the Walnut Diary

I have just finished reading The End of Oil, the eye-opener by Paul Roberts. While the book’s 2004 publication date leaves it rather dated in its assumptions that oil prices could rise as high as forty dollars per barrel and that bio-fuels can help, Roberts provides an interesting context for the U.S.’s current resistance to climate change legislation.

The Kingston Steam Plant in Oakridge, Tennessee, was built by the TVA in 1955. It is one of nine hundred coal-fired power plants in the United States which with minimal pollution controls produce over 44% of the nation’s electricity (268).

The problem is that the older plants are paid for, produce very cheap electricity, and new plants fall under the federal Clean Air Act which requires expensive pollution controls. The old plants are exempt. What’s more, Roberts explains that the TVA has done a $400 million stealth renovation on the Kingston plant, doubling capacity, but not improving air quality, so it continues to emit a hundred thousand tons of sulfur and nearly four million tons of carbon every year (261).

It’s a simple question of costs. Coal is dirt cheap and the Kingston plant can produce power for about 2 cents per KWH. A new gas-fired plant would be clean and not too expensive to build, but natural gas costs three times as much as coal, and the price of the electricity would be more than the market would bear. A new coal gasification plant could operate efficiently, and even sequester the carbon dioxide produced, but the cost would rise to a prohibitive 6.5 cents per KWH.

In the energy world of the United States there is no economic reason to reduce carbon outputs, and every reason to devote millions of dollars and votes to fight climate policy. Herein lies the resistance to the Kyoto Accord and other climate-change initiatives. George Bush Jr. won the presidency with the support of the coal-producing states and a war chest made rich by contributions from oil companies and auto manufacturers.

There is at present no economic disadvantage to emitting CO2. Putting out a ton of carbon doesn’t make you or your company less competitive or less profitable – whereas cutting CO2 emissions almost always will, in terms of additional technology costs and lost productivity (273).

Roberts explains why automobiles in North America have worse fuel efficiency than they did in 1988. Following the OPEC crisis in the mid seventies, Corporate Average Fuel Efficiency legislation stipulated a steadily-rising standard for vehicles sold in the United States. Ronald Regan cancelled it “and terminated a decade of dramatic improvements in fuel efficiency” (262).

Roberts likens the social costs of gasoline consumption to those of cigarette smoking, and explains how the tax on tobacco by government is primarily a means to internalize the costs. He suggests that a similar tax on carbon is increasingly in use around the world to offset the costs of oil consumption which extend well beyond the pump price.

This idea is not new. In the United States, coal-fired power plants already pay a penalty for each ton of sulfur dioxide they emit – a requirement that has dramatically reduced sulfur emissions and the acid rain they cause. A similar system for carbon would be even more transformative. As carbon began to represent a cost to be avoided, so consumers, companies, and entire industries would shift their business strategies, investment patterns, and technology programs to minimize carbon consumption and emissions. A carbon tax would rectify the myriad perverse incentives that today not only encourage wasteful building, driving, and other inefficiencies, but give hydrocarbons an advantage over other energy technologies, such as hydrogen or renewables. Consumption patterns would shift dramatically: as the price of gasoline or coal-fired power rose to reflect carbon capture, consumers and businesses would move toward more efficient cars and appliances (276).

It remains to be seen, however, whether such an idea can cross the Atlantic and overcome the American disdain for paying for pollution, something that has been free for centuries (279).

“The utilities will never admit this in public,” says one climate analyst who has worked closely with the power sector, “but if you talk one on one to senior guys from the power industry and you ask them whether they think that at some point in the next five to ten years there will be a significant limit on carbon, they will all say yes. They know this is coming, and they are investing in little clean technology things on the margins. But until they see what the limit will be, what the carbon market actually is, they can’t move. (280)”

Paul Roberts saved a surprise for his last few pages. Stephen Harper’s trying to dismiss Stephan Dion’s proposed carbon tax in Canada as “crazy” but in 2003 a similar program narrowly missed passage in the U.S. Senate after a late rally by the Republicans. Its champions? John McCain, the current Republican presidential nominee, and Democrat Joe Lieberman (p. 331).

Roberts, P. The End of Oil: On the Edge of a Perilous New World. Houghton Mifflin Company. Boston. 2004.