November 09, 2006
Energy Research Seen Necessary For Emissions Reductions

Fossil fuels burning continues to rise and atmospheric carbon dioxide concentrations continue to rise as well. In some areas such as in China the emission of conventional pollutants is also on the rise. This trend can only be stopped by advances in cleaner energy technologies. Andrew Revkin of the New York Times reports that in inflation-adjusted terms government-funded energy research has dropped in the United States and other industrialized countries.

In the United States, annual federal spending for all energy research and development - not just the research aimed at climate-friendly technologies - is less than half what it was a quarter-century ago. It has sunk to $3 billion a year in the current budget from an inflation-adjusted peak of $7.7 billion in 1979, according to several different studies.

That $3 billion a year amounts of about a week and a half of the cost of US military operations in Iraq. With the longer term costs of disability and medical problems of injured soldiers the current budget costs of the war understate the real total costs. Why not spend money on research to make oil obsolete and Middle Eastern politics irrelevant to the United States?

We need advances in nuclear, solar photovoltaics, solar heating, batteries, and energy efficiency boosting technologies such as better insulation materials and more efficient engines. Rather late in his presidency George W. Bush wants to up energy research.

President George W. Bush has sought an increase to $4.2 billion for 2007, but that would still be a small fraction of what most climate and energy experts say would be needed.

Federal spending on medical research, by contrast, has nearly quadrupled, to $28 billion annually, since 1979. Military research has increased 260 percent, and at more than $75 billion a year is 20 times the amount spent on energy research.

Internationally, government energy research trends are little different from those in the United States. Japan is the only economic power that increased research spending in recent decades, with growth focused on efficiency and solar technology, according to the International Energy Agency.

Libertarians argue against government funding of energy research. But energy is an industry where large market failures inflict lots of costs that do not show up in prices. Worse, lots of voters in democracies and leaders of countries in non-democratic countries prefer lower energy prices with large external costs. Even where voters attach some importance to cleaner air their attention is not focused on the issue. Whereas lobbyists and political action committees have the money to spend to influence policy and block and delay attempts to reduce pollution. In this situation I strongly prefer convincing people to support larger amounts of government funding for energy research.

Environmentalists make the huge mistake of just arguing for restrictions on fossil fuel usage. Few populaces are willing to inflict such restrictions on themselves. Some of the Kyoto Accord signers have let their fossil fuels energy usage skyrocket (e.g. Canada) even as their left-leaning politicians criticised the United States for not signing that agreement to reduce fossil fuels emissions.

Environmental campaigners, focused on promptly establishing binding limits on emissions of heat-trapping gases, have tended to play down the need for big investments seeking energy breakthroughs. At the end of "An Inconvenient Truth," former Vice President Al Gore's documentary film on climate change, he concluded: "We already know everything we need to know to effectively address this problem."

My message to the impractical environmentalists: US state governments haven't even been able to raise gasoline taxes so that highway tax revenues keep up with growing populations and more miles driven per year. So states can't keep up with highway construction. If the states can't raise gasoline taxes to fund popular and immediately beneficial highway construction how do you expect to get Americans to inflict higher taxes on gasoline and other fossil fuels in order to derive a potential benefit decades from now? The level of taxes needed to make a significant dent in the growth in US fossil fuels usage would have to be very sizeable. The United States just went through a period where gasoline costs rose by more than a dollar a gallon and the impact on gasoline consumption was pretty small. Americans aren't going to vote for a $4 per gallon gasoline tax.

Worse yet for the environmentalists, most of the growth in fossil fuels usage is now coming from Asia, and China especially. The 1.3 billion Chinese people aren't going to keep their very low living standards in order to avoid using more energy.

A typical new coal-fired power plant, one of the largest sources of emissions, is expected to operate for many decades. About one large coal-burning plant is being commissioned a week, mostly in China.

China's growth in energy demand is going to accelerate. As long as they maintain a 7% or 8% yearly growth rate their absolute growth rate will get larger and larger. The Chinese people are even less inclined than Americans to restrict their energy usage for the benefit of all the people who will be alive 75 or 100 years hence. But all those coal power plant investments the Chinese are making will be with us for a long time to come.

"We've got a $12 trillion capital investment in the world energy economy and a turnover time of 30 to 40 years," said John P. Holdren, a physicist and climate expert at Harvard University and president of the American Association for the Advancement of Science. "If you want it to look different in 30 or 40 years, you'd better start now."

Experts say acceleration of energy technology advances is the best way to cut back on emissions growth.

Many experts say this means the only way to affordably speed the transition to low-emissions energy is with advances in technologies at all stages of maturity.

I'm not an expert but I've made that argument many times on FuturePundit.

I do not expect the worst case scenarios for global warming to come to fruition because even wiithout higher government funding of energy research we'll eventually reach a tipping point where advances in photovoltaics and batteries technologies make them cost competitive with fossil fuels. Advances made in nanotechnology (made mostly for other purposes) will enable much cheaper methods of photovoltaics fabrication. So solar will begin to displace fossil fuels from the energy marketplace.

But the argument for higher funding of energy research is that it can make cleaner energy sources become cost competitive much sooner. We'd benefit in a number of ways. Most obviously potential threat of global warming could be avoided. But one doesn't have to take the global warming threat seriously in order to find substantial benefits to research into cleaner energy resources. Fossil fuels also pollute the environment with particulates, oxides of sulfur, oxides of nitrogen, mercury, and other toxins. We'd be healthier if we used cleaner energy sources.

Cheaper cleaner energy sources would raise living standards. First off, they'd be cheaper. So we'd pay less for energy. But also, the health benefits of cleaner energy include economic benefits. Lower rates of asthma, lung cancer, and other health problems would reduce medical costs and sick time from work.

Once technological advances are made they start paying back. The sooner the advances get made the sooner the payback starts and the greater the total benefit.

Share |      Randall Parker, 2006 November 09 10:16 PM  Energy Policy

epobirs said at November 11, 2006 12:29 AM:

Actually, in California, we've been able to raise masive sums of gas taxes intended to maintain and expand our highways. And it's desparately needed. The existing facilities are horribly overcongested and experience frequent failures because he CalTrans crews cannots remotely keep up with the problems. Trying to be gainfully employed is seriously impeded when one's range of travel is severely constrained by traffic load. A commute that was doable in little over an hour in the early 90s can now take three hours.

So if we have all of this money coming in, why can't we fix things? Because our legislature has consistently stolen the money every years for over a decade to to shore up their pet entitlement programs. Many of these duplicate federal programs. So why do they exist? Beause the federals version have these funny requirements of legal residency within the country. Apparently it is so important for the state of California to provide taxpayer funding services for Mexican citizens that our highways must go underfunded.

The money is there. It's just been stolen by corrupt politicians to buy their ongoing revolving door careers in this state. We had a proposition in the voting last to forbid this in the future. We actually have to define every possible case of theft to prevent its commission by our fine elected officials. I expect they'll find a loophole very quickly.

Randall Parker said at November 11, 2006 8:09 AM:


California's state level gasoline tax of about 18 cents per gallon is very similar to most other states. See this chart of by state gasoline taxes. Some are much higher. Wisconsin's cost is 32.1 cents per gallon and Rhode Island is 30. Pennsylvania is 31.1. States that also have 18 cent per gallon state level gasoline tax include Alabama, Arizona, Indiana, Mississippi, and New Hampshire.

Those tax levels have not kept up with inflation.

Also, it is not like the states have had much choice about the growth in their social spending. States have been hit hard by Medicaid cost growth. Medicaid is levied in states as an unfunded entitlement by the federal govenment. Medical costs grow faster than inflation. Employers who hire dumber and less skilled and therefore lower paid workers are dropping medical insurance. So those people are shifting onto the Medicaid and other publically funded medical programs. Plus, the percentage of the population too dumb to earn much in the labor market is growing.

Also, the increase in fuel efficiency of cars as compared to the 1970s has decreased tax revenues from gasoline sales as a function of miles driven.

Wisconsin at 32.1 cents per gallon and New York at 31.9 cents per gallon are the highest gasoline tax states. Even the most liberal states in America won't inflict much gasoline taxes on their publics. 32 cents is not enough to make car buyers shift to much more fuel efficent vehicles. Do do that we'd need a few dollars per gallon gasoline taxes. No way that's going to happen.

And that's my point: Taxes as a way to cut back on emissions won't work because the people are opposed to paying much more in taxes for fuels. So only accelerated technological advances can solve the problem. But the acceleration of technological advances can't come from the private sector because the people will never let fuel taxes rise high enough to provide a strong market incentive to develop newer cleaner energy technologies.

Randall Parker said at November 11, 2006 9:38 AM:

Another gasoline tax table puts California's gasoline taxes much higher with state at 45 cents per gallon and New York at 43.9 cents per gallon. But that column of total taxes on that page does not really include all taxes. For example, if you look at Nevada's comments you'll see mention of a 10 cent a gallon county gasoline tax. Well, do all Nevada counties levy this tax?

They claim at the top of that page that the average total gasoline tax works out to 62 cents per gallon. Both this page and the previous page put the federal gasoline tax at about 18 cents a gallon with the latter page putting it at 18.4 cents per gallon. The US uses about 140 billion gallons of gasoline per year. Well, if the total taxes are 62 cents a gallon then that works out to $87 billion in taxes collected per year from gasoline with more from diesel.

Then the next important question becomes how much do federal, state, and local governments spend on roads?

The Department of Energy puts total taxes from gasoline in 2005 as 19% of an average $2.27 per gallon. That 19% is only 43 cents per gallon and so at 140 billion gallons per year it is only $60 billion per year.

Ken said at November 13, 2006 9:42 PM:

Better photovotaics, better batteries. These are THE essenstials to solve these problems, although let's not neglect entirely things like better thermal insulation with the improvements of efficiencies of energy use and reuse that can result, and the more and less exotics like thermo electrics, wind, wave. And sure, even the ongoing r&d into fusion, although I'm convinced that we'll get more giga watts per buck and much sooner with PV, and to put it to use and make it most effective, better batteries.

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