gas industry and climate change activists make good bedfellows?

I’m back from a busy past couple months and have a couple things I wanted to post.

First up is a post from the Breakthrough Journal – a group that I regularly read for their fascinating and often controversial commentary on the future of economics, policy, and environmentalism.  I often have to read their posts a couple times because it really shakes some foundational concepts that we rarely question.  This post is no different:

In the 70 years that have passed since Joseph Schumpeter coined the term “creative destruction,” economists have struggled awkwardly with how to think about growth and innovation – including those focused on climate change. Economists have framed the global warming challenge as the efficient distribution of scarce resources (pollution credits) – a mental model born of the 18th Century – not the creation of new ones (zero carbon power)

That’s starting to change. MIT’s rising economics star, Daron Acemoglu, and his colleagues, constructed a model that shifts the emphasis of climate mitigation from carbon pricing to “directed technical change” – efforts to make zero-carbon energy cheap. And real-world events – shale gas and renewable revolutions caused by public investment against immeasurable changes caused by carbon pricing in Europe – back up this intellectual shift.

Not everyone’s on board. EDF’s Gernot Wagner offers up a vigorous defense of carbon pricing as the highest climate priority in a new debate with the two of us at The Breakthrough Journal.

But the real choice, the two of us argue below, isn’t between competing policy priorities. It’s between an economics of the past, and an economics of the future.

— Ted and Michael

Are carbon taxes and cap and trade the wrong approaches based on outdated economic theory?

Read the rest here:

http://breakthroughjournal.org/content/blog/the-creative-destruction-of-cl.shtml

Now, back to the title of this post: how in the world would the gas industry and climate change activists ever get along?  This is fossil fuels vs clean energy right?  Well, in this post, some argue that cheap gas prices are bad for both groups, and they both have motivations see some sort of federal policy supporting the benefits of the lower GHG footprint of gas over coal.

http://www.eenews.net/public/energywire/2012/05/09/1

[bold is my own highlights]

Cheap gas has undermined investment in renewable energy, new nuclear power, and carbon capture and storage, which are likely to be needed to bring carbon emissions close to zero, he says.

That won’t necessarily matter in the short run, Schrag writes. “But if our goal is to minimize cumulative global emissions over the next century, the delayed investment in renewable technologies may set us back more than the climate benefits achieved from a marginal reduction in U.S. coal consumption.”

Schrag says the natural gas and renewable power industries ironically share a common goal — an increase in natural gas prices.

The drop in gas prices because of the surge in shale gas production is squeezing gas developers’ profits, threatening a financial shakeout in parts of the industry.

A federal law setting a substantial price on carbon, say $30 per ton of carbon dioxide emissions, would help gas, renewable energy and nuclear power sectors, Schrag says. If a carbon price were in place, gas would win against coal because of its smaller carbon footprint, he adds.

A political alliance between the gas industry and environmental groups in support of a carbon price could overcome the deadlock over climate policy in Congress, the Harvard professor says. “The key is not just to displace some current portion of current coal use in the United States, but rather to weaken severely the coal industry’s political power by virtually eliminating conventional coal use in the United States.”

There may be some encouraging evidence that we are moving the right direction – emissions dropped in 2011 in the US, and this article guesses it may partly be due to the transition from coal to natural gas:

http://www.washingtonpost.com/blogs/ezra-klein/post/the-us-cut-its-carbon-emissions-in-2011–but-got-swamped-by-china/2012/05/25/gJQAiZEBqU_blog.html

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