Category — Energy Consumption
“It’s estimated that, in large part thanks to new, coal-powered infrastructure, between 1 billion and 2 billion people now have access to clean drinking water that didn’t 20 years ago.”
So far this week, I’ve argued that fossil fuels actually improve the environment for human beings, and applied that idea to two important strategies for any debate on the value of fossil fuels: taking the moral high ground and taking the environmental high ground.
I apply both in the following excerpt from my book, Fossil Fuels Improve the Planet.
How the Coal Industry Should Defend itself
Once you understand that coal and other fossil fuels improve our environment, your ability to defend them is incomparably greater.
Let’s work through an example: the controversy over coal exports in the Pacific Northwest.
Here’s a typical attack: “They’re coming to ship their poison so they can poison the people in China. And that poison’s going to come back here and poison your salmon and your children, so don’t let it happen.” 
That was from Robert F. Kennedy, Jr.
So let’s say you’re debating Robert F. Kennedy Jr. in the media. How do you respond?
If you’re clear that coal improves our environment, not just that it’s less poisonous than he thinks, you can completely turn the tables and make clear that as supporters of coal you’re the environmental benefactor and he’s the environmental danger.
Here’s how I might respond if I were in the coal industry: [Read more →]
August 30, 2013 2 Comments
“You may know that coal has dramatically improved the economies of India and China by allowing them to build super-productive factories that make their people much more well off financially. But you might not know that their environments have gotten much better as well.”
Yesterday I wrote about why it is so important for the energy industry to take the moral high ground in the debate about fossil fuels, and today I want to connect that to the related issue of taking the environmental high ground.
One of the ways in which environmentalists have been able to gain the moral high ground is by accusing the energy industry of polluting the environment and making life on earth worse. On its face that may seem plausible, but as I wrote Tuesday, if you look at key indicators of human health as they relate to the environment, fossil fuels have actually improved our environment and made us healthier than we’ve ever been at any other time in history.
For the same reason the energy industry deserves to take the moral high ground, so it deserves to and should claim the environmental high ground. Here are some thoughts on how to do that.
Taking the Environmental High Ground
Whenever possible in a debate, you want to take the high ground right out of the gate. When discussing fossil fuels, that is particularly true on environmental issues.
Here’s an example of how to do it on coal. Here’s what the industry might say to a college audience:
August 29, 2013 3 Comments
“The ideal source of energy is not some ‘sustainable’—i.e., endlessly repeatable—form, but the best, cheapest, ever-improving form human ingenuity can devise. . . . An oil industry is ideal in the same way the iPhone is an ideal for so many. It may not be the best forever, but it is the best for now and we should be grateful to have it.”
Yesterday, I discussed the idea that fossil fuels actually improve the planet for human life. This idea has major implications for how the fossil fuel industry represents itself to the public.
Because of the narrative that fossil fuels harm the planet, the industry has tended to fight for its existence defensively, with the argument that it is a necessary evil, to be tolerated because of the jobs it creates, or because of other economic benefits.
But that approach doesn’t work, and it shouldn’t work. To their credit, most people are unwilling to tolerate something they consider immoral. To win the hearts and minds of the public, the energy industry needs to present itself as a necessary good, because taking the moral high ground in the fossil fuel debate is the only winning strategy.
Taking the Moral High Ground
Imagine you are an advertising executive, and a CEO asks you: “Do you think you can help improve the reputation of my industry?”
You respond, “Sure, what are some ways your industry makes people’s lives better?”
He replies, “Well, actually, our product helps people in just about everything they do. This past year, it helped take 4 million newlyweds to their dream destinations for their honeymoons. It helped bring 300 million Americans to their favorite places: yoga studios, soccer games, friends’ houses. It made possible the bulletproof vests that protect 500,000 policemen a year and the fire-resistant jackets that protect 1,000,000 firefighters a year.” 
“If you do all that, how could you be unpopular?”
“We’re the oil industry.” [Read more →]
August 28, 2013 2 Comments
Over at Center for American Progress (and Climate Progress), where oil production and oil consumption are considered bads, Memorial Day is not a welcomed time. And so their holiday-weekend message is that oil is not a good buy (it is more expensive thanks to the policies CAP/CP advocate), and ”Big Oil” is a culprit. Here is their spin:
Beginning with the Memorial Day weekend and throughout the summer, Americans will spend their hard-earned dollars traveling to visit family, friends, and the great outdoors. Meanwhile, Big Oil will be making huge profits off of these travel expenditures on fuel, while at the same time fighting for decreased public health and climate-change protections.
At MasterResource, we celebrate the beginning of the peak driving season knowing that our free-market philosophy is about energy abundance and affordability. And there is little to apologize for.
Oil, gas, and coal have been/are being technologically transformed into super-clean energy resources. Carbon-based energies are growing more abundant, not less. And energy/climate alarmism is losing steam on all fronts.
The real energy sustainability problem is statism, not free consumer choice. As Matt Ridley recently concluded: “There is little doubt that the damage being done by climate-change policies currently exceeds the damage being done by climate change.”
Energy is the master resource. Motorized transportation is freedom-of-movement. So, like the Shell commercial says, Let’s Go!
May 25, 2013 3 Comments
“Perhaps the main failure of rationality is that of the regulators themselves.”
-Ted Gayer and W. Kip Viscusi, authors, Overriding Consumer Preferences with Energy Regulations
In a working paper for the Mercatus Center titled Overriding Consumer Preferences with Energy Regulations, economists Ted Gayer and W. Kip Viscusi examine several energy use regulations and the accompanying Benefit-Cost Analyses (BCAs). They find the regulations would not pass a BCA (provide net benefits) without two assumptions: first, that individuals make systematic and financially significant mistakes in their energy consumption choices, and second, that government policies can correct these mistakes.
The regulations cited in the paper include mileage requirements for vehicles and energy efficiency standards for household appliances and light bulbs. The BCA numbers are telling – the authors show, for example, that the vast majority (about 85 percent) of the estimated benefits of the mileage requirements proposed in 2011 accrue to the individual user, mostly in the form of avoided fuel costs.
Without counting these private benefits (strictly counting avoided external costs, including CO2 emissions), the regulation would fail the BCA. That is, the regulations only make economic sense if we assume consumers behave irrationally when left to their own devices.
“Energy Efficiency Gap”
One type of irrationality discussed in the paper manifests as an energy efficiency gap, defined by some as “the difference between the actual level of energy efficiency and the higher level that would be cost-effective from the individual’s or firm’s point of view.” (International Energy Agency, 2007) The idea is that consumers neglect significant future energy savings by forgoing gainful investments in more energy-efficient cars, appliances, light bulbs, etc. According to proponents of the concept, consumers in such situations reveal irrationally high discount rates by their willingness to pay higher energy costs over the life of the product.
However, the authors criticize the concept of the energy efficiency gap on several levels, including the basic methodology for calculating the gap. ”Since the engineering studies focus only on capital costs and operating costs,” the authors find, “they do not allow for any heterogeneity of preferences and use of products across consumers.” [Read more →]
August 6, 2012 8 Comments
Much of today’s energy policy assumes that regulations mandating greater energy efficiency will reduce energy use. But that isn’t always the case, and energy efficiency improvements are seldom as large as promised by engineering calculations because of “rebounds.” Such is the most general conclusion from hundreds of studies pertaining to the effects of energy efficiency, whether market or nonmarket.
For example, people who install lighting that is 50 percent more efficient frequently leave the lights on longer, negating some of the energy savings from greater efficiency. This is called an energy efficiency rebound. Sometimes these mechanisms even bring about net increases in energy use known as backfires.
Rebounds have a direct implication for energy efficiency mandates and incentives. If rebounds are substantial, efficiency policies will be less effective at reducing air pollutants, for example, because the “saved” energy gets consumed elsewhere. Energy consumption may even increase on net to cause backfires.
Rebounds, and certainly backfires, fall into the ‘unintended consequences’ category of government intervention into the complex market. It is reason to ‘let the market decide’ with energy usage, as in energy production. [Read more →]
July 17, 2012 5 Comments
Left environmentalists critical of electrified America must have mixed emotions this time of the year. It may be the season of good cheer and goodwill toward all, but it is also the time of the most conspicuous of energy consumption. America the Beautiful is at her best come December when billions of stringed light bulbs on buildings and trees turn the mundane or darkness itself into magnificent beauty and celebration.
Holiday lighting is a great social offering—a positive externality in the jargon of economics—given by many to all. it makes one wish for more lighting all months of the year in urban centers–for ease of movement, for safety, for better moods. “Here Comes the Sun,” a favorite of so many, could be joined by “Here Comes the Light.”
While energy doomsayers such as Paul Ehrlich have riled against “garish commercial Christmas displays,” today’s headline grabbers (Grist, Climate Progress, where are you?) have not engaged a public debate over the issue. Yet holiday lighting is a glaring exception to their goal of reducing discretionary energy usage to help save the world. If holiday energy guzzling is forgiven, why not excuse outdoor heating and cooling, one-switch centralized lighting, and instant-on appliances that “leak” electricity, not to mention SUVs?
Prancing around to turn on individual lights or waiting for the paper copier to warm up waste the scarcest and one truly depleting resource: a person’s time. Surely extra energy use for comfort and convenience has priority over purely celebratory uses of energy.
What about the holiday humbug that celebratory electricity depletes future fossil-fuel supplies, fouls the air, and destabilizes the climate? Good tidings abound! [Read more →]
December 24, 2010 14 Comments
One of the most curious facts about energy is that economies continue to use more of it even as they use it more efficiently. This strikes us as strange because it has become an article of faith that making cars, buildings, and factories more energy efficient is the key to cheaply and quickly reducing energy consumption, and thus pollution.
But energy experts have never seen this as particularly mysterious. As energy historian Vaclav Smil notes, “Historical evidence shows unequivocally that secular advances in energy efficiency have not led to any declines of aggregate energy consumption.” A group of economists beginning in the 1980s went further, suggesting that increasing the productivity of energy would increase economic growth and energy consumption.
Efficiency advocates dismiss the evidence of rebound of energy use pointing to direct behavioral changes at the household or business level that are easiest to measure. But the most significant energy rebounds are indirect — in the production of energy, raw materials, and consumer goods — not in the “end use” consumer products.
Below, a leading energy economist, Harry Saunders, explains why energy efficiency does not decrease energy consumption in the way we conventionally understand it. In the process, Saunders clarifies the controversy over his recent co-authored study for the Journal of Physics, which reviews 300 years of lighting history to predict the impact of new solid-state lighting technologies (e.g. LEDs).
Against the widespread belief that new lighting technology will reduce energy consumption, Saunders and his colleagues found that they will likely increase it — greatly expanding the global use of lighting in the process, especially in developing countries. Saunders clarifies some important questions, and explains the basics of “the rebound effect.”
With the new study, rebound has firmly moved from the theoretical to the empirical, and the implications of it must now be dealt with by all of us who were counting on efficiency to be an easy way to reduce greenhouse gas emissions.
Here is Saunders’s latest thinking: [Read more →]
October 1, 2010 20 Comments
[Note: This article has been updated to Twenty Bad Things about Windpower — go here.]
Trying to pin down the arguments of wind promoters is a bit like trying to grab a greased balloon. Just when you think you’ve got a handle on it, it squirts away. Let’s take a quick highlight review of how things have evolved.
1 – Wind energy was abandoned well over a hundred years ago, as it was totally inconsistent with our burgeoning more modern needs of power, even in the late 1800s. When we throw the switch, we expect that the lights will go on — 100% of the time. It’s not possible for wind energy, by itself, to ever do this, which is one of the main reasons it was relegated to the dust bin of antiquated technologies (along with such other inadequate sources like horse power).
2 – Fast forward to several years ago. With politicians being convinced by lobbyists that Anthropological Global Warming (AGW) was an imminent threat, a campaign was begun to favor all things that would purportedly reduce CO2. Wind energy was thus resurrected, as its marketers pushed the fact that wind turbines did not produce CO2 in their generation of electricity.
3 – Of course, just that by itself is not significant, so the original wind development lobbyists then made the case for a quantum leap: that by adding wind turbines to the grid we could significantly reduce CO2 from fossil fuel electrical sources (especially coal). This argument became the basis for many states’ implementing a Renewable Energy Standard (RES) — which mandated that their utilities use an increased amount of wind energy.
4 – Why was a mandate necessary? Simply because the real world reality of integrating wind energy made it a very expensive option. As such, no utility company would likely do this on their own. They had to be forced to. [Read more →]
September 20, 2010 38 Comments
Power Generation Industry Forecast: Natural Gas as Fuel of Choice, Little Change for Other Technologies (Part I of II)
“It’s déjà vu all over again,” said Yogi Berra. The baseball Hall of Famer could easily have been predicting the coming resurgence of new natural gas–fired power plants. A couple of nuclear plants may actually break ground, but don’t hold your breath. Many more wind turbines will dot the landscape as renewable portfolio standards dictate resource planning, but their peak generation contribution will continue be small (and disappointing).
The most interesting story for 2010 is that the dash for gas in the U.S. has begun–again. In Part II or this two-part report, we will explore the challenges facing nuclear, coal, and renewable energy electricity sources in 2010 and beyond.
Business Climate–Energy Demand
As we enter the second decade of the 21st century and a second year of avoiding an economic collapse, the U.S. business climate seems to have become more positive. A growing sense of cautious optimism is appearing. A mid-October survey by the National Association for Business Economics concluded that the largest recession since the 1930s Great Depression is over, and economic growth is likely for the U.S. economy in 2010. The government announced that third-quarter 2009 economic growth hit 3.5%, the first positive growth in five quarters, suggesting an end to the recession (Figure 1).
Figure 1. Electricity growth resumes in 2010. After a two-year contracting market, total electricity consumption in the U.S. in 2010 is expected to increase. Source: EIA, November 2009 Short-Term Energy Outlook
The implications for electric generation are mixed. What gets built depends on a complex stew of credit markets, regulatory responses, economic growth, technology, and national politics. Some of those are leading economic indicators, some lagging, some not clear at all.
Renewable generation has not made a convincing economic case in the market. But politically it has the upper hand. Coal and nuclear continue to take a political battering at the hands of the renewables advocates. The politics of energy is being upended by new implications for natural gas. The political and regulatory landscape is a dog’s dinner (a Britishism for an undigested mess).
The need for new generation to supply load appears less urgent than in previous years. According to the EIA, demand for electricity has fallen since the economy tanked in 2008. The demand down-tick is the first since the EIA has accumulated these statistics in 1977.
Facing a sluggish economy, consumers have reduced thermostats, cut off air conditioning, and dialed down appliances, leading to the decline in electricity demand. A cool 2009 summer in most of the U.S. helped to reduce air conditioning load. Net electric generation dropped 6.8% from June 2008 to June 2009. That was the 11th consecutive month that electric generation slid downward, compared to the same month in the prior year.
Analysts say they expect the declining demand trend to reverse when economic growth shows up at the beginning of 2010 or thereabouts. But they have been wrong before and may be wrong again. The EIA, the U.S. Department of Energy’s statistical agency, says it suspects the decline in demand will continue into early 2010, despite what appears to be a bottoming-out of the recession.
Many electric power company long-term capital spending plans have been built on the dire forecasts of the past decade, particularly from NERC. For years, the conventional wisdom in the generating industry was that the U.S. was running out of generating capacity. Year after year NERC had the same message: It’s time to build baseload, particularly nuclear and coal, and make major investments in high-voltage transmission.
Maybe not. Intermediate-load and peaking units, suggesting new gas plants, may be the ways to hedge big investment bets on future baseload units. A recent Washington Post article quoted anonymous sources as saying that new nuclear plants aren’t economical until natural gas prices are above $7/mmBtu. That’s more than double the current price. [Read more →]
January 13, 2010 2 Comments