Economics – Page 93 – a sibilant intake of breath

Australia’s carbon price delayed

When Australian Prime Minister Kevin Rudd came to power, it was hailed as a victory against climate change, given the inaction of his predecessor and the contents of the Rudd platform. Disappointingly, a key element of that has how been put on hold for a year, supposedly because of the ongoing economic crisis. Australia’s emissions trading scheme (ETS) will now launch in 2011, rather than July 2010, as originally planned.

Personally, I think it is foolish to delay carbon pricing on account of the credit crunch. We want to be rebuilding national economies in a manner complimentary to climatic stability. Also, the less time we give ourselves to increase carbon prices to the necessary levels, the more painful the eventual adjustment will be. Given that prices were to be set at $7 per tonne for the first year, the policy would not have been an excessive burden on industry, even if the funds weren’t recycled back via tax cuts elsewhere or investments in low-carbon infrastructure. A moderate carbon price now thus serves the dual purpose of alignment economic redevelopment more with environmental goals, while stretching out the total timeline across which adjustments will be made.

Like Canada, Australia has some of the highest per-capita emissions in the world. That means they bear special historical responsibility for the climate change problem. It also means they should have more opportunities for low-cost reductions in emissions. Both ethical and economic logic suggest that this delay is a mistake.

A Canadian coal phase-out

Both The Globe and Mail and The New York Times are reporting on recent comments from Jim Prentice, Canada’s minister of the environment, about phasing out coal-fired electricity in Canada:

“The concept is that, as these facilities are fully amortized and their useful life fully expended, they would not be replaced with coal.”

That is certainly necessary, but may not be sufficient to achieve Canada’s domestic emission reduction targets. Indeed, if the world as a whole is to get onto an emissions path consistent with avoiding dangerous climate change, it will probably be necessary to scrap some existing coal plants before the end of their working lives.

About 18% of Canada’s current greenhouse gas emissions are from coal-fired electricity, with facilities in Ontario (about 25% of the total), Alberta (about 47%), Saskatchewan, Nova Scotia, and New Brunswick.

Climate risk ‘pyramid’ from US polling data

Back during the 2008 election, many eyes were glued to fivethirtyeight.com: the statistics-oriented website of a baseball analyst turned electoral statistician. A couple of days ago, the man who runs the site posted an interesting diagram based on polling data about climate change (n=2,164). Basically, it shows that ever-decreasing numbers of people expect harm from climate change, the closer to them it would appear. For instance, more people expect it to harm plants and animals than people, and more people expect it to harm those in developing countries than those in the US.

All told, I think the trend is an accurate reflection of the most likely outcomes from climate change. It seems highly likely, for instance, that future generations will suffer more than this one. Nonetheless, the chart does a good job of demonstrating just how hard it is to get people to accept immediate sacrifices in order to protect long-term climate stability: they are not fully exposed to the risks, and they have ample opportunity to fob them off on others, so as to avoid making changes in how they live their own lives and how the political and economic systems in their states operate.

While I think the pyramid is basically correct when it comes to the relative magnitude of harm that will likely occur in each area, what it doesn’t convey is that the absolute level of harm would still be unacceptable, across the board, in the absence of strong climate policies. Continuing to emit greenhouse gasses at present levels until the end of the century will almost certainly cause massive harm to those living in the United States and other rich countries. It may not be as bad as the harm that would be visited on future generations and poorer countries, but it is more than serious enough to justify devoting a significant fraction of society’s resources to building a carbon neutral future.

There is some more discussion of the pyramid over at ZeroCarbonCanada.

Emissions permits for new entrants

One proposed element for a cap-and-trade system is holding back some permits for ‘new entrants.’ Basically, this would mean preemptively grandfathering emissions from certain types of new facilities. Depending on how it was done, it seems like it could be either environmentally beneficial or harmful. If the overall cap for any year is set below the level of emissions last year, on a downward trajectory compatible with stabilizing concentrations at a safe level, reserving some credits for new entrants would force other firms to bid for fewer permits, raising prices and increasing the number of mitigation activities that are worth undertaking. Conversely, if this is used as an excuse to increase the cap, it might impede the transition to a low-carbon future.

There is also the issue of complexity. It seems likely that special treatment for new entrants will lead to weird Enron-style accounting trickery. The more complicated a carbon pricing scheme becomes, the easier it is to do hidden favours, and the harder it is to transparently assess what is going on.

DIY waste heat capture

We have discussed the issue of waste heat before, in the context of both incandescent lightbulbs and the cogeneration of heat and power. For those interested in a more hands-on treatment of the subject, there are instructions for building a thermoelectric unit which allows you to charge electronics using waste heat from appliances. The same page also shows how to make a LEGO car powered by electricity produced using the heat from a small tea candle.

Using this system while heating your house doesn’t make a lot of sense, but similar devices may have some practical value inside buildings that are being cooled or outdoors. Of course, the cost and complexity of the thermoelectric unit also demonstrates why a lot of waste heat goes uncaptured, since it is cheaper to use more electricity or fuel than to improve system efficiency.

Obama’s Earth Day speech

It is heartening to see that Barack Obama has at least rhetorically accepted the fact that the fossil fuel industry has no long-term future:

Now, the choice we face is not between saving our environment and saving our economy. The choice we face is between prosperity and decline. We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy. We can allow climate change to wreak unnatural havoc across the landscape, or we can create jobs working to prevent its worst effects. We can hand over the jobs of the 21st century to our competitors, or we can confront what countries in Europe and Asia have already recognized as both a challenge and an opportunity: the nation that leads the world in creating new energy sources will be the nation that leads the 21st-century global economy.

More from this speech is available on the Climate Progress blog.

While it is important to make people aware of the dire threat posed by climate change, and the gross immorality of not dealing with it, it is also vital to stress the opportunities associated. Foremost among them is the chance to shift society from dependence on harmful and dwindling stocks of fossil fuels to clean and inexhaustible renewable forms of power.

Baseload solar power

Albiasa Solar, a Spanish company, is planning a 200 MW concentrating solar plant in Arizona that will feature the capability of storing heat in molten salt, so it can continue to generate power throughout the night. The plant is expensive, with a cost estimated around $1 billion, but it will require no fuel and produce no waste. Hopefully, it will also provide experience that can be used to reduce the costs of such construction in the future.

All told, concentrating solar with energy storage is a very promising looking technology. It has many of the advantages of fossil fuel and nuclear plants, no fuel requirement, and good sustainability credentials. Plus, there is a lot of high quality solar land available in the southern US, as well as southern Europe, North Africa, and the Middle East.

Needless to say, this is a much more practical way to get 24-hour solar power than space-based systems would be.

Biofuels and nitrous oxide

In theory, biofuels are an appealing climate change solution. They derive the carbon inside them from atmospheric CO2 and their energy from the sun. They can be used in existing vehicles and generators, and store a lot of energy per unit of volume or weight. The raw materials can be grown in many places, without massive capital investment. Of course, recent history has given scientists and policymakers an increasingly clear understanding of the many problems with biofuels. A report (PDF) from Scientific Committee on Problems of the Environment (SCOPE) of the International Council for Science (ICSU) concludes that, so far, biofuel production has actually produced more emissions than using fossil fuels would have. Partly, this is on account of the nitrous oxide emissions associated with the use of artificial fertilizers in agriculture. Over a 100 year period, one tonne of nitrous oxide causes as much warming as 310 tonnes of carbon dioxide. Corn produces especially large amounts of nitrous oxide, because it has a shallow root system and only takes in nitrogen for a few months each year.

It is possible that better feedstocks, agricultural techniques, and biofuel production processes will eventually make these fuels ecologically viable. Not all transportation can be electrified, and there will probably always be industrial processes that require petroleum-like feedstocks. Nonetheless, it must be recognized that the world has been going about biofuel production in the wrong way. That is something that should be borne in mind particularly by the citizens of states that are lavishing government support on them, both in the form of subsidies and by mandating that they comprise a certain proportion of transportation fuels.

European Commission green paper on overfishing

In addition to their illegal and deeply unethical fishing practices overseas, countries in the European Union have also been exploiting local stocks in an unsustainable way, encouraged partly by counterproductive government policies. All this is clearly articled in a green paper issued by the European Commission and described by the BBC. It mentions factors including subsidized fuel, and the willingness of politicians to inflate allowable catch numbers in defiance of scientific advice.

If we are ever going to get sustainable global fisheries, we are going to need governments with the fortitude and integrity to manage their own fish stocks, first. The sad examples set by Europe, Canada, and others are not encouraging on that front. Indeed, it continues to appear that reduced human consumption of fish will arise as the inevitable product of over-exploitation, not as the result of restraint motivated by long-term self interest (much less, any concern for marine ecosystems themselves). Hopefully, voters will eventually become cognizant of what is happening and demand that politicians abandon their damaging support for a fishing industry driven by the availability of short-term profits, rather than the management of a potentially sustainable resource.

The economic crisis and missed opportunities

[Update: 3 July 2010] Photo removed at the request of the subject.

The most frustrating thing about the ongoing financial crisis is the way in which it has sapped the ability of the Obama administration to do much of anything else. Even if he had inherited an economy in tip-top condition, there would have been an extremely lengthy list of things for Obama to work on: from foreign relations to domestic climate policy. As things stand, everything is taking a back seat to restoring the financial sector to some semblance of normality: an exercise in institutional repair that only has the potential to leave the country slightly better off than it was before the crisis began. A banking system more resistant to crises is a good thing to build, but doing so is ultimately a lot less impressive than reforming health care or pushing the economy firmly onto the track of long-term greenhouse gas reduction. It is, at best, damage control rather than meaningful reform.

Of course, presidents need to deal with the circumstances they encounter. Harold Macmillan may have been right to call ‘events’ the greatest challenge faced by statesmen. Still, one cannot help feeling disappointed at seeing the energies and talents of this administration being primarily directed towards sorting out some errors of lax regulation and oversight which blew up the global economy, rather than making good on its progressive potential. We can only hope that the bank recovery will work, the economy will get back on its feet, and there will be time enough left to take action on other fronts.