In honor of Earth Day, Reason.tv offers this video featuring Ron Bailey (a 2010 PERC Julian Simon fellow):
Posts in Economic Growth
Thursday, 04/14/2011
What will our energy future look like? Unlike many of our political leaders, I claim no special insights, but I see some interesting trends. The first is reported by Roger Pielke, Jr. demonstrating the switch away from oil in electric power generation in the early 1980s by OECD countries.
Beginning in the 1970s a sharp rise in oil prices (compared to other fossil fuels) induced power generators to switch from oil to other energy sources, e.g., to coal, nuclear, or alternatives. The result? Over about 40 years oil lost about 90 percent of its share as a source for electricity production (to 2.5 percent from 25 percent).
Pielke makes the following points regarding this dramatic shift, some of which he claims are obvious, but worth repeating. I agree. Here they are:
1. Significant energy shifts happen.
2.They can take many decades.
3. Such shifts depend upon available substitutes.
4. The trend was from more expensive energy to less expensive energy, not vice versa.
Vaclav Smil, from the University of Manitoba, reinforces these compelling observations: “There is one thing all energy transitions have in common: they are prolonged affairs that take decades to accomplish, and the greater the scale of prevailing uses and conversions the longer the substitutions will take.” Smil’s work contains many stunning examples, including these nuggets:
- In most of the world’s developed economies it took more than fifty years for internal combustion engines (both gasoline and diesel) to displace agricultural draft animals. (In many low-income nations this process is still not complete.)
- James Watt’s improved steam engine, which became commercially popular during the 1770s, remained an important technology into the mid 20th century.
- The first diesel-powered car (the Mercedes-Benz 260D) was made in 1936. It wasn’t until the 1990s that diesels claimed 15 percent of the new car market in the European Union. (In 2007, diesels share of the U.S. new car market was 3 percent.) This is despite the fact that diesel engines have always been inherently more efficient than gasoline engines (the difference is up to 35 percent), and that modern diesel-powered cars have very low particulate emissions.
As a result, capital investment shifted towards a new generation of coal-fired power plants. If all the coal-fired electric generating capacity added during the last thirty years had been fueled by natural gas, U.S. carbon dioxide emissions would have been about 20 percent lower. This act was repealed in 1987. Recent natural gas finds in “unconventional” geologic formations (e.g., the Barnett Shale in Texas) may double America’s natural gas (CH4) resources.
Holly Fretwell
Wednesday, 03/30/2011
Last Saturday night (March 26) was Earth Hour. A time that, presumably, billions of people turn out their lights to support energy conservation. Hilton Worldwide, among other hotels and businesses, claim to participate in this celebration.
In its fifth year, Earth Hour was designed for people to show their support for sustainable actions. How could anybody oppose such a simple act or environmental sustainability itself?
Often there is more than meets the eye. That is my impetus to blog; not to dwell on what is seen, rather to point out what is often not seen, as so eloquently described by Frederic Bastiat more than 100 years ago.
Rather than reiterate here what others have already said, I will merely redirect you to their points.
- Ross McKitrick “abhors” Earth Hour because it demonizes electricity regardless of the benefits and increased prosperity that it provides.
- Don Boudreaux and others celebrate Human Achievement hour instead, and propose turning the lights on.
- Krishnan comments that resource use is often mistaken for waste even when it provides for increased well-being.
As an interesting sideline, I stayed in a Hilton brand hotel in Montana this weekend and heard nary a word about Earth Hour.
Originally posted at Environmental Trends
Laura Huggins
Sunday, 03/20/2011
by Laura E. Huggins
There is a battle brewing between the energy industry and environmentalists concerning the dangers of removing natural gas from shale using a process called hydraulic fracturing, or fracking.Fracking involves pushing millions of gallons of water (mixed with sand and chemicals) through wells at high pressure to fracture the shale. Roughly half the fracking fluid remains in the ground. The rest of it comes back out of the well and is considered industrial waste.
This process has been around for more than 60 years. But only in the past several years, with the rising cost of fossil fuels, has it been determined to be cost effective.
Given that fracking is relatively new to the scene many people can’t say if they support this process. The positive economic impact of natural gas drilling is proven, but if this process is contaminating local aquifers there may be unintended consequences, which bring us to property rights.
If there are problems, for example, who is liable, the surface owner or the owner of the lease for sub-surface mineral rights? I would love to read more about hydrofracking and nuisance law or impacts on tribal lands.
One of the few people raising concerns associated with property rights and fracking is Idaho Statesman reporter (and former PERC media fellow) Rocky Barker.
Company officials told the Legislature that they were negotiating both subsurface leases and surface use agreements. But landowners should be sure the agreements they sign protect their rights, experts said.Another key issue the oil and gas conservation commission will have to address is unitizing the gas field for development. This process, which delineates how the subsurface resource is divided, is ripe for gerrymandering that could cut mineral right owners out on royalties.
Holly Fretwell
Friday, 02/25/2011
Paul Ehrlich has had quite a career. He is the author of numerous books – The Population Bomb from 1968 was a bestseller – a Stanford University professor, and a scholar of biology, entomology, and demography. He has recently authored a new book and, according to at least one interview, it is just as pessimistic about the global environment and the future of humanity as the previous works.
As always, Ehrlich’s method to save the world is a centralized, top-down approach. He advocates government control to change consumer behavior. He exemplifies the United States during WWII as a successful method to alter consumer behavior. Nearly overnight the U.S. shifted production from millions of consumer autos to military vehicles instead. No mention is made of the required ration cards, price controls, and lower income.
Indeed, there are three general methods to impact behavior: the stick (government mandate), the carrot (market function through profit and loss), and moral suasion (using persuasion to convince). Empirical evidence does not support Ehrlich’s centralized approach nor his dismal outlook.
Julian Simon and Bjorn Lomborg are far more optimistic when it comes to rating environmental and life quality over time. Lomborg and others show that we live in a cleaner, healthier, and wealthier world than in 1968 – even with a greater population. Societies across the globe have done more to keep the air and water clean for citizens. We invest more in protecting wildlife, habitat, and biodiversity.
The late Julian Simon called humans “the ultimate resource.” He pointed out that every human not only uses resources but is a resource. Every new mind has potential to be that creator of a great new idea; an idea to put glass (or plastic) in front of the eye for better vision; to create the computer, the internet, the smart phone, or a new app; the idea that turns sunlight, wind, or waves into energy – at a cost less than fossil fuels.
Simon studied the institutions that help motivate more great ideas from the human resource. Good institutions like well specified property rights, honest government, and a good rule of law to enforce contracts. Good institutions that help lower the costs of transactions, help ensure the full costs and benefits of negotiations are internalized, and help motivate movement of resources toward their highest valued uses.
It is human ideas that will lead us to a better future. As we have seen in the past, centralized control tends to stifle innovation and the utilization of new ideas, rather than motivate them.
Originally posted at Environmental Trends
Laura Huggins
Wednesday, 02/09/2011
Bruce Yandle has a new research paper out with Jody W. Lipford on the Environmental Kuznets Curve, a stylized version of which is presented above. The EKC holds that economic growth precedes improvements in environmental quality. After a certain threshold of economic growth is reached, environmental improvements follow.
Yandle and Lipford apply the theory of the EKC to the effect of NAFTA on Mexico's environment:
The effects of NAFTA on Mexico’s environment were of great concern pre-NAFTA and have continued to be a matter concern in the post-NAFTA era. As the many studies and evidence presented in this paper show, Mexico’s environment in the post-NAFTA period has not suffered as much as pessimists feared, nor has it improved as much as optimists hoped. This outcome is consistent with theory and evidence from Environmental Kuznets Curves in that Mexico’s macroeconomic performance has been inadequate to raise Mexico’s per capita income to levels needed to cross estimated turning points for many pollutants. Seen in this light, Mexico’s environmental quality will continue to be a mixture of modest improvements along with modest setbacks until the economy exhibits strong and sustained growth.
For more from Yandle on the EKC, see this primer, or this PERC Research Study.
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Founded 30 years ago in Bozeman, Montana, PERC—the Property and Environment Research Center—is the nation’s oldest and largest institute dedicated to improving environmental quality through property rights and markets.
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