The Energy Tax

Rate Watch #677 The Energy Tax
July 3, 2009
by Dick Lepre
dicklepre@rpm-mtg.com
www.loanmine.com

The Energy Tax

I want to apologize at the start for the somewhat disjointed nature of this piece. I want to get it out Thursday because of the Holiday and my wife was ill yesterday and I had to take her to the ER. She has asthma which triggered a respiratory infection. In any case, I started this and really did not have enough time to finish it as well as I could have. The ideas are all here but not pulled together as well as they could have been.
The House passed an energy tax bill last week which will probably be revised substantially by the Senate. As written by the House this bill is a bit bizarre. It starts from doubtful premises, increases taxes and threatens our trading partners with tariffs if they do not constrain emissions.
I am by no means convinced that man-made global warming is really significant. I wrote about this a few years ago and my views have not changed substantially. My newsletter of four years ago is here.

There is a Good Side to This

To me, the House Bill starts with the dubious proposition that there is an almost existential problem created by our production of CO2. I want to give another view. Since the start of the Industrial Revolution humans have vastly changed the face of the planet. This is done through farming, dam building, creation of cities which are "urban heat islands", and we have created industries which spew stuff into the atmosphere and water. Our consciousness of this is much greater than ever before and our intentions are much better but getting the science correct is still vital.

Concluding that CO2 is the main culprit of the way mankind had reshaped the surface of the planet is a bit narrow. The reality is that this is complex. No one really knows how much man made CO2 has caused temperature increases. The science is simply too complex. I do want to make a very important point about science. Statements such as "most scientists believe that humans are responsible of global warming" or "IPCC concluded that they are 90% certain that global warming is due to man-made CO2" are not scientific. Science is not done by consensus. Any statement that something is 90% likely to be true is, by definition, not scientific. That does not mean that such an opinion is not of value. It only means that it is not science.

Just because a vast majority of scientists believe something does not make it scientific. Science is not the collective opinions of scientists. Science is a process of formulating theories and having them stand by having attempts to disprove them fail. Science rarely reached ultimate answers. It yields our best intellectual estimates of out understanding of the physical world at the present.

I certainly believe that CO2 is a greenhouse gas and causes increases in temperature. I am by no means convinced about the relative impact of man-made CO2 on temperature variations. My opinions are detailed in that piece from four years ago.

Even though I may not believe that anthropogenic global warming is a significant factor in explaining the multidecadenal changes in average temperature and even though I may be concerned about the consequences of the House Bill which also has some "this will never work" pieces decreeing that the US will tariff nations which do not follow suit the fact is that lurking here is the heart of a really good idea. Unfortunately the really good idea was lost.
That really good idea is clean energy independence. Contriving a method of encouraging a method for eliminating imported oil and eliminating shocks associated with energy produced by commodities with volatile prices is a good idea. If the cost of this energy is as low or lower than energy from fossil fuels that this becomes a great idea.

The history of our dependence on oil follows this form: oil prices rise, everyone gets upset, we start talking about alternatives, oil prices fall making alternatives too expensive, we give up on alternatives. The nice things about this very bad bill is that it potentially breaks this mold.

The two obvious present sources are nuclear and solar. While I, as a guy with a degree in Physics who has spent enough times at places like the Nevada Test Site am not afraid of dealing with rad waste I have no interest in spending time convincing others of this. We spent a ton of money developing a place in Nevada to store this and politicians have taken this apart.

A large part of the solution in the short run is solar photovoltaic (PV) power. The disadvantages of solar are that it is much more effective in Arizona than it is in Minnesota. Electrical power has losses when delivered over large distances. PV generates nothing at night. A dependence on PV likely will require more advanced methods of storing energy. The advantage of PV is that it makes use of a source of energy which will not vary in cost.
There is an article on a sort of Moore's Law for PV from IEEE. I would regard that as an optimistic view of the path of PV.
While one might make a case that this cap-and-trade system will help new technologies it would have made a lot more sense to me to simply help these new technologies rather that create more government infrastructure.

I believe that getting into the mind set that energy is a bad thing and we have to use less of it is nonsense. What I believe we need is more research in physics to find massively large new sources of energy which do not have any of the annoying environmental effects of coal or the rad waste storage problems or nuclear.

If I am going to be technical what we need is new sources of power. This is defined in physics which starts with arbitrary units of length, time and mass and goes on from there. Power = work/unit of time. Work = Force x distance (an oversimplification to make a point). Force can be defined by the unit of force called the newton. A newton is the amount of force necessary to accelerate a 1 kilogram object so that its speed increases by 1 meter/second each second.

To make this more casual: work is getting something done (moving a car), energy is the ability to do that work and power is the ability to do that work quickly.
What is lurking in the nether regions of my mind here is the following: we may find that there is nanotechnology which enables us to created macroscopic objects - let's call these "ham sandwiches" - but that these require a lot of energy. It is only breakthroughs in physics which will give us access to these energies. The only such thing out there at present is controlled fusion. This is research which has been going on a very long time. The hope is that the NIF facility here in Livermore will lead to the long sought breakthrough. All of the NIF lasers were fired up in May and the hope is that this machine can achieve fusion in 2010.

It is interesting and rarely discussed that NIF just happens to be at what was one of out two nuclear weapons research facilities - Lawrence Livermore Laboratory. In the 1970's and 1980's there were underground nuclear test done using the basic concepts which NIF seeks to use. That all stopped when testing ceased in 1988.

To me, as someone who used to work there, the amusing part of the NIF story is that is was pitched as "stockpile stewardship". "Stockpile stewardship" more or less means methodologies of testing nuclear weapons so that we are sure they still work after years of storage rather than having underground nuclear test which we agreed by treaty not to do.

Dick Lepre
RPM - SF
580 Pacific Avenue
San Francisco, CA 94133
dicklepre@rpm-mtg.com
Web site: www.loanmine.com
Blog: economy.typepad.com
(415) 343.6789 (direct dial number)
(866) 488-2051 fax

Comments

[lewis cary]

G. Warming is probably influenced by us Humans, but there are other huge effects not related to us. It makes some sense to stop Freon etc. I am for changes that will not cripple our economy and are predicted to be very (90%) effective.
WRT the energy bill passed be congress. Unless I am missing something I think the "energy audit" mandated to sell any home *will* cripple the economy. I wrote to all the Democrats in my state, but was told to stick with the representatives in my area. These happen to be Republicans and the Democrats are the one's needing a clue. Sorry that I bothered them.

Lew