Prompted by David Hone (“bonkers”, says NB :-). But it says something that I’ve been thinking for a bit, and haven’t seen anyone else say:

Arguably, we are in a time where underlying global energy demand exceeds supply. This isn’t to say they are out of balance as that is not possible, but it says that if there were more energy then global economic growth would be even faster. This condition could well persist for a long time given population growth and the rapid expansion of several major economies – with more to follow. A direct implication of this thinking is that the production of all fossil fuel energy is infra-marginal, i.e. there is nothing at the margin and that even the most expensive to produce barrel or tonne on the planet is profitable at current price levels.

Now I’m not entirely sure about his economics there, but I do think his basic point is either true or close-to: that for a lot of fuels, oil most obviously, use is limited by production. If we (we? The West, say) limit our use by being nicely green, then someone else is going to burn it instead. I’m not saying “and therefore we should do nothing” but it does present a problem.

Comments

  1. #1 Nick Barnes
    2011/11/24

    Sorry, ‘bonkers’ was a bit terse and also a bit ruder than my usual style. I was rushed for time. Still am, but here are a few more words to explain my view:
    - yes, of course, action on CO2 has to be global.
    - CCS continues to be nonexistent. So this is the “rely on magic pixie dust” plan.

    [Ah yes I forgot the CCS. Agreed: it is simply uneconomic at the moment -W]

  2. #2 J Bowers
    2011/11/24

    Assuming there isn’t an oil crash. Independent audits of reserves seem to suddenly reduce the estimate by ~40% (Shell). OPEC won’t allow any.

  3. #3 Michael Hauber
    2011/11/24

    ‘there is nothing at the margin and that even the most expensive to produce barrel or tonne on the planet is profitable at current price levels. ‘

    I’m sure this can’t be stricly true. There must be at least some coal somewhere that we could only dig up for the cost of say $8,000 a tonne. Or oil we could only extract at $12,000 a barrel.

    But perhaps the amount of fossil fuel in this range is range is quite limited. If the amount that can be produced at any price is only 1% greater than what can be produced at current market rates than the difference is probably not worth arguing about.

  4. #4 David B. Benson
    2011/11/24

    Anthropogenic emissions will (eventually) be reduced, one way or the other.

  5. #5 Tom C
    2011/11/24

    “If we (we? The West, say) limit our use by being nicely green, then someone else is going to burn it instead. I’m not saying “and therefore we should do nothing” but it does present a problem.”

    Yes, it does present a problem, doesn’t it. Have you not grasped this “problem” until now?

    [Was there something difficult about "it says something that I've been thinking for a bit" that you failed to understand? -W]

  6. #6 The Bishop of Stratocaster
    2011/11/24

    Saying “demand exceeds supply” is daft (except in the extremely short term) whether you’re talking about energy or chocolate Hob Nobs. Demand depends on price, as does supply. I don’t think the bit about economic growth being greater if energy were more freely available is particularly insightful either, though for somewhat different reasons.

    Nevertheless the argument that if the developed world goes green then someone else will use more energy has merit. In basic economic terms if global demand falls because the developed world reduces consumption the price should fall accordingly. Then new customers, namely the developing world, could afford to buy more. There would probably be a bit less consumption overall; just how much is a very interesting question (an economist would talk about things like the price elasticity of demand for different sectors of consumers).

    [I don't think it is just this, or I wouldn't have bothered to comment on it. Though clearly there is some part in the demand-falls-price-falls bit, as the recent recession shows -W]

    All this assumes that energy trades in a classical free market. That’s of course not entirely true especially in the short term. But we do indeed see the price of a barrel of oil vary as demand grows and slackens, e.g., the decline in price when the current recession was at its deepest point. So it’s probably not too bad an assumption, at least for making general arguments.

  7. #7 TheGoodLocust
    2011/11/24

    Sans a technological revolution or worldwide disaster our emissions will not be reduced.

    But more to the point – why should we reduce them?

    [Trolling removed -W]

  8. #8 Tim Worstall
    2011/11/25

    That there are more fossil fuels available to burn at prices we’re prepared to pay to burn them is, I think, obviously true….more than we’d like the emissions from to end up in the atmosphere I mean.

    Which leads us to the conclusion that the only way to stop the burning of them is to come up with a different energy production system….and here’s the important part….that is cheaper.

    It’s pretty much Lomborg’s point all over again. Whatever money we’re willing to spend to address this should be going into the R&D of new energy systems. And most certainly not the roll out of horribly expensive ones.

    [Had L just stuck to that point, we'd all have been better off. And the best way to mix in the costs is via a carbon tax -W]

    It’s also possible to see the outline of a technology that currently works and could become economic. Solar plus fuel cell (ie, use solar ‘leccie when you’ve got it, run it through a fuel cell to electrolyse water when you don’t need it, store the H2, run that back through the fuel cell when you want ‘leccie and the Sun isn’t shining)does in fact work, but it’s currently horribly expensive.

    Fortunately both technologies are subject to something akin to Moore’s Law. Solar cells are really baking the oxygen out of sand, slicing the Si ingot an getting a circuit onto the wafers. Fuel cells are really just getting a circuit onto zirconia (which we also get from sand of a certain type). We’ve no shortage of raw materials and the Moore’s Law part indicates that they should become ever cheaper over time.

    Fuel cells (solid oxide fuel cells that is) are perhaps a decade behind solar cells in terms of manufacturing expertise: I know of one manufacturer that actually hand paints the important parts, rather than using something sensible like thin film technologies.

    Perhaps I am just blinded by optimism but I really cannot see any reason at all why that solar/fuel cell mix shouldn’t decline in price by an order of magnitude over the next decade or two.

    At which point, of course, out problem is solved.

  9. #9 Observer
    2011/11/25

    I don’t think that the premise “if we dont burn it, someone else does” is true. When a significant part of the relevant countries (USA,Europe,China,Japan..) agree, that we must lower our CO2 emissions and they phase out fossil fuels (e.g. by pricing CO2, making it increasingly more expensive and switching to renewables) than there will be a huge demand on renewables. Many companies will invest and do research on making them cheaper and better. And when you can mass-produce those products, than they get even more cheaper. We have seen this with everything. And renewables will get through this to a point, where it just doesn’t make sense to burn oil, because you can have at the same price or even cheaper the same energy from clean sources.
    But if no one makes the first step, the chance is, that renewables can’t establish themself without help at the beginning, because they will not reach the amount of demand, that will be necessary to drive the prices down enough.

    I agree, that we need affordable alternatives. But how do you want to get these in time, when you do nothing and just wait for the oil to run out. The danger there is, that prices will spike and jeopardize the economy, because we my not be able in the future to produce enough oil in time to meet the rising demand. And if you then have no feasible alternative, you have a much bigger problem. So we have to start switching now, because we can’t allow us to wait before the climate goes to shit *or* the oil gets short.

  10. #10 PeteB
    2011/11/25

    If we add a carbon tax (globally) that covers the cost of the externalities, and for the sake of the argument, even with the carbon tax, we still use all fossil fuel reserves, then that seems OK to me, because the cost of the damage caused is priced into the tax. (I actually very much doubt this will be the case)

    [In principle, that is correct: but the big IF, of course, is getting the price right. There are two big problems with that: having the science right, to know what the price should be; and (at the moment appearing rather more difficult) having the political will to do it. The fisheries-policy example is not encouraging -W]

  11. #11 Tom Fiddaman
    2011/11/25

    The idea that “underlying demand exceeds supply” is kind of silly. Demand doesn’t exist, except with reference to some price. So, this is really saying that if energy were free, people would want more. If you think people are using too much, or more to the point, emitting too much, then the obvious remedy is to raise the price.

    The “if I don’t burn it, someone else will” argument is morally pretty fishy. It also has a fairly obvious remedy, which is border adjustments (i.e. tariffs on embedded GHGs). That doesn’t solve the whole problem, but there’s no point in worrying about the rest when we’re so far from solving the first order price issue.

  12. #12 Wow
    2011/11/25

    “The idea that “underlying demand exceeds supply” is kind of silly”

    Even said twice, this doesn’t make it true.

    “Demand doesn’t exist, except with reference to some price.”

    There’s demand for Anime DVDs in the USA, but no supply for 99% of them. Not at any price.

    Demand is infinitely larger than supply.

  13. #13 SteveWW
    2011/11/25

    Is it just me or does the “someone else will always burn it” view ignore the fixed infrastructure costs related to fossil fuels. Port terminals, pipelines, oil refineries, rail lines all help determine where coal, oil, and natural gas get burned. And they’re all unevenly distributed to wealthy, industrialized countries. If we were to drastically reduce fuel consumption magically, the fossil fuels couldn’t suddenly switch to somewhere else; there would be a lag time for the infrastructure to build up.

    I suppose the question is, can that lag time be used to humanity’s advantage in reducing overall emissions? India, China, and other developing nations are building new infrastructure rather rapidly, but it seems as though economic incentives to other developing nations to produce renewable fuel infrastructure and not build additional fossil fuel infrastructure might be worthwhile if anyone can be convinced to spend the money for those incentives.

  14. #14 TheGoodLocust
    2011/11/25

    How was that trolling?

    Reducing oil/gas exploration/extraction before we can replace nitrate fertilizers would kill billions.

  15. #15 Sou
    2011/11/25

    even the most expensive to produce barrel or tonne on the planet is profitable at current price levels.

    There seems to be something wrong with this notion. Unless I’ve misread it, it doesn’t make sense. If the cost of production is higher than the price paid, how could it be profitable? At the ‘current price levels’ there are oil deposits, coal deposits etc that are not exploited because they are not profitable.

    Demand / supply operates probably even more today now that alternatives are becoming more widespread.

    If prices rise then people look for alternatives. Let the price rise high enough and people will invent alternatives.

    If prices drop too far then no-one will dig up the stuff. It would cost more to produce than miners got paid.

  16. #16 andrew dodds
    2011/11/25

    As far as conventional oil and gas go, the amounts available are fairly fixed – most is in
    The big fields, and geology says how much you get out. And big fields are cheap.

    We’ve had reasonably cheap carbon free electric for decades now (nuclear fission),
    but refuse to use it. R&D could get 4th gen online in a couple of decades, but again,
    we don’t seem bothered. Given sufficient electricity, liquid fuels just become an issue
    of chemical engineering.

    It’s been doable for ages. Question is.. why haven’t we?

  17. #17 Kooiti Masuda
    2011/11/25

    Chinese government has an ambitious goal on reducing carbon dioxide emission per GDP. That is the same as “carbon intensity” that G.W. Bush insisted. But, I think, that the implication is different, for in communist China politics controls business while in the USA business commands politics.

  18. #18 Steve Bloom
    2011/11/25

    More meaningfully, I think, and ignoring the quite different circumstances of each, the Chinese government is run by engineers (who oddly enough seem to uniformly respect the views of their climate scientists) and the U.S. government by financial speculators (who, um, don’t).

  19. #19 Eli Rabett
    2011/11/25

    Basically the lay back and enjoy it argument of somebunny of Eli’s acquaintance. If you try and shoehorn climate change into economics you come out where you are headed. OTOH, if you realize that it is an intergenerational moral issue you come out somewhere very different.

    [That is a very fundamental difference of opinion and approach. I don't agree with the "shoehorn" idea - with carbon taxes, there is an easy unforced fit. Which also "solves" the renewables price difference problem, in the long term. Casting it as a moral problem sounds doomed -W]

  20. #20 David B. Benson
    2011/11/25

    Quarter-baked economics is quite soggy inside.

  21. #21 Andy
    2011/11/26

    What if the U.S.A., Canada, Norway, Australia and G.B. (i.e. countries that have substantial coal and oil deposits and might decide to become “greenies”) refused to extract it?

    That could make a difference.

    [They have lots of coal, but there is lots elsewhere. And they don't have much of the oil. More importantly, they show no interest in not-extracting -W]

  22. #22 Brian Schmidt
    2011/11/26

    Most cap-n-trade/Ctax regimes include “leakage” proposals to address whether the reductions create incentives to increase GHG emissions elsewhere. This should in theory address the problem. I’m sure it’ll take practice to get right, but the political incentives to make sure foreigners aren’t getting away with stuff that domestic emitters can’t, encourages development of pretty good leakage prevention.

    [What sort of "leakage" proposals? I'm having a hard time seeing what those might be -W]

    Yes, some domestic interests will ally with foreign emitters to impose pollution costs on the rest of the world, but I don’t expect them to be the big winners in the political game.

  23. #23 MikeN
    2011/11/26

    Nice to see a non-skeptic acknowledge this.
    One tidbit. Oil is not the biggest part of carbon emissions, so even getting rid of all oil use would be about a 20% drop, and not enough.

    You are right, any drop on oil use would just be oil that is used by someone else. So those tar sands are going to be extracted.
    Global emissions really can’t be reduced when China is growing so much, as are other developing countries.
    The percentage of emissions that are contributed by US/Russia/Canada/Europe/South KOrea/Japan/Australia is <50^ and shrinking. China is at 25% while the US is at 18%.

  24. #24 Eli Rabett
    2011/11/26

    Carbon taxes are only justified by moral analysis of the problem.

    [No, not at all. CT is justified by std economic theory. I strongly dislike trying to solve this on the basis of morality, because I think it is doomed. We don't have a common morality, there is no basis for a framework -W]

    Go read Gardiner on the perfect intergenerational problem. WRT climate change earlier generations impose problems on later ones in a way that only benefits the earlier ones.

    Where economics plays a part is finding the lowest cost method of sharing the problems equitably. You have conceded the argument without realising it.

    [Certainly, if you're doing an economic analysis you're obliged to balance costs and benefits - there is no other way (rather in the way that physics fundamentally depends on maths). But your description is inaccurate: if the economic analysis showed that the costs of the problems was greater than the good of emissions, the std economic analysis would be to not do the emissions. Asserting that economics merely shares out the problems is completely wrong -W]

  25. #25 Hank Roberts
    2011/11/26

    This is unfortunate but true. It’s the same logic behind “if you don’t log/take/eat/kill it someone else will” — that unless you’re powerful enough to fence off and guard any resource there is always someone who will take it and walk off.
    http://adventuresportsjournal.com/blogs/earth-talk/timber-thefts

  26. #26 Eli Rabett
    2011/11/26

    What economic theory? What is your economic justification for imposing costs on me for the benefit of your grandchildren?

    [Internalising externalities -W]

  27. #27 Andy S
    2011/11/26

    Sure, internalizing externalities does provide an economic case for carbon taxes, but if the main effects of those externalities emerge decades down the road, conventional discount rates will greatly reduce the net present value of those negative externalities and will justify only a small carbon tax.

    Eli’s mostly right; introducing a sufficiently high carbon tax to radically change the way we produce our energy requires an ethical justification. Let’s use ethics to define our priorities and rely on economics to efficiently allocate the resources we need to achieve those goals.

    [Shall we use my ethics, or yours? Or the Pope's? Or someone else's? -W]

  28. #28 Steve Bloom
    2011/11/26

    William seems to forget discounting and the legal obligations of corporations to their shareholders. Costs don’t have to be very far off in the future to be considered not costs at all. Of course that’s where government and things like carbon taxes ought to enter in but, while their discounting is less formal, politicians and bureaucrats seem to want to do it to nearly the same degree. Children don’t vote or buy shares in politicians, even more so the ones not born yet. Thus our problem.

    [Nope, I remember discounting. It needs to be done properly. Of course, you then get to argue about what the discount rate should be -W]

  29. #29 Paul S
    2011/11/26

    What economic theory? What is your economic justification for imposing costs on me for the benefit of your grandchildren?

    [Internalising externalities -W]

    I think Eli’s point is that you are implicitly invoking morality. What economic justification is there for caring about people’s living standards 100 years from now?

    [When I first wrote that, I was brief because I thought I was on a sticky wicket. I was going to invoke some wurble about a simpler underlying morality we could all agree on, if pushed.

    But having thought about it, I realise I don't need to. Economics doesn't care about births and deaths, just resource flows. Costs and benefits are discounted into the future. It doesn't matter whether it is you, or your children, or your grandchildren alive then. The economics works exactly the same -W]

  30. #30 Andy S
    2011/11/26

    Wm: my ethics, or yours?

    For every policy decision and law we have to use some agreed-upon ethical basis. Surely you are not urging policy-makers to abandon all ethical considerations just because you and the Pope will never see eye-to-eye?

    [No, indeed not. I was pushing the argument further than it will go in the hope of making my point. We do need some kind of shared ethical framework in order to make laws, or at least, in order to have laws that the populace will respect. That works when there is commonality. But we don't have a global legal system, or a global moral system -W]

    And economics, despite what some believe, is not ethics-free, the ethics are just buried in the fundamental assumptions.

    [Really? -W]

  31. #31 Andy S
    2011/11/26

    But we don’t have a global legal system, or a global moral system -W

    Exactly. And then there’s the intergenerational problem; evolution didn’t equip us with intuitions or institutions to respond to threats to our unborn descendents. Add to that all the uncertainty about the magnitude, nature, timing and distribution of the effects of climate change, and all the wiggle room that those uncertainties provide for procrastination and self-serving inaction. It’s little wonder we’re proving hopeless at dealing with this problem.

    http://e360.yale.edu/feature/the_ethical_dimension_of_tackling_climate_change/2456/

  32. #32 Richard Tol
    2011/11/26

    Economics, like all social science, revolves around three questions. The first is shared with the natural sciences: What if? That is, trying to describe and understand the system, and predict what it would do under certain circumstances.

    Economists also ask so what? That is a value is attached to the prediction — not in terms of high or low, but in terms of good or bad. Most economists are democrats: Do they not impose their own values, but try to measure the values of “everyone”. Everyone used to be defined as rich white men, but it has become more inclusive since.

    The third question is what to do? Given predictive skills for the system, and an assessment of what is good and bad, how to intervene so as to do most good?

    Any economic analysis of policy is thus a mix of facts and values, of positive and normative elements.

  33. #33 Bart Verheggen
    2011/11/26

    “[discounting] needs to be done properly. Of course, you then get to argue about what the discount rate should be -W]”

    The proper discount rate to use for such long timeframes and different cups of tea such as comparing current expenditures with future sea level rise necessarily involves ethical judgment.

    The discount rate to use in such circumstances is ethics disguised as economics.

    [I don't currently believe that, though I'm open to being persuaded. There are long-term business non-moral discount rates in the world -W]

  34. #34 crf
    2011/11/26

    The conclusion that global emissions can only be reduced by cleanish technologies that are cheaper than coal is one held by many fairly smart people, and, in my opinion, pretty valid.

    Hone’s ideas are also interesting, because they imply that, to mitigate CO2, cheaper than coal is not enough, technology must be even more easily deployed than coal, or liquid fossil fuels.

    I think of this whenever I read some report or blog extrapolating cost or deployment trends for renewable technologies, far beyond their current forms, or when someone casually blurts about a “switch to renewables” as if they are saying something truly connected to reality. This opium is found on too many climate science blogs now. (Does it really make climate-science bloggers feel better?) (some names: Romm, Eli Rabbett, SameFacts). It bothers me tremendously.

  35. #35 crf
    2011/11/26

    Stoat, regarding Brian Schmidt’s comment about leakage, you may wish to read Jeff Frankel’s weblog. He’s done a lot of thinking on this subject. http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/category/climate-change/

  36. #36 crf
    2011/11/26

    One more link, for those interested in this unfortunately moot subject of carbon tariffs and trade.
    http://web.hks.harvard.edu/publications/getFile.aspx?Id=335

  37. #37 David B. Benson
    2011/11/26

    No economic theory, not one, actually works in practice.

  38. #38 Eli Rabett
    2011/11/26

    Most economists are democrats?

    Yes, Milton Friedman advising Pinochet was a perfect democrat.

    Basically another one of Tol’s Tales

  39. #39 Paul Kelly
    2011/11/27

    The Externalities Accountancy Tax (EAT) is hereby imposed on all carbon dioxide emitting human entities and enterprises. Collection of the tax starts immediately. The tax is $10 per month or $120 per year, payable locally. For the sake of efficiency and effectiveness, government authority is the basis for neither the imposition nor the collection of the EAT.

    Rather than attempting to price externalities, the purpose of the EAT is to preclude them. A pricing tax is an indirect method of accounting for externalities, dependent on government with all of it’s attendant deficiencies. A preclusion tax, arising from the people, accounts directly by reducing future emissions.

  40. #40 Steve Bloom
    2011/11/27

    Taking an argument too far makes it less interesting.

    Re discount rates, having them set properly would be lovely. We will achieve this how? See below for my answer. I’m not sure I’m right, indeed I hope I’m not, but I’m afraid the smart money says I am.

    “The conclusion that global emissions can only be reduced by cleanish technologies that are cheaper than coal is one held by many fairly smart people, and, in my opinion, pretty valid.”

    Wishful thinking, I’m afraid. What we need are some large and obvious repercussions in the First World that are nonetheless early enough in the process so that the resources to do anything haven’t evaporated. We may not get that.

    ["large repercussions" amounts to a proof that the externalities are larger than currently accepted; that just folds into a carbon tax -W]

  41. #41 Richard Tol
    2011/11/27

    William:
    An individual discount rate is a moral choice: It reflects your attitudes towards the future and towards risk.

    [It isn't clear to me why you would call that a moral choice. In particular, why is my attitude to risk a moral choice? -W]

    A market discount rate is an average of the discount rates of the individuals who partake in that market.

    A market discount rate is therefore a collective moral choice. Markets operate with an aggregation rule that is roughly equal to “one dollar, one vote”.

    Different people operate in different markets. Different markets have different discount rates. The choice of the “best” market, and hence the “best” discount rate, is a subjective one.

  42. #42 Bart Verheggen
    2011/11/27

    Tol’s new cost-benefit paper says: “The uncertainty about the marginal costs of climate change is large and skewed, and estimates partly reflect ethical choices (e.g., the discount rate).”

    [Tol asserts elsewhere here that the discount rate is a moral choice. Unless the proof of that is short, it would be nice to see a link towards a proof, or a clarification -W]

  43. #43 Bart Verheggen
    2011/11/27

    There is no proof for that assumption, but the whole notion of comparing current and future valuations is inherently subjective. I can’t “proof” either that my attitude towards abortion is a subjective moral choice; it just is. I’m sure a professional philisopher would disagree, but for us here, talking in a virtual bar, I think that’s how it is.

    Perhaps it’s the word “moral” that irks you. But I think you can agree that it’s a subjective chjoice how someone weighs the future towards the present. I think RT in 40 describes it very well.

    [Yes, its the word "moral". If you replace it with "subjective" I wouldn't object -W]

  44. #44 Paul S
    2011/11/27

    [Tol asserts elsewhere here that the discount rate is a moral choice. Unless the proof of that is short, it would be nice to see a link towards a proof, or a clarification -W]

    Look at it this way:

    What was the discount rate for those people who thought the rapture was going to whisk them away in the past year?

    What’s the discount rate for those who think 2012 will mark the end of the world?

    What’s the discount rate for people who don’t care at all about living standards of future generations?

    [Anyone who thinks the world will end soon, will clearly apply a high discount rate (indeed the concept fails to work in your example). But your third example is not so clear. Why does the discount rate that person will apply to their decisions change? -W]

  45. #45 J Bowers
    2011/11/27

    Seems relevant:

    Ethical dilemma profoundly sways climate economics

    Interesting that a Google of ‘”discount rate” ethics’ almost solely returns hits on climate change and the Stern Review.

    [Um. The problem there is their assertion that discount rate == ethics. But that is just an assertion on their part -W]

  46. #47 crandles
    2011/11/27

    Can you separate a subjectively appropriate discount rate from the purpose for which you are using it?

    Most people use a discount rate to evaluate investments. For this purpose the rate at which you can borrow money is a very important guide to the discount rate to use. You might adjust either the cash flows or the discount rate to reflect risks of the project.

    If you change the purpose to considering societal decisions on trying to avoid climate change risks, does the rate change? In part, there is a reason for saying no, leave it at the same rate. Then if it makes sense to make other investments to make society weathly so they are more able to afford the costs then the discount rate will be high enough to make the do little about climate change yet decision correct.

    However, if there are risks that the do little about climate change decision involves sufficient uncertainty that there is a risk of wiping out the human race then a moral element surely needs to be made to the investment decision discount rate (or the cash flows you are evaluating). I suggest this adjustment is morally based as well as being subjective.

  47. #48 Eli Rabett
    2011/11/27

    Your equality sign is naive (and wrong). Ethics goes into the choice of a discount rate in that there are ethical considerations in determining value, particularly the value of future generations and poor people.

    The Stern report did not spring full blown out of thin air with the idea of a social discount rate. There had been a long discussion about how to set global discount rates for long periods of time, the problem is you are just not aware of it. Among other things is how do you set the value of a person. Is one African worth 0.1 European or less? Is an African worth more if he crosses the border into Europe or the US??

    As to market discount rates being set democratically, what proportion of the market is determined by the 0.1%? If you call that democratic, good luck.

    A reason the econometricians glommed on to asymmetric risk was it got them out of the intergenerational/international ethical binds that Stern pointed out.

  48. #49 Eli Rabett
    2011/11/27

    Oh yes, EAT, Eli had that idea about four years ago

  49. #50 J Bowers
    2011/11/27

    “Um. The problem there is their assertion that discount rate == ethics. But that is just an assertion on their part -W”

    I’d suggest it all boils down to life expectancy being the best and most universal measure, without any need to introduce ‘ethics’ or ‘morals’ to muddy the waters.

  50. #51 Richard Tol
    2011/11/27

    The weights that you put on the future relative to the present, on others relative to yourself, and on remote possibilities relative to near certainties are all of the same order.

    Some people call these preferences. I call them moral (or ethical) choices, because they are the sort of things your mother and your priest taught you.

    My morals are objective, in the sense that they are independent of the observer. Beauty is subjective: It is in the eye of the beholder.

  51. #52 Paul Kelly
    2011/11/27

    It is comforting to use words like ethics and morality. They allow us to consider those who disagree with us as unethical and immoral.

    [That is a problem -W]

  52. #53 Tom C
    2011/11/27

    Well, OK. I am impressed that you have thinking about this for a bit. It is a rather elementary point, though.

    As long as you are in the thinking mood, how about another problem. We are talking about only reducing emissions. Reducing emissions only delays slightly the inevitable buildup. But according to the Story, emissions exceeded the earth’s uptake way back at the end of the 19th century. So, to actually halt the accumulation, emissions would have to be dialed back to late 19th century levels.

    Now that is a problem, isn’t it?

    [Yes, but that is no New Thing. Rather than thinking about emission rate, it can be easier to think about total emissions, since to first order they are all still there. This kind of stuff: http://www.newscientist.com/article/dn17051-humanitys-carbon-budget-set-at-one-trillion-tonnes.html -W]

  53. #54 Hank Roberts
    2011/11/27

    And there’s this point of view, sigh:

    “… The future belongs to the efficient. Efficient energies are those naturally chosen by consumers who know their needs better than an intelligentsia and/or central planners….”

    From one Robert Bradley, one of the “two sides” at an Economist debate here: http://www.economist.com/debate/days/view/777

    See, there’s no need of those _thoughts_ and _skills_.

    Use _shoppers_ to make the best possible decisions in this best of all possible worlds.

  54. #55 Eli Rabett
    2011/11/27

    Shoppers have money. Or at least they used to.

  55. #56 Steve Bloom
    2011/11/27

    ["large repercussions" amounts to a proof that the externalities are larger than currently accepted; that just folds into a carbon tax -W]

    Or, potentially, the future not necessarily being arrayed for our convenience, collapses into other things rather than folding into something tidy like a carbon tax. Unfortunately, there are several possibilities along those lines.

    During your or my lifetime, though? The chances get smaller. Indeed, that makes it possible for some to imagine them to be nonexistent. Thus our problem.

    OK, that went beyond the economic into the philosophical, so let me put it in the form of a specific question: One event that I think would safely make a carbon tax seem like a bit of a candle in the wind would be a runaway blow-off of a large fraction of the East Siberian Shelf-area methane — how much should we be willing to push that (unknown) limit, and how should that inform policy?

    (Just to note, I’m entirely in favor of an escalating carbon tax, preferably implemented as part of a global agreement to sharply reduce emissions. That is perhaps obvious, but not everyone here is. Really, I’m in favor of pretty much anything that works. We need to reduce emissions, as quickly as possible, before they reduce us.)

  56. #57 Steve Bloom
    2011/11/27

    It’s interesting, Hank, how faith in the EMH lives after a disconfirming event. Well, these guys wouldn’t want to have to find something else to do for a living.

  57. #58 Tom C
    2011/11/27

    William -

    Thanks for the link to the New Scientist article. I don’t see how this answers the problem I posed. CO2 started to go up because the rate of emission exceeded the rate of uptake. It is true that the driving force of uptake will be increased due to the higher atmospheric concentrations of CO2. But it will still be far from the uspposed steady state conditions of the late 19th century.

    [The point was about us having a total carbon budget (late 19th C emissions being so low that they are effectively zero). You were talking about "actually halt the accumulation", which is the same thing as having a total budget (well, nearly) -W]

  58. #59 Bart Verheggen
    2011/11/29

    Richard TOl (48): “My morals are objective, in the sense that they are independent of the observer.”

    Not sure how you mean that. Surely your morals are different than those of others (hence I’d call them “subjective”). Perhaps you meant that whoever is observing your morals could see the same ones? That doesn’t strike me as a very relevant notion though.

  59. #60 Paul Kelly
    2011/11/30

    I’m renaming my idea the Externalities Accountancy Payment (EAP). Eli’s Emissions Added Levy (EAL) is nothing like it. Hank gets to a little of it with “Use shoppers to make the best possible decisions in this best of all possible worlds”.

    The steps necessary to implement EAL make it a near fantasy. This flaw infects all the global top down solutions. The structures for an effective EAP are already in place. The number one argument in favor of EAP is that it is voluntarily self imposed. Rather than trying to price externalities, EAP in effects purchases their preclusion.

    Shoppers’ alert. Micro units of fossil fuel replacement on sale now.

  60. #61 Faraz
    2011/12/08

    Yes global emissions can be reduced with the help of global unity specially among people from any nation. Regardless of ethnicity and status people should gather on one platform to raise voice for this cause. Apparently this looks impossible but a great change always looks impossible before it comes. Climate change is getting fast and weather is more extreme in plain areas. There are more impacts of climate change in plain areas than other. There are many factors that are considered climate change causes.

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