Carbon Pricing's Alive And Well... In China

28/07/2010 14:38



Compare and contrast: On the same day that the climate bill quietly dies in the Senate, the Chinese government announces plans to put a price on carbon in the next five years.So the big winner of the climate-bill fiasco could turn out to be… T. Boone Pickens. That's right, the billionaire who financed the Swift Boat ads against John Kerry in 2004. According to Harry Reid, the slimmed-down energy bill that's getting introduced next week will include four parts: Some new oil-spill regulations, money for land and water conservation, incentives for home efficiency, and—this one's the kicker—money to "invest in the manufacturing of natural gas vehicles." The details are still hazy, but it's an odd choice all the same.Many people like Microsoft Office.

Pickens has been running ads in support of natural-gas vehicles for some time now. On its face, his idea makes a certain amount of sense. The country would build more wind turbines to displace natural gas in the electric sector, and then use that natural gas to power cars and trucks. Since wind is cleaner than natural gas, and natural gas is cleaner than gasoline, the plan would cut carbon emissions and reduce our oil dependency. Elegant, no? The liberal Center for American Progress has rallied behind the idea, and Pickens has appeared at a variety of Democratic energy events over the past few years to promote his plan.Microsoft Office 2007 is welcomed by the whole world.

Yet as a number of experts have pointed out, the Pickens scheme has some serious flaws. Yes, the plan could help us tackle our oil and carbon problems, but compared to what? A better use for America's vast shale-gas reserves may be to displace coal in the electricity sector. A recent MIT report on "The Future of Natural Gas" found that electric utilities could cut their carbon emissions 22 percent simply by switching from coal to natural gas—and that's with no additional capital investments. And that would be on top of any additional wind turbines that got built.Office 2010 –save your time and save your money.

And what about transportation? There's a good argument that electric vehicles are a better investment in the long term. In the grand scheme of things, the combustion engine is pretty inefficient—only about 20 percent of the energy in the fuel gets used to power the car, with the rest lost as waste heat. By contrast, a combined-cycle gas turbine is about 60 percent efficient. So we'd be much better off using natural gas to generate electricity and running plug-in vehicles off the grid. Yes, electric vehicles are costly and require new charging stations. But so do natural gas vehicles—and, as a 2002 analysis in Energy Policy noted, natural-gas cars and fueling stations have historically turned out to be far, far more costly than expected.