Tuesday, October 16, 2007

Addressing global warming

I actually got this idea a while back in April when Thomas Friedman wrote a long article in the NY Times Magazine on "The Power of Green" (also a good short video summary there), arguing that America could build a great export industry around green technologies. But with Al Gore recently winning the Nobel Prize for his movie and work on climate change, it seemed like a good time to bring it forward (who knew those frozen northlanders, the Swedes, of all people, would be opposed to a little global warming?). Friedman points out that, on a global basis, even drastic measures in the U.S. will be negated by truly massive amounts of "dirty" and high-CO2 energy coming on-line in the developing world like China and India, primarily coal. He argues that what we really must develop are clean technologies that can compete with coal on a direct cost basis.

I think the technology will eventually get there, but in the meantime, it might actually make good sense to subsidize clean energy technologies globally so those 30+ year capital investments in dirty energy don't get made in the first place. One answer might be a tariff on imports from those countries that then gets invested back in clean energy in those countries - primarily nuclear (it would need to include a design and inspection regime to prevent diversion to nuclear weapons), but also clean coal and natural gas. It's one of those solutions that might actually get political traction.

Here's why developed nations like the U.S. might like it:
  • Helps them have more time to adjust their local economy to globalization by increasing import prices.
  • Fee on goods from places like China feels more like "their money" rather than ours, really a "voluntary tax" if you choose to buy imports. Politicians are not directly raising involuntary taxes.
  • The money gets spent with our firms using high-tech to build the plants, stimulating our own economy via these exports.
The developing world may not be extremely happy with it, but they might tolerate it because of the subsidized high-tech energy plants they're getting that also help them address their own mounting pollution problems (not just CO2).

A few caveats. As my regular readers know, I'm usually a free-market and free-trade guy. Yes, I realize this does create economic costs that have to be weighed up against the benefits. I also find much of the science and economics of climate change very controversial (it's quite possible we're better off adapting to it than trying to fight it). So I'm not really sure this is the right answer, but it does seem like one that is politically feasible (a critical criteria often ignored with all the talk of a carbon tax) while potentially having a large positive impact at a relatively low cost. And, of course, it has the potential to be a boom for the emerging clean energy technology industry in Houston...

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At 3:46 PM, October 16, 2007, Blogger ian said...

"it's quite possible we're better off adapting to it than trying to fight it"

Wow, that statement really puts this blog into a completely new perspective for me. And not a good one.

About nuclear energy, there was a report in the most recent edition of Texas Professional Engineer magazine, going over the pros and cons of the technology. Some of the cons probably wouldn't interest you (the fact it leaves around radioactive waste, possibly even the note that it will not substantially reduce greenhouse gas emissions because of the necessary refining of nuclear ore), but I think one in particular would catch anyone's eye: "Nuclear energy is NOT a renewable energy source."

Why not?

"The US Army Corps of Engineers stated in a recent report that uranium supplies are projected to last only another 20 years at present consumption rates. If the renewed interest in nuclear power leads to many new nuclear power plants, these supplies will be exhausted even sooner, leading to steep cost increases for uranium. Breeder reactors, used in Europe and Japan, can help extend limited supplies of uranium, but such plants can be unstable and generate the fissionable materials for nuclear weapons." The article further points out that clean ore is becoming scarcer and scarcer, and emissions produced from refining the dirtier stuff will push nuclear closer and closer to coal in terms of emissions.

So maybe you're right. We should just give up. That's way easier than worrying about all these darned problems. But dang though --it'd be so much easier to give up if I could place blame on someone else. Like polar bears. Bastards had it coming.

At 4:00 PM, October 16, 2007, Blogger ian said...

I'd like to add that the main point of the article - using a tax system to fund clean energy - sounds like a great idea! :)

At 6:49 PM, October 16, 2007, Blogger Tory Gattis said...

Believe it or not, there have been some economic studies done that say it may be less expensive to adapt than dramatic CO2 reductions that would crash the world economy. Don't forget there are some benefits, like large portions of Canada and Russia becoming arable land with agricultural potential. The question, as always, is how the costs match up with the benefits.

The 20-year uranium reserves quote sounds very similar to me to the quotes that have been made for over 100 years that we only have a couple decades of oil reserves left. People, economics, and technology always make more.

At 9:48 PM, October 16, 2007, Blogger Michael said...

It would be very difficult for me to believe that the costs to adapt would be less than the cost of prevention. For one thing, the melting of the ice caps and sea level increase is going to displace what - tens or hundreds of millions of people? You've already seen the chaos and cost of displacing just one city with Katrina / New Orleans - now multiple that times what - 100? 1000?

Obviously, nobody favors sending the global economy into a tailspin either - but seems like we should be able to solve the climate issue without doing so.

At 10:19 PM, October 16, 2007, Blogger Tory Gattis said...

Actually, I saw something recently noting that the sea level has risen a foot around NYC in the last 100 years with few ill effects, and the sea-level rise prediction for the next 50 or 100 years is similar.

My personal thinking is we should take some modest, low cost steps now that won't jeopardize the world economy ("low hanging fruit" so to speak), and lay the R&D groundwork for the amazing technologies that will "save us" in the next few decades (think Moore's law: tech is always getting more effective and cheaper). As an example, how about that algae they featured in the Chronicle recently that both eats CO2 *and* creates biodiesel? Pretty cool stuff.

At 2:14 AM, October 17, 2007, Anonymous Neal said...


One observation on energy consumption - increased energy consumption is correlated with higher incomes. Note that I did not say that correlation is causation, nor did I say anything about conservation efforts via voluntary means, taxation, or regulation.

I do like the idea of a Pigouvian type carbon, pollution tax, or emissions trading, provided that others would consider eliminating income taxes, property taxes, sales taxes, or other forms of confiscation in return. Also, the Clean Air Act has helped reduce air pollution and our vehicles get cleaner by the year.

15+ years ago, I had the pleasure of spending nearly a year and a half in China. I still have vivid memories of running 4-7 mile workouts in Zhou Zhou and coming back to my compound, blowing my nose and seeing the mucus coming out black. Even on nice sunny days, the air had a slightly dark haze to
it. Piles of coal were common sights on the streets and there were numerous chimneys in the town where black fumes from burning coal belched into the air. The ponds around the town were full of a greenish muck. One time I plucked up my courage and went to the edge of one, only to find that there were dead fish floating on the top of the water. Incredibly, the peasants used to go out at night, wade into those ponds and get them.

Building on my statement about incomes and energy consumption above, I can only imagine that things are worse now (pollution wise) in China than they were when I lived there. There were very few cars in the town at that time. At night Zhou Zhou would descend into an mournful, quiet, eerie darkness, punctuated by a small number of lonely electric lights along the main road. Otherwise, it was pitch dark.

I do realize that many bitch about environmentalism in America, but every time I read or hear someone talk about how disastrous things are in the West, my first impulse is to offer to fly them to where I lived and have them stay there for a few months. They can then experience first hand the joys of how a totalitarian Communist state deals with the environment.

Elsewhere, from what little I can pinpoint on the pricing of green and renewable technologies, they still cost an order of magnitude higher at the present time than simply digging up and using fossil fuels.

A recent article in the Economist about the modest revival of solar power out West noted that the price per kilowatt hour of electricity produced by burning coal was about 3 cents. The current price of a kilowatt hour of electricity produced by solar power is about 17 cents.

Now that is not to say that we have not made progress in producing green energy. Much activity has taken place in the past few years in response to higher energy prices. Many websites correctly note that the price of solar power has dropped an average of about 5 percent per year for the past 30 years. I do think that scientists will crack the puzzle on producing ethanol from switch grass on an industrial scale soon, as well as producing oil on an industrial scale from algae via genetic manipulation. A big question to ask is whether such technologies will be competitive with fossil fuels?

If I were compelled to place a bet today on when renewable or green forms of energy will become reasonably competitive with fossil fuels, I would say it will be in another 25-50 years. It may well pay off to spend a couple of billion dollars of public money to try speeding up the process, but I keep wondering whether the oil and gas industry will decide to spend shareholder monies doing the same thing.

I tend to think that the Tom Friedman's of the world underestimate the market pricing mechanism and how much power it has, both to discipline behavior and to unleash human creative energy to solving these kinds of problems.


At 7:39 AM, October 17, 2007, Blogger Tory Gattis said...

Thanks, Neal. Re:


I agree with this, but the problem here is that when you put a tax on something, people consume less of it (the objective in this case, of course), generating less and less revenue over time. Of course, if the tax were high enough, eventually there would be no revenue at all - in which case you're back to needing all the same taxes you had before to run the govt. Could work at a modest level though - similar to the cigarette tax.

At 12:48 PM, October 17, 2007, Blogger Michael said...


NYC is not the type of place I am necessarily concerned about - because I think we would use almost everything at our disposal to save a city like NYC. Sea-level rise would affect the entire planet (digging around - it looks like a 1 meter rise by 2100 is not out of the question - but the measurements are still being debated):


From that site:

"A 1M (3 feet) sea-level rise would affect 6 million people in Egypt, with 12% to 15% of agricultural land lost, 13 million in Bangladesh, with 16% of national rice production lost, and 72 million in China and "tens of thousands" of hectares(1 hectare =2.47 acres) of agricultural land. "

The effects in Canada or Siberia could be more beneficial - but in general I don't think we should be playing games like this any more than we have to.

Now, if your argument was to continue to use CO2, but take steps to capture it, or reduce global temperatures through other means, that would be a potentially interesting argument. But I don't think the current argument (that the effects of global warming left unchecked will be less expensive to deal with than combatting the problem in some fashion) is very believable.


At 1:40 PM, October 17, 2007, Blogger Tory Gattis said...


Not my argument, but that made by some pretty highly respected economists (at least partly from the Copenhagen Consensus of Nobel Prize winning economists). Although I don't think anybody is arguing "do nothing" - it's a question of how much to do at what cost.

At 3:07 PM, October 17, 2007, Anonymous kjb434 said...

In reference to nuclear energy, the main problem in the US is that we don't recycle nuclear waste.

The average fuel rod after running through a fusion reactor is about only 2% toxic waste. The remaining 98% of the fuel rod can be recycled. France currently does this. They get 75% of their energy from nuclear sources and all of their waste fits into a facility of about 15,000 square feet (a Walgreens store). The US, under EPA rules lobbied by environmentalist during Carter's administration prevented any recycling in an attempt to prevent construction of new nuclear plants. So all of our spent fuel rods are deemed toxic and being shipped to Nevada. The reality is that about 2% of all the rods should be shipped their. Our storage would still be larger than France's, but it wouldn't be the size of the project at Yucca Mountain.

We are throwing out years of potential clean energy generation into a mountain because of a lobbying group with ulterior motives during the 70s.

If you really want to cut carbon emissions (which I personally don't think this is a problem at all because science hasn't link global warming to increased carbon dioxide production yet), we need to replace coal electric plants with nuclear power.

At 3:10 PM, October 17, 2007, Anonymous kjb434 said...


are you thinking of Bjorn Lomberg (i think that is how you spell his las name).

He is a big believer in man-made global warming, but argues that we have many more important issues in the world than global warming itself.

He's written some great books and articles. He even argues quite well that in the end, global warming can provide more good to humanity than bad.

At 7:08 PM, October 17, 2007, Blogger Tory Gattis said...

Yes, he's one I've read about. Even saw him speak at Rice a few years back. He makes strong arguments backed up by solid facts and analysis.

At 9:15 PM, October 17, 2007, Blogger Brian Shelley said...


Would this be in addition to cap-and-trade or a substitute?

Has anyone suggested that Harris County use cap-and-trade to try to get us under the clean air standards? Not only is it more efficient than just caps, it would also give Houston companies some experience to cash in on the possible cap-and-trade services industry if the U.S. adopts the European model.

At 9:52 PM, October 17, 2007, Blogger Tory Gattis said...

I don't know. Either way. Ideally a companion.

No way a locality like Harris County does it. It does have costs, and businesses would quickly locate outside the county lines to avoid those costs. It has to be at least a national program, and really global, to be effective.

At 11:16 AM, October 18, 2007, Blogger ian said...

"science hasn't link global warming to increased carbon dioxide production yet" -- kjb, I'm pretty sure we're beyond this already. The science shows that the link is there, as good as current science can. The thing about science is that it changes as further evidence is discovered, so in 50 years we may learn that oops, there wasn't much of a link at all. But I think it'd be a much more prudent idea to respond to what our overwhelming current evidence tells us than to rely on what future research may or may not tell us -- especially when the current evidence predicts such dramatic, costly, deadly consequences for the world.

One thing that seems to be left out of the global warming discussion here is the effect on all the rest of life on Earth. Polar bears, seals, migrating birds, fish, insects, entire ecosystems of wildlife and plants -- they have no say in any of this, yet I say they have just as much a right to life as we do. Thawing out Canada may economically benefit humanity in some ways, but at what environmental costs? Humans are great, and I'll fight to make sure the world is a great place for us to live -- but it sure would be a shame to have no other forms of life to share this great world with. Especially if their deaths are directly tied to our economic ambitions.

At 12:13 PM, October 18, 2007, Anonymous kjb434 said...


At best, science has only shown correlative and anecdotal evidence. NO study exists and gone through peer review that truly links carbon dioxide and and global warming.

The only really convincing data we have truly linking the two actually throws a wrench into the argument. A common graph (used in Inconvenient Truth and many places) shows carbon dioxide levels plotted against global temperatures over time. If you would actually look close at the graph and look at research of carbon levels in geological evidence (soil strata and ice borings), the rise in carbon dioxide occurs after the temperature rise. More evidence that natural global warming causes increases carbon dioxide levels, not the other way around. This is what the hard evidence actually shows. Currently scientist are working to try to plausibly explain this. Some theories are floating around.

At 12:21 PM, October 18, 2007, Anonymous kjb434 said...


The polar bears are doing too well.

According the Canadian wildlife researchers, the weight loss and unhealthy look to many polar bears is that they are overpopulated (which reduces food supply) and have no relation to global warming. And actually, having a slightly warmer climate would benefit the polar bears more than hurt them by increasing available food supply. Steps to adjust hunting of the polar bears to keep the population in check is underway. Also, I laughed out loud when the animation ran showing the polar bear falling of the floating ice in Inconvenient Truth. Polar bears can swim for hundreds of miles with no problems and naturalist often document polar bears at play on floating ice. I guess Gore needed something to scare the children.

Also, we don't much of a say in global warming either. We are in the same boat as nature. We have to adapt to natural change. Unless you have access to the thermostat the central heater we call the sun.

At 3:00 PM, October 18, 2007, Blogger Michael said...


"We are in the same boat as nature".

Not true - we have much more power to influence nature than any other species. We could easily destroy the planet with nuclear weapons many times over if we wanted to, for example. We also do things like build damns, levees, cities, etc, that influence nature. The question here is if global warming is going to have disastrous consequences, do we just sit idly by and let it happen. Ian and I (and most others, including the vast majority of economists / scientists) say that just sitting by is not a valid approach. Some form of prevention / correction is needed, based on what we know now.


At 8:04 AM, October 19, 2007, Anonymous kjb434 said...

You actually think humans have that much power?

Let's see. Earth: 4.5 billion years old.

Human influential existence: 10,000+ years.

At any moment nature without any help from us can eradicate humanity. A burp on the sun's surface can raise our planets temperatures dramatically. To believe our scratching of the earth's surface with our cities and industries is threatening nature in its entirety is pretty arrogant. Yes, we can locally pollute a body of water or the air over a city, but humans barely inhabit this planet. Just look at the US and an you can see we only inhabit about 5% of the landmass.

When your start putting everything into perspective, you realize that we humans are quite powerless.

Yes, we can set off nuclear bombs all over the planet, but nature will be fine and will adapt. Humans may be gone. Maybe a bunch of surface animals will disappear, but the magic of nature is that is just being thrown a curve ball and will adjust. A nuclear winter is similar to naturally produced events such as large volcanic eruptions and/or meteorite impacts. Nature took a beating during the almost complete eradication of the dinosaurs, but it came back.

At 8:42 AM, October 19, 2007, Blogger ian said...

Come on KJB, I know what you're trying to say, but I don't know why you're saying it. "Nature," by your definition, will never go away, no matter what we do or don't do. That's a fine definition for certain purposes, but it misses the point here entirely. The kind of impacts we're talking about, and which you freely admit we're capable of making, are the kind of impacts that will change the world dramatically from how it would have been without us at all. We will be CHANGING nature. Yes, it will still be around. But who's being arrogant here: those that recognize that we can change nature, or those who see no problem in changing nature? We manipulate our environment all the time, and I have no moral qualms about many of those manipulations. But surely you're not saying that just because some form of "nature" will still be around after we blow the Earth to smithereens it would be an okay thing to do? Somewhere between building cities and destroying the planet, a moral line is definitely crossed!


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