Economics – Page 116 – a sibilant intake of breath

American climate change impacts report

Because of a 2006 lawsuit filed by the Center for Biological Diversity, Greenpeace and Friends of the Earth, a judge in Oakland California ordered the release of the Climate Change Science Programs (CCSP) assessment of climate change impacts in the United States. In total, the public release of the report was delayed for three years. The report – Scientific Assessment of the Effects of Global Climate Change on the United States – is now available online. It is not unlike the impacts report previously released by Natural Resources Canada.

None of the contents of the CCSP report will be surprising to those who have been paying attention to what the Intergovernmental Panel on Climate Change (IPCC) has been releasing. Indeed, that is not surprising. The IPCC is looking at the same scientific evidence when they reach their judgments. One thing that would have been helpful would have been a more comprehensive effort to estimate the total economic damages associated with different plausible levels of climate change. It is information of that kind that seems most salient to those making hard choices about what actions to take.

Border guards and copyright enforcement

According to Boing Boing, Canadian border guards may soon be in charge of checking iPods and other devices for copyright infringement. If true, the plan is absurd for several reasons. For one, it would be impossible for them to determine whether a DRM-free song on your iPod was legitimately ripped from a CD you own or downloaded from the web. For another, this is a serious misuse of their time. It would be a distraction from decidedly more important tasks, like looking for illegal weapons, and probably a significant irritant to both those being scrutinized and those waiting at border crossings.

Hopefully these rumours of secret plans – also picked up by the Vancouver Sun are simply false.

Monbiot to King Abdaullah

British journalist and climate change agitator George Monbiot has written an interesting open letter to King Abdaullah of Saudi Arabia. He comments on the degree to which remaining oil supplies in Saudi Arabia are one of the biggest geopolitical mysteries out there, and how Saudi Arabia retains a unique influence to manage oil prices. He also comments on the contradictory policies of western leaders who both assert that they want to solve climate change and continue to envision a world in which oil is cheap and plentiful:

In other words, your restrictions on supply – voluntary or otherwise – are helping the government to meet its carbon targets. So how does it respond? By angrily demanding that you remove them so that we can keep driving and flying as much as we did before. Last week, Gordon Brown averred that it’s “a scandal that 40% of the oil is controlled by Opec, that their decisions can restrict the supply of oil to the rest of the world, and that at a time when oil is desperately needed, and supply needs to expand, that Opec can withhold supply from the market”. In the United States, legislators have gone further: the House of Representatives has voted to bring a lawsuit against Opec’s member states, and Democratic senators are trying to block arms sales to your kingdom unless you raise production.

This illustrates one of our leaders’ delusions. They claim to wish to restrict the demand for fossil fuels, in order to address both climate change and energy security. At the same time, to quote Britain’s Department for Business, they seek to “maximise economic recovery” from their remaining oil, gas and coal reserves. They persist in believing that both policies can be pursued at once, apparently unaware that if fossil fuels are extracted they will be burnt, however much they claim to wish to reduce consumption. The only states that appear to be imposing restrictions on the supply of fuel are the members of Opec, about which Brown so bitterly complains. Your Majesty, we have gone mad, and you alone can cure our affliction, by keeping your taps shut.

The letter is a somewhat cheeky way for Monbiot to make his points – appealing to the autocratic ruler of a foreign state to help temper the bad policies of his own government – but it does share the intriguing quality of most of his writing.

More and more, people need to gain an appreciation that concerns about climate change and energy security do not always push us in the same policy direction. Concern about climate change tells us to change our infrastructure, cut back on energy use, and use the energy we have more intelligently. Energy security often presses us towards a desperate search for alternative fuels, regardless of what environmental consequences their production may have.

Net neutrality

Today, there is a rally on Parliament Hill in favour of net neutrality. Basically, these people are arguing that internet and telephone companies should not sift through the kind of data their customers are using: designating some for the fast stream and letting some linger or vanish.

In general, I am very supportive of the idea of net neutrality. On the one hand, this is because packet filtering has creepy privacy and surveillance issues associated with it. On the other, it recognizes that established companies will usually do whatever they can to strangle innovative competitors. Without net neutrality, its a fair bet that we would never have had Skype or the World Wide Web.

At the same time, there are legitimate issues about bandwidth. There are people out there exchanging many gigabytes a day worth of movies, music, and games. I am not too concerned with piracy and intellectual property, but that traffic is a real strain on the network and a burden to others. It pushes up costs for everyone as ordinary users subsidize excessive ones.

The best solution seems to be to allow bandwidth capping but disallow packet filtering. That way, sending a terabyte a month of illegally copied films will be restricted, but Skype-like new services will continue to emerge and there will be fewer general opportunites for telecom companies to abuse.

I cannot go to the rally myself, since I will be at work, but I would encourage those who are free and feeling a bit activist to attend.

Historical emissions and adaptation costs

It is widely acknowledged that developing countries will suffer a great deal from climate change. They are vulnerable to effects like rising sea levels and increased frequency and severity of extreme weather. They also have more limited means available to respond, as well as other serious problems to deal with. Providing adaptation funding is therefore seen as an important means of getting them on-side for climate change mitigation. It could be offered as an incentive to cut emissions.

That being said, there is a strong case to be made that developing countries should not need to do anything in exchange for adaptation funding. Making them do so is essentially akin to injuring someone, then demanding something in return for the damages they win against you in court. The historical emissions of developed states have primarily induced the climate change problem; as such, developing states suffering from its effects have a right to demand compensation.

Very roughly, the developed world as a whole is responsible for about 70% of emissions to date. The United States has produced about 22% of the anthropogenic greenhouse gasses in the atmosphere; Western Europe is responsible for about 17%; Canada represents something like 2% of the total. It can be argued that – by rights – states like Bangladesh and Ghana should be dividing their total costs for adaptation and sending the bill to other states, on the basis of historical emissions.

That being said, it is only fair to say that developed states are only culpable for a portion of their total emissions, on account of how the science of climate change was not well understood until fairly recently. Exactly where to draw the line is unclear, but that doesn’t especially matter since developing states simply don’t have the power to demand adaptation transfers on the basis of past harms. States that developed through the extensive use of fossil fuels will continue to use the influence they acquired through that course of military and economic strengthening to make others bear most of the costs for their pollution.

Harper on gas prices and carbon taxes

One thing for which you need to give Stephen Harper some credit: unlike the American presidential candidates, he is willing to admit that the government cannot do much to reduce gasoline prices. Unfortunately, he is also using those high prices to oppose carbon taxes, probably the most economically efficient economy-wide mechanism for reducing greenhouse gas emissions.

Polar bears ‘threatened’

As of today, the American Department of the Interior has listed the polar bear as a ‘threatened’ species, on account of the ongoing disappearance of the Arctic ice cap. In making the announcement, Secretary of the Interior Dirk Kempthorne stressed that the decision is not meant to compel the regulation of greenhouse gasses:

Listing the polar bear as threatened can reduce avoidable losses of polar bears. But it should not open the door to use of the ESA [Endangered Species Act] to regulate greenhouse gas emissions from automobiles, power plants, and other sources. That would be a wholly inappropriate use of the ESA law. The ESA is not the right tool to set U.S. climate policy.

In a sense, that is fair enough. Creating something as comprehensive as a greenhouse gas mitigation strategy in response to concern about a single species is definitely a backwards-seeming way to go about it. At the same time, one is reminded of how somewhat awkward justifications have sometimes been used in the past to secure legal outcomes: for instance, the use of the ‘interstate commerce’ clause in the US Constitution to assert federal jurisdiction, or even the indictment of Al Capone on tax evasion charges, rather than those directly associated with organized crime.

The point here is less whether concern about polar bears does or does not create a legal obligation to act on climate change. Rather, this is another demonstration of how virtually all conservation planning now requires the consideration of climate change effects. This is just one of a thousand cuts through which federal reluctance to effectively regulate greenhouse gasses will need to be eliminated.

Electric vehicles in Canada

Dynasty is a Canadian company that builds light, low speed, battery powered cars. Their Dynasty IT vehicle has a range of 50km and a top speed of 40 km/h. Because Transport Canada refused to follow the lead of 44 American states and authorize the vehicles for non-highway use on roads, the company has decided to relocate to Pakistan. There, they will manufacture cars for the American market. The ZENN is in a similar predicament.

There is a real trade-off between producing light vehicles and producing ones that do well in crash tests. That said, we do permit people to ride absurdly unsafe motorbikes – even on the highway. It is incoherent to ban one and permit the other.

Perhaps it would make sense to create a special legal category for small, light vehicles of limited range, intended primarily for urban use. By all means, those purchasing them should be informed that they will not fare as well in a crash with a huge truck as someone in a larger, steel-framed car. That said, the economic and environmental advantages may justify the risk in the eyes of many.

Vehicle efficiency

My friend Mark sent me a link to a book in progress about sustainable energy. One of the more interesting sections is on vehicle efficiency. The author stresses that, while some kinds of efficiency gains are physically possible, others are not:

Could we make a new car that consumes 100 times less energy and still goes at 70mph? No. Not if the car has the same shape. The energy is going mainly into making air swirl. Changing the materials the car is made from makes no difference to that. A miraculous improvement to the engine could perhaps boost its efficiency from 25% to 50%. But the energy consumption of a car is still going to be roughly 40 kWh per 100 km.

The story is a familiar one: efficiency can get you a long way, but there are no free rides. Another interesting comment from this chapter is the major design differences between an efficient city car and an efficient highway car. Since the former is always stopping and starting, low weight is really important. Brakes that regenerate energy also make a big difference. For a highway car that avoids major acceleration and deceleration, the most important thing is reducing drag. Weight is comparatively trivial.

One other interesting assertion is that the energy involved in making a car is actually pretty trivial compared to the amount used in driving it around:

The energy cost of making the raw materials for a one tonne car is thus equivalent to about 3000 km of driving; an appreciable cost, but probably only 1% of the lifetime energy-cost of the car’s fuel.

If correct, that makes it seem a lot more reasonable to upgrade from an old and inefficient vehicle to a newer and less gas-thirsty model. It also suggests that government programs to replace inefficient cars with better ones might have strong justification, in terms of climate change mitigation potential.

In order to move to a low carbon society, we need to do a slew of things. We definitely need to increase the energy efficiency of accomplishing most tasks. We definitely need to reduce the quantity of greenhouse gas produced in the process of generating a unit of energy. We probably need to significantly reduce total energy consumption. Finally, we need to take actions that manage the greenhouse gasses that will inevitably be produced by some actions. The protection and enhancement of carbon sinks (mostly forests and soils) are essential for this.

When it comes to reducing total energy usage, the chapter does make one excellent suggestion: “a cyclist at 21 km/h consumes about 30 times less energy per kilometre than a lone car-driver on the motorway: about 2.4 kWh per 100 km.” Those who cycle more slowly are likely to be even more efficient, since doubling the time it takes to travel somewhere apparently reduces energy usage by three quarters.

The structure of consumer spending

This graphic, provided by the New York Times, is quite interesting on two levels. To start with, it displays some interesting information about the structure of consumer spending. In addition, it provides an excellent example of data being displayed in a concise, comprehensible, attractive, and accessible way.

The first thing that is interesting is the breakdown between spending areas:

Housing: 42%
Transportation: 18%
Food and beverages: 15%
Health care: 6%
Education and communication: 6%
Recreation: 6%
Apparel: 4%
Miscellaneous: 3%

Also interesting are the single biggest spending items:

“Owner’s equivalent rent:” 23.9%
Rent: 5.8%
Gasoline: 5.2%
New cars and trucks: 4.6%
Full service restaurant meals: 3.0%
Electricity: 2.8%
Hotels and vacation homes: 2.4%
Car insurance: 2.0%
Used cars and trucks: 1.8%
Cable: 1.2%

Beer spending is a paltry 0.3% – only three times what is spent on butter or ice cream.