Common sense isn't.
Cato Policy Analysis No. 280, August 27, 1997
by Robert L. Bradley Jr.
One of the centerpieces of the environmentalist agenda has long been the regulation of fossil-fuel consumption. Although anti-pollution controls are the accepted short-term solution to many of the environmental problems posed by fossil fuels, many people believe that the long-term answer is the gradual replacement of fossil fuels with other, less environmentally threatening fuel sources. That philosophy can perhaps best be described as eco-energy planning, the belief that government intervention in the energy economy is necessary to maximize environmental protection and, in the end, the nation's economic vitality.
Renewable energy--power generated from the nearly infinite elements of nature such as sunshine, wind, the movement of water, the internal heat of the Earth, and the combustion of replenishable crops--is widely popular with the public and governmental officials because it is thought to be an inexhaustible and environmentally benign source of power, particularly compared with the supposedly finite and environmentally problematic alternative of reliance on fossil fuels and nuclear power. Renewable energy is the centerpiece of eco-energy planning. Yet all renewable energy sources are not created equal. Some are more economically and environmentally viable than others. The list of renewable fuels that were once promising but are now being questioned on economic or environmental grounds, or both, is growing.
Wind power is currently the environmentalists' favorite source of renewable energy and is thought be the most likely renewable energy source to replace fossil fuel in the generation of electricity in the 21st century. Hydropower has lost favor with environmentalists because of the damage it has done to river habitats and freshwater fish populations. Solar power, at least when relied on for central-station or grid electricity generation, is not environmentally benign on a total fuel cycle basis and is highly uneconomic, land intensive, and thus a fringe electric power source for the foreseeable future. Geothermal has turned out to be "depletable," with limited capacity, falling output, and modest new investment. Biomass is also uneconomic and an air-pollution-intensive renewable.
Despite its revered status within the orthodox environmental community, wind power poses several major dilemmas. First, wind remains uneconomic despite heavy subsidies from ratepayers and taxpayers over the last two decades. Second, from an environmental viewpoint, wind farms are noisy, land intensive, unsightly, and hazardous to birds, including endangered species. With the National Audubon Society calling for a moratorium on new wind development in bird-sensitive areas, and an impending electricity industry restructuring that could force all generation resources to compete on a marginal cost basis, wind power is a problematic choice for future electricity generation without a new round of government subsidies and preferences.
Because of the precarious economics of acceptable renewable energy, eco-energy planners have turned to taxpayer and ratepayer subsidies for energy conservation as an alternative way to constrain the use of fossil fuels. Yet fundamental problems exist here as well. Multi-billion-dollar taxpayer and ratepayer subsidies over two decades have resulted in severely diminished returns for future subsidized (and even nonsubsidized) conservation investments. The potential reduction of electricity prices due to the introduction of electricity industry restructuring threatens to lengthen the payout period of energy conservation investments and consequently worsen the problem.
A major but largely unrecognized development in the public policy debate over taxpayer- or ratepayer-subsidized renewable generation and energy conservation has been the elevated role of natural gas in electricity generation. Not only is natural gas significantly cleaner burning and less expensive than a decade ago, it has increasingly become the "fuel of choice" for new generation capacity. The eco-energy planning agenda for electricity generation--developed with coal and fuel oil in mind--must now be reconsidered. Such a reconsideration places in question some of the most important public policy missions of government energy agencies, from the California Energy Commission (CEC) to the U.S. Department of Energy (DOE).
This study has six parts. The first defines eco-energy planning and differentiates it from market-based energy environmentalism. The second details the economic and environmental problems of wind power, the most favored renewable energy alternative. The third presents the problems of the other major renewables, including "negawatts," the environmentalist euphemism for subsidized energy conservation. The fourth is a study of the major challenges to eco-energy planning posed by the ongoing restructuring of the electricity industry. The fifth is a description of new developments with natural gas that have made it a benchmark for environmental comparison in the United States if not abroad. Finally, the author considers the public policy implications of the conclusions for the DOE, state public utility commissions, and state-level energy commissions.
|Quote of the moment|
|Nothing can bring you peace but yourself.|
|~ Ralph Waldo Emerson, Essays. First Series. Self-Reliance. ~|
Common sense isn't.
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