Friday, June 18, 2010

How Much Will You Pay For Clean Energy?

We have all heard the term "clean energy" buzzing around recently. Climate science says that our current output of CO2 is dramatically changing our planet. President Obama wants to make it a major component of our future economy. Basically everyone seems to be in favor of energy sources that don't involve smokestacks.

That is until it comes to paying for it. A Rassmussen Reports poll released today shows that despite the preference for clean energy, when asked how much more they would be willing to pay for it 51% said nothing, while another 20% said no more than $8 per month. Only 24% said they would be willing to spend over $25 more a month to promote clean energy. That means over two-thirds of the country isn't willing to give up more than a couple of Big Macs per month for the environment.

So in typical American fashion, we want something but we don't want to pay for it.


  1. Nick,

    I can see that people don't want to pay more for it. Practically, the only viable options will be ones that are clean *and* convenient for people to embrace. (Economically especially)

  2. There was something I watched the other day about toilets, of all things, and how very few people in India and Indonesia have toilets. This is presenting a problem because if no one has a toilet then the government can't install modern sewage systems, which means all the waste water (and other stiff) goes straight to the rivers. Now because of this they have a major ecological disaster on their hands (in some cases literally, on their hands, ewww...), and no way of easily fixing the problem.

    In the show that I was watching there was one guy who had the goal of fixing the problem, and he said the only way to fix the problem was to make it so that someone made money from fixing the problem (i.e. selling toilets, repairing them etc.). So according to him, the vast majority of the sanitation problems in the world won't be fixed until someone finds a way to make a living off of it.

    I think the same holds true for the environment in general. Most people (~75%) won't actually lift a finger to have clean energy until someone finds a way to make it an economic reality (i.e. it makes money and jobs). Until then it will only be a pipe dream.

    (Further note: Raising taxes to fund these things does not count as "making money" or jobs. The demand has to be there before it makes sense for the government to do anything. Governments don't install sewer systems because they want people to buy toilets (and then employ plumbers), they do it because people already installed toilets and hired a plumber.)

  3. Joe,

    After some digging I found that the cheapest form of this new "clean energy", wind power, still has a true cost (including the costs of government subsidies) of something like $90 per MW-hour, while coal costs about $80 per MW-hour (without considering future environmental costs). That means that if we want "clean energy", we need to pay roughly 10% more than we do now, which apparently we're not willing to do.

  4. I think if we paid the true cost of fossil fuel the gap might be a bit closer. How much does pollution/CO2/Oil Spills etc.. cost or will cost us? The government is subsidizing fossil fuels because nobody knows what the true costs are that should be paid at the pump.

    He's some humor on the topic...

  5. Stan,

    I agree that there are some additional environmental costs to fossil fuel use, but those are almost impossible to estimate since no one knows exactly how much it might cost to mitigate the effects of climate change, or even exactly what those effects might be. In fact in some scenarios it may actually increase the agricultural yield of the planet by opening the Canadian plains and Siberia to agriculture. Will that offset the social and economic disruption caused by sea-level rise or shifting rainfall patterns in Africa? I have no clue. The point is that what we really need to do is treat climate change risk in a probabilistic sense and figure out what the likelihood and cost of each scenario might be, take some sort of weighted average, and then add that to the price of coal. I, however, have no idea how to do that and I don't think anyone else does either at this point.


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