One of the smaller and cuter stakeholders in climate change is the pika, an alpine mini-rabbit that has nowhere to go as warming takes their habitable zone above mountaintops.
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Category: Climate
Hair of the dog that bit you climate policy
Roy Spencer on reducing emissions by increasing emissions:
COL: Let’s say tomorrow, evidence is found that proves to everyone that global warming as a result of human released emissions of CO2 and methane, is real. What would you suggest we do?
SPENCER: I would say we need to grow the economy as fast as possible, in order to afford the extra R&D necessary to develop new energy technologies. Current solar and wind technologies are too expensive, unreliable, and can only replace a small fraction of our energy needs. Since the economy runs on inexpensive energy, in order to grow the economy we will need to use fossil fuels to create that extra wealth. In other words, we will need to burn even more fossil fuels in order to find replacements for fossil fuels.
On the face of it, this is absurd. Reverse a positive feedback loop by making it stronger? But it could work, if given the right structure – a relative quit smoking by going in a closet to smoke until he couldn’t stand it anymore. Here’s what I can make of the mental model:
Spencer’s arguing that we need to run reinforcing loops R1 and R2 as hard as possible, because loop R3 is too weak to sustain the economy, because renewables (or more generally non-emitting sources) are too expensive. R1 and R2 provide the wealth to drive R&D, in a virtuous cycle R4 that activates R3 and shuts down the fossil sector via B2. There are a number of problems with this thinking.
- Rapid growth around R1 rapidly grows environmental damage (B1) – not only climate, but also local air quality, etc. It also contributes to depletion (not shown), and with depletion comes increasing cost (weakening R1) and greater marginal damage from extraction technologies (not shown). It makes no sense to manage the economy as if R1 exists and B1 does not. R3 looks much more favorable today in light of this.
- Spencer’s view discounts delays. But there are long delays in R&D and investment turnover, which will permit more environmental damage to accumulate while we wait for R&D.
- In addition to the delay, R4 is weak. For example, if economic growth is 3%/year, and all technical progress in renewables is from R&D with a 70% learning rate, it’ll take 44 years to halve renewable costs.
- A 70% learning curve for R&D is highly optimistic. Moreover, a fair amount of renewable cost reductions are due to learning-by-doing and scale economies (not shown), which require R3 to be active, not R4. No current deployment, no progress.
- Spencer’s argument ignores efficiency (not shown), which works regardless of the source of energy. Spurring investment in the fossil loop R1 sends the wrong signal for efficiency, by depressing current prices.
In truth, these feedbacks are already present in many energy models. Most of those are standard economic stuff – equilibrium, rational expectations, etc. – assumptions which favor growth. Yet among the subset that includes endogenous technology, I’m not aware of a single instance that finds a growth+R&D led policy to be optimal or even effective.
It’s time for the techno-optimists like Spencer and Breakthrough to put up or shut up. Either articulate the argument in a formal model that can be shared and tested, or admit that it’s a nice twinkle in the eye that regrettably lacks evidence.
Tax time
It’s time* for environmentalists (and everyone else) to give up on a myriad of second-best regulatory policies and push for a simple emissions price (i.e. a carbon tax). The latest reason: green subsidies are unraveling under adverse energy market conditions. There are many others:
- It’s hard to design an emissions market that works well on a large scale, resisting volatility, in pursuit of elusive environmental certainty.
- Performance standards don’t permit enough tradeoffs.
- Portfolio standards can have perverse and volatile outcomes and tend to develop strange internal convolutions.
- Subsidies and credits send the wrong price signal for conservation, have poor equity effects, and because they cost money, tend to self-extinguish when they simply get too successful.
- R&D subsidies won’t get the job done on their own.
- Rebates get discounted or wasted.
- Green labeling presents a weak and confusing signal.
All of the above have some role to play, but without prices as a keystone economic signal, they’re fighting the tide. Moreover, together they have a large cost in administrative complexity, which gives opponents a legitimate reason to whine about bureaucracy and promotes regulatory capture.
If all the effort that’s now expended in fragmented venues to create these policies were focused on one measure, would it be enough to pass a significant emissions price with fair revenue recycling and a border adjustment? I don’t know for sure, but I’d like to see us try.
* Actually, I think it was time for a carbon tax at least 20 years ago.
EU ETS on the ropes
The EU declined backloading, a deferral of permit auctions that would have supported prices in the Emissions Trading System (ETS).
This is described imminent collapse to the system, threatening the achievement of emissions targets. Perhaps a political collapse is imminent – not my department – but the idea that low emissions prices threaten the system is a bit odd. The ETS price is a feedback mechanism. Low prices are a symptom, indicating that the marginal cost of meeting targets is extremely low. That should be a cause for celebration (except for traders).
For the umpteenth time, this shows the difficulty of running a system that invites wrangling over allocation and propagates noise from the economy into a market.
Meanwhile, carbon taxes grind away at their job.
Thorium Dreams
The NY Times nails it in In Search of Energy Miracles:
Yet not even the speedy Chinese are likely to get a sizable reactor built before the 2020s, and that is true for the other nuclear projects as well. So even if these technologies prove to work, it would not be surprising to see the timeline for widespread deployment slip to the 2030s or the 2040s. The scientists studying climate change tell us it would be folly to wait that long to start tackling the emissions problem.
Two approaches to the issue — spending money on the technologies we have now, or investing in future breakthroughs — are sometimes portrayed as conflicting with one another. In reality, that is a false dichotomy. The smartest experts say we have to pursue both tracks at once, and much more aggressively than we have been doing.
An ambitious national climate policy, anchored by a stiff price on carbon dioxide emissions, would serve both goals at once. In the short run, it would hasten a trend of supplanting coal-burning power plants with natural gas plants, which emit less carbon dioxide. It would drive some investment into low-carbon technologies like wind and solar power that, while not efficient enough, are steadily improving.
And it would also raise the economic rewards for developing new technologies that could disrupt and displace the ones of today. These might be new-age nuclear reactors, vastly improved solar cells, or something entirely unforeseen.
In effect, our national policy now is to sit on our hands hoping for energy miracles, without doing much to call them forth.
Yep.
h/t Travis Franck
Equation Soup
Most climate skepticism I encounter these days has transparently crappy technical content, if it has any at all. It’s become boring to read.
But every once in a while a paper comes along that is sufficiently complex and free of immediately obvious errors that it becomes difficult to evaluate. One recent example that came across my desk is,
Polynomial cointegration tests of anthropogenic impact on global warming Continue reading “Equation Soup”
Climate incentives
Richard Lindzen and many others have long maintained that climate science promotes alarm in order to secure funding. For example:
Regarding Professor Nordhaus’s fifth point that there is no evidence that money is at issue, we simply note that funding for climate science has expanded by a factor of 15 since the early 1990s, and that most of this funding would disappear with the absence of alarm. Climate alarmism has expanded into a hundred-billion-dollar industry far broader than just research. Economists are usually sensitive to the incentive structure, so it is curious that the overwhelming incentives to promote climate alarm are not a consideration to Professor Nordhaus. There are no remotely comparable incentives to the contrary position provided by the industries that he claims would be harmed by the policies he advocates.
I’ve always found this idea completely absurd, but to prep for an upcoming talk I decided to collect some rough numbers. A picture says it all:
Notice that it’s completely impractical to make the scale large enough to see any detail in climate science funding or NGOs. I didn’t even bother to include the climate-specific NGOs, like 350.org and USCAN, because they are too tiny to show up (under $10m/yr). Yet, if anything, my tally of the climate-related activity is inflated. For example, a big slice of US Global Change Research is remote sensing (56% of the budget is NASA), which is not strictly climate-related. The cleantech sector is highly fragmented and diverse, and driven by many incentives other than climate. Over 2/3 of the NGO revenue stream consists of Ducks Unlimited and the Nature Conservancy, which are not primarily climate advocates.
Nordhaus, hardly a tree hugger himself, sensibly responds,
As a fifth point, they defend their argument that standard climate science is corrupted by the need to exaggerate warming to obtain research funds. They elaborate this argument by stating, “There are no remotely comparable incentives to the contrary position provided by the industries that he claims would be harmed by the policies he advocates.”
This is a ludicrous comparison. To get some facts on the ground, I will compare two specific cases: that of my university and that of Dr. Cohen’s former employer, ExxonMobil. Federal climate-related research grants to Yale University, for which I work, averaged $1.4 million per year over the last decade. This represents 0.5 percent of last year’s total revenues.
By contrast, the sales of ExxonMobil, for which Dr. Cohen worked as manager of strategic planning and programs, were $467 billion last year. ExxonMobil produces and sells primarily fossil fuels, which lead to large quantities of CO2 emissions. A substantial charge for emitting CO2 would raise the prices and reduce the sales of its oil, gas, and coal products. ExxonMobil has, according to several reports, pursued its economic self-interest by working to undermine mainstream climate science. A report of the Union of Concerned Scientists stated that ExxonMobil “has funneled about $16 million between 1998 and 2005 to a network of ideological and advocacy organizations that manufacture uncertainty” on global warming. So ExxonMobil has spent more covertly undermining climate-change science than all of Yale University’s federal climate-related grants in this area.
Money isn’t the whole story. Science is self-correcting, at least if you believe in empiricism and some kind of shared underlying physical reality. If funding pressures could somehow overcome the gigantic asymmetry of resources to favor alarmism, the opportunity for a researcher to have a Galileo moment would grow as the mainstream accumulated unsolved puzzles. Sooner or later, better theories would become irresistible. But that has not been the history of climate science; alternative hypotheses have been more risible than irresistible.
Given the scale of the numbers, each of the big 3 oil companies could run a climate science program as big as the US government’s, for 1% of revenues. Surely the NPV of their potential costs, if faced with a real climate policy, would justify that. But they don’t. Why? Perhaps they know that they wouldn’t get a different answer, or that it’s far cheaper to hire shills to make stuff up than to do real science?
Climate Russian Roulette
John Sterman at the MIT Museum, reflecting on bathtub dynamics, public perceptions and political conflict over climate change:
Beggaring ourselves through coal mining
Old joke: How do you make a small fortune breeding horses? Start with a large fortune ….
It appears that the same logic applies to coal mining here in the Northern Rockies.
With US coal use in slight decline, exports are the growth market. Metallurgical and steam coal currently export for about $140 and $80 per short ton, respectively. But the public will see almost none of that, because unmanaged quantity and “competitive” auctions that are uncompetitive (just like Montana trust land oil & gas), plus low royalty, rent and bonus rates, result in a tiny slice of revenue accruing to the people (via federal and state governments) who actually own the resource.
For the Powder River Basin, here’s how it pencils out in rough terms:
| Item | $/ton |
| Minemouth price | $10 |
| Royalty, rents & bonus | $2 |
| Social Cost of Carbon (@ $21/tonCo2 medium value) | -$55 |
| US domestic SCC (at 15% of global, average of 7% damage share and 23% GDP share) | -$8 |
| Net US public benefit | < -$6 |
In other words, the US public loses at least $3 for every $1 of coal revenue earned. The reality is probably worse, because the social cost of carbon estimate is extremely conservative, and other coal externalities are omitted. And of course the global harm is much greater than the US’ narrow interest.
Even if you think of coal mining as a jobs program, at Wyoming productivity, the climate subsidy alone is almost half a million dollars per worker.
This makes it hard to get enthusiastic about the planned expansion of exports.
Global lukewarming
Fred Krupp, President of EDF, has an opinion on climate policy in the WSJ. I have to give him credit for breaking into a venue that is staunchly ignorant the realities of climate change. An excerpt:
If both sides can now begin to agree on some basic propositions, maybe we can restart the discussion. Here are two:
The first will be uncomfortable for skeptics, but it is unfortunately true: Dramatic alterations to the climate are here and likely to get worse—with profound damage to the economy—unless sustained action is taken. As the Economist recently editorialized about the melting Arctic: “It is a stunning illustration of global warming, the cause of the melt. It also contains grave warnings of its dangers. The world would be mad to ignore them.”
The second proposition will be uncomfortable for supporters of climate action, but it is also true: Some proposed climate solutions, if not well designed or thoughtfully implemented, could damage the economy and stifle short-term growth. As much as environmentalists feel a justifiable urgency to solve this problem, we cannot ignore the economic impact of any proposed action, especially on those at the bottom of the pyramid. For any policy to succeed, it must work with the market, not against it.
If enough members of the two warring climate camps can acknowledge these basic truths, we can get on with the hard work of forging a bipartisan, multi-stakeholder plan of action to safeguard the natural systems on which our economic future depends.
I wonder, though, if the price of admission was too high. Krupp equates two risks: climate impacts, and policy side effects. But this is a form of false balance – these risks are not in the same league.
Policy side effects are certainly real – I’ve warned against inefficient policies multiple times (e.g., overuse of standards). But the effects of a policy are readily visible to well-defined constituencies, mostly short term, and diverse across jurisdictions with different implementations. This makes it easy to learn what’s working and to stop doing what’s not working (and there’s never a shortage of advocates for the latter), without suffering large cumulative effects. Most of the inefficient approaches (like banning the bulb) are economically miniscule.
Climate risk, on the other hand, accrues largely to people in far away places, who aren’t even born yet. It’s subject to reinforcing feedbacks (like civil unrest) and big uncertainties, known and unknown, that lend it a heavy tail of bad outcomes, which are not economically marginal.
The net balance of these different problem characteristics is that there’s little chance of catastrophic harm from climate policy, but a substantial chance from failure to have a climate policy. There’s also almost no chance that we’ll implement a too-stringent climate policy, or that it would stick if we did.
The ultimate irony is that EDF’s preferred policy is cap & trade, which trades illusory environmental certainty for considerable economic inefficiency.
Does this kind of argument reach a wavering middle ground? Or does it fail to convince skeptics, while weakening the position of climate policy proponents by conceding strawdog growth arguments?