PS: loving the blog icon, its fabulous!

Perhaps the most worrying statement is “Why not use fossil fuels until they’re more expensive than greener alternatives?” At the risk of stating the obvious, there is now a growing consensus amongst the scientific community (e.g. The Royal Society) that climate change is accelerating and that we will soon reach a tipping point beyond which vital eco-systems wll not recover. That makes it all the more imperative that we reduce the use of fossil fuels sooner rather than later.

On the point about going to war. I know countries go to war over oil. I don’t know of any that go to war over wind and solar energy.

First, all resources are finite. In fact, that’s the most fundamental concept in economics. The only “renewable” resources are those that are either recycled, or regenerated by the sun. There’s nothing special about oil.

Second, the beauty of humans, and a core strength of capitalism (which seems unfairly maligned in this article), is adaptability, in this context specifically learning to squeeze more from less, or find another way entirely. Oil will eventually run out, but capitalism will see to it that the running out is in a relatively orderly fashion, and as the price slowly (at least on a long-term time scale) rises and supplies run out, the higher prices will, without government intervention, capitalistically stimulate replacements, conservation, etc. The world will not suddenly run out of oil and grind to a halt.

Third, a scintillating demonstration of this was the economic/business response to the oil shocks of the 1970s. Higher prices drove businesses to improve energy efficiency, to the extent that within 15-20 years the U.S. produced the same output with half the energy (and we use less oil today than we did just before the oil shocks). Of course, computers and the Internet have accelerated energy efficiency. Humans aren’t stupid, and capitalism, like water, finds the easiest (read: cheapest) path.

Fourth, an economy is not the same as a small group of people stranded on a desert island. Fossil fuels will eventually (and, with oil shale, oil sands, deep water exploration, coal, and nuclear thrown in, it likely won’t happen for another two hundred years) run out, but until then, what’s the point of “conserving” the dwindling supplies in favor of more expensive alternatives (solar and fusion, for example, may someday be our clean, sustainable salvation, but for now they are not cost-effective) now? Capitalism will find a way, in a much smoother and seamless transition than any government could ever pull off – if in no way else, than simply by raising oil prices enough that solar IS cheaper, and then quickly, almost everyone will switch from fossil fuels to solar. That’s the entire point of the price system, the bedrock of capitalism, to channel resources in the most efficient, cost effective way (that imperfect human beings are capable of).

Fifth, I could argue that capitalism is not focused on economic growth, but that misses the point – economic growth doesn’t mean we have to consume more resources (re-read “third” above). For a nontrivial example, paper and construction once upon a time consumed trees, but now they plant as much (or more) than they consume. Of course, we can’t regenerate oil, but human ingenuity, driven by the profit motive of capitalism, will find a way to keep the fires burning – Japan and France get most of their power from nuclear, Iceland and the Philippines from geothermal, I think the Netherlands from hydro (to say nothing of recent advances in solar and wind). Or maybe someday, sooner or later, a company will become rich finding a way to “grow” oil (incidentally, biotech companies have already achieved this, though it’s far too expensive).

Of course, this all assumes that the burning of fossil fuels does NOT contribute to global warming – but that was the point of this article. As long as we ignore the external cost of pollution (or include it through a cap-and-trade system), why not use fossil fuels until they’re more expensive than greener alternatives?

Overall, my point is that pontificating and hand-wringing, as well as promotion of ENORMOUS government intervention and life-or-death policy decisions, is unnecessary, and at least a little ignorant. (For example, who should decide which populations to limit, and at what level? The U.S.? The U.N.? What if India or the Philippines – both with rapidly growing populations – doesn’t agree? Do we impose government sanctions? Go to war?)

Capitalism will find a way.

Alongside policy actions the new economy must be driven by a new demand from the the consumer. Tonight I answered the door to an nPower salesman trying to sell me cheaper energy. I know times are hard, but for me I don’t care about the price I pay for my ‘green’ energy, because the company I’m giving my money to, only installs renewable power generation facilities. For me no cost compares to the problems my future children will have, and if I don’t have any children, then I’ll owe to those that have gone before us and given us the freedoms we have today.

Can we achieve this change? YES WE CAN! (sorry I couldn’t resist saying that)