Cap and dividend

Spider on concrete wall

One intriguing form of carbon pricing that is being bandied about is the ‘tax and dividend’ approach. The idea is this: everybody pays a carbon tax on fuels and emitting activities. All the money is collected in a fund and redistributed evenly back to all taxpayers. As such, anyone who buys emits more than the mean quantity of carbon becomes a net payer and everyone who emits less actually gets back more than they pay. As mean emissions fall, so does the equivalence level of emissions – the point where you get back exactly what you paid.

For example, let’s imagine a tax that starts at a relatively modest $20 per tonne of carbon dioxide equivalent (CO2e). The mean Canadian produces about 23 tonnes of carbon a year, meaning they would pay $460 in carbon tax that year. That being said, the mean Canadian would also get back $460 as a dividend. A Canadian who is really trying (not flying, not eating meat, living in an efficient home, not driving, etc) might have much more modest emissions: say, 6 tonnes a year. They would pay $120 in carbon taxes and get back $460 – a nice ‘thank you’ for living a life that does less harm to others. Of course, someone who flies trans-Atlantically several times a year might end up paying significantly more in tax than they get back as a dividend.

Now say it is ten years on. The price of carbon has risen to $50 per tonne of CO2e and mean emissions per person have fallen by 25%. The break-even point is now 17.25 tonnes of carbon. As a result, someone who has not changed their lifestyle is now paying (23 – 17.25) * $50 or $287.50 a year in carbon taxes. If the 6 tonne person also managed a 25% cut, they would be earning (17.25 – 4.5) * $50 or $637.50 more in dividends than they paid in taxes.

These numbers are purely illustrative. It is possible that the per-tonne carbon taxes could be lower, and also possible that they would need to be much higher. In whatever case, the structure of the approach should be clear.

The approach has much to recommend it. For one, it is likely to enjoy the support of those already living relatively green lifestyles. For another, it has similar incentive effects to other carbon pricing schemes. It would encourage people to minimize or forego things with a heavy carbon burden, as well as make them more willing to invest in capital and technology that will reduce their carbon footprint.

Oil versus labour

Thought of the day:

One barrel of oil contains about 5.8 million British thermal units (BTUs) of energy (1700 kilowatt-hours). That is roughly equivalent to the energy output of an adult human working 12.5 years worth of 40 hour weeks.

At present, the world uses about 31 billion barrels of oil a year. That is equivalent to the global population (6.7 billion people) working for 58 years.

While the theoretical capacity of renewables is even higher, it is a fair bet that they will take a lot more effort to harness. There aren’t many places where solar panels will spurt out of holes you make in the ground.

Oil’s next century

Spiky blue flowers

With oil prices at levels rivaling those during the crises of the 1970s, virtually everyone is clamouring for predictions about medium and long-term prices. Those concerned about climate change are also very actively wondering what effect higher hydrocarbon prices will have.

In order to know what the future of oil looks like, answers are required to a number of questions:

  1. How will the supply of oil change during the decades ahead? How many new reserves will be found, where, and with what price of extraction? How much can Saudi Arabia and Russia expand production? When will their output peak?
  2. How will the demand for oil change? How much and how quickly will high prices depress demand in developed states? What about fast growing developing states like India and China?
  3. At what rate, and what cost, will oil alternatives emerge. Will anyone work out how to produce cellulosic ethanol? Will the development of oil sands and/or oil shale continue apace?
  4. What geopolitical consequences will prices have? If prices are very high, will that prove destabilizing within or between states?
  5. Will the emerging alternatives to oil be carbon intensive (oil sands, corn ethanol) or relatively green (cellulosic ethanol, biomass to liquids)?

Of course, nobody knows the answer to any of this with certainty. There are ideological optimists who assert that humanity will respond to incentives, innovate, and prosper. There are those who allege that oil production is bound to crash, and that civilization as we know it is likely to crash as well.

Mindful of the dangers of prediction, I will hold off on expressing an opinion of my own right now. The magnitude of the questions is far too great to permit solution by one limited mind. What contemplating the variables does allow is an appreciation for the vastness and importance of the issue. Virtually any combination of answers to the questions above will bring new complications to world history.

Almost nothing is sustainable

Tree branches overhanging water

Sustainable development’ is an expression that you hear a great deal. It was famously defined by the Brundtland Commission as meeting the needs of the current generation without sacrificing the ability of future generations to meet their own needs. This seems sensible enough, but it raises two major questions: how do we identify the ‘needs’ of this generation, and how do we anticipate the capabilities of future ones.

Most talk of sustainability these days is nonsense. The simple reason for that is that very little of what we do is sustainable. Nothing dependent upon fossil fuels is sustainable, so there go most of our forms of transportation, a lot of our electrical generation, and most of global agriculture. Nothing that destroys the long-term productivity of agricultural land is sustainable, but much of our agriculture does just that. Continually requiring more fertilizers to cope with loss of soil nutrients is not sustainable. Virtually no fisheries anywhere in the world are used in a sustainable way (none when you consider the impact climate change will have on them). Finally, nothing that contributes to accelerating climate change is sustainable; that doesn’t really create sharp categories between what is or is not sustainable. Rather, it gives an idea about the total intensity of all the greenhouse gas emitting things we undertake must be.

What does this generation need?

The matter of defining the ‘needs’ of the current generation is enormous and partially irresolvable. At one absurd extreme is the flawed idea that people have the right to continue living as they always have. Asserting this is akin to a French aristocrat facing the guillotine, arguing that his life of privilege so far justifies more privilege in the future. We cannot have a right to something that demands unacceptable sacrifices from others – particularly when that right hasn’t been earned in any meaningful way. At the other extreme is the assertion that nobody has any right to material things and that people starving around the world and dying from treatable, preventable diseases have no credible moral claim to additional resources. Somewhere between the two lies the truth. The important thing isn’t to work out precisely where, but to generate a universal understanding that constraint is going to need to be a part of human life, if we are to survive in the long term.

Arguably, ‘needs’ are entirely the wrong way to think about things. Instead of starting with who we are and what we want, perhaps we should start with what there is and what impact that has on how we can live, where we can be, and how many of us there can be at any one time.

How capable will future generations be?

The matter of the capabilities of those in the future is similarly challenging. Our expectations about the future produce a ‘treadmill’ effect, where we expect added financial wealth and improved technology to make future generations better off despite how more resources have been depleted, more climatic damage done, and more pollutants released into the environment. If people in the future are super-resourceful technological wizards, the degree of restraint we need to observe in order to accommodate them is small. No wonder this belief is so popular among those seeking to defend the status quo.

Of course, it is possible that future generations will have less capability to satisfy their needs than we do. Most obviously, this could be because of the depletion of fossil fuels (a vast and easily accessed form of energy) or because of the impacts of climate change. To some extent, we need to take such risks into consideration when we are deciding what duties we owe to future generations. Any such consideration will require passing along more resilience, in the form of more resources and a healthier planet.

What might sustainability look like?

Quite possibly, the only people in the world living sustainably are those in small agricultural communities with little or no connection to the outside world. Since they do not import energy, they must be sustainable users of it. Even such communities, however, need not necessarily be sustainable. Unless they have a low enough population density to keep their food production from slowly degrading the land, they too are living on borrowed time.

Producing a sustainable global system probably requires all or most of the following:

  1. The stabilization of global population, perhaps at a level significantly below that of today.
  2. The exclusive use of renewable sources of energy, derived using equipment produced in sustainable ways.
  3. Agriculture without fossil fuels, and with soil and crop management sufficient to make it repeatable indefinitely.
  4. Sustainable transport of old (sailing ships) and new (solar-electric ground vehicles) kinds.
  5. The preservation of ecosystems that provide critical services: for instance, tropical forests that regulate climate.
  6. An end to anthropogenic climate change.

While it is technically possible that we could manage to build problems and solve them through clever technology indefinitely, it does seem as though doing so is risky and probably unethical. It may be more prudent to begin the transition towards a world unendingly capable of providing what we desire from it.

Selling ‘clean coal’

Milan Ilnyckyj in The Manx pub

In the spirit of the laughable ads from the Competitive Enterprise Institute, there is a new offering from the coal industry. The strategy seems to be shifting from “there is no reason to believe in climate change” to “anything that would harm the fossil fuel industry would cause unacceptable harm to consumers.”

‘Clean coal’ will always be a non-sensical statement, given the environmental damage done by coal mining, the toxic emissions, and greenhouse gasses. Even with carbon sequestration, coal will be a dirty way of generating power. Furthermore, it seems unlikely that coal in combination with carbon capture and storage will be a source of cheap energy. As the cancellation of FutureGen due to cost overruns suggests, clean coal isn’t cheap.

Electoral statistics

This website presents the 2008 American Presidential election, as represented by an expert in baseball statistics. At this time, the message seems to be that Clinton has a better chance of beating McCain than Obama, but I wouldn’t read too much into that. This election has already repeatedly confounded early polls and conventional wisdom. A lot will happen before November.

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

Sunglasses

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.

Climate ethics and uncertainty

Climate Ethics has a thoughtful post up about climate change, scientific uncertainty, and ethics. While not particularly novel, the arguments are well and concisely expressed. Key among them is the basic ethical point Henry Shue has made about revolvers and the heads of others: even if you only have one bullet chambered, pulling the trigger is still an immoral act. It is the possibility of severe harm, rather than the probability of the harmful outcome, that is most ethically relevant.

The uncertainties of climate change are primarily about how bad it will get how quickly, as well as how quickly we need to act to stop it. There is also very strong consensus that the climate can change in ways that would be disastrous for humanity and that present activities materially contribute to the risk of that taking place.

On ethical grounds, it does not seem as though there are any remaining arguments for total inaction in the face of climate change. The question now is the degree to which our moral obligations to future generations compel us to make massive and rapid changes in our lives.