The Trade Off Between Time and Cost in CO2 Emissions Growth Mitigation

It’s been a while since I did a post on CO2 emissions. In my last post, I explained how cap-and-trade (i.e. emissions trading) works. We also found that a true cap-and-trade policy is not any sort of tax. In fact, we found that it’s actually a market solution to the problem that markets are not always efficient at solving pollution problems. Even some extreme libertarians think it’s a brilliant way to reduce the need for government intervention and let the market solve it’s own problems.

Now a while back, one commenter said that he’d support laws reducing CO2 growth if there was “evidence that the net benefits of the efforts to reduce CO2 emissions exceed the net costs of doing so.”

Well, let’s start with the assumption that we’ve just waved our magic wand and we now have a world wide treaty (that no one plans to ever violate) that lays out how we can reduce CO2 growth in, say, 50 to 100 years but adds does not add additional costs to carbon, or at least none without plenty of time to prepare alternative energy sources first.

Pipedream? Not at all. Given a 50 to 100 year time frame, this is not just a dream scenario. As I explained in a past post, it is possible to come up with legislation that adds few or even no additional costs to energy in the short term, and possibly even the long term, but still puts pressure on the market to change within some (long) time frame.

Now let me just cut off one argument at the pass. Maybe, feeling skeptical (and perhaps simply feeling like you need to argue) you might claim that it couldn’t be done in 100 years because this change is so massive that you’d need longer than that. Okay, so let’s assume 200 years instead.

Maybe you reject 200 years. Okay, let’s assume 300 years. In fact, pick any length of time you wish no matter how high. Make it 2000 years if you wish.

It simply does not matter to me how many years you assume as long as you keep adding years. In fact, the more years you add, the stronger the need to act immediately. This is precisely the point I made back in my risk mitigation post. The longer the lead time you need to stop CO2 growth without hurting the economy the larger the onus to act today to start the clock ticking on that 300 years ‘lead time required to implement’.

What If You Assume No Lead Time Required?

Now in this post, Eric argued that economic disaster was likely if we tried to curb CO2. But later he seems to have changed his mind and in this comment he argued that actually a no economic impact solution would require only a short period of time.

Now obviously these two points of view are mutually exclusive. If you can, in a few years, change over to alternative energy without impacting the economy, then obviously there is no scare of economic disaster.

I am going to venture a guess that Eric missed the fact that he was responding to my concern that a solution that did not cause economic problems would require a very long time. (“I’m going to guess that it would take no less than five decades to implement a CO2 Curbing strategy without an economic collapse.”) Therefore, I will not hold Eric accountable for his argument because I think he missed the context. 

However, what if someone really did believe this? What if they believed that the time required to change to alternative energy sources without impacting the economy was only a few years?

Well, obviously this changes my risk mitigation quite a bit. If the proposed solution requires, say, two years to implement and had no potential economic downside, then there really is no need to act today as I’m advocating.

But if anyone wants to claim this, I’ll hold them accountable for the other side too. There is also no objection (at least not economically) of implementing a CO2 reduction policy either. The dire warnings of economic collapse are no longer a weapon in your hands. And, in fact, given that you believe in a two year / no impact solution, there is really virtually no cost implementing the solution so we might as well do it if only to reduce our dependence on foreign oil and to win the tree hugger vote. (If you hate tree huggers so much you wish to not implement this no impact / short term solution just to hurt them, my advice is to seek counseling.)

What Does a No Cost Solution Look Like?

Some of you may wonder what a no cost solution would be like. It works like this. Mind you, these are all just fictional made up numbers.

Let’s say that our best scientific consensus tell us that we are at 400 parts per million on carbon today and that we are growing at 10% per year. Let’s also say that our best scientific consensus says we will continue to have additional heat growth until we cut back to 300 parts per million.

Using a no cost strategy, we ignore AGW entirely. We simply do not worry about cutting back to 300 parts per million. If AGW turns out to be a problem, we’ll implement our contingency plan – geo engineering – to buy us time. Plus, once some sort of massive disaster happens (if it happens) the political motivation will come in spades.

But we’re hoping that the AGW crowd really is wrong in the short term. If we believed they were right, or that there was a pretty good (say greater than 5%) chance they were right, the only morally acceptable alternative would be a massive geo-engineering and carbon emissions reduction program ASAP. But we’re assuming there is no short term (less than 30 years say) impact to worry about.

Instead, we’ll concentrate on initially just holding the growth to 10%. We’ll setup a emissions reduction policy and we’ll set the cap above our current carbon output. (In our example, we might set the cap at 500 parts per million to give us room to grow.) Will there still be a so-called “carbon tax?” Not at all.

But even having the emissions reduction policy in place will start to cause the market to recognize that if alternative energy sources are not found soon, and a switch over does not start, that eventually that non-existent “carbon tax” will become very expensive. While there is none today the market will see that we’ll have one in the future if we don’t start switching to alternatives.

How far into the future? That entirely depends on how we set it up. If we put the emissions cap way out there, it might be a long while. If we want to try to affect a quicker change, we might start with a really high emissions cap, but legislate that it shrinks every 3 to 5 years.

Carbon Market Visibility

With a policy like this in place, the market will now ‘see’ carbon as having a future cost, even if it has no cost today. As future plans are made, there will be economic pressure to start developing alternatives. [1]

In a worst case scenario, if we want to create some level of squeeze, we can imagine a slowly dropping emissions cap that people slowly adjust to, but eventually comes under control and then evaporates once the switch to alternative energy sources are complete.

Think this wouldn’t happen? Actually, it’s already started. Just the mere threat of a “carbon tax” has already led to market visibility to CO2. Geoff tells me that often the oil companies are the very ones funding AGW research? Why? Probably because they are already putting money into alternative energy sources due to the threat of a future “carbon tax”. It’s natural for them to want to see a emission reduction programs passed if they think they are in a better competitive position then their competitors. That’s the power of market visibility.

Still, my guess is that making the market slowly aware of carbon will take a very long time. Eric suggested that people change cars often enough that it might happen faster. If so, it’s all good. But my guess is that this is more of an infrastructure problem then he realizes. Would you buy a non-gasoline car if there were no ‘fuel stations’ in which to fuel up? How long will it take to have natural gas or electric stations at every street corner? Probably not just a decade or two.

Other Advantages

Another advantage of my proposed solution (which as it turns out is also a disadvantage) is that once we have such legislation in place, it’s easier to change it. In other words, if support for AGW grows (for the sake of argument, let’s say legitimately) and we feel we need to crank up the carbon tax to reduce CO2 emissions faster, we already have the correct pieces in place.

Return on Investment

With this proposal now on the table – and admitting that I’m glossing over the considerable political problems that would still exist in trying to get a world wide treaty together even on something as innocuous as this – I ask you to now evaluate the ROI based on what is essentially a minimal to no economic impact. Only administrative costs need to be considered and that is it.

I know this doesn’t address the fear that government screws everything up and we should keep it local. I’ll address that in a future post.

Notes

[1] I feel criminal at how much I gloss over here. For example, you’d have to be sure you never add to the amount of carbon without really obvious reasons or else the legislation loses it’s teeth immediately because no one believes the bar won’t just keep growing forever. Still, I’ve had so many AGW Skeptics tell me that CO2 growth is going to drop off on it’s own that I feel like glosses like this are justified to this audience. If the AGW Skeptics are right, these laws I’m proposing will literally never come into play. The natural drop off they’ve hung their hopes on will come prior to my engineered one and all will be happy. So I can’t see how the skeptics can have issues with my proposal.

And if I’m wrong, and we end up with more CO2 growth than anticipated, and therefore a larger carbon tax then anticipated, it’s arguably not a bad thing since that proves we really aren’t in control of our CO2 growth as much as the Skeptics claimed. We may have to then face that economic disaster the conservatives fear.

7 thoughts on “The Trade Off Between Time and Cost in CO2 Emissions Growth Mitigation

  1. Bruce, a lot has happened since you last posted on this.

    1)Man-made CO2 has decreased in the last two years. CO2 is still increasing overall because the number of people on the planet is increasing. Is this a problem? Should we be alarmed? Actually, no. One of the most clear, measurable results from CO2 growth is the re-greening of the savannahs and deserts in Africa and the improvement in worldwide crop yields. Given that northern Africa and the Middle East are some of the fastest-growing areas in the world, the re-greening of Africa and other areas on the edge of the deserts is a very, very good and timely thing. So, is CO2 growth necessarily bad? So far, the answer in terms of what we can actually measure is NO.

    http://blogs.forbes.com/jamestaylor/2011/03/23/global-warming-is-creating-perfect-crop-conditions/

    2)The globe has been stable to cooling since 1998, when temperatures reached their peak.

    http://wattsupwiththat.com/widget/

    3)There are significant reasons to think that sun activity will actually decrease global temperatures in the next few decades. We need to worry about global cooling, not warming.

    http://techland.time.com/2011/06/15/claim-sunspots-to-disappear-global-cooling-may-ensue/

    4)Meanwhile, global climate talks are going nowhere, and Al Gore’s reputation has never been worse.

    http://blogs.the-american-interest.com/wrm/2011/06/27/the-failure-of-al-gore-part-deux/

    My favorite part:

    “Gore’s failures are not just about leadership. The strategic vision he crafted for the global green movement has comprehensively failed. That is no accident; the entire green policy vision was so poorly conceived, so carelessly constructed, so unbalanced and so rife with contradictions that it could only thrive among activists and enthusiasts. Once the political power of the climate movement, aided by an indulgent and largely unquestioning press, had pushed the climate agenda into the realm of serious politics, failure was inevitable. The only question was whether the comprehensive green meltdown would occur before or after the movement achieved its core political goal of a comprehensive and binding global agreement on greenhouse gasses.

    That question has now been answered; the movement failed before it got its treaty, and while the media and the establishment have still generally failed to analyze these developments and draw the consequences, the global climate movement has become the kind of embarrassment intellectuals like to ignore. Like the Club of Rome, Y2K, the Iraq Study Group and President Obama’s management of the Middle East peace process it is something polite people try not to think about. This is why Al Gore is less visible than he used to be, and his views are less eagerly sought: the polite world and its ready handmaid the press know Gore has failed but does not want to think or write about why.”

    But please, please read the whole thing. Mead is not a partisan. He is respected by all sides.

    5)There will be no global climate agreement of any kind during the next 50 years. Discussing this issue makes as much sense as discussing whether the tooth fairy has wings or not. Discussing something this theoretical and this removed from reality simply is not worth anybody’s effort.

    6)In your last post, I linked several problems with cap and trade that you have ignored. Cap and trade on a worldwide basis will not happen in our lifetimes, so discussing it is, again, a waste of time.

    Bruce, you write very well, and you have an admirable, logical mind. But this venture is tilting at windmills.

  2. Bruce, to back up my point in the above, I would ask you to read the following from the Mead article I linked above. Again, Mead is a respected non-partisan writer.

    “The global green treaty movement to outlaw climate change is the most egregious folly to seize the world’s imagination since the Kellog-Briand Pact outlawed war in the late 1920s. The idea that the nations of the earth could agree on an enforceable treaty mandating deep cuts in their output of all greenhouse gasses is absurd. A global treaty to meet Mr. Gore’s policy goals isn’t a treaty: the changes such a treaty requires are so broad and so sweeping that a GGCT is less a treaty than a constitution for global government. Worse, it is a constitution for a global welfare state with trillions of dollars ultimately sent by the taxpayers of rich countries to governments (however feckless, inept, corrupt or tyrannical) in poor ones.

    For this treaty to work, China, India, Nigeria and Brazil and scores of other developing countries must in effect accept limits on their economic growth. The United States must commit through treaty to policies that cannot get simple majorities in Congress — like sending billions of dollars in climate aid to countries like Iran, North Korea, Syria and Pakistan, even as we adopt intrusive and expensive energy controls here at home.

    The green plan is a plan for a global constitution because the treaty will regulate economic production in every country on earth. This is a deeply intrusive concept; China, Nigeria, Myanmar, Iran and Vietnam will have to monitor and report on every factory, every farm, every truck and car, every generator and power plant in their territory. Many states do not now have and possibly never will have the ability to do this in a transparent and effective way. Many others will cheat, either for economic advantage or for reasons of national security. Many states do not want their own citizens to have this knowledge, much less the officials of hostile foreign powers.

    Moreover, there will have to be sanctions. After all, what happens if a country violates its treaty commitments? If nothing happens, the entire treaty system collapses of its own weight. But to work, enforcement will have to mean penalties greater than the advantages from cheating. Who will monitor output around the world, assess performance against commitments, levy penalties and fines — and then enforce those decisions when they are made?

    There are no real answers to these questions and can be none. No institutions exist with the power and resources to play these roles; the world’s jealous nation states will not consent to create them.

    The dream that the menace of global warming will cause humanity to overcome its ancient divisions and unite in a grand global coalition is sophomoric. Rising CO2 levels will not cause the world’s governments to accept and enforce international policing of the most intimate details of their economic lives. If the menace of nuclear war can’t create world government, the menace of global warming won’t do it either”

  3. Bruce, I have to agree with Geoff. Your story is a nice one, but it is just that: a story. Utopian dreams have rarely been achieved, and then only when the wicked are destroyed, leaving the righteous to serve one another.

    Cap and Trade agreements would never work in the real world, because each nation and company would seek out benefits for itself. Even the C&T agenda made by the Democrats was so full of pay offs to organizations and companies seeking additional credits that it rendered it useless.

    The best thing to do is to have government get all the way out of the way. Let people innovate without regulations blocking the road. I’ll bet we would develop cleaner technologies much faster, while having oil, clean coal, and natural gas to help us in the short term at an affordable price.

    We can do this. Just look at how we stepped up to the environmental needs of the 60s and 70s, most done without government intervention.

  4. At first, the government was not involved. It was the great development of environmentalism outside government that started it all. I was deeply involved in Greenpeace and a few other clubs back then. Sadly, most have since become a force for extreme radical movements that no longer are interested in common sense fixes, but in returning the entire earth to a pre-human period. Ted Turner even has stated that we should force the world’s population back down to 2 billion via government intervention.
    The government eventually did get involved, but the initial movement occurred outside government. And it can still work that way, if government will get out of the way.

  5. I’m finally actually reading this. (My computer crashed and I was off line for quite a while. I’m still not back all the way.)

    Geoff,

    It’s interesting how we’re this far into the conversation and you still can’t acknowledge that there is a difference in my positions and Gore’s. Doesn’t that worry you just a little bit about your own position? Remember, I separate CO2 from global warming as separate issues. You keep inappropriately co-mingling them because Gore did. But we both agree Gore is full of it, so of course I see no relevance since I’ve already dismissed him entirely in my past posts. I can’t even conceive why you continue to see little difference between me and him.

    Since you haven’t addressed the differences it’s hard to know how to respond to you. I don’t agree with Gore at all. I completely agree with the points you made. So what? It doesn’t even seem relevant to the the problem of CO2 emissions being unsustainable and wanting to come up with a plan.

    I even agree that Cap and Trade might be impossible. But I completely reject the idea that just because it’s known to be difficult that we must therefore assume it’s impossible. Surely we must see that this is bad logic. (Or at least a self fulfilling prophecy.) And surely you must see that the approach I’m suggesting is considerably easier to imagine putting in place then anything you’ve probably seen suggested before, since it’s zero cost and assumes a very long time frame and ignores the global warming issues all together. (Other than as a contingency plan via geo-engineering.)

    I’ll read the whole article (I haven’t as yet) but what really seems to be lacking prior to this point in your arguments is a credible theory as to how perpetually growing CO2 could somehow continue to be good forever or that our previous CO2 models (Note: NOT WARMING MODELS!!!) were incorrect and why even skeptic Steve MacIntyre got it wrong. I’ve brought this up several times now. But none of the articles you’ve sent me in the past even attempted such a model. Before I read it, does this latest article attempt a counter model? Or does it just shoot more holes in the (already dismissed) warming models that I’ve already said I believe are incorrect? (Also, don’t you see the rational difference between shooting holes in someone else’s model and having a counter model? Those aren’t even close to being the same thing.)

    The best you’d had so far is the suggestion that technologies naturally change and your gut feel is that technologies will change this time before anything nasty happens. You even gave me an ancedotal story about how this happened once before with forests. (You also ignored cases where the reverse was true.) I would hope you’d see why that might not console me (or others) and at least see really small proposals like this as at least politically favorable even if the only reason you support it is because some people (me?) are big scaredy cat with delusions and paranoia — as is the human condition — but still human beings that deserves a voice and deserves to have their concerns addressed, especially if willing to put forth such incredibly modest proposals like this. Does the fact that you don’t believe in Budhism mean we should ignore freedom of religion? The fact is that I’m talking about considerable political compromise and middle ground here. I get the feeling you are blind to even such a possiblity.

    And can’t you see that this proposal (if it were a real political proposal) would be absolutely worth backing even with a 99.99% denial position? It costs little or nothing, it ignores global warming altogether (well, except via geo-engineering contingency, which you already said you could support), it might be impossible anyhow and if it is impossible it will prove that a larger proposal is definitely impossible. It’s so dang modest and so likely to serve your own purposes (if you turn out to be right) it’s hard to believe anyone short of 100% denial could possible respond to it negatively.

    Also, I think you vastly underestimate both our ability to switch energy sources in a timely manner (if I remember correctly, you guaranteed me 30 years with no issues. But it may take a lot longer than that to make a change) as well as the market’s ability to “see” a need to switch fuel sources if the damage is over a very long period of time and has no direct costs associated with it because it’s spread out over many people.

    Ram,

    I can’t even conceive how many environmental factors could have been addressed without the use of government. So the idea that if the government got out of the way *all* things would be fixed lack a needed empirical reality check. I think this is Tim’s point and, if so, he’s right about that. Government is part of the whole infrastructure. In fact, in a functioning democracy it’s not separate from the people (as you seem to be suggesting), it largely is the people. I can hardly thing of any undesirable part of the American democracy that went directly against the will of the people. We have the government we wanted, for better or worse.

  6. Geoff,

    One other thing to consider. If my proposal were a real political proposal, one of the best reasons for you to support it would be because it would utterly undermine the possiblity of a Gore like proposal from coming up again. You understand politics — can you see why?

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