One day after the election, the White House press secretary Robert Gibbs said that a national renewable electricity standard could be an area of bipartisan energy cooperation, after President Obama had said cap-and-trade was not the only way "to skin the cat." It is ironic that while cap-and-trade -- a sensible approach to reducing carbon dioxide emissions linked with climate change -- is dead and buried in the Senate, considerable support has emerged for an approach would be both less effective and more costly. A national renewable electricity standard would mandate that a given share of an electric company's production come from renewable sources (most likely wind power), or, in the case of a "clean energy standard," from an expanded list including nuclear and hydroelectric power.
One irony is that cap-and-trade is a market-based approach to environmental protection, which harnesses the power of the marketplace to reduce costs imposed on business and consumers, an approach championed by Republican presidents beginning with Ronald Reagan. Within its narrow domain, the renewable standard approach, which involves nationwide trading of renewable energy credits, is also market-based. Whereas cap-and-trade would raise the cost of fossil fuel, as its opponents have stressed so effectively, renewable standards would raise the cost of electricity, which its supporters seem reluctant to admit. If renewables really were cheaper, even with Federal subsidies, it wouldn't take regulation to get utilities to use them.
A second source of irony is that renewable or clean electricity standards are a very expensive way to reduce carbon dioxide (CO2) emissions -- much more expensive than cap-and-trade. These standards would only affect electricity, thereby omitting about 60 percent of U.S. CO2 emissions. And even then, the standards would provide limited incentives to substitute away from coal, the most carbon-intensive way to generate electricity. Even more problematic, renewable/clean electricity standards would provide absolutely no incentives to reduce CO2 emissions from heating buildings, running industrial processes, or transporting people and goods. And unlike cap-and-trade, which would also affect oil consumption, the electricity standards would make no contribution to energy security. Only a very tiny fraction of U.S. oil consumption is used to generate electricity.
Increasing renewable electricity generation is no more than a means to an end for one part of the economy. Cap-and-trade keeps our eyes on the prize: moving the entire economy toward climate-friendly energy generation and use.
Those who believe that renewable electricity standards would create a huge number of green jobs have forgotten the lesson of Detroit: a large domestic market does not guarantee a healthy domestic industry. At the end of 2008, for instance, the U.S. led the world in installed wind generation capacity, but half of new installations that year were accounted for by imports. And a recent Lawrence Berkeley Laboratory study of the impacts of the economic stimulus package incentives for renewable electricity investments estimated that about 40 percent of the (gross) jobs created by new wind-energy investments were outside the United States, where many wind turbines are manufactured.
A sounder approach, for those concerned about green jobs, would focus on the long-term determinants of economic growth, such as technological innovation. That's where cap-and-trade -- which creates broad-based incentives for technology innovation -- holds another edge over renewable electricity standards.
It is often argued that if cap-and-trade is dead, enacting renewable or clean electricity standards is better than doing nothing at all about climate change. While that argument has some merit, since the risks of doing nothing are substantial, there is a real danger that enacting these standards will create the illusion that we have done something serious to address climate change. Worse yet, it could create a favored set of businesses that will oppose future adoption of more efficient, serious, broad-based policies -- like cap-and-trade.
If a national renewable electricity standard is nonetheless inevitable, it should not impose excess costs on businesses or consumers. It should pre-empt state renewable portfolio standards, since with a national standard in place, states' programs simply impose extra costs on their citizens without affecting national use of renewables at all. And any national program should allow unlimited banking to encourage early investments. No environmental or economic purpose is served by limiting banking to two years, as current Senate legislation would do.
Carbon cap-and-trade has been killed in the Senate, presumably because of its costs. Renewable electricity standards or clean energy standards would accomplish considerably less and would impose much higher costs per ton of emissions reduction than cap-and-trade would. This does not sound like a step forward.
Richard Schmalensee is the Howard W. Johnson Professor of Economics and Management at the Massachusetts Institute of Technology; Robert N. Stavins is the Albert Pratt Professor of Business and Government at the Harvard Kennedy School.
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Also, that something is "market-based" is not necessarily recommendation if, as is the case with cap and trade, it means inviting in a market of financial speculators to determine the price of carbon.
The Master Plan:
* Consolidate all the banks in the world into one global bank.
* Give all citizens of Earth one nontransferable voting share each.
* Eliminate ALL taxes and all poverty at the same time.
* Give everybody a living allowance and universal health care.
* Fix all of our environmental problems without concern for costs.
* Everybody goes free at last. Work is optional. Do something you enjoy.
* Entrepreneurs can still get rich in a totally free market - except for the bankers.
* This bank would be private, nonprofit, totally transparent and democratically controlled by all.
Since all the money that gets spent ends up returning to the same bank, cost is no object for any expense that affects the public good.
http://define.com
Cast your vote, tell your friends to vote, watch the votes come in. All we have to do is be on the same page. This is a good page.
Name me one public program that serves the public good, and I'll guarantee that this private bank would fund it. There's no need to tax people, all the people's money is in the same bank, so all the people can allocate all money for the public good.
Let's say you want a loan to go to college. The bank could give you a total grant. No need to repay debt. The bank can afford to do this, because that grant money goes to the college, that pays the teachers who deposit the money back in the same bank.
Cancer research. You need $200 Billion for research, the bank can grant the $200 Billion. It goes to the scientists and medical equipment suppliers who deposit that money back into the same bank.
It's a closed system, so money is no longer an object.
You need roads and bridges fixed. Fine. Fiber optic internet to everybody's homes. No problem. All that money is available, and goes to the construction workers and equipment suppliers who deposit it back into the same bank.
Providing clean water and medical facilities in third-world nations, no problem, unlimited grants. With that money, they pay the workers that deposit it back into the same bank.
So WHAT PUBLIC PROBLEM CAN'T WE SOLVE?
An 11 year sunspot cycle has begun. NASA estimates that any one of four anticipated “extreme” solar storms could cause New York, Washington, D.C., Chicago, Atlanta, Seattle and most of the Eastern U.S., as well as many other metropolitan areas, to lose grid electricity, possibly for weeks.
On-site renewable energy has become a wise insurance policy - as well as a practical way for disruptive technologies to start to supersede the need for fossil fuel!
See: www.aesopinstitute.org for an overview - and an outline of preventative actions.
Three huge Coronal Mass ejections (CME) have been born so far this year. One came very close last week.
Imagine massive blackouts lasting for days or weeks.
More than 500 sunspots that could produce a CME are anticipated in this cycle. NOAA estimates four such “extreme” events are likely during the current 11 year cycle.
In the U.S., NASA estimates a strong geomagnetic storm could cause 130 million people to suffer a long-term shortage of electricity. The cost is estimated to be $1-2 trillion the first year. Roughly the combined price tag, to date, of the wars in both Iraq and Afghanistan!
The White House should immediately ask the Senate to quickly pass the GRID ACT, HR 5026, which has been passed by the House and approved by the Senate Committee on Energy and Natural Resources.
It can be restored easily by the full Senate. It would be great to have that happen in the Lame Duck session.
This is the very fact that China understands and needs the world to buy the merchandise she produces. It matters not if it is power equipment or toys, when you manufacture and sell to another country you gain wealth from that country. (at wholesale prices from China to the USA, the markup is a profit of 4 to 500 percent, a profit China uses to expand their economy. It also explains the huge profits of the mega companies)
The manufacturing market of the USA to the world will not compete outside the USA for low ball products. We, as a nation, have to produce the next generation of innovations, make them here at top quality and sell them to the world. This means a change in the control of the US government to allow the US citizens the power to make the best (!) here in the USA. The American party will change free trade to equal trade, the wholesale price will match US costs. It will retool factories and open innovation and production of what the world will want next but produce them in America. This new American party will also open space to commercial interests because it knows new ideas come from new directions in thinking. Jobs, innovation, manufacturing and the world buying American again. The American party 2012!
The new Department of Ubiquitous Hope. Strange, sordid story at:
http://spnheadlines.blogspot.com/2010/05/obama-announces-department-of.html
Happy Thanksgiving, and Peace! :-)
Great article. I have read a number of your studies over the years and I found them to be very informative.