Category: Economics

Matters of money

Is runaway climate change possible? Hansen’s take

Back in 2008, I wrote about whether ‘runaway’ climate change might be possible on Earth. At one point, Venus had liquid water on its surface. Then, the sun grew brighter and Venus warmed. Its oceans evaporated and huge amounts of carbon dioxide (CO2) got baked out of the crust. The heat made the water break up into hydrogen and oxygen: the oxygen bonded with carbon to make more CO2, and much of the hydrogen escaped into space. Venus became permanently hostile to life, with surface temperatures of 450°C.

Could burning all of Earth’s fossil fuels produce the same outcome?

Some people take comfort from the fact that there have been times in the history of the planet when greenhouse gas concentrations were much higher than now. The world was very different, but there was no runaway greenhouse and life endured. James Hansen devotes the entire tenth chapter of Storms of My Grandchildren to considering whether this assessment is valid. Three things give him pause:

  1. The sun is brighter now than it was during past periods with very high greenhouse gas concentrations. The 2% additional brightness corresponds to a forcing of about 4 watts per square metre and is akin to a doubling of CO2 concentrations.
  2. For various reasons, the greenhouse gas concentrations in past hot periods may not have been as high as we thought.
  3. We are introducing greenhouse gases into the atmosphere far more quickly than natural processes ever did. This might cause fast (positive) feedback effects to manifest themselves forcefully, before slower (negative) feedback effects can get going.

He also explains that the sharp warming that took place during the Paleocene–Eocene Thermal Maximum (PETM) were not caused by fossil fuels (which remained underground), but rather by the release of methane from permafrost and clathrates. If human emissions warm the planet enough to release that methane again, it could add a PETM-level warming on top of the warming caused by human beings.

Hansen’s conclusions are, frankly, terrifying:

The paleoclimate record does not provide a case with a climate forcing of the magnitude and speed that will occur if fossil fuels are all burned. Models are nowhere near the stage at which they can predict reliably when major ice sheet disintegration will begin. Nor can we say how close we are to methane hydrate instability. But these are questions of when, not if. If we burn all the fossil fuels, the ice sheets almost surely will melt entirely, with the final sea level rise about 75 meters (250 feet), with most of that possibly occurring within a time scale of centuries. Methane hydrates are likely to be more extensive and vulnerable now than they were in the early Cenozoic. It is difficult to imagine how the methane clathrates could survive, once the ocean has had time to warm. In that event a PETM-like warming could be added on top of the fossil fuel warming.

After the ice is gone, would Earth proceed to the Venus syndrome, a runaway greenhouse effect that would destroy all life on the planet, perhaps permanently? While that is difficult to say based on present information, I’ve come to conclude that if we burn all reserves of oil, gas, and coal, there is a substantial chance we will initiate the runaway greenhouse. If we also burn the tar sands and tar shale, I believe the Venus syndrome is a dead certainty.

To re-emphasize the point, averting catastrophic or runaway climate change is the most important ethical and political task for those alive now, even if most politicians don’t yet realize it or don’t yet understand what that involves.

That last line also offers something to throw back, next time someone says the billions of dollars of revenue from exploiting the oil sands are simply too valuable to not collect.

Bright-Sided

From Oprah to New Age philosophy, ‘positive thinking’ has become a hugely influential movement in business circles, the religious sphere, in pop medicine, and elsewhere. In Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America, Barbara Ehrenreich makes the case that the movement is poorly thought out and damaging. Her arguments are convincing, especially when it comes to situations where positive thinking is used to blame the victim when they suffer as the result of developments beyond their control: be it the movement towards corporate downsizing (which corresponded with the rise of motivational speakers in the workplace) or the unjustified assertion that cancer patients are responsible for their own worsening or recovery, on the basis of the mental attitudes they maintain.

Ehrenreich highlights how relentless optimism leads to dangerous groupthink, in which risks are downplayed and those who raise legitimate worries are sidelined. She provides ample evidence that these factors played a role in the inflation of the global house price bubble, and have continued to have important economic and political effects. These include the weird state of deluded isolation in which society’s richest people now reside. She also spends considerable time discussing the warped theology in which god is seen as a sort of mail-order service, happy to send you whatever good things (houses, cars, promotions) you are able to ‘manifest’ for yourself, simply by fervently desiring them.

Positive thinking involves a weird reversal, when it comes to dealing with risks. They cease to be external (concern that your company might fire you to improve their short-term profitability) and become entirely internal (fears about what your state of mind might do to you). It is also tied fundamentally to the notion that happiness is not most important in itself, but rather insofar as it influences events: “Nothing underscores the lingering Calvinism of positive psychology more than this need to put happiness to work – as a means to health and achievement, or what the positive thinkers call ‘success.'” The former tendency puts people in danger of worrying about the wrong things, while the latter strategy puts them at risk of seeking to achieve particular outcomes in nonsensical ways. That is especially dangerous when it comes to making big purchases on credit, firm in your belief that the universe will provide you with the means of dealing with it later.

Ehrenreich’s points are well-taken, though the book can be a bit tedious to read at times. There are also some partial contradictions. It is repeatedly asserted that there is no medical evidence that thinking positively improves health outcomes, yet it is taken as plausible that George Beecher was able to speed his demise through negative thinking. In the course of her analysis on the medical evidence, Ehrenreich claims to be “not in a position to evaluate” evidence that those with a positive outlook may have some protection against heart disease, but is seemingly happy to evaluate research on other illnesses that confirms her hypothesis.

All told, Ehrenreich makes important points about the poisonous institutional culture that accompanies an excessive focus on positivism – and the view that individuals are almost entirely responsible for what happens to them. Her concluding call for ‘realistic’ thinking is certainly appropriate enough, though perhaps she does not go far enough in suggesting how the empire of positive thinking she has mapped the outlines of might be deconstructed. As the world continues to grapple with real problems, magical thinking cannot be a substitute for dispassionate analysis, risk management, and contingency planning. How we get from our world to one more like that, however, remains mysterious.

Risk and reward

Depressing fact: apparently, one third of global banks still offer multi-year guaranteed bonuses to new hires. It is fantastically absurd that they are still able to convince shareholders that such payments are justified by the need to acquire ‘top talent.’

One cannot escape the feeling that banks and bankers have come out of the credit crunch having successfully bilked taxpayers out of billions of dollars, while avoiding reforms that would make future crises more rare or less severe.

My fantasy climate change policy

Even once you have reached agreement that there must be a cost associated with dumping greenhouse gases in the atmosphere, there are countless ways in which you can choose to do so. Many different instruments could be combined in many different ways.

Some argue that the simplest policy that corrects for the market failure is the best. I think there are multiple interlinked market failures, which require multiple policies to correct them.

If I had the power to dictate a climate policy for a developed state, it would look something like this:

1) Ban coal

Coal has no place in our energy future, given the terrible climatic effects that would result from burning the world’s massive reserves of the stuff. As such, no new coal-fired facilities should be allowed. Existing facilities should be subjected to the same carbon pricing mechanism as the rest of the economy, with no refunds, exemptions, or special treatment.

If someone wants to build a coal-fired facility that captures and stores its greenhouse gas emissions, they can be free to do so, provided:

  1. The firm pays the full cost for the equipment;
  2. They demonstrate that the technology is safe and environmentally effective;
  3. They continue to pay the market price for any greenhouse gas emissions not captured.

In practical terms, the demand for subsidies may be impossible to resist. At the very least, they should be directed towards research and demonstration projects, not towards commercial ventures.

2) Set a hard cap

This could be done in either of two ways. You could calculate the quantity of emissions likely to be produced by burning a unit of any particular fuel, then cap how much can be extracted or imported. Alternatively, you could require permits for the emission of greenhouse gases and only sell a set number.

Some intermediate system could also be possible: with fuels capped upstream and certain emission-generating activities capped at the point of emission (such as cement production). The important thing is that the cap should include all activities that occur within a country, and which lead to greenhouse gas emissions. This would also include things like land use changes, as well as the emissions embedded in imports. The latter should be addressed with a carbon tariff applied at the border. This could be waived in the case of imports from states that have robust carbon pricing systems of their own.

To get the level for the cap, you would start by choosing an overall temperature target (such as keeping the increase to less than 2°C), then work out a fair way to distribute the global cap that generates between nations. Some kind of contraction and convergence approach would likely be the most fair, with emissions in rich states falling soonest and fastest, but with everyone eventually reaching carbon neutrality.

3) Auction all permits

The revenue from the production/import/emission permits should be used in several ways. Firstly, some should be recycled back to taxpayers. In the event that refunds are granted for children, the level of the benefit should be capped at two per family, as an incentive to constrain population growth in emissions-intensive societies.

Some of the income should be used for basic research into low-carbon technologies, including renewable forms of energy, air capture of greenhouse gases, etc. Some could also be used for feed-in tariffs, to encourage the deployment of zero-carbon forms of energy.

4) Establish rising floor prices for transportation fuels

Fossil fuels were never going to last forever, and volatility in their prices leads to inefficiency and other problems.

As such, the government should set minimum prices for transportation fuels including diesel and gasoline. These should rise predictably over time. In the event that market prices are above the minimum, market prices would prevail. If those fall below the mandated minimum, the government would collect the difference.

The funds that accumulated would go into a fund from which payments would be made to all citizens, without ever drawing down the principle. That way, future generations will benefit from the bounty of fossil fuels, even if they live long after we’ve stopped using them.

5) Coordinate with other policies

Even all together, these approaches might not be sufficient to drive society aggressively in the direction of carbon neutrality. They could be supplemented with additional policies, as the effect of those already enacted becomes clearer. Also, the rate at which the overall cap is tightened could be increased or decreased, as necessitated by improved understanding of climate science or economics. Other policies and incentive schemes may well be necessary to ensure that the costs of complying with the declining cap do not become excessive. These would include support for research and international cooperation on zero-carbon energy projects.

Other existing policies that promote high emissions should be scrapped, such as subsidies to fossil fuel producers or emissions-intensive industries. Climate change must also be taken into account when making policy in areas like urban and transportation planning.

It would also be appropriate to participate in international efforts in areas like climate change adaptation and preventing deforestation.

India’s booming airlines

There are few elements of global climate change policy trickier than the relationship between climate change and development. Developing states insist that they have a right to get rich as fast as they can, with no particular heed paid to their greenhouse gas emissions. The figures for air travel in India show one small part of this:

According to the Airports Authority of India, the total number of domestic and international passengers was 10.7 million in October 2009, up 23% on the same month a year earlier.

Aircraft movements climbed by almost 59% in the same period.

And yet, if billions of people in the developing world follow a high-carbon path to development, the eventual emergence of catastrophic climate change is all but assured.

The future of human prosperity depends fundamentally on a stable climate. Achieving that end will require the recognition in developing states that they cannot pursue a high-carbon form of development indefinitely. To do so would be to grant a bit more wealth to those working now, while undermining the basis of prosperity for all future generations. At the same time, developed states need to show that it is politically and economically possible to have a society with rapidly falling emissions.

Renewables in Germany

Germany may be the developed country doing the most to expand the share of renewable energy it uses for electricity generation. Partly as a consequence of feed-in tariffs (where power distributors are obliged to buy energy from renewable facilities at set prices), renewables now represent about 15% of Germany’s electricity supply, much of that from wind. Since 2008, the quantity of solar energy employed in Germany has doubled.

Unfortunately, budgetary concerns may lead to the scaling back of the initiative. While it is fair enough to say that there are cheaper ways to fight greenhouse gas emissions than putting solar cells in Germany, it is also meaningful to highlight that the whole world will eventually need to transition to the use of renewable forms of energy. By helping to determine the political and technical measures necessary to do that, pioneers like Germany are doing a favour for those who will follow after.

For instance, feed-in tariffs are an important part of Ontario’s Green Energy Act.

The MSC and BCs sockeye salmon

I have written before about how the certification of a fishery by the Marine Stewardship Council is not sufficient cause to think it is genuinely sustainable (even before factors other than fish numbers, such as fossil fuel use by ships, are taken into account). More evidence for this has been forthcoming recently. Now, they have decided to certify the British Columbia sockeye salmon fishery, despite how the fish numbers are dwindling and subject to an ongoing inquiry. Last year’s run on the Fraser river was less than 10% of what had been expected. The recent history of salmon in BC is a catalog of failure. The decision to certify regardless certainly doesn’t leave the MSC looking very credible. Their decision doesn’t become official until a 15-day complaint period has concluded, and people will hopefully be able to persuade them to think differently during that span.

For those who really care about environmental issues and are willing to make personal choices to reflect that, I recommend avoiding fish (and other sorts of meat) entirely. Keeping fishing activity at a sustainable level just seems to require more political integrity and long-term thinking than any of the world’s governments can muster. It’s so much easier to grab a haul now, earn a bundle, and leave the mess for those who will come later.

Emissions drop from Canada’s biggest GHG polluters

One curious thing about those who are determined to avoid the emergence of effective climate change policies is how they argue that climate science is far too uncertain to serve as the basis for decision-making, while simultaneously claiming that their economic models prove that going low-carbon will produce certain economic ruin. That claim is especially poorly defended over the long-term, given that economic models cannot effectively incorporate the consequences of technology and capital changes across a span of decades. Also, the idea that fossil fuel based prosperity will be everlasting faces a fundamental challenge from the scarcity of those fuels, and the political volatility of many of the regions in which they are found.

Near-term data also suggests that Canadian companies can cut emissions without suffering economic ruin. According to Tyler Hamilton’s blog:

[Canada’s] Top 10 industrial CO2 emitters reduced their greenhouse gas emissions by 9 per cent in 2008 compared to 2007. At the same time, the Canadian economy grew by 0.5 per cent. Given that the impacts of the economic downturn were felt mostly in 2009, an even greater drop is expected this year. Canada’s Top 350 emitters reduced greenhouse gas emissions by nearly 6 per cent during the same period.

Of course, that does not prove, in and of itself, that effective climate change policies would be painless in terms of costs or jobs. Still, just as the onus must be on climate scientists to both refine their models and acknowledge their limitations, those who assert that good climate policies will be economically ruinous must address both evidence and arguments that suggest that this may not be so.

Haiti, crises, and the international community

Haiti’s terrible earthquake has given the international community an opportunity to demonstrate where it is capable of effective response. International organizations, national militaries, the media, and non-governmental organizations are all familiar with the business of short-term post-crisis response. The issues at stake are immediate, acute, and highly visible. The cost of making a commitment is fairly clear from the outset: whether you are evacuating people, digging through rubble, providing emergency shelter, or what have you. The response is also essentially apolitical: there is no blame to be assigned after such a natural disaster, and there are no clear partisan divisions in terms of what our response ought to be. Certainly, the international assistance is laudable and valuable. Predictions that a second wave of death would follow the Asian tsunami (on account of hunger, disease, etc) were partly defied as a consequence of energetic international aid efforts.

Of course, while a crisis illustrates what the international community is reasonably good at, it indirectly highlights areas in which responses are far more hesitant and ineffective. While the movement of tectonic plates is not a political phenomenon, the question of why Port-au-Prince was so vulnerable has political implications. The 1995 earthquake in Kobe, Japan was similarly powerful, but killed fewer people: about 6,500 compared with 40,000 plus in Haiti. Surely, construction standards and overall levels of societal wealth are part of the explanation for that. Comparisons can also be drawn to disasters that lack the features that make this one so politically simple: those that exist for an extended period, require uncertain and potentially large commitments of resources and political capital, and which lack the ability to create an immediate emotional response in the voting and tax-paying public.

While Haiti will provide incremental experience in acute crisis management, it is worth asking whether it can show the international community anything about longer-term risk management. In an increasingly interdependent world, the capabilities of the international community arguably need to expand beyond just sweeping up the broken glass, though doing so calls into question issues like sovereignty and the ‘responsibility to protect’ doctrine that seems to have become an unexpected casualty of the second Iraq war. Certainly, the U.N. cannot create seismic standards and hope they will be enforced in poor countries; at best, the U.N. and other such international organizations might be able to get a better handle on transboundary issues, which can only become more acute as the world is ever more densely populated, and the total material withdrawals and waste deposits from humanity into the biosphere continue to grow.

If there were a climate change conspiracy…

A flawed but interesting blog post about climate change and conspiracy theories does a good job of summing up what climate change deniers are actually alleging:

They argue that the governments of Europe, of the US, of Canada, of China and India, and indeed of much of the rest of the world–governments that rarely agree on anything, I might point out–are acting in concert to promote a bogus claim that the earth is heating up because of man-made release of carbon dioxide into the atmosphere. They claim that this conspiracy is being supported by the almost universal connivance of the world’s scientists, who are collectively falsifying data and hiding countervailing data. And all this is happening, they assert, despite the almost universal opposition of the world’s corporations, most of which, we know, are resisting having governments take any serious action to combat climate change, and in many cases (look at the US Chamber of Commerce), are actively challenging the whole notion of climate change.

When put that way, it really doesn’t sound terribly plausible. Of course, there will be new developments in science as we refine our models and collect more data about what is actually happening in the world. That is simply a consequence of the nature of the climate system and of scientific inquiry. To argue, however, that the world’s scientific and political community are cooperating to actively mislead people into thinking there is a problem where none actually exists is quite preposterous.

Note that I called the post ‘flawed but interesting’ because it contains a number of dubious claims not related to climate change – for instance, that only a fire hot enough to melt steel could explain the catastrophic failure of the World Trade Center towers on September 11th. As the BBC explains, the 800°C fires were hot enough to weaken the steel to the point where the weight of the towers could not be borne. While I wouldn’t endorse the entirety of the post, I do think the point about the alleged climate change conspiracy is well made.