In Response to “A Prosperous and Cleaner Future…” by Lynne Kiesling

If I were to describe Lynne Kiesling’s publication “A Prosperous and Cleaner Future: Markets, Innovation, and Electricity Distribution in the 21st Century” as anything, it would be that she is the Friedrich Hayek of energy policy. This paper methodically, and almost poetically, describes a major issue facing the energy and environmental policy world today: archaic design, a design that was put in place during the 19th century Progressive Era which put regulators “as agents, custodians, and stewards of ratepayer resources” (Kiesling 2015).

However, putting regulators in a dynamic and ever-changing market as custodians gives rise to what Austrian economist Friedrich Hayek describes as “The Knowledge Problem” in his 1945 essay “The Use of Knowledge in Society,” in which he says:

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. (Hayek 1945).

Politicians and regulators are generally the butt of many party jokes as being incompetent and foolish, however this is a misunderstanding of why regulators stifle markets and innovation. Energy regulators will make bad decisions on what is best for the energy market or the environment not exactly because they don’t know what is best, but because they can’t know what is best.  The same could be said about a CEO of an energy company. Lynne Kiesling explains this idea by saying “[i]n dynamic markets with diffuse private knowledge, neither entrepreneurs nor policy makers can know a priori which goods and services will succeed with consumers and at what prices.”

Thus, it is not the free market assertion that private sector forces know better than public sector forces, per se. However at first glance, it seems that a solution in energy and environmentalism problems can never be found if no one actually knows enough to solve it.  This is not the free market assertion either. Instead it is that a free market is the quickest trial-and-error process for determining solutions based on the dispersed knowledge of private sector actors, which is determined through prices and profit. This is the crown-jewel of competition, which is absent in today’s energy market because of government sanctioned monopolies. Public sector action is simply too slow to enact this trial-and-error method, nor would they be able to determine what is and isn’t successful quite like consumers and the market can. Furthermore public sector forces are too slow to keep up with the innovation of today’s market, which is illustrated by Kiesling through the emergence of new technology like smart-grids, nuclear energy, and combined-cycle gas turbines. Kiesling as a result concludes that our regulation methods are inherently far too static for the dynamic market and technology we see today:

Many of the assumptions of this regulatory model are increasingly untrue in our modern society. The assumption of a single production technology with a declining long-run average curve has long been incorrect, as shown by the smaller-scale combined-cycle gas turbine (CCGT) innovations in the 1980s and the ensuing unbundling of generation from the vertically integrated firm and the liberalization of wholesale energy markets in restructured states in the U.S. This assumption is becoming even more problematic in the face of recent innovations in smaller-scale generation technologies, including natural gas, renewables, and even small modular nuclear power. (Kiesling 2015).

If Kiesling and Hayek are correct, it is clear that a feasible solution to problems we face today in energy and the environment, which are increasingly complicated topics, is the free market, and not an expansion of archaic regulation methods.

TransCanada Sues for $15 Billion: Environmentalism and Eminent Domain

On January 6th, TranCanada announced that it would be filing suit under the North American Free Trade Agreement (NAFTA) and would be seeking $15 billion in damages. The pipeline was introduced in 2008 but was rejected in November of 2015, and with the rejection President Obama gave three primary reasons for the rejection:

  1. The State Department does not foresee this being as beneficial to our economy as others presume.
  2. The pipeline will not make gas cheaper.
  3. The pipeline does not enhance our “energy security,” and we must focus on generating a clean energy economy.

In response, a TransCanada spokesperson made the following statement: “TransCanada has been unjustly deprived of the value of its multi-billion dollar investment by the U.S. Administration’s arbitrary and unjustified denial. It is our responsibility to take the actions we deem appropriate to protect our rights.”

While free trade and arbitrary regulation are something that should be avoided in the marketplace, I believe the Obama Administration has rightfully denied TransCanada’s Keystone Pipeline, but for all the wrong reasons. To say that the government should pick the winner and losers of an energy market to focus on a clean energy economy is cronyism at is essence. To say that the government should reject a project because it does not foresee economic benefit or cheaper gas prices is central planning and cronyism at its essence, as well.

However, this is not the big issue with the proposed pipeline. If the pipeline were to be accepted, we would not be escaping cronyism within our government in the least. TransCanada proposed a pipeline that will be 1,179 miles long and ending in Nebraska where it will meet up with already existing pipelines. However, there is very little mention from the Obama Administration or TransCanada about the private property that would be seized under eminent domain because of the pipeline.

The project would seize the private property of other landowners across several northern states, namely South Dakota, Nebraska, and Montana, if deals were not reached with the owners of the property. This is undoubtedly anti-market behavior from the side of the federal and state governments for the sake of the TransCanada company.

According the company, it has reached agreements with private property owners in South Dakota and Montana, and would not have to use eminent domain. Yet, this is not the case for landowners in Nebraska.  Furthermore with eminent domain seizures above the heads of so many South Dakotans and Montanans, did these landowners really have much choice? If they were to deny the company of sale, TransCanada would most likely use eminent domain to their advantage, which would not be opportune for the landowners.

Conservatives and libertarians should be skeptical of the reasons this Administration has rejected the Keystone Pipeline, but they should also take another look at what is being proposed. This proposal is not inherently free-market and further degrades private property rights for individuals within the United States.

Earth: A New Hope (Geologic Time to Star Wars)

Geologic time is vast, and the Earth is incredibly old. So old that understanding its scale can be hard to fathom. In order to understand its longevity, we will be looking back a long time ago in a galaxy far far away to Star Wars: A New Hope.

The origin of our Earth is 4.6 billion years ago in which a black screen envelops our movie screen to be shifted to a 20th Century Fox logo blaring loud trumpets. For 600 million years our world was bombarded by space junk, dust, and meteorites. By the time this bombardment is over in the context of A New Hope, Storm Troopers are combing the deserts of Tatooine and one brazenly yells “look sir droids!” Fast forward to a scene in the Millennium Falcon, and Han Solo is scolding Luke Skywalker with his famous line “hokey religions and ancient weapons are no match to a good blaster at your side, kid.” About a minute before this line is said, our Earth is undergoing its first tectonic activity.

Finally, we reach some of our first life on earth, which are eukaryotic cells about 2 billion years ago, and we are already over half way through the movie when imperial troops are boarding the Millennium Falcon on board the Death Star. By the time the first amphibians and insects show up on the stage of earth, the Rebel alliance is already halfway through their attack of the Death Star and Darth Vader is arriving in his specialized Tie Advanced with two Tie Fighters on both his sides. As the battle continues, dinosaurs and mammals make their entrance onto Earth, but the first flowers make their appearance right as Luke’s X-Wing missiles enter the Death Star’s exhaust port. The extinction of the dinosaurs happens right as the last scene of the movie, the award ceremony, begins.

The direct ancestors of humans arrive, but the movie is minutes to being over, as Chewbacca makes his first roar of the awards ceremony. Humans arrive at his second roar about 10 seconds later (millions of years in Earth time). As the final circular fade out of the movie happens, the earliest cave art known is found, the Neanderthals go extinct, Mount Vesuvius buries Pompeii, and everyone you have every known was born.

The credits roll.

To put this into quick perspective, the dinosaurs go extinct right as the Youtube video below begins. Everything you ever learned in history class happens right after Chewbaca’s second roar, seconds before the movie ends.

Below are the exact times things happen:

Geologic Time Real Event Movie Time
4.6 Ga Origin of Earth and the Solar System 0:00:00
4.0 Ga End of heavy meteorite bombardment; oldest surviving rocks 0:15:38
3.9 Ga Oldest sedimentary rocks; first possible geochemical evidence of life 0:18:17
3.5 Ga First likely microbial structures 0:28:45
2.7 Ga Biomarkers of blue green “algae” (cyanobacteria) & of eukaryotes 0:49:40
2.3-2.2 Ga First global tectonic activity 1:00:07- 1:02:44
2.0 Ga First eukaryotic cells, first oxidized soils; significant oxygen in atmosphere 1:07:57
750-600 Ma Widespread glaciation, oxygen rises to 100% of present level 1:40:38-1:44:33
600 Ma First fossil metazoans (multicellular animals) 1:44:33
543 Ma First multicellular animals with skeletons & modern metazoan phyla 1:46:02
500 Ma First vertebrates 1:47:10
440 Ma First multicellular land plants 1:48:44
370 Ma First amphibians & insects 1:50:34
345 Ma First amniotes (vertebrates with water tight eggs) 1:51:13
250 Ma Permo Triassic Mass extinction (over 90% of species lost) 1:53:42
220 Ma First mammals & dinosaurs 1:54:29
120 Ma First flowering plants (angiosperms) 1:57:06
66 Ma Cretaceous -Tertiary mass extinction followed by rapid diversification of mammals 1:58:31
4-7 Ma First hominids 2:00:03
100 Ka Homo sapiens first appears in rock record 2:00:13.84
50 Ka earliest cave art 2:00:13.92
45-30 Ka Extinction of Neanderthals (Homo neanderthalensis) 2:00:13.93-2:00:13.95
12 Ka Mass extinction of large terrestrial mammals, possibly caused by humans 2:00:13.98
79 CE Mount Vesuvius erupts burying Pompeii 2:00:13.9999
1816 CE “The Year without a Summer” (part of the Little Ice Age) 2:00:13.999999
1995 CE My birthyear 2:00:13.9999999999999

 

Movie Time Movie Event
0:00:00 Black screen fades to 20th Century Fox Logo
0:15:38 Storm Troopers are looking for the missing escape pod in the desert and a Storm Trooper says “Look sir! Droids!”
0:18:17 Uncle Owen just bought C-3PO from the Jawas and says “take these two to the garage”
0:28:45 R-2 has just alerted Luke and C-3PO of the Sand People in the area and they are looking at their Banthas
0:49:40 Storm Troopers walked into the cantina at Mos Eisley, and come check out Han and Chewie’s table
1:00:07- 1:02:44 R-2 kills one of Chewbaca’s pieces in the Dejarik game; “hokey religions and ancient weapons are no match to a good blaster at your side, kid”; Obi Wan gives Luke a helmate with a blast shield
1:07:57 Two imperial workers board the Millenium Falcon with a crate
1:40:38-1:44:33 A rebel engineer is describing how a precise hit to an exhaust port will destroy the Death Star; “I use to bullseye wamprats!”; Rebel pilots take off for mission against the Death Star
1:44:33 Luke’s X-wing is taking off for mission against Death Star
1:46:02 “Cut the Chatter Red 2” X-wings in attack formation approaching Death Star
1:47:10 X-wings are being scattered by turret fighter; “Watch yourselves!”
1:48:44 Tie fighter outflanks Luke’s X-wing and gets right behind him
1:50:34 Darth Vader arrives with two other Tie fighters to the Death Star Trench
1:51:13 Imperial officer asks Grand Moff Tarkin if he would like to evacuate the Death Star
1:53:42 “Luke at that speed will you be able to pull out in time!?”
1:54:29 Darth Vader is .3 units away from Rebel pilots; “Fighter coming in .3!”
1:57:06 Luke’s missiles enter the exhaust port on the Death Star
1:58:31 Wide shot of the forest on Yavin IV and trumpets playing in the background
2:00:03 Chewbaca roars for the first time at the award ceremony
2:00:13.84 Chewbaca roars at the award ceremony for the second and last time
2:00:13.92 The circular fade out appears at the edges of the screen
2:00:13.93-2:00:13.95 Fade out reaches half-way through the screen
2:00:13.98 Fade out encompasses the screen and George Lucas’ end credit fades in slowly
2:00:13.9999 Screen is full of stars and George Lucas’ name is fully on the screen
2:00:13.999999 Screen is still full of stars and George Luca’s name is fully on the screen
2:00:13.9999999999999 Absolutely no changes

What does it mean to be agnostic on energy?

Simplistically, it means that we support the free market methods of finding a preferable energy source, whether it be renewables, fracking, nuclear energy, or some other energy production method.

It seems that there are many conservatives and libertarians across the United States that are against renewable energy, namely wind and solar, in and of itself. However, this shows a complete misunderstanding of the free market position. Oil and natural gas are not libertarian sources of energy, whatever that may mean. The whole point of a free market is that it is undesigned. There are no winner and losers chosen, but instead our energy source is “chosen” through consumer demand, prices, supply, and a multitude of other factors.

The truth is that I have a soft spot for renewable and clean energy. The environment is important to me, and I wish for people for years to come to enjoy the same Rocky Mountains I have enjoyed my entire life. I hope most people would think it would be absurd to claim otherwise. However, I still do not think it is appropriate for the government to mandate or skew markets for the sake of what a few may determine is a preferable energy supply, as it would most certainly be arbitrary.

For example if I were to choose, I would probably choose nuclear energy as a preferable form of energy production as it is clean, really awesome (totally not a value statement), and relatively effective. However, nuclear energy is not perfect as it can be really expensive to build the infrastructure for and takes incredibly specialized professionals to do the job. If some environmental leftists were to choose, I assume they would choose wind energy. Wind energy production doesn’t create emissions, and the wind is a resource that won’t be going away anytime soon. However, wind is not a reliable enough source of energy to depend on and the materials used to build these farms are not environmentally friendly either. Similar things could be said about solar energy. If a traditional conservative were to choose, they might choose hydraulic fracturing, which is relatively cheap and cleaner than crude oil drilling. However, fracking is not emissions-free and is also not currently politically desirable in many ways.

So when we set up a system that chooses winner and losers, the winner is only dependent on who the chooser is, which is not something that I think anyone is particularly interested in.

However, that does not mean we can’t have an effect on the energy being used today. We certainly can, but we can’t use government preferences for these ends. Consumer demand is a powerful element of a market, and it is something that we all can affect. If you are interested in cleaner energy, educate people about it. Make people really desire having cleaner energy or whatever form of energy you think is best. This isn’t an impossible task, but it is more difficult than using the government as a tool to your ends.

Furthermore, as surprising as this may sound, we must check our own privileges when discussing sound energy policy. Yes, the environment is important and we should protect it, but this does come with a higher bill. While this higher bill is mostly affordable to the high and middle class, the same can’t be said for the less fortunate and lower class. While they would certainly benefit from a cleaner environment, I am not sure they would find the tradeoff of being able to afford more food, better clothes, and so on desirable. However in a free market of energy, they could make such a choice if they so desire.

When it comes down to it sound energy policy is quite difficult, and even more so when you think the government should pick winners and losers in the market. People think that it is so easy when they post things to Facebook like “of course the government needs to subsidize renewable energy” yet they know very little about the costs of such a policy and who it effects. Likewise, people think it is so easy to say “oil and gas is the cheapest therefore the best”, but they don’t even bother to consider the externalities of such a decision or how different people may value its environmental effects.

Trevor Burrus, a research fellow at the Cato Institute, recently wrote about the difficulties of gun policy in which he explains that the gun control argument is not as obvious of an argument as its advocates would like you to believe and the gun rights argument is not as obvious of an argument as its advocates would like you to believe. The same could be said about energy policy, and most policy matters. It is hard. It is nuanced. There is no cure all policy or energy source, for that matter.

This is why I am agnostic on energy sources, and this is why the free market is so important. There are certainly market failures in addressing issues throughout history, but freeing up the market takes the hard decisions out of the hands of an arbitrary decider, or deciders, and into a complex system in which we all are a part of.

Nuclear Energy: But What about Rocky Flats Plant?

Nuclear energy can be a touchy subject to Coloradans. The only real commercial power plant to exist in the state was Fort St. Vrain, and then there is an even bigger and more widely known elephant in the room: Rocky Flats. If you don’t know what Rocky Flats is, it is a controversial nuclear weapons development facility near Golden, Colorado that was opened in 1952. When it was built, the information of what the facility was doing and the materials it was using was mostly secret due to national security interests because of our contentions with the Soviet Union. Transparency was certainly not a virtue of the Cold War Era. Due to our lack of knowledge in the nuclear area at this time, there were some precautions taken to eliminate contamination, but not all the proper precautions were taken. As a result the Environmental Protection Agency (EPA) and a few other governmental organizations had investigated the site and found huge breaches in safety for the surrounding public, the environment, and plant workers. Production halted in 1989, and cleanup began in 1992.

While the current contamination of surrounding areas, which include residential and agricultural areas, are not high enough to warrant cleanup by the EPA, the site is still highly monitored by the EPA and the Colorado Department of Public Health and Environment (CDPHE), as it is listed as a Superfund site by the EPA. Public outcry against the site was huge back in the early 90s, and there is still a lot of public contention today.

However, it is wrong to conflate a commercial nuclear plant with a nuclear weapons plant. Rocky Flats Plant was used to create nuclear weapon triggers called “pits”, while commercial nuclear plants create electricity. The Rocky Flats Plant used weapons grade plutonium, while nuclear power plants use regular enriched uranium. While plutonium was used at the Rocky Flats site, uranium is normally used for weapons as it is more readily found than plutonium, but the uranium used for electricity in commercial plants is still much different than the uranium used in weapons. To put this in perspective, weapons grade uranium has drastically higher levels of 235U (the isotope used to create both electricity and weapons) than the concentration of the enriched uranium (also the 235U isotope) used in electricity generation. Weapons grade uranium has over 90% 235U, while the enriched uranium used in electricity is 0.7% to 25%.

With this perspective, it is clear to see why weapon development has a much higher chance of contamination and a more severe effect from contamination than electricity generation. While there are possible health and environmental concerns with nuclear power, to use weapons development as evidence against it is groundless.

Nuclear Energy: What about Chernobyl?

Ever heard of Godwin’s Law? It is a joke created by Mike Godwin that says that as a conversation on the internet, whether it be a comment section on Facebook or forum, grows longer that the probability of someone comparing an idea or argument to Hitler or Nazis becomes inevitable. I think something similar could be said about Chernobyl when discussing nuclear power. Chernobyl seems to always come up when discussing nuclear power.

In case you do not know, Chernobyl was a nuclear power facility located in the Ukranian state of the Soviet Union in which a unit, namely Unit 4, exploded and caught fire in 1986. 31 workers of the plant were killed. It is estimated that the disaster is the cause of over 7,000 cases of cancer throughout Ukraine, and the environmental effects has been catastrophic.

However, the takeaway from the story of Chernobyl is not the horrors of nuclear power, but the horrors of Soviet-style socialism and leadership. According to Grigori Medvedev, an engineer at Chernobyl, construction and safety checks for the plants were rushed for the sake of hitting deadlines and receiving bonuses provided by the Kremlin, safety violations were constantly overlooked for the sake of good reports to superiors, most of the workers at the time of the explosion were poorly trained, and managers decided to take the plant to very low power causing the plant to become unstable.

Chernobyl was a formula for disaster, but I think to blame the disaster on the dangers of nuclear power is a red herring. While there are many dangers to producing nuclear power, most of them can be avoided with proper procedures and precautions. Soviet leadership is 100% to blame for the Chernobyl disaster.

There are many things we use every day that provide potential dangers, but with proper precautions and procedure disaster is avoided. The same can be said with nuclear energy.

If you are interested in learning more about the Chernobyl disaster and what happened on that April day in 1989, I would highly recommend Grigori Medvedev’s book: The Truth About Chernobyl.

Nuclear Energy: Uranium Mining in Colorado

Colorado has a long and controversial history with uranium mining. While uranium did not get into extremely high demand until the early 1950s due to the Cold War and the development of nuclear weapons, Colorado began similar mining with radium in the 1910s and vanadium in the 1930s, which were popular for more commercial uses like paints and clays. Both radium and vanadium are indicator minerals for uranium, hence why their mining and extraction are so interrelated.

The first uraninite, also known as pitchblende, found in the United States was found near Central City, Colorado. While most the uranium used for nuclear weapons, specifically the Manhattan Project, came from Congo and Canada, Colorado, through the Uravan mining district, produced about 850 tons of uranium ore for weapons testing. Prospecting and mining continued to expand after World War II as the largest uranium deposit to be found in Colorado was discovered in the late 1940s. Due to recession, the scaling down of the Cold War, and uranium being released from weapon stockpiles, uranium mining decreased dramatically in the 1980s due to a large decrease in price. During the boom of uranium mining in Colorado (1948-1978), it is estimated that Uravan belt had over 1,200 mines and mined 63 million pounds of uranium.

Currently, Colorado ranks third for the most known uranium reserves in the United States, just behind Wyoming and New Mexico. Since 2009, there has been no major uranium mining in the state of Colorado, and there are currently no active mines. However, there are 31 permitted projects in Colorado.

While uranium mining has the potential to be a very lucrative industry in the future, especially if nuclear energy becomes more popular, it does come with externalities to the environment and public health. When it comes to describing nuclear waste, it is generally described in two tiers: low-level waste and high level waste, which refer to their level of radioactivity. Uranium mining, which produce mill tailings, is the source of low-level waste, while high-level waste refers mostly to used reactor fuel after the uranium has been used to generate electricity. According to the Energy Information Administration, “by volume, most of the waste related to the nuclear power industry has a relatively low-level of radioactivity”, meaning most of the waste comes from the extraction of uranium.

Mill tailings from uranium mining, which has the presence of its indicator mineral radium, will break down into radon, which is a radioactive gas that can collect in the atmosphere if special precautions are not taken. Furthermore environmental contamination can occur from the tools used if special precautions also are not taken.

While it is important to keep in mind the externalities of uranium mining when discussing nuclear energy, we must remember that these kinds of trade-offs exist almost anywhere in energy production. Wind and solar energy, as well as hybrid and electric cars, fluorescent lightbulbs, and Ipods, have very similar externalities to nuclear power as they use rare earth elements like lanthanum, cerium, scandium, terbium, and several others. When comparing the externalities of uranium mining to the externalities of other rare earth element mining, the risks are almost identical.