The Schwartz Energy Blog
Surprise! Cheap Energy Is The New Policy
Cheap energy has for decades been the energy policy of the United States and is once again. This is no surprise as cheap energy is very popular with everyone except environmentalists, who dislike it because higher prices encourage efficiency and accelerate the shift toward cleaner technology.
Two events have conspired to defeat any momentum toward raising the price consumers pay for energy. The first was the recession and rising unemployment, which at a minimum makes the timing bad. The second event was the shift in power in the Senate resulting from the election in Massachusetts. There is now a belief widely expressed in the Senate that cap and trade or any other scheme that raises the price of energy during the recession is dead. The focus of policy has shifted mainly to the supply side – cheap natural gas, nuclear power, renewables and, of course, off shore oil – all justified mainly by energy security rather than climate change.
Cheap energy misaligns incentives and undermines any effort to meaningfully deal with climate change. There are two options left:
- Regulating efficiency does work as we have seen, particularly in California. Tough and rising standards make it harder to be inefficient. But they are also politically difficult to achieve.
- Senator Maria Cantwell has proposed something else that just might fly, Cap and Dividend. The idea is that the money made by selling permits under the cap would be sent as dividends to consumers to compensate for the higher price of energy. It is not piece of rhetorical twist and might be more popular. For an excellent overview on Cap and Dividend, see this February 4th article from the Economist.
Unfortunately, however, for the near future cheap energy will encourage demand and extend the time horizon needed to recover investments in efficiency and new technology.
Dealing with Climate Change is Very Hard
Several events in recent weeks demonstrate clearly why climate change may be the most difficult challenge our civilization has ever faced. The uncertainties in the science, both perceived and real, still remain, leading to a broad spectrum of concern ranging from “What, me worry?” to literally “The sky is falling!” The things we must do [...]
China discovers Climate Change
I have been impressed with China’s recent response to climate change. While the scientific community in China has been engaged for years, Hu Jintao seems to have discovered climate change only a few months ago. He is now a passionate campaigner, having taken a scientific and engineering approach to the problem in keeping with the [...]
How I could be wrong
As a scenario planner I always ask myself how I could be wrong. The question usually leads to interesting scenarios. In my first post I laid out my basic thinking, but in the last week I had two conversations that suggested how I could be wrong in an important way.
In times of major technology [...]
My Point of View
The unofficial energy policy of the United States for most of the last fifty years has been to maximize demand, minimize supply and buy the rest from the people that hate us the most. This perverse reality was not the intended result of energy policy. Rather it was—and is—the result of many policy choices, only [...]
Impact of Climate Change
Climate change poses unique challenges to U.S. national security and interests. Yet current approaches and methods for understanding climate change and its impacts fall short in their efforts to help us anticipate and prepare for these eventualities. This white paper is intended to help imaging potential impacts of climate change and to develop alternative analytic [...]
The Coming Bust in Clean Technology
New clean technologies are the great hope for dealing with the challenges that the world faces in so many arenas, whether it is climate change, pollution, water, waste management and more. As the world grows richer and more populous, the pressure on our natural systems will become ever more intense. The only lever we have [...]
American Energy Economics: Maximize demand and minimize supply…
When it comes to energy, America is in trouble – and it’s getting worse. If America keeps on its present path, our energy will be more expensive, polluting, unreliable and insecure. The old deal our nation made between energy producers and consumers is broken. What is the new deal! On this blog we’ll investigate this [...]
Peter Schwartz
GBN cofounder and chairman. An internationally renowned futurist and business strategist, Peter previously headed scenario planning for Royal Dutch/Shell and directed the Strategic Environment Center at SRI International.
Read more.