In Sunday’s New York Times, the reporter, Melanie Warner, (or her editor) poses the question: "Is America ready to give up coal? Describing the situation, Warner writes that:
"With concerns over climate change intensifying, electricity generation from coal, once reliably cheap, looks increasingly expensive in the face of the all-but-certain prospect of regulations that would impose significant costs on companies that emit large amounts of carbon dioxide and other greenhouse gases.
As a result, utilities’ plans for new coal plants are being turned down left and right. In the last two-and-a-half years, plans for 83 plants in the United States have either been voluntarily withdrawn or denied permits by state regulators. The roughly 600 coal-fired power plants in the United States are responsible for almost one-third of the country’s total carbon emissions, but they are distinctly at odds with a growing outlook that embraces clean energy."
The Times piece goes on to discuss the expense of the technology to capture and store carbon and the expense and unreliability of renewable sources of energy. This is a worn out argument. The article also presents the usual environmental and industry advocates arguing on each side of the issue. The Edison Electric Institute can be relied on to argue that new technology will cost too much and threaten our electric supply. I wonder what old Thomas Edison would say if he knew that his name is now being used to oppose the development of new technology?
Why does this tired argument keep getting repeated? The cost figures on carbon capture and storage are based on assumptions that cannot be tested. We don’t really know how much this will cost. The estimates that carbon capture and storage will more than double the cost of coal fired power plants is clearly too high. Since it hasn’t been done, it’s easy to see why investors would believe that the first ones will be quite expensive. I’m sure that’s true, but it’s not really relevant. The private sector should not and will not pay the cost of developing this technology. Government will need to subsidize this until it becomes cost effective.
The debate on carbon dioxide regulation seems caught in the same rhetoric we saw in the 1970’s and 1980’s over more conventional environmental regulation. There was similar discussion about how arbitrary and sudden government regulation was going to shut down American business. Anyone who actually observes regulation in this country knows that the "business of America is business". Regulations are implemented slowly, with negotiated schedules and great care. Businesses are given plenty of time to clean up their act. Moreover, regulations and rules allow the good guys to do the right thing and compete on a more level playing field. And without environmental regulation there is no pressure to develop new and cheaper technologies that produce without polluting.
As for the cost of renewable energy; solar power, wind power and battery storage prices will also come down as the technology develops. Think of computers. The computer I am writing this on sits on my lap and is more powerful than the million dollar plus mainframes of the 1960’s. As mass markets are developed and technology is refined, prices come down and today’s infeasible ideas become tomorrow’s everyday experiences.
How do we get this done? How do we go from here to there? In the case of computers, a lot of the basic Research & Development came from the Defense Department and NASA. Our rockets, missiles and space capsules needed smaller, more powerful computers. And then there’s the internet that was also developed by government: Our military computers needed to communicate with each other. One thing led to another and eventually we had an internet. Government paid the costs of development and then it was turned over to the private sector and a new industry was created.
Sometimes national security drives the development of technology- sometimes it is public health. Cities like London developed sewers and indoor plumbing to prevent disease. Cities like New York developed a hugely expensive water supply system because local sources were polluted. I’m sure someone was saying: Do you know how expensive this indoor plumbing will be? We will all go broke installing these pipes and pumps everywhere!
More recently we had some of the same arguments raised against paying the cost of installing air pollution devices on cars and power plants and against spending billions of dollars on sewage treatment plants. We did all of that and the economy continued to grow. In fact, the economic benefits of cleaner air and cleaner water far outweighed the costs.
Here is the fundamental truth that it is time to face: Just as we needed to develop new public health technologies to survive in cities when they went over a million in population, we must now invest in world-scale technologies to survive on a planet of seven billion people. The climate problem is the first planet-wide stress we know about. Others will surely come. We need to learn how to develop and implement the 21st century equivalent of indoor plumbing.
We are capable of making this transformation but it requires that we escape from the environment- economic growth tradeoff paradigm we see on the front page of the Sunday New York Times Business Section. We need to work on the push and pull of carbon dioxide reduction. We need to regulate and set a cap on carbon dioxide. This should be done with mandatory reduction targets, a tax on fossil fuels and a trading system to allow the most efficient reductions possible. In addition we need to spend money on the basic and applied technology of carbon sequestration, renewable energy, energy transmission and energy storage. We need cheaper and smaller solar receptors and cheaper and more efficient batteries.
Clean coal may be a fiction in 2009, but if we are to use coal for electricity, we must develop better ways to mine and burn coal. As my Columbia colleague Klaus Lackner eloquently argues, no matter how fast we develop renewable energy, we will continue to use fossil fuels for many years. He estimates the costs of sequestration will come down dramatically as technology and a mass market is developed. The problem is developing the technology and mass market. Government can and must stimulate the technology and market.
In the long run fossil fuels will be more expensive than other sources. Fossil fuels are finite and must be mined from within the planet. They will get harder to mine and scarcer and for those reasons will eventually be more expensive. We need to accelerate the development of the new technology of energy. Let’s end these 20th century debates once and for all and get on with the job.