Study Shows Why We Need A Carbon Tax, Not R&D To Preserve Livable Climate For Our Children

by Guest Contributor

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Originally published on ClimateProgress
by Joe Romm

So there’s this new study in Nature Climate Change, “Intra- and inter-generational discounting in the climate game.”

Sounds too wonky to get many eyeballs, no? That’s why editors at places like TIME magazine have jazzed it up with this sort of headline: “Why We Don’t Care About Saving Our Grandchildren From Climate Change.”

Except that isn’t exactly what the study shows, as we’ll see. Indeed, the study design is such that it may not show anything at all relevant to climate change (and so all headlines about it, including mine, need an asterisk).

But if you accept the study,then you ought to accept the study’s own conclusions, which make clear how much more important a price on carbon is than, say, a massive new research and development program in carbon-free energy, if we are to avoid catastrophic global warming.

The study ran a “collective-risk group experiment.” TIME has a detailed explanation of it:

Each subject in groups with six participants was given a $55 operating fund. The experiment went 10 rounds, and during each round, they were allowed to choose one of three options: invest $0, $2.75 or $5.50 into a climate account. The participants were told that the total amount contributed would go to fund an advertisement on climate change in a German newspaper. If at the end of the 10 rounds, the group reached a target of $165 — or about $27 per person — they were considered to have successfully averted climate change, and each participant was given an additional $60 dollars…. If the group failed to reach the $165 target, there was a 90% probability that they wouldn’t get the additional payout. As a group, members would be better off if they collectively invested enough to reach that $165 target — otherwise they wouldn’t get the payout — but individually, members could benefit by keeping their money to themselves while hoping the rest of the group would pay enough to reach the target.

The bold-faced sentence above is a buried bombshell, as we’ll see.

Here’s the twist, though: that $60 dollar endowment was paid out on three different time horizons. In one treatment, the cash was given to the groups the next day. In the second treatment, it was given seven weeks later. And in the third treatment, the cash was instead invested in planting oak trees that would sequester carbon — but since those trees wouldn’t be fully grown for years, all the benefit would accrue to future generations, not the current players in the experiment. The difference between that third treatment and the first and second is what’s known as “intergenerational discounting,” which happens when the benefits of an action in the present are highly diluted and mostly spread among many people in the future. Which, as it happens, is pretty much how climate policy would work.

Unsurprisingly, the more delayed the payout was, the less likely the experimental groups would put enough money away to meet the goal to stop climate change. Even among those who knew they’d get the payout the next day, only seven of 10 groups invested sufficient funds, while none of the 11 groups who knew their endowment would be invested in planting trees gave enough money to “stop” climate change.

Unsurprisingly, indeed. Nothing about this study is terribly surprising except the sweeping generalizations made about it. For instance, the news release asserts “A study published today in the journal Nature Climate Change reveals that groups cooperate less for climate change mitigation when the rewards of cooperation lay in the future, especially if they stretch into future generations.”

Except that the groups weren’t asked to invest in climate change mitigation! They were asked to invest in newspaper advertisements urging people to do stuff (details here). One doesn’t have to be very well-informed (or very cynical) to understand that newspaper advertisements are not a terribly good investment if you are genuinely concerned about climate change.

And you don’t have to be highly informed on climate change to realize that we aren’t going to solve the climate problem by planting trees — and this study was done with Germans, who tend to be better informed than most on climate matters.

Time magazine quotes the conclusion of the study itself:

Applying our results to international climate-change negotiations paints a sobering picture. Owing to intergenerational discounting, cooperation will be greatly undermined if, as in our setting, short-term gains can arise only from defection. This suggests the necessity of introducing powerful short-term incentives to cooperate, such as punishment, reward or reputation, in experimental research as well as in international endeavors to mitigate climate change.

In short, we need a price on carbon to have the long-term harm from carbon pollution reflected in the short-term (i.e. current) cost of fossil fuel-based energy. The obvious reward is to return the money collected from, say, a carbon tax back to individuals and businesses, thus rewarding those who reduce their carbon pollution.

Oddly, TIME draws the exactly-backwards conclusion:

The Nature Climate Change study also underscores why “win-win” climate policies — like innovation investments that can lead directly to cheap clean energy, rather than policies that make dirty energy more expensive — are likely to be the most effective ones. Barring a species-wide personality change, few of us will be willing to endure present pain so that our grandchildren won’t have to endure an unlivable climate.

To the extent that “innovation investments” mean big, new investments in R&D, then the study suggests that is precisely what won’t work. After all, asking Americans to spend billions of their tax dollars on R&D is “present pain” but the benefits of R&D obviously accrue only to future generations (unless the R&D effort is used as an excuse to delay mitigation even longer, in which case it effectively harms future generation by undercutting urgent efforts to avoid crossing irreversible climate tipping points).

TIME does make the case for aggressive deployment of clean energy:

Fortunately, short-term incentives for fighting climate change do exist. It takes decades to benefit from reductions in carbon-dioxide emissions, but phasing out fossil fuels like coal and oil can bring immediate improvements in air pollution. And air pollution has turned out to be even more dangerous than experts thought, with the World Health Organization last week declaring that bad air is a leading environmental cause of cancer, comparable to secondhand smoke.

Precisely. And if we add a revenue-neutral carbon price then we ensure short-term incentives match long-term interests.

We know human beings are capable of making tremendous sacrifices for their children’s well-being. Heck, we are willing to “endure present pain” — by working harder and/or saving money — to pay for higher education that won’t provide measurable benefits to our children for a long, long time.

BOTTOM LINE: It may well be that the study’s design is too narrow to support any definitive generalizations about climate change at all. But to the extent that we can draw larger conclusions, it’s that climate change mitigation efforts require “powerful short-term incentives to cooperate, such as punishment, reward or reputation.” And nothing meets that goal like a price on carbon.

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This article, Study Shows Why We Need A Carbon Tax, Not R&D, To Preserve Livable Climate For Our Children, is syndicated from Clean Technica and is posted here with permission.

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Guest Contributor is many, many people all at once. In other words, we publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people. 😀

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Who Are The Big 5 In The Carbon Trade?

Originally published on Shrink That Footprint by Lindsay Wilson

When we talk about a country’s carbon emissions we generally only consider those that occur within its borders. But where does the fuel for those emissions come from? And where do the products a country makes go?

In this second part of our series The Carbon Trade we look at who the big traders of carbon are. We’ll analyze the major importers and exporters of fuels and products and in doing so explain much of how carbon moves around the world, both before and after its combustion.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

The Regions Fueling the World

In the first piece of this series, The Globalization of Carbon, we noted that in 2007 traded carbon totaled 17.6 Gt CO2, or 60% of total carbon emissions. More than half of this traded carbon was in the form of fuels, in particular oil and gas.

The big exporters of fuel carbon are those regions and countries that produce more fossil fuels than they use at home.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

The big five fuel exporters are the Middle East, Russia, Sub-Saharan Africa, North Africa and Australia. Together these five regions export 63% of carbon in traded fuels.

Indeed they are each so rich in fossil fuels in the form of oil, natural gas and coal that each of them export more carbon in fuels than they create through combusting fuels within their borders.

Each tonne of oil, natural gas or coal that is exported by these regions is imported somewhere else. So let’s see where they go.

Living On Foreign Fuel

It is widely known that the US is dependent on foreign oil, so much so they banned crude exports back in the seventies oil shocks. But the US isn’t the only region living off fossil fuels from other regions.

This fact is plain to see when we look at who the big importers of carbon in fuels are.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

When taken together the countries that make up Europe (EU27) import more carbon in the form of fuels than the US. These two regions are the big fuel importers followed by Japan, China and South Korea, based on 2007 data.

Together these five regions import a staggering 71% of all carbon traded as fuels.

China is the World’s Factory

Now that we have seen how carbon is traded before it’s combusted, it is worth looking a how it is embodied in the trade of products after its combustion. For clarity’s sake products in this case means both goods and services though the former dominates.

In the last two decades exports of Chinese made products have exploded, driven on by cheap labour, capital controls and government subsidies. This phenomenon is plain to see in the data for carbon in exported products.’

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

In 2007 the carbon embodied in China’s exports of goods and services totalled 1,556 Mt CO2. About the same as the exports of the United States, Europe and Russia combined.

Although these five regions accounted for a healthy 58% of the trade of carbon embodied in products it is as a general rule less centralized than is the case for fuels.

Europe and the US Buy the World’s Stuff

If China is the big exporter of carbon embodied in products it will surprise few that the US and Europe are the big buyers.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

In 2007 there was 1,514 Mt of carbon dioxide emissions embodied in European imports of goods and services, a quarter of which came from China. The US was the other major importer, followed by Japan, China and the Middle East.

The fact that so much European and American consumption is supported by emissions that occur in other parts of the world highlights the perils of focusing solely on terrestrial emissions for climate policy. The increased outsourcing of carbon intensive production to regions with weaker climate regulation risks undermining the effectiveness of national climate policies.

Such risks also exist regarding carbon in fuels. If factors reducing terrestrial emissions result in increased exports of fuels this can undermine the effectiveness of national action. The more than doubling of US coal exports since 2006 in reaction to the shale boom is a good example of this.

Join us for the final post in the series tomorrow when we Mind the Carbon Gap between country’s extraction, production and consumption totals.

All the data used in this series is based on the recent, and freely downloadable, paper ‘Climate policy and dependence on traded carbon‘ by Robbie Andrew, Steven Davis and Glen Peters. Many thanks to Robbie in particular for providing the data.

This article, Who Are The Big 5 In The Carbon Trade?, is syndicated from Clean Technica and is posted here with permission.

US Uses 11 Times More Energy Than UK

Why are Environmentalists excited about the Natural Gas boom?

Why are Environmentalists excited about the Natural Gas boom? | 18/03/13
by John Brian Shannon John Brian Shannon

Mirror, mirror, on the wall, which is the cleanest fossil fuel of all?

You guessed it! Natural gas is the cleanest fossil fuel – and by significant margins as data from the Environmental Protection Agency illustrates in the chart below.

Fossil Fuel Emission Levels in pounds per billion Btu of energy input. Source: EPA Natural Gas Issues and Trends 1998
Fossil Fuel Emission Levels in pounds per billion Btu of energy input. Source: EPA Natural Gas Issues and Trends 1998

Natural gas, as the cleanest of the fossil fuels, can be used in many ways to help reduce the emission of pollutants into the atmosphere.

Burning natural gas in the place of other fossil fuels emits fewer harmful pollutants, and an increased reliance on natural gas can potentially reduce the emissions of many of the most harmful pollutants. — naturalgas.org

After investigating the externalities associated with conventional sources of energy and cognizant of their commitments towards clean air, many nations have begun to embrace natural gas as a stepping stone towards a cleaner energy future.

In the U.S.A., as far back as 2003 when coal supplied more than 50% of America’s electrical power, coal-fired plants have been retired more quickly than new ones have come online. By 2012, coal supplied only 38% of U.S. electricity.

Nine gigawatts of U.S. coal-fired power generation was shut-down in 2012 alone, and replaced by an almost equal amount of natural gas power generation. Emission levels from those comparably-sized replacement natural gas power plants are less than half of those retired coal-fired plants!

Many more U.S. coal-fired power plants are scheduled for complete shutdown, or conversion to natural gas over the next few years totalling 35 GigaWatts (GW) according to the experts.

Chart courtesy of the U.S. Energy Information Administration — shows carbon emissions dropping as a result of switching from coal to natural gas,  2005-2012.

U.S. Carbon Emissions by Sector. Source: U.S. Energy Information Administration
U.S. Carbon Emissions by Sector. Source: U.S. Energy Information Administration

Carbon emissions of all end-use Sectors have decreased since 2005 in the United States.

The largest reductions appear to be due to the Electric Power and Transportation sector’s emissions, followed by the Industrial, Residential and Commercial sectors.

[Of all sectors] “the largest reduction to carbon emissions is due to coal-to-natural gas ‘fuels switching’ and construction of higher efficiency power plants. 

Expansion of renewable power, overwhelmingly due to expanded wind power, has been the second largest factor to reduced Power Sector carbon emissions.” – theenergycollective.com

Many expert studies show CO2 emissions dropping as a result of the combined effects of many countries switching from coal to natural gas and/or renewables, 1990-2100.

Chart depicts probable CO2 levels, depending on the choices we make. Image courtesy of Royal Dutch Shell 'New Lens Scenarios'
Chart depicts probable CO2 levels, depending on the energy choices we make. Image courtesy of Royal Dutch Shell ‘New Lens Scenarios’

The change-up to renewable energy will vary by country as OECD nations continue to take the lead in renewable energy between now and 2100. Even so, total worldwide emissions will drop dramatically and the switch from coal to natural gas is one big step towards a cleaner environment.

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