Free Market Energy: Advantage Renewables


The United States requires access to a consistent, low cost, stable, supply of energy to meet the needs of citizens, business, the military, and government; relying primarily on fossil fuels to meet the growing energy needs of the country (Miller & Spoolman, 2010).  Yet, fossil fuels are problematic for a number of reasons, including a dwindling supply (Webster, 2011), harmful environmental effects (Miller & Spoolman, 2010), and international price shocks created by nation-states that control oil production (Allaire & Brown, 2009).  Therefore, to enhance U.S. energy security and economic interests, while reducing environmental harm, the country needs to wean itself from fossil fuels and invest in domestic production of alternative, yet reliable forms of energy.  However, U.S. government energy policy favors the production of fossil fuels through a variety of tax breaks, subsidies, and other government interference.  Some energy analysts believe that fossil fuels should continue to receive subsidies and tax breaks, while private industry develops renewable energy sources (Needham, 2011).  Others, including this author, recommend phasing out tax breaks and subsidies for fossil fuel production, in favor of subsidies and tax breaks for renewable energy alternatives (Miller & Spoolman, 2010).  However, a more reasonable, achievable, approach is to phase out all government energy subsidies and let energy companies compete with the best available technology.

The energy industry receives roughly $20 billion in subsidies and tax breaks every year, with the lion’s share going to fossil fuel industries (Leonard, 2011).  Not only does renewable energy receive far less subsidies annually, but especially when viewed from a historical perspective.  Fund and Healey (2011) found that inflation-adjusted, average annual subsidies for fossil fuels were 5 times that of renewables, while nuclear power was subsidized at a rate of 10 times that of renewables.  In the final analysis, the federal government are underwriting the energy sector unevenly, put renewable energy development at a significant disadvantage, given both the high startup costs of innovation and competition from large, entrenched, subsidized, organizations; hardly a level playing field.

Despite the inherent challenges faced by those committed to renewable energy development, renewables have a distinct advantage; namely, they are renewable.  While coal and natural gas remain plentiful in the United States, concerns over reaching peak oil, coupled with growing demand in the both the developed and developing world, have driven oil prices to record highs, making the development of renewable alternatives feasible despite the high cost of capitalization in the energy industry.  Even the Defense Advanced Research Projects Agency has invested in renewables, developing an algae-based biofuel alternative for jet fuel (Goldenberg, 2010).   In a free market system, devoid of subsidies for either fossil fuel or renewable energy development and production, the advantage goes to renewable energy; it is simply a matter of time and the laws of supply and demand.

More importantly, it may be possible, given the country’s financial woes, to drop energy subsidies entirely.  In a year when four energy companies are in the top ten of the Global 500 Most Profitable Companies, collectively earning more than $90 billion annually (CNNMoney, 2011), while the country is facing massive debt problems, and taxpayers are being squeezed, it would seem the time might be right to level the playing field.  Leonard (Leonard, 2011) believes the time may be right politically as well, given the rise of the Tea Party on the right and a disaffection with ethanol on the left.

U.S. dependence on fossil fuels has become increasingly problematic with the implications felt in the economy, military, industry, politics, and the environment.  In an ideal world, the federal government would subsidize the development and production of renewable energy, minimally, at the same level as fossil fuels.  Unfortunately, the U.S. government uses energy policy to pick winners and losers in the energy sector and provides fossil fuel producers a distinct market advantage.  It is time to phase out all government subsidies in the energy sector and let the most efficient technologies compete in the open market; with the advantages inherent in renewable energy, the shift away from fossil fuels is simply a matter of time.

References

Allaire, M., & Brown, S. (2009). Eliminating subsidies for fossil fuel production: Implications for U.S. oil and natural gas markets (pp. 1-19). Washington DC: Resources for the Future.

CNNMoney. (2011). Global 500 2011: Most profitable companies  Retrieved December 9, 2011, from http://money.cnn.com/magazines/fortune/global500/2011/performers/companies/profits/

Goldenberg, S. (2010). Algae to solve the Pentagon’s jet fuel problem  Retrieved December 9, 2011, from http://www.guardian.co.uk/environment/2010/feb/13/algae-solve-pentagon-fuel-problem

Leonard, J. (2011, February 2011). Get the energy sector off the dole  Retrieved December 9, 2011, from http://www.washingtonmonthly.com/features/2011/1101.leonard-2.html

Miller, G. T., & Spoolman, S. (2010). Environmental science (13th ed.). Belmont, CA: Brooks/Cole, Cengage Learning.

Needham, M. (2011, November 8). Time to eliminate wasteful energy subsidies  Retrieved December 9, 2011, from http://dailycaller.com/2011/11/07/time-to-eliminate-wasteful-energy-subsidies/

Pfund, N., & Healey, B. (2011). What would Jefferson do?: The historical role of federal subsidies in shaping America’s energy future. San Francisco, CA: DBL Investors.

Webster, S. C. (2011, February 9). Peak oil now? Leaked cables show concerns that Saudis running low. The Raw Story  Retrieved December 9, 2011, from http://www.rawstory.com/rs/2011/02/09/peak-oil-wikileaks-cables-show-concerns-saudis-running/


The Stewardship Worldview: Power to the Crowd


Source: neWTom

The planet earth recently reached an important, albeit arbitrary milestone, as the global population reached 7,000,000,000 people (U.S. Census Bureau, 2011), prompting widespread discussion over whether the planet could sustain the growing population amid unchecked hyper-consumption.  Miller and Spoolman (2010) echo the debate, asking, “Can we provide an adequate standard of living for a projected 2.7 billion more people by 2050 without causing widespread environmental damage” (p. 94)?  Some, that hold an environmental wisdom worldview, have used the milestone as an opportunity to question our future amid concerns of overpopulation and overconsumption (Miller & Spoolman, 2010), environmental damage and non-renewable energy depletion (Sanjayan, 2011).  These modern, global, challenges lead to difficult ethical questions, none more pressing than whether everyone should have the right to have as many children as they want, or whether society should seek to stem or regulate population growth.  Regulating population growth is a temptingly simple approach, yet comes with many unintended consequences; rather the consumption side of the equation offers more opportunities for improvement.

Population growth is very concerning, and society should seek to productive ways to stem overpopulation.  The regulation of population growth through government policy is in place in China; while effective to reduce the population has numerous unintended, negative, consequences (Miller & Spoolman, 2010).  Rather, given that TFR lowers in predictable stages commensurate with the transition from developing to post-industrial economies, the focus should be on economic development; in conjunction with family planning and gender equality (Miller & Spoolman, 2010).  In this manner, population growth will eventually reach equilibrium.

In addition, it is important to recognize that the world is changing in interesting ways.  Ridley (2010) argues persuasively that prosperity is the result of the interchange and mating of ideas, made possible by trade and specialization.  With the advent of the many-to-many communication model made possible by the Internet and the Web, innovation is occurring at an unprecedented pace (Baym, 2010).  Shirky (2010) argues that the growing connected population is creating a cognitive surplus that increasingly is being applied to solve problems unaided by government or business, using the power of the crowd.  How then is this cognitive surplus and mating of ideas used to address the problems of overconsumption?

Botsman and Rogers (2010) describe unresolved environmental problems and financial uncertainty as catalysts to a growing shift from hyper-consumption to collaborative consumption; enabled by the crowd and the network.  They go on to describe collaborative consumption as the fifth ‘r’ of sustainable living; reduce, reuse, recycle, repair, and now redistribute (Botsman & Rogers, 2010).  Examples include redistribution markets like eBay or various swap sites, collaborative lifestyle capabilities like Landshare.org, or product service systems like Zip Car for car sharing.  The growing perspective on collaborative consumption rises from people tackling unresolved problems through collaboration and innovation; the use of our growing cognitive surplus for the good of the population and the planet we share.

“Can we provide an adequate standard of living for a projected 2.7 billion more people by 2050 without causing widespread environmental damage” (p. 94)?  The answer depends on us.  A better question is: Can we harness the cognitive surplus of 7,000,000,000 souls to promote economic growth in the developing world, reduce overconsumption in the developed world, and preserve the environment?  This steward’s answer is yes.

References

Baym, N. K. (2010). Personal connections in the digital age. Cambridge, UK ; Malden, MA: Polity.

Botsman, R., & Rogers, R. (2010). What’s mine is yours : the rise of collaborative consumption (1st ed.). New York: Harper Business.

Miller, G. T., & Spoolman, S. (2010). Environmental science (13th ed.). Belmont, CA: Brooks/Cole, Cengage Learning.

Ridley, M. (2010). The rational optimist : how prosperity evolves (1st U.S. ed.). New York: Harper.

Sanjayan, M. (2011, October 31, 2011). A Letter to #7,000,000,000. HuffPost Green  Retrieved November 20, 2011, from http://www.huffingtonpost.com/m-sanjayan/7-billion-people_b_1067143.html

Shirky, C. (2010). Cognitive surplus : creativity and generosity in a connected age. New York: Penguin Press.

U.S. Census Bureau. (2011). U.S. & World Population Clocks. Washington DC: U.S. Census Bureau.