Tuesday, December 13, 2011

Best Case Against Green Energy

Source: Wind Powering America
Every oil field on the planet runs a course from discovery through increasing production to peak production to declining production and eventually to exhaustion. The last drop is never really extracted from the ground; fields can be reopened if the prices rise or technology improves. Nonetheless, just as most of the world's individual oil fields have passed their peak, so also has the planet as a whole. Peak production of the other fossil fuels may not have been reached on a global level yet, but coal and natural gas will inevitably decline, albeit much later than oil has done.

I was reminded of this as I read an article against green energy in an April 2011 issue of Forbes magazine. In The Green Energy Economy Reconsidered, Jerry Taylor and Peter Van Doren do the great service of describing five important drawbacks to sustainable energy alternatives, with a particular focus on wind and solar power. I call their article a service because it is important to understand the limitations of these sources, if for no other reason than to understand why they have not yet been adopted much more widely.

The authors describe fundamentally geographic reasons that essentially free energy has not been widely adopted in the United States or elsewhere. Low spatial density and spatial mismatches between supply and demand are two of the major obstacles. For Taylor and Van Doren, these are among a handful of reasons to reject government efforts to promote green energy. The article implies at least a faint recognition of the peak-oil problem, but dismisses it as not particularly relevant to questions of electricity production, in which more-abundant coal is dominant. As free-market proponents, they argue that the burdens of green energy are so great that they do not justify market-distorting subsidies.

I would like to suggest the opposite. The limitations of green energy explain why the market has not yet allowed for their widespread adoption, but these limitations do not explain why that initial market response (or non-response) should be accepted. This may be the strongest possible case against green energy, but it falls short in several key respects. First, fossil fuels appear more cost-effective than they actually are, because important externalities -- including but not limited to pollution costs -- are ignored. Second, free markets in petroleum and the other fossil fuels would lead inevitably to the near-exhaustion of each resource described above, but this need not be taken as the only possible future.

Given the extremely high costs of climate change, our current goal should be to leave as much oil, coal, and natural gas in the ground on a permanent basis as possible. Subsidizing green energy in the short term -- though admittedly not easy -- can bring about some of the needed reductions; doing nothing will, of course, achieve nothing.

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