Internet will Require Greater Energy Reliability
On January 13, CEI Senior Fellow Mark Mills gave a presentation at the Center for Strategic and International Studies Energy and National Security Program to follow up his Greening Earth Society analysis on why “The Internet Begins With Coal.” During the speech, he argued that the electricity and telecomm industries must begin to communicate with each other on matters relating to the policy, structure, and business aspects of the Internet to make the long-run development of the information economy a reality.
Mills focused on how the Internet economy will require the development of new levels of electricity distribution reliability that have not yet been achieved within the current distribution mechanism. As businesses increasingly provide internet-based services, minor outages caused by faults in the distribution mechanism will impose increasingly high costs on the economy. In addition to this, the physical hardware of the Internet itself requires that its power sources operate at a reliability of 99.9999% to function effectively.
As a result, he predicts that companies will be willing to spend money to correct these shortcomings. Telecomm deregulation enabled companies to build overlapping distribution networks to improve reliability. Electricity deregulation could have the same effect.
Mills also predicts that combination diesel/electric devices will be the technology of choice for companies seeking to improve reliability outside of the current distribution grid. As companies continue to produce these devices, internet-based companies will continue to buy them and maintain them outside of the grid.
Overall, Mills believes that if the deregulation process is conducted effectively, the electricity industry will be turned on its side. Vertically integrated firms will be replaced by firms that adopt the matrix-like organizational structure used in the telecomm industry. Of course, all of this could be short-circuited if Kyoto-style limits on energy use become a reality.
Implementing Kyoto Over Our Heads
Stopping bad environmental policy at the international level is becoming increasingly difficult due to the vast network of supranational organizations with the power to autonomously create and implement policy. So far the U.S. has resisted being saddled with the burdensome, but largely ineffectual, Kyoto Protocol, on the domestic front. But other means of pushing the Kyoto agenda are being pursued at the international level, which are almost entirely shielded from U.S. Congressional oversight.
The World Bank, for example, has just launched its Prototype Carbon Fund that will create a market for carbon and a way for companies to get carbon credits toward future possible Kyoto commitments. The fund will be made up with money contributed by industrialized nations and private companies. The money will then be “invested” in CO2 reductions in developing countries. “The PCF is intended to invest in projects that will produce high quality greenhouse gas emission reductions that could be registered with the United Nations Framework Convention on Climate Change for the purposes of the Kyoto Protocol,” the World Bank said.
So far Finland, the Netherlands, Norway, and Sweden have made funding commitments, as well as private companies from Japan and Belgium (BNA Daily Environment Report, January 19, 2000). The ploy behind the PCF is similar to that under the various “credit for voluntary action” schemes proposed in the U.S. Companies that contribute to the fund for whatever reason will be awarded carbon credits that will be worthless unless the Kyoto Protocol is ratified. The result will be the creation of an industry-based constituency that favors implementation of Kyoto.