Let the Market Reduce Emissions

This summer’s high temperatures, prolonged heat wave and “extreme weather” gripping a large part of the country have brought climate change back to public attention. The media see reducing emissions as the solution.

The Obama administration failed in its attempt to impose carbon cap-and-trade legislation to curtail energy consumption. But what it could not get from Congress it is doing with regulation. Thanks to a misguided Supreme Court decision in 2007, the EPA is issuing regulations controlling CO{-2} emissions — first from light-duty vehicles, and now from large industrial sources.

What the media conveniently ignore is that U.S. energy-related carbon dioxide emissions have been declining. They are down 7.5 percent in the first quarter of this year compared with the same period in 2011, and could be down to 1990 levels by the end of the year. According to U.S. Energy Information Administration forecasts, “total energy-related emissions of carbon dioxide in the United States (will) remain below their 2005 level through 2035.”

The prolonged recession has had a major impact, but it is not the only factor. The trend began before 2008. A major contributor is the shift from coal to natural gas for electric power generation as a result of technology that is being used to tap enormous supplies of natural gas deposits in shale rock. Another factor has been the plateauing of oil consumption as a result of demographics and advances in automotive technologies.

Politicians like to use “talking points” to get their messages out – simple declarative sentences that they repeat over and over. The decline in carbon dioxide emissions in the United States is a great talking point demonstrating that market forces can be more effective than government mandates.

By contrast, Europe has adopted what writer Peter Glover calls “sheer synchronized stupidity,” “market-interfering policies,” invoking global treaties, setting carbon emission targets and imposing cap-and-trade rules. One perverse result is that coal has become the most profitable fuel for electric-power generation, while natural gas is getting more expensive because European Greens are aggressively fighting to ban the use of hydraulic fracturing to increase production of lower-cost natural gas.

It is not necessary to accept a linkage between carbon emissions and climate to agree that market-induced changes in energy use that reduce emissions are good. Allowing market forces and advances in technology can continue the trend of reducing the carbon intensity of our economy.

Domestic energy development as a result of advances in technology is creating American jobs and improving our balance of trade — and can contribute to a stronger economy and lower federal deficit.

Huge private investments in exploration and production technologies have led to the development of massive natural-gas fields and record production, which in turn has reduced consumer costs for electric power, allowing people to keep more of their hard-earned money. Industries that use natural gas are also benefitting from lower costs.

The picture has been much the same in the oil sector, where hydraulic fracturing and horizontal drilling have led to new crude oil production in places like North Dakota and Ohio and improved output from older traditional oil fields. As a result, the United States’ oil production is the highest in 14 years, and imports are declining.

These oil and gas developments have created tens of thousands of well-paying jobs, increased demand for goods and services provided by small businesses everywhere, improved the economies of many local communities and boosted tax collections by local, state and federal governments.

Repeated efforts to replace fossil energy and create a “green jobs economy” have failed because the alternatives are not commercially or technologically viable.

Vaclav Smil, distinguished professor of environment at the University of Manitoba, explains in a recent essay in IEEE Spectrum:

“It is impossible to displace this super system (fossil energy system) in a decade or two — or five, for that matter. Replacing it with an equally extensive and reliable alternative based on renewable energy flows is a task that will require decades of expensive commitment. It is the work of generations of engineers.”

Private investment, advances in technology, and allowing the marketplace to determine how our energy system evolves has served the United States well and will in the future, if allowed to work without the interference of mandates driven by ideology.

This article appeared in the Richmond Times-Dispatch on August 16, 2012 http://www2.timesdispatch.com/news/rtd-opinion/2012/aug/16/tdopin02-let-the-market-reduce-emissions-ar-2134078/

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