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July 17, 2008

Responding to Al Gore's Clean Energy Challenge

Al Gore has put forward an energy challenge, which has very few details. The challenge is for the United States to get to zero carbon electricity generation within 10 years. Al Gore also spoke with Katie Couric of CBS News about his challenge

His primary policy recommendation related to this goal is to cut the payroll tax and replace it with carbon taxes to motivate the change.

Federal payroll tax $713 billion in 2003. 71% was Social security. 21% was Medicare

The United States generates 6 billion tons of CO2 each year So a CO2 tax would generate whatever dollars per ton times 6 billion. A $60/ton of CO2 tax would generate $360 billion/year. A complete replacement of all federal payroll tax would be about $120/ton of CO2.

Note: it is not clear if the carbon tax proposed would be against all CO2 which would effect transportation and industry and not just electric generation. Also, if the de-carbonization of electricity was starting to be successful then payroll taxes would have to be re-raised to replace any reduced carbon taxes because you still have to pay for Social security and medicare.

First the choice of the goal
The goal of complete de-carbonizing of United States electrical generation seems like an excessive focus on electrical generation. This is separate from the carbon tax proposal which would make sense. The carbon tax proposal is a good one (just as certain versions of Cap and trade can be made to work as well), it just that if the carbon tax is the only policy the result will be some de-carbonization but not complete de-carbonization and more nuclear power and for quite some time more natural gas power as well as more renewables. [See the next section on the carbon tax effect]


Looking at CO2 sources for the USA. From 2001 DOE sources.

It would seem that a more balanced overall approach which addressed the other segments of transportation, industrial, residential and commercial sources would make more economic sense. The Gore challenge also mostly sidesteps the most pressing issue for Americans which is the price of oil and foreign oil dependence. He also does not address air pollution which this site feels is the most important issue. The proposal would address air pollution as a byproduct of achieving the first goal. Air pollution kills 60,000 Americans per year and (indoor and outdoor) air pollution kills 5 million people per year worldwide. (World Health Organization statistics)


Very little oil is used for electricity (313,000 barrels/day) and only some is used for heating which could be displaced with electricity. However, displacing oil with electricity for heating would be raising the bar on the amount of clean electricity that is needed. However, this site believes it is the better strategy.

This site is all for eliminating coal power for electricity as this would also help reduce pollution from transportation to move over 1 billion tons of coal per year.


The overall sources of US energy which includes all uses transportation, industrial, electricity.


Carbon tax effect
An EIA analysis of the McCain Lieberman climate change bill indicated the effect of a growing cost per ton of carbon from $14-58/ton. The $58 high end would be about half of a complete federal payroll tax replacing carbon tax. Which would still increase natural gas and not eliminate coal by 2030 based on the EIA projection of similar carbon cost increases with a Cap and trade as opposed to carbon tax method. So the de-carbonizing goal would not be achieved although the situation would be improved.



It shows that with no allowance for letting international offsetting of the climate rules, that the economics would drive by 2020 about a 33% reduction in coal usage but an increase in natural gas. There would be substantially more nuclear power and renewable power but even in 2030 there would not be complete elimination of coal and natural gas usage would continue to grow.

So Gore would have to be pushing a far larger carbon tax and other policies to generate his desired effect.

Carbon taxes are described at wikipedia

Oil: According to the EIA, emissions total about 20 pounds of CO2 per gallon of petroleum (2.4 kilograms per litre, 2.4 kg/L), so a tax of $100 per ton of CO2 ($110 per tonne of CO2) would translate to a tax of about $1.00 per gallon ($0.26 per litre). To be precise: Emissions are 19.564 pounds of CO2 per gallon of motor gasoline, 22.384 pounds of CO2 per gallon of diesel fuel, and 21.095 pounds of CO2 per gallon of jet fuel (2344.3 g CO2 per L of motor gasoline, 2682.2 g CO2 per L of diesel fuel, and 2527.7 g CO2 per L of jet fuel). So a tax of $100 per ton of CO2 translates to a tax of $0.978 per gallon of motor gasoline, $1.119 per gallon of diesel fuel, and $1.055 per gallon of jet fuel ($0.258 per litre of motor gasoline, $0.296 per litre of diesel fuel, and $0.279 per litre of jet fuel). At a price between $2.50 and $5.00 per gallon, a tax of $100 per ton of CO2 would raise fuel prices by 40–20%.

Natural Gas: A tax of $100 per ton of CO2 translates to a tax of $6.03 per thousand cubic feet of natural gas. At a price of between $4 and $10 per thousand cubic feet, a tax of $100 per ton of CO2 would raise natural gas prices by 60–150%.

Coal: A tax of $100 per ton of CO2 means a price increase of 500–1,000% depending on the type (512% for lignite, 680% for sub bituminous, 903% for bituminous, and 1039% for anthracite).

Electricity: a tax of $100 per ton of CO2 translates into a tax of $0.05854 per kW·h for natural gas, about $0.0775 per kW·h for petroleum, and between $0.1027 and $0.1137 per kW·h for coal. Current electricity prices are in the neighborhood of $0.08 per kW·h.


Why you could still have coal power even with a high carbon tax ? The coal plants could sequester CO2 to save the carbon tax. They could still make money which exceeds variable costs of efficient existing plants.

Emissions trading systems have differences from carbon taxes. Cap and trade systems allow an overall level of pollution and then put a price on the carbon. Companies and counties that have high costs for reducing carbon can then pay another company or country to reduce who can do it for lower cost.

A high carbon tax that was high enough to put coal plants out of business too soon before replacement power can be built would create power shortage situations.

The carbon tax could make it worth billions to put out underground coal fires. Only if some companies can be made responsible for the coal fires or if credits are given for those who reduce the CO2 levels regardless of source.

Energy Technology Plan
This site has proposed an energy plan with a greater focus on applying better energy technology. The plan is not solely focused on CO2 emissions.

Short term
Efficiency and drilling for regular and enhanced recovery, policy that discourages coal and fossil fuel and encourages nuclear and renewables. Try to reduce fuel usage 2-4% per year and try to increase oil from drilling and biofuels by 3-6% per year.

Accelerate the development and deployment of inflatable electric cars and adapting cars like the $2500 Tata nano to be plug in electric vehicles.

Accelerate the development and deployment of new building technology like Calera cement which removes one ton of CO2 for each ton of cement instead of adding one ton of CO2 to the air. If all cement worldwide were able to use this then instead of adding 2.35 billion tons of CO2/year there would be a removal of 2.35 billion tons.

Encourage the adoption of electric bikes and scooters. China has 80 million and is building 21 million per year. Electric scooters can reach highway speeds and folding e-bikes can be rolled onto public transit.

Build the factory mass producible meltdown proof high temperature nuclear reactors. Accelerate the factory mass producible Hyperion power Uranium hydride reactor. [currently targeting 2012 deployment]

Build the Fuji Molten salt reactor which can use thorium and can burn 99% of the thorium, uranium and plutonium which only leaves 30 year half life material.

Mid Term
Big nuclear buildup and thermoelectric and transmission efficiency Triple nuclear power by 2020 by using new (MIT annular nuclear fuel can increase power by 50% for existing reactors) uprate technology and advanced thermoelectrics and some new plants. (25% of all energy from nuclear instead of 8.2% and 17% less fossil fuel. First reduce coal first - 30,000 deaths from coal air pollution, 60,000 deaths from combined coal [over 13 times all US forces deaths from the current Iraq war] and fossil fuel air pollution in the USA. Plus moving 1.2 billion tons of coal is 40% of freight rail traffic and 10% of diesel fuel usage.) Can get up to six times more nuclear by 2030. Displace all coal and a lot of oil.


Mid-Long Term
Very advanced nuclear fission and nuclear fusion and better renewables (geothermal, wind [kitegen, superconducting wind turbines], solar [concentrated solar in municipal or rural power configurations. My favorite is CoolEarth's solar balloons], genetically modified organisms for biofuel)

Also part of the near term steps, but which would not likely have impact until the mid-term is to fully fund the best nuclear fusion power generation possibilities. Create policies to accelerate research and deployment.


Time to Small Cost to Achieve Large scale chance
Concept Description Scale net energy Net Energy after small success Funded?

Plasma Focus 6 years $1M+ Sales X-scan 80% Y, $1.9m
Focus fusion website
Focus fusion US patent application
Working on a funded experiment with Chile 2006-2010
.

Bussard IEC Fusion 3-5 years $200 million 90% Y, $2m
My intro to Bussard fusion and update on prototype work
.

Tri-alpha Energy aka 8 years $75 million 60% Y, $50m
Colliding Beam fusion aka
Field Reversed Configuration
My review of the academic research before the funded stealth project
.

General Fusion aka 3-6 years $10-30 million 60% Y, $15 m
Magnetized target fusion
Steam generated shock wave into spinning liquid metal
.

Multi-pole Ion beam
version of Bussard IEC 3-5 years $200 million 90% N
FP generation MIX IEC fusion
.

Koloc Spherical Plasma 10 years $25 million 80% N (self)
Attempt to create stable ball lightning plasma balls
In 2004, trying to generate 30-40cm plasma spheres


There should be a Darpa of energy created to fund high risk and high return energy technology.

FURTHER
Gore spoke with Katie Couric and expanded upon his plan. In the interview, he discusses the value or lack thereof of clean coal, nuclear power, and natural gas. For nuclear, Al states that the keeping the current nuclear is OK but that more nuclear power is too expensive and that there are no small reactors. There are small nuclear reactors that are being developed now. High Temperature reactors are in the 200MW range. China is starting production in 2009 and after the first success will step up to mass production.
The United States and other countries have micro and small nuclear reactors designs and pilot projects but have not stepped up to production

The Fuji Molten salt reactor is an excellent small reactor design

Mass production of small reactors allows for cost reductions similar to those from scaling to large sizes. Plus one can place say eight 200 MW modules in one place and use one control center and generate the same power as a 1.6 GW reactor. This is one of the Chinese plans. China also plans to order 100 large AP1000 reactors [1.25-1.7GW] to have built or being built by 2020.

In the comment section of a discussion at Newtalk.org the question of is nuclear power needed to address climate change is addressed by this site.

The question of is nuclear essential is based on some energy decisions and policy going forward. It is only a question of whether more nuclear will be added along with other power additions. Energy policy does not change that fast. so this would only be a meaningful question for projects starting or in early progress in 2010. It is also not much of a meaningful question for China and several other countries they are already committed to nuclear power for other reasons.

Other countries who will be building more power will use nuclear
The EIA forecast is 86 Quad BTU being added to the world 2010-2020.[reference case 2008]
Currently about 480 Quad BTU in use in the world.
The US uses 100 Quad BTU.
China is forecast to add 33.3 Quad BTU. 110GW of hydroelectric being added by China 2010-2020. 50+GW of nuclear power is being added. So about 6 Quad from hydro and 4+ quad from nuclear.
As noted, China is talking about 100 AP1000 (1.25 GW-1.7GW) instead of 40 built or being built by 2020. And the mass production of high temperature reactors.
Russia adding 40GW of nuclear and India and other countries have firm nuclear power plans. So it looks like 10+ quads based on current plans from nuclear.
At the end of 2006 the US had 11.6GW of wind. This had generated 0.258 quads of energy in 2006. So almost one hundred times that amount to displace coal usage. 1TW of wind power. Also, coal used for industrial processes probably could not be displaced by wind. High temperature nuclear reactors could supply the right thermal energy for those industrial processes.
So how much will some OECD countries adjust their mix of 25% of the world new power build ? Will there be an actual programs to shift the already installed power mix in the OECD ?

No Opportunity cost for Nuclear Power
Greenpeace claims that there is an opportunity cost of nuclear power. The choice to develop nuclear power is being made by business and government interests in many countries. Some of those companies such as GE also are major developers of wind power. If wind power would make GE more money then GE would develop more wind power. Many of utilities and companies involved develop a range of power generation sources.

The nuclear industries track record is not as bad as projects cherry picked for high prices and overruns would indicate. Many of recent nuclear construction in China, Japan and south Korea have been on time and budget and the budgets have been far lower than the Florida quote. The Florida quote is also a budget that includes everything including extra grid and not just the power plant. Wind power costs: 1.5 billion euro for 500MW. Which generates the equivalent of 150MW of nuclear. So 15 billion euro to make equivalent of a 1.5GW nuclear reactor.

Cost: The analysis made by the countries and companies investing in nuclear indicates that they believe costs for nuclear are low enough. With accelerating orders and build.

Safety: Externe (swiss) analysis of deaths per TWH for nuclear compare very favorably to other power sources. Especially good compared to coal and oil which remain the dominant energy sources now and in every forecast of actual energy development. So if wind and solar cannot replace all of the coal and oil by X years then nuclear should be developed along side to displace the far more deadly coal and oil. Air pollution (indoor and outdoor) kills 5 million worldwide (World Health Organization).

Deaths from coal are not pleasant. Here is a description of the dam of mountain top removal coal mining sludge breaking in the USA and the London fog deaths

Here is a description of the struggle that two chinese coal miners endured to live when 179 did not. Many of the 179 probably also struggled to live but failed.

Security: No meaningful security breaches have been made. On proliferation : are we going in time to stop Pakistan's Khan from giving Iran and North Korea nuclear secrets?) In terms of terrorist action, there are plenty of targets (hydro dams, water supplies, oil refineries etc...) layers of nuclear plants is sufficient and pro-actively eliminating or reducing terrorism at the source is the more cost effective option (and more effective in general)

Waste: What about the billions of tons of air pollution particulates ? What is the halflife of mercury or arsenic ? How about the twenty thousand tons of uranium and thorium going into the air from burning coal. Did a Greenpeace plan address that in 7 years ? Nuclear can be kept in barrels or pools onsite. Better reactors like molten salt reactors (Japan, Fuji molten salt)or accelerator driven reactors (EU) or high temperature reactors that can burn the waste from current reactors can be developed. Waste which is mostly unburned nuclear fuel. Molten salt reactors were built in the sixties and seventies by the USA so they are not fairy tale reactors. Warren Buffet did not invest in Google or Microsoft either. Warren makes his money where he is comfortable, if he does not invest it does not automatically mean that investment is bad.

Scaling up clean energy faster
The Greenpeace and RMI claims that renewables like solar and wind can be scaled up faster. This has been stated for decades and not been proven to be true. Many billions per year have been spent in Germany, Spain and other places to subsidize wind and solar but in spite of many years of subsidized build up wind is at 194 TWh globally and 50 Twh in Germany. The Global wind energy council forecasts that if Germany has optimal wind friendly policies then Germany could have 55 GW of wind by 2020 generating 150 Twh. Yes France in the 1980s built its 60GW of nuclear power which generate 420 Twh. So the wind and solar build up faster line is bunch of BS. Greenpeace quote RMI and Lovins. Lovins has claimed that nuclear power is a dieing industry since his Foreign Affair article in 1976. Since then global nuclear power has increased by over 400% and is now over 2600 Twh. A lot of the increase was from operational improvements and uprating existing plants (increasing power from existing plants).

Further uprates are possible. MIT has piloted annular fuel which could increase power generation by 50% for existing PWR and there is other work for increasing BWR by 30+%. Westinghouse is working on commercialization. There is still room for standard uprates as well. Applying 50% power uprates would increase nuclear power from 20% now to 30% power generation even if no new plants were built.

China is increasing its nuclear power build. Official target for 2020 now 6086 GWe and discussing have 100 AP1000 reactors built or being built by 2020. (1.25GW-1.7GW sizes). China starting in Sept, 2009 the construction of a 200MW high temperature nuclear reactor which would have 40% thermal efficiency and would be meltdown proof. Meltdown was shown in 10MW pilot reactor when cooling systems were turned off. The high temperature reactors are designed for factory mass production.

Nuclear proliferation: to which countries ? Most countries already have actual weapons or the means to produce them. Canada and many other countries choose not to produce nuclear weapons. Countries have historically gotten nuclear weapons first and then commercial nuclear power. North Korea, nuclear weapons but no commercial nuclear power.

Plus the nuclear build will primarily be in places that already have nuclear weapons and nuclear power.

Business as usual nuclear power is on track to increase 200GW and 1400 Twh by 2020. With an accelerated build effort and with 50% uprating this can go to an increase of 600GW and 5200Twh. Wind, solar, geothermal power should be built up as well but there is no reason to not build up the nuclear power. Plus a lot of the build action will be in China and Asia where Greenpeace sentiment is meaningless.

Supply Chain bottlenecks being removed

Not all nuclear reactors need the big containment dome forgings. Candu reactors don't. Areva, France nuclear/the world's biggest reactor builder, is considering modifying its newest design to be able to make the central reactor-vessel part from a 350-ton ingot instead of more than 500 tons as required today. Russia also makes their own forgings. South Korea's large forging capacity is coming online and is already taking orders. Britain and China are also building up large forging capacity. China is willing to weld two half size forgings together (this was a procedure done earlier in the nuclear industry).

Japan steel can turn out four of the steel forgings that contain the radioactivity in a nuclear reactor. They will double capacity in the next two years. Another alternative is to turn back the technological clock and weld together two smaller forgings, said John Fees, CEO of McDermott International Inc.'s Babcock & Wilcox Co. That technique was used over the past 40 years in the U.S. and France and is still applied in China. China High temp reactors do not need large forgings either. Neither would Hyperion Power Generations Uranium hydride reactors.

Proliferation
Proliferate to which country or group? North Korea already has the tech. Iran has all the know-how and is working on getting the material. Pakistan has the bomb. What is the differential risk? Countries get the bomb first then they get nuclear power. If China has 11 reactors and 300 nuclear bombs or if China has 500 nuclear reactors and 300 nuclear bombs then what is the differential risk? Proliferation already has happened slowly over the last 6 decades. Proliferation has killed no one. No new country that has gotten nuclear weapons has killed anyone with nuclear weapons. Meanwhile over 200 million people have died from air pollution and over 300,000 have died from coal mining. Conventional weapons have killed over 150 million since the end of WW2. Why not concentrate on things that are actually killing people every year in very large numbers instead of theories of greater risk which are not correct. Should not more dangerous or deadly actually kill more people?

Extra
Material usage for wind power and the size of wind turbines

Amory Lovins has not only been wrong for decades about nuclear energy, his current plan for micro-power is 70-80% small diesel generators, coal plants, and natural gas.

Various EIA forecasts of the impact of different past climate change policy proposals.

EIA Kyoto related footnotes

A permit auction system is identical to a carbon tax as long as the marginal abatement reduction cost is known with certainty by the Federal Government. If the target reduction is specified, as in this analysis, then there is one true price, which represents the marginal cost of abatement, and this also becomes the appropriate tax rate. In the face of uncertainty, however, the actual tax rate applied may over- or undershoot the carbon reduction target. Auctioning of the permits by the Federal Government is evaluated in this report. To investigate a system of allocated permits would require an energy and macroeconomic modeling structure with a highly detailed sectoral breakout beyond those represented in the NEMS and DRI models. For a comparison of emissions taxes and marketable permit systems, see R. Perman, Y. Ma, and J. McGilvray, Natural Resources and Environmental Economics (New York, NY: Longman Publishing, 1996), pp. 231-233.


Carbon Tax and International Emissions Trading: A Swiss Perspective

Sweden has had a $100/ton carbon tax since 1991 which was raised to $150/ton but does not apply to electricity generation. Tthis is a link to their current energy profile.

The carbon tax site reviews the carbon tax situation around the world

Finland enacted a carbon tax in 1990, the first country to do so. While originally based only on carbon content, it was subsequently changed to a combination carbon/energy tax (U.S.EPA National Center for Environmental Economics). The current tax is €18.05 per tonne of CO2 (€66.2 per tonne of carbon) or $24.39 per tonne of CO2 ($89.39 per tonne of carbon) in U.S. dollars (using the August 17, 2007 exchange rate of USD 1.00= Euro 0.7405).

Finland's energy profile is here

Finland's electricity

Last year, combined heat and power generation (CHP) covered 29 percent of electricity consumption, nuclear power 25 percent, hydropower 15 percent, and coal and other conventional condensing power 16 percent. The share of wind power was 0.2 percent. Net electricity imports rose by ten percent, now accounting for 14 percent of electricity consumption.

Finland's energy mix



Swedish energy agency discussion of their electricity situation

15 comments:

kurt said...

Perhaps Al Gore and T. Boon Pickens would consider financing the IEC polywell fusion technology if the WB7 experiments should prove successful this fall.

More likely, both of these gentlemen will prefer to mentally masturbate over windmills and solar energy instead, even if the WB7 experiments should be successful.

Anyone here care to take a bet on this?

John said...

Gore is so biased and partisan, I don't see any reason to listen to a word he says.

Gerard said...

The really big question here is: "Why bother in the first place?"

TmjUtah said...

I hope you don't expect to be taken seriously by REAL Global Warming/Energy - Power - Transportation/Climate Change players.

You used all that logic, factual data, and objective analysis stuff.

I bet you aren't even positioned to the hilt to benefit financially from ham handed, confiscatory government tax policies, are you? Huh? ARE YOU?

Didn't think so.

On the other hand, you've written a fabulously thoughtful and useful post, the link for which I will definitely forward to folks I know that are interested in this subject. Great job, sir, and please accept my humble thanks.

Marcel F. Williams said...

Gore said today that he wanted the US to provide all of our
electricity needs within the next 10 years through non-carbon dioxide
polluting systems by:

1. dramatically increasing solar energy production
2. dramatically increasing wind energy production
3. dramatically increasing geothermal
4. the utilization of clean coal
5. while keep nuclear energy production at its current level (20% of
electric power generation in the US)

I don't know, but Gore may be as dumb as McCain on his knowledge on
the energy requirements of this country.

1. Solar power currently represents just 0.1% of our total electricity
production. So even if you increased solar power capacity by-- 10
times-- current capacity over the next decade, solar would still only
produce about 1% of our nations total electricity.

2. Wind currently produces close to 1% of our total electricity
production. So if you increased wind capacity about 10 times over the
next decade, wind would still only produce about 10% of our total
electricity needs.

3. Geothermal produces about 0.3% of our total electricity production.
If you could somehow increase that by 10 times over a decade, that
would represent about 3% of our total electricity needs.

So non-hydroelectric renewables (solar, wind, and geothermal) would
only produce about 14% of our total electricity needs if we
dramatically increased current production by a enormous factor of ten
times current capacity within ten years. Add hydroelectric to that and
21% of our electricity could be produced by renewable energy. This of
course assumes that there will be no significant increase in
electricity demand due to increasing population and economic growth.

Clean coal? Coal produces 100 times as much radioactive waste as
nuclear power per unit of electricity produced and thousands of times
more toxic waste. Trying to capture the carbon dioxide from these
plants will raise electricity prices from coal-- dramatically. And
there is no long term environmentally sound place to put the carbon
dioxide after its captured. Clean coal is a total myth.

Just increasing nuclear capacity by less than-- 5 times-- current
capacity could supply all of our electricity needs plus the off-peak
electricity from nuclear could be used to produce hydrocarbon fuels
that could cut our oil imports by at least 50% . But even I wouldn't
say that this could be done in a mere decade. Additionally, replacing
all of our electricity through carbon neutral systems would only solve
about 40% of our total energy needs.

Both Gore and McCain need to look at the real numbers. This energy and
climate change problem is going to optimistically take at least 30 or
40 years to resolve.

Marcel F. Williams

Michael McNeil said...

A review by farsighted physicist Freeman Dyson appeared last month in the New York Review of Books, which is well worth perusing in its entirety, while an excerpt appears below.

Dyson doesn’t dispute the observable fact that concentrations of carbon dioxide and other “greenhouse” (insulating) gases are rocketing up exponentially in the atmosphere, nor that such a rise is likely to eventually have substantial impacts on our planet. However, he opposes the Kyoto treaty and like simplistically proffered remedies, a la Al Gore, as not at all sensible approachs economically to coping with the problem.  It’s worth considering more closely the astronomical difference in costs in attempting to cope with foreseeable problems of global warming. As Dyson writes (sorry for the length; I quote it to establish essential context):

“William Nordhaus is a professional economist, and his book A Question of Balance: Weighing the Options on Global Warming Policies describes the global-warming problem as an economist sees it. He is not concerned with the science of global warming or with the detailed estimation of the damage that it may do. He assumes that the science and the damage are specified, and he compares the effectiveness of various policies for the allocation of economic resources in response. His conclusions are largely independent of scientific details. He calculates aggregated expenditures and costs and gains. Everything is calculated by running a single computer model which he calls DICE, an acronym for Dynamic Integrated Model of Climate and the Economy.

“Each run of DICE takes as input a particular policy for allocating expenditures year by year. The allocated resources are spent on subsidizing costly technologies — for example, deep underground sequestration of carbon dioxide produced in power stations — that reduce emissions of carbon dioxide, or placing a tax on activities that produce carbon emissions. The climate model part of DICE calculates the effect of the reduced emissions in reducing damage. The output of DICE then tells us the resulting gains and losses of the world economy year by year. Each run begins at the year 2005 and ends either at 2105 or 2205, giving a picture of the effects of a particular policy over the next one or two hundred years.

“The practical unit of economic resources is a trillion inflation-adjusted dollars. An inflation-adjusted dollar means a sum of money, at any future time, with the same purchasing power as a real dollar in 2005. In the following discussion, the word ‘dollar’ will always mean an inflation-adjusted dollar, with a purchasing power that does not vary with time. The difference in outcome between one policy and another is typically several trillion dollars, comparable with the cost of the war in Iraq. This is a game played for high stakes.  […]

“Nordhaus examines five kinds of global-warming policy, with many runs of DICE for each kind. The first kind is business-as-usual, with no restriction of carbon dioxide emissions — in which case, he estimates damages to the environment amounting to some $23 trillion in current dollars by the year 2100. The second kind is the ‘optimal policy,’ judged by Nordhaus to be the most cost-effective, with a worldwide tax on carbon emissions adjusted each year to give the maximum aggregate economic gain as calculated by DICE. The third kind is the Kyoto Protocol, in operation since 2005 with 175 participating countries, imposing fixed limits to the emissions of economically developed countries only. Nordhaus tests various versions of the Kyoto Protocol, with or without the participation of the United States.

“The fourth kind of policy is labeled ‘ambitious’ proposals, with two versions which Nordhaus calls ‘Stern’ and ‘Gore.’ ‘Stern’ is the policy advocated by Sir Nicholas Stern in the Stern Review, an economic analysis of global-warming policy sponsored by the British government. ‘Stern’ imposes draconian limits on emissions, similar to the Kyoto limits but much stronger. ‘Gore’ is a policy advocated by Al Gore, with emissions reduced drastically but gradually, the reductions reaching 90 percent of current levels before the year 2050. The fifth and last kind is called ‘low-cost backstop,’ a policy based on a hypothetical low-cost technology for removing carbon dioxide from the atmosphere, or for producing energy without carbon dioxide emission, assuming that such a technology will become available at some specified future date. According to Nordhaus, this technology might include ‘low-cost solar power, geothermal energy, some nonintrusive climatic engineering, or genetically engineered carbon-eating trees.’

“Since each policy put through DICE is allowed to run for one or two hundred years, its economic effectiveness must be measured by an aggregated sum of gains and losses over the whole duration of the run. The most crucial question facing the policymaker is then how to compare present-day gains and losses with gains and losses a hundred years in the future. That is why Nordhaus chose ‘A Question of Balance’ for his title. If we can save M dollars of damage caused by climate change in the year 2110 by spending one dollar on reducing emissions in the year 2010, how large must M be to make the spending worthwhile? Or, as economists might put it, how much can future losses from climate change be diminished or ‘discounted’ by money invested in reducing emissions now?  […]

“The choice of discount rate for the future is the most important decision for anyone making long-range plans. The discount rate is the assumed annual percentage loss in present value of a future dollar as it moves further into the future. The DICE program allows the discount rate to be chosen arbitrarily, but Nordhaus displays the results only for a discount rate of 4 percent. Here he is following the conventional wisdom of economists. Four percent is a conservative number, based on an average of past experience in good and bad times. Nordhaus is basing his judgment on the assumption that the next hundred years will bring to the world economy a mixture of stagnation and prosperity, with overall average growth continuing at the same rate that we have experienced during the twentieth century. Future costs are discounted because the future world will be richer and better able to afford them. Future benefits are discounted because they will be a diminishing fraction of future wealth.

“When the future costs and benefits are discounted at a rate of 4 percent per year, the aggregated costs and benefits of a climate policy over the entire future are finite. The costs and benefits beyond a hundred years make little difference to the calculated aggregate. Nordhaus therefore takes the aggregate benefit-minus-cost over the entire future as a measure of the net value of the policy. He uses this single number, calculated with the DICE model of the world economy, as a figure of merit to compare one policy with another. To represent the value of a policy by a single number is a gross oversimplification of the real world, but it helps to concentrate our attention on the most important differences between policies.

“Here are the net values of the various policies as calculated by the DICE model. The values are calculated as differences from the business-as-usual model, without any emission controls. A plus value means that the policy is better than business-as-usual, with the reduction of damage due to climate change exceeding the cost of controls. A minus value means that the policy is worse than business-as-usual, with costs exceeding the reduction of damage. The unit of value is $1 trillion, and the values are specified to the nearest trillion.

“The net value of the optimal program, a global carbon tax increasing gradually with time, is plus three — that is, a benefit of some $3 trillion. The Kyoto Protocol has a value of plus one with US participation, zero without US participation. The ‘Stern’ policy has a value of minus fifteen, the ‘Gore’ policy minus twenty-one, and ‘low-cost backstop’ plus seventeen.

“What do these numbers mean? $1 trillion is a difficult unit to visualize. It is easier to think of it as $3,000 for every man, woman, and child in the US population. It is comparable to the annual gross domestic product of India or Brazil. A gain or loss of $1 trillion would be a noticeable but not overwhelming perturbation of the world economy. A gain or loss of $10 trillion would be a major perturbation with unpredictable consequences.

“The main conclusion of the Nordhaus analysis is that the ambitious proposals, ‘Stern’ and ‘Gore,’ are disastrously expensive, the ‘low-cost backstop’ is enormously advantageous if it can be achieved, and the other policies including business-as-usual and Kyoto are only moderately worse than the optimal policy. The practical consequence for global-warming policy is that we should pursue the following objectives in order of priority. (1) Avoid the ambitious proposals. (2) Develop the science and technology for a low-cost backstop. (3) Negotiate an international treaty coming as close as possible to the optimal policy, in case the low-cost backstop fails. (4) Avoid an international treaty making the Kyoto Protocol policy permanent. These objectives are valid for economic reasons, independent of the scientific details of global warming.

“There is a fundamental difference of philosophy between Nordhaus and Sir Nicholas Stern. Chapter 9 of Nordhaus’s book explains the difference, and explains why Stern advocates a policy that Nordhaus considers disastrous. Stern rejects the idea of discounting future costs and benefits when they are compared with present costs and benefits. Nordhaus, following the normal practice of economists and business executives, considers discounting to be necessary for reaching any reasonable balance between present and future. In Stern’s view, discounting is unethical because it discriminates between present and future generations. That is, Stern believes that discounting imposes excessive burdens on future generations. In Nordhaus’s view, discounting is fair because a dollar saved by the present generation becomes fifty-four dollars to be spent by our descendants a hundred years later.

“The practical consequence of the Stern policy would be to slow down the economic growth of China now in order to reduce damage from climate change a hundred years later. Several generations of Chinese citizens would be impoverished to make their descendants only slightly richer. According to Nordhaus, the slowing-down of growth would in the end be far more costly to China than the climatic damage.”
And not just for China.  Notice, according to Freeman Dyson’s review, the stupendous difference in cost various approaches to coping with global warming entail.  As his piece notes, according to reasonable extrapolations of economic growth over the remainder of the century, Al Gore’s suggested remedy would cost the economy (relative to simply doing nothing, i.e., ‘business as usual”) the staggering sum of $21 trillion dollars (‘disastrously expensive,” Dyson characterizes it). Dyson, contrariwise, believes likely and suggests holding out for (one of) the so-called technological ‘low-cost backstop” solution(s), forecast to have an economic benefit of $17 trillion. Difference in economic impact between Al Gore’s and Dyson’s recommended approach:  38 trillion (2005) dollars.

Updating Sen. Everett Dirkson’s familiar (but perhaps apocryphal) adage: a trillion here, a trillion there — pretty soon we’re talking about really gargantuan sums of money.

What does Dyson think is likely to be most effective as a technological “low-cost backstop” in warding off global warming?

“The science and technology of genetic engineering are not yet ripe for large-scale use. We do not understand the language of the genome well enough to read and write it fluently. But the science is advancing rapidly, and the technology of reading and writing genomes is advancing even more rapidly. I consider it likely that we shall have “genetically engineered carbon-eating trees” within twenty years, and almost certainly within fifty years.

“Carbon-eating trees could convert most of the carbon that they absorb from the atmosphere into some chemically stable form and bury it underground. Or they could convert the carbon into liquid fuels and other useful chemicals. Biotechnology is enormously powerful, capable of burying or transforming any molecule of carbon dioxide that comes into its grasp. Keeling’s wiggles prove that a big fraction of the carbon dioxide in the atmosphere comes within the grasp of biotechnology every decade. If one quarter of the world’s forests were replanted with carbon-eating varieties of the same species, the forests would be preserved as ecological resources and as habitats for wildlife, and the carbon dioxide in the atmosphere would be reduced by half in about fifty years.”

Sounds good to me.

Kate Lee said...

The comment that "If wind power would make GE more money then GE would develop more wind power. "

GE has two basic constraints on the amount of wind power equipment the company can manufacture:
1/ the number of manufacturing plants that can build the blades. The company has a huge backlog of orders for this technology and you can believe they'd rather have those units sold now, instead of later!
2/ the status of the tax-credits that incent energy companies to purchase the wind turbines.

If Congress would take a longer-view on the tax credits, say a 5-year renewal instead of the 2-year renewals we've seen in past sessions, manufacturers would invest in more capacity, because there would be a greater likelihood of customers. This is a long-lead-time purchase for wind energy producers (utilities), and the short tax-credit window doesn't get the job done.

Lobby Congress to create a 5-year incentive tax credit, and you'd see much greater acceptance of this technology.

jrandyb said...

Is there any discussion on the cost to the consumer for electricity if you eliminate coal? Currently it is the most inexpensive form electric power generation. Nuclear power is the next lowest cost.

Wind power sounds like it is free, but it is not. A single 2.5 MW wind generator, is expensive to install, and stands nearly 400 ft high, and they require maintenance. Currently wind power is only feasible with generous tax credits to the power companies.

Solar is still very expense and would likely never provide a return on investment, before it needs replacement or major maintenance. It is likely not a viable source of electricity.

And the big question that has not been answered... There is no proven connection between CO2 and global warming, and trying to alter the climate by reducing CO2 is a futile exercise. CO2 represents 0.00038 of atmospheric gases all of which are greenhouse gasses. Our atmosphere in total is our greenhouse which is needed to sustain life on this planet.

Karl Schroeder said...

I'm sure there are many details of this plan that can be critiqued; the main idea, however (of a revenue-neutral tax shift) is pretty mainstream now. In Canada,the Liberal party (no, it doesn't mean "liberal" in the sense used in the US, they're the most MOR mainstream political party in the country) has proposed something very similar. In fact, Stephan Dion, the Liberal leader, has bet his political future on it. You can find out details at http://www.thegreenshift.ca. And it's not their idea originally, either. The British have extensively studied this method, as have others. The biggest problem the Canadian plan faces is that it's merely revenue neutral; the Liberals had an opportunity (since our government runs a surplus and is actively paying down the national debt) to accompany the tax shift with really deep cuts in income tax. That would have brought people on side in droves, but by merely making it "tax neutral" they've opened themselves to salvos of abuse from their political enemies. That is likely to scuttle the plan.

In some tax shift models, by the way, income tax can be entirely eliminated. Think about that for a while...

To say Gore's version of the plan is bad simply because Gore (or any other particular person) proposed it is simply the same blindly partisan knee-jerk reaction we're seeing up here. As I said, specific details can certainly be critiqued, and this site is doing that; what we've learned in Canada is that you really have to sell something like this--but you can, if you accompany the shift with deep tax cuts somewhere where ordinary people will feel the difference.

Karl Schroeder said...

I should add that Germany, for instance, has had such a tax structure for 10 years now, and the Netherlands, Austria, the UK and Portugal are also introducing similar measures (albeit slowly). So when I say it's mainstream I mean it's mainstream.

Red River said...

A doubling in CO2 means a much higher crop yield. Seeing as much of the world's dominant economic output is food, these nations would see a 10-30% increase in food ( economic ) output.

I doubt if that was factored into any equation.

The other question is - is it better to be warmer or colder or the same? Assuming Co2 has a marginal effect on climate - it may not - then it would be better to be warmer for food, energy, and health reasons.

YCSTS said...

The problem with green shift type carbon taxes, they allow manufacturers to collude, and simply pass the costs on to the consumer. The prime example being the collusion to suppress the electric vehicle. What good does it do, taxing gasoline, when manufacturers refuse to offer EV's for sale, no matter how profitable they will be. And then there is Chevron, buying the NiMH battery patent, and refusing to sell the large format NiMH batteries "for transportation or storage applications". See:

EV’s that the Oil / Automotive industry suppressed

The Government had to pay Detroit to build 60-90 mpg full-sized HEVs in the late 90’s, which they easily did, and pocketed most of the cash, without offering the vehicles for sale.

The NiMH battery Pelican Brief, How Chevron Buried the Large Format NiMH battery

Another example is Methanol, Oil Interests are trying to shove their Hydrogen Economy gravy train down our throats, and so are suppressing Methanol, a far superior fuel to Hydrogen. Where are the Methanol filling stations and why don’t we have clean burning, environmentally friendly, 43% efficient Methanol engines in our vehicles, especially in series hybrid EV’s, with 4 times the efficiency of current vehicle propulsion systems. See:

The 43% efficient, extremely low emissions, Methanol engine, with a extraordinarily wide island of high efficiency.

The best way to achieve success is to have energy policy determined by scientists and engineers, selected by national academies, vetted for conflict of interest. And target technologies with the highest potential gain vs investment ratios and those that result in the fastest reductions of Fossil Fuels at the lowest cost. That leaves Wind and Solar way low down on the best options list. Many technologies, such as Nuclear Fusion, take years to develop, and private investment is not going to be sufficient.

djysrv said...

Al Gore's moon shot speech for solar and wind

Good analysis, bad advice

Former vice president Al Gore gave a high profile speech in Washington, DC, on Thursday July 17 in which he called for conversion of all U.S. electricity generation to solar, wind, and other renewable resources within 10 years. In it he compared his goal to that of President John F. Kennedy who called for putting a man on the moon within a decade.

Just about any politician worth his salt knows that making promises that live in the future, especially well beyond the next election, are an easy sell. Gore knows, from experience, that ten years is about the lifetime of any big idea because it is within the grasp of two senate terms and the political lifetime of a two-term president. So it makes sense to package a super size vision inside of a practical time line. That's one of the few things he gets right.

Full details at Idaho Samizdat
http://djysrv.blogspot.com/2008/07/al-gore-moon-shot-speech-for-solar-and.html

Karl Schroeder said...

Cool discussion. Not sure I agree about collusion being a result of carbon taxes, but it's easy to check: some European countries have had carbon taxes for over a decade, including Germany, Finland and Sweden. Their energy mixes are rapidly evolving to low-carbon alternatives, so the tax is at least not negative in its effect. What we need here is a good study of the effect of these taxes, now that they've been around for more than a decade.

Incidentally, there seems to be one glaring omission in your otherwise brilliant energy plan: biochar. Done right, it's carbon-negative energy and some estimates put a global transition to biochar as capable of sequestering 5gt+ per year, so its effect is potentially greater than anything else you've listed, including Calera cement. It's not sexy, but it's important.

M. Simon said...

Uh. Solar scientists think we are headed for a little ice age.

How many solar scientists are on the IPCC? Hint: it is a whole non-negative number less than one.

The longer we put off the transition the better and lower cost the transition will be. We should do solar and wind where it makes sense without subsidies.

Where will the high carbon industries (like steel making) go? China. India.

Europe has a plan to build a LOT of coal fired electrical plants in the next decade. So they are no shining beacon.

America needs to build 150 GW of baseline capacity in the next decade or two to prevent grid overload. That is one nuke plant a month for ten years.

And to tie all of Al's grandiose plans together (solar energy from deserts and wind from the upper Mid West) we are going to need a lot of 2 MV DC transmission lines. There is no such technology currently available.

The #1 problem with this plan is storage. Al doesn't even mention it.

He doesn't explain how he plans to get past the NIMBYs and enviros who oppose large scale solar and wind. Not to mention nukes.

Anti-carbon is popular hysteria.

If we really wanted to solve the carbon "problem" at low cost there is a natural answer: trees.