How Obama's Climate Policy Could Create $1.3 Trillion in GDP

Coal may become much cleaner by mid-century. Source: Wikimedia Commons

When President Obama and the U.S. Environmental Protection Agency unveiled new rules aimed at corralling carbon dioxide emissions from power plants, critics were quick to respond with the following headlines:

"EPA carbon dioxide rules a job killer."

"Will EPA carbon standards hurt the economy?"

"Double Whammy: EPA Carbon Regulations Will Mean Higher Electricity Costs, Fewer Jobs."

While the new rules don't bode well for the coal industry in the near-term and fail to address methane emissions from natural gas production, they are a step in the right direction to minimizing our contributions to climate change. However, any discussion focused on the gloom and doom of carbon-cutting policies fails to account for a market they create for one often-ignored technology -- and it's about to go mainstream. It could save the future of coal power plants at Duke Energy (NYSE: DUK  ) and boost margins for industrial manufacturers such as oil refiner BP (NYSE: BP  ) , car manufacturer Ford Motor Company (NYSE: F  ) , and renewable fuel company Green Plains (NASDAQ: GPRE  ) -- all of which are investing in or considering the technology. NASA even thinks it could support future manned-missions and bases on the moon and Mars.

Most notably, the often-ignored technology could add over $1.3 trillion to American GDP and reduce the nation's total CO2 emissions by 52% from 2012 levels in just a couple of decades. What, exactly, is going on behind the scenes to make carbon policy the economy's best friend? It's a carbon sequestration technology like no other. Imagine converting waste CO2 into chemicals, fuels, animal feed, and even flavors and fragrances at a cost petroleum and sugar feedstocks could only dream of. Electricity generators (responsible for 38% of the nation's total carbon emissions) and industrial manufacturers (responsible for 14%) will be able to slash carbon emissions and monetize CO2 instead of dumping it into the atmosphere or paying a tax. Will companies really be able to create money out of thin air?  

It's time to rethink carbon dioxide
There are several ways to convert waste CO2 into valuable products, but they can generally be groups into two categories: catalytic processes (enzymes) and biocatalytic processes (algae, yeast, and the like). Platforms using either approach could be built into or next to any existing manufacturing facility (co-located), scaled to meet the manufacturer's needs, and utilize a feedstock that is cheaper than petroleum or sugar. To see this future, you'll have to change the way you think about CO2, which instantly evokes negative connotations. Consider that the carbon atoms in a molecule of CO2 (output) are the same carbon atoms powering (input) combustion or manufacturing processes, whether in the form of coal, natural gas, petrochemicals, or sugars. Companies paid for that carbon atom, why should they let it float away into the atmosphere?

Don't take the background in this advertisement for the new 2015 Ford F-150 for granted. Source: Ford.

Such platforms will turn conventional thinking on its head. Ford could convert CO2 emissions from the Ford F-150 manufacturing process into the fuel the trucks would one day run on. BP could wield oil refineries with zero (or near zero) emissions. Even Duke Energy's coal power plants -- powering 35.7% of its generation portfolio -- could be transformed into clean and valuable sources of energy. Carbon-free is championed as the end goal for energy production, but doesn't carbon-efficient make more sense? If CO2 can be efficiently sequestered and monetized the industry would be forced to think about cheap, "dirty" coal much differently.  

Meet the industry
Who's building this carbon efficient future? I recently spoke with Kyle Teamey, CEO and Co-Founder of the electrochemical start-up Liquid Light, which lists BP Ventures as an investor. The team is building a platform that uses a catalytic approach to convert waste CO2 into valuable products such as ethylene glycol, which is the company's first target molecule and represents a $27 billion annual market.

Source: Liquid Light.

Innovation doesn't stop there, however. An additional 35 molecules containing up to six carbon atoms have been produced to date and are supported by over 100 patents and applications, while a total of 60 unique molecules are possible (initially). That includes commodity chemicals, sugars, flavors, and fragrances. In other words, industrial CO2 could soon be the parent of the flavor in your ice cream.

Here's the world's first scaled up electrocatalytic reaction cell for conversion of CO2 to ethylene glycol. Source: Used with permission from Liquid Light.

If you think that's cool, consider that Dr. Andy Bocarsly of Princeton University is currently developing a system powered by solar panels. One day in the not-too-distant future fuels and chemicals could be manufactured directly from sunlight and waste CO2. That could provide a much needed solution for a renewable energy industry struggling to store solar energy in off-peak hours.

There are several companies approaching waste CO2 with biological approaches, too. Green Plains is the fourth largest ethanol producer in the nation, but it also owns a majority stake in BioProcess Algae. The company's platform utilizes photosynthetic algae and waste heat to produce valuable chemicals, commodity chemicals, fuels, protein-rich animal feed, and more. Both companies are currently evaluating and enhancing the performance of a 5-acre facility at the Shenandoah, Iowa ethanol facility owned by Green Plains. If successful, the project could be expanded to 400 acres.

Can this 5-acre project change the world? Source: BioProcess Algae YouTube video.

There's also Proterro, which is developing a platform that utilizes photosynthetic bacteria to convert waste CO2 into low-cost sugars. How low is low? The company believes it can achieve $0.05 per pound, compared to $0.17 per pound at current market prices. Today, corn and sugarcane are grown, harvested, and processed into sugars for foods, beverages, and industrial feedstock inputs. If we didn't need corn to produce renewable fuels, biobased chemicals, animal feed, or fish feed; then farmers could instead focus on supplying humanity's food (you know, that stuff agriculture was invented for?). In fact, the renewable chemical refineries gobbling up sugar could produce some of their own needs onsite from their own emissions. It's the ultimate closed-loop process.

Source: U.S. EPA.

How it all adds up
This is great and all, but how will it contribute over $1.3 trillion to American GDP in a couple of decades? It involves some math, but the calculations can be completed on a napkin. First, we'll have to take all of the CO2 emitted from the United States in a single year, which amounted to roughly 5.4 billion metric tons in 2012. Second, we'll have to multiple that by the percentage of CO2 that can potentially be replaced, which is 52%. That means the nation's total addressable waste CO2 volume is about 2.8 billion metric tons per year.

Next, we'll have to determine what the average net selling price of chemicals will be. While high value chemicals will be added to the mix, the massive volumes of low value, commodity chemicals will make their prices more representative of the average. So let's assume the average chemical produced from such platforms sells for $700 per metric ton, which is the low price fetched for ethylene glycol. However, the carbon dioxide needed to create that two-carbon molecule will cost Liquid Light $125 with its current technology. That means the average net value of chemicals produced will be about $575 per metric ton.

The final step should include a mass balance to account for each carbon atom (which differs for each chemical), but we'll simplify the calculation by sticking with ethylene glycol as our representative molecule. Just know that it takes about 1.42 metric tons of CO2 to produce one metric ton of ethylene glycol at a perfect yield. In other words, the nation's 2.8 billion metric tons of waste carbon dioxide could be converted into almost 2 billion metric tons of chemicals with a net value of $1.38 trillion.

This is not meant to be an exhaustive analysis and makes plenty of assumptions, such as 100% conversion and equal costs for catalytic and biocatalytic platforms. However, it could also be a drastic underestimation of the value of waste CO2 manufacturing. Making an almost endless supply of building block molecules such as ethylene glycol -- which is then converted into even higher value chemicals -- promises to shake up global supply chains for numerous industries. Either way, my intention is merely to change the way you think about CO2 and demonstrate the power of carbon efficiency.

Foolish bottom line
President Obama's carbon policy directly affects inefficient and uneconomical coal energy, but its indirect consequences could be the most profound. It could catalyze technologies looking to monetize waste CO2 streams from energy production and industrial manufacturing. Far from wrecking our economy and killing jobs, the latest carbon policy could actually boost American GDP by over $1 trillion and create an entirely new industry full of jobs.

While the big picture is great, zooming in for more detail paints an equally optimistic scenario. We could replace the hopes for a carbon-free economy with an easier to achieve carbon-efficient one. Ford Motor Company, BP, and Duke Energy could all reduce their environmental footprint while simultaneously boosting margins from monetizing more of the overall carbon they pay for. Your grandfather may have traveled to work to mine coal, but your grandchild (or child) may travel to work to "mine" the carbon dioxide it produces when burned. Imagine that. 

Will carbon efficiency change how Warren Buffet invests?
Carbon efficiency seems like a win-win, but not all emerging technologies arrive with zero casualties. Warren Buffett just called this emerging technology a "real threat" to his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. It won't be long before everyone on Wall Street wises up, that's why The Motley Fool is releasing this timely investor alert. Click here to learn more about what's keeping Buffett up at night and the one public company we're calling the "brains behind" the technology.

 


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  • Report this Comment On June 22, 2014, at 1:24 PM, kthor wrote:

    "How Obama's Climate Policy Could Create $1.3 Trillion in GDP"

    Didn't he say something similar with the obamaCare?

  • Report this Comment On June 22, 2014, at 10:00 PM, farmlegend wrote:

    I suppose the author of this piece never heard of "malinvestment". Which will result big time from any subsidies to non-competitive energy sources and penalties to using competitive ones (ie., coal).

    Penalizing coal will cause consumers to have to pay more for energy. The economic drag caused by forcing people to pay more will more than offset any economic activity "created" by shifting to windmills, solar, or algae.

  • Report this Comment On June 22, 2014, at 10:59 PM, DaSky wrote:

    You have become a left-wing shill org Fool!

  • Report this Comment On June 23, 2014, at 1:19 AM, gmg wrote:

    what's the worst that could happen? we get cleaner air and in the short term coal miners won't be getting black lung. so what's everyone afraid of ? If republicans came up with the idea everyone would be all for it unless obama decided to implement it. then everyone would be against it just like the health care which was a republican plan because democrats know that our plan is medicare for all or single payer.

  • Report this Comment On June 23, 2014, at 10:15 AM, mcampbell8 wrote:

    GMG/TMFBlacknGold - Your logic is flawed. What's the worst that can happen, we pay billions more in taxes and it’s all wasted on something we can't have a real impact on. Meaning that real legitimate issues that we can influence don't get funding. Take the war on poverty for example. We spent 17 trillion on that battle and it’s worse today than in the past. Meaning maybe other methods instead of throwing trillions at the issue would have helped alleviate the problem and put people on courses to self-suffice and wealthier lives than what’s allowed when you receive funding from the government.

    But one of the most horrendous things about the global warming debate is the complete lack of integrity and honesty on the matter. In the financial world we call it a pyramid scheme or a Bernie Madoff. Simply put, those who support the position are using false data. Numbers that are constantly changed or adjusted to produce the false outcome they want to justify taking and spending billions if not trillions. Look at the report linked below from the UK that indicates the US has actually been cooling since the 1930’s, but real data was changed to support the warming position. Some of us are smart enough to avoid pyramid and Madoff schemes and protect ourselves. But when the government championed a process devoid of integrity, some jump on board despite the vast evidence that the truth is being manipulated in a way that justify personal agendas.

    I believe we should be good stewards of our environment and balance using the resources in sustainable way, reducing polluting our environment as well as promoting economic development that grows our economy and benefits our nation. But targeting industries for elimination on unfounded and unproven data is completely wrong. Most of the people who will be hurt by shifting policies are the poor and working class individuals who will see energy prices soar and find it difficult to feed their families and keep the lights on thanks to blind sighted adherence to these policies.

    http://www.telegraph.co.uk/earth/environment/10916086/The-sc...

  • Report this Comment On June 23, 2014, at 11:29 AM, kennyhobo wrote:

    And how Obama Policy could kill 80% of all Black Americans!

  • Report this Comment On June 23, 2014, at 11:44 AM, kurvbal wrote:

    Energy prices will and must rise to account for the costs climate change. Period. Without a successful strategy to address slowing the global demise of climate collapse, all the rest is moot.

  • Report this Comment On June 23, 2014, at 1:55 PM, TMFBlacknGold wrote:

    To all,

    This is not presented as a political debate nor do I take a stance on climate change. Instead, this article demonstrates how one mostly ignored technology -- waste CO2 manufacturing -- can substantially reduce carbon dioxide emissions.

    Let's stay on topic.

    Maxxwell

  • Report this Comment On June 26, 2014, at 9:51 AM, mauser96 wrote:

    Denier of reality about the vast amounts of energy required to make hydrocarbons or other chemicals from carbon.

    There is no such thing as perpetual motion.Was this post meant as comedy?

  • Report this Comment On June 26, 2014, at 10:03 AM, Mathman6577 wrote:

    Let's hope you are right but based upon the administration's previous (and disproven*) claims about anything it touches I don't think reduced coal and increased solar and wind activities are the answer. The policies are likely to reduce economic growth, not help it.

    (*) In spite of what has been written (mainly by the administration apologists) a key reason for the 3% GDP 1st QTR contraction was a big decline in health spending (bad weather contributed but was not the sole reason for the huge drop in economic activity). The botched implementation of ObamaCare is the prime reason we are likely entering a new recession.

    We shouldn't be messing around with another important part of our economy to further hamper things.

  • Report this Comment On June 26, 2014, at 10:22 AM, petersimmons72 wrote:

    How can you not take a stance on climate change? It is the biggest hoax of the last hundred years. To claim that you don't take a stance is to deny the truth. You cannot believe that a government-led economy could possibly allocate billions or trillions of dollars better than the market could do so.

  • Report this Comment On June 26, 2014, at 10:26 AM, SkepikI wrote:

    Maxx.... considering your education, you could have at least touched on the economic and process problems associated with working in low concentrations of anything...energy, CO2, production sites (bio units).....the cruel realities of the laws of Thermodynamics and Reaction Kinetics will intrude on this pollyana landscape.... This is the implacable force which has kept the Solar business oppressed, NOT the political or social rules. Low concentration of "stuff" in this case incident solar energy has defeated every wishful, lazy, intellectually bankrupt solar gooney by simple economics. Maybe if they would focus (pun intended) on concentration of the energy AND making the cells for nearly free without subsidies, they would actually make headway.

    Similarly, Maxx, if any of these "secret technologies" is to be successful, they will need to face economic, kinetic and thermodynamic reality, and so should you....

  • Report this Comment On June 26, 2014, at 11:27 AM, djlaino wrote:

    I appreciate the thought-provoking article Maxx. It is a shame it has brought out the "flat-Earth society" type comments.

    There is always another side to the coin, and this article is simply pointing it out. Burning fossil fuels is exothermic and creates CO2, so converting the CO2 back to a fuel would indeed require energy (it is endothermic). I think the article makes that point, though perhaps not so transparently. Mining for fossil fuels takes energy as well. It just might be possible that the former process could be done less expensively than the latter, and I think that is the point of the article. Speaking as someone who likes progress, I'm happy to know some people are out there are trying to figure this stuff out.

    -DJL

  • Report this Comment On June 26, 2014, at 11:59 AM, dreamimmigrant wrote:

    " It involves some math, but the calculations can be completed on a napkin. "

    This is what happens when you live in an idiocracy...

  • Report this Comment On June 26, 2014, at 12:04 PM, dreamimmigrant wrote:

    "This is not presented as a political debate nor do I take a stance on climate change. Instead, this article demonstrates how one mostly ignored technology -- waste CO2 manufacturing -- can substantially reduce carbon dioxide emissions.

    Let's stay on topic.

    Maxxwell"

    Maxxwell, I'll believe that when you also write an article on how Obama's Climate Policy will cost tax payers, cost industries and jobs apart from the fact that they won't actually even have a remote impact on climate change.

  • Report this Comment On June 26, 2014, at 12:12 PM, TMFBlacknGold wrote:

    To all,

    I'm glad we invented ways to produce and distribute electricity before we invented the internet comment section. Or antibiotics. Or metalworking. Or...

    Maxxwell

  • Report this Comment On June 26, 2014, at 12:27 PM, darktide2 wrote:

    Thats what they told us in Denmark too when the government started subsidising windmills and green energy 10 years ago. In the end it didn't create any jobs, probably the opposite, and energy became alot more expensive.

  • Report this Comment On June 26, 2014, at 12:28 PM, TMFBlacknGold wrote:

    @Skepikl

    "considering your education, you could have at least touched on the economic and process problems associated with working in low concentrations of anything"

    The International Energy Agency states that, on average (to account for differences in carbon content), 1 MT of coal produces 2.4 MT of carbon dioxide. Assuming all of the world's coal production in any given year is burned for energy or manufacturing, humans produce about 18.8 billion MT of carbon dioxide each year from coal alone. Now consider that the world works very hard to create 0.165 billion MT of sugar (another industrial feedstock) each year. Seems like a good industrial input to me.

    Maxxwell

  • Report this Comment On June 26, 2014, at 12:28 PM, DfenceCtr wrote:

    The real question is will this proposed $1.3 trillion offset the money lost due to Obama's climate policy which has effectively cut off federal lands from gas/oil as well as not allowing the Keystone XL. Top down government policy in the realm of economics has produced no effective solution at all. However, free market solutions, if allowed to proceed, will probably beat out anything that Obama could do anyway. Natural gas is huge and replacing coal (link below). Nobody needed to use the force of law to affect this change. As in most things we would most likely be better off if government just got the heck out of the way.

    http://online.wsj.com/news/articles/SB1000142412788732476340...

  • Report this Comment On June 26, 2014, at 12:38 PM, TMFBlacknGold wrote:

    @DfenceCtr

    "Natural gas is huge and replacing coal (link below). Nobody needed to use the force of law to affect this change."

    Except that regulators have chosen to turn a blind eye to many harmful aspects of natural gas production, such as methane emissions. Certainly helps these "market forces".

    Maxxwell

  • Report this Comment On June 26, 2014, at 1:02 PM, TheAl wrote:

    "Ford Motor Company, BP, and Duke Energy could all reduce their environmental footprint while simultaneously boosting margins from monetizing more of the overall carbon they pay for."

    "Electricity generators (responsible for 38% of the nation's total carbon emissions) and industrial manufacturers (responsible for 14%) will be able to slash carbon emissions and monetize CO2 instead of dumping it into the atmosphere or paying a tax."

    If this technology will allow a business to recycle, reuse, and reinvest their waste products, then what does Obama's new climate change regulations have to do with it?

    If this technology is capable of what you lead us to believe in the article, which I have no reason to doubt, then how come they have to regulate carbon emissions more? Wouldn't a business be more than willing to use this technology, if it will allow them to "slash carbon emissions and monetize CO2".

    It seems to me that if a company can be "simultaneously boosting margins from monetizing more of the overall carbon they pay for", then they won't need to be forced by the government to adopt said practice or technology.

  • Report this Comment On June 26, 2014, at 1:10 PM, steveluannj wrote:

    As stated above, the mass balance of carbon would yield a lot of chemicals, which have value, but what is omitted is the energy balance- this carbon was sequestered in fossil fuels by plants, the sun, and lots of time. We broke apart the chemical bonds, and used the energy released for our purposes.

    Of course we CAN put the carbons back into longer chains, in any form we choose, given enough energy to do so. Thermodynamics second law says we will require at least as much energy as we got when we broke them apart to do so.

    It will cost more than the money you can sell the chemicals for. There is no string of logic in which it would be more efficient to produce these chemicals by first burning the hydrocarbons, then capturing them, then reassembling them. The environmental benefits or the "feel good" benefits aside, there is no way to truly make this a net win on an thermodynamic or economic basis.

    A fool, just not that kind.

  • Report this Comment On June 26, 2014, at 2:06 PM, mtracy9 wrote:

    Unfortunately, many right-wing

    Tea Party types have been brainwashed

    with oil company propaganda. When you

    present them with some facts

    about alternative energy, their brains don't

    know how to process it.

  • Report this Comment On June 26, 2014, at 2:19 PM, TMFBlacknGold wrote:

    @TheAI

    "It seems to me that if a company can be "simultaneously boosting margins from monetizing more of the overall carbon they pay for", then they won't need to be forced by the government to adopt said practice or technology."

    The government isn't forcing Ford or BP to do anything. The new regulations only dictate what can be released from power plants. Why aren't they doing it already then? It's not political -- the technology is just beginning to be commercialized.

    Maxxwell

  • Report this Comment On June 26, 2014, at 2:27 PM, TMFBlacknGold wrote:

    Also check out Novomer, which is developing a platform similar to Liquid Light but with different catalysts (and therefore different chemical products):

    http://www.novomer.com/?action=CO2

    Or OakBio, which is developing a biocatalytic platform:

    http://www.oakbio.com/

    Maxxwell

  • Report this Comment On June 26, 2014, at 2:43 PM, TMFBlacknGold wrote:

    @steveluannj

    "what is omitted is the energy balance- this carbon was sequestered in fossil fuels by plants, the sun, and lots of time...Thermodynamics second law says we will require at least as much energy as we got when we broke them apart to do so."

    Eh not quite. Catalysts (biological or otherwise) reduce the energy required to complete a reaction by allowing it to proceed at lower temperatures and pressures. Perhaps I glanced over what a "catalyst" is and that's my fault, but suggesting that the energy balance doesn't favor waste CO2 manufacturing isn't accurate.

    Even if we assume that more energy is required, feedstock costs, not energy, are what drive chemical prices. Consider that Liquid Light could pay as little as $125 for the CO2 required to produce 1 MT of ethylene glycol. Other processes require feedstocks worth between $617 to $1,113. That's where the difference comes into play.

    Maxxwell

  • Report this Comment On June 26, 2014, at 2:44 PM, NorthJoisey wrote:

    Your headline contains the words "Obama" and "Energy Policy" How can it not be a political article?

  • Report this Comment On June 26, 2014, at 3:18 PM, Bisesi wrote:

    What a lot of ignorant twaddle.

  • Report this Comment On June 26, 2014, at 3:24 PM, FoolTheRest wrote:

    <<Thats what they told us in Denmark too when the government started subsidising windmills and green energy 10 years ago. In the end it didn't create any jobs, probably the opposite, and energy became alot more expensive.>>

    Interesting. If they are not working, what are all those people doing in the Vestas factory in Aarhus and Siemens factory in Brande?

  • Report this Comment On June 26, 2014, at 3:46 PM, skinnypitt wrote:

    So basically speaking the writer of this article has no idea what industry is or what it does. You also have no idea how our economy works. First industry is already so regulated and taxed that new regulation can do nothing but put more burden on that same industry. They are also so regulated that those industries are fighting for space as it is and so co-located new industry does not benefit them but is instead a hindrance to growth. Since I am sure those simple explanations are not simple enough for your simple leftist brain then let me ask how taking money from one pocket (current industry) and putting it in the other pocket (your redistribution into this "new" industry) how is that growth? that is a like saying a parasite is positive growth.

    This is besides the fact that we are talking about CO2 , you know plants live on it then make oxygen for us to breathe...

    Controlling CO2 emissions is only a back door way for governments to control and thus get more tax money out of industry. Please take this leftist crap somewhere else.

  • Report this Comment On June 27, 2014, at 9:21 AM, TMFBlacknGold wrote:

    @skinnypitt

    "This is besides the fact that we are talking about CO2 , you know plants live on it then make oxygen for us to breathe..."

    Actually, the oxygen created by plants comes from water molecules, not carbon dioxide molecules. Perhaps that's too difficult to understand, though.

    Maxxwell

  • Report this Comment On June 27, 2014, at 9:39 AM, damilkman wrote:

    The basic problem is before we can declare that something really can be a share of GDP it must be profitable in a model not distorted by artificial constraints.

    For example it is economical to recycle aluminum. The reason is that even though aluminum ore is quite plentiful, there is a very large energy investment required to extricate aluminum from the ore. There is no need for a government mandate to impose aluminum recycling on the industry. If it turns out that companies like Liquid Light can use CO2 and turn a profit under the current economic climate, more power to them.

    The problem with Maxx's article is he implies that Obama's policy is a requirement for this new market. The implication is none of this new technology is cost efficient in the current market. In order for there to be a market the cost of consuming energy has to increase such that this extra process of converting the CO2 must be done. If energy prices increase by 2.5 trillion to introduce a 1.3 trillion market, the US economy is 1.2 trillion dollars in hole. So the question to Maxx is what does the napkin cost say?

    This leads to the political side of the debate. If you are a climate skeptic the entire process is viewed as an artificial construct and needlessly wasteful. Human history is filled with large groups of people who had made a consensus of A and were eventually proven wrong that the answer was B. This usually occurred because the population who decided they were the consensus had an agenda.

    There was a reason the religious authorities wanted the Earth to be the center of the world. There was a reason why our society claimed black people were of inferior intelligence. There was a reason why Soviet intelligence concluded Reagan was about to attack after his famous "I launched the miscles joke" and Phillip Morris had to tell them it was a joke via back channels. This is why the climate scientists who cannot get a job in the real world fudge the numbers because they have an agenda to.

    If this technology like aluminum recycling can stand on its own great. But if it can only exist because of distortions introduced into the economy due to a political agenda, us skeptics will point out that the emperor has no clothes and the 1.3 trillion added to the economy is fake and only can exist because of the distortion.

  • Report this Comment On June 27, 2014, at 10:10 AM, damilkman wrote:

    Here is an example of an economic distortion. I live in a region of SE Michigan where we must use wells for water instead of being on a water system. For a thought experiment image a mandate is made that there shalt not be any more extraction of water via wells for residential use. The reason is not important. A few things occur. Additional economic activity is generated because water utilities spend money to extend their water systems or in cases where that is not viable an entire industry is built shipping water to residential units. Someone sells me a big water tank. Someone else comes by once a week perhaps and fills my tank up.

    On paper extra economic activity is generated. Construction workers are employed to dig trenches for pipe. Companies that sell and maintain mini water towers come into existence. Lastly, someone has to drive those water trucks. Everything is great because I have created a 1.3 trillion dollar industry.

    Except I and all of the people in the region have to pay more money for a resource that used to be cheap. For every dollar created for the nascent water supply industry a dollar is removed from the residential consumers. Money really does not grow on trees. Thus I decide to do without and spend less because of my higher fixed costs.

    This might make sense in an arid region where water is scarce. However in rainy cloudy swampy Michigan it would be insane. I have no problems debating whether CO2 causes global warming or not. However stating that we can make money by increasing the cost of industry is claiming you have a perpetual money making machine. Just like in thermal dynamics economics states this is impossible. Lets call it what it is, a tax. Making misleading statements and circular arguments does not trick anyone.

    If you want to be a season ticket holder for Michigan football you have to pay a mandatory seat donation independent of the ticket price. If you pay 800 dollars for 8 games and paid a mandatory donation of 800 dollars is the cost of your ticket 100 or 200 dollars. Thus any mandate to reduce carbon emissions is the same thing.

  • Report this Comment On June 27, 2014, at 12:45 PM, TMFBlacknGold wrote:

    @damilkman

    "In order for there to be a market the cost of consuming energy has to increase such that this extra process of converting the CO2 must be done. If energy prices increase by 2.5 trillion to introduce a 1.3 trillion market, the US economy is 1.2 trillion dollars in hole. So the question to Maxx is what does the napkin cost say?"

    I cannot stress enough that chemical production and prices are reliant on feedstock prices, not energy. See my comment to @steveluannj above. You also wouldn't be growing the ethylene glycol market, but supplanting older production technologies (and the energy they consume) with newer ones.

    Maxxwell

  • Report this Comment On June 27, 2014, at 4:48 PM, damilkman wrote:

    To Maxxwell. If chemical production and prices are reliant on feedstock prices, not energy how come the title of this article is "How Obama's Climate Policy Could Create $1.3 Trillion in GDP"? If redirecting and collecting CO2 from the burning of fossil fuels is cost effective it does not matter what the climate policy will be because it is in the utilities best interest to collect and sell CO2 to companies like Liquid Light.

    In your calculation it would cost Liquid Light 125 dollars per ton to produce ethylene glycol using CO2 as a feedstock. What happens if it costs 2000 dollars per ton for a utility to collect it? A utility with a coal burning plant is not going to do it unless forced to because they have to. It is great for Liquid Light and your 1.3 trillion dollar industry. But it will crummy for any electrical customer.

  • Report this Comment On June 27, 2014, at 9:38 PM, TMFBlacknGold wrote:

    @damilkman

    I don't understand your argument.

    The carbon policy will help spur waste CO2 manufacturing, which is still being developed. It will occur with or without such a policy. This isn't a political issue and it is economical.

    Why would it cost Liquid Light $125 of CO2 and a utility $2,000 of CO2 (16x more) to produce the same chemical? Liquid Light is getting its CO2 from the utility -- they're working together. At any rate, there are no other examples of a feedstock costing 16x more for one company than another.

    I also don't see how this will cost customers paying for electricity. What's more cost-effective, installing scrubbers/next-generation sequestration technologies (a cost) or monetizing CO2 (a revenue stream)? If anything, customers will pay less for energy after the payback period of installing a co-located facility.

    Maxxwell

  • Report this Comment On June 27, 2014, at 10:49 PM, TMFBlacknGold wrote:
  • Report this Comment On July 03, 2014, at 10:51 AM, FoolforBerky wrote:

    We should just pipe all the waste CO2 into registered republican homes and they can witness first hand just how benign this gas is. Every time some one tries to do something to clean up this beleaguered planet the right wing low brows chicken littles scream that the sky will fall.

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