Is there an antinomy between a low-carbon future and Keynesian theory?

By Glenn Stehle

In the comments section to my last post Thomas Bergbusch supplied a link to an outstanding series of posts published by a heterodox Canadian blog, The Progressive Economics Forum.  It deals with A Staple Theory of Economic Growth.”   The theory was originally articulated by Mel Watkins in 1963.

Amongst the many important questions the series raises are two which for me stand out:

1)      Is a low carbon future necessary?

2)      If so, is there an antinomy between a low carbon future and Keynesian theory?

I admit that I find myself conflicted over these two questions.  I suppose one of the reasons for this is that I am caught in the crossfire between warring opinion leaders.  One easily gets swept away in a tidal wave of conflicting empirical and moral claims.

Amongst the more optimistic of the opinion leaders we find Dr. Bert Metz, who at the UN’s ongoing annual climate summit in Poland argues that “alternatives to fossil fuels are already available and affordable.”

UNFCCC executive director Christiana Figueres is also optimistic, but doesn’t believe a low carbon future is necessary.  What is necessary, in her estimation, is for the carbon industries to clean up their act.  For instance,  

The coal industry faces a business continuation risk that you cannot afford to ignore. Like any other industry, you have a fiduciary responsibility to your workforce and shareholders … And by now it is abundantly clear that further capital expenditures on coal can only go ahead if they are compatible with the 2 degree Celsius limit.

One of the authors of The Progressive Economics Forum series, Gordon Laxter, hits a more pessimistic note in “Alberta’s Sands, Staples and Traps.”  But it’s only slightly more pessimistic.  For him, conservation is the key, the pursuit of which can yield plenty of new jobs:

I used to support the staples diversification model. Upgrade the resources in Alberta. Don’t export ‘our’ jobs. Use way less energy, but get way more value added from it. Now I think it’s a dead-end. It bets that the age of fossil fuels will unproblematically continue, and that we can blithely continue to spew out carbon without limit.

As we saw, the staples theory views the final demand linkage as the best way to fully escape a staple trap. It’s based on consumer spending and economic growth.

The Keynesian post-war bargain went like this. If workers and their political allies agreed to forget their long-held dream of replacing capitalism with a more just system and accept annual pay raises instead, they would stay in alienated jobs with long work hours, but reap the rewards of middle-class, consumer lifestyles as compensation. The grand bargain led to a mass society fixated on over-consumption. It will bury us in carbon and climate change chaos.

A better path is deep conservation. A unit of fossil fuel energy saved and not burned is much better than one extracted, used up and emitted. Many more jobs can be created in saving a unit of carbon energy – through things like building LRTs, a high-speed, intercity train between Calgary and Edmonton, and retrofitting buildings and houses.

So is it true that “many more jobs can be created in saving a unit of carbon energy” than in extracting and burning a unit of fossil fuel energy?  My answer is:  I don’t know.  And I think there are a lot of people who feel they don’t know.

What seems imperative to me is that the externalized costs of any form of energy production and consumption, whether it be carbon or otherwise, should be charged back to that energy source.  I don’t know if this is within the realm of political possibilities, but it seems like it is not outside the realm of economic possibilities.   In my way of thinking the economy should be able to bear this cost.   For instance, in the United States in 2010, total energy expenditures – gasoline, natural gas, electricity, diesel, heating oil, coal, etc. – amounted to only 4.7% of gross output and 8.3% of GDP and the U.S. is one of the biggest energy hogs in the world.

But here’s where the pessimists come in.   Some argue that increases in energy costs have and will completely shipwreck the economy.   Here, for instance, is Robert Lenzner writing for Forbes:

I was reminded by Kirk Spano, the founder of Bluemound Asset Management today that spiking oil prices in 1973, 1980, 1991, 2001 and 2007 contributed to a greater or lesser degree to the economic recessions of 1973-4, 1980-81, 1991-92, 2001-2003 and 2007-08….

ROBERT LENZNER, “The Recessions of 1973, 1980, 1991, 2001, 2008 Were Caused By High Oil Prices”

Rick Santorum in The Atlantic, backed up with a paper published by economist James Hamilton, carries Lenzner’s argument to an even greater extreme:

“We went into a recession in 2008. People forget why,” Rick Santorum told an audience recently. “They thought it was a housing bubble. The housing bubble was caused because of a dramatic spike in energy prices that caused the housing bubble to burst … People had to pay so much money to air condition and heat their homes or pay for gasoline that they couldn’t pay their mortgage.”

[….]

In 2009, economist James Hamilton published a paper that retroactively forecast what an oil shock, like the one we experienced in 2007-08, would do to GDP. And guess what? His model accurately predicated much of the collapse in GDP that resulted from the Great Recession — as if there had been no housing bubble or financial crisis! The oil spike was that bad.

DEREK THOMPSON, “Rick Santorum Is Right:  Gas Prices Caused the Great Recession”

I generally mark up arguments like those of Santorum, Thompson, Hamilton and Lenzner under the heading of Peak Oil fundamentalism.

The intellectual author of Peak Oil fundamentalism, according to John Kenneth Galbraith, was Richard Nixon.  It provided Nixon a scapegoat on which to blame stagflation, something which had been caused by the implementation of Nixon’s own lobotomized version of Keynesianism.  As Galbraith explains:

In the autumn of 1973 came the Yom Kippur war, the oil embargo and a very large increase in petroleum prices. These were widely blamed by the Administration economists, among others, for the inflation. Around three fourths of the price increases of 1973 occurred before the war and before the oil prices went up appreciably.

[….] 

Beginning in 1973, but with full effect in 1974, came the great petroleum price squeeze. In keeping with much else in this history this too was extensively misunderstood….

Everywhere the higher oil price was considered highly inflationary; in the United States it served invaluably as an excuse for official inadequacy in the control of inflation. In fact, it was deflationary. Especially in the Arab countries but also in Iran and elsewhere, the revenues accruing from the higher prices were far greater than could immediately be spent for either consumers’ or investment goods. So they accumulated in unspent balances.  Thus they represented a withdrawal from current purchasing power not different in immediate effect from that of levying a large sales tax on petroleum or its products.23 The effect, increasingly evident as 1974 passed, was the predictable effect of fiscal astringency. As demand faded, prices in competitive markets — those for food, commodities, services — began to weaken. Prices subject to corporate market power continued to rise. So did unemployment. The oil-producing countries had provided the industrial countries with a surrogate tax increase. Its effect, like any general fiscal or monetary action against inflation, was to increase unemployment well before acting to arrest inflation.

What we have seen since Nixon gave birth to Peak Oil fundamentalism, however, is that it resonates just as much with certain factions of the left as it does with the right, and fits just as well with some left-wing ideologies as it does with right-wing ones.  So we have to be wary of allowing ourselves to be swayed by an ideological taint.

Michael Hoexter in one of his posts alluded to this ideological taint:

[M]any with pre-existing visions of a social utopia have congregated to the climate issue and present versions of their utopia as the standard vision that we all should pursue….

In the category of social visions, one common set of approaches might be called “neo-primitivism”, within which there is a broad spectrum of views….

[….]

While neo-primitivists are justified in asserting that earlier societies used less natural resources and emitted less greenhouse gases, their insistence that modernity in all its forms is necessarily a dead end for humanity is a product of personal and social preferences. They are fatalistic about the adaptability of human beings to the energy and climate challenge, even though those humans have adapted themselves in the last hundred years to the modern society they criticize.

There is nothing new about neo-primitivism.  The doctrine of asceticism – the principles and practices of self-denial and austerity — runs through Western civilization like a thread, and it has become a distortional mainstay of New Left thought.  Here’s how Bryan Ward-Perkins describes it:

My conception of Roman civilization, and its demise, is a very material one, which in itself probably renders it unfashionable.  The capacity to mass-produce high-quality goods and spread comfort makes the Roman world rather too similar to our own society, with its rampant and rapacious materialism.  Instead of studying the complex economic systems that sustained another sophisticated world, and their eventual demise, we seem to prefer to read about things that are wholly different from out own experience, like the ascetic saints of the late and post-Roman worlds, who are very fashionable in late-antique studies.  In their lifetimes, the attraction of these saints was their rejection of the material values of their own societies, and our world, which is yet more materialistic and ‘corrupt’, seems to find them equally compelling….  This is a much more beguiling vision of the past than mine, with its distribution maps of peasant settlements, and its discussion of good- and bad-quality pottery.

–BRYAN WARD-PERKINS, The Fall of Rome and the End of Civilization

Evenhandedness requires us, however, to recognize that on the other side of the ideological divide are what Hoexter calls the “technological utopians.”  As John Gray explains, there are many ways of being modern, and

the belief that there is only one way and that it is always good has deep roots.  From the eighteenth century onwards, it came to be believed that the growth of scientific knowledge and the emancipation of mankind marched hand in hand.  This Enlightenment faith – for it soon acquired the trappings of religion – was most clearly expressed in an exotic, sometimes grotesque but vastly enduring influential early nineteenth-century intellectual movement that called itself Positivism.

The Positivists believed that as societies came to be based on science they were bound to become more alike.  Scientific knowledge would engender a universal morality in which the aim of society was as much production as possible.  Through the use of technology, humanity would extend its power over the Earth’s resources and overcome the worst forms of natural scarcity.  Poverty and war could be abolished.  Through the power given it by science, humanity would be able to create a new world.

–JOHN GRAY, Al Qaeda and What It Means to Be Modern

There doesn’t seem to be a clear answer as to whether an antinomy exists between a low carbon future and Keynesian theory.  And here’s the rub:  getting hung up on the horns of this sort of dilemma – a paradox not unlike the antimony between liberty and equality – makes unified and decisive action of any political movement difficult. 

 

29 responses to “Is there an antinomy between a low-carbon future and Keynesian theory?

  1. Simply put, an economics based upon ‘least dollar cost’ (deficit-based money) policies has completely different outcomes to an economy based upon ‘least energy cost’ policies .

    You only need to look at Denmark to see the positive outcomes which follow from least energy cost policies.

  2. “Carbon-based” versus “carbon-free” is often re-arranged to mean “energy-intense” or “high-energy” versus “low-energy”. Should we go back to the land – and tend to gardens and goats – in order to to stop global warming? It’s not a real choice. No one except affluent artisinal-foodies will ever choose it. Everyone wants modernity – the question is whether it necessarily self-destructs based on its energy budget and available energy sources and carriers.

    Fossil fuels are energy carriers. The only energy sources in the universe (that we know of) are solar and nuclear – i.e., fusion and fission. Fossil fuels are fossilized, mostly-Triassic sunlight. Geo-thermal is natural-nuclear, based on the decay of uranium and thorium in the earth’s interior. Wind and hydro are solar surrogates as well.

    This is an engineering problem before it is an economic problem, and the engineering studies I trust definitely suggest that carbon-free energy modernity is possible. The overall model is to concentrate diffuse and “stranded” solar and wind-energy flows to create carbon-free synfuel and fertilizer (ammonia). Ammonia can also be a fuel and can also drive an electric turbine, as can carbon-neutral di-methy ether. There’s a big ammonia research center in Ames Iowa that works on these things.

    If it turns out that we also need some form of nuclear to avoid catastrophic levels of climate change, the same principal applies. The problem of “not-in-my-backyard is solved by not building them in the backyard. Political reality will probably dictate that we build nuclear plants in remote, geologically stable exclusion zones in countries that are politically safe and stable too. Turn all of the output into synfuels, build a network of pipelines, and go from there. We will also benefit from advanced reactors called “molten salt reactors” that can burn up most of the plutonium and other long-lived waste on-site. What remains will be a 200-year problem, not a 20,000 year problem. If we don’t need nuclear, prove it. In that case, no one wants it. But if the choice is civilizational collapse, then, again, it’s moot. We’ll ultimately resort to it. (For more on molten salt, Google “Flibe Energy”)

    In his presidential address to the Association For Environmental Economics last year, Jamie Galbraith summed up the imperatives for Keynesian economics in three points:
    http://utip.gov.utexas.edu/Speech/JG%20AFEE%20Presidential%202013.mp3

    1.) Open the discipline to input from the physical and geo-physical sciences.

    2.)Integrate economics into a re-forged understanding of the primacy of the rule of law.

    3.) Re-assert the central role of social solidarity in economic life.

    All three points are relevant to this discussion. It is becoming increasingly clear that we need an Economics that recognizes constraints, especially climatological constraints. Climate models and economic models must, at minimum, learn how to “talk to each other”, if not interact even more directly. Steve Keen over in Australia is making this a big part of his “Minsky” software project. http://www.debtdeflation.com/blogs/minsky/

    In his address, Galbraith re-asserts what used to be an obvious point – that lawful regulation, as a pre-condition of trust, is also a pre-condition for the existence of markets. He points out that the only lettuce an urban Chinese person will buy comes from Sam’s Club and is grown in California. We can’t have any kind of civilization until we clean up financial fraud and re-set inequality. (Which Galbraith has analyzed as a mere consequence of fraud and financial crime – it’s “how the bankers got rich”).

    Ultimately, our survival hinges on a decisive turning-away from the Hobbesian / Ayn-Randian ethos that has somehow managed to capture so much of especially America’s cultural consciousness. The intellectual foundations of this ethos are found in the “neo-classical” Economics we all come here to help combat. All roads lead to MMT.

    Thanks again, Glenn

    Cheers

    • Another carbon free fuel you didn’t mention is Di-hydrogen oxide, sometimes known as water. Although not as dense an energy carrier as some, it is a ubiquitous and inherently safe (in its oxide state) energy carrier which produces zero pollution when oxidized. Safe and easily reversed storage of the hydrogen is an engineering problem which begs for more attention and research funding.

      • Hydrogen from water as a fuel is a way of transporting the energy and/or converting it to a different form for a specific purpose. It takes energy input to make water into hydrogen, which is the energy released when it combines with oxygen (“burns”). But energy transfer is not perfect, so it takes more energy to make the hydrogen from water than you can get back from burning it. And the electricity used comes from other fuels.

        But there is some moving water that can be used to generate electricity: waves and tides.

        • Everything you say is true, Golfer1, except that the electricity used to convert water to hydrogen fuel does not have to come from other fuels. It can come directly from sunlight either by photovoltaic conversion or from algae which can release hydrogen, or indirectly from sunlight via wind turbines. Since the earth receives approximately 100 times as much energy from sunlight as it consumes in electricity, there is an abundance of energy to make the conversion. Of course you recognize that all the carbon based fuels are derived from sunlight, mostly sunlight that reached earth many millions of years ago.

          • Yes, but so far the only uses for hydrogen are in fuel cells to make – electricity! Except for moving the hydrogen to places where solar is unavailable, there is no point in using electricity to make hydrogen.

            • The electricity from hydrogen fuel cells can power transportation and agriculture. At least three car companies announced this week that they are bringing out fuel cell powered cars in the next year or two. A fuel cell powered tractor was featured in a Scientific American article in the 60 s or 70 s and I believe Chico, Ca. operates a fleet of fuel cell powered buses. As the costs of carbon fuel increases, these options will become increasingly more attractive; especially because they do not externalize the costs associated with pollution and climate change. Government policies could facilitate the adoption of this technology.

    • To also add some proportions to Dan Pierce’s point. If I recall correctly from when I did the math, since I don’t want to redo the math. Total energy consumption is quite a bit less than 1% of total worldwide solar energy excluding food. I think I figured with fairly high inefficiency because storage had to be assumed, it would take about 1% of the earth’s surface to provide all worldwide energy from solar. Other sources have said that geothermal energy under the United States is also well in excess of total US energy consumption. So, I guess that makes me a positivist, in that there is clearly plenty non-fossil fuel energy, we just need to use it.

      I am more worried about limitations in the amount of physical stuff that a fully employed society might want, since automation has made it possible to make a lot of physical stuff with relatively little labor input. So, it seems to me that raw material pressure may be a longer term environmental issue of a “growth” economy that energy. But, my thought is once survival needs are taken care of what do people really want? I was thinking time to enjoy themselves and the activities to enjoy. And, those sorts of things can have low raw material and energy impact while providing private sector economic activity and growth.

    • “In his address, Galbraith re-asserts what used to be an obvious point – that lawful regulation, as a pre-condition of trust, is also a pre-condition for the existence of markets.”

      Not only markets but the Division of Labour as the French sociologist Emile Durkheim pointed out in his 1893 dissertation turned book “The Division of Labour in Society”. Durkheim argued that it was the growth in restitutory law that supported the expansion of the Division of Labour. Indeed government in its spending policies can be seen as a major legislator of restitutory law. For example, Walmart as a Welfare Queen because its workers require government benefits to top up the inadequate wages paid by the company to most of its staff.

  3. One can imagine a strange political tryst between Conservatives and Environmentalists, and if they can get past that whole global warming spat—they could be enthusiastic bedfellows. Liberals want everyone to have affluent lives using up lots and lots of natural resources, maybe much more than is available to go around. So a slower more conservative society won’t rock the environmental boat so much. Time to kiss and make up?

    Whenever I take these paradoxes to their natural conclusion—like Freedom and Order, or Energy Self-Sufficiency vs Clean Energy, it strikes me the way forward is to have a generational plan (20+ years) developed and approved by a supermajority of society, epistemically sound, ideologically diverse, and all and-I-mean ALL ideas vetted in the informational phase of the deliberation. There is a vibrant body of work being done by political scientists (Landemore, Goodin) about deliberation, and I propose a non-governmental citizen’s panel might easily come up with a way forward besides rapacious capitalism or a command control economy—neither of which appeals to me personally. IMO, there are many ideological overlap answers that are the opposite of false equivalence, but are being blocked by crony capitalism—which is neither free market nor command control.

    I think there is a surfeit of resources to pull off such a panel, but me thinks there really isn’t the will. I’m game if anyone else wants to try.

  4. Correction – Association for Evolutionary Economics – Sorry.

  5. peanut gallery

    If through some miracle of global political cooperation, or just simple depletion, we happen to find ourselves with fewer or less convenient sources of energy, it seems obvious that there will be fewer goods to go around. In the sense that there are fewer material goods, the economy is smaller. That doesn’t mean there has to be higher unemployment though – to increase the amount of goods will require more labor per item with less energy inputs, once we have exhausted improvements in energy efficiency. The real question is how do we define a healthy economy?

  6. What if there were a nuclear power source that was extraordinarily safe, ubiquitous and cheap? We had it. We developed it at Oak Ridge by the same inventor of the nuclear power plants we have today, Alvin Weinberg, which have proved to be neither safe or cheap and which Weinberg didn’t even like and lobbied against. This nuclear power was made from the element thorium, which was awful for making weapons, and so uranium won out as the source of nuclear power because it could do both. Had we developed Weinberg’s liquid flouride thorium reactor (LFTR for short) we would have never had Fukishima or Three Mile Island.

    Everyone should watch this video on liquid fluoride thorium reactors, just to see what we could have had.

    • Wasn’t early nuclear reactor development led by the US Navy, whose considerations ran heavily toward size and weight rather than cost? How did that influence the money available for development of thorium breeders vs. the kind of pressurized water reactors used in Navy and US civilian plants?

      Fukushima and Chernobyl were boiling water reactors, a different and less safe, but cheaper technology. Three Mile Island was the result of a monumental string of human errors, and only the inherent safety of the reactor design prevented a serious disaster. If our experience with PWR shows anything, it is that it is very difficult and probably impossible to have a meltdown of a PWR without human intervention to permit it.

      I’m not aware of the unique safety considerations for LFTR, but the breeder technology would seem to deserve further development for its economics. It may not be something that can be done by the private sector, given the unpopularity of nuclear and the high cost of development. And without the military application, not likely to be undertaken by government until MMT triumphs.

      • My understanding is LFTR’s are smaller and safer, making them a better option for naval vessels, anyways. It should be noted that much of the cost involved in nuclear is due to regulations and red-tape, which would need to be factored into an MMT proposal. More over, thorium produces 1/1000th (iirc) of the waste of conventional nuclear plants, and a recently-announced new technology can combine nuclear waste w/ glass to condense it to 10% of the volume, making it an excellent choice for radioactive batteries (which could also have military, as well as space exploration, applications).

  7. For 40 years or so carbon-based energy costs have been trending up, while solar-based costs have been coming down. Maybe technology has delayed “peak oil” and found lots more natural gas, some of which replaces coal and helps keep carbon emissions down, but it will also continue to reduce the cost of solar. Eventually the cost curves will intersect, and solar will become nearly free, and that changes everything. Cheap oil made the industrial revolution possible, and cheap solar will solve all sorts of problems, not the least of which is water supply. Improved battery technology will enable solar to provide energy even when the sun isn’t shining.

    So there’s no antinomy.

  8. When John Kenneth Galbraith writes that “Around three fourths of the price increases of 1973 occurred before the war,” he’s talking about US crude prices going up $0.50/barrel. From $3.39 at the end of 1972 to $3.89 at the end of 1973.

    This in no way created the oil crisis with the long lines that we endured in early 1974. The Arabs didn’t react until October 17, 1973, three days after we announced on Sunday, October 14, after Israel lost 76 planes, that we would send planes and weapons to Israel. Since that wasn’t in the agreement Kissinger made with Sadat after he became Secretary of State on September 23, 1973, and which Sadat had informed King Faisal about, Faisal reacted by slamming on the oil brakes.

    Kissinger first made a deal with Sadat in the summer of 1972 when he was on the National Security Council: if Sadat would agree to get rid of the Russian officials in Egypt, Kissinger would coax Israel to give back the Sinai. Sadat did it, but Kissinger couldn’t get anywhere with Golda Meir; she hated Kissinger, didn’t trust him. So after Kissinger became Sec State, he suggested Sadat and Syria start a ‘little war’ with Israel that the US would overlook to bring Israel to the table. Kissinger didn’t tell Nixon, who was consumed with Watergate, what he’d done until October 13th. He certainly didn’t tell Israel. Golda armed 13 nuclear warheads, pointed one at Cairo and and another at Damascus, and threatened to bomb Russia; they thought this was the end of Israel. This story goes on and on, but the oil crisis was the least of our worries. We were at Defcon Five by October 25th, and narrowly avoided WWIII; worse than the Bay of Pigs. Faisal’s cutting back of our oil supplies affected the US military globally–one to two days of fuel at military locations around the world–and changed our oil policy forever. From that point, oil became national security item #1, and remains that way today. If you think that under any circumstances we are going to get rid of oil for solar or wind power, you’re whistling Dixie. The military has done extensive studies in the last few years, and alternatives don’t cut it except for absolutely benign uses that they can use as PR.

  9. There is no conflict between Keynsianism and a low carbon policy. Adopting the latter policy may well reduce GDP per head to where it was sometimes in the 1990s for example. But so what? We had more or less full employment then. Standards of living were perfectly acceptable (or far too high, as viewed by those who advocate the simple life).

    • That assumption is based on not replacing fossil fuels with other sources of energy; on the contrary, public investments in net-positive housing, wind power, and high-speed rail would be sufficient to allow a ban on fracking, bitumen, and strip mining alongside lower energy costs. To the best of my knowledge, residential is 37.5% of electric demand, supplied 50% by coal and 22% by Natural Gas (which wind power could replace), while 70% of fuel consumption is from truckers, which could either be replaced by high speed rail or by grants, subsidies, and incentives to purchase/install biodiesel engines.

      • Converting crude oil to distillates like gasoline and diesel fuel is called “the crack”. The rule of thumb is that 3 barrels of oil can produce 2 barrels of gasoline and 1 barrel of other distillates, including diesel fuel, heating oil, and jet fuel. It’s known as 3:2:1.

        So diesel and heating oil together are about 23% of oil usage, gasoline about 47%. Since semis run on diesel, converting them all to trains would save less than 23%, not 70%.

        Trains are already quite competitive with trucks, when the train can handle most of the distance. Usually the end points are not train stops, and the cargo must traverse the first and last miles by truck anyway.

  10. I’m not sure why there’d be antinomy between low-carbon and post-keynesian economics, anymore than there’s be a paradox between a paleo diet and post-keynesian economics. If anything, transitioning from a carbon-based energy system to a high-energy, carbon neutral/free system requires public investments; two important ones would be net-positive housing, eliminating 37.5% (off the top of my head) of energy demand that is residential and adding some amount back in, and space-based solar panels, which would require new vigorous investments into space exploration (since private industry has made it quite clear they’re impotent in space). Off course, T. Boone Pickens has made quite a reputation on the notion wind power can replace natural gas as an electric power source, which also requires investments.

    So, I’m not sure how the notion post-keynesianism and a green energy economy would be inherently at odds came to be.

    • “So, I’m not sure how the notion post-keynesianism and a green energy economy would be inherently at odds came to be.”

      Because the green movement seems to require lower growth and higher energy costs. They demand reductions in carbon emissions more than can be gained by technology or conservation, only by reduced production.

      Wind or solar will not replace other sources of electric power, because when the wind doesn’t blow or the sun isn’t shining, you still need the same capacity. They will be additional sources, and can reduce the fuel consumption rate, but not replace the need for electric plants that work all the time, pending some dramatic improvements in battery technology.

      • A few observations: You don’t need the same electric capacity at all times, especially at night when the sun isn’t shining. The wind almost always blows, just not always where its most convenient to be converted into electricity. Transmission from windy areas is key. Energy storage can be accomplished by many methods including batteries, flywheels, compressed air, hydro-pumping, capacitor storage, and chemical storage. These are technical problems that require investment and funding, not fundamental barriers.

        • Right, the storage obstacles are simply technical and will be solved eventually. Maybe in 50 years, maybe sooner.

          But for now, if solar is your only source, what do you do on a cloudy day? Like in Phoenix were it’s been raining for 3 days now and will continue tomorrow? If we didn’t have Palo Verde, and were dependent on solar, of which we have substantial amounts, we’d be in the dark.

          Driving from LA to Phoenix, we passed lots and lots of wind turbines, many of them standing still because the wind wasn’t blowing in the place where it usually does. Maybe it was blowing elsewhere, but what do you do, build them everywhere because the wind is uncooperative and unpredictable? No, you keep enough conventional capacity to meet the peak demand.

          • Some of the storage options are already available and only require a commitment, either by government or industry, to implement. High speed carbon fiber fly wheels could be installed at the site of every large wind farm to store excess capacity and even out the fluctuations in power production. Pumped hydro storage is currently being used on a limited scale but could be adapted in areas with several sequential impoundments such as the Tennessee River valley, the White River in Arkansas and Missouri, the upper Missouri River and the Colorado and Columbia basins among others. Excess solar electricity could be stored as hydrogen gas or compressed air to produce electricity during periods of low output. Other methods of storage might require more research and investment, but costs to develop and deploy any of these technologies would not be a barrier to a government operation on MMT principles.

            • If storage were practical, power companies would be using it now, with flywheels or hydro-pumping or whatever, to take advantage of time-of-day rates. Produce extra during the night, when demand is low, and sell it during the day when rates are high. The problem is that no energy conversion technology is 100% efficient, and the losses make it impractical, unless there is some overriding consideration. If you can plug in your electric car to charge the battery, why pay extra to run it on a fuel cell? If there is no place to plug it in – like in outer space – or you can get substantially more range with fuel cells, then it makes sense regardless of cost. (I mean energy cost, not financial cost.)

              But, someday, many of these storage devices may be more efficient, or the relative cost of solar will be so advantageous that the losses are no longer a problem.

      • The green movement doesn’t require it; it simply demands it anyways. Part of this is the fact people usually rely on outdated paradigms, which include a lack of updated technologies or neoclassical proposals. In truth, expanding HUD budget to create net-positive housing, alongside the use of job guarantee members to update houses to net-positive standards, would eliminate 37.5% of electric demand, and increase supply by some portion of that, which drastically reduces demand from power plants. The same can be said of building wind power plants, which, btw, are completely capable of storing energy for later use now. I also mentioned space-based solar panels, which would require expanding NASA’s budget as well.

        Since the technology exists for a green economy, the notion that one would be at odds w/ post-keynesianism is inherently false. It’s a holdover from the sixties when this technology didn’t exist, and when neoclassicalism made it’s return to the scene. In reality, Hoexter (iirc) already outlined a part of a proposal for transitioning to a post-carbon economy.