This passage caught my eye in a recent Wall Street Journal article:
For years, the big criticism of alternative energy was cost: It was too expensive compared with energy based on traditional fuels like coal and natural gas. Even though the fuel was often free - such as wind or the sun’s rays - alternative-energy producers had to plow lots of money into finding the best way to capture that energy and convert it into electricity. Fossil-fuel producers, on the other hand, could draw on billions of dollars in infrastructure investments and decades of know-how.
Now the equation is showing significant signs of change. Costs are falling for some alternative-energy sources, driven by new technology and renewed development interest.
Alternative energy still can’t compete with fossil fuels on price. But the margins are narrowing, particularly since oil and gas prices have been rising. The math looks even more favorable if you consider the environmental cost of fossil fuels - which most purely economic calculations don’t.
I emphasize the above phrase because I believe that a carbon cap is exactly the sort of mechanism that will lead to new technologies and increased interest. I have said many times that alternative sources of energy cannot compete with fossil fuels until they are comparable in price, and some of our readers have gone further, saying that requiring people to buy the more expensive alternative is bad governance.
A carbon cap can help narrow this price gap using market forces rather than tax increases - if government intervention rubs many of us conservatives the wrong way, perhaps we can look at a carbon cap as the lesser of two evils.
Developing these new technologies will not be without cost - but we can afford it. And we should look at these costs as an investment, as I believe that increased use of renewable sources of energy will ultimately be beneficial to the economy.
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Trackposted to Outside the Beltway.
This entry was posted on Wednesday, March 21st, 2007 at 11:15 am and is filed under Alternative Energy Technology, Cap and Trade, Politics/Government . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 21st, 2007 at 4:32 pm
It has become abundantly clear to me that the ultimate goal goal of this site is to sell the idea of carbon caps. Achieving energy independence is a secondary concern, if it all. So lets assume I buy into the idea of carbon caps (and I dont) as an alternative to a government bureaucracy to regulate carbon. How does this work? If I decide to build a steel mill (burns coke makes lots of CO2) somebody has to make sure that I purchase the necessary carbon credits. That wouldnt be the government? Who makes sure that the certificates of carbon are not fake? Who makes sure that the people who sell them are legitimate? Al Gore owns a company which sells carbon credits. How does anybody know or enforce how his company actually reduces carbon emissions by the amount he sells? There is room for massive fraud here which means a federal bureaucracy will have to be created to watch over it.
As to the notion that this will be beneficial to the economy, this is absurd. Just because the cost isnt in the form of a tax, but is in the increased cost of doing business doesnt make it any better for the economy than a tax (which is not good at all). Increasing the cost of energy is always a drag on the economy. The money spent on reducing carbon or finding ways to do it does not benefit the economy, it merely consumes wealth just like any other regulation, or just like welfare spending. Maybe we can afford it now, but if you look at the trend in welfare spending and regulatory compliance, you will see that the day is comming where will not be able to afford it.