Politics – Page 177 – a sibilant intake of breath

Barack Obama on oil imports

Compared with his 2004 performance, Barack Obama’s speech at the Democratic National Convention the day before last seemed a bit lackluster. That being said, it was a more specific about the priorities of a potential Obama administration. Energy issues were touched upon a few times – the environment hardly at all – but that is probably not surprising, given that winning the election is the over-riding priority for him now, and talk of effective climate change policies is (sadly) likely to lose more votes than it wins. The speech only mentions climate change once, as one of the “threats of the 21st century” along with “terrorism and nuclear proliferation, poverty and genocide, climate change and disease.” The lack of elaboration demonstrated both the degree to which this speech was aimed at a domestic audience primarily concerned with the state of the US economy and the desire to avoid the mention of polarizing specifics when enumerating challenges – a tactic that was also used in relation to a number of domestic social issues.

One line struck me as ambiguous and potentially problematic:

[F]or the sake of our economy, our security, and the future of our planet, I will set a clear goal as president: In 10 years, we will finally end our dependence on oil from the Middle East.

If this just means shifting American imports from Middle Eastern states to those elsewhere in the world, this won’t be much of a solution for either climate change or energy security. Let’s say the US buys all of its oil from outside the Middle East. Even so, the world price of oil will largely be set by developments there: particularly expectations about output in volatile areas, as well as confidence in the ability of Saudi Arabia to moderate oil price shocks through reserve capacity. Since the price of Alaskan or Albertan oil moves along with developments in Kuwait and Iran as much as oil
anywhere else, the source of the imports isn’t hugely important when it comes to price or security of supply. If the non-Middle Eastern producers selling to the US can get a better price in Europe or Japan, the oil will follow the money.

A more ambitious and effective plan would focus on ending dependence on oil altogether, regardless of source. That can begin in areas where oil can be easily replaced at present – such as powering urban vehicles – and can progressively move into areas where fewer alternatives now exist. The pledge in the speech to devote $150 billion to developing alternative energy sources hints at an appreciation of the importance of a renewable energy economy. Achieving that requires altering the mechanisms through which energy is generated, transmitted, and used – not just changing the flags on incoming supertankers.

Export industries, shipping, and the price of oil

The high price of oil and uncertainty about future supplies may have broad macroeconomic impact in the near future. One major area where that could prove true is in terms of where in the world manufacturing takes place. While shipping is generally a small fraction of total costs, the profit margins of some producers – especially in Asia – are small enough that further increases in shipping prices may eliminate their competitive advantage over producers closer to rich markets, such as those in Central America and Eastern Europe:

The cost of shipping a standard 40-foot container from Shanghai to America’s east coast, for example, has jumped from $3,000 in 2000 to about $8,000 today. The extra cost of transporting goods halfway around the world, Messrs Rubin and Tal wrote, is wiping out the often slim margins of Chinese exporters. What is more, if oil and shipping prices stay high, many Western companies that now outsource their manufacturing to China might decide that it makes more sense to shift production closer to their customers at home.

Of course, much will depend on near-term developments in energy prices. Continued economic malaise in Europe and North America could help to keep oil prices moderated (though it is hardly good for exporters, either). A return to a world where economic growth is strong in both developing and developed states, at the same time as hydrocarbon supplies are constrained, may well produce a partial reversal of the globalization trend. The same market forces that made low wages and economies of scale the dominant consideration for placing production may shift towards favouring reduction of energy and transport expenses instead.

Listeria and the food system

The ongoing listeriosis outbreak in Canada is evidence of how broken out primary food system is, particularly insofar as meat is concerned. Producing billions of clones in packed conditions is dangerous enough, particularly if you simultaneously marinate them in growth hormones and antibiotics. Marrying that with a food system where every step of the production chain is concealed from consumers increases the risk.

What is most astonishing to me is the result of a poll conducted by The Globe and Mail on their website. Asked: “Has the listeriosis outbreak damaged your opinion of Maple Leaf products?” 38% of respondents said “no.” Perhaps this demonstrates the degree to which we are not aware of the shortfalls of our food system and food regulation, to the point where we accept this kind of occurrence as an inevitable consequence of food production.

More people should read Michael Pollan’s The Omnivore’s Dilemma. A safer, healthier food system is entirely possible. It will not, however, emerge while people are still happy to accept a dozen Canadian deaths (and counting) as part of the cost of having “pre-packaged meat products” available for purchase.

Stories of this kind sometimes makes me wonder whether personal vegetarianism is actually a selfish choice. Opting out of the system can be seen as an inferior alternative to agitating for change. After all, it was basically consumer demand that produced the emergence of organic and local food options. It is only when a mass market demand exists for healthy, safe, natural, and sustainable meat and seafood that systemic change could become possible.

More on food, health, and the environment:

Emily also wrote a post on this previously.

Quick poll on future communications

Between now and the demise of the human race (when the universe ends, if not before), will there ever be a time when there is no system with the following characteristics:

Capability to transmit data to most parts of the world with significant human populations.
Affordability for almost anyone with a moderate income in a moderately rich state.
Accessible by most members of relatively free societies.

Basically, it should allow someone in a major populated area of North America to communicate in real time with someone in Asia, as well as transmit data.

Personally, I think something akin to the internet will exist from now on. Even in a future with harshly constrained resources or radically shifted geopolitics, it seems like the kind of thing that is too valuable to give up, especially given the relatively modest costs associated with maintaining it.

Moral relevance of the ‘dash to gas’

Between 1990 and the present, a significant reduction in European greenhouse gas (GHG) emissions took place because coal based electricity generation was replaced by natural gas plants. Here’s the big question: should that switch be considered an act of climatic virtue on the part of the European states, and thus be taken into account when identifying their fair share of remaining necessary emissions reductions, or should it be ignored? This is in some ways akin to the matter of additionality, as mentioned here before

There are naturally arguments on both sides. It seems fair to say that at least some of the motivation for the switch came from concern about climate change and a desire to meet Kyoto Protocol targets for emission reductions. At the same time, it is very difficult to determine how much was driven by other considerations: from the state of gas production in the North Sea to concern about non-GHG pollutants to long-term estimates of the relative price of coal and gas.

Another issue to consider is long-term energy use. If the European states had chosen to stick with coal, but they had switched to natural gas at some point in the relatively near future, the impact would largely have been the same, in terms of climate. The same additionality problem that applies in the present exists for the recent past. Using the gas in the distant future would have less of an effect (assuming successful climate change mitigation does occur) since the timing of emissions is important for climate stabilization pathways.

Pragmatically, giving some credit to the Europeans for the transition may be a necessary step in negotiations. That being said, the conundrum is enough to make one wonder whether a metric ignoring ‘additionality’ would be more manageable in practice. Ignoring the question of whether emissions reductions were motivated by concerns over climate change or not, and instead focusing only on the magnitude of reductions, would probably be a more efficient form of calculation. That being said, it would arguably be less equitable. Also, it might be incompatible with the notion that different states or sectors should spend ‘comparable’ amounts on climate change mitigation.

Thoughts? Does it make the most sense to give the European states full, partial, or no credit? Secondly, is ‘additionality’ sufficiently ethically important to justify the headaches it produces?

Debating the future of energy

The Economist is holding a debate in the style of the Oxford Union debating society (which I never joined while there due to the excessive cost). The topic is: “We can solve our energy problems with existing technologies today, without the need for breakthrough innovations.” This certainly seems to be the emerging wisdom among those who have looked seriously and comprehensively at the problems of energy and climate change. That’s not to say that technological improvements in things like batteries and photovoltaic cells would be useful, it is simply to assert that ‘breakthrough’ new technologies are not required, though they may well help.

The debate should be an interesting one to observe. The opening statements are from Joseph Romm – whose book I discussed earlier – and Peter Meisen.

Climate change and the limits of Canadian sovereignty

Thesis: Canada is free to enact more stringent climate policies than the United States, but not free to enact less stringent ones.

Argument:

As long as little is being done in the United States, American corporations are not concerned about being made uncompetitive with foreign firms because of climate change policies.
If the United States did adopt a serious climate policy (a national cap-and-trade plan with auctioning, perhaps, or a carbon tax), those firms would suddenly be very concerned about losing business to firms not thus restrained. This is especially true in sectors with high emissions per dollar’s worth of output. This includes heavy industry, the petroleum sector, and so forth.
These firms will lobby the American government to pressure its trading partners to adopt comparable policies.
These firms will find many supporters in Congress who think similarly. Politicians will also be fearful of domestic job losses and the relocation of production to foreign jurisdictions with less stringent rules.
In the case of Canada, legal vehicles through which this might occur include the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). Potentially, other agreements pertaining to transboundary pollution might play a role.
If taking a legal route fails or is not desired, it is always possible for the US to put enormous trade pressure on Canada. 85% of Canadian exports go to the United States and even illegal trade blocking moves by the US can be so painful as to force a surrender (as with softwood lumber).
No Canadian government will be willing to sacrifice access to the American market, even if avoiding it requires a considerable loss of face.

As such, there seems to be a decent change that if a new administration in the United States adopts a relatively strong national climate change mitigation policy, some version of the events above will lead to the introduction of a comparable regime in Canada. Of course, the ability of even an Obama presidency with Gore as a climate czar to get emission regulations through Congress cannot be taken for granted, largely on account of the short-term interests of the selfsame corporations mentioned above.

Comments? Counter-arguments?

International emissions trading

In many quarters, there is considerable resistance to the idea of international carbon trading. Some people characterize it as shipping money abroad for no reason, or the buying of ‘Hot Air.’ While there have certainly been problems with the implementation of carbon trading so far, the principle is intellectually sound. It could serve as a strong mechanism for reducing the total costs of climate change mitigation.

To understand why, consider that the major purpose of international carbon trading is to make tonnes of greenhouse gas emission reductions into a commodity. As such, their economic characteristics would be akin to those of other internationally traded commodities. Consider, for instance, an island state that requires copper for various purposes. It is technically possible to acquire copper on their territory, but the costs of doing so are enormous. Their copper reserves are dispersed and of poor quality, making the cost per tonne of finished copper excessive. Provided that the cost of buying copper internationally is lower than that of producing it domestically, the sensible thing to do is to buy the stuff on the world market. If the situation changes somehow (international prices rise, or foreign prices fall), the economically optimal choice may change as well. In the case of copper, this is immediately clear to virtually everyone. States that can produce copper more cheaply relative to other things sell copper internationally while those in the converse situation buy it. Both states with low-cost and those with high-cost copper benefit from this arrangement.

When it comes to carbon emissions, there are still comparative advantages that differ between states. This creates the possibility of positive sum trade: an exchange where both sides end up happier than they would be without trading. A relatively wealthy state that has already eliminated all the greenhouse gas emissions that can be easily forgone can pay a developing state to cut their own emissions. The buying state spends less than they would for producing the reduction domestically, and the receiving state gets the economic incentive to mitigate.

To reach this point, a few critical things are needed. First, for emission reductions to be tradable as a commodity, they must be measurable and verifiable. They differ from other commodities in that it is much more challenging to measure the tonne of CO2 a factory does not produce than the tonne of carbon that it does. That said, the difficulty is surmountable. We know how much greenhouse gas is produced by using different fuels in different ways. We also know how much is produced through different kinds of industrial production, such as cement manufacture. All that is required is the infrastructure and personnel to quantify and ensure reductions.

A trickier problem is that of additionality. If Country X pays Country Y $Z to build a natural gas power plant that will produce ten million fewer tonnes of CO2 than a coal power plant, it can only legitimately bank those tonnes if it was only the payment that motivated the choice. If Country Y actually chose the gas plant because coal plants pollute terribly and coal prices have been rising, Country X did not produce as many ‘additional’ reductions as intended. As with simple measurement, additionality is a practical problem that can be addressed through scientific and economic tools.

Developing and deploying those kinds of tools, so as to further the emergence of a robust and effective international carbon market, should be an excellent way to cut total human greenhouse gas emissions in a relatively rapid and low-cost way.

The media and climate change ‘dissent’

This Ron Rosenbaum article in Slate argues that it is inappropriate for journalists to portray “the anthropogenic theory of global warming” as an undisputed fact. It cites the importance of considering dissenting views, and asserts that the history of science shows that a consensus held by most of the scientific community can be wrong. While there is some value to both arguments, I think they are weaker than the counter-arguments, in this case.

Starting with dissent, we need to appreciate the character of the consensus on climate change and the character of opposition to it. As discussed here before, there are areas of greater and lesser certainty, when it comes to climate change. What is absolutely certain is that we are increasing the concentration of greenhouse gasses in the atmosphere and that, in turn, causes more energy from the sun to be absorbed. The precise consequences of that overall warming are not known with certainty, but we do know enough to have very good reason to be worried. Arguably, those dissenting from this view are a combination of the self-interested (industrial groups reliant upon heavy emissions, conservative ideologues opposed to government regulation) and conspiracy theorists. The doubts of legitimate scientists establish the areas of uncertainty within climatic science, including questions about the strength of feedback mechanisms, the effects of planetary warming on regional weather, and so forth.

On the matter of scientific consensus, the article argues that a “lone dissenting voice of that crazy guy in the Swiss patent office” overthrew the Newtonian conception of gravity. This is a relatively absurd claim. Firstly, relativistic physics essentially includes Newtonian physics as a special case, in situations where velocities are not close to the speed of light and massive objects are not close at hand. Secondly, the process through which Relativity became an established scientific theory was largely focused on the collection of empirical evidence (demonstrations of gravitational lensing, for instance) and the refinement of the theory within the scientific community. Newtonian physics, for its part, is still completely adequate for planning space voyages within our solar system – the basic relationships posited within it are close to correct in most cases. If we have done so well with our climate models, we have engineered them effectively indeed.

Relations between science and the media will always be challenging. The media generally doesn’t have the time, expertise, or interest to deal with nuance. It also lacks an audience interested in cautious and non-confrontational assessments of fact. In short, the kind of story that is demanded of the media is one in which the scientific process and the character of scientific conclusions cannot always be presented effectively. Moderating some of the incentives to distort that are inherent to the contemporary practice of journalism is thus an undertaking with some merit. It is not as though we should forbid any mention of opposition to our general understanding of climate change; rather, journalists should strive to make clear that the evidence on one side is overwhelmingly stronger than that on the other. A defendant who was seen to stab someone in the middle of the field at the Super Bowl, viewed by millions of people, surely has the right to make a defence at his trial. He does not have the right to media coverage that gives equal weight to claims that he had nothing to do with the death.

Temperature and extreme weather

A new article in Science provides observational evidence of the link between rising temperatures and extreme weather events:

These observations reveal a distinct link between rainfall extremes and temperature, with heavy rain events increasing during warm periods and decreasing during cold periods. Furthermore, the observed amplification of rainfall extremes is found to be larger than predicted by models, implying that projections of future changes in rainfall extremes due to anthropogenic global warming may be underestimated.

Of all the impacts of climate change, extreme weather seems especially likely to help spur mitigation action, especially when that weather occurs in rich states. Reasons for that include the visibility and newsworthiness of floods, droughts, hurricanes, and so forth. Another major factor is the importance of the insurance industry, especially insofar as their professional estimations of risk affect the cost and feasibility of different projects. That is, so long as policy-makers do not establish incentives for risky behaviour.