Many commentators have already pointed out dozens of misquotes, misrepresentations and mistakes in the ‘Global Cooling’ chapter of the new book SuperFreakonomics by Ste[ph|v]ens Levitt and Dubner (see Joe Romm (parts I, II, III, IV, Stoat, Deltoid, UCS and Paul Krugman for details. Michael Tobis has a good piece on the difference between adaptation and geo-engineering). Unfortunately, Amazon has now turned off the ‘search inside’ function for this book, but you can read the relevant chapter for yourself here (via Brad DeLong). However, instead of simply listing errors already found by others, I’ll focus on why this chapter was possibly written in the first place. (For some background on geo-engineering, read our previous pieces: Climate Change methadone? and Geo-engineering in vogue, Also the Atlantic Monthly “Re-Engineering the Earth” article had a lot of quotes from our own Raypierre).
Paul Krugman probably has the main issue right:
…it looks like is that Levitt and Dubner have fallen into the trap of counterintuitiveness. For a long time, there’s been an accepted way for commentators on politics and to some extent economics to distinguish themselves: by shocking the bourgeoisie, in ways that of course aren’t really dangerous.
and
Clever snark like this can get you a long way in career terms — but the trick is knowing when to stop. It’s one thing to do this on relatively inconsequential media or cultural issues. But if you’re going to get into issues that are both important and the subject of serious study, like the fate of the planet, you’d better be very careful not to stray over the line between being counter-intuitive and being just plain, unforgivably wrong.
Levitt was on NPR at the weekend discussing this chapter (though not defending himself against any of the criticisms leveled above). He made the following two points which I think go to the heart of his thinking on this issue: “Why would anyone be against a cheap fix?” and “No problem has ever been solved by changing human behaviour” (possibly not exact quotes, but close enough). He also alluded to the switch over from horse-driven transport to internal combustion engines a hundred years ago as an example of a ‘cheap technological fix’ to the horse manure problem. I deal with each of these points in turn.
Is geo-engineering cheap?
The geo-engineering option that is being talked about here is the addition of SO2 to the stratosphere where it oxidises to SO4 (sulphate) aerosols which, since they are reflective, reduce the amount of sunlight reaching the ground. The zeroth order demonstration of this possibility is shown by the response of the climate to the eruption of Mt. Pinatubo in 1991 which caused a maximum 0.5ºC cooling a year or so later. Under business-as-usual scenarios, the radiative forcing we can expect from increasing CO2 by the end of the century are on the order of 4 to 8 W/m2 – requiring the equivalent to one to two Pinatubo’s every year if this kind of geo-engineering was the only response. And of course, you couldn’t stop until CO2 levels came back down (hundreds, if not thousands of years later) without hugely disruptive and rapid temperature rises. As Deltoid neatly puts it: “What could possibly go wrong?”.
The answer is plenty. Alan Robock discussed some of the issues here the last time this came up (umm… weeks ago). The basic issues over and above the costs of delivering the SO2 to the stratosphere are that a) once started you can’t stop without much more serious consequences so you are setting up a multi-centennial commitment to continually increasing spending (of course, if you want to stop because of huge disruption that geo-engineering might be causing, then you are pretty much toast), b) there would be a huge need for increased monitoring from the ground and space, c) who would be responsible for any unanticipated or anticipated side effects and how much would that cost?, and d) who decides when, where and how much this is used. For point ‘d’, consider how difficult it is now to come up with an international agreement on reducing emissions and then ponder the additional issues involved if India or China are concerned that geo-engineering will cause a persistent failure of the monsoon? None of these issues are trivial or cheap to deal with, and yet few are being accounted for in most popular discussions of the issue (including the chapter we are discussing here).
Is geo-engineering a fix?
In a word, no. To be fair, if the planet was a single column with completely homogeneous properties from the surface to the top of the atmosphere and the only free variable was the surface temperature, it would be fine. Unfortunately, the real world (still) has an ozone layer, winds that depend on temperature gradients that cause European winters to warm after volcanic eruptions, rainfall that depends on the solar heating at the surface of the ocean and decreases dramatically after eruptions, clouds that depend on the presence of condensation nuclei, plants that have specific preferences for direct or diffuse light, and marine life that relies on the fact that the ocean doesn’t dissolve calcium carbonate near the surface.
The point is that a planet with increased CO2 and ever-increasing levels of sulphates in the stratosphere is not going to be the same as one without either. The problem is that we don’t know more than roughly what such a planet would be like. The issues I listed above are the ‘known unknowns’ – things we know that we don’t know (to quote a recent US defense secretary). These are issues that have been raised in existing (very preliminary) simulations. There would almost certainly be ‘unknown unknowns’ – things we don’t yet know that we don’t know. A great example of that was the creation of the Antarctic polar ozone hole as a function of the increased amount of CFCs which was not predicted by any model beforehand because the chemistry involved (heterogeneous reactions on the surface of polar stratospheric cloud particles) hadn’t been thought about. There will very likely be ‘unknown unknowns’ to come under a standard business as usual scenario as well – another reason to avoid that too.
There is one further contradiction in the idea that geo-engineering is a fix. In order to proceed with such an intervention one would clearly need to rely absolutely on climate model simulations and have enormous confidence that they were correct (otherwise the danger of over-compensation is very real even if you decided to start off small). As with early attempts to steer hurricanes, the moment the planet did something unexpected, it is very likely the whole thing would be called off. It is precisely because climate modellers understand that climate models do not provide precise predictions that they have argued for a reduction in the forces driving climate change. The existence of a near-perfect climate model is therefore a sine qua non for responsible geo-engineering, but should such a model exist, it would likely alleviate the need for geo-engineering in the first place since we would know exactly what to prepare for and how to prevent it.
Does reducing global warming imply changing human behaviour and is that possible?
This is a more subtle question and it is sensible to break it down into questions of human nature and human actions. Human nature – the desire to strive for a better life, our inability to think rationally when trying to impress the objects of our desire, our natural selfishness and occasionally altruism, etc – is very unlikely to change anytime soon. But none of those attributes require the emission of fossil fuel-derived CO2 into the atmosphere, just as they don’t require us to pollute waterways, have lead in gasoline, use ozone-depleting chemicals in spray cans and fridges or let dogs foul the sidewalk. Nonetheless, societies in the developed world (with the possible exception of Paris) have succeeded in greatly reducing those unfortunate actions and it’s instructive to see how that happened.
The first thing to note is that these issues have not been dealt with by forcing people to think about the consequences every time they make a decision. Lead in fuel was reduced because of taxation measures that aligned peoples preferences for cheaper fuel with the societal interest in reducing lead pollution. While some early adopters of unleaded-fuel cars might have done it for environmental reasons, the vast majority of people did it first because it was cheaper, and second, because after a while there was no longer an option. The human action of releasing lead into the atmosphere while driving was very clearly changed.
In the 1980s, there were campaigns to raise awareness of the ozone-depletion problem that encouraged people to switch from CFC-propelled spray cans to cans with other propellants or roll-ons etc. While this may have made some difference to CFC levels, production levels were cut to zero by government mandates embedded in the Montreal Protocols and subsequent amendments. No-one needs to think about their spray can destroying the ozone layer any more.
I could go on, but the fundamental issue is that people’s actions can and do change all the time as a function of multiple pressures. Some of these are economic, some are ethical, some are societal (think about our changing attitudes towards smoking, domestic violence and drunk driving). Blanket declarations that human behaviour can’t possibly change to fix a problem are therefore just nonsense.
To be a little more charitable, it is possible that what was meant was that you can’t expect humans to consciously modify their behaviour all the time based on a desire to limit carbon emissions. This is very likely to be true. However, I am unaware of anyone who has proposed such a plan. Instead, almost all existing mitigation ideas rely on aligning individual self-interest with societal goals to reduce emissions – usually by installing some kind of carbon price or through mandates (such as the CAFE standards).
To give a clear example of the difference, let’s tackle the problem of leaving lights on in rooms where there is no-one around. This is a clear waste of energy and would be economically beneficial to reduce regardless of the implications for carbon emissions. We can take a direct moralistic approach – strong exhortations to people to always turn the lights off when they leave a room – but this is annoying, possibly only temporary and has only marginal success (in my experience). Alternatively, we can install motion-detectors that turn the lights out if there is no-one around. The cost of these detectors is much lower than cost of the electricity saved and no-one has to consciously worry about the issue any more. No-brainer, right? (As as aside, working out why this isn’t done more would be a much better use of Levitt and Dubner’s talents). The point is changing outcomes doesn’t necessarily mean forcing people to think about the right thing all the time, and that cheap fixes for some problems do indeed exist.
To recap, there is no direct link between what humans actually want to do and the emissions of CO2 or any other pollutant. If given appropriate incentives, people will make decisions that are collectively ‘the right thing’, while they themselves are often unconscious of that fact. The role of the economist should be to find ways to make that alignment of individual and collective interest easier, not to erroneously declare it can’t possibly be done.
What is the real lesson from the horse-to-automobile transition?
Around 1900, horse-drawn transport was the dominant mode of public and private, personal and commercial traffic in most cities. As economic activity was growing, the side-effects of horses’ dominance became ever more pressing. People often mention the issue of horse manure – picking it up and disposing of it, it’s role in spreading disease, the “intolerable stench” – but as McShane and Tarr explain that the noise and the impact of dead horses in the street were just as troublesome. Add to that the need for so many stables downtown taking up valuable city space, the provisioning of hay etc. it was clear that the benefits of the horse’s strength for moving things around came at a great cost.
But in the space of about 20 years all this vanished, to be replaced with electrified trolleys and subways, and internal combustion engine-driven buses and trucks, and cars such as the Model-T Ford. Almost overnight (in societal terms), something that had been at the heart of economic activity had been been relegated to a minority leisure pursuit.
This demonstrates very clearly that assumptions that society must always function the same economic way are false, and that in fact we can change the way we do business and live pretty quickly. This is good news. Of course, this transition was brought about by technological innovations and the switch was decided based on very clear cost-benefit calculations – while cars were initially more expensive than horses, their maintenance costs were less and the side effects (as they were understood at the time) were much less burdensome. Since the city had to tax the productive citizens in order to clear up the consequences of their own economic activity, the costs were being paid by the same people who benefited.
Levitt took this example to imply that technological fixes are therefore the solution to global warming (and the fix he apparently favours is geo-engineering mentioned above), but this is a misreading of the lesson here in at least two ways. Firstly, the switch to cars was not based on a covering up of the manure problem – a fix like that might have involved raised sidewalks, across city perfuming and fly-spraying – but from finding equivalent ways to get the same desired outcome (transport of goods and people) while avoiding undesired side-effects. That is much more analogous to switching to renewable energy sources than implementing geo-engineering.
His second error is in not appreciating the nature of the cost-benefit calculations. Imagine for instance that all of the horse manure and dead carcasses could have been easily swept into the rivers and were only a problem for people significantly downstream who lived in a different state or country. Much of the costs, public health issues, etc. would now be borne by the citizens of the downstream area who would not be benefiting from the economic prosperity of the city. Would the switch to automobiles have been as fast? Of course not. The higher initial cost of cars would only have made sense if the same people who were shelling out for the car would be able to cash in on the benefits of the reduced side effects. This is of course the basic issue we have with CO2. The people benefiting from fossil fuel based energy are not those likely to suffer from the consequences of CO2 emissions.
The correct lesson is in fact the same as the one mentioned above: if costs and benefits can be properly aligned (the ‘internalising of the externalities’ in economist-speak), societies and individuals can and will make the ‘right’ decisions, and this can lead to radical changes in very short periods of time. Thus far from being an argument for geo-engineering, this example is an object lesson in how economics might shape future decisions and society.
Finally
To conclude, the reasons why Levitt and Dubner like geo-engineering so much are based on a misreading of the science, a misrepresentation of proposed solutions, and truly bizarre interpretations of how environmental problems have been dealt with in the past. These are, in the end, much worse errors than their careless misquotes and over-eagerness to shock highlighted by the other critiques. Geo-engineering is neither cheap, nor a fix, and the reasons why it is very likely to be a bad idea are ethical and legal, much more than its still-uncertain scientific merits.
tharanga – “None of that has any bearing on my points: The actual efficiencies of photovoltaics are well below any thermodynamic limit, so boasting of a high thermodynamic limit is pointless. And energy efficiency does not necessarily tell you much about cost efficiency, which in the end, determines what gets built. If solar cells were only 2% efficient, but somehow the resulting solar energy cost 3 cents per kWh, you’d still happily build solar cells left and right.”
Good points there – but the second (and first) law of thermodynamics is handy to give an upper limit for all technology for a given heat source and sink – further specification of the technology may and will impose other limits.
Fossil fuel and nuclear power plants also operate far below the thermodynamic limits, as defined by the available free energy of the fuel. Fossil fuel plants and nuclear power plants are generally a bit over 30 % efficient (natural gas plants do a bit better than others) in conversion of fuel energy to electricity; I’m not sure but I would guess solar thermal power plants are generally in the same range. If the right technology came along, we could drastically cut emissions and still be dependent on fossil fuels without any energy use efficiency improvements (but why stop there?). Well, there is the concept of using waste heat from power plants (and that could be applied to renewable heat to electricity conversion plants as well) – this is particularly amenable to industrial on-site electricity generation. Whatever happened to magnetohydronamic generators? What would be awesome is if hydrogen could be stripped from the hydrocarbons and used in fuel cells – there would be energy loss from unoxidized C, but that cuts the CO2 emissions out, and the fuel cell conversion would be more efficient. Although I have read that fuel cell technology can also apply to CO, in which case, you’d have the emissions but you might still get more electricity per emission. Now if the H and CO came from biomass… Also, I have read of a bacterial fuel cell in which the bacteria feed on sugar and actually produce a usable voltage between electrodes. But I digress…
Anyway, it is nice to know that solar cells have the potential to improve. See 341 Hank Roberts’ comment above – the limit there is lower than the upper limit for all solar cells because it applies to a specific category. Conventional single-junction solar cells can only convert photons to electron-hole pairs when the photon has energy greater than or equal to the band gap energy (the energy gap between the top of the valence band and the bottom of the conduction band), while of all the energy of those photons, any that is greater than the band gap tends to be thermalized as the excited charge carriers fall back towards the band edges. (The simplest way photons produce electron-hole pairs is for a single photon to excite an electron from an occupied state to an unoccupied state; because the photon has very little momentum, the wave vector k of the electron remains approximately unchanged; energy bands can be approximated as a continous set of electronic states in which energy varies as a function of k; within that band, electrons can move to different states by changing energy and k via phonons (I think); the valance and conduction bands can actually consist of multiple such bands that overlap in energy values, and there are other bands above and below, but the top of the valence band and the bottom of the conduction band are those available energy levels that come closest to the fermi level from either side; in thermodynamic equilibrium the occupied states as a fraction of available states varies with energy with a distinct shape that goes from near 100 % below the fermi level (which is within the band gap for semiconductors) to near 0 % above the fermi level, and the range of energy values with intermediate fractions expands with increasing temperature, but the fraction of occupied states will always decrease going to higher energy levels when in local thermodynamic equilibrium, and so charge carriers (when defined as holes in the valence band) tend to fall towards the fermi level from either side. In a direct band-gap material, the band edges closest to the fermi level occur at the same k; in an indirect band-gap material, the band edges do not occur at the same k, so at any given k, the difference in energy between valance and conduction bands is always greater than the band gap, so photons have to reach a threshold energy somewhat greater than the band gap before they can produce electron-hole pairs as described above (unless there’s something about excitons?… that’s going way beyond what I know); processes that allow photons closer to band gap energy to produce usable electron hole pairs tend to occur more rarely, and so a thicker layer of material (or light-trapping) is needed to absorb a good fraction of those photons, as is the case for c-Si. Anyway, the maximum efficiency of such a device, in terms of electrical power output per unit incident radiant flux, varies as a function of band gap energy and of the spectrum of radiation – for solar radiation at least, the general tendency (will be distorted a bit by water vapor absorption bands in solar IR in particular and various other bumps in the spectrum) is for small band gap energies and large band gap energies to have lower potential efficiency than intermediate values, because at higher band gap energies, fewer photons can be utilized, while at lower band gap energies, a lot more of the photon energy of those which do produce electron-hole pairs is converted to heat. Further constraints on efficiency come from theoretical limits on how charge carriers drift and recombine, probably related to the necessary built-in potential (vanishes at open circuit, is necessary to organize charge carrier drift, reduces the voltage of the output of the cell), which is related to the fill factor (maximum power that can be produced divided by the product of the short circuit current (maximum built-in potential in the absence of an externally-applied voltage), zero output voltage) and the open circuit voltage (maximum output voltage in the absence of externally-applied voltage, zero built-in potential). I think higher photon absorption rates per unit volume tend to result in higher fill factors; fill factor tends to decrease with decreasing incident radiation flux … and there are many many interesting details that I couldn’t possibly go into because I don’t know enough.
This limitation doesn’t equate to the Carnot efficiency, but it is obvious that a solar cell cannot produce power from a radiation source at the same temperature. If the solar cell is at local thermodynamic equilibrium with the exception of energy produced from absorbed incident radiation, then it will have to be able to emit as well as it can absorb at any one wavelength (in any given direction, in any given polarization), which means it would be in radiative equilibrium with an opaque cavity at the same temperature.
PS for solar thermal power, the heat flux available to conversion to electric energy could increase even faster with decreasing temperature of the heated material relative to solar radiation than is implied by using the difference in the fourth power of temperature (even if the available radiation were as if from a perfect isothermal blackbody) – the reason is that the spectrums shift away from each other; if the heated material has greater absorptivity at short wavelengths and less at longer wavelengths, then allowing it to cool will decrease the radiant energy loss faster than the the change in the fourth power of temperature. By the way, this would be loosely/broadly analogous to a greenhouse effect.
—-
Chris:
“Also, how will people be able to farm “around the bases” of solar panels if the solar panels are blocking out the sun?”
Shade grown crops. Diffuse light will come in from the sides.
Although the ‘farm around the bases’ sounds more like a characteristic of wind power. With solar power, when in semi-arid land, the rainfall would (via runoff from panels, etc.) be concentrated in between panels or on neighboring land, potentially boosting the agricultural value of that land.
“If we look at SEGS VIII and IX in California they take up 1 Km^2 but their output is only .45% (that’s .0045) of the total energy needed for the state. That means you would need around 450 new plants for California alone, in similarly ideal locations, for the demand that California has right now.”
0.45 % * 450 = something larger than 100 %.
But even 450 km^2, or lets say 600 km^2 (making up for less than ideal conditions), is actually quite small – I’m surprised that would be sufficient. But assuming 1 m2 of panel area per 3 m2 of land (it might be smaller or larger but probably somewhere around there for flat panels at fixed tilt) and incident solar radiation on panels of 200 W/m2 (it would be higher than that on ideal land, provided the panels are not packed too closely), and efficiency of perhaps 7 % (may include some losses outside the panel and a little bit of performance decay – I’m not quite sure this is the best number to use), we get a time average of 4.67 W/m2 of land, or 4.67 MW of average power from 1 km2, or 2.8 GW of power from 600 km2. That’s not enough for CA. You’d need roughly 100,000 km2 (a bit over 1 % of U.S. land) under those conditions to supply all U.S. electric power. Still, the land that would actually be needed is not that big compared to CA (and by the time a significant fraction of necessary power is supplied, conversion efficiency may be larger, and maybe my 1/3 ratio of panel area to land area was too low, and cheaper technology could allow for sacrificing average panel insolation to gain greater time-average power output per unit land. Might solar power collectors be floated on already existing artificial reservoirs (which would reduce evaporation, perhaps helpul in a drying West)).
“but can you really say that ALL our power can be solar given the limited amount daylight and space available?”
Storage. Solar thermal power has an option of hourly-diurnal scale storage built into the concept. For seasonal storage, hydrogen and CAES. There’s also pumped water storage. Also, desalinate and pump water during sunny droughts, use more (no need for ALL our power to be solar) hydroelectric power and geothermal, biofuel, etc. when necessary. Adapt industry to resources (as has been done before). HVDC lines. Maybe smart appliances with flexible schedules (refrigerator, air conditioner) respond to short term cloud variability. Wind energy, too. Etc.
“Still, the land that would actually be needed is not that big compared to CA ”
That’s for CA energy usage – I’m not sure what it is, but it’s not much more than 10 % (or even that?) of U.S. population.
Another thing about taxes and spending –
Obviously, when money flows to the government via a tax, it can’t just be transported to the future to be spent on things at that time – even if it could, actually wealth could not follow – instead, the result would be deflation (relative to whatever background tendency there is) during taxation and inflation during spending.
In the simplest possible tax/spend structure, where there is a tax on emissions (or other externalities) as they are emitted, supporting some type of spending at that time, and then in the future, there is spending to compensate for losses, with revenue coming from whereever, the result is (if formulated correctly):
Emitters pay a fair price; those who suffer losses recieve a fair compensation.
But this is linearly superimposed on (setting aside the effects of the unspecified sinks and sources of public funds):
During time of emission, there is to a first approximation no net cost to society as a whole – which means that they are still benifiting from the emissions without paying for them.
During the time of compensation, there is to a first approximation no net benifit to society as a whole, which means they are not as a whole being compensated.
However, this doesn’t at all argue against the effect of the price signal on emitting economic pathways – it would still encourage mitigation via market mechanisms.
Future generations generally do benifit from the past via accumulated technology advances, economic progress in general, and more general cultural inheritence, even as they face scarcer resources. Thus, there is a trade off and leaving future generations with less of something is not necessarily unfair. However, the goal is not to be fair – although fairness is an important consideration, what they goal is is the best. Obviously, the future can’t be compensated for climate change from inherited benifits if climate change obliterates those inherited benifits.
PS I think I forgot to point out above that the future trajectory of population also affects the public costs of climate change from emissions today. And so on…
And then there’s the discount rate. Intergenerational ethics. Etc.
Anyway:
Specifying the as of yet unspecified could allow for some adjusting of this picture. Obviously, investing the tax revenue in measures that reduce the future losses due to climate change would make perfect sense. This could include mitigation (which also benifits/compensates the future by reducing their own emissions taxes that have to be put into such public investments as mitigation and adaptation as opposed to stuff they would rather have if they could).
But it gets weird when the revenue pays for mitigation, because the most obvious relationship that is justified by principle is that the tax rate is such that revenue be equal to what is necessary to compensate or ameliorate, etc, the effects of the externality – thus, the tax rate represents the cost of each unit of externality, which would be constant aside from nonlinearities that make the tax rate dependent on the future externality trajectory, among other things, and potentially variable in time on time scales longer than the longevity of the externality accumulation.
However, public spending on mitigation increases the price signal and reduces the future emissions/etc. more/faster than otherwise. Spending on mitigation may well be justified (for reasons mentioned before along with this one – it plays the same role as public investment in adaptation measures to reduce future losses to climate change), but it’s mathematical proportionality to tax revenue is different. Does this mean the tax rate will vary with time according to cummulative public spending on mitigation? Well, maybe it should…
Chris:
Every desert doesn’t have to become a mirror. Do the math.
How many coal-fired power plants currently operate in California?
Yes, easily. Do the math.
Hank Roberts (#342, 30 October 2009 @ 1:11 PM):
Levitt and Dubner, who? I think that the bottom of old threads is seen as the place for poorly conceived, off topic rambles.
Steve
“Mark, 335: None of that has any bearing on my points: ”
It has HUGE bearing on your facaetious and fatuous comment #326:
“321: Did you just calculate a Carnot efficiency with the surface of the sun as the heat source, and try to apply it to solar cells? That’s, um, innovative.”
To which the efficiency of what we build is NEVER at the carnot efficiency, so saying “it’s only 30%” is irrelevant point. Hence my post is irrelevant to your later posts about what efficiency rates we get: it has ABSOLUTELY NOTHING to do with your post in 326 which was a response to my post 335.
Ergo “no bearing on my point” is bull: your point wasn’t what we get from PV but your apparent incredulity that carnot cycle efficiency was applicable, so it doesn’t HAVE to have bearing on the points I wasn’t answering.
tharanga – ” If solar cells were only 2% efficient, but somehow the resulting solar energy cost 3 cents per kWh, you’d still happily build solar cells left and right.”
Other point: efficiency will influence the cost. For a given panel output at a given cost per unit power, higher efficiency reduces the area needed by the panel, possibly the necessary materials (especially the non PV materials – less glass or plastic, to some extent less metal in wiring, less structural support), and some manufacturing costs of the panel itself, plus the land area (directly and by allowing greater output from roof space), and balance of system components related to panel area (mounting, tracking if that is used) and maintanence of panels (occasional washing or clearing of snow, etc.). Less sensitive to efficiency of panels are the costs of inverters, storage, HVDC, etc.
11:
I’m obliged to John Atkeison for pointing out he read the geoengineering ”
excerpt from the book in the Sunday Parade magazine”
It’s a locus classicus of policized science, the venue then-science editor Carl Sagan used in 1983 to impose a “sophisticated one dimensional model ” of a global deep freeze on the popular imagination.
Having the largest circulation of any magazine , Parade’s capacity to inflict factoids remains unrivaled in print. But whatever it carries, from ‘nuclear winter ‘ to Freakomonics, must first be edited down to the lowest common denominator to fit its yack TV demographic.
This leads to an interesting division between policy investors who view Freakonomics as a threat to Cap and Trade, and those who view the dumbing down of geoengineering as a necessary prelude to making it an investment vehicle.The lack of crosstalk between Parade readers and New Yorker subscribers explains why Maocolm Gladwell’s coverage of the same events in May 2008 passed almost unnoticed, while a firestorm has erupted around Freakonomics pre-Copenhagen floating of Geoengineering Lite.
I still must take exception to Atkeison’s elision of media events and reality. Writing as though Katrina’s aftermath had something to do with real-time sea level change, he says “Here in New Orleans it was the poor working class who suffer the most… those who have contributed the least to the problem are those hit hardest and first, especially in the global sense. (I am happy to report that our daily paper also carried the Maldives underwater story prominently as well.)”
This just doesn’t wash-while the Maldives remain above sea level, the waterlogged neighborhoods of New Orleans were below it to begin with.
Those decrying Republican fondness for uninsurable waterfront property should take scuba gear to Copenhagen to stage a submarine protest against the Maldivian’s bad example in colonizing a chain of so fecklessly low and deservedly deserted islands. It speaks to the intellectual poverty of UNEP’s case that they should make such a demographic outlier their poster child in an epoch that is seeing more land created by poldering , delta growth, and evaporative retreat of lake and sea shores in Asia and Africa that is being lost to Indo-Pacific microstates with single digit average elevations, and out-islands seemingly better fitted for use in New Yorker cartoons than human habitation.
> the Maldivian’s [sic] bad example in
> colonizing … deservedly deserted islands
Two millenia ago, at least. You’re suggesting they should have known better?
http://www.iias.nl/iiasn/iiasn5/insouasi/maloney.html
Re 304 Chris:
“Whatever the costs of maintaining this system are they are surely less than the economic inefficiencies of carbon taxes that result in lower wages and higher prices for the average person.”
So how are you going to pay for this system? Why shouldn’t it be payed with taxes on the thing that made it necessary? And why would taxing a negative externality result in inefficiency – it is the lack of tax that is at the root of the inefficiency. What happens to wages and prices depends on how the revenue is spent.
“The optimum usage is dictated by the global price of coal and oil, which is based on the supply and not the demand as the middle east withholds production.”
Yes, if only some nations reduce usage via a price signal or other means, then there will tend to be a reduction in price, which causes an increase in usage in other nations. But that increase cannot make up entirely for the initial reduction, because that would bring the price back up to where it was. Furthermore, even with some adverse trade effects caused by differences among nations in policy (something with an obvious solution by the way – even without a more comprehensive global agreement, one can have tariffs and/or subsidies for imports/exports), there would be some stimulation of R&D and scaling up of mitigation options, tending to reduce their costs, and making alternatives more palatable elsewhere.
“You will have noticed that China and India refuse to sign a pact to reduce their emissions for our benefit because doing so will add costs to their products and make them less competitive. ”
1. What about their own benifit?
2. The socioeconomic conditions of such nations make it somewhat ridiculous to even ask them to reduce their emissions in an absolute sense when nations like the U.S. haven’t even begun to reduce. It is difficult to be fair in allocating set amounts of emissions to countries – other ideas exist that are better.
“It is also of note that most new office buildings have motion sensors because the owners want to save money (i.e. be efficient).”
That’s great!
“providing a cheaper or near optimal alternative”
Again, price signals help direct spending on R&D among other things.
Re 310 Chris:
“c) that the scarcity of carbon would not force investigations into alternative energy without a tax.”
*** But it will take longer, and the cummulative reductions will be less than is jusitified by the combination of scarcity and externality. ***
359;
“Known better” ?
Whatever Sinhalan sons of Sinbad made landfall there circa 500 AD wisely went for the high ground the oldest stupa foundation stands all of 12 feet above sea level.
Continued from 353, https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-8/#comment-140195
In summary, a tax on emissions and spending of revenue don’t necessarily compensate the future for the effects of those emissions, but does benifit the future by imposing a price signal that drives private sector spending away from emissions-intensive economic pathways and towards alternatives.
Some taxation and spending in the future may compensate for the inequities of the externalities but not necesarily offer much compensation to the future as a whole for those externalities.
Direction of externality tax revenue, perhaps +/- other funds, into investments that benifit the future (scientific and technological progress, planning (the spending-aspect of planning, such as investing in decision making resources and in the power to enact those decisions, etc.), capital goods and infrastructure). Some of this investment (greater than what would otherwise occur) may take place by market mechanisms as people plan for climate change for themselves (private investments). Otherwise the investments would be public spending (public investments). Note that the private investments may in particular not depend on the externality tax revenue, whereas in principle it makes sense for public investments to be in some way related to the tax revenue since their cost reflects the externality. Note also that private investments might be publically compensated either specifically or indirectly from nonspecific spending of the tax revenue; public spending that specifically supports private investments should be counted as public investments here, though they can make use of market mechanisms. Actually, an additional policy might apply to incentive private investments (besides mitigation) in preparation of future consequences – not just via public spending but also taxation on maladaptive behavior. ***This just brings some of the same aspects of spending which I previously mentioned and brings them from the time period of realization of the costs of climate change back to a time period of preparation for climate change (except for that, nothing in this comment and the last economics comment (link at top of this comment) from which this is continued are in disagreement with my earlier series regarding a general policy structure proposal: (
Big policy commnet 1 (MC1)
261
https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-6/#comment-139621
Big policy comment 2 (MC2) (with a beginning portion focussed on technological issues outside the focus of this set of comments)
293
https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-6/#comment-139784
Big policy comment 3 (MC3)
307
https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-7/#comment-139904
additional points, clarifications/corrections, and summary:
317
https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-7/#comment-139994
Summary of Summary:
340
https://www.realclimate.org/index.php/archives/2009/10/why-levitt-and-dubner-like-geo-engineering-and-why-they-are-wrong/comment-page-7/#comment-140126
); this present comment and the one it follows are just to give some additional perspective on mathematical relationships).***
There could be some amount of spending of the tax revenue on sequestration or otherwise direct neutralization of the effects of emissions – to the extent that they exactly cancel the externality, payed at the same rate as the externality tax. Subracting this spending from the tax revenue, we have a net tax revenue that reflects the amount of externality passed on to the public (most of which is realized in the future (it occurs to me that some of ocean acidification in particular would be immediate (although the ecological effects would cascade in time, I’d guess – don’t know all the details – I’d guess some of it is modulated by climate change, too) – whereas even aerosol forcing, when persistent, has a time lag from thermal inertia).
Thus it makes sense that the net revenue would go to paying the cost of investing for compensating the future. Note that the tax rate on the externality depends in part on how effective these investments are; if a small investment could massively compensate, the tax rate would be smaller because the public cost is smaller because of the existence of that option, provided the option can be utilized.
This investment can include general economic investments but also investments specific to adaptation/amelioration and to mitigation. Some portion of those investments pay back via their adaptive/ameliorative and mitigative effects, while another portion may pay back by regenerating funds – the portions can’t necessarily be spent independently of each other; the total would be counted as either one or the other portion depending on the value of the effects – a mathematical procedure to assign value to different aspects of the process.
Note that for public spending, either directly or in support of private spending decisions, for mitigation, has a mitigating effect (M1) that is in addition to the mitigating effect (M0) of the market response to the price signal of the tax.
It might also be justified to spend some additional revenue that is not from the emissions tax on mitigation (M2), in so far as general economic concepts not specific to externalies would justify it.
Spending for M1 is justified in so far as it is an efficient investment – paying back more (via reduced climate change, ocean acidification, etc., and also with regeneration of funds) with less spending – and such efficiency in general should guide how public spending is apportioned.
One effect of the spending on M1 (if not spending on M2) is to bridge what would otherwise be the valley between two optima, or otherwise increase the slope to increase the incentive to mitigate – for example, the mass market advantage delays the point in time at which alternatives can take a given share of the market from the externality-intensive pathways; support of an alternative up to the threshold of mass market advantage, as well as accelerating other improvements in the economic efficiency of the alternative, can, at least up to a point, increase overall economic efficiency.
Earlier I mentioned that spending for M1 was a bit weird – not that it is unwise or unjustified, but that it has a different mathematical relationship to the externality. Over time, this is true; public investment in mitigation effectively compensates the future for externalities by reducing the production of externalities. But if those externalities are not produced, what is taxed to fund that which makes up for the effect of something that didn’t happen? As a solution to that puzzle, I figured some combined modeling could attempt to figure out an optimal trajectory, including spending scenarios, and the tax rate in that optimal trajectory would be justified by a sort of inversion of market behavior – that a market will ideally tend to perform optimally if an externality is corrected (and then consider a perspective in which the government, or at least parts of it (at least the parts that correct externalities and manages the commons) can be seen as an entity within the market (it does provide goods and services (services can be in the form of catalyzing private sector activity)).
But now I’m also thinking that maybe the mathematical relationship for public investment in mitigation is not so different. In particular, public spending on mitigation in any one year would give a benifit to the future by way of reducing subsequent emissions to compensate for some of the emissions from that same year which provided the tax revenue.
Okay, puzzle solved?
(And spending for M2 is justified by, perhaps among other things, the scarcity of fossil fuels – of course, ideal free market response would address the scarcity issue alone just fine, but the gap between new innovation and mass market advantage, and the benefits of a smooth transition, which a realistic market might not produce, may justify such public investment.
Actually, this is a service provided to us by the oil speculators who drove up the price back in early 2008 – Bringing a taste of the future into the present should help the market prepare for the future. Unfortunate that it came in one big surge, though. It may not have been entirely due to the actual future (? a lot was said, and I don’t remember much of it – was it a case of the tulips?)- not that prices couldn’t eventually go even higher after correctiong for inflation.)
(I forgot to point out that increasing investment in such things as capital goods does actually take away benifits to the presentand give them to the future, not that it’s a one-to-one correspondence.
Making capital goods/infrastructure/research/etc. for future economic activity takes away the supply of products and services that people to have for end use now. (Just as making more durable goods reduces the available resources for making marshmallows to eat in the next hour.) In general we make this sacrifice because we plan on us or our childrent, etc, being alive at some future date and wanting stuff, and we never would have gotten to a level of prosperity near what we have without such investments. It is analogous to saving some grains of wheat to plant for next season at the expense of having a little less to eat this year.)
(“Making capital goods/infrastructure/research/etc. for future economic activity takes away the supply of products and services that people to have for end use now. (Just as making more durable goods reduces the available resources for making marshmallows to eat in the next hour.)”
But again, not a one-to-one trade-off. There’s a production possibilities curve, the slope in general is not constant over the range of values.)
______________
I’m done with that. Maybe I can get back to putting together a list of references about renewable energy (I have it but it’s not organized – could still take me a while).
Patrick 027:
I got 450 from .45% because you can only count on sunshine for a maximum of 12 hours a day.
Spending tax dollars on R&D for an externality is an illogical extension of the idea of externalities because it does not pay for costs incurred. We can start from the point of view that the costs will be very large, but that is not certain.
I mean how would you calculate the actual costs to society without knowing what the damage will be? And the damage to whom? And who caused it? People in Kansas may be paying for the mansions in Florida and California that are underwater, but be generally unaffected. How do you justify making them pay for California’s problem? What do people in Bolivia care about coastal flooding when the Andes will surely protect them from any rise in the level of the sea? What are their costs? I don’t think the fact that they may never see a live polar bear in the wild will weigh too heavily on them.
That said. Why would it make a difference if the emissions are now or later if the CO2 is not going anywhere? I think we can safely say that plants are being a little bit lax in their CO2 intake recently. Does the speed at which this stuff happens really matter? How much damage to society do we avoid by merely slowing climate change down?
Chris (#366) said:
“What do people in Bolivia care about coastal flooding when the Andes will surely protect them from any rise in the level of the sea? What are their costs?”
Glaciers retreating, rivers drying up, crops failing, ancient peoples gone for ever? A poignant example:
http://www.guardian.co.uk/world/2009/apr/24/andes-tribe-threat-bolivia-climate-change
Chris, it’s not nice to pose facile rhetorical questions in other people’s name, when you don’t even bother to google their situation.
CM:
Is climate change responsible for diverting the river? Why don’t you read the articles you cite?
Re Chris 366:
“I got 450 from .45% because you can only count on sunshine for a maximum of 12 hours a day.”
in 343 you wrote:
“If we look at SEGS VIII and IX in California they take up 1 Km^2 but their output is only .45% (that’s .0045) of the total energy needed for the state.”
I assumed that was a time-average output, thus already accounting for nightime. So, do you know if this is the case or not?
Otherwise, were you refering to capacity? If so, is it the capacity as a fraction of average power usage or as a fraction of total power generating capacity?
—
12 hours a day?
100/0.45 = 2000/9 ~= 222.22. 222.22 * (24/12) = 444.44, so your math is correct.
But if you were going by the capacity, then the above equation takes into account a capacity factor of 0.5 That’s the maximum capacity factor (not counting a very very slight gain from atmospheric refraction) you can get in the annual average, assuming you go by the output for the maximum insolation per unit (tilted) area you can get as your capacity (at the utilized wavelengths, etc.), as opposed to the the output for the a standard 1 sun insolation, which can be exceeded at higher elevations … -to realize this capacity factor, you would need two-axis tracking (as would be typical for parabolic dish technology or a mirror array with a central reciever), and the solar flux per unit area would have to be invariant over the entirety of daylight hours, which it won’t be because, even with the clearest, dryest skies, more sunlight will be absorbed and scattered by the atmosphere when the sun is nearer the horizon.
For fixed tilt flat panels, you could get capacity factors over 0.25 in the best places; many places will give you near or greater than 0.2. Capacity factors for geometric concentrators depend on direct-beam solar radiation, which will lower the capacity factor, although the capacity factor is increased via tracking; within the U.S., geometric 2-axis tracking concentrators can get greater capacity factors than fixed flat panels in much of the West.
Diurnal-tracking and 2-axis tracking concentrators, however, require greater land area to spread out the collectors so that they do not cast much shadow on each other. The land area needed for a given area of fixed panel or seasonal tracking collectors is not as large to reduce shadowing by the same amount. (The arc of the sun only shifts by a range of ~ 50 degrees over a season, whereas the equinox sun traces a full semicircle; on the summer side of the equinox, the sun actually traces out more than 180 degrees – relative to a latitude-tilt axis with tracking at precisely the same period as the solar day (sidereal days slightly shorter), the panel would actually point somewhat downward at sunrise and sunset to aim at the sun in spring/summer; in fall/winter it would be somewhat upward – this reflecting the changing length of the day. On the other hand, a diurnal tracking axis could be horizontal, in which case the rotation rate would have to be variable but the collectors would only go through a half-circle each day. Of course, if the solar collector array were on an equatorward facing slope with latitude tilt, then the daylight hours would be limited to 12 hours in spring/summer.
Note that fixed panels at latitude tilt would recieve only 12 hours of direct beam insolation; panels with less tilt could recieve more, though the winter output (not effective daylength) would be reduced for direct beam insolation. An east-west axis could be used for both seasonal and daily tracking – at equinox, there would be no daily tracking; at the summer solstice, the collectors would have to point poleward early and late in the day. When there are overcast skies with isotropic diffuse radiation (that probably never exactly happens, of course), the best panel orientation tends to be pointed straight upward; geometric concentrators that don’t use diffuse light needn’t worry about that.
While land use will be greater per unit capacity for 2-axis and north-south axis (rotating east-to-west) diurnal tracking, the capacity factor will be larger for the same collector technology (flat panel or geometric concentrator); the geometric concentrators will have smaller capacity factors for the same tracking set-up; but geometric concentrators tend to have a higher conversion efficiency, and can also be used for direct heating needs (parabolic troughs are sufficient for temperatures used in a good portion of industrial processes).
“For fixed tilt flat panels, you could get capacity factors over 0.25 in the best places”
Just to be clear, by ‘best places’, I didn’t mean a few acres of land here and there; so far as the U.S. is concerned, a capacity factor of 0.25 or greater can be achieved in a large chunk of the desert Southwest ( including almost the entirety of AZ and NM).
Chris, the article framed the water diversion in question as a matter of competition for resources increasingly scarce in the context of climate change, and quoted an expert who referred to the group in question facing a double whammy of competition and climate change. But okay, you’re not obliged to accept that interpretation, of course — on reflection, I have some problems with it myself. Certainly the Uru community is struggling with many different problems, and to claim that (man-made) climate change that is already worsening their situation is contentious. (To point out the vulnerability to climate change of people eking out their existence in extreme environmental conditions, on the other hand, should be uncontroversial.)
The article also referred to erratic rainfall and disappearing glaciers, two major climate change issues for Bolivia more generally (though in parts of the country, the problem has been too much rain and flooding rather than too little, and melting glaciers too cause floods in the short term).
Your assumption was that Bolivians wouldn’t worry about climate change impacts because they wouldn’t care about the sea level or polar bears. My point was that they have other things at stake.
But I’ll try to be more discriminating with my cites. Here’s one from the IPCC to round off the Bolivia discussion, which was tangential to the questions you tried to raise.
Chris –
— “spending tax dollars on R&D for an externality is an illogical extension of the idea of externalities because it does not pay for costs incurred.”
Yes, I agree, and yet, attempting to pay for the costs incurred can end up including R&D and further public support in mitigation as well as adaptation. It’s just a question of what combination achieves the greatest payback per unit investment.
— “We can start from the point of view that the costs will be very large, but that is not certain.”
It’s very likely more than zero, which is approximately where the policy is now in the U.S.
— “I mean how would you calculate the actual costs to society without knowing what the damage will be? And the damage to whom? And who caused it? People in Kansas may be paying for the mansions in Florida and California that are underwater, but be generally unaffected. How do you justify making them pay for California’s problem? What do people in Bolivia care about coastal flooding when the Andes will surely protect them from any rise in the level of the sea? What are their costs? I don’t think the fact that they may never see a live polar bear in the wild will weigh too heavily on them.”
The tax on externalities would be payed via a tax on the externality-producing activity; market forces will tend to distribute the imposed cost among the willing benificiaries of that activity, thus, those who pay the tax and therefore whatever the tax revenue goes toward are those who are responsible.
It is true that people can also contribute to the cost by maladaptive behavior. Hence my statements above that compensation to specific losses incurred by people or groups of people should be formulated so as to discourage maladaptive behavior and encourage adaptive behavior. This can be done either after the fact, wherein a loss in property value plus investments to mitigate that loss are compensated based on what those things are if the owner takes the most economical available adaptive measures (for a farm, switching to different crops, using efficient irrigation techniques, etc.), and does so ahead of time if that helps (adaptive planning). On the other hand, some portion of that could be done before the fact by the public policies – for example, effectively having a climate-change risk tax and subsidy to discourage maladaptive behavior and encourage adaptive behavior.
Easier said than done? Of course. And approximations will probably have to be used. It won’t be perfect. Why would this necessarily make it worse than doing nothing?
— “Why would it make a difference if the emissions are now or later if the CO2 is not going anywhere?”
If the same CO2 emission is removed from year x and shifted to year x + dx, there will be a period of dx years with less forcing of climate and an increase in forcing at a later time if the emission stays in the atmosphere for the same time after it was emitted.
Over sufficiently long dx (relative to the time scale of atmospheric composition perturbations and natural oceanic pH buffering), spreading out emissions in time would reduce the total climate change and ocean acidification, plust reduce the cost of adaptation further by increasing the time available to adapt. I don’t think this is much of an effect for the time scales of anthropogenic forcing, though.
But the sooner sequestration takes place, the shorter the time period that a given amount of emission has stayed in the atmosphere, and the less time-integrated radiative forcing it has done. In the most simple case wherein a given total amount of emission is released at time 0 and taken out at time t, the greatest difference made to the peak in the climate shift per unit change in t occurs at small t, since the climate change will approach a new equilibrium at larger t (although the longer-term feedbacks and effects such as with ice sheets shouldn’t be discounted).
But when there is ongoing emission, it isn’t so much the timing of each bit of sequestration that matters, but that sequestration starts sooner and ramps up sooner than otherwise – this doesn’t mean that the subsidy for sequestration would vary with timing; the existence of a subsidy would encourage greater sequestration, starting sooner.
“How much damage to society do we avoid by merely slowing climate change down?”
Likely a bit more than doing nothing, but the goal of these policies is not just slow emission rate growth; they would cause emissions to peak at a lower value than otherwise, and decline sooner, thus tending to reduce the peak in atmospheric CO2, etc, thus tending to reduce the peak global warming.
> best places … desert … almost the entirety of AZ and NM
Off topic, but as an aside, I suggest you look into current uses of the area and include those details in your plans, rather than simply assume they’re empty and available to you. That would be repeating the Pilgrims’ Mistake.
That applies to loading up the Arctic stratosphere with sulfates that will descend into the Arctic Ocean. It also applies to siting solar and wind generators.
Examples of what one can easily find:
http://flyways.us/images/flyway-map-bio.gif
http://www.pacificflyway.gov/Management.asp
See also
http://www.treehugger.com/files/2008/03/migratory-bird-flyways-off-shore-wind-farms.php
http://www.treehugger.com/north_american_migration_flyways.jpg
“rather than simply assume they’re empty and available to you. ”
I never made that assumption, but within a vast area of land, there is some probability of finding parts that are available.
Patrick:
Since peak hours are during the day I assume that SEGS is used to cover the difference between peak load and the base capacity.
An update on the SEGS figures:
Doing the math based on the figures given by the DOE for 2007 (www.eia.gov) in terms of actual energy provided (5.5 Trillion BTU) over the amount used (1975.6 Trillion BTU) that works out to being .28 %. Maybe .45% is an ideal number, but judging from actual output it is nowhere near that amount.
Chris –
– “spending tax dollars on R&D for an externality is an illogical extension of the idea of externalities because it does not pay for costs incurred.”
Me: – “Yes, I agree, and yet, attempting to pay for the costs incurred can end up including R&D and further public support in mitigation as well as adaptation. It’s just a question of what combination achieves the greatest payback per unit investment.”
Okay, in time, a given emission could be made up for in a net time-integrated sense by reducing some future emission in some proportional way.
But in the totality of all emissions ever made, any tax money that goes to mitigation has to be a contribution to what keeps emissions as they are. It cannot actually cancel the emissions that payed the taxes to do so.
And I thought about that earlier.
I think I went about this the wrong way. Here’s a different perspective: When the externality tax is invested in capital goods and similar things, it takes away from the welfare of society at present (more resources directed to capital goods means higher prices for things used at the present time for their own direct value in end use as opposed to value via the value of things they will provide), and gives back to the future (the payback from the investment). When money is invested in solar cells, the result is an energy source with low maintenance costs, etc, for several decades into the future. By paying for the goods up front and eliminating debt and the interest on that debt, a low levelized cost can be realized. Thus investment in solar cells now can provide inexpensive energy to the future. It isn’t that emissions are removed (* they are indirectly via reduced demand for fossil fuels, but that also reduces the total energy consumption, but not back to where it would have been without this spending on energy sources), but that energy is provided at low cost and low externality cost to the future to compensate for the emissions. Similarly, investing in energy efficiency can, depending on economics, reduce costs to the future. Feedback can further reduce emissions to the future via a market response, and yes, this is in addition to the market response to the tax itself, so it would seem like this type of spending, in adding to the effect of the price signal, actually is going beyond the optimum trajectory, if in fact the tax rate was the correct price signal – in other words, the original idea was that the tax rate was equal to the correct price signal that represents the public cost of the externality, and in so doing, the market response is to tend to go toward an optimum which includes the cost of the externality in the measurement of overall economic benifit; thus, additional spending on mitigation would actually go past that optimum, being a net detriment – that is, if we set aside the various imperfections of a market economy besides externalities (the kinks in the supply-demand relationships caused by mass market advantage, for example, which can trap the economy in a local optimum that is lower than another optimum).
But consider this:
What if investment in clean energy and energy efficiency pay back more to the future per unit input than other investments that are meant to make up for the public costs of emissions? Would it not then be quite silly to avoid the more efficient use of funds?
But then, also note that the existence of a more efficient option makes the public cost less, because the externality can be compensated to the same degree for less cost. Thus, IF IT IS (I’m not saying it is, I’m not saying it isn’t) the case that investment in mitigation is more efficient than investment in adaptation or some other combination of things, then the tax rate based on investment in mitigation would be lower than that based on the other options.
Of course, each broad category contains various things, and the cost per unit won’t generally be constant over variation in amounts, so the optimal investment strategy may be a combination of options.
It might be easier to start with an optimal trajectory, whose numerical values are unknown but can be labelled with variables whose values can be solved later. This optimal trajectory may include spending on clean energy and energy efficiency. It also includes a tax rate. Concievably, then, the tax rate doesn’t actually represent the full public cost per unit externality. Yet it does represent the full amount per unit net externality (emissions – sequestration) that the present does for the future in response to the externality.
You know what, I’m going in circles here trying to get it to match up. There seems to be a possibility of two incompatible tax rates or two different total public costs of the externality. It’s a paradox. But it shouldn’t be – mitigation should be an application of the revenue if that’s part of the most efficient combination, and the tax rate should be whatever it should be to, in combination with the correct spending of revenue and some other things, make the optimal trajectory happen.
Because if the tax rate were changed from that value, the trajectory would no longer be optimal, and so the tax would have to be adjusted back to compensate for the public cost.
Oh, Chris, I think “we’ve” made this thing a lot more complicated than it needed to be.
The problem is I started with the knowledge that there is an externality, and put a tax on it, and was then left trying to figure out how to spend the revenue.
But we should do that in reverse.
There’s an externality.
The present and future benifit from the activity that produces the externality. The present (ocean acidification) and future realize the public cost of the externality – but mostly the future (climate change has a lag time from forcing, etc.). There is a mismatch in the timing, and in particular, the externality production itself occurs in the present, thus the decisions affecting it are in the present, based on motivations present (existing) in the present (time), thus it makes since, if there is a tax on emissions in the present, to apply it then.
But aside from that, there is an externality that should in fairness and the interest of optimal market performance be compensated in some way. That compensation for the externality realized in the future may take the form of investments that are a economic sacrifice for the present and earlier future (should this match up with the time scale of the benifits of the emitting activity?) that payback in the later future. This may include investments in alternative economic pathways that emit less (mitigation).
And now we take the public cost of that spending, and use it to determine the proper tax rate. And that tax rate produces a price signal that causes a market response that tends to shift economic activity away from externality-intensive pathways and toward alternatives.
The public cost being determined by the cost of what was necessary to compensate for the externality in an efficient way, the tax rate produces the correct market response, even if the compensation for the externality has a component that is of a similar shape.
In other words, the externality justifies the spending, which justifies the tax, so the tax and market response occur in a world in which public spending on mitigation is a given based on efficient compensation for the externality.
Okay, puzzle solved?
I find it incomprehensible that there is all this discussion about the wildest ideas imaginable including everything from emulating volcanoes to restructuring the economic balance of developed world countries and jaw boning the developing countries into compliance contrary to their perceived interest.
Cutting CO2 due to transportation and cutting CO2 due to electricity generation are real worthy tasks. The challenge is to do these things within the framework of the existing economic systems.
Impossible you say? Well maybe not. Fairly mundane engineering might actually get the job done.
I am sure others besides myself are thinking this way, but for example, we could cut out 80% to 90% of the energy loss in personal transportation by reshaping cars like well known aerodynamic forms like the airship. Maybe it is unknown to many, but the airship has a drag coefficient that is about 20% that of the best production car. There is no need for people to ride side by side in a car to accomplish the main functions of a car, and simply by seating people in tandem, the car aerodynamic drag can be cut by a half on top of the benefit of cutting the drag coefficient.
Steel rails can be laid on highways where the height is about 2 inches. Steel wheels can be incorporated in truck wheels and these would roll on the rails when the rails are present. The rubber wheels would be retained. This hybrid kind of wheel would make trucks about as efficient as trains on long hauls and would still enable the delivery efficiencies that long ago made trucks superior to trains in most overall operations. Coal trains that take 120 cars from mine to power plant are hard to beat, but most other things require more delivery flexibility. The rails would be rounded so cars could cross over them without serious effect.
Then we need the trucks to be shaped aerodynamically, also like the airship perhaps.
These solutions could nearly wipe out the CO2 from transportation, and in the USA this is about a third of all man-made CO2.
The cost of these approaches could be palatable to the public. Energy savings by the trucking industry would be easily seen as a cost benefit. Putting down the rails would be an infrastructure project of significance. A highway engineer involved in replacing a long stretch of Interstate road which had been pounded to near destruction found this to have some possible appeal simply as a way of extending highway service life. Of course, fuel saving for personal cars would be a real incentive.
I have talked before about distributed cogeneration of electricity based on high efficiency cars such as the aerodynamic sort I described above, where the engines running on natural gas, next to households where the engine heat would be utilized by the household, could make that natural gas two to three times more productive than if it was used in a central power plant. This would give economic incentive to shift from coal to natural gas for power generation. The operation of the small generators would be conditional on the ability of the household to use nearly all the heat discharged.
Now we have cut man-made CO2 by about a half in the USA. Would this help more than trying to build a volcano? I think it might.
I hate to be the proverbial hippie, but I do feel I need to make a point. You suggest that we could not justify putting sulfer into the atmosphere because it would be an ongoing project, extremely costly and the extraneous factors or ‘Unknown, Unknowns’ are too many. This may be true but it remains to be pointed out that we are geoengineering this planet’s changes that are occuring currently. Our own industry is an ongoing project, extremely costly, and imperfect. All it seems to do is profit a small amount of people and injure the earth. It is human industry that is forcing these changes and it is an ongoing project spanning hundreds of years. Another argument you have brought up is that humans can be given easy alternatives to implement into daily life and the use of products through research and technology breakthroughs. If we continue to do it like we are and never make any moves towards Fixing(not slowing, because we are passed that point) the process of global warming, what you said about people normally being forced into certain behavioral attributes will come true. We will be forced to live underground or protected by some other means.(this is radical of course)It is however important to not get sucked into the, “Oh we will figure it out and technology will prevail,’ attitude. It is extremely acceptable that we may need to act to undo the damage we have done. We have been geoengineering destruction for years, why not get good at it and geoengineer the planet right?
At any rate I believe this scientific line of reasoning is due some further study and a lot of research. Not a complete downplay of its benefits.
Chris, where will the people displaced by the melting glaciers and other problems near Bolivia go?
Do you think they may consider invading Bolivia?
Now do you think that the Bolivian government and the people themselves would like the prospect?
“This may be true but it remains to be pointed out that we are geoengineering this planet’s changes that are occuring currently….
We have been geoengineering destruction for years, why not get good at it and geoengineer the planet right?”
So because we’re screwing up the planet with one geoengineering feature we should undertake another one???
How about “stopping the geoengineering project we currently have in place”?
Re myself 377:
“That compensation for the externality realized in the future may take the form of investments that are a economic sacrifice for the present and earlier future (should this match up with the time scale of the benifits of the emitting activity?) that payback in the later future. This may include investments in alternative economic pathways that emit less (mitigation).”
specifically:
“(should this match up with the time scale of the benifits of the emitting activity?)”
It is unnecessary to consider that, since the sacrifice is via the cost imposed by the tax and tends to follow along with the benifit of emitting activities.
The taxation plus spending the revenue on investment should have, to a first approximation, no net cost to people in the present who are not benifiting from emitting activity (the stimulative effect to the present economy by the spending would tend to balance the effect of the tax in so far as such people are concerned – of course, few people within a developed nation, and in general, are truly completely out of the loop of benifiting from the emitting activities, but the point is that they would tend to face a cost proportional to their benifit from those activities).
On the other hand, spending for the moment would reward the public of the present for nothing in particular and leave the future to face the cost.
Of course, the two can’t necessarily be completely seperated – spending for the moment can end up benifiting the future in some ways (even the benifit to the end-user is not the ultimate end, because that person may still interacts with society).
It is possible to consider that, over time, a diffusion of benifit to the public does occur, and this could be subtracted from the public cost of the externality to find a net public cost, which is that portion which should be made up for by spending, including investments. But this public benifit can’t simply be taken to be the average per capita effect – it would have to only apply to benifits that were not motivators of the behavior – the positive externalities of economic activity. (? Otherwise, the policy could end up sending a negative price signal for emissions in the short term, as judged by the optimal trajectory not being an actual halting of all emissions right NOW (because this would remove much of the ability to develop alternatives and cause much harm to people anyway)?)
Mark (#380), not such a likely scenario perhaps? (Poor Andean peasants are no invasion force.) Heightened international tensions over upstream water-diversion projects sounds possible. But I’d guess *internal* civil unrest over water would be security concern #1.
Anyway, I apologize for starting this off-topic ‘Bolivia’ digression: please, let’s not go off on my tangent. Chris and Patrick were having an interesting and vaguely on-topic discussion of economics before I butted in.
Patrick:
The problem is that there cannot be an “efficient” compensation for the externality based on the “unknowns” and “unknown unknowns” of the situation. It is completely arbitrary. To come full circle with this point for CM. I believe that this is exactly why there is a “do-nothing” attitude from Levitt and Dubner and other Economists who are not adherents to the “Public Choice” Theory of economic analysis (e.g. Krugman (who was an advisor to Enron btw)). The “do-nothing” attitude stems not from the denial of the problem, but from the inadequacy of the solutions available. The “externality” theory was created by the release of the report by Stern. However, this would be like saying that CO2 emissions are equivalent to normal pollution, which, despite what the EPA says, they are not because they are not localized (i.e. there is no significant difference in the long-term concentration of CO2 in any one location). What cap-and-trade or any other tax on carbon amounts to is just a tax, no matter what fancy term you come up with to justify it.
As a climate neutral example of this kind of revenue/subsidy matching there was a bill in Congress to impose a $1 tax on every phone line in America with the proceeds to be used to develop internet and telecommunications infrastructure in rural areas. This bill may seem to you to have nothing to do with a tax on Carbon as there is no externality related to phones, but it would have the same effect as cap-and-trade. The bill would have taxed new phones, driving smaller telecommunications companies out of business and increasing the costs to the consumer, while providing a subsidy to the politically appointed companies responsible for creating the infrastructure in rural communities.
Similarly, cap-and-trade causes a distortion in demand (of a much larger order of magnitude) at the cost of higher prices to consumers and lost jobs in manufacturing and other low skill areas (making it extremely regressive) to provide subsidies for R&D in renewable energy. However, the subsidies would go to renewable energy producers not based on the probability that they would be efficient (we have Venture Capitalists to do that without subsidies) but on how politically attractive the projects are to various Congresspeople.
Such a development would be bad for the economy and potentially ruinous for any innovative ideas in the field of renewable energy. The distortion in supply would crowd the marketplace, which would lower potential profitability and adversely affect the risk-reward ratio for investment and affect capital formation for workable ideas. All R&D for renewables might have to be funded by the government due to the lack of private initiatives and the government will have to construct these projects and maybe nationialize the power grid or create some GSE for renewable energy. The decline will not be immediate as there are innovations right now that will be pursued due to the financing that is currently there without this subsidy. However, having Government pick the ideas that are “winners” will certainly cause future good ideas or productive lines of research to be abandoned.
All of this, of course, neglects the costs of future emissions (i.e. the externality itself). R&D does nothing to defray the costs of an environmental catastrophe. There is no fund for flooding in Florida etc. so that is an additional cost to the R&D that was subsidized. As I have said before, the amount of decrease in global emissions (unlike straight pollution where they come from does not matter except in some abstract moral sense) in the long-term due to taxes will be minimal as emissions will shift to countries that care about being competitive more than environmentally friendly. Ex: California has net imports of energy from Mexico and there is no reason why that would not continue to grow as the power will be cheaper. The alternative being that companies simply move their manufacturing operations offshore (ala Intel).
To tie this into L&D (again) limiting emissions is not only expensive in the actual money diverted and extra costs incurred, but the opportunity costs of lost productivity, jobs and better ideas that come from a competitive (economically not politically) marketplace. The approach of combatting climate change without limiting emissions is thus the better and cheaper way to go for society. Even if “global cooling” is not the answer it is a step in the right direction because it is based on sound economics and not on arbitrary assumptions about costs that cannot be identified as a way of creating so many pork barrel projects for Congress to subsidize.
chris –
“The “externality” theory was created by the release of the report by Stern. ”
I think the concept has been around quite a bit longer than that and CO2 and other emissions obviously fit the bill.
“However, this would be like saying that CO2 emissions are equivalent to normal pollution, which, despite what the EPA says, they are not because they are not localized (i.e. there is no significant difference in the long-term concentration of CO2 in any one location). ”
How does that make it not an externality? I suppose I could see your point if it were automatically the case that all people benifited equally from the emitting activity and thus any person’s decision to reduce emissions would be accompanied by a full realization of the benifits of the individual action over time because everybody else automatically does the same. But this is not the case. There are some complexities with intergenerational ethics and the effects being contingent on future decisions, but that doesn’t make the problem go away. (While the identities, much less the actions and preferences, of future people are yet undetermined, the statistics of the group should be more predictable. We have some influence over future population growth or lack thereof, and other things – these needn’t be treated as complete unknowns anyway.)
” What cap-and-trade or any other tax on carbon amounts to is just a tax, no matter what fancy term you come up with to justify it.”
Gee, and I’ve tried so hard to avoid using the word ‘tax’ up till now :)
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“This bill may seem to you to have nothing to do with a tax on Carbon as there is no externality related to phones,” …
Not directly. Presumably the idea is to reduce transportation by increasing communication. It’s a bit clumsier than using an imposed price signal to increase the demand for communication to encourage development of communication infrastructure. On the other hand, such infrastructure issues may benifit from some public planning and targeted incentives.
…”but it would have the same effect as cap-and-trade. The bill would have taxed new phones, driving smaller telecommunications companies out of business and increasing the costs to the consumer, while providing a subsidy to the politically appointed companies responsible for creating the infrastructure in rural communities.””
Taxed new phonse because ? Maybe the logic was that redirecting the revenue to specific parts of the communications sector would have a net benifit by way of reducing transportation energy use? That said, it makes more sense to pay for it with revenue from an emissions tax.
There is also the problem that this type of policy implies that the population distribution as is is a public good – which is to say, it subsidizes rural living. Maybe the climate tax would cause some partial depopulation of rural areas, and that would be a good thing if that is what happens. But maybe there is a public benifit to some rural population. Maybe we want to maintain rural population until the incentives from wind and solar power production are sufficient to keep the rural population there, because otherwise, there might be some migration into urban areas followed by migration out of urban areas, which has some cost that could be avoided if such temporal blips were smoothed-over (similar problem with the housing bubble – we built a bunch of houses, we destroy some houses, we build them again inevitably…).
And then, maybe the smaller businesses should go out of business if they aren’t efficient enough. Or is there a public value to having such competition? – would this pruning risk monopoly? If the rural telecommunications businessess serve some public purpose should they not be subsidized?
But I couldn’t claim to know the actual economics of such a policy. It might be good, it might be bad.
All the same, it does sound like a clumsy move to me. The problem with climate change legislation thus far is that politicians are reluctant to do the most sensible thing; they don’t want to have to force their constituents to take personal responsibiliy (which is ironic since this is especially true of Republicans on this issue, the so called advocates of personal responsibility – yeah right!).
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“Similarly, cap-and-trade causes a distortion in demand (of a much larger order of magnitude) at the cost of higher prices to consumers and lost jobs in manufacturing and other low skill areas (making it extremely regressive) to provide subsidies for R&D in renewable energy.”
Therein does NOT lie the distortion (except in some potential specifics, such as if they only focus on large emitters (to protect small businesses?), ignore some consequential emissions categories, and specifically allocate caps to various sectors – but do note I have already stated that I am against those kinds of things.). That is a corrective lens for a preexisting distortion.
“However, the subsidies would go to renewable energy producers not based on the probability that they would be efficient (we have Venture Capitalists to do that without subsidies) but on how politically attractive the projects are to various Congresspeople.” … ” However, having Government pick the ideas that are “winners” will certainly cause future good ideas or productive lines of research to be abandoned.”
Therein DOES lie the potential distortion. But there are ways to design a policy to make it less corruptable. For example, setting up criteria for rewarding money to venture capitalists, etc, based on performance. Subsidies for renewable energy projects would be based on energy output relative to energy input and costs. Studies right now indicate that solar power has tremendous potential as a solution, suggesting government money should be directed to encourage development there. But within that field and related supporting fields, of course, there should be competition for funds. Also, energy efficiency. And if another area can justify investment, so be it, of course.
There will be errors. The question is, how big will they be relative to the extenality that we are trying to correct, and how do we keep them small. Will the biggest errors be those necessary to get the legislation passed? Unfortunate if so, but better 80 % than zero.
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“All R&D for renewables might have to be funded by the government due to the lack of private initiatives and the government will have to construct these projects and maybe nationialize the power grid or create some GSE for renewable energy.”
I actually don’t know what GSE means. Aside from that…
Okay, good point – the public spending reduces the potential benifit of private spending. But is it 1-to-1, or is there an optimal point on the production possibilities curve?
Traditionally the government has funded some R&D. It might be best to maintain the fraction it contributes relative to the whole, since private enterprise has adapted to that condition – or at least announce sufficiently in advance any changes, so that private enterprise can take optimal advantage. Or instead of pushing, pulling might be better – reward the successful private R&D. But the state of the private sector must be considered: from some years ago, perhaps outdated, but consider: Michael Brower, “Cool Energy”, 1993, p.28:
“Even when new technologies have been developed to the point of being ready for commercial testing and deployment, they have not been picked up by industry. During the eighties, in fact, the Department of Energy eschewed programs designed to foster transfer of technology to industry on the grounds that such programs would interfere in the “free market” and usurp the role of industry. Instead, emphasis was put on basic research. Most renewable energy companies, however, do not have the financial strength or technical know-how to turn component technologies into reliable and marketable systems. Photovoltaic cells are one example: Even though scientists’ understanding of the inner workings of photovoltaic cells has advanced in the 1980s, the same cannot be said for the industry’s ability to produce reliable, low-cost photovoltaic modules (integral collections of cells) on a large scale. Other promising technologies, such as tapping the geothermal energy of hot dry rock”…” are virturally doomed unless the federal government provides technical support and funding for commercial-scale demonstrations.”
Specifics may have changed since then, but perhaps the lasting lesson is that public funds should be designed to take advantage of privately-funded progress in a complementary, supporting, and symbiotic way, giving private enterprise something from which to gain rather than with which to compete.
Nonetheless, any increase in total funds, provided good incentives for success, will tend to increase supply, just not necessarily linearly – watch out for decreasing returns, look for increasing returns, but note there will usually be some range of decreasing returns to get through to reach the optimal point.
There is another important point, also from Brower, pp. 27-28:
“Since renewable energy sources represent largely new technology, investment in research and development is of critical importance to their success. Yet as we have seen, federal funding for renewable energy R&D declined through the eighties, and despite substantial increases in fiscal 1991 and 1992, it still constitutes less than 10 percent of total federal funding for energy supply R&D.[4]”
Maybe dated, again, but an important point – yes, competition with the private sector, especially if imposed in such a way as to send the message that private sector successes will not be rewarded in kind but rather usurped, will discourage private sector investments. Nonetheless, for industries which as a whole have a fair way to go to mass market scale, a public good can come from public support, aside from push verses pull. And yet, how much government support is going toward established energy supply industries? Some rearrangement is in order – or was, but I suspect still is.
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“All of this, of course, neglects the costs of future emissions (i.e. the externality itself). R&D does nothing to defray the costs of an environmental catastrophe. There is no fund for flooding in Florida etc. so that is an additional cost to the R&D that was subsidized.”
What if mitigation is more efficient than other investments in the ability to compensate for losses. Which is to say, if it costs $x to compensate and move people from 100 sq. mi and $y to prevent flooding of another 100 sq. mi by mitigation investments, and $z to build a sea wall… and the ecological externalities therefrom… There is probably some optimal combination that minimizes the public cost of compensation/amelioration/adaptation; should this not be pursued?
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“the amount of decrease in global emissions (unlike straight pollution where they come from does not matter except in some abstract moral sense)”
Maybe you didn’t mean to imply this, but if the abstract moral sense does not matter, then why do you even care what ends up happening. If there is no moral imperative, it makes since to just be apathetic and not participate in this conversation.
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“in the long-term due to taxes will be minimal as emissions will shift to countries that care about being competitive more than environmentally friendly. Ex: California has net imports of energy from Mexico and there is no reason why that would not continue to grow as the power will be cheaper. The alternative being that companies simply move their manufacturing operations offshore (ala Intel).”
But I addressed that issue, as did Gavin Schmidt in an inline response. Here you are raising an issue as if it did not have solutions.
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“To tie this into L&D (again) limiting emissions is not only expensive in the actual money diverted and extra costs incurred, but the opportunity costs of lost productivity, jobs and better ideas that come from a competitive (economically not politically) marketplace. The approach of combatting climate change without limiting emissions is thus the better and cheaper way to go for society. Even if “global cooling” is not the answer it is a step in the right direction because it is based on sound economics and not on arbitrary assumptions about costs that cannot be identified as a way of creating so many pork barrel projects for Congress to subsidize.”
1. In the long run the economics of wind and even solar look quite good. In fact there could be a net economic benifit to investing in solar power now even without the climate issue. Petroleum prices are ultimately destined to soar in the absence of an alternative – price reductions resulting from alternatives will slow the decrease in use but also provide an economic savings, and the whole economic savings of electrifying transportation might pay the costs of replacing even cheap coal with solar power. Even with storage/HVDC costs – although there is a lot of information out there and I haven’t processed it all.
2. Don’t forget energy efficiency.
3. for 1 and 2, some of the problem isn’t cost but force of habit. Habit will be overcome with time but a boost from public policies could help various parts of the economy get out of a well-worn rut and make it free to run towards optimum.
4. The public value of geoengineering would be from climate-changing emissions. Why shouldn’t an emissions tax pay for the geoengineering?
5. Won’t some geoengineering schemes continue to cost for maintanence even after 100 years, when solar and wind will likely be cheap?
…”based on sound economics and not on arbitrary assumptions”…
6. I can’t predict the future of solar and wind power economics, of course, though there are those who know more than I, but besides that, what about predicting the effects of geoengineering?
7. I never took sequestration off the table (might be better than geoengineering?). It is only the net tax revenue after sequestration payments that would go towards climate change and climate change effects amelioration/compensation/adaptation/mitigation investments.
8.
“cannot be identified as a way of creating so many pork barrel projects for Congress to subsidize.” —
“without limiting emissions” – meaning no cap or tax? No price signal? Doesn’t that place not just some but ALL of the task on the government’s shoulders? Did all your reservations about government action just evaporate?
How do you know the government will pick the right winner? Aren’t you worried that a congressperson from a district that produces sulfur will cut a deal to get sulfur injections preferential treatment? If the U.S. pays, doesn’t that get China and India and Mexico off the hook? If any of these concerns can be addressed, why couldn’t they be addressed for mitigation funding?
Also, if a portion of investment in mitigation is done by increasing demand for clean energy and energy efficiency via incentives, that would buffer the effects of direct public investment in reducing the incentive for private enterprise investments.
But there is one particular area where public investment should help unequivocably:
Increased resources to environmental siting analysis to speed up the planning stages of projects on the public end. Areas favorable to solar and wind should be evaluated for ecological sensitivity, and the least ecologically-sensitive areas (which will be a function of the technology – wind having different issues than solar) should be spotlighted. And so on for given options for new transmission lines, including HVDC (which is ‘undergroundable’ as I read in a follow up to the “Solar Grand Plan” article, thus the lasting aesthetics are less of a concern there).
Patrick-
If what you say about wind, solar etc. (I would include nuclear in that category) being increasingly more efficient is true then the market will adopt them. What does not make sense is to create costs to steer the market toward adopting this technology now because you end up with isub optimal products (i.e. not marketable) that if installed will not provide power efficiently. You may have a problem with market outcomes, but that is a moral issue and has nothing to do with economics. Such outcomes are also exacerbated by government taxing to fund a subsidy, which distorts the efficient outcome even more than if the government had put the tax revenue into a fund for future infrastructure repairs. In addition, the type of competition fostered by grants is not efficient either because it is political and not economic. If you think that defense appropriations are corrupt, wait until they start to dole out the cap and trade revenue. I feel the same way about the global cooling scenario, but at least such a solution can be budgeted properly (since the costs are known). All this is by way of saying that market outcomes are better in this case than with a tax because the solution will be more efficient, the distortions (from this particular piece of legislation) will be absent. The free market eventually punishes distortions in the form of higher costs, lower quality or shortages, which is something that the economy will react very negatively to as higher prices are to the economy what leg irons are to a marathon runner.
About the global aspects of the proposed solutions (i.e. will the US pay?) the US will pay anyway if we choose to tax or geo-engineer. But the tax payments are intentionally slowing down the economy so the demand for emissions goes down. I’ve discussed this in previous posts. Mitigation funding itself is 1) redundant as there is no reason to believe that funding for these projects is inadequate as money would be made if a technology is marketable without subsidies 2) ineffective in terms of mitigating actual emissions as the tax will curb emissionis by slowing economic growth and have very little effect on global demand 3) ripe for pork spending i.e. putting solar panels in Alaska or windmills for their own sake in rural districts or hiring campaign contributors as contractors or inefficient local firms 4) permanent because once you subsidize something it will never approach the efficiency demanded by the market.
If you address the additional emissions by China, India and Mexico by putting tariffs on their goods to pay for their emissions this will mean higher prices for everything. Otherwise, their economies will grow while ours shrinks. In either case what you can count on is that unemployment here will keep growing among the poorest and least skilled and our standard of living will decline.
All of this translates into lower costs for the geo-engineering solution (compared with neutering our own economy for something we cannot even accurately predict) even if other countries do not pay for it. Even if it does not work we know that cap-and-trade will not solve the problem as I discussed above. So it makes sense to look at those types of solutions rather than distortionary taxes that create social-ills.
Chris (#366) asked: “Why would it make a difference if the emissions are now or later if the CO2 is not going anywhere?”
Patrick (#372) suggested earlier cuts would slow the warming rate, allowing for a bit more natural buffering, and also reduce adaptation costs a little by giving more time to adapt.
A more important point, perhaps, is that the longer we continue on a high-emissions trajectory, the steeper the cuts we will have to make later on for a given stabilization target. The procrastinate-then-panic scenario is likely to be far more costly than an early start because we won’t know what works, we won’t have stimulated development of new technologies, and we’ll have to try all sorts of mitigation measures at once.
Chris (#384), a few comments (some parentheticals for Patrick, too):
No, it’s how any economist would frame the problem, and they have been doing so long before the Stern report.
Global pollution is pollution. A global externality is an externality. It still needs correcting if society is not to be worse off. You just can’t expect to correct it in the same way you might if it were some textbook case of, say, factory effluents ruining a downstream salmon fishery, where you could work out how much compensation is owed by whom to whom. As you point out, it’s hard to say how, and how much, humanity should compensate itself for wasting the planet; better, then, to work out how to avoid incurring that cost in the first place (as far as possible).
This bill may seem to you to have nothing to do with a tax on Carbon as there is no externality related to phones
Indeed. Your example has nothing to do with a carbon tax, which is meant to limit carbon emissions, whereas your phone tax is not meant to limit phones. (Patrick, I think you tried too hard to find a point in Chris’s example.)
I’d like to repeat my earlier contention (#241): The primary point of a tax/cap on carbon emissions is to reduce pollution by increasing costs, not to generate revenue to fund anything.
(Patrick, at #250 you seemed to agree but at #261 you stated “the value of the tax itself is contingent on the spending of revenue”…?)
The size of those caps/taxes should not be determined by calculating the future costs of compensation or adaptation. Instead, society would decide what risk it is willing to take, and setting a stabilization target accordingly. Working backward from there, you set an emissions cap low enough, or a tax high enough, that this target will be reached.
Calculations like those in the Stern report suggest the costs of inaction would be higher than the costs of action (for a given choice of stabilization levels), so saving the planet is not just common sense but also makes economic sense. Put another way, if we designed the tax to cover the costs of adaptation and compensation for the harms of inaction, as Chris seems to think we would have to for a tax to make sense, it would cost more than one that is just set high enough to trigger the necessary emissions reductions.
But there will be revenues, and there will be adaptation costs whatever we do at this point, so setting the one aside for the other could make moral and political sense. Patrick’s broad discussion of the many options and competing claims here is useful.
No, it corrects one, by internalizing (part of) the external cost.
You’re ignoring the new business opportunities in low-carbon energy, energy efficiency, clean transport, manufacturing, farming, etc. and the jobs they’ll create. You’re also ignoring the fact that this just gets us a head start on the challenge we’ll face anyway when we run out of oil.
Any policy (including geoengineering, as Patrick pointed out) can be subverted by pork-barrel politics. That is not an argument against carbon taxes in particular, or even against subsidies for renewables.
With no experience to go on regarding how it would work, plenty of ideas how it might go spectacularly wrong, back-of-napkin calculations suggesting cheap fixes for the energy imbalance of the planet are riddled with assumptions. They can be improved by using the same models that feed into calculations of the costs of climate change.
“But the tax payments are intentionally slowing down the economy so the demand for emissions goes down.”
No, the point is to send a price signal for the market to react to by increased efficiency and clean energy investment/production.
The reason why it might make sense for a portion of revenue to be spent on mitigation is that this might be one of the more efficient ways to make up for the public costs of climate change.
… other stuff … So construct the criteria for spending based on performance!
more later
CM:
I think that you are starting from a position of “moral imperative” and working backwards, which is the kind of thinking that L&D are trying to expose in their book. There are activities that we know have costs to society beyond their market prices in the absence of making the producer pay these costs, but most of these have measurable costs and have already been internalized in most developed countries. There is also a definite source we can identify to which we can allocate the costs. If you look at smoking, for example, the costs to society is in medical care, as the costs to society for carbon emissions is flooding or other environmental damage of property. However, the higher costs of insurance for smokers or property holders should cover these costs as insurance companies have taken the risk in agreeing to indemnify them. Taxes on tobacco products can largely be seen as regressive taxes on the poor solely for revenue purposes as cap-and-trade would be a revenue stream for government. Discouraging smoking or carbon emissions is thus redundant as the potential costs are being borne by third parties in most cases. A better way forward for the emissions problem would be for the government to allow companies to buy litigation insurance for climate change issues and to create a system for climate change suits to be adjudicated by federal judges instead of having jury trials. That way the costs of the problem will be adequately dealt with and reparations can be made via the government and not by the government. The price mechanism should take care of the issue of the scarcity of condensed carbon-based energy sources.
On the issue of job loss you have to look at “net jobs”. There may be some jobs created in “green” areas, but they will be much fewer than the jobs lost as low-skilled, less capital intesive jobs will be the first to go and the jobs created will have high capital intensity and skill requirements due to the nature of “green” jobs. In addition, if the jobs created require subsidies then we would be better off having people who have lost jobs collect unemployment rather than reinforcing inefficient production methods or unworkable ideas.
Speaking of inefficiency and unworkable ideas, it is a misunderstanding of the nature of “pork-barrel” projects to equate the potential subversion of Myhrvold’s plan to add SO2 to the atmosphere with the potential uses for the revenue from cap-and-trade. In the case of the SO2 solution we have a plan in search of funding while with cap-and-trade we will have billions of dollars in search of a plan. Even without a plan that money will have to be spent, and it will be. It will be like a feeding frenzy and the economically viable renewable energy plans will most likely get buried in favor of less efficient plans located in the district of important members. Tax credits for PV on San Francisco buildings in Nancy Pelosi’s district, a second Hoover dam for Harry Reid etc. Such a system will be somewhat beneficial for the recipients of the largesse of varions members of the House and Senate. But, for the people who lose their jobs because of the increased costs involved (if costs of production increase by %10, as many people fear, that could cost 100s of thousands of jobs nationwide alone)not so great. For the people who manage to keep their jobs and have to pay more for their groceries and everything else not so great for them either.
In short, better to have market mechanisms and risk reduction take the place of taxing and spending. Better to have real plans with measurable goals being proposed than money that needs to be spent. Better to have everyone weigh in on the issue everyday with their dollars through insurance premiums and market prices than to simply hijack the system so that the beliefs of the few can be foisted on the many. All cap-and-trade for carbon does is to move us farther away from a real, market-based solution to the problem and toward a dysfunctional, anti-carbon technocracy.
Chris –
“I’ve discussed this in previous posts. Mitigation funding itself is 1) redundant as there is no reason to believe that funding for these projects is inadequate as money would be made if a technology is marketable without subsidies.”
Yes, the price signal from the tax would in principle largely accomplish the proper mitigation, but the tax is justified by the public cost, suggesting the revenue (aside from sequestration) should pay the public cost of the unsequestered emissions, and how this should be done depends on what is more efficient, and what if additional investments in, say, solar power plants, give more return to the future than if it is all spent on aquaducts and desalination plants, migration costs, … etc? Yes, the math is tricky there; it’s not obvious if the public cost should be equal to the revenue or if the revenue should be equal to half the public cost since the price signal is effectively doubled (roughly speaking) if all revenue goes toward mitigation… And I am open to suggestions, there, but then you need to explain why (beside the imperfections of a representative democracy).
“2) ineffective in terms of mitigating actual emissions as the tax will curb emissionis by slowing economic growth and have very little effect on global demand”
Even without any international action, total demand for fossil fuels should drop (from the baseline trajectory) if some users cut their demand, because a 100 % compensatory increase elsewhere puts the price back to where it was, which would then be too expensive for those who were not otherwise using it.
“3) ripe for pork spending i.e. putting solar panels in Alaska or windmills for their own sake in rural districts or hiring campaign contributors as contractors or inefficient local firms”
What about just subsisidizing solar panel sales and wind turbines at a constant per MW output per year of service or per unit capacity per year or even per unit expense – this still preserves the incentive to put those devices where they would be best used, and still use the least expensive devices. And for per unit expense or capacity, maybe specifically the longest-lived components, as this becomes a gift to the future.
OR perhaps much better, a constant subsidy per unit capacity*intrinsic longevity of the longest-lived device (don’t double count and add multiple subsidies for devices that work together for the same output) of a type of clean energy, scaled to a fraction of the lowest-cost option.
And some corrolary subsidy for energy-efficient devices. Skylights. Etc.
Even then, I can think of some need for adjustments. But I only just started to describe it. It shouldn’t be too hard to get something good.
As for the R&D side, well, it’s already being done, we just need to scale up and maybe diversify (go over the literature and designate some research on new PV materials that are promising in abundance, lack of toxicity, potential performance and compatibility – for example, CZTS (or is it CTZS?) and zinc phosphide).
(Admittedly, maybe a lot of funding would be most easily spent paying down the debt. Keep that in mind as an option. I didn’t mean to rule it out.)
“4) permanent because once you subsidize something it will never approach the efficiency demanded by the market.”
Write a phase-out schedule (contingent on trigger conditions, where applicable) into the policy for those things that should be phased out.
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CM –
“(Patrick, I think you tried too hard to find a point in Chris’s example.)”
Okay.
“(Patrick, at #250 you seemed to agree but at #261 you stated “the value of the tax itself is contingent on the spending of revenue”…?)”
I agree with you that the tax alone would suffice to accomplish a significant amount. My point was that since the tax is justified by the public cost, the revenue should go towards that public cost, and the public cost itelf depends on how much revenue is needed to do that adequately for that portion of cost which would be covered by the funding of adaptive infrastructure, etc.
Chris, you’re not making sense.
Huh? If I manage to forget about passive smoking for a moment, I can sort of see your point about smokers, who are the cause of their own misery, but how does that extend to property holders who get their land flooded by global warming? Sure, they may pay higher insurance premiums. How is that a solution? How is it fair? Presumably you don’t argue that flooding occurs only on the land of big CO2 emitters?
Who’s going to insure against the slow but certain flooding of land by sea-level rise? And while disaster insurance is a sensible part of adaptation, it typically requires huge capital reserves and hence comes with high premiums, so you should be worried about regressive impacts on the poor here, too.
I’m trying to imagine it:
– Drought has parched your crops. Global warming is to blame. Who you gonna sue?
– The Arctic melts, the tundra thaws, the Amazon croaks, the coral reefs dissolve, millions of species go extinct, hundreds of millions starve. You mastermind a class-action suit against the coal industry that reaps billions of dollars in punitive damages. Why does victory feel so hollow, you wonder?
*Carbon*-intensive jobs will be the first to go, and you can’t generalize that these will be low-skill, low-capital or labor-intensive jobs. As for green jobs, you don’t need a PhD to install solar panels or solar water heaters, isolate lofts, construct wind farms, separate garbage streams for recycling, build trains as opposed to trucks, grow and refine biofuels… (And if biochar is adopted as a mitigation measure, how much skills do you need to burn and bury green stuff?)
That’s not to say there won’t be re-training needs, frictional unemployment, and regional impacts (in coal mining districts for example), just that you are painting a very one-sided picture.
Risk reduction’s good. That’s why we need to limit emissions. Measurable goals are good. That’s why we should aim to hold at 450 ppm or so and try to take it downward from there. Market mechanisms are good (at allocating stuff, less so at discovering when there’s too much stuff). That’s why we want to put them to work with a cap-and-trade system or, alternatively, price signals sent through a tax.
“All cap-and-trade for carbon does is to move us farther away from a real, market-based solution to the problem and toward a dysfunctional, anti-carbon technocracy.
Comment by Chris”
Show me we have a market based economy, Chris.
It’s riddled with cliques, artificial barriers, tariffs and lots of other protectionist encumbrances.
And why would an anti-carbon technocracy be dysfunctional?
To what use would we put the CO2 that this anti-carbon technocracy would deny its use for? Or was that loaded language to alarm anyone against hinting it might not be a bad thing to be anti-carbon and a technocracy (especially if compared to an anti-ecology plutocracy)?
Re CM –
“The size of those caps/taxes should not be determined by calculating the future costs of compensation or adaptation. Instead, society would decide what risk it is willing to take, and setting a stabilization target accordingly. Working backward from there, you set an emissions cap low enough, or a tax high enough, that this target will be reached.”…”Put another way, if we designed the tax to cover the costs of adaptation and compensation for the harms of inaction, as Chris seems to think we would have to for a tax to make sense, it would cost more than one that is just set high enough to trigger the necessary emissions reductions.”
I think future costs (or costs now to avert them), probabilistically, would be the basis for deciding a worthwhile risk threshold and setting a stabilization target.
That said, if the minutia of allocating revenue to the purpose of adaptation/compensation is too complex and uncertain, it could be set aside for the moment. It will probably become critical, though, to compensate climate-change refugees and their receiving countries, or else invest in water infrastructure, etc, to prevent that, lest tensions escalate, perhaps to the point of @#$%!$%@#$%.
——–
Re me (re chris): “And I am open to suggestions, there, but then you need to explain why ”
For example, if we consider what future people, if they had control over the revenue, would decide, how much (M1) would they choose to have invested in mitigation? Well, if we assume convex (when mapped onto a value-proportional space) production possibilities curves (decreasing returns) all around, the mitigation spending increase from the ideal market response (M0) to the tax would increase the mitigation investment would be such that additional investment in mitigation greater than M0 would be worth less then the money spent, which represents the combination of externality avoided and the any other benifits (energy, profits that would occur in the absense of the tax). This suggests that the if the future public has the benifit of a history of ideal market response, they would have a net loss if choosing to invest more in mitigation. So they should invest in adaption, etc. Okay.
Therefore, the only public mitigation spending (if the tax represents the whole public externality of the emissions themselves, and the production possibilities curve is not concave) should be to make up for dimples in the production possibilities curves (the interim period before mass market advantage is reached), habitual behavior, and public planning, much of which can be phased out after mass market thresholds have been surpassed (for each sufficiently promising technology), the market has been sufficiently shaken of old habits and is then more free to pursue the optimum. All with some continuing basic R&D. (By the way, in case it was forgotten, mitigation isn’t just energy and energy efficiency; it’s irrigation efficiency, cow methane issues, etc.)
Okay, puzzle solved?
—-
“I feel the same way about the global cooling scenario, but at least such a solution can be budgeted properly (since the costs are known).”
We actually have records of solar panel production, sale, installation, etc, and reasoned future projections, and so on for CSP, wind, etc.
In the long run, renewable energy will probably save money, climate change or not; it is important to get the market response sooner because of climate change (and ocean acidification, etc.).
When was the last time somebody sold the service of injecting sulfur into the upper atmosphere? And again, what about the side effects besides the inteneded global cooling?
“All this is by way of saying that market outcomes are better in this case than with a tax because the solution will be more efficient, the distortions (from this particular piece of legislation) will be absent.”
Meaning you expect somebody to offer this service (of spraying a substance into the air) to … whom, exactly, besides the government?
In addition to CM’s response:
Re Chris:
–
“starting from a position of “moral imperative” and working backwards, which is the kind of thinking that L&D are trying to expose in their book.”
I see. Like ‘Theft is wrong; how can we reduce it, what should we do when it happens’ – is that too backwards for you?
Anything worthwhile must have a moral imperative (though in many cases, the small and ‘easy’ decisions are not regarded as having moral dimensions simply because they are so easy that we needn’t think much, or because they are too small to justify the allocation of decision making resources). Otherwise it is purposeless. You are appealing to morality in your own arguments, too, as well you should.
“There are activities that we know have costs to society beyond their market prices in the absence of making the producer pay these costs, but most of these have measurable costs and have already been internalized in most developed countries.” …
“However, the higher costs of insurance for smokers or property holders should cover these costs as insurance companies have taken the risk in agreeing to indemnify them.”
Your example of smoking – well, in many countries there are bans and restrictions to manage the externalities, and if there is a box on the insurance form to check, you’ve got the harm to self covered – or do you? Does the insurance company actually keep tabs on how many cigarretes you smoke? One way to manage that which would not be intrusive is to tax cigarretes and put the revenue into health care.
Note that some property risks are not covered by insurance. Note that FEMA covers some of that. Note that this ‘public property insurance’ ought to be reformed via being funded at least in part by a tax proportional to risk proportional to what is not covered by private insurance, etc.
And aid to farmers should also be reformed.
Note I mentioned this in my big policy comments above in this thread.
“Taxes on tobacco products can largely be seen as regressive taxes on the poor solely for revenue purposes”
Because … the poor are too stupid to avoid falling for tobacco advertisements?
Because of addiction. Because addiction limits freedom of choice, in a manner of speaking? Perhaps addictive drugs are harmful to the free market.
(Aside from fossil fuel companies, aside from big corn, aside from big health insurance, … there are people who should … not just have their businesses taxed, but perhaps be locked up in jail, and they are Tobacco execs. Seriously, why doesn’t Colombia ask us to crack down on our Drug suppliers?)
“There is also a definite source we can identify to which we can allocate the costs.”
Like the emitting activities.
“A better way forward for the emissions problem would be for the government to allow companies to buy litigation insurance for climate change issues and to create a system for climate change suits to be adjudicated by federal judges instead of having jury trials. That way the costs of the problem will be adequately dealt with and reparations can be made via the government and not by the government.”
In principle, this is not a bad idea, provided a class action lawsuit can be filed on behalf of all future people from now till ….
But isn’t this awfully inefficient? Wouldn’t it be more efficient to put a tax on fossil C emissions.
And aren’t you concerned that your distorting the market for lawyers?
“In addition, if the jobs created require subsidies then we would be better off having people who have lost jobs collect unemployment rather than reinforcing inefficient production methods or unworkable ideas.”
Why would unworkable ideas and inefficient methods be given preferential treatment? Why couldn’t any of my suggestions (among others) be considered as ways to mitigate waste? Even if subsidies were rewarded at random, the better performing economic pathways would still tend to be selected by the market.
“In the case of the SO2 solution we have a plan in search of funding”…
Ted Stevens had a plan. Was it not pork-barrel (and of the worst sort, not only was it less efficient than a free market, it could be argued that the bridge to nowhere would have had an efficiency less than zero, because additional money would have to have been spent to remove it after it was built)?
Wouldn’t a company with a lot of sulfur on hand like to have such a plan and like to get funding from someone else?
…”while with cap-and-trade we will have billions of dollars in search of a plan.”
The search for a plan is a search as to how best to connect the funds to the justification for them, requiring a connection over time, requiring investments. If you’re willing to just spend at random without trying to be efficient, then the search can stop before it starts.
…”It will be like a feeding frenzy and the economically viable renewable energy plans will most likely get buried in favor of less efficient plans located in the district of important members. Tax credits for PV on San Francisco buildings in Nancy Pelosi’s district, a second Hoover dam for Harry Reid etc.”…
I know there is government waste; I understand a generalized concern. Why cannot we be motivated by that concern to mitigate waste, rather than throw the baby out with the bathwater, which is what I think you are doing here.
Why would a PV tax credit only apply to one district as opposed to nation-wide (if it did, by the way, it would still result in less total incentive to install PV (for the same local purpose) in Alaska than in Arizona (for some purposes, a PV application might make sense even in Alaska – I hardly think we should ban PV sales to Alaska, in case that’s what you would argue) – better yet, the tax credit might be contingent on local insolation, including landscaping effects (see what I wrote previously).
Where would a second Hoover Dam go, exactly? Hydropower will have an important role, especially in filling in the diurnal and other temporal variations in supply of solar + wind, but there isn’t much room for increasing the total supply of hydroelectric power.
“than to simply hijack the system so that the beliefs of the few can be foisted on the many.”
What the HELL is that supposed to mean?
“All cap-and-trade for carbon does is to move us farther away from a real, market-based solution to the problem and toward a dysfunctional, anti-carbon technocracy.”
It can actually do the exact opposite (except for the anti-carbon bit (except if a workable CCS comes along, and the possibility of carbonat mineral formation as sequestration … etc.) – I mean, that’s the whole point!).
RE: The Initial Topic
Hey All,
As regards the relationship between atmospheric chemistry and aerosols, there is a new paper being prepared for publication by Dr. Shindell and Dr. Schmidt. Based on the NASA media release it looks as though there are different ways we need to be looking at pollutants.
Congratulations to the authors, I await the paper reaching the public domain. The media release: http://earthobservatory.nasa.gov/Newsroom/view.php?id=40975&src=eoa-nnews
Cheers!
Dave Cooke
Thanks, Dave. Interesting, indeed.
And congrats to Gavin.
Patrick-
If a workable (i.e. economically feasible) CCS comes along it would do so without a tax on Carbon. What happens when government controls the money is that you do get stuff like a second Hoover Dam or PV investment in a perpetually foggy city like SF. This is especially true when employment is an issue. Private investment expects a return for the amount of risk it takes so it does not gravitate to stuff that will not work. When government enters the picture politically popular projects crowd out economically feasible projects because the government is assuming a great deal of the risk. You can see this effect at work in the number of Ethanol producers that were subsidized that have since gone bankrupt. More government funds always produce less economically feasible solutions because government uses tax dollars (meaning less free capital) and distorts risk reward ratios.
Many of the assumptions about “net jobs” created also use this type of math where Net Jobs = New jobs created with subsidies – Energy sector job losses. This totally ignores jobs lost to offshoring, plant closings and other collateral effects of more taxes and neglects the reality that subsidized jobs come at the expense of other jobs in more productive industries.
Chris – you keep discussin what could go wrong, and aren’t considering my suggestions for minimizing these errors and problems.
If the government is assuming risk and propping up things that should otherwise not be pursued, then why would ethanol producers that have been subsidized be going bankrupt? Wouldn’t you expect the government to keep throwing good money after bad to prop them up? And why would public funding of SO2 geoengineering be better? And why should the average tax payer have to shoulder the burden of SO2, and why should we risk losing jobs for it?
Anyway, the ethanol subsidy is not the sort of thing I’d pursue.
I’m not going to stop advocating a policy just because of the risk that people will mess it up. I would advocate against people trying to mess it up. Just not doing anything because somebody could screw it up is itself screwing up, I think.
“Private investment expects a return for the amount of risk it takes so it does not gravitate to stuff that will not work.”
I Know!
Try reviewing all of my previous comments.