5 ms·

Smart move because there is not economic incentive for most "green energy" projects. Apologies to my liberal friends, but until you go full-Marxist in the first

Smart move because there is not economic incentive for most "green energy" projects. Apologies to my liberal friends, but until you go full-Marxist in the first world countries, market-cost will always win. Game on!

kbenson 10y ago
Until we correctly account for negative externalities and stop giving certain incumbent energy industries a free ride (or worse, rebates), market cost won't reflect real cost, and economic incentives end up really being political incentives.
- marcgcombi 10y ago
  Aren't the incentives in place to encourage exploration and improve supplies and supply stability? I suppose that you're correct, to some degree. However, in the end, the equation is pretty simple when (cost of production + profit) > (the cost of an equivalent product, already in the market) then people will engage in that particular commerce. It's no more complicated than that.
  - kbenson 10y ago
    Cost of production includes cost of locating and developing resources, so incentives that offset the cost of these allow for equivalent profit at a lower price. The real point though is that the negative externalities are not included in the cost of production, because we as a society do not attribute their cost to the company that causes them. The simplistic example is the company that pollutes the local water and the overall health of people in the community goes down. Even without major sicknesses and death, if it causes an average of an extra sick day per year for the local people, that's a major impact on the entire region[1]. But then what if we look at hard a little more removed? What if the river pollution affects other industries more directly? For example,if there's a ranch bordering the river, what if it makes the cattle sick, even just sicker than normal? What if it affects Salmon spawning downstream? These are all costs borne by others, so are not accounted for in the cost of the product the original company produces, but we all pay for it in litttle or big ways. What if it just affects a species negatively without an industry behind it? If it's causing the extinction of some fish or frog species, what is the cost of that? You could say it negatively affects even human being in some small way to cause an extinction, but I don't know how to quantify the cost. Originally we didn't account negative externalities because we didn't know it mattered. In the few cases where it was obvious we used the courts to deal with it. Now we're learning (or have learned) that things are interconnected much more than we believed, but we're stuck with a bunch of industries that are used to not paying for this, and a public that's used to the current costs of goods and services, and it's hard to change that. But hard to change doesn't mean it's economically sound. 1: http://ohvec.org/mountaintop-removal-articles/health/ http://ohvec.org/mountaintop-removal-articles/health/
dredmorbius 10y ago
Those "market costs" are based on some exceptionally deep accounting failures of both externalities of use, and externalities of formation. The "market price" is off by roughly seven orders of magnitude, for petroleum.
- gmac 10y ago
  Sure, the private cost of petroleum doesn't reflect the social cost. But you're saying it should be TEN MILLION TIMES dearer?
  - dredmorbius 10y ago
    Based on the inputs of time and initial biomass, yes, roughly. Burning petroleum or coal is much more like burning diamonds than wood, economically and geologically. And if you look at the history of how we got here, especially the law and economics, the scientific basis for those assumptions was tremendously flawed. https://dge.carnegiescience.edu/DGE/Dukes/Dukes_ClimChange1.pdf https://dge.carnegiescience.edu/DGE/Dukes/Dukes_ClimChange1.... https://en.m.wikipedia.org/wiki/Rule_of_Capture https://en.m.wikipedia.org/wiki/Rule_of_Capture It's a complicated story, I'm working on putting it together.
    - fennecfoxen 10y ago
      You know what? The linked paper's assertion of 89 metric tonnes of plant matter = 1 gallon gasoline today? That's a thing. Sure. Calling the overall use of fuels reckless? Also a thing. It's fine, really. Assigning gas a $20,000,000/gallon value based on crude extrapolations of what biomass it would take to replace gas, without doing hardcore economic modelling on the price elasticity of demand, the availability of substitutes, and explaining the assumptions you've made to determine what's the right discount rate to use on the future value of the stored resource – and, indeed, of the value of the environment and humanity's future in general? That's little better than pulling the numbers out of your ass. The world isn't linear enough to just do things like that.
      - 10y ago
caf 10y ago
In what sense is this a "green energy project"?
- ars 10y ago
  I'm not the OP but natural gas is MUCH better for the environment than oil or coal. Many consider it a stepping stone in between now and a future with no hydrocarbon fuel.
  - caf 10y ago
    The distinctly faint praise of "better than coal" does not seem to justify the term "green energy", I've certainly not heard anyone describe it thus before.
    - ars 10y ago
      https://www.forbes.com/sites/jamesconca/2016/02/04/u-s-natural-gas-rises-as-americas-co2-emissions-drop/ https://www.forbes.com/sites/jamesconca/2016/02/04/u-s-natur... That was just one result on Google, you will find plenty more. Using Natural Gas is the #1 reason CO2 emissions have dropped in the US (and other countries).
      - suihkulokki 10y ago
        Until recently, gas was just flared at oilrigs. It was waste not worth shipping. I remember flying past Persian gulf and looking down at sea been light by gas flares. Now the gas is put in use, it is still burned into co2. But now it creates electricity and reduces use of oil and coal. So if LNG terminal reduces flaring, it's "green energy" project. But if it is to increase fracking, it's just fossil fuels project.
        pjc50 10y ago
        Indeed. To my mind, we really shouldn't start on fracking until flaring has been reduced to near-zero levels. It's wasteful and we can't afford the CO2 emissions.

kbenson 10y ago

Until we correctly account for negative externalities and stop giving certain incumbent energy industries a free ride (or worse, rebates), market cost won't reflect real cost, and economic incentives end up really being political incentives.

marcgcombi 10y ago
Aren't the incentives in place to encourage exploration and improve supplies and supply stability? I suppose that you're correct, to some degree. However, in the end, the equation is pretty simple when (cost of production + profit) > (the cost of an equivalent product, already in the market) then people will engage in that particular commerce. It's no more complicated than that.
- kbenson 10y ago
  Cost of production includes cost of locating and developing resources, so incentives that offset the cost of these allow for equivalent profit at a lower price. The real point though is that the negative externalities are not included in the cost of production, because we as a society do not attribute their cost to the company that causes them. The simplistic example is the company that pollutes the local water and the overall health of people in the community goes down. Even without major sicknesses and death, if it causes an average of an extra sick day per year for the local people, that's a major impact on the entire region[1]. But then what if we look at hard a little more removed? What if the river pollution affects other industries more directly? For example,if there's a ranch bordering the river, what if it makes the cattle sick, even just sicker than normal? What if it affects Salmon spawning downstream? These are all costs borne by others, so are not accounted for in the cost of the product the original company produces, but we all pay for it in litttle or big ways. What if it just affects a species negatively without an industry behind it? If it's causing the extinction of some fish or frog species, what is the cost of that? You could say it negatively affects even human being in some small way to cause an extinction, but I don't know how to quantify the cost. Originally we didn't account negative externalities because we didn't know it mattered. In the few cases where it was obvious we used the courts to deal with it. Now we're learning (or have learned) that things are interconnected much more than we believed, but we're stuck with a bunch of industries that are used to not paying for this, and a public that's used to the current costs of goods and services, and it's hard to change that. But hard to change doesn't mean it's economically sound. 1: http://ohvec.org/mountaintop-removal-articles/health/ http://ohvec.org/mountaintop-removal-articles/health/

dredmorbius 10y ago

Those "market costs" are based on some exceptionally deep accounting failures of both externalities of use, and externalities of formation. The "market price" is off by roughly seven orders of magnitude, for petroleum.

gmac 10y ago
Sure, the private cost of petroleum doesn't reflect the social cost. But you're saying it should be TEN MILLION TIMES dearer?
- dredmorbius 10y ago
  Based on the inputs of time and initial biomass, yes, roughly. Burning petroleum or coal is much more like burning diamonds than wood, economically and geologically. And if you look at the history of how we got here, especially the law and economics, the scientific basis for those assumptions was tremendously flawed. https://dge.carnegiescience.edu/DGE/Dukes/Dukes_ClimChange1.pdf https://dge.carnegiescience.edu/DGE/Dukes/Dukes_ClimChange1.... https://en.m.wikipedia.org/wiki/Rule_of_Capture https://en.m.wikipedia.org/wiki/Rule_of_Capture It's a complicated story, I'm working on putting it together.
  - fennecfoxen 10y ago
    You know what? The linked paper's assertion of 89 metric tonnes of plant matter = 1 gallon gasoline today? That's a thing. Sure. Calling the overall use of fuels reckless? Also a thing. It's fine, really. Assigning gas a $20,000,000/gallon value based on crude extrapolations of what biomass it would take to replace gas, without doing hardcore economic modelling on the price elasticity of demand, the availability of substitutes, and explaining the assumptions you've made to determine what's the right discount rate to use on the future value of the stored resource – and, indeed, of the value of the environment and humanity's future in general? That's little better than pulling the numbers out of your ass. The world isn't linear enough to just do things like that.
    - 10y ago

caf 10y ago

In what sense is this a "green energy project"?

ars 10y ago
I'm not the OP but natural gas is MUCH better for the environment than oil or coal. Many consider it a stepping stone in between now and a future with no hydrocarbon fuel.
- caf 10y ago
  The distinctly faint praise of "better than coal" does not seem to justify the term "green energy", I've certainly not heard anyone describe it thus before.
  - ars 10y ago
    https://www.forbes.com/sites/jamesconca/2016/02/04/u-s-natural-gas-rises-as-americas-co2-emissions-drop/ https://www.forbes.com/sites/jamesconca/2016/02/04/u-s-natur... That was just one result on Google, you will find plenty more. Using Natural Gas is the #1 reason CO2 emissions have dropped in the US (and other countries).
    - suihkulokki 10y ago
      Until recently, gas was just flared at oilrigs. It was waste not worth shipping. I remember flying past Persian gulf and looking down at sea been light by gas flares. Now the gas is put in use, it is still burned into co2. But now it creates electricity and reduces use of oil and coal. So if LNG terminal reduces flaring, it's "green energy" project. But if it is to increase fracking, it's just fossil fuels project.
      - pjc50 10y ago
        Indeed. To my mind, we really shouldn't start on fracking until flaring has been reduced to near-zero levels. It's wasteful and we can't afford the CO2 emissions.