ON INFLATING ALL THINGS GREEN

YET ANOTHER BUBBLE

One of the most over-used solutions to many of our recent national problems have been met with a clarion cry by supporters from multiple constituencies to just "Go Green". 
The rallying cry has been pushed as the answer to so many of our problems from the environment to energy, to our currently sagging economic picture.  Going Green has becoming a mainstream band-wagon, with politicians, business-folk of all stripes and sizes, the media and the scientific community, along as passengers.  All this is a good thing, but we need to be careful that we don't get carried away again.

Joe Weisenthal of Clusterstock has a post that encapsulates the current situation well:

"In the years after 9/11, commentators like Thomas Friedman argued that the "green" movement could be a force for fighting terrorism.
The basic idea: Through alternative energy, we can achieve energy Independence, choking off cash from our enemies. Nice idea, but riddled with problems..."
Fast forward, and now the big concern is the crumbling economy. Once again it seems the solution to our problems happens to be "green".
How convenient.
Both candidates for President have promised scads of green jobs, even though the promises don't really make any sense."

Especially egregious is the way both Presidential candidates promise millions of "Green Jobs" to mainstream folks like Joe the Plumber and Joe Six-Pack, as Joe of Clusterstock notes in a post from a week ago:

In fact, jobs are just about the worst thing to focus on. Geoffrey Styles (via Knowledge Problem) takes a look at Obama's desire to see 5 million green jobs, and what that suggests about the future of the energy sector:

As of last year, the US oil and gas industry employed 1,772,000 workers in all categories, spanning exploration & production, refining, transportation and distribution. Nor are they all engineers and highly-paid drilling specialists. Nearly half this figure was associated with employment in service stations. Collectively, these 1.8 million people produced, processed and delivered fuels carrying 33 quadrillion BTUs of energy, or "quads", to US consumers and businesses. That's a third of total US energy consumption and 46% of US energy production.  On average, it equates to 18.6 billion BTUs per worker, or 3,100 barrels of oil equivalent each, annually."

In order to come up with a comparable productivity metric for renewable energy, we need to make some assumptions about how much this sector will produce when it reaches its anticipated employment of 5 million Americans.

It must be a lot more than the 1% or so of electricity and 7% of gasoline currently supplied by wind, solar power and ethanol. If we combine the 36 billion gallons per year of biofuel targeted for 2022 under the federally-mandated Renewable Fuel Standard with the 20% of net electricity generation from wind by 2030 posited by a recent DOE study, as a proxy for all new renewable electricity, the total equates to roughly 14 quads per year.

And that's giving the kilowatt-hours from renewable electricity the benefit of a gas-fired turbine heat rate, rather than the normal engineering conversion, which is 2/3 lower. The resulting productivity figure works out to 2.8 billion BTUs per green energy worker, or 470 barrels of oil equivalent per year.
On that basis, we should expect that the average energy productivity of this huge new renewable energy sector would only be about 15% of the productivity of the current oil and gas industry."

Now, it's hard to imagine that this is what Obama has in mind, and in fairness, McCain has made very similar promises, so this isn't a partisan issue.
But it's symptomatic of a misguided focus on jobs, rather than efficiency or productivity."

Going Green is unquestionably a very good thing for the country over the long-term, with so many advantages and benefits.  Let's just not over-hype it like we did so many other good things, like the promise of the Internet, the benefits of low-interest rates, the advantages of middle-class home ownership, the use of derivatives for better, more efficient markets, and how the iPhone will really change our lives.

Just this time, let's try and not to create a "Green Bubble" like all those other Bubbles, which started with good intentions and the promise of a very good thing in the long-term.
*Image source.

Comments

[Tim O'Brien]

Predicting macroeconomic shifts is always a losing bargain, and every time I here people talk of the "Green Economy" I wonder what they are talking about. How many people were talking about the approaching "Web economy" in 1990? Eight years later our entire culture had been transformed by the revolution.

// BEGIN SARCASM
MP, really what we need is more talk of Earth 3.0?
// END SARCASM

Technological revolutions tend to be surprising and unexpected, the next will be no different from the last. For all we know we could be in the middle of the "Room temperature super conductor" revolution next year. We don't know what we don't know.

[Alex Tolley]

"In fact, jobs are just about the worst thing to focus on. "

Actually no. Jobs are a classic Keynesian economic stimulus. At the very least, you get people doing productive things who might otherwise be doing nothing and drawing a government check.

Secondly the balance sheet for the oil energy efficiency calculation does not include the hidden costs - CO2 emissions, pollution, military action to preserve supplies. (I'm not talking Iraq either, the Japanese initiated WWII because the US was cutting off natural resources to Japan, including rubber and oil).

[Alex Tolley]

As to the main point of the post, I agree that the "green" label and possible hype is a mistake. It will likely come to grief much as it did in the 1970's, the last time it was tried.

However, that is not to say that the 1970's did not achieve much, most of the new environmental laws were established at that time that have demonstrably improved the quality of life in industrialized countries.

This time around we have many more mature technologies that can reduce our culture's use on non-renewable and non-recyclable resources. At some point we have to have an economic system that mimics the natural world, recycling all matter through the system if we are to have a long term sustainable future.