Wagener: Finding real climate solutions

Praxis Makes Perfect

Last week, a major climate skeptic made big waves when he endorsed the view that there has been significant global warming resulting from human activities. After his unexpected testimony before Congress, global warming activists trumpeted his alleged “conversion” as proof that the United States needs to adopt a “cap and trade” carbon taxation scheme. These climate alarmists display a stunning lack of understanding of climate change when they propose to solve it via unilateral carbon taxes: A global pollution problem cannot ever be solved by unilateral action.

Dr. Richard Muller, a respected professor of physics at UC Berkeley, had long been critical of what he termed climate alarmists. After years of independent study, however, he concluded that there has, in fact, been a general warming trend that has loosely followed increases in human production of so-called greenhouse gases. Global warming activists declared a major victory after his testimony, and immediately made a push to resurrect a dormant proposal to tax the production of carbon dioxide.

Unfortunately, such asinine leaps are symptomatic of the rigidly ideological public sparring over global warming. On the left, green activists make unsubstantiated, apocalyptic predictions about the future, while on the right, pundits regurgitate talking points about shoddy, biased climatology research. Consequently, the debate over the public response to global warming has far too often centered on the degree of warming over the past several decades, rather than the much more relevant metric of weighing costs and benefits of actual proposed solutions to increased production of greenhouse gases.

Assuming that there is man-made global warming, it is caused by the production of greenhouse gases all over the globe. The problem with a unilateral carbon tax is precisely that it doesn’t operate globally: It would only tax carbon dioxide production in the United States. In a globalized world where China, India and other developing countries are responsible for ever-larger shares of industrial activity — and already aggregately produce several times more greenhouse gases than the Untied States — limiting American production of greenhouse gases won’t make a serious difference, even in a naïve model that doesn’t incorporate game theory and trade economics. All it would do is harm American manufacturing and cost American jobs through an additional tax burden.

When you remember that the United States has relatively free trade with most of the world, the outlook on carbon taxes gets even worse. Firms locate production facilities wherever costs are lowest, and a carbon tax would simply result in most American factories shutting down while new factories are built in China and India to produce the exact same goods. Not only would there be no impact on greenhouse gas production, but it would also cost countless American jobs at a time of dangerous unemployment levels.

To their credit, a few climate alarmists have recognized that unilateral action is tantamount to economic suicide and unlikely to impact greenhouse gas production or slow warming. These slightly wiser activists have focused their attentions on proposed treaties that would bind many nations together in a joint carbon tax scheme. Unfortunately, this makes no practical difference: Treaties are voluntary, and there is no inducement that would make China or India (or any one of countless other developing economies) adopt meaningful carbon taxes, since it would stunt the rapid growth those countries are experiencing. If the United States, Canada, Europe, Australia and Japan all adopted carbon taxes and the rising developing countries didn’t, it would simply transfer wealth from the high-minded developed countries to the developing countries, and without reducing emissions.

The only way to make the adoption of carbon taxes result in actual reductions in greenhouse gas production would be to end free trade by imposing tariffs on goods from countries without carbon taxes, and that would result in a ruinous trade war like that of the 1930s: Greenhouse gas production would be reduced, but at the cost of dramatically reduced economic and industrial activity. Quite simply put, carbon taxes are not the solution unless you believe that temperatures rising one or two degrees justify massive increases in poverty worldwide.

A globalized world with relatively free trade has brought about unprecedented wealth, economic growth and opportunity — especially in developing countries where billions are emerging from poverty for the first time in history — but it also prevents unilateral actions by one or a few rich countries from effectively solving global pollution issues. If we get all those climate activists pushing for research in engineering solutions — rather than unworkable policy solutions — to rising greenhouse gas levels, they might actually do some good for a change.

Trevor Wagener is a senior in Pierson College. His column runs on alternate Mondays.

Comments

  • blueyes1119

    Excellent essay, Mr. Wagener. It is irresponsible to push policies that wreck our US economy when this is a global responsibility. Even if we were to cover America the Beautiful from “sea to shining sea” with marginally useful wind turbines to reduce impact on climate, it wouldn’t make a dent in the world problem but would bankrupt our country. We also couldn’t do it without the government ballooning the $14 Trillion National Debt that your generation is burdened with already.

    Two items that never get considered in the discussions regarding global climate impact are actually far more effective and far less costly solutions that the global community could implement immediately. Effective world population control and massive re-forestation. The world’s population has doubled in the last 40 years, meaning half the world’s population is now or will be in the future at reproductive age, creating incredibly huge impacts on global sustainability. Re-forestation would put massive ability to sequester carbon in place while cooling the atmosphere and turning the tide on encroaching desertification.

  • timemachinist

    So the “climate skeptics” are also identity-stealing pranksters? Not much to trust there, I prefer James Hansen on this issue:

    http://pubs.giss.nasa.gov/authors/jhansen.html

  • Standards

    PK, really?

    First, there is a difference between climate and weather.

    Second, even if one cold winter is evidence of a changing climate, what’s your point? That our *climate* has *changed,* maybe?

    You’re contradicting yourself.

    Way to keep it coherent, PK

  • yalieeleven

    fake PK

  • mememine69

    There is now serious talk of forcing the government to issue treason charges to those in academia and possibly key news editors too, for (in their words) “ knowingly lead us to a false war against climate variation“. Was climate change environmentalisms Iraq War of lies and WMD fear mongering? And considering Obama chose not to mention the “ global climate crisis” in his state of the union speech at all, plus the fact that the IPCC had it’s American funding eliminated by the senate, one can see how damaging and costly and pointless continued support of the CO2 mistake is. And when IPCC funding was cut off and Obama turned his back on the scientists, did our saintly scientists march in the streets in protest and demand time on CNN for Obama bailing and having funding cutoff? This was the worst possible emergency EVER wasn‘t it? Climate Change wasn’t “environmentalism”, it was a 25 year old death threat to our children and marching orders for mindless ideologues. Real planet lovers were glad it was a criminal exaggeration of disco science and fear mongering media and thus averting an unspeakable end of the world by unstoppable warming. It was a sick and twisted mistake and history is cursing us all for this madness.

  • graduate_student

    ^^^

    lulz

  • dwalsh

    Trevor:

    Conflating cap and trade with a carbon tax is the first of many errors in your opinion piece.

    A carbon tax, like any tax, would impose a per-unit charge on some good. In the case of carbon (or greenhouse gases generally), the unit is tons emitted, the good carbon or carbon-equivalents. A tax like this could potentially, and briefly, slow economic growth. But carbon taxes have been implemented around the world and results indicate nothing even remotely similar to “economic suicide.”

    Cap and trade is not a tax, but a technology-forcing mechanism. A cap is placed on total emissions. Creditable permits are distributed (or auctioned) to industry players. Through basic market forces, these permits are then traded to a point of efficiency. The basic point is that cap and trade provides incentive for industry to reduce emissions and thereby sell permits at profit to heavier polluters.

    This is notably different from taxation. Whether interested in climate change or not, any economist would agree.

    It is also important to highlight your thesis: “A global pollution problem cannot ever be solved by unilateral action.” With this, you misconstrue the reasoning behind cap and trade. Nobody believes that US institution of a cap-and-trade policy will solve global warming; it would mitigate global warming. But additional considerations inform this policy debate, and you fail to mention them: is global justice and equity of any importance (historical and per-capita emissions)? Given carbon regulation is inevitable, will it not hurt US competitiveness to stall on this issue? Could addressing a problem not HELP – rather than harm – US manufacturing and add – not subtract – US jobs?

    The American Recovery and Reinvestment Act leveraged a $16 billion investment in cleantech to create over 200,000 jobs.

    You seem to reveal a hand with phrasing like “Assuming that there is man-made global warming…” This is no longer a debate. There is nothing to assume. For every 1 report produced by a skeptic, 100s can be produced in counter. Galileo no longer looks silly or seems radical for advocating heliocentrism. It’s only a matter of time.

    As a final point, you cooly describe the “much more relevant metric of weighing costs and benefits of actual proposed solutions to increased production of greenhouse gases.” In what way, and to whom, is cost-benefit analysis more relevant? Increasingly, policy makers, legal scholars, scientists, and even economists are grappling over the value of CBA, which fails to capture so much as to be almost laughable. Additionally, CBA has so far failed to address the exceptionally problematic debate over discount rates. How much are future generations worth?

    This piece certainly offers an opinion. I question the foundation of this opinion.

  • RBK2000

    DWalsh,

    I would like to disagree with points you assert in your post.

    Assuming that industrial activity is causing global warming, how will a tax on carbon reduce this effect? The only way it could do so is if the cost of the tax was large enough to make it profitable for industry to find methods of production that reduce emissions to the point of mitigating the cost of the tax. Considering the fact that industries in the United States are already subject to stringent environmental regulations, are you imagining that there is significant room to reduce emissions of carbon to a degree that will ALTER THE EARTH’S CLIMATE? And considering that all taxes are passed on to the consumer, are you asserting that increased prices for goods produces no drag on the economy? How do assert that this economic effect would be temporary?

    Secondly, as you point out, cap-and-trade is a system of credit swaps that would take place between polluters. Since the whole point of cap-and-trade is to allow companies that produce more carbon do so by buying credits from companies that produce less, where is the net gain? Isn’t cap-and-trade a shell game of taking water out of the deep end of the pool and pouring it into the shallow end? You also claim that cap-and-trade would “mitigate” global warming. Really? By what percentage? At what cost?

    You scoff at the idea of weighing costs versus benefits. I believe you scoff because you cannot show the benefits except in the most nebulous and theoretical manner. Since you cannot show a direct correlation between reduction in carbon emissions and a decrease in climate variability, you are proposing that industries and ultimately consumers be burdened with very real taxes and costs, for what are in reality, ephemeral benefits.

    You apparently are neglecting to mention, or perhaps do not recognize, that cap-and-trade will coincidentally generate billions of dollars in fees for the people who handle the transfer of the credits. Are any of the people proposing these schemes positioned to benefit by their implementation? Are we to assume that you favor the transfer of carbon taxes from industrialized countries to third-world countries? Would this work to increase the “global equity” that you mention?

    Are you in fact using global warming as an excuse to manipulate global economies to satisfy your idea of “justice”? Can you please define the concept of “global justice and equity” in terms that do not self-reference?

    I appreciate your time and look forward to your answers.

  • dwalsh

    1) If a tax were set appropriately, it would not only mitigate emissions in one industry, but it could provide funding for innovation in other, less carbon-intensive industries. I don’t understand your question about altering earth’s climate, but to the following points: the tax does not have to be burdened in-full by consumers, as credits from this very tax can be passed on to defray higher costs; or, in the case of energy, a pool can be devoted to consumer efficiency and/or demand-side reduction efforts. The drag would not be permanent because low-carbon technologies would rise in place as they became more competitive in a carbon-taxed market.

    2) I’m not an economist, so I don’t know offhand the costs of mitigation through cap and trade. Plenty of papers are available on this. But cap and trade is not a shell game. Suppose the US now emits 100 tons of CO2 across the energy sector. A cap and trade could, say, put a cap of 90T per year (slowly ratcheting this down each year). Cumulatively, this would produce a net decrease, but the decrease would come about in the most efficient way possible dictated by market trading between companies. The basic premise requires diminishing emissions.

    3) I don’t scoff at cost-benefit, but I would argue it is woefully inadequate for the problems to which it is applied. And even if I cannot produce direct causal links between CO2 emissions and costs, there are other routes: the burning of coal (and its mining) is easily traceable to ridiculously expensive public health costs and the downtrodden economies of Appalachia. The natural gas industry, now busting into the Marcellus shale, has already produced radioactive and flammable water and a whole cluster of contaminated water impoundments, not to mention dead cattle and nutrient loading in the Chesapseake Bay. These are costs, they can be measured, and they are paired with fossil fuels that emit CO2. I don’t want to get into the question of causality and scientific evidence.

    4) By “people who transfer the credits,” I assume you mean government. I don’t know how this money would get from our government to developing countries. Rather, it would be reinvested in things like a modernized electric grid, better higher education for scientists/engineers, innovative energy products, adaptation to rising sea levels, etc. Developing countries would reap the indirect benefit of reduced emissions from one of the world’s largest emitter. In that sense – indirectly – yes, cap and trade would increase global equity.

    5) No, that’s not what interests me about cap and trade, but it is a viable argument. I don’t know that I could, right now, clearly articulate a satisfactory definition of “global justice and equity.” But let me tell you what it’s not: one country containing 300M people – about 5% of global population – emitting 20% of the CO2. (There is plenty to point out as wrong with this gross figuring, but it is a start.)

    I appreciate the civility of the exchange.

  • RBK2000

    You’re very welcome regarding the civility. It’s amazing how much fun you can have talking to someone you disagree with as long as you do so with respect and good humor! ;)

    So, to approach your points last to first:

    5) Issues having to do with the population of the U.S. and our CO2 output vs the rest of the world, have to take into consideration what is produced per capita vs the CO2. America produces more per capita than anywhere else on earth, including food and medicine that benefits the world. We send billions of dollars of our profit around the world in aid to developing countries. Our people, (even, or especially, our poor) live in far better conditions than the rest of the world. Obviously, people in Bangladesh live in squalor and produce nothing, so their CO2 output per capita is very low. Additionally, when compared to many countries, such as Russia, for example, our CO2 output per capita is low because other countries have far less efficient manufacturing with none of the environmental controls that we do. So arguments about the CO2 produced by the United States are, I believe, very poor ones.

  • RBK2000

    4) When I said “people who handle the transfer of credits” I meant Goldman Sachs and investors like Al Gore (see Generation Investment Management). Modernization, innovation and education are wonderful things, without doubt, but I believe it’s very important to understand that since all taxes of businesses are paid for by the consumers of that business’s product, you are simply increasing the taxes on the population that uses energy and manufactured goods, and using that money to promote things that you see as valuable. That taxation, by the way, will hit the people with lower incomes most harshly. Finally, you again assert that we would benefit the third world by our decrease in emissions, which is to repeat the assertion that a percentage decrease in CO2 emissions from the United States is going to effect the world’s climate, which is a completely speculative and unprovable assertion. It also neglects to look at the cost to the third world of a decrease in the goods and services provided by the United States due to an increase in their costs. In the same way that raising the cost of fuel oil through carbon taxation will hurt the poor in America.

    3) I appreciate that you recognize cost/benefit at play with regard to shale extraction. Cost/benefit is always operating. It may not give you answers that you like, but it cannot be ignored. Wind turbines have a cost in terms of pollution that is rarely recognized. Manufacturing solar panels has a cost. Ethanol production has costs that no one anticipated, like starvation due to rising food costs. We could lower CO2 production instantly by making use of gasoline and coal illegal, but the cost in terms of transportation and electricity would be intolerable. Existence itself is based on the production of CO2. Are you perhaps working with a “zero tolerance” model toward CO2? Or are you saying that incremental improvements in the reduction of CO2 are worth ANY price? I think you’re far smarter than that.

    2) The costs of cap and trade are very simply the monies manufacturers have to pay for the carbon offset credits. Those costs will be passed on directly to the consumer. Secondly, cap and trade will not produce a decrease in carbon emissions. I understand your reasoning but it makes several incorrect assumptions. You assume that we can declare a decrease, and that business will have to comply; but unless the cost to the business of decreasing it’s carbon footprint through technological innovation is less the the carbon tax, it will just pay the carbon tax. Additionally, your assertion that “the decrease would come about in the most efficient way possible dictated by market trading between companies” conflates the efficiency of carbon trading and the efficiency of manufacturing processes as they relate to carbon reduction. Remember, efficiency equals profit; there is always a built in incentive for manufacturers to increase efficiency.

  • RBK2000

    1) You are referring here to the fundamental premise that we will force legacy energy producers and manufacturers to pay for new green technology. This, I believe is a deeply flawed concept for several reasons. First and foremost is the fact that research and development is an organic process that cannot and should not be short circuited by picking winners and losers in advance. Private sector R&D is a process of experimentation and testing on a small scale, followed by course corrections, abandonment of unworkable models, and the necessity for successful ideas to be self-sustaining commercially. The best example of this gone awry is ethanol. As it turns out, the ethanol model of converting corn to fuel caused food shortages around the world that are still causing riots. Secondly this model assumes that a panel of experts can decide what technology should be funded and promoted. In a world of unlimited money, there would be nothing wrong with paying for hundreds of research facilities to explore all emerging technology options and to promote those that showed promise. But we don’t live in that world. The reality is that we will take working people’s money by means of pass-through taxation in order to pay for multifaceted research facilities to explore all emerging technology options and to promote those that showed promise. (Or, we will borrow the money from other countries, or we will print it up out of thin air). The private sector is driving green innovation, FAR more efficiently than government will. And with no cost to the consumer.

    I have to step back from our entire discussion for a moment and recognize that this whole exchange hinges on whether or not CO2 causes climate change. We probably can agree between us that imposing taxation and carbon credits and mandated pollution reductions will cause massive disruptions to our economy, that may be in service to a very good cause; I mean, I don’t want the earth to burn up, either. BUT….it may also be in service to completely erroneous prediction. THAT would be freaking hy-larious, wouldn’t it?

    The entire ecology movement started in 1962 with the publication of Rachel Carson’s book, Silent Spring, that predicted mass extinctions and epidemics of cancer due to the use of DDT. The U.S. imposed a ban in DDT in 1972. As it turns out, DDT is the most effective agent known to combat mosquitoes. In Africa, every year, three quarters of a million children under the age of 5 die EVERY YEAR from malaria. That’s millions upon millions of people dead due to the ban on DDT since 1972.

    Cost vs benefit, my friend. Was it worth it?

  • fireofenergy

    Excellent! Obviously, excess CO2 must be a concern and as such, should be dealt with. The USA still has more fossil fuels than the whole world has ever used (but hardly any easy oil).
    My questions are: Why don’t we become a “thorium based economy”? And why is it so hard to make the LiFePO4 battery like 10 times less expensive? (And on the political side), why is it that trade tariffs won’t work (as it seemsthey would benefit the U.S.)?

  • RBK2000

    FOE,

    I can’t help but respond to your post. May I tweak your nose just a bit? Your questions reveal such a total lack of understanding of physics, politics, economics, chemistry, earth science, and technology that it would take at least 4 full years of university study for you to establish enough of the fundamentals to begin to understand the answers. Oh. Wait a minute. That’s right, you’re at Yale. Hang in there. ;)