Sunday, May 17, 2009

Use Energy, Get Rich and Save the Planet

This article under this provocative title (follow the link) has as its central argument something called the Kuznets curve. This is a plot of an environmental damage index versus affluence of a society. It is shaped like an upside-down U, meaning that it has a maximum- and for a level of affluence greater than that maximum the environmental damage done by a group begins to decrease. The reason for the shape of the curve is that over a certain level of affluence, people can begin to afford to clean up their act, and offer themselves clean air and drinking water, use carbon-light fuels (coal -> natural gas -> nuclear), and with their more efficient agricultural methods, allow re-forestation since fewer acres are under cultivation. Something like a conclusion is drawn that the best thing we can do for the environment and the atmosphere in particular is to keep our hands off the energy market and let it work its own magic.

My principal criticisms of this way of thinking are as follows:

-The experimental outcome of the American energy policy and the European one disagree with the policy-won't-work approach. Europeans, who have a similar standard of living to us, consume much less energy than we do per-capita, and per $GDP, because unlike us they made conscious and effective decisions about taxing energy in a way that discourage to a degree its overuse. This fact is a direct contradiction of the author's point that “Energy systems evolve with a particular logic, gradually, and they don’t suddenly morph into something different." In fact, France, of which he makes an example as being just past the maximum of a Kuznets curve, made a very deliberate choice a few decades ago to be less reliant on foreign energy. Their nuclear program represents a dramatic and sudden morphing of their energy system through government policy and not in any way from market forces. In a domestic example, wind energy now accounts for a large fraction of our newly built electricity production capacity- made possible by a federal credit to make it competitive with fossil energy. Another policy-driven decarburization the market doesn't yet support.

-The next step our energy system is supposedly poised to make to further decarburize requires technological developments- sometimes evolutionary, but just as often revolutionary. There, is in the latter cases, little market force driving the basic scientific research this requires- much of it is done in national labs or in university labs funded by government agencies (DOE, NSF). The rate of advancement depends to a large degree on availability of government funding, and who is in charge (and whether or not they are pushing for a "green revolution") makes an enormous difference, in contrast to the author's claim. To put it another way, to slide down the Kuznets curve toward a less harmful way of living, we need development of technologies that the market can not provide, because currently there is no market for them.

-There are plenty of externalities (environmental and otherwise) that I think the K-curve analysis neglects. Take for instance the example of reforestation due to more land-efficient agriculture. Sure, fewer acres are necessary, ok, and that's a good thing by this one measure. But how are the ecosystems in the Chesapeak bay doing, a thousand miles from the "environmentally friendly" low-acreage-per-bushel-of-corn farms that drain into it? Is there any bioactivity in the soil, or has it been chemically scorched with fertilizers and pesticides in the name of increased efficiency?

-Finally, I'll wager that the West is benefiting significantly from having priced ourselves out of the manufacturing game for many of our common every-day products. Our affluence coupled with globalization of product streams has resulted in a massive shift in manufacturing capacity from the West to Asia, and with that capacity went the emissions it produces. It is easy to pat ourselves on the back for cleaning up our air and water, but one result has been that some of the burden of that pollution has been transferred to China.

It's an interesting article, and does contain some lessons worth keeping in mind when crafting energy policy, but I think that the call to "Use Energy, Get Rich and Save the Planet" is simplistic, and discourages necessary action.

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