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BOHANON & STYRING: Energy can be both clean and abundant

December 24, 2016

Economic AnalysisWhether menorah, votive candle or colored electric bulb, light is a common theme of our religious and holiday observances. Longer, colder nights are punctuated by new light to the world. We give gratitude for God, Savior or simply a secular festive family occasion.

It is heretical to some, but we should also be grateful our ancestors learned how to harness fossil fuels for light, heat and energy. Life was pretty miserable before fossil fuels replaced animal and human muscle power. We forget just how bad it was. Throughout most of human history, world population was stuck at a few hundred million. A 40-year-old person had outlived his life expectancy.

A recent issue of Economist magazine pointed out the main environmental problem of 1898 was horse manure. Henry Ford and the internal combustion engine took care of that.

Indoor air pollution from burning wood and animal dung is still a huge killer in developing nations. In India, liquefied natural gas is giving a lease on longer lives.

Current fashionable thinking is that fossil fuels are doomed—that greenhouse gas emissions must be curbed to alleviate climate change. Try breathing the coal-plant air in Beijing or New Delhi. “Peak oil,” some argue, means it’s time to leave fossil fuels in the ground.  

So, what is the future of fossil fuels?  

Three points come to mind. First, all forms of energy impose some third-party cost. Anthropogenic CO2 might impose costs on beachfront property owners via rising sea levels, but whooshing wind farms impose costs on neighbors (and birds). Second, quantifying these costs is difficult and contentious. Proponents of a particular energy technology always minimize external costs and risks. But groups whose mission is to find environmental costs and risks always find them with near-religious zeal.

Third, and to our mind the most important, the invisible hand often leads to new environmentally friendly technologies and behaviors unimagined by the elites.  

Fracking emerged from a handful of profit-seeking visionaries who gave us cheap natural gas. Market prices said, “Burn more gas and less coal,” and gas emits about half the CO2 of coal. So energy costs, CO2 and particulates all decline.

And has anyone noticed that, without government mandates, the Chinese have bought 200 million electric bicycles? Lower-cost technology usually means fewer pollutants.

So our assessment is in the spirit of the season: There is good reason to believe the future can be both energy-abundant and environmentally clean.•

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Bohanon is a professor of economics at Ball State University. Styring is an economist and independent researcher. Both also blog at INforefront.com. Send comments to ibjedit@ibj.com.

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