(Editor's Note: It's no secret that we need to become more efficient in our use of energy. Though the USA is already one of the most efficient countries in the world in terms of GDP per unit of energy, we still use more energy than most other countries per capita (because we contribute so much to the world economy per capita). There is room for improvement. There are two reasons for this. One, there is the possibility that global warming exists and that it is at least exacerbated by human CO2 emissions. Second is energy independance. Though complete energy independance is probably impossible without significant technological breakthroughs, we could at least become independant from the Persian Gulf supplies, eliminating the need to coddle dictatorships that repress freedoms and civil society and contribute indirectly to terrorism. Below are two articles from The New Republic, the first examines a proposal to treat CO2 emmissions in the same way as acid rain emissions (with tradable vouchers). The second examines the benefits of a 1/3 increase in average MPG over a 10 year period (5 years lead time with 5 years of implementation)... achievable with conventional technology... including near independance from Persion Gulf oil. California has recently passed legislation to this effect; the size of the Californian market may demand that the car companies make these requirements standard in all markets.
Of course, I think that in the short term (the next 30-50 years) there needs to also be increases reliance on nuclear and clean-coal technology (the Bush administration has been pushing the latter successfully). -BBM)
Energy Saver
by Gregg Easterbrook
Only at TNR Online
Post date: 11.22.04
This report,
New Approaches on Energy and the Environment, released last week by the nonpartisan think tank Resources for the Future, offers the White House a menu of new policy ideas to decrease foreign-oil dependence and greenhouse gas emissions without harm to the economy.
For sheer brainpower on energy and environmental issues, no one can touch Resources for the Future. The think tank was founded in 1952 by the Ford Foundation, which charged it with warning the world about the coming exhaustion of petroleum and other primary resources.
Instead Resources for the Future researchers concluded there was plenty of everything, and swam against the 1960s doomsday-chic tide by saying so.
Then the organization got interested in improved environmental protection using market-based ideas. Its triumph was the 1991 Clean Air Act revisions that created an allowance-trading program for acid rain reduction.
Since 1991 acid rain has declined spectacularly--that's why you never hear about it anymore--and the trading system designed by Resources for the Future is the reason. Not only was the system successful, it cost far less than expected. When the 1991 program was enacted, the Environmental Protection Agency estimated that reducing acid rain would cost about $10 billion a year. It turned out to cost only about $1 billion annually, because trading allowed the system to be efficient in market terms. Trading also created incentives for utility companies to invent new ideas to reduce emissions--because if a company cuts its acid rain below the legal mandate, it can sell the extra credits to someone else.
Now Resources for the Future has called for substantial alteration of U.S. energy policy, especially on fossil fuel use. New Approaches on Energy and the Environment is a powerful and important volume--my only complaint is that it does not roll the drums for increased use of zero-emission nuclear power and for building the badly needed natural gas pipeline from Alaska's North Slope to the lower states. Otherwise the volume brims with appealing ideas.
The analysts of Resources for the Future offer these basic possibilities for progress on greenhouse gases and foreign-oil dependency: higher taxes on gasoline or on any carbon-containing (fossil) fuel; higher federal miles-per-gallon standards on vehicles; or a carbon-allowance trading system modeled on the acid-rain trading system [Easterbrook goes on to note that higher gas taxes (even if offset by lowering taxes elsewhere) or higher MPG would be difficult politically]...
That leaves carbon trading, and here I am guardedly optimistic. The emission-trading regime worked incredibly well for acid rain. "Tradable" is a good word in economics and in politics; systems based on trading allow individuals, not government officials, to be the ones who make the decisions about environmental priorities. Resources for the Future proposes a pilot program that would place a five dollar-per-ton charge on carbon emissions. All companies, such as electric utilities, that emit carbon dioxide would pay five dollars per ton, while companies that sell fossil fuels to individuals, such as gasoline retailers, would factor the charge into consumer prices. Every carbon-emitting corporation would get a maximum level--a "cap." The cap is what causes the reductions, by setting an upper limit. Any company that reduced emissions below the cap would be awarded tradable credits. As with the acid-rain trading program, the latter provision creates an economic incentive to invent ways to reduce greenhouse gases, since extra reductions create a product that can be sold. The product in this case is an emission allowance. Right now, no one is working on technology to limit greenhouse gas emissions because there is no economic incentive to do so. Experience teaches that once there is an economic incentive, human beings prove to be spectacularly ingenious.
Resources for the Future wants the revenue from a carbon-trading pilot program to go toward deficit reduction; a five dollar-per-ton carbon charge would raise about $8 billion in its first year. If carbon trading turned out to reduce greenhouse gas emissions without causing economic harm, Resources for the Future would gradually increase the charge, to perhaps $40 per ton by 2020, raising a larger sum for deficit reduction. There's a safety-valve provision in the proposal--if economic harm is detected, the program stops. Acid rain reduction, it's worth noting, caused no economic harm and created net benefits by saving the Appalachian forests. The early, five dollar-per-ton charge would have no noticeable effect on consumers, costing the average driver about $10 per year via slight raises in gasoline prices. (Yes, you did the mental math correctly--the typical car emits two tons of greenhouse gases annually; SUVs emit three to four tons.) As the carbon charge rose, gasoline prices would slowly rise, encouraging people to pump less. But if you were determined to keep that mega SUV, you could do so the old fashioned way--by paying the price.
Joining the Resources for the Future report in a couple weeks will be the findings of the National Commission on Energy Policy, which is expected to recommend significant changes in U.S. energy policy, including action against greenhouse gases and gas-guzzler vehicles. The commission, a true bipartisan group whose members include the chairman of ConocoPhillips and the author of Dick Cheney's energy plan, is also expected to back the Alaska natural gas pipeline and other production increases. Its recommendations--more production and global-warming action--will therefore have an even-handed feeling. Given the frustration many in Washington feel that Congress can't move energy legislation even on consensus issues such as utility grid improvements, the National Commission on Energy Policy report may become a catalytic tool. One can always hope.
Turn On
by Gregg Easterbrook
Here's the math. About 17 million new cars and "light trucks" (SUVs, pickups, and minivans) are sold in the United States each year and driven, on average, about 12,000 miles annually. If the fuel efficiency of 17 million vehicles driven 12,000 miles annually rose by one-third, from a real-world 17 MPG to a real-world 23 MPG, that would save about 200 gallons of gasoline annually per vehicle, or about 3.4 billion gallons of gasoline. Since a barrel of petroleum yields 20 gallons of gasoline, about 170 million barrels of oil would be saved.
Perhaps you think, Aha! With U.S. petroleum demand at 20 million barrels daily, this MPG initiative has saved just about one week's worth of oil. Yes--in the first year, the MPG increase would have little effect, in much the same way that, in their first year, few investments yield much return. But remember the miracle of compounding! In the second year, with two model-years' worth of vehicles at the higher MPG, 340 million barrels of oil are saved. The next year, the savings is 510 million barrels, the next year 680 million, and so on. In just the fifth year of this initiative, we would need to purchase about 850 million fewer barrels of petroleum--approximately the amount the United States imports each year from the Persian Gulf states. If future vehicle sales are about the same as current sales, it would only take seven to eight years for there to be more vehicles on the road with the new standards than without them. Then, a tipping point might be reached, and national petroleum consumption could actually start to decline. (Note to econ majors: Yes, this is a simplified calculation that does not include the effects higher MPG standards might have on auto markets.)
...
But wouldn't higher MPG standards force people to drive econo-box death traps? No--mileage standards could rise by one-third with hardly any outward change in cars. Godzilla-class SUVs, such as the Hummer and the Excursion, would be history, but full-sized sedans and large SUVs, such as the Ford Explorer, could still grace auto showrooms.
Consider that, from 1981 to 2003, the average horsepower of new vehicles sold in the United States rose 93 percent, average acceleration time improved 29 percent, and average weight rose 24 percent, while average MPG remained essentially unchanged. That Detroit has been able to make its products heavier, faster, and more powerful while essentially keeping mileage the same means that engine efficiency has improved significantly: It's just that improvements have gone into power, not MPG. The main changes needed for vehicles to show a big rise in MPG, yet remain full-sized and comfy, are reductions in horsepower and acceleration.
Gregg Easterbrook is a senior editor at TNR and a visiting fellow at the Brookings Institution.