Bringing down greenhouse gas emissions with a "cap and trade" system of tradable emissions allowances seemed like a good idea. When first proposed, the prospect of setting up a carbon market to create incentives for energy efficiency and renewable power looked like a cutting-edge policy tool. But the legislative effort to pass a climate change bill has stalled. Today, cap and trade looks badly out of sync with political reality. So what is Plan B?
Before we shift policy gears, it is important to understand what went wrong with the Waxman-Markey and Boxer-Kerry bills. We owe these leaders in the Congress a great debt of gratitude for having gotten a serious climate change policy debate going, but their proposals failed to take seriously our current political and economic circumstances.
First, cap and trade turned out to be badly out-of-step with our difficult economic situation. This approach to greenhouse gas emissions control locks in the environmental target but leaves open the question of the price at which allowances will trade - and thus what the economic burden to society will be. In the wake of a deep recession, this economic uncertainty unsettled many in the Congress, including Democrats as well as Republicans.
Second, rather than auctioning off the emissions allowances and generating revenues that could be used to lower other taxes (or fund universal health care or support clean energy research and development), the current legislation gave away nearly 80% of the pollution permits - and not just for a couple of transition years but out to the 2030s. The "free" allowances were spread in many directions but the largest chunk went to coal utilities and their customers. This was said to be the political price for change - buying off those who would be hurt by putting a price on carbon. But if this were the logic, the strategy failed. The votes needed to pass legislation have not materialized.
And the allowance giveaways seemed like another example of special interests manipulating the political process for personal gain. And indeed, the loss of $800 billion in potential revenue over the next decade offered real cause for concern. But even more troubling, the allowance allocation would have blunted the incentives for behavioral change. Rather than sharpening the focus of both power producers and consumers on the need to move toward lower emissions, the free allowances would have meant that many coal-burning utilities had little reason to shift to cleaner fuels until their fossil energy (and emissions spewing) plants reached the end of their useful lives. Likewise, at the household level, consumers would have seen little change in their electric bills (after the free allowance rebates) and thus not given much thought to energy conservation.
Third, the idea of a "carbon market" seemed like a flexible and sophisticated way to harness market forces in pursuit of an important environmental goal. But in the wake of our recent economic meltdown, the idea of another esoteric and opaque market didn't sit so well. It felt like another opportunity for Wall Street bankers to make money at the expense of Main Street.
Finally, the current legislation said almost nothing about natural gas. But with half the emissions of goal per unit of electricity generated, natural gas offers the best transition strategy to a clean energy future. Moreover, in the last couple of years, vast new reserves of natural gas have been identified in the United States. The price of gas has come way down and supplies look plentiful for decades to come.
More importantly, natural gas has a proven record as a cost-effective approach to lowering greenhouse gas emissions. Only three countries met the goal of the 1992 Framework Convention on Climate Change and reduced their emissions in the year 2000 to 1990 levels. Russia hit the target, but only by collapsing its economy - not a very useful policy prescription. Both Britain and Germany cut their emissions dramatically by shutting coal mines and shifting to natural gas as the primary fuel source for power generation.
So what should climate change legislation look like? First, we must refocus on driving technology innovation. We need a policy framework that offers real incentives to develop energy efficiency, carbon-free power generation, and the infrastructure (particularly electricity storage and transmission systems) needed to support a clean energy future. Innovation is critical because the key to a winning political coalition on climate change lies in finding breakthroughs that give us more energy (not less!) at lower prices (not higher!).
In this regard, it remains critical to put a price on greenhouse gas emissions. But we need to do it right this time. Let's avoid complexity and adopt a straightforward carbon charge (or better yet, let's call it what it is: a "harm charge") of perhaps $4/ton starting in 2012 and rising $4/year for 20 years, yielding a price of $84/ton in 2032 - with all of the revenue returned to the public in the form of lower payroll taxes. Using the money raised to cut payroll taxes would broaden the base of support for climate change action since any family that did its part to reduce its own energy consumption would come out ahead. And lowering payroll taxes would also encourage businesses to hire more workers and thus provide a significant economic stimulus.
The low initial rate of the emissions harm charge would impose little economic burden. Indeed, utilities in the Northeast are already buying allowances at about $3/ton under the Regional Greenhouse Gas Initiative. And European companies are paying five times this amount under the EU Emissions Trading System.
Die-hard environmentalists will complain because this slow ramp-up will not guarantee that emissions come down on a specified schedule. But the prospect of paying much higher harm charges in the future will change investment decisions. It will mean that utilities think hard about the right fuels for the future - knowing that for most of the life of any power plants they build now, they'll be paying $80+ for each ton of carbon dioxide emissions. And anyone building a new factory, house, school, or shop will also face a new energy efficiency calculus - with investments in more efficient lighting, heating, air conditioning, windows, and insulation all paying off in a much bigger way in the years ahead. Likewise, consumers will look harder at the energy efficiency of everything they buy from cars to appliances.
The biggest impact, however, of an escalating harm charge would be the incentive created for investment in energy innovation. With a clear price signal in place, private capital would flow to companies with strong energy technology pipelines. The promise of a huge payday for breakthroughs that contribute to a clean energy future will engage entrepreneurs across the country and the world in finding ways to bring down the costs and improve the reliability of power generation from the wind, sun, geothermal wells, second-generation biofuels, waves, tides, and other alternative sources.
And we shouldn't leave nuclear power out of this technology development race. If the waste disposal and safety issues can be addressed and power plant designs structured to keep costs down, nuclear energy might well turn out to be the winning bet. Likewise, we should let those who envision an energy future based on oil, coal, and natural gas compete. Their technology challenge will be to demonstrate that carbon capture and storage can be done cost effectively.
Remember that energy is a $6 trillion dollars per year sector of our global economy so the stakes are high. But with a clear price signal and an open playing field, we can engage the creative spirits and inventive minds across society in the mega-challenge of creating a clean energy future that will not only address climate change but drive economic progress and global prosperity.
Dan Esty directs the Yale Center for Environmental Law Policy. He served for a number of years as a top official at the US Environmental Protection Agency and more recently as an energy and environment advisor to the Obama campaign and as a member of the Presidential Transition Team. He is the author or editor of nine books including the recent prizewinning Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage.
Martin Rivers: Flying Through EU Skies? Then Expect to Play by EU Rules
Kelly Rigg: Aviation Industry on Trial: The Dark Arts of Climate Obstructionism
The International Case for Carbon and the Economy
My name is Butch Davenport. I work for a company that recycles textiles with the primary mission to keep usable clothes out of landfills. We reuse and resell clothing to affordably dress people both locally and around the world. We provide green sector jobs to Americans in a sustainable growth industry while providing affordable clothing to people locally and around the globe.
80% of the world’s population survives on less than $10 a day. For many secondhand clothing is all that is affordable. A pair of pants in clean, damage-free condition can be delivered to the east coast of Africa for only $0.34 a pair – and a sweater to Pakistan for only $0.12 each. This is less than the cost to mail a letter.
5 Million pounds of clothes and shoes reused is comparable to the following:
• Offsetting emissions from 2,900 cars in a full year
• Saving water equivalent to 171,000 swimming pools
• Avoiding the use of 1,000,000 lbs of pesticides for cotton growth
• Reducing the use of 1,500,000 lbs of fertilizer for cotton growth
By allowing these items to be reused we will reduce greenhouse gas emissions by 35 million pounds.
http://donovanlawgroup.wordpress.com/2010/04/05/regional-greenhouse-gas-cap-and-trade-programs-may-be-the-solution/
Couple that with expanded wind farms and offshore wind platforms and if we REALLY wanted to we could eliminate the need for coal, oil, and nuclear energy for electricity. That by itself would make a huge ding. Also expand use of natural gas to all large vehicles and you'll take care of a huge chunk of auto emissions especially if you build a nationwide maglev network for the movement of cargo.
Suppose we only give a dividend to households whose annual income is less than $100,000. Then those who need it have more than enough to offset their cost increase. So maybe you didn't sleep through econ 101. Maybe you didn't even show up, or maybe you just failed arithmetic.
On the merits, the nod goes to Cantwell-Collins by a comfortable margin. Its foremost advantage is simplicity: it’s less than 50 pages long (compared to about 1,500 for Kerry-Lieberman-Graham), it’s much easier than Kerry-Lieberman- Graham to understand, and would be far simpler to administer. For example, it requires no monitoring of smokestacks or verification of offsets in distant lands.
Another virtue of Cantwell-Collins is its transparency. Its permit auctions are com- petitive and open, and the public can readily see where all the revenue goes: 75% to everyone equally and 25% to climate-related programs. Moreover, because off- sets are not allowed, financial shell games are virtually impossible. By contrast, it’s virtually impossible to tell where the money will go under Kerry-Lieberman- Graham, and financial shell games are as certain as oversized Wall Street bonuses.
A third advantage of Cantwell-Collins is its dividends. These guarantee that middle class families won’t be screwed. Indeed, a majority of households in all states will come out ahead because their dividends will exceed their higher carbon costs. This will sustain consumer spending and spur our ailing economy. It will also retain popular support for a declining cap as carbon prices rise over time.
http://www.capanddividend.org/?q=node/257
Democratic, DECENTRALIZED power production needs to be the centerpiece of any policy. Massive efficiency upgrades, affordable solar power generated WITHIN OUR BUILT ENVIRONMENT, localized storage solutions and a firm resolution to keep Big Energy out of our wilderness forever.
The main reason we don't want cap and trade is because it further distances us from the consequences of our own behaviors and continues the practice of externalizing costs and privatizing profits. A FAIR system of loans and feed in tariffs would take us where we need to be - accountable to ourselves and our community for our pollution, waste, energy use and our energy production. Finances will DIRECTLY relate to amounts of power used vs produced, which will lead to drastic cuts in wasted energy and huge increases in clean, local power generation.
We can't continue the Big Energy model - it is irreparably broken, outdated, unreliable and corrupt. Time to take the future into our own hands - starting with rooftop solar in the built environment and NO BIG SOLAR IN OUR DESERTS. This is critical
"Why on earth would we want to create another bureaucracy to collect our money, siphon a bunch off, then spit it back to us?"
Taxing carbon where it enters the economy means taxing coal and petroleum corporations, not "us" as I consider myself. But I agree that the ideal situation is to encourage rooftop solar via loans and feed-in tariffs as much as possible and I agree that decentralization is the primary reason to favor rooftop solar over the runner-up technology, windmill farms.
"Democratic, DECENTRALIZED power production needs to be the centerpiece of any policy. Massive efficiency upgrades, affordable solar power generated WITHIN OUR BUILT ENVIRONMENT, localized storage solutions and a firm resolution to keep Big Energy out of our wilderness forever...
Time to take the future into our own hands - starting with rooftop solar in the built environment and NO BIG SOLAR IN OUR DESERTS."
I agree. The Cape Wind project in Massachusetts should just be moved seven miles further out to sea, where it will be out of sight of the natives and not interfere with their rituals. And the estimates of the cost and generating capacity of any concentrating solar power project that's ever bid should be compared to the number of solar panels that could be installed on area rooftops for the same price. I think we'd find that a decentralized power collection model would be less expensive per MWh and employ more electricians.
But in total of course the revenue from the charge on carbon is equal to the extra cost of fossil fuel. So even for the average person the dividend could pay for none of the cost of using the more expensive lower carbon energy sources or making the energy savings which are the sole purpose of the whole exercise.
"But in total of course the revenue from the charge on carbon is equal to the extra cost of fossil fuel."
No. Long haul truck drivers and taxi drivers might not get enough subsidy to make the new policy financially unnoticeable, unless they switch to carbon neutral technologies.
"Revenue from Cantwell and Collins’ auctions would be split two ways: 75% would be returned to the American people to compensate for higher energy prices, and 25% would be used for transition assistance and public investments, subject to annual appropriations."
http://www.capanddividend.org/?q=node/257
25% is spent on windmills, and 75% is returned to the 75% of Americans who earn less than a million or so -- you can look up exactly what income level includes 75% of U.S. workers yourself if you want the exact annual income that could be included.
What is important about the Cantwell-Collins climate and jobs bill is that nobody who *would* be overburdened will be. And you know it.
The huge majorities of so-called “deniers” are not really saying it is ok to put more and more CO2 into the air. The real problem is that every solution offered to them costs more than they can afford. They understand that the whole purpose of a “carbon tax” or “cap and trade”, just as proponents do, is to raise prices on current forms of energy so new forms can compete. They read that many of these new forms of energy are many times more expensive that coal, that means electric bills many times higher. They are hearing about a future where they cannot afford energy, that’s too hard to contemplate, hence the denial. And all the science cannot convince them the consequences of putting CO2 in the air, is worse than a future they cannot afford.
And for the Al Gore side who love point to France and say SEE, the French only have 1/3 the carbon footprint per person of an American, so we should do better. Then turn around and fight any new nuclear plants in the US. Obama’s DOE Head Dr. Chu, said wind and solar cannot supply over 20-25% without storage.and cost 5 times more. And unlike Al Gore, Dr Chu is a PhD in PHYSICS and a Nobel Prize winner in PHYSICS. It is NOT “Coal” or “wind and solar”, it’s Coal or Nuclear, with a little wind and solar.
The first (and most cost effective) abatement action that can be taken is to halt the growth of energy consumption, or in fact reverse it. In economics one would call it "Productivity". For every given $/unit of energy input, more of value is created. This tends to free up those dollars for spending on other things. In local towns in the colder climes in the UK where better insulation and weatherisation projects were performed the percentage of disposable income spent on energy decreased substantially. The savings tended to stay locally.
In Australia, incentives are provided to remove old electric water heaters replacing them with solar systems. In Sydney, household energy bills are down (freeing disposable income). The calculated energy saving makes it likely that at least one 300MW power station will not need to be built as the program is rolled out. This is both an enormous capital and CO2 saving.
The net effect is an economic expansion via cost savings for households.
Similar projects could be undertaken for micro CHP (http://en.wikipedia.org/wiki/MicroCHP) in cold climes and solar hot water for warmer areas. The company I work for is managing the audit for a uCHP project in New Zealand. Early results have energy consumption savings approaching 80%. The monetary saving is put back into the surrounding region.
The fundamental problem with energy economics at the moment is that it is the providers' business to provide MORE energy.
Thorium reactors were proven in hundreds of tests at Oak Ridge from the ’50s through the early ’70s. But thorium hit a dead end. Locked in a struggle with a nuclear- armed Soviet Union, the US government in the ’60s chose to build uranium-fueled reactors; in part because they produce plutonium that can be refined into weapons-grade material and Thorium does not. The course of the nuclear industry was set for the next four decades, and Thorium power became one of the great what-if technologies of the 20th century.
After Thorium has been used as fuel for power plants, the element leaves behind minuscule amounts of waste. And that waste needs to be stored for only a few hundred years, not a few hundred thousand like other nuclear byproducts. Because it’s so plentiful in nature, it’s virtually inexhaustible.
Renowned climatologist James Hansen specifically cited Thorium as a potential fuel source in an “Open Letter to Obama” after the election to prevent climate change.
India, China, Russia and France are moving fast on Thorium reactors (liquid fluoride thorium reactor, or LFTR). The USA should be leading both because we invented it here and because we don’t want to be importing our future power plants. We need to keep the lead, and the jobs, here.
Read more:
http://www.wired.com/magazine/2009/12/ff_new_nukes/all/1
http://www.technologyreview.com/energy/19758
http://www.huffingtonpost.com/brendan-demelle/greenpeace-unmasks-koch-i_b_518036.html
to acquire federal funds
http://www.grist.org/article/2009-09-22-fossil-fuel-subsidies-dwarf-clean-energy-subsidies-obama-wants
fraudulently
http://skepticalscience.com/global-warming-scientific-consensus.htm
Just a suggestion.
Nuclear and hydropower are the only two widespread alternative energy sources in the United States. Wind power is making progress, but is uneconomic with today's low gas and coal prices.
Natural gas is the perfect bridge fuel. Not only does it have 50% less carbon emissions than coal, but it contains very little other pollution, unlike coal which has carbon soot, NOx, and sulfur gas emissions.
Furthermore, many power plants are dual power coal and natural gas. The astonishing fact is that the US is only using 20% of it's natural gas power generating capacity - a full 80% is sitting idle because coal is so cheap. We could be using 5 times more natural gas, literally almost overnight ,which means we would be using significantly less coal.
Natural gas is not the final answer, but it will get us to a 100% alternative, clean energy future. We have the supply right here in the US and our friendly neighbor Canada. We should use natural gas, in favor of coal and oil, and begin a massive Manhattan Project-style program to find sustainable, affordable alternative energy.
The overall carbon emissions of natural gas compared to coal depend on how sour the gas is coming out of the well (i.e. its content of acid gases hydrogen sulfide and carbon dioxide as well as nitrogen, which becomes an acid gas when burned in oxygen). Obviously the carbon dioxide represents a 1:1 emission. The Claus kilns that process the hydrogen sulfide run at 850C and require lots of energy to operate. The nitrogen has to be distilled by cryogenic refrigeration. All of these refinery processes add up and can make the comparison to coal less favorable.
All said, natural gas is probably still better than coal, but as we attempt to exploit more challenging deposits of sour gas trapped in deep layers of shale, the end-to-end footprint (including hydrofracturing, etc.) is going to get increasingly worse.
As for the carbon footprint of extractin, the carbon and enviornmental footprint of mining coal outweights the drilling of natural gas.
Bottom line is that, on average, natural gas has 50% less CO2 emissions and much less other pollution, and zero carbon soot. So it is resoundingly better than coal, although it is not a permanent solution.
http://www1.eere.energy.gov/geothermal/geomap.html
These are at depths of upto 6kms.
The technology exists to create deep drilled nuclear waste disposal alternatives to Yucatan;
http://www.newscientist.com/article/mg20627544.600-drilling-deep-under-the-us-to-dispose-of-nuclear-waste.html
Use those funds to liberate the geothermal resource instead.
I agree. No matter how much energy we save or how many nuclear plants or windmills we build if we are still burning fossil fuel we need to capture the carbon dioxide produced. But I would drive the challenge you propose directly through the market. I would use all the revenue from your charge on carbon in fossil fuel at source, to pay for the capture and sequestration of carbon dioxide by whoever can provide this service at the lowest cost per ton.
We are accustomed to paying for services from suppliers in other nations so paying for sequestration around the globe is likely to be acceptable. My proposal requires no share out of allowances or revenues between nations, so for a global arrangement all that the world needs to agree is the charge escalation rate.
Your $4/ton/year escalation on the carbon charge would certainly decarbonise power generation and other major point sources by 2030 based on all cost estimates I have seen. If the escalator continued for a further 20 years it would likely be sufficient to drive atmospheric CO2 capture for applications that could not switch such as aircraft.
See my article at
http://www.ngoilgas.com/article/sorting-climate-change
and my website at
http://jemsavestheplanet.blogspot.com/
The costs are incredibly variable, conservatively doubling the cost of electricity from coal plant, perhaps even doubling the cost of the plant itself.
http://en.wikipedia.org/wiki/Carbon_capture_and_storage#Cost
The sites that might accept billions (not test plant size) of tons of CO2 are unknown, and not necessarily close to existing plants, requiring massive piping projects. Storage into oil-fields (the most commonly referred to option) range from $1/tonne to $8/tonne CO2!!!
There is a 15-40% energy penalty to capture, compress, pump and inject CO2, actually INCREASING the amount of CO2 produced, or that itself has to be stored. This also increases the consumption of water for these plants - an infrequently discussed issue.
Dollars spent on CCS would be more effectively spent on consumption side efficiency or diversions to cleaner fuel sources (natural gas etc).
http://jemsavestheplanet.blogspot.com/2010/01/more-on-global-warming.html
It is because of the expense of CCS that nobody will do it without a robust financial incentive; even when built it would always be cheaper to run the dirty old plants than the ones with CCS. But carbon capture is affordable. UK emissions in 2008 were 581 million tonnes of CO2. UK GNP was $2.22 trillion. Even if capturing or preventing the emissions cost $75/tonne, that is still less than 2% of GNP (less than a year of typical growth). To put it another way adding just $32 to the cost of a barrel of oil, which is modest compared to price movements we have seen in recent years, would pay for capturing the carbon dioxide (at $75/tonne) produced when it was burnt. The International Energy Agency (an intergovernmental organisation) say that stabilising the climate in 2050 would cost at least 70% more without carbon capture.
What I find puzzling is that we would rather fry the planet, abandon our affluent lifestyle, or replace our natural environment with biofuel or biochar crops than pause the increase in our standard of living for a year or so.
If it proves impossible to dislodge some infestation, what other options are there? How about turning the motivation/incentive of the pest against itself? Bait. What drives these organisations? Profit. So, identify ways in which to make the desired direction of progression, appear enticingly attractive to them.
E.G. It was mooted that disposal of waste generated by a household would be subject to a charge governed by weight. This proposal prompted an outcry. “Tut!”. Consequently, it was suggested that waste, pre-sorted and presented for recycling by a household, would be credited upon collection. In order that refunds might be set against tax demands for that service, when due.
Taxation cannot be levied on companies that do not exist. Nor for that matter on citizens who are unemployed. Nor on the materials and maintenance service those activates could spawn. So initiating the creation of such renewable industries by offering tax-free status on their core operations, is not necessarily a write-off in respect to such revenues.
Just eliminating those would be a nice start. I like the tax and dividend idea. Tax the carbon, return the proceeds to the people in the form of a dividend. People and industries that use less carbon come out ahead of where they are now.
THREE HUNDRED BILLION US DOLLARS PER YEAR to the wealthiest industries in the world.
G20 leaders "agreed" to phase these, but so far nothing has been achieved.
http://www.reuters.com/article/idUSTRE58O18U20090926
1) Make all new energy technology companies favored children. Tax exempt, as if they were non-profit organizations. Put in place every loophole closing measure, so that only companies, or parts/branches thereof, ones that really, truly are engaged in such activities, and are "certified" and audited as such, can participate. Business as usual for everyone but them.
2) Likewise, ZERO taxes, ZERO gains of any kind for the government on energy sources, like wind and solar, that are not fossil fuel related.
3) Full-on rebate/credits of any fossil-fuel energy related taxes, excise or otherwise, based on moneys paid for alternate energy sources. In other words, if I paid a 30% OIL SIN tax at the pump, I can save those receipts, combine them with receipts from the purchase of something related to solar or wind energy, and get additional credit.
All carrot, without any stick. No subsidies, no other artificial machinations required. The only thing sacrificed is the salivation by some upon seeing yet another perpetual revenue stream of which some of the more vision challenged among us are so fond. They're sacred cows, feeding our future, and you just...leave...them...the hell...alone. And let them grow.
Either way, your idea is not "revenue neutral", it costs money.
Taxing cheaper energy in order to make it obsolete is not going to happen.
Biggest reason congress and the people they represent. Plus the US is one country. Maybe you can even get Europe on board. If someone is hitting all cylinders then maybe Russia as well.
But other countries especially developing ones will use the cheaper energy. Oh they will take payments from the US and make a great show of complying while alot of money is secreted away in private bank accounts
Only cheaper energy will work in the long run and it is also the only way to get the world to comply
Throw money at research and maybe someone will be able to use seawater to make energy by spitting hydrogen atoms. If a byproduct is clean drinking water then absolutely wonderful
We can't pay more for renewable, clean energy, like solar or wind?
Coal miners have to die so you can have cheap energy?
We have to subsidize Arab terrorist nations so you can have cheap gas?
I reject the argument that our energy policy should be based on cheapest cost, any more than our defense policy should be for our troops to have the cheapest weapons.
Energy policy is strategic. If we used less oil, we wouldn't have invaded Iraq.
I propose a simple and revenue-neutral transfer payment policy whereby an excise is levied on the carbon content of fossil fuels produced or imported in America, and this same amount is redistributed as a retail subsidy on each unit of energy consumed in America.
The excise is proportional to carbon and the subsidy is proportional to energy, so the structure operates exclusively on the carbon-intensity of energy. It will increase the cost of fossil energy and decrease the cost of renewable energy without affecting the the cost of the average unit of energy.
Since the carbon-intensity of America's energy supply is currently skewed to the left, the initial effect will be a slight increase in the price of the large amount of carbon-intensive energy balanced by a substantial decrease in the price of the relatively small amount of low-carbon energy.
The indirect effects of this policy would likely be increased consumer demand for cheaper low-carbon energy and a corresponding investor demand for low-carbon energy production.
This policy doesn't create any new commodity derivatives markets, doesn't empower the government to pick winners and losers in the low-carbon energy marketplace, and doesn't involve any wildly inaccurate regulatory generalizations (such as considering all biofuels to be carbon-neutral).
All it does is promote energy sources that conserve our fossil fuel reserves.
On-site generation, for example micro combined heat and power (uCHP), can be a better solution, especially in colder climate zones, and particularly if existing natural gas pipelines can be transitioned to methane from waste biomass.
A typical gas-fired condensing boiler at roughly 90% thermal efficiency is a much better heating system than a 100% efficient electric resistive boiler supplied by a state of the art gas turbine combined cycle power plant.
I get most of my electricity from The Geysers natural steam bed geothermal plant, so electric resistive heating makes sense for me, but gas heat is not bad.
Electricity and methane are both theoretically multi-source energy transport media. Today, most of our electricity and methane come from fossil fuels, but in the future, both could conceivably come from renewable resources. Considered purely as a medium, methane has some definite advantages over electricity in certain applications, and heating is certainly one of them.
Complexities of this nature are why I believe the public policy should be blind to all considerations other than fossil carbon intensity. We shouldn't care about electricity vs. methane. We should only care about fossil carbon in and energy out.
The best way to solve our energy crisis is to use less. With less overall consumption, that's less we need to replace with other sources.
Most energy consumption is metered at the household or business level. Everybody has an incentive to use less energy. Our energy use is a function of our way of life, which can change over time, but not overnight.
We use more energy than Europe because we have to heat/cool our suburban McMansions and commute long distances to work. We also use a third of our energy producing 4,000 calories of subsidized food per American per day, some of which (I should hope) winds up fattening Europeans.
We can change. We can abandon the suburbs (this generation of 20-somethings doesn't really like them anyway). We overhaul the industrial food system. But we can't do it overnight, and until we make these kinds of changes, the existing incentives to conserve energy can only chip away at the margins.