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Global Warming: Who are the winners and losers?
By Gary Smith -
President, PowerSouth
March 2008
Climate change. Global warming. You can hardly go anywhere without hearing about the dangers of a carbonized world.
Global warming has become an emotionally charged issue that finds its way into forums on various subjects. Last summer at an Electric Power Research Institute meeting, I was nearly assaulted by a scientist during a discussion of global carbon levels.
She became very agitated when I refused to agree we should take all necessary measures, regardless of cost, to eliminate ALL carbon emissions. My response that 50 years from now we would be paid to emit carbon was almost more than she could stand.
The next day, she gave an impressive presentation on the development of geologic formations favorable to the storage of captured carbon dioxide. It was obvious the scientists at her institution have invested much study and thought into carbon storage. They are willing work with electric utilities to develop these formations to allow for the safe storage of carbon – for a fee, of course.
Which leads to the question – who financially benefits from the reduction of carbon emissions?
As I wrote last month, China constructs approximately 1,700 megawatts of new coal-fired generation each week – almost as much generation as PowerSouth’s annual peak. None of those plants have environmental emission controls comparable to U.S. standards, and China apparently has no plans to require additional environmental controls, much less control carbon emissions. This means Chinese industry has a cheaper source of energy than American industry.
When China’s cheaper energy is combined with lower wages, Chinese goods have a distinct advantage over American-made products. If American utilities are forced to spend (and American consumers are forced to pay) billions of dollars to control carbon emissions, China’s economic advantage will only increase. China is a winner.
Solar photovoltaic cells and wind generators are reaching their lowest possible manufacturing cost, and the power created by these renewable facilities is not cost-competitive with coal- or natural gas-generated power. However, a carbon tax or additional environmental costs imposed on carbon-emitting electricity (such as coal- or natural gas-fired power) makes solar and wind power more cost-competitive. A more competitive cost profile makes for more sales of solar and wind generators. The manufacturers of solar and wind generators (and the electric consumers who can afford to install them) are winners.
Carbon emissions from coal-fired generation are about two-thirds greater than natural gas-fired generation. If carbon emissions are taxed or additional environmental costs are imposed, a greater percentage of generation will be shifted to natural gas-fired generation and, as new generation is needed, more gas turbines will be installed. Natural gas producers and manufacturers of natural gas generators are winners.
In 2008, the U.S. government will issue about $5 billion in grants to study the impacts of carbon emissions and global warming. Almost all grants will be awarded to scientists and institutions that predict irreparable harm to the environment from global warming. These scientists and institutions are winners.
Who are the losers?
If higher carbon levels lead to the destruction of life as we know it (as stated on many programs on global warming) or have other devastating effects on the Earth, we all lose – and big. But if the damage is less devastating than advertised – and after reading many papers and articles, I am convinced the effects of global warming (if it is occurring) will not be recognizable to any of us – who loses? We all do.
Every consumer will pay considerably more for electricity, possibly three or four times more than we pay now. And what do we get for our money? We get fewer energy choices and an economy that trails China’s and other countries that did not succumb to the current global warming hysteria.
I believe a better path is to continue studying the impacts of increased carbon levels but refrain from acting rashly and destroying the U.S. economy based upon hypothetical studies of scientists rewarded for finding adverse results.
Next month, I will continue to look at global warming by looking at what can be done.
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