Picking winners has unintended consequences, sometimes they cause gas

Nitrogen dioxide (NO2) is a reddish brown toxic gas produced as a by-product of some industrial processes.  In 2007, Dr Paul Crutzen of the Max Planck Institute for Chemistry in Mainz, Germany, concluded that, over a century, its impact on global warming is more than 300 times that of an equivalent mass of CO2.

This is especially disheartening when considering where one of the biggest sources of NO2 comes from:  agriculture.

Fertiliser used to grow crops in depleted soils contains nitrogen that soil bacteria fix in the ground to become food for plants.  Not all plants can absorb this nitrogen well and the worst “offenders” happen to be maize and canola; the very plants being used to produce biofuels to replace fossil-fuels.

The International Council for Science has issued a report which declares that “the production of biofuels has aggravated, rather than ameliorated, global warming”.

A decade of lobbying by environmental groups has gone into influencing politicians to change laws and issue subsidies to promote a particular choice which appears to be wrong, and destructive.  Getting politicians to now back down from this particular choice, and get environmental lobby groups to admit they were wrong, is unlikely.

A winner has been arbitrarily picked in the form of agro-subsidies to produce environmentally and economically harmful biofuels.  We must live with the consequences of increased food prices and an increased rate of global warming.

This is the problem with picking winners on a grand scale.  If each consumer gets to pick their own winner in a freely competing market, then all those tiny decisions have as large an impact as a single state-driven choice.  The difference is that all those tiny choices go in different directions and individuals can quickly change their minds about how to spend their own money should conditions require it.

Repurposing an entire economy through the direction of the state, via a committee of politicians, is much harder and carries greater risks. 

David MacKay, a Cambridge professor of physics, has considered the absolute potential of the renewable energy around us to do meaningful work (like power your car to take the kids to school).  He has pointed out that, even if you could trap all the energy available in a good gale, it would still take country-sized wind-farms to generate sufficient power to make any meaningful contribution to energy needs.  A similar result is true of solar, or wave power, or any of the other renewable energy sources.

What is required, he concludes, is an integrated approach which must “add up”.  Energy produced must meet the demand of the population; something a windmill on every roof will never achieve.

In a country like South Africa, where a large proportion of the population is still to own a car and power up a houseful of electronic devices, that future demand is very large.  It is unfair to expect people without to accept a lower standard of living so that people with can keep running their hair-dryers.

Numerous solutions have been proposed by numerous think-tanks around the world.  The solutions come down to two choices: either we must cut our power consumption and accept a grossly reduced standard of living, or we must accept significantly higher energy costs (or we can continue as we are and learn to wade).

Economists have calculated that, if the true cost of environmental pollution is levied on coal-power producers, then most other clean-energy sources would be cost competitive.

Much is made of government populism; of giving people what they demand even if it isn’t good for them.  Much less is made of government pragmatism; of ensuring that economic conditions are not biased and that incentives – either in law or in cash – do not favour one industry over another.

By favouring coal-based energy, governments around the world have shown they prefer being popular to being pragmatic.