Wednesday, November 21, 2007

The Wrong Trousers, The Right Trousers, Or No Trousers At All

The much talked-of paper by Gwin Pryns and Steve Rayner, The Wrong Trousers: Radically Rethinking Climate Policy , in which they urge dumping the Kyoto protocol, has appeared in its full form just in time for the Bali Summit. Discussion of the alternative strategy presented in an earlier version of their paper, the "silver buckshot approach" (or the "do nothing and pray for a market miracle approach") has been offered here and here, among other places.

These are a few of my own comments on the final product.

Prins and Rayner argue that the Kyoto Clean Development Mechanism (CDM), which is a GHG emissions trading program designed to encourage sustainable development in countries such as India and China, should be dismantled and replaced with a series of "grass roots"--national or sub-national--cap and trade schemes, which may or may not merge together in the fullness of time to become one big global emissions market. The problems they identify with the CDM are real and have been pointed out before, including by me, here. However, a couple of things.

Firstly, whether the issues with the CDM require that it be scrapped, or whether a "mend it, don't end it" response is more in line with the magnitude of its defects, is a point open to debate. Since most of the abuses involve nation states taking advantage of the "rules of the game", why not adjust these rules to tighten up some of the loop-holes rather than throw the whole thing out? (especially since, in practical terms, carbon trading through the CDM has become a multi-billion dollar industry and ain't going anywhere anyhow)

Secondly, one of the problems with the CDM--finding legitimate projects to invest in--is writ larger the smaller the scale. Looking close to home, how many farmers interested in adopting no-till methods can you find in Canada, for example? Enough that every emitter can meet their targets? Probably not, which is why many Canadian companies have lobbied our federal government to allow investments overseas as a means of upholding their commitments under any nationally adopted carbon regulation system--to allow investment in the CDM or something very much like it, in other words. It is entirely unclear whether replacing the international CDM with a bunch of tinier, national, state or provincial CDMs, will lead to a better result and, should the results prove unsatisfactory on the regional level, is it not a good thing to have the existing international carbon market already sitting there for these various smaller sub-markets to integrate into?

Thirdly, Prins and Rayner argue for a greater emphasis on adaption over mitigation measures. It sounds like they want the U.S. to commit about $80 billion a year on things like lofting giant mirrors into space or inhibiting coastal development. Beyond the sheer unlikelihood of some of the projects--if you don't want people living close to the sea-shore, where will you send the millions of them that are already there? for example--the question arises: how are you going to pay for that? The odds of any government being able to do the kind of things Prins and Rayner seem to like (the space mirrors) without doing the kind of things they don't like (instituting a carbon tax) seem pretty minimal.

Finally, a new paper by Richard Eckaus, economics professor emeritus at MIT, seems to suggest that Prins and Rayners emphasis on technology and R&D (over regulation) is wrong headed:

"We found that, in spite of increasing energy prices, technological change has not been responsible for much reduction in energy use, and that it may have had the reverse effect," said Eckaus...

The good professor has been kind enough to send me a .pdf of "The implications of the historical decline in US energy intensityfor long-run CO2 emission projections". However, it involves some very complex economic modelling and, given my one quick reading, I would be lying if I said I could follow his argument at any length. However, in Mr. Eckaus opinion:

"Putting your money on technological change is risky," Eckaus said. "If you want to have less energy use from fossil fuels and less carbon emissions, society is going to have to pay for it."

Just for kicks, here is Mr. Eickhaus Unemployment Effects of Climate Policy, wherein he suggests that a policy of wage subsidies can offset many of the negative economic effects of limiting greenhouse gas emissions.

And, for reading this far, you get a picture of someone who is definitely not wearing trousers.


Anonymous said...

Since India & China have zero interest in reducing their huge rates of current and rapidly increasing coal use, Kyoto 2 and all the Bali talks are 100% waste of time and just produce excessive CO2 to fly all the publicly funded teat suckers for a 10 day junket in the Tropics.

Save the planet, abort Kyoto 2 now.

Anonymous said...

"Putting your money on technological change is risky," Eckaus said. "If you want to have less energy use from fossil fuels and less carbon emissions, society is going to have to pay for it."

Ummm, yeah. But isn't the whole argument that if we don't do anything we could pay even more in the future?

I could be taking his statement out of context but if we're going to have to reduce CO2 emissions then either fossil fuels have to become much more carbon efficient (i.e. sequestering carbon dioxide underground) or alternative carbon-limited technologies will need to become more competitive. Either way (and probably both will be needed), we're looking at technical solutions that would likely involve some sort of pricing mechanism for CO2 whether it be through a tax mechanism or some sort of emissions market.

"Since India & China have zero interest in reducing their huge rates ..."

India is a bit player in this whole debate (~6% of global emissions). Any solution will essentially involve a deal between the US (~25%) and China (~25% and increasing). The argument against a multi-national Kyoto-style approach should be do we really need to involve so many countries in negotiations that, given Europe has acted unilaterally, would amount to a grandiose bilateral agreement?

bigcitylib said...

Anon 11:03,

I think Eckaus is suggesting a combined carbon tax/technological approach, whereas Prins and Rayner are simply leaning on technology and investments in technology (anbd adaption).

Anonymous said...

At the turn of the century, the greatest 'eco-disaster' or pollution problem that large cities were concerned about was the ever-growing amount of horse crap in the city streets.

Somehow, it the problem got taken care of without creating some ridiculous 'global horseshit trading scheme'. Mind you, we should enact a horseshit reduction program here in Canada. It would essentially involve putting duct tape over the mouths of Dion and Layton.

Anonymous said...

"Somehow, it the problem got taken care of without creating some ridiculous 'global horseshit trading scheme'."

Yeah, they made it illegal. Are you proposing banning fossil fuels? Brilliant idea.

As for emissions-trading schemes, they're the invention of right-leaning policy makers. You know, the people who believe that markets are more efficient than governments. Do you really want Dion and Layton (or Harper for that matter) deciding how to reduce Canada's emissions with our tax dollars? I don't.

The point of pricing carbon would be to let the private sector "see" the cost of pollution rather than treating it as an externality. Government revenue generated from this should be used for enforcement and the rest allocated for income and corporate tax reductions, IMO.

The Mound of Sound said...

Emissions trading by whose rules? As Monbiot puts it, emissions trading is like moving your food around on your plate. Adaptation? We don't have any choice on that but that doesn't relieve us of the problem itself. We have to cap GHG emissions and then work like hell on slashing them. Global warming is a global problem and will require global solutions. That doesn't exempt us from bringing our, per capita GHG emissions into line with the rest of the planet. And yes there will be social and individual costs to that. The costs of not acting, however, are bound to be much greater yet.

Anonymous said...

"As Monbiot puts it, emissions trading is like moving your food around on your plate."

Hurray for false analogies. You cap emissions and create an emissions trading market to let business decide the most efficient way of reaching that target. If you set the target below current emissions (or below a business as usual target), where does that 'food' go? It gets dealt with through control technology or pollution prevention measures depending on the price (i.e. "off the plate" using Monbiot's stupid analogy).

You want to cap emissions and do what exactly? Have perpetual government committees to decide how best to use this precious limited resource? It'll cost more and it's a total waste of the government's time.