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Summer Rerun: The FT : “We Need a Clear and Predictable Price for Carbon”

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This post first appeared on February 5, 2007

We have to admit to being a little slow on the uptake from time to time. We reported on the FT’s February 2 editorial, which commented on the publication of the first of four reports by the Intergovernmental Panel on Climate Change. (Media watch item: still no editorial yet on this topic in the New York Times. And a Barbaro-related story again took pride of place, this time on the first page of the Sunday “Week In Review,” section, with a big photo, while the global warming got a teeny story on the second page. 1:22 A.M. correction: we do have an NYT comment, a satirical op-ed discussing the efforts of a Park Avenue co-op to reduce its carbon footprint. If this is all the Times has to offer, we’ll take Barbaro any day).

The FT editorial, “We need a clear and predictable price for carbon,” gives a high level discussion of the global warming problem and the key elements of an effective response.

Do read the editorial (see our post ). We call attention to two items. First, the article recommends acting on the recommendations of the UK’s Stern Report, which suggests that the costs of combating global warming may only be 1% of world GDP if steps are taken now. What is noteworthy is that the Stern report has gotten very little press in the US (if you type “Stern report” and “global warming” in Google News, nearly all the entries are in Commonwealth newspapers. And the few references in America are buried in comparatively long stories).

Why is this of concern? It increases the possibility that those who have something to lose will exaggerate the costs of taking action.

The second matter is the recommendation in the headline, “a clear and predictable price for carbon.” That may sound simple and uncontroversial, but it is anything but that. The regime that business finds most palatable for dealing with global warming is carbon trading. Indeed, as we discussed earlier, Wall Street firm are keenly interested in this area, not just as investors, but as market makers.

Unless I am missing something, the idea of having a market is antithetical to having a stable, let alone predictable, price. But from a public policy standpoint, you need some level of price predictability in order for companies and entrepreneurs to fund projects Volatility favors speculators, not investors. But it seems that the speculators are leading the development of this market.

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16 comments

  1. blah

    With respect to trading, I have seen little attempt made to address the types of concerns raised in this article:

    http://harpers.org/archive/2010/02/0082826

    If the descriptions are accurate, the current trading scheme is something of a racket that does little to reduce carbon emissions but makes money for some connected players. Given the inherent risk of the sort of legalized corruption we see in the global financial system, it is difficult to have much faith in a global carbon trading system exploited by the same elite financial institutions.

    Taxes are simpler to administer and easier to measure. Trading creates complexities and may in fact fail to reduce carbon emissions. At least that is what I fear.

  2. Tao Jonesing

    This “Summer Rerun” is perhaps the one and only example of a well deserved self congratulations of which I know.

    Seriously. Well done.

  3. michel

    It is simply ridiculous. First, there is no reason to think that increased CO2 has caused, or will cause, warming. Second, there is no reason to think that lowering CO2 has ever caused, or will now cause, cooling. Third, there is no reason to think cap-and-trade or carbon taxing will lower CO2.

    If you really, really want to lower CO2 emissions on the scale said to be required, then abolish the auto industry (and malls and suburbs with it), and make agriculture organic. Also close down the airline industry. And rebuild most housing to make it energy efficient. It will be 1870 with computers. It will require huge lifestyle changes and population moves.

    I don’t believe it will make any difference to global temps, but it would at least be logical, in the sense that the means chosen would deliver the desired end of emission reductions. Carbon pricing as currently conceived, along with windmills and hybrids are simply gestures, in the IPCC’s own terms. Pointless.

    1. aet

      Your first paragraph is erroneous.

      Molecules can absorb and emit three kinds of energy: energy from the excitation of electrons, energy from rotational motion, and energy from vibrational motion. The first kind of energy is also exhibited by atoms, but the second and third are restricted to molecules. A molecule can rotate about its center of gravity (there are three mutually perpendicular axes through the center of gravity). Vibrational energy is gained and lost as the bonds between atoms, which may be thought of as springs, expand and contract and bend. The three kinds of energy are associated with different portions of the spectrum: electronic energy is typically in the visible and ultraviolet portions of the spectrum (for example, wavelength of 1 micrometer, vibrational energy in the near infrared and infrared (for example, wavelength of 3 micrometers), and rotational energy in the far infrared to microwave (for example, wavelength of 100 micrometers). The specific wavelength of absorption and emission depends on the type of bond and the type of group of atoms within a molecule. Thus, the stretching of the C-H bond in the CH2 and CH3 groups involves infrared energy with a wavelength of 3.3-3.4 micrometers. What makes certain gases, such as carbon dioxide, act as “greenhouse” gases is that they happen to have vibrational modes that absorb energy in the infrared wavelengths at which the earth radiates energy to space. In fact, the measured “peaks” of infrared absorbance are often broadened because of the overlap of several electronic, rotational, and vibrational energies from the several-to-many atoms and interatomic bonds in the molecules.

      1. michel

        The issue is not whether CO2 aborbs IR and so gets warmer. We know it does. The issue is whether such a warming forcing is attended by positive, negative or neutral feedbacks in the real world climate of planet earth.

        As an example, we know that turning up the gas on a boiling pan of water imparts heat to the water. It does not however raise its temperature. We know that a gallon of gas has a certain amount of energy. However, dependent on engine and vehicle design, that can propel a car anything between 10 and 100 miles.

        I do not think there is any evidence that the heating supplied to the climate by doubling CO2 levels produces a rise in the equilibrium level of global temperatures. It is most unlikely that there are any positive feedback associated with our climate’s response to any warming inputs, and it seems quite likely that there are negative ones.

        So, does it apply heat? Yes. Do we have any evidence that applying heat raises the planetary temperature? No. And still less as far as lowering CO2 and producing cooling. There is no evidence that this has ever caused previous cooling episodes, why should this time be different?

        No, taxing carbon will not do it. Or rather, taxing carbon at any level possible in a democracy will not do it. We will not succeed in raising gas prices to levels where everyone will move out of the suburbs and back to the cities, and the malls fold, and the auto industry vanish. Any government trying to do it that way would get unelected instantly.

        The only way to do it is by a huge national program. It is a project which dwarfs WWWII. But that is what it will take to lower emissions by the amounts alleged to be needed. Anything else is just arm waving. We need to be clear and honest and logical about what is actually involved in lowering emissions by 80%. We are talking very serious lifestyle changes. Quite literally, no more auto industry, no more malls or suburbs, no chemical and industrial agriculture, no passenger air travel.

        It might be a much nicer world, but no useful purpose is served by saying that we will get there by a few hybrids and windmills, and gas prices going up by a dollar or so.

      2. eric anderson

        aet, yours is a textbook description that is valid in a laboratory with all other variables controlled. The earth is quite another story. Because you are highly educated and intelligent, you know this, yet choose to ignore the complexities and uncertainties, the known unknowns. Why? I don’t know, because I can’t read minds. I guess you’ll have to ask yourself that question.

        We can look at proxy records of CO2 and temperature in the ice cores and see that rising CO2 cannot prevent falling temperatures (i.e. descent into another ice age), and neither can falling CO2 prevent warming of temperature. This is what the factual record shows.

        What are we to conclude from this? The physical chemistry, which you noted, indicates that CO2 has some finite effect, though in the past that effect must have been swamped by other factors, other feedbacks, etc. The only evidence I am aware of to implicate CO2 as a primary factor is the controversial “hockey stick” but this depends on the interpretation of proxy historical temperature data that precludes a medieval warm period.

        Oh, mind you I know that if we had no CO2 the planet would probably be much colder. But if you increase CO2 from 0 to 100ppm, that does not mean a tripling of the warming effect will occur if you bump it up to 300ppm. We may well be near saturation, where further CO2 increases contribute little to global temperature. That is why we had ice ages in the past with CO2 much higher than today’s levels, and why in the dim distant past when CO2 was more than ten times current levels, the earth did not turn into Venus. It is also why the IPCC’s dire predictions depend on an unproven positive feedback, i.e. multiplication, of CO2-related warming.

        One only wishes to God we understood the feedbacks! You don’t. I don’t. The IPCC does not.

        Should we spend even 1% of precious GDP on solving an unknown “problem” with unknown “solutions”? Especially when the largest increases in CO2 are coming from nations who are unlikely to play along? It doesn’t make a lot of sense to me. But of course I’m not in the club of climate modelers with infallible crystal balls, who actually believe their numbers are valid, without confirmation from real world data of successful predictions.

        1. Anonymous Jones

          eric — I thought you made an excellent comment. We *are* in fact ignorant of the feedback loops (“known unknowns”), and we are obviously ignorant of all the “unknown unknowns” that may radically change climate (of which we may or may not be the cause in the future…surely, no one would suggest we would be to blame for a megacaldera eruption). At the same time, I’m sorry, but acknowledging our ignorance of the future is not necessarily a defense of maintaining the status quo (in any debate about anything). Yes, we may not be able to prevent (or ameliorate) the current environmental degradation going on around us (because we do not control (or even hold mechanisms that could influence) the worst offenders), but that is not a lock solid argument that we should not try.

          1. eric anderson

            Anonymous, if we don’t know what we’re doing, we don’t know what we’re doing. The “just do something” faction is presuming the existence of a problem that needs solving. I look at past history, see higher temps, and lower temps, and I see we’re in a nice middle right now. So, what is the problem?

            The problem is governments want more control, more money to play with. “Climate change” is the vehicle, the excuse. But fundamentally, we don’t know what we’re doing. That’s not an excuse for inaction. It is certainly cause for caution, and more research — research conducted with more honesty and open access to data and methods than has heretofore been the standard among those who are bleating the loudest about the alleged problem.

  4. attempter

    The concerns written here remain the same today. No one who’s serious about mitigating GHG emissions would support the corporatist version of cap and trade which any Washington bill would hack up. (Therefore the very concept is suspect and probably malign in principle. One who’s serious would demand a carbon tax or direct regulation, as even the corporate supreme court already demanded in EPA vs. Massachusetts. Of course, the House bill was written specifically to gut this EPA authority.)

    I wrote a post on this last year, which links to a Friends of the Earth report which discusses the Wall Street cap and trade scam in great detail.

    http://attempter.wordpress.com/2009/04/05/subprime-carbon/

  5. michel

    quite right, attempter. Whatever you think of CO2, a position that says, we have to get it down, and then proposes actions that, however drastic, really will get it down, commands intellectual respect. You can argue then about whether its necessary, but at least the people you differ with are making sense.

    The hysterical advocacy of Kyoto, which even in the IPCC’s own terms would have made no difference to warming, and the advocacy of carbon pricing and cap and trade, which will make minimal reductions in emissions, its simply craziness. Still, its on a par with the general leftish mania for advocating solutions to imaginary problems which, even if adopted, and even if the problems were real, would not help them and would probably make them worse.

    Cap and trade for CO2 reduction is like the New Reading in the UK as a solution to children not learning to read. They were in fact learning to read by the traditional methods, so there was no problem. But worse, when the New Reading was introduced, with its maniacal insistence that English be learned as an ideographic language rather than an alphabetical one, the result was to produce a literacy problem which had not previously existed.

    If Freud and Breuer could come back today, they would be delighted to find that sexuality was no longer the source of our hysteria. But they would be appalled to discover the enormous variety of things we have managed to find to get hysterical about, in its place.

    1. aet

      You quote Freud, when attacking the science behind global warming?

      You ARE hysterical.
      Hysterically funny, that is.

      Bone up:

      http://cdiac.ornl.gov/pns/faq.html

      Heavy carbon taxes will be the only answert, with idiots like you throwing sand in the gears of any attempt to deal with the problem.
      This ship don’t turn on a dime: and you do not even want to start to turn the wheel, until it is too late.

      1. Dan Duncan

        The science of global warming….

        The facts are these:

        1. The Anthropogenic Global Warming Hypothesis is not falsifiable. The “science” is tainted and compromised. There is no amount of information that could be proffered to get the “Believers” to change their minds. The best the “Believers” can offer as a rebuttal is that the same applies to “Deniers”.

        2. The Anthropogenic Global Warming Hypothesis provides no credible, reliable predictive value. For every assertion that is deemed correct, there is another assertion that’s proven to be incorrect. And when incorrect, there’s always a disclaimer. The best AGW acolytes can say is that meteorology offers predictive value and most meteorologists believe in the AGW Hypothesis.

        The foremost thinkers on science and The Demarcation Problem–Popper and Kuhn–have asserted that true science needs one or both of these attributes. The AGW does not possess them.

        At this point, the AGW Hypothesis is nothing more than Consensus-Science. It is deemed “scientific” because other scientists say it’s scientific. It’s a story unto it’s own.

        Obviously, none of this means that AGW is wrong, but save your scorn at Michel’s Freud reference in connection with AGW. Anthropogenic Global Warming is narrative that is not falsifiable and it offers no reliable predictions. Thus, the reference to Freud, the Father of Narrative Reconstruction is apt.

        And if this bothers you, it’s because you harbor repressed sexual feelings for your mother.

        1. eric anderson

          Dan, God bless you. Your post has provided multiple ejaculations of hearty laughter. Which is really the only antidote to warmists and their predictions of climate Armageddon. They are silly creatures, and we should laugh at them.

          1. charcad

            AGW cultists are more to be pitied than anything. Or simply observed as a brief and very maladaptive late strain that will soon vanish. They are completely clueless about creating anything of value.

            They long ago “offshored” and “outsourced” all the creative productive activities from their now decomposing society. As a result these economic activities are out of their tax reach. The only things left from them to tax are things that already exist, i.e. tailpipes.

            The Chinese and Indians have noticed these endlessly bizarre tinfoil hat candidates moving like lemmings to a cliff edge. So they’re going along, but only as far as the brink to provide a helpful push over the edge.

            As a group the AGW Cultists are headed for the compost pile of history post haste. The end stage Roman Empire also featured a proliferation of zany religious “mystery” cults whose deep secrets and relics could only be known by initiated believers.

            We’re seeing the same the mechanism at work with the AGW Cultists and their endless attempts to hide their software source code and even entire datasets from “unbelievers” on a variety of pretexts.

        2. Anonymous Jones

          Obviously, as a skeptic (and a devotee of Popper), I agree with almost all of this. What you seem to fail to understand, Dan, is that if you applied the same scrutiny to all the beliefs you seem to hold dear, you would hardly suffer the continuing embarrassments we witness almost daily here at NC.

          Regardless of who is right and who is wrong (and who is overreaching) in this debate, the anger displayed on both sides *does* in fact expose deep psychological issues for those who engage in it.

          What is so odd here is that in this comment of yours, the one place that some sort of anger or disdain *is* appropriate (because you are clearly right that people do not know what they think they know…this *is* provable), you have made a calm, intelligent comment. Irony abounds!!!

          1. Anonymous Jones

            Ha! And then eric proves me right during the time I was drafting my comment! Classic!!! Laugh on, sir. You will likely perish before you realize the joke’s on you.

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