Yves here. Rejecting environmental progress has been bad business as well as bad for Americans’ health and well-being. For instance, the Big Three automakers fought higher fuel efficiency standards designed to reduce pollution. Europe and other economies, by contrast, embraced them. That enabled European manufactures to gain share globally by having cars that were cheaper to operate as well as more environmentally friendly.
By James K. Boyce, who teaches economics at the University of Massachusetts Amherst. He is the 2017 recipient of the Leontief Prize for Advancing the Frontiers of Economic Thought. Originally published at the Institute for New Economic Thinking website
The alarm that greeted President Donald Trump’s announcement that the U.S. will withdraw from the Paris climate accord was an overreaction in one respect. The pace at which the world moves away from fossil fuels won’t, in fact, be greatly affected. The other countries that together now account for 85% of carbon emissions will not change course even if the U.S. drags its heels. In another respect, however, Trump’s latest proclamation is truly alarming: in what it means for America’s economy.
The U.S. joins Syria and Nicaragua as the only countries in the world that are not parties to the Paris accord. Syria’s absence stems from the fact that the country is in a horrific civil war and its leaders are under international sanctions. Nicaragua refused to sign not because it considered the accord too onerous, but because it didn’t go far enough to combat climate change.
Oddly, Trump echoed Nicaragua’s position when he said the accord would reduce global temperatures by only 0.2 degrees Celsius in 2100, calling this a “tiny, tiny amount.” His main rationale for pulling out, however, was not the modesty of the accord’s benefits. Instead it was “the draconian financial and economic burdens the agreement imposes” on the U.S. Never mind that the agreement “imposes” nothing: All commitments under the Paris accord are voluntary and non-binding, and each country’s policies can be changed at will.
Trump asserted that “the onerous energy restrictions it has placed on the United States could cost America as much as 2.7 million lost jobs by 2025.” His source for this claim was a report by a Washington, DC consulting firm called National Economic Research Associates. In a footnote, the report acknowledges two omissions: First, it “does not take into account potential benefits from avoided emissions,” and second, it “does not take into account yet to be developed technologies” but instead is based on “current technology costs and availability.”
Both limitations have huge economic implications. Assuming zero technological change means ignoring the rapidly plummeting costs of renewable energy. And the motivation for pro-active climate policy is precisely to secure the non-trivial benefits of avoided emissions, like keeping Miami above water. A side benefit, also far from trivial, is cleaner air: The Obama administration’s Clean Power Plan would have generated health benefits for Americans valued at $29 billion per year by 2020.
A third major omission is that the report does not take into account robust job creation in energy efficiency and renewable energy sectors. The U.S. coal industry today employs roughly 76,000 workers; the solar industry employs more than 250,000. As my colleagues Robert Pollin and Heidi Garrett-Peltier have documented, investments in energy efficiency and renewables yield substantially more jobs per dollar than spending on fossil fuels. At the same time, far from writing off coal miners and other fossil fuel workers as “collateral damage” of the energy revolution, they and others advocate “just transition” policies for their re-employment and pension guarantees.
The “draconian” financial burden called out by Trump is the UN’s Green Climate Fund, which he claimed is “costing the United States a vast fortune.” National contributions to the fund are strictly voluntary. The U.S. has pledged $3 billion – less than $10 per American – a “tiny, tiny” amount, one could say, compared to climate adaptation needs in vulnerable countries. Sweden has pledged six times as much per person.
Trump’s announcement will have little effect on the pace of the world’s transition from fossil fuels to clean energy. As before, all other countries (apart from Syria) remain committed to the Paris accord or stronger measures (as in Nicaragua’s case). China is investing heavily in solar, wind and energy conservation, and starting to scrap plans for new coal plants. India, too, is canceling coal plants because they can no longer compete with cheaper solar power. In the US, Trump is moving in the opposite direction: before withdrawing from Paris, his administration decided to scrap the Clean Power Plan and other Obama-era initiatives.
The good news is that within the U.S., many remain committed to cutting carbon emissions. California, the world’s sixth largest economy, is proposing to extend its cap-and-trade program beyond 2020 by setting one of the highest carbon prices in the world and rebating the revenue directly to its people as carbon dividends. A dozen states that together account for 36% of U.S. GDP, including California, New York, Washington, Massachusetts, Minnesota and Virginia, have entered into a U.S. Climate Alliance committed to meeting or exceeding the Obama administration’s goals. Major cities, along with corporations that compete in the global marketplace, have announced similar plans.
Still, Trump’s announcement will handicap the US economy in the energy revolution that promises to be the defining technological breakthrough of the 21st century. Forsaking national movement toward energy efficiency and clean energy means foregoing opportunities for both cost savings and job creation. Compare this to the picture a century ago, when the U.S. pioneered the transition from horses to automobiles, averting the specter of cities drowning in manure. It is as if, today, the world was moving to automobiles while the U.S. was sticking resolutely to its horses.
For the American economy, this is a recipe for global non-competitiveness. Moreover, as other countries forge ahead in the energy revolution, Trump’s policies expose U.S. exports to the risk of carbon sanctions.
Within the U.S. economy, those states, cities and businesses that persevere in the energy revolution will fare better than those that lag behind. Over time, this divergence will further widen the economic inequalities that are tearing American society apart.
The world energy revolution train has already left the station. It started late and it’s running behind schedule, but it’s gathering steam. Trump’s announcement does not alter this reality. His policies will merely relegate the U.S. to the caboose. In the name of “America first,” he’s really putting America last.
88 comments
Comments are closed.
Global non-competitiveness indeed. It’s been long-argued that we should be taxing imports from countries with environmental controls that do less than those found in the United States. Absent this, the only way to compete globally is to remove environmental protections at home, and that is exactly the road we are on.
Agreed. Our lax enforcement of environmental controls and human rights with our trade partners is a sore point for lefties. We have the richest market in the world and access to it should be ours to control.
Under the various Free Trade Treason Agreements which the Class Enemy Occupation DC FedRegime
has put us under, such taxes would be illegal as “non-Tariff barriers to trade”. Or am I wrong, as Bill O’Reilly would say?
If I am right, then the only way we could possibly apply such Carbon Dumping Taxes would be to abrogate and withdraw from every Free Trade Treason Agreement we are currently subject to, and then establish a trade-control regime of Militant Belligerent Protectionism.
No Militant Belligerent Protectionism? No carbon-dumping taxes against anti-environmental imports.
Won’t. Happen. As our President would say.
Not to mention this: That enabled European manufactures to gain share globally by having cars that were cheaper to operate as well as more environmentally friendly.
Hmmm, like VW which gamed the system by claiming both fast, powerful cars that also met emission standards. The truth was their cars could not deliver the HP at the economy standards they claimed, thus ripping off so many unsuspecting customers, many of which cannot resell their vehicles and find even when they can they have lost the greater part of the equity they thought they had.
Is the author, James K. Boyce, a wealthy person or a poor person? My guess is that he is wealthy.
How old is the car that he drives? How many cars, boats, airplanes does he own? How much electricity did his household use last year? How big is his house? Does he fly domestically and internationally often? Does he have a garden that supplies food for his household?
What is his carbon footprint?
I am not accusing, I am asking.
Poor people generally are not in favor of making energy more expensive. If they cannot afford sufficient gasoline, electricity and heating fuel, they suffer. The carbon taxes, paid by the poor, are wasted by the rich on endless wars. Booom booom booom- more CO2 released.
How about a world wide PEACE agreement?
What have you been smoking? Did you not read the bio?
Dear God, he’s an academic at a leftie school. Only the ones who write textbooks (which if they sell big are serious money makers) or teach at major law and business schools AND do a lot of consulting make serious $.
And did you miss that nominally cheap power comes at a health cost? For instance, Birmingham, Alabama is one of the cities with the worst air in the US because it is downwind from coal fired power plants. My mother has to run an air purifier at home and she gets fatigued due to the poor air quality when she has to spend much time outside her house. That’s how bad it is.
So he must be poor with a tiny carbon footprint, just like me. I don’t smoke, thank God.
It is actually very easy to find out the location, value and square footage of his house, just as it is with anyone’s dwelling these days. I’m not going to post it of course, but if you are curious you can readily find out and decide for yourself whether you would count it as a big carbon or environmental footprint.
But what if it is a totally hip, modern and with-it zero-carbon self-heating-and-cooling passive house?
https://images.search.yahoo.com/search/images;_ylt=AwrBT879dzxZOnMAmCZXNyoA;_ylu=X3oDMTEyNWNiaW4yBGNvbG8DYmYxBHBvcwMxBHZ0aWQDQjI5NDRfMQRzZWMDc2M-?p=passive+house&fr=sfp
What if it is a retro-nostalgiac sun-tempered house in the tradition of Peter van Dresser’s designs from the 1940s and 1950s?
http://www.motherearthnews.com/Nature-and-Environment/peter-van-dresser-zmaz75sozgoe
https://images.search.yahoo.com/search/images;_ylt=A0LEVy9ceDxZEMsAqM1XNyoA;_ylu=X3oDMTEyNWNiaW4yBGNvbG8DYmYxBHBvcwMxBHZ0aWQDQjI5NDRfMQRzZWMDc2M-?p=peter+van+dresser&fr=sfp
Even a big house could have little carbon tiptoes if it is designed right and built right.
Or even just super-weatherized and thermally retro-up-insulated after the fact.
Habitat destruction matters, too. Carbon isn’t everything. If you looked at the natural habitat that any individual big house displaces/destroys, you would feel sick. So people don’t look. That is why I wrote “carbon or environmental” footprint.
And, I’ll pass on the super-weatherized. Not the kind of air I want to breathe. I’d rather have a draft and not have to inhale every molecule of off-gassing from tiles and mattresses and paint and cabinets.
Our forebears all survived the many Ice Ages. Putting us in climate controlled cages (buildings), devoid of plant life, is a bad idea. We need environmental stresses in our day in day out lives; Too cold, too hot; no food, plenty to eat; lots of sleeping, lots of exercise;…..
We are taught that the easy, comfortable life is the good life?
If the electricity went off and stayed off, (say, Stuxnet)
https://en.wikipedia.org/wiki/Stuxnet
our modern world would stop- in spite of solar panels on the roof.
Super ventilated house with clean air . . . or super-insulated house with poisonous house-toxin air . . . it seems an unpleasant tradeoff.
Luckily, there is a way out. Air-to-air heat exchangers for the super-insulated house. They push-pull outgoing air and incoming air past eachother through a special ventilation machine and inlet so that the outgoing air’s heat is dumped into the incoming air as it enters the house.
et voila’ ! Desired-temperature retention inside the house while rotating used and tainted house air with clean outside air at the same time. I have read that they have had very advanced ones in Scandinavian countries and in Hokkaido Island Japan for decades now. Here is a link to how air-to-air heat exchangers work.
http://vanee.edenenergy.com/hw-vanee-airexchanger.php
If we had zero population growth and zero immigration, we could have zero new home building except to replace old houses that burn down or flood away or otherwise wear out. But there is nothing wrong with super-weatherizing the houses we already have.
This is just repeating a meme that the Koch Bros and others have been successful at spreading – i.e. that reducing energy use and protecting the environment hits the poor more. Its palpable nonsense, its the poor who suffer most from environmental degradation and its the poor who will take the brunt of climate change.
The poor can be most vulnerable to high oil and coal prices precisely because they are made vulnerable through poor housing and insufficient access to good public transport (or just cyclable roads) – i.e. inequality and austerity policies trap them in a cycle of dependence on cheap heating oil and having to keep their cars running.
+1.
Hey, maybe it resonates because if I can’t pay my mortgage I don’t care about any lofty goals.
Maybe it resonates because we’re tired of our ongoing economic conditions being given lip service.
That 29 billion dollar health savings over X years is a pie in the sky abstraction when most of the US has a negative net worth.
Hey, but keep rearranging the deck chairs though. The iceberg is not climate change, it’s violent revolution in response to systematic corruption. “The Hamptons are not a defendable position” as Mark Blythe likes to say.
I keep coming here thinking maybe you guys just need another perspective, but I’m getting tired of your lack of empathy for your fellow Americans who are not in the Military/Pharmaceutical/Academic/Financial/Government Industrial Complex.
“Hey, maybe it resonates because if I can’t pay my mortgage I don’t care about any lofty goals.”
it makes very little sense to talk about empathy and make selfish statements like that. What you call “lofty goals” are often other people’s very LIVES. Empathy recognizes that. I get that we all get caught up in our own lives and can’t entirely escape it. But statements like that are not a defensible philosophical position.
and btw, although full environmental sustainability is actually a very hard nut to crack, choices between day to day survival and polluting less are FALSE CHOICES. And it is not empathy to accept those choices. Empathetic people reject them as the false choices they are. They don’t want to see people homeless and they don’t want to see people getting asthma from pollution. And they know it’s not necessary. And they will stand in solidarity against both. Even when they support carbon taxes etc. they favor an offset to rebate money to people from them. Yes we need better environmental standards but also much more generous social programs.
PEACE=CO2
War is Global Cooling.
If they reduce population size enough, gains in CO2 reduction are accretive. [that means they add, like in arithmetic.)
Krugman is doing a paper on it. He’s making 3 color charts and graphs too.
Thomas L. Freidman can explain it better than I can.
Rush Limbaugh did, but his pet Lobster latched onto his jugular last time he decided to terrify it by threatening to dunk it in a pot of boiling water on public TeeBee. He had to go to the emergency room and get 3 stitches for $1999.
His legal staff finally negotiated it down to a gift card at the Red Lobster.
“just asking” is a lame logical ploy. That aside, does hypocrisy negate the validity of what someone says or recommends? I have met criminals, addicts and alcoholics who have all told me to avoid committing crime, doing drugs, or drinking too much. Should I do the opposite? Just asking.
I think the views expressed above are both optimistic and naïve. Paris imposes few obligations on those who have ratified it beyond setting aspirational targets. Meeting them is another matter completely. The second quote is true only in the unintended sense that Paris itself will have little effect on the pace of the world’s transition from fossil fuels to clean energy, which will be determined by economic forces.
Under our previous Prime Minister, the mad monk Tony Abbott, Australia would have followed the US out of Paris in a flash. He’s still influential and called in January for renewable energy targets to be scrapped. He campaigns on behalf of the coal industry at every opportunity. Here he is this week warning against lowering emissions:
Abbott said he was concerned about media reports that Australia’s chief scientist, Alan Finkel, would recommend a low emissions target to the prime minister and the premiers this Friday.
Abbott said primarily, the electricity system needed to deliver consumers “affordable, reliable, energy”. Emissions reduction was a secondary consideration, he said.
Asked whether Australia should follow the US and withdraw from the Paris climate accord, Abbott said Paris was “aspirational only, it is not binding, it is not mandatory”.
In other words, while he’d prefer to be out of Paris, staying in brings no real obligations at all, especially not obligations to move away from fossil fuel use.
It’s only by an accident of politics that he’s no longer PM, and the current government is not much better, it wants to open several new coal mines and double exports, for $$ and jawbs. Canada under Harper may well have followed the US out of Paris. Oil and gas exporters are not cutting supply to cut global emissions, they’re doing it to maximise market share and long-term profits. Essentially, any country that has fossil fuel resources to use and sell cannot be trusted to meet Paris’s non-binding self-imposed targets, especially when the US lead provides yet more cover for failure to meet them.
Actual emissions reductions, in Australia and elsewhere, will be dictated almost exclusively by profit seeking, short-term needs of domestic politics, and hard economic rationalism, not by Paris, or any sense of duty to preserve the ecosphere. This is the reality of life in the fossil fuel age under capitalism.
I”m in two minds about this.
It is true that Paris is non-binding and every country is interpreting it to suit itself in one way or another. For example, here in Ireland the big offender in growing CO2 emissions is the agriculture sector, in particular dairying. It seems to be national policy to cover the whole planet in lakes of Irish milk. The response of the government has been just to pretend its not a problem – they use dubious stats to argue that commercial forestry off-sets it, and then changes the discussion to all the wind farms being built. You’ll find examples in nearly every country.
But on the flip side, the positive thing about Trump pulling the US out of Paris is that it widens awareness of the Accord and strengthens the had of civic groups all around the world to hold their own politicians to account. Its interesting now that in both China and India it is seen a source of national pride that they are ‘leading the world’ in renewable energy, etc. The narrative is changing, and its getting harder and harder for governments and companies to follow business as usual, and those outside the US may well have Trump to thank for that. There is nothing that focus the mind more than an obvious enemy, and Trumps almost comical level of bullying is achieving just that.
+PlutoniumKun China & India will do nothing that will be against their interests. The current governments in both countries may not even be around for the time when they would be held accountable for anything due to the Paris deal.
However, in both the countries there is a lot of pubic awareness about pollution and there is a demand from the public to do something. (Read about pollution in Bejiing and New Delhi for instance) So, both the governments were more than happy to oblige. Its just a political statement for them – just as much as it is JUST a political statement for Trumps to pull from the Accord. Although, on the plus side they may end-up with some nice extra $$ for nothing from the western countries.
The sincerity of China and India in fighting anything related to climate is as credible as the economic numbers coming out of those countries.
Exactly. It’s much easier to be green if your economy is based on exporting money (i.e. banking) than if it’s based on exporting oil.
The irony is the bankers want to make the oil exporters pay yet they depend on the black gold.
It’s all about making someone else pay for your mess.
Exporting coal looks to be a loser in even the medium term. You can’t sell what nobody’s buying, which appears to be the direction China and India are heading.
Areas like Australia, which export resources and import finished goods, used to be considered colonies. At best they depend on cheap labor and the strong economies of their patron/owners. The US south did that when it could exploit slave labor. Are we looking to that as our new model?
It’s an Indian company, Adani, that wants to open up one massive new mine. Because our coal is better than theirs. About half the volume and 2/3 of the value of Australia’s coal exports are metallurgical grade (coking), for use in steel making, and India has effectively none of that. Even our thermal coal is better quality than most sources. Most coal exports go to Japan, China, Korea, Taiwan, and India. Japan is the largest consumer of coal in Asia. Our impoverished neighbour Indonesia exports only a bit less than we do.
This 2016 US government report predicts essentially flat global coal use through 2040. Coal isn’t going away until something cheaper replaces it for energy generation, and the world agrees to stop turning iron ore into steel.
…then what accounts for California? It has fossil fuel resources to sell, but leads the nation in auto fuel efficiency, air quality controls, and conversion to renewable energy and efficient use of resources.
It’s current governor has said he will continue the Paris accord policies and just finished meeting with China on improving renewable technology transfer and carbon reduction.
Car pollution got so bad in Los Angeles that California was choked and strangled into beginning to think and do efficiency. Also, did California pump as much oil as California was using? If not, then California had to buy the difference. That would have given California a stone-cold “mercantilist” type of incentive to lower its oil use. And yet parts of SoCal still (from what I read) have such a car culture that several million SoCalians find themselves sacrificing 1-2 hours a day each way in rush hour stop-and-creep traffic. Perhaps that will finally disgust them into even more efficiency. Especially building new train systems all over and around Greatest Los Angeles and feeder lines taking people to and from all the suburbs and satellite cities a little further out from L A and also San Diego maybe.
By the way, I read somewhere that California stabilized and froze its electricity-consumption-per-capita in the 1970s. Its electro consumption per capita has stayed the same from then to now as the per capita consumption in the other 49 states kept rising. Supposedly California uses half the electricity per capita as the rest of the country. How did they do that? Several years ago Newsweek Magazine put out a special issue about How California Diddit. But I don’t remember when that was.
IMO, what we are seeing is just the natural unfolding of events. The US got too big for its britches and is getting right sized.
With 5% of the world population, it consumes many times that weight in natural resources and energy. The rest of the world is gradually taking a bigger share while the US will probably keep on seeing a declining percentage.
Therefore, it is in the best interest of America to decrease its consumption of energy and natural resources or to increase its efficiency in everything it does, accord or not.
These accords maybe show goodwill, or a step in the right direction but I have trouble believing that we can control climate change with top-down measures based on dollar amounts shared between countries that have such huge economic discrepancies.
It’s perhaps less about controlling climate change than blunting the impact. We have passed a mark of no return, but we can soften the landing and we can help people on fixed/limited incomes live in more energy efficient and comfortable spaces so the hotter summers and colder winters hurt them less financially. We can move people out of the areas that we already know are going to be more flood prone. We can start planning for how we’re going to adjust crop cycles and regions based on weather changes.
We can soften the landing if some of us weren’t so obsessed with giving tax cuts to wealthy individuals and corporations.
Americans are so obsessed with paying as little taxes as possible and yet they want all the government bennies. My solution is to revoke the non profit status of most of these yuuuge outfits and make them pay.
Cap and trade is pure BS. Tax carbon and rebate some $$ to the needy. The others can learn to use less energy.
That is what the Pure Hansen Tax and Dividend is supposed to achieve. Every unit of carbon fuel sold into the market has to pay a carbon fee first. The merchants of carbon then raise the price of their carbon to make back the cost of the carbon fee they had to pay in order to be permitted to sell the carbon. That fee increased price follows the carbon down along every step of the production to consumption chain. The higher price should disincentivize people from buying and using things with a high enough “carbon-fee-added” price.
And then yes, all the fees paid for every unit of carbon sold are then divided evenly and an exactly equal amount paid out to every Legal US Resident. The rich who have money to burn will burn a lot of it buying fee-priced carbon regardless of how high the fee is. Their dividend will end up being less than the fee-price they paid on the carbon they bought. But the exactly same-equal-size dividend paid out to a poor resident will be more money than what the poor person spent on carbon. That is how the the poor are supported to survive on sufficient carbon without having to hire any gatekeepers or credentialed liberal meristocrats to “decide” who “deserves” a carbon fee dividend check.
Has anyone worked out the figures for “average global per capita consumption of” various things? How much electricity is used around the whole world? What would be the exact average amount of electricity consumed per capita, for example?
Or to make it even simpler, how much electricity is consumed around the whole world? What is 5% of that? If America consumed 5% of that whole world figure and America is 350 million people including the Illegal Aliens, what would each American resident consume per capita of electricity?
Don’t forget that it takes a lot of resources and energy to produce resources and energy as well as consumer goods.
So if the US is net importing hard goods, all the resources and energy consumed in other countries to produce these exports and ship these should actually be added to the American per capita consumption of energy and resources.
Then the developed world would look even more voracious.
You seem to ignore “renewable” in your conjectural analysis, and seem confined to a corporate-dependent-sustenance ‘model’ of consumption. Where this ‘model’, seems more about the lopsided power of dependency, than the means to meet sustenance needs. There are alternatives that don’t seem eager to embrace a corporate-dependent-consumer ‘standard of living’, but rather an interdependent quality of life. Not that they should be necessarily mutually exclusive, but it may be beneficial to at least make an effort to recognize the underlying class dynamics.
You may have noticed a BBC link in the post–>”Nicaragua’s reason for refusing the deal, though, is not because it wanted to burn more fossil fuels, but because the agreement did not go far enough. The country already gets more than half of its energy from renewable resources, and plans to bump that up to 90% by 2020.” …Meaning, they plan to reduce their current 0.71 Metric Tons Carbon Dioxide Emissions Per Person, even more.
http://www.ucsusa.org/global_warming/science_and_impacts/science/each-countrys-share-of-co2.html#.WTxqxjVtmUm
Apparently , Saudi Arabia and Australia are worse transgressors than the US, “per capita”, with Canada not far behind.
“The Axis of Evil”
more like “praxis of hypocrisy” and contempt for the “working class poor”…
Firstly, my point was about today’s consumption and we are currently in a corporate model system.
Secondly, because we are stuck in this system, reduced consumption by some just gives more access to resource and energy consumption to others.
Firstly, TINA is a hoax and there are always alternatives, and who is the “we” you refer to?
Secondly, and again, you ignore “renewable”, and again, who is this “we”?
And would you blame “America” for that? Americans did not ask to have all their factories and jobs shipped out to enemy economies. The Class Enemy Occupation BizNazi DC FedRegime Lords . . . . anti-human cancers-come-to-life like Bill Clinton and so forth . . . made that choice and forced it on us.
If we brought all our production back here, then we could be responsible for all our own pollution and consumption. If we protectionized our economy so as to rigidly exclude imports from all the Pollution Paradises and Slavery Havens of the world, then we would be able to increase our efficiency of production and consumption here at home.
But it has to begin with Trade Rejectionism. Without Rejectionism, NOTHing can happen. Ever. Ever.
I believe the intro version of pollution controls is not quite correct. In my recollection European imports once had to be retrofitted to meet stricter US emissions standards–which had been opposed by Detroit to be sure–and as we’ve seen with Volkswagen even now they have been cheating on the US standards. And despite the longstanding presence of the Volkswagen beetle, it was really the Japanese who led the way to widespread US adoption of smaller cars by producing inexpensive small cars of high quality.
I recall that as well. Many of the small-car European imports of the 70s and 80s were considered junk–VW’s Rabbit and Renault’s LeCar for example which didn’t make much of a dent in the Japanese imports or for that matter in the domestic small cars being introduced at that time. Europeans then turned to the US luxury market instead.
Yes, those were junk. But consider the Honda Civic. The first one I ever saw, in 1981, delivered an astonishing 40 mpg. The Datsuns from the 1970’s were quite fuel efficient. I remember the big wigs in Detroit saying something to the effect that Americans didn’t want to drive small cars. The next thirty-something years proved them to be exactly wrong. I see Trump exhibiting the same behavior as these discredited auto-crats. In both cases, the world will forge ahead and leave us behind to play catch-up.
I’m not an expert on the topic, but I think its true to say that in the US emission standards tend to have been historically higher than with European cars, but European regulations focus much more on fuel economy and safety. The difference in fuel use between typical European and US cars is quite striking. This is reflected in the way that companies like Ford have tended to develop their big vehicles in the US, and their compacts in Europe. But I am pretty sure that its true to say that once the initial cycle of tight regulation in the US waned in the 1990’s, it was mostly Europe that led the way in tightening, so cars wanting to sell there (including of course Japanese and Korean brands) had to work much harder on fuel economy.
I think there is also the issue that very cheap gas from the 1990’s encouraged US car companies to focus on very profitable trucks and SUV’s rather than invest in better engines, lighter construction techniques, etc. High taxes elsewhere meant there was constant pressure in Europe and Asia to keep fuel consumption low, leading to overall better designed and constructed cars.
This talk about cars goes to show a point… where do we start when it comes to being green?
Should we increase fuel efficiency or reduce the number of cars on the road? Should we increase investment on public transportation?
All these decisions would impact housing and infra. We are so far from being green it’s ridiculous.
If our efficiencies just permit us to keep the status quo, what’s the use? If my energy conservation practices make it possible for others to keep on entertaining wasteful practices/leisures, what’s the use?
Well, it clearly has to be both. Unfortunately, we’ve engineered cities over the last 70 years or so for the automobile, and that can’t be reversed overnight. But there are plenty of good examples, from Copenhagen to Curitiba, where its been shown that with fairly modest investments people can be given a real alternative. I haven’t owned a car in nearly 20 years (although I had a small camper van for a few years), but I still need to rent frequently, as there are so many things you can only do with a car.
So it has to go hand in hand with more fuel efficient cars and EV’s. Its frustrating that the technology to vastly decrease the impact of cars has been available for years, but there have been too many obstacles put up to implementing them properly.
‘We’ve engineered cities over the last 70 years or so for the automobile.‘
As the curmudgeonly James Howard Kunstler never tires of pointing out, WE’RE STILL DOING IT. “The nation is poised at the rim of a financial clusterf*ck that will make the fall of the Roman Empire look like a small business bankruptcy,” he cried yesterday.
In parts of the western US, 19th century railroads were awarded with 12 square miles of land per track mile completed, in a checkerboard pattern which endures to this day. These privately-owned square miles got developed first.
Check out the map of Prescott AZ in this link. It’s an urban area of around 100,000 that — thanks to the embedded checkerboard of state trust lands — sprawls over hundreds of square miles. Densely-packed suburban subdivisions alternate with empty squares of grassland grazed by cattle and pronghorn antelope. Some houses are miles away from a food store.
Cuckoo … cuckoo … cuckoo … and now the Californicators are pouring in. :-0
After enough years of saying the exact same thing way after way after way, Kunstler begins to sound like a One Schtick Phony.
Amen to the Kunstler reply.
If your energy practices become so efficient that you can “air-gap” yourself from the energy grids, then you don’t have to worry about supporting or helping the stupid slob consumers who will eventually consume their way past the biggest grid capacity ever imagined.
They won’t be able to reach out and touch you. That’s whats in it for you.
I stated fuel economy, which has an impact on total emissions, not the emissions controls directly. You drive a huge heavy car even with better emissions controls and you are still emitting a lot greenhouse gasses compared to driving a fuel efficient car. Remember, a lot of greenhouse gas emission takes place at the wellhead, like flaring gas, and in transporting it, which isn’t factored into the emissions made by cars but ought to be.
Well…
Boiled down to its basic elements, the author’s thesis seems to be 1) non-binding, aspirational, 2) state and local government is taking action anyways and 3) the economics of renewables have turned the corner such that they’ll displace petroleum, so 4) withdrawal doesn’t matter. Except 5) it does because we’ll miss out on the new, green economy.
Incoherent as the argument is, I think there’s some truth to it. But it’s not because we pull out of the UNFCCC wank-fest. And it’s certainly not because doing so in itself puts US industry at some disadvantage.
It’s because withdrawal signals an ideology very hostile to the agreement’s goals.
The agreement was only ever useful insofar as it brought together nations acting in good faith to share best practices and urge each other on. As MoiAussie points out, plenty of signatories will act in bad faith.
We’re not among them. Now, we won’t even pretend to try.
The real loss is the US government’s unwillingness to fund clean energy, vice, say, a 350 ship navy and $200M JSFs. That’s ever where our comparatively rich government has it’s advantage: in investing in the most expensive research out there, beyond the capacity of corporations and too far from commercialization to be of interest. The space program, the internet…
Commercially viable renewables are taking off. It’s great to see, and given our historic inability to predict the consequences of geometric growth, one hopes for the best. But it may be to late to avert a lot of suffering, displacement and extinction.
We need more effective technology than that which is on the table now. The government could develop that technology, and hand it off to industry to commercialize, were it committed. It could also create the infrastructure needed to field extant technology.
Imagine what we could accomplish, for example, with a federal government willing to put in a hydrogen infrastructure on its tab. Ike built the interstates, after all – he didn’t wait for logistics firms to do it. What if we could capture and sequester carbon directly from the atmosphere at scale? What if we were willing to tear down our old, dangerous reactors, and replace them at a multiple with pebble reactors, on the public dime, and thus without self defeating and artificial economic calculations?
It’s possible, and there are nations headed in that direction. Sad that they are too small to reverse the tide…
It’s always about doing more with less, when it should be do less. How will it ever be possible to use less energy, with a gargantuan mountain of debt sucking interest payments so that everyone has to enter the rat race to make those payments? The rat race itself is the problem, generating bullshit jawb after bullshit jawb, doing really pointless work.
How about a jawb guarantee? Your jawb is to do nothing. To get the economists on board, they can have the jawb of figuring out what the optimum living standards can be for a comfortable low energy life. Then pay people to live it. Could even be a market with transferable rights.
The future is clear. Your job is to read ads on your Farcebook feed, consume, and recommend products to your downstream network. You will get freebies, specials, and small commissions, unless you are sufficiently charismatic and sociopathic to make big bucks. You will be praised and feel like a useful member of society, and tell others that you are a supply chain optimisation executive.
Most renewable fuels are not commercially viable without subsidies. Ethanol requires an amount of fossil fuel and fertilizer to grow the crops used as a feed stock, Which should be subtracted from the energy yield of the resulting fuel to calculate the actual energy yield. Never mind that a carrier group cannot run on a fuel that is both very volitile and has such a low energy density.
Hydrogen is merely an energy storage medium, that rarely occurs naturally, Hydrogen typically is made from natural gas at a cost in energy that cannot be recouped. Natural gas is more stable, safer and much easier to store, not requiring special materials and techniques as hydrogen does.
Building a hydrogen infrastructure would be a giant waste of effort and expense. We’d be better off using our existing hydrocarbon distribution infrastructure in a more environmental way. Like on hybrids and fuel cells.
I think more solar and wind would be great but the North American wind industry has some design issues to deal with. Transmission-less designs are the best solution but we are stuck in some sort of patent boondoggle that is keeping that technology out of the US
I’m mystified by your response. You point out some challenges, all of which can be overcome. As I pointed out,we need better technology than what’s on the table.
Most people recognize that money spent on R&D developing that technology would be a far more valuable investment than, say upgrading our nuclear strike capability.
I’m simply pointing out that pulling out of the Paris Agreement is only a symptom. Of the problem, not the problem itself.
All things in perspective.
With all due respect, your reply is a handwave. “Magic technology will solve all.” Sorry, that’s not the case.
I spent a chunk of my earlier life evaluating tech deals. Despite having promising-seeming advances (and I wouldn’t have been brought in to evaluate them if they didn’t pass geek muster) I nixed them all, correctly, it turns out.
Why? The promoters inevitably did at least one of several things:
Most never became viable businesses. The only one that did took ten years longer than the founders forecast.
To your point, for instance, thorium reactors are a pretty clean energy source. They won’t be implemented on any scale for at least 20 years.
Moreover, moving to lower greeenhouse gas tech involves much bigger offsets than you acknowledge. New infrastructure like light rail has high energy costs. Hybrid or electrical cars use environmentally nasty rare earths. Redoing cities to get rid of suburbs and have denser living would have ginormous up front energy costs.
The only way to make real progress fast is conservation. There is a ton of low hanging fruit but people would also need to embrace large lifestyle changes, like radically reducing their use of cars, under heating and cooling their houses, and using computers less. Any other approach is sheer fantasy.
Yves,
No, that’s not my argument. I merely point out that the Paris Agreement wasn’t going to force the kind of conservation you seek anyways, so all the associated sturm and drang over our pull out is pointless.
If I’ve understood correctly that you take exception with this diagnoses, then I’m sorry, but it is so. While I really don’t want to get into dueling appeals to authority, this is my beat, sad to say.
Will technology solve everything? Like you I’m skeptical. But we’ll certainly not find out when the most scientifically and technologically capable nation in the world refuses to fund R&D because it is busy protecting legacy industries like oil and coal.
What I find most interesting about your response – particularly given the nature of your most outstanding blog – is the restricted lane in which you’re willing to operate. I don’t doubt for a minute that those proposals you refer to weren’t, as you write, viable businesses.
That is, I’m sure you understand, beacause the current petroleum model doesn’t price in externalities. Thus under the logic of crony capitalism building a hydrogen infrastructure is too expensive, but putting Miami Beach and other coastal communities under water by warming the globe and inducing sea level rise isn’t.
I’d suggest the same applies in the case of thorium reactors. If we leave aside the very real challenge of selling nuclear to a skeptical public, the problem isn’t that they are too expensive or insufficiently understood. It’s that we’ve privatized our energy grid and current plant operators want to wring the last dime out of legacy technology.
But how rational is that? How much would Japan or Ukraine pay to replace Fukushima and Chernobyl if they had a time machine? How much should we be willing to spend right now to replace aging plants with newer and inherently safer technology?
How about to replace coal plants?
How about a national solar program aiming to cover every rooftop?
We should do it. With public money if it doesn’t “pencil out.” We managed the space program without confirming an NVP… because back then we knew that economics doesn’t have all the answers. I for one would prefer a national renewable push to more aircraft carriers or upgrading our nuclear deterrent.
And no, respectfully, to acknowledge the potential that such policies have in mitigating climate change is not the same as imagining the problem magically solved.
It is, in my opinion, far more realistic than imagining that conservation will happen at all, let alone on a scale to affect actual mitigation.
The Paris Agreement was never going to achieve its goals by getting people to turn off their air conditioners, air dry their laundry, and ride bicycles…
All of which I do, BTW, so please don’t shoot the messenger…
You are now engaging in bad faith argumentation. That is a violation of our written site Policies.
First, you straw manned my position. I have never said the Paris Accords would lead to conservation. I clearly said that conservation was the only way we might limit climate change in the time frame in which it is necessary to take action
Second, you also straw man my statement about technology adoption. The reason the business failed or were very slow to get adopted was the dogs would not eat the dog food. Consumer or businesses weren’t willing to make the changes needed to adopt the new technology. These were as much behavioral changes or changes in how they did business.
Third, this statement was a handwave:
And your comments on a solar panel on every roof as the solution is still an handwave. Many homes aren’t in locations where they get enough sun. Solar requires either that homes have batteries (assuming they generate enough surplus power during peak times to be self sufficient all the time) or be attached to the grid. Rich people are making those investments and detaching from the grid, increasing cost for the middle class and poor. And solar panels are no solution whatsoever for the most energy-efficient housing, apartment buildings. And it does not solve the transportation problem either.
Fourth, in other respects, you’ve changed your position without acknowledging it, another form of bad faith argumentation.
And finally, you are condescending, which is a tell of bad faith.
clarky90,
he’s wealthy, went to yale and has never had a real job
So the only ones who should have a say in environmental policy should be poor and uneducated?
Why do you presuppose “only”? Why do you conflate “poor” and “uneducated”?
You need to cut this out. It’s an ad hominem attack and against our written site Policies. Plus in my day 25% of the kids at Harvard were work/study and a lot were merely middle class. You didn’t have to be rich to go to an Ivy when I went.
Can somebody shoot that tired, patronising and resentment driven, “not a REAL job” nonsense?
For a different perspective on Trump and the establishment:
http://www.bostonglobe.com/news/politics/2017/06/09/ground-game-romney-elite-summit-establishment-could-strike-back/wiy2liVGfMpjOieRy9so2L/story.html?s_campaign=weekinpolitics:newsletter
If it is true that the arctic ice cap is now not frozen, but mostly “brown slush”, then it’s too late to prevent big climate swings, and storms of the century happening every other year, coastal flooding, etc. If the earth’s former thermostat fails to work (and the arctic does not freeze again, thereby failing to prevent precipitation in the northern hemispheres) then it really doesn’t matter what we do. It’s already too late. The point here is that the earth itself might be too warm to allow the ice cap to refreeze – so it won’t even matter if the Gulf Stream ceases to exchange warm for cold which has kept the north so temperate. We don’t have a clue what is going to happen next. It almost sounds like a new slushy glaciation that will be mud and flood instead of nice clean glaciers. In which case it will be wise to conserve all our energy resources because we will need them for a very long time. And the major goal will be maintaining the healthiest environment we can.
I agree that it’s already too late to push the toothpaste back into the tube. If all the world suddenly stopped burning petroleum products — this minute — I’m afraid we are already in for an interesting future. Even so we should do what we can not to make things worse.
Trump’s pulling out of the Paris accords signals U.S. abdication of whatever leadership role it may have had in dealing with Global Warming. As in many areas that leadership role was less than might be hoped for but now Trump made it plain. I cannot gauge the impacts of this abdication — but I believe the greatest impacts are outside the Global Warming issue. The U.S. never really was a leader in reducing CO2 emissions. Whatever small remainder of moral authority the U.S. might have mustered is fading.
Sadly, the U.S. stands alone in its ability to put boots-on-the-ground almost anywhere in the world in a relatively short time. Lately that capability has been dedicated to “defense” missions but the Army could as readily bring food and potable water with tools and equipment to areas hit by natural disaster. Global Warming appears ready to create many opportunities to help others.
Maybe I drank too much of the KoolAide but I believe the U.S. might have been able to act as an honest broker in settling disputes of the sort Global Warming appears ready to create. Pakistan and India have nuclear weapons, a long history of enmity, and share together serious problems with future water shortages. It won’t take much increase in sea level before Bangladesh has a problem with flooding. There are already plenty of climate related problems in Africa the Middle East and Indonesia, not to mention many Pacific Islands. The U.S. has shown little leadership in helping to deal with these and other current and soon to be problems. Pulling out of the Paris accords — actually not joining in the accords — tells the world what kind of leadership might be expected from the U.S.
Those who can help should help. So far the U.S. has shown itself most able at making things worse.
That’s also what I wish our military would gear up to do, instead of picking all these wasteful fights.
The military isn’t the institution which picks the fights. It is the civilian political governating elites which pick the fights.
“HanniHill Lecter” Clinton wasn’t in the military when she agitated for toppling Quaddafi. “HanniHill Lecter” Clinton wasn’t in the military when she sought “no fly zones” over Syria in order to create a war situation with Russia.
I’m confused. All we heard from Obama was that nuclear power should be the thing. And I don’t think any of those coal miners had received notifications from the Obama Administration that they were being retrained and/or given new jobs in the solar sector.
In other words, what are you talking about, matey? Things look great on paper, but they are meaningless unless they are done. That was not going to happen in the Obama Administration. So now it’s not going to happen–possibly–in the Trump Administration? So what? American policy is no different than it was 12 months ago–the kowtowing to the now. Jobs now. Don’t take a loss. Don’t do anything with long-term goals only short-term ones.
This is what the American people are demanding: jobs now. Or at the very least, no more job loss now.
That some local and state governments are going to go their own way? They already were. As Trump said in his speech: America has already lowered emissions and become more invested in alternative energies and this has nothing at all to do with the Paris Accords–we are doing them anyway. That states and cities are going to keep doing them? That’s not a change. That’s not a statement on Trump at all.
It’s not Trump, and it’s not the elite oil barons or whatever is the latest boogeyman. It’s the American people, wanting jobs. It’s the ability of government to take broad-based steps like Eisenhower did, like FDR did, like even LBJ did.
That’s not possible now in America. Trump sees that. So he’s trying to make something happen within the constraints of this way that America is at this time. Will it fail? Maybe. Possibly probably. But you don’t know that. And neither does anyone really.
While autocratic governments like China and Russia etc. and the much more in-touch with people European governments can make the broad-based investments in alternative energies, America is not set up that way at this point.
At least Trump is doing something. Again, is it the right thing? From here, it looks like the only thing that will float in America right now given the way things are with the American people and the representatives that those people have elected.
Busting on Trump? That’s a losing move. It’s also a misguided move. We all know that China can order all of their people to do what they think is best (and that happens to be solar at this moment in time; it could just as easily be something in the other direction tomorrow if there were a regime change).
And that makes China better? Um, ok. Ever hear of democracy? It’s messy. Unlike China. Who will triumph? Why are we talking in those terms anyway? Why are we wrirting articles that diss Trump instead of actually dissing the American people? Why can’t they be more like China? What Price Democracy?
Yves: There must be a better talking point about the idiocy of US companies in avoiding addressing climate change than your auto industry example. The Big Three have fought mileage standards not because they don’t want to invest in better gas mileage but because they make all of their US profits from over-powered gas guzzlers with giant engines. Ford is a serious player in Europe, and worldwide, with fuel efficient cars. Chrysler is owned by Europeans, though it is true they were well behind the curve for years until they were bought. (But they were never a serious player worldwide so it would be wrong to say they lost global share.) So when you say “Big 3,” I think you really mean GM. It’s different calling out a company as opposed to an entire industry.
Too much global capacity force feeding too much debt on the people perpetuating a car dependent system.
All this energy going into depreciating and environmentally destructive assets…
But, but, but my car gives me freeeeedom!
GM focuses on what you call gas-guzzlers with giant engines because their profit margins are higher on those kinds of vehicles. I believe GM management is/was willing to lose market share and risk diminished total profits because of this management fixation on profit margins. This is a variation of the “deep-thought” that went into GE Neutron Jack’s 15% margins or sell rules which lead to sales of GE divisions failing to make the margin cut.
How does this disprove the point? The Big Three have lost share globally and even had to be rescued (did you miss that part?) due to their refusal to adapt to changing conditions, which included the market moving to lighter cars for environmental reasons and not much for cost (gas was plenty cheap when the Big Three were fighting this battle).
What was bad for the environment was also bad for their business. And cars are a big contributor to pollution, as the example of LA shows. Even now with better emissons standards, the air is visibly clearer in Manhattan on weekends than on weekdays.
The onus is on you to provide a better example.
My point, not well stated, is that there is no longer a Big Three. Chrysler has been owned by Europeans for almost 20 years now and Ford does not fit your profile.
I certainly wasn’t trying to defend the Big 3. I could give you chapter and verse about idiotic management practices at GM and Chrysler. Ford, in my view, is a generally well run company for a traditional auto maker.
Trump’s move is the same as was Reagan’s when Reagan pulled down the Solar Panels President Carter had put on the White House.
American’s & American industry, American’s Power industry did not have to follow Reagan’s lead, but they did. There is a lot of the US that is below the Mason Dixon.
Some have made the observation that Trump doesn’t care about all of the US, but only those who elected him. I personally have never been within 100 yards of anyone wearing a Trump baseball hat.
His ground game and use of his Boeing was excellent. It was even a winning paint scheme.
Starting now: If I had the ear & the money to fly a Missouri School candidate to all the right airports in the US I could get a win. The campaign is on now. Who is running on my side? Franken?, or Warren, or Sanders. The fail is in a completed picture of their Utopia. Closest thing I’ve seen now is the Bank of North Dakota.
Imagine UN Sec. General Antonio Guterres flying around opening UN offices that support through industrial service banking sustainable development holistically?
The competition for the Learjet is the Telephone I used to say. I’d go on to say you needed to know the Person at the end of the phone line.
The way Trump thinks is he saw the US was committed to giving away 2 billion. All the knows is,”don’t pay.”
Since Trump is rude and often a liar, he makes the US and its people into an enemy for others of the world. This is another way of making the US into an enemy. For Allies The US Becomes More of an Enemy.
Trump thinks he can keep the money and make all the enemies in the world.
Luxury Enemies just say bad things about you.
Real enemies slit your throat.
I went to a lecture a couple of months ago by an person who writes on energy issues; an academic. I mentioned that our utility bills have been going up steeply. A typical monthly electric bill for our condo is $150. This is in Silicon Valley; we don’t have air conditioning; it is just some air filters, computers, electric lights, fridge; a few loads of laundry a week. If we use space heaters sparingly in the winter, it goes up to about $230/month. When we first moved here 21 years ago, we turned on the baseboard (electric) heat and the cost that month was so astronomical that we haven’t turned it on since. I had a neighbor who just moved into an assisted living place; in the 26 years she rented here she never turned on the heat; she slept in a sleeping bag.
When I mentioned the high/rising rates, the speaker seemed a bit embarrassed. He said that what they are seeing in California is that the rich are putting in solar systems to avoid the high costs. It used to be that heavy users subsidized the regular users (since it is a tier system). But now the heavy users (who are usually rich) are abandoning the system. Low income users get subsidies. The middle class is now paying for the system, including the massive legacy costs. A lot of middle class people in CA live in condos; it is not impossible to get permission to put up solar panels but it is not easy; I’ve looked into it but the only option would be a shared carport rooftop. Also the more middle class people who manage to opt out, the more the burden for those who remain in the system.
I don’t want to live downwind from a major polluter,and I don’t want anyone else to either, but clarky90’s point about bills being painful is a real one. I’m fine personally; we can afford the bills – but we’re financially comfortable and have no dependents. If the rising utility costs are borne exclusively by middle income people, this is not going to make renewables very popular.
You’ve stumbled onto the one of the big problems with the use of renewable power for CO2 reduction: Rising electricity prices.
Every country that has strongly embraced renewables has seen rising prices, with Germany and Denmark leading the way: https://en.wikipedia.org/wiki/Electricity_pricing#/media/File:Electricity-prices-europe.jpg. The price in Denmark is literally TWICE what you pay in California (a “mere” $0.15/kWh), and nearly 3X the US average ($0.11/kWh).
And in Germany, these ever-climbing prices have resulted in a record number of households having their electricity disconnected: https://ktwop.com/2015/11/18/record-number-of-german-households-have-electricity-disconnected-following-high-prices/. And in London, so many people have turned off their electric heating systems and started burning wood that air pollution is making a serious comeback: http://www.telegraph.co.uk/science/2017/01/24/air-pollution-london-passes-levels-beijingand-wood-burners-making/.
High electricity prices hurt people. And despite proclamations that renewables are cheap, we’re not seeing evidence of it in people’s power bills.
There are many factors that cause rising electricity prices, and the adoption of renewables is only one. It’s hardly surprising that a major switch to renewables brings with it substantial new infrastructure costs that are passed on to consumers. Other factors that drive up prices are asset replacement costs, reductions in government subsidies, and the market prices of coal and gas. Deregulation of markets and profiteering by suppliers is also a common cause of rises. Renewable energy generation can be cheaper than coal or gas, but the lower costs simply aren’t passed on to consumers.
In Denmark, the costs of a long-term investment in new assets are being paid for by consumers and industry. Denmark aspires to have “an invisible transmission network” which brings higher costs for placing transmission cables underground. It’s retail market has been “liberalised”, see below. Danish consumers also pay 25% VAT, one of the highest sales tax rates in the world, and a “research charge” as part of their bills. In 2014. the average wholesale spot price for electricity was a mere .03 Euro per kWh, about 15% of the retail rate. Only 10% of Danish consumers are supplied at regulated prices, the rest are subject to the whims of the free market, and pay handsome premiums if they don’t work hard to find the best deal.
The structure of retail electricity tariffs has changed in many countries to compensate for decreased use of electricity by consumers, in some cases due to adoption of rooftop solar. Tariffs are structured to ensure that halving your use doesn’t halve your bill. Fixed charges for supply can constitute up to 30% of total monthly electricity bills, eg in Finland.
In Australia, electricity prices shot up between 2008 and 2014, not because of strongly embracing renewables, but because electricity generators and distributors gamed the regulatory system by overinvesting in network infrastructure to replace aging assets and created a “gold-plated network”, knowing they could fully pass on these costs to consumers. Another factor was that the retail energy market was opened up to create a layer of rent-seeking intermediaries in between power distributors and consumers. As usual, the neoliberal claims that “a competitive retail market” would drive down retail prices has proved disastrously wrong.
A question: in Australia from 2008 to 2014 when the price of electricity was going up, did Australia’s per-capita use of electricity stay the same, keep going up regardless, or go down?
I’m extremely pleased to have the original writing, the links and the moderated comments each morning to prepare me for my day. There is no better ‘comments’ section in any blog I’ve ever run across. Thanks Yves and Lambert – and everyone at NC.
I think I’m gonna donate some $$ now.
The neo-liberal global economy has led us into the new normal of secular stagnation and even this can only be maintained with record low interest rates and massive liquidity injections from the ECB and BoJ.
Is there a better way for the economy and equality?
There is.
Japan used this to transform an economy in ruins after the Second World War to the second largest economy in the world. The Asian Tigers used it for their success. In all cases it results in low inequality.
They underwent “shock treatment”, neoliberal reforms and they have never been the same since. What they had before was better.
To kick start the Japanese economy the BoJ cleared all the banks of their bad war debts by buying them up with freshly printed money to restore the banks to health.
After 2008, the US banks were restored to health by the FED clearing them of their bad assets.
The ECB has let the Euro-zone banking crisis drag on since 2008 and loaded lots of private debt on to sovereign nations causing sovereign debt crises, and it is not helping at all.
Step 1 – Get the ECB to use its power to clear the banking crises in the Euro-zone with freshly printed money at no cost to tax payers.
The success of the Asian Tigers was due to a policy known as “window guidance” by the Central Bank; this directs bank credit into the important areas of the economy that will ensure it thrives, business and industry. It ensures the bankers don’t go into the normal bubble mode by guiding them away from real estate speculation, financial speculation and focusing on just one area of business without looking at the bigger picture.
Without “window guidance” you can see what the neo-liberal, US and UK, economies have done:
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png
They blow their economies up through misallocation of credit into real estate and financial speculation.
The US had done this in 1929 as well, this time using bank credit to fuel a stock market boom.
Germany doesn’t use “window guidance” but it ensures bank credit caters for the long term needs of business and industry by having 70% of its banks being small, non-profit organisations that are closely tied to the regions they serve. There is no incentive to blow bubbles for short term profits, dividends and bonuses.
Step 2 – Allocate bank credit prudently within the economy and direct it into business and industry.
Successful allocation of bank credit is the secret and Richard Werner has followed Japan from success to
economic basket case, loaded up with government debt in “Princes of the Yen”.
https://www.youtube.com/watch?v=p5Ac7ap_MAY
This also covers the transition of the other very successful Asian economies to the less successful neo-liberal model.
“Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.
Irving Fisher looked into his mistakes and in the 1930s comes up with a theory of debt deflation.
Hyman Minsky carried on with his work and came up with the “Financial instability Hypothesis” in 1974.
Steve Keen carried on with their work and spotted 2008 coming in 2005.
They found out what was wrong with neoclassical economics after its last outing, the corrections were never included in today’s economics.
Many years ago when Alan Greenspan first proposed using monetary policy to control economies, the critics said this was far too broad a brush.
The critics can see the problem of monetary policy without window guidance.
After the dot.com crash Alan Greenspan loosened monetary policy to get the economy going again. The broad brush effect stoked a housing boom.
When he tightened interest rates, to cool down the economy, the broad brush effect burst the housing bubble. The teaser rate mortgages unfortunately introduced enough of a delay so that cause and effect were too far apart to see the consequences of interest rate rises as they were occurring.
The end result 2008.
The stimulus goes into real estate and financial speculation as there is no window guidance.
James Rickards in Currency Wars gives some figures for the loss magnification of complex financial instruments/derivatives in 2008.
Losses from sub-prime – less than $300 billion
With derivative amplification – over $6 trillion
The biggest problem is actually the speculation.
This is very interesting. I’ve often thought that part of our problem is that banks are so timid about lending for anything other than mortgages and auto loans. I’m sure there are valid statistical reasons for that caution, but our economy is so monochromatic at this point.
Private capital is launching restaurant chains, building hotels and rental housing and small businesses are vanishing as they simultaneously lose access to capital and market share to huge players who have supply chain advantages and economies of scale and have the ability to thrive on slim margins.
I’ve pondered the idea of “Baby Feds” at the state level, that would tend to state economies more closely than the regional ones. This is the first I’ve heard of window guidance but it looks to tackle the same issue. It seems like the EU centralizing banking has had a destructive effect as it has hamstrung the member nations.
Thanks for the post.
I know I am going to catch hell for this, but once again we are discussing a topic which no longer bears any discussion. What was man made global warming morphed into anthropogenic climate change, and now simply the environment. Carbon dioxide has simply become another pollutant which never you mind that without adequate levels of CO2 all life on the planet would suddenly die.
Whatever way it is discussed it is talked about not as an issue to be analysed and choices to be made, but as a catechism to be repeated by rote, a religious obligation.
Do not for one moment think I am on the side of people like Trump and his fascist army of the right, they are just as bad but their religion is the almighty dollar and the accumulation of all wealth for a very few hundreds of oligarchs.
What we do have are issues that go WAY beyond the assumptions that man is responsible for the effects in the global temperature we see (or do not see if you believe some of the science that is studiously ignored). There are matters like the fact that we could not begin to feed the current planetary population without pesticides and fertilizers, both of which are chemical byproducts of the vast economy of scale that is modern petroleum. Without the fuel sector of the economy which the new priesthood of the environment demand be phased out there would be almost no economical way to produce these agricultural products, and no, organic farming is quaint and allows some to feel good about spending double or more on their food, but it cannot feed more than 2 billion people at most.
Then there is the consequences of this warming, do you deal with the root causes of the problem assuming you are indeed causing it, or do you instead invest those trillions that will cost in ameliorating some of the worst damages it will cause, like relocating 80% of the global population that lives within 100 miles of a coastline? This is a fact, 80% of all humans are littoral. Some cities are suitable for sea walls which will protect them, but most are not. One thing is certain, there will not be enough economic power to do both, addressing the root problem, and dealing with the immediate consequences.
To me it is clear, no matter the cause of the warming, be it man made or cyclical natural effects, we have choices to make, they all entail great expense and hard work, and they all have casualties. There is no rosy scenario that gets us out from under without historic levels of pain and suffering and expense.
Lastly, common sense says that it is really at it’s base a math problem. Is it too much carbon per person being pumped out? Or is it too many of those carbon footprints which will have to get smaller and smaller as people refuse to cap human population? Because by the very arguments made by the new church of environmental correctness we are required to reduce our overall carbon levels to some nostalgic past level that the most zealous of the priesthood claim was optimal, never mind that it is also the lowest level in the geological record. What they have done is made it into a zero sum game, a total amount of carbon in the atmosphere which must be divided by the total number of people alive, bingo that is your share of carbon footprint. Welcome to the stone age, because the last time man put out a per capita carbon level like the one you will be allowed proto humans were chipping flint off of larger rocks.
Now, prove me right, start screaming heresy rather than discussing the real ramifications of warming, and the choices that WILL have to be made.
Speaking of Dogma, one particular bit of fossil fuel industry propaganda that never fails to get under my skin is equating CO2 emissions to technological advancement, as if fossil fuels are the only thing keeping us out of the stone age. In fact, clinging to fossil fuels is what is dragging us back technologically. They are a declining resource and we should have been moving to new energy sources decades ago. For example, Molten Salt reactors, a design that avoids most of the safety and disposal issues of other designs. Oak Ridge Laboratory had a working prototype 30 years ago, but it was never pursued because the purpose of the nuclear industry in the US to produce weapons, not safe and clean power.
Technological advancement, at least so far, has directly correlated with energy output, but that doesn’t mean we should let representatives of the 21st century equivalent of the buggy-whip industry get away with presenting themselves as the only ones keeping us out of the stone age.
That buggy whip industry as you call it also produces the fertilizers, pesticides, and herbicides without which we would be lucky to keep 3 billion people alive, and even if we could food would be the largest expenditure in your monthly budget. You might not like the idea of the petrochemical industry, what’s to like about it? But, it is a necessary evil that requires the economic scale provided by the motor fuel side of oil. All the windmills and all the solar panels will not help grow one bushel of wheat or one grain of rice. Thorium reactors are not economically viable, they work in the lab, they do not work in the economy and that has nothing to do with conspiracy theories.
Molten Salt Breeder Reactors (MSBR’s) have as a byproduct uranium 233, it is easier to make bombs out of this than plutonium and poses serious waste removal problems. Google the pros and cons of MSRBs before you ask why we are not using them.
I do appreciate though that you were able to comment without directly implying I am less than a thoughtful, well educated, intelligent man. I would LOVE to see a solution to the energy problems, the climate issues so far as we can do anything about that, and I especially would like to see energy costs for the average human drop. I am pretty sure it CAN be done, but we have to get past the hysteria about human destruction of the planet as if just by existing we are both unnatural and a pox on the world. More than that, I am tired of it, aside from flatly unproductive it thwarts any REAL hope of a solution because you have two camps that are pretty much the same as the Germans and the allies in WWI, trench warfare with static lines of defense and a LOT of casualties, but no end to it.
I live in Ireland, this nation has the most bizarre attitude about energy on the planet in my opinion. They have spent billions (in a nation with a population half that of Ohio about the same area) to install electric meters that measure use from 8 in the morning till 10 or 11 at night depending on summer or not summer, and night use from about 10/11 till 7 or 8 in the morning. This had NOTHING to do with the environment though it is sold that way now, it was because they did not have enough generating capacity to meet day peak demands and had massive excess at night. Big industrial nations give large scale smelters like Alcoa very cheap power at night when generation is not otherwise demanded. So in the US they get dirt cheap power by doing the heavy load industrial work during off peak hours. Not so in Ireland. Here they came up with a Rube Goldbergesque system of residential storage systems that collectively cost the consumer billions more to install and ENDLESS pains in the butt to maintain, like storage hot water heaters, storage radiant room heaters. I have NEVER figured out how to actually use these, for one thing when you set a heater to draw power only at night which heats a fluid that is stored hot till you require the heat during the next day, well my crystal ball must not be as good as yours, I do not know if I will want that stored heat the next day. And the storage hot water heater is a totsal and complete bust. It assumes all your hot water needs will be in the morning when you rise, but the power input overnight only raises the temperature of the water to lukewarm at best. Then you have to go to the closet and engage the BOOST dial. Ah, but there is no temperature control. It brings the water to about 180 F which can scald you in less than a second. They do that so that you have a decent temp water by adding cold to it, but the hot is so hot you can mix a lot of liters before the hot water is all gone. It is a hyper insulated 15 gallon tank. It also means you do not have the modern convenience of hot water upon demand. This is the future the eco terror types want to bring us.
How did they get consumers to swallow all this inconvenience and expense to install and maintain? Simple, the power generation was state owned, they had no competition and so could set rates at whatever price got the job done. I pay a bit more than 11 cents (euro which is about 12.2 cents today) per kWh during the night rate, and well over 54 cents (euro 60 cents) per kWh day rate. This means any and all day use of electricity is what an American would call PROHIBITIVE and there is 23% VAT on top of that. I go out of my way to use as little power as I can in the day, maybe good for the environment, who knows, but NOT good for the economy.
In fact the total spent on all this storage heating and dual meters and etc. was NO CHEAPER than just building more capacity into the energy grid, which would have had the knock on effect of creating a lot of jobs. They could have gotten the same level of conservation and maybe even more had they just done what is done in America, a progressive rate charge based on kWh used. In the USA I averaged 700 to 900 kWh per month and my average bill was about 60 bucks. Big users paid more and more as they used more and more, and that is the way it SHOULD be. I was warm in winter, cool in summer, and had tastefully accent lighted my decor. Yet I still remained on average below 1,000 kWh per month.
The irony is the wind here is just about as constant as any place I have ever been. Yet when you ask the Irish about why they do not use wind power as most of the EU does they do not want to talk about it, they just do not like windmills. You can pose an argument to them that they would have much lower rates as the winds seem heavier in the day when loads on the grid are higher, but it just annoys them. By the way, my own power bills in the US in Oregon were in fact some of the cheapest in the nation owing to all the basically free power produced by the Columbia River dams built in the depression almost 100 years ago. Sure there are environmental trade offs but there is and always will be with power.
In that sense we can reduce the argument to energy use verses the trade offs that energy requires. I will say that NOT using energy is just not an option. As romantic as it sounds we cannot with 8 billion people go back to the era of whale powered oil lamps. Itself a devastating environmental problem that has as much to do with destabilizing the oceans as any fossil fuel use. And we cannot allow that population to hit 9 or 10 or 11 billion, because it is the collective footprints that are the problem, not the size of the individual footprint. You can cut that footprint by 20% or raise it by 100% will not matter it is so swamped by the scale of the issue when so many billions are involved.
¿¿¿???