Science blogger Greg Laden is having trouble figuring out whether or not to install a solar electric power system in his home.
I want to put a solar panel on my roof so that I am releasing less greenhouse gas into the environment. But then I hear that manufacturing solar panels causes the release of greenhouse gasses, so I have to subtract that from the good I think I’m doing. But then I realize that the people who are making the solar panels have to change their method so they release less greenhouse gas into the environment.
We hear this argument all the time (for example, here). You think you are doing something “green” but it really isn’t green because yadayadayada.
Laden has decided he isn’t real impressed by that argument. For one thing, he just doesn’t trust some of the sources for those numbers. I wouldn’t either. With billions of dollars in play and ideological positions to defend, it’s hard to find unbiased information on climate and energy issues.
Laden lists three more reasons for disdaining that argument, but they are all variations of the same thing:
So what? Nobody tells me I have to make a rational decision about buying the 72 inch wide TV to replace my 64 inch wide TV, but suddenly I’m a bad person if I don’t do a detailed Carbon-based cost benefit analysis when I want to do something EVEN COOLER than having a bigger TV, like putting a freakin’ cool solar panel on my roof?
This is an excellent reason for buying solar power. I think it’s cool too, and I’ll definitely look into it when we move out of our condo into a house where we can do stuff like that. In fact, according to a recent Lazard report, solar photovoltaic electricity generation is starting to become competitive with some of the more expensive conventional electricity generation methods. I expect the next ten years will see a lot of solar powered homes and a lot more solar generation from electrical utilities.
Laden thinks this will also apply to electric cars:
Driving an electric car in a region where more coal is used to make electricity, would have to be MUCH less efficient than not driving the electric car (in terms of carbon release) to make me think twice about it. I’ll drive my electric car and at the same time we’ll watch the electricity companies make more and more of their electricity from wind and solar, and they will have a bigger market to sell that in because we are locally replacing gas with electricity.
Laden has clearly thought about this a lot, at least in terms of the carbon footprint produced by his next car. But he has apparently given very little thought to many other aspects of his new electric car.
For example, how much valuable steel is it going to consume? We use steel in a lot of different ways in this country — for everything from wall fasteners to medical devices — so how do we know that providing Laden with a car to drive is the best use of that steel? It would be unfortunate if some poor diseased person died because the medical device that would have saved their life was never built because the steel was used to make Laden’s car.
Or what about the people who spent collectively hundreds of hours on the assembly line building the car? Perhaps they could have been doing something more important, like teaching children how to read or working to reduce the spread of infections in hospitals. Or maybe they would rather have had that extra time to take a class at a local college or stay at home with their children.
And should we even have that assembly line? Maybe that factory could be put to better use making dishwashers or big screen TVs. Maybe the land the factory is on would be better used as a Walmart or as apartment buildings for people who work nearby.
For that matter, once the car is built, who’s to say that Greg Laden is the best person it could go to? Maybe there’s a father of three who needs it to get to work, or a single mom who needs to drive to night classes so she can get her nursing degree. How do we know that Laden is the right person for the car?
My guess is that Greg Laden has spent very little time thinking about any of these issues, and rightly so. The answer to any one of these questions would be difficult to find. But fortunately the answer to all of these questions turns out to be quite simple:
Of course, I will need the electric car to get cheaper before I can get one…
There you go. Every question I raised involves something that is traded on the (more or less) free market. The steel foundries sell their output to the highest bidders, and the buyers — car makers, wall fastener manufactures, medical device suppliers — each bid on as much steel as they can profitably use. The laborers can choose to work for a car maker, a school, or a hospital, each of whom will bid on their labor according to how valuable it would be for them.
The same calculations apply to the factory owner and the land developer. They will make their resources available to the buyer offering the highest price, and the buyer that can offer the highest price is the buyer that can do the most with those resources. And when the electric car arrives in the dealer’s showroom, they will try to sell it at the highest price they can, to the person willing to pay the most for it.
In this way, the pricing system of the free market is used to coordinate the decisions of thousands of people all over the world to allocate their resources and time to produce the goods and services that will be valuable to the final consumers. And what it all comes down to is that when the car is sitting in the showroom, the sticker price represents everything Greg Laden needs to know about all the decisions used to produce it all over the world. And he took a look at the sticker and thought, “Eh, not today.” Decision made.
However, there’s at least one important resource that is not included in the price of the car: Its impact on global warming. The factories and steel foundries consume energy and dump greenhouse gases into the atmosphere, raising the planet’s temperature in a way that will harm other people. Laden’s car would contribute a very small amount of global warming and does an almost infinitesimally small amount of harm to Laden himself, but when you multiply out that harm by the billions of people living on the planet, the amount is probably significantly more than zero, which is the amount global warming currently adds to the sticker price.
That’s a problem, because the cost of the car’s contribution to global warming is every bit as real as the cost of the car’s steel or the cost of the labor that goes into assembling the car. But since nobody involved in making the car has to pay that cost, the final sticker price of the car understates the true cost of manufacturing the car. So people like Greg Laden may be tempted into buying the electric car because the sticker price is less than the true cost. Of course the same thing applies to any other car Laden might buy, and more importantly, it applies to the energy that Laden’s car consumes when he drives it, whether he’s charging an electric car or burning gasoline in a sports car.
The basic problem is that the Earth’s capacity to absorb greenhouse gases is not traded in the market. It is available free to anyone who wants to use it: All they have to do is release the gases into the air. The price of releasing gases is effectively zero. But the cost of the damage they do to the climate is significant. The fact that people can do damage without paying for it is the source of all of our climate problems.
One especially attractive solution to this problem is to use taxation to put a price on releasing greenhouse gases. This is usually called a carbon tax, after a principle element in greenhouse gases. The idea is to set the tax rate for releasing a ton of carbon as close as we can get to an economic estimate of the damage done to the climate by releasing the carbon. This tax will be applied to all sources of energy — coal, oil, gas, nuclear, solar, wind — according to the amount of carbon released (lots for coal, zilch for solar). Thus the price at the electric meter or the gas pump will include the cost of climate damage.
That cost will cascade through all the productive processes in the economy. Laden will no longer have to worry about the carbon released to build his solar cells or his electric car, because that price will have been incorporated into the cost of the manufacturing process. Climate-damaging energy consumption will raise the costs of the product. And when Laden walks into the electric car dealership, the cost of the car will have gone up enough to include climate damage. But the cost of operating a gasoline-powered car will also have gone up due to the carbon tax, so Laden may find that gasoline cars are no longer as cost effective, which might make an electric car worth the price after all.
Or maybe not. But the point is that with carbon taxes (or a number of similar ideas) we can be climate conscious without researching the total carbon footprint of everything we buy. All we have to do is compare prices.