The biggest question in my mind when reading this article is "how are the relative costs and values actually being calculated?"
How can we say that $1.00 spent on clean energy will bring $11.00 in benefits, when $1.00 on counter-terrorism will bring $0.30 in benefits? How much of it is speculation?
In other words, what was the method for quantifying the amount of benefit that we see from the investment?
This article doesn't make any sense. Lomborg says that cap-and-trade returns 90 cents on the dollar, but investing in clean energy would return 11 dollars on the dollar. But the whole case for cap-and-trade is that it's the most economically efficient way to invest in clean energy.
No, cap-and-trade is supposed to be the most cost-effective way to reduce emissions. Investing in clean energy has many other benefits (improving science and tech, creating new industries, job creation, lower cost of energy, etc).
I understand that not all of the money under a cap-and-trade system goes to generating new clean energy. For example, in many cases using a kilowatt of energy we already have more efficiently is less expensive than generating a new kilowatt. However, the idea that we should design our energy policy around maximizing new energy creation even when it's more cost effective to make our current products more energy efficient makes no sense, assuming we take economic benefit to mean wealth created per dollar spent. Unless Lomborg simply means that investing all of our money in clean tech would create more jobs, in which case that's just an example of the broken window fallacy.
(And I understand that many cap-and-trade schemes also have provisions for things like paying South American countries to reduce their rate of deforestation, which is neither a case of conservation of existing energy nor production of new energy, but this amounts to only a few million dollars per year.)
> However, the idea that we should design our energy policy around maximizing new energy creation even when it's more cost effective to make our current products more energy efficient makes no sense, assuming we take economic benefit to mean wealth created per dollar spent.
Sure it does. Even if we made all of our current products us 0 energy, we might want more energy for other things than the amount saved.
BTW - is it actually more cost-efficient or is that assumed because it's convenient for some other argument?
In the sense that pure markets are the most effective known way to efficiently allocate resources. In reality they can fall short in any number of ways.
Cap-and-trade for sulfur dioxide is the poster child. It has worked well in reducing overall levels quickly and cost effectively: http://www.grinningplanet.com/2004/02-12/cap-and-trade-pollu... . But I don't know of any other examples of cap-and-trade so it's not clear it's an all-purpose strategy.
It works as long as you have an accurate historical baseline and you are able to accurately track the amount emitted by each source. IIRC cap-and-trade has been used successfully in a few other places, but I don't know where offhand.
On the other hand, I do know that a tax has never solved a single air pollution problem anywhere in the world.
"Even if we made all of our current products us 0 energy, we might want more energy for other things than the amount saved."
Let's say it costs 5 dollars to save one kilowatt of electricity. Let's also say it costs 20 dollars to generate one new kilowatt of electricity. Both ways, we get one new kilowatt of electricity, but one way is less expensive. Of course at any given time we would be pursuing a mix of strategies that involve both new generation and conservation. We should always pursue the mix of strategies that is the least expensive, assuming the cost of carbon is internalized.
> Let's say it costs 5 dollars to save one kilowatt of electricity. Let's also say it costs 20 dollars to generate one new kilowatt of electricity. Both ways, we get one new kilowatt of electricity, but one way is less expensive.
Except that energy saving is capped. If we're using 5kw and we want 100kw, saving that 5 is nice but only 5% of the goal.
And yes, we're going to need significantly energy than we have today. The first of those "extra uses" are also known as India and China.
Also, while the assumption that energy savings costs 25% of new production costs is convenient for an argument, it isn't all that common. People don't spend more money than they have to. As energy costs have gone up, the low-hanging fruit has been picked.
Of course, some folks cheat by including "savings" that requires changing behavior/reducing value and assuming that that's cost free. That's wrong because minimum energy use isn't the goal - the goal is to maximize value for cost. Just because you don't see the value of something that uses energy doesn't mean that everyone else agrees.
"Except that energy saving is capped. If we're using 5kw and we want 100kw, saving that 5 is nice but only 5% of the goal."
Your argument is flawed because you are assuming that you either have to create new electricity or conserve electricity and you can't do both. The least expensive way to get X units of new energy is always going to be some mix of conservation and creation, and the free market lets us find the most efficient point along the spectrum.
"People don't spend more money than they have to. As energy costs have gone up, the low-hanging fruit has been picked."
The technology used to save can: what we want is new useful energy, not new energy per se. If a new use, using current technology, would require 100 W, but using energy-saving technology [developed to save on current use] would only require 50 W, then investment in current savings will produce future savings. Compare the trends in electricity use in California and the rest of the US since the '70s: California's per capita use has been nearly flat, while the rest of the country's has grown substantially.
Dropping the cost to create solar energy has a larger long term impact than building more solar cells with existing tech. If we want to change to 100% green tech in 20 years it may be a good idea to postpone most investments in green infrastructure 5 years and focus on research. Think in terms of a render farm if you buy 100k in PC's now and calculate for 5 years you generate a result. But by waiting one year to start and then buing 100k in PC's you will finish sooner and have a more valuable render farm.
Certainly true, but the way you spur innovation in any field is to make that innovation profitable. And of course more basic research funded by government is always good as well.
How do they have any idea of the return on R&D? It's like trying to predict the odds of fusion power becoming possible if we spend a billion dollars researching it. Who knows?
A "solution" proposal like that doesn't make me trust the whole approach very much. There are many underlying issues besides buying a heap of vitamins for x dollars. I think most children would not benefit so much from the vitamins if the situation that made them malnourished stays the same. Perhaps they would be slightly more efficient soldiers, though.
Changing the political situation surely is more complicated than simply throwing money at it.
Odd how in these situations no one ever thinks of simply funding companies that would generate the most economic growth. And yet if you diff present conditions against conditions 100 or 500 years ago-- even in the poorest places-- I'd bet most of the improvement came not from explicitly benevolent projects so much as ordinary economic growth.
Obviously the two are hard to disentangle, but even in a project like shipping vaccines to poor countries, think about how much better it is to have things like fridges, phones, aircraft, etc. To say nothing of all the infrastructure in the labs that make the vaccines, etc, etc.
My whole point was that what actually helps children in developing countries most is not heroic rescue missions but boring infrastructure improvements. That is, the stuff that helps children in developing countries most is the stuff that helps everyone, like making power transmission more efficient, or cloth manufacture cheaper.
Lots of YC funded startups make the world more efficient in some way. Octopart, for example. They make the electronics industry more efficient, and that helps everyone, just in a quiet, diffuse way.
Absolutely true, but does it help the children now? It's a bit like antimalarial research, of course it will help millions of people when a vaccination is finally available. But it won't help those children who will be infected next week, free mosquito nets and free drugs might help.
Looking only at the longterm economic development perspective you are absolutely right, but if you want to help those suffering right now, you are wrong.
Your quote:
"And yet if you diff present conditions against conditions 100 or 500 years ago-- even in the poorest places--"
What would starving people think about us when we tell them that we are not giving them any food because it's not worth it in the long term?
I read recently that the largest increase in human life expectancy came from the advent of indoor plumbing, which still does not exist in much of the world. I don't know the French word for Plumber, but perhaps we should start the equivalent Sans Frontieres for them.
I agree that economic growth outweighs anything else.
But why would funding companies be the best way to generate the highest economic growth? There are many obstacles that prevent economic growth, especially in poor countries. Examples are high child mortality, malnourishment, corruption, lack of any kind of (micro-)credit, lack of education, tariffs, red tape, etc.
Taking away such obstacles can do very much for economic growth. The main advantage of funding companies is that their profits are returned to the investors.
E.g. the 1846 repeal of the Corn Laws had a much greater positive effect on economic growth in Britain than any investment in specific companies.
The repeal of the Corn Laws led to a massive flow of people to the cities, providing much needed labour to fuel the industries there. And by lowering the price of food, the entire country people had more money to spend on other goods. It also created a bigger market for the surplus of grain that the U.S. was able to produce, which gave a huge boost to their economy, and allowed it to continue to absorb enormous numbers of immigrants.
Also, the repeal of the Corn Laws became a landmark for the free trade movement, leading to a more efficient division of labour between states that gave a huge boost to economic growth that continued throughout the 19th century.
"Spending an extra dollar cutting C02 to combat climate change generates less than one dollar of good, even when we add up all the economic and environmental benefits."
I don't think there's any sort of consensus on that. I've seen varying figures proposed by economists. An accurate cost benefit analysis would seem to require too many facts we just don't know yet.
Not one figure passed the smell test. If you can actually say "1 dollar here or there provides x or y ROI" life would be pretty simple. It isn't simple.
For my part, I would put every penny on genetic engineering R&D. The ROI would either be zero or infinite.
Of course, some of these goals counteract each other. If we treat disease, we increase population and thus hunger and climate change. I wonder what kind of ROI we get on investing in population control.
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[ 3.4 ms ] story [ 88.9 ms ] threadHow can we say that $1.00 spent on clean energy will bring $11.00 in benefits, when $1.00 on counter-terrorism will bring $0.30 in benefits? How much of it is speculation?
In other words, what was the method for quantifying the amount of benefit that we see from the investment?
(And I understand that many cap-and-trade schemes also have provisions for things like paying South American countries to reduce their rate of deforestation, which is neither a case of conservation of existing energy nor production of new energy, but this amounts to only a few million dollars per year.)
Sure it does. Even if we made all of our current products us 0 energy, we might want more energy for other things than the amount saved.
BTW - is it actually more cost-efficient or is that assumed because it's convenient for some other argument?
Cap-and-trade for sulfur dioxide is the poster child. It has worked well in reducing overall levels quickly and cost effectively: http://www.grinningplanet.com/2004/02-12/cap-and-trade-pollu... . But I don't know of any other examples of cap-and-trade so it's not clear it's an all-purpose strategy.
On the other hand, I do know that a tax has never solved a single air pollution problem anywhere in the world.
Let's say it costs 5 dollars to save one kilowatt of electricity. Let's also say it costs 20 dollars to generate one new kilowatt of electricity. Both ways, we get one new kilowatt of electricity, but one way is less expensive. Of course at any given time we would be pursuing a mix of strategies that involve both new generation and conservation. We should always pursue the mix of strategies that is the least expensive, assuming the cost of carbon is internalized.
Except that energy saving is capped. If we're using 5kw and we want 100kw, saving that 5 is nice but only 5% of the goal.
And yes, we're going to need significantly energy than we have today. The first of those "extra uses" are also known as India and China.
Also, while the assumption that energy savings costs 25% of new production costs is convenient for an argument, it isn't all that common. People don't spend more money than they have to. As energy costs have gone up, the low-hanging fruit has been picked.
Of course, some folks cheat by including "savings" that requires changing behavior/reducing value and assuming that that's cost free. That's wrong because minimum energy use isn't the goal - the goal is to maximize value for cost. Just because you don't see the value of something that uses energy doesn't mean that everyone else agrees.
Your argument is flawed because you are assuming that you either have to create new electricity or conserve electricity and you can't do both. The least expensive way to get X units of new energy is always going to be some mix of conservation and creation, and the free market lets us find the most efficient point along the spectrum.
"People don't spend more money than they have to. As energy costs have gone up, the low-hanging fruit has been picked."
http://www.salon.com/news/feature/2008/07/28/energy_efficien...
>Your argument is flawed because you are assuming that you either have to create new electricity or conserve electricity and you can't do both.
Huh? In my example, I did both.
I should have written that the low-hanging fruit is being picked.
The fact remains that expected energy demand exceeds current capacity. That means that savings can't get us out of the problem.
Also, if you care about CO2, you want to replace existing sources even if the existing sources provide enough energy.
But then, by the same logic it is better to wait another year...and yet another year...etc. You have to start some day, don't you?
Is it?
A "solution" proposal like that doesn't make me trust the whole approach very much. There are many underlying issues besides buying a heap of vitamins for x dollars. I think most children would not benefit so much from the vitamins if the situation that made them malnourished stays the same. Perhaps they would be slightly more efficient soldiers, though.
Changing the political situation surely is more complicated than simply throwing money at it.
Obviously the two are hard to disentangle, but even in a project like shipping vaccines to poor countries, think about how much better it is to have things like fridges, phones, aircraft, etc. To say nothing of all the infrastructure in the labs that make the vaccines, etc, etc.
Lots of YC funded startups make the world more efficient in some way. Octopart, for example. They make the electronics industry more efficient, and that helps everyone, just in a quiet, diffuse way.
Looking only at the longterm economic development perspective you are absolutely right, but if you want to help those suffering right now, you are wrong.
Your quote: "And yet if you diff present conditions against conditions 100 or 500 years ago-- even in the poorest places--"
What would starving people think about us when we tell them that we are not giving them any food because it's not worth it in the long term?
But why would funding companies be the best way to generate the highest economic growth? There are many obstacles that prevent economic growth, especially in poor countries. Examples are high child mortality, malnourishment, corruption, lack of any kind of (micro-)credit, lack of education, tariffs, red tape, etc.
Taking away such obstacles can do very much for economic growth. The main advantage of funding companies is that their profits are returned to the investors.
E.g. the 1846 repeal of the Corn Laws had a much greater positive effect on economic growth in Britain than any investment in specific companies.
The repeal of the Corn Laws led to a massive flow of people to the cities, providing much needed labour to fuel the industries there. And by lowering the price of food, the entire country people had more money to spend on other goods. It also created a bigger market for the surplus of grain that the U.S. was able to produce, which gave a huge boost to their economy, and allowed it to continue to absorb enormous numbers of immigrants.
Also, the repeal of the Corn Laws became a landmark for the free trade movement, leading to a more efficient division of labour between states that gave a huge boost to economic growth that continued throughout the 19th century.
I don't think there's any sort of consensus on that. I've seen varying figures proposed by economists. An accurate cost benefit analysis would seem to require too many facts we just don't know yet.
http://climateprogress.org/2007/09/17/debunking-bjorn-lombor...
For my part, I would put every penny on genetic engineering R&D. The ROI would either be zero or infinite.