Saturday, January 24, 2009

Debating Strategies for Reducing Carbon Emissions

How best to move quickly to reduce carbon-emissions?  Today's NYT has an op-ed arguing in favor of a cap-and-trade system (whereby industries would have quotas for emissions, which they could sell to each other as they cleared the bar) and against the "renewable portfolio standards" (which Ohio and other states have adopted), mandating that a certain percentage of energy production come from renewables by a certain date.

Portfolio standards emerged because the Bush Administration blocked action on a national level, and states could direct their investments to support renewables.  A cap-and-trade system requires a national--if not a worldwide--market, and the Times also reports that the European Commission will ask the US to move in that direction.

Here's what J. Wayne Leonard says:

A renewable portfolio standard is said to be needed for creating and
improving renewable energy technologies. In practice, however, it does
little to reduce carbon dioxide emissions and makes energy production
excessively expensive.

Coal-fired power plants produce more
than 83 percent of the electricity sector’s carbon dioxide emissions.
But because coal is cheaper than natural gas or oil, it is the least
likely to be displaced by solar or wind power.

Natural gas has
a relatively low carbon content. But it is likely to be the first to be
displaced by renewable sources of energy because it is more expensive
than coal. That means that even a renewable portfolio standard as high
as 20 percent would reduce emissions by only a small fraction of what
is needed to lower the risk of catastrophic climate change. 

I don't know enough to evaluate the arguments offered, although "excessively expensive" sets off my
skeptic-o-meter. Strategically, the push for cap-and-trade moves the
struggle to Washington, terrain that favors industry, and I wonder
whether the targets wouldn't be set too low.  On the other hand,
uniform national standards would sweep in states that haven't moved towards greener energy.

But what should energy cost? For years, critics have pointed out that utility companies--energy and water--price their products like other commodities, so that the more you consume, the less you pay (volume discounts).  Turning that model around--so that customers would have an incentive to conserve, rather than waste, energy--would be a key step in getting price-incentives right.

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