Idealism vs. Political Realities
June 3rd, 2008Posted by: Roger Pielke, Jr.
David Cox writes in the Guardian on climate change: “It’s surely time for a change of tack. Or should we just wring our hands?”
A further excerpt:
Perhaps, it’s time to get real. Climate change activists should come to appreciate what religious reformers, communist revolutionaries and other utopian visionaries have learned before them. You can’t change human behaviour in the interests of the supposed greater good.
Nonetheless, warming hasn’t gone away, even if its character is less clear-cut than has been suggested by those urging us to make obeisance to it. What should we do about it?
The answer is surely to switch our efforts away from trying to change human behaviour towards other approaches to the problem. The most obvious is technological research into methods of alleviating warming. Up until now, mentioning this route has been considered a sinful attempt to divert attention from the hairshirt remedies on which the prophets of doom have insisted. Perhaps partly as a result, such research is proving surprisingly skimpy.
He raises a good point, which I’d characterize as, if efforts to put a meaningful price on carbon fail, what is plan B?
June 3rd, 2008 at 10:54 am
“He raises a good point, which I’d characterize as, if efforts to put a meaningful price on carbon fail, what is plan B?”
I’d characterize it as, “WHEN efforts to put a meaningful price on carbon fail…”
…because there’s no way that China, India, and other developing countries are going to subject their populations to the additional carbon prices that would be necessary to lower their carbon emissions in the next several decades.
So what should Plan B be?
Technology prizes amounting to several billion dollars for:
1) (Non-tokamak) fusion,
2) photovoltaics,
3) battery technology, and…maybe…
4) technologies that produce biofuels using algae or bacteria (particularly using the CO2 in exhaust from power plants as an input).
June 3rd, 2008 at 9:14 pm
If you can’t change human nature for the greater good then we’re basically screwed anyway – if not by climate, by nuclear war or some other catastrophe – unless the Kurzweil Singularity saves us. But it’s a little silly to equate all climate policy with utopian visions and pretend that we currently do nothing for the common good. Government (at least allegedly) in the common interest consumes a third of GDP and places significant constraints on decisions. If it doesn’t affect behavior, why do people complain about it so much?
More importantly, if we fail to put a price on carbon, many technical policies will fail too. Why capture carbon when emitting is free? The most effective technology prizes are not given to winners picked by some agency; they’re dished out by the market in response to innovations responding to price signals.
Where Cox has a point is that electorates aren’t really ready to do anything about climate if it costs much. But perhaps the prescription there should be “quit whining” rather than “give up.” Can it really be easier to move the population of the tropics to the taiga than to get people to give up their patio heaters?
The claim that policymakers eschew adaptation because they’re planning to head off warming with reduced energy consumption is pretty laughable, at least on this side of the pond. It would be nice if people were at least thinking that far ahead. It could be a real advantage if they started; contemplating some of the real challenges (and the fact that adaptation options for nature are limited) might get people thinking more seriously about mitigation. Then they could fund their magic technology and adaptation with a carbon tax.
June 3rd, 2008 at 10:41 pm
Tom, with all of the hand waving about the price of gasoline, do you think that the government will honestly take actions that will raise the price of energy further?
I would say that is pretty unlikely. And the fact that no one (at least that I have seen) is claiming that the rise in gas prices is a good thing – even with evidence that the total miles driven by Americans has dropped – merely confirms it.
June 3rd, 2008 at 11:38 pm
The speculative rise in gas is probably more effective a policy than any policy proposed by any government.
Considering that both US and Canada economies are slowing down artificial taxes would likely not help^.
June 4th, 2008 at 5:04 am
Well claiming that the high price of oil is a good thing is to take the long-term view and ignore the short-term suffering. How noble! How ivory tower! If it’s not hurting, it’s not working eh? How about climate-change activists should just shut up and leave it to people who don’t inhabit a dream world.
The most obvious tack is NOT “technological research into methods of alleviating warming”. The money pot is limited so let’s spend it on supporting new, clean energies where we would actually have all-party, all-people support. By which I mean, why don’t governments actually buy the energy alternatives to stir the market instead of just lecturing the rest of us to do it? Better yet, arrange long-term cheap loans for the lumpen public to get geothermal heating/cooling installed. It’s still effectively taxation but somewhat more pro-active, avoids many admin costs and greedy traders.
June 4th, 2008 at 8:42 am
Sylvain & smilerz – I tend to agree that it’s unlikely (though things might look different after the election). But should we lower our aspirations simply because a good outcome appears unlikely? There’s a huge difference between high gas prices, with profits paid to foreign governments or a limited pool of shareholders, and a carbon tax with broad revenue recycling through lump sum rebates or income tax reductions. The latter, implemented gradually, would have a small effect on the economy compared to the current oil price spike.
JamesG – What is the government going to do with the energy alternatives it purchases? The trouble with loan guarantees and other subsidies on energy supply and efficiency technologies is that they lower the effective cost of energy or carbon services, so people consume more of them. Better to set a broad $100/tonC carbon price, and let people fund efficiency with their $500/yr rebate (using ballpark #s for the US).
June 4th, 2008 at 10:41 am
“Why capture carbon when emitting is free?”
It’s worth capturing if one can use the captured carbon in a way that generates more money than capturing it cost.
For example, suppose CO2 from stacks is used to grow biofuels, and $1 spent on capturing the carbon yields $1.20 more biofuel. Then it makes sense to capture the CO2 and use it for biofuel, even if it costs money to capture the CO2.
June 4th, 2008 at 10:50 am
“The most effective technology prizes are not given to winners picked by some agency; they’re dished out by the market in response to innovations responding to price signals.”
What economic studies of technology prizes form the basis for this statement?
And the “winners” aren’t “picked by some agency.” The energy prize rules should be clear enough that everyone would agree who won the prize.
Further, the net cost of energy technology prizes could be reduced to zero, if the federal government simply stops funding energy research, and diverts that funding to energy technology prizes.
Right now, the federal government is planning to pay billions of dollars to fund the ITER (International Tokamak Experimental Reactor). The government could simply stop funding that, and use the money instead for fusion technology prizes. There would be no increase in funding of fusion.
June 4th, 2008 at 7:18 pm
Tom- I would argue that it’s not a fact that
“and the fact that adaptation options for nature are limited”. Adaptation has a wide array of possibilities- I think you would have to be in one of the “working with plants and animals” fields to appreciate this. And I do think that we will have to do some adaptation even if we stopped carbon release tomorrow (somewhat unlikely, no?)
Adaptation vs. mitigation is a false duality as we will have to do both.
Also I too am very attracted to the prize concept. If it’s too avant-garde for the government research bureaucracy, how about a charitable foundation or consortium? I like that it gets people inspired and creative and it based on performance not proposals and review panels. Energy technologists and not modelers are going to be the heros of this story and, in my opinion, the best way out of our dilemma is to give them the reins.
June 4th, 2008 at 9:06 pm
Mark – “It’s worth capturing if one can use the captured carbon in a way that generates more money than capturing it cost.” – True, but this sounds to me like an unlikely proposition: lots of capital needed with low utilization (due to low energy density of solar input, for example) to swim against the thermodynamic tide.
Mark & docpine – I’m actually not opposed to the use of prizes; for many purposes they could be quite effective. However, it’s commonly observed that there is a “valley of death” between discovery and adoption of new technologies (sorry, no time to dig up cites). A prize motivates the discovery, but the discovery may prove a dud in the market. Ultimately the target of the prize has to be picked by someone in the hope of market success (by “picking winners” I meant choosing what goals to reward with prizes, not determining who wins a particular prize). That’s not the same as actual market success. Things that change the economy are seldom isolated technologies; they are suites of complementary technologies, coordinated somewhat serendipitously. That kind of environment doesn’t lend itself to prizes, because it’s so hard to anticipate which of many moving parts is the critical one. That’s why I think that changing the market landscape that selects technologies through a price signal on GHGs is a prerequisite for success. That doesn’t preclude a role for prizes where there are market failures in science; in fact the two policies would be complementary.
docpine – I’m out in my field working with plants and animals most days, though I don’t think that’s what you meant. I’m sure that many species have adaptive options. What I meant is that humans will have little influence on that trajectory. We might save some megafauna and plant some trees, but the vast majority of nature will have to fend for itself, with winners and losers (a big natural selection experiment).
June 5th, 2008 at 5:20 am
Tom
The government can use these alternative energies to heat and power it’s vast bureaucracy, the budget for which is huge. Certainly enough to kick-start the market and reduce the cost per unit. If we have to lose a few civil servants to pay for it, then that’s a bonus since most of them are simply creating work for other civil servants. For a start we could get rid of the ever-growing army of government funded quangos who sit around and write papers about how we should “do something” without ever specifying what that something is. 20,000 of these leeches were at Bali compared to about 300 scientists. If we actually did do something then these jobs would have even less reason to exist.
Reduction of the cost of fossil fuels might be undesirable in the long-term but I don’t see your complaint about reducing the cost of alternative fuels. Isn’t that be the absolute aim? With cap and trade, carbon taxes or prizes, you are all simply wishing for something to magically happen via nebulous market forces, whereas my proposal directly forces it to happen. The trouble is that most people would buy green energies but nobody can afford it.
June 5th, 2008 at 7:07 am
Tom- it depends on how you think about “nature”.. we have plants and animals that have evolved on this planet from arctic to tropical to desert. So evidence seems to show that “nature” is perfectly capable of adapting to whatever. That’s how evolution works- even if humans don’t like the result- which it makes it our challenge to adapt to what is possible given climate and our biota. But, it seems to me, the inland seas and tree ferns of millions of years ago are just as “natural” as the prairies of today or the whatever of tomorrow.
June 5th, 2008 at 8:10 am
“The government can use these alternative energies to heat and power it’s vast bureaucracy, the budget for which is huge.” That’s not a bad idea in principle, but in practice it could easily devolve into a porkfest for technology winners selected by dubious criteria. Better to let the market lead.
I only oppose reducing the cost of alternative energy when it involves subsidies. Subsidizing R&D is sometimes OK, but subsidizing supply, through tax incentives, loan guarantees, purchase programs, etc., artificially lowers the cost of energy and encourages overconsumption. Same goes for efficiency measures. Does the purchaser of a $43k Lexus RX400h hybrid really deserve a $2200 tax credit for its rather pathetic 25mpg?
If the government is a bunch of leeches and market forces are nebulous, what’s left? Certainly there are reasons to think that market forces can’t do everything by themselves. Legal and institutional barriers also need to be addressed (deregulation – gasp!). But as long as the price of carbon is zero, nothing else works well.
“evidence seems to show that “nature” is perfectly capable of adapting to whatever.” Sure – if you don’t mind waiting a million years. Even if one subscribes to your “sh!t happens” valuation of nature, one ought to consider the implications of “if humans don’t like the result”. My experience with disturbed ecosystems suggests that the transient over the next century could involve a real loss of amenities and a real bonanza for undesirable invasives. In the long run things will indeed adjust, but that doesn’t mean there’s no issue.
June 5th, 2008 at 10:23 am
“‘It’s worth capturing if one can use the captured carbon in a way that generates more money than capturing it cost.’ – True, but this sounds to me like an unlikely proposition: lots of capital needed with low utilization (due to low energy density of solar input, for example) to swim against the thermodynamic tide.”
I’m not exactly sure what you mean, but there could be technology prizes for:
Materials that remove CO2 from flue gas:
http://www.sciencedaily.com/releases/2008/03/080303163804.htm
…and separate prizes for processes that utilize concentrated CO2 to produce fuels (possibly in the absence of sunlight, if lack of sunlight seems to be a significant problem).
Or the prizes could be for the total package of going from CO2 in the flue gases to fuel:
http://smarteconomy.typepad.com/smart_economy/2006/10/algae_bioreacto.html
I’m not trying to minimize the issue of what the technology prizes should be, and what the monetary values should be. I think those are both huge questions, requiring large amounts of thought.
I propose that the U.S. government stop or greatly reduce the subsidies it’s currently giving for things like ethanol from corn and the International Tokamak Experimental Reactor, and used the money saved to instead design and implement technology prizes in those areas (or closely related areas, such as biofuels from sources other than agricultural crops, and fusion from sources other than tokamak reactors).
“A prize motivates the discovery, but the discovery may prove a dud in the market.”
That’s true. And I fully accept and support the market deciding questions like that. But presumably, if large amounts of technology prizes are awarded without any of the resulting winners going commercial, then the technology prizes were poorly designed. Presumably, that could be corrected by changing the nature or the amount of the prizes.
“Ultimately the target of the prize has to be picked by someone in the hope of market success (by “picking winners” I meant choosing what goals to reward with prizes, not determining who wins a particular prize).”
Yes, I agree that the target of the prize has to be picked. But let’s take fusion, for example. Fusion is essentially the ultimate energy source. It is energy-dense, with very low pollution per unit of energy (so it can be located near or even inside population centers), is not intermittent (i.e., can be ramped up and down to meet demand), and with an unlimited fuel supply.
So why hasn’t the market already developed fusion? Well, it seems to me that one reason is that the cost to get fusion to commercial status is likely to be billions, or even tens of billions of dollars. And the companies that would be most likely to have both the money and expertise to develop fusion to a commercial technology (e.g. General Electric, Siemens, Westinghouse, etc.) already have competing technologies that are already commercial. So they’d be “cannabalizing” their existing businesses.
And universities have no reason to study fusion, because the U.S. and other governments are committed to fusion using the tokamak reactor.
But of the incredibly small amount of research that’s been done on fusion, it seems (to me) that some of the results are very promising.
For example, some people at Navy research labs seem to think that “cold fusion” is a legitimate phenomenon:
http://www.infinite-energy.com/iemagazine/issue44/navy.html
http://www.lenr-canr.org/Collections/USNavy.htm
From that first document:
“We do not know if Cold Fusion will be the answer to future energy needs, but we do know the existence of Cold Fusion phenomenon through repeated observations by scientists throughout the world. It is time that this phenomenon be investigated so that we can reap whatever benefits accrue from additional scientific understanding. It is time for government funding organizations to invest in this research.”
Now, maybe they’re wrong. Maybe cold fusion isn’t a real phenomenon. But my point is that they (the Navy) should not be researching the phenomenon at all. They should be developing technology prizes–and perhaps serving as the testing ground for determining the winners–while universities, and/or industries, and/or non-profit research labs are doing the actual research and development. That way, if “cold fusion” is NOT a legitimate phenomenon, no technology prizes will be awarded. And if “cold fusion” is a legitimate phenomenon, technology prizes will be awarded, with the resultant publicity and incentive to do more research.
“That’s why I think that changing the market landscape that selects technologies through a price signal on GHGs is a prerequisite for success.”
I strongly disagree. For example, if fusion was to produce energy at the same cost as coal right now (even without the “price signal on GHGs”), the game is over. That’s it. That’s the one energy technology that the world will use. (Though it might take a decade a few decades to convert completely to fusion, even if it produced energy at the same price as coal.) Further, no one is going use the “price signal on GHGs” to study fusion. But they definitely WOULD use the price signals of technology prizes for fusion.
There is also the fact that the amounts I’m talking about for technology prizes are trivial compared to any tax on carbon required to produce a meaningful “price signal.” For example, I truly think that fusion technology prizes of under $10 billion would be enough to support the research and development that would bring fusion to the point where private for-profit companies would commercialize it. That’s about *1 year* of *$5/ton* of carbon tax in the U.S. (Worldwide, it would be ~1 year of $1.50 per ton of carbon tax!)
Now, maybe I’m wrong. Maybe fusion isn’t that promising. So that would mean either that the fusion technology prizes would not be awarded at all, or someone would have the chance to see that the $10 billion would be better spent on other technology prizes. Either way, $10 billion is trivial compared to the amount necessary to send reasonable “price signals” based on GHG emissions. Look at gasoline. The U.S. currently spends approximately $500 BILLION a year on gasoline (~130 billion gallons at ~$4.00 per gallon). A tax of an additional 20 cents per gallon would cost ~$25 billion *per year*. And do you honestly think that an additional 20 cents per gallon would cause any significant reduction in U.S. CO2 emissions?
Look at it this way: Set up the technology prizes for fusion, photovoltaics, batteries, and biofuels (from algae or bacteria, or at least something besides food crops). Set the maximum amount for ALL of them combined at $20 billion. That’s chump change compared to anything that will produce any reasonable “price signal on GHGs” (that’s ~$10 per ton of carbon for ***1 year*** in the U.S.). If I’m right, that $20 billion will lead directly to commercialization of technologies that will completely solve the world’s energy and GHG problems. If I’m wrong, the prizes presumably wouldn’t get awarded. Or they would get awarded, but the world’s energy and GHG problems wouldn’t be solved. Then it might be time to think about setting up “price signals.”
“That doesn’t preclude a role for prizes where there are market failures in science; in fact the two policies would be complementary.”
I don’t agree that the policy of sending “price signals” is even necessary. I think that energy technology prizes that would cost a small fraction of the amount necessary to send adequate “price signals” would solve the problem completely. (Though it might be the middle of the century before worldwide GHG emissions were cut by more than 50 percent.) Further, because the technology prize money I propose is so small (relative to the amount necessary to send “price signals”), it should be much more politically palatable. Again, look at the political problems of raising the federal tax on gasoline by even 20 cents per gallon (and costing $25 billion per year)…which would have virtually zero effect on U.S.–let alone worldwide–CO2 emissions. Try the technology prizes first. If they don’t work, then try the price signals.
June 5th, 2008 at 12:42 pm
If fusion was to produce energy at the same cost as coal now, all else equal, you’d get 50% coal, 50% fusion – not game over. And that’s a big if.
The history of science suggests that a $20b prize portfolio will do next to nothing. Total US R&D is more than 10x that, and progress moves according to power law diminishing returns (if it didn’t economic growth rates would be super-exponential, and they’re not). Even if you attribute all economic growth to technology, and recognize that basic research is only a small part of total R&D, the best a small prize is going to do is slightly increase the rate of progress. And of course if the prizes aren’t awarded, you’re not out any money, but you’re decades down the road with nothing to show for it.
Low-carbon primary energy sources are the target most amenable to prizes. In other areas, absent price signals, it can be expected that technical success will be eroded by rebound effects ( see for example http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1088074 ). Just look at the history of the automobile from the mid 80s to the early 00s. Fuel prices and CAFE standards were fairly constant. There were huge technical innovations in engine efficiency, vehicle design, strength of materials, etc. Absent price signals, technical progress was entirely consumed by increased size, weight, power, amenities, and driving. The same happens in the long run to any technology that lowers the cost of energy services.
One of the basic economic insights about regulation is that it’s most effective when as many tradeoffs as possible are allowed. A broad carbon price is effective in that sense because it allows so many tradeoffs: low carbon energy supplies, moving closer to work, buying an efficient car, switching from bottled water to tap, and solving principal-agent problems between home builders and buyers all face exactly the same carbon incentive. Narrow policies, like renewable fuels standards and sectoral cap&trade are generally deficient in flexibility. Prizes are, if anything, even narrower.
It’s wrong to equate $20bn spent on prizes with $20bn carbon tax revenue. The actual cost of the carbon tax is not the revenue; it’s the changes in material allocations in the economy created by the price signal, which could be very different.
If you want to go for the big breakthroughs with prizes, fine by me. But in isolation it’s not a robust strategy. What’s your plan B?
June 5th, 2008 at 7:09 pm
“If fusion was to produce energy at the same cost as coal now, all else equal, you’d get 50% coal, 50% fusion – not game over.”
You are completely neglecting that “all else” is NOT equal. If coal and fusion had the same price per unit energy output, there would be far more fusion power plants than coal power plants, because the fusion plants could be placed right at the points of demand, whereas nobody wants a coal-fired power plant in their back yard, and no one wants coal trains running by their houses. Therefore, coal-fired power plants tend to be located near coal sources…or at least out in the country.
“The history of science suggests that a $20b prize portfolio will do next to nothing. Total US R&D is more than 10x that,…”
Total U.S. R&D isn’t the relevant parameter. What has total R&D spending been on fusion? On photovoltaics? On batteries?
I don’t know the exact numbers, but my guess is that total federal government R&D spending on photovoltaics, batteries, and non-tokamak fusion have each been less than $1 billion.
“If you want to go for the big breakthroughs with prizes, fine by me. But in isolation it’s not a robust strategy. What’s your plan B?”
That *is* “plan B!” That’s plan B for WHEN (not “if!”) “efforts to put a meaningful price on carbon fail…”
In one sense, the “meaningful price on carbon” is essentially zero. So in one sense, we’re ALREADY in a situation in which a “meaningful price on carbon” has been established. That’s because the present value of the net discounted future damage from CO2 is essentially zero. It’s “meaningful,” in an economic sense, to tax at a rate that is equal to the net discounted value of the harm produced. How will the essentially zero increase in the price of carbon affect demand for coal, gasoline, and natural gas? Answer: It will have essentially zero effect, because it’s essentially zero increase in price.
So we ALREADY have a “meaningful” price on carbon…in the sense that the present price of zero is approximately equal to the net (problems minus benefits) discounted (discounting future damage to present) value of the damage of CO2 emissions.
But by “meaningful,” Roger probably meant “capable of resulting in a very significant reduction in worldwide CO2 emissions in a few decades.”
And how will a price increase that’s “meaningful” in that sense perform? It won’t, because price increases that would produce significant worldwide reductions in CO2 emissions simply aren’t politically feasible. Far too many laypeople understand, at a common-sense level, that the discounted future damage from CO2 is essentially zero.
As I told Roger, even if developed countries could persuade their citizenry to accept taxes on fossil fuels sufficient to reduce demand within those developed countries (and the evidence is overwhelmingly robust that they can’t), there’s no way that China, India, and other countries are going to do the same.
So what is YOUR plan B, when efforts to place a “meaningful” price (in terms of reducing worldwide emissions of CO2) fail?
One world government, perhaps?
June 5th, 2008 at 7:43 pm
“…and progress moves according to power law diminishing returns (if it didn’t economic growth rates would be super-exponential, and they’re not).”
Ummmm…I suggest you take a longer look. Economic growth rates ARE super-exponential. The doubling time of GDP per capita is not merely fixed, but is actually declining.
That’s why world per-capita GDP in the year 2100 will probably be more than $1 million (year 2000 dollars, purchasing power parity).
June 5th, 2008 at 9:41 pm
“That’s because the present value of the net discounted future damage from CO2 is essentially zero.” & “One world government, perhaps?”
Ahh … we’ve reached the usual point of libertarian cognitive dissonance. We can’t deal with climate without cooperation, so let’s just deny that the problem exists. I’m not aware of serious studies indicating that benefits=costs – could you share the rationale?
“Ummmm…I suggest you take a longer look. Economic growth rates ARE super-exponential.”
If you plot gdp/cap for leading economies on a log scale, it’s been a straight line for more than 200 years. The only upward discontinuity I can see was the industrial revolution.
Re PV, this paper http://www.iop.org/EJ/article/1748-9326/1/1/014009/erl6_1_014009.html#erl227672s4 estimates about $4bn in cumulative R&D (eyeballing the graph) and a 20% learning curve. So, to be optimistic, let’s say $2bn cumulative and a 30% learning curve. Dedicate 10% of the prize pot to PV, and you get … a 30% improvement. Not quite the breakthrough needed. Then you have to double the prize to get the next 30%.
June 6th, 2008 at 7:34 am
Tom
I’m amazed you might think that there would be more porking with direct government purchases than with cap and trade, especially since we have the actual evidence that 2/3 of carbon credits to date have been misused, for example to compensate companies for not building projects which had little chance of approval anyway, or for planting trees which had no chance of survival. Plus we have the evidence of gross manipulation by power companies in the European carbon price bonanza. The jury is already in: Cap-and-trade and carbon pricing are an expensive farce which punishes rather than promotes. No one will benefit except the traders themselves.
I didn’t propose subsidizing but long-term loans – for technology which is a proven money saver over the long-term; such as geothermal heating/cooling. It’s a win-win situation. Neither did I say the government were leeches, I said the multiple climate change quangos were leeches. The money going to them should be redirected towards engineering projects, many of which are currently starved of cash. There is apparently no limit to the funding of talkers but not much available for the doers.
June 9th, 2008 at 10:26 am
“Ahh … we’ve reached the usual point of libertarian cognitive dissonance. We can’t deal with climate without cooperation, so let’s just deny that the problem exists.”
I think you need to look up the definition of “cognitive dissonance.” You’re not using it in the same context as others use it. From wonderful Wikipedia:
“Cognitive dissonance is a psychological state that describes the uncomfortable feeling when a person begins to understand that something the person believes to be true is, in fact, not true.”
Therefore, you can only declare a “libertarian cognitive dissonance” to exist if you are a libertarian (and think that you can safely extrapolate your own thoughts to libertarians in general).
There is no “cognitive dissonance” when I say that global warming a trivial problem. And in fact, boatloads of people who are not libertarians say the same thing.
Look at the survey of economic studies that Richard Tol conducted, to assess the marginal cost of damage from CO2 emissions. He got a mode (most common) value of $2/tC ($2 per metric ton of carbon) and a median value of $14/tC.
http://www.uni-hamburg.de/Wiss/FB/15/Sustainability/enpolmargcost.pdf
Those are absolutely trivial numbers. Since gasoline emits 2.4 kg of carbon per gallon, it would take 413 gallons of gasoline burned to emit 1 ton of carbon. That means that the median value for damage from CO2 from burning 1 gallon of gasoline was $14/413 gallons, or 3.3 CENTS per gallon.
Do you disagree with any of those numbers?
Do you think that the people who got numbers below $14/tC (HALF of all the estimates in the survey) were simply “libertarians”? After all, half of the estimates for damage from CO2 emissions from gasoline were less than 3.3 CENTS per gallon! (Or do you think my calculations are wrong?)
June 9th, 2008 at 12:52 pm
“Look at the survey of economic studies that Richard Tol conducted” … sure, but look deeper. The low “cost” is more a statement about equity than about tangible damages. For comparison, use this Exhibit I built to browse the studies in Tol’s meta analysis:
http://www.metasd.com/simile/Tol2007.html
You’ll find that the median social cost of carbon is much higher in studies with low rates of time preference, for example.
To state that Tol’s survey proves damages are trivial is like saying that the median reported cost of a Lexus is 50 bucks, without mentioning that the survey participants are a bunch of crack dealers who think it’s OK to steal one.
Also take note of Tol’s 2007 observation that, “The total cost estimates omit some impacts of
climate change; they tend to ignore interactions between different impacts, and neglect
higher order effects on the economy and population; they rely on extrapolation from a
few detailed case studies; they often impose a changing climate on a static society; they
use simplistic models of adaptation to climate change; they often ignore uncertainties;
and they use controversial valuation methods and benefit transfers.”
So, yes, I think the SCC numbers are dodgy.
I think I used cognitive dissonance in quite typical fashion, to denote “the filtering of information that conflicts with what one already believes, in an effort to ignore that information and reinforce one’s beliefs” (a few lines down on your wikipedia cite). But really I was just baiting you because you brought up the “one world government” baloney. One doesn’t have to be a libertarian to observe a surprisingly convenient conviction among many – not just libertarians – that there are no negative social externalities.
June 9th, 2008 at 7:17 pm
“To state that Tol’s survey proves damages are trivial is like saying that the median reported cost of a Lexus is 50 bucks, without mentioning that the survey participants are a bunch of crack dealers who think it’s OK to steal one.”
I see…so now people who think the marginal damages are less than $14 per metric ton of carbon (once again, 50 percent of the estimates were below $14 per metric ton of carbon) aren’t merely “libertarians,” but are thieving crack dealers! Are you sure they aren’t Holocaust Deniers? Or maybe they’re libertarian thieving-crack-dealer Holocaust Deniers?
“But really I was just baiting you because you brought up the ‘one world government’ baloney.”
So you’ve got a Plan B for what to do when the governments/people of China and India say they have no intention of putting burdens on their present people (in the form of extra prices on fossil fuels) for the hypothetical benefit of people of the future who will almost certainly be better off? What is it? What is your Plan B? How will you convince the governments/people of China and India to impose even greater costs on fossil fuel usage than the costs that they are already bearing? (Note: I’ve already presented *my* Plan B, which is billions of dollars of technology prizes for three or four technologies: fusion, photovoltaics, batteries, and possibly biofuels from sources other than agricultural products).
“One doesn’t have to be a libertarian to observe a surprisingly convenient conviction among many – not just libertarians – that there are no negative social externalities.”
I guess one also doesn’t have to be a libertarian to put up a straw man and kick the straw out of him.
I’m not aware of any time I (or anyone else) ever claimed there were “no negative social externalities.” I merely claimed that the net discounted future damage of climate change is trivial. Richard Tol’s study supports my assertion.
But don’t stop there…every study of which I’m aware that compared global warming to other significant social problems has come up with the conclusion that global warming mitigation doesn’t rank very high in proper societal priorities.
See, for example, the work of Roger’s undergraduate students:
http://sciencepolicy.colorado.edu/prometheus/archives/education/000991class_copenhagen_con.html
Or…let me guess: they must all be libertarians, right?
June 12th, 2008 at 11:50 am
“I see…so now people who think the marginal damages are less than $14 per metric ton of carbon (once again, 50 percent of the estimates were below $14 per metric ton of carbon) aren’t merely “libertarians,” but are thieving crack dealers!”
You’ve missed the point of the analogy, which is not that neoclassical economists are bad people. The point is that $14/ton conflates actual material costs over time with value judgments about the relative importance of compensating people across regions and time.
The median pure rate of time preference in Tol’s study is about 2%/yr. At that rate, effects a century from now are worth 15% of effects today. The $10/ton median cost in the 2% studies in Tol’s survey is thus a statement (very roughly) that $10/ton today would be adequate compensation for marginal damages, as long as your concept of “adequate compensation” is 15 cents on the dollar. From a societal perspective, I don’t see a big difference between stealing from the future and stealing a Lexus, though society clearly places rather different sanctions on each.