From THOM HARTMANN
Article with footnotes here
We live in a democracy and policies represent our collective will. We cannot blame others. If we allow the planet to pass tipping points…it will be hard to explain our role to our children. We cannot claim…that “we didn’t know.”
- Jim Hansen, Director, NASA Goddard Institute for Space Studies
I have taken the four-hour train ride from the airport in Frankfurt, Germany, to the Bavarian town of Stadtsteinach in the Frankenwald often enough to know it by heart. I look out the window and see the familiar sights – the towns, the rivers, the houses.
I have visited Stadtsteinach many times over the past 30 years, working with Salem International, a relief organization headquartered in that town. The community for abused kids that Louise and I founded in New Hampshire is based on its family-oriented model, and we have helped start Salem programs in Australia, Colombia, India, Israel, Peru, Russia, and Uganda, among others. So at least once a year I’ve made it back to Germany, and we lived there for a year in the mid-1980s.
But during the past decade, as the train rolls along eastward from Frankfurt, I’ve seen a dramatic change in the scenery and the landscape. First there were just a few: purplish-blue reflections, almost like deep, still water, covering large parts of the south-facing roofs as I looked north out the window of the train. Solar panels.
Then, over the next few years, the purplish-blue chunks began to spread all over, so now when I travel that route it seems like about a third—and in many towns even more—of all the roofs are covered with photovoltaic solar panels.
Given that Germany is one of the cloudiest countries in Europe, right up there with England—the sun shines for only about a third of the year—it seems crazy that it would have more solar panels per capita than any other country in the world and that it employs more than 40,000 people in the solar power industry. But the Germans made it happen.
They figured out a way to use their existing banking and power systems to begin to shift from dependence on coal and nuclear power to solar. And all it took were pretty small tweaks in the grand scheme of things. A minor recalibration in the way money moves around in the energy and banking sectors has turned the country into a solar powerhouse. Within the past decade, Germany has gone from near zero to producing 8,000 megawatts (MW) of power from solar, the equivalent capacity of eight nuclear power plants in the United States.
We can and should do the same—begin to invest in solar and other renewable forms of energy in America. For far too long, we have been hooked on oil, and we continue to pay a terrible price for it economically, politically, militarily, and environmentally. We need to wean ourselves from it both for our own future survival and prosperity and because so often other countries of the world look to us as an example of what they can or should do.
Strip Oil of Its Strategic Value
Two hundred years ago—and for a thousand years before that— one of the most strategic substances on earth was salt. It was “strategic” because no army could travel without it—salt was necessary to preserve food in a pre-refrigeration era. Wars were fought over it, and countries that had lots of salt made out well, while landlocked countries with no salt reserves were forced to sell their natural resources in exchange for it.
Oil is the new salt. It is now the planet’s number one strategic resource. And, as has been noted by numerous commentators since the first Gulf War in 1990–1991, if the primary export of Iraq were broccoli, we wouldn’t have given a damn that Saddam Hussein was a tinpot tyrant.
The unfortunate reality is that we have within and around our national boundaries about 3 percent of the world’s oil, but we consume about 24 percent of the world’s produced oil. So we buy what we don’t produce. This dependence represents a massive transfer of wealth from us to oil-producing countries. It’s a strategic blunder that would have horrified Julius Caesar, who expanded the Roman Empire all the way to central Europe when he ran out of fuel—wood—by deforesting virtually all of Italy, and then paid the price as his empire began to collapse from over-expansion.
Countries like Saudi Arabia rake in billions from oil-dependent countries like the United States, and oil revenues fuel their economies. In 2008, for instance, Saudi oil revenues spiked to $281 billion, a quadrupling of revenues from 2002. In 2009 those fell sharply to $115 billion, still nothing to sneeze at. Oil revenues fund much of the fundamentalist Wahhabi Movement within Saudi Arabia, and it’s out of this movement that come the most virulent anti-American and anti-Semitic rhetoric, textbooks, and television and radio programming.
Thirty years ago the nations composing OPEC, the Organization of Petroleum Exporting Countries, were producing around 30 million barrels per day, nearly half of the world’s oil consumption. Regardless of how much we buy from OPEC nations or instead buy from Mexico, their production will continue, because oil is a fungible commodity, and it will just go to others who are no longer buying from whomever we choose to buy from. The proof of this is that today OPEC production is still around 30 million barrels—even though world oil consumption has increased and is now around 85 million barrels per day. The OPEC nations don’t adjust production to meet demand; they maintain it to control prices so they have relatively stable income.
The only way we can change this situation is by reducing the amount of oil we use. Oil is a strategic commodity, and we need to strip it of its strategic value.
So what do we use all that oil for that makes it a strategic resource? We certainly don’t use it to produce electricity—only 2 percent of our electricity is generated by oil because we have huge domestic supplies of coal, which produce more than half of our electricity. Pretty much nobody is producing electricity with oil except the oil-rich countries of the Middle East; even rapidly growing countries like China and India, for example, are not producing oil-fired power plants.
Thus, moving to solar, wind, biomass, or even nuclear power to generate electricity in the United States will help tremendously with our CO2 output and all the pollution “externalities” associated with coal, but it will not make us less oil dependent or strip oil of its strategic significance.
The simple fact is that oil accounts for roughly 95 percent of the energy used for transportation in the United States (and our military is the world’s single largest consumer of oil), and that’s what makes it strategic. If we want to strip oil of its strategic value, so it can’t be used as a weapon against us and we can use our remaining oil supplies for rational things like producing plastics and medicines, we need to shift our transportation sector away from oil and do so quickly.
This has been the essence of T. Boone Pickens’s rant, although the eccentric oil billionaire is now a natural-gas billionaire, and he’s suggesting that we convert our truck fleet in this country from oil to natural gas, which is nearly as bad a source of greenhouse gases as is oil. He’s right that such a change would make us stronger and safer, both militarily and strategically, but he misses the climate change part of the equation (which is also increasingly becoming a strategic issue, as global climate deterioration leads to crises both at home and abroad).
Europe, Japan, and China are moving fast to shift their transportation sectors from oil to electricity, mostly through the use of trains. Brazil did it over the past 20 years by mandating that all cars and trucks sold would have to be “flex-fuel”—capable of burning gasoline or ethanol, diesel, or biodiesel. The result is that Brazil now meets nearly half of its transportation needs with domestically grown ethanol made from sugarcane, and more than 80 percent of its cars and trucks are now flex-fuel. And the added cost to Brazilian drivers to buy a flex-fuel car instead of a gasoline- or diesel-only car? About $100.
China is similarly moving in the direction of flex-fuel cars and is doubling every year its methanol production (mostly derived from domestically produced coal). Flex-fuel cars can also burn part-ethanol, part-gasoline. If, for example, we were to shift to only 20 percent of automotive fuel being gasoline (the remainder being ethanol or methanol), a single gallon of gas would go five times as far. A 40-miles-per-gallon (mpg) car would become a 200 mpg car in terms of the strategic resource of oil-derived gasoline.
Most significantly, in the United States fully half of all automobiles are driven fewer than 20 miles in any given day. This is an easy range for an electric-only or a plug-in-hybrid car. By moving to the latter immediately—mandating them—we could shift the entire U.S. auto fleet to consuming 50 percent or more electricity instead of gas/diesel in less than a decade, stripping oil of half its strategic importance.
And our trade policies are really stupid on this. We have no import tariff whatsoever on oil, so there is nothing to discourage American drivers from using foreign-produced oil products to fuel their cars and trucks. But we charge an import tariff of more than $0.50 per gallon on ethanol, discouraging Americans from using the fuel and discouraging the more than 100 countries in the world where there’s enough intense sunlight and sugarcane grows well from becoming net fuel exporters. And while we offer billions in tax breaks and incentives to oil, gas, and coal companies in the United States, we don’t subsidize or support with tax subsidies (as the Danes are doing) electric or part-electric cars, either in their production or on the consumer end.
If we add to all of this some good scientific innovation in developing a mix of low-carbon energy resources (solar, biomass, geothermal, wind, tidal power) and can figure out a way to strip the carbon dioxide from our power plant smokestacks and turn it into a solid (calcium carbonate—which you can buy at the store under the brand name “Tums”—is a good candidate), it’s not inconceivable that by 2050 we could cut our CO2 emissions by more than 80 percent. And perhaps even decades sooner, if we begin now. Plus we could strip oil of its strategic value and make our nation independent of Middle Eastern dictatorships.
So today we face a twofold crisis: First, the planet is getting warmer and it appears that our reliance on carbon-based fossil fuels is at the core of that trend. Second, the United States itself is more vulnerable to being held hostage by our reliance on imported fuel than we were in the early 1970s when the Arab oil embargo, triggered by our support of Israel in the Arab-Israeli War of 1973, nearly brought us to our knees.
Make Polluters Pay
In Denmark gasoline is taxed heavily and costs nearly $10 per gallon because the government—with the consent of its citizens, the result of a public information campaign that wasn’t drowned out because there is no domestic oil industry to speak of—realized it was picking up about $3 per gallon of the real cost of gasoline.
Cars and trucks produce exhaust, which deteriorates buildings and statues, causes cancers and asthmas, and, when rain catches it on the way down, pollutes waterways and crops, with those poisons ending up in the food chain. With a national health-care system in addition to other public services, taxpayers in Denmark are picking up the cost of cleaning public areas and historic sites, treating the cancers and the asthmas, cleaning waterways, and restoring farmland that’s been polluted by gas additives, like lead and MTBE (methyl tertbutyl ether).
So they decided to recover those “externalized costs” from gasoline with an increased gas tax.
Internalizing Profits while Externalizing Costs
Here in the United States, we allow businesses to externalize those costs and have government or consumers (in the case of cancers and asthma) pay for them, instead of incorporating that cost into the retail price of gas. The first imperative in business is to make a profit, and one of the effective ways to do so is to internalize profits while externalizing costs.
The internalizing-profits part is pretty easy to figure out: keep as much money as possible in the company, jack up prices to the maximum the market will bear, reduce expenses like labor and raw materials as much as possible, and increase efficiencies. All of these things constitute “the way of doing business” that most Americans understand.
But it’s only half of the equation. “Externalizing costs” is a fancy way of saying, “Pass along the costs of doing business to consumers or to the government so that they don’t affect profits.”
Another part of this equation is the use of nature, which involves a bit of both internalizing to the company the “free” services of nature, including the presence of fossil fuels, and externalizing to nature the “costs” of pollution.
For example, a nuclear power plant must exhaust hundreds of millions of calories of “waste heat” every day. The way the nuclear industry does this is by building nuclear plants next to rivers or lakes, and cycling the cold water from “nature” through the nuke’s cooling towers. Not only do nuclear power plants not pay for this water but the heat that’s added into the rivers or lakes (and the water that escapes as steam, evaporated in huge plumes from the cooling towers) has a real set of “costs” associated with it.
Fish die, ecosystems are altered, and less water is available downstream for uses like drinking and agriculture. The same is true of the lethal radioactive nuclear waste that is produced at every nuclear plant, which is temporarily kept on-site and eventually shipped off to government-run waste management sites.
Not one of these costs is paid by nuclear power plant operators: instead, where they’re run for-profit (like in the USA), it’s the taxpayers, the citizens, and nature itself that pay the externalized cost.
The result is that we’re wiping out nature by our use of its “free” resources. In 2001, with support from the United Nations, 1,360 of the world’s top scientists and experts convened to examine the consequence on nature of these externalized costs. Four years later, after exhaustive analysis of ecosystems around the world, the Millennium Ecosystem Assessment was explicit:
Nearly two-thirds of the services provided by nature to humankind are found to be in decline worldwide. In effect, the benefits reaped from our engineering of the planet have been achieved by running down natural capital assets.
In many cases, it is literally a matter of living on borrowed time. By using up supplies of fresh ground water faster than can be recharged, for example, we are depleting assets at the expense of our children….
Unless we acknowledge the debt and prevent it from growing, we place in jeopardy the dreams of citizens everywhere to rid the world of hunger, extreme poverty, and avoidable disease— as well as increasing the risk of sudden changes to the planet’s life-support systems from which even the wealthiest may not be shielded.
We also move into a world in which the variety of life becomes ever-more limited. The simpler, more uniform landscapes created by human activity have put thousands of species under the threat of extinction, affecting both the resilience of natural services and less tangible spiritual or cultural values.
We need to step back a bit from our oil, transportation, and energy policies and take a holistic view of the planet’s ecology and how human actions affect it.
Earth as an Organism
Since the Gaia Hypothesis of James Lovelock, first popularized in his 1979 book, the scientific and philosophical worlds are becoming increasingly aware that the planet earth is a single giant living organism, and all the living and “nonliving” parts of it are actually continually interacting in the dance we call life.
Our Aristotelian and Cartesian worldviews—that the world is actually a giant machine of sorts, and if we can just find the right lever to pull, we can fix everything—are being shown for the myths that they are, whether by climate change, the massive amount of oil that poured into the Gulf of Mexico in 2010, or the explosion of cancers and gender deformities in life forms worldwide (from frogs to humans) over the past 50 years as we’ve dumped huge amounts of hormone-mimicking plasticizers and other chemicals into our environment.
The simple reality is that I can take a car apart in my driveway, then put it back together, turn the key, and it’ll run. But if I took a cow apart in my driveway, no matter how skilled a surgeon I am in reassembling it, it’ll never moo again. Life is different from machines.
And our separation from life—whether by our worshiping gods in boxes every weekend, our belief in the supremacy of science, or our living, moving, and working in separated-from-life environments—has caused us to make personal and societal decisions that are destructive to life all around us for millennia. The tragic reality is that life is undergoing the sixth biggest extinction in the history of the planet—an extinction that may one day include us if we don’t quickly wake up.
What we need to do immediately is to start taking small, incremental steps while also raising societal awareness in preparation for taking bigger and more substantive steps toward more earthfriendly approaches and policies when it comes to energy use.
The good news is that we know what we need to do to help solve our energy and sustainability problems.
For example, about 10 percent of the electricity we generate in the United States is consumed by “vampire” appliances and power supplies that are not even turned on or in use. Another 6.5 percent of the electricity we produce in this country is wasted through “line losses”—the resistance of copper wires to the passage of electricity through them over long-line high-power transmission lines. If we used electricity at the point of generation—like running your house off your own solar power—that loss percentage would drop to zero. Instead, because it’s profitable for large power companies to have centralized generating stations, we’re losing all that electricity as heat from transmission lines and are burning enormous amounts of coal, natural gas, and oil to produce it.
Lessons from Abroad
These problems are huge but they’re not insurmountable. Other countries are already showing the way. Just as America now faces an unsustainable thirst for energy, so too was Germany faced with a power crisis in the late 1990s. Growing demands for electricity collided with the reality that the country has no oil reserves and a strong bias among its people against building new nuclear power plants in the wake of the nearby Chernobyl meltdown in 1986.
Yet the government knew that the country needed the electricity equivalent of at least one or two nuclear reactors over the next decade. So, how was it to generate that much electricity without nuclear power?
Germany’s Alternative to Nuclear
In 1999 progressives in Germany passed the 100,000 Roof Program (Stromeinspeisungsgesetz), which mandated that banks had to provide low-interest 10-year loans to homeowners sufficient for them to put solar panels on their houses. They then passed the Renewable Energies Law (Erneuerbare-Energien-Gesetz) and in 2004 integrated the 100,000 Roofs Program into it. The Renewable Energies Law mandated that for the next 10 years the power company had to buy back power from those homeowners at a level substantially above the going rate so the homeowners’ income from the solar panel would equal their loan payment on the panel and would also represent the actual cost to the power company to generate that amount of power had it built a new nuclear reactor.
At the end of the 10 years, the power company gets to buy solar power from its customers at its regular rate, and it now has a new source of power without having to pay to maintain (and eventually dismantle) a nuclear reactor. In fact, while the reactor would have had a 20- to 30-year lifespan, the solar panels typically have a lifespan of 50 years.
For the homeowners it was a no-brainer: they were getting low-interest loans from banks for the solar panels, and the power companies were paying for the power generated by those panels at a rate high enough to pay off the loans. It was like getting solar power panels for free.
If anything, the government underestimated how rapidly Germans would embrace the program and thus how much more power would be produced and how quickly. By 2007, Germany accounted for about half of the entire world’s solar market. Just that one year, 2007, saw 1,300 MW of solar-generating capacity brought online across the country.
For comparison, consider that the average generating capacity of each of the past five nuclear power plants brought online in the United States is 1,160 MW.
In 2008, Germany added 2,000 MW of solar power to its grid, and in 2009 homeowners and businesses put onto their roofs enough solar panels to generate an additional 2,500 MW. Although the goal for the first decade of this century was to generate around 3,000 MW, eliminating the need to build two new nuclear power plants, this simple, no-risk program had instead added more than 8,500 MW of power.
And because the generation sources were scattered across the country, there was no need to run new high-tension power lines from central generating stations, making it more efficient and less expensive. Meanwhile, as dozens of German companies got into the business of manufacturing and installing solar power systems, the cost dropped by more than half between 1997 and 2007 and continues to plummet.
The Germans expect that by 2050 more than 25 percent of their total electricity will come from solar (it’s now just over 1 percent), adding to the roughly 12.5 percent of all German energy currently being produced by renewable sources (mostly hydro, but also including wind, biomass, and geothermal).
The solar panel program has been so successful that the German government is now thinking that it’s time to back off and leave this to the marketplace. As the New York Times noted in May 2008:
Thanks to its aggressive push into renewable energies, cloud- wreathed Germany has become an unlikely leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, which convert sunlight into electricity, with roughly half of the world’s total installations….
Now, though, with so many solar panels on so many rooftops, critics say Germany has too much of a good thing—even in a time of record oil prices. Conservative lawmakers, in particular, want to pare back generous government incentives that support solar development. They say solar generation is growing so fast that it threatens to overburden consumers with high electricity bills.
Translation: the solar panel manufacturers want the subsidies to stop so they can catch up with demand and then bump up the price—and the profits. Because of the subsidies, prices have been dropping faster than manufacturing costs.
Other Lessons from Europe
Germany is now considering incentives for its world-famous domestic auto industry to manufacture flex-fuel plug-in-hybrid automobiles that can get more than 500 mpg of (strategic) gasoline (boosted by domestically produced rooftop solar) with existing technology.
Meanwhile, Denmark has invested billions into having more than half of its entire auto fleet using only electricity by 2030.
Even China is no slouch when it comes to renewable energy. Although the Chinese continue to bring a dirty coal-fired power plant online about once a week, they surpassed every other nation in the world in 2010 in direct investment in the production of solar and wind power. As the Los Angeles Times reported in
U.S. clean energy investments hit $18.6 billion last year, a report from the Pew Charitable Trusts said, a little more than half the Chinese total of $34.6 billion. Five years ago, China’s investments in clean energy totaled just $2.5 billion.
The United States also slipped behind 10 other countries, including Canada and Mexico, in clean energy investments as a share of the national economy….
The Pew report pointed to another factor constraining U.S. competitiveness: a lack of national mandates for renewable energy production or a surcharge on greenhouse gas emissions that would make fossil fuels more expensive.
Clearly, it is time for the United States to take action.
It’s the Taxes, Stupid
Taxes do two things. First and most obviously, they fund the operations of government. But far more importantly, taxes have been used since the founding of this country to encourage behaviors that we deem good for the nation and to discourage behaviors we consider bad.
For example, in 1793 Congress passed much of Alexander Hamilton’s plan to use taxes—tariffs—on imported goods to encourage Americans to start manufacturing companies to meet demand and needs here in this country. Those tariffs stood until the 1980s, and American jobs stayed here along with them.
Similarly, two presidents—Republican Herbert Hoover (1929 to 1933) and Democrat Franklin D. Roosevelt (1933 to 1945)—supported high taxes on the rich. They believed it’s not a good thing for too much wealth to be concentrated in too few hands because it would lead the wealthy to influence government policy for their own good rather than the public good.
So they taxed incomes above approximately $3 million per year (in today’s dollars) at around 90 percent, and the effect of that tax from the 1930s until it was repealed by Ronald Reagan in the 1980s was that CEO pay in the United States was about the same as in the rest of the world—around 30 times that of the lowest-paid employee—and few families of dynastic wealth rose up to try to seize political power.
Other examples of using tax policies to promote public policy are the home mortgage interest deduction (which encourages home ownership) and providing accelerated deductibility to companies for research and development.
Now we need a new tax to encourage change that will help us kick our addiction to oil and spur us toward a clean-energy future. We need a tax on carbon. Other countries are already doing it in a variety of direct and indirect ways. This simple solution will address both the environmental problem of carbon-based fuels fouling our atmosphere and the strategic problem of our transportation system’s being the weakness that keeps us addicted to imported oil.
There are two pretty straightforward ways to tax carbon. The first is to simply assign a tariff or tax value to it at any particular point in its use cycle. The tax could be levied when it’s used, for example, or when it’s extracted. A tax on carbon that’s imported would serve to really speed our change from gasoline-only cars to flex-fuel and plug-in-hybrid cars.
The second way to tax carbon is to tax the industrial emission of it but also “allow” a certain amount of carbon to be released into the atmosphere by “giving away” to polluters what are referred to as “carbon credits.” A threshold is set for the total amount of carbon a country will allow to be emitted (a “cap”), and anything above that point is heavily taxed. Companies that don’t want to pay the tax can instead pay to buy carbon-emitting credits from companies that have a surplus of them (presumably because they’ve reduced their levels of carbon pollution), thus “trading” the carbon credits.
This cap-and-trade program can work if the threshold is low enough, the number of credits “given away” is low enough, and the tax is high enough. On the other hand, if the thresholds are set high, the taxes are low, and the majority of the credits are given away, cap-and-trade policy becomes a windfall for Wall Street (the credits are traded via conventional commodity exchange mechanisms) but doesn’t do much for reducing carbon emissions.
The European Union, for example, has instituted a cap-and- trade program, although many European countries (Denmark is the leader) have gone one better by instituting domestic carbon or oil taxes to further encourage conservation, innovation, and the development of domestic renewables.
We should do the same.
One problem with this is that, in the absence of tariffs, many companies will simply export more manufacturing jobs to the few countries in the world that are not taxing carbon so that they can continue to use carbon-based fuels (or electricity generated from them) over there instead of here.
But there is a way around this. We can extend our carbon tax throughout the chain of manufacture. Just like our tariffs used to be based, in part, on the relative cost of foreign labor, a carbon tax tariff could be based on the amount of carbon generated in the manufacture of goods overseas. A carbon-based value-added-tax (VAT), where a small tax is imposed at every stage of manufacture reflecting the carbon used to bring about that manufacture, would do the job quite nicely if it had the power to extend itself to imported goods.
Of course, this is what the oilmen who fund the right-wing protest movements fear the most. But their interests are not those of the United States of America. And the faster Americans realize that, the better.
*The most conspicuous consequence of the deforestation of Italy during the early years of Caesar’s rule was the “currency crisis” in which the cost of refining the silver used in Roman coins doubled—because the cost of the wood used to fire the smelters more than doubled. Some historians argue that this moment—when Rome could no longer supply its own en- ergy needs—was the first signal of the beginning of the end of the Roman Empire. Interestingly, 1970 is widely accepted as the “peak oil” year for the United States, when our domestic supplies began an irreversible slide and our imports began to shoot up from 10 to 20 percent into the 50 to 60 per- cent range, where they are today. Then-president Richard Nixon called for an alternative energy strategy to get us off oil, and President Jimmy Carter actually put one into place in 1978, but Ronald Reagan rolled it back in 1981, leading directly to a dramatic increase in our imports of foreign oil.