The Economics of Climate Change

I have worked in several areas of green business and things are getting better for sure. Nevertheless the bottom line that is stopping growth of clean energy use is the fact that it is free to pollute. When I have this discussion with friends that do not study this stuff on a daily basis we often end up in the same place. The friend claims that they want to do the right thing but it is just too expensive. If solar or wind were simply cheaper than coal, then that would have no problem buying solar or wind for their home.

Of course the discussion takes many turns. First I tell them that to buy solar or wind for their own home is like buying a power plant for the house. Right now they pay by the month because the central power plant was financed, so why not finance your own power plant?

Secondly though, I explain that the health and environmental costs are currently not figured in to existing pricing when buying energy from the grid that is usually produced from coal. I then go on to explain externalities. This usually takes at least one beer's worth of discussion for the non-financial types. Once they get it though, they see their energy in a whole new light.

Until there is a cost to energy, only a breakthrough technology will get us over the hump. The long but interesting article in the New York Times magazine is a great primer.