Saturday, September 19, 2009

The Technological Trouble of Climate Change

. Saturday, September 19, 2009

A lot of discussion over climate change has focused on the political and economic difficulties in solving the collective action problem in a way that doesn't massively lower global standards of living. But there is a bigger concern, says Bjorn Lomborg:

Let us imagine that the world ultimately agrees on an ambitious target. Say we decide to reduce CO2 emissions by three-quarters by 2100 while maintaining reasonable growth. Herein lies the technological problem: to meet this goal, non-carbon-based sources of energy would have to be an astounding 2.5 times greater in 2100 than the level of total global energy consumption was in 2000.

The point is: even if we could all agree on where we wanted to go we have no idea how to get there. Agreeing to carbon caps is like agreeing to go to Mars: all and fine and good, but until we have ways of actually achieving the goal it doesn't really get us anywhere (except austerity, of course). Here's the proposed solution:

Green and Galiana propose limiting carbon pricing initially to a low tax (say, $5.00 a ton) to finance energy research and development. Over time, they argue, the tax should be allowed to rise slowly to encourage the deployment of effective, affordable technology alternatives.

Investing about $100 billion annually in non-carbon-based energy research would mean that we could essentially fix climate change on the century scale. Green and Galiana calculate the benefits – from reduced warming and greater prosperity – and conservatively conclude that for every dollar spent this approach would avoid about $11 of climate damage. Compare this to other analyses showing that strong and immediate carbon cuts would be expensive, yet achieve as little as $0.02 of avoided climate damage.

The idea of a small carbon tax that is phased-up as market alternatives become more common is appealing to me, although I don't expect political outcomes to be that technocratic. And this is perfectly compatible with a prize system (as described in this report) that is preferred by many economists.

This is not Pigouvian since it is redistributive, but it does seem to move us towards a direction of aligning private and social costs. I'd like to see more thinking along these lines and perhaps some pilot programs.


Sarah Bauerle said...

Bjorn Lomborg is a nut job and quite possibly intellectually dishonest. His research is mired in controversy. No me gusta Bjorn.

Kindred Winecoff said...

This isn't his research. It's somebody else's. Either way, it's more of an idea than a hard statistical finding. You don't have to like somebody to evaluate their ideas.

The Technological Trouble of Climate Change
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