Written in response to http://www.energyblogs.com/Causey/index.cfm/2008/4/28/This-insurance-against-something-that-may-not-be-real-is-far-far-too-expensive

First, I was going to simply write a short comment, but as the comment grew longer, I decided to create a blog and write it here instead.

Sadly, but also thrillingly, science is a messy endeavour.  Despite Causey's claim to the contrary, a cursory review of aggregation sites (eg. http://en.wikipedia.org/wiki/Scientific_opinion_of_global_warming)

shows that there exists a broad scientific consensus that there is an increase in CO2 and that it is likely due to human activities.  There are no sure things in system engineering and the earth is a complex system currently, and perhaps forever, beyond our complete understanding.  I do not support ad-hominen arguments and scientific organizations, like all organizations are subject to political manipulation, but these are the specialists, publishing in open peer-reviewed journals and their research, for the most part, can be read on the internet.   Is human-caused global warming "true"? Perhaps all these specialists are wrong – it has happened before in science. Absolute agreement between scientists is close to impossible[1]. Absolute truths are sadly rare amonst open-minded people, and making choices based only on those few absolute truths is just not practical.  If there were a lot of absolute truths, then most decisions would be easy – in fact, many decisions are difficult because we are faced with considerable uncertainty about the current and future states of our world.  What to do about many of the world's most important issues are in shades of gray, even if one is committed to doing the "right thing".

Causey can believe what he likes, but the leap between his two affirmations, human-caused global warming is not a scientific law like gravity and computer models do not constitute solid evidence (two affirmations I entirely support) and his two conclusions that the global warming argument is politically-motivated fiction and that taking steps to try to forestall further global warming will lead to economic collapse, is just not well-supported.

The title of article about the price of the insurance being too high, an interesting title whose underlying implications weren't explored in the essay, deserves to be explored more fully.  First, one never knows whether an insurable event will happen or not, or it would not be insurable! One has to decide whether one is willing to bear the loss if it happens and self-insure or decide that the risk is unbearable and transfer it to someone else, for a price (the insurance premium).  The risk transfer analogy breaks down for global warming since the risk of civilization-ending ecological catastrophe obviously cannot be transferred into a Bermuda-based limited-liability insurance corporation!  

The currently operant risk transfer of the fossil fuel status quo is the opposite of insurance. The fossil fuel status quo transfers risk onto future generations while the current generations accrue the benefits. As many a politician has opined, future generations do not have a vote in our elections or in our consumer market, but who, in the western world, wants to doom their grandchildren to an energy-deprived existence for short-term benefits today[2]?  Absent major technological innovations and assuming the world economy continues to grow (pulling people out of abject poverty seems a worthy goal), high fuel prices are here to stay, and they may even continue to increase as increasingly marginal sources are exploited.

Besides the fossil fuel status quo has problems. Nuclear and coal plants are unfashionable, and few young engineers go into those fields compared to the forecasted labour demand - How does one run a coal-fired electricity plant, which is a very complex system, without manpower-automation only goes so far.   Oil will become increasingly scarce (What will happen to our plastic-based economy?), natural gas in North America has peaked, and the economic impact of transferring large parts of our hard earned wealth to the middle east, Russia, and other third world countries is a significant issue, more significant than the purported research and development costs of alternative energy! As for coal, America has 240 or so years of coal assuming current use – but with the growth in energy demand (if unchecked), as other fossil fuels run out, as the rest of the world continues develop and continues to require ever larger quantities of (coal-coked) steel, and adapting various Hubbert peak-oil arguments to coal[3], there could be less than 30 years before we are collectively forced to look elsewhere to satisfy growing energy demand.  

The low-cost of coal-fired electricity is one of the foundations of our modern life-style, but now, while the initial rumblings of possibly inevitable changes to our energy model are being felt, is the time to invest in alternatives.  Waiting until an energy crisis is full-blown will augment that pain. Who wants their grandchildren's innovative ideas to belong to oil rich countries which will have recycled their oil wealth into the acquisition of first-world assets and companies?  To pay $10/gallon for syn-fuel-gas?  To be in a full-bore energy crisis and then be forced to change the economy's energy model with the 10-20 years of even worse pain while the necessary technical innovation occurs and the economy transitions? 

The undeniable economic impact of changing our energy model sadly lends little credibility to industry PR campaigns, for the simple reason that industrial lobby groups have no credibility. Every industry in America seems to consistently fight against regulations that could even disfavor them (tobacco, environmental waste dumping, acid rain, E. Coli in beef), even if mildly and uniformly applied. The use of PR front-groups with nice green names was, in our information-rich, densely-connected world, only a stopgap measure. 

Utility executives, middle managers and engineers that insist that people will be unwilling to pay the "real" cost of carbon legislation are sticking their heads in the sand: Would citizens pay the "real" cost of the Sydney Opera House[4],  the "real" cost of the Big Dig in Boston[5], the "real" cost of the Iraq War[6]?  A better question might be if they would have chosen to go ahead with those projects if they had understood the "real" costs? Maybe, maybe not – but the high "real" cost of a project is hardly a dependable trump in policy forecasting.  Politics often – and arguably, usually--   trumps economics. Furthermore, economics is not the final word about peoples' values[7], and assuming otherwise can be dangerous to a utility's long-term health.

Even if industrial lobby groups had public credibility, the comparisons between today's existing energy options with future alternatives will tend to be dominated by narratives not quantitative economic arguments because that is the nature of our society: narrative trumps numbers.  Utilities benefit from this relatively unsophisticated public discourse on some issues and are penalized on others. In the global warming discussion, where sophisticated credible technical specialists are advocating against the fossil fuel status quo, obtaining outcomes supporting this status quo will obviously be more difficult.

Causey is far from alone in believing that we are risking our prosperity in trying to change our energy model. I believe it is wise to invest a part of our current prosperity in order to reduce the long-term risks. This is not insurance: it is major preventative maintenance for our way of life.