Re: [asa] A greener way to get electricity from natural gas

From: Rich Blinne <>
Date: Mon Dec 07 2009 - 14:35:32 EST

On Mon, Dec 7, 2009 at 11:51 AM, Schwarzwald <> wrote:

> Heya Rich,
> Some replies below.
> That's the wonder of cap and trade. Any CCS will be more expensive than
>> without just as scrubbers are more expensive than when utilities belched out
>> acid rain. When the George HW Bush administration introduced the concept of
>> cap and trade they came up with a great idea of influencing the free market
>> to "do the right thing". In that case, it made reducing SO2 emissions
>> profitable and Shazam! companies found a way to do it under budget and ahead
>> of schedule. If BP makes money reducing CO2 emissions using domestic fuel
>> sources instead of making money from selling oil to us from hostile
>> countries I say good for them.
> Influencing the free market to "do the right thing". So that's what the
> government is for nowadays? That's good to know, because there's just so
> many "right things" I think should people should be doing. That government
> is clearly in the business of strongly encouraging people and markets to
> make the right decisions opens up so many doors for myself and others.

For example, the government makes something it thinks needs to be
encouraged, charitable giving, both for individuals and corporations tax
deductable. It's just Reagan's dictum. The more you tax something the less
you get and the more you subsidize something the more you get. Governments
do it all the time. All I am saying is to be deliberate rather than
accidental about it. Furthermore, cap and trade, carbon taxes, and R&D tax
credits are all equivalent here. The choice is purely a pragmatic one of
which one works best. What I've seen from inside a high tech company is that
the last category is not terribly effective. The middle category is
untested. The first category is one and one with a huge success with respect
to SO2 and disappointing results with Kyoto. It stands to take a close look
at cap and trade and see why one succeeded and the other failed. My personal
opinion is that it relates to the amount of "leakage" in the trading and
making sure there are not too many "free" credits.

> Incidentally - "hostile countries"? Interesting choice of words,
> considering at times those are also the "developing countries" we're
> supposed to be -helping- when it comes to environment-related questions. I
> wonder if, when it comes to those agreements, we'll be giving money to
> "hostile" or "developing" countries.

Yes, that is a conundrum. The corruption that comes with being an oil-rich
country oftentimes keeps the benefits thereof from reaching their people.
What we learned from helping Nigeria, for example, should be applied in the
context of providing adaptation aid to developing countries.

> What's more, you talk about how "companies aren't charities", and use
> this to justify why your CEO apparently lobbied for additional government
> funding in the "stimulus package". Again, that's not capitalism. But more
> than that, let's go with your reasoning about what motivates a company, and
> that (apparently) that should just be accepted. Then here's something worth
> considering: A company with that sort of reasoning will never spend a penny
> on something, *regardless of its profit potential*, if those leading it
> think another party (particularly the government) will provide funding with
> either no or at least acceptable strings attached. In fact, they'll many
> times be more than willing to research an utter and obvious dead end if the
> money is laid out.
> Believe it or not, companies in the past were more than willing to engage
> in speculative research - just as they're willing to take other risks in the
> marketplace. Running a company does not mean that you only do what's
> absolutely certain to turn a profit, and avoid anything where uncertainty
> exists.

Our CEO is taking the long view investing back in the company and as a
result our stock got hammered by Wall Street. He realizes the long term
benefit view that includes basic research that will pay off decades from now
if at all. The only companies that did basic research were IBM and Bell Labs
but Wall Street pressures have pretty much stopped that. The government can
help here by counterbalancing the short-term thinking of Wall Street.

  And I don't think the government should be in the business of always
> making sure people "do the right thing" - though perhaps I should reconsider
> that.

See Nehemiah 5 for a Biblical example.

Rich Blinne
Member ASA

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Received on Mon Dec 7 14:35:52 2009

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