Llewellyn King: The Nasty Magic of the Market
The late, great neo-classical version of Pennsylvania Station, whose construction was completed in 1910. The grand structure was torn down in 1963, to be replaced by the claustrophobic current version.
As architectural historian Vincent Scully wrote: "One entered the city like a god {with the old Penn Station}. One scuttles in now like a rat.''
The market is a wondrous place. It ensures you can drink Scotch whisky in Cape Town and Moscow, or Washington and Tokyo, if you prefer. It distributes goods and services superbly, and it cannot be improved upon in seeking efficiency.
But it can’t think and it can’t plan; and it’s a cruel exterminator of the weak, the unready or, for that matter, the future.
Yet there are those who believe that the market has wisdom as well as efficiency. Not so.
If it were wise, or forward-looking, or sensitive, Mozart wouldn’t have died a pauper, and one of the greatest — if not the greatest architecturally — railway station ever built, Penn Station, wouldn’t have been demolished in 1963 to make way for the profit that could be squeezed out of the architectural deformity that replaced it: the Madison Square Garden/Penn Station horror in New York City.
Around Washington, Los Angeles and other cities are the traces of the tracks of the railroads and streetcar lines of yore. These were torn up when the market anointed the automobile as the uber-urban transport of the future. As Washington and Los Angeles drown in traffic, many wish the tracks — now mostly bike paths — were still there to carry the commuter trains and streetcars that are so badly needed in the most traffic-clogged cities.
Now the market, with its concentration on the present tense, is about to do another great mischief to the future. An abundance of natural gas is sending the market signals which threaten carbon-free nuclear plants before their life is run out, and before a time when nuclear electricity will again be cheaper than gas-generated electricity. World commodity prices are depressed at present, and no one believes that gas will always be the bargain it is today.
Two nuclear plants, Vermont Yankee in Vernon, Vt. , and Kewaunee in Carlton, Wis., have already been shuttered, and three plants on the Exelon Corp. system in the Midwest are in jeopardy. They’ve won a temporary reprieve because the Federal Energy Regulatory Commission (FERC) says the fact that they have round-the-clock reliability has to be taken into account against wind and solar, which don’t. In a twist, solar and wind have saved some nuclear for the while.
Natural gas, the market distorting fuel of the moment, is a greenhouse gas producer, although less so than coal. However gas, in the final analysis, could be as bad, or worse, than coal when you take into account the habitual losses of the stuff during extraction. Natural gas is almost pure methane. When this gets into the atmosphere, it’s a serious climate pollutant, maybe more so than carbon dioxide, which results when it is burned.
Taken together — methane leaks with the carbon dioxide emissions — and natural gas looks less and less friendly to the environment.
Whatever is said about nuclear, it’s the “Big Green” when it comes to the air. Unlike solar and wind, it’s available 24 hours a day, which is why three Midwest plants got their temporary reprieve by the FERC in August.
When President Obama goes to Paris to plead with the world for action on climate change in December, the market will be undercutting him at home, as more and more electricity is being generated by natural gas for no better reason than it’s cheap.
As with buying clothes or building with lumber, the cost of cheap is very high. The market says, “gas, gas, gas” because it’s cheap – now. The market isn’t responsible for the price tomorrow, or for the non-economic costs like climate change.
But if you want a lot of electricity that disturbs very little of the world’s surface, and doesn’t put any carbon or methane into the air, the answer is nuclear: big, green nuclear.
Llewellyn King (lking@kingpublishing.com) is host and executive producer of White House Chronicle, on PBS, and a longtime publisher, editor, columnist and international business consultant.
— For InsideSources.com
Philip K. Howard: Infrastructure repairs drown in regulatory molasses
To our readers: This column also ran in a pre-renovation version of New England Diary a few weeks ago. As we seek to import the pre-renovation archives, we will rerun particularly important files, such as Philip Howard's piece here.
-- Robert Whitcomb
By PHILIP K. HOWARD
NEW YORK
President Obama went on the stump this summer to promote his "Fix It First" initiative, calling for public appropriations to shore up America's fraying infrastructure. But funding is not the challenge. The main reason crumbling roads, decrepit bridges, antiquated power lines, leaky water mains and muddy harbors don't get fixed is interminable regulatory review.
Infrastructure approvals can take upward of a decade or longer, according to the Regional Plan Association. The environmental review statement for dredging the Savannah River took 14 years to complete. Even projects with little or no environmental impact can take years.
Raising the roadway of the Bayonne Bridge at the mouth of the Port of Newark, for example, requires no new foundations or right of way, and would not require approvals at all except that it spans navigable water. Raising the roadway would allow a new generation of efficient large ships into the port. But the project is now approaching its fifth year of legal process, bogged down in environmental litigation.
Mr. Obama also pitched infrastructure improvements in 2009 while he was promoting his $830 billion stimulus. The bill passed but nothing much happened because, as the administration learned, there is almost no such thing as a "shovel-ready project." So the stimulus money was largely diverted to shoring up state budgets.
Building new infrastructure would enhance U.S. global competitiveness, improve our environmental footprint and, according to McKinsey studies, generate almost two million jobs. But it is impossible to modernize America's physical infrastructure until we modernize our legal infrastructure. Regulatory review is supposed to serve a free society, not paralyze it.
Other developed countries have found a way. Canada requires full environmental review, with state and local input, but it has recently put a maximum of two years on major projects. Germany allocates decision-making authority to a particular state or federal agency: Getting approval for a large electrical platform in the North Sea, built this year, took 20 months; approval for the City Tunnel in Leipzig, scheduled to open next year, took 18 months. Neither country waits for years for a final decision to emerge out of endless red tape.
In America, by contrast, official responsibility is a kind of free-for-all among multiple federal, state and local agencies, with courts called upon to sort it out after everyone else has dropped of exhaustion. The effect is not just delay, but decisions skewed toward the squeaky wheels instead of the common good. This is not how democracy is supposed to work.
America is missing the key element of regulatory finality: No one is in charge of deciding when there has been enough review. Avoiding endless process requires changing the regulatory structure in two ways:
Environmental review today is done by a "lead agency"—such as the Coast Guard in the case of the Bayonne Bridge—that is usually a proponent of a project, and therefore not to be trusted to draw the line. Because it is under legal scrutiny and pressure to prove it took a "hard look," the lead agency's approach has mutated into a process of no pebble left unturned, followed by lawsuits that flyspeck documents that are often thousands of pages long.
What's needed is an independent agency to decide how much environmental review is sufficient. An alteration project like the Bayonne Bridge should probably have an environmental review of a few dozen pages and not, as in that case, more than 5,000 pages. If there were an independent agency with the power to say when enough is enough, then there would be a deliberate decision, not a multiyear ooze of irrelevant facts. Its decision on the scope of review can still be legally challenged as not complying with the basic principles of environmental law. But the challenge should come after, say, one year of review, not 10.
It is also important to change the Balkanized approvals process for other regulations and licenses. These approvals are now spread among federal, state and local agencies like a parody of bureaucracy, with little coordination and frequent duplication of environmental and other requirements. The Cape Wind project off the coast of Massachusetts, now in its 12th year of scrutiny, required review by 17 different agencies. The Gateway West power line, to carry electricity from Wyoming wind farms to the Pacific Northwest, requires the approval of each county in Idaho that the line will traverse. The approval process, begun in 2007, is expected to be complete by 2015. This is paralysis by federalism.
The solution is to create what other countries call "one-stop approvals." Giving one agency the authority to cut through the knot of multiple agencies (including those at state and local levels) will dramatically accelerate approvals.
This is how "greener" countries in Europe make decisions. In Germany, local projects are decided by a local agency (even if there's a national element), and national projects by a national agency (even though there are local concerns). One-stop approval is already in place in the U.S. New interstate gas pipelines are under the exclusive jurisdiction of the Federal Energy Regulatory Commission.
Special interests—especially groups that like the power of being able to stop anything—will foster fears of officials abusing the public trust. Giving people responsibility does not require trust, however. I don't trust anyone. But I can live with a system of democratic responsibility and judicial oversight. What our country can't live with is spinning our wheels in perpetual review. America needs to get moving again.
Philip K. Howard, a lawyer, is chairman of the nonpartisan reform group Common Good. His new book, "The Rule of Nobody," will be published in April by W.W. Norton. He is also the author of, among other works, "The Death of Common Sense''.