Category: Economics

Matters of money

American decline on The Agenda

Steve Paikin’s show on TVO is a video equivalent to CBC’s The Current, in that they both tackle matters of going political importance, tend to get into the substantive matters involved, and feature hosts that press guests to go beyond sound bites.

The recent segment with author Chris Hedges on American decline – “The Collapse of the American Empire?” – is a good use for half an hour:

They also had a good recent segment on Ontario’s Ford government undoing carbon pricing and much of the pro-climate legacy of the Liberal Wynne government: The Cost of Ford’s Energy Shake-up. He tries to press the anti-carbon pricing panellist to go beyond criticism and offer solutions, but the other panelists are pretty effective in arguing that right wing critics are privately content to do nothing about climate change (the representative spouts some nonsense about how we can just adapt, regardless of the severity).

Open thread: climate justice

Both in the literature on fossil fuel divestment and when speaking with divestment activists the concept or worldview of “climate justice” is prominent. A good example is Jessica Grady-Benson and Brinda Sarathy’s paper “Fossil fuel divestment in US higher education: student-led organising for climate justice“. They contend that climate change is increasingly seen as a social justice issue.

As I understand it, the key features of the “climate justice” perspective are the view that climate change is not a distinguishable issue that can be isolated from others like unjust power differentials, poverty, or racism. That analysis helps produce a program of action that emphasizes intersectionality: the efforts of those in one justice-based struggle to assist those involved in others, even if the immediate connection between say, maternal health in low-income countries and environmental policy in European municipalities or conditions in American prisons, is obscure. The conceptual motivation connects to both networking and political pragmatism, through the hope that social movements can be mutually reinforcing and therefore that alliances between climate change activists and those advocating for racial or economic justice will help everyone achieve their policy goals.

This climate justice terminology is comparatively new. In a post back in 2007 I used the term to refer to the question of the fair international distribution of burdens in addressing climate change: a perspective much more along the lines of institutionalist liberal environmentalism which basically accepts the existing order of the world and seeks to make the institutions that already hold power change their behaviour for the sake of their collective longer-term interests.

The liberal environmentalist account sees problems like climate change as techinical, scientific, and with the potential to be solved within existing institutions. Climate change is an unfortunate accidental product of fossil fuel energy that doesn’t automatically carry any moral lessons beyond that. British Comedian David Mitchell has a ‘soapbox’ talk describing this view succinctly.

One relevant consideration concerns motivation. Even if I accept it intellectually, Mitchell’s portrayal of climate change as an accident that nonetheless obligates a response may lack the emotional heft needed to actually produce a change in behaviour. Another key issue is the need to not only adopt decarbonization policies but to maintain them for long enough (decades) to avoid the worst possible climate change effects. Arguably, this requires a political consensus that extends beyond the left or progressives and, in fact, a political program that demands agreement on every progressive cause risks being alienating and ineffectual rather than a path to solidarity and success.

All these questions are intensely contested, and certainly cannot be resolved in a blog post or subsequent comments. On the one hand, the case that climate change is interwoven with other issues of injustice is highly convincing; it’s because some people are privileged over others that it’s so easy to allow unfettered fossil fuel use for the benefits it provides to the privileged while ignoring the harms it imposes on the marginalized, non-human nature, and future generations. It’s also plausible that the climate change movement needs to forge and maintain strategic alliances to succeed. In the end, we can’t know in advance what will work because we have never faced a problem like this before. We may never have the opportunity to do so again, since a sufficiently bad failure on climate change carries the risk of making all other human political projects moot. As such it seems obligatory to me to open up and maintain multiple paths to success, including those that require reaching beyond comfortable networks of people who broadly agree and solutions that consist of behaviours that we largely see as desirable anyhow. Stopping catastrophic climate change will mean giving up a lot, not only in terms of personal comforts and indulgences, but also in terms of comfortable political associations and worldviews.

India and coal

One frequent talking point from people who see no problem with continuing to enlarge the bitumen sands is that action by countries like Canada is pointless as long as larger places like India and China continue to build large amounts of coal capacity.

The Economist recently reported (in an issue with a cover story about how “the world is losing the war against climate change“):

Although coal is horribly filthy, India is utterly dependent on it. It generates more than three-quarters of the country’s electricity. Mining it and turning it into power accounts for a tenth of India’s industrial production. It provides jobs as well as power. Coal India, a state-owned coal miner that is the world’s largest, employs, at last count, 370,000 people, and there are up to 500,000 working in the coal industry at large. Far from reining in production, Coal India plans to increase it, from 560m tonnes in 2017 to 1bn tonnes by 2020. The government’s target for national production is 1.3bn-1.9bn tonnes by 2030.

…

Coal’s life will be made harder by increased competition from cheap solar and wind. Because of that, Mr Subramanian suggests that Mr Modi, his solar-evangelist boss, should slow down his roll out of renewable energy. “In my ideal world India should do a bit less renewable and a bit more coal for the next 10-15 years,” Mr Subramanian said in May. Some dismiss his comments as deliberately provocative. Yet he has rubbed salt into the wounds of environmentalists by describing efforts to wean energy-poor countries such as India off fossil fuels as “carbon imperialism”.

Coal’s staying power may be reinforced by India’s sense of immunity from international pressure to clean up its act. India resists the idea that it cannot put carbon dioxide into the atmosphere simply because the rich world, which produced much more per head during its own development, has used up all the available “carbon space”. In fact, the government continues to support coal projects to keep them afloat. A report by the Centre for Financial Accountability, a think-tank focused on India, says that coal projects in India received almost three times as much support as renewable-energy projects in 2017, mostly from government-owned banks.

Dealing with climate change is only possible on the basis of broad and effective international cooperation. States like India which are still building huge amounts of new energy infrastructure have the capacity to make choices that will make avoiding catastrophic climate change impossible. Persuading them to make different choices requires many things, including financial and technical assistance, but critically it requires that countries like Canada be willing to move first and accept what seems like an economic sacrifice for the sake of a better future for everyone. I say “seems” like a sacrifice because in a world with extreme climate change the cash Canada is banking through continued fossil fuel development is liable to be meaningless.

Everyone who has to give something up or adjust their lifestyle about decarbonization seems to raise some kind of ‘fairness’ argument: why should I give up what I feel I deserve? Why should I act when others aren’t doing so? Countries like India where extreme poverty remains widespread have a genuine and convincing case that they should not have to sacrifice important human welfare developments for the sake of global decarbonization. Still, coal is so awful once you add up the health, environment, and climate costs that even the poorest places with the worst problems should not still be deploying it. For Canada and other rich states to credibly encourage that requires both far more aggressive domestic action to stop fossil fuel development and the determination to provide sufficient technical and financial assistance to help states like India decarbonize quickly enough to help us all avoid global catastrophe.

Explaining climate inaction

A couple of days ago the New York Times published a long and controversial article by Nathaniel Rich which purports to explain why, despite decades of strong scientific consensus about the seriousness of climate change and the action needed to keep it under control, we’re still on track for catastrophic warming: Losing Earth: The Decade We Almost Stopped Climate Change.

The account is disputed, among others by Naomi Klein who questions the idea that ‘human nature’ is to blame: Capitalism Killed Our Climate Momentum, Not “Human Nature”.

The Economist‘s cover story has a similar theme: The world is losing the war against climate change. I have written before about how inconsistent their coverage is and, in particular, how they have never reconciled their acceptance of the need to confront climate change with the unfaltering priority they accord to continued economic growth.

“Transition” isn’t adequate for what climate change will mean

Greyhound shutting down outside Ontario and Quebec

I got an email from Greyhound which confirmed recent headlines:

We are permanently cancelling all Greyhound Canada services in the provinces of Alberta, Manitoba and Saskatchewan.

In British Columbia, we are cancelling all services as well.

This is a shame both for me personally and in general.

It means the train is now the only available low-carbon travel option from Toronto or Ottawa to Vancouver, making a repeat of my bus-based Low Carbon Cross Country (LC^3T) trip impossible after the end of October.

It also makes remote communities and their inhabitants more isolated and vulnerable, especially for people who lack the credentials or vehicle access to drive. It also seems to represent a breakdown in the idea that Canada ought to be connected as an entity, especially alongside the high cost and low frequency of rail services.

On universal postal services

Universal mail services are interesting to consider, both in terms of the relationship between universal social needs and the government provision of services and because of how they illustrate connections between public policy and technology.

It’s important to define what I mean, because it’s distinct from the broader category of delivery services, which are provided by everyone from pizza places to courier companies. In some cases, these delivery services are included in the price of a product, like a desk chair delivered from a shop or home food delivery. In other cases, it’s for a point-to-point transfer of objects provided by the customer to a specific destination, generally with a specific price charged for every pair of start and end locations. The method of delivery also distinguishes universal mail services, since their delivery systems are prepared to deliver an item to every address in the area covered every time they circulate with mail, whereas couriers and house moving companies go from point to point.

My understanding is that the London Penny Post was the earliest universal mail service, naming itself after the innovation of charging a single price for delivery of an envelope between any two points covered by the system. This cuts down a lot on necessary infrastructure, since the envelopes can be deposited in unstaffed depots (mail boxes) and customers can calculate and affix their own postage.

A contemporary system like Canada Post almost certainly could raise more revenue by charging differential rates for delivery across different distances. Even if you think the net benefit is very much worth it for society, you have to admit that shipping anything from Miramichi, New Brunswick to Dawson’s Landing, British Columbia costs the shipper more than delivering from downtown Vancouver to a suburb, or even between two major urban centres. We choose to keep the price the same perhaps partly for simplicity and customer satisfaction, but also as a social policy choice: deciding to emphasize the connectedness of some places, specifically all mail delivery addresses in Canada.

With the decline of lettermail the part of the postal system that is under threat is this routine door-to-door delivery to all addresses several times a week. Canada Post already runs point-to-point package services which compete with Fedex and UPS, with the same feature of a variable rate depending on source and destination. Routine delivery to every address costs the postal service a great deal and is currently the main basis of their whole logistical system, down to trucks circling the streets and mail carriers delivering to doors and mailboxes.

The decline in lettermail is pretty convincingly attributable to the rise of electronic forms of correspondence, particularly for things like utility bills. The volume of letters is falling, but the system still largely costs the same amount to operate. The choice to end routine delivery and switch to a courier service model would probably mean significantly reducing the staff. If maintaining this kind of mail delivery is a public priority, Canadians can doubtless insist that it happen. Canada Post is a Crown corporation, so while its operation has elements of a commercial firm, it’s ultimately state-owned and government controlled.

There are elements of universal mail that are definitely appealing to me, both in terms of the simplicity of being able to buy single units of postage in advance to ship envelopes at your discretion and in terms of the assertion of national community it represents, as an implicit subsidy from those whose shipping addresses can be cheaply reached to those whose addresses are remote, like smaller communities and communities in Canada’s north.

Canada and losers in a global transition to climate-safe energy

Canada’s continued enthusiasm for new fossil fuel production not only helps undermine the world’s chances of dealing with climate change, but it also threatens Canada’s future economic prosperity as one of the dirtiest and highest-cost producers of a commodity that may see sharply declining demand.

A recent special report in The Economist said:

Yet the transition has plenty of potential to cause geopolitical friction, too. The most obvious example is the challenge it will pose to economies that depend on petroleum. A new book, “The Geopolitics of Renewables”, edited by Daniel Scholten of Delft University of Technology in the Netherlands, argues that the clearest losers will be those blessed with ample fossil-fuel reserves and those who bet on oil for too long without reforming their economies.

Reforming the economy means doing several politically difficult things, including progressively shutting down the politically powerful bitumen sands, getting consumers to accept higher prices for fossil fuel energy, and working with enthusiasm and determination to curtail fossil fuel energy demand. There is little sign at present that Canada’s politicians are up to any of these tasks, or that the minority of voters who really understand the need to decarbonize will be able to bring them around, especially in time to live up to commitments like the Paris Agreement.

Canada’s message to the world

Yesterday I photographed two rallies outside Toronto-area offices of Members of Parliament and Ministers of Finance and Foreign Affairs Bill Morneau and Chrystia Freeland.

With Freeland we asked if Canada was now going to withdraw our signature from the Paris Agreement. The sentiment was crafted to be possible to express in one photograph, but the issues are nonetheless closely related. The Paris Agreement’s central operative clause is an aspiration to: “Hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change”.

I say “aspiration” because the agreement says little about implementation. This is a treaty negotiated with the participation of every country on Earth and there are many who would have objected to explaining what those temperature targets mean in terms of greenhouse gasses, fossil fuels, and public policy. There are some who hope a magical technology will let us burn all these fossil fuels without dangerously warming the planet, but there are good reasons to question the efficacy and ethics of both geoengineering and carbon sequestration. As for a marvellous new energy technology so much better than both climate-safe options like nuclear fission and renewables and fossil fuel options, I don’t see that happening during the critical window of only a couple of decades where we will decide if the Paris targets can ever be attained or not.

The Paris Agreement is ambitious in its ultimate objective but frighteningly imprecise about the means of getting there. That means that for the decades ahead the locus of diplomacy will have to be convincing countries facing major problems of poverty and regional insecurity to commit fully to decarbonization as well. To achieve that, countries which have historically used the largest amounts of fossil fuel and where emissions per person continue to be the highest will need to be seen to be doing their part, cheerfully and in a spirit of global cooperation.

The clearest signals we’re sending are the big energy choices we make. A new pipeline says that the bitumen sands can continue to grow and that we expect fossil fuel use to remain as high as it is now for decades to come. It says that we’re not serious about Paris or avoiding dangerous climate change.

Canadian politicians want an easy answer that can satisfy Alberta, Saskatchewan, and the oil industry while also showing that sort of global leadership. That isn’t possible. At some point all of Canada needs to have a hard conversation about shutting down the oil sands industry, and that process needs to begin now by definitively stopping expansion.

To some degree the fights over Keystone XL, the Northern Gateway pipeline, and Energy East have already sent important signals to industry. If you want a big fossil fuel project now, it is going to be a fight. That message is actually reinforced by the Trudeau government’s decision to buy the Trans Mountain project. They think they’re telling industry that the federal government will step in to get things done, but they’re also suggesting that projects like this aren’t viable without exceptional government support. Even if Trudeau welds the last section of pipe personally, and the government’s dream of recovering taxpayer funds by selling the pipeline to the private sector is fulfilled, there will be big questions about how much sense any further bitumen sands expansion will make.