How much would carbon policies hurt?

10/06/2014 § 3 Comments

We’ve been talking about carbon policies to address climate change for years — the Kyoto Protocol was agreed in 1997 — but carbon emissions keep increasing. The recent news about the West Antarctic Ice Sheet seems to confirm that climate change and sea level rise are coming, ready or not. Policies are not biting enough to change emissions enough to have an impact.

One thing holding us back is that we don’t want to pay for it. There are interesting discussions about the best way to pay for climate change policies. Do we reduce economic activity now by a little? Or, do we grow faster now and pay more later but out of a larger pot of money? How do we divide our efforts among prevention, mitigation, and adaptation? But these interesting discussions also serve to delay, limiting our ‘prevention’ options and de facto pushing us into adaptation. We will end up paying one way or another.

Also, emissions reductions are not necessarily that expensive, as a new study confirms and earlier research has shown. Car emissions are a good example. I have driven American cars made in the 1970s; they were horribly inefficient compared to modern cars. We have learned how to motor around using a lot less fuel per kilometre, and we are getting better all the time.

I often think about the economic impacts of carbon policy as turning back the clock to some earlier time when we were poorer. That’s not to say I’m taking the Roger Pielke view that energy and the economy have an immutable one-to-one linkage our only two options are either economic growth or ‘technological innovation in energy systems on a predictable schedule‘ — a view ably rejected by Paul Krugman. Less carbon, though, does mean less energy use, which does mean less energy-intensive production, which essentially means less stuff. It might mean prettier stuff, in a baroque/Japanese, let’s-make-it-exquisite sort of way. But, still, probably, not so many physical objects that have been transformed from raw materials into commodities.

So, what are we talking about? Even with more efficient cars, lighting, heating, hot water systems, etc., we might have to put up with less stuff. Can we place it in an era? Well, let me explain with US data, with the caveat that the New Zealand experience has been different. How about the 1980s? Or the 1970s? How awful was it, really, just to have one television set per household instead of three? Or, to have 50 square metres per person instead of 100?

On the other hand — and I think this is important when considering resistance to carbon policies — a lot of people aren’t much richer than they were 20, 30, or even 40 years ago. The recent focus on inequality keeps emphasising that growth has been better for some people than others:

income

There are two ways to look at this. The first is that moving to the same level of consumption as 1975-ish wouldn’t be that painful for a lot of people. They are already there. The consumption basket has changed, sure, but the overall level of consumption has barely moved.

The second way, the one that creates the resistance, is this: lots of people have gained only a little over the last 40 years. Would carbon policies ask them to give up what little they have gained? If so, that’s a big ask.

The question, therefore, isn’t just ‘how much would carbon policies hurt’. It is also, ‘who bears the brunt of the change?’

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§ 3 Responses to How much would carbon policies hurt?

  • Bill-

    About this: “the Roger Pielke view that energy and the economy have an immutable one-to-one linkage.”

    I see that you’ve been reading Krugman.

    I’ve never written anything like this nor do I believe it. See my book The Climate Fix for my actual views on the relationship of growth and emissions. See also this paper on Australia’s climate policies:

    http://sciencepolicy.colorado.edu/admin/publication_files/2010.36.pdf

    Thanks.

    • Hi Roger –

      Thanks for the link. Interesting paper — I haven’t had time to fully digest it, but it’s good to have these sorts of calculations that make it clear what ‘decarbonisation’ might really entail.

      If we go to your letter on the FT website (http://www.ft.com/intl/cms/s/0/35fc26dc-ebf4-11e3-8cef-00144feabdc0.html#axzz34NhQ0zFZ), it reads:

      Sir, Your article “China climate adviser urges emissions cap” (June 3) fails to go into detail on what a “carbon cap” actually implies.

      Carbon emissions are the product of growth in gross domestic product and of the technologies of energy consumption and production. More precisely, this relationship is called the Kaya Identity – after Yoichi Kaya, the Japanese scientist who first proposed it in the 1980s.

      Thus, by definition, a “carbon cap” necessarily means that a government is committing to either a cessation of economic growth or to the systematic advancement of technological innovation in energy systems on a predictable schedule, such that economic growth is not constrained. Because halting economic growth is not an option, in China or anywhere else, and because technological innovation does not occur via fiat, there is in practice no such thing as a carbon cap.

      Where carbon caps have been attempted, such as in the European Trading Scheme, clever legislators have used gimmicks, such as carbon offsets, or set caps unrealistically high so that negative effects on GDP do not result and the unpredictability of energy innovation does not become an issue.

      It should thus not come as a surprise that carbon caps have not led to emissions reductions or even limitations anywhere. China will be no different. The sooner that we realise that advances in technology are what will reduce emissions, not arbitrary targets and timetables for reductions, the sooner we can focus our attention on the serious business of energy innovation.

      Roger Pielke Jr., University of Colorado, Boulder, CO, US

      In this letter, you indicated that ‘a “carbon cap” necessarily means that a government is committing to either a cessation of economic growth or to…’ etc. I read that as — in the popular press — your giving readers the choice between two seeming impossibilities.

      By contrast, you could have discussed the possibility of a future economy that includes some slower growth, some tech change on an unpredictable schedule, some mix of incentives for better use of current technology, and some shift of preferences toward less carbon-intensive consumption.

      Sending us to an academic article doesn’t erase the FT letter.

      Having said all that, the statement in my post is wrong, and I will change it.

      Thanks for stopping by.

      • Thanks Bill, The FT letter simply expresses the Kaya Identity which holds that

        Emissions = GDP * (Energy intensity * Carbon intensity)

        EI * CI can be expressed as C/GDP so

        Emissions = GDP * C/GDP

        where C/GDP reflects choices in how we produce and use energy (what I generally call technological choices).

        There are thus indeed two big levers to use in implementation of a “carbon cap” which (obviously) refers to putting a hard limit on the left side of the equation. Making such a limit work in practice means that you can either use GDP or C/GDP to satisfy the cap. These are the two possibilities for reducing emissions. This is just definitional.

        As I wrote, I don’t see using GDP for this purpose in any manner as politically feasible. I hear other views on this all the time, and despite this, have yet to see any politician anywhere campaigning on a platform of limiting, halting or reversing GDP growth. Quite the opposite.

        The alternative that you suggest – “a future economy that includes …” – is nice, and makes practical sense. Indeed it is pretty close to what you’ll find in my book. But such an approach is in no way compatible with a “carbon cap” for the reasons that I described.

        Hope this makes sense, Thanks!

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