Category: Politics

All posts on what Bismarck called “the art of the possible”

Treating carbon as a cost in government projections

A document from the British government defining their ‘shadow cost’ of carbon (PDF) also discusses an approach to government planning that has a lot of potential. Essentially, the document estimates what the maximum amount a rational actor concerned about both the present and the future should pay to reduce carbon emissions. It then calls for that price to be incorporated into government planning and assessments, just as any other cost would be. For instance, two different proposals for the design of a hospital could be compared in a way that treats the social cost of carbon just like any other expense. The result is a cost-benefit analysis that operates as though a socially optimal carbon tax exists, even when no such instrument exists in the wider economy.

In situations where carbon costs have already been partly or fully taken into account – for instance, if a government building is using electricity on which an upstream carbon tax has already been applied – then only the remaining portion of the shadow price of carbon would be applied.

The approach is exciting because it could spur carbon-rational government action, without the need to wait for an economy-wide price of carbon to emerge. That means earlier results. It also means opportunities to secure economies of scale. The government is a major purchaser of products and services, and a push to incorporate the social cost of carbon into government procurement would affect which products are available to the economy as a whole, and at what price. Another advantage is that each layer of government has the power to impose the requirement; provinces and municipalities that wish to move forward could do so without the need for cooperation from the layers of government above them.

Fuel price floors and funds for the future

While prices send important signals about availability and marginal cost, volatility in fuel prices can be quite problematic. It impedes effective planning, causes abrupt swings in capital and wealth allocation, and sometimes leaves people hoping for future low prices, rather than investing in efficiency now. At the same time, there is an issue of inter-generational equity when it comes to fossil fuels. They are marvellous things: portable, packed with energy, and thus far relatively cheap and easy to extract. Recent generations have benefitted handsomely for their use (though future generations may suffer even more from the consequences of the emissions). A case can be made that some fossil fuel use has served to benefit future generations, because it has helped create the conditions for their material prosperity. Other uses are unambiguously selfish. The difference is akin to that between borrowing to invest and borrowing to finance consumption.

There does seem to be a fairly straightforward mechanism through which both of these problems can be made more manageable. The government could put a floor on fuel prices: pocketing any difference between the market price and the sale price as revenues. Those could then be invested in a fund that will pay out annual dividends to future generations. This would be akin to the oil-funded pension system that has been established in Norway. In this way, members of future generations will at least profit in some proportion of this generation’s fossil fuel wealth. It would also simplify planning for all those who use fuels, since they would be certain of paying at least a pre-set amount at any point in the future.

This isn’t an approach that the world as a whole could take, or even any major players in it. If the government set a floor price of $2 for a litre of gasoline, gas suppliers could just expand their prices to that point and eliminate any payments to government. Since Canada isn’t large enough to substantially affect the international price of oil, however, there may be scope to tax the difference between the floor price and the international price for an equivalent amount of crude oil / coal / etc.

No doubt, this system would cause some economic and equity-related problems I haven’t anticipated. That being said, it is perhaps an example of the general kind of approach that governments should be considering.

Garnaut on managing risk

One of the better aspects of the Australian Garnaut Review of the economics of climate change is the straightforward language in which it is written. That particularly applies to the introductory and concluding chapters (PDF), the latter of which is entitled “Fateful choices.” Perhaps the finest passages in the whole work concern how we ought to respond to the uncertainty that remains in projecting future climatic change as a function of human emissions:

[T]he Review accepts the views of mainstream science ‘on a balance of probabilities’. That formulation allows the possibility that the views on climate change of the IPCC and the learned academies in all of the main countries of scientific achievement are wrong.

There is a chance that they are wrong. Just a chance. But to heed instead the views of the minority of genuine sceptics in the relevant scientific communities would be to hide from reality. It would be imprudent beyond the normal limits of human irrationality…

The mitigation process can be cut short, with due notice to those who have committed their capital to a new economy of low emissions, if at any time the international community comes to the view that new scientific knowledge establishes that the concerns of 2008 were erroneous to the extent that mitigation judgments based on them have become obsolete.

In this case, Australia would have paid 2 per cent of GNP as insurance against what would otherwise have been a high risk of immense damage. It would be a high price, but one that was reasonable on the basis of the evidence available at the time when decisions had to be made.

The consequences of inaction now are not similarly reversible. The arithmetic of Chapter 3 (PDF) about the new patterns of global growth takes away the time we may once have thought we had for experiment, talk, and leisurely decision making. It tells us that business as usual is taking us quickly towards what the science tells us are high risks of highly disruptive climate change…

On a balance of probabilities, the failure of our generation would lead to
consequences that would haunt humanity until the end of time.

The report concludes that an international agreement is vital. It needs to include a global goal for the concentration of carbon dioxide at the moment of stabilization (550 parts per million, perhaps, for an initial agreement – refined to 450 ppm in a subsequent iteration). The agreement needs to incorporate equity concerns, especially through the principle of contraction and convergence, and national commitments must add up to the global target.

It must be very much hoped that the UNFCCC Conference of Parties in Copenhagen next year will at least begin the process towards those outcomes. Barack Obama’s apparent seriousness about making climate change a priority is cause for optimism. If the US, China, India, Japan, and Europe can reach an accord, it seems likely that enough others will be drawn in to make the thing really work.

Head injuries and homelessness

A study recently published in the Canadian Medical Association Journal examined the correlation between traumatic head injuries and homelessness. 601 men and 303 women were surveyed, among whom 53% had experienced such injuries: 70% of those prior to their becoming homeless. Their overall rate for such injuries is five times higher than that of the population as a whole.

While the study does not seek to establish a causal link, the data is certainly suggestive. While it might be relatively rare for a head injury to be the exclusive cause of becoming homeless, it is certainly plausible that those who already lacked a social safety net could find themselves homeless as the eventual consequence of one.

It’s just another acute demonstration of how acutely unfair life really is. Providing long-term aid to those who require it is an onerous burden, and one that is perhaps borne poorly by impersonal governmental structures. That being said, the study does provide support for the ethical claim that society as a whole owes moral duties to the homeless, who may be in their present circumstance far more as the consequence of ill-fortune than as a consequence of any choices that we might feel make them undeserving of substantial assistance.

I learned about the study from The McGill Daily – a campus newspaper I picked up when I was visiting my brother in Montreal. Their story is available here.

Canada’s new 90% target for non-GHG emitting electricity

Note: In light of a perceptive comment, I have made some revisions to the post below. In all cases, the old text is struck out.

In yesterday’s Speech from the Throne, the government pledged to increase the share of Canada’s electricity generated from non-emitting sources to 90% by 2020. Looking into the math behind this objective reveals just how ambitious it is. The following numbers are all somewhat approximate, but their precision is not important for revealing the underlying dynamic.

In order to have 90% non-emitting power, you need to have ten nine times more capacity in non-emitting sources like hydroelectricity, nuclear, and renewables than you have in emitting capacity like coal and natural gas plants. Right now, Canada has somewhere around 110 gigawatts (GW) of total installed electrical capacity: 70% of which is non-emitting. Using the following basic equation, we can work out how much non-emitting energy we need in order to reach the 90% objective, based on different scenarios for what happens to the emitting capacity:

0.90 = (gigawatts non-emitting) / (gigawatts non-emitting + gigawatts emitting)

In every case, you have ten nine times more non-emitting (clean) capacity than emitting (dirty) capacity. Therefore, getting to the 90% target while retaining all 33 GW of Canada’s dirty capacity means bumping our clean capacity from 77 GW to 330 297 GW – an increase of 253 220 GW.

To put that in perspective, 253 220 gigawatts is 230% of Canada’s current total electrical generating capacity. 253 220 gigawatts is more than thirty-seven thirty-two times the capacity of the Grand Coulee Dam and is equivalent to more than fourty thirty-five times the output of the Bruce Nuclear Generating Station. 253 220 gigawatts is more than eleven nine times the generating capacity of the Three Gorges Dam.

Things get worse if you expand Canada’s dirty electricity generating capacity. If we were foolish enough to double it, we would need 583 517 GW of new clean energy to achieve the 90% target. Cutting the dirty capacity by 50% from today’s level means we would need to build another 88 71.5 GW of clean capacity. If we cut the dirty capacity by 75%, we would be able to reach the 90% target with no new clean capacity built.

The reasons for all this are intuitive enough. It is like a lever where the arm on one side of the fulcrum is ten nine times longer than the other. If you want to balance out the weight on the long arm (equivalent to the dirty capacity), you need to add an awful lot of weight to the short arm (equivalent to clean capacity).

Of course, all this is rather misleading when considered in the abstract. It’s not as though doubling our dirty capacity would be just fine if we also built 583 517 GW of new dams, wind farms, and nuclear stations. What is important in the end is the total quantity of Canadian emissions: an outcome only partially influenced by the balance between zero-emission and high-emission electricity capacity. The fact that the 90% figure is unaffected by replacing coal plants with superior gas plants also demonstrates how problematic it is as a metric.

The final possibility to mention here is that of carbon capture and storage (CCS). If it proves effective and economical, applying it to existing dirty facilities would be equivalent to switching them into the clean column. Realistically, CCS will probably only ever capture 80-90% of the emissions from any facility it is coupled with. Applying that imperfect technology to a coal-fired behemoth like the Nanticoke Generating Station wouldn’t shift it from the dirty column to the completely clean one, but it would represent a useful chunk of real reduction in the quantity of climate-altering greenhouse gasses Canada is emitting into the atmosphere.

[Update: 8:11pm] For those interested in the numbers on this, please have a look at this post on Tyler Hamilton’s blog and the discussion below it.

The coming auto bailout

North America’s auto manufacturers seem to be next on the list for a big government bailout. As with other bailouts of private sector firms, there are legitimate worries about the public at large bearing the cost of losses, while gains had accrued to private individuals. In the case of the auto industry, there is the further risk that a bailout will permit North American firms to continue with their existing mode of operations, which had clearly failed before the credit crunch made the situation acute.

That being said, a case can be made that a bailout is the least problematic option. It can also be pragmatically recognized that governments are likely to provide the cash, rather than allow one of more of the firms to fall into bankruptcy.

Perhaps the best way this situation can be turned somewhat positive is to mandate tougher efficiency standards for vehicles, as partial public recompense for the funds. The biggest gains can be made in improving the least fuel efficient vehicles. According to calculations posted on Gristmill, improving the fuel efficiency of dire vehicles like the Hummer H3 (15 mpg), Yukon Denali (14 mpg), and Chevy Trailblazer (13 mpg) is a more promising initial strategy than trying to push the efficiency of cars like Honda Civics (29 mpg) upward.

This strategy is likely to be politically problematic. For one thing, it impinges on the flawed notion that people have a right to drive whatever they want and can afford. For another, the production of highly inefficient, high-margin vehicles is concentrated in North America. Nonetheless, if this is to be a one-off rehabilitation, rather than a temporary reprieve from systemic problems, the North American auto industry needs to shed much of its past philosophy and approach. It is remarkable that no automobile assembled in North America meets China’s fuel-efficiency standard. Along with the structural financial problems in the industry, that is a situation that will need to change.

Sierra Club legal victory on coal in the US

In an exciting development, the Environmental Appeals Board of the U.S. Environmental Protection agency has handed down a ruling that effectively freezes construction of as many as 100 new coal-fired power plants around the U.S. The ruling requires new coal plants and expansions of existing ones to include “Best Available Control Technology,” and it seems that it will be up to the next administration to define what that means. The ruling directly impacts permits for 30 new plants in the seven states directly regulated by the EPA planning process, as well as all projects on Indian Reservations.

This will be a good opportunity for the Obama administration to demonstrate its commitment to building a low-carbon economy. That being said, it will also be a major challenge. The coal industry is large and powerful in the United States, and some regions are more than 90% dependent on coal power. Forcing them to introduce expensive (and, in some cases, largely untested) new greenhouse gas mitigation technologies will require a lot of political courage.

The full decision (PDF) is available online.

Ken Caldeira on geoengineering as contingency

In testimony before the British Parliament, Ken Caldeira has done a good job of expressing what I consider to be the appropriate perspective on geoengineering: the deliberate modification of the climate system, intended to counteract anthropogenic climate change. While it may well be possible to reduce the degree of temperature increase – or even reduce atmospheric levels of greenhouse gasses – though geoengineering, it seems nearly certain that doing so will produce harmful and unintended effects. There is also the danger that simply exploring the prospect of geoengineering will encourage us to use it as a perceived quick fix, rather than actually reducing greenhouse gas emissions.

Those things being said, there is a strong counter-argument. We know from the paloeclimatic record that there have been times in history when climate changed violently, over the span of decades. We also know that we are pushing the climate system farther and farther from the equilibrium it was at prior to the Industrial Revolution. As such, the risk of abrupt or runaway climate change is very real and potentially catastrophic. This is especially true if the climate system is actually as sensitive as climatologist James Hansen has suggested in his recent work.

For the sole purpose of having a fall-back if disaster seems imminent, it seems sensible to investigate possible geoengineering technologies, assessing them in terms of probable effectiveness, secondary consequences, and overall risks. As Caldeira explains:

“Only fools find joy in the prospect of climate engineering. It’s also foolish to think that risk of significant climate damage can be denied or wished away. Perhaps we can depend on the transcendent human capacity for self-sacrifice when faced with unprecedented, shared, long-term risk, and therefore can depend on future reductions in greenhouse gas emissions. But just in case, we’d better have a plan.”

If we find ourselves suddenly on the cusp of the disintegration of Greenland or West Antarctica, the abrupt drying and burning of the Amazon, or the failure of the Asian monsoon, we may find ourselves glad to have conducted this research in advance, even if the ultimate result of that research is the knowledge that geoengineering is actually technically impossible or unacceptably risky. Better to learn that in advance than to roll the die at a time when no room for deliberation remains.

The Wicker Man

Last night, I watched the 1973 film The Wicker Man. Basically, it is about a Christian policeman who (a) tries to prevent murder in and (b) tries to suppress paganism in a Scottish island community. It was a bit perplexing from a contemporary standpoint. Most of my friends would agree that the state has a critical role to play in deciding what children should be taught and the legitimate terms under which lives can be ended. At the same time, most of them would likely consider paganism less objectionable than Christianity, if one was forced to choose a religion.

As such, the film felt oddly disconnected from time, like a satire from a place and era you do not understand. From my current perspective, it was almost at the precise balance point between mocking the pagans and mocking the Christians. Neither had any claim to empirical validation of their belief structure.

It is enough to make one wonder about how today’s satire will be viewed in 25 years. Will people find themselves uncertain about whether The Daily Show was mocking or praising the Bush administration?

Celebrating soldiers, celebrating peace

The problematic nature of Remembrance Day has been covered twice here already, in 2006 and 2007. My question for today is this: would it be better to have two separate holidays, one of which is unambiguously pacifist and committed to recognizing the horrible character of war, and another in which the sacrifices of veterans are marked?

The first occasion would mostly be about civilians, since theirs is the primary experience of contemporary war. The second would still need to address difficult questions about why sacrifices on one side were more noble than those on the other, as well as what kind of conduct we should consider acceptable or laudable in war.