Advertisement

Gauging the costs, and opportunities, of a greener world

Share

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The ECO:nomics conference in Santa Barbara last week was all about the free market’s collision with sustainability. Times staff writer Edward Silver filed this report on the meeting:

It’s fitting that, at a conference sponsored by the Wall Street Journal, green strategies were held to account for their costs and competitiveness vis-à-vis the carbon economy.

Advertisement

On the other hand, the views aired were refreshingly fixed on the future. That’s a sign of evolution because the market gets a bit baffled when pressed to address long-term needs, and the extra costs tend to kick up its allergies. Environmentalists, frustrated with the rampant short-sightedness, habitually ask, ‘Where’s this company/industry/way of life going after the next quarterly report is filed?’

Many of the presenters at the gathering see it as their mission to extend the market’s attention span and make it work for the environment. A greener world could well cost more, they may say, but think of it as trading up to a sturdier home.

Ignoring the ruin of the Earth’s assets amounts to a ‘massive market failure,’ Al Gore declared shortly after his introduction. To take one example offered by the ex-veep, Nobel laureate, Oscar winner and venture capitalist, no one is paying for the use of the atmosphere to dump carbon, which is melting Greenland and other ice bodies. Sea levels will rise, he warned, and newly uncovered water will release methane, an especially menacing greenhouse gas.

At least a partial antidote is attaching a price to carbon. That could take the form of the cap-and-trade system contemplated by the Obama administration, which would impose charges on, and create a market in, the right to emit. Such an approach could, for instance, create incentives for coal plants to capture and inject emissions underground, an unwieldy, unproven blueprint that by some estimates could raise the cost of burning the stuff by 40%.

As these economic blows against fossil fuels land, both producers and consumers could get bruised. In fact, the bills could widen the gulf between energy haves and have-nots. Nevertheless, the cause of energy innovation is likely to prosper, and the planet may curb its quickly mounting losses.

Likewise, revamping the way the market sets prices is the only thing that can prevent a national water calamity, said Disque Deane Jr., chief investment officer at Water Asset Management. Americans still gulp, flush, wash, spray and irrigate with abandon, he lamented, warning that a tsunami of scarcity is ready to hit. . . .

Advertisement

This is old news in drought-stricken-but-still-complacent California. Across the country, though, the pipe network built in spurts at the turn of the last century and after World War II is in the twilight of its useful life, Deane said. Furthermore, the dream of energy independence calls for serious water management. Homegrown North American energy is a powerful water siphon, whether it’s coal and nuclear plants, oil extraction from tar sands, ethanol, or producing the electronics to manage a sprawling, smarter grid.

High-quality H2O isn’t priced to reflect its value and dampen consumption, the investor argued. ‘We need water price signals. . . . The only way people will be aware of watershed issues is if they are told about it and they have to pay for it.’

He also mentioned the population shift from the well-hydrated Great Lakes region to the parched Southwest. The demand-supply imbalance, made all the worse by migration, is abetted by the free market -- job seeking, among other motives. Higher costs might be a better outcome than dry taps.

Along with the money to be made in solutions and the money to be lost in the carbon economy, there’s money to be saved. Peter Darbee and Amory Lovins touted the financial rewards of conservation and efficiency. Darbee, the CEO of Pacific Gas & Electric parent PG&E Corp., said experience showed that efficiency programs were the most lucrative investments California utilities had made. Electric rates here tend to be higher than the U.S. average, he explained, but bills are lower because we use less.

Lovins, chief scientist at the Rocky Mountain Institute, is the well-known originator of the term ‘negawatts’ -- a way to quantify energy saved. After a video feature on his hyperefficient though abundantly comfortable home, Lovins pointed to the Saudi Arabia under Detroit: It’s in the oil to be saved in designing cars with conservation in mind. And the secret is not just in the powertrain but the materials that form the vehicle.

Indeed, efficiency is the claim to fame of SunPower Inc., the largest U.S. solar company by 2008 revenue. Its cells are the industry’s most productive at converting light into electricity. Standard solar cells and computer processors share the same raw material -- silicon -- which lends credibility to SunPower chief Tom Werner’s assertion that Moore’s law is happening in solar.

Advertisement

What’s that mean? Remember when puny desktops cost $2,000? It means solar could see something like the crash in costs paired with the leaps in power silicon chips are known for.

Compared with the economics of coal and natural gas, solar has been found wanting up till now. Fossil sources, though, have a long industrial history and are deployed, of course, in vast scale. Solar, a rooftop feature here and there, is just now becoming a building block of power plants.

Coal generates energy, and fouls the atmosphere, at bargain rates. But to contrast the costs of a mature industry to one coming into broad use is an apples-to-oranges exercise, Werner said, raising the rhetorical point: ‘How much did the first coal plant cost per kilowatt-hour?’

Obviously, the cost of the dirty fuel came down, way down. ‘Scale equals cost reduction,’ Werner intoned. Combine that with continuing technology gains and, he added definitively, ‘we will be competitive.’

Renewables, inevitably, will get cheaper. If environmentalists in Washington use their new levers of power, and if the spreading oil and gas shutdowns bring back the bad old days of the supply squeeze, fossil fuels will get dearer. That will alter the terms of the cost debate yet again.

Top photo: Al Gore. Credit: Frederick M. Brown / Getty Images

Advertisement

Advertisement