Friday, September 21, 2012

One more irony

The NY Times recently reported that U.S. CO2 emissions are down.  The substitution of natural gas for coal is the cited reason.  The political favorites (wind, solar, biofuels, etc.) did not get any of the credit.  In terms of the 2012 game of "you did not build that," it is clear that the credit goes to private energy markets.

No, they are not totally free of tax credits and other meddling, but that would not be a bad idea.

This morning's LA Times reports the extent to which taxpayers and ratepayers will be on the hook for more of the least cost-effective alternatives.  These have already spawned lobbies to assure that they will go on. We know the ethanol story.  It is so awful that it has no serious support, but it may be here to stay.

The other story is that the U.S. has slipped from it's position as #1 carbon emitter.  China is now #1.  What to do?  Export more windmills?  There is a better way.  Become an exporter of cheap natural gas.  The latter can actually happen.  The WSJ documented the falling price of natural gas -- and the prospects for U.S. natural gas exports.

Carbon is a global common pool. The capacity of markets to "solve" the global CO2 problem will always be pitted against the efforts of policy makers to do the same thing.  You would think they could work together and you would be wrong.