Saturday, May 31, 2014

On June 3, pricing carbon becomes a more conservative option than a status quo

All the kids are waiting to see exactly what Obama's going to do on Monday to regulate existing power plant CO2 emissions. The hope is that it would be fairly substantial regulation, a 20% cut by 2020, possibly modeled on the Natural Resources Defense Council proposal we've discussed before. The proposal pushes states towards action, with more coal-dependent states having to do more but not having to get the same result as the less coal-dependent ones, and lots of flexibility for reaching results, including cap-and-trade.

My main point is that Monday will change the status quo. Until then we've referred to pricing carbon, either via a tax or cap-and-trade, as the conservative/free market approach to solving climate change. Next week it will also be more free-market oriented than sitting on your hands, because one of the status quo options under the new rules will be lots of economic regulation instead. The states may choose to operate cap-and-trade programs anyway, but those programs will likely only be part of the state response, just like it is here in California.

A free market conservative will be able to argue that a fairly comprehensive price on carbon that replaces regulation is more capitalist than inaction. A populist conservative could even argue that passing all of the money back to individuals shrinks government and the power of big businesses. (I don't agree with all this, btw, but it's a feasible position from that perspective.) They don't even have to believe in climate reality, this argument stands as a free-market argument on its own. The analogy would be the Paul Ryan approach to Medicare in 2012, which basically argued for converting it to Obamacare. They wanted to do it because it was more conservative than the status quo.

Whether conservatives will make the same realization this time around is another question. My guess is that some will at the state level but few will at the federal level.

I've been thinking a lot about prison reform efforts sweeping through conservative states. Back in the early 90s if you asked which was the more firmly conservative position - that climate change didn't require action or that society needed to get consistently tougher on crime - it was the latter. It may not be easy to get conservatives to move on this issue as well, but we need to try.

Other relevant point is the Chamber of Commerce's "sky is falling" economic analysis of regulation. Same thing happened several years ago when the Western States Petroleum Association produced a "sky is falling" economic analysis of California's climate legislation, AB 32.  So far, the sky's still up there and California's doing reasonably well. That one will be worth revisiting, maybe now and definitely in a few years.


Anonymous said...

Mindless moves by the irrational or the power grabbers and dolers - that's what governments do.

Of course, now we should also outlaw greenhouse growers from dumping carbon pollution on the nation's food supply.

And outlaw Taco Bell from serving bean burritos.

Sky Rocket

Brandon R. Gates said...


Right off the bat I will state that I'm dubious of imposing regulations to limit emissions as the main strategy. As I understand it the main idea is to spur innovation in renewables. But from where? Private industry I suppose? I can see how that might work. I haven't read the NRDC's state level emissions proposal yet.

Yes, it *would* seem that cap and trade would be something that more conservatives would be able to stomach. Revenue-neutral taxation seems the better option as I understand the differences between them. But tax is a really dirty word for our friends on the right.

Not that it means much, but I have several Republican friends dipping toward the Tea Party of the spectrum who don't care what you call it: to them it's all stealing money out of their wallet.

Even if the Obama administration can accomplish what they're planning, and that's a big if in my mind, I'm still worried that it's only setting up another contentious fight in an already overly-polarized political theatre.

So there's this again:

I'm really don't think very kindly of radical environmental left on the subject of nuclear power. We're already swimming upstream against the physics of the planet, and since forever the main GHG mitigation strategies involve also swimming upstream against the forces of the market.

The latter also gets us in an uphill political fight.

Seriously, how much political capital do you think the Democrats have left to spend? I'm not seeing it.

I appeal to your middlish position on nuclear power to tip toward that option. I think we need a bone to throw the denierbots and their puppeteers. Then a carbon pricing scheme for development of renewables as the trade-off.

Fretting about the potential dangers of nuclear power doesn't do much to improve technologies and make it safer. From my view, all it does is create more red tape.

Anonymous said...

This is what I have noticed on the issue: "Obama will let states decide how to cut greenhouse gas emissions."

John Puma

J Bowers said...

@Brandon R. Gates -- "As I understand it the main idea is to spur innovation in renewables. But from where? Private industry I suppose?"

From Babbage's difference engine (grant from the British government) to gas fracking ($100 million direct subsidies and billions in tax breaks) to the iPhone (even the algorithm that runs it is the result of federally funded research), innovation has always needed big gummint involvement. Personally, I don't really count making stuff smaller and more marketable as real innovation or invention.

Brian said...

Brandon - revenue neutrality can be done through either a carbon tax or cap-and-trade. Look up "cap and dividend" for more info.

Obama's original proposal would return a large share of the cap-and-trade fees to the public. California's AB32 returns a modest share via electricity bills.

To the extent you achieve climate protection by carbon pricing, you don't need to choose which technology (like nuclear versus wind) provides the solution - the market chooses for you. My guess is the market won't choose nuclear, but I'm fine with putting a price on carbon and finding out that way. I do think government-funded basic research would help though. That's the only reason nuclear power exists is from government funding.

Jeffrey Davis said...

I wouldn't push the absence of new builds of nuclear power plants off on the Left. It's, first, a question of return on capital and the horrendously long lead times that capital must be tied up before there is any dough returning to the investors. There is already a cap on liabilities for nuclear accidents. The market is asking that the Feds put up the initial investment as well! I presume that means that the Feds put up the money and then, when the reactor comes on line, they would sell it off to private investors. Considering the huge number of nuclear reactors involved, the Feds would become an energy construction firm with a government attached to it.[1] Whose philosophy of government would approve of such a scenario?
And unless we are going to staff these reactors with Homer Simpsons, we're going to have to re-constitute our Nuclear Engineering programs in our universities luring candidates with the promise that 10 or so years after graduation there may be jobs available for them.

Fobbing the issue off on the political Left is just opportunism.

[1] hyperbole alert

Steve Bloom said...

"I think we need a bone to throw the denierbots and their puppeteers."

Yes, the hippies must be seen to lose, right?

The appeal to free markets is strange. Take away Price-Anderson and it's no nukes. Charge fossil fuel emissions for the damage they do to the commons and they're not long for the world either. Simple. People who oppose these things don't believe in free markets at all.

To make it fair, ensure that the renewables industry pays every penny for solar and wind spills.

Oh wait, sorry, can't do it that way since the hippies will win.

Anonymous said...

As for the CoC "the sky is falling" report, Paul Krugman does a nice dissection of it in his blog ( The cost of a 40% reduction of CO2 will be 0.2% of GDP according to the CoC's sponsored analysis. That seems like a bargain to me.

Brandon R. Gates said...

Brian: Thanks, I now understand better about the market choosing the technology under a revenue neutral carbon pricing system. Will do more reading. 90% of what I know about climate change is the science, not the economics or politics.

Jeffrey Davis: France has been making nuclear power work for 50 years. 50% of their electricity generation is nuclear, 30% from renewables. The remaining 20% is from fossil fuels, the lowest in the world.

France generates 17.2% of the EU's electricity. Overall, the EU produces a 6.7% surplus of electricity (consumption/production). That ratio is 17.5% in France, and it accounts for 45.0% of the EU's total surplus, having only 13.0 percent of the population.


France has the lowest electrical utility rate in the EU and the best air quality. That suggests to me that their nuclear program is doing something very right, and is also well-coordinated with renewables and fossil fuels.

Suggesting a political horse-trade is not fobbing off anything on anyone. It's called negotiation and compromise. I don't play favorites, I play rational arguments that make economic and environmental sense to me as far as I understand the realities of both. I want everyone to win, regardless of which overly-polarized partisan camp they belong to, left or right.

Steve Bloom:

I would like to see the tragedy of the commons wrt our environment from not happening. I support wind, solar and geothermal to the extent that they make economic sense. The first two do not provide baseload power. Geothermal may do so, not sure. Of those three, it appears to be the most promising, and DOE projections show that it has the best ROI of just about anything. Apparently there is potential for 5 western states to provide 20% of the nation's power needs.

Nuclear is not green energy in the sense that it is not a renewable. On a per kWh basis, it kills far fewer people than coal. In the US, the guesstimate is that coal power kills 10,000 people per year as of 2013, against 1,572,179 million kWh power generated, for a rate of 0.0066 deaths/million kWh.

Including Fukushima and Chernobyl, the guesstimate is that the rate for nuclear power is 0.00009 deaths/million kWh. As of 2013 that works out to a theoretical (risk) rate of 71 deaths per year in the US against 789,017 million kWh generated.

From 1949 to 2013 using these rates, total deaths by power source are:
Coal - 485,379 deaths / 73,542,271 million kWh generated
Nuclear - 2,041 deaths / 22,678,313 million kWh generated

This does not account for future impacts of GHG emissions for coal. And of course the US has not had any major incidents on the order of Russia or Japan, but as is oft pointed out, there are no guarantees. But it is absolutely essential to make some attempt to quantify the risks instead of unquantified and irrational appeals to fear.

Electrical power by source -

Deathprint -


I did a bunch of calculations not covered explicitly by any of those articles and may have screwed something up. Feel free to check my maths.

Anonymous said...

Fortunately, electricity is decentralized, so consumers don't really care about the source, but only the cost, reliability, and availability.

Since Nat Gas is the cheapest, moving to it ( which has already been happening, of course ) seems a no brainer.

The one advantage of coal is the storage - they have a ready supply just by dumping a load in the yard.
When nat gas gets tight ( as it did this winter ) and people are depending on it for heat and electricity, greater blackouts and price spikes are likely.

It might be good if the closed the most notorious coal plant of all - the one that supplies the Capitol!!!


Brandon R. Gates said...


Many consumers do care where how their electricity is being generated and are willing to voluntarily pay higher rates to support development of renewable sources in their market.

It's not good practice to assume your own attitudes are representative of others.

Brandon R. Gates said...

J Bowers (and Jeffrey Davis):

I have been thinking on and off about the Tennessee Valley Authority as a model for ramping up not just nuclear but renewable energy capacity as well. Yes, it's politically unpopular in some areas of the right, but it still exists and benefits the residents of some pretty red states. Dunno how good the finances are ... oh wait $726 million net income on $11.26 billion gross revenue in 2009 according to Wikipedia. Not a shabby margin, they did something right that year.

Sooo, the big difference is that the TVA wasn't replacing generating capacity, it was introducing all new capacity where none had previously existed.

The big similarity is that it was Depression era and created jobs jobs jobs. I haven't been able to find specific spending on the TVA, but throughout the New Deal era, gummint spending averaged 15.4% of GDP (1933-1939).

The big difference is that the gummint is spending 41.6% of GDP today. Also, in 1936, the top marginal income tax rate was 79%. Also also, unemployment peaked in 1933 at 24.9%, compared to a very healthy 3.2% in 1929, pre-crash. So the straits were more dire then and the gummint wasn't as big.

But, there is a model today that got its start in WWII: Military contracting. It's big money, Republicans love it and it employes a lot of people, which, if you're a Kenyesian, should make total sense to you and maybe even make you happy.

Something that has absolutely plagued the nuclear industry in the US is that nearly every plant built is significantly customized. Yes, GE provides much of the basics, but it's not a cookie-cutter operation by any means.

This is, to use a perfectly acceptable medical term, retarded and just plain wrong.

France, on the other hand, has ~5 reactor designs with a sixth next-gen design (EPR) just entering construction in France as well as in Finland and China. My understanding is that the control room, plumbing -- pretty much the whole plant -- is mostly similar from plant to plant within one of those given 5 types, and presumably in the EPR as well.

They got there because their gummint nationalized their utilities industry when they were still burning coal just after the war. They cut out the private industry and standardized everything in their transition to nuclear power.

Won't work here. The analogy to the defense indusry in the US is this: we typically don't build 200 individually customized fighter jets. As in we never do it. We do know how to get competitive bids from private industry for military hardware though. To do that, a bunch of Pentagon engineers, I'd imagine with the help of Boeing, Lockheed, etc., draw up a spec first, then send it out to bid.

In the case of the F-35 (which is such a turkey, so maybe this is a bad example) when Boeing lost out to Lockheed, the gummint still cut them in on the deal to do the manufacturing and thereby cover Boeing's lost opportunity cost which they spent on R&D for their own bid.

Do you see where I'm going with this? Is it even being talked about? (I've seen the modular reactor proposals on the DOE website already.)

Steve Bloom said...

Price-Anderson, Brandon?

Re the solar/wind baseload issue, the primary requirement is for an HVDC grid, which note we basically need anyway. With that in place, geothermal, tidal and hydro should be able fill the remaining gap. And let's not forget the negawatts, regarding which a serious effort has yet to be made. In places with good solar (the bulk of the country), distributed generation with local storage would make a big difference (e.g. using expired car batteries, the supply of which will be ramping up quickly, or more ambitiously the batteries still in the cars, although that requires electric cars to have a large market share). Have a look at Mark Jacobson's work.

David B. Benson said...

Here is a small modular nuclear power plant which seems to have prospective customers:

Anonymous said...

Well it's here. 30% reduction from 2005 levels by 2030.

As expected, EPA basically pulled a number out of their ass and told the states to go figure the rest out themselves:

Got something to add? Tell 'em:


Anonymous said...

Probably need a term for the Democrats in coal country besides Blue Dog -

Black Lung Democrats?

Brandon R. Gates said...

Steve Bloom,

What about Price-Anderson? Do you mean that both were Democrats? 1957 was a long time ago. Are you seriously suggesting that there hasn't been a concerted effort by left aligned environmental activist lobby against nuclear power since then?

I spent a lot of time in Berkeley as a child and I live there (here) now. My mother went to rallies. Her best friend is on the front page of the Oakland Tribune (or was it the Chronicle?) sitting in the middle of the road with fellow protesters blocking the entrance to LLNL. The photo was shot just prior to my mother's friend being arrested for obstructing traffic on a public road.

Union of Concerned Scientists has a branch office in walking distance of my house. I did temp work for them once on one of their publications regarding fuel efficiency ratings for major auto manufacturers. I was proud of my work. I also disagreed with their long-standing opposition to nuclear power.

How can anyone in their right mind consider Greenpeace pro-nuclear. Or right wing Republican?

I don't subscribe to partisanship. Bad arguments are bad arguments. To the very best of my knowledge, and it is admittedly weak wrt the economics and politics of climate change, nuclear power is simply the best near term solution for providing baseload power. That doesn't mean I don't want to see development and deployment of true renewables in the short term as well. I applaud that effort.

My sticking point here is that coal power kills 10,000 people per year in the United States alone. Present day. Not 50 years hence.

Had there not been a long-standing opposition to nuclear power from the left, it's quite likely that those coal plants would have been shut by now. If that were the case today, the *risk* of deaths per year, based on rates I previously posted, would be about 200 deaths per year.

So no. I'm really not interested in hearing about what two Democrats did in 1957. You're not in a partisan argument with me here. You're in a "how can we save 9,800 lives per year by getting rid of coal and replacing it with nuclear" argument, without breaking the bank and without dragging things out another three decades.

I'm calling for the environmental left to unstick from their long-standing and staunchly partisan orthodoxy. It's past since time for that lobby to get consistent with their laudable aims to save future lives by also saving some lives in the present. The only way I can see to do that as soon as possible is to endorse nuclear power as the baseload replacement for coal. Two birds with one stone. The math isn't all that difficult.

Getting it done will be the problem, but it will never happen if the left keeps its heels dug in.

Thanks for the perspectives on other renewables, and the tip for Jacobson. I think I've read some of it already. My problem with these scenarios is the time it will take to roll out. Nukes are off-the-shelf now. They've been mature, robust technologies for 30 years. What the hell?

Brandon R. Gates said...

David Benson: thanks for that tip.

Brian said...

Brandon - I think you missed Steve's point, which is that the Price-Anderson law is a huge societal subsidy to nuclear power. Renewable power bears the full cost of liability for harm it causes in accidents, but nuclear doesn't.

J Bowers said...

Brandon -- "My sticking point here is that coal power kills 10,000 people per year in the United States alone."

36,000 (H/T Dano).

Brandon R. Gates said...

Brian: Thank you for the clarification, I did indeed miss the point, and it is a good one. It's a double-standard on the face of it, though I think I understand its purpose: nuclear accidents are catastrophic when they do happen. Were there not a gummint subsidy to protect them from liability, funding to build a plant would be even more difficult to obtain than it already appears to be.

OTOH, renewables have already been shown to be more hazardous relative to nuclear on a deaths per power generated basis. Rooftop solar PV is dangerous for installers, many injuries and deaths from falls.

Perhaps the equitable way to resolve this is to offer the same government subsidy to green energy technologies enjoyed by nuclear plant operators. Does that jibe with your own views?

Brandon R. Gates said...

J Bowers: thank you for that link. The Harvard study, which I was not previously aware of, is from 2006. The 10,000 deaths/yr figure I cited came from more recent publications, but those were based on WHO studies which I have not been able to find.

36,000 is a HUGE number. It's on par with the number of deaths per year caused by automobile collisions.

Regardless, these are epidemiology studies and wide-ranging guesstimates are to be expected, therefore to be taken with somewhat a grain of salt. I like to be conservative in such matters, but it's good to know the range.

Conversely, I'm quite willing to use high-range estimates for the risk of nukes. Even then, there exists a two orders of magnitude difference between the high end nuclear deaths estimate and the low end estimates for coal.

Which is more than sufficient to make the point.