Supply-side economics holds that supply ensures demand by friendly (though competitive) persuasion. Everything gets sold, at one price or another. Conventional economics holds that governments are necessary arbiters of these transactions, either compelling consumption (for example, by "stimulation") or rationing it (for example, by "cap and trade").
We are now approaching a decisive test of these doctrines, both of which cannot be right. The test is: Can supply-side economics solve global warming all on its own? The quick answer is yes - probably.
Take the supply of carbon in the atmosphere, which many people think excessive. In a perfect supply-side economy, someone would recognize this surplus as an opportunity. Atmospheric carbon, after all, is free for the taking. Entrepreneurs who found commercial uses for it would make fortunes. On a certain production scale, they would turn fossil fuels into a renewable resource.
A Santa Barbara, Calif., company called Carbon Sciences Inc. provides a convenient prototype. The company announced last week that it has developed a "breakthrough technology" that converts atmospheric carbon dioxide into commercial-grade gasoline, diesel fuel and jet fuel. Founded in 2006, Carbon Sciences had previously converted CO-2 into low-grade methanol using an enzyme-based technology. Now, it said, it has combined chemical and biological engineering in a bio-catalytic process that transforms carbon emissions into "a cost-efficient" energy resource.
It is possible that this "breakthrough technology" won't work out of the lab. But it is possible that it will. The basic science isn't novel; a number of carbon conversion techniques have been proven in university laboratories. The hypothetical implication of these technologies is profound. With an industrial process that tapped the atmosphere for oil, environmental objections to fossil fuels would logically end, and the threat of global warming, however calculated, would recede.
The transformation technology required for this process, Carbon Sciences Inc. said, can be fitted onto the flues of coal-fired power plants, eliminating the need to sequester the carbon emissions. Further, it said, the technology does not require the use of distilled fresh water in the chemical process. Further still, it said, the process requires no capital-intensive infrastructure. "Now, we have the way to go directly to gasoline," Carbon Sciences CEO Byron Elton said in a press release. "By being able to use raw CO-2 [from the flues of coal-fired power plants] we are no longer dependent on the success or commercial availability of carbon capture systems." In addition, he said, the CO-2-to-fuel process can produce fuel in minutes to hours, not months to years.
More than half of the world's electricity, by the way, comes from coal-fired generation plants.
This column does not recommend investments, covertly or overtly. It is a simple matter of fact, however, that Carbon Sciences Inc. is a publicly traded company. Its stock traded this week at 10 cents (U.S.) a share. Beacon Equity Research, which tracks speculative stocks, said in a "stock alert" last week that Carbon Sciences, with its patented technology, is now "well positioned" to sell its intellectual property to wealthier energy companies. Beacon noted that, around the world, governments and companies will invest $20-billion this year to develop carbon-sequestration technology, an investment that could be wasted should carbon-to-fuel technologies work. Carbon Sciences said it anticipates commercial exploitation of its technology by the end of the year.
Although supply-side environmental scientists attract little public attention, they are hard at work turning surplus carbon emissions into useable products. By way of example, Chemical and Engineering News, the professional journal of the American Chemical Society, reported last week that a team of scientists led by chemist Elisabeth Bouwman of Leiden University in the Netherlands has developed a catalyst that reacts with ambient CO{-2} to form oxalate, a white crystalline powder, "a useful feedstock" for the production of organic compounds. The transformation, the journal said, requires very little energy.
This breakthrough isn't yet ready for the marketplace. "Our study is purely fundamental," Ms. Bouwman wrote. But the technological advance impressed other scientists. Clifford Kubiak of the University of California at San Diego, a specialist in CO-2 conversion research (who was not involved in Ms. Bouwman's research), commented that it was amazing that her electrochemical catalyst perfectly performed the job it was experimentally assigned to do.
Oxalic acid is a compound found in all leafy, green vegetables, most notably rhubarb. It is 3,000 times more acidic than acetic acid (from which, much diluted, we get vinegar) and serves therefore as an excellent industrial cleanser, especially when used to scour rust off metals.
Aside from gasoline, diesel and jet fuels, Carbon Sciences said it has transformed carbon emissions into an extensive variety of commercial products, including glass, ceramics, cosmetics, paper, plastics and chalk. In a very literal way, the company's primary technique appears to be alchemy. The medieval chemists never managed to turn base metals into gold. But biochemical engineers are now on the verge of transmutations equally awesome, equally wonderful.