But now instead of just being an academic idea, we have the financial resources to go out and prove the concept. And, it bears noting, quite a bit of financial pressure to do so.

More important than that, though, is that we have a platform to change the way the world makes power.

Lots of good press today in Bloomberg, the Chicago Tribune, and The International Herald Tribune, among others. (Or, if you're a stickler for original source material, our press release is here.)

But perhaps the best piece -- and the one that really gets what we're out to do -- is on the Dow Jones newswire, printed below the fold ($ub req'd, or else I'd give the link).

Expensive coal + hydrogen = ?

As follow-up to my post yesterday: There is now a bidding war emerging for the FutureGen clean coal plant, targeted to cost $6500/kW. Texas and Illinois are fighting to win this fantastic prize. If they get it, they'll ensure they can keep burning coal, but will do it in a plant that is absurdly expensive.

As a fringe benefit, they'll generate hydrogen (aka, a fuel that no one is presently demanding for their vehicles), on the off chance that if a market arises they can sell it. Goodness knows they'll need it if the coal plant is ever going to pencil out.

Presumably, this is a better idea than investing in more cost-effective renewable/cogen/efficiency projects that would actually produce a product people want.

See an article from Restructuring Today, "Illinois works hard to win FutureGen clean coal/hydrogen plant" ($ub req'd), below the fold:

Expensive coal + hydrogen = ?

As follow-up to my post yesterday: There is now a bidding war emerging for the FutureGen clean coal plant, targeted to cost $6500/kW. Texas and Illinois are fighting to win this fantastic prize. If they get it, they'll ensure they can keep burning coal, but will do it in a plant that is absurdly expensive.

As a fringe benefit, they'll generate hydrogen (aka, a fuel that no one is presently demanding for their vehicles), on the off chance that if a market arises they can sell it. Goodness knows they'll need it if the coal plant is ever going to pencil out.

Presumably, this is a better idea than investing in more cost-effective renewable/cogen/efficiency projects that would actually produce a product people want.

See an article from Restructuring Today, "Illinois works hard to win FutureGen clean coal/hydrogen plant" ($ub req'd), below the fold: