The Economics of Moving Forward-Part 2

In August of 2013, I wrote about the economies of moving forward at the local level, here in Dacula. You can see that article here. This article is the second part of that process. How do policies at the federal level work here in Dacula?

In June of 2013, the President made a speech at Georgetown University announcing a new policy about public financing of coal-fired power plants. Mr. Obama said, “Today, I am calling for an end to public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity.”

In the wake of that speech, the United States Export-Import Bank (you did know we had such an agency) dropped plans to fund a new 1.2 GW coal plant in Vietnam. At the same time other international investment banks also indicated they would screen out investments that didn’t meet carbon emission thresholds set by those banks.

While that policy shift by the United States and those decisions by other international banking bodies do not directly affect U. S. residents, two major points ought to be drawn from this model shift. First, the decisions are framed from the climate change debate (do carbon emissions play a role in climate change or don’t they?). Second, most pundits agree that electricity is one of the top constrainers on economic development (limit electricity production, limit economic growth/development).

“Two lessons. Limit infrastructure; limit economic development; and limited economic development will result in a higher cost of living for all.”

While the U. S. policy shift announced by the President involves foreign investment, how might this creeping policy affect a national government even our own? I found a report on South Africa. Currently, the U. S. Ex-IM Bank is financing two colossal coal-fired electrical plants in South Africa. One of the plants is up and running/ the other planned to come online in 2014. In 2008, electricity shortages caused the national currency of South Africa, the Rand, to fall by 15%. What does that mean in practice? It meant that everything that South Africans bought in 2008 went up by 15% because the money was worth 15% less.

Two lessons to be learned here for Dacula, I think: Limiting infrastructure will limit economic development; and reducing the opportunity for economic development will result in higher costs of living for all residents.

While everyone I know wants to be good stewards of our world, there has to be some sort of compromise in using  sources of power domestically/internationally. Coal, as a source of producing electricity, is going to be needed for a very long time in the U. S. and internationally. And we can all wonder, how long before this foreign policy become the law of our land?

As a very first step in mitigating the controversy, a national energy policy, that looks at every source of energy, must be encouraged, debated, decided, and implemented. It takes coordinated action, not merely words.