Holiday lighting is a great social offering—a positive externality in the jargon of economics—given by many to all.

In terms of proved reserves, world oil reserves are 20 times[i] greater now than they were when record-keeping began in the 1940s; world gas reserves are over six times[ii] greater than they were in the 1960s; world coal reserves have risen almost fourfold[iii] since 1950. Political events can drive supply down and prices up, but the raw mineral resource base is prolific—and expanding in economic terms thanks to an inexhaustible supply of human ingenuity and exploratory capital.

Despite record energy consumption, U.S. air quality is 60% better today than in 1970.

Record energy consumption has been accompanied by improving air quality. The U.S. Environmental Protection Agency reported that urban air quality is almost 60 percent better today than in 1970 in the United States.[iv] According to the Energy Information Administration, this fall in criteria pollutants was accomplished when fossil energy usage increased by almost a third.[v] Further air emission reductions are expected, but it will not be accomplished by forcing higher prices or inconvenience levied on consumers. It will be accomplished with market incentives, technological improvement, and regulation based on sound science, not alarmism.

But most importantly, the wealth created from affordable, plentiful energy provides the primary means for societies to improve the environment. In the final analysis, wealth is environmental health, which explains why increasing energy usage and environmental improvement have gone hand in hand in the Western world.

There is much to be thankful for this holiday season with our energy economy. But thoughts about the less fortunate should be with us too. An estimated 1.4 billion people do not have electricity for lighting, heating, cooling, cooking, or water purification. For these people, there could be no greater holiday gift than affordable electricity itself, explaining why the developing world has flatly rejected proposals from environmental elites to forsake future energy usage.

Energy consumption is good—for comfort, convenience, and even celebration. May one and all in good conscience enliven this holiday season with lights aplenty. With  energy technologies rapidly improving, Americans can look forward to even more energetic celebrations and shared goodwill in the holidays ahead.

Christmas lights photo courtesy of Flickr user Andy Peters

[i]Robert Bradley, Julian Simon and the Triumph of Energy Sustainability (Washington: American Legislative Exchange Council, 2000), pp. 29–30, and Energy Information Administration, http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=57&aid=6

[ii]Robert Bradley, Julian Simon and the Triumph of Energy Sustainability (Washington: American Legislative Exchange Council, 2000), pp. 29–30, and Energy Information Administration, http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=3&aid=6

[iii] Robert Bradley, Julian Simon and the Triumph of Energy Sustainability (Washington: American Legislative Exchange Council, 2000), pp. 29–30, and Energy Information Administration, http://www.eia.gov/aer/pdf/pages/sec11_27.pdf

[iv] Environmental Protection Agency, http://www.epa.gov/airtrends/2006/emissions_summary_2005.html and http://www.epa.gov/airtrends/aqtrends.html.

[v] Energy Information Administration, Annual Energy Review, http://www.eia.gov/aer/pdf/pages/sec1_9.pdf

What is “spontaneous decarbonization”? In order to estimate the costs of reducing carbon dioxide levels, among other things, IEA estimated carbon dioxide emissions over time, technological change, and improvements in energy efficiency. Improvements in technology and energy efficiency reduce the amount of energy (and carbon dioxide emissions) required to produce the same amount of work. For example, from 1990 through 2000, the U.S. used 1.6% less carbon dioxide per dollar of GDP per year. That’s a pretty impressive improvement.

By improving our energy efficiency through technological innovation, the economy of the U.S. has experienced some “spontaneous decarbonization.” You can call this spontaneous decarbonization because it happened without programs like cap-and-trade or a carbon tax.

Why do estimates of the rate of spontaneous decarbonization matter? Cost estimates such as IEA’s and the IPCC’s (the U.N.’s Intergovernmental Panel on Climate Change) assume that the vast majority of future carbon dioxide reductions come from spontaneous decarbonization and not programs like cap-and-trade. In an article in Nature , Roger Pielke Jr., Tom Wigley, and Christopher Green calculate that in the IPCC’s reference scenario, 77% of the carbon dioxide reductions needed to stabilize atmospheric carbon dioxide levels at 500 parts per million would come from spontaneous decarbonization of the economy.  Only the remaining 23% would require explicit policies such as carbon taxes or cap-and-trade.

What if estimates of the rate of spontaneous decarbonization are wrong? Roger Pielke Jr., at the Center for Science and Technology Research at the University of Colorado, Boulder, calculates that if we don’t assume there will be spontaneous decarbonization, reducing carbon dioxide concentrations in half will cost between $255 and $545 trillion. This is far more than IEA’s estimate of $45 trillion.

An Unpredictable Future. If one looks at the decarbonization of the U.S. economy, it seems safe to project sponteanous decarbonization into the future. But this might not be the case everywhere in the world or for the world as a whole. According to Pielke Jr., Wigley, and Green:

the IPCC assumptions for decarbonization in the near term (2000-2010) are already inconsistent with the recent evolution of the global economy (Fig. 2). All scenarios predict decreases in energy intensity, and in most cases carbon intensity, during 2000 to 2010. But in recent years, global energy intensity and carbon intensity have both increased, reversing the trend of previous decades.

Figure 2 above is from Pielke Jr., Wigley, and Green’s paper in Nature. It shows that the observations from 2000-2005 buck the global trend of lower energy intensity per unit of GDP.

Will this continue into the future? No one knows. If it does, it will cost far more than IEA’s estimate of $45 trillion to cut carbon dioxide levels in half. Because the future is unpredictable, we should pay close attention to Pielke Jr, Wigley, and Green’s conclusion:

There is no question about whether technological innovation is necessary—it is. The question is, to what degree should policy focus directly on motivating such innovation? The IPCC plays a risky game in assuming that spontaneous advances in technological innovation will carry most of the burden of achieving future emissions reductions, rather than focusing on creating the conditions for such innovations to occur.

For a limited time, Scared to Death’s chapter on global warming can be downloaded and read by clicking here: Scared to Death: Saving the Planet.  The entire book is a must read and is available at Amazon.com.