December 19, 2004 to December 24, 2004
Global Warming
Global Warming
This week I am posting first.
The term "global warming" refers to increased global temperatures caused by increased concentrations of "greenhouse gases" in the atmosphere. A greenhouse gas is a gas that tends to block heat reflected from the earth's surface while letting the heat of the sun through to heat up that surface; so the higher the concentration of such gases in the atmosphere, the hotter the surface becomes. The most important greenhouse gas is carbon dioxide, which is emitted into the atmosphere by a variety of human activities, mainly the burning of fossil fuels (oil, coal, and natural gas) and of forests; those fuels, and of course wood, are made out of carbon and burning them liberates carbon in the form of carbon dioxide.
Recent decades have seen large, and accelerating, increases in annual emissions of carbon dioxide, because of growth of population and of economic activity. The increases in emissions have been accompanied by substantial increases in the atmospheric concentration of carbon dioxide, and by increases in global temperatures as well. It is now the scientific consensus that these developments are linked: the emissions increase the atmospheric concentration of carbon dioxide and the increase in that concentration causes global temperatures to rise. Not all scientists agree, but the ranks of the dissenters are shrinking as new evidence of global warming emerges, such as the recent recession of glaciers in Alaska and elsewhere.
What if anything is being done, or should be done, about global warming? The Kyoto Protocol, which recently came into effect by its terms when Russia signed it, though the United States has not, requires the signatory nations to reduce their carbon dioxide emissions to 7 to 10 percent below what they were five years ago, but exempts developing countries, such as China, a larger and growing emitter, and Brazil, which is destroying large reaches of the Amazon rain forest, much of it by burning. The effect of carbon dioxide emissions on the atmospheric concentration of the gas is cumulative, because carbon dioxide leaves the atmosphere (by being absorbed into the oceans) at a much lower rate than it enters it, and therefore the concentration will continue to grow even if the annual rate of emission is cut down substantially. Between this phenomenon and the exemptions, there is a widespread belief that the Kyoto Protocol will have only a slight effect in arresting global warming; yet the tax or other regulatory measures required to reduce emissions below their level of five years ago will be very costly.
The Kyoto Protocol could certainly be improved, but on balance I think it is a step in the right direction'if the United States ratifies it, which it has thus far refused to do. But my reasoning is different from that of most of the Protocol's supporters. They are content to slow the rate of global warming by encouraging, through heavy taxes (for example on gasoline or coal) or other measures (such as quotas) that will make fossil fuels more expensive to consumers, conservation measures, such as driving less or driving more fuel-efficient cars, that will reduce the consumption of these fuels. This is either too much or too little. It is too much if, as most scientists believe, global warming will continue to be a gradual process, producing really serious effects'the destruction of tropical agriculture, the spread of tropical diseases such as malaria to currently temperate zones, dramatic increases in violent storm activity (increased atmospheric temperatures, by increasing the amount of water vapor in the atmosphere, increase precipitation), and a rise in sea levels (eventually to the point of inundating most coastal cities)'only toward the end of the century. For by that time science, without prodding by governments, is likely to have developed economical "clean" substitutes for fossil fuels (we already have a clean substitute'nuclear power) and even economic technology for either preventing carbon dioxide from being emitted into the atmosphere by the burning of fossil fuels or for removing it from the atmosphere. But the Protocol, at least without the participation of the United States, is too limited a response to global warming if the focus is changed from gradual to abrupt global warming.
At various times in the earth's history, drastic temperature changes have occurred in the course of just a few years. The most recent of these periods, called the "Younger Dryas" (Dryas if a flower that flourished then), took place about 11,000 years ago, shortly after the end of the last ice age. In a period of no more than a decade, temperatures soared by about 14 degrees Fahrenheit. Because the earth was still cool from the ice age, the effect of the increased warmth on the human population was positive. But a similar increase in a modern decade would have devastating effects on agriculture and on coastal cities, and might even cause a shift in the Gulf Stream that would result in giving all of Europe a Siberian climate.
Because of the enormous complexity of the forces that determine climate, and the historically unprecedented magnitude of human effects on the concentration of greenhouse gases, the possibility that continued growth in that concentration could precipitate'and within the near rather than the distant future'a sudden warming similar to that of the Younger Dryas cannot be excluded. Indeed, no probability, high or low, can be assigned to such a catastrophe. It may be prudent, therefore, to try to stimulate the rate at which economical substitutes for fossil fuels, and technology both for limiting the emission of carbon dioxide by those fuels when they are burned in internal-combustion engines or electrical generating plants, and for removing carbon dioxide from the atmosphere, are developed. This can be done, in part anyway, by stiff taxes on carbon dioxide emissions. Such taxes give the energy industries, along with business customers of them such as airlines and manufacturers of motor vehicles, a strong incentive to finance R&D designed to create economical clean substitutes for such fuels and devices to "trap" emissions at the source, before they enter the atmosphere. Given the technological predominance of the United States, it is important that these taxes be imposed on U.S. firms, which they would be if we ratified the Kyoto Protocol and by doing so became bound by it.
One advantage of the technology-forcing tax approach over public subsidies for R&D is that the government wouldn't be in the business of picking winners'the affected industries would decide what R&D to support'and another is that the brunt of the taxes could be partly offset by reducing other taxes, since emission taxes would raise revenue as well as inducing greater R&D expenditures. However, subsidies would be necessary for technologies that would have no market, such as technologies for removing carbon dioxide from the atmosphere. There would be no private demand for such technologies because, in contrast to ones that reduce emissions, technologies that remove already emitted carbon dioxide from the atmosphere would not reduce any emitter's tax burden.
This analysis completes the circle from our patent postings of last week. Private investment in technologies for reducing global warming by developing clear fuels or reducing emissions from the burning of the dirty ones could probably not be financed by the market, because of the cost and risk involved, unless inventors were allowed to obtain patents on these new technologies.
On Global Warming
On Global Warming-Becker When climatologists construct models of global warming caused by industrial emissions of CO2 and other greenhouse gases, they are much more like economists than the typical experimental biologist or physicist. By that I mean that they can only test the implications of their models with the data thrown up by current and past actual events, not by experimental isolation of particular forces. Since many other not well-understood or readily observed forces affect climate, it has been difficult to prove that these models give accurate predictions about future warming. This helps explain the considerable skepticism about whether man-made activities explain much of the temperature build-up in recent decades, although Posner is right that consensus on this has grown considerably during the past 15 years.
So I agree with him that it is prudent to take actions to reduce the build-up of carbon gases in the atmosphere, but which ones? Despite his recognition of its many shortcomings, Posner believes the US should join the Kyoto Protocol. I disagree because this Protocol in its present form has major defects, even if one fully accepts the concern about global warming. The most fundamental problem is that some 140 developing nations are excluded, including China, India, Brazil, Mexico, and oil producers like Saudi Arabia.
As a consequence, the greater the restrictions and costs imposed on companies in developed countries to cut back their emissions, the stronger their incentive to shift production to exempt nations, like China, India, and Mexico. This is economically inefficient, and helps explain why influential unions and companies in the United States oppose these restrictions. These production shifts could even have a perverse effect on pollution because poorer nations tend to pollute more per unit of industrial output than rich nations do. For companies in the developed world are, even aside from Kyoto, subject to popular pressures and laws to reduce their output of pollutants. Such restrictions are weak or absent in most countries trying to catch up to the economic leaders.
One way to begin to overcome the opposition to Kyoto from developing nations, Congress, and the President, would be to start a system of marketable quotas, for example of CO2 emissions, that would be traded on a worldwide exchange. The total number of quota rights issued in any year would be determined by the level of worldwide emissions of CO2 allowed in that year. The EU is starting an exchange- modeled after the Chicago Climate Exchange that successfully trades sulfur dioxide emission rights- with a limited form of trading in their carbon emission quotas under the Kyoto Agreement.
A most important modification of the Protocol would be to allocate to the major developing nations a greater share of the quotas than their share of emissions. This would make developing nations net sellers of quotas on the proposed climate exchange, and so they would collect payments (or "taxes") from companies in the richer nations who on balance would buy quota rights to reach their production goals. Russia recently agreed to the Kyoto Protocol after much indecision probably because they expect to be net quota sellers in the foreseeable future.
A favorable system of quota allocation might overcome the resistance of China and other developing nations to abide by the Protocol while they are industrially so far behind Europe, Japan, and the United States. It could also reduce the opposition in America-depending of course on how many quotas it receives- because companies in developing countries would have no artificial cost advantage in production, as long as they had to pay the market price for any quotas they receive.
A tradable quota system is equivalent in its effects on production to a unit tax on emissions that leads to the same total quantity of emissions as the quota system. Indeed, the market price of a quota for say a ton a unit of carbon pollution would exactly equal the equivalent tax on that ton. So tradable quotas and taxes have the same beneficial effects on incentives to discover ways to reduce emissions.
Posner is worried about the effects of abrupt, catastrophic, and irreversible changes in climate that could produce enormous damage to the world. Apparently, a catastrophic climate change occurred naturally about 11,000 years ago, and maybe at a few other times. These effects are possible in multiple equilibrium climate models- multiple equilibrium models are also used in economics- whereby a sufficient deviation from one climate equilibrium position can set in motion forces that lead to large and rapid movement to a wholly different, and possibly much worse, position.
But a few naturally induced rapid climate changes in the course of thousands of years does not mean that the man-made risk of such a dramatic change should receive much weight. Given all the risks the world faces, such as terrorist control of nuclear and biological weapons, or runaway nanotechnology, genetically modified crops, and cloning-all very well discussed in Posner's new book Catastrophe- I believe he is excessively concerned about climatic catastrophes. A sympathetic and informative review of such abrupt climate changes by Stephen Schneider of Stanford published in 2003 by the OECD's Workshop on "Benefits of Climate Policy" reaches the modest conclusion that "My own personal value position, given the vast uncertainties in both climate science and impacts estimations, is to enact (and act on) policies to slow down the rate at which we disturb the climate system. This can buy us time to better understand what may happen-a process that will take many more decades- and lead to lower cost decarbonisation options.'
I should add that throughout history, there has been a tendency to underestimate the potential for technological developments that greatly reduce the predicted doom from various natural and manmade disasters, such as claims during the past several centuries that the world is running out of wood, coal, or oil. One glaring and instructive example is the 1865 book The Coal Question by the great economist, W. Stanley Jevons, which predicted disastrous coal shortages by the end of that century. The lesson for warming is that new technologies may arrive much sooner than expected, technologies that not only effectively reduce the emission of greenhouse gases, but also help take them out of the atmosphere.
Still, I agree with Posner that we might want to give financial and other incentives to speed up the development of ways to remove carbon dioxide from the atmosphere. He may be right that governments should subsidize research on this topic, although he would agree that the subsidies to ethanol and the Synfuels corporation, and the hype about the potential of hydrogen to replace oil and coal, are not reassuring about government subsidies of other climate-improving technologies. It may be better to convince rich philanthropists to establish lucrative prizes for technologies that can remove carbons from the atmosphere. Perhaps even we should allow patents on these technologies, which would be purchased by signatories to the Kyoto Protocol through auctions of the type described skeptically in my previous commentary on patents.
Response to Global-Warmng Comments--Posner
These were a fine set of comments, and let me reply briefly to some of the major points made.
One interesting suggestion is that a tax limited to net emissions would create a private market (contrary to what I suggested in my post) for devices for removing carbon dioxide from the atmosphere. A power plant, say, would willingly pay a license fee for such a device if the fee were less than the tax savings from being able to offset the plant's emissions by carbon dioxide that the device removed from the atmosphere.
Another commenter points out, correctly but misleadingly, that water vapor in the atmosphere blocks more heat from the earth's surface than carbon dioxide does. That is true. But an increase in atmospheric temperatures brought about by an increased atmospheric concentration of carbon dioxide increases the amount of water vapor in the atmosphere (because warmer air holds more water), and thus has a multiplier effect. It is also true but, to me at least, not reassuring that climate has fluctuated a great deal in the course of the earth's activity quite apart from any human influences on climate. I am not reassured because a human-engendered increase in global temperatures could coincide with and reinforce a natural increase, rather than offsetting it.
In this connection, I emphasize the possibility of a runaway greenhouse effect. Becker discusses the underlying problem in terms of multiple equilibria. A less technical way to describe it is in terms of tipping, feedback, or a "vicious cycle." For example, higher atmospheric temperatures cause melting of the permafrost in Alaska and Siberia, which releases methane (stored in great abundance in permafrost), which causes a further temperature rise, which causes more melting and so more release of methane.
The fact that severe climatic effects might unfold quite rapidly is a reason not to be comforted by the argument that, after all, the earth might be better off if it were warmer--Greenland would once again be green, Siberia would support agriculture, and so on. If abrupt global warming destroyed tropical agriculture, it would take decades to relocate that agriculture to formerly frigid areas; the transition costs would be immense.
It is thus the possible rapidity of extreme climate changes that worries me; and it also makes me doubt that we can count on technology to bail us out. In the long run, yes; but we are probably decades away from the development of economical technologies for arresting human-engendered global warming. We are thus in a vulnerable period in which technology-forcing taxes (or quotas, as discussed by Becker) may be a prudent response.
Finally, the fact that abrupt global warming is less probable than gradual global warming is small comfort, because a proper cost-benefit analysis of safety measures takes into account not only the probability of a harm but also the magnitude of the harm should it occur.
Response on Warming
Response on Global Warming-Becker Several informed comments, including a few in emails directly to me. Some claim I overstate the warming problem, others that I understate it. This indicates that controversy remains about the causes and cures of any warming. I have a few additional points.
I agree there is room for doubt about whether industrial and other human activities are causing significant warming. But I have become more convinced than I was 15 years ago that it is a risk worth some effort to protect against, just as we insure against other risks that may never happen. I would oppose draconian cut backs in energy emissions, but not a modest and sensible program of the type set out in my commentary.
Enforcement is always a problem, and a quota or tax system of emission controls would need international enforcement. I believe that can be reasonably successful, although some rogue nations and companies would cheat.
I am a strong supporter of nuclear power, and believe that the opposition in the "70's in the US and elsewhere was motivated more by emotion than by good analysis. So yes, let us pressure countries to reduce the excessive regulation of nuclear, so that the US (and other nations) can get far more than 20% of its power from this source.
I have used some multiple equilibrium, or "runaway", models in my own work in economics, and have seen many such models. But at least in economics, they are far more common at the model-building stage than in any evidence yet analyzed. That may not be true in the climate area, but my admittedly cursory examination of some multiple-equilibrium climate literature does not lead me to place much weight on these models in the warming debate.