So what CO2 price will we need for 450 ppm? Nordhaus & Breakthrough Inst. weigh in, sort of

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"So what CO2 price will we need for 450 ppm? Nordhaus & Breakthrough Inst. weigh in, sort of"

This is, I think, an extremely important question to examine. Anyone who is interested in avoiding catastrophic climate outcomes should formulate a rough answer in his or her head, if for no other reason than to figure out if and/or when 450 ppm might become politically achievable — since it surely isn’t right now (see here). [This post will also allow me to once again debunk the myth that a plausible price for CO2 would mainly drive efficiency and conservation.]

This question arose in the comments section of Tuesday’s post, “Bear with me, readers — it does matter why Pielke, his Nature article, and the Breakthrough Institute are wrong.” It shows that all the back-and-forth is at least focusing on key issues and making my differences with them clearer, sort of.

Ted Nordhaus (here) seemed to question my statement that, among many other things, we need a major price change (to have CO2 prices match their economic damages) in order to stabilize atmospheric concentrations of CO2 at 450 ppm (as I wrote here)

Then Ted wrote (here), “We strongly support carbon regulation that establishes a modest, sustainable, and consistent price for carbon.”

So I naturally wondered (here):

TED– WHAT’S YOUR CO2 Price?

You say I sound like environmentalist because I think we need a “major price change.” Then you say, you support a “modest, sustainable, and consistent price for carbon.”

Can you ballpark that price for me? Apparently you don’t want the market to set it on the basis of whatever is needed to achieve 450 ppm, as I do, which will certainly be a major price, which I would define as a price roughly equal to or greater than the current European price — $23 Euros a ton of CO2.

So you would set a “modest” price and hope that works? I can’t go with you there, sorry!

At 1:25 today, Ted posted (here)

Joe, For a guy so ready to take a 2X4 to the head of anybody who you believe has misused or misunderstands technical terminology, you are awfully sloppy yourself. The current EU carbon price is $23E per ton of carbon, not CO2. If you meant to write per ton of carbon, then we are largely in agreement as to what a modest price for carbon would be, if not what it’s [sic] effects on carbon emissions and prospects for achieving 450 ppm will likely be.

If you actually meant $23E per ton of CO2, a price almost four times the current EU price for carbon then we disagree, both as to the price point and it’s likely efficacy.

A classic unverified comment blurted out — a lesson for all who blog/comment, me included, to always verify on Google that which is easily verified! Ted is, of course, quite wrong. I use Point Carbon (here) for the latest price of European Union Allowances (EUAs), which is 23.5 euros as of now. EUAs are “Tradable emission credits from the EU Emissions Trading Scheme. Each allowance carries the right to emit one tonne of carbon dioxide” (see here).

[I am not one to say “I told you so” … okay, I am, I mean, I did after all just write a post titled “The biggest source of mistakes: C vs. CO2“.]

Anyway, I was in the middle of lunch so I didn’t reply right away. And I did want to see if anybody else would catch the mistake.

At 2:10, Ted corrected himself (here)

Correction. I believe I confused the standard generally used in the EU, carbon not CO2, with the pricing of EUA in the EU ETS which appears to be CO2. Joe’s statement of the carbon price in the EU appears to be correct. One which I believe will primarily drive efficiency and conventional fuel switching, not rapid adoption of alternative technologies.

Well, it’s good to know my statement “appears to be correct” [Note to Ted: For a guy who just accused me incorrectly of sloppiness, would it kill you to just say “Joe’s statement was correct”? I withdraw the question.]

Note: Google currently claims “1 Euro = 1.571 U.S. dollars.

PRICE CONFUSION ABOUNDS AT B.I.

So my apologies if I’m now a tad confused. A couple hours ago, Ted dismissed $23E (= $36/tCO2) but embraced $23E per ton of carbon (= $36/tC) as the kind of modest price he endorsed, albeit without suggesting what its effects might be.

One hour later, Ted said that $23E (= $36/tCO2 = $132/tC) will “primarily drive efficiency and conventional fuel switching, not rapid adoption of alternative technologies.”

So my questions to Ted and B.I. are

  1. Is $36/tC the modest price you are looking for?
  2. $132/tC a major price that you think is way too high?
  3. What price of C or CO2 do you think we will need to stabilize at 450 ppm if we adopted your $30 billion annual federal investment to “develop, demonstrate, and stimulate the commercialization of a range of [clean energy] technologies”?

There is one more point that faithful readers of this blog probably may be expecting me to make — one that I am graciously repeating before B.I. answers my question:

Ted is quite wrong about what the price of $132/tC will or won’t do. It will most certainly NOT stimulate much efficiency. I have written about this many, many times (see here). As I first learned when I was overseeing “Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy-Efficient and Low-Carbon Technologies by 2010 and Beyond,” [yes, I have been in the efficiency and decarbonization with technologies business a long time] by five national laboratories, otherwise known as the 5-Lab study:

$50 per tonne of carbon corresponds to 12.5 cents per gallon of gasoline or 0.5 cents per kilowatthour for electricity produced from natural gas at 53% efficiency (or 1.3 cents per kilowatt-hour for coal at 34% efficiency).

So $132t/C gets you 33 cents a gallon added to the price of gasoline. Not gonna drive bloody much fuel efficiency.

It adds 1.3 cents to the price of gas electricity and 3.4 cents to the price of coal. That might would raise overall U.S. electricity prices by a third. It would drive a little energy efficiency, but not much.

Of course, in the end, you can’t decide what is an acceptable price and constrain prices — that is the safety valve trap. You need to let the market figure it out, I think.

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33 Responses to So what CO2 price will we need for 450 ppm? Nordhaus & Breakthrough Inst. weigh in, sort of

  1. Ted Nordhaus says:

    Joe,

    It is you, not we, who has a problem here. If $132/ton of carbon will raise electricity prices by 1/3 and gasoline by $0.33 per gallon while having will drive little increase in energy or fuel efficiency then how do you propose that such a price might actually achieve 450 ppm?

    You just wrote earlier today that you believed we need to set a carbon price at a level necessary to achieve 450 ppm,

    “which will certainly be a major price, which I would define as a price roughly equal to or greater than the current European price — $23 Euros a ton of CO2.”

    So earlier today you asserted that you believed that such a price would get us to 450 ppm (presumably unless it doesn’t in which case it will be higher) and now you say that it won’t achieve much by way of efficiency. It certainly won’t drive renewables into the market at a level that would achieve such an outcome.

    So how is it that such a price achieves your desired goal?

  2. Joe says:

    Ted:

    Since you didn’t answer my questions, I’m assuming you’re sticking by your original $36/tC.

    Second, I made clear the market should set the price, but that it would “certainly be a major price,” equal to or higher than $132/tC. I don’t think I said $132 would do the trick, just that it would have to be at least that high. Remember, I was trying to solicit an answer from you by throwing out a reasonable ball-park number. [Note to self: It didn’t work.]

    In any case, to be crystal clear, I am not saying $132 would do the trick through 2050. The European price is not aimed at 450 ppm, after all. I meant that it is probably of the order of the price we need to begin at to start getting serious results. Sorry if I wasn’t crystal clear. That happens in comments.

    Third, how many times do I have to tell you guys — I don’t think price is the only thing you do. It may not even be the most important, though I think it is a sine qua non. If you had been reading my blog, you’d know we need to do a lot more to rapidly deploy technologies, much more than a price could accomplish fast enough (without savaging the economy), much more than throwing $30 billion a year of federal dollars at the problem, at least the way you all describe. Again, I like the Obama plan — as I believe you do too.

    Fourth, you are quite wrong about renewables. That price, plus the other policies, will get us quite far. I think we can do better than a wedge of CSP, by the way. Not with government spending, for sure, though.

  3. David B. Benson says:

    $(US) 132 per short ton of carbon is $(US) 120 per tonne of carbon. This is certainly enough, or more than enough, to simply bury the excess carbon in carbon landfills, after some carbonization process.

  4. John Mashey says:

    It would really help others read this discussion (which flies all over the place) if there were a simple table, preceded by:

    2007 average/range of prices for gasoline, diesel fuel, electricity, therm.

    Carbon tax level
    $ increase for gallon gas
    $ increase for gallon diesel
    $ increase for KWh
    $ increase per therm

    Pick 5-10 tax levels, including the current EU one, and then one might argue more coherently about what to do and understand the different viewpoints. We certainly do have some efficiency data from US states with regard to electricity use versus price.

  5. Ted Nordhaus says:

    Joe, as I understand it, your position is that a price for carbon, of the order of magnitude that you speak, plus a variety of regulatory policies to address non market barriers to energy efficiency and market penetration of renewables are, if not sufficient, certainly the primary policy vehicles necessary to drive deep reductions in carbon emissions. You say you support public investment but that it would not be a particularly high priority. If I misstate your position, please correct me.

    We place a much higher priority on public investment but also recognize that a price and a variety of other regulatory policies are also necessary. Taken together, as all of these policies are in Obama’s plan, we find that we both strongly support the same program.

    But while we have generally been careful to stick to our disagreement with you over policy and science, you have spent much of the last year calling us delayers, comparing us to George Bush and Dick Cheney, and claiming to “debunk” us when almost everything we have asserted is well documented in the energy and climate science literature. You have also repeatedly asserted that we believe that “technology alone” can solve global warming – a statement that you know to be untrue.

    If you would stop with the hysterical character assassination and slander, we might actually be able to have a serious debate about the proper mix of pricing, regulation, and public investment in U.S. climate policy – one that might actually contribute to the policies that the next president and the next congress might actually enact. Below I will repost a comment from an earlier post about why we are willing to accept a lower carbon price paired with much higher levels of public technology investment. As always, we welcome reasoned and fair argument and criticism from you or any one else at Climate Progress:

    A carbon price that is not high enough to drive rapid deployment of clean energy technologies but that significantly raises energy prices and risks significant public backlash is the worst of both worlds. That is why we have consistently taken the position that we ought to have a modest price that is consistent, stable and politically sustainable. The price necessary to drive wholesale transition to clean energy technologies is higher than most, if not all democracies are likely to tolerate (and much higher than present or future carbon prices in the EU are likely to rise). So rather than fight a pitched battle to increase carbon prices to levels that become increasingly unsustainable politically even as they do not approach levels that will drive deep reductions in emissions and rapid transition to renewables, we believe we are much better served accepting a lower price paired with very large direct public investments in technology to drive down the price of clean energy alternatives rapidly such that they are cost competitive with a lower carbon price.

    To be sure, the higher we set the carbon price, the less we need to drive down the cost of clean energy technologies before they are cost competitive. But if we are serious about seeing real progress as soon as possible we are better served accepting lower carbon prices paired with higher public investment than holding our breath until we get higher carbon prices which may not be sustainable politically once the American public receives the bill in the form of higher energy prices.

    This is all the more true given that the challenge is not simply to reduce US carbon emissions but to dramatically reduce global carbon emissions. So even if we are able to establish high carbon prices such that clean energy technologies becomes cost competitive at higher prices in the US, we are unlikely to see similarly high carbon prices established in India and China. So the explicit objective of US climate policies must not be simply to reduce our own carbon emissions but to the rapidly drive down the cost of clean energy technologies in real, deployed, unsubsidized terms such that they are cost competitive in developing economies where there will likely be no price for carbon. If we do not accomplish the latter objective very rapidly, we are quite simply sunk.

    All of the above is the reason that we put much more emphasis on making clean energy vastly cheaper than on making dirty energy vastly more expensive and hence are more willing to accept lower carbon prices in exchange for much higher public technology investments.

  6. David B. Benson says:

    For what it is worth,

    http://www.sciencedaily.com/releases/2008/04/080407102812.htm

    is entitled “Breakthrough In Biofuel Production Process” and is about making ‘green gasoline’ from cellulositic biomass. Article makes this process appear quite promising. Note the funding sources and what appears to be the quite modest cost of R&D.

  7. Joe says:

    You haven’t quite characterized my position the way I would, so I’ll get to that. I appreciate your asking. Tonight is busy as is tomorrow a.m. So I’ll post that closer to noon Thursday if I can.

    I think I have stopped calling you two “delayers” a while back. If not, I’m sorry. Anybody who supports Obama’s plan is not a delayer. I disagree with some of the things you are doing — and plan to point that out.

    For the life of me I don’t know why you keep attacking Al Gore. That makes a lot of people question what you are doing.

    Pielke is a different matter, but he says he wants 450 ppm, so I stopped calling him a delayer, though he is never specific about what his plan is. I will finish debunking the Nature piece over the next few days. Sorry, but from my perspective he says some things that simply aren’t true, but the subject is so arcane that it is taking me a while to explain why clearly. I think I’ve figure it out.

    It is probably always a good idea to be as civil as possible. So as I said in an earlier post, I will simply try to say where I think you folks are wrong and avoid the adjectives.

    My biggest area of disagreement with you is over where exactly to put the public investment. As you know, I’m on the record supporting the Obama plan, which is $15 B a year. I’d put a little in basic research, a bit more in applied, even more in development — but the vast majority in what most people call deployment. More tomorrow.

    I am not sure this is possible: “So the explicit objective of US climate policies must not be simply to reduce our own carbon emissions but to the rapidly drive down the cost of clean energy technologies in real, deployed, unsubsidized terms such that they are cost competitive in developing economies where there will likely be no price for carbon.”

    I am unwilling to gamble the health and well-being of the next 50 generations on what I believe is the likelihood that it is not possible. Plus, and this is important, you still have to get China to go back and shut down many existing coal plants by the 2020s — no pure technology strategy can possibly create a zero-carbon power sources cheaper than already-paid for coal, certainly not by, say, 2030.

    You think we are probably screwed if your plan doesn’t work. I don’t think your plan is likely to work, so I think we are probably screwed if that is our primary strategy. That, I suppose, is our big difference.

    If China won’t put a serious price for CO2 by 2020, or take national action that is equivalent to such a price (i.e. simply mandate the use of, say, CSP for new power and start phasing existing coal out), then we are sunk. China is now in a position to unilaterally destroy the climate, as we have been for over a decade. If we flip our policies in 2009, as seems likely, then the entire world MUST get China to change its energy policies over the next decade. And India too, of course.

    Nobody said it would be easy — certainly not me!

    If not, we are probably screwed, though might still would have a one (small) shot at 450 ppm in the 2020s. That will be the subject of a later post.

  8. John Mashey says:

    1) I actually like the objective:

    “So the explicit objective of US climate policies must not be simply to reduce our own carbon emissions but to the rapidly drive down the cost of clean energy technologies in real, deployed, unsubsidized terms such that they are cost competitive in developing economies where there will likely be no price for carbon.”

    Whether this is feasible or not, or when, is unclear, but I’d certainly like to understand better how to make it happen. in the normal paradigm, equivalent to:

    Pure research
    Applied research
    Exploratory or advanced development
    Development
    Deployment

    Can Ted Nordhaus say more about the proposed allocation of public (& privte) resources to do this? Where in that progressive commitment process does the money go? Who makes the decision about further commitments? Put anotehr way, what’s the intended model for R&D portfolio management?

    2) As I’ve said before, from 10 years at Bell Labs, including working for a guy who later became President of it, our normal mantra was:

    “Never schedule breakthroughs.”

    Because we *couldn’t”, although of course Bell Labs was famous for generating breakthroughs. We just couldn’t do it on demand. Since energy is (mostly) a different turf, I’m trying to understand how breakthroughs happen there.

  9. Ted Nordhaus says:

    Joe,

    You appear to have stopped calling us delayers as of this weekend, shortly after Grist refused to give us regular blogging privileges so that we could respond to your attacks and apparently decided to simply ban all mention of us from the site. Nonetheless I do appreciate that you have stopped much of the slander and ad hominem attack. More so, I appreciate the tone and focus of your comment above. While it is critical of us on a number of fronts, I can honestly say that it is the first thing that you have ever written about us that did not make my blood boil.

    As to the issues you raise:

    1. Gore has done important work raising awareness about GW, most especially among elites, not so much, as many believe, among the wider public. We have long acknowledged the importance of this accomplishment.

    We have been critical of Gore because he has so relentlessly focused on the nightmare of GW without offering much of anything by way of a vision of a positive and better future for us if we do address the crisis. Moreover, he has increasingly emphasized regulation, pricing, and private sector VC’s like his new employer, Kleiner Perkins, and deemphasized the role of public technology investment. This was not always the case. In Earth in the Balance, he proposed a massive global Marshall plan to address GW. That was the right approach then and we believe still the right approach today. We want more of the guy who invented the internet and less of the guy who wants to beat the American public over the head with the science of global warming until they cry uncle and agree that Gore has been right all along.

    2. We believe that we need to invest in a broad portfolio of technologies across the spectrum of RD&D stages. That means smaller bets in more technologies in the earlier stages of that process and very large bets in the most promising technologies in the later stages of that process. We support Obama’s plan because it represents a quantum leap in the level of investment proposed but we also think that $15 billion annually probably understates the level of public investment needed by a factor of somewhere between 2 and 4.

    3. We believe that Pielke’s critique of the IPCC scenarios is extremely important. 5 of the 6 scenarios presented for policy makers by the IPCC assume rates of global decarbonization over the next century that are at or higher than the global decarbonization rate from 1980 – 2000 (the sixth is lower but still assumes a positive rate of decarbonization). During that period, the developed world, which was responsible for much of the world’s energy use, was undergoing the transition from industrial to post-industrial economies, which brought with it vigorous rates of decarbonization. Over the next century, by contrast, much of the global economy will be undergoing the transition from pre-industrial to industrial economies – a transition not typically characterized by decarbonization but rather by increasing carbon intensity of the economy. The result is that the recarbonization trend of the present decade, in our view, appears likely to continue over at least the next two to three decades, without dramatic developments in clean energy technologies. We do not believe that the U.S. refusal to participate in Kyoto or cap its own emissions has much to do with this trend. Rather China’s entry into the WTO, the rapid expansion and integration of the global economy, and the declining importance of China’s centralized, command economy are the primary reasons. The result is that global emissions over the next two to three decades may in fact substantially exceed the worst IPCC scenarios. This suggests that even if you could succeed in getting China to agree to a significant carbon price by 2020 it may be too late.

    4. While I am not confident that we can improve the price and performance of clean energy technologies to the point that they are cost competitive in unsubsidized, deployed terms, we believe it is the best shot we have at getting to stabilization given the third point above. Included in that suite of new technologies almost certainly will have to be carbon capture technology, not only for new plants, but for existing plants as well. The first is conceivable but not without a huge effort to demonstrate and deploy those technologies. The latter is an even larger challenge but we believe we have to try. We are not sanguine about any of these challenges. they are massive and unprecedented.

    5. While efforts in the developed world to reduce emissions may buy us a little bit of time (less than has been previously thought due to how fast developing world emissions are increasing), the primary and most important thing that we can accomplish is getting the cost of clean energy technologies down radically such that they can feasibly be deployed in the developing world. As noted above, this will be no easy task. But should we fail, developing world emissions will likely swamp developed world reductions before we’ve even gotten started.

    That’s our view. We welcome your response.

  10. Joe says:

    Ted:

    Thanks for your comment. We disagree about Gore and I will probably blog on that next week.

    For the record, I don’t have any input into Grist editorial decisions. They just reprint the posts of mine they want to.

    I’m giving a talk tomorrow. I’ll reply after that.

    Joe

  11. Ted Nordhaus says:

    Good. I’ll look forward to it.

  12. Ted Nordhaus says:

    by the way, if I didn’t make it clear in my earlier posts, I do really appreciate your apology and hope we can all endeavor to engage in these discussions respectfully in the future.

  13. Wow! I’m liking that you guys are putting down the invective and the caricatures of each others positions and starting to get down to substantive issues. There may be hope for us yet…

    The way I understand the differences in your positions is using a concept I use called the “Cheap Energy Contract”. This is a social contract that puts government on the hook to ensure that energy prices are low; it is particularly strong in the US and Canada where people feel entitled to cheap energy prices.

    I think of Ted and Michael’s position as a re-affirmation of the Cheap Energy Contract in an era of carbon-constraint, in which you folks are hoping that technological innovations will enable clean energy to remain acceptably (I would say dirt) cheap.

    Joe’s position appears to be that we should revoke the Cheap Energy Contract by assigning a high-ish price to dirty energy that will make clean energy more attractive.

    I agree with Ted and Michael that politically acceptable prices for carbon will probably not be high enough to incentivize clean energy development. On the other hand, I believe Joe is right in pointing out that Ted and Michael’s emphasis on government-funded research misses the key problem of deployment of existing technology or those already in the pipeline.

    This is why I think a carbon price with feed in tariffs is the most appropriate policy package in addition to research spending. The feed in tariffs can drive the deployment of specific renewable technologies and focus on bringing down manufacturing costs through DEPLOYMENT and also a descending price over time. As feed in tariffs are mixed in with other electric rates, they can be substantially higher than the price of fossil generation plus whatever politically acceptable carbon price exists.

    I am concerned that just relying on research dollars does not necessarily create the relationship between renewable energy development and the efficiencies and cost reductions that come with economies of scale. If we are talking about setting up the Western Area Power Administration or the TVA to commission and run (many) new renewable power plants, this would fall into a different budget line than R&D.

  14. john says:

    Michael:

    It’s important to keep the difference between price and cost in mind. The 5 Lab study Joe mentioned — and innumerable other later studies (See the McKinsey analysis for example) suggest that for individual consumers, as for the economy at large, price per gallon and per kW might go up, but net costs can be held at or near current costs for some time because there is a great deal of cost-effective efficiency available (See ACEEE studies for Fla., Tx, NC, Md, or checkout The Art of Energy — just google it). So we can make a great deal of progress in cutting carbon, and we can endure a significant price on carbon for some time without incurring excessive costs.

    And that is precisely why policies and regulations designed to capture available technologies matter. It’s the same for renewables — remember, as much as half of all innovation occurs AFTER a product has been brought to market –as well as significant price reductions.

    Ted: Exhibit A on why a carbon price would need to be high has to be oil and gas — it’s more than doubled since late 2004, and yet until very recently, it hardly dented vehicle choice or VMT. I don’t know offhand what $1.70 per gallon works out to in price per ton, but it’s dear.

    Another observation — I have had folks cite your article (which I have read) and your book (which I have not — but intend to) as evidence that we don’t need to act now.

    Regardless of your intent, your message is getting used by those who would delay, and it’s not just one or two who are doing so.

    And for someone who has issues with perceived ad hominem attacks, you are pretty ruthless with Al Gore — Yet Gore has consistently offered solutions as well as outlined the challenges. Indeed, there’s a rather stirring sermon in an Inconvenient Truth about climate change being an opportunity to not only make money and create jobs, but it is also an opportunity to forge a generational commitment — a privilege granted to few generations — that can lift us to the highest levels of the human spirit.

    My main concern with your message is that I believe you set up a false dichotomy — breakthrough R&D (very valuable) vs. commercialization and market transformation (not so much). The first is prospective, and highly uncertain — the second is cheap and certain — but I think we need both. To extend the WWII analogy, we need to draft and train the dogfaces, and we need the Manhattan project. I believe it’s just plain dangerous to discount one at the expense of the other.

    And for the record, EPA under Hank Habicht and Bill Reilly were implementing a lot of what you present as the next new, new thing. Much of what I read in Death of Environmentalism sounded very familiar to stuff I taught in a course at Vermont Law School in the early 90’s — and I picked it up from stuff that had been around a while already. As I said, you seem to have crafted a strawman — vintage 1970 and 80’s style command and control regulations, and launched a jihad against it. Well, good. It deserves a stake in the heart — but for the most part, it’s been long dead.

    But I’m glad that this discussion is settling in on substantive issues and differences, as well as — hopefully — examining common ground. This problem is too big, the need too urgent to do otherwise.

  15. Thank you thank you thank you! Both of you!

    Look where we can get when we get down to substance and put aside personal attacks and ad hominem arguments.

    This exchange is freakin’ brilliant.

    Ted, Joe has a point here:

    “no pure technology strategy can possibly create a zero-carbon power sources cheaper than already-paid for coal, certainly not by, say, 2030.” Power form a fully amortized coal plant is as cheap as the fuel, and it’s about as cheap as the dirt it’s dug out of…

    I think that’s why Ted and Michael focus on carbon capture and storage and air capture as well. It’s our safety net, if we fail to get as close to stabilization as we need to be.

    Joe, Ted (and Roger Pielke) has a point here:

    “Over the next century, by contrast, much of the global economy will be undergoing the transition from pre-industrial to industrial economies – a transition not typically characterized by decarbonization but rather by increasing carbon intensity of the economy. The result is that the recarbonization trend of the present decade, in our view, appears likely to continue over at least the next two to three decades, without dramatic developments in clean energy technologies.”

    Michael, I like your characterization of this debate as being about “the cheap energy contract.” Nice term. While I think it may be possible for Americans to put aside some of that cheap energy contract, it will be all the more politically difficult at a time of recession. Furthermore, we are fools if we bet the future of civilization on China, India, Brazil, Mexico, Indonesia and the rest of the developing world giving up on the cheap energy contract if it means slower economic growth (as it surely will).

    That simply fact means that if we expand our focus beyond our own boarders, we simply MUST recognize the importance of driving down the real, unsubsidized costs of clean energy.

    The Montreal Protocol worked for ozone-depleting aerosols because cheap, less harmful substitutes existed and were ready to scale up. There are certainly mature technologies ready to go today – wind, efficiency, geothermal in particular all face non-market barriers for the most part – but these technologies alone will fall short of what is needed, especially in a global context.

    For example, here in the Pacific Northwest, where I live and work (on renewable energy policy), we are a national leader in energy efficiency, and both Oregon and Washington recently adopted renewable energy standards – 25% by 2025 and 15% by 2020 respectively. We are also largely hydropowered (about 50% regionally).

    You’d think we would be well positioned to slash carbon emissions. But the Northwest is also growing – the secret’s out that it’s a pretty nice place to dwell! – and so is our energy demand. The result: expected levels of energy efficiency and deployment of renewables to meet the RES policies will only meet expected load growth.

    Let me say that again: two states that are largely hydropowered to start with, are leaders in energy efficiency, and have some of the more aggressive RES policies in the country will only meet expected load growth! Existing policies and efforts will be required to reduce emissions from our existing power plant fleet – which includes plenty of coal and natural gas.

    Why? Because we’re growing at a couple percent a year. Now think about China, which is growing at double digits! What’s the scale of the technology challenge there? Just one example…

    Ted, Joe, thank you both for burying the hatchet and getting down to substance. This is where progress is made. Both of your contributions to this debate are excellent – and there’s nothing more important to be debating. We’ve got to get this stuff right.

  16. John,
    Yes, people will probably pay about the same for energy if we keep up with increasing our energy efficiency but this doesn’t mean there aren’t price shocks. These price shocks can become political problems if the promise is made that politicians are going to keep unit energy costs cheap forever. At the same time, the rising price is a stimulus to get more efficient (so dynamically the price is in most cases a cause of efficiency investments)

    Jesse,
    More on the Cheap Energy Contract idea:
    http://terraverde.wordpress.com/2008/01/14/the-renewable-electron-economy-xii-the-%E2%80%9Ccheap-energy-contract%E2%80%9D%E2%80%A6bedrock-or-dinosaur/

    Michael

  17. Robert says:

    On carbon pricing, consider the UK tax on petrol. Petrol is £1.07/litre in the UK, so the price in $ would be:

    1.07 x 3.785 x 1.98 = $8.01 per US gallon

    That is some carbon tax! People in the US whinge at prices that are less than half of this figure. Yet vehicle use and congestion in the UK is worse than ever and our road seems to have more giant SUV-style vehicles (e.g. Range Rover, BMW X8, Nissan Navarra) in people’s drives with each passing month. This tells you just how price-inelastic fossil fuel use is and just how high you would have to set a carbon tax to have any effect whatsoever.

    I do buy this argument:

    “So the explicit objective of US climate policies must not be simply to reduce our own carbon emissions but to the rapidly drive down the cost of clean energy technologies in real, deployed, unsubsidized terms such that they are cost competitive in developing economies where there will likely be no price for carbon.”

    Deploying low carbon energy sources in the US only might assist your local energy security and trade deficit issues but it will do nothing significant towards global emission reduction. This is the strength of the BI position.

  18. john says:

    Michael:

    I agree there will be price shocks — but with the right policies and yes, regualtions, people will pay more for each kW and gallon, but buy less of them, and therefore have about the same monthly costs. And we’ll be able to do this for some time to come, and make a great deal of progress in cutting carbon — again, that’s why rules and regs and market interventions are important.

    Ultimately, this will cost us, but not as soon and not as much if we’re smart about how we do it.

  19. YoloMike says:

    Thanks to Ted and Joe, but especially to Michael and John for providing an alternative to the unnecessarily divisive course of the debate thus far. Your posts display an admirable flexibility, and I’d especially like to hear more about feed-in tariffs from Michael, which sound like a sensitive mechanism for connecting carbon prices to technology subsidies.

    I did find it somewhat ironic that Ted took such umbrage at getting roughed up, given the explicitly divisive tactics and tone of both “DOE” and Break Through. The Breakthrough Institute’s current youth campaign continues this trend, putting the adoption of its plans in the terms of oedipal / generational warfare. Not helpful!

    I have sometimes wondered about BI’s aims. I know that it is associated with the Evans/McDonough PR firm and receives funding from the Rockefeller philanthropy advisers, who have a number of quite anti-progressive board members, including (in environmental policy) a former close aid of Bill Frist, Amy Holmes. Does anyone know more about how this group is funded and by whom>

  20. Ted Nordhaus says:

    Yolo Mike,

    There is a difference between criticizing those you disagree with and blatantly and intentionally misrepresenting what they say, suggesting nefarious motives, and otherwise slandering and smearing them. That is what we objected too. That so many here and at Grist couldn’t tell the difference, cheering it on and believing that we were getting what was coming to us for having been “divisive” in criticizing the environmental movement is a problem.

    I accept Joe’s apology and hope that folks like Dave Roberts at Grist will do the same. It has opened the door to a much more productive discussion about what are, by most accounts, pretty important questions that the environmental movement, and everyone who cares about climate change needs to address. While our writing has, and probably always will have an edge to it, we have always tried to accurately represent the words and arguments of those we disagree with.

    I would also be careful with the implications that we are part of some kind of anti-environmental, anti-progressive conspiracy. Most of our major funders are currently or have recently been major funders of the Center for American Progress, Joe’s employer and the sponsor of this blog. So if we are part of the conspiracy so is CAP and so is Joe. Moreover, many RPA donors and board members are also funders of CAP. And while we do have a long relationship with EMC Research, a public opinion research firm, CAP as well has deep connections to DC based polling firms such as Greenberg Research and a variety of others.

  21. David B. Benson says:

    Ted Nordhaus — Roger Pielke, Jr. has published, in one form or another, two comparisons of temperature data to IPCC projections. The first such study is so completely bone-headed that even I could see the problems. The second, using an almost reasonable amount of data, 17 years, is also flawed:

    http://www.realclimate.org/index.php/archives/2008/04/model-data-comparison-lesson-2/langswitch_lang/fr

    SUch comparisons might have some value if done by a competent statistician. Unfortunately, neither has been. It seems that IPCC did a moderately good job of it last year. Use that instead.

  22. Peter Foley says:

    I will not lay down and let a 450$ a year tax be imposed on me with out cause. Keep playing the on-line if I was in charge games, but don’t expect your ideas based on vapor & unproven causal chains to be used to run the world. Let have some working climate models that reflect the climate as it is, not the so far inaccurate ones you are basing your climate jihad on. When the anti-carbon AGW cult is debunked completely who will pay the punitive and actual damages from the moronic attempt to decarbon civilization? Any one willing to pledge THEIR money, lives or not so sacred honor on the premise of CO2 increase as wholly evil?

  23. Robert says:

    Peter F –

    Irrespective of climate change, how sensible is it to keep increasing civilisation’s dependency on a resource base which we KNOW will run out within a couple of generations? Your post seems to indicate that you think the high-carbon lifestyle will go on for ever and ever. It can’t and it won’t. I’d like to see you try and explain your reasoning to your great-grandchildren.

    If there are workable substitutes for fossil fuel then the sooner we switch over the better. If it turns out that renewables are not a flier (absent the hidden subsidy provided by fossil fuel) then the sooner we find out the better – before the global population and general level of fossil fuel dependency gets any worse.

  24. David B. Benson says:

    Renewables are certainly a ‘flyer’. The careful study by some researchers in The Netherlands states that ample is available from bio-energy alone:

    http://jcwinnie.biz/wordpress/?p=2815

    As for the cost of carbon dioxide, about $200–300 per tonne of CO2 suffices to bury the carbon content back in the ground. Potentially CCS is maybe $60–100 per tonne of CO2.

  25. Robert says:

    I don’t think anyone can say for sure whether our civilisation could keep going in anything like its current form and population on renewables alone. This is because renewables are inevitably subsidised by fossil fuel at all stages of their design, development, manufacture, installation, maintenance and decommissioning.

    We need to start finding out asap. The longer we leave it the harder it will be.

  26. Robert says:

    …also, biofuels seem like the worst form of renewable. We can barely feed the global population as it is, agriculture is possibly the most destructive aspect of modern civilisation in terms of its impact on the biosphere and the EROEI of most biofuels struggles to exceed break-even.

  27. Yolo Mike,
    More information about feed in tariffs can be found here:
    http://www.feed-in-cooperation.org/content/view/17/29/

    and here:
    http://www.wind-works.org/articles/feed_laws.html
    and here:
    http://terraverde.wordpress.com/2008/03/17/the-renewable-electron-economy-xiv-renewable-energy-finance-and-feed-in-tariffs/

    Effective feed in tariffs are wholesale electric generation rates priced at cost plus reasonable profit and then scaled down to drive efficiencies in the manufacture of RE generators. I have proposed that a subset of feed in tariffs can be used to incentivize the building of RE generators that can emulate the electrical output of coal and natural gas generators, thus allowing the phase-out or partial mothballing of fossil generators. You could call them “climate protection tariffs”.

  28. markl says:

    I am new to this discussion and just beginning to get more interested in GW as a professional focus (esp. after reading Break Through). I am an experienced water resources planner, however, and have been doing to research to address GW impacts on water systems.

    It’s not clear to me why there is so much skepticism from Joe Romm and others about the Pielke paper in Nature. From a policy analysis/planning standpoint, you have to do a detailed analysis of what the likely possible futures are. In the water business, we typically assumed ONE baseline future and compare all planning options against that one future. This is completely inadequate because any future scenario implies assumptions about actual human decisions and these decisions are driven by markets, politics, policies, and a host of other drivers. We water planners are getting better at considering multiple possible future baselines and analyzing what those multiple futures mean for current decisions.

    The same is true for climate policy. It’s reasonable to point out that future trends embedded in IPCC scenarios may not materialize. To assume a certain trend of technological change (and therefore emmissions reductions), implies assumptions about human decisions in politics, policy, markets etc. These things aren’t going to happen magically, they will happen only if human decisions result in them happening. To acknowledge that fact and consider possible impacts of future trends going a different direction is responsible policy analysis and planning. The only thing certain about these kinds of problems is that our projections are almost always wrong. Considering the uncertainties and developing robust solutions given those uncertainties is a must if we are to end up with desirable outcomes. It complicates things, but, as has been stated repeatedly, this is an incredibly complicated and difficult problem.

    So why the original controversy? Is it just old fights resurfacing in new ways? Either way, this is fascinating and I look forward to reading more.

  29. Earl Killian says:

    Ted Nordhaus, you wrote “If 132/ton of carbon will raise electricity prices by 1/3 and gasoline”. How did you get the rise in prices by 1/3?

    It appears you took the 1.3 cents from 50/tonneC, scaled to 132/tonneC to get 3.4 cents per kWh, and then used that to calculate a percentage. However that is not the correct way to do the calculation, because coal is not 100% of the U.S. grid (it is approximately 49%).

    After 49% coal, the next fossil is natural gas at 20%, and the next petroleum at 1.6%, and other gases at 0.4%. I think we can ignore anything but the natural gas, and adding in 1.3 cents per kWh and weighting by the shares, I get 1.9 cents per kWh, or just a 20% increase.

    Joe is correct that this is unlikely to drive residential and commercial efficiency. The way to drive that is well trodden. We just need to implement California’s energy efficiency policies at the Federal level to get a 43% decrease in per capita energy usage.

    However, 3.4 cents per kWh is probably enough to make most traditional new coal power plants uneconomic.

    By the way, the 2006 cost of electricity in the most efficient state, California, was 12.82 cents per kWh, 44% higher than the U.S. average of 8.90 cents per kWh. However, at 7032 kWh/Californian vs. 12,347 kWh/American, that means that Californians pay 197 less per person per year than the rest of the country.

    Adopting California efficiency policy at the Federal level would save enough electric energy that we could shut down 80% of our coal power plants if the grid were perfect. A regional analysis would be required to figure out what would happen given regional needs. Please note that this 80% reduction requires only 1970s thinking (that is when California started on its efficiency binge); no breakthrough needed for this piece.

  30. David B. Benson says:

    Robert wrote “… biofuels seem like the worst form of renewable.” Not so. Some biofuels are a poor/bad idea. Ethanol from corn is the worst with biodiesel from rapeseed or palm oil not far behind. There are many on many other alternatives. Just now, ethanol is produced from sugarcane in Brazil and India. As sugar is a glut on the world market, this is a wise use of resources.

    Other, even more efficient, biofuels will be on the market in a few years. The biomass for these processes can be grown on lands unsuited to either agriculture or forestry.

  31. Paul K says:

    Sugar is artificially expensive in America thanks to the more powerful than the oil lobby sugar lobby.

    No one has yet confronted the BI argument that, for maximum deployment, it is better to reduce the cost of alternatives than to raise the price of fossil.

  32. David B. Benson says:

    Paul K — Consider current oil and coal prices. Those are are big driver for (at least) biofuel alternatives. The cost of producing biofuels is lower in Africa, South America, South Asia and Southeast Asia than in North America.

    The ‘invisible hand’ of the market is settling the matter for at least biofuels.

  33. Eli Rabett says:

    It appears that Ted Nordhaus has yet another misleading calculation to apologize to everyone about if Earl Killian is right, and Earl appears to be making sense.

    I would also point out to Nordhaus that Gore has had a huge effect internationally as well as in the US. You only have to look at the shift in media coverage, as well as the furious response that he has engendered.