Climate Change: Optimizing Regulatory and Market Forces

Ken Silverstein | Sep 18, 2012

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Caught in the shelling between those who think that addressing climate change is urgent and those who think such action is farcical, voters are thoroughly confused. The issue has become increasingly partisan with fossil fuel interests funding one side and green technology providers bankrolling the other.

Beyond the money and the loud voices that seek to distort the debate, some important environmental and economical factors are surfacing. Consider the severe summer heat waves and the subsequent droughts, all of which has hurt food production this year. Then add to that the number of typhoons rolling across Asia, and it is fueling concerns that man-made global warming is dawning right now.

“Climate change is not a hoax,” says President Obama, during his acceptance speech at the Democratic National Convention.

The Obama administration is enacting stricter air quality rules that also include greenhouse gas restrictions, all to encourage a shift away from older technologies and into cleaner ones. But those “man-made” actions may pale when compared to the market forces that are causing electric generators to use far more natural gas and far less coal. Tougher rules are, in fact, giving natural gas facilities a leg up over the competition. But cheap and abundant natural gas supplies are also providing the fuel source a natural advantage.

The result is that carbon dioxide emissions in the United States are less than what they were 20 years ago, even though more people are using more energy. The U.S. Energy Information Administration is saying that such releases will be 9 percent less this year than they were in 2007, or before the recession hit.

Why? Coal-fired power had once provided about half of the electric generation market. Now is about 45 percent, and falling. At the same time, natural gas from shale is rising, providing 30 percent of overall net generation. In 20 years, the energy agency expects shale to provide 45 percent of electric power. Meantime, modern combined-cycle natural gas generators are efficient and create less less pollution. That’s all on top of the fact that natural gas, generally, releases half the overall emissions as coal, including carbon dioxide.

Economic Improvement

Certainly, people of goodwill disagree over whether climate change is the culmination of industrial activity or whether it is a naturally-occurring phenomenon. The discussion, though, has become politicized and driven in large part by PR campaigns and political contributions -- not necessarily by the climatologists who are motivated by pure science.

Even true believers on both sides are divided over the tactics they should each use. A story written for Politico by Stanford University journalism professor and former New York Times writer Joel Brinkley juxtaposes the views of two environmentalists: Bill McKibben, who heads the 350.org that is best known for trying to halt the Keystone Pipeline and Fred Krupp, who leads the Environmental Defense Fund.

McKibben is quoted as saying, “On our planet, growth may be one big habit we finally must break.” But Krupp responds, “Let’s not live in a dream world where capitalism can be voted out of office.”

No doubt, the two agree that global warming is an immediate threat. Indeed, Brinkley, who is a relative of this reporter, goes on to cite some compelling data: NASA is reporting that Greenland’s massive ice sheet thawed this summer while it is also saying that 13 percent of the earth's surface is now experiencing extreme summer heat. Meantime, the National Snow and Ice Data Center says that the sea ice in the Arctic has fallen to the lowest level ever measured.

What’s next? Denying economic productivity is not the solution. And so the answer then rest with the degree to which our elected officials establish the regulatory nuances in relation to the existing free market forces. It is about optimizing the intersection between ecological and economic concerns.

“Government has always, and I think we can expect it always will, advance certain technologies that it thinks are worthwhile, not withstanding pure economics,” says Doug Egan, chairman of Competitive Power Ventures. “It’s a bit of a mixed bag but it is predominated by economics.”

Both President Obama and GOP-hopeful Mitt Romney would each tilt the playing field based on their exercise of the regulatory levers and the allocation of the treasury’s coffers. But the aggressive entrance of shale gas is a potentially more powerful scenario, negating the notion that reducing carbon dioxide emissions and improving industrial production are at eternal odds.


EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been named one of the Top Economics Journalists by Wall Street Economists.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com

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Comments

Funding of climate change science is not cleantech-driven!

Ken -- Your columns are typically balanced and factual, which we in your audience greatly appreciate.  I am afraid that this one, in your effort to be balanced, is not factual in a critical respect:  the funding of climate change scientific research.  The cleantech industry is in no way the lead source, or even a major source, of funding for this activity, certainly not to the extent that the fossil fuel industry has underwritten "research" to cloud the issue.  Notwithstanding all the efforts by fossil energy proponents to obfuscate the issue, there is near-unanimity among legitimate, accredited climate experts (98% today, up from 97% a few years ago) on key points.  The earth is, on average, warming; changing climate and weather patterns and rising sea levels pose a serious threat to human health and economic well-being, particularly in the world's heavily-populated coastal areas; and the primary sources are anthropogenic (principally, the extraction and burning of long-buried fossil fuels, formed during the ancient carboniferous period).  We are, in the space of a century or so, extracting from the earth and returning to the atmosphere levels of carbon that the earth hasn't experienced in roughly 300 million years.  The economic meltdown of 2008 led politicians to downgrade their perception of the risk posed by these changes relative to the near-term pain of recession, but the science hasn't changed -- it has only strengthened.  It is a disservice to your readers to leave the impression that this near-unanimous scientific consensus is driven by  partisan politics, or influenced by funding from a small and thinly-funded segment of the energy industry.  It is because your columns are generally so objective that I feel compelled to call you out on this characterization.  Thanks for the hard work you put in every day on the challenging issues our industry faces.  John Howe, FloDesign Wind Turbine Corp.