Climate Change Policy Issues

EVERYTHING IS CONNECTED
EVERYTHING IS UNCERTAIN
ANYTHING MIGHT CAUSE ANYTHING
DON'T DO ANYTHING ...
SOMETHING HAS TO BE DONE!
-Michael Markels (Cited in Wired Magazine, 8 (11), November 2000)

Maintaining the Earth’s climate within habitable boundaries is probably the greatest "public goods game" played by humans. However, with >6 billion "players" taking part, the game seems to rule out individual altruistic behavior. Thus, climate protection is a problem of sustaining a public resource that everybody is free to overuse, a "tragedy of the commons" problem that emerges in many social dilemmas.
- Milinski et al (2006)

Many people, most governments, and large industries have concluded that climate change is happening. The important questions now are:

1. How serious is the threat of warming?
2. If it is serious, how best to respond to the threat?
3. Is it better to wait until the threat becomes clearer?
4. Or should we act now, without clear knowledge of what will happen?

How Serious Is the Threat?

Scientific evidence for warming is convincing. Earth's surface is warming. The future is less certain. Do we even want to stop global warming?

Given that the climate is changing because of inadvertent consequences of human activities, the question arises as to whether efforts should be made to deliberately change climate to counteract the warming. Aside from the wisdom and ability to do such a thing economically, the more basic question is the ethical one...Who makes the decision on behalf of all humanity and other residents of planet earth to change the climate deliberately? Climate change is not necessarily bad.
Frosch and Trenberth (2009).

Our understanding of the importance of global warming depends on the accuracy of climate forecasts. Forecast accuracy depends on how well we understand earth's carbon cycle, economics, and politics. All influence warming. All are uncertain.

For a contrarian view on global warming, read HERETICAL THOUGHTS ABOUT SCIENCE AND SOCIETY by Freeman Dyson.

The Precautionary Principle

Faced with the uncertainty in our ability to predict future climate change, many argue in favor of the precautionary principle.

When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically.
From The New Uncertainty Principle.

Policymakers need to take a precautionary approach to environmental protection ... We must acknowledge that uncertainty is inherent in managing natural resources, recognize it is usually easier to prevent environmental damage than to repair it later, and shift the burden of proof away from those advocating protection toward those proposing an action that may be harmful.
From New Jersey governor Christine Todd Whitman In an October 2000 speech at the National Academy of Sciences in Washington, D.C.

The precautionary principle has been interpreted in many ways. In its strongest form

The principle can be interpreted as calling for absolute proof of safety before allowing new technologies to be adopted. For example, the World Charter for Nature (1982) states "where potential adverse effects are not fully understood, the activities should not proceed." If interpreted literally, no new technology could meet this requirement.
From "Science and the Precautionary Principle."

The strong form stifles progress. If the principle had been applied when fire was invented, we would still be eating our food raw. "If applied to aspirin, it would never have been licensed for sale." writes Helene Guldberg in Challenging the Precautionary Principle.

The principle is more useful in a weaker form. We need only require that present activity be modified if the future costs of present activity may greatly exceed the cost of changing present activity. For example, if the future cost of climate change may greatly exceed the cost of reducing emissions of greenhouse gases, then we ought to reduce the emissions.

When applied to climate change and global warming the important points are:

1. We have only one earth.
2. If greenhouse gas emissions cause large changes in climate, we may not be able to return to our present climate for centuries. CO₂ concentrations will remain high for more than 100 years, and temperature will continue to rise even if we stopped all emissions today, even if we do not know how much temperature will rise.
3. The economic and environmental costs of abrupt climate change far exceed the costs of slowly reducing greenhouse gas emissions (over the next two decades).
4. Therefore we ought to reduce emissions even if we are not sure they will cause abrupt climate change.
5. Two decades from now we will know much more about climate change, and at that time we can reassess our activity.

The precautionary principle may also apply in trying to reduce greenhouse gas. Reducing greenhouse gas to their pre-industrial level may not return earth to a pre-industrial climate.

In a highly nonlinear feedback-controlled system like global climate, we would expect complex hysteresis effects: Decreasing a control variable such as greenhouse gas will not necessarily lead the climate back along some path like the one it followed when the control variable was increased. The end state of the control-variable manipulation may not at all resemble the original state before the control variable was increased, nor will it necessarily be a state we want to be in.
Frosch and Trenberth (2009).

The Kyoto Protocol: A Framework for International Cooperation

Most of the governments of the world, are considering ways to reduce greenhouse gas emissions. The first global step toward reductions was the Kyoto Protocol. On February 16, 2005, the Kyoto Protocol entered into force without ratification by the United States. By July 10, 2006 164 nations and economic regional integration organizations had ratified the Protocol.

1. What is being proposed?
   The primary document is the Kyoto Protocol to the United Nations Framework Convention on Climate Change. According to the protocol
   
   "The Parties included in Annex I [the developed countries of the world] shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012."
   From Article 3 of the Kyoto Protocol.
   
   
2. How sound are the arguments that support or oppose the proposals?
   1. Read the US Congressional Research Service (CRS) abstract of their report on Global Climate Change: Major Scientific and Policy and the report (104 kByte pdf file) which gives a good overview of the policy issues up to 11 August 2006. The Kyoto Protocol became legally binding on 16 February 2005 at midnight New York time (0500 GMT). The countries that ratified the protocol agreed to cut their greenhouse gas emissions between 2008 to 2012 to levels that are 5.2 per cent below 1990 levels.
   2. Then go the the Energy Information Administration's Analysis and Report and read about the implications for the US economy.
   3. The United States has ratified the United Nations Framework Convention on Climate Change, but we have not ratified the Kyoto Protocol. The primary reasons for not ratifying the protocol include:
      1. It excludes the world's most populous countries, China and India, because they are developing countries. The US wanted meaningful participation by all countries.
      2. There is no clear statement of penalties for failure to implement the protocol.
      3. The protocol emphasizes sources of greenhouse gases, but atmospheric concentration depends on sources and sinks. The protocol did not give sufficient weight to implementing new sinks of greenhouse gases. For example, reforestation removes carbon dioxide from the atmosphere. Or, carbon dioxide could be removed from the atmosphere and injected into deep wells. To what extent can which carbon sequestration by forests, soils and agricultural practices be counted toward a country’s emission reductions?
      4. It was not clear how much of a country’s obligation to reduce emissions can be met through purchasing credits from outside, vs. taking domestic action.
      5. The role of emissions trading was not clear. The US would like to use emissions trading to meet a significant percentage of our required reduction in greenhouse gas emissions.
      6. It penalizes the US more than other countries because our economy has been growing strongly compared with other countries that have ratified the protocol.
   4. Although some of these problems were mitigated through later meetings of the Conference of the Parties (COP), the problems are still not completely solved.
   5. Economists point out that the cost of reducing emissions now exceed the cost of reducing emissions in the future when we know more about the consequences of global warming.
   6. Economists also point out that the cost of global warming is about equal to the benefits. Canada and Russia will gain, other economies will lose. "Given reasonable inputs, most cost-benefit models show that dramatic and early carbon reductions cost more than the good they do."– Stern Review: The dodgy numbers behind the latest warming scare.
      
      The Kyoto Protocol is a symbolically important expression of governments' concern about climate change. But as an instrument for achieving emissions reductions, it has failed. It has produced no demonstrable reductions in emissions or even in anticipated emissions growth. And it pays no more than token attention to the needs of societies to adapt to existing climate change.
      Time to Ditch Kyoto. Prins (2007)
      
      
3. What are the implications for TAMU students?
   
   
   
   Carbon price needed to meet Kyoto goals in the US. Price increases encourage a reduction in the use of energy services (heating, lighting, and travel, for example), the adoption of more energy-efficient equipment, and a shift to less carbon-intensive fuels. The carbon price reflects the amount fossil fuel prices in the US, adjusted for the carbon content of the fuel, must rise to achieve the removal of the last ton of carbon emissions that meets the carbon reduction target in each case. From; Energy Information Agency.
   
   Note: 10 barrels of oil contain about 1 metric ton of carbon. US EPA Green Power Equivalency Calculator Methodologies.

Ways to Reduce Greenhouse gas Emissions

The Kyoto Protocol sets a goal for reducing greenhouse gas emissions. Each country must determine how to reach the goal. Three approaches are taken.

1. Command and control. The government decides what must be done. For example, the US Congress is proposing to set limits on gasoline mileage for cars. This approach is rarely effective. Drivers in the US switched from small cars to large, less-fuel efficient cars, despite government regulations on fuel efficiency, because the larger vehicles are safer and they are able to carry children and sport equipment used by children. Historical experience since 1800 shows that increased energy efficiency usually leads to more energy consumption.
2. Economic incentives. European and other governments provide economic incentives such as reduced taxes and funding to those who produce electricity from wind turbines or solar cells.
3. Use market-based incentives such as taxation to encourage reductions. For example, tax the emission of green-house emissions, allowing each user to determine how best to avoid the tax. This is the approach preferred by economists. The market place is almost always wiser than any politician or government, and it can act much faster and more efficiently.

The different approaches have very different costs, and governments often make popular but costly choices.

The cost of different ways to cut emissions of carbon dioxide in euros per ton of carbon dioxide. Insulation improvements are the least expensive, and switching from coal to gas for production of electricity is one of the most expensive.
From The Economist, 3 June 2007 page 9.

An Overlooked Argument

We know that climate changes, and the changes influence society. As greenhouse gas concentrations increase, the probability of climate change increases. Climate change is inevitable. We know furthermore that many societies are especially vulnerable to climate change. Coastal communities in Florida are vulnerable to increased hurricane frequency and intensity. The Maldives are vulnerable to rising sea level.

If climate will change, we need to reduce society's vulnerability to change. This aspect of the problem has been largely ignored.

Other Sources (if you like to read a lot):

1. Resources for the Future has a good Guide to Climate Policy.
2. The Sierra Club has an Overview of Global Warming and Energy.
3. The New Scientist provides a European Perspective.
4. Greenpeace's Save the Climate Campaign
5. Wall Street Journal Editorial 19 January 2006 page A14: Although many developed countries that have signed the Kyoto Protocol have criticized the USA for not signing the Kyoto Protocol, they have failed to reduce their own emissions. Denmark has increased emissions 6.3% since 1990 although they committed to reducing emissions by 21%. USA emissions are up 15.8% since 1990, Greece's emissions are up 23%, Canada's are up 24%.

Background Information

If you have the interest, you might look at these web pages.

1. For an international viewpoint, read the documents presented at the meetings organized through the United Nations Framework on Climate Change.
2. CNN maintains an historic site describing the issues from their viewpoint. See their report on the economic costs of implementing the Kyoto Protocol and the international disagreements on what to do next.
3. In determining policy, the cost of future damages C due to climate change must be converted to their present value C_t, where:
   

   Present value is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.
   From Wikipedia article on Present Value.

   The present value C_t of a future expense C is calculated from C_t = C (1 + i)^–t, where t is the time in years, and i is the cost of money, usually an assumed interest rate that could be earned if the money were invested. The assumed interest rate is controversial because a small change in the rate makes a large difference in the present value if time is several decades or a century. For example, a cost of $1000 that will be incurred in 50 years has a present value of $87.20 if i = 5%, and a value of $54.29 if i = 6%.
   
   For more on this problem, read the Hoover Digest article An Economist Looks at Global Warming by Gary S. Becker, who was awarded the Nobel Prize for Economics in 1992.

References

Frosch, R. A. and K. E. Trenberth (2009). "Geoengineering: What, how, and for whom?" Physics Today 62 (2): 10–12.

Manfred Milinski, Dirk Semmann, Hans-Jürgen Krambeck, and Jochem Marotzke (2006) " Stabilizing the Earth’s climate is not a losing game: Supporting evidence from public goods experiments." Proceedings of the National Academy of Sciences, 103: 3994 - 3998.

Prins, G. and S. Rayner (2007). Time to Ditch Kyoto. Nature 449 (7165): 973–975.

Revised on: 20 February, 2009