Economics – Page 95 – a sibilant intake of breath

Oil sands, game theory, and jobs

If we are going to prevent catastrophic climate change, every major country in the world will need to have policies that put a price on carbon and encourage the transition to a low-carbon economy. If the range of estimates for safe concentrations is approximately right (350 – 550ppm, very broadly), such policies will need to be in place within a period of years to, at most, decades. In such a world, projects like Canada’s oil sands would be enough to make the state permitting them an international pariah. It seems quite legitimate to expect harsh trade sanctions against a state that is so blatantly ignoring the need for the world to cut emissions, once many other states have seriously begun to do so. Given that I don’t think Canada has the stomach to be another North Korea, it seems like we would eventually give in to pressure to bring our policies in line with those of the United States and our other allies and trading partners.

As such, there are two possible long-term outcomes that can be envisioned. Either catastrophic climate change will occur or Canada will be forced to cut emissions like everybody else. In the former case, I suppose our current climate policies are not hugely relevant. If the rest of the world doesn’t get its act together, human civilization will probably snuff itself out. In the latter case, further investment in the oil sands will just increase the medium-term economic losses associated with the abandonment of the project. Such investment will also make it more and more politically difficult for the government of Alberta to support sane climate policies, turning it into more and more of an active ‘spoiler’ in domestic climate change negotiations between different levels of government.

Unfortunately, the ‘bite’ in this analysis doesn’t come into effect for some time, probably beyond the political horizons of most Canadian policy-makers today. As a further consequence, it is very hard to get people to take such long-term considerations into account. That being said, if a large majority of Canadians came to understand the issue in these terms – that we are pouring effort into a project that will ultimately need to be abandoned – the political landscape might shift considerably. The discussion may then be less about jobs now versus climatic stability in the future, and more about directing the ongoing development of the economy towards jobs that will still be viable in ten years, instead of ones that will be extinguished along any effective path to a sustainable future.

Renewables, land, and trade-offs

Whether it is solar power, wind farms, dams, or biofuel crops, renewable energy tends to be land-intensive. Indeed, that is one of the major reasons for which improving efficiency in sectors like buildings and vehicles is some important. Improving their efficiency can allow us to reduce our fossil fuel use, both out of concern for climate change and in response to their inevitable depletion, while engaging in the decades-long project of deploying the kind of renewable infrastructure we are going to need to power human civilization in the future. If we want to have an acceptable balance between areas used for energy generation, those used for all other human purposes, and those where nature is meant to be dominant, we will need to improve the efficiency of both our energy production and our energy use.

There are many trade-offs to be considered. For instance, the best sites for wind farms and solar facilities are often far away from centres of energy demand. That establishes a trade-off between producing power at the best sites and managing losses across long distances. While there is a lot of excitement about highly distributed forms of electrical generation, it may well prove to be the case that the most economically and ecologically sound approach is based on big renewable facilities linked to cities through efficient transmission systems, such as high voltage direct current (HVDC) lines.

There are also ecosystem trade-offs: dams block rivers, biofuel plantations are generally sterile monocultures that can lead to deforestation, and solar facilities crowd the dessert. That being said, fossil fuel extraction certainly causes harm to ecosystems, a well. There is direct harm from both deliberate actions (open pit oil sands extraction, coal mining, etc), near-term indirect harm from accidents like oil and coal ash spills, and the potentially massive long-term harm associated with climate change. Indeed, that final issue alone may be a strong justification for converting large amounts of land towards renewable energy generation; in that way, ecosystem harm can be made to occur in a planned way within large but controlled spaces, rather than globally and chaotically as the consequence of temperature increases, precipitation changes, and ocean acidfication.

Dams and climate change

In the past, environmental groups have often opposed hydroelectric projects, both in the form of large dams and smaller run-of-river projects. Now, I think the seriousness of climate change overrides past objections about destroying habitat and disrupting ecosystems in rivers. While we should definitely take cost-effective measures to reduce the harmful impacts of dams (for instance, removing trees from the area that is to be flooded), I think we need to accept more dam construction as a necessarily part of moving to a sustainable low-carbon economy.

Dams have virtues as a consistent source of energy for electrical generation. Their variable output also means they can be used to balance out production from sources like wind farms and solar facilities. With pumped hydroelectric storage, dams can also save energy at times when production exceeds demand, and do so in a way that is reasonably efficient.

Climate change impacts also support the call for more dams. The loss of glaciers and snowpack mean that natural water flows are going to become more variable. More and larger dams could help to smooth that out, as well as compensate for how our current hydroelectric infrastructure will face challenges as a result of decreased summer water flow.

Climate change is making many people re-think nuclear power, a source of electricity with a lot more black marks against it than hydroelectricity has. As such, I think we should be glad that many past attempts by environmentalists to block dams have failed, and we should strive to support their further development where suitable sites exist.

Ocean iron fertilization for geoengineering

The idea behind iron fertilization as a form of geoengineering is this: organisms in the ocean often have a rate of growth that is confined by the availability of a single nutrient. It’s like assembling laptops when there is only a limited amount of silicon around for processors. No matter how many cases, keyboards, and screens you can build, you can’t make finished laptops until you get more silicon. Since iron is often a growth-limiting nutrient in the ocean, the hope is that humans could add it to the sea, causing a bloom in ocean plant life. Those living things would draw carbon dioxide (CO2) from the atmosphere and then, hopefully, sink to the bottom of the sea and keep the carbon trapped there for a long time.

Recently, scientists tried adding six tonnes of iron to the Southern Ocean, around Antarctica. The idea was to test whether such an approach could help draw down the level of CO2 in the atmosphere. As reported by the BBC, the experiment was not very successful. They quote Victor Smetacek as saying:

There’s been hope that one could remove some of the excess carbon dioxide – put it back where it came from, in a sense, because the petroleum we’re burning was originally made by the algae. But our results show this is going to be a small amount, almost negligible.

Basically, the problem seems to be that the algae get eaten by animals near the surface, rather than sinking undigested to the cold ocean floor. That means the carbon remains within the Earth’s physical and biological cycles, rather than sinking down to where it won’t have medium-term effects. It may be that fertilization experiments in other locations, or with other nutrients, prove more successful.

Some odd game theory surrounds geoengineering. One possibility is that no type of geoengineering will not work at all. Another is that it might lower temperatures, but have unacceptable other effects. People also worry that the very possibility of geoengineering makes policy-makers more reckless, since they see it as a possible long-term solution that eliminates the need to reduce emissions. From an environmental standpoint, it would be useful to know that geoengineering certainly would not work, since it would help avoid a dead-end technology and would make it even more clear that emissions must be sharply reduced. That being said, it may be environmentally harmful to learn that it is possible, especially if the harmful consequences will mostly be borne by people living in poor states with relatively low greenhouse gas emissions. Powerful states may be tempted to geoengineer their way out of the climate problem, even if the consequences for those in other parts of the world are appalling. Given how appalling the consequences of our greenhouse gas emissions are likely to be for future generations within our own states, it would not be surprising if voters and governments opt for such a negligent course of action. The fact that we are cheerfully committing suicide suggests that we will probably commit murder without the slightest concern or consideration. Of course, knowing that geoengineering is possible would give us one last desperate option, in the event that abrupt and catastrophic climate change begins.

As it stands, the world simply isn’t coordinated enough to prevent any research into geoengineering. All we can do is fight to ensure the information and techniques that are acquired be used in a responsible way: taking into account the welfare of people around the world, in both this generation and those that will follow.

Seeking information on green buildings

While this site has seen a lot of discussion of electricity generation, vehicles, and fossil fuels there has been less discussion of ways in which low-carbon buildings can be encouraged. I would be quite interested if people could provide book or article suggestions on any of the following:

Materials
Certification standards like LEED
Lighting
Heating and cooling
Appliances and smart metering
Zoning and urban design
Cogeneration of heat and power
District heating
Cooling using bodies of water, as in Toronto
Green designs and construction techniques
Retrofits to improve efficiency
Solar water heating
Distributed electricity generation
Policies to encourage green buildings, such as financial incentives

And anything else relating to the sector.

On the complexity level of climate policies

When it comes to policies for regulating greenhouse gas emissions, complexity can conceivably serve three purposes. Two of them have some justification, while the third is largely reprehensible but entirely obvious and largely unavoidable. Unfortunately, it is the two dodgier options that are overwhelmingly more likely to emerge.

The first purpose is environmental effectiveness. For instance, we might add complexity to a pure carbon tax by also banning the construction of new coal-fired power plants. Doing so is likely to reduce emissions somewhat further, especially given that once a coal power plant is built, it takes a brave politician to refuse to grant an exception that will stop a carbon tax from bankrupting it, tossing out those who work there, and nullifying the investments of the financial backers.

The second purpose is economic efficiency. In some cases, it may be that a more complicated policy can achieve the same level of emissions reduction at a lower cost than a simpler one. It may also be that other economic objectives need to be sought in concert with greenhouse gas mitigation. For instance, we might want to increase the total portion of our energy use that comes from domestic sources.

The third purpose is being able to grant hidden favours to friends and contributors. As soon as you start giving away ‘grandfathered’ permits, creating tax exemptions, and the like you, open the door to both soft and hard forms of corruption. The more complex the set of regulations, the easier it is to conceal this. Once you start stacking on special rules for new facilities, different modes of compliance, and complex interactions between carbon policies and other forms of taxation and subsidy, you gain a dense canopy of rules, under which all sorts of shady business can be undertaken.

A government that realized the scope of the threat we face could put a simple policy in place in a matter of weeks or months. They could say:

“If we continue to emit at the level we are now doing, we will probably destroy the ability of the planet to sustain human civilization. This may well happen by the end of this century, especially if our emissions remain on an upward trajectory. To respond to this risk, we are implementing an economy-wide carbon tax. Every time fuel that generates greenhouse gasses is produced or imported, the producer or importer will pay the tax. The cost will then spread through the rest of the economy. This year, the tax will be $20 per tonne of CO2 equivalent. It will rise by $5 per year until at least 2030. We will use the revenues to provide financing for efficiency improvements in all sectors.”

Instead, we are likely to see governments that fail to appreciate the magnitude of the danger, but fully appreciate the opportunities new regulations provide for them to strengthen their electoral positions. As a consequence, there is a very strong possibility that we will fail to respond effectively to the threat of climate change before it becomes impossible to avoid catastrophic harm.

Free book on the oil sands

Tar Sands: Dirty Oil and the Future of a Continent is a book written by Andrew Nikiforuk, a Calgary journalist. The publisher, Greystone Books, has decided to make it available as a free PDF until Friday, March 20th. The book’s description suggests that it is very critical of the oil sands industry, overall:

This out-of-control megaproject is polluting the air, poisoning the water, and destroying boreal forest at a rate almost too rapid to be imagined. In this hard-hitting book, journalist Andrew Nikiforuk exposes the disastrous environmental, social, and political costs of the tar sands and argues forcefully for change.

Getting the PDF requires that you give them your email address. Of course, you can always buy the book if you prefer.

More about this is on Gristmill.

Monbiot on adaptation and mitigation

George Monbiot’s dire new column highlights how the enormous danger associated with climate change has produced action that is grossly inadequate. Furthermore, it challenges the idea that we will be able to deal with it later by ‘adapting.’ He argues that the costs of doing so will be massive, some impacts will be impossible to lessen through any level of spending, and that rich nations presented with the immediate reality of massive climatic challenge will never have the will to assist poorer states.

It remains vital to understand that adaptation is pointless without mitigation. There is no adaptation possible, if the 5.5 to 7.1°C ‘business-as-usual’ path projected by the Hadley Centre is the one we follow. In order to have a world where adaptation remains a physical possibility, we need to be aggressively cutting greenhouse gas emissions, making sure their peak concentration does not reach a level where feedbacks will re-organize the world into something deeply hostile to humanity.

Digital cameras beyond megapixels

As I have been telling friends for quite a while now, megapixels are no longer a key metric for deciding between different digital cameras. For relatively inexpensive cameras with small lenses, there is probably no advantage to having any more than about six megapixels, in terms of the quality of images you will get. Indeed, having too many pixels crammed onto a small sensor can start to decrease image quality, as pixels that are overwhelmed by the amount of light hitting them ‘leak’ into neighbouring ones. Images from sensors with unnecessary megapixels also clog up memory cards and hard drives, and mean that you need a very powerful processor to deal with large numbers of them at a time.

Akira Watanabe, manager of Olympus’ SLR planning department, has declared that twelve megapixels is adequate for all consumer purposes. Furthermore, he has declared that Olympus will now focus their attention on other issues, such as dynamic range, colour reproduction, and low-light image quality.

From a photographer’s perspective, this is very good news. I have taken plenty of great photos with a 3.2 megapixel camera, and subsequently blown up some of them as large as 11 x 14″. At the same time, most small digital cameras have poor performance in low light and problems addressing dynamic range. At this stage, improvements in those areas are a lot more valuable than cramming more pixels onto their sensors.

Of course, it will cause a bit of trouble for people selling cameras in big, non-specialist retail outlets. When I worked for Staples, I was never given any information on products beyond what was written on the little information card in front of it. While it is easy to say: “This camera has eight megapixels, that one only has seven,” it is a lot harder to test, understand, and express more subtle photographic characteristics.

Institutionalizing concern for future generations

Within political and bureaucratic processes, nobody really speaks for future generations. In the area of the environment, there may be some voters, politicians, environmental non-governmental organizations (eNGOs), and bureaucrats who are concerned about the effects of current policies and behaviours on future generations. What is lacking is an organized mechanism through which those concerns can be made influential. At present, near-term concerns have an overwhelming grip on political influence. This is because of election cycles, as well as the willingness of almost everybody to delay pain and difficult decisions.

The question, then, is whether any political or bureaucratic mechanism could help shift the balance of influence towards those who are not yet here to express their preferences. Most depressingly, we could conclude that only extreme prosperity puts people in a position where they are willing to make small sacrifices for the benefit of future others. Arguably, Norway’s stabilization fund is an example of this. Most optimistically, it could be argued that all that is necessary is to provide clear information on the future consequences of present actions, and people will make changes voluntarily. Between those views is a perspective that focuses on building institutions that think for the long term. Doing so is certainly challenging, since such organizations must be shielded from year-to-year demands in order to function. That challenge is made even more acute by the necessity that, if any such organization is to be effective, some organization that currently exists and operates will need to cede some power to the new body.