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Climate Change Discussion

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At Cato Unbound, Jim Manzi argues for low-cost solutions to climate change. Joseph Romm makes the case that we are headed for catastrophe if we do not do anything.

My sense is that over the past year, the debate has changed in subtle ways, as evidenced by the Cato Unbound essays (which I recommend reading). On the Right, there has been an emphasis on the high cost of altering energy usage, in comparison with adaptation or trying to use technology to reduce atmospheric carbon dioxide. On the Left, they are ratcheting up their forecasts of doom--predicting greater temperature increases, higher sea levels, and so on.

Romm cites a study suggesting that carbon reduction might not involve any economic cost.

a 20% reduction in global emissions might be possible in a quarter century with net economic benefits.

I have difficulty reconciling Romm's forecast of a huge rise in atmospheric carbon concentrations with his optimistic view of alternative energy technology. If atmospheric carbon concentration shoots up, I assume it will be because we have tapped into high-marginal-cost fossil fuels, such as shale oil. I don't see why the market would do that if alternative energy is going to be cheaper.

Why do global warming alarmists want government to interfere with energy markets? It seems to me that they have to believe either

(a) that Romm is wrong about the free lunch in alternative energy. We will have to pay a stiff price to reduce atmospheric carbon dioxide, and the free market won't want to pay it;

(b) markets are perverse; even though alternative energy will be cheaper at the margin, the market will choose fossil fuels instead;

(c) markets are intrinsically bad; our lifestyles are intrinsically bad; government should be in of control energy production and consumption

I think that (a) is probably true, at least for the next twenty years or so. I think that (b) is unlikely to be true. I worry that (c) is the core belief from which the fear of global warming follows, rather than the other way around.

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COMMENTS (15 to date)
Zdeno writes:

You didn't mention d) which is that the left is primarily concerned with expanding the influence and scope of government, the means of doing so being a mere afterthought. The panic over AGW is one of the more tranparent examples of this, but certainly no worse than other imagined crises such as the struggling family farmer, 40 million with no health insurance, peak oil etc etc.

Consider the following conditions that must be met for unilateral carbon-reduction to be a rational policy:

1) Causal link between atmospheric carbon and climate - I'll concede this point. Google Ross Mckitrick for a good analysis of why it might not be, though.

2)Strongly negative expected value of increased world temperatures - why is this so blithely accepted? Perhaps I'm biased eh, as a Canadian. But the negatives of global warming, i.e. drought, dessertification, rising seas levels will be at least partially offset by the benefits.

3)Ability of people to reduce worldwide carbon emissions - if this can happen within our lifetimes, it is not going to be a result of halogen light bulbs and hybrid cars. It will be the result of radically disruptive advances in power generation, some modern equivalent of cold fusion.

4) Given 1-4, the expected costs of prevention must outweigh the expected costs of mitigation - build some levees, relocate some farms, take a hit on your AC bill. Even if you accept the worst-case scenarios predicted by alarmists at p=1, the massive costs of abandoning lower-lying areas of major cities, ice age in Northern Europe, etc... these massive costs must be pretty incredible to outcompete the immediate trillions of dollars in costs we must bear.

And that's not even taking into consideration that the mitigation costs will be borne by a much wealthier group of people, in a highly uncertain future.

Excuse the anger, my flatmates are hippies and I often have to talk sense into them on matters such as these.



stephen writes:

I have been waiting for this “conversation” for a while now. I want hear more about probabilities, uncertainty, expected values, cost/benefit analysis, and so on. And I want to hear both sides together, simultaneously.

That’s what Manzi seems to be trying address here, and elsewhere. However, and maybe it was just me, but it seemed like Romm side stepped Jim’s questions altogether and proceeded directly to saying something along the lines of ‘the far right end of the distribution is going to happen with p=1, and its worse then we thought’. Of course, maybe I missed something.

reason writes:

The market only implements solutions where it can capture value. You need to work fully through the dynamics of adjustment and work out who pays what and who recieves what. Never heard of the tragedy of the commons?

reason writes:

So yes, if you like, maybe point b is relevant in this case. After all it is misleadingly framed. Maybe we don't just need to substitute one form of energy for another.

fundamentalist writes:

I don't understand why Copenhagen Consensus on global warming doesn't get more discussion. The economists on the panel assumed that global warming is human-caused and will result in disasters, but found the cost/benefit of trying to stop it far below the cost/benefit of solving other problems that are more serious and can be solved. Solving GW came in at about tenth on a litst of priority projects.

floccina writes:

Or it could be that the left is just very, very risk averse. Heck they often eat organic food for fear of damage that study after study has failed to show. They fear nuclear power despite its long good safety record. They fear starvation in the USA should welfare be cut. Even middle class and rich leftists fear that without SS they might be destitute later in life. They fear hospital bill and yet I bet most have never looked at how much and operation costs.

Dan Weber writes:

What would be the economic effect of replacing the Federal Income Tax with a Federal Carbon Tax?

The US takes in about $1.2 trillion from the income tax. It emits about 6 billion tons of CO2 a year. This means we can replace the income tax revenue with carbon tax revenue with a $200 a ton carbon tax.

About 100 gallons of gas make a ton of CO2, so we're talking about a national $2 a gallon tax on gas, in exchange for getting rid of the income tax (and the IRS!).

Consumption taxes are better for the economy than production taxes too, right?

ed writes:

Sometimes I have my doubts about how efficient the market really is.

For example, see this Times piece on heat pumps. It appears that heat-pumps make tons of economic sense, but still only a tiny fraction of new construction over the last few years has been installing heat pumps, maybe because people are ignorant or myopic about the upfront costs. I think there is lots of research about failure to buy energy efficient appliances that has a similar conclusion.

aaron writes:

Dan, I agree for the most part. But it's very regressive and the transition would need to be smooth. Moving to a consumption tax would require companies to re-evalute their risk-return and cause a big shock to the system. Also, a while ago I came to the realization that as inefficient as our tax system is, if we over simplify it we lose a lot of valuable data. I think our income tax system's main function is providing information by determining what we count and how we count it, which is ultimately determines what money is worth.

Les writes:

I think Zdeno is right, although he tends to concede that there may be a causal link between atmospheric carbon and climate - which has not been demonstrated in my opinion, despite its blithe acceptance by people whom I believe display insufficient scientific skepticism.

Dezakin writes:

If atmospheric carbon concentration shoots up, I assume it will be because we have tapped into high-marginal-cost fossil fuels, such as shale oil. I don't see why the market would do that if alternative energy is going to be cheaper.
Consider the case of nuclear power. Its often cheaper in the long run than coal or natural gas, but has very high capital costs with low marginal costs. The market will shy away from that when interest rates are unpredictable. When you have government providing loan guarantees and mandates, you get a somewhat different result, like France with the lowest electricity prices in Europe.

When you get into the stratospheric area of 10 billion dollar projects of the energy industry, the market behaves a bit differently than the theoretical world.

CO2 is a waste product. Thus, it costs money to make. Companies hate to throw money out their chimneys. Thus, CO2 emissions will, over the long term, decrease. That's how the market will reduce pollution -- as it always has.

HACS writes:

The alarmists need to approve the radical measures as soon as possible because the own credibility of their catastrophic forecasts will be questioned if such guess not to begin to happen in some years. But, if the governments buy the alarmists' version and the worst not to happen then they can allege that the such extremely adverse conditions did not happen due to the preventive measures. It is a prophecy and the name of the game is collectivism against individualism.

Graham Gordon Thomas writes:

I know how climates change it is not CO2 I am seeking a documentary maker to help me show how climates change I am a refractory engineer and evolutionary philosopher I can definately show how climates on earth change and why there are different types of changes please contact the email to discuss

reason writes:

One thing about these environmental cost-benefit analyses. They make one big mistake I think. Price is not the same thing as value. Think about it.

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