Breakthrough

Haven't had to a chance to pick up Bjorn Lomborg's new book but have recently seen two interesting reviews.

Over at Salon, our friend Eban Goodstein attacks Lomborg for "cherry picking" both the science and the economics to bolster his view that the likely impacts of global warming do not justify the economic impacts that global carbon regulations would impose. Chris Anderson, on his Long Tail blog, is, by contrast, more willing to accept much of Lomborg's argument, but takes issue with his solution, preferring a higher price for carbon and lower public investment in clean energy technology.

But the one thing both seem to agree on is that Lomborg places too much emphasis on the need for public investment and not enough on the spur that carbon regulation and pricing will give to private investment.

Goodstein argues that while he supports public investment, "to foster the kind of technology revolution that can stabilize global warming pollution, significant government support will be necessary, but far from sufficient." You would think based upon this sentence that most efforts to address climate change were focused around public investment in clean energy technologies and that regulation and private investment were at best an afterthought. But nothing could be further from the case. In fact, virtually every major effort to address global warming is centrally focused upon increasing the cost of carbon, either through caps or taxes and all of those approaches assume that private investment, not public investment, will then be the primary driver of clean energy innovation and adoption.

Anderson, for his part, argues that, "rather than spending the government tax money on federal research (which is best reserved for cases of market failure, which is clearly not the case in this greentech boom), use it to reduce taxes elsewhere. That is, of course, the Silicon Valley Way."

I don't know what world Chris is living in, but if our present predicament is not a text book case of market failure, I don't know what is. Excepting hydropower, renewables presently comprise less than 2% of the US electricity market. And energy R&D has declined precipitously over the last two decades.

Moreover, while Silicon Valley boosters like to imagine that it all started in Bill Hewlett's garage, the reality is that the federal government, primarily the Department of Defense, largely created Silicon Valley out of whole cloth. The field of computer science didn't exist before the federal government began pumping money into it in the 50's and 60's. The Defense Department guaranteed the market for microchips in the 60's and again in the 1980's. Fortunes have been made and lost (mostly made) and America's economy, and indeed American life, transformed. But we should never forget how and why it all started.

Private investment into greentech is indeed important, but it tends to follow public investment and even at that, tends not to flow toward the long term bets and breakthrough research that will be necessary to create clean energy technologies that are both scalable and cost competitive at a global level. Nor will private investment address the critical new infrastructure that will be needed to bring clean energy technology to scale. These are things that only public investment can accomplish and they are unfortunately largely absent from the current policy framework that environmentalists and their allies are pursuing. It is arguably the one thing that Lomborg unequivocally got right.