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Cap And Trade

Published on February 29th, 2016 | by Steve Hanley


Put A Price On Carbon Or Face Trillions Of Dollars Of Costs & Massive Food Security & Migration Challenges

February 29th, 2016 by  

Originally published on Gas2. Reprinted with permission.

Don’t call it a carbon tax. Everybody hates the idea of taxes. But unless society addresses the damage done by burning fossil fuels, the world is on a collision course with reality. Cataclysmic changes are in the offing and those changes will impose enormous costs on our global society. Who will pay them?

The bottom line is that the carbon dioxide created when fossil fuels are consumed is accelerating the rise in global average temperatures. Higher temperatures are melting glaciers and polar ice caps, which leads to rising sea levels. Those higher waters threaten most of the world’s major cities. What will be the cost of protecting them from the ravages of sea water? No one knows the answer precisely, but the opening estimates are in the trillions and go up sharply from there. Americans don’t want to pay 25 cents a gallon more for gasoline under the president’s plan to add a carbon fee of $10 a barrel on oil? Imagine how they will scream when New York City asks for $5 trillion to keep the ocean from flooding Wall Street?

Climate change is leading to alterations in global weather patterns that are still not completely understood. But the best guess is that many parts of the world will become much drier than before, making it impossible to grow crops. Other regions will be far wetter, which will also inhibit normal agriculture. Fewer crops means famine and starvation for hundreds of millions of people. Billions may be affected. We just don’t know. What will be the cost of feeding all those people?

Atmospheric pollution is recognized as a leading cause of illness and disease among humans. Who should pay for the medical care all those unhealthy people need? Who will make up the millions of man-hours of lost productivity when workers are home sick instead of contributing to the economy? If food and water become scarce, wars will be fought over declining resources. Would Americans be happy to see the world explode in conflict and pay for endless war rather than have the price of gas go up a quarter? If we are horrified by the Syrian refugee crisis today, expand it by a factor of 10. Are we willing to countenance that for the sake of a few pennies?

The point is, burning fossil fuels has costs. Enormous costs, in fact. But the wealthiest citizens of the world have convinced themselves and convinced us that they should not have to pay the costs associated with their products. They are so brazen as to suggest that doing so puts an unreasonable burden on the capitalist system. Are you buying that?

A new report from MIT entitled “Will We Ever Stop Using Fossil Fuels?” certainly does not. According to Science Codex, it suggests that in the absence of a rational carbon pricing structure, “the world is likely to be awash in fossil fuels for decades and perhaps even centuries to come.” It goes on to find that burning all the available conventional fossil fuel will raise global average temperatures 10 to 15 degrees Fahrenheit by the year 2100. Burning oil shale and methane hydrates, two more potential sources of copious fossil fuels, would add another 1.5 to 6.2 degrees Fahrenheit to that. “Such scenarios imply difficult-to-imagine change in the planet and dramatic threats to human well-being in many parts of the world,” the report concluded.

“You often hear, when fossil fuel prices are going up, that if we just leave the market alone we’ll wean ourselves off fossil fuels, but the message from the data is clear: That’s not going to happen any time soon,” says co-author Christopher Knittel, an energy economist at the MIT Sloan School of Management. “If we don’t adopt new policies, we’re not going to be leaving fossil fuels in the ground,” he says. “We need both a policy like a carbon tax and to put more R&D money into renewables. Clearly we need to get out in front of climate change, and the longer we wait, the tougher it’s going to be,” Knittel emphasizes.

In economic theory, things like rising sea levels, famine, and poor health outcomes are called externalities. Elon Musk made a clear and powerful argument for including the costs of such externalities when he addressed the Paris Conference on Climate Change last December. A video of his presentation is included below. “Taxes on externalities are not inconsistent with the free-market system,” Knittel says. “In fact, they’re required to make the free-market system achieve the efficient outcome. This idea that a pure free-market economy never has taxes is wrong.” In other words, the so-called leaders of the Republican party who are always bleating about the evils of government regulation are spouting ideological drivel, rather than sound economic policy.

The case for a carbon fee is simple. Mankind has been using the earth as a toilet since the beginning of the Industrial Revolution. Doing so is simply unsustainable. Continuing to do so is like playing Russian Roulette with an automatic rifle and full clip of ammunition. Ideology won’t save us. In fact, it will bury us just as surely as global nuclear war. We make dog owners clean up after their pets. Why do we not insist that industrialists like the Koch Brothers clean up the mess they have created for their own selfish purposes?

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About the Author

Steve writes about the interface between technology and sustainability from his home in Rhode Island. You can follow him on Google + and on Twitter.

  • Rim Shot

    Everyone should learn about “Carbon Credits” – the owners(Mega wealthy) of the Solar Panel Manufacturing plants will earn millions in “Carbon Credits” – these credits can then be Boutght, sold or traded on the open market. Billions will change hands in the newest Wall Street tradeing game. Google “Carbon Credits” –

    It wont stop pollution or carbon in the air – it just means a handful of the worlds wealthiest people will once again get richer.

    Another Hillary promise for Wall Street.

    Fe – Fi – Fo – Fum

    Tell the truth about “Uranium One”

    • Bob_Wallace

      The acid rain credit program was a rousing success. Credit trading solved the acid rain problem in the US.

  • tmac1

    Great article
    We need a carbon dividend
    All proceeds go back to each citizen 4x/year

  • vensonata

    Destructive actions towards large populations have been a feature of the 20th century and have had to be addressed by international law.( war crimes etc). What must be clearly laid out is what constitutes an environmental crime against humanity. If there is no definition, how can you blame anyone in retrospect? Conventions like Paris tip toe around, they are nervous, they have no power. Let us say that by 2020 the consensus science leaves no valid excuse for negligence, inaction and especially false claims or concealment of actions contributing to significant warming. Then it is simply a matter of enacting penalties and force of law. Tax is one thing, criminal and civil law is another appropriately severe persuader.

    • Riely Rumfort

      Leading to an equivalent of 100,000 starving, a life sentence?
      Fine by me.
      Operant Conditioning works.

  • Freddy D

    Same exact arguments as 10 or 20 years ago. But don’t stop making the case. To alleviate climate change requires 3 things:
    1) Technical Feasibility. Can decarbonizing the economy technically be done? A decade or two ago this might have been a legitimate question, and today: technical feasibility to decarbonize the economy has been proven beyond a shadow of a doubt. See the Solutions project, scientific American, countless articles here in Cleantechnica.
    2) Economic Feasibility. Same answers as 1) above, with one important add: The economics of renewable energy are becoming so compelling that it’s utterly impossible to stop the conversion
    3) The will of humanity to act and act effectively.

    This article works toward addressing 3). Another part of the story is to tear down the inaccurate perceptions about 1) and 2). must be relentless about educating on the truth, both from a rational side as well as from a moral and emotional side.

  • Guy Hall

    A recent Washington Post interview on climate change with experts from fossil fuel giant ExxonMobil :

    “With no government action, Exxon experts told us during a visit to The Post last week, average temperatures are likely to rise by a catastrophic (my word, not theirs) 5 degrees Celsius, with rises of 6, 7 or even more quite possible,” writes the Post’s editorial page editor Fred Hiatt in a piece ti4tled “Even ExxonMobil says climate change is real. So why won’t the GOP?“

    • Global Citizen

      Waterworld for Sure.

  • Guy Hall

    F.A. Hayek, the economist who defined libertarian, and a favorite economist for conservatives and libertarians, in his book The Road to Serfdom, notes that there are certain areas, such as the environment, where activities that cause damage to third parties (known to economists as “negative externalities”) cannot effectively be regulated solely by the marketplace:

    “Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question, or to those willing to submit to the damage for an agreed compensation.”

    “… these tasks provide indeed a wide and unquestioned field for state activity. In no system that could be rationally defended would the state just do nothing.”

  • JamesWimberley

    Energy economists like these are guilty of exaggerating the problem in order to justify their perfectly sound policy prescriptions. The transition in electricity generation is happening already, even on the tilted playing field of current uncorrected market prices. In transportation, it still depends on the subsidies that form a rough proxy for a carbon price, but only for another ten years at most. What we really need a carbon price for is the hard cases: cement, aviation, shipping, steel, sequestration.

    • Hazel

      James, what part of this do you consider exaggeration? And if removing fossil fuel subsidies and adding an externalities tax on fossil fuels makes the transition happen faster – by reflecting true societal costs – where is the harm in that?

      If anything we need *more* voices calling for sound policy like this, not fewer.

      In a less important point, very few people share your optimism on the unregulated market making more than a tiny dent in transportation energy use or emissions. Even with projected battery cost declines and performance improvements, it’s just too easy to keep burning gasoline in cars and diesel for freight, and air travel will continue to grow. Biofuels will have a cost disadvantage into the indefinite future. And fossil fuels are not a stationary target, costs for new tight sources could keep declining as they have been for the past ten years.

      • JamesWimberley

        Random sample: “If we don’t adopt a carbon tax, we won’t be leaving fossil fuels in the ground”. Coal production has peaked.

        I have never defended the unregulated market. What I do defend is the second-best mess of kludgy tax breaks, FITs, net metering, auctions, renewable obligations, public purchasing and the like that have the merit of existing. They are doing a much better job than perfectionist advocates of a carbon tax give them credit for. The way things are going, we will only get a carbon tax after the battle has been won and the fossil lobby is too weak to put up a real fight any more.

        • Hazel

          Thanks for the clarification. And there is progress in reducing emissions in electricity generation, mostly, though there’s still a lot of new gas generation, and estimates of gas leaks during production keep going up and up. But you didn’t address my earlier questions.

          First, how are the “perfectionist advocates” doing damage? Second, how does any of the FITs, net metering, auctions, etc. address one iota of transportation emissions, which make up something like one third of our greenhouse problem?

          Beyond my earlier questions, some “solutions”, such as aluminum vehicle bodies, merely shift some of the pollution from one sector (transportation) to another (industry). How do you deal with that without a uniform carbon tax?

          To add to that, if we don’t advocate for uniform controls now, when will we start? When is it too late?

          Are you just fine with “only get a carbon tax after the battle has won”? If not, what do we do to bring about the carbon tax sooner, if not agitate?

          I don’t think we disagree, but want some clarification on your positions regarding transportation and other emissions beyond grid substitution away from coal. Your comments are generally intelligent and lucid, and I’m trying to make sense of this one.

    • Freddy D

      I absolutely agree that natural economics will definitely carry this decsrbonization ball well down the field. There are many “hard cases” of enormous scale. In addition to those you mentioned, I’ll add building climate control, many systems remaining in place for a half-century or more, installed capital of cars and trucks and equipment, most of which get run for 3 decades (we may not see them as many move to other countries for their last decade or two of life). I’m sure there are more.

      These “hard cases” are of sufficient magnitude that a “decarbonization incentive” would likely be necessary to get the job done this century. Caveat: IMHO and professional scientific and economic judgment.

    • Jens Stubbe

      Just tax carbon (you do not need to impose taxes that are anything near fair) and remove fossil subsidies and Synfuel will sweep the floor. The key reason is that it will force the transition away from coal and therefore provoke a landslide in solar and wind capacity build up, which will bring cost of electricity down and open the big question is it affordable to regulate intermittent energy with batteries or cheaper simply to produce Synfuel. Once cost of electricity goes down it becomes cheaper to over provision and to use excess electricity for Synfuel that can utilize the entire fossil distribution and storage infrastructure for Synfuel. At that point oil exploration and oil production grinds to a halt and the same will soon be true for fracking gas.

      I do not see any of the mentioned hard cases you point out as particularly hard because for each and everyone of them you can find a 100% renewable solution. Only inhibiting factors are tradition, regulation and cost for the time being.

  • nakedChimp

    What was that about the Tragedy of the Commons?

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