Daily Archives: November 12, 2003

WILL HYDROGEN CLEAR THE AIR?

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A final juicy tidbit today is this New York Times article on hydrogen.:

Widespread hydrogen use has been enthusiastically embraced by major corporations and environmentalists alike as a panacea for global warming and the depletion of fossil fuels, and is a particular favorite of the Bush administration. But skeptics, and even some hydrogen advocates, say that use of hydrogen could instead make the air dirtier and the globe warmer.

The article then goes on to state, accurately (and to the consternation of many hydrogen evangelists), that hydrogen is merely a way to store energy, and that because hydrogen does not exist here in isolation we must use a fuel such as natural gas to generate it. Regular readers of Knowledge Problem know that natural gas prices are high relative to historic averages, and that because of both demand and supply pressures they are unlikely to decline substantially in the near future. Thus the experts quoted in the article can compare hydrogen fuel cell costs and internal combustion costs:

For now, fuel cells are about 100 times as expensive, per unit of power, as internal combustion engines.

That cost also reflects the fact that using hydrogen requires an expensive catalyst, like platinum.

The article then goes on to discuss using coal to generate hydrogen, the role that hybrid vehicles play in the evolution of low-emission technologies, and the tradeoffs that we confront as these old and new technologies evolve. I particularly think the conclusion is something we should bear in mind:

But some parts of the portfolio are more environmentally beneficial than others. Dan W. Reicher, a former assistant secretary of energy for conservation and renewables, who now manages a fund that invests in companies that produce energy from renewable sources, put it this way: “Not all hydrogen is created equal.”

For those interested in more on hydrogen, I wrote a 5-part series on hydrogen in March 2003.

ANGRY ECONOMIST ON MONOPOLY AND ANTITRUST

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Another juicy tidbit is this Angry Economist posting on monopoly, competition, and antitrust. I appreciate the spirit in which he argues that antitrust laws may be unnecessary or even counterproductive:

Perhaps, you might wish to argue, antitrust laws could be used in those market segments which are difficult to enter. No. Even then a public policy is served by allowing some monopoly prices to be charged. Consider that if a market segment is hard to enter, there must be a reason for it. Perhaps much concrete needs to be poured, or many people employed all at once. If the market is hard to enter, it must be that a large investment is needed. If you were planning a society in detail, and had full control over everything, you would reasonably be reluctant to create too many firms in this type of market segment. By allowing some monopoly prices, you give potential competitors an incentive to enter the market … but not too much of one.

But we need to take this argument a step further and look at the ability of incumbents to deter entry by using the political system to raise rivals’ costs. That would be an interesting innovation at the DOJ: prosecutions based on the use of lobbying, regulation, and political relationships (i.e., rent seeking) to deter entry. That may well be in the public interest and, as one of my good friends who works at the DOJ calls it, doing the business of the American people.

DON’T BUILD WIRES, USE ENERGY EFFICIENCY

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Am running around today like the proverbial headless chicken … so must rely on tempting tidbits, such as this article from Live Power News entitled “Don’t Build Transmission Lines Near My Home Use Energy Efficient Technologies Instead.”

The author, Albert Thumann, thinks that energy efficiency adoption is a marketing problem. I disagree; I think it’s a regulatory barriers problem. Between the ability of utilities to leverage their relationships with state regulators and block a lot of the interconnection of distributed generation systems and the federal site-specific energy efficiency regulations, energy efficiency is not as economical an option as it could be if unencumbered by this regulatory baggage.