And back to the specific of the Renewable Energy Standard …
This map is interesting and illustrates what Una first pointed out to me. Most states, for good or naught, already have or are considering a renewable energy standard of their own. Mostly its the Southeast that does not and truth be told their renewable resources are sparse. Forcing them to mitigate in a manner that would likely be extremely inefficient for their resource mix is stupid.
DSeid, your link to the map gives:
Is there another link, or if not, what does the map show?
Thanks.
You can overay it with these maps. Pretty good correlation of no RES and no significant identified wind or solar or geothermal resources to speak of. That section of the South has biomass and hydropower as renewable and that is it.
If a national standard is passed there will need to be loopholes for these Southern sates and the net effect will be roughly the same as the extant state standards.
Well reading this (sorry, Science subscription wall) makes me think maybe the Southeast states could make that biomass work for them (if the RES passes).
I do not know if biochar is an option for them, but if so it would garner them more CO2 credits as it would be net CO2 negative.
And it seems that some in the Southeast are playing with biochar. And another US concern is experimenting with it too.
And cofiring may become more attractive to major utilities:
As to the op again, I posted to argue against a RES in favor instead of a cap and trade system. But if it turns out, as many now expect it will, that cap and trade will not get addressed this year, or may be even not next (with the current administration choosing that as one battle not to fight too hard for) then the RES and subsidies are the least poor remaining option and better than doing nothing at all.
I agree with the author that a Renewable Energy Standard (hereafter RES) is unnecessary, but for a different reason.
While the United States of America indeed does need to cut down on its carbon emissions, the solution is not more mandates, but guess what… less subsidies.
The problem is this. Oil is required for industry, so what local governments do is that they subsidize the oil industry to lower the price of oil, to encourage industry. To put an RES on top of that system is just a waste of money, when you could simply ban subsidies on oil and force the country to develop its infrastructure on something else than oil. This will happen because the price of oil will immediately rise to where it belongs; on par with what we have over here in Europe, in other words, ridiculously expensive. Only under such circumstances can we expect the market to treat the problem accurately.
The market will not fix this problem itself unless it’s a real market, and with subsidies, it’s not. It’s government sponsored consumption. The laws of the market do not apply under such circumstances, so the only options are to either re-invoke the laws of the market in which case we can go capitalist on the issue, or put in regulation.
I’m no capitalist fundamentalist, but if the market can fix the problem on its own, that’s good, because then we don’t need the paperwork, the taxation and all the general hazzle it is to fix problems like these directly. If the market is healthy (and very often, it isn’t) the problem takes care of itself. That cannot be expected to happen when you have subsidies artificially lowering the price of oil.
So nevermind the RES, it’s unnecessary if those damned subsidies are taken out. Make them illegal. The economy will just have to take the hit, that’s life, deal with it. The economy should never have been allowed to become so thoroughly dependent on oil to begin with, and it wasn’t through the free market, but through subsidies.
Very little electricity is made with oil. Most is made using coal, nuclear, hydro and natural gas (almost 90%).
Teekin, could we have a cite for this claim?
What subsidies on oil are you referring to?
More on biomass for electricity here.
Not only free and not only displacing that much coal being burned, but also otherwise to decompose into CO2 with only taking up landfill space in the interim.
As for the issue of oil subsidies … see here. More than $3.5 billion per year subsidizing oil and gas in direct subsidies (not including the indirect subsidies of ignoring the cost of their wastes) second only to the ethanol boondoggle in absolute amount (albeit a small fraction of the total spent on the product).
Link doesn’t work for me … got another?
Thanks.
DSeid, many thanks for that link, very informative. From their Exhibit 28-8, here is the amount of subsidy in Texas per consumer dollar spent on various forms of energy:
Subsidy per consumer dollar Federal Texas State Total
Biomass (wood, waste) 0.4¢ 0.4¢
Hydroelectric Power 0.5¢ 0.5¢
Geothermal 0.5¢ 0.2¢ 0.7¢
Oil and Gas 0.5¢ 1.5¢ 2.0¢
Coal 7.4¢ 7.4¢
Biodiesel 11.4¢ 3.6¢ 15.0¢
Wind 13.1¢ 0.2¢ 13.4¢
Solar 15.7¢ 11.7¢ 27.4¢
Nuclear 26.4¢ 26.4¢
Ethanol 36.1¢ 36.1¢
Teekin, I asked for the cite that was graciously provided by DSeid in response to you saying:
Given the numbers above, I’m sure you can see the problem. In the US as a whole there is a subsidy of only half a cent per consumer dollar spent on oil and gas. Texas, as an oil producing state, subsidizes it a further cent and a half. It does not do this to “encourage industry” as you say above. It does it to encourage production. In either case, total subsidy … a whole two cents.
Removing that would make little difference. Or at least that’s my two cents’ worth.
I am puzzled by your stated aim above, however. You say you want to “force the country to develop its infrastructure on something else than oil” … force the country?
intention, that does come to $1.5 billion, which again is second only to the huge pay-off to farmers that is corn ethanol subsidization. You are slicing it in a very particular way. You can also look at it the way Business Week did:
And of course there are the previously discussed implicit subsdies that fossil fuels enjoy by not having to price in the costs of their waste products as they are just dumped into the environment. (The comparable circumstance would be to let nuclear plants just toss their radioactive waste into the local rivers and not fine them or charge them in any way.)
What are the implicit or external costs of gasoline in the transportation sector? One (admittedly biased) analysis claims
Which brings us around to the original thesis, doesn’t it? 
DSeid, as always, thanks for an interesting post.
Yes, we could look at it that way … but what’s the point? It’s like looking at GDP and saying “Brazil is much richer than Liechtenstein.” That, like this, is true but not all that meaningful. We need to look at GDP per capita if we want to see on average how rich the individuals are in each country.
The same is true with subsidies. Wind and solar, which represent only a tiny part of the energy used in the US, get huge per-unit subsidies. As you point out, the total is not huge … so what? That’s just because the wind and solar are a tiny fraction of the energy picture.
We care about the cost per unit of energy, not the total dollars represented. The total is immaterial to the consumer, we care about how much our prices are getting jacked up at the pump. Bang for the buck, in other words, which is why I gave figures per dollar spent.
Couldn’t agree more, it’s a sad number, because R&D is where the government gets the biggest bang for the buck.
The US uses about 140 billion gallons of gas per year. The figures given in the final cite say that for every gallon of gas burned, there are between $1.60 and $6.60 in “environmental, health, and social costs” … ORLY? Six bucks per gallon in environmental and health costs?
Of course, when we look at how they calculated that, we find costs like “travel delays due to road congestion ($46.5 to $174.6 billion), uncompensated damages caused by car accidents ($18.3 to $77.2 billion)” and the like. Say what? Gasoline allows us to travel, but when the roads are congested that’s an “external cost” of gasoline?
Like I said before, I despise the wholesale and blind acceptance of “implicit subsidies” and “externalized costs.” Occasionally they are valid. But most of the time, they are just stupid. If you are going to count travel delays as a cost of the use of gasoline, you absolutely must count travel itself as a benefit of the use of gasoline. The analysis you cite is more than “admittedly biased.” It is totally worthless.
Nor is your immediately previous cite on “implicit subsidies” much better. For example, it includes the cost of automobile accidents as part of the “subsidy” on gasoline … what, like hybrids and all-electric vehicles don’t get into accidents? Counting accident costs as a subsidy on gasoline merely shows the ideological bent of the person doing the counting. What’s next? If we’re counting the cost of the road accidents,do we count the cost of building the roads as a “gasoline subsidy”? Is the cost of highway police a “gasoline subsidy”? How about the cost of squirrels and deer killed by the cars, is that a “gasoline subsidy”?
Two steps off the path, and the mud is already up to our necks …
Which is why I prefer real numbers that refer to real subsidies. All too often, anything more is just cherry-picked numbers with no relation to reality.
Of course at the same time they ignore any potential impact on global warming scenarios.
I honestly cannot find any analyses of the external costs of gasoline for transport that are not trying to push a particular agenda so I am unable to a reasonably valid figure on it, like there is for coal production for electricity. That however does not mean that the cost is zero any more than it means that is $6/gallon. There are pollution effects, there are estimated increases in global warming risks (even if some here discount those as real risks), etc. What there is not is any serious thought at internalizing any of those external costs - there is not even any real chance of having the “gas tax” come close to really funding the maintenance of the infrastructure let alone covering other external costs. But these costs, as undefined as they may be for the moment, are real, and are a form of subsidy that is currently unaccounted for.
Hmmm. One way to estimate may be this - combustion converted to motive force is typically something like 30% efficient (don’t quote me, just what I vaguely recall) … we can use the numbers for oil electricity and triple them converted into a per gallon format. If you really want a number and have the math chops. I’m satisfied with the concept that there is such a calculable number that really should be added to the subsidies and ignoring it is handwaving away real costs.
What does this have to do with Renewable Energy Standards?
DSeid, basically I agree with you. Everything that we do has both monetary costs and benefits, as well as non-monetary costs and benefits.
The problem comes when we try to convert non-monetary costs into monetary costs. The first difficulty is that we do not have any guidelines on how to calculate that cost.
For example, there is pollution from the burning of fossil fuels. (I’m not referring to CO2, but to pollution).
Now … how do we put a cost on the pollution? We could say, “Well, it is the avoided cost of having to put in the equipment to control the pollution.” That’s a reasonable approach.
But control pollution to what level? It is relatively cheap to control pollution a little bit. It is horrendously expensive, and perhaps impossible, to eliminate it completely. So our number for the “avoided cost” could be anything from a few thousand dollars to billions of dollars.
The second difficulty is what to include and what to exclude. Are automobile accidents and traffic delays and deer killed crossing the road part of the “externalized costs” of gasoline? There are a huge number of what may or may not be "externalized costs"for any activity … which do we choose?
The third difficulty is the flip side of the coin, the “externalized benefits”. If delays in traffic are an “externalized cost” of fossil fuels, then is smooth traffic an “externalized benefit” of fossil fuels?
So we’re left with three huge challenges. How do we convert non-monetary things into dollars? Which non-monetary costs do we include and exclude? Which non-monetary benefits do we include and exclude? There are not even any general guidelines for this, much less hard-and-fast rules. As we have seen in your citations above, each person doing the analysis includes and excludes wildly different things, based on their own agenda.
The result is that we get numbers that have no meaning. Even the authors of one of your cites above put their calculated cost at something like $1.50 to $6 per gallon … and that’s just their own estimate of the huge uncertainty. For example, that study included the costs of traffic delays as a cost, but somehow, unaccountably, they did not include the benefits of smooth flowing traffic as a benefit … probably just a coincidence.
If we include smooth flowing traffic as a benefit, we may just find that the huge benefits from being able to get from point A to point B with a load of produce or a dying person in an ambulance may dwarf the other externalized costs …
Now, I’m not saying we should calculate it that way. I’m saying that including traffic benefits on the credit side of the ledger is just as reasonable as using the cost of traffic delays on the debit side of the same ledger.
What we have are real measurable monetary costs and monetary benefits, which we know the dollar value of. We also have non-monetary costs and benefits, which we don’t know the costs of. Depending on your choices of what external costs and benefits to include and how to price them, the net of the costs and benefits can total up to any number you want to name.
So while (as you correctly point out) we know the externalized costs and externalized benefits of gasoline are actually there, depending on your choices they range from a huge net cost to a huge net benefit. You observe, again correctly, that “What there is not is any serious thought at internalizing any of those external costs.” But to internalize those costs, we have to put numbers on them, and we’re back where we started. What numbers do we use? Do we include the costs of auto accidents? Do we include CO2? Do we include the deer and squirrels dying on the road? Do we include the cost of lowering pollution from its current standards … and if so, lowering them to what level?
I don’t see any easy way out of that morass.
Oh without doubt monetizing these costs is a challenge.
How I think it is done (and IANAEconomist) is, for example, that the cost of pollution is priced at the cost of health care estimated resultant of it and clean-up that are reasonably expected to be done - not the cost of having to put in the equipment to prevent it, since that has not been done.
In other words they are best estimates of real costs to be borne by society at large that result from the product that the producer does not pay for.
There are other methods that can be used as well. In some past thread (I cannot off the the top of my head recall which one) we discussed how the monetary value of a statistical human life is calculated. There economists deduce the value by what people are willing to be paid to risk their lives and what they are willing to pay for risk reduction.
Monetizing the non-monetary is something economists have adequate tools to handle.
What to include? Yes that can be up for debate but perhaps even more precisely the issue has to be to be clear if they are avoidable with the alternatives. So, for example, wear and tear on the roads and accidents and traffic congestion are external costs of automotive transport that would be the same whether the cars are powered by gas or electricity. The fuel source is not the culprit but the mode is. OTOH that cost can be reasonably compared as different to riding the train.
Of course those who are motivated by a conclusion first and then create the data can play with numbers, but that does not tell us that better numbers are incalculable (albeit perhaps not easy) or less important.
DSeid, thanks as always for your thoughts. Monetizing the non-monetary, as you point out, has various established methods. There are certain areas where the issue and the methods have been looked at in some detail. For example, a human life is given a certain dollar value.
Even that is not clearcut, however. There are a number of methods for pricing human life (e.g. what they would have earned for the remainder of their life, or assigning a equal fixed dollar value for anyone’s life, or a value based on their age, or a value based on what someone would want in order to risk their life).
Often, however, these methods lead to contradictory or counter-intuitive results. For example, non-smokers cost the medical system more than smokers. Smokers tend to die earlier, and there generally is no cure for lung cancer so they do not incur huge medical expenses. Non-smokers live longer (more medical expense) plus they often have huge end-of-life medical expenses. As a result, any attempt to internalize these external costs would lead to the conclusion that we should encourage people to smoke … hmmmm.
And that’s just the problems with humans. Lets say that pollution in a river has destroyed a local colony of poorly understood freshwater snails … what kind of price do we put on that?
Finally, you still have not dealt with the other side of the coin, the externalized benefits. Just as we have externalized costs to society from most activities, we also can have externalized benefits. You can’t just include one, you have to include both sides of the ledger. If you want to count the costs of gasoline-produced CO2, you have to include the benefits of gasoline-produced CO2.
So yes, we can calculate a number for the net of external costs and external benefits … in fact, we can calculate a host of them. What is hard is to come to agreement on the numbers … you say that “better numbers” can be calculated, but what happens when your “better number” is my “worse number”?
For example, suppose we analyze some national industry and find out that it is polluting … obviously there is an external cost. We calculate the external cost, and decide to tighten the environmental regulations. As a result, half the industry goes bankrupt, the other half moves to India, and thousands of people are out of work.
What is the net external cost of all of that? I say we have to include the benefit of retaining jobs on the plus side of the ledger. Someone else says that’s not appropriate, we should just use the health cost of the pollution … which one is right? I don’t see how one can even establish general guidelines that will be acceptable to everyone about what to include or exclude, much less how to cost it.
Doesn’t mean it is not worth doing, it is. It just means that it is a very subjective kind of scale, which only has real use when we are comparing apples to apples.