The fallout from global economic recession ripples through Montana. In addition to unsettling lives, the economic downturn has important consequences for Montana’s energy policies. Here are some.

Governor Schweitzer hopes Montana can be a leading producer of synthetic fuels, and he’s advocated for the construction of a 22,000 barrel-per-day coal to liquid plant near Roundup. Since Montana has about 25 percent of U.S. coal reserves this proposal had great appeal, especially when oil was expensive. In 2005, with the inflation adjusted price of oil over $60 a barrel, the Governor wrote in the New York Times, “The hurdle in making synfuel has always been the [high] cost of production, about $35 a barrel.... But as we all know, times have changed.” Yes, indeed they have, and Montana’s synfuel plant is on hold.

The legislature’s mandate that 15 percent of Montana’s power come from renewable sources by 2015 is a likely casualty. At about eight cents per kilowatt-hour, only thirteen states have cheaper average electricity rates than Montana. The problem with renewables is twofold. First, is their continued high cost compared to the alternatives (even with huge subsidies they are still too expensive). In 2008, federal subsidies for solar and wind energy were, respectively, $24 and $23 (per megawatt-hour). Compare these with those for natural gas (25 cents), coal (44 cents), hydroelectricity (67 cents), and nuclear power ($1.59). These are the energy sources that (along with oil) do the heavy lifting in our economy. While there may be legitimate arguments for mandating that consumers use expensive energy, boosting the economy isn’t one of them.

Our lawmakers missed an opportunity when a carbon sequestration bill failed to get out of committee. Carbon sequestration won’t happen in Montana unless the state defines the legal process. Among the questions: Who is liable if sequestered CO2 leaks into the environment? (In high concentrations CO2 can be lethal.) Who is responsible for assuring the CO2 stays underground? What happens if it acidifies groundwater flowing into trout streams? In short, a host of legal and regulatory policies must be addressed.

Failing to establish the “rules of the game” cedes the playing field to our coal rich neighbor Wyoming. Wyoming already has resolved ownership and regulatory issues. Further, by signing an agreement with GE (to develop a coal research and technology center in the Powder River Basin), Wyoming will attract this potentially lucrative business.

Expect to see the political consensus regarding climate change policy crumble. This is not due to any overturning of the understanding that we are changing the global climate. Rather, it is due to the fact that policymakers and politicians can no longer avoid the reality that their targets for stabilizing carbon emissions are simply not achievable.

There are at least three reasons for this. The first is uncertainty. Uncertainty is risk for which probabilities can’t be reasonably estimated. For example, if the Greenland and Western Antarctica ice sheets melt rapidly (i.e., in decades rather than centuries or millennia), the result will be a catastrophic 20 feet sea level rise. There is some non-zero probability of this occurring, but no consensus on the odds. Policymakers face this question: How many resources should we spend now to avert this uncertain and potentially distant risk?

The second is that climate change produces an unequal distribution of costs and benefits. In general, harms are concentrated on countries in the tropics and benefits accrue to those in higher latitudes. This means that different countries will behave and bargain strategically to advance their perceived interests.

Finally, climate change is the mother of all collective action problems. This is a problem that can’t be solved by a single individual or member of a group; it requires the cooperation of others who often have different interests and incentives.

For decades policies have focused solely on reducing CO2 emissions. (Until quite recently calls for adaptation or geoengineering were taboo.) This was because climate change looked like an engineering problem. Technical knowledge was thought to be sufficient to derive appropriate social policies. This is a profound mistake. Human systems, like natural ones, exhibit complex patterns and processes. Rarely do the problems they generate succumb by applying a mechanistic approach.