Will CO2 reduction save or cost money?....

Today’s post: Wednesday, 5-20-2009

We need an 80% reduction in fossil fuel use by 2050 to avoid the worst global warming effects. And, practically speaking, we need to also double our electricity generation and double the useful work done per unit of electricity & other energy sources as well during that same time to have a decent economy.

But will CO2 reduction save or cost money?

Two emails I get this week suggest opposite answers.:

“Help curb global warming while saving consumers money” is the email from the Union of Concerned Scientists.

“Help Stop the National Energy Tax” is the email from the Republican Party.

It seems they expect different answers to the question will CO2 reduction save or cost money.

The Union of Concerned Scientists sounds more like they know what they are talking about as they include the results of an extensive analysis.

And, as is typical of the current Republican Party, they simply rely on their readers reacting to “taxes” as a bull reacts to a waving red flag.
My suspicion though is that they are BOTH correct despite the seeming incompetence of the current Republican party.

Here’s the statement from yesterday’s email from the Union of Concerned Scientists.:
"Today, the Union of Concerned Scientists (UCS) released the Climate 2030 Blueprint, a peer-reviewed study showing that the United States can dramatically cut global warming pollution while saving households and businesses in every region of the nation billions of dollars in energy costs.

The study shows that combining energy and transportation policies with a strong limit or "cap" on emissions-set at 56 percent below 2005 levels by 2030-would save the average U.S. household $900 on electricity, heating, and transportation costs in 2030. In that same year, businesses would benefit from collective net energy savings of $130 billion." "

I have reason to believe that this analysis is correct or nearly so.

When all the current Republican Party has to offer is in essence, “Taxes are bad. And we believe the current cap & trade efforts are an energy tax.” -- and says virtually nothing else at all, why do I think they might be correct that CO2 reduction might cost money similar to a new tax?

How can they both be correct?

The simple answer is to look at when the statements are correct.

Today, we depend massively on petroleum for transport and burning coal for generating electricity.

So when cap & trade and other CO2 reduction programs in some way costs the companies that provide petroleum and coal or which use them more money, they will charge us more to stay profitable and to survive.

Worse, there is evidence that cap & trade systems may be manipulated in a way that increases their cost to everyone concerned.

That’s why I favor having them phase in slowly and to have their full effect conditional on more renewable energy sources becoming actually available to do the job at what will then be a LOWER cost while making much more massive increases in renewable energy occur much faster then is now expected.

However, if we do build the renewable energy sources well and quickly and get to the point where we have cap & trade AND various kinds of carbon taxes, our real energy costs will be dramatically lower than they would have been had we not acted.

If we fail to act, we will have $8 to $10 a gallon costs for gasoline and diesel fuel due to global economic and population growth. And paying for the costs of pollution, armed forces to ensure oil supply, and the costs of global warming will all be dramatically more. So the taxes to pay for those will also be much more.

So my emphasis and that also I believe the country should emphasize is to dramatically speed up bringing much more renewable energy online, while postponing somewhat the full effect of cap & trade and carbon taxes, etc.

A second way to cut the initial cost of switching to an economy NOT based on fossil fuels is to work out ways to run our existing economy with less energy.

The recent sharp increase in the mileage required for new cars is clearly an extremely desirable and large scale step in that direction.

This may cause buyers to pay up to $1300 more for a new car but will return something like double that for sure in net savings if gasoline prices stay as low as they are now and much, much more than that if gasoline prices go up as I think they will.

President Obama also is quoted as saying this.:

"Consumers pay less for fuel, which means less money going overseas and more money to save or spend here at home. The economy as a whole runs more efficiently by using less oil and producing less pollution," he said. "And companies like those here today have new incentives to create the technologies and the jobs that will provide smarter ways to power our vehicles."

The president also said it will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years.

He said, the reduction of oil burned in that five years in the United States will equal all of a whole year’s U.S. imports from Saudi Arabia, Venezuela, Libya and Nigeria combined.

And, he pointed out that is a truly huge sum of money that will no longer leave the United States. That will improve our economy as well since those dollars will be available to fuel our economy when they would not have been available here otherwise.
This action also will increase our national security in ways that likely will save us money as well.

So, even though there will be some up front costs and cap & trade may cost far too much at first, if we focus mostly on these kinds of conservation steps, adding new technology that saves energy, and building huge amounts of renewable energy & the network to transport it to where it will be used, our costs soon WILL be far less than they would have been and our economy will be dramatically stronger.