More thoughts on carbon

In light of all the brewhahaha at Copenhagen still finding its way into the news, and having faced an accusation my views on this topic follow from my heart and not my head, I thought I'd expand a little on my views about carbon emissions.

Environmentalism

I am far from what most people would consider an environmentalist, as perhaps readers of my first ever blog post might have inferred.

I am strongly in favour of nuclear power (with costs such as waste management duly internalised) as part of the strategy to mitigate climate change.

I support the farming of GM crops and livestock and continued research into genetic engineering techniques.

I think most anti-whaling sentiment in this country is fuelled by sheer racist hypocrisy - there is a legitimate case to make against the practice, but most Australians aren't in a position to make it.

As far as limited resources I am a relatively radical Cornucopian - I don't believe we will run out of any material economic inputs for a very long time, for reasons that are best left for explanation in another post.

I believe the lives of all other animal species are worth significantly less than human lives (which is a distinct proposition from animal suffering being less important than human suffering, for me a far murkier issue.)

More generally I think nature and the biosphere are wondrous and precious things in their own right, but human civilisation is overwhelmingly more precious. The universe in which humanity destroys every other living species on earth but survives to colonise another star system is infinitely preferable to one in which humanity itself goes extinct but life goes on for the rest of planet Earth.

Anyway, that is probably enough ranting to establish my non-green credentials.

Why I support a price on carbon

If I'm not an environmentalist, why on earth would I support reducing emissions?

Well, in spite of how some may read the above, I do care about the environment, for both its own sake but especially to the extent that damaging it is bad for humanity. And to be extremely generous to the climate skeptics, lets measure such damage to human welfare chiefly by reductions to global GDP - so this becomes pure economic number crunching and never mind moral abhorrence of so many impoverished Bangladeshis dying.

There are lingering (although small and diminishing) uncertainties over how much of the climate change is anthropogenic. Likewise concerning exactly how much warming we can expect. Most crucial to my mind are the oft neglected economic benefits of the world heating up - and I'd say there are more of these than most people are admitting. Weigh all this up in a hugely complex and uncertain cost-benefit analysis, and you might come out with carbon restrictions reducing the expected value of global GDP in say 2100. I tend to think you don't, but I'm really not well versed enough in the science or economics of it to have a solid idea.

However, I will openly admit that in this context I am quite risk averse, and also what you might term volatility averse.

The former is a concept with wide currency in economics. It means I am very happy to lose 1% of GDP guaranteed, to avoid a 1/20 chance of losing 20% of GDP, even though probabilistically this is a neutral trade off.

By the latter, I mean that I'd rather see 20 years of flat 2% GDP growth, than 17 years of 3% growth followed by 3 years of 3.5% decline, even though the resulting GDP level after the 20 years is the same.

I think these are utterly reasonable positions to take concerning the global economy, and that strong carbon reductions now are sure to minimise both the risk and volatility associated with potential economic change that follows from what's happening in the atmosphere.

So that's how you can be a filthy planet hating economic rationalist bastard, and maintain reservations about the probability of global catastrophe from a changing climate, and still be very firmly in favour of a carbon price.

An equitable solution

What would a genuinely fair and workable globally binding agreement look like, if it were actually politically possible to come up with such a thing (which is clearly not the case at the moment)?

Since the effects of emitting are truly global - my carbon ends up in every other person's atmosphere and heats every other persons' planet - its incoherent to view the problem on the scale of nation states. The climate is the equivalent of a commons for our entire species, and we are trying to instil some market forces to prevent a classical tragedy.

To me, the only just way to do this in a morally justifiable fashion is more or less to partition the resulting property rights equally, between every single person on the planet.

So there should be a global emissions market, initially with as many permits as our current total emissions. These should allocated to each government on a per capita basis - it being impractical, even within this idealised world I am imagining, to assign them directly to individuals - to do with as they wish. (There are a few countries where the government is simply too corrupt or powerless for this to be a good idea - but they aren't significant to the carbon picture. The permits for the populations of such countries can accumulate in trust until they get better governments.)

Most developing countries would sell the bulk of their permits to the developed world, as they don't need them. This would amount to a massive "wealth transfer", as Tony Abbott has put it, but I am no opponent of wealth transfers as a rule.

Would this amount to too radical a shock to the structure of the global economy? Perhaps. Certainly I don't think the U.S., to take an obvious example, is in a financial position at the moment to buy all the carbon permits it would need to sustain its current levels of economic activity. Now, shocks are bad, as I hope we agreed earlier when I was making arguments concerning volatility. To halve the real wealth of the top 10% of the worlds population and spread it amongst the remaining 90% is not bad thing - in the long term. Occurring instantaneously, though, it would likely prove disastrous.

So, to temper my thought experiment scheme with some pragmatism, I would say countries should also have the option of buying additional carbon permits at a fixed price. This would act as an upper ceiling on the price of permits, which mitigates one of the major disadvantages of an ETS with respect to a tax. The money spent purchasing these "excess" permits would be invested into a fund that countries having to adapt to negative effects from climate change could make claims against - much less messy, politically, then the small Pacific island nations having to beg for the odd billion here and there from their rich counterparts. Of course, what body could be left in charge of stewarding and dispensing all that money is itself a vexatious political question - can you say One World Government, conspiracy theorist nutbags?

Back in the real world

All the speculation above is of course ridiculously idle. No such scheme is likely to come into existence for decades, if ever, as the farcical arrangement decided upon recently in Denmark shows all too clearly.

So how do I see the course of events playing out? I don't think climate change, directly, will be responsible for wiping out human civilisation. My generation, or the generation to follow us, may end up paying dearly for humanity's current folly. But eventually, pay we will - the hotter the planet gets, the clearer and more precise the science comes, and the richer we get (making carbon reduction comparatively cheaper), the more political will to actually do something about the problem should grow. Perhaps there will be a horrible runaway positive feedback cascade via sea bed deposits of ice-trapped methane or some other mechanism, but I take liberty to doubt it, given all the evidence we have suggests the biosphere has survived through significantly higher temperatures and carbon concentrations than what the foreseeable future holds. It is the shock of the change occurring so rapidly that is the problem, but while this no doubt spells doom for many species, humanity should survive, in some form, in nearly any conceivable scenario.

What bothers me more are the possible indirect effects of climate change. Consider the Middle East, where scarce water is already a cause for conflict in an area that hardly needs more excuses for war to break out; where one nuclear power already exists, surrounded by enemies, and where another state, already an international pariah, may soon come into possession of the atomic bomb. If Iran and Israel are close to the brink of war now, as many observers believe, and unrest grips many of their Arabic neighbours, how much worse will the situation be when the only fresh water to be found in the region is that manufactured in desalination plants?

Or what of China and America? Although the current global deal is in truth the agreement these two countries reached bilaterally, the negotiations fell far short of success, and the world's two biggest carbon emitters both seem keen to manoeuvre so that the blame falls upon the other. The world desperately needs these two countries to establish better relations, not find new grounds for conflict. We have enjoyed such a remarkably peaceful era over the past 20 years in part because of the dominance of a single, unchallenged super power. The transition back to a world more akin to pre-1914 Europe, where multiple entities vie for supremacy, is fraught with danger. We, as a species, can afford to pay a carbon tax, and we can even, probably, afford to pay the costs of living in a world that is 3 or 4 degrees warmer. I doubt we can afford to fight World War 3 over the issue, though.