Liquid assets

I was chatting with a transportation expert over the weekend about carbon taxes and so forth. His view is that carbon taxes are, for cars, mostly window dressing. The price of oil varies by much more than any politically feasible carbon tax in America. Moreover, if global oil production has really peaked¹, then supply constraints will become a dominant contributor to the price as well. America will move to smaller, denser housing, not because the government tells them to, but because they will no longer be able to afford the heating and transportation for large, dispersed homes.

Where carbon taxes may make a difference is in preventing coal-to-liquids from becoming a viable substitute for gasoline. CTL has a terrible carbon profile, and it isn't particularly good for other bits of the environment either. This sets up an interesting political problem for the future. The public debate over carbon has focused on driving, because right now it's mostly aimed at securing voluntary consumer cooperation, and consumers don't have much control over what sort of plants their power generator uses. But if oil truly becomes as expensive as the peak oil folks think, coal will suddenly become a major battleground, as producers promise consumers cheap(er) fuel--and Senator Byrd shifts his efforts from paving West Virginia into one shining sheet of asphalt, towards gaining massive CTL research subsidies. You may see the West Virginia delegation increasingly allied with Michigan.

¹a notion of which I am somewhat skeptical, although Hugo Chavez is certainly doing his best to make sure that the-artist-formerly-known-as-Venezuela's-bitumen never makes it onto the world oil markets in any quantity

Comments

I still think you're wrong about population density. Those 4000 sq ft. homes in the suburbs are going to be the only ones with enough roof space for all of the solar panels needed to charge up the ol' 'lectric SUV for that day trip to Falls Church Beach.

Posted by Xmas | October 9, 2007 10:37 AM

Why do you have to see it as "preventing coal-to-liquids" when it could be a force to make coal-to-liquids better? Isn't that why we (not everybody, 'l'-word people) like markets so much? If it makes sense, the market will find a way. If it is your desire, mandate cleanliness.

Posted by anomdebus | October 9, 2007 12:48 PM

Saying that CTL has a terrible carbon profile is like saying that having water taps in your kitchen is reason for permanently wet floors. There is a solution for the wet floors, your sink. And CO2 sequestration has been in use for decades and will be a solution for carbon 'problems' of CTL.
Mixed with biomass, CTL can be a lot better than what we use today for transportation fuels, and it's not like burning the food of the poor, what biofuels is like.

Posted by Iredeu | October 9, 2007 6:26 PM

By the time you have a windmill on every block and CTL in full swing, the hydrogen/nuclear combo will make them pointless.

Posted by willis | October 10, 2007 9:38 AM

The public debate over carbon has focused on driving,

Thereby demonstrating the non-seriousness of the debate.

Pounding on Americans for their driving habits has much more to do with the neo-Puritan anti-materialist agenda of the Greens than it does with actually reducing total carbon output, since driving is less than a third of Americans carbon output, and the hardest to reduce since it would require massive infrastructure changes.

Posted by R C Dean | October 10, 2007 10:00 AM

During the "energy crisis" of the '70 the dense cities of the American northeast collapsed and the auto based cities of the mid and southwest exploded. If high petroleum cost give cities an economic advantage, it isn't a big one.

Without lots of cheap power, dense cities are even more unlivable than the suburbs. Cities consume mostly electricity but without a low carbon emitting electricity source the total CO2 production will be a wash with the suburbs.

Cost is an excellent proxy for energy use which in turn is an excellent proxy for CO2 production. City living cost more than the suburbs so we can assume that it most likely generates more C02 as well.

I think city dwellers think they don't consume energy because as individuals they never actually use the energy directly. Its all done for them. It flows under the streets and through the walls managed by a class of troglodytes that the big thinkers only notice when they go on strike. Anyone who dares to examine the vast infrastructure of a modern city quickly sees its vast energy consumption.

Posted by Shannon Love | October 10, 2007 10:17 AM

They already have stiff carbon taxes (sorry, gas taxes) in Europe and most of the world. Doesn't help or matter much.

The enviros will accept nothing less than "cap-and-trade". Cap is the key word. They dream of lowering that "cap" continuously, and let people live with the consequences (that is: live in the dark and cold).

Posted by Jacob | October 10, 2007 11:10 AM

The price of oil might fall in real terms like every other commodity in history. But even at half the current price of oil, it's still much higher than the cost of coal per carbon atom. Think about it: $50 for a tank of gas, $20 for a TON of coal. The total cost of coal at the mine annually in the US is about $20 billion. With West Virginia as a swing state candidates compete to lavish subsidies on CTL and other "clean" coal technologies. So we get a net subsidy of billions instead of a tax. Coal makes up only a fraction of a cent of the price of electricity so it would take a tax of several hundred percent to get electricity generators to switch to natural gas, nuclear or solar.

Posted by Sam Dinkin | October 10, 2007 12:34 PM

Cost is an excellent proxy for energy use which in turn is an excellent proxy for CO2 production. City living cost more than the suburbs so we can assume that it most likely generates more C02 as well.

In many cases cost is a good proxy for CO2, but I don't think that's the case here. A significant portion of the higher cost of city life is due to the higher cost of real estate. The real estate is more expensive because of scarcity, which is entirely unrelated to energy or CO2

Posted by Ignorance is Bliss | October 10, 2007 1:46 PM

The cost of reducing CO2 emissions from cars is around $200/ton, if I recall correctly. This is much higher than the cost of reducing CO2 emission from coal combustion. At that CO2 cost, for example, nuclear beats coal by a wide margin.

What this means is that, if things were done in an economical rational order, we'd keep using fossil fuels in cars for a while longer (perhaps including CTL, with sequestation of the roughly 50% of the carbon that is converted to CO2 at the CTL plant), but instead first phase out coal burning powerplants, or at least retrofit them with equipment to strip CO2 from the flue gases.

Posted by Paul Dietz | October 11, 2007 4:10 PM

There is CTL and there is CTL....

Making hydrocarbons for transport fuel can be done today with lots of coal and some water. Since the reaction is endothermic (consumes energy), one has to burn a lot of extra coal per atom of carbon in the end product. That extra coal goes up the smokestack as CO2, hence the "terrible carbon footprint."

Alternately, one can supply the hydrogen in CTL hydrocarbons from nuclear sources (from water) and mix directly with coal to make hydrocarbons - someday.

The energy in a gallon of gasoline costs only 7 cents in a nuclear reactor today - the carbon content if from coal would only cost 27 cents at today's prices. That leaves plenty of room for thermodynamic inefficiencies, capital charges, and other factors of production.

With nuclear-generated CTL, synthetic transport fuel need not have a carbon footprint any different than today's petroleum based sources and might even be a bit better.

Posted by Joseph Somsel | October 11, 2007 6:58 PM