The Best Way to Judge Any Green Energy Policy


Energy policy is often judged by three criteria: cost, reliability and effect on carbon emissions. That makes good sense, but I would like to suggest an alternative approach: Ask which green energy policies can get the support of most special-interest groups, and the fewest forces in opposition, and rank them accordingly. That might sound cynical, but given how long and deep the policy failures have run, some cynicism is in order.

The energy sector is remarkably politicized. The current infrastructure could probably not be built under today’s regulatory regime, which may also hinder the development of tomorrow’s green-energy infrastructure. It is not easy to put wind turbines next to the homes of wealthy, well-organized homeowners. So maybe energy policy needs to start with the political questions first.

Nuclear fission is green, reliable and (currently) expensive. With further technological advances and some degree of regulatory forbearance, it could become much cheaper. It works just fine in France, Sweden and some parts of the U.S.

Yet voters do not like or trust nuclear power, and Japan and Germany are shutting it down. The Indian Point nuclear power plant, which helped to power New York City, was closed prematurely two months ago, and only a few policy wonks complained. Not enough people profit directly from nuclear power to keep the sector up and running. For the public utilities it has become a political and public-relations headache.

So which green (or greener) energy sources are the most special-interest friendly?

One obvious candidate is solar power, especially when combined with more effective batteries. Many people argue that solar energy isn’t powerful or reliable or storable enough, but few people hate the idea of it. Special-interest groups don’t have a well-developed critique of solar. The production of more batteries for solar power might in fact involve environmental disruptions, but they are relatively invisible and are not focal. They have not stopped the political elevation of solar power.

Electric cars also appear to be relatively special-interest friendly. Tesla now has a much higher valuation than any of America’s legacy automakers, and no government policies stopped this from happening. Electric cars even received government subsidies.

Removing carbon from the air and sequestering it also seems politically acceptable. There are debates over how cheap carbon sequestration will be, but that’s an argument for putting more research and development into this area. Storing carbon, either in plants or underground, does not create highly visible problems. It also might become a profitable line of business for fossil-fuel companies, which would mean one very powerful special-interest in favor of it. The politically powerful but carbon-dirty construction industry has few low-carbon options and likely would be inclined to support these approaches as well, were they to prove feasible on a larger scale.

A less obvious politically viable candidate is geothermal power. It is easy enough in Iceland, El Salvador and Kenya, where geothermal energy is readily accessible, but digging deeper for geothermal energy and sending it up to the surface would require further technological advances. On the plus side, geothermal power does not seem to irritate the Not-in-My-Backyard types, is popular where used, and could be run through a modified version of the existing energy infrastructure, thus minimizing the stranded-assets problem.

Japan seems to be approaching its energy infrastructure with politics at the forefront. It is making a big bet on hydrogen power, which is technologically iffy and expensive, currently about eight times more so than natural gas. Yet Japanese leaders are aware that Japan does not have its own solar power industry at scale, making the country dependent on China for solar panels. Hydrogen can also be used by existing (though modified) power plants, which both reduces cost and eliminates the need for new infrastructure. And if this all works, Japan could become known as the world leader in hydrogen power.

Greenpeace has criticized the Japanese approach, saying that its ammonia-reliant formula for hydrogen power is costly and will itself create greenhouse-gas emissions. That critique may well be right, but it’s also possible that Japan is thinking through the political questions at a deeper level.

The most relevant question about green energy isn’t necessarily about technology or cost. It may be about politics: “How many special-interest groups support this idea?” If there isn’t a decent answer, then maybe the idea doesn’t stand a decent chance.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."

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