A Climate Deal with China is a Key Benchmark on the Way to a Stable Climate and a Global Economic Boom!

Go Barack!

http://nyti.ms/10W2wvO

U.S. and China Reach Agreement on Climate After Months of Talks
By MARK LANDLER

President Obama and President Xi Jinping of China, with their delegations, met inside the Great Hall of the People in Beijing on Wednesday.
Mandel Ngan/Agence France-Presse — Getty Images

BEIJING — China and the United States made common cause on Wednesday against the threat of climate change, staking out an ambitious joint plan to curb carbon emissions as a way to spur nations around the world to make their own cuts in greenhouse gases.

The landmark agreement, jointly announced here by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.

Administration officials said the agreement, which was worked out quietly between the United States and China over nine months and included a letter from Mr. Obama to Mr. Xi proposing a joint approach, could galvanize efforts to negotiate a new global climate agreement by 2015.

It was the signature achievement of an unexpectedly productive two days of meetings between the leaders. Mr. Obama and Mr. Xi also agreed to a military accord designed to avert clashes between Chinese and American planes and warships in the tense waters off the Chinese coast, as well as an understanding to cut tariffs for technology products.

A climate deal between China and the United States, the world’s No. 1 and No. 2 carbon polluters, is viewed as essential to concluding a new global accord. Unless Beijing and Washington can resolve their differences, climate experts say, few other countries will agree to mandatory cuts in emissions, and any meaningful worldwide pact will be likely to founder.

“The United States and China have often been seen as antagonists,” said a senior official, speaking in advance of Mr. Obama’s remarks. “We hope that this announcement can usher in a new day in which China and the U.S. can act much more as partners.”

As part of the agreement, Mr. Obama announced that the United States would emit 26 percent to 28 percent less carbon in 2025 than it did in 2005. That is double the pace of reduction it targeted for the period from 2005 to 2020.

China’s pledge to reach peak carbon emissions by 2030, if not sooner, is even more remarkable. To reach that goal, Mr. Xi pledged that so-called clean energy sources, like solar power and windmills, would account for 20 percent of China’s total energy production by 2030.

Administration officials acknowledged that Mr. Obama could face opposition to his plans from a Republican-controlled Congress. While the agreement with China needs no congressional ratification, lawmakers could try to roll back Mr. Obama’s initiatives, undermining the United States’ ability to meet the new reduction targets.

Still, Mr. Obama’s visit, which came days after a setback in the midterm elections, allowed him to reclaim some of the momentum he lost at home. As the campaign was turning against the Democrats last month, Mr. Obama quietly dispatched John Podesta, a senior adviser who oversees climate policy, to Beijing to try to finalize a deal.

For all the talk of collaboration, the United States and China also displayed why they are still fierce rivals for global economic primacy, promoting competing free-trade blocs for the Asian region even as they reached climate and security deals.

The maneuvering came during a conference of Pacific Rim economies held in Beijing that has showcased China’s growing dominance in Asia, but also the determination of the United States, riding a resurgent economy, to reclaim its historical role as a Pacific power.

Adding to the historic nature of the visit, Mr. Obama and Mr. Xi were scheduled to give a joint news conference on Wednesday that will include questions from reporters — a rare concession by the Chinese leader to a visiting American president.

On Tuesday evening, Mr. Xi invited Mr. Obama to dinner at his official residence, telling his guest he hoped they had laid the foundation for a collaborative relationship — or, as he more metaphorically put it, “A pool begins with many drops of water.”

Greeting Mr. Obama at the gate of the walled leadership compound next to the Forbidden City, Mr. Xi squired him across a brightly lighted stone bridge and into the residence. Mr. Obama told the Chinese president that he wanted to take the relationship “to a new level.”

“When the U.S. and China are able to work together effectively,” he added, “the whole world benefits.”

But as the world witnessed this week, it is more complicated than that. Mr. Xi won approval Tuesday from the 21 countries of the Asia-Pacific Economic Cooperation forum to study the creation of a China-led free-trade zone that would be an alternative to Mr. Obama’s Trans-Pacific Partnership, a 12-nation trading bloc that excludes China.

On Monday, Mr. Obama met with members of that group here and claimed progress in negotiating the partnership, a centerpiece of his strategic shift to Asia.

Negotiations for the Trans-Pacific Partnership are much further along than those for the nascent Chinese plan, known as the Free Trade Area of Asia Pacific, and some analysts said the approval by the Pacific Rim nations of a two-year study was mainly a gesture to the Chinese hosts to give them something to announce at the meeting.

For all the jockeying, the biggest trade headline was a breakthrough in negotiations with China to eliminate tariffs on information technology products, from video-game consoles and computer software to medical equipment and semiconductors.

The understanding, American officials said, opens the door to expanding a World Trade Organization agreement on these products, assuming other countries can be persuaded to accept the same terms. With China on board, officials predicted a broader deal would be reached swiftly.

“We’re going to take what’s been achieved here in Beijing back to Geneva to work with our W.T.O. partners,” said Michael B. Froman, the United States trade representative. “While we don’t take anything for granted, we’re hopeful that we’ll be able to work quickly” to conclude an expansion of the agreement, known as the Information Technology Agreement.

On Wednesday morning, Mr. Xi formally welcomed Mr. Obama at a ceremony in the Great Hall of the People; they later toasted each other at a state banquet.

Administration officials said Mr. Obama had pressed Mr. Xi to resume a United States-China working group on cybersecurity issues, which abruptly stopped its discussions after the United States charged several Chinese military officers with hacking.

“We did see a chill in the cyber dialogue,” said Benjamin J. Rhodes, the deputy national security adviser. “We do believe it’s better if there’s a mechanism for dialogue.”

On Tuesday, Mr. Obama credited APEC with originating the work on reducing tariffs, saying, “The United States and China have reached an understanding that we hope will contribute to a rapid conclusion of the broader negotiations in Geneva.”

Talks with China over expanding the 1997 accord on information technology broke down last year over the scope of the products covered by the agreement. But after intensive negotiations leading up to Mr. Obama’s visit, Mr. Froman said, the Americans and the Chinese agreed Monday evening to eliminate more than 200 categories of tariffs.

While the United States still exports many high-technology goods, China is the world’s dominant exporter of electronics and has much to gain from an elimination of tariffs. Taiwan, South Korea and Japan increasingly find themselves supplying China’s huge electronics industry, deepening their dependence on decisions made in Beijing.

The administration estimated that expanding the Information Technology Agreement would create up to 60,000 jobs in the United States by eliminating tariffs on goods that generate $1 trillion in sales a year. About $100 billion of those products are American-made. The administration faces a longer path on the Trans-Pacific Partnership, including whether Mr. Obama will obtain fast-track trade authority from Congress. That could make it easier for the United States to extract concessions from other countries, since they would have more confidence that the treaty would be ratified by Congress.

While Mr. Froman conceded that sticking points remained, he said, “It’s become clearer and clearer what the landing zones are.” He said that Mr. Obama would seek fast-track authority, but that the best way for him to win congressional passage of the Trans-Pacific Partnership would be to negotiate the best deal.


Keith Bradsher and Chris Buckley contributed reporting from Hong Kong, and Coral Davenport from Washington.

Traveling with Airbnb

Airbnb, a web site for finding rooms, apartments, or houses to rent in the U.S. and around the world, has taken root in countries like Italy and Tunisia where people are desperate for innovative ways to earn a little extra income. The web site's essential economic virtue is to bring into play underutilized resources, while its key social virtue is to bring together people from diverse cultural backgrounds who would not otherwise meet.

Within Airbnb, there is a definite experiential divide, as we found out on a recent trip to Italy and Tunisia. Within the website, one can rent either a room within a house with access to a bathroom and oftentimes the kitchen, or one can rent a complete domicile. The price and quality range is substantial, creating options for almost any travel budget. We discovered a distinct difference between renting a room within someone's home and a complete apartment. Doing the latter amounts to a fairly standard landlord-tenant relationship. Doing the former embeds you in the daily life of the host to varying degrees. This can give one an incredible window to a local culture and sometimes useful information about how to navigate it. One can also get involved in your host's problems of the day, which can be interesting but also stressful. You will for sure get an experience a conventional hotel cannot offer, and probably one you will never forget.

I can't get into details about our particular encounters because of the public nature of the Airbnb website and it's highly functional system of both host and renter reviews. Suffice it to say we had a wonderful dinner with young student hosts that will stick in our memories forever, we learned about the serious problems of unemployment and making ends meet in two countries, and we experienced the wonders and anxieties of family and child-rearing, having for us a familiar ring, but in a culture not our own. We also met and enjoyed a dinner and very special conversation with a fellow tenant and wonderful young Arabic-speaking American student intern working on a degree in International Studies.   Again, these kinds of experiences a tour guide cannot arrange for you. While cultures vary, with each having problems and wonders of its own, in getting through daily life we are all not so different.

Securing a dwelling through Airbnb, no matter whether it's a room or an apartment, has the added virtue of embedding you in a locality outside of the usual tourist zones and exposing you more fully to the actual daily public life of the city, village, or countryside you visit. One can more easily enjoy the experience of shopping in neighborhood grocery stores, stopping for a coffee or glass of wine in a local cafe and watching the daily goings on, eating a meal in a restaurant favored by locals, walking or exercising in a local park, hiking along a country road or urban trail, and still visit famous attractions using local public transit. This we were able to do readily in Florence, Bologna, Ancona, and Rome, Italy as well as Tunis, Tunisia.

Finally, what's good for connecting one with the local culture is also good for spreading tourist dollars more effectively around the local economy. Instead of dumping your money into the coffers of multinational corporate hotels, restaurants, and tour organizers, your dollars will flow to local home owners, shops, street vendors, and transit systems, to individuals and businesses that will themselves be more likely to recycle the money they receive back into the local economy than the multinationals. This is even the case for a clever pickpocket on a crowded tram that unzipped my front pant's pocket an got my wallet. In short, Airbnb is a back door global development strategy that can help the Italy's and Tunisia's of the world to seek a better economic life.   

The Coming Good Boom in Egypt Under the Counterrevolution Radar

A New Kind of Revolution in Egypt

Despite the current political chaos in Egypt, a positive revolution is going on in the desert under the radar. Taking advantage of Egypt's abundant sunshine, water-conserving aquaponics is coming to the desert and producing tons of nutritious plants and fish for the Egytian population and creating new jobs in the process. Thanks to my son Jeremy for bringing this to my attention. Go Egypt! Check out the following article.

http://www.aljazeera.com/indepth/features/2013/09/egypt-aims-for-revolution-desert-farming-2013923123946325303.html#.UlK8-wQlaMw.gmail

Cairo, Egypt -The hazy desert that extends from the outskirts of Cairo has become the unlikely scene of another revolution that has the potential to transform Egypt - and it is green.
Inhospitable, yellowed wasteland is now yielding up ripe red tomatoes, fresh kale and schools of fish in a bold experiment fuelled by the country's most precious resource: water.
This surprising harvest illustrates how Egypt is witnessing a slow transformation in attitudes towards the environment driven by groups such as Greenpeace and Nawaya alongside an innovative young sustainability movement.
In the vanguard of this movement is Faris Farrag, an Egyptian banker inspired by a love of growing plants and fishing, who has embraced the revolutionary technique of aquaponics at his unassuming farm outside Cairo called "Bustan" (Arabic for orchard).
"As the price of water soars, as the price of petrol soars, and when the subsidies on farming disappear, this model makes sense," says Farrag.
Reviving ancient techniques
Aquaponics, an ancient form of cultivation that originated with the Aztecs, enables farmers to increase yields by growing plants and farming fish in the same closed freshwater system.
Farrag studied the technique under Dr James Rakocy at the University of the Virgin Islands, whose sustainable farming method grew in popularity in the 1980s and is n
Enterprising farmers have implemented the system in countries as diverse as Bangladesh, the United Arab Emirates and Yemen to save water and increase output.

As the price of water soars, as the price of petrol soars, and when the subsidies on farming disappear, this model makes sense Farris Farrag, former banker

At Bustan, the first commercial aquaponics farm in Egypt, olive trees flank the growing areas sprouting from what seems to be sandy ground, and dusty mesh screens are the only barriers protecting delicate young plants from the expansive tracts of sand.
Water circulates from tanks hosting schools of fleshy Nile tilapia through hydroponic trays which grow vegetables including cucumber, basil, lettuce, kale, peppers and tomatoes on floating foam beds with run-off flushed out to irrigate the trees.
It is an ingenious solution to an old problem in a country dominated by unforgiving deserts where access to fresh water is a luxury in many areas.
The Nile supplies Egypt with almost all its water, 85 percent of which goes to agriculture - but the country has long outgrown agreements with neighbours on its share of this resource as its population has soared to 85 million, and is pressing to renegotiate terms.
Earlier this year the most populous Arab nation made global headlines in an angry disagreement over plans to dam the Blue Nile, denouncing Ethiopia's attempts to reroute the river.
Need for environmental policies
Compounding problems of access to water is pollution, and visitors only have to peer at the Nile's swirling eddies and water catchments to notice the gunk and assorted rubbish that confirm the low priority afforded environmentalism.
Most of the population lives on the 2.9 percent of land that is arable and use the only source of fresh water as an industrial, human and agricultural dump, undeterred by laws that prohibit the throwing of waste into the Nile.
Compounding water pollution, Egypt's annual "black cloud" caused by the burning of agricultural waste costs an estimated $6bn in damage to natural resources and a further $2bn in associated health effects, according to date compiled by the American University in Cairo.
These challenges are a bleak reminder of how desperately Egypt needs environmental policies to protect its fragile agricultural resources.
From Cairo's unremitting expansion into fertile areas to the mountains of garbage strewn on the city's streets, incessant congestion, and misuse of the water supply, there are precious few examples of sustainability.
Which is where Farrag believes aquaponics comes in - Bustan uses 90 percent less water than traditional farming methods in Egypt.
He argues that his model is economically viable and scalable, producing between 6-8 tonnes of fish per year and potentially yielding 45,000 heads of lettuce if it were to grow just a single type of vegetable.
Sustainability underpins the whole operation, he says. Bustan is not land-intensive and Farrag also uses biological pest control methods, such as ladybirds to kill aphids, in order to avoid chemical inputs.
The project also employs two locals, Abdul Rasul Hassanain and his wife Amal, who live on a nearby plot of land and have dramatically increased their role in running the farm.
Dr Ashraf Ghanem, a professor of water engineering at Cairo University, is a strong advocate of the system.
He recently told journalists about the potential benefits of these farms in the Middle East, saying they: "Could serve as a means of income generation for unemployed women, as well as a means of education for children of the household on principles of water saving, plant and fish biology, nutrient cycle, fluid mechanics, hydraulics, microbiology and renewable energies."

A local non-governmental organisation, Nawaya, is taking a leading role in supporting sustainable farming and has brought locals to visit Farrag's farm in a bid to help them swap traditional irrigation techniques for sustainable methods.
But that transition does not come cheap. Inside Bustan, the hum of pumps to ensure the fish are raised in pools with properly filtered water is constant, raising concerns about costs - and posing questions about whether sustainable farming can only be a novelty for the wealthy.
Farrag has invested more than 300,000 Egyptian pounds ($43,500) in his dreamover the last two years - a daunting sum compared to the modest incomes of most rural Egyptians.
But the green entrepreneur is quick to point out that the project could be set up with half that sum, and notes that Bustan was built with locally sourced construction material.
"This is all Egyptian made or stuff that's easy to find in Egypt. Anyone could do it," he says.


With the late afternoon sun hanging low in the sky and the desert wind brushing over olive branches, the hangar-like structure of the farm rests like an oasis.

"The beauty of this system is that you can go to a piece of land that is non-plantable, that is not viable for agriculture, because you build the system"” adds Farrag.

"You can take a rock and build on it. And then you have tomatoes and fish in the desert."

Cooling the Climate and Heating up the Economy: Politics and Philosophy

President Barack Obama in his 2013 State of the Union recommitted himself  to the hard work of bringing global warming to heal. In his first term, the Senate refused to salute a House-passed clean energy bill (American Clean Energy and Security Act of 2009) that would have created a cap and trade system placing annual absolute limits on carbon emissions (and their equivalents) and reducing emissions 85 percent by 2050. With the political ascendency of the Tea Party and the Republican capture of the House of Representatives in the 2010 elections, any chance for passage of a comprehensive clean energy bill evaporated. Despite this defeat, the Obama Administration under its own authority engineered a substantial boost to motor vehicle energy efficiency requirements (CAFE standards) that will substantially curtail carbon emissions in the transportation sector and undertook a variety of other measures to advance the creation of a clean energy sector.  Without the help of intransigent Republicans who deny that climate change is a problem, incremental progress is nonetheless being made by the Administration in curtailing carbon emissions, but much more is possible, especially since the Supreme Court ruled that the federal government has the power to regulate greenhouse gas emissions under the Clean Air Act. The EPA got the ball rolling in response to the Court’s decision by recently publishing new source performance standards that will reduce future emissions from new electricity generation facilities. Securing such reductions is a genuine plus, but already existing power plants generate some 40 percent of all carbon emissions in the U.S. today. To get the problem of global warming in hand requires a serious tightening of carbon pollution from these facilities, a task  achievable under existing provisions of the Clean Air Act.  

President Obama has now begun to solidify  his environmental legacy by asking the EPA to publish Clean Air Act regulations requiring states to curtail carbon emissions from all power plants within their boundaries. The highly respected Natural Resources Defense Council (NRDC) in a recent report lays out the details of flexible and low cost methods compatible with the Clean Air Act for reducing greenhouse gas pollution from power plants, such as emission trading within and across state boundaries, that would take the U.S. a long way toward meeting the basic intentions of the defeated clean energy bill, to cap carbon emissions and create a clean energy sector. In short, President Obama is now circumventing a grid-locked Congress in using the Clean Air Act to bring about a green energy revolution in the U.S. and help to set the world on a path to a stable climate future. With our own climate house in order, the U.S. will be in a position to negotiate rigorous global emission standards with other countries, using, if necessary, the leverage of its dominant position in the global trading system.

Environmentalists in their organizing efforts today focus predominantly on opposing construction of the Keystone Pipeline, a great thing for raising public consciousness about the environmental perils of fossil fuels, but the really important task for limiting climatic warming is expanding the coverage of the Clean Air Act to all existing sources of carbon emissions. To bring this about requires pressure from the environmental movement  to insure implementation over the long-haul. The Clean Air Act would have died on the vine without environmentalist pressure for the last half-century, both in the political arena and the courts. 

Democrats have a propensity to needlessly shrink in fear of a Republican backlash from doing something about climate change, but the usual Republican position, that regulating carbon emissions will be a job killer, has no clothes. The essential Democratic political trump card in the climate deck is the capacity for a clean energy sector to create an abundance of good jobs and to produce environmentally friendly energy at an affordable price. Because it is so much more labor intensive than fossil fuels, shifting to clean energy by itself will add jobs, and the kind of jobs created will cover the full spectrum of skills from solar panel installers and wind generator mechanics to electrical engineers. Clean energy expansion will set off an investment boom of a new kind, one that will do the environment a favor and at the same time lift economic boats all across the income distribution spectrum. A big part of the move to clean energy will be accomplished through energy conservation, which will mostly be a “free lunch” by virtue of resulting savings in energy costs. The cleanest, greenest, and cheapest energy of all is that not consumed. Clean energy costs will dampen further through the attainment of what economists call “scale economies;” the more you do of any economic activity, the lower will be its unit cost, a phenomenon already apparent in both wind generators and solar panel installations.

Even more important politically than job creation for halting global warming, is a little noticed but persistent trend among the young in the direction of “post-materialist” values (See the work of University of Michigan professor, Richard Inglehart).  Post-materialists worry less about economic accomplishment and place a higher value than their elders on self-expression, personal freedom, shared experiences, and social tolerance. Many post-materialists also profess a “universalist” concern for the welfare of others, whoever they may be, and for the global environment. In short, post-materialism represents a shift in personal philosophy away from a currently predominant economic materialism. We all give our highest priority to our own well-being and that of those closest to us, and we all seek our personal pleasures, but the experience of economic and personal security among the young causes many to pursue personal values that go beyond the acquisition of material goods. Consumerism is fine, but it gets boring after awhile. This bodes well for the future of a values-oriented Democratic Party, and specifically for Democrats willing to go out on a limb and do something about a changing climate. As the future unfolds and younger generations replace older, post-materialists will become more and more prevalent among the voting population, to the benefit of a Democratic Party oriented to clean energy and environmental improvement. Philosophical values indeed matter for our climate future.

PHILOSOPHY FOR A GREEN ECONOMIC FUTURE

PHILOSOPHY FOR A GREEN ECONOMIC FUTURE is now available from Amazon.com as a Kindle book or paperback. Learn about a new "post-material" philosophy that bodes well for our environmental and economic future.

Carbon Tax Makes Ireland Even Greener

Read this article in the New York Times at: http://nyti.ms/VkVYk3

Ireland has bought itself a future good boom. 

Is Clean Energy Truly More Spatially Compact than Fossil Fuels?

Living more compactly to leave more space for nature means shifting to renewable, clean forms of energy, I argue so far in this blog. We need to settle once and for all whether clean energy is indeed more spatially parsimonious than fossil fuels. The footprint for wind energy is fairly small, but solar energy requires substantial amounts of space. When we account for the probable spatial impacts of climate change induced by continued fossil fuel use, is it the case fossil fuels will absorb more space than a shift to clean energy, especially to solar?  

Global warming alters our spatial landscape through two primary mechanisms: sea-level rise and shifts in vegetation zones. As the earth’s climate warms, oceans expand and rise by absorbing more heat from the atmosphere and more water from retreating glaciers and melting ice sheets. Rising oceans rip away at beaches, inundate coastal wetlands, invade low-lying cities, and take over agricultural lands in river deltas. Climatic warming also leads to upward shifts of vegetation zones both in latitude and altitude. Hot-weather zones such as deserts expand their coverage at low latitudes, while cold-weather zones such as tundra with permafrost shrink at high latitudes. In mountainous landscapes, prairies and warm-weather forests march upward to higher elevations while subalpine zones retreat and contract with no place to go. 

One area of the world much affected by desert expansion is the Sahel, a band of land up to a thousand kilometers wide just below the Sahara desert stretching across Africa from the Atlantic Ocean to the Red Sea. The Sahel is a 3 million square kilometer transition zone between Sahara desert to the north and less arid savannah and tropical forests to the south. The Sahel is mostly grassland with scattered acacia trees, and was once home to large populations of grazing mammals, some of whom have gone extinct in the face of overhunting and competition with livestock. On its seasonal wetlands, the Sahel also hosts millions of migratory birds moving along the African-Eurasian flyways. 

The countries of the Sahel are home to more than 90 million residents who in the last fifty years have suffered from increasing incidences of drought, crop failures, and periodic famines due to subnormal rainfall. These countries, including Chad, Mali, Mauritania, Niger, and Sudan, are among the poorest in the world. The Sahel is vulnerable to declining vegetation cover and desertification not just because of drought, but as a consequence overpopulation, overgrazing, and excessive cropping, all of which add to the area’s poverty. Improvements in agricultural practices that reduce erosion and economize on scarce water resources have begun to raise living standards for some in the Sahel, but the future will be increasingly difficult for most if global warming continues at its current pace. As recently as 2010, the Sahel suffered a serious drought placing 350,000 in danger of starvation and 1.2 million under the risk of famine. The Intergovernmental Panel on Climate Change (IPCC) predicts that under current climate trends the proportion of the global landscape subject to extreme drought will increase from the current 1 percent to about 30 percent by the 2090s. If this occurs, a southward push of the Sahara desert boundary into the Sahel will likely continue as will the suffering of its residents. 

While low-latitude hot deserts are predicted to expand due to continued climate warming, the actual average annual temperature increases on a global scale will be greatest at higher latitudes. Arctic tundra, a major high-latitude vegetation zone, is already exhibiting symptoms of stress from rising temperatures. Arctic tundra covers a huge, sparsely populated area of 11.5 million square kilometers extending across the northern edge of the North American and Eurasian continents just above expansive stretches of boreal forest. Tundra landscapes feature long, very cold winters, short summers, desert-like precipitation, high winds that blow across a flat topography, and huge volumes of permafrost (permanently frozen soil) just below the biologically active surface soils. Because of a short growing season and harsh winter conditions, only ground-hugging shrubs and low-stature grasses, wildflowers, mosses, and lichens can survive in the tundra, not trees, and even shrubs disappear in the northern-most reaches. In the short summers, the tundra teems with grazing caribou and musk oxen and millions of waterfowl attracted by marshes, bogs, and lakes created by the melting of the upper permafrost layers. Historically, human intrusion in the Arctic tundra was limited to aboriginal populations that survived mainly through hunting and fishing, but recently the North Slope of Alaska and other locations have become prime territory for oil production. The Arctic tundra remains one of the least directly disturbed natural habitats in the world. 

Climatic changes are already afoot in the Arctic. Weather reporting stations throughout the area show an upward trend in both temperature and precipitation over the last fifty years. Permafrost temperatures measured from bore-hole samples taken for the past 20 years show a distinct upward trend. The end of snowmelt in recent decades is occurring at progressively earlier dates in the spring, resulting in longer summer growing seasons and lengthier periods of permafrost melting. Glaciers in nearby mountains have shrunk substantially since the 1950s, showing evidence of a long-term warming trend. In response to a lengthening growing season and more moderate temperatures, shrubs are expanding northward into previously shrub-free areas where only grasses and other ground-hugging vegetation survived historically. At the southern boundary of the tundra, the boreal forest appears to be marching northward as temperatures moderate with younger trees successfully establishing themselves farther and farther north over time. Within the tundra, more and more depressions, called thermokarst, can be observed where ice-rich permafrost has melted and caused subsidence of the soil layer above.

One could easily think that tundra warming and the advance of forests into the tundra really doesn’t matter that much because so few people live there. The caribou, arctic foxes, musk oxen and waterfowl that make the tundra home would of course disagree, but there is another good reason to worry about the health of the tundra biome. Under normal conditions, tundra accumulates huge amounts of carbon. Each year plants grow and die in the summer season, but the organic matter they create doesn’t get a chance to fully break down before the winter freeze, and a portion of this organic matter gets locked up in the permafrost. The accumulation of permafrost over time has created a huge carbon reservoir. As the arctic tundra warms and increasing amounts of permafrost melt, organic matter freed from the ice is broken down by bacteria and carbon is released back to the atmosphere. Where oxygen is available, this release takes place in the form of CO₂, but in the many arctic bogs lacking oxygen, the release occurs as methane which is a much more powerful and dangerous greenhouse gas than CO₂. Through this mechanism, permafrost melting leads to more greenhouse gas emissions, increased climatic warming, and yet more permafrost melting to complete a not so virtuous circle. Although potentially substantial because of the Arctic tundra’s size, the final quantitative effects of permafrost melting on climate change remains unknown. Why take a chance? Destructive impacts of global warming on big landscapes like the Sahel and Arctic tundra can be avoided by moving quickly to a clean energy economy that will itself possess a modest spatial footprint. To see this, let’s focus our attention on one of the potentially most disturbing of all climate change impacts, the inundation of coastal lands by a rise in the sea level. 

Until recently, scientists were predicting up to a 1 meter rise in sea level by the end of this century, but now some have changed their tune. The melt rates for the Greenland and Antarctic Ice sheets are greater than recently thought, increasing sea-level rise estimates to 1-3 meters by 2100 with the possibility of a 5 meter rise if ice-sheet breakups takes place. The effects of a 1-meter rise are substantial and a 5-meter rise could be catastrophic. I refer you to a recent report, “The Impact of Sea Level Rise on Developing Countries: A Comparative Analysis,” from the World Bank for a fascinating analysis and description of the sea-level rise problem. 

As one can imagine, those countries that suffer the greatest effects from sea-level rise are low-lying, such as the Bahamas, and possess extensive river deltas, such as Viet Nam, Egypt, and Bangladesh. These countries will suffer from population displacement, declines in gross domestic product, and a general loss of land area that will include inundations of croplands, urban landscapes, and wetlands. The country likely to be hardest hit from a 1-meter sea-level rise is Viet Nam with projected inundation of 5 percent of its total land area, 7 percent of its agricultural lands, 11 percent of its urban extent, and nearly 30 percent of its wetlands. Of all the world’s ecosystems, wetland loss is potentially the most devastating from sea-level increases because so much has already disappeared due to past human intrusions. At the global level, a 1-meter sea-level rise will impact nearly 2 percent of remaining wetlands, while a 5-meter rise will raise that number to 7 percent.

Because of both geography and a lack of resources for coastal  landscape defenses, it is the developing countries of the world that will suffer the most from sea-level rise. Ironically, attacking climate change through clean energy development will not only avoid such harms, but for some countries, such as Egypt, it will create significant economic opportunities. Egypt, is second only to Viet Nam in projected potential damage from sea level increases. While Egypt won’t loose much of its 1,000,000 square kilometer surface area, because its population and arable lands are so heavily concentrated in the Nile Delta, even a meter sea-level rise will be devastating. From such an increase, Egypt will see some 13 percent of its 40,000 square kilometers of cropland inundated and as much as 9 percent of its population will suffer displacement. A 5-meter sea-level rise would increase the cropland loss to 35 percent. 

Harms of this kind can be avoided with a shift to clean sources of energy over the next forty years. A recent pear-reviewed study by DESERTEC, a foundation that advocates for desert-based solar thermal energy, points the way to a clean energy future with a minimal impact on global land use (See “Clean  Power  from  Deserts: The DESERTEC Concept for Energy, Water and Climate Security”). The world’s hot desert cover 36 million square kilometers on which a huge volume of solar energy falls each year, so much that only about 1 percent of desert surface area would be needed to replace present-day global fossil fuel energy. Primary global energy consumption from fossil fuels currently equals 107,000 Terrawatt hours (TWh) a year, and a kilometer of hot desert receives 2.2 TWh of solar energy annually, of which 0.33 TWh can be captured at a presently attainable 15 percent electricity conversion rate. Even if total fossil fuel energy demand ultimately doubles, which exceeds current projections for the next half-century, no more than 2 percent of desert landscapes would be needed for solar energy production under the radical assumption that all of our fossil-fuel replacing energy comes from deserts. As opposed to photovoltaics, which generate electricity only when the sun shines, solar thermal technology uses mirrors which focus the suns energy on towers containing molten salt that store heat for powering steam driven electric generators 24 hours a day. Some desert landscapes, such as the Sonoran and Mohave deserts in the U.S., contain threatened species, but avoiding the destruction of rare desert habitat seems reasonable under a solar energy regime through careful placement of solar thermal facilities given the amount of desert landscape available worldwide. In sensitive habitats, photovoltaic panels may be the better technology to apply because it needn't be installed in the more disturbing large scale facilities typical of solar thermal. Solar panels can be tucked in along exists roads and power lines without doing much damage. At some point in the future we will most likely be using daytime solar energy to produce hydrogen through electrolysis that can in turn be employed in fuel cells that convert hydrogen back into electric energy for any number of applications including running motor vehicles or supplying electricity on demand. 

Countries like Egypt and Tunisia can play a huge role in supplying solar energy, not only for North Africa and the Middle East, but the European Union as well. As noted in an earlier post, a thermal solar project is already planned for Tunisia that will deliver 2,000 megawatts of energy to the Italian electrical grid through a direct current high energy line under the Mediterranean. If Egypt devoted 2 percent of its deserts to thermal solar energy production as its share of a doubled global fossil fuel-replacement total, it would absorb only about 18,000 square kilometers of its 1,000,000 square kilometers of surface area. Solar energy development of this magnitude on Egypt’s deserts would be a small price to pay for avoiding inundation of 13 percent of its Nile valley agricultural lands and displacement of 9 percent of its population due to a fossil-fuel induced sea-level increase. 

Given the opportunities for both wind and solar energy production in northern climates, some of which are already being utilized, deserts will never have to supply anywhere near a 100 percent of the worlds fossil-fuel replacing energy needs. Nevertheless, DESERTEC predicts a substantial clean energy role for North Africa and the Middle East in the future, with upwards of 700 Terrawatt hours per year imported from the region’s deserts by Europe in 2050. Even though the volume of investment over the next 40 years to achieve this much solar capacity would be huge, the final cost per kilowatt hour would be an affordable 0.05 Euros. The amount of desert surface area needed for this much energy production would be a bit more than 2,100 square kilometers, with perhaps half being located in Egypt. Needless to say, the volume of investment flowing into North Africa to develop enough solar capacity to supply 700 Terrawatt hours for export as well as meet local energy demand would significantly boost the region’s pace of economic development. DESERTEC forecasts a total investment in North African and Middle East thermal solar power of 350 billion Euros plus another 45 billion in high voltage direct current transmission lines by 2050. 

The point is simple: solar energy is a much more spatially compact and benign route to take than the fossil fuel/climate change path we are now on with its probable harms to coastal landscapes from sea level increases. If we stick with fossil fuels and climatic warming, major vegetation zones will suffer damage and loss as well, such as the Sahel from drought and desertification and the Arctic tundra from permafrost melting and the northward march of boreal forests. 

Peak Oil Revisited

Simple logic tells us that the fossil fuels we extract from the earth’s crust are necessarily finite resources.  Oil, natural gas, and coal come from fossilized organic matter deposited millions of years ago in a geological process of limited extent and duration.  If we continue to extract fossil fuels at anywhere near current rates, their deposits will ultimately approach exhaustion and production will necessarily decline.  This constitutes the concept of peak oil.  Daniel Yergin, a widely respected expert on energy, questions the near-term validity of peak oil in his new book,The Quest.  Previous predictions of peak oil have failed to come to pass and advances in extraction technologies that allow access to more remote and diffuse deposits will likely frustrate forecasts of peak oil for years to come, according to Yergin.

Were we in fact soon to approach global peak oil, petroleum prices would permanently accelerate, causing economic trauma by shifting purchasing power from consumers to already wealthy petroleum sheiks and dictators and oil giants such as Exxon Mobil and BP.  If not offset by government fiscal actions, this shift in purchasing power would substantially dampen global economy activity as it did in the energy crisis of the 1970s.  A virtuous consequence of such a price rise would be a hastened shift to alternative sources of energy, such as solar, wind, biofuels, and nuclear power, and a retardation in the volume of carbon dioxide and other global temperature increasing greenhouses making their way into the earth’s atmosphere.  The trouble with waiting for peak oil is the economic damage it would cause and the added global warming that will result before the peak is reached.  Both can be avoided through a slowly increasing publicly imposed user fee per ton for greenhouse admissions that will encourage a steady and orderly shift to clean energy.  Polluters who cause public harm, simply put, ought to pay for the costs of their actions.  A greenhouse gas polluter user fee is a price paid for the disposal of wastes into the earth’s atmosphere, much as we currently pay for the cost of our trash disposal in landfills. The revenues from a user fee can be returned to the public as tax reductions or used to fund decreases in our public debt or to pay for needed public investments. In Daniel Yergin’s eyes, waiting for peak oil would be like waiting for Godot; we expect him to show up, but he never does.  

 Even if peak oil is not on the horizon, doing something about global warming still stands before us as a moral imperative, but one that will cost us very little in the end to achieve.  Let me review why I think this to be the case.  In my previous blog posts and in my book, The Coming Good Boom, I have made the case for the following conclusions which I will not repeat here:

• A global greenhouse emissions user fee that by 2030 rises to $100 per ton of CO2 and equivalent emissions will stabilize climate by 2050 and cause fossil fuels to be largely supplanted by clean energy.  Cap and trade would work just as well to accomplish this goal, but its adoption now seems politically unlikely in the U.S.
• Given such a user fee, by 2050 the bulk of U.S. spending on petroleum imports undertaken today will have been diverted to a domestic clean energy industry creating millions of new jobs.  In effect, income in the process will be transferred from wealthy owners of foreign oil reserves to American workers.  This gain will be dampened somewhat if China gets the upper hand in solar panel production, but not totally eliminated.  
• An economic boom in the U.S. will in all probability be fostered by the process of adjusting to a new energy reality.  The engines of expansion will occur not only in the arenas of clean energy and energy efficiency, but also as the consequence of a move to a more compact form of living.  This will set off heavy investment in mass transit and urban development along new transit lines.  A revolution in agricultural will also likely occur shifting it from fossil fuel intensive practices in meat and dairy production to more labor intensive and environmentally friendly grass-based approaches.  
• As greenhouse emissions user fees rise, households will see their energy bills increase, but will have the option of reducing such costs through improvements in energy efficiency and the substitution of clean for carbon-based energy purchases.  A greenhouse user fee will be increasingly avoidable over time as a new clean energy sector is created.  Economic theory predicts that the fossil fuel industry itself will bear an increasing share of the user fee over time because of such household actions.  By 2050 the cost of energy as a percent of average household under the new energy regime will be the same or only slightly more than it is today.

Households in this country will face very little real burden from polluter user fees that bring about climate stability, and a number of households will gain from expanding economic opportunities associated with new approaches to energy, agriculture, and urban living.  In short, solving the climate change problem will ultimately cost us very little and as a bonus will improve the health of our economy.  User fees provide a huge source of revenues that can be returned to consumers in an income equalizing fashion to offset recent harmful expansions in economic inequality.  Some of these funds can also be used for reducing the federal debt and to finance public investments that will move the energy revolution along.  Even if peak oil turns out to not be a problem, unhooking ourselves from fossil fuels will be a good deal.  

Energy consuming, spatially expansive living is our dream and passion in the U.S.  Yet our compactly developed older cities are experiencing something of a renaissance.  This phenomenon is not being driven by any special economic trends, such as dramatically higher energy costs on a European scale that would push people toward denser more energy efficient living.  Neither has there been any substantial shift in planning laws, such as a growing use of urban growth boundaries, that would force central city infill development and limit suburban expansion.   The trend seems to be occurring on its own, suggesting possibly a shift in attitudes about compact forms of living.  This is an especially virtuous trend for meeting the challenge of global warming.  Because they live at such high densities, New York City residents on average emit less than half the carbon of a typical American.  A simple increase in the density of urban settlement in this country would take us a long way toward limiting our greenhouse gas emissions. Transformations in human values and attitudes do occur, and to find out why with respect to compact living requires us to consider in detail the source of the things we care about most deeply.  We need a “philosophy of compact" living rooted in human perceptions of life’s meaning as it relates to how we arrange ourselves spatially in the world.  This topic I will take up in future posts.

Earth Day Economics: A Green and Prosperous Future (Published in The Shepherd Express, Milwaukee, WI, 4/13/2011)

The astounding success of the first Earth Day on April 22, 1970 under the tutelage of a true Wisconsin hero, Senator Gaylord Nelson, marked the coming of age of the environmental movement in this country.  Environmental victories in the 1970s included the passage of such landmark legislation as the Clean Air, Clean Water, and Endangered Species Acts.  Earth Day ushered in a new environmental era, and today the quality of our lives is much improved for it.

Unfortunately, our work remains unfinished.  

Our single greatest environmental threat today is global warming brought to us by the burning of fossil fuels to power our cars, heat our homes, grow our food, and fabricate and operate all our wonderful consumer gadgets.  Scientists tell us that greenhouse gases from fossil fuels act like a “tea cozy” around the earth bringing forth dangerous environmental harms reported in the news now on a daily basis—a shrinking polar ice cap, rising sea levels, more powerful storms, droughts, wildfires, and threats to endangered species.  

Bringing global warming to a halt can be accomplished with a simple act—freeing ourselves from the environmental tyranny of fossil fuels.  Some will say this is easier said than done, but doing so will bring on what I call  a “good boom,” an economic expansion based on a turn to compact living and clean energy that will lift all our boats.  

The first task in reversing climatic warming is to use less energy, and, thankfully, easy money-saving and life-improving steps are available including weatherizing our homes, buying energy efficient appliances, installing low energy light bulbs, and using energy efficient cars and public transit.  Both the quality of our lives and the amount of energy we consume bears an intimate connection to where we live.  Residing in compact urban neighborhoods instead of a spatially expansive suburbs will reduce our energy consumption by a third or more.  The urban renaissance occurring in Milwaukee’s Bayview, Brady Street, the Third and Fifth Wards, and Walker’s Point demonstrates that living at high density can be exciting and rewarding.  These neighborhoods offer ready access to work opportunities, an interesting and esthetically pleasing housing stock, a vibrant street life, entertainment, shopping, libraries, galleries, coffee houses, and cafes, and the ease of getting around on foot, by bike, or on a bus.  Compact cities and neighborhoods benefit both us and the environment.  

Milwaukee, as already reported in the Shepherd Express, is on the cutting edge of both the energy conserving “buy local” movement and its natural complement, urban farming.  In Growing Power’s refurbished greenhouse on the northwest side and Sweet Water Organic’s rescued Bayview factory building, water circulates from tanks filled with lake perch and tilapia to trays of leafy plants above them and back again in a closed loop that cycles nutrients from fish to plants and clean water back to fish.  Both operations use much less energy than their conventional rural competitors for getting food on our tables, and both offer a boon to the local economy by creating a totally new kind of employment for Milwaukee’s residents.

Necessary to moving beyond fossil fuels is a switch to truly clean sources of renewable energy.  Notwithstanding Wisconsin Governor Scott Walker’s attempt to bring wind energy to a screeching halt with onerous regulations, both wind and sun are the primary energy sources of the future.  As we do more of anything in our economy, the cost inevitably falls, and this is happening already for both wind and solar energy.  The Great Plains is on track to becoming the Saudi Arabia of wind energy, and throughout the Midwest industrial belt old factories are quickly being refitted to produce wind generators and solar panels.  Despite the naysayers, the wind and solar energy revolution is underway, bringing forth an abundance of new jobs—windsmiths, solar panel installers, weatherization specialists, solar engineers, wind and solar equipment fabricators, and, here in Milwaukee, urban farmers.

To be sure, the fossil fuel industry will resist going quietly and will defend to the death its right to pollute the atmosphere without cost.  Eventually, the industry will lose this battle and will pay the public piper through some form of a tax on greenhouse gas emissions.  Given the huge amount of revenues such a tax could generate, and the need to reduce our federal budget deficits, resistance to it will ultimately melt away. This will be especially true once we fully recognize that an emissions tax will redirect trillions of dollars from the petroleum dictators of the world to our own domestic clean energy sector.  Fossil fuel’s unjustified competitive edge will finally be taken away, and clean energy will win out creating an economic boom that will serve us all.  

Fish, Vegetables, and Milwaukee’s Coming Good Boom: Sweet Water Organics

Tanks filled with lake perch  and tilapia and trays of leafy plants above them in an old factory building two short miles to the south of Milwaukee’s downtown in the newly popular Bay View neighborhood could well be one of the city’s future engines of economic and environmental progress.  It’s hard to imagine that economic advance in an old industrial city could ever be traced to ordinary commodities such as vegetables and fish, but Sweet Water Organics may just prove this to be the case.  Founded in 2009, Sweet Water currently raises some 55,000 yellow perch and tilapia in raceways embedded in the concrete floor of an aging but spacious factory building located in Milwaukee’s south side industrial belt.  Instead of exploiting natural habitats for good things to eat, Sweet Water leaves nature alone and creates an aquatic environment that mimics a wetland in a highly compact urban space to produce fish and vegetables for human consumption.  The production cycle is amazing in its simplicity.  Fish wastes provide nutrients for plants, and plants in turn cleanse the water for the fish.  Water ladened with fish wastes is pumped from the raceways up to double deck beds where it flows across pea gravel containing bacteria that break down ammonia and other wastes into nitrates that plants can use for food.  The nutrient-rich water is pumped up to a middle bed of watercress plants for additional filtering and then to a top deck where it fertilizes a variety of potted herbs, sprouts, and vegetables.  The cleansed water then flows back down to the fish tanks.  The only inputs into the system currently are commercial fish food and energy for pumps, heating, and grow lights which supplement natural lighting from clearstory windows.  In a secondary cycle, composting of food wastes gathered from local businesses creates both a mineral-rich plant growing medium as well as worms that will eventually replace the commercial fish food now in use.  The composting  system may also eventually provide heat for the fish tanks reducing the need for external energy inputs once technical problems are ironed out.  

Sweet Water Organics offers a fascinating model for fostering a business expansion in Milwaukee of a new kind—a good economic boom that will not only bring economic prosperity in its wake but will help resolve environmental ills as well.  A coming economy-wide good boom, as I have argued this blog, will be built on a turn to compact living and clean energy fostered by the need to solve the problem of global warming.  As things stand, prices today for gasoline, coal, and other fossil fuels don’t account for the environmental costs of climate change, and reversing climatic warming will require correcting this error by placing a real cost on greenhouse gas emissions from fossil fuels. As a consequence of doing so, fossil fuel prices will rise, giving us a strong incentive for turning to green energy and spatially compact forms of living that not only reduce energy consumption, but leave more space on the planet available for nature.   Sweet Water, through its innovative scheme of production, is helping us realize both of these goals, as we will now explain.  

Expanding nature’s space follows from the Sweet Water’s quest to mimic natural processes in the design of its system for producing fish and vegetables.  Raising fish in a building that would otherwise stand empty substitutes for the commercial extraction of fish from the wild and helps to abate further threats to already over-exploited global fish populations.  In essence, Sweet Water’s human created ecosystem is being substituted for the exploitation of a natural one leaving more undisturbed space for nature.  Sweat Waters cultivation of vegetables in high-rise tiers of planters above its fish tanks also constrains human expansion into the natural world.  Anyone who has ever spent much time in California’s valley landscapes knows how much space vegetable production normally requires.  In these places for as far as the eye can see land is devoted to what ends up on our dinner plate.  If you dine at a Milwaukee restaurant such as the historic Third Ward’s  Coquette Cafe, or if you buy your produce at Outpost Natural Foods Coop, chances are your salad greens will have come from nearby Sweet Water where next to no land at all is needed for their growth.  Less land in agriculture translates into more land for nature.  

Mimicking natural cycles in a spatially compact space, such as Sweet Water’s old factory building, also helps our global quest to reduce energy consumption and lessen greenhouse gas emissions.  The norm in conventional industrial vegetable cultivation in such places as California and Florida is the heavy usage of fertilizers, herbicides, and pesticides, all of which require huge amounts of fossil fuels to produce.  One sees none of this around Sweet Water Organics.  The act of industrial vegetable cultivation itself requires the use of fossil fuel powered tractors and harvesters, and the shipping of produce to market from far afield itself absorbs substantial amounts of energy.  This is avoided at Sweet Water where cultivation is an act of human labor and shipping both vegetables and fish to market is a highly local affair.  The norm these days for fish caught on the high seas is to air freight them from all corners of the earth to urban markets, a step which is avoided by Sweet Water’s location in close proximity to its customers.  The need for heat and grow lights constitute the only energy inputs Sweet Water requires which eventually can be supplied from local solar installations or from Wisconsin’s abundant  wind energy.  Sweet Water produces food for local consumption using local resources and the only significant input that comes from afar is commercial fish feed which  compost-produced worms can eventually curtail.  

Sweet Water’s decision to locate in older urban neighborhood reinforces a recent increase in the popularity of living at higher densities in older central cities like Milwaukee.  The bloom is off suburban living and young and old alike are looking to the city for a more interesting place to live.  In her classic work, The Life and Death of Great American Cities, Jane Jacobs sets out the features that defines successful urban neighborhoods—high density, a diversity of businesses and residential dwellings in close proximity, a vibrant street life, and a pedestrian friendly street layout.  Neighborhoods with these characteristics make it possible for people to work, reside, and recreate all within a walkable area.  The presence of people on the streets throughout the day going to work or school, shopping, or drinking an espresso in a sidewalk cafe creates a lively environment of the kind especially attractive to urban dwellers.  Bay View has such features and the presence of Sweet Water benefits the neighborhood by creating employment opportunities within easy reach of affordable and interesting housing.  Compact living in a neighborhood like Bay View is not only enjoyable, but has the special value of limiting the need to consume fossil fuel energy for getting around in carrying out the tasks and pleasures of everyday life.  

Economists like to say “there is no such thing as a free lunch.”  They mean by this that whenever we spend resources on one activity, we can’t put those resources to use doing something else.  Everything we decide to do has a cost in the form of a lost opportunity.  In its use of an unemployed building that would have otherwise stood empty, Sweet Water is a living refutation of the “no free lunch doctrine.”  Putting old industrial building to a new use is in effect a spatial free lunch.  By doing this, we don’t need to expand outward into green spaces surrounding a city taking up more land and we don’t need to use up scarce natural resources for new construction.  Sweet Water is also creating employment opportunities in a community with an ample supply of high quality housing and in area where unemployed workers need jobs.  Putting the unemployed to work also constitutes a free lunch given their lack of alternative options for earning a living.  Creating jobs within the city’s boundaries has the bonus of taking pressure off of outward suburban expansion and the increased use of space and energy that goes with it.  

The continuation of all these benefits to the environment and the local community from Sweet Water of course depends on its ultimate success.  The hope of its founders is to be profitably producing and marketing upwards of 500,000 pounds of perch annually and 1,000 pounds of produce a week in a few years, employing as many as 40 workers in the Milwaukee area at multiple sites, a substantial expansion from Sweet Water’s current six employees.  Milwaukee is already a mini-Silicon Valley for aquaponics  pioneered by Growing Power, a nonprofit organization with the purpose of bringing good food to Milwaukee’s inner city led by MacArthur Foundation Fellow, Will Allen.  Sweet Water’s essential goal is to prove that Growing Power’s methods can be the basis for profitable business expansion in the Milwaukee area.  The future is always uncertain, but one can easily imagine that a new kind of urban agriculture could be an essential engine of a future “good boom” in Milwaukee.   

Is Chinese Clean Energy Competition Good or Bad for the U.S.?

Evergreen Solar, the third-largest producer of solar panels in the U.S., will be closing its main plant in Massachusetts, laying off 800 employees, and moving its operation to central China.  Lower wages usually explain why businesses make such moves, but for solar panel manufacturing labor makes up a minor share of total operating costs.  Evergreen’s advantage from relocation lies in obtaining a large loan at a low borrowing rate from a state-owned bank with the help of its local Chinese partners.  As the result of this and other kinds of subsidies, Chinese manufacturers can sell solar panels in the U.S. at a $1.60 per watt, well below Evergreen’s $2 a watt U.S. manufacturing costs.  Chinese solar panel factories account for a little over half the world’s production and control almost a quarter of the U.S. market.  In both solar and wind energy, China has followed a proven strategy of inviting in foreign companies, learning their technologies, and subsidizing the growth of domestic spinoffs.    With an expanding domestic market for clean energy, government requirements for domestic content, and subsidized loans and site costs, Chinese solar manufacturers have quickly achieved scale economies and reduced production costs, allowing them to outcompete their rivals on the global stage.    China also invests heavily in science and engineering education with the hope of becoming its own innovator in green technologies.  On top of this, China depresses the value of its currency in international markets, effectively subsidizing its exports, although an accelerating Chinese inflation rate is eroding the benefits of an undervalued currency by boosting export prices.  Government-aided growth of China’s clean energy sector have many wondering about U.S. future prospects in this field.  

An expanding domestic clean energy sector could be an especially powerful engine of U.S. employment growth by staunching the current drain on domestic economic activity from imported petroleum.  When you buy a gallon of gasoline, almost 90 cents on the dollar goes to oil sheiks and petroleum dictators around the world with little of that finding its way back to the U.S.  If China takes over the U.S. clean energy market, one drain would in effect be substituted for another.

A further look at the market for solar energy suggests, however, that worries about Chinese competition may be overstated.  Solar cell modules in the U.S. currently accounts for about half the cost of an installed solar system (a bit less for residential and a bit more for commercial and utility systems).  Module prices presently run about $2 a watt, but are dropping rapidly in part because of Chinese competition.  The magic benchmark of $1 a watt where solar begins to outcompete conventional energy seems well within reach.  If this benchmark were achieved today, solar module costs would drop to about a third of the total for solar installations.  This means that as much as two-thirds of this cost would go to domestic businesses that manufacture supporting equipment for solar and undertake system design, installation, and maintenance.  In a worst case scenario where the Chinese fully capture U.S. solar panel sales, the domestic content of the solar industry would still be substantial, and replacing fossil fuels with solar would still provide a significant boost to the U.S. economy.  The Chinese could be doing us a favor by driving solar panel costs down to the point where solar outcompetes fossil fuels.  The U.S. Department of Energy originally projected solar module costs to not drop to near a dollar a watt until 2020, but this target will now be realized much sooner than expected due in part to competition from low cost Chinese manufacturing.  

Complete Chinese dominance of the solar module market seems unlikely given the U.S. capacity for technological innovation.  Arizona’s First Solar, the world leader in thin film solar technology, claims that it has already cracked the $1 a watt cost barrier, suggesting that it will be close on Chinese solar heals in the global marketplace.  Thin film panels are made from less costly cadmium tellurium instead of silicon.  The primary customers for thin film are utilities because of lower solar conversion rates and larger space requirements, not rooftop installations.  Some analysts predict that thin film costs per watt will fall to 65-75 cents by 2012.  

Without further action, the future of clean energy looks bright in the U.S. even with stiff competition from abroad.  Nonetheless, placing a price on carbon emissions either through cap and trade or a carbon tax would move the coming clean energy revolution along even more quickly.  Doing so would take away an unfair subsidy that fossil fuel producers now get for their zero cost use of the global atmosphere to dispose of waste carbon and other pollutants.  Removing this subsidy would increase the cost of fossil fuels, accelerating the shift to clean energy.  A price on carbon has the added virtue of providing a revenue source for doing many good things such as reducing the federal debt, decreasing economic inequities, accelerating clean energy development, and expanding energy efficient public transit.  

With the Republican ascendancy in the recent election, the chances for cap and trade or a carbon tax seem remote.  Nonetheless, recent talk of major tax reform to reduce the federal debt could open up an opportunity in the future for placing a price on carbon.  A carbon price could easily generate enough revenue to cut the national debt in half over the next forty years with funds left over for other purposes.  Despite poor prospects in the immediate future, the eventual adoption of a price on carbon remains a distinct possibility.  In the meantime, the near-term political prospects for a clean energy standard seem to have brightened as a reasonable “second best” approach.

In his recent State of the Union, President Obama called for a requirement that utilities generate 80 percent of their energy from clean sources by 2035.  His definition of clean energy includes nuclear power, clean coal, natural gas, as well as solar, wind, and other renewable sources.  Given the high cost of nuclear and clean coal, they will probably play a minor role in future electricity generation, but may bring political support from a few Republicans.  Natural gas emits about half the carbon as coal per unit energy, but remains a big source of carbon pollution.  Environmentalists question its inclusion as a clean energy source, but political realities make it tough to leave out.  Even with natural gas in the mix, the role of solar and wind in meeting the clean energy 2035 target would likely be substantial and could accelerate the decline in cost per watt for these sources through market expansion.  Combined with increased CAFE mileage requirements for motor vehicles and tightened efficiency standards for appliances, a clean energy standard constitutes a reasonable strategy for moving us along to a wind and solar based energy economy.  

Increased competition from China may turn out to be a blessing in the legislative arena by placing pressure on lawmakers to do something that will benefit the U.S. clean energy sector.  China’s clean energy advances also give it a large and growing economic interest in cutting its own carbon emissions, which is especially important since it is the world’s largest emitter.  In the larger scheme of things, Chinese competition may well be a good thing for both the U.S. economy and the global environment.