Causality and Climate Change

I've believed for a while that the debate over climate change is troubled in part because of a slippery grasp of causality. I've been thinking of an analogy to make the point, and Richard Lindzen provides one:

Consider the following example. Suppose that I leave a box on the floor, and my wife trips on it, falling against my son, who is carrying a carton of eggs, which then fall and break. Our present approach to emissions would be analogous to deciding that the best way to prevent the breakage of eggs would be to outlaw leaving boxes on the floor.

What does this have to do with anything? Well, consider the doomesday scenarios being tossed around. The Maldives, for instance, is in threat of ending up under the waves due to rising sea levels. Water wars are supposedly looming in other countries, and so forth.

But the causality here is a little mixed. It's not the case, for instance, that every country faces the threat of going underwater. The Netherlands has set up a fancy water wall that will contain the effects of higher sea levels. The EU will handle any future political turmoil just fine. Climate change will have very different consequences in different places.

So you cannot isolate certain effects, dub them the "result" of global warming, and see carbon cuts as the only solution. Rather, climate change intersects with multiple problems--chief among them poverty, political instability, and bad institutions--that combine to cause further issues down the road. It's by no means obvious that targeting climate change on its own is the best way to address these issues, let alone whether action against climate change is the most cost-effective way to improve welfare in the developing world. All of the problems above will continue to exist whatever the state of the climate; yet we continue to weight deaths due to climate fluctuations far more than deaths due to dysentery and the like.

This is particularly problematic as proposed action against climate change--carbon dioxide reduction in one form of another--harms growth and so destroys economic base necessary to adapt to and mitigate the effects of a warmer world. Back to the Maldives--the government plans to turn the country into a Prius and go carbon-neutral. This is all well and good as a publicity stunt. But it is a waste of resources that comes exactly when the government needs to figure out its climate adaption strategy--throwing up sand bars, buying up land elsewhere, or what have you.

Indur Goklani has an analysis which makes this point clearly. He estimates the GDP per capita in 2100 of developing countries under energy-intensive development with global warming–$72,800–and under a more environmentally friendly regime–$40,200. Ignoring (important) distributional effects, the welfare consequences of enduring lower growth outweight the costs of global warming--even for developing countries.

There is also an incredible amount of status-quo bias in this debate. Can anyone really say that the temperature that prevailed in, say, 1900 was really the optimal temperature for humanity? Is it obvious that a warmer planet is worse; and, if so, wouldn't that imply that a global temperature colder than it is now would be better? Of course a temperature change of any magnitude would change settled patterns and (again) imply distribution effects. Yet a quick scan across America--where temperatures varies substantially without a corresponding variation in income--suggests that climate matters very little in determining the quality of life in a developed economy. Maybe things are different elsewhere. But that's all the more reason for them to develop quickly--something which will be harder for them to do with carbon targets.

I say all of this without questioning the science behind climate change (which Richard Lindzen does) or opposing a revenue-neutral carbon tax. But the broader point is that climate change is crowding out other fruitful tactics for improving the lot of the poor; carbon cuts are crowding out other strategies for dealing with the consequences of climate change; and a focus on reducing emissions by raising taxes ignores other cheap hanging fruit like technology transfers and preventing deforestation.

Be More Like France

Ed Glaeser says (via The Economist):

[I]f China’s per capita carbon dioxide emissions increase by 14.4 tons and reach United States levels, then world carbon dioxide emissions will increase by about 19 billion tons or 67 percent.

If per capita carbon emissions in both China and India rise to United States per capita levels, then global carbon emissions will rise 138 percent. If the emissions of these rising superpowers stop at French, rather than American, levels, global emissions will only increase by about 28 percent.

This suggests the biggest contribution that the United States can make to reducing world carbon emissions is to persuade the Indians and Chinese to use energy like Frenchmen rather than Americans.

This is true. However, it's important to know why France has lower emissions. It's not because they obsess more about the green content of their packaging or worry more about leaving the lights on as they leave the room, or because the French are more moral or better people. In huge part, it's because the French went all-nuclear after the '70s Energy Crisis, while the US enacted an array of environmental-pushed regulatory barriers on nuclear after Three Mile Incident. As a result, the US uses lots of carbon-intensive coal to generate power.

India and China also have huge coal stores, but they've been more farsighted about taking a look at nuclear power. China has plans to generate about 250 GW of energy (about five times the total output of Britain) by 2030. The India-US nuclear deal has paved the way for the Indian nuclear program; with potential output of 470 GW by 2050. Obviously, both of these are optimistic projections; but certainly energy of this magnitude is going to come online either from coal or nuclear, and a share of nuclear this large is the only way to ensure that China and India approach France-like levels of carbon emissions rather than US-levels. Incidentally, by signing this bill, Bush possibly did more for reducing global carbon emissions than Obama (though he voted for the bill) ever will.

The US could get down to French levels as well. For various reasons, the feel-good technologies like wind and solar will probably not get us there--they're too expensive, too intermittent, and not scalable enough to replace coal as a source of base energy--nor will green jobs materialize. Yet nuclear power, especially linked with battery cars, can cut US emissions drastically with no increase in costs. Switching over to electricity instead of gas would also end persistent trade imbalances which have been implicated in the financial collapse, and eliminate oil shocks as a source of economic problems.

Fortunately, Carlos Ghosn is hard at work on electric cars (though Chevy has backed away, despite this being the rationale for their bailout); the Energy Secretary is pro-nuclear; and there are encouraging signs that the bipartisan deal being brokered over Cap and Trade will feature a heavy nuclear component as well.

The takeaway here, as usual, is that the environmental movement is its own worst enemy. Their emotional and fear-based attacks against all things nuclear have jeopardized the only clean, cheap, and scalable source of combating global warming.

They've chosen to highlight global warming on grounds of personal morality; spreading "awareness" and emphasising how we all need to inconvenience ourselves in ways that address our guilt in destroying the world, but which ultimately are not effective. If they got together and emphasized rational, cost-effective policies like nuclear power, geoengineering, or carbon taxes; we would make much more progress, both here and other countries.

Rational Environmentalism

Suppose you really, really care about climate change. You think that global warming is the absolute biggest game changer in the world, one that will cause absolutely horrible damage throughout the world. Florida and Bangladesh will disappear under the seas, Arizona will erupt into flames, Chicago will become livable--Al Gore kind of stuff. What do you do?

You should favor a crash program to build as many nuclear plants as technically feasible to replace all natural gas/coal plants. Then you mandate that all cars be electric, and hook them up to the grid. It looks like that the vast majority of greenhouse gases in the US come from electricity generation or transportation, so at a stroke you could virtually make the entire country emissions-free.

Remember, all you care about is climate change. You know wind and solar can't scale up in time, and electric cars hooked up to coal plants just shift emissions elsewhere. Sure, nuclear waste is an issue, but it pales in comparison as a problem to Africa self-detonating.

This isn't pie-in-the sky--France did it in the 70s, with 70s technology. Today, they don't any fossil fuels for electricity. They didn't even care about the greenhouse gas angle--they just wanted cheap power and energy independence.

With the advances in nuclear power since then, it's even easier to get cheap, clean power for the entire country. Why doesn't anyone talk about that? Why do we keep looking at futuristic technologies that are too expensive or difficult to scale up? Why does energy have become an issue over guilt, rather than a place where we take the most cost-efficient solution and apply it everywhere?

In fact, environmentalists--the people who should be caring about global warming--have been the biggest roadblocks to this happening. This is a perfect example of letting the perfect be an enemy of the good--letting good, safe, clean technology become overlooked because "better" technologies exist. It's also a perfect example of an interest group trying its hardest to work against their own interests.

Environmentalism has always been a torn movement, divided between the sentimentalists (Emerson and company) and the more pragmatic (Teddy Roosevelt). Someday, I hope the latter crowd win and we get hyper-rational, capitalist environmentalists. People who don't just care about the environment for the sake of caring about things, but are actually driven to see improvements. They'll start venture funds, lobby to build nuclear plants, and pore over data. You'll have climate investors demand to see a return on their investment. The environment is too important a cause to be defended by environmentalists. If the Gordon Gekkos and Goldman Sachs of the world decided to care about the environment, you would see improvement very quickly.

This would make for a great political platform too, which could unite business interest (cheap energy) as well people who care about the environment, but don't buy into Greenpeace. It's a no-go area for the Democrats (because of Harry Reid, among other reasons), but some Republicans are talking about it (Mitch Daniels?). China and India realize that nuclear offers a great way to generate cheap, clean, energy and are rapidly building more. Assisting countries like that to make more nuclear power, and then turning all power at home into nuclear, is the only way to seriously cut down greenhouse gasses while keeping energy cheap. That makes for an amazing political platform--but you'll have to plow through the environmentalists first.

Economic Stability

A big reason why we have a Federal Reserve handle monetary policy is to smooth out the economy over time and prevent recessions and booms.

But interest rates aren't the only reason why economies fluctuate. These days, oil prices are really important--their spike last year is a big and underappreciated contributor to the current economic problems.

The reasons why oil went up that high haven't gone away. Much of the remaining oil is controlled by autocratic regimes with nationalized oil companies, who chronically underinvest in new production. The rest is barely accessible, poor quality crude, in deep sea deposits, or tar sands. Combined with price controls in important consumer areas--the Middle East, South and East Asia--this results in inelastic demand and supply.

And that means huge price fluctuations in energy. But today's economy is very dependent on energy prices--it made the crash worse, then low prices contributed to a quick rebound, and higher prices in the future might cut off a recovery.

That means, as long as the price of oil remains as volatile, America's economy will remain very unstable, and will respond to and drive the cost of oil. Especially now that monetary policy is very limited, being immune from world energy prices would really help stabilize the economy.

And that would require a very different energy source.

Mad Max

The aftermath of Katrina left much of the southeast United States short on gas as refineries and pipelines shut down. A few weeks ago, I was in Asheville, NC seeing something familiar in the aftermath of Ike. Asheville is at a high altitude and it's hard for gas shipments to reach there after a crisis. It was pretty exciting, really, to see the entire region practically shut down. Many gas stations ran out of gas, others--mostly independent retailers--had prices going up to about $5 a gallon. Some stations tied to the oil majors had lower prices, but had large lines. Traffic plummeted and at the clinic I was working at, many people cancelled appointments.

Well, this is still ongoing. From what I hear, gas is still in short supply, and stations either have no gas or long lines for expensive gas. Police are stationed at pumps, and all sorts of events have been shut down or curtailed. It's a great glimpse at our dependence on fossil fuels, and the chaos and anarchy underling the well-greased market system of tradable goods and services. It's tough to imagine Appalachia with excessive gas prices. Without roads to connect far-flung valley communities and mountain outposts, you either have self-contained hamlets or a handful of denser areas. And without the tourism or expansive mountain cabins, there are few remaining attractions. It's going to be a lot easier to replace this addiction with biofuels or compressed natural gas rather than move to a Japanese or European style of living.