Matt Yglesias writes

Back in 2008 both Barack Obama and Hillary Clinton and John McCain and Mitt Romney all seemed to agree, in principle, that it ought to be a high priority to enact some kind of binding limit on American greenhouse gas emissions. Even given that, the path to a binding workable global agreement was clearly frought with peril since there’s a divergence of perspectives between newcomers to the high emissions party (China) and those who’ve been there a long time (United States). But in the intervening three years, the politics of this have been totally transformed in a way that’s not even slightly backed up by the scientific information that’s come in over this time. Instead of debating whether or not emissions will be limited or reduced, we’re debating the Keystone XL pipeline as a kind of proxy war over fossil fuels.

What’s changed is whether or not the debate matters. To back up a bit more, in 2006 it would have been easy to suggest that:  look its probably impossible to alter the general trend line on global emissions but there is some damage associated with carbon and so it makes sense to tax carbon rather than to tax things we like such as work and savings.

As a bonus, this might speed up the arrival of wind or solar as a major player and that indeed might have some real upside effect.

Since that time the workability of this type of mild, tax-carbon-instead-of-work scheme has seemed to fall apart. We got a complicated mess in Waxman-Markey and even that couldn’t pass the Senate, with what looked like a favorable ideological make-up.

Thus failing compromise, the politics has mutated into pro and anti fossil fuel camps. Even this, however, could have been considered a sideshow, until recently.

Its is now becoming rapidly apparent that economic future for fossil fuels is much brighter than we would have suspected a few years ago. In particular, North America looks to be in a position to earn enormous rents from fossil fuel production.

Moreover, this comes at precisely a time in which interest rates and aggregate demand are very low. Large scale structural projects with multi-decade high rent payoffs are exactly the type of thing you need in this situation. And they are coming to us on a platter.

Thus, the nature of the signal changed.

In 2006 supporting, in theory, a carbon tax was a signal that you believed the science on climate change. In 2011, pushing for the Keystone Pipeline is a signal that you value US industrial production over symbolic statements about the importance of climate change.

Filed under: Global Warming

In the wake of my initial posts on climate change Brad Johnson asked me to grapple with a number of different articles on the subject.

I think this is a conversation worth having but my core issue with the discussion’s current state is summed up in one of the pieces Brad points me to. Its entitled: Why two degrees really matters.

The problem is that it doesn’t actually tell us why 2 degrees matters. It tells us stuff like this

The warming-limit approach is analogous to how businesses conduct planning under uncertainty: Set a long-term goal, then work backward to determine how to achieve it, modifying plans dynamically as developments dictate. It’s operationally much more useful than a target for a single year. In fact, it can be used to derive such targets over many years, once the budget is allocated to developed and developing countries. It also has advantages over conventional, forward-looking policy analyses, which are hamstrung by the inherent limitations of economic forecasting models in accurately predicting the future.

Which is to say a lot of the discussion revolves around at what rate the planet is warming, what various emission targets would or could produce in terms of warming limits, etc. However, what I would love to get to center the conversation around is what we think is actually going to happen when the as the planet warms.

This is especially true, because I hear talk of apocalyptic scenarios bandied about. I am certainly not shy about apocalyptic thinking and analysis but to do it, we actually have describe the event chain that leads to the apocalypse.

If we can do that, we have something to work with.

Now, I am sure that someone, somewhere has done this. It would be helpful to get a pointer in that direction. As I said, I worked with the old Nordhaus models. I know those damage functions. I also know they are not really dynamic.

Nor, where they meant to be. These types of models were trying to bound prices on carbon. However, if we want to think about disaster, we have to talk about disaster.

Filed under: Economics, Global Warming

The debate over green jobs continues at the Economist. The polls show that Van Jones is winning this debate so far, taking an early lead away from his opponent:

I suppose one does not rise to the stature of Czar without the ability persuade people of the usefulness of whatever it is one will be Czaring over.

I think Morris’ is losing because he failed to immediately make clear that there are things the government should do. Since the more radical forms of libertarianism are often what people have in mind, it’s important when arguing for libertarian ideas to establish that there is a legitimate role for the government (only, of course, if there is in fact a legitimate role for the government). Coming out of the gate crowing “Let the market handle it!” when the problem at hand is a classic market failure will solidify you in people’s minds as the extreme libertarian caricature they generally default to anyway.

That said, Morris does a much better time this round. He makes the case for innovation prizes, and argues against fighting dirty energy subsidies with clean energy subsidies, mocking Jones thusly:

Rather than get rid of wasteful subsidies that transfer money from consumers to special interests in fossil fuels, his solution is to give others their chance at the trough.

Both sensible ideas, both defining a legitimate role for the government. He should have opened up with this point.

Jones rebuttal drives home three points: 1) green energy is more labor intensive than dirty energy, 2) the market is already distorted in favor of dirty energy, and 3) doing nothing is not a good option. If one is to argue for green jobs, this is the tract to take. One of his weakest points this time around is an argument that quite frankly works against him:

Mr Morriss claims that the work of moving to a cleaner economy is hampered by the lack of a universal and timeless definition of the term “green jobs”. This is a red herring. In public policy, we continually debate, revisit and reshape what should be included under any important label, whether the term is “American made”, “organic food” or “green jobs”. In a democracy, these kinds of debates are continuous and any resolution only provisional.

It would agree with everything he said, except to replace “continuous” with “ridiculous”, and “provisional” with “arbitrary”.

He has two points near the end I’d like to highlight. The first one is completely false and highlights an unfortunate thinking that I think drives a wedge between progressives and libertarians who actually agree on the second statement:

One, we do not have infinite amounts of carbon in the ground to burn. At some point, our earth will run out. Thus, it is sensible for governments to create incentives for alternatives to carbon-based fuels on a grand scale, now.
Two, our atmosphere does not have infinite capacity to absorb all the carbon that humanity could potentially extract and burn. If we emit too much, we will do irreparable damage to the climate.

There are very few useful things on this earth that we have an infinite capacity of. It is absurd to claim that a lack of unlimited supply of something we value justifies government action on a “grand scale”, and immediately. The fact is that we have alternative, non-carbon-based ways to create energy now, and if scarcity drives the price of carbon based fuels up (which is exactly what scarcity does!),  people will begin buying them. If Jones is right and higher prices of carbon-based fuels would not lead consumers and firms to begin demanding clean energy technologies en masse, then we should not be spending a single dollar on existing clean energy technologies, since they are apparently so incredibly far from being cost effective.

Filed under: Economics, Global Warming