The Regulatory Hydra

Regulation of oil, gas and coal is like trying to cut the head off a hydra.   You do it, because the head is dangerous, but two more heads pop up in its place. The ongoing saga of fighting for reasonable regulation of gas is exemplified by the news out today that scientists are challenging EPA conclusions on fracked water.

At some point, the focus must be on the demand for these fuels. A growing number of experts identify a carbon tax is THE gold standard means for addressing that.  Other carbon pricing mechanisms can work too. We don't have one of those. Congress isn't really keen on passing one.  Yet.  (Citizens Climate Lobby and other groups have seen great progress on the Hill and Sanders' campaign just raised awareness and political will for a carbon tax immeasurably).

Carbon pricing is not the only way to send market signals, however. We have seen the impending demise of coal simply because we allowed gas to be utterly cheap. That happened by allowing frackers to pollute and create wanton destruction.

Lack of regulation keeps market prices low. Imposing regulation drives up market cost. The more we regulate gas, the higher its cost will be.

Yes. Back to the dreaded hydra. Because, at the end of the day, it comes to us to demand that private actors don't hurt each other. We have a police force because we recognize that. Private actors don't just use theft, trespass, rape and murder to hurt each other. They use things like fracking too, so long as it's profitable.

However, we'd better be careful. As we regulate gas, if we don't want to return to coal, we'd best be sure there is a cheaper alternative to them both.

Renewables are looking to be that. Some reports show that by 2020, renewables will be the cheapest means of energy production.  However, without transmission or storage, renewables will remain dependent on gas.

So, we must make transmission and storage and solar and wind work together more cheaply than gas. Quickly.

How?  Subsidize the corporations making renewables or give tax breaks to the people buying them.

Congress, last December extended the tax credits for solar and wind purchases. There are growing numbers of state programs supporting renewables as well. This is important to getting us to the 2020 mark when renewables will be cheaper even without these subsidies.

But transmission?  We need a national grid. (Hillary's got a plan for that, as part of her infrastructure plan.  And she is continuing to make it a key part of her campaign even when she is talking about the broad scope of her campaign.)

The market signals also impact another source of energy:  nuclear. At the moment, nuclear, like renewables with transmission and storage, can't compete with poorly regulated gas unless subsidized. This is not just true of newly built plants. This is true of maintaining current plants. Yes. Running already existing nuclear plants is more expensive than fracked gas. That's why they are closing.

If we want carbon free energy, we will subsidize it while also regulating carbon filled energy. It's really that simple.

Well, it could be simpler. We could ditch all that and enact a revenue neutral carbon fee and dividend.

Thanks to CCL Canada for the Image