Category: Economics

Matters of money

Gorbachev on the end of the Cold War

Following up on his exceptional books The Making of the Atomic Bomb and Dark Sun, historian Richard Rhodes‘ The Twilight of the Bombs provides fascinating details on all matters nuclear-weapon-related during the fall of the Soviet Union and years afterward. For instance, there are many details on the clandestine Iraqi nuclear weapons program in operation after the first Gulf War, along with frightening details on the August coup against Mikhail Gorbachev and the protection of American tactical nuclear weapons in Europe during the later years of the Cold War.

One interesting passage Rhodes quotes comes from Gorbachev’s speech from Christmas Day, 1991 formally dissolving the Soviet Union:

“We had plenty of everything: land, oil, gas and other natural resources, and God had also endowed us with intellect and talent – yet we lived much worse than people in other industrialized countries and the gap was constantly widening. The reason was apparent even then – our society was stifled in the grip of a bureaucratic command system. Doomed to serve ideology and bear the heavy burden of the arms race, it was strained to the utmost… The country was losing hope. We could not go on living like this. We had to change everything radically.”

Rhodes, Richard. The Twilight of the Bombs: Recent Challenges, New Dangers, and the Prospects for a World Without Nuclear Weapons. p.116 (hardcover)

In another fascinating passage, Rhodes discusses the control systems in place for the Soviet nuclear arsenal during the August coup. With the particular combination of conspirators involved, it was not possible for them to make unauthorized use of the Soviet strategic nuclear arsenal. A different group of conspirators with different tactics and objectives, however, might have been able to circumvent the Soviet nuclear controls and use weapons without Gorbachev’s approval:

“‘There is an important lesson here,’ [Bruce] Blair concluded. ‘No system of safeguards can reliably guard against misbehaviour at the very apex of government, in any government. There is no adequate answer to the question, “Who guards the guards?”‘”

Ibid. p.95

Climate change and conflict between generations

From what we can tell, the people alive today are putting their own welfare ahead of the integrity of the planet, worsening the prospects of those who will follow. Can anything be done about that?

The problem

The decisions of governments have always affected future generations. When a new bridge is built, it will likely remain in use for a number of decades. Today’s health research (or lack thereof) affects the fates of disease sufferers in the future. The debts accumulated by governments today affect what sort of financial environment the people of the future will live in. The legitimacy of democratic governments is grounded on the claim that they represent the interests of the people who they govern. More precisely, they are meant to implement the current wishes of those people, as identified and put in action through institutions like elections. Ideally, such a system prevents the emergence of parasitic or predatory governments that serve their own interests at the expense of those of the population at large.

Climate change complicates the situation, most importantly by creating a deep conflict between the current generation and all future generations. The choices we are making today – about how much energy we use and where we get that energy from – profoundly affect what kind of world members of future generations will live in and, by extension, what their life prospects will be. The choices we can make that seem most likely to improve their life prospects are generally deeply unpopular, given that they usually involve sacrifices. For instance, we can reduce our impact on the climate by traveling less, enduring colder homes in winter and warmer homes in summer, tolerating the presence of dangerous nuclear power stations, eating less meat, and reducing our consumption of luxury products. By contrast, many of the things which we enjoy doing cause harm to future generations.

Today’s governments necessarily respond to the preferences of the current generation. There is some extent to which those preferences include concern for the future. We generally resist proposals to clearcut national parks, for example. But the revealed pattern of our overall behaviour strongly suggests that we care a lot more about our own immediate physical comfort and convenience than we care about the prospects of the people that follow us. We might delude ourselves into thinking that buying recycled toilet paper and avoiding plastic bags represent sufficient action to protect the planet for future generations, but it seems naïve to think that anybody aside from the most ill-informed members of society seriously believe that.

Today’s governments therefore represent a generation that has chosen to be parasitic and predatory when it comes to the interests of the generations that are to come. We are choosing to impoverish their world, in order to continue to enjoy our present comforts and recreations. Even though we have been amply informed that we are emptying the seas of fish, stripping the planet of biodiversity, and flooding the atmosphere with climate-changing gas, we prefer to carry on as we have in the past. The only threats that seem to motivate large-scale action are immediate threats to the financial system (witness the eagerness with which banks are rescued) and threats to our physical security (the over-reaction to September 11th, huge ongoing investment in weapons, paranoia and mass incarceration in response to crime, etc).

Possible solutions

How are we to escape from this situation? One set of possibilities centres around ways in which the current generation could be brought to sacrifice some of its own welfare for the sake of future generations. One possibility is that the current generation will progressively become willing to accept sacrifices for the sake of the people who will follow – foregoing cheap flights and giant air conditioners for poorly insulated homes. Another possibility is that people will become sufficiently concerned about climate change affecting themselves personally that they will become willing to accept present sacrifices in exchange for a reduction in future risks. Governments could also deviate from the course of implementing the current wishes of voters by enacting policies that reduce the welfare of those alive now for the sake of those yet to come.

There are some alternative possibilities highlighted by those who see such sacrifices as either undesirable or unattainable. It is possible that technological advancement and the operation of markets will somehow make our current preferences compatible with a good world in the future, thus eliminating the conflict between generations. It is also possible that we will undergo a profound shift in what we value, moving away from a preference for resource- and energy-intensive goods and services toward a preference for things that have less of an impact on the planet.

Obviously, there are reasons to be skeptical about all of these possibilities. There are probably other possibilities not listed here. Still, it seems we are in a situation where a clear problem exists and where no clear route forward toward solving it is obvious. Indeed, several of the possible approaches to solution are in conflict with one another. Should we be covering huge areas of desert with solar panels and building hundreds of new nuclear plants to feed the energy ‘needs’ of future generations without altering the atmosphere, or should we be trying to provoke people into re-assessing their needs and living less energy-intensive lifestyles? Perhaps we should be encouraging a rapid reduction in the global population, so that the aggregate impact from a smaller number of richer people will remain within the boundaries of what the planet can tolerate. Perhaps we should be giving up on the project of reducing greenhouse gas pollution, which has been failing now for decades, and accept that our best chance of preventing catastrophic climate change is developing technologies to intentionally cool the planet. Of course, there is no guarantee these technologies will work, and it is virtually certain that they will have serious side-effects.

There are so many overlapping uncertainties that it is challenging to adjudicate between these and other options. We don’t know what the future of fossil fuel production will look like, particularly given that we don’t know what sort of investment decisions will be made. We don’t know how the technology and economics of other forms of energy will evolve during the next couple of decades, in fields as diverse as batteries, nuclear power, and solar panels. We don’t know how quickly and severely the impacts of climate change will be felt, or where in the world they will first occur. We don’t know the political future of important countries like China, or important supra-national entities like the European Union.

One possible response to uncertainty is to identify the things about which we can be most confident and focus our action on them. We now know that burning fossil fuels causes the climate to change dangerously. In response, we could devote our energies to doing whatever we can to avoid the production and use of fossil fuels. We also know that there are many opportunities around the world for improving energy efficiency while simultaneously saving money. That suggests that strategies focused on deploying more efficient technologies and approaches could be promising. We also know that people do care to some extent about the kind of world they are creating for their children and grandchildren, suggesting that further efforts to share what we are learning about the consequences of our current actions and the alternatives that exist for us may prove fruitful.

All of these responses have problems. Restricting fossil fuel use mainly involves choices that are deeply unpopular. People in rich places are accustomed to incredibly energy-intensive lifestyles which only fossil fuels can plausibly sustain in the near-term. Efficiency improvements can be hard to achieve, and tend to be negated when people invest the savings in doing more energy-intensive things, rather than achieving an overall efficiency improvement. Finally, while people do care about the prospects of their children, it is hard to convince them that a stable climate is a key part of that. Even if they can be convinced of that, people are loathe to take action when others around the world are not doing so. Also, our energy choices affect hundreds of future generations. People may care intensely about the prospects of their children and grandchildren, but they tend to behave as though they are indifferent to the prospects of people living in 500 or 1000 years, who by most accounts have an equal claim to our moral consideration.

All told, this is a murky time for the environmental movement. Progress has been blocked on most fronts. International negotiations on climate change have failed to produce meaningful action. The United States, which is arguably the most important country in the world when it comes to developing a global consensus to proceed, is immobilized by domestic politics. Nuclear power stations – one of our larger-scale low-carbon options – are explosively unpopular. Meanwhile, continued growth in rapidly-developing countries and the development of unconventional oil and gas resources keep the world on a trajectory of ever-increasing greenhouse gas pollution. It’s hard not to despair about the future.

Related:

Earth as inheritance

People sometimes refer to the Earth as an inheritance that passes from each generation to the next. There is some truth in this, but it misses something important. A child who inherits nothing nonetheless stands a decent chance of surviving, but no human generation can survive without an intact biosphere. That makes the Earth much more important than any inheritance and therefore makes it substantially more unethical to squander for short-term enjoyment.

Fallback careers: locksmithing

Starting a PhD program in the fall, I am fully aware that the associated job prospects are poor. It’s a long investment of time, and the skills to be acquired are of interest to only a very few employers who already have a great many applicants and who are mostly losing funding.

Investing in a practical skill seems like a decent risk mitigation strategy. I can keep doing some commercial photography on the side, but that’s another field crowded with amateurs chasing too little work for poor monetary returns.

Perhaps it would be worthwhile to become certified as a locksmith. It would be interesting, and I suspect it’s a growth business. I think the future will be full of fear, with people keen to protect what they have from others who will try to take it. The world’s governments also have an unsavoury enthusiasm for completely eliminating individual privacy.

That creates double opportunities for locksmiths, since they have skills demanded by both those trying to keep attackers out and by those determined to break in.

Replacement Etymotic mc3 earbuds

I’ve written before about the durability of Etymotic headphones.

On 5 August 2011, before leaving on my trip to New Orleans and Washington D.C., I bought a pair of Etymotic mc3 earbuds, with a built-in microphone for use with my iPhone.

A few weeks ago, they failed in the ordinary way. At the connection points between the wire and the audio-in jack, the constant bending of the cable led to structural failure. The sound became distorted and intermittent. With other pairs, I have had the same thing happen at the junction point between one of the wires and one of the individual earbuds.

I sent them back to Etymotic with a copy of my Amazon receipt and a short note explaining the problem and today I received a brand new pair of mc3s in the mail. I think every pair of headphones I have ever purchased from Etymotic has been replaced free of charge (starting back in Oxford in 2005 or ’06).

My expectation when I buy Etymotic earbuds is that they will last for one year of heavy daily use. Then I will get them replaced once under warranty. Then, after about a year, the replacement earbuds will fail and I will buy a new pair.

I don’t know if their more expensive models are more durable. I may try a pair next time, to see whether the sound is better and whether the construction better withstands the abuses of life.

None of this should be taken as evidence that I am unsatisfied with Etymotic products. They are pretty great. The sound is good and they block off outside noise very effectively. It’s pretty amazing to have a product that fits in such a tiny space and which can turn anywhere into quite a good listening environment.

[Update: 19 December 2014] My latest pair of Etymotic earbuds failed today – one of the wires inside seems to have broken right near where it connects to my music player. Now, there is only sound in one ear. I will naturally need to replace them, and will probably go with another pair of Etys.

Alternative to a carbon tax: carbon deposit

It just occurred to me that there might be a way to both (a) spur the development of effective carbon capture and storage (CCS) technology and (b) circumvent the apparent political impossibility of creating a carbon price. It involves treating tonnes of greenhouse gas pollution like soda cans.

Instead of charging people a fee based on their tonnes of emissions, as an incentive to use less, you could require everyone to pay a disposal fee for the carbon up front when they buy oil, gas, or coal. It’s possible to separate carbon dioxide (CO2) from air and to bury it underground. The cost of doing so could be built into the disposal fee. For instance, if it cost $600 to bury a tonne of carbon, there could be a $600 deposit required on that quantity of fossil fuel. If you burn it, capture the carbon, and sequester it then the deposit gets returned to you. If you just vent the CO2 into the air, then you lose the deposit. The effect is similar to a carbon tax, with an exemption for firms that demonstrably nullify their emissions. (Of course all the issues with safety and verification and CCS remain.)

A $600 carbon price would have a large and immediate effect on an economy like Canada’s, so this probably isn’t politically possible either. (Of course, it would be possible to start lower and scale up, giving people more time to adjust.) There may well be all sorts of other problems with it also, but I thought it was an idea worth contemplating.

We usually count climate pollution badly

As far as the atmosphere is concerned, it doesn’t matter if an extra molecule of carbon dioxide (CO2) comes from a recently-felled tree, from a molecule of methane in burned natural gas, from oil burned in an airplane, or from a coal-fired power plant. Regardless of the source, it adds to the already-dangerously-large stock of CO2 in the atmosphere.

This is one reason why commenters miss the point when they say things like: “the oilsands were responsible for seven per cent of Canada’s annual greenhouse gas emissions in 2010, while the entire oil and gas sector produced 22 per cent of Canada’s greenhouse gases in the same year”. While these figures may be accurate, they convey the false notion that these are the only sources of CO2 we need to worry about and that reducing these numbers is adequate for solving the climate problem.

What matter is how much fossil fuel we burn in total across history

These figures only take into consideration the emissions that arise from the process of producing oil and gas. For instance, there is the natural gas that gets burned to make bitumen liquid enough to be processed and transported. The figured do not include the emissions that result when these fuels are burned. This is where most of the pollution actually happens and it is inevitable. Even if carbon capture and storage (CCS) was completely free and available today, it wouldn’t be possible to capture the pollution from vehicles, and that is where most of the oil from the oil sands ends up.

The key factor that will determine how much climate change the planet experiences is how much CO2 gets added to the atmosphere. Burning coal, oil, and gas inescapably contributes to that stock, which is already dangerously large. As such, Canada cannot ignore exports when it considers how to bring its economic activity in line with what the planet can withstand. The entire coal, gas, and oil industries need to be phased out in a rapid way. At the same time, we need to develop whichever carbon-neutral energy sources will sustain us in the future: some mixture of renewable forms of energy like wind and solar, biomass, and nuclear power.

Warming begets further warming

It is important to remember that the indifference of the climate to the source of CO2 molecules extends beyond direct human activities. If we warm the planet so much that the Amazon dries out and becomes grassland, the huge volume of CO2 currently stored in the rainforest will be added to the atmosphere. Similarly, if we warm the permafrost to the point where it melts and releases its gargantuan content of methane (a more powerful greenhouse gas than CO2, though shorter-lived), we will have another large dollop of warming to deal with, and an increased chance of catastrophic outcomes like the disintegration of the ice sheets in Greenland and West Antarctica.

Based on the evidence we have from millions of years of climate data, we know that the climate can be prone to violent swings when provoked. Push it a little bit and perhaps it will naturally return to about where it was before (‘pushing’ here means releasing greenhouse gas pollution). Push it enough, however, and it can tip over into a very different state, like a Coke machine tilted to the point where it falls over. All of human civilization has taken place during times of relative climatic stability. If we radically destabilize the climate, the consequences for human beings everywhere will be dire.

Our choice

To a very large degree, Canadians are missing the point about climate change. It isn’t a matter of deciding whether growth in the oil sands is pushing up the Canadian dollar in a way that hurts manufacturers. It also isn’t a matter of deciding what sort of small carbon tax would make Canada’s emissions acceptable. If we are to preserve a habitable planet for the people who will follow us, all signs indicate that we must get serious about the process of phasing out fossil fuels. Either humanity has a future or the global fossil fuel industry does – not both. That is very unwelcome news in a country that stands to make billions of dollars from fossil fuel exports, but it is the situation in which we now find ourselves.

We can choose to ignore the fact that what we are doing threatens the future habitability of the planet. We can also choose to bet that some future technology will allow us to solve or counteract the climate problem. If we make such choices, we should be entirely clear about what we are doing. If we accept the reality of climate change but choose to plow on heedlessly anyway, we should accept that we are entering into a suicide pact with countries like China and the United States that are doing the same thing. Neither has shown itself to be at all capable of moderating its demand for fossil fuels, and Canada is providing an increasing share of the oil, gas, and coal that fuels their frightening emissions.

If we choose to bet on technological salvation, we should similarly recognize that we are placing bets with lives that are not our own. We are saying that whether people in future generations inherit a planet that permits human prosperity or a planet in which civilization struggles to endure depends on whether some magic new technology appears in time to correct our mistakes – mistakes we now fully understand, but which we have so far refused to stop making.

Every barrel of oil we dig up and burn is another dangerous dart we are hurling at random at the people of the future – people who are already going to suffer substantially from the damage we have already done. We don’t need to choose that kind of irresponsible and selfish behaviour. We can turn our energy instead to building a zero-carbon energy system and an efficient society. Such a society will have a shot at long-term prosperity, which is something that cannot be said for societies that depend on fossil fuels that are ever-more scarce and which are destroying the planet.

Canada’s climate targets in 2012

Today’s report from Canada’s Commissioner of the Environment and Sustainable Development (CESD) has attracted a fair bit of media attention. On climate change, the report argues that Canada lacks a credible plan for meeting our 2020 target of cutting greenhouse gas pollution to 17% below 2005 levels by 2020. This target replaced Canada’s much more ambitious but now abandoned Kyoto Protocol target of cutting to 6% below 1990 pollution levels by 2012.

A few points in response:

1) None of Canada’s climate targets have ever been tough enough to be compatible with a fair global pathway that avoids more than 2°C of warming. In order to stay below the level at which climate change is generally considered ‘dangerous’, Canada and other countries must do much more than has been proposed so far.

2) As the CESD points out, Canada’s existing targets are more notional than realistic. In order to meet them, much more on-the-ground action needs to occur.

3) All of these pollution figures ignore Canada’s huge hydrocarbon exports. The question of how to assign responsibility for a litre of oil or a tonne of coal mined in Canada and sold overseas isn’t straightforward. At the same time, the planet doesn’t care whether the fuel is burned in Canada or in China. Either way, it contributes the same amount of warming to the climate system. If we are to address climate change, exports also need to be phased out.

Once we take into consideration the amount of fossil fuel we are exporting, Canada’s climate change record looks even worse then we only look at our failure to reach our past targets. It can be argued that fuel burnt in China or the United States isn’t our responsibility. This argument isn’t entirely convincing. For one thing, Canada regularly uses the inaction of China and the United States as an excuse to do less about climate change. That position doesn’t seem very credible if we are simultaneously supplying them with large quantities of fossil fuel.

Dealing with climate change requires transitioning the world away from fossil fuel dependence. Continued fossil fuel production is very costly, and delays those efforts. People are going to continue to make excessive use of coal, oil, and gas for as long as they are cheap and their use is unrestricted. At this stage in human history, it makes an enormous amount of sense to simply leave these fuels in the ground. In so doing, we sacrifice the short-term economic value that selling the fuels could provide. At the same time, we gain the opportunity to re-orient our economy and energy system in a way that is compatible with the coming post-carbon world.

Critically, leaving the fuels underground also lessens the harm we are imposing on other people around the world and on future generations. Because of the serious impacts of climate change, fossil fuel production is a fair bit like stealing copper wiring from the houses of other people. It seems profitable to the people doing the stealing, since they didn’t pay to have the wires installed in the first place and they won’t pay to have them replaced. From the perspective of society as a whole, however, copper wire thieves are causing harm while producing no net benefit. Rather than exploiting the economic opportunities that exist because the world hasn’t yet become serious about climate change mitigation, Canada should be investing its efforts and resources into making an effective and efficient transition to a zero-carbon economy with no fossil fuel exports. Firms like Suncor and Syncrude are much like those copper wire thieves. They are profiting handsomely today, but only doing so by imposing frightening costs on all members of future generations. Unfortunately, today’s oil companies are rich and politically influential, whereas future generations are defenceless and silent.

The targets that really matter are global: how much the planet will warm; how much sea ice will melt; how affected global agriculture will be; and how many more people will suffer from extreme weather or shortages of food and water. Canada’s current approach is short-sighted and selfish, to a degree that isn’t entirely obvious if you only look at our domestic pollution reduction targets and our (inadequate) efforts to reach them.

Canada is choosing a future for the world that is characterized by extreme climate instability, with all the human suffering that goes along with that. If we want to choose a different future, we need to accept that the era of fossil fuels is coming to an end, and it is time for us to make a devoted effort to rapidly phasing them out of our energy system.