President Obama this week declared war on coal when he announced that he'll sidestep Congress and address the "manufactured" climate change crisis through regulatory fiat. He wants to establish himself as the eco-warrior to appease his left-wing environmental base.
His global warming crusade will cost the U.S. thousands of jobs and impose higher electricity bills across the land. All in the name of pandering to junk climate science.
Obama also sent the decision to build the Keystone Pipeline back to the State Department for yet another round of assessments. He ordered State Department not to approve the pipeline, which transmits Canadian Oil Sands to U.S. refineries, if it adds to net carbon emissions.
While the President is currently writing new rules that will make it harder for existing coal-fired power plants to operate, adding significant costs and effectively destroying tens of thousands of jobs in the coal sector and its supply chains, these plans are being sold as effective government action to address rising carbon emissions in the United States.
Unfortunately, for the President, he's too late. Carbon emissions produced by the U.S. today is at the same level we emitted in 1993. We've already won the climate change war.
What caused such a drastic reduction in carbon dioxide? There is another force doing more to reduce carbon emissions than the government ever could (unless the administration just completely shuts down the U.S. economy.)
And it is this force that the President should learn to embrace more often if he wants to really add to his presidential legacy.
The driving force? The Free Market.
Free Market Embraces Natural Gas, Lowers Emissions
Despite the President's goals to reduce carbon emissions internationally through "environmentally friendly" trade agreements and yet another International treaty that will do more harm than good to the U.S. economy, the administration should look to the real driver of climate adaptation: Cost effectiveness.
As we noted last week, when a new technology comes along that is cheaper, more efficient, and provides greater "bang for your buck," the market will migrate toward its use.
The same goes with sources of energy. The transition from coal to natural gas in the United States has been nothing short of staggering since the adoption of hydraulic fracturing has facilitated one of the greatest economic booms in the history of the United States.
Carbon dioxide emissions from energy sources declined by 12% between the years 2005 and 2012 and reached their lowest levels since 1992, according the Energy Information Administration.
The principle driver of this has been the transition from coal to natural gas as a primary source of electricity. In 2005, coal provided 50% of energy in the U.S. But, by the spring of 2012, that figure fell to 34%.
Natural gas prices have plummeted with the onset of fracking and it is much cleaner than coal. No surprise that this has drastically improved air quality across the country.
"There's a very clear lesson here. What it shows is that if you make a cleaner energy source cheaper, you will displace dirtier sources," Roger Pielke Jr., a climate expert at the University of Colorado, told the Associated Press.
Gosh. It's amazing how letting entrepreneurs find solutions to problems is so much more effective than top-down bureaucracy that takes years to come up with an unworkable decision. Obama has given the decision to approve an unexceptional pipeline the same media coverage that LeBron James received when he decided to play basketball in Miami.
But not only does the newer, cleaner source of energy create new jobs and fix our problems through the power of innovation, it also doesn't require the release of talking points to environmentalists in an effort to drown out the failures of government intervention in the free market.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.