Bitcoin Mining isn’t an Environmental Disaster

I don’t know what possesses people who don’t understand the advancement of technology to write about the advancement of technology. Bitcoin has been headlining many news sites recently. Most of the headlines discuss the recent crash but Mark Gimein had decided to write about another aspect of Bitcoin, the energy requirements of Bitcoin mining. According to Mr. Gimein Bitcoin mining is an environmental disaster:

Most people aren’t used to thinking in terms of the energy it takes to solve math problems; a few minutes of Excel may not take much energy. But make the problems complicated enough, and things change. “Mining” Bitcoins takes so much processor power that it’s often done with specialized computers optimized for rapid repetitive calculations. So how much power can that take?, a site that tracks data on Bitcoin mining, estimates that in just the last 24 hours, miners used about $147,000 of electricity just to run their hardware, assuming an average price of 15 cents per kilowatt hour (a little higher than the U.S. average, lower than some high cost areas like California). That, of course, is in addition to the money devoted to buying and building the mining rigs. The site estimates the profits from the day of mining at about $681,000, based on the current value of Bitcoins. So mining, at least for the moment, is a lucrative business.

The trade-off here is that as virtual value is created, real-world value is used up. About 982 megawatt hours a day, to be exact. That’s enough to power roughly 31,000 U.S. homes, or about half a Large Hadron Collider. If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically.

What Mr. Gimein fails to understand, or at least mention, is that Bitcoin is in its infancy and, like any technology in its infancy, is still running inefficiently. New technologies always start off rough around the edges and improve over time. A majority of Bitcoin mining was originally performed using computer processors. Today a majority of Bitcoin mining is done using graphics cards. Both processors and graphics cards, especially the powerful ones that were and are used by Bitcoin miners, can require a great deal of power. However the technology is improving.

First, let’s understand the the current trend in computing is power efficiency. More computing is being performed on mobile platforms, which need to run off of energy stored in batteries. A mobile phone, for example, doesn’t do much good if it can only run for an hour before the battery goes dead. This is why manufacturers are sinking huge amounts of research and development dollars into making more power efficient chips. Consumers always want more. They want more powerful devices and better battery life. Manufacturers want to make consumers happy because making consumers happy is what nets manufacturers a profit. So we are seeing more powerful processors and graphics processors that also consume less power.

The age of wearable computing is also beginning. Google has introduced Glass, the Pebble watch is selling very well, and there are rumors that Apple is planning to introduce a watch of its own. Wearable computers are even smaller than mobile phones, meaning there isn’t as much room for batteries. When wearable computers begin to take off the demand for even more power efficient chips will increase.

Today Bitcoin mining may take 982 megawatt hours a day. Tomorrow it will likely take less. Not just because of more power efficiency processors and graphics cards, but because current efforts are being focused on Application-Specific Integrated Circuits (ASICs). ASICs are chips designed to perform a specific task. This contrasts with general purpose computing chips such as the processor and graphics card (which are more specialized than processors but still capable of performing other tasks) found in your computer. Because of this ASICs can be designed to use less power. The linked article linked to Butterfly Lab’s website. Butterfly Labs is purporting to build ASICs for Bitcoin mining (I say purported because I know several people who have ordered from Butterfly Labs but have so far received no hardware). ASCIMiner is another ASIC aimed at Bitcoin mining and is powered off of a standard USB port.

Mr. Gimein must believe that Bitcoin miners like sinking vast amounts of money into buying electricity. If that was the case then Bitcoin miners wouldn’t be looking for more efficient methods of mining. But Mr. Gimein’s apparent belief is incorrect, Bitcoin miners don’t like spending great deals of money on electricity, which is why money is being put into developing more efficient mining hardware. Doing more with less has been the trend in human technology. When somebody makes estimations based on current technology they are doomed to fail. One must also predict how technology will advance. The electricity required in Bitcoin mining will decrease as the technology matures.

Another Example of Statist Environmentalism

I’ve discussed statist environmentalism at length on this blog but one of my favorite points to bring up is the fact that the Environmental Protection Agency (EPA) doesn’t prevent the emission of pollutants, it licenses pollution. If you want to emit pollutants into the environment you merely have to purchase a license from the EPA.

OK, the EPA doesn’t prevent the emission of pollutants, but they inspect potential sources of pollution to ensure those sources don’t emit pollutants, right? As it turns out, not so much:

Tyler County Emergency Management Coordinator Dale Freeman says just under 20,000 gallons of oil have spilled into Otter Creek off County Road 2590. Tyler County officials were alerted to the spill Saturday by residents who noticed the oil in Otter creek.


The pipeline is owned by Sunoco Logistics and the company says the leak has been patched up and oil is no longer flowing through the pipeline.

Sunoco sent a statement to 12News via email saying “We will perform a thorough investigation into the cause of the incident. Right now, our priorities are the safety of the community, our employees and contractors, and the protection and restoration of the environment.”

The Environmental Protection Agency and the Texas Commission on Environmental Quality are helping with the clean up. Crews have been ordered to work around the clock until it is complete.

It’s a good thing the EPA is involved in helping with the cleanup effort. After all they apparently forgot to inspect the pipeline, ensure proper oil leak detection capabilities were built into the pipeline, and ensure proper methods were in place to contain any unexpected spillage. In addition to that the EPA is likely to suffer no consequences for failing its supposed mission of protecting the environment.

A question many people may be asking is what alternatives exist to statist environmental protection. Once again I turn to my friend private law, in this case tort law. Tort laws revolve around compensating victims for damages caused by third parties. This system has been the traditionally chosen system for stateless societies such as medieval Iceland, medieval Ireland, the American Frontier, and Neutral Moresnet. In fact tort law was also traditionally used in the United States against polluters until the 1840s. Before the 1840s a person could sue a coal plant if soot emitted from the plant landed on the plaintiff’s property. After the 1840s the state, who has a monopoly on courts, started allowing polluters to emit pollution if they were also providing a “public good” (a term that was defined by the same court that oversaw the suit). Allowing property owners to sue polluters, and therefore hold polluters entirely responsible for the damages they cause, would likely lead to a reduction in polluting entities. Under the EPA polluters are generally immune from prosecution if the amount of pollutants they emit are below a certain threshold set by the EPA. If a polluter wants to emit pollutants above that threshold they must seek the EPA’s permission. Furthermore the amount of damages a polluter is responsible for paying are generally capped, which is why British Petroleum (BP) was able to get away with leaking crude oil into the Gulf of Mexico without going bankrupt.

Were the state’s protections removed from polluters the cost of polluting would increase and, therefore, the instances of emitted pollution would likely go down. If Sunoco Logistics knew they would be entirely responsible for repairing the damages caused by a spill from their pipeline do you think they would forgo effective leak detection, containment mechanisms, and other safety procedures that would reduce the likelihood and severity of a spill? Probably not, and if they did they would find themselves facing bankruptcy in rather quick order. In fact oil companies may find that running pipelines is entirely too costly and find other methods of transporting oil to refineries or they may choose to build smaller refiners at the oil fields (or even find alternatives to oil).

Under a system of private law inspections and regulations would likely be handled by competing entities that would also be held responsible if they failed to perform property inspections or create effective regulations. The EPA, being a state entity, is immune from consequences of performing a poor job or failing to fulfill its responsibilities. Therefore no recourse exists if the EPA approves something that shouldn’t have been approved. If multiple entities were performing inspections and creating regulations then those who did an effective job would likely be relied on while those who did a poor job would likely become irrelevant and therefore go bankrupt.

So long as we continue to put the state in charge of protecting the environment the environment will face constant threat. Decentralizing the power to protect the environment will give more options and offer victims of polluters easier access to compensation, which would encourage potential polluters to contain their messes.

What About the Nature Preserves

The life of a free market environmentalist can be interesting. One of the most important tasks of a free market environmentalist is to overcome political environmentalism. People who have lived their entire lives under political environmentalism are often unable to think of alternative systems. I do not mean to insult those who advocate political environmentalism. As an advocate of a different system it is my duty to convince others that it is better, which is what I hope to do with my posts on environmentalism.

One of the questions often asked to libertarians is how would national parks exist under free market environmentalism. In fact a recent thread in /r/Libertarian lead to this very question, to which I provided an answer. In this post I plan to clean up and expand upon what I said in that thread.

A common misconception people hold regarding national parks is that they were established after the state foresaw the need to preserve exceptionally beautiful areas of nature. This isn’t the case. The value Yellowstone, the first national park, held was actually first realized by Norther Pacific Railroad. The Not So Wild, Wild West discussed this starting on page 207. On that page there is a quote from an unnamed Northern Pacific Railroad official that demonstrates what I’m claiming:

We do not want to see the Falls of the Yellowstone driving the looms of a cotton factory, or the great geysers boiling pork for some gigantic packing house, but in all the native majesty the grandeur in which they appear today, without as yet a single trace of that adornment which is desecration, that improvement which is equivalent to ruin, of that utilization which means utter destruction.

Northern Pacific Railroad saw Yellowstone, in its natural state, as a source of profit. Namely they could make a great deal of money by transporting tourists to the area. One must wonder why then did Northern Pacific Railroad lobby the state to establish Yellowstone as a national park instead of simply claiming the land for themselves. This has much to do with the Homestead Act. The Homestead Act was a bill passed by the federal government meant to encourage development of western territories. In exchange for living on granted land for five years the state would grant an individual or family a deed for no additional cost. As you can imagine the Homestead Act encouraged many individuals to claim great tracts of land and do everything possible, whether it be destructive to the land or not, to survive on the land for five years. What homesteader wouldn’t jump at the opportunity to own a piece of Yellowstone? Obviously Northern Pacific Railroad needed the area protected from homesteaders and the only way to do that was to beg the state to make some kind of exemption for the area we now call Yellowstone National Park (in addition to that Northern Pacific Railroad asked the state to grant it a monopoly on transportation to the park, no surprise). Effectively the state was lobbied to protect against a problem of its own creation (in other words business as usual).

Could Yellowstone have been preserved in a stateless society? I believe so. In fact I believe it would be better preserved in a stateless society (Yellowstone is periodically used by drug gangs since it’s an optimal place to hide from the state’s drug prohibition). First, of all the absence of a state would have eliminated the threat created by the Homestead Act. Second, there was obviously recognized value in Yellowstone as it existed in its natural state. The second point brings the important aspect of self-interest, which is the basis of all human action, into the equation. As a tourist destination I believe people would have acted to preserve Yellowstone.

This is where I’m going to diverge from most libertarian philosophies. Under most libertarian philosophies land can only become owned if one mixes their labor with the land, an act of appropriation, or obtains it from appropriator. Libertarianism makes no allowance for claiming ownership of land in its natural state. With that said there is a method of declaring ownership that I’ll call de facto ownership. Property rights are only applicable if other individuals recognize them. I could claim myself to be the owner of the Egyptian pyramids but that claim would be entirely pointless since nobody would respect it. The same applies to any claim of property, if nobody else in society respects the claim then the claim is meaningless. I’ll be taking a concept from my post describing alternatives to prisons. If enough individuals wanted to prevent the development of Yellowstone, or any other nature preserve, they could accomplish their goal by simply refusing to cooperate with anybody who attempted to develop it. Effectively an individual attempting to develop Yellowstone would find themselves banished from society insomuch as others would be unwilling to interact with him or her. Life is miserable when nobody is willing to cooperate with you. Imagine how your quality of life would diminish if nobody was willing to serve you at a restaurant, sell you food at a grocery store, or fix broken water pipes in your home. In effect the land would become useless because no value could be derived from it. Sure one could build a factory in Yellowstone but if nobody is willing to buy the goods that came from that factory then the self-interest wouldn’t exist to build it. The land would essentially become toxic to development and create a de facto deed to nobody (or the community, depending on how you look at it).

Nature preserves can exist without a state so long as enough people demand it. In essence the creation of nature preserves in the absence of a state falls unto society instead of a handful of bureaucrats sitting in some marble capitol building. It also means that there isn’t a state that can later sell or allow privileged access to the preserve (for example, the state wouldn’t exist to sell drilling rights to an oil company).

How Jill Stein’s Green New Deal isn’t Green

The Green Party runs on a platform of environmentalism that is often mixed with socialist ideas. Hearing Jill Stein, the Green Party’s 2012 presidential candidate, talk about a “Green New Deal” wasn’t surprising but her plan opposes both environmentalism and the socialist idea that capitalism promotes waste:

Like the first New Deal, Stein’s Green New Deal is essentially Hamiltonian, aimed at preventing deflation. Not only does she propose solving the problem of underutilized mass-production facilities with Michael Moore’s expedient of retooling underutilized GM factories to produce high-speed trains, but she calls for an official “full employment” policy based on direct government creation of jobs on a counter-cyclical basis. At present that would mean government creating 25 million public sector jobs, with hiring administered through local employment centers, to guarantee full employment at a living wage.

This Hamiltonian approach is just the kind of thing genuine greens used to object to. It works on exactly the same principles as planned obsolescence and the permanent war economy — that is, it generates enough waste production to guarantee the existing stock of labor and capital will be fully utilized at a target price.

Such proposals are just a greenwashed version of mid-20th century, mass-production capitalism.

Stein wants to promote environmentalism and guarantee full employment. Unfortunately, because of her reliance on the state to accomplish her goals, her ideas are necessarily oppositional to one another. The only way the state could guarantee full employment is to either pay people for not working, draft unemployed individuals into the military, or pay people to produce goods that may or may not be purchased.

Paying people to not work will promote unemployment. Why would somebody seek employment if they knew the state would pay them to not do anything? Most people probably wouldn’t and thus everybody would seek state payment to do nothing and the entire economy of the country would collapse (which would make it impossible for the state to continue paying people to do nothing and thus such a scheme is self-defeating).

That leaves us with military drafts or paying people to produce goods. I think the downside to a military draft is fairly obvious. In order to continue paying individuals in the military the state would have to find some way to expropriate wealth from elsewhere. What better way to expropriate wealth than to invade a foreign country using the giant military you have on hand thanks to the draft? Drafting everybody into the military would, in all likelihood, lead to more wars as the state found itself needing to take more wealth from other countries to pay for it’s drafted military members.

So we’re left with paying people to produce goods. This option seems to directly clash with Stein’s other goal of environmentalism. Most environmentalists view the consumption of resources at being environmentally unfriendly and therefore advocate for reducing what they view as waste. Reducing waste involves consuming less natural resources, which requires producing less goods, using less fuel, reducing the amount of consumed electricity, and many other things that oppose increasing the production of goods. On top of that no guarantee exists that people would purchase the goods being produced as the state doesn’t have the market feedback mechanism to know what is and isn’t in demand.

This is the flaw in most progressive environmental systems. One cannot uphold a great number of socialist ideals, such as guaranteed full employment, and environmentalism.

The Melting Greenland Ice Sheet

The National Aeronautics and Space Administration (NASA) recently released news about a massive ice melt in Greenland:

The melting spread quickly. Melt maps derived from the three satellites showed that on July 8, about 40 percent of the ice sheet’s surface had melted. By July 12, 97 percent had melted.

This extreme melt event coincided with an unusually strong ridge of warm air, or a heat dome, over Greenland. The ridge was one of a series that has dominated Greenland’s weather since the end of May. “Each successive ridge has been stronger than the previous one,” said Mote. This latest heat dome started to move over Greenland on July 8, and then parked itself over the ice sheet about three days later. By July 16, it had begun to dissipate.

Needless to say many progressive environmentalists have been proclaiming this as proof of man-made global warming and that we are in the end times. What these so-called environmentalists failed to do was read the entire article because it came with the following disclaimer:

“Ice cores from Summit show that melting events of this type occur about once every 150 years on average. With the last one happening in 1889, this event is right on time,” says Lora Koenig, a Goddard glaciologist and a member of the research team analyzing the satellite data. “But if we continue to observe melting events like this in upcoming years, it will be worrisome.”

It’s not the end of the world, just a predictable cycle that plays itself out every 150 years. Progressive environmentalists remind me of gun control advocates in that they try to stir up peoples’ emotions instead of relying on evidence and reasoning. When NASA announced this the progressive environmentalists jumped on it and started explaining to anybody who would listen that this is definitive proof that man-made global warming is upon us. They either missed or purposely ignored the disclaimer indicating this event was expected and indicates nothing insidious.

The Unintended Consequences of Wind Energy

I’m continuing my assault on the failures of progressive environmentalism by addressing another dark side of wind energy. Previously I explained how carbon taxes would hinder the adoption of wind energy but now I’m going to discuss the unintended consequences of adopting it. The problem with progressive environmentalism is the same problem that faces any central plan, you only have a handful of individuals mulling over the plan and therefore a great number of possible issues aren’t brought up.

Progressive environmentalists have been demanding more wind power. They have also been advocating the protection of wildlife. What didn’t occur to them was that these two goals are mutually exclusive. Let’s take a look at a report generated by the Fish and Wildlife Services (FWS):

Focus on Key Sectors: In fact, the rapid expansion of the wind industry will also be addressed in general as the second part of this Law Enforcement initiative to lessen the impact of energy production on wildlife resources. While wind power promises to be an important part of the Nation’s strategy to address climate change, wind farm operations already kill significant numbers of birds, bats, and other species. With more than 100,000 turbines expected to be in operation in the United States by 2030, annual bird mortality rates alone (now estimated by the Service at 440,000 per year) are expected to exceed one million.

Wildlife, it appears, doesn’t understand human central plans. Politicians and progressive environmentalists have been generating propaganda for the wind energy industry for some time now. What they didn’t stop to consider was the fact that humans are the only species that can read. When we build a giant wind farm the local airborne wildlife doesn’t comprehend that those wind turbines are giant rotating murder machines. Anything that flies into those spinning blades is almost certain to come out the other side in more pieces than it entered.

Now the progressive environmentalists have to make a decision, birds or wind energy. Like the decision between trees and water, the decision between birds and wind energy is mutually exclusive. You can’t simply build wind turbines away from birds because birds inhabit every part of the planet (even Antarctica). Today the FWS already estimates the bird mortality rate from wind turbines to be around 400,000. As the number of wind turbines increase the number of dead flying animals will also increase (until so many of them have been killed that their populations collapse due to lack of genetic diversity or breeding stock).

It’s actually amazing that the same central planners that enacted legislation to protect wild birds didn’t stop to consider giant spinning blades in the air as potential threats to birds. Oh well, at least there is always solar… son of a bitch [PDF]:

Solar One related animal mortality.–During approximately 40 wks of study, we documented 70 bird fatalities involving 26 species at Solar One (Table 1). The mean rate of mortality between visits was 1.7 birds _+ 1.8 SD (n = 40, range 0-7). Results of the scavenger bias experiments indicate that from 10-30% of carcasses were removed between searches, thus, the actual rate of mortality may have been from 1.9-2.2 birds. Two causes of avian mortality were identified at Solar One, colliding with structures and burning from standby points.

It’s almost as if there are no free lunches on this planet.

The Cause of Increasing Severity of Forest Fires

2012 has been quite a year for forest fires with a great portion of the western and southeastern parts of the country ablaze. Many of these fires, including one in Colorado, have been record breakers as far as span of the fire and the cost in property damage. As you can expect the progressive environmentalists are blaming the increased number and severity of these forest fires on global warming climate change:

As the climate warms, moisture and precipitation levels are changing, with wet areas becoming wetter and dry areas becoming drier.

Higher spring and summer temperatures and earlier spring snow-melt typically cause soils to be drier for longer, increasing the likelihood of drought and a longer wildfire season, particularly in the western United States.

These hot, dry conditions also increase the likelihood that, once wildfires are started by lightning strikes or human error, they will be more intense and long-burning.

The progressive environmentalists are correct in part, the increased intensity of forest fires is manmade. What they’re incorrect about is what manmade phenomenon is causing the headaches. I wrote about the water shortages caused by denser forests that exist due to human efforts to fight all forms of fire. On top of water shortages there is another unintended consequence, more fuel exist to feed the fires:

For most of the 20th century, U.S. federal fire policy focused on suppressing all fires on national forests. The goal was to protect timber resources and rural communities, but this policy ignored the ecological importance of fire. North American forests have evolved with fire for thousands of years. Fire returns nutrients to soils, encourages growth of older fire-resistant trees, and promotes establishment of seedlings.

Decades of fire exclusion have produced uncharacteristically dense forests in many areas. Some forests, which previously burned lightly every 15-30 years, are now choked with vegetation. If ignited, these forests erupt into conflagrations of much higher intensity than historic levels. Grasses, shrubs, and saplings in the understory now form a fuel ladder, through which flames can climb to the forest canopy, killing entire forest stands.

The intensity of modern forest fires is due to the arrogance of central planning. Some guys in Washington decided to decree that fire is bad and that all forest fires that breakout in the United States will be suppressed. This arrogance has lead to a vicious cycle. Water is used to prevent forest fires from occurring, forests become more dense, more water is needed to prevent further forest fires due to the increase in available fuel, forests become more dense, etc. Property damage also becomes a bigger issue because fires that do breakout burn much hotter, burn longer, and cover much more ground than they naturally would. Like our economy, our issue with forest fires is spiraling towards a disastrous collapse. In order to prevent future forest fires we need to use a great deal of water, which creates a further water shortage. If we don’t prevent forest fires they have enough fuel at this point to cause great amounts of property damage (the ones have been been breaking out recently have been causing record amounts of damage already). We’re effectively stuck between a rock and a hard place… if we rely on the state to resolve this issue.

What can be done to stave off disaster? In a twist of fate I find humorous the solution to our forest fire problems and our economic problems is the same, the free market. A great deal of forest fire fuel happens to be a valuable resource, wood. Why not let logging companies go into the forests and get rid of a great deal of the fuel that is currently lying around and waiting for a mere spark? We can harness this valuable commodity for the benefit of all instead of letting it go up in smoke, taking much of our valuable property with it. Unfortuneatly the state has been doing quite the opposite, they’ve actually been reducing the amount of logging:

The fire problem is exacerbated by decreasing federal timber harvests since the late
1980s.1 In the absence of fire, and with reduced timber harvests and thinning, numerous smalldiameter trees have proliferated. Stressed trees compete for scarce water, sunlight, and growing
space. In this weakened state, trees are not only at greater risk of catastrophic wildfire, but are
also more susceptible to disease and insect infestation (Fretwell 1999).

We can see the Achille’s heel of central planning, when a central planner makes a bad decision everybody suffers. Combine the central planner that issued the decree against forest fires with the central planner that issued the decree against logging and we get a cascade of unintended consequences. Increases in wood prices, water shortages, and more property damage from hotter burning fires are all thanks to a handful of politicians in Washington DC dictating decrees that everybody in the United States is forced to obey. At least if these decisions were made only on a state level the chances of containing major damage to said states would be possible. In fact the need for clearing out forest fire fuel was well know:

The Forest Service was created in 1905 to manage the nationís forest reserves, and soon thereafter the agency adopted a nation-wide policy of fire suppression. Fire historian Stephen Pyne notes that in the early years, the Forest Service needed to prove its qualifications. Many foresters at the time recognized the value of “light burning” to clear out understory vegetation, but the Forest Service wanted to set itself apart from this common practice of rural farmers and Native Americans. “The Forest Service had insisted that it should manage the forest reserves precisely because it offered something different from frontier practices” (Pyne 1982, 106).

Native Americans and frontiersmen periodically practiced “light burning” to clear out current underbrush and reduce the severity of any forest fires that may breakout. Then some idiots in Washington decided they knew better than the people living in forested areas and decided to arrogantly force their central plan on the entire country, which lead us to the problems we face today.

Progressive environmentalists continue to demand state intervention in environmental matters and it only results in more environmental damage. You would think that they would have learned their lesson by now.

The Cap and Trade Endgame

Yesterday I wrote about the failure inherit in the idea of carbon taxes. What about carbon rationing, more commonly referred to as cap and trade? If there is a hard set limit to the amount of carbon that can be outputted by an individual or company won’t that solve the problem? Won’t the issue of carbon being emitted into the atmosphere be a thing of the past (also, why to progressive environmentalists spend all of their time focusing on a compound necessary for plant life, I can think of far more dangerous compounds to be concerned about)?

While progressive environmentalists love to parrot political solutions to environmental problems they fail to see the fact that political solutions are never actually solutions, they’re merely mechanisms of plunder. How can a system of hard set limites be used as a mechanism of plunder? Through the punishment wielded against those who surpass their ration. All political solutions have a common problem, enforcement (which isn’t the only problem mind you). Who is going to enforce a carbon ration? Either a currently existing agency or a newly formed agency. My money would be put on the Environmental Plunder Protection Agency (EPA) being given the task of enforcing a carbon rationing scheme in the United States although legislation could create a new Carbon Enforcement Agency. Either way the same point of corruptibility will exist, the desire to plunder.

Government agencies are the same as individuals and businesses in one respect, they want more wealth. Unlike individuals and businesses, government agencies are only able to get more wealth through expropriation. One form of expropriation is taxation, another is through fines. Let’s look at a piece of existing legislation that affects the same realm as a proposed carbon rationing scheme does, the Clean Air Act [PDF]. What happens when an individual or business violates the Clean Air Act? They’re fined:

Section 113 of the Clean Air Act allows EPA to seek penalties of up to $25,000 per day for each violation. EPA may in appropriate cases accept less than the statutory maximum in settlement.

The maximum amount a violator can be fined is $25,000 per infraction per day but the EPA maintains the ability to issue lesser fines. There is an entire section of the document that deals with “calculating a penalty.” Reading through it various criteria exist for determining the penalty issued against a violator including the perceived economic benefit gained by the violator, the gravity of the violation, and the potential for harm. What interesting is that the supposed economic benefit is based on a computer model while the other criteria are determined by enforcement agents. Giving enforcement agents the right to determine the severity of a violation and set a fine according to that set severity opens the doors for cronyism.

Of course we would need a motive for an individual or business to violate a carbon rationing law. For the motivation we need to only look at basic economics, namely supply and demand. Creating a carbon rationing system would create a supply of carbon ration units (CRU) which would be in demand by any entity that emitted carbon. So long as demand remains the same prices have a tendency to increase as supply decreases. Likewise, so long as supply remains the same, prices have a tendency to increase as demand increases. In the case of a carbon rationing system the supply of CRUs would likely remain constant or decrease over time (as the law is trying to discourage emitting carbon into the atmosphere) while the demand would increase (as the demand for electrify and consumer goods increases). Therefore it would make sense that the cost of CRUs would continue to increase with time. Therefore CRUs would become a valuable good (although a fiat one) that holders would have cause to sell while emitters of carbon would have cause to buy.

A third factory of this grand scheme that needs to be looked at is the way CRUs would be distributed. Two methods would likely exist: either those wanting to emit carbon would have to buy CRUs from some government agency or some government agency would grant CRUs based on some kind of formula. Either scheme is likely to favor larger polluters. Let’s consider the first method, companies had to purchase CRUs from a government agency. As stated above, as demand for CRUs increased or supply decreased (or both) the price of CRUs would increase. An increasing price would favor established individuals and businesses that had access to enough excess capital to soak up the additional costs of purchasing CRUs to continue with business as usual. Meanwhile a new barrier to entry has been placed on markets that involved emitting carbon into the atmosphere, the cost of purchasing enough CRUs. Now on top of having a place of business, a method of manufacturing goods, a method of getting those goods into the hands of consumers, the cost of complying with current regulations, etc. a new market actor also has to purchase CRUs. Effectively the established market actors are further shielded from new competition because the bar to enter the market has been raised. If the prices of CRUs continued to increase the bar would be in a constant state if rise, further shielding currently established market actors from potential competitors.

Now I’ll consider the other method of distributing CRUs, a government agency doling them out. The information about the Clean Air Act I linked to earlier demonstrates the problem with allowing government agencies to determine things, they get to determine the criteria their determinations are based upon. A government agency in charge of distributing CRUs would have a plethora of criteria to use including economic need (for example, power plants are necessary for modern life so it would make sense to give power plant holders enough CRUs), economic benefit (a large company can be said to provide more economic benefit since they serve more customers), necessity for the security of the nation (obviously defense contractors would need to be given enough CRUs since they build the weapons that allow the state to plunder foreign countries protect our nation from the terrorists), etc. Such a system would be ripe for cronyism. In fact it would be very possible, and I would even say very likely, that new market actors would not receive enough CRUs to manufacture enough goods to turn a profit. Due to this they would likely be forced to sell their CRUs to already established market actors in order to simply keep the doors open. Since they would be unable to manufacture goods they would be unable to compete with established market actors and the established market actors are once again protected from possible competition by the state. Regardless of the method chosen to distribute CRUs established market actors would have a major advantage over new market actors.

So we have three factors to consider: the mechanism of punishing violators of a carbon rationing scheme, the motivation a business would have to violate a carbon rationing scheme, and the method in which CRUs would be distributed. All of this combines into a nasty system that favors currently established market actors and hinders new market actors.

Going by historical examples it would be likely that violators of a carbon rationing scheme would be fined and the amount of that fine, although capped at a maximum, would be determined by an enforcement agency. The law of supply and demand would likely cause the price of CRUs to increase over time. At some point the price of CRUs is likely to exceed the common, or even maximum, find of violating the carbon rationing scheme. There is when it will be in the best interests of carbon emitters to violate the rationing scheme. In fact such a scenario wouldn’t be dissimilar to one where British Petroleum (BP) was able to buy permission from an environmental enforcement agency to dump more mercury into the Great Lakes. The state doesn’t care if it gets its money through fines or selling permission, and neither do businesses that are able to soak up the additional costs. Unfortunately for new market actors they are unlikely to have the additional capital to pay the fines that would almost certainly be involved in violating the rationing scheme.

Of course the state could just keep increasing the fine, right? Technically yes, although they would be shooting themselves in the foot by doing so. The state exists through theft and is unable to continue existing if they run out of victims to steal from. What motivation would the state have for increasing fines to a point violators couldn’t pay? Doing that would ensure the end of continued payments, effectively it would kill the cash cow. The state, like a tick, only takes what it can get away with without killing its host. A tick that bled a host dry would find itself having to go through the trouble of finding a new host and eventually would fact the harsh reality of having no hosts left to suck blood from. The state is the same way, they don’t want to bleed their cash cows dry, they want to bleed them as much as possible without killing them so they can continue the parasitic process. It’s unfortunate for new market actors that they don’t have enough excess capital for the state to take otherwise they could get in on the scheme.

A carbon cap, like a carbon tax, is a mechanism of plunder. It won’t accomplish the goal of lowering carbon output because the state won’t create a system that will kill its cash cows. All a carbon cap will accomplish is rewarding the state and its cronies at the cost of everybody else. No new competitors will be able to enter the market meaning currently established market actors will be free to increase their prices (don’t forget that any additional costs, such as needing to buy CRUs, will be forwarded onto customers) without concern. Overall quality of life will be reduced as individuals are unable to afford many of the goods and services they normally would if competition forced a lowering of prices (like many state policies this one affects the poor the most). On top of that we probably won’t have any reduction in carbon emissions anyways so the whole point of the system would go unfulfilled.

By demanding a “cap and trade” system progressive environmentalists have once again allowed themselves to be suckered into helping the very people they oppose (namely large polluters).

How Carbon Taxes will Harm Renewable Energy Production

If there are two things progressive environmentalists love it’s carbon taxes and so-called green energy. What’s ironic about this is that one of those things directly hampers the development of the other. A carbon tax is nothing more than an additional cost for emitting carbon into the atmosphere and almost every form of energy production and many forms of manufacturing emitting carbon into the atmosphere. Effectively carbon taxes increase the cost of energy and manufacturing in one fell swoop.

This cost increase is beneficially to currently established carbon emitters, namely it prevents new competitors from entering their markets. Unlike the already established carbon emitters who can afford to soak up the cost of another tax, new competitors in a market do not enjoy the same excess capital. The picture becomes more clear when we look at the currently established energy producers, namely coal and natural gas facilities. Current coal and natural gas-based power plants need not worry about carbon taxes because they will just forward the cost onto their customers, many of which are manufacturers.

By increasing the current costs of energy carbon taxes increase the cost of manufacturing solar panels and wind mills. Manufacturing solar panels isn’t a zero-sum carbon game either:

In the best case scenario, one square meter of solar cells carries a burden of 75 kilograms of CO2. In the worst case scenario, that becomes 314 kilograms of CO2. With a solar insolation of 1,700 kWh/m²/yr an average household needs 8 to 10 square meters of solar panels, with a solar insolation of 900 kWh/m²/yr this becomes 16 to 20 square meters. Which means that the total CO2 debt of a solar installation is 600 to 3,140 kilograms of CO2 in sunny places, and 1,200 to 6,280 kilograms of CO2 in less sunny regions. These numbers equate to 2 to 20 flights Brussels-Lissabon (up and down, per passenger) – source CO2 emissions Boeing 747.

According to the researchers, producing the same amount of electricity by fossil fuel generates at least 10 times as much greenhouse gasses. Checking different sources, this claim is confirmed: 1 kilowatt-hour of electricity generated by fossil fuels indeed emits 10 times as much CO2 (around 450 grams of CO2 per kWh for gas and 850 for coal). Solar panels might be far from an ideal solution, but they are definitely a better choice compared to electricity generated by fossil fuels. At least if we follow the assumptions chosen by the researchers.

The article then continues on to explain how the amount of carbon produced by generating electricity from solar panels isn’t necessarily lower than producing it by burning fossil fuels. You can continue reading the article if you’re interested but the main point I want to bring up is the fact that producing solar panels comes at a cost of carbon emissions, which will increase costs if carbon taxes are implemented.

Wind generators aren’t free of this issue either [PDF]:

Though CO2 emissions from wind are very small compared to coal, they are still responsible for some emissions. The amount of electricity produced per turbine, which is a factor of the number of years the nacelle operates and the capacity factor (which is a factor of both wind and nacelle availability), has the greatest impact on the CO2 emission factor of wind-generated electricity. The amount of CO2 emitted per GWh of electricity generated has a range of two, but it is still 50-100 times less than coal-generated electricity.

Although the amount of carbon emitted by generating electricity from wind (which includes everything from construction to decommissioning a windmill) is lower than burning coal the companies invested in producing electricity by burning coal are established and thus have the capital required to soak up the cost of any carbon taxes.

Let’s not forget that while “green” energy producers receive buckets of government money so do coal burning power plants [PDF] (man I love the progressive environmentalists’ sources against them):

The United States is the single largest contributor to the World Bank and a major supporter of other international financial institutions such as the Inter-American Development Bank and the African Development Bank. The United States also provides subsidized financing internationally through the Overseas Private Investment Corporation and the U.S. Export Import Bank. Together, international financial institutions have helped finance 88 new and expanded coal plants since the United Nations Framework Convention on Climate Change came into effect in 1994, providing more than $137 billion in direct and indirect financial support for new coal-fired power plants.

Obviously owners of coal burning power facilities are in favor with the state.

Carbon taxes will harm all forms of production, including those required for the new wave of “green” energy the progressive environmentalists want to bring in. Such additional costs will, like most taxes, favor currently established market actors (power producers that use fossil fuels) while hampering new market actors (power producers that use renewable sources of energy). If history is any indication we can also assume that the currently established fossil fuel industries will receive other forms of benefits that will hamper the well-connected but not as well-connected “green” energy industries.

When you rely on political solutions to solve your problems you enter a deadly game where victory isn’t determined by facts but by political connections and money. Of course one could increase the costs of polluting, which would increase the costs of generating power by burning fossil fuels, if they supported actual property rights.

Unintended Consequences

What to make a progressive environmentalists cringe? Show them this story:

Today, the hottest and thirstiest parts of the United States are best described as over-forested. Vigorous federal protection has stocked semiarid regions of public land with several billion trees too many. And day after day these excess trees deplete a natural resource that has become far more precious than toilet paper or 2-by-4’s: water.

Scientists and water managers report that 39 states face water scarcity. Much of the nation’s freshwater shortfall comes from our population growth, waste, hunger and contaminants. But we must also now implicate the escalating thirst of unnatural forests.

Progressive environmentalists are often referred to as tree huggers because of their obsession with saving tress. This obsession has lead to massive afforestation in areas where trees were never meant to grow as densely as they currently are. Now too many trees are competing for ever scarcer resources such as soil nutrients and water.

The state has passed numerous pieces of legislation to protect forests. What they didn’t stop to consider when passing said legislation is that nature requires some amount of destruction. Normally forests are controlled by nature disasters such as forest fires but as the federal government has declared a war on forest fires nature’s control mechanism has fallen out of whack. Now we’re seeing the consequences of our arrogance, we have arid regions where water is naturally scarce to begin with suffering from water being used to suppress fires to save trees that require water. A vicious cycle has been created, one that could have potentially been solved by the free market.

Yes, I’m going to about free market environmentalism again. In a free market resources have a tendency to increase in price as they become more scarce. Water will be more expensive in areas where it’s more scarce and that price will only go up as the scarcity increase. As the price of a resource goes up so do peoples’ tendency to conserve that resource, which requires decisions be made on how to best utilize said resource. Let’s look at our current situation through the lens of a hypothetical free market.

People, especially environmentalists, love trees. Because of their love for trees they try to preserve them. Part of this preservation is preventing the trees from being burned to the ground, an action that requires the use of water (both to suppress fires and to keep forests from becoming messes of dried kindling). This action will likely have little consequence in areas where water is plentiful (these are also areas where forests are usually plentiful). In arid regions the constant use of water to prevent forest fires will cause the price of water to increase, which in turn causes the environmentalists to make decisions on how to best utilize the water. At some point their love of trees is going to be superseded by their need for food, water, clothing, and shelter. This is when they will cease using water to prevent forest fires and nature will be allowed to do what it does best, burn some trees to clean out the over-forested area and allow things to return to a more natural state.

The other avenue for the free market to work is through the fact trees are a valuable resource in of themselves and thus many companies would be more than happy to go into the forest and thin it out. Obviously, being an article in the LA Times, such a solution is frowned upon by the author:

So how do we unlock the nexus to replenish the Earth? A century’s accumulation of dry fuel in public lands makes it too expensive and risky — for people, property, habitats or carbon emissions — to unleash prescribed fires throughout our 16-million-acre ponderosa tinderbox. Mechanical thinning generates popular distrust as long as timber industry chain saws try to cut “high grade” valuable mature growth to compensate for less profitable small-diameter “trash trees.”

Happily, a lumber mill’s trash has now become a water user’s treasure. Thirsty downstream interests could organize to restrict thinning to scrawny excess trees simply for the purpose of releasing the liquid assets they consume. Western water rights markets value an acre-foot at $450 to $650 and rising. So rather than compete with forests for rain and snow, private and public institutions could invest $1,000 per acre (average U.S. Forest Service price) to cut down fire-prone trash trees, yielding at least $1,100 to $1,500 worth of vital water. To reduce fuel loads and increase runoff, the water-fire nexus pays for itself.

One of the biggest issues facing progressive environmentalists is the idea that profits are evil and thus must be avoided at all costs. In their mission to save the environment and squash profits they have created self-perpetuating problem. They don’t want to allow private entities to manage the environment because those private entities will make money so they turn to the state, which is corrupt to the core and has no regard for the environment. Private entities, because they can make money, have a genuine interest in preserving the environment. As I’ve explained, a lumber company has an interest in ensuring forests under their care remain healthy so they continue to produce trees. Not only do they have an interest in preserving the forests, they also have an interest in allowing nature to run its course because that is the cheapest way to manage said forests.

Progressive environmentalists have a choice to make, trees or water? Do note that choosing trees will eventually lead to the complete collapse of the ecosystem you’re trying to protect as water becomes too scarce to support your trees. They must also decide if they will continue to rely on the state, which has continuously mismanaged the environment, or finally throw away the idiotic idea that profits are bad and turn to private solutions.