Why it’s unlikely that we’ll arrest global warming soon (or at all)

The argumentation is simple yet convincing (Rolling Stone — Global Warming’s Terrifying New Math):

All told, 167 countries responsible for more than 87 percent of the world’s carbon emissions have signed on to the Copenhagen Accord, endorsing the two-degree target. Only a few dozen countries have rejected it, including Kuwait, Nicaragua and Venezuela. Even the United Arab Emirates, which makes most of its money exporting oil and gas, signed on. The official position of planet Earth at the moment is that we can’t raise the temperature more than two degrees Celsius – it’s become the bottomest of bottom lines. Two degrees.

(emphasis mine)

He makes the point that 2 degrees might already be too much but that there’s no political will to pay lip-service to less.

Scientists estimate that humans can pour roughly 565 more gigatons of carbon dioxide into the atmosphere by midcentury and still have some reasonable hope of staying below two degrees.

This is model-based but pretty much the best estimate we have and ties the lip-service to at most a 2-degree raise to requirements for controlling total future CO2 emissions.

The Third Number: 2,795 Gigatons This number is the scariest of all – one that, for the first time, meshes the political and scientific dimensions of our dilemma. It was highlighted last summer by the Carbon Tracker Initiative, a team of London financial analysts and environmentalists who published a report in an effort to educate investors about the possible risks that climate change poses to their stock portfolios. The number describes the amount of carbon already contained in the proven coal and oil and gas reserves of the fossil-fuel companies, and the countries (think Venezuela or Kuwait) that act like fossil-fuel companies. In short, it’s the fossil fuel we’re currently planning to burn. And the key point is that this new number – 2,795 – is higher than 565. Five times higher.

We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We’d have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain.

And this is where anything “market-based”, even if better designed than the EU’s malfunctioning cap-and-trade, breaks down. It is not a question of limiting the yearly, i.e. relative, emissions of individual cars, factories, firms. It is a question of limiting the total emissions of the entire world economy.

It is not a question of telling fossil fuel companies: “you can’t sell this quickly”, it is a question of telling them “you can’t sell this ever” (or at least not until so far into the future that the horizon of a profit-oriented firm doesn’t encompass it – see basic research). And there’s simply no market-based solution for this – the market doesn’t reward “don’t sell this”, unless there’s a “sell it later at a higher price” (which isn’t an option) or “sell a replacement at higher margin” (which doesn’t really exist yet, especially given the significant investments producers already made into accessing those fossil fuels).

An “obvious” solution would be for some country or international organization to pay fossil fuel producers not to extract fossil fuels in the first place, or to buy up all they can sell at higher prices than any private entity can shoulder that intends to burn them, somewhat as has been done in agricultural price stabilization schemes in the EU and Australia, for instance. But apart from the problem that some of those producers are countries, which might have other motives in addition to profit and therefore not be susceptible to this, the context in which those schemes have been used are a give-away of one of their effects: the supply of fossil fuels would shrink, driving up prices, making it more attractive to sell them in the first place. This “solution” would therefore require a sustained, immense monetary commitment of countries, something that is unlikely in the neoliberal era of balanced-budget- and small-government-fetish. (It would also amount to a state-sponsored wealth-increase for a lot of already rather wealthy people.)

Related to this there’s a paper in Real World Economics Review that discusses this from a probabilistic point of view:

This is particularly serious for biodiversity. A typical approach employed by free-market economists is to divide species into two categories. On the one hand there is the remarkable biodiversity, comprising those species considered by various ad hoc bodies to be threatened. For them we calculate the cost of maintaining them as we would for, say, a historic building. On the other hand, for ordinary biodiversity, i.e., all other species, we calculate their value by the ecological service they provide, from prokaryotes (bacteria) to eukaryotes (higher species) using standard methods of cost-benefit analysis. We can then buy and sell every part of nature or exchange against goods or services already quantified economically.
It is clear that on each specific question, on the way to preserve such and such species in its current condition, the fluctuations in cost legitimize artificial substitutions and the irreversible destruction of habitats. Consider a specific marshy wetland area that is in destructive competition with a deposit of fossil fuels. The two rarities do not evolve in the same way. On the one side there are real and random fluctuations in the price of fossil energy (due to speculation) and on the other there are gradual adjustments in the calculation of “ecological services”. The fuel deposit will, someday, end up priced above the carefully calculated estimates for the marsh. For the environment, this method is the bulldozer of substitutability.

So what this all amounts to is simply this: there is no economic solution to this problem. The only possible path is political and amounts to strongly regulating the fossil fuel market (effectively almost shutting it down) and enforcing these regulations (drug prohibition shows us that the hard part is not declaring a commodity illegal but enforcing the prohibition). This political path will not be taken, however, as long as political actors are heavily influenced by fossil fuel producers, which is also the conclusion of the Rolling Stone article: fossil fuel producers are not a partner in the quest to arrest global warming, they’re the enemy because the solution to the problem consists of them giving up a highly profitable business model. A first step on the political path therefore has to be to weaken fossil fuel producers (and consumers) politically so much that their interests will be overridden.

Good luck to us all.

Further evidence: for the reasons explained above the EU’s cap-and-trade system won’t help limit global warming to 2ºC. In addition, it was ill-designed: the cap was chosen based on a year with particularly high CO2 emissions, and initially, CO2 certificates were handed out for free. As a result of this there is an oversupply of certificates, resulting in low prices. To counteract this, the European Commission is contemplating handing out fewer emission certificates than planned in 2013, not none, fewer! National governments, however, lead as usual by Germany (the commissioner for energy is a German), have come out against this idea to make sure that energy prices don’t “overburden” industry, tying this (erroneously) to the euro-crisis. (Source – unfortunately only on German)

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This entry was posted in anthropogenic climate change, economic policy, science, science-based policy. Bookmark the permalink.

One Response to Why it’s unlikely that we’ll arrest global warming soon (or at all)

  1. Tim Rez says:

    Yup, a clear connection between commodity value of fossil reserves and the faulty logic of property rights without regard for the commons.

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