I was amused by this in an Economist editorial:
[T]he criticism of the economic approach to climate change implicit in the Green New Deal is not that it is flawed or politically unrealistic, but that it is a category error, like trying to defeat Hitler with a fascism tax. Climate change is not a market glitch to be fixed through pricing, in this view, but part of a dire social crisis. It is hard to judge such arguments without decades of hindsight. But they seem to be winning, raising the possibility that, for the moment, economists have lost the chance to lead the fight against climate change.
The claim that economists have lost control is based on the absence of a cost-benefit analysis in the Green New Deal and the fact that carbon pricing is rejected.
Of course, the Economist is wrong. There is a cost-benefit analysis in the Green New Deal: we cannot afford not to do it, whatever it costs.
And carbon pricing does not work. Marco Fante explains why here. The essence is simple though: renewables are cheap enough to ensure that carbon pricing is itself priced out of the market.
So the economists - or rather, the neoliberal economists that the Economist thinks to be the holders of that tile - have lost.
But the green political economists have won. As I always thought we would, one day, which is why I kept on banging on about this.
It's taken a while. But the Economist should note, the change is seismic. And for the sake of the planet, irreversible.
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Marco is mistaken imv. Green neoliberalism is definitely on the table and is the most flexible way of tackling climate change, and lets markets deal with the trade off between costs and benefits. You can assert that benefits versus costs is yesterday’s analytical method, that everything will be destroyed and we’re all going to die, but even the most dire predictions of the IPCC don’t say this. They state what the human and financial damage will be if nothing and varying degrees of something are done.
But Marco should consider this – he says renewables are cheaper than fossil fuels already, presumably for generating electricity. That’s great but suppose prices don’t stand still, and that gas becomes cheaper than windmills in 10 years time. A carbon dioxide tax means that the new gas facility doesn’t get built unless the value of the output from less the tax paid exceeds the value of the output from the windmills. or some new cell technology comes along where we can make H2 on our garage exercise bike, combine it with CO2, and get methane and oxygen at low cost.
A carbon tax incentivises research into that by everybody – a green new deal only incentivises the government to do it.
Green neoliberalism will win out I’m afraid.
You really have no read about what the Green New Deal does, have you?
Or that it really does deliver private sector growth
Despite what you’re claiming
So who’s paying you for the industry / sector lobbying?
Oh Flanders Lad,
I think that you are being a bit tedious and you probably are a lad because your contributions have that youthful kind off ‘rah rah’, doubling-down stubbornness about them.
Now regarding this which is your only salient point that I can identify:
” suppose prices don’t stand still, and that gas becomes cheaper than windmills in 10 years time”
That ain’t gonna happen and I’m going to go a little formal here in briefly explaining why. The reason concerns the nature of fixed and variable costs in electricity generation.
Fixed costs are those that remain constant across the long-run*, things such as your land or rent, your plant and equipment etc.. mostly start-up costs.
Variable costs are more of a day-to-day variety of cost and they are the ones that go up and down according to your level of production. Production inputs mostly – materials, fuel etc.
In the case of electricity generation a coal or gas fired plant will need to use more coal or gas as it it increases production. Nuclear would also need more fuel to produce more. For these electricity producers. That is their main variable cost.
Now, here’s the thing – renewables don’t have variable costs, hardly any, and why? Because the sunshine, the wind, the tides and the geothermal energy are free. Yes, free of charge – simple, and you cant beat that.
Their fixed costs are also lower or becoming lower (per megawatt hour) but, looking forward,it is the near-zero variable costs that make them the decisive and undisputed winner in this analysis.
*Footnote the ‘long-run’ generally refers to the production period in which fixed (or ‘capital’) costs remain the same.
Very good
I wish I had your patience
@ Flanders Lad
I don’t think taxes on CO2 output are the solution. I mean, they could be if there were no alternative technology and limiting CO2 was the only option… but it’s not. And it hasn’t done an awful lot so far.
To advocate against the GND on the basis that, for instance, gas is going to drop in price significantly when compared with (to take your example) wind generation within the future seems close to wilful ignorance or delusion. To labour the point slightly — one can reasonably safely assume that gas-fired electricity generation is so close to optimised as for it not to matter. Whereas wind, solar, tidal, et al are still either nascent or rapidly improving in both output and cost. The idea that green investment should not be done because of belief that market prices might at some point render the green investment not quite so cost (money cost) effective is bonkers. Money is a human construct, the environment is not.
As to the GND incentivising only government to research: who do you think does the research? It’s not predominantly the central government. But the availability of government grants for specific projects (or areas of research) drives the direction of research. Or at least that is my impression, please anybody feel free to correct me if I’m wrong.
And the major point, which Richard so eloquently made, is that we cannot afford not to do it.
I looked at carbon trading in about 2008
Colin Hines and I met many advocates
Even then we were in doubt: it seemed like an exercise in backside / guilt covering that had little chance of actually changing emissions
I still feel the same now
And now there are better options
I can accept carbon pricing as tax
But not as trading
Markets will certainly deliver the products needed to de-carb society. However, moving to a sectoral level/energy vector level the situation becomes somewhat different. I’m sure you have noticed that the Germans are already moving to electrolysis/hydrogen as a means of buffering electricity from renewables. Oddly, to a lesser extent ditto the UK. These developments will lead to hydrogen networks and thus sector coupling (gas/electricity). This is a one-way street. The evolution of nat gas prices in this context is meaningless, for the reasons given by others. I’d also note that both the Gazprom & the Americans are developing natural gas pyrolysis systems (output: solid carbon and hydrogen) which suggests they know “which way the wind is blowing”.
Ending on exercise bikes, taking an output of 250watts (you would be doing well to sustain this), and based on a highly optimistic 50kWh/kg of H2 via your fuel cell, cycling for one hour would produce 5 grams of H2. If you combined it with CO2 (from your respiration?) then you would lose 2.5gms of H2 as water – leaving you with a “useful” 2.5gms of synthetic CH4. I’m not sure there would be a very large market for such a system, but hey! you seem like a bright chap – prove me wrong!
Being a bit thick here Marco, but does the variable cost come into play (at least some of the time) for renewables when they ain’t renewin’. Is that what you meant about nearly no variable costs?
Thinking of cloudy windless days on those days we have to burn something.
Marcus,
Batteries (grid scale batteries for storage and ‘frequency management’) are key and make up the difference in low energy periods. That technology is admittedly nascent but coming on fast and already being applied in Australia and Korea.
https://www.abc.net.au/news/2018-04-06/tesla-battery-outperforms-coal-and-gas/9625726
https://www.ecowatch.com/hyundai-tesla-worlds-largest-battery-2622468655.html
We haven’t won. Nobody anywhere in any position of power is doing anything about it. Just fracking, drilling holes and burning hydrocarbons. Plus using nasty pesticides that kill our pollinators while in this country they’ve spent 2-1/2 years talking about Brexit and in the US about a wall. Where is someone like Roosevelt? Nero comes over as a dynamic statesman compared to the current lot.
“There is a cost-benefit analysis in the Green New Deal: we cannot afford not to do it, whatever it costs.”
Concise and to the point, precisely.
If find this bit (from The Economist) to be very funny:
“for the moment, (orthodox) economists have lost the chance to lead the fight against climate change”
The science was established long before Al Gore forced it into the spotlight with an “An Inconvenient Truth” almost 14 years ago. They’ve lost the chance by little or nothing for 20-odd years or more.
Agreed
The fossil fuel companies are hanging on like grim death even though they are like pilots of the Titanic facing inevitable destruction.
The “markets” are totally useless in restricting carbon use as the oil, gas and nuclear industries have huge lobbying power despite the fact that renewable energy production is becoming much cheaper compared with oil, gas and coal. The UK government is not taking climate change seriously otherwise they wouldn’t allow fracking for oil or allow airport expansion and white elephant projects like HS2, Hinkley Point C and Heathrow expansion to go ahead.
Bill,
Re. ‘Heathrow expansion’, commercial aircraft will continue to be fossil-fuel powered for the foreseeable future and:
“Burning that fuel currently contributes around 2.5% to total carbon emissions, a proportion which could rise to 22% by 2050 as other sectors emit less.”
The good news there is that the one transport technology that isn’t currently green-replaceable accounts for just 2.5% – and the “22%” estimate is, arguably (when you think it through) a positive statement about the “other sectors” – well, it is for the most part, but not entirely because of this:
” the number of passenger aircraft in our skies is set to double by 2035.”
https://theconversation.com/its-time-to-wake-up-to-the-devastating-impact-flying-has-on-the-environment-70953
The academic author of that article argued that the current carbon-offset system imposed on airlines should be replaced with a carbon tax that would reduce overall air traffic. The problem with that is that it would tend to cut the lower-income people out of the market. A more positive approach would be a regulatory push for more fuel-efficient aircraft and there is apparently quite a literature on the current potential for that:
https://www.wired.com/2015/06/planes-get-efficient-heres/
https://news.nationalgeographic.com/news/energy/2013/04/130423-reshaping-flight-for-fuel-efficiency/
https://www.prescouter.com/2018/01/technologies-improving-aircraft-fuel-efficiency/
https://www.theicct.org/blog/staff/size-matters-for-aircraft-fuel-efficiency
The damage done by aircraft is far greater than the headline figures of 2 or 3% or whatever, because of where they create the emissions. https://davidsuzuki.org/what-you-can-do/air-travel-climate-change/ And they don’t pay any fuel tax.
Unfortunately quite a number of commentators take air travel as a given, almost a “human right”, NGO’s included as they jet around to conferences wailing about co2, and fail to point out the many other downsides of air travel, such as the spreading of pathogens and alien species. And then there are those who say that per passenger kilometre air travel isn’t so bad. It doesn’t matter how many passengers are on board, it’s the number of journeys and distance travelled while polluting that matter.
A more sensible approach, if we think we are facing armageddon, as I do, is to find ways of reducing journeys of all kinds that rely on fossil fuels, either directly or indirectly, as with the case of fossil fuel generated electricity. All projections for all kinds of travel seem to indicate huge increases in the pipeline such that the effects of mitigating technologies or strategies will quickly be nullified. And the trouble with mitigation is that it sends the message that it’s alright to keep burning, when really we need to stop.
Thanks Graham,
That was an interesting article from Dr Suzuki and I must admit that I had forgotten (or wasn’t previously aware of) a couple of the points that he had made. The point about high altitude emissions is a good one. I don’t doubt that this then takes the headline figure of 2-3% of emissions and stretches it out to “4-9% of climate change impact” but I do think that there may be some logical traps and fallacies in the idea of a dichotomy between volume of traffic and mitigation through fuel efficiency designs (or better fuels).
The fact that attempts at mitigation may be nullified by an increased volume of travel is no reason to disregard mitigation. On the contrary it makes the mitigation efforts all the more urgent as the counterfactual position (with no mitigation) would be an even greater increase in emissions.
So the reasonable conclusion may be that we need to do both – increase fuel efficiency AND restrict the volume of air traffic. Politically, restricting air travel, hitting the tourism industries of the world and low income tourists is a hard sell. And yes, I know that global extinction is more important than bloody tourism but I also know that, in an urgent situation, the paths of least resistance are faster.
So looking at the articles that we have linked above we know what the current potential is for efficiency gains. Proposals to reduce air travel are, as far as I know, a little less clear. For me, few quick thoughts at the moment would suggest that measures which hold air traffic at current levels (more or less) would encounter less resistance politically as people will more likely fight retain to what they have now rather than something that they might have in the future (?). I don’t know how that would work.
Regulatory measures that restrict or tax frequent flying may be more readily accepted than those hit poorer (less frequent) travellers. The business jet-set can use Skype or use it more often(?)
The articles listed above suggest that aviation bio-fuels are much cleaner than kerosene but more expensive because currently, there is no mass production infrastructure for aviation bio-fuels. Well, there’s another project for the Green New Deals of the future.
https://www.theguardian.com/environment/2016/sep/27/can-the-aviation-industry-finally-clean-up-its-emissions
https://arstechnica.com/science/2017/03/use-of-biofuel-could-reduce-aviation-related-emissions/
https://www.eco-business.com/news/how-the-aviation-industry-is-lowering-its-carbon-footprint/
The irony is not lost that international aviation and marine fuels are not Taxed.
On the subject of airtravel, the Insitutue for Public Policy Research published a paper this week (reviewed in the Guardian) called “This is a Crisis – Facing Up to the Age of Environmental Breakdown”. Page 23 is the bit relevant to this line of discussion (on air travel). It shows emissions based on wealth for various countries. The top 10% of households in the UK are doing around 24tonnes/Co2 emissions per capita. The bottom 40% are doing 5 tonnes/capita. Most air traffic out of Heathrow is now holiday traffic. Most of this done by the more well-off segment in society – certainly not by the bottom 40%. Mass air travel has to, more or less, end. It is as simple as that. & in answer to the question: to refuse to fly for holidays and very very rarely for business (= maybe once per year – max).
I achieve the former
I aspire to the latter
If renewable energy is cheaper than carbon based energy then everyone will move to renewable (green) energy regardless, no? Does this not defeat / achieve the aims of the Green New Deal anyway without the need for implementation?
Of course not
Markets are slow
The rate of innovation even slower
And the need is pressing
And the Green New Deal is also about financial and other reforms
Clearly you are missing its point
Only governments have the power and the money to effect the seismic shift that’s required if humanity isn’t going to go extinct. Only government can legislate to ban fossil fuel use and other harmful substances and practices such as pesticides, herbicides and industrial, soil- and habitat-destructive agriculture. Only government has the money to finance risk-taking research which may not improve the bottom line in the short-term (which is all neoliberalism is interested in) but in the longer term will lead to new humanity-saving technologies. (eg the Large Hadron Collider was funded by States)
The only snag is, as others have said, there is no government with anyone of sufficient intelligence to take this forward.
“renewables are cheap enough to ensure that carbon pricing is itself priced out of the market.”
So, job done then. Renewables are cheaper than non-renewables, so there’s no need to make them artifically cheaper, or make non-renewals artificially more expensive. Just by competing on their own merits they will wipe the floor, with no artifical intervention needed. Well done, wipe your hands, take a step back and let things run by themselves.
Jonathan,
That was a thoughtless, would-be-clever comment that shows you read one line and not all of the post. The point that you made has already been anticipated (surprise, surprise!) covered in the post above and through the 2nd link that it provided.
I am not going to repeat any of that because you couldn’t be assed reading it and I don’t think that anyone else will either.
Well it looks like Trump, in one of his most deranged rally speeches yet, has discovered the Green New Deal:
‘Mr Trump’s depiction of the Green New Deal, a sweeping plan put forward by a group of Democrats last week to combat climate change and create thousands of jobs in renewable energy, was no more faithful to the facts.
He wrongly claimed the proposals would mean “you’re not allowed to own cows anymore,” “shut down American energy” and end “a little thing called air travel”.’
https://www.independent.co.uk/news/world/americas/us-politics/trump-el-paso-rally-speech-border-wall-mexico-texas-democrat-ralph-northam-a8774956.html
At least Portes now has something to make his article seem reasonable by comparison. At any rate when Trump starts telling idiotic lies about someone or something at his rallies they can know that they’ve made it and that they’re probably on to something good.
Would that be the links posted 29 minutes after I posted? I couldn’t find any links in your original post.
I have no idea because when I moderate comments I cannot see what you are referring to
There are 2 hyperlinks in the post above, one in the very first sentence and another in the 3rd paragraph. I assume that they were from the outset.
They were
I completely agree with Richard’s opening statement. I would add that it would have many spinoffs like the Nasa moon program – technology advancements , more employment, less poverty, …
The effort could need so many resources, it could require wartime rationing practices – the stakes are ever higher. This breakthrough in Kidney transplant using Economic thinking ​https://www.youtube.com/watch?v=9uQB6ok1-F4 is a good example of ensuring we get the most of the resources we apply to the crisis.
The Economist and Greg IP of WSJ are justified in asking for smart efficient strategies, but they can’t judge the project strictly on cost-benefit analysis.
Extinction is the ultimate cost.
​https://www-wsj-com.cdn.ampproject.org/v/s/www.wsj.com/amp/articles/an-expensive-divisive-way-to-fight-climate-change-11550055780?amp_js_v=a2&_gsa=1&usqp=mq331AQCCAE%3D#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fan-expensive-divisive-way-to-fight-climate-change-11550055780