Back to the Future

Out of nowhere it seems, energy and climate change issues seem to have returned to the front pages, or at least the opinion pages of the Manchester Journal. For a time, the debate around "global warming," as it used to be referred to before some marketing consultant came up with the less-threatening sounding "climate change" concept, interest, at least among those not directly involved in it, seemed to have waned or been on hold.

While there remain many who question whether climate change is occurring at all, and if it is, question whether it's the result of human activity or simply the endless cycle of nature, our view has been that the preponderance of evidence supports the likelihood that the planet is warming and there are potential consequences of that which will be severe and significant. Those go beyond warmer winters (less snow for skiers) and the occasional ferocious storms that will occur from time to time, such as Hurricane Sandy last year or the recent typhoon that devastated parts of The Philippines. We're talking flooding of low-lying coastal areas, the disappearance of whole islands in the Pacific Ocean, and the melting of polar ice caps, which present consequences that are surely large but unclear at this stage.

Closer to home, energy and climate change questions have sparked renewed debate around wind, solar and other renewable sources. The recent wind forum in Dorset and another one in Townshend continue to reveal that this controversial source of electric power presents some interesting trade offs. Ultimately, these are questions that will get decided as much by economics as by morality. Should climate change have its 9/11 moment - when the hypothetical becomes all too frighteningly real and is not something to be wished for - we may see more movement towards the carbon tax solution, which remains the most straightforward and elegant solution to how to finance adapting to changed circumstances. But the potential economic costs are large, and one of the paradoxes of climate change is that we may not be mobilized to do what needs to be done until it's too late.

Here's one step however, admittedly a small one but in the right direction, that has been taken. Federal regulators from the Environmental Protection Agency have proposed reducing the amount of ethanol - energy derived in the U.S. mostly from corn - integrated with gasoline. At first blush, that seems like a backwards step, but the whole corn-based ethanol project, while well-intentioned and a seeming win-win for environmentalists, farmers and motorists, has worked out poorly. It has prompted the reduction of open prairie land, driven up corn prices (although they have leveled off somewhat recently), and in general distorted the market. The problem of course is that six years after it became federal policy to encourage corn ethanol, many farmers and businesses invested heavily to gear up to produce it, and now see the rug being pulled out underneath them.

It just goes to show that in the end, supply and demand do rule. The smarter, cheaper way to integrate a renewable fuel like ethanol would have been to import it from Brazil as sugar-based ethanol. But that would have been politically unpopular, and wouldn't have satisfied the powerful farm lobby. If enough people care about using ethanol to offset fossil fuels, the smart answer remains a sugar-based product. Corn has too many other uses. And by the time you're done converting corn into ethanol, the energy savings are nearly a wash.

It's good to see this economics/environmental debate joined again, and we look forward to chiming in as well.


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