Recent Currents in Climate Science and Climate Policy

The quality popular press has run a number of features on global warming and climate policy during the last few days.  New Scientist carried a special report on Climate Change: What we know...and what we don’t.   And the New York Times had a Sunday review essay on “Where Did Global Warming Go?” , 24 October 2011. And, most significantly of all, The Wall Street Journal (WSJ) featured an essay on its opinion pages by Richard Muller, professor of physics at UCLA Berkley entitled The Case against Global-Warming Skepticism. But it then followed-up with an editorial entitled The Post-Global Warming World which seemed to contract some of the points in the prior article.       

The essay with the least substance in my view was the one that appeared in the New York Times. Its basic premise is that there has been a notable diminution of political support for policies to address climate change policies in the US.  Evidence offered for this position is that in 2008 both Obama and McCain had as elements of their policy manifestos proposals to address climate change.  But now, pushed in a different direction by the Tea Party and other political currents, many of the potential GoP challengers are actively hostile towards policies to address climate change, and even President Obama has gone silent on the matter.  By contrast with US recidivism on carbon emissions, the article suggests, measures to address global warming are proceeding apace, in both developed countries such as the EU, and recently Australia, as well as in key developing countries such as China and India. 

The article is helpful in alluding to what is evident; that the conventional political segmentation between right and left wing politics is not a particularly helpful categorisation in the area of climate policy.  For instance it notes that the EU’s commissioner for Climate Action Ms Hedegaard has a prior career as a conservative politician. Those on the far “left-wing” fringes of the climate debate would impose such draconian measures on society that they are in many instances indistinguishable from the “hard right”.  But the article also perpetuates some misconceptions, where for instance it claims that “scientists agree that extreme weather events will become more severe and frequent on a warming planet”.  Actually, this is not really right, and is typical example of the type of language that proliferates in such reports.  Often the writer will find one scientist prepared to venture an opinion, and then that opinion will be prefaced with “scientists say”. There is no immediate direct connection between climate and weather. A research project was launched recently in order to try to uncover whether in fact any recent extreme weather events can be attributed to manmade global warming. But this project is in its infancy and at this stage the jury is still out.

The schism between US and EU attitudes to climate policy that the article purports to identify probably doesn’t exist to anything like the extent suggested in the essay.  For instance another WSJ article EU Weighs Pullback on Cutting Emissions suggests that Europeans are becoming disenchanted by a lack of progress on measures to mitigate carbon emissions in countries outside of the EU, and, concerned at the possible competitiveness effects for EU Industry (I plan to address this topic in much more depth in a subsequent note) is considering scaling back its climate change ambition, at least insofar as the 2050 targets are concerned. In this context, few entertain hopes of substantial progress towards a globally binding agreement at the climate summit in Durban in November/December.     

Where the NYT article is interesting is in pointing out that despite the overall bleak political landscape, green manufacturing/green business remains one of the most vibrant sectors of the economy, continuing to expand even as more traditional manufacturing has faltered.  But it was ever thus.  I don’t believe prospects for the sector are necessarily vested in top-down global solutions.  While George W. Bush was President, despite his manifest unwillingness to embrace anything to do with ameliorating carbon emissions or protecting the environment, venture capital funding for cleantech was growing apace, with Silicon Valley becoming a veritable hotbed of cleantech innovation.

The New Scientist feature provides a handy “child’s guide” to what is known about climate patterns and most importantly the degree of uncertainty, the range of probabilities involved, and where the known risks lie. It doesn’t stray very far from the IPCC angle on any of the important issues.  It is worth noting that while the IPCC has been accused of grossly exaggerating the impact of manmade global warming, political science provides an opposite perspective on this.  Political scientists point out that the IPCC is a very broad church, and some high-profile errors in IPCC reports notwithstanding, for any stance to find its way into an IPCC report it generally has to be very moderate in tone, otherwise it won’t be acceptable to all members of the committee.  The New Scientist feature fortunately avoids the racy tone of certain publications I have seen on this topic, in which phrases such as “the problem has become ever more urgent”, “or “the problem is becoming more urgent by the day” appear. In fact, the science in the area of atmospheric physics changes very slowly.

This is evident in the article by Muller, which is to my mind the most important of the bunch. It is especially significant given that it appeared in the WSJ, which has deployed the example of the failure of Solyndra to rail against any form of government subsidies, particularly those for the solar industry.  My view is that one failure doesn’t undermine the whole case for subsidies for particular industries, any more than one imploding company undermines the case for stock-picking in the context of an overall portfolio.  Muller addresses what are sound reasons for scepticism about the whole notion of manmade global warming.  Indeed, he musters so many that midway through the essay it’s easy to expect that the article is heading towards a denunciation and repudiation of climate science.  For example he notes that many weather stations that would initially have been situated in rural areas will by now have become part of urban areas.  The urban heat island effect is well-known – asphalt for example absorbs heat. But this is not global warming.  However such stations will detect an increase in temperature over time. 

However, Muller’s essay reports on an extensive and painstaking project he has undertaken which corrects for all these measurement biases and other problems.  And he finds that the trend towards global warming remains intact, in line with the IPCC’s 0.8 degrees C over the past century.  Indeed, he finds that the corrected data could arguably support a stronger warming trend.  This is in line with the New Scientist feature which establishes the case for 2 degrees C global warming as a likely minimum, 3 degrees probable, but with risks to the upside. 

This is how science is supposed to proceed.  Not by tagging some with offensive and insulting labels such as “climate deniers”, but through methodical and painstaking research. Overall, there are some chilling messages – some possible effects are not reversible on a human timescale, and some effects are not reversible at all. 

What the evidence stacks up to is that no responsible politician who spends any time reviewing the evidence can conclude that burning tons of fossil fuels is right way forward as the response to a growing population’s energy needs.                      

In the context of the issue raised by the New York Times – which countries and regions are doing anything at all to address climate change and which are doing most about it?, a report on the Vivid economics website makes fascinating reading:  Vivid Economics, The implicit price of carbon in the electricity sector of six major economies, report prepared for The Climate Institute, October 2010. 

The study focuses on the power generation sector, and argue that while the imposition of a carbon price either through a carbon tax or an emissions trading regime is important, other policies also need to be considered in arriving at an overall metric of the overall level of effort as it pertains to the policy stance applicable to the power generation sector.  Policies such as subsidies, feed-in tariffs, or minimum obligations for renewable generation also need to be taken into account. In the report, a methodology combining all of these measures into a single implicit carbon price is presented which provides a basis for comparability between countries. Data is provided for 6 countries - Australia, China, Japan, South Korea, the UK and the US. But the authors would like to see the methodology extended to a broader range of countries.

Policies can foster the uptake of low carbon generation either through increasing the price received, or reducing the cost incurred, by low-carbon generators. What is especially interesting is that Vivid notes that there are almost no measures specifically targeted to discourage coal-fired generation, which is the real problem-child of the array of generation technologies insofar as emissions are concerned. (There is indeed a literature that argues that would-be installers of renewable generation technology are up against actual subsidies that favour traditional generation technologies. I intent to return to this thread in a subsequent post).   The idea is to develop a metric that identifies the extent to which the uptake of low carbon generation is incentivised relative to high carbon coal and oil-fired generation technologies. For the purposes of the exercise, all alternative technologies – advanced coal generation (such as supercritical plant), nuclear generation, renewable generation, biomass and natural gas generation – are defined as low carbon.  In the UK for instance there is a school of thought that argues that in order to avoid the imposition of excessive costs on households and firms, the UK may have to traverse a path where natural gas is adopted as an intermediate stage before truly renewable generation comes into its own.

The measure, the implicit carbon price, is the weighted sum of the average derived carbon prices for each separate policy measure.  There is an important issue concerning the efficiency of policy measures. In the countries studied in some respects it might have been possible to achieve the same outcome at lower cost through policy measures with lower average costs. It is not always necessary for government to directly intervene to specify specific low carbon generation technologies.  Given a particular carbon price, it can be expected that market forces will incline firms to gravitate towards solutions that abate carbon at a lower marginal cost than the extant carbon price. 

The conclusions of the study are fascinating.  Firstly, that none one of the countries examined has imposed a sufficiently onerous regimen to attain even the diminished undertakings agreed in Copenhagen.  Those that are doing best are about halfway towards imposing an overall policy package and implied carbon price that would achieve those commitments.  Secondly, that some of the developing countries are closer both relatively and absolutely to tackling carbon emissions in relation to the Copenhagen agreement than are the US and Japan.  These findings are displayed on the table below:

Country	Copenhagen Commitment (% change in 2020 emissions relative to BAU)	Economy-wide 2012 CO2 price consistent with commitment   (2006 US$)i	Implicit electricity sector CO2 price   (2010 US$)
Australia	-35	15.91	2.34
China	-22	15.22	8.08
Japan	-48	50.36	4.22
Western Europe	-36	56.76	28.46 (UK)
US	-33	28.09	5.05

Source: Vivid Economics and McKibbin et al (2010)

Relatively speaking China and the UK have about half the implicit level of carbon prices in place that it is estimated would take them all the way to attaining their Copenhagen commitments.  By contrast the level of effort in the US and Australia falls far short of what has been agreed.  So in this sense the New York Times article is right; China is tackling its carbon emissions with far greater enthusiasm than the US.  This finding is contrary to conventional wisdom, which often casts China as a primary obstacle in the path to achieving a global deal.

The same implicit CO₂ price though doesn’t necessarily impose an equivalent economic burden on countries in terms of achieving their climate objectives.  An economy that has a CO₂ intensive economy that exports a carbon intensive product mix would see its exports fall consequent of the imposition of a carbon price, as export prices would be increased by such a measure.  This would result in lower economic activity in the economy overall.  By contrast, a low carbon or predominantly services orientated economy imposing the same implicit carbon prices would be affected to a lesser extent as there would be a much smaller relative impact on exports.      

At the same time, the cost of achieving the targets is admittedly large.  The WSJ editorial puts a figure of € 48bn per annum on the cost of achieving the EUs 2020 target.  With heated quarrels over pensions and protestors on the street in Athens it would not be surprising if other priorities took precedence.   

It is ironic, and somewhat dispiriting that just when climate science is being put on a firmer footing, prospects for a global agreement are receding as the US and EU wrestle with pressing domestic agendas ( unemployment and the survival of the euro respectively).  However, many of the advances in green energy and cleantech that have already been achieved have not necessarily been steered by the hand of government. Moreover, China for instance has tended to be viewed as an obstacle to the achievement of a global deal but in reality its incentive structure for the abatement of carbon emissions has more bite than the US equivalent.  Progress will continue to be made, but, barring an expected breakthrough in Durban, it will probably be of the three steps forward and two back variety. And many of the most significant advances will be bottom-up as opposed to top-down. But it was ever thus.