future clean tech

No. Absolutely not. And yet the conservative Wall Street Journal yesterday implied that America should, in a column entitled, “Down Under: Can the US Learn From Australia’s Emissions Plan?”

It’s easy to see why the Journal is pumped about Australian Prime Minister Kevin Rudd’s “Carbon Pollution Reduction Scheme” (that’s what they’re calling the Aussie ETS): it’s a sop to heavy polluting industry and the conservative opposition that supports it. The amended legislation gives a free ride to the carbon mafia, delaying really significant cuts in CO2 and passing on the residual costs to the average punter. The minimum “guaranteed” reduction is 5% by 2020 – talk about rearranging the deck chairs on the Titanic. Only this time there won’t be an iceberg in sight.

Interestingly, conservative Opposition leader Malcolm Turnbull chose to lay his leadership on the line over this issue. His Liberal Party is severely divided over the legislation and the Liberals’ usual political bedfellows, the Nationals, are united against it.

Turnbull is an ideological descendant of the old, pre-John Howard Liberal Party: liberal on social issues, and to a greater or lesser extent conservative on economic issues. Global warming is a social issue with serious economic repercussions (and, what conservatives tend to discount, serious opportunities) and so it is no surprise that an old-school Liberal like Turnbull would support a sort of diluted version of action on climate change – but action nonetheless.

Turnbull’s dilution of the CPRS bill is worrying enough, but the really interesting thing is that much of his party thinks he’s gone too far. Former Prime Minister John Howard was almost singlehandedly responsible for the conservatisation of Australian politics, and the conservative rump of the party Howard left behind is about to commit collective suicide by declaring war on Turnbull for being too progressive. Turnbull, whose leadership is in serious trouble, is probably the best hope the Opposition has of breaking through the Government’s approval numbers anytime before 2013.

There is no lesson for America here. Australia’s electorate is overwhelmingly in favour of action on climate change, whereas the American electorate is somewhat more divided. I’d like to be able to say that Australia offers a warning to conservatives overseas not to oppose climate change action, but it seems like the Liberal Party, much like the Republican Party, is trending rightward.

From a policy perspective, Australia’s recent experience is a total disaster. It represents a triumph of politics over policy. The US and the EU are both looking at 17% and 20% cuts respectively by 2020, which is nowhere near enough. We need to cut 80% by 2020. Australia’s promising 5%. No lessons here.

Why are we not surprised about this latest report? The global energy lobby is working to kill progress on climate change, says the Huffington Post, reporting on a recently released study by the Center for Public Integrity.

Here’s the whole article.

Last week, Terry McCrann – “Australia’s foremost business commentator” – published a piece entitled The enormous cost of hot air. It would be charitable to call the title of the article ironic.

Terry McCrann, allegedly "Australia's foremost business commentator"

McCrann parrots the rest of the world’s skeptics in citing a Spanish paper whose most outrageous claim is that each green job created leads to the destruction of at least 2.2 jobs in the wider economy.

This is, of course, utter nonsense. The Spanish article makes this spurious claim simply by dividing the amount of renewables subsidies per worker (€571,138) by the average amount of resources the private sector employs per worker (€259,143). Voila, 2.2. The problem with this calculation are many, including, but not limited to, the following:

• No account is taken of the amount of subsidies given to the dirty energy sector, or any other economic sector for that matter.
• While government subsidies represent an opportunity cost, it is a stretch to call the use of those resources “job destruction” when no actual jobs are being destroyed.
• State subsidies are always going to be higher for nascent industries. Afterwards, economies of scale will accrue.

Here’s Terry McCrann’s credulous take on it:

While it would be inappropriate to translate Spain’s experience directly to the US, the Obama Administration’s claim that “green energy” could create 3-5 million jobs is likely to directly wipe out 6.6 million to 11 million jobs elsewhere.

Why? Because of the costs to production and employment, principally in metallurgy, non-metallic mining and the food processing, beverage and tobacco industries.

It is not clear whether the study factors in the jobs that would be lost from reduced consumer spending because of the higher power costs.

But don’t panic. Because none of this is real. It’s fiction in the mind of a skeptic. In reality, yes, some jobs will be lost. And that is no bad thing – jobs are in a constant state of destruction and creation. Punch-card computer operators were reskilled. Asbestos workers had to find other work when we finally figured out how toxic asbestos is. And now, as we finally acknowledge what we’ve known for a long time – that dirty industry is killing us and our planet – jobs in dirty industries will be lost.

But jobs will be created in clean industries, and they will far outweigh the number of jobs that will be lost in dirty old industries – no matter how much tricky mathematics some heretofore unheard-of academic and “Australia’s foremost business commentator” try to spring on the unsuspecting public. You simply can’t say that 2.2 jobs will be lost for every green job created on the basis that significant government expenditure is going into the clean energy space right now. Much of that is capital spending. To say that this initial spend is “destroying jobs” is to compare apples and oranges. It is doing nothing of the sort. The fuel costs of renewable energy are generally zero, and so in the long run, we’ll be saving money on energy and freeing up resources to create even more jobs.

Frankly the illogic is enough to give a man a seizure. But it is so silly that it has been taken seriously by the kinds of elements that take silly things seriously (to wit: the Washington Post (which deigned to sneer at the president’s press secretary for calling the premise of the article “weird” and “simply flat wrong”), the New York Post, and “Australia’s foremost business commentator”, among others) that I just had to take it on.

There’s more to say about this, but I’ll leave it for next time, because there will surely be a next time.

It would be hilarious if it weren’t so tragic: the Republican House Minority leader, John Boehner, told George Stephanopoulos that the idea that CO2 is harmful to the environment is “almost comical”.

George, the idea that carbon dioxide is a carcinogen that is harmful to our environment is almost comical. Every time we exhale, we exhale carbon dioxide. Every cow in the world, you know, when they do what they do, you’ve got more carbon dioxide… The question is how much does man have to do with it, and what is the proper way to deal with this?

Stephanopolous could barely believe it himself – that a top elected official could still espouse such views just has to be seen to be believed:

Boehner: It’s ‘comical’ to say carbon dioxide is dangerous

The good news is that there’s seriously positive action happening where it matters. As David Niebauer writes at Cleantechblog.com, congressmen Waxman and Markey introduced a cap-and-trade bill in late March that would enable reduced deforestation in tropical rainforests -anywhere in the world – to be purchased as carbon credits. The EPA reckons that the scheme will cost just “pennies a day”.

It seems that finally public policy is catching up with the necessity that I’ve blogged about before – for us to price the externality of rainforest depletion into the economy. And it proves the point that it is virtually irrelevant what the skeptics say: the paradigm shift to the clean economy has reached an inflection point. It’s only going to snowball from here.

Today I was discussing the future of hydrocarbons with a colleague whose family has been highly successful in the fossil fuel industry, and in addition to his skepticism on the anthropogenic nature of climate change, he raised the issue of cost. He was of the opinion that we will become steadily more, not less, addicted to oil, coal and gas in the medium- to long-term.

I disagreed strongly with him, and here’s why. Within a matter of seconds, I had him agreeing with me that vehicles are rapidly shifting from oil. We shared the belief that electric vehicles are the future. His objection? Where are we going to get the electricity from? And his definitive answer? Coal. And perhaps some nuclear.

Of course, if we’d had this conversation a mere decade ago, he would have laughed off the suggestion that our vehicles would run off batteries in a matter of a few years. The technology was unproven, expensive, heavy, and on and on. And yet, here we are in 2009, on the cusp of what is widely recognised as the next phase in vehicle production. The future, as they say, is now.

The same will be true of coal. Within the next few years, there will come a point when power generated by one or more renewable sources will be cheaper than coal-generated power. Ron Pernick and Clint Wilder have pointed out that this tipping point already occurred in Colorado after Hurricane Katrina caused natural gas prices to spike, and clean energy produced by wind power briefly became not just competitive with but in fact cheaper than hydrocarbon-derived power. Demand for the local green power program quickly outstripped supply that November in Denver and the rest of that state.

Of course, this was temporary, but it was a harbinger of things to come. Coal is cheap because it is an entrenched, old technology. It is financially “safe” and relatively plentiful. Wind happens to be the clean technology that has become most widespread and most cost-efficient – and as the technology improves and returns to scale increase, costs will dip even further. In the long-run, the same is likely to be the case for solar, tidal, geothermal, wave, and other renewables. And as soon as these technologies deliver energy more cheaply than dirty energy, the growth in takeup will be explosive.

This is the very reason why a price must be put on carbon today. Is pricing GHG emissions “artificial”? Perhaps. But it is simply a policy decision that must be taken to speed up the consumer uptake of clean energy. Rather than waiting for all smokers to die of lung cancer, we put a price on lung cancer by taxing cigarettes and funding public health with the revenue; rather than waiting for double-digit unemployment, we put a price on unemployment by taxing progressively and funding reskilling and work-finding programs; and now we will put a price on carbon to reverse the damage that dirty energy has hitherto caused. The reason in the short-term is that we must put a price on the externality of pollution and climate change, but in the long-term it is a no-brainer: burning fossils – literally – is a 19th century practice that will inevitably be replaced by clean energy.

It is my view that the tipping point will occur with or without what I regard as sufficient government intervention. The current ETS being considered by the Australian government doesn’t even begin to take the issue seriously. But even this scheme, the CPRS, will drive innovation, and the cost-efficiency of the technology will snowball, and we will rapidly come to the point where we view burning hydrocarbons to produce energy as quaint, if not downright barbaric. Like the mainstreaming of electric vehicles that is about to take place, renewable energy which is already competitively priced today will – inevitably – become cheaper than coal and extremely widespread.

As an aside, US Interior Secretary Ken Salazar today proclaimed that wind power off the East Coast could replace 3000 coal-fired power plants. This is just the very beginning of what is in store for clean energy over the next decade.