A Conservative's Take on Environmental Regulation

When one thinks of environmental policy, one usually assumes that environmental policies primarily fall within the realm of the Democratic Party and left-leaning thinkers.  To an extent, this has been true recently, with Democrats sponsoring legislation to increase regulation of our air and water, including a relatively recent proposal to move to a carbon cap-and-trade system.  However, the Republican Party, usually known as the party favoring business interests, has been sensitive to environmental issues in the past (Richard Nixon created the EPA, after all), and there are parties concerned with the environment within the party that believe that some regulations are actually harmful to the environment.  Thus, by eliminating unnecessary regulations, the state of the natural world can be improved, while the republican philosophy of smaller government can be realized.  One conservative group, R Street, has published a website detailing these cuts, and the head of the firm, Eli Lehrer, shows us how eliminating regulations can be good for the environment as a whole.

Lehrer’s group’s proposal “outlines almost $700 billion in cuts that would improve the environment.”  His group takes the shears to all subsidies for oil companies, as well as for green energy companies, arguing that in times of large deficits, subsidies that go to companies that are already profitable doesn’t help taxpayers with the bills.  He also states that the litany of tax credits and subsidies also ends up distorting the clean energy market, and eliminating those will help the market function more smoothly.  He looks at subsidies for specific insurance programs, like those for agribusinesses and beach houses, and says that the private market can handle those duties as efficiently as the government.  Additionally, Mr. Lehrer recommends that the budget be gone over and eliminated of wasteful programs like the Essential Air Service Program.  The program enacts subsidies that “encourage the use of small, inefficient planes and don’t save significant time for travelers.”  In the end, the report proposes cuts that “include $269.78 billion from energy programs…$167.09 billion of agricultural subsidies…$212.02 billion of transportation subsidies…$101.8 billion of federal flood, crop, and nuclear insurance subsidies…[and] $24.99 billion from wasteful or environmentally damaging public lands and water projects.”

            While it may seem surprising to see these cuts proposed by a member of a party not usually associated with environmental protection as of late, Lehrer proclaims that these cuts came with the support of Taxpayers for Common Sense, and the progressive group Friends of the Earth.  While I believe that pricing pollution effects into the free market can help green tech with its competitiveness, smart regulation changes can be a good thing if properly vetted and administered.  It reminds me of a scene from Pixar’s Ratatouille, where several characters, particularly critic Anton Ego, take offense to chef Gusteau’s slogan “Anyone Can Cook.”  In the end, the point of Gusteau’s slogan was not that anyone can make good food, but rather, that good food can come from anywhere.  It seems that this can hold true with the policy arena as well:  not everyone can create good policy, but smart, pragmatic, well thought-out policy measures can come from anywhere.  

Industrial Policy: Is It All It's Cracked Up To Be?

When it comes to discussing market incentives for green energy promotion, policymakers are blessed with a variety of different options for helping nascent industries compete with the established market.  In order to provide monetary scaffolding for companies to grow, the government has provided a combination of tax credits and subsidies for alternative energy companies, and direct stimulus to governmental departments focusing on green energy research.  The approach is known as “industrial policy,” and the idea behind this strategy is that it represents a “one-two punch” to help specific sectors compete more effectively with outside competition.  But is such an approach really beneficial for the energy sector in the long run?  One new study by the centrist Brookings Institute questions the viability of the current approach, and compares it to former methods practiced with other institutions in the past.  While agreeing that some federal funding may be appropriate, the authors instead make a case for a continued push for a carbon “cap-and-trade” system, in order to more properly capture the hidden costs of fossil fuel consumption.

            Industrial policy measures have been a staple of green energy promotion in the past.  In the 1970’s, during a time period of stagnation in America’s industrial sector, policymakers looked for solutions that would help revive manufacturing and increase its competitiveness in the face of new industrial powers in Japan and Germany.  One such school of thought postulated that the federal government could be used to push industry in specific, preordained directions through “indirect measures,” like tax credits and subsidies, and direct stimulus as well.  The idea was that these measures would shift industry into the “proper” cutting-edge technologies, and create increased American competitiveness in those sectors.  While this school of thought died out in the early 1980s as American productivity rebounded and Japan’s economy slowed down, the ideas behind industrial policy still appeal to various interest groups, particularly those with left-leaning ideologies.  Although these policy ideas are primarily associated with the industrial sector of the US economy, they have also been applied to the green energy sector as well.  Over the past 40 years or so, the industry has been the recipient of a combination of subsidies and grants, beginning with a massive effort by the Carter administration to produce synthetic fuels, and continuing off-and-on throughout subsequent decades. 

With the advent of the financial crisis of 2008, policymakers espousing industrial policy found an opportunity to promote green energy technologies within the context of a stimulus for the economy as a whole.  Advocates of this policy touted that “[the investments] will help address global warming and…promise greater ‘energy security,’ but also deliver thousands of ‘green jobs.’”  Like the Carter administration in the 1970’s, the Obama administration made a push for alternative energy development a centerpiece of its policy initiative, and authorized $32 billion in stimulus funds to go to the Department of Energy (DOE) for green energy research.  History has shown us that this approach is iffy at best in its effectiveness:  while a 2001 study by the National Academy of Sciences showed that DOE projects yielded returns of about $40 billion at a cost of $17 billion, “just three of the energy efficiency programs produced 75% of the benefits.”  Additionally, most of those developments occurred in the building efficiency sector, while most of the other initiatives in other sectors merely broke even, or suffered from cost overruns.  Given these facts, it’s easy to see that direct investment on an industrial scale can be a dicey proposition.

Many advocates of green energy industrial policy proclaim that we are in competition with other nations, like China, Germany, and Brazil, to produce effective alternative energy solutions, and that taking control of this industry’s development, and “winning” the competition, will result in increased jobs and a stronger economy.  Using this logic, initial investments to support industry growth will result in a quicker rate of technological progress and a leg up on the competition.  However, the logic isn’t as sound as one might think; the authors turn to the liberal-leaning economist Paul Krugman to debunk these claims.  According to them, “Krugman notes that, while the term ‘competitiveness’ is meaningful when applied to individual firms, it makes little sense when applied to the economic relationships among countries.”  What he means by this is that one can’t lump countries and corporations in the same boat when talking about competitive principles.  A corporation is a singular entity, and while corporations benefit from obtaining greater market share, international trade actually ends up helping countries more than it hurts them.  It’s tempting to believe that countries can gain a boost in GDP from aggrandizing the competitiveness of their industries in order to gain market share, but Krugman found that even if a strategic American trade policy could be crafted to gain a majority share in markets to maximize any monopolies enjoyed by US firms, the process would net less than a percent to U.S national income.  In contrast to industrial policy, empirical data support the idea of international trade to lower energy costs.  The authors of the study note that when other countries develop cheaper green tech, more of it will be used in the US as well, which will then minimize costs for conversion, and help the environment too.  Indeed, they cite recent anti-dumping cases levied by solar firms against firms in China as an example that dumping cheap solar panels in the US may actually help US consumers “by artificially lowering the costs of solar power,” and making it more competitive with nonrenewable energy sources.

            The final question concerning industrial policy is whether the claim that policy measures of this type can produce “thousands of green jobs” hold up in practice.  The first thing we need to take into account is the nature of this policy.  Industrial policy composed of direct stimulus tends to be “timely, targeted, and temporary.”  And in the 2009 stimulus proposed by President Obama, the money allocated to the Department of Energy and other green entities was just that:  a short-term burst of direct funds and tax cuts designed to provide demand for services when the private markets are unwilling or unable to do so.  Unfortunately, the Institute notes, this form of stimulus is at odds with the goals of most energy research.  This research is a time-consuming process, and beginning a project “require[s] detailed proposals, competitive contract selection, and negotiations over the scope of work,” unlike, say, a transportation or construction project.  Green energy research also tends to draw from a highly educated pool of labor that is less likely to be affected by downturns in the market, and therefore, causes less of a dent in unemployment than projects requiring less-skilled workers.  Thus, the authors conclude that “programs designed to promote the sustained commercialization of new technologies are seldom effectively counter-cyclical.”  Unfortunately, while green energy can provide many benefits to the environment, it is not the most efficient vehicle for promoting job creation.

Since industrial policy seems to falter on several of its selling points, what then would be a more efficient solution?  The authors come to the conclusion that “getting prices right” is the most logical first step in making green energy more attractive to commercial enterprise.  Properly factoring in the “hidden costs” of carbon production, like the harm carbon emissions pose to the environment and society, can help to level the playing field between green energy producers and more traditional energy companies.  The authors propose that a carbon cap-and-trade system be the main focus for creating a price scheme reflecting all costs of production, but also note that targeted governmental investments can provide a nice complement to private research and development.  To this effect, they note that the DOE would do well to shift its policy portfolio to focus on investments that “would have been taken by firms in the presence of an effective carbon price” until cap-and-trade can be implemented in Congress.  Therefore, the DOE should focus on “technologies with the lowest expected cost of abatement and the highest probability of market penetration,” instead of its current priorities.  In short, they recommend a focus on technologies that would provide a firm the maximum amount of profit if carbon were properly priced.  This combination of solutions, they argue, would be a more market-friendly solution and more properly set the carbon market at a level where green tech could compete.

            It’s interesting to note that the Brookings Institute is recommending a shift in government policy, rather than having the more often-heard debate on whether government should be helping the industry at all these days.  It says something about the importance of having government provide support to certain industries, even though there can still be plenty of debate about how that support should manifest itself, whether it be cap-and-trade, direct investment, or other methods.  Although throwing money willy-nilly at every possible energy solution seems inefficient, a more sensible solution for proponents of direct investment is to keep closer tabs on research projects, and instead move to support those projects that show the most return, like the three projects that accounted for 75% of the DOE’s profits.  That way, targeted direct investment can produce the maximum “bang for the buck,” and provide a nice complement to a future cap-and-trade program or a carbon tax.    Investing this way will help to pick up any slack in research that exists in the private sector, and help to ensure that green energy development won’t be consigned to the wastebasket in case of a future downturn in fossil fuel prices.

Note:  All quotes taken from: http://www.brookings.edu/~/media/research/files/papers/2012/6/04%20clean%20energy%20morris%20nivola%20schultze/04_clean_energy_morris_nivola_schultze.pdf

Tech Talk, Round 2: Singapore's "Supertrees"

As you may have gathered from reading this blog, I am a fan of the multitude of steps that Singapore has undertaken to decrease its climate footprint in order to combat man-made climate change.  The country is among the world's leaders in creating policies that further the adoption of energy-efficient technologies and strategies to reduce its carbon emissions.  And the country has also been one of the most innovative in coming up with unique solutions to combat climate change.  One such undertaking really showcases a way where climate mitigation can be as beautiful as it is practical.

The finishing touches are being applied to Singapore's Gardens By the Bay exhibit, which is set to open by the end of the month.  Source:  CNN.com

Singapore's National Parks Board (NParks) is set to open a new exhibit this month, Gardens by the Bay, which will showcase flora and fauna from around the world and create an "urban oasis" within Singapore's city limits.  The main attraction consists of two conservatories, the Cloud Forest and Flower Dome, that will end up displaying over 200,000 plants from the rest of the world's ecosystems.  The designers, however, chose to integrate the biospheres' support systems into the attraction as well, by designing a grove of "trees" to act as collectors of energy.  The "trees" are designed to generate solar power by collecting energy through photovoltaic cells in their canopies, which will then be used to run the technology in the conservatories themselves.  The trees will collect rainwater, and also serve as vertical ventilation shafts for the conservatories.  According to CNN, "the large canopies also operate as temperature moderators, absorbing and dispersing heat, as well as providing shelter from the hot temperatures of Singapore's climate to visitors walking beneath."  NParks is also building skywalks to integrate the "trees" with the rest of the exhibit, and provide visitors with a bird's-eye view of the greenhouses.  

The Cloud Forest conservatory is one of two main display areas for the world's flora and fauna in Singapore.  Source:  CNN.com

This "urban oasis" will not only help reduce Singapore's urban heat-island effect by absorbing sunlight within its natural canopies, but will provide entertainment for its citizens too.  Already, NParks is working on building in bike paths and hiking trails so that visitors can explore the rest of the gardens in the area,  and the addition of marina boardwalks will help visitors to take advantage of the natural beauty of Dragonfly and Kingfisher Lakes, and relax by the water.  The park is a practical and gorgeous example of how climate mitigation strategies can be entertaining to the eye, and beneficial for the planet, too.

Bike trails and boardwalks invite visitors to explore the entirety of Singapore's Gardens by the Bay. Source:  CNN.com

Tech Talk: The Advent of the Wind Lens

One of the most exciting aspects of green energy production is that, because it is a nascent industry, technological advances can occur at a relatively rapid pace.  One such advance, made possible by scientists at the University of Kyushu, could end up helping wind power take flight.

Computer simulation of proposed wind farm off the coast of Kyushu, Japan.  Source: http://polizeros.com/2010/08/02/wind-lens-turbines-could-triple-energy-output/ 

The "wind lens" is actually a series of modifications to the traditional wind turbine that help to increase airflow through the blades of the turbine, and subsequently, increase total power output.  The design works by encasing the blades themselves in an outer shell.  The shell is designed to create small vortices on the leeward side of the lens.  These vortices then create an area of low pressure where the wind exits the turbine (Fig 1).  Because pressures are lower where the wind exits the turbine, more air must move in to fill that area and attempt to achieve equilibrium; this effect causes wind speeds to increase in front of the blades and force more wind through the turbine.

Fig 1: Diagram of wind lens creation of low pressure system.  Source:  Kyushu University RIAM Wind Engineering Section Homepage. http://www.riam.kyushu-u.ac.jp/windeng/en_aboutus_detail04_02.html

The effects of this phenomenon, the researchers found, was to increase wind power by up to a factor of three from the "traditional" turbine design.  Thus, by upgrading wind turbines to wind lenses, existing wind farms could produce up to three times as much power, and energy needs could be satisfied with 1/3 of the space (Fig 2).  Now, due to additional materials usage, and the additional personnel required to retrofit existing structures and construct new fields, the initial startup costs for wind lens technology will be higher than that of traditional designs, but the long-term power advantages will be huge.  With wind lenses deployed in enough locations, the United States could see nearly 90% of its current energy usage accounted for by these wind farms.  Additionally, the wind lens is reported to be quieter than current windmills, and can be created in differing sizes to take advantage of microclimatic conditions in cities or countrysides.  

Fig. 2:  Comparision of results for wind generation between "conventional" turbines and wind lens technology.  Source:  Kyushu University RIAM Wind Engineering Section Homepage.  http://cleantechnica.com/2011/09/02/wind-lens-triples-turbine-output/

It's heartening to know that advances in green tech are rapidly closing the "cost gap"  between nonrenewable sources of energy and renewable, clean alternatives.  As costs fall, companies will be more inclined to pursue these sources to power their operations, since the social benefits combined with lower costs will be a boon for them both on their balance sheets, and in their public images.  Hopefully, proper subsidies and grants will be forthcoming for this technology in the coming few years, so that construction will be initiated in a timely manner, and the transformation of the world to a clean energy society can continue.

Pragmatism at Work: Singapore's Approach to Addressing Climate Change (Part 2)

This week, we'll examine some of the competency-building strategies that Singapore is utilizing to improve the awareness of its population towards minimizing climate change.  As awareness of energy-saving and green technologies increases, all parties will be able to tailor their decisions with the environment in mind.  To hasten its change towards a more carbon-neutral society, Singapore is working to build up its competencies towards energy efficient technologies, with an emphasis on research and development being pursued simultaneously between the government and the private sector.  One technology that holds significant promise for meeting Singapore’s energy needs going forward is solar cell development.  Due to its abundant sunshine hours from its location in the tropics, Singapore is positioned to reap many advantages from improved solar cell efficiency.  To explore this technology and its applications, the government and Singaporean universities are doing research into new solar cell technologies.  This, in conjunction with similar projects to produce more cost-effective fuel cells and wind turbines, will intensify Singapore’s commitment to green growth in its domestic markets.

One of the most innovative programs that the Singaporean government is currently implementing is the Certified Energy Manager (SCEM) program.  This program aims to “help equip facility owners and technical staff with the necessary knowledge and skills to manage energy services within their facilities (24).”  The idea behind this is that professional staff with more education on energy-efficient options for their businesses will be more willing and likely to pursue those options as part of a long-term cost-cutting strategy, and speed the conversion to more environmentally friendly methods of commerce and industry in the process.  This program is the first of its kind in Southeast Asia, and will act as a pilot program for other countries in the region.  Hopefully, the skills managers acquire through the training program will be disseminated throughout the companies they represent, increasing awareness.

Singapore has also taken steps to improve the competency of households in adapting to green, energy efficient technologies.  The government has imposed Minimum Energy Performance Standards on household air-conditioners and refrigerators and also mandated that energy labels be placed on different models to inform consumers of the relative efficiency of different appliance brands.  The government is also looking into the feasibility of producing an “energy vending scheme” to allow households to purchase energy from any electricity vendor and to monitor energy usage at home.  Providing households with maximum choice in the market is a way to increase competition between energy vendors, thus keeping costs low as vendors compete for market share.  The system will also increase awareness of energy consumption habits by households.  This awareness, combined with a National Environment Agency (NEA) program to educate the populace via website and mailings on simple energy-saving habits, will help to make households more energy-efficient, and even save them some money on their energy bills. 

Finally, Singapore has taken steps to integrate its domestic policies with those of the larger international community.  The country is a signatory of the Kyoto Protocol, and is working to grow its carbon services sector to join carbon exchanges networks in Asia and Oceania.  To increase international awareness and interest in these exchanges, Singapore has positioned itself as a hub for education and finance in Asia.  The country has organized carbon seminars, meetings, and other activities to spread awareness of carbon trading to other Asian nations.  One such event, Carbon Forum Asia 2007, drew “1000 participants from 46 countries (37)”, and is symbolic of Singapore’s push to become a model carbon-trading country for other states to emulate. In addition to its emphasis on international forums and workshops, Singapore was chosen as a base for the Renewable Energy Exchange Capital Asia to bring together investors and entrepreneurs alike for funding of green projects.  This speaks highly of Singapore’s ability to achieve its goals in the international arena, as well as domestically.

Perhaps the most striking thing that jumps out while examining Singapore’s blueprint for mitigating climate change is how much it reads like a corporate brief.  The government comes across as intensely pragmatic:  both market incentives and governmental programs are considered and chosen as solutions, with the overriding goal being the maximization of policy effectiveness.  It is a focus on what works, without regard to ideology or bias.  And this focus manifests itself not only in the environmental arena, but throughout different areas of the market as well.  It is this fundamental mindset that has produced policies that have brought Singapore to first-world status, and this continued push for sensible, productive solutions will serve the country appropriately as it transitions to a more environmentally-friendly, energy efficient society.  To be sure, Singapore’s governmental situation is rather unique; while it is a parliamentary democracy, the People’s Action Party has been in control of the government for decades, which allows it to have the luxury to plan with the long-term in mind.   But an absence of this situation in other countries does not have to preclude the development of smart, pragmatic policies that can help further economic growth while simultaneously reducing mankind’s impacts on the environment.  If properly implemented and reviewed, sound policy measures can end up as a “win-win” situation for both the economies and the environments of countries.  Hopefully, Singapore’s efficiency and emissions-reductions strategies will serve as a model for the rest of the world to adapt and implement to create a more carbon-neutral and environmentally-friendly planet.

Pragmatism at Work: Singapore's Approach to Addressing Climate Change (Part 1)

This two-part post will focus on how one country's endeavors to tackle its contributions to climate change can serve as a model for other countries to emulate in their progress towards climate change mitigation within their own boundaries.  Hopefully, smart policy solutions from one country will catch on and help the planet speed its progress towards carbon-neutral status.

Singapore is one of the world’s greatest national success stories of the 20^th century.  As one of the four Asian Tiger economies (the others being Taiwan, South Korea, and Hong Kong), Singapore has achieved a remarkable level of industrialization and growth over a very short timeframe.  The country now ranks among the world’s leaders in a host of categories, including per capita income, life expectancy, and quality of life.  However, because of its vulnerabilities as a small island nation with limited resources, Singapore is also a country that is acutely aware of its needs for sustainability and efficiency in all walks of life.  These needs have propelled it to the forefront of efforts to adapt to the growing challenges posed by global climate change.  To meet these challenges, Singapore has developed a strategy that combines mitigation efforts in its infrastructure with competency building amongst its business communities and populace to create a synergistic approach towards insulating itself against the possible future effects of global climate change.

In drawing up their blueprint for attacking global warming’s consequences, the Singaporean government first assessed its vulnerabilities to climate change, as well as the strengths and weaknesses of its programs already in place.  As denizens of a low-lying island city-state, Singaporeans are keenly aware of the possible effects of rising sea levels towards their homes and businesses, in addition to the changes in wind and precipitation patterns caused by changing atmospheric conditions.  Because the country is so small, it cannot produce much of its energy needs domestically, and must import fuel from abroad to meet its consumption habits.  The size of the country also limits the availability of renewable forms of energy, such as hydroelectric or geothermal sources.  Hence, the country is reliant on fossil fuels to meet its energy demands, and thus susceptible to fluctuations in oil and coal prices.  Additionally, as Singapore’s economy is highly export-based, it is an energy-intensive economy for its size.  These factors place additional pressure on the government to make sure that every watt of energy is used to its maximum ability. 

To its credit, even before the study was commissioned, the Singaporean government had already taken steps to begin to maximize its energy efficiency.  By 2007, 79% of the country’s power was from natural gas, with plans for further conversions towards gas sources in the near future.  The country is connected by a highly efficient mass transit system, and has policies in place that encourage its use and discourage automobile ownership.  By not subsidizing its energy industry, the government encourages competition amongst energy providers to minimize costs to consumers; this competition also ensures that energy can be purchased at a reasonable price by industries that need increased amounts to function effectively. 

While the country has a solid foundation to build upon to increase its energy efficiency, the Singaporean government recognizes that there is ample room to improve on the state’s “green” standing in multiple sectors.  The main push that the government is currently undertaking is to improve the energy usage of buildings throughout the country.  The first method being implemented is the mitigation of heat stress, or, the urban heat-island effect.  The heat island is a bubble of higher temperatures in urban areas created by the absorption of light rays by building faces and concrete.  This temperature bubble results in increased air conditioner usage by building occupants, creating a need for large amounts of energy.  Easing this effect would help to lower energy usage, and subsequently, energy prices, resulting in economic and environmental benefits alike.  To do this, Singapore’s Urban Redevelopment Authority (URA) has developed a program to increase the number of parks within the country limits, and the National Parks Board (NParks) has started a program known as Community in Bloom to encourage private gardening groups amongst Singaporeans.  The Community in Bloom program will provide advice on urban gardening, and the groups started will help to foster a greater sense of community, in addition to providing more plant cover to absorb light and heat energy.  NParks also has been undertaking a program to plant over sixty thousand trees within city limits to help combat the urban heat island effect.  While Singapore is already known as the “Garden City” because of its abundant greenery, these additional measures will help to ensure that the heat island effect will continue to be minimized within Singapore’s urbanized areas.

Another step that the government is taking to help maximize energy efficiency and minimize environmental impact from Singapore’s commercial and residential building infrastructure is to provide grants and incentives to upgrade existing buildings, as well as those under construction, and make them more energy-efficient.  For example, to support efforts by industry to refit machinery with energy-efficient models, the government has approved both a deduction on income from purchasing green equipment, as well as a one-year accelerated depreciation credit on qualifying equipment to ease tax burdens.  The government has also worked to provide additional incentives toward upgrading building structures by providing a $9 million grant towards subsidizing businesses that choose to renovate with green technologies.  Additionally, the Singaporean government has created a system, the Green Mark system, (which is similar to the United States’ LEED program) where energy-efficient buildings are rated and scored.  The highest rated buildings, Platinum and Gold, will be given a cash incentive of $6/m² or $3/m², respectively, as an award for meeting the higher standards.  The government is providing these incentives because it understands that, while green buildings are more profitable over the long-term, they are up to 20% more expensive to construct, and that extra start-up cost needs to be reduced so that businesses can stay competitive, and the country remains an attractive base for interested multinational companies. 

Because the main source of Singapore’s energy use comes from its industries, the government has taken extra steps to promote structural energy efficiency within this sector.  In 2002, the government introduced an audit program designed to provide industries with a comprehensive examination of their capital and recommendations for energy efficiency improvements.  While the companies are expected to bear the cost for the audits, the government has set aside money to subsidize 50 percent of the cost; as of January 2008, 87 companies had signed up for the audits.  Furthermore, the government is heavily promoting the use of the cogeneration and trigeneration energy production processes, whereby heat produced from fuel combustion, whether it is within industries, power plants or commercial buildings, can be captured and used to produce more energy.  The process of cogeneration “can increase the efficiency of power generation from 50% to more than 75% (22),” with trigeneration producing even more efficient results.  Improving these industries’ energy efficiency is not only good for the environment, but will also improve their balance sheets and competitiveness, a “win-win” situation for both parties.

Next week, I'll take a look at some of the competency-building strategies Singapore employs in its efforts to reposition itself as a greener state and a leader in the carbon-mitigation community, and take a stab at what this will all mean for the larger human community as well.  Stay tuned!  You'll find that this tiny country has a lot more to teach us than we think.

After Oil: The Coming Crisis? (And What To Do About It)

Oil.  It runs our cars, it puts food on our tables, and it creates many of the machines that our society today takes for granted.  But oil is a finite resource, and eventually we must face the inevitable question:  What happens to us, and the rest of humanity, when oil runs out?

The concept of Peak Oil is based on the premise that at some point in the near future, oil production will reach a climax, after which dwindling resources and increased demand will raise the oil price to the point where it will be too expensive for the majority of individuals and business entities to afford to buy it.  We've already seen what effects spikes in the price of oil have had on the daily lives of Americans and others; many of the Baby Boomer generation can still remember waiting in line to get gas for their cars.  While lately we've been spoiled by reasonably cheap gasoline and diesel prices, it is foolish of us to expect those prices to remain stagnant for much longer.  Increasing demand in China, India, Indonesia, and elsewhere will begin to raise oil and gas prices for all of us in the next decade or sooner.

If this trend continues, cars will eventually be too expensive to drive around.  Law enforcement, fire, ambulance, and supply trucks will all cease to function, which will cripple the effectiveness of such services.  Without the supply trucks to bring food, medicines, and consumer items to stores, Americans will not have any readily available means of feeding themselves, clothing themselves, or keeping themselves healthy.  The fact that many Americans are living in car-driven suburbs only exacerbates the problem:  because they have to drive everywhere to obtain essential services, Americans in the suburbs will be effectively stranded once their cars cease to run.  Even our technology will become ineffective extremely quickly:  computers and microchips require oil to produce.  I'll leave you to your imagination as to what would happen next.  This breakdown will, of course, not come peacefully, and it will not be limited to the United States.  Other developing nations will be affected just as much,  if not more so, due to more limited resources.  I imagine that if a crisis like this were to unfold, the death toll would be astronomical before things began to stabilize. 

So, what are we to do about this coming crisis?  Believe it or not, we already have a blueprint for success (and for failure) in the event that oil becomes cost prohibitive, and it comes from a place that most people would not ordinarily think to look to for inspiration.  In the late 1980s, the Soviet Union suffered from massive budget imbalances and subsequently collapsed, and two countries that had become almost completely dependent on Soviet oil suddenly were nearly completely without that resource.  Those countries were North Korea and Cuba.  

(I'm going to turn the next two paragraphs over to mental_floss' blogger Ransom Riggs, who can explain what happened far more succinctly than I can)

"North Korea froze. Their political structure was far too rigid and they didn’t move quickly enough to address the crisis. They had this top-down food distribution system where most people got their groceries from the government — and when the oil stopped, and their economy collapsed, the food distributions stopped, too. People starved to death at an amazing rate. Something like three million people died. Kim Jong Il stationed army units in every town in the country just to collect and dispose of the bodies, but even they were overwhelmed. And even while this was going on, the North Korean government ordered many of its farmers to grow non-food crops, like opium poppies, for export.

Cuba, on the other hand, responded quickly. Food production went local. It was mandated that every bit of arable land in Havana be used to grow crops. As a result, they made it through the collapse, and now the Cubans are eating better than ever — they have plentiful, organic, locally-farmed food, which is more than even many Americans have."

To be fair, however, the story of Cuba's success does come with one major caveat: that Cuba is a relatively small island nation. While it is restricted from trade with the US, Cuba was able to receive aid from other nations to help smooth its transition after it lost its source of oil. But in a worldwide crisis, who is there to provide aid to other countries when every country on the planet has to deal with its own set of problems?

Regardless, it seems to me that a reasonable solution in the event of an oil crisis is to downsize: make communities more walkable and accessible, rely on local produce and livestock to provide for community needs, and become more self-sufficient. The communities that manage to convert to a more sustainable lifestyle sound like the ones who will best be able to weather this crisis and prosper afterwards.

In the end, whether you believe in the Peak Oil crisis or not, we can all agree that downsizing certain aspects of our lives would probably be beneficial to us in more ways than not. If nothing else, more exercise from walking more places and less time spent on phones, computers, ipods, and televisions would be beneficial to our mental and physical well-being. Interaction with others on a personal level, rather than through video screens and audio devices, may also help to foster communication and more cooperation between community members. These changes are well within our means to achieve, if only we put our minds to them.

Hmm.  Looks like Karl Marx might've gotten something right after all.

Surge Protector: The Role of Governments in Promotion of Alternative Technologies

The inclusion of green technologies into the world’s energy production sectors presents a number of opportunities for both developing and developed countries alike to pursue a pro-jobs agenda while improving mankind’s environmental stance.  However, because these new technologies are in their relative infancies, support from governmental institutions are critical to provide entrepreneurs with the necessary incentives to overcome start-up costs and keep these technologies cost-efficient until technological advances can bring operating costs down.  In providing these incentives, it is imperative for governments to provide a stable policy foundation to give businesses the time to make plans for growth in the intermediate-to-long term.  Yet, both domestic and international governments continue to equivocate and push policy decisions off towards the future, instead of creating this foundation for the present.  This piece aims to show why sound and well-reasoned green energy policy should be a critical facet of any government’s vision for the future of the country it represents.

The last few years have seen remarkable investments by developed and developing nations alike towards alternative energy initiatives in both the public and private sectors.  A combination of tax credits, combined with billions in current and proposed expenditures in 2011 alone, has helped to subsidize both technological advancements and utility construction towards wind, solar, geothermal, and tidal energy sources.  Rising oil prices and public pressure provided the impetus for these investments, but recently the trend towards alternative energy sources has begun to stall.  Total investment in green technologies (public and private sector) has dropped 28% from 2011 fourth-quarter earnings (Q4) to a current 27 billion in funds between the United States and Europe.  This represents a decrease of 22% from the previous year’s Q4 levels, and that pattern appears likely to continue in the future.  The primary tax credit for wind power in the United States, the Production Tax Credit, will expire at the end of 2012 unless renewed by Congress, and European governments are simultaneously looking to cull alternative energy investment as part of a general Union shift towards austerity and elimination of nonessential government services.  These policy changes have not gone unnoticed by the private sector; by the end of Q4 in 2011, private sector investment was down 87% from Q1 of the same year due to the slowing performance of alternative energy stocks.  A lack of coherent governmental policy vision for this sector will continue to hamper stock performances, and consequently act as a drag on private market investment into this field.  Providing a more stable policy foundation will help to ensure that nascent green technology companies can compete with established energy sources and carve out their own markets in the near future.

Additionally, in today’s job-starved economies, investment in green energy can provide a new, and environmentally responsible, source of employment opportunities.  Recently, leaders in the European Union met to discuss a new, pro-growth agenda to stave off an impending recession for the continent.  In their proposals, they discussed the impact of a green energy focus in providing millions of jobs over the next decade, commenting that “Job growth in the green economy has been positive throughout the recession and is [forecast] to remain quite strong.  Only the energy efficiency and renewable energy sectors could create 5 million jobs by 2020”.  To this effect, they propose a combination of environmental tax increases to encourage carbon-neutral industry formation, and a shift of taxation policies away from labor activities and towards energy and emissions outputs as a deterrent to traditional energy usage.  The commission’s representatives state that this pairing of tax strategies could lead to the creation of as many as 1.5 million new jobs, in addition to the two million jobs that can be created from enacting “energy-efficiency measures”, and the 500 thousand jobs created from the “increased recycling of key materials”.  Overall, the plan argues that over 20 million jobs could be created by 2020 if the reforms are adopted by EU member states.

While the Brussels plan offers promise as a starting point for a general transition towards an alternative energy economy, it is too early to tell at this point whether the plan will be ratified by the Union’s members.  It is important to keep in mind that the climate in Europe is currently not conducive to additional spending and taxation, as Europe’s leaders are taking a page out of the Austrian school of economic thought and pursuing a general program of austerity in the hope that fiscal discipline will stimulate economic growth.  Across the pond, the US is in an election year, and partisan gridlock in Congress will keep many policy initiatives from being enacted.  Nevertheless, it is imperative that green energy incentives and investment be continued, even in the face of prevailing attitudes towards budgetary constraints.  We have already seen that, without government support, private sector investment can drop off markedly because of the inherent risks associated with emerging energy markets.  It will take a solid, stable, long-term policy base to provide markets with the reassurance to invest in alternative energy utilities.  If the proper incentives are put into place today, green energy will continue to be a growth industry throughout the coming decade, and provide developed and emerging economies alike with a source of desirable employment.  

Welcome!

Hello!


Welcome to the Green Giant green energy blog!  With occasional clarity of insight and (hopefully) spot-on humor, I'll be commenting on different facets of alternative energy politics and policies, and all those other topics you wouldn't want to discuss at the dinner table with your in-laws.


That said, the Green Giant is also going to touch on some of the really clever and creative technological advances taking place within the green energy community these days.  It will hopefully shed some light on all the possibilities a greener planet can provide for mankind today as well as tomorrow.


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