It is so easy to attack proposals, especially ones that threaten status quo. And, one could critique our supposedly cheap current electric generation model from a variety of directions, not the least of which would be enrinching a few select people/companies, heavy politically motivated regulation (or lack of it), and lack of real competition. To single out wind generation in this manner without an honest discussion about the shortcomings of status quo and other options seems politically driven, or just narrow-minded.

Perhaps it is too much to ask that people cooperate toward their mutual survival.

In the interim we should be shutting down coal-fired plants or switching them to natural gas. That will do far more to reduce CO2 emissions than populating Texas and the Midwest with wind farms. Obviously natural gas is not the long-run answer as it too emits CO2. But it provides a great “bridge” fuel until that long-run answer is realized.

When I started writing the blog expanding on the letter, I saw that I was going to have about 8 pages, way to long for a blog, so I went back to go and started over again.

In my original, I commented about how my experience in the electric industry has always been a trade off between reliability and cost, trying to get the lest costly way of achieving the best reliability. This project is not the least costly way of achieving reduced CO2 emissions.

I also wrote that we have been studying climate change since 1800. But those 200 year old studies of climate change dealt with glaciations and the ice age. We still don’t have a consensus on what causes the accumulation of glaciers and then their retreat. I don’t see how we got to the “consensus” on GHG in 20 years when we couldn’t get to one on glaciations in 200 years. I think at least some of the issue is boondoggles.

The most important green house gas is H20. But we don’t hear people clamoring about what to do about glaciation or H20.

My view is that glaciation is a form of lake effect snow. I even included it in a presentation at the USAEE conference in Calgary in October 2010. When the Arctic Ocean melts, it will form the long sought Northwest Passage, but not just for ships but also for the Gulf Stream to go past Greenland, through the Arctic Ocean, and then out the Bering Strait. The accumulation of snow will lower the ocean level until there Northwest Passage is going dry and freezes over for decades. At least that is my scenario. What are the scientists working on the issue of the glacial cycle? Or what to do about H20 GHG?

I also worry about the physics of intermittent resources. We need to put into place prices that appropriately price those intermittencies, rewarding those that help the system and punishing those that hurt the system. You might be interested in the article I submitted recently to IAEE on that subject.

I have one major comment about policies to mitigate climate change due to emissions from the energy sector, and another about who should pay the costs of mitigation. Iconclude with a note on the carbon emissions pricing scheme passed recently by the Australian Government.

First, according to majority of the relevant scientists we face climate change that could well be catastrophic if a business-as-usual scenario is permitted to continue. See references cited here, and in particular the book and website maintained by the economist Frank Ackerman. This is despite a campaign of disinformation by so-called ‘climate sceptics’. In this regard see the important comment by William Nordhaus in the March issue of the NYRB.

The energy sector has an obligation to future generations to mitigate climate change due to its emissions. But that won’t happen if we rely on altruism. It requires policies that are cost-effective in meeting the necessary emission reductions. For the vast majority of energy economists this means putting a sufficient price on emissions, whether by means of taxes or through a system of tradable permits. Manifestly, this has not been done in the U.S. where (for example) it is an alarming criterion of electability for Republican Presidential aspirants that they reject the climate science.

This being the case, the question of second and nth best policies of necessity arises, including for levels of government below the Federal level that ideally is responsible but in fact is shirking that responsibility.

Total reliance on renewables to abate emissions is bad policy because it strays from cost-effectiveness. In turn, cost-effectiveness is important not least because it impacts on maximising political acceptability, which becomes progressively more indispensable as adequate emission targets cut in.

Special assistance to high-cost, locally manufactured renewables is even worse and can indeed amount to boondoggle. Nonetheless, despite its reliance on cost-effective correction of market failure, emission pricing is not being implemented. Hence, while still arguing strongly for emission pricing, second best and less cost-effective options must be on the table—at least for those who want to address the problem. And despite arguments elsewhere presented by Nordhaus, the need for international action is urgent, and with the U.S. is a major participant

Whether or not cost-effective and rational policies are implemented there will be winners and losers.

In this context the question of legislated or regulated compensation to losers arises. For those corporations that have invested in climate change denial (like Exxon) it is hard to be sympathetic. Regulations against the cigarette companies and asbestos have not been too hung up about issues of compensation to those companies. Because of their contemptible actions over many decades there would have been no public ‘sympathy’ for any such compensation. The continuity between the maltreatment of ‘science’ in climate change denial and in tobacco industry has been well documented by Oreskes and Conway in their 2010 book Merchants of Doubt.

In other words, the struggle for a respectable climate change policy is about humanitarian values but it cannot be genteel. For the vested interests, and for the so-called ‘sceptics’ and ‘merchants of doubt’ the issue is being treated as analogous to war, where truth is the first casualty. That fact of life must also be recognised by proponents of policy action who accept both the science and their civic obligations. In war there will be losers.

In Australia the Federal Government in November 2011 passed legislation on CO2 pricing in transition to a system of internationally tradable permits and directed to markedly reducing emissions by 2020. This was done in conjunction with policies of compensation that have been widely discussed and transparent. Special assistance programs to high-cost renewables are simultaneously being phased out in consequence, in some cases recognising unsupportable levels of subsidy to technologies that are recognised as (for now) distant from cost-effectiveness. These latter (to use Ackerman’s terminology), have been recognised as ‘magic bullets that have failed to reach the target’. However, it would be anticipated that the pricing of CO2 at these levels would significantly encourage technologies such as wind-power and the replacement of coal-fired electricity generation by gas-fired combined cycle gas turbines (CCGTs).