Asymmetrical Information - Megan McArdle
06.25.13 2:34 PM ET
What Are We Going to Do About Carbon?
At 1:30 today, the president will make a big speech outlining his plans for carbon control. It involves using the EPA's regulatory power to slap emissions controls on power plants, and minor additional subsidies for renewables, and speeding up permitting for clean energy projects. Conservatives are predictably huffing about lost jobs, while liberals are blaming Congressional Republicans for not signing onto a bolder but more economically efficient plan, such as a carbon trading scheme. My take is somewhat more laconic: this just doesn't matter much. It's a way for Obama to please environmentalists in his base, and maybe get a footnote in the history books for doing something about global warming. But the odds that this initiative will noticeably slow global warming are pretty slim.
My basic take on global warming is that on the science, liberals are the realists, while the right has spent too long in denial. (Yes, I'm familiar with the skeptics' arguments, and I agree that folks like Michael Mann and Peter Gleick have behaved very badly, but let's be honest: most Republican politicians are not having arcane debates about modeling assumptions, decisions under uncertainty, and the philosophy of science. They are ignoring a fairly compelling body of science because they don't want to even talk about doing something.)
But on the policy side, the conservatives are the realists and the liberals generally let wishful thinking drive their pronouncements. Kyoto goals were met, but mostly thanks to three factors we probably can't repeat: the exhaustion of Britain's coal deposits, the collapse of the Soviet Union and the shuttering of Eastern Europe's vilely inefficient industrial base, and the 2008 financial crisis. (Just in case you're tempted to argue "But without Kyoto, they would have risen!" let me point out that the United States, which didn't sign Kyoto, is also enjoying carbon emissions below their 1997 level)
Since 2005, when Europe's carbon trading scheme launched, I have been hearing that the program has just now gotten over its initial launch difficulties, and is now on the verge of really doing something serious about carbon. Apparently, we're still verging. Meanwhile, thanks to emerging markets, especially India and China, global emissions are rising at a brisk clip. Periodically, the Chinese government makes noises about controlling emissions, and breathless articles are written treating these noises as if they were statements of fact, proving that the Chinese government is far ahead of the United States on environmental issues (even as they build hundreds of new coal plants!) Upon closer examination, these statements turn out to be vague noises, not hard promises. Or it turns out that the Chinese are keen on controlling the particulate pollution that is choking their cities (I do think they're serious about this, but serious as in "they're going to install stack scrubbers" not "they're going to stop burning coal".)
Or, at best, that they're talking about reducing the carbon intensity of their production. It takes China about 50% more carbon emissions and energy to produce $1 billion worth of GDP than it takes the United States. I believe China is serious about getting that figure down. But I also believe that they are serious about increasing their GDP by a lot more than 50%--which means that overall, their emissions are going to go up, not down, for the foreseeable future. Since they are the world's leading emitter of greenhouse gasses, and India is coming up fast behind, this limits the potential for controlling climate change. Especially since one of the ways that companies in rich countries deal with carbon emissions restrictions is to export production to countries with fewer restrictions, or buy dodgy credits from "reducing" emissions in said countries. (China has been a leading source of dodgy carbon offsets used by the EU carbon trading scheme.)
There are still arguments for doing carbon control in the United States, of course. The power generators that Obama's new proposal will cover cannot be moved to China (though manufacturers who buy their power can). And if if carbon pricing or other regulation helps drive development of truly cheap renewables, then India and China will happily switch from coal to solar.
During today's climate change speech, President Obama said that we need to act before it's too late.
Of course, "our sacrifice now might incentivize development that would some day cause China and India to shut down their thousands of coal plants" is a somewhat harder case to make than "if we sacrifice enough now, we can halt global warming", or the preferred Democratic politician mode of pretending that this will be some minor adjustment. Even with a global scheme, the sacrifices will be deep and permanent, a point that Michael O'Hare ably makes:
If I thought it would work, I might join this chorus and preach that we will all get rich making windmills , but it won’t fly. The facts, that will make themselves known willy-nilly, are that climate stabilization will be very expensive, independently of the asymmetry of costs and benefits (if we go on as we are the Swiss will have to learn to grow coffee and oranges, but those Bangla Deshis will have to find a whole new place to live in a crowded neighborhood). We will have to liquidate enormous capital investments in car-dependent suburbs and coal plants, and we will have to learn to live with less stuff of every kind, and we will deny people who never got to drive cars a future they have every right to. Then we will have to buy enormous amounts of expensive stuff like a smart electric grid and trains. Habits and aspirations that almost reach the level of identity definition will have to be abandoned, like driving wherever we want alone and parking free when we get there, and living in a big house with rooms we hardly ever sit in.
Even here, however, it seems to me that O'Hare is gentlefying it for his audience. Who is going to suffer most in this imagined future of carbon neutrality? On the one hand, people in emerging markets who never get to be middle class. And on the other hand, people who live in McMansions and drive big gas guzzling SUVs around the sprawling suburban wasteland where they have unaccountably chosen to make their home. That doesn't sound so bad, does it? At least, not to me, since I live in a nice, compact row home, and have driven my Mini-cooper a grand total of 7,000 miles in the five years I've owned it. Probably not to Michael O'Hare, who I imagine lives in or near Berkely, where he teaches. On the other hand, I assume it sounds awful to those of you who have for some reason chosen to enjoy a spacious lawn, low property taxes, and the quiet chirping of the crickets on a summer's evening.
It might be worth examining some adaptions that people like Michael O'Hare and I would care about very much:
1) Air conditioning and heating Actually, Professor O'Hare probably won't care much about either of these, since the lucky devil has chosen to live in California. But the rest of us will probably care a lot. Like most of you, I live in a climate that would be . . . well, I can't say it would be intolerable without air conditioning and central heating, since obviously, the region supported human habitation without either. But it would certainly be uncomfortable to turn the thermostate down to 50 in the winter and do without air conditioning. Unfortunately, heating and cooling are the largest components of residential carbon emissions--and while the construction and size of your house do matter (more stories + lower ceilings + shared walls = more efficient) the fact is that most of us keep our houses at temperatures that would have been unimaginable a few decades ago. People who get it worst: those who live in northern states.
2) Food The good news is that residential carbon emissions make up only a small percentage of carbon emissions. The bad news is that the other stuff is all the stuff we enjoy having, like . . . lots and lots of fresh produce. Except for a few months a year, Mr. and Mrs. Middle Class, 1950, lived on meat, starch, a few particularly hardy crops like apples and iceberg lettuce, and lots and lots of canned and frozen vegetables. Moreover, food was immensely more expensive, because it was picked and tended by hand. Cutting emissions probably means returning to a less varied, less fresh, lower quality diet for most Americans. Doritos and canned green beans may have a smaller carbon footprint than those lovely, leafy greens you brought home in March.
3) Air travel Somehow, air travel tends to slip out of discussions of our lower-carbon future. One suspects that this might be because the public intellectuals who discuss these matters tend to spend a lot of time on planes. But if you want to do carbon reduction, the first place to start is with frequent fliers. Average annual carbon emissions from a US passenger vehicle: 5.1 tons. Carbon emissions per passenger of a round trip flight from New York to San Francisco: 2 to 3 tons. If you take two long-haul flights a year, you are emitting as much carbon as if you had driven an extra car. If you attend distant conferences or take international vacations while complaining about suburbanites who drive SUVs, you should shut up and drown silently in your own shame.
4) People who live in rural areas Tell me you haven't met this couple: they're committed environmentalists. They have a modest second home, somewhere near the mountains where they can hike and bike and kayak and generally enjoy nature. They have a truck or an SUV . . . "but only for the farm/cabin/cottage". The implication is that the climate will obligingly not warm, because they are driving their SUV (and heating and cooling an extra home) for good reasons. At home in the city, they bike to work and use recycled grout.
This couple is one of the resons that it is so uncomfortable to talk about the fact that huge carbon taxes, or regulatory rules that aim at the same thing, are not just going to hurt soulless suburbanites, but also a whole lot of people in rural areas. There's a reason that most people in the 19th century did not spend a lot of time getting back to nature, unless they already happened to be there, and that reason is that low-carbon travel is really expensive and time consuming.
5) Women The main reason that women got out of the home in the 20th century is not that we suddenly got more enlightened; it's that we invented appliances which took the place of all the work we used to do. All of those appliances run on expensive electricity. More time washing dishes by hand and hanging the clothes out to dry is less time to work on your career. Of course, men could step up and do half of it, but the reason women were in the home in the first place is that many of these tasks take enormous amount of time without huge, energy-sucking appliances, and it's actually most efficient to do them all at once, often synchronously with other time consuming and inefficient tasks--simmer dinner while you're hanging out the laundry, and so forth. Given currently observed social reality, using less energy probably means using more female labor.
The point is that this will not be painless for anyone. Unless we get really cheap solar, it will be painful for everyone--so painful, I submit, that it probably isn't going to happen. Let's return to Obama's plan. Final standards will be released in 2015 and phased in slowly. (You will observe that the president has cleverly timed things so that he is out of office when the cuts begin to bite). If they are toothy enough to really hurt--produce a measurable increase in electric bills that really changes behavior, other than causing manufacturers to shift production to Chinese facilities where energy-efficiency is lower, but so are energy prices--then I predict that President Obama's successor will roll the rules back even more swiftly than they were unrolled. If said successor does not, but digs in and stands on environmental principle, then Congress will step in and amend the law to remove EPA oversight over carbon emissions. This will happen whether Democrats or Republicans control the House, for the same reason that European parliaments keep weaseling out of strengthening the EU carbon trading regime. To paraphrase Chesteron, serious action on global warming has been found painful, and left untried--all over the world, not just here. Unless something major changes in the price of renewables, I expect that pattern to continue for the indefinite future.
This doesn't make me happy. I believe that global warming is real, and risky, and I would prefer to see us doing something about it. But the collective action problems seem insurmountable. The fact that even serious policy folks like Michael O'Hare tend to focus on the stuff that will hurt others, and not their nice liberal audience, shows just how tough this problem is.