by frog
Further to the UK climate change and energy issues I was blogging on over the weekend, this morning Jeanette provided a comprehensive perspective on the NZ situation.
Opening the Solar 2005 conference at Otago University, she delivered a hard hitting speech that brings together in one tidy package Green thinking on the energy crossroads New Zealand faces as a result of climate change and Peak Oil.
I recommend a read of all of it, but for a snapshot, here’s Jeanette’s take on where the climate change debate is now at:
Amory Lovins used to say that it is always either too soon, or too late, to invest in energy efficiency. He meant that as long as there is surplus supply capacity it was too soon, and as soon as there wasn’t, it was too late to avoid building new supply. Some commentators have taken the same approach to climate policy. For years they head-butted the science, saying there is not enough proof to change the way we do things, or it was so far in the future we didn’t need to do anything yet.
Now I’ve heard the first comments starting – that climate change is so far advanced that it is too late to stop it and we should instead adapt to the new situation rather than try to curb emissions. The ignorance that betrays is dangerous. It suggests there is some new stable state into which climate change will propel us and we can just adjust to it. The reality is that there is no new stable state as long as greenhouse gas emissions keep rising. Stabilising then reducing emissions is just the first step to stabilising climate in some new state, provided we don’t trigger runaway feedback effects, some of which seem to have already started.
And here’s a little something to exercise the right wingers out there:
The current mix of regulation and the market in the energy sector is not working well and also needs review. But if we are to retain any market elements, and I strongly believe we should, then any economist will tell you it is essential to get the pricing right. Users of fossil fuels currently pay nothing for the environmental damage caused by their emissions, so compete unfairly with investments in renewables and efficiency, which have no emissions. The carbon tax is designed to level this playing field.
Published in Environment & Resource Management by frog on Mon, November 28th, 2005
Tags: environment
on the trolls and those who are unable to keep on topic
I liked this bit:
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“The carbon tax is designed to level this playing field.”
I would argue that this tax is deesigned to speed up the market model. As non-renewable fuel sources near their end, the price becomes greater. Eventually, alternatives become more viable as their cost becomes relatively cheaper. The carbon tax would make this happen earlier, though I have concerns over the use of any tax paid.
What good does it do for the environment if it is given to countries which in all likelihood, will use it to subsidise the more expensive traditional fuels? Are we not better off to use it ourselves to subsidise the innovation and development of sustainable energy?
Of course the problem then, is that the question is raised of who is best able to choose which technologies should be invested in!
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Was Lovins being ironic?
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One problem with the eco-tax idea is:
- What is the revenue being collected for? If people are going to pay to pollute, they should get something in return. If the pollution is causing damage, the sufferers of the damage ought to be able to take legal action for the damage conclusively proven, on balance of probabilities, to be due to trespass of the toxic emissions from the polluter’s land to the sufferer. Don’t say an eco-tax is to go through government so bureaucrats can fund some nice feel-good scheme – it should be about compensating victims, and that can be done far better through legal action than through taxation.
A rational reason to price is if there is a scarce resource that needs rationing which *could* be a limit on certain emissions within a certain area. A polluter then buys the right to pollute up to that level and can sell it if the polluter finds cleaner alternatives. This might work.
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Scott
a sensible (finally) comment deserves a sensible reply, i reckon, so I’ll have a go:
The tax is not to raise revenue per se – it is to increase the price of polluting activities to match the social cost of those activities. Increasing the price will change people’s behaviour (in a good way, ie less emissions). Economists who want to “get the prices right” are expressing exactly the same sentiment as environmentalists who want to change people’s behaviour. The question is then “what is the right price?”, but the answer depends on scientific evidence, people’s predicted behaviour (elasticities of demand, etc), and even how much value we place on future generations consumption and enjoyment of the environment. Given we don’t have thousands of years to debate that solution, we can reasonably agree that some level of taxation (ie putting some positive price on pollution) is better than none (the current 0 price of emmissions).
The tax is a double edged sword because it raises revenue as well as changing behaviour. It doesn’t matter much what the revenue is being used for – since revenue is not the aim of the tax. Practically, it has to be used for something, so a good idea would be to lower the rates of purely revenue-gathering taxes, ie personal income and corporate tax, thus removing some of the discouragement from “good” activities that those taxes create.
If you’re worried about equity – the “most polluting people get hit hard so we should compensate them” – consider the tax as returning people’s decisions to a neutral/equitable basis, neutral meaning “the price of an activity reflects the full cost, ie private plus social cost”. In this case the equity question isn’t (post-tax) “why should I pay more pollutant-tax than him, thats not fair” but (pre-tax) “why should I get to consume more of our limited environmental capacity than him, thats not fair”. So my Ford Falcon-driving, rubbish throwing, electricity-wasting neighbour gets hit hardest because his lifestyle is furthest away from a “fair, equitable” level of environmental damage.
And about legal action – can never work, the costs of organising those affected (6 billion, plus all future earth inhabitants) to sue those responsible (who knows) might just be too big to be practical. So damages of this kind are best prevented, rather than compensated for through legal action.
Buying the right to pollute up to a level (or being assigned that right), and selling if you can produce cheaper, is called emissions trading, which is what Kyoto is all about.
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Tom
My problem is that *all* activities have a social cost – which is something that would have to be imputed by bureaucrats. Defining the right price is indeed the problem. All activities also have “social benefit” – there are plenty of people who love cars, watching and hearing them, as well as those who loathe them. The multiplier effects of so many economic activities are enormous, yet nobody wants to charge people for the positive externalities of businesses that may spin off into new infrastructure, employment, training and social benefits that arise. In short – we can’t pay for everything that we gain from, or when we cause harm to others.
The value we put on things does not mean you and I, but what a bureaucrat or politician imputes. What I value is reflected in what I am prepared to pay.
I do NOT necessarily agree that a price on pollution paid to the state is the right approach. Much pollution has NO social cost. My breathing of carbon dioxide, particulates from a car in a desert, urinating in the sea – the net effect is nil. My preference is that people buy a right to pollute – a property right, for the use of the atmosphere (which is difficult to grant property rights over) and waterways/lakes/oceans (which are not so difficult to grant property rights over). Land is easy – you pollute you own land, but don’t let it leak onto others’ without their permission.
The revenue DOES matter, because from my perspective – taxation is theft. The state should not be able to fund activities because people do bad things – and this sets up a perverse incentive. People should choose to pay for what the state does.
I am not worried about equity, because those who want to pollute the most should purchase the rights to do so – but there must be limits on what remains of the commons – (e.g. urban atmospheres).
I disagree about your scepticism over legal action – because in most cases, it could work, as most environmental issues are highly localised. Owners of private property tend not to pollute it – those with short term rights over it do, and those with no rights certainly do. This can be extended to waterways, and to a limited extent, the atmosphere. Bigger atmospheric issues are more difficult, but this is a debate about means rather than ends.
Emissions trading is fine, except I am sceptical about the costs of implementing Kyoto vs. the benefits – that is another issue though.
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Amory Lovins has a great website over at http://www.oilendgame.com and having read and absorbed his book on the way forward for energy generally, I can agree that a certain amount of central direction is useful in alliance with market solutions. In particular, the ‘scrap a clunker’ scheme took my fancy.
The NZ context is somewhat irrelevant here, as we are not as subject to the tax distortions that have so skewed the USA’s vehicle mix. Although scarpping clunkers would be a good place to start.
But we can contribute technical innovation, which is the thrust of Lovin’s proposition. ‘Fraid he’s not a Kyoto fan, though: sees it as a bureaucratic and unhelpful way to miss the real point, which is not so much climate as energy related.
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