Energy Policy Target = 1 %

Quantity targets or cost limits?
Most energy policies set a quantity target, for example, C02 emissions will be reduced 20% by 2020. While these seem certain and dependable, in practice they are the most risky and failure-prone approach. Committing to a cost level is far more realistic and in the end, will achieve much more.

Cost must be considered when the expense is great
Energy policy is a matter of buying fossil fuel reductions. The first reason not to target quantity and ignore price, is just a matter of smart shopping. The principle is simple respected by every shopper, but when confronted with unimaginably large purchases, great uncertainty, and frightening sales pitches even the best shoppers can become disoriented. To regain balance and common sense consider first some more familiar purchases.

There are two basic questions to ask when going shopping. How much do we want? How much do we want to spend? When shopping for something small, the first question is sufficient. We need two quarts of milk, so we buy two quarts of milk. We want a can of soda, we buy a can of soda. But as purchases get more expensive, cost become a factor. We may buy 2 CDs instead of 3 because of cost. When costs reach into the thousands of dollars, cost becomes dominant (except for the super rich). Almost no one buys the car or the house they would most like to have. At this level of expense, cost is the dominant factor.

But when costs reach into the billions and are difficult to pin down, people take the easy way out and just ignore them. This is obviously a mistake, but it seems so much easier and more pleasant just to think about what we want. This could only make sense if we could afford whatever we wanted. But we can't. If cost were no object, everyone would want 100% clean energy. Not even the ecologists advocate that, because they know it's too expensive. At the policy goal level--20% by 2020--energy policy, like every other expensive choice is dominated by cost. That is why it is completely wrong to hide that fact and claim it is just a matter of choosing a quantity target.

Do quantity targets work?
No, they have a dismal track record, even among those with the best intentions. Canada promised a 6% reduction in emissions, instead it is headed for a 30% increase. Etc.

Is a quantity target necessary
No. We don't know of a tipping point. Since there is no black and white answer, how much protection we should by is a cost trade off: the cost of environmental damage vs. the cost of fossil mitigation.

Limiting total cost, eliminates the main objection to energy policy
The most powerful objection to energy policies, because it is frightening and true of some, is that it will cost a fortune and wreck the economy. For example, a policy to end oil imports by 2020, if actually carried out, might be very damaging. It might not, and there is not reason to debate the details here, but such a rapid change could be extremely costly. No one really knows.

But a policy to spend 1/2% of national income on reducing fossil use cannot, by its very design, cost a fortune. Half a percent is simply not a fortune.

Cost-Quantity Judo
Who can object to a half percent target? Not Amory Lovins. He claims it can all be done for much less than nothing. So committing 1/2% is way more than he thinks is necessary. Not Al Gore. He also believe it should be almost free. Not President Bush. He says one of the nation's top problems is our "addiction to oil." Surely, if he is serious, he will back a half percent commitment.

http://zfacts.com/p/583.html | 01/18/12 07:23 GMT
Modified: Mon, 12 Nov 2007 15:56:50 GMT