Written By: - Date published: 7:26 pm, July 4th, 2016 - 110 comments
Categories: capitalism, climate change, Economy, Environment, ETS, global warming, International, science, tax - Tags: carbon pricing, climate change, economics, ets, global warming, tax
So this post is about a suite of frameworks not to adopt if the goal is to avoid 2 degrees of global warming.
I’ve no idea what a chrematistic camel of the post header might look like by the way. I guess its hump might be made from the curve of a $ sign. I do know a haruspice sits atop it. A haruspice is a charlatan who claims to know what’s going on by their reading of chicken entails and other such like. Haruspices have had a name change in recent times. These days they’re called economists – ie, a certain type of economist – one who would reduce the entire world and everything in it to a dollar value. For some reason the clowns and dolts we elect as our politicians treat these haruspices with reverence and awe. Anyway, we need to break the camel’s back and leave the haruspice stranded in the furthest reaches of some remote desert.
I’ll be happy enough if this post amounts to so much as a straw…
We have, according to the pesky laws of physics, about 15 years to get emissions from energy down to zero to have an outside chance of avoiding +2 degrees of warming. There have been enough posts done about that. I’m not spending time here running through it again.
It would seem that proposals claiming to deliver emissions reductions fall into a singular category. That category is jam packed with various proposals built around the use of various monetary mechanisms and instruments that, it is claimed or hoped, will bring about large enough changes in behaviour that a concomitant drop in emissions will occur, and we’ll avoid dangerous levels of global warming.
Actually, there’s a caveat to all those chrematistic proposals. They don’t actually confront the reality – they underplay the severity of our situation and rely on the belief that negative emission technology will suddenly rear up, come on line, and avert a 2 degrees average surface temperature rise at some point in the future. Again, there has been enough written about exactly how integrated assessment models underplay the severity of our situation and puff up our future prospects, and of how our politicians, under the guidance of the
economists haruspices, base policy around those assessment models. I’m not spending any time on that here.
Our government, in line with almost every other government on the planet has committed itself to take measures to avoid dangerous climate change that won’t cause poverty and that are informed by science. So, we know the path we have to walk – it’s signposted equity and it’s sign posted science.
Meanwhile, financial mechanisms and levers are the ‘go to’ tools for politicians and policy makers in the face of global warming. To be effective, they would have to achieve something like a 10 – 15% in reduction in emissions per annum – immediately.
And there’s not a single policy built around taxes, fees or levies that achieves anything remotely like that scale of reduction. They simply don’t work at that level of change. It’s time to rummage them out of the tool box and throw them off to the side instead of instinctively waving them in the impervious face of physics as if it’s going to achieve anything.
If you have doubts on their efficacy, then you don’t really have to look any further than the much touted Emission Trading Schemes (ETS) – dangerous shambles’ that may well have encouraged a rise in emissions. Now sure, many people said ETS would never work and wanted a straight up price placed on carbon – a carbon tax as it were. This is still a very much ‘go to’ solution for many, if not almost all, people. But from a 2 degrees perspective, it won’t work.
There are various ‘tax and dividend’ suggestions out there. The basic idea is that carbon is taxed and the tax take is then passed back to consumers, either directly or in the form of enhanced infrastructure. The NZ Green Party has such a policy. Climate scientist and activist James Hansen supports tax and dividend proposals. British Columbia has such a policy up and running.
This is what the supporters of the British Columbia “tax and dividend” scheme have to say. (pdf link)
Since then (2008), per capita emissions of carbon dioxide and other greenhouse gases covered by the tax have declined, continuing a downward trend that began in 2004. Averaged across the period with the tax (2008 through 2013…), province-wide per capita emissions from fossil fuel combustion covered by the tax were nearly 13 percent below the average in the pre-tax period under examination (2000-2007).
Taking those numbers at face value, and ignoring any reasons as to why emissions were reducing before the tax was introduced, and ignoring any potential on-going effects those things might have had – 13% over six years is all very well and good, but nowhere near the 10% – 15% per year reductions required to have any chance of holding global temperatures to + 2 degrees.
For a take on a carbon tax that was instituted and where cross border/state purchases weren’t possible (as is arguably the case in British Columbia), then we just need to look to Australia. Australia introduced a carbon tax of A$23 per tonne in 2011.
If we ignore every other possible cause for a drop in emissions (such as economic slow downs, increased efficiencies and so on) and assign all of any reduction to the effect of pricing carbon, then the tax resulted in a 1.4% drop in emissions over the period of one year.
As reported in The Guardian
“The Greens leader, Christine Milne, said: “These figures demonstrate to the rest of the world just how effective our carbon price was at bringing down pollution. This is the biggest ever drop recorded and the price made it happen.”
You get that? A 1.4% reduction when we need between 10% and 15% rates of reduction apparently demonstrate the “effectiveness” of pricing carbon.
Or there was the Australian Conservation foundation quoted in the same piece
“The price did better than expected. Also, we would have seen deeper cuts in emissions over time as the price created a long-term economic signal and changed investment in energy. We never expected to see the biggest reductions straight away.”
Is it just me who can’t quite reconcile “long-term economic signal” with a fifteen year window of opportunity?
There’s another example, much closer to home, that demonstrates how effective the application of chrematistic notions of the economy are in the field of policy.
In 2010 the NZ government embarked on a fifteen year plan to make new Zealand smoke free. The fifteen years is worth noting. That’s the same time scale we have to work on carbon emissions. (So think annual reductions in the 10 – 15% range)
Smoking rates were dropping prior to 2010. But in 2010, alongside a slew of public awareness programmes, ‘adaptation’ services, legislation and law changes, the government chose tax as its principle weapon against the prevalence of smoking. So every year, the tax on an already expensive product rose by the rate of inflation, and then by another 10%.
You can go view some rudimentary charts here that show the smoking rate in NZ has continued to decline since 2010, but on a trajectory not so very different from that which was already underway before 2010.
And unlike in the case of carbon emissions, readily available and cheap alternatives were and are available to smokers. Yet the whole “Smoke Free 2025” is (excuse the pun) going up in smoke. Just look at the figures as reported by the MSD
Between 2006/2007 and 2013/2014, the proportion of the population who were current smokers decreased 2.8 percentage points.
The bottom line (if that’s not too incongruous a term) is that monetary measures or financial instruments, are to tackling global warming as a bread knife is to sawing up a couple of cubic metres of wood. Yes, it can be done. But not by the end of the day. And figuratively speaking, as far as reducing emissions go, we only have ‘til the end of the day.
One last word on the idea that we can price our way out of this mess. In 2009 Alice Bows, Kevin Anderson and Anthony Footitt released a study paper (pp89 -109) on carbon prices as they would affect air travel. At a carbon price of ~ NZ$500 per tonne, (ie – many times higher than any tax suggested by Hansen or implemented in either British Columbia or Australia) the cost of an airline ticket would only increase by about 25%.
I just randomly looked up the cost of a return to Sydney. House of Travel. One way, departing Auckland, for $161. A $500 carbon tax makes that flight about $40 more expensive. A deal breaker? I don’t think so.
Anyway, if you know of any pricing mechanism that will reduce emissions at the level required, and not bury the poor in the process, then please, link to it or explain it in the comments.
The next post will be the bare bones, or a sketch or outline if you will, of a framework guaranteed (big call that, eh? ;-)) to bring the emissions from NZs transport sector (responsible for over 40% of NZs energy related emissions) down to zero by 2030 – as demanded by physics and in line with promoting equity as demanded by the international agreements the NZ government has signed up to.