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Why the Peak Resource Crowd Is Wrong

Legendary investor Jeremy Grantham says we're headed for "a disaster of biblical proportions" because the earth has only enough resources to support a population of 1.5 billion-- just a fraction of the 7 billion already here on earth and growing.

Computer scientist and former Microsoft executive Ramez Naam agrees that the world's population now is using too many resources, but he's confident that we can not only remedy the situation but enhance our standard of living through ingenuity and innovation.

The author of the new book, The Infinite Resource: The Power of Ideas on a Finite Planet, tells The Daily Ticker, " "It's possible for humanity to live in higher numbers than today in far greater wealth, comfort and prosperity with far less destructive impact on the planet than we have today...We need to act but if we do act there's a bright future ahead."

So on this Earth Day we look at what can be to save out planet?

Here's the basic problem, as Naam sees it: “...the world’s population right now is using up 1.5 planets’ worth of natural resources. And if everyone on Earth lived like an American, we’d be using up 4.4 planets’ worth of natural resources…This doesn’t look like a situation that can be maintained indefinitely.”

The key to reversing that situation, says Naam, is to replace nonrenewable resources like coal and oil with renewable resources like solar power.

The sun’s power hitting the planet every day provides “5,000 times as much energy as we use from fossil fuels right now,” Naam tells The Daily Ticker. “Half of a percent of the earth’s land area would be enough to capture all the energy we need without any carbon emissions, without climate change.“

Related: Natural Gas Boom Could Make U.S. Energy Self-Sufficient: BBVA's Karp

He suggests a carbon tax charged to companies that release greenhouse gases—a tax on every ton of CO2 emissions and other pollutants--to make renewable fuels more price competitive. The government would then return the money raise to citizens in he form of lower taxes.

“Then you’ll see that green energy is cheaper than fossil fuels and you’ll have more money in your pocket because of the tax on fossil fuels,” says Naam, who prefers the carbon tax to cap and trade.

He says renewable fuels are actually very competitively priced already compared to nonrenewable fuels, though many people don’t realize that.

“Solar has just reached the point where in the sunniest parts.... of the U.S.--in Arizona, Nevada, parts of Texas--- it’s now competitive with coal and natural gas. [Solar] will be cheaper than fossil fuels in the sunny parts of the U.S. and on par in the Midwest and most of the U.S. in 10 years.”

But even now, Naam says, solar and other renewable fuels are competitively priced if the costs of climate change are included in the calculation.

“Last year we had $100 billion of damage in the U.S. from climate change and related events. Sandy did $65 billion; the drought did $35 billion of damage, and both of those events were made many times more likely because of climate change,” says Naam. If those damages were priced in, then, says Naam, "solar would already be tremendously cheaper than fossil fuels.”

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