Feds losing the forest for the trees with smart grid nationalization

Call me a traditional liberal (i.e. a libertarian), but I think a more, not less, free market could do us some good in the area of electricity generation. Direct the market with taxes inspired by the Natural Capitalism approach, then step out of the way. I say this in response to a post I just read at smartmeters.com, which basically says that the federal government is going to begin meddling with transmission line placement in its effort to accelerate deployment of the "smart grid." It doesn't really say what aspect of the "smart grid" is going to be deployed, or how distribution easements play into that. Go figure.

Ken Salazar, Interior Secretary, raised the point that lack of well-placed power lines are an obstacle to opening up federal lands to alternative power generation facilities. Okay, I get that. It's hard to build an off-shore wind farm when there is no power line easement between the rural coast where the power is generated and the distant city in need of that power. Fine. But this seems to be getting the cart before the horse.

Before we address the issue of transmission line placement, can we at least think about the pricing imbalance between wind/solar and fossil-fuel generation? Politicians are opting to tackle the relatively easy issue of NIMBYism writh regard to power lines instead of tackling the much thornier issue of carbon caps and carbon taxation. Until we price electricity according to its total cost (including environmental and social impacts), wind and solar will continue to require heavy federal subsidies and other seemingly-arbitrary mandates. Under the current schemes, the market has no motivation to provide the optimal blend of renewable power, dirty power, and energy efficiency improvements.

Senator Jeff Bingaman chairs the Senate's Energy and Natural Resources Committee and was also in attendance.  The committee is responsible for developing energy legislation that would provide the federal government's framework for the establishment of a national smart grid.

Bingaman said ... that he agrees that the Federal Energy Regulatory Commission does need expanded authority to develop new power infrastructure. He added that he hopes to have a bill within the next six weeks that will address the smart grid issue and will establish requirements that utilities across the country generate a certain amount of renewable energy.  By 2020 that requirement could be 20 percent.

Further, the idea that a 20% renewable energy mandate is more effective than a "true cost" taxation structure on fossil fuels and CO2 emissions seems silly to me. How do we know that 20% is the right amount of renewal energy to produce? How is the 20% computed? Is it peak production capacity, or actual production? What happens if a utility fails to comply? What will gaurantee that the most efficient technology gets used? How will we reconcile that 20% mandate with the simultaneously necessary carbon capture and storage requirements for coal and gas-fired power plants? How will we decide which one, a carbon capturing coal plant or an offshore wind farm, is better at meeting our climate goals? I think back to Paul Hawken's concept of Natural Capitalism, and I can't help but feel that our leaders are losing the forest for the trees. Let's work on setting price signals, to motivate people in the right direction. Let's tax strip mining operations to reflect their environmental costs. Let's get a carbon market in place. Then let the smart folks in the energy industry, the ones that know the details, make some decisions. Get the ill-informed bureaucrats out of the way.