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Monday, August 04, 2008

Energy, Climate Change, Politics and Economic Reality

Peter Huber, senior fellow at the Manhattan Institute, serves up an interesting column in the August 11 issue of Forbes titled “The Carbon Curtain.”

In essence, the piece contrasts the politics of global warming with the economic reality of people’s energy needs. Huber is working from analysis done by Vinod K. Dar, who runs Dar & Company, an energy industry consultant.

A key point in Huber’s column is the following:

To judge by actions, not words, the carbon-warming view hasn't come close to persuading a political majority even in nations considered far more environmentally enlightened than China and India. Europe's coal consumption is rising, not falling, and the Continent won't come close to meeting the Kyoto targets for carbon reduction. Australia is selling coal to all comers.

On the far side of the environmental curtain China already mines and burns more coal than any other country. Together, China and India control more than one-fifth of the planet's vast coal reserves. Dar predicts--very plausibly, in my view--that the two countries may fire up a new coal plant as often as once a week for the next 25 years, adding about twice as much coal-fired generating capacity as the U.S. has today. Persian Gulf states are planning significant coal imports, because coal generates much cheaper electricity than oil or gas.

In developing countries the political survival of the people at the top depends on providing affordable fuel for kitchens, farms, fertilizer plants, steel mills, highways and power plants. Oil and coal are the only practical fuels at hand.


Huber concludes by asking: “So does the climate computer have a real audience, or is it really just another bag lady muttering away to herself in a lonely corner of the intellectual park?” Good question.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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