Energy Policy:

Lester Brown talks about threat of Chinese consumption growth, promise of wind power

China's rampant economic growth has led to a huge upswing in natural resources consumption and energy demand, forcing the country's leaders towards major policy decisions on environmental issues. During today's OnPoint, Lester Brown, president of the Earth Policy Institute, discusses the changes underway in China and the path ahead for other developing nations. Brown, author of the book "Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble," also discusses the growing wind industry and why policymakers should support renewable energy before turning to nuclear power or biofuels.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. My guest today is Lester Brown. He's the president of the Earth Policy Institute and author of the new book Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble. Lester thanks a lot for being here today.

Lester Brown: My pleasure.

Brian Stempeck: You talk quite a bit, in the book, about China's emergence as a major consumer of natural resources. What kind of implications does that have the United States and for the world as a whole?

Lester Brown: Now that China has overtaken the US in the consumption of most basic resources the next question becomes what happens if they catch up to us in consumption per person? Which they're heading toward very rapidly. And if they grow at 8% a year, somewhat slower than in recent years, by 2031 income per person in China will be the same as it is the United States today. If we assume similar consumption patterns, that is they spend their money more or less the same way we do then in 2031 China's 1.45 billion people will be consuming the equivalent of two thirds of the current world grain harvest. Their paper consumption, at US per capita levels, will be double current world paper production. There go the world's forests. They'll have three cars for every four people. They'll have a fleet of 1.1 billion cars. The current global fleet is 800 million cars. They will be using 99 million barrels of oil a day. The world is currently producing 84 million barrels and will probably never produce much more than that. What China is teaching us is that the Western economic model, the fossil fuel based, automobile centered, throw away economy is not going to work for China. If it doesn't work for China it will not work for India, which by 2031 will have an even larger population than China. Nor will it work for the other 3 billion people who live in the developing countries, 3 billion people who are also dreaming the American dream. And in some ways, most importantly in an increasingly integrated global economy, where we all depend on the same oil, grain and steel, it won't work for us either. That's what China is teaching us.

Brian Stempeck: Do you think the Chinese government is aware of this problem? I mean they're already taking some steps on fuel economy, on building wind energy, renewable sources of energy, the same with the Indian government. Do you think they're aware of the problem that you're talking about in the book?

Lester Brown: They are because it's got a lot of coverage in China. Indeed the Chinese translation of the book is virtually complete. And we only published the English edition six weeks ago, so they're moving very fast. Almost all the recent books I've done have been published in China. In fact all of them have been. And I've attended a number of – spoken at a number of conferences and met with senior Chinese officials. So they're very much aware of these issues. What they haven't figured out is what to do about them. I mean the Chinese economy is sort of like a bicycle. You have to keep it moving fast to maintain political stability. If you let it slow down too much it could topple. So they feel the real pressure to keep the economy going with a full head of steam. And yet they know they can't continue indefinitely down that road. Indeed, they can't continue much further down that road, but they're not quite sure how to make the adjustments. They're wrestling with it in the same way that we're wrestling with energy policy here right now. And I might add not very successfully.

Brian Stempeck: What changes are they making though? I mean do you think they're being more progressive than the United States when it comes to some of the policy changes that they're making?

Lester Brown: They're beginning to talk seriously, that is government officials are, about environmental taxes as a way of restructuring the economy. And that happens to be the key. They've learned that the indirect cost can be much greater than the direct cost of many goods and services. You may recall record flooding in the Yangtze River basin in the summer of 1998. It went on for several weeks and caused $30 billion worth of damage. That's equal to the value of the annual rice harvest in China, so it was not a trivial event. And they kept saying, as the summer went on and the flooding continued, that this was an act of nature and in a sense it was. But then in mid-August they held a press conference in Beijing and said this is an act of nature, but there's a human contribution to this. We've been deforesting, in recent years, the upper reaches of the Yancey River basin. And they said we're going to ban all tree cutting in China from natural forests. And they justified in it economic terms. They said the value of trees standing are worth three times the value of trees cut. And what they were recognizing was that the flood control services provided by the forests are three times as valued as the timber in those forests. If that were a cartoon you'd see a light bulb here you know. I mean suddenly they saw it and they understood it. So they realized that they've got to make some major changes and don't have a lot of time to make them in. It would be good if some other countries, like the United States, were providing leadership in this because we're faced with exactly the same problems they are. I mean we're part of the same global economy now and there's no way we can avoid their problems or they can avoid our problems.

Brian Stempeck: One of the other dominant themes you talk about in the book is the emergence of wind power as a major solution that many countries are looking at. You talk about how it now provides energy for about 40 million Europeans. Talk a bit about the trend that you're seeing there.

Lester Brown: Well the growth in wind power in recent years has been around 30% a year. Last year, in this country, it grew by 35%. There's an enormous amount of wind energy in the world and some exciting things happening in this field now. One is that, as you know, many utilities have offered consumers a green power option now for probably close to a decade. If you wanted green power you signed up for it and you paid more for it, 10% more or 15% more, depending on the situation. But now in some parts of the country – and I've seen the detailed data for Austin, Texas for example. In the Austin region of Texas those who signed up for green power years ago and have been getting it ever since are now getting it cheaper than the utility rate because a lot of the fuel for generating electricity in that part of the country comes from natural gas. And as you know natural gas prices have doubled in the last 14 months. So suddenly there are a lot of good environmentalists out there now who want green power. But it's an example of how the lines are crossing. I had a phone call from my son sometime back. He was driving on one of the interstates in West Texas. And he saw one of the new wind farms and the rows of wind turbines sort of receding toward the horizon. It's a huge wind farm. And interspersed among the rows of wind turbines were oil pumps and the oil wells were pumping and the wind turbines were turning. And he said it was such a graphic image because it was the past and the future meeting. What he was looking at was the energy transition, the old energy economy with the new energy economy superimposed on it. But there are a lot of exciting things happening with wind now. I mean one of the most interesting, to me, and probably the most important, is Goldman Sachs going into the wind business. I think it was a year ago this month roughly that they thought a small company that built wind farms called Horizon. As of today Horizon has about 5000 megawatts of wind generating capacity, either under construction or in the planning stages. 5000 megawatts is equal to 17 average sized coal-fired power plants. I mean it's not a trivial commitment and that's only within one year. I mean I think they're just getting started.

Brian Stempeck: At the same time though how realistic is it to think that wind power can really cause that much of it a dent in our overall energy? Especially in countries, say, like China, where we're seeing them basically build as many coal-fired power plants as they can. In the book you basically brush off the idea of nuclear power, saying it's not viable because of security threats and terrorism threats.

Lester Brown: And economics.

Brian Stempeck: And economics. But I mean that seems to be a direction a lot of countries are going, especially in Europe with the Kyoto Protocol going into effect. A lot of countries realizing they can't do it with wind alone. So I mean what other solution – if you rule out nuclear, how can you do it all with wind and these other solutions that you talk about?

Lester Brown: Right. Nuclear is interesting. A lot of people are talking about it, but no one is committing very much capital. I don't think there's a single nuclear power plant being built anywhere in the world where there is a competitive electricity economy. They only do it where they're sheltered by governments and where they can fix the electricity rates. There are a number of economic problems with nuclear power. One is you have to decommission nuclear power plants. And it may cost as much or more to decommission as it does to build them in the first place. The second is you have to dispose of waste. A third is you have to insure them, but no insurance company will insure them. And so in the United States this gets passed on to taxpayers shouldering that burden. If nuclear power has to pay its way it's finished. It will never get out on the starting blocks. And the last nuclear reactor that was ordered in this country, I don't know 1978 or whenever it was, will continue to be the last one ordered.

Brian Stempeck: Can you make the argument though that wind power itself is getting – I mean it get subsidies around the world, in United States, in Denmark, in Europe. You can make the same argument that it's subsidized as well.

Lester Brown: It is subsidized in order to offset the subsidies for fossil fuels. I mean it doesn't even come close to offsetting the subsidies for nuclear for example. But on a level playing field, where the costs are absorbed entirely by the electricity generator, by the utility, wind is a winner. And it's getting cheaper while natural gas, for example, is becoming more costly all the time. In this country, in 1991, the Department of Energy did that national wind resource inventory. In which they pointed out that three of our 50 states, North Dakota, Kansas and Texas, had enough harnessable wind energy to satisfy national electricity needs. And everyone said, “Wow.” Because we didn't realize it was such a huge resource. But in retrospect we know that was a gross underestimate, because it was based on the wind turbine technologies of 1991. Advances in design since then enable wind turbines to operate at lower wind speeds, to convert wind into electricity more efficiently and instead of being 120 feet tall, they're 300 feet tall. So they're harvesting a much larger wind regime, more reliable winds. Wind is, I think, going to become the centerpiece for the new energy economy.

Brian Stempeck: One last question for you because we're running out of time, but in the book you also talk about biofuels. Last month, of course, we saw President Bush talk about ethanol in his State of the Union address. A lot more attention towards ethanol from corn, from sugarcane, from other sources, other types of crops. You mention in the book that this could really set up a conflict between, I think you said, supermarkets and service stations. Basically fighting over corn and these different crops as fuel. Talk about that little bit.

Lester Brown: We've always been concerned about the effect of high oil prices on food production costs because modern agriculture is so oil intensive. And that remains a legitimate concern, but the more important effect is the effect of high oil prices on the demand for agricultural commodities. Because once the price of oil gets up to $60 a barrel it becomes profitable to convert agricultural commodities into automotive fuel. And almost everything we eat can be converted into either ethanol or bio diesel. All the major commodities, wheat, corn, soy bean, sugar cane, can be used to produce fuel. Now what this means, as the number of ethanol distilleries and bio diesel refineries increases, and they're growing by leaps and bounds now in the United States, in Europe, in Brazil and a number of other countries around the world, is that we're creating a situation where there's a second group of buyers in the agricultural commodity markets. It used to be basically food processors. Now the fuel producers are bidding for the same crops. And this means we're creating the situation where supermarkets and service stations compete for the same commodities. Looked at at the global level, the 800 million of us who are affluent enough to own automobiles will be competing for the same food commodities as the 2 billion poorest people in the world for whom getting enough food to make it from day to day is real challenge.

Brian Stempeck: All right. Lester, we're out of time. It's a great book. Thanks for stopping by. We appreciate it.

Lester Brown: My pleasure.

Brian Stempeck: I'm Brian Stempeck. This is OnPoint. Thanks for watching.

[End of Audio]

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