The environment – Page 121 – a sibilant intake of breath

Payback: Debt and the Shadow Side of Wealth

This series of lectures, published in book form, shows Margaret Atwood at her lively best. It is reminiscent of James Burke’s series ‘Connections,’ in which he traces a seemingly random path through history, choosing the most interesting and unexpected road at every juncture. In some ways, Atwood’s consideration of debt occurs in an even richer world, since it includes literature, mythology, and religion among the kind of paths that can be followed.

The first section of the book examines debt in a historical and conceptual way: considering different kinds of debt (financial, moral, spiritual, etc) as well as different modes of repayment. It considers the ethics of being a borrower and a lender, as well as the consequences that can arise for those who happen to be near either. Atwood’s examination highlights how lenders can err both in being too harsh on their debtors and in being too stingy with their money – both the vicious loan shark and the penny-pinching miser are culpable. The book discusses revenge as a special form of debt repayment, as well as the complexities that arise when debts are being incurred by states and princes. All this is made quite entertaining by the cleverness of the connections being identified, and the teasing and humorous tone of the narration.

The second section is an exposition of our current state of deep indebtedness, and a recognition that the greatest and most threatening of those debts are ecological. While Atwood’s updated Scrooge story includes asides on the unjustness of the World Bank and IMF, as well as the risks associated with fiat currencies, her primary concern is with the wanton destruction of the natural world that has been accelerating since the industrial revolution. She singles out overfishing, biofuels, deforestation, overpopulation, soil depletion, and climate change as examples, painting a general picture of extreme human recklessness. The redemptive vision is one based around neo-hippie victory: renewable power, an international agreement to stop climate change, and organic food for all.

The concluding story feels a bit trite, really. Any corporate baron paying the slightest bit of attention would already be jaded about the messages from the ghosts Atwood’s Scrooge Nouveau receives. That said, and while the literary merits of the first section exceed those of the second, it is appealing that this is a book of action as well as contemplation. It is hard not to agree with the thrust of Atwood’s argument. By all means, let’s increase the fairness of the global financial system and curb humanity’s self-destructive ways. This book contributes to that project by provoking a great deal of thought about the symbolism and meanings of debt. We will need to look beyond it for concrete ideas about how to overthrow or convert those who favour the status quo and thus bring about a sustainable (appropriately indebted) new order.

I say ‘appropriately indebted’ because the book makes a strong case that we can never really be out of debt. As social entities, there are always tallies of obligation between us, and nobody can ever be said to be sitting perfectly at the balance point of these transactions. Indeed, given the way they are denominated in different currencies (honour, favours, wealth), seeking such an outcome is hopeless. What we can attain is the position of borrowing and lending rightly, with forgiveness and an awareness and concern about the consequences for those around us and the wider world.

In any case, the book is highly topical, informative, and makes for a quick and rewarding read. It is telling that, while other books have been sitting around my apartment for months, I received this one in the mail yesterday and finished it today.

Climate change and generations

Arguably, the more personally invested in a problem you become, the more you have to fear from a miracle solution. Say, for instance, you are a recent university graduate intensely concerned with climate change. If, a couple of years from now, someone develops a machine that can turn atmospheric carbon dioxide into oxygen and diamonds for ten dollars a tonne, you will probably be hugely relieved and excited. In one swoop, we would have dealt with climate change, while also providing a lot of very strong building material for ourselves. All hail The Diamond Age.

While I cannot speak from experience, it does seem as though the same development would appear quite different from the perspective of someone who has spent a whole career dealing with climate change, using conventional technologies, and who suddenly finds themselves confronted by this curveball. Certainly, there would be some who rejoiced with all the enthusiasm of the newbies. Others might feel redundant or even cheated, perhaps quite legitimately.

In some ways, this speculation reduces to the fact that humanity rarely, if ever, faces problems that are both multi-generational and wholly deliberate. The development of stone tools was multi-generational, but it wasn’t terribly strategic or deliberate at that timescale. Similarly, post-WWII reconstruction was strategic and directed, but did not really span across multi-dimensional time. At least, not in the same way that climate change probably will. Based on the relatively conservative projection of current trends of technological development, energy use, and human population, it may well be the case that complete and permanent carbon neutrality takes several hundred years to achieve.

Given the risks that exist, we need to commit ourselves to the long haul process of carbon neutrality the difficult way, while retaining the flexibility to adopt a less challenging path, should it be presented to us. That combination of flexibility, determination, and objective evaluation will be a difficult thing to develop and maintain.

Building standards and climate change

When it comes to planning, we really need to be thinking about the lifespan of what we are building, and the changes likely to occur during the course of it. For vehicles, that means thinking about efficiency standards and probable future developments in fuel types, prices, and availability. For buildings, it means thinking about efficiency and the payback time for different low-energy technologies. For all areas, it means thinking about what successful climate change mitigation and adaptation will involve.

New building construction is one of the areas where this can be most easily accomplished. Many different governments have levers through which they can influence private decisions. Governments build and renovate their own properties and, to a considerable extent, set the terms under which private actors do so. That power can be used to build a society that is both more economically and ecologically sustainable.

Federal, provincial, and municipal governments should be thinking about mechanisms like the Leadership in Energy and Environmental Design (LEED) standards and the effect they can have on the economic and environmental sustainability of future built environments. In a climate like that of Canada, there are a huge number of situations in which high building efficiency standards are rapidly repaid in the form of decreased energy use. At the societal level, they are repaid even more richly, since the externalities associated with that energy production are also eliminated. Simple initiatives like painting roofs white can reduce the urban heat island effect and reduce energy use associated with cooling in summer: achieving mitigation and adaptation simultaneously.

On the adaptation side, planning is similarly crucial. While many of the downscaled effects of climate change remain uncertain, there are a few we can already be pretty clear about. We are, for instance, going to see smaller glaciers and less winter snowpack. That affects how cities should be doing their water planning. Smart governments should be thinking about how communities can be grouped, in terms of the probable climate impacts they will face. Along with the insurance industry, governments can then encourage cost-effective preemptive adaptation measures.

There are those who argue that taking these kinds of action is inappropriate or counterproductive: that governments should just introduce carbon pricing and let the market respond. There are several reasons for which that is not an appropriate attitude. For one thing, these kinds of standards help address other non-climatic externalities. For builders, there is an incentive to build shoddy, poorly insulated homes. The societal welfare arising from durable, well-insulated homes is significantly greater. Setting standards can help close the divide. Also, there is no real prospect of an appropriate carbon price emerging in the next few years. There is, by contrast, hope for one that will escalate to a sensible level. By starting to build today the kind of buildings that will be sensible in that environment, we can both get ahead in the process of building a low-carbon society and preemptively address accusations that carbon prices places an unacceptable burden on ordinary people.

The ongoing financial crisis, which is so deeply connected to building construction and financing, provides governments with even more levels through which to push sensible standards. Doing so judiciously is one way through which a victory can be gleaned out of this catastrophe.

Oceans added to Google Earth

Google’s decision to add seabed data to Google Earth is welcome. It is now conventional wisdom to argue that humanity knows less about the open oceans than we do about many of the stellar bodies in the solar system. That being said, given the level of pressure humanity is placing upon the oceans, coupled with the vital role they play in the planet’s biological functioning, gaining an appreciation for the nature and importance of the oceans is a critical medium-term undertaking for humanity.

One decidedly welcome thing about my new computer is that it has the processing and graphics power to make the Google Earth flight simulator smooth and visually compelling. It is neat to do something similar with the Mariana Trench.

Presentation on near-term American climate policy

Dr. Holmes Hummel has put together a useful Powerpoint deck and presentation about American climate change policy in the period before and immediately after the Copenhagen negotiations. The slides are available here, along with an mp3 of the spoken presentation. Hummel is a Congressional Science Fellow, currently developing climate and energy legislation through the office of Congressman Jay Inslee. I wholeheartedly hope that she is correct in anticipating the proposal of a 100% auction cap-and-trade system from the Obama administration in 2009.

Her website has a number of other presentations.

Receding horizons in energy economics

Over at The Oil Drum, a reader has expressed an idea they call the ‘Law of Receding Horizons.’ This pertains to the energy industry and holds that, for unconventional fuels like ethanol and the oil sands, higher oil prices are not a guarantee of increased profits. This is because their own costs of production are not insulated from the direct and indirect effects of oil price increases. As such, their costs of production often rise to squeeze away any increased profit margin. Robert Rapier expresses the same idea in his recent post on fuels made using a thermal depolymerization process.

It seems unlikely that this holds true in all cases. Certainly, oil sands producers were a lot more upbeat when oil was around $150 a barrel than they are now that it is around $40. That being said, it may prove to be one reason for which new sources of unconventional fuel do not emerge in a cost-effective way as older and cheaper sources are depleted.

It is also worth mentioning that the costs here exclude any externalities. I maintain that if all the people who are and will be affected by oil sands production offered a dollar value equivalent to the level of harm they suffered to the oil sands producers, in lieu of continuing to produce they would choose to take this settlement. The externalities associated with the oil sands are probably greater than the welfare benefits of the fuel being produced.

The budget and federal environmental policy

The Globe and Mail has a fairly lengthy article about the recent federal budget, oil sands policy, and environmental policy integration with the United States. It highlights the speculative nature and unknown costs of emissions reductions associated with carbon capture and storage (CCS) technology:

However, this week’s federal budget provided little sense that Ottawa is preparing the country for a shift to a green economy, or even that it is concerned about the slump in the oil sands, which extends to the oil and gas industry generally.

Rather than any direct measures, the federal government provided $69-billion to ease access to credit in the economy generally — admittedly, an important problem for a capital-intensive oil industry — and vague promises of funding for carbon-capture-and-storage technology.

CCS is the fig leaf of the oil sands — an untested, hugely expensive technology that governments and industry claim will be critical if oil-sands emissions are to be reduced to acceptable levels. The idea is to divert CO2 emissions from smokestacks and store it permanently underground, but skeptics doubt it will ever be commercially viable.

A lot of talk these days surrounds a joint North American approach to climate change and energy security. Few people seem to have publicly considered the jurisdictional difficulties associated with such an approach. If I were Barack Obama, trying to get a cap-and-trade bill through Congress, I really doubt that I would want to have to deal with ten provincial governments, a second federal government, a separate legal and constitutional arrangement (including, for instance, aboriginal issues), and all the other complexities associated with jumping straight into a two-state system. That being said, having a North American strategy that is at least poised for integration could be important for securing the support of private firms worried about cross-border competition.

Without a doubt, these are interesting times for the emergence of climate policies.

Obama visiting Canada

President Barack Obama will be visiting Canada on February 19th. Presumably, that will include some sort of large public gathering, hopefully with an appearance from the man himself. In preparation, it seems fitting to contemplate what sort of message it would be most valuable to convey to the new president.

With that aim in mind, I propose that people submit their best ideas for a message that could be put on a placard for the media (and maybe even the President) to catch a glimpse of. Text versions and images would both be welcome. The former can be posted as simple comments. In the latter case, people can email images to me for possible posting. My immediate idea would be something along the lines of:

The oil sands are a trap!
Choose zero-carbon energy!

These days, it seems that the best hope for an aggressive shift towards decarbonizing the global economy comes from the possibility of new US leadership and the destruction of the reckless approach to energy the world is using at present. The challenge of expressing that general necessity in a compact statement is a considerable one.

Free book on environmental economics

Jason Scorse, of the Monterey Institute of International Studies, has written a book on what environmentalists need to know about economics. He has also made it available online, free of charge.

The first six chapters consider the general approach of economists to environmental issues. The next eight chapters look into specific environmental issues, including climate change (PDF). The relatively brief climate chapter concentrates on the possibility of an international cap-and-trade or carbon tax system, rather than focusing on some of the more conceptual issues in climate change economics, such as the appropriate discount rate or the degree to which we should hedge against catastrophic risks. Nonetheless, it is a potentially useful resource for those seeking to increase their knowledge of the general subject area.

Norway: green ambitions and oil exports

This Economist article on Norway should make interesting reading for Canadians interested in questions of energy, environment, and politics. It highlights how Norway is both progressive on climate change – with a carbon tax and a grid almost completely dominated by hydroelectric power – and a major indirect emitter on account of its large exports of oil and gas. Oil and gas sales produced 413 billion kroner ($75 billion Canadian) in revenues in 2008, and such exports have allowed Norway to build up an oil-revenue fund worth 2.1 trillion kroner ($382 billion Canadian).

The challenge of being a hydrocarbon exporter at a time when future human prosperity depends on the fairly rapid abandonment of fossil fuels is an acute one. While carbon capture and storage (CCS) technologies may eventually help square the circle a bit, that is by no means guaranteed. Indeed, placing excessive confidence on the rapid and economical deployment of that technology will leave states in the lurch if it doesn’t deliver as rapidly as promised.

In addition to discussing carbon pricing instruments and oil exports, the article examines the practice of ‘offsetting’ emissions by paying to have them reduced somewhere else, then taking the credit for doing so by counting those avoided emissions against your own. As discussed before, it is an idea not entirely without merit. That being said, it must be rigorously operated, or it will risk being abused.

Norway’s considerable efforts to respond appropriately to climate change deserve to be both applauded and, where appropriate, replicated in Canada. As for balancing the desire to do what’s right against the temptation of cash for dirty fuels, hopefully Norway will opt to show other oil producers that the temptation can be restrained without destroying prosperity, and that there are big opportunities to be found in alternative, renewable sources of energy. Depressingly, it may only be with strong examples of this type elsewhere that Canada will even begin to seriously contemplate such a shift.