On Global Warming

On Global Warming-Becker When climatologists construct models of global warming caused by industrial emissions of CO2 and other greenhouse gases, they are much more like economists than the typical experimental biologist or physicist. By that I mean that they can only test the implications of their models with the data thrown up by current and past actual events, not by experimental isolation of particular forces. Since many other not well-understood or readily observed forces affect climate, it has been difficult to prove that these models give accurate predictions about future warming. This helps explain the considerable skepticism about whether man-made activities explain much of the temperature build-up in recent decades, although Posner is right that consensus on this has grown considerably during the past 15 years. So I agree with him that it is prudent to take actions to reduce the build-up of carbon gases in the atmosphere, but which ones? Despite his recognition of its many shortcomings, Posner believes the US should join the Kyoto Protocol. I disagree because this Protocol in its present form has major defects, even if one fully accepts the concern about global warming. The most fundamental problem is that some 140 developing nations are excluded, including China, India, Brazil, Mexico, and oil producers like Saudi Arabia. As a consequence, the greater the restrictions and costs imposed on companies in developed countries to cut back their emissions, the stronger their incentive to shift production to exempt nations, like China, India, and Mexico. This is economically inefficient, and helps explain why influential unions and companies in the United States oppose these restrictions. These production shifts could even have a perverse effect on pollution because poorer nations tend to pollute more per unit of industrial output than rich nations do. For companies in the developed world are, even aside from Kyoto, subject to popular pressures and laws to reduce their output of pollutants. Such restrictions are weak or absent in most countries trying to catch up to the economic leaders. One way to begin to overcome the opposition to Kyoto from developing nations, Congress, and the President, would be to start a system of marketable quotas, for example of CO2 emissions, that would be traded on a worldwide exchange. The total number of quota rights issued in any year would be determined by the level of worldwide emissions of CO2 allowed in that year. The EU is starting an exchange- modeled after the Chicago Climate Exchange that successfully trades sulfur dioxide emission rights- with a limited form of trading in their carbon emission quotas under the Kyoto Agreement. A most important modification of the Protocol would be to allocate to the major developing nations a greater share of the quotas than their share of emissions. This would make developing nations net sellers of quotas on the proposed climate exchange, and so they would collect payments (or �taxes�) from companies in the richer nations who on balance would buy quota rights to reach their production goals. Russia recently agreed to the Kyoto Protocol after much indecision probably because they expect to be net quota sellers in the foreseeable future. A favorable system of quota allocation might overcome the resistance of China and other developing nations to abide by the Protocol while they are industrially so far behind Europe, Japan, and the United States. It could also reduce the opposition in America-depending of course on how many quotas it receives- because companies in developing countries would have no artificial cost advantage in production, as long as they had to pay the market price for any quotas they receive. A tradable quota system is equivalent in its effects on production to a unit tax on emissions that leads to the same total quantity of emissions as the quota system. Indeed, the market price of a quota for say a ton a unit of carbon pollution would exactly equal the equivalent tax on that ton. So tradable quotas and taxes have the same beneficial effects on incentives to discover ways to reduce emissions. Posner is worried about the effects of abrupt, catastrophic, and irreversible changes in climate that could produce enormous damage to the world. Apparently, a catastrophic climate change occurred naturally about 11,000 years ago, and maybe at a few other times. These effects are possible in multiple equilibrium climate models- multiple equilibrium models are also used in economics- whereby a sufficient deviation from one climate equilibrium position can set in motion forces that lead to large and rapid movement to a wholly different, and possibly much worse, position. But a few naturally induced rapid climate changes in the course of thousands of years does not mean that the man-made risk of such a dramatic change should receive much weight. Given all the risks the world faces, such as terrorist control of nuclear and biological weapons, or runaway nanotechnology, genetically modified crops, and cloning-all very well discussed in Posner�s new book Catastrophe- I believe he is excessively concerned about climatic catastrophes. A sympathetic and informative review of such abrupt climate changes by Stephen Schneider of Stanford published in 2003 by the OECD�s Workshop on �Benefits of Climate Policy� reaches the modest conclusion that �My own personal value position, given the vast uncertainties in both climate science and impacts estimations, is to enact (and act on) policies to slow down the rate at which we disturb the climate system. This can buy us time to better understand what may happen-a process that will take many more decades- and lead to lower cost decarbonisation options.� I should add that throughout history, there has been a tendency to underestimate the potential for technological developments that greatly reduce the predicted doom from various natural and manmade disasters, such as claims during the past several centuries that the world is running out of wood, coal, or oil. One glaring and instructive example is the 1865 book The Coal Question by the great economist, W. Stanley Jevons, which predicted disastrous coal shortages by the end of that century. The lesson for warming is that new technologies may arrive much sooner than expected, technologies that not only effectively reduce the emission of greenhouse gases, but also help take them out of the atmosphere. Still, I agree with Posner that we might want to give financial and other incentives to speed up the development of ways to remove carbon dioxide from the atmosphere. He may be right that governments should subsidize research on this topic, although he would agree that the subsidies to ethanol and the Synfuels corporation, and the hype about the potential of hydrogen to replace oil and coal, are not reassuring about government subsidies of other climate-improving technologies. It may be better to convince rich philanthropists to establish lucrative prizes for technologies that can remove carbons from the atmosphere. Perhaps even we should allow patents on these technologies, which would be purchased by signatories to the Kyoto Protocol through auctions of the type described skeptically in my previous commentary on patents.

Comments

[John Palmer]

I like to rely on markets to promote economic efficiency as much as possible.

But using internationally tradable CO2 permits requires the creation, assignment, and enforcement of property rights (a la Coase), and I just cannot figure out who can do this effectively. I certainly would not trust the UN or the EU or the US to do it; I wouldn't even trust Canada to do it.

And so if we cannot create effective tradable emmision permits, we are left with the atmosphere as "the commons", and each country or firm facing a prisoners' dilemma/free-rider problem -- each will continue to emit too many emissions because the costs of doing so are born by others while the benefits to the firms or countries from reducing their own emissions are minor.

[joe]

One thing that has been left out of both of your discussions is a larger, scarrier uncertainty... that of the Runaway Greenhouse Effect. The greenhouse effect (described by posner) in equilibrium, is a good thing for Earth... it keeps us warmer than the cold of space. However, increasing greenhouse gasses like CO2 will result in the amount of water vapor in the atmosphere increasing (as the temperature rises the vapor-pressure of water from our seas will increase).

What's the big deal with having more H2O in our atmosphere? Well, water vapor is a much, much more effective greenhouse gas... which will increases the temperature and place even more water vapor in the atmosphere.

The tipping point, so to speak, where we've passed a point of no return in this cycle, is largely unknown to science. We may have already past this point or it may be in our distant future... one thing is for sure: we need to figure out how to quantify, study and model all of this.

And curbing emissions now could do nothing but help...

[RAZ]

One way to have a major impact on greenhouse gases is to mitigate the emission of such into our atmosphere from power plants. The most effective way to get large blocks of reliable power onto the grid without greenhouse emissions is to promote the development and utilization of nuclear energy. Much research has been conducted over the last few decades to establish safe "cookie-cutter" nuclear power plant designs that employ technologies minimizing the risks associated with the operation of such facilities, as well as the ability to divert nuclear material to weapons programs. I recognize that nuclear power plants still pose a waste disposal issue, but that problem also seems soluble--at least more easily soluble than developing whole new technologies that eliminate greenhouse gases and yet still produce usable energy. Why are the Kyoto proponents not supporting the prudent exploitation of nuclear energy? This is clearly one way to minimize the adverse impact on economies by preserving their need for a secure power supply at a reasonable cost, while at the same time making a real dent in man-made emissions of greenhouse gases! I am afraid that we are still paying the price for the scare tactics that environmentalists used in the 70's and 80's to block nuclear power plants, regardless of their record of safe operation. Pretty ironic when you think about it! Sort of being hoisted on your own petard!

[Ana Vasconcelos]

I think the Kyoto Protocol is nonsense.
Is just some good intended empty intentions, pointing to the creation of a terrible bureaucracy that would measure and certify emissions so that they can be traded.
Since no one is going to actually exchange cans of clean or poluted air, those who buy clean air are paying a tax that allows them to polute. Only they don't do that to a central authority they do that to an aledgelly clean country of their liking. Moreover this bogus commerce will probably be cheaper than introducing technological changes needed to reduce emissions.
Finally their are no sanctions to violation of the Protocol.
Much a do about nothing...
Ana Vasconcelos

[James]

Joe - the idea of a "runaway greenhouse effect" is exactly what Becker means by "multiple equilibria." There are both positive and negative feedback effects, and should the positive ones outweigh the negative ones, we would undergo a rapid shift to a new, probably undesirable equilibrium.

Now, a question about the allocation of pollution rights: although any allocation is somewhat arbitrary, why not simply give each country pollution rights proportional to its population? This seems like the most natural way to do it, and also probably the most fair.

A secondary question: once these pollution rights are distributed, would they be absolute, or would they be subject to embargoes? For instance, one way to punish a cruel regime would be to revoke its pollution rights. This would have the desirable feature of removing funds from the government without depriving the people of the benefits of trade. Of course, the country would still pollute, but it could no longer sell its unused credits. One downside is that this would remove the opportunity cost of polluting.

[Bruce]

I have two comments:

First, the most economically efficient CO2 removal technology is plants, notably large green plants that breath a lot of CO2 and large amounts of algae. Deforestation, droughts, water/air pollution all damage these natural CO2 eaters.

Second, investing in non-combustion technologies for energy production would likely be more beneficial over the long run than investing in CO2 reduction technology. Examples include various hydo-electric (fresh and ocean type, geo-thermal, nuclear fission, and my favorite is nuclear fusion ( a yet to be realized sun in the bottle). The reason they are more efficient is two-fold. First, you are developing a technology that would free us from oil dependence, something that costs a lot in capital (human and financial). Second, these technologies don't create CO2 pollution - with the exception of nuclear fission, none of them create any significant pollutants.

[Jan Blickenstaff]

Sirs: I did not see any reference to the CO2 exhale by Mother Earth. Some of the discussion I have read claims that 95% of the CO2 is natural emmissions of the planet. Nothing I have seen discusses if this is increasing or decreasing. Also, I have not seen any discussion of the natural warming of the climate. The status quo of climate and temperature is not the reality of climate. The only constant is change. Moving to the non-burning power production is the answer. However, that is a political decision not likely to be supported by the luddite environmentalists.

[Peter Konefal]

Sirs: Becker writes,

"I should add that throughout history, there has been a tendency to underestimate the potential for technological developments that greatly reduce the predicted doom from various natural and manmade disasters, such as claims during the past several centuries that the world is running out of wood, coal, or oil."

Firstly, this does not imply that future estimations of manmade or other disasters are over-estimations. One cannot infer from the frequency of innacurate past estimations that current and future estimations possess similar properties, although patterns are something to be aware of of course. Certainly, this knowledge is insufficient for a policy maker to judge current projections about global warming for example, or resource depletion as 'over-estimations' in and of themselves. Corrospondingly, there is no guarantee that 'technology' can (or will) be recruited to solve our problems for us on a global scale. To continue to pollute as we are under the assumption that technology can 'fix' the planet, would be a dangerous course of action (excepting compelling new evidence about technological solutions).

Secondly, the only contentious aspect of the claim that the world is running out of fossil fuels, is the timeline for such occurances. The basic premises of peak oil theory for example, is incontrovertible. Whether that global peak happened in the 1970s (certainly for US domestic production it did) or will occur in the future is not yet known.

Blickenstaff: I agree with you about moving away from non-burning power production, but I'm curious why you think that this is a political decision unlikely to be supported by 'luddite environmentalists'?

From what I understand, many environmentalists are not luddites (i.e. advocates of wind power etc), and moreover, not to be overly picky on the details, but the luddites were not anti-technological, so much as anti-technological-when-that-technology-is-used-to-oppress-and-dehumanize-workers (see Hobsbawm, 'The Machine Breakers'; Ure, 'the Philosophy of Manufacturers')

Good comments so far... :0

[anon]

Jan, you might want to bounce that off the folks at realclimate.org. But I suspect they won't find "The only constant is change." a convincing argument.

[Nate]

Does anyone know if there is a similar model to the x-prize working here? It seems that an adequate prize for free-market alternatives could encourage new technologies that produce fewer emmisions, and do it at a much cheaper cost than the $150 billion suggested cost of the Kyoto protocall. It worked well to foster spaceship-one, by not just subsidizing the research cost, but also providing huge media coverage and an immediate buyer of the new technology. Furthermore, it would be a nice positive effect to funnel some of these funds that go into fueling politics and policy, an invention that in and of itself doesn't produce a tangible product (these are millions of dollars spent by environmentalist groups that are probably not achieving optimal benifit).

[Alex Rau]

On Becker's discussion of the exemption of developing countries from the Kyoto Protocol leading to the export of carbon-intensive industries from US/EU/Japan etc, I would think this is overly alarmist at this point.

The Kyoto Protocol right now only has binding targets through to 2012, and the average reductions are roughly around 5% below the 1990 emissions levels of the industrialized countries. This level of reductions is rather modest and will likely be achievable by all countries at little or no cost, given that most of these reductions are achieveable through improvements to energy efficiency or the elimination of gas flaring, which are anyway good for the bottom line of the contributing companies. They are thus termed the "low-hanging fruit" of carbon abatement opportunities.

Given this situation [as exemplified by the UK, which has already reduced its emissions by 10% from 1990 levels, or on the corporate level, BP which reduced its emissions by 10% from 1990 levels and MADE $650 million in operational cost savings in the process], it is extremely unlikely that there will be any substantial migration of carbon-intensive industries to non-Kyoto [developing] countries.

The economic pressures to do so for the pre-2012 committment period just aren't that strong in comparison to labor pressures or other costs. In other words, the outsourcing of services jobs to India or of manufacturing jobs to China for labor cost reasons will be several orders of magnitudes more serious than any migration of carbon intensive industries because of the Kyoto protocol.

However, Becker's point becomes much more serious when considering post-2012 reduction laws, none of which have been agreed upon, and which the recent discussions at COP10 in Buenos Aires failed to make any progress upon [in large part because of the US's obstruction].

In any case, from my perspective in the carbon management services space as well as from the sciences, the model of reductions off a baseline level of emissions [e.g. 1990] is not the wisest approach to reducing emissions worldwide, since there is no direct link to what is a safe and acceptable level of atmospheric concentration of carbon. Much better would be to think in terms of stabilizing the atmospheric concentrations of carbon by a particular year [Socolow at Princeton has addressed precisely this point in an August 2004 SCIENCE article], and then referencing all committments/targets and reduction projects to their effect on achieving this stabilization effort.

Granted, the science is not clear yet as to "what is an appropriate concentration of atmospheric carbon?" -- i.e. is it 450 ppm or 550 ppm [current levels are 380 ppm and growing by roughly 1.5 ppm/yr; preindustrial levels were 280 ppm], but this approach would be flexible as the science provides more and more accurate predictions in the years to come.

In any case, it becomes clear then that in the short term [next decade or two], there are few technologies available to large emitters [energy industry, automotive and transportation industry] that will have a meaningful impact on stabilizing the atmospheric concentrations of CO2, so the only real option available is for them to embrace emissions "offsets", which would bundle a carbon intensive product/service with a corresponding amount of emissions reductions sourced externally. The increased demand for such carbon offset projects [wind farms, landfill gas recovery projects, agriculture methane mitigation, bio/geosequestration, etc] would provide market-based financing that could promote the development of new low-carbon technologies.

[Anonymous]

should rich philanthropists do more?

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