Natural gas and climate change

Natural gas is cleaner than many alternatives, notably coal. It could help to reduce US carbon dioxide emissions from around 18 tonnes per person today to around 14 by 2040.

Unfortunately, that is nowhere near enough. I went to an interesting presentation last week on the 'Economic Implications of Moving Toward Global Convergence in Carbon Emissions'. I learned that taking into consideration population growth, the sustainable level per person per year is around 2 tonnes. That is around the India's level today.

A carbon tax imposed only in the developed world can help. But even a tax of around $250 per tonne would not be sufficient to achieve convergence at sustainable levels. A tax around this level would increase the price of petrol by around $4 per gallon. That sounds like a lot but it really isn't. Americans are still drastically under-paying for petrol compared with Europe and even compared with plenty of developing countries, which can least afford it. Unfortunately, carbon is currently trading at around $10 per tonne in the EU. Still some way to go.

Who cares about climate change?

58% of Americans, 68% of Europeans and a full 99% of people who live on small islands. That is what I learnt in a nice little seminar I went to yesterday chaired by Andrew Steer, the World Bank's special envoy for climate change. The Maldives puts some of its tourist dollars into a special trust so that they can eventually buy a new homeland when they go under the sea. Not a bad idea... The US Navy apparently assumes a 1.2 meter rise in sea levels by the end of the century and some of the island nations are working on the possibility of up to 5 meters.

Carbon offsetting is sexy!

I did it for my flights to the UK over the xmas hols and for the 1600 miles I managed to clock up in the hire car. I don't think that I should have had to do either as it should be included automatically. Happily, any airlines flying into or out of the EU now have to pay the carbon tax if they exceed their (tradeable) limits. It's a pity these carbon credits were given away rather than sold to begin with and not sold but it is a good start. 

I am really happy the EU resisted pressure from airlines and other countries not to introduce the tax. See, for example, this stupid article from the Washington Examiner which thinks that the EU is trying to get foreigners to bail out the failing European economy - um... Europeans have to pay the tax too; increasing transport costs hurt not benefit the economy in the short run; and, quite frankly, we will all destroy all of our lives if we done implement schemes such as this - in economic models, that results in a utility of minus infinity making this excellent long-run economics.

Carbon offsetting the flight and the car journey makes them both more expensive but if I don't pay, someone else (who is probably significantly poorer than me) will pay for it. 

I use myclimate.org to do my carbon offsetting.

Exporting pollution and jobs

George Osborne had a few Green Concessions in his Autumn Statement, although maybe not enough - more words than actions but it is a good start as it at least acknowledges the importance of climate change for the economy.

Here is a part I found interesting:

"We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers," Osborne said, announcing the expected rebate. "All we will be doing is exporting valuable jobs out of Britain."

From an economic perspective, I dislike it - it smacks of protectionism and subsidising some sectors when British society and developing societies would all be better off if British steel mills, aluminium smelters and paper manufacturers did indeed shut down and we imported these goods from other places.

But I do agree that from a climate change point of view, he is probably right. Brits will not stop consuming these goods - they will just be imported. The pollution will just be shifted elsewhere. Here is some excellent analysis from The Oil Drum blog which shows that carbon emissions can decline in, say, the UK, but it gets shifted to, say, China (HT: MM). The planet as a whole does not benefit. Indeed, due to transport and the fact that China is less energy-efficient there may be a short term negative impact (but perhaps longer term positive one thanks to learning to be more energy efficient).

This is not a sufficient argument for bad economics though. Instead it means that it is the consumers and not the producers of carbon who need to pay for it. Shifting dirty production abroad and importing the goods is just cheating. It should also imply that taxes in the West help to pay for industrialising countries to become more energy efficient.

Why I carbon offset my last personal flight and why it should not have been a choice

I took some personal flights over the last (Thanksgiving) weekend and I just got around to doing my carbon offsetting through MyClimate. 

I don't think I should have had to choose to do this or make additional effort to do so. Fuel taxes should be higher to ensure that the full cost to humanity is integrated into the price of the ticket. At the moment, when I fly, I pay for the ticket which includes the cost of the fuel. But the pollution has a cost for more people which I am not paying for. The pollution I am causing is resulting in floods, droughts, crop failure, lost work days, increased sickness and many other bad things for other people. They are paying for a part of my flight and most of them live far more difficult lives than I do. (So, thank you for subsidising my flight - I appreciate it.) 

Just as for driving, fuel prices should reflect the full cost to humanity. It is true that the price would be higher if I had to pay the full cost and I would not fly so often. But that is part of the point - pollution would go down as I choose to take only more essential flights that I think are really worth it. I would still have the option to fly but I would have to value it highly enough to justify some negative impacts on other people. In addition, the increased taxes should go towards footing the bill for climate change in the poorest countries which are most effected and towards schemes to reduce climate change - call it 'offsetting' if you will.


Here is a nice video of the full effects of fuel for cars:

I don't think doing this offsetting should be my choice - I think it should be integrated into the ticket prices for everyone. As this article says "the big problem with voluntary donations is that they do not encourage airlines to demand cleaner planes or fly cleaner routes" (article in French-HT: KG). But till then it would be nice if airline companies made it easy to do this. Unfortunately, BA did not seem to make it obviously easy for me whilst purchasing tickets or on board but at least they did not pretend to, unlike some awful competitors. I think that is a pity.

West should pay for climate change

A Malawi study reveal the cost of adaptation to climate change.

“The cost of adapting a integrated farming system in a village in Nepal could be US$20,000 per year, that of a rain-fed maize system in a district of Malawi’s US$55 million, and protecting the entire livestock sector of Tanzania could cost up to US$280 million — with all costs likely to treble by 2030."

Developing countries have to pay the price for western pollution but convincing people in the west that we have to pay for this is difficult. The Daily Mail for example, seems to feel that it is both a waste of taxpayer money and a way to manipulate African governments. I think that it is a good use of taxpayer money to pay developing country governments to be greener. The economic costs of climate change are high and it makes sense for wealthier countries to foot the bill. You can make your own personal contribution so that the Ecuadorian government does not rip up the rain forest to pump oil HERE.  As for manipulating African governments. Well, maybe. In the same way as I am manipulating potential smokers by taxing cigarettes. Or manipulating manufacturers by choosing what I buy. I think I can live with that.

Adaptation to consequences of climate change in Kenya

The BBC has a short article on use of greenhouses in agriculture to help counteract the heavy drought in Kenya. Below is a short video, also in Kenya, on the impact of drought and climate change.

I find the below interview somewhat leading but it is still interesting.

How biking can save cities billions of dollars in health expenses

Nearly 70 percent of Americans' car trips are less than two miles long. It's a no-brainer that biking instead of driving to take care of these trips is a great way to get exercise while cutting air pollution. While we've always assumed that the cumulative effect of many individuals making that choice would be longer, healthier lives and cleaner air in our cities, a recent scientific study put some rigor to our hypotheses and proved us right.

Read the full article HERE.

HT: MM

Question Time on Climate Change

"future economic growth requires us to tackle this issue successfully" (William Hague, Foreign Secretary)

"climate change undermines the basis for achieving the MDG" (Ambassador Mxakato-Diseko, South Africa)

"when means of income generation suddenly disappear because of flooding [people's] means to educate their children disappear before they eyes" (Ambassador Mxakato-Diseko)

Climate change offers new business opportunities - for example E-idea, Jakarta (Martin Davidson, Chief Executive of the British Council.

Need to reduce carbon emissions without compromising growth, poverty or job creation (Ambassador Mxakato-Diseko)

"[Climate change] is a reality that we experience every day" (Ambassador Mxakato-Diseko)

Watch it HERE.

HT: JT

The economic and human costs of high urban pollution

"For the past few days, Beijing has been covered by a thick blanket of smog, forcing the closure of several highways and the cancellation of hundreds of flights. The US embassy in the Chinese capital has warned that air quality has reached hazardous levels and, according to media reports, hospital admissions have risen by almost a third."

THIS short BBC report shows a scientist taking his child out of school because he judges pollution levels too dangerous for the child to be outside. There are increases in hospital admissions as a result of the smog and presumably many work and education days lost to illness. The lost human capital and work effort will directly contribute to lower economic growth this year and for many years to come. A nice illustration of the economic of high pollution.

Air pollution in Ankara, Turkey

Here is a photo of Ankara taken from my temporary office window. Notice the thick layer of smog over the city. 

I found an article from a Turkish newspaper taking about Ankara's air pollution:

"The large increase in natural gas prices and the distribution of free coal by municipalities prior to local elections has led to an enormous jump in pollution levels in Ankara, reaching 9,350 micrograms per cubic meter in the Sıhhiye district. According to the World Health Organization, or WHO, the acceptable level of pollution is a maximum of 300 micrograms. "This is one of the highest levels in the world’s history. When pollution rose over 4,000 micrograms per cubic meter in London in 1952, approximately 4,000 people died," Dr. Recep Akdur, an expert in public health, said yesterday." (December, 2008)

Air pollution seems to be an issue for Ankara and elsewhere and can have significant negative health impacts - in cities more than elsewhere. A research paper recommends switching away from coal (rather than distributing it free, as has happened in the past in Ankara-before elections, I am told). Given transport is also partly responsible, efforts to switch to electric cars can also have a beneficial impact on urban pollution and hence public health.

Good economics is about wellbeing or happiness (utility), not only about getting rich, although this is obviously an important component. Pollution on these levels reduces life quality, life expectancy and the negative impact on health likely causes lost work days and school, reducing human capital, economic output and wealth. This youtube video shows the true cost of fuel which takes into account these negative side-effects:



High-pollution development models are reaching their limit.

The high-pollution development model

Tehran is sometimes effectively shut down due to the pollution levels and some estimates put the number of deaths caused by pollution there at 3,600 per month.

Iran is heavily energy intensive but with fuel subsidies amounting to a staggering 20% of GDP, it is no surprise that Iranians over-consume it. Unsurprisingly, analyses show that fuel subsidies are bad for the environment and are unsustainable from a development perspective. Thankfully, there have been large recent reductions in Iran.

Nonetheless, Abbas Milani thinks that one of the toughest questions journalists could as President Ahmadinejad is on his government's neglect of some environmental issues:

"Your government has been oblivious to the grave ecological dangers faced by your country. The Zayandeh Rude River in Isfahan has dried up; the drying up of Lake Orumiye will affect the lives of hundreds of thousands of Iranians living in the area. Why have you, in spite of your much-touted trips around every province, ignored these grave problems?"

Taken from the Wikipedia article on Lake Orumiye, here are satellite images of the rapid shrinking of the lake between 2003 and 2010: