Module 11: Policy Options
Module 11: Policy OptionsOverview
Strong science and economics give us high confidence that reducing greenhouse gases can be a sound investment. If we use the knowledge efficiently as we make decisions, we will be economically better off. But, we’re a little like a worker with an illness related to their job—the job brings great good as well as bad, and the same is true of fossil fuels.
If you go to a doctor with an illness, the doctor has lots of options. She may give you medicines that cure the disease, or others that lessen the symptoms. She may help you learn coping strategies to reduce the problems, and other actions to prevent additional illnesses or treat other difficulties that are making this illness worse.
In the same way, we can think about “curing” the global-warming problem by switching to other fuels that don’t raise the Earth’s temperature, or by putting CO2 back in the ground; such actions to reduce or eliminate the warming are often called mitigation. Or, we can look for ways to cope with the coming climate changes, by breeding heat-resistant crops, building walls against the rising sea or moving out of the way, and otherwise engaging in adaptation as the changes happen. We even can try to cover up the symptoms, using geoengineering to block the sun. And, we can encourage research, education and innovation to help make the transition.
How do we really do any of these? What decisions need to be made? What other issues are involved? Let’s go policy-wonking!
Goals and Objectives
Goals and ObjectivesGoals:
- Recognize the role of human actions in determining the future of our climate, except that by avoiding climate change, the shift will make the economy better and thus increase employment
- Explain scientific concepts in language non-scientists can understand
- Find reliable sources of information on the internet
Learning Outcomes
By the end of this module, you should be able to:
- Recognize the multitude of policy options available for our energy system and economy
- Explain how the effectiveness of emissions treaties and carbon taxes can be verified internationally using remote data collection
- Recognize that shifting gradually to renewable energy is likely to have little overall impact on employment rates
- Recall that energy policies and subsidies have been in use for decades, and some of these have promoted fossil fuels over renewable resources
- Research and evaluate an example of an energy subsidy reported by the IMF
Roadmap
Roadmap| What to do | Task | Due On |
|---|---|---|
| To Read | Materials on the course website (Module 11). | A.S.A.P. |
| To Do | Discussion Post Discussion Comment Quiz 11 | Due Wednesday |
Questions?
If you have any questions, please post them to Help Discussion. We will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.
Policy Options and Regulations
Policy Options and RegulationsShort Version:
A huge range of policy options is available, and many regulations likely would be required to implement some of them. Or, a price on carbon, such as a carbon tax, could be used to get the whole economy working on the problem. If paired with a tax swap to reduce more-intrusive taxes, this would have little impact on the economy and might cause growth, even if the benefits of avoiding global warming are ignored. International harmonization of carbon taxes could be used, with econometric and geophysical verification. Such an approach is likely to have collateral benefits through avoiding negative externalities of some fossil-fuel use, improving national security through avoided environmental problems, reducing rapid changes in energy prices, and possibly increasing employment. Current policy positions probably are serving to accelerate global warming, so a neutral stance or reduction in global warming would require policy actions. Clearly, effective responses require well-designed and implemented policies; it is possible to mess things up with poor policies.
Longer, but friendlier version:
On June 25, 2013, US President Barack Obama made a major speech introducing his administration’s Climate Action Plan.
The 21-page document that accompanied the speech sketched a series of policy actions proposed for the remaining years of the president’s term in office. By the time you read this, that speech will be old news. But, it is instructive even as it becomes history because despite the sheer number of proposals, and their great breadth and depth, this plan did not even mention the most commonly discussed policy option.
Consider some of the proposals. (Many of the words that follow are directly from the Plan, but some are paraphrased.) Don’t try to learn or memorize these; just notice how many there are:
Cut Carbon Pollution in America by:
- Completing carbon-pollution standards for new and existing power plants;
- Promoting renewable energy, including accelerating clean energy permitting, developing hydroelectric power at existing dams, deploying renewable energy through the Department of Defense, increasing federally installed renewable energy, and expanding and modernizing the electric grid, including streamlining transmission projects;
- Unlocking long-term investment in clean energy innovation, including increasing funding for areas ranging from advanced biofuels to emerging nuclear technologies such as modular reactors to clean coal, guaranteeing loans for projects to avoid, reduce or sequester human-produced greenhouse gases, and instituting a Federal Quadrennial Energy Review to assess and guide actions;
- Advancing transportation, including fuel-economy standards for heavy-duty trucks, buses, and vans, improving biofuels, and leveraging public-private partnerships to deploy cleaner fuels such as advanced batteries and fuel cell technologies;
- Reducing energy bills by increasing energy efficiency standards, reducing barriers to investment in energy efficiency by financing efficiency investments in rural America, and developing a new fund to allow testing of novel approaches to cost-effective residential electricity, and expanding programs for better buildings;
- Reducing emissions of other greenhouse gases, including various programs to curb emissions of hydrofluorocarbons and methane, and preserving forests;
- Providing federal leadership, including consumption of clean energy and energy efficiency, with initiatives such as (quoting from the bottom of p. 11 in the plan)
In the report, these proposals to cut carbon pollution were followed by proposals to Prepare the United States for the Impacts of Climate Change, and to Lead International Efforts to Address Global Climate Change, with similar detail.
Many people provided opinions about the plan in the days after it was released, but among those experts who favored policy actions to address climate change, there was widespread acceptance that these proposals were serious and moving in a useful direction. Standard contracts, synchronized building codes, and access to capital markets for investments are indeed important, as are many more policy options.
But recognize that 21 pages of this sort of text were needed just to sketch a suite of policy responses—the rules and regulations were not in the document, just statements committing the administration to working on those rules and regulations. And, this is just one level of government in just one country in a very big world. Furthermore, a price on carbon emissions was not even discussed (see below).
So, if you expect a truly comprehensive discussion of policy options in this chapter, you will be disappointed. The energy system is so huge and pervasive in our lives, and so strongly linked to release of CO2, that almost everything we do, publicly or in private, can be changed to influence global warming.
Instead, we’ll look at a few of the most frequently discussed options. We’ll also look at additional motivations, and effects of policy actions.
Dr. Alley, your tour guide here, is a geologist by training, and a recognized expert on some aspects of glaciers and ice sheets. This does NOT make him a policy expert. Furthermore, a lot of what follows could be misinterpreted as an endorsement of some particular policy or policies. So, let’s get it out in the open right now: We are NOT endorsing any particular policy here. It is up to you to make up your own mind. We do hope that the evidence and reasoning presented here will help you with this. We are NOT telling you how to vote about issues such as synchronized building codes to reduce carbon pollution. But, we are trying to show you what the best understanding says about motivations and options for this often-contentious and very important topic. And again, because the topic is so vast, we will hit only a few of the high points.
Tax and What?
Tax and What?
Outlaw Dumping of Carbon Dioxide
Outlaw Dumping of Carbon DioxideOne possible policy approach to global warming is to outlaw dumping of CO2 into the air where it affects neighbors, just as we outlaw dumping human waste onto a neighbor’s lawn. This is not a favored policy approach for now; Dr. Alley knows of no serious proposals to outlaw most CO2 emissions in the short term. However, some of the proposals in President Obama’s plan involve laws or regulations that reduce emissions, through actions such as requiring that trucks travel more miles per gallon of diesel fuel, or that power plants emit less CO2 per kilowatt-hour of electric generation. In some sense, this is outlawing a small fraction of CO2 emissions.
Economists generally recognize the utility of at least some regulations, such as those prohibiting dumping of human waste on a neighbor’s lawn. (Although, the British publication The Economist editorialized against sewers in 1848, as reported by S. Halliday in The Great Stink of London, 1999.) But, there is fairly broad support among economists for using “price signals” instead of regulations where practicable.
Cap and Trade
For example, instead of outlawing CO2 emissions, governments could set a limit on how much CO2 could be emitted, and sell or give away permits to emit that much CO2. Then, the people holding those permits could actually emit that CO2, or sell (trade) those permits to other people who wanted to emit the CO2. This process is often called cap and trade. By reducing the permitted emissions over time, or raising the price of the permits, total emissions could be reduced.
At any time, the trading of permits allows the economy to reduce emissions at the lowest possible price. If CO2 is reduced by regulations rather than price signals, those regulations might be written with an eye toward political expediency rather than economic optimization, and so might end up cutting emissions in rather expensive ways. By letting markets achieve the reductions, more-efficient ways are likely to be found. At the time of this writing, cap and trade was being used in Europe to address CO2, in the US to reduce acid rain, and in other ways around the globe. Some danger typically exists that political considerations will cause caps to be set so high that there is little practical effect of the policies. However, with appropriately set caps and sufficiently well-regulated and monitored markets and emissions, this approach can work, and has done so in some cases.
In the broadest sense, cap-and-trade with permits sold by the government is a complex way to levy a tax on CO2 emissions. In part because of the complexity, many economists argue that it would be much more efficient to just tax CO2 emissions directly.
A Highly Relevant Detour
A Highly Relevant DetourNow, a bit of a highly relevant detour. Governments levy taxes to raise funds so the governments can function, but those taxes always have impacts in addition to the fund-raising. In the United States, governments tax tobacco to raise money and reduce smoking. Governments tax alcohol to raise money and reduce drinking. And, governments tax the wages of workers to raise money… and reduce working?
Reducing the value of work does reduce working. For example, suppose Dr. Alley has $100 to get help with some task. Compare two options: he offers some students $100 to help, or, he offers the students $50 to help, and the government gets the other $50. Which is more likely to convince the students to change their plans and go help Dr. Alley? The answer should be clear.
Just as taxing tobacco, alcohol and wages tends to reduce smoking, drinking and working, respectively, taxing our fossil fuels would reduce their use, as well as promoting substitutes that now are more expensive than the fossil fuels. And, because energy use powers the economy, this would reduce economic activity unless certain other actions were taken.
If a tax (or a cap-and-trade program) were developed to reduce CO2 emissions, the economic impacts would depend hugely on what was done with the money raised. Some political campaigns in the US recently featured advertisements using numbers assuming that money collected from a cap-and-trade system was then run through a shredder, disappearing completely from the economy. This makes the cap-and-trade program sound very expensive, which may be politically useful. But, in our experience, governments that get money tend to spend it rather than shredding it.
Tax Swap
Tax SwapProbably the most frequently discussed policy option is to place a tax on carbon emissions, and use the money in a “tax swap” to reduce the tax on wages, or to reduce other taxes that especially reduce economic growth. (Other options include giving the money back to people directly, or using the money to stimulate research—the funds would be available for anything that money can be spent on.) In 2013, the US Congressional Budget Office summarized available research showing that if we ignore all of the benefits of reducing fossil-fuel emissions and avoiding global warming, a properly designed tax swap would have little impact on the economy as a whole—it might slow growth a little, or speed growth a little, but without too much change (Effects of a Carbon Tax on the Economy and the Environment, 2013). Earlier, the US EPA had conducted a similar study and found a slightly overall increase in household consumption over the next 30 years in response to a price on carbon—a stronger economy from putting a price on carbon emissions and using the money to reduce the tax on work. (U.S. Environmental Protection Agency, Office of Atmospheric Programs, 2009, Revenue recycling to reduce labor taxes, in Supplemental EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress, p. 23, scenario 16.) You might think of this as arising from the fact that replacing fossil fuels is difficult, and taxing fossil fuels causes inefficiency in the economy, but replacing workers is about as difficult and perhaps even more difficult, and taxing their wages causes about as much and may be even more inefficiency in the economy.
Such studies also show that it is possible for governments to raise taxes on carbon and then use the resulting money in ways that are not as helpful to the economy so that the carbon tax really does reduce economic growth significantly. (The worst example of this might be taking the money and shredding it!) But, used appropriately, there is little economic cost and possibly economic gain from a carbon tax even if you ignore the benefits of reducing CO2 emissions. And, as noted in the previous chapter, a cost on carbon emissions is strongly justified if the costs of global warming are included.
One objection to a carbon tax, even if implemented efficiently with a tax swap, is that it takes relatively more money from poor people than from the wealthy; such a policy is often called regressive. In contrast, income taxes tend to be designed in a progressive manner, so that wealthier people pay relatively more. However, other policies can be designed to address such issues if they are deemed important.
In his 2008 book, A Question of Balance, the Yale economist William Nordhaus (we met him in Module 10) devoted a whole chapter to “The many advantages of carbon taxes”. Three days after the Obama administration’s 21-page sketch of policy actions, economist Henry Jacoby of MIT told National Public Radio’s David Kestenbaum (Morning Edition, June 28, 2013) that economists could solve the problem with a one-page bill. Kestenbaum’s analysis in the interview says “This is why economists love a carbon tax: One change to the tax code and the entire economy shifts to reduce carbon emissions. If you do it right, a carbon tax can be nearly painless for the economy as a whole.” (And, again, this ignores the benefits of reducing global warming, which make the carbon tax more favorable.)
Impact on Coal Miners
Impact on Coal MinersA carbon tax (or cap and trade, or regulations, or any other serious attempt to reduce CO2 emissions, probably including carbon capture and sequestration) is likely to have unfavorable impacts on some groups, and favorable impacts on others. In particular, coal miners are likely to lose. One of the short-term responses to reductions in greenhouse gases is likely to be a switch to natural gas for generating electricity—gas emits about half as much CO2 as coal for a given amount of electric generation, and the greater ability of gas turbines than coal-fired boilers to change their output quickly means that more renewables can be used easily in an energy system that has more gas-fired and less coal-fired generation.
Video: Coal Miner (1:33)
Pennsylvania coal miner (name unknown), from US Library of Congress. The CO2 from coal causes expensive climate changes, but putting coal miners out of work would be expensive to them. The economically optimal path starting now would allow many miners to retire without being fired, but if we delay taking action until many more coal miners are hired, the economically optimal path starting in the future may fire many of them.
DR. RICHARD ALLEY: This photograph, from the US Library of Congress, shows a coal miner from 1942 from the Pittsburgh, Pennsylvania area, the Montour Number 4 mine of the Pittsburgh Coal Company. We don't even know the miner's name. We do know that a lot of miners have done very difficult jobs to help their families, to help their communities, to help their countries. No one likes going around firing coal miners.
Coal, right now, is under a lot of pressure. Some of it does come from government regulations. Probably, more of it is coming from natural gas being cheaper, although you'll find an argument on that.
The economically optimal path for dealing with CO2 involves starting very slowly to deal with the problem, and making changes over decades, with the idea, in part, that coal miners, who made honest decisions to be coal miners, will retire in their jobs, coal investors will get their money back, but future generations will do something else. If we ignore the science and the economics, for now, we let another generation coal miners get started, then the economically optimal path will involve much faster changes, with a greater likelihood of firing coal miners. So in some sense, if you really hate the idea of firing coal miners, you want to put our knowledge into the decision-making now.
There is a fascinating issue here, which overlaps with ethics in the next module. The economically efficient path puts a small price on carbon now, and then raises that price slowly but steadily, by perhaps 2-4% per year, so that in a few decades the price becomes high. A person who already decided to be a coal miner, obtaining the education, mortgage, and other things that go with that choice, has a good chance on the economically optimal path to retire as a coal miner, with future generations doing something else (or else with future generations mining coal and then capturing and sequestering the carbon). If someone invested in a coal-fired power plant, they likely will get their investment back on the optimal path.
But, the social cost of carbon is projected to climb rapidly as temperatures and damages rise. If we notably delay starting our response, so that a new generation of people become coal miners or coal-plant investors, the higher social cost of carbon in the future will mean that an optimal path starting in the future involves faster changes, which will make it much harder for those new “coal” people to complete their careers or recoup their investments. If you really are ethically opposed to the general act of firing coal miners or hurting the investors in coal plants, starting now to deal with climate change is probably better than delaying, because of the likelihood that delay now will lead to more coal miners being fired later. (The biggest danger to coal-mine jobs and investors in the US now may be the recent drop in gas prices as fracking has increased gas supply; the free market does not adopt 30-year plans to minimize impacts on coal miners. And, as noted below, the fracking boom involves commercialization of research that in significant part was paid for by the US government, so in that sense government policies have caused trouble for coal miners. Notice, though, as described in the Enrichment linked below, that even if the main danger to coal-mine jobs comes from the free-market influence of gas, the public communications may paint a very different picture.)
Want to learn more?
Read the Enrichment titled Coal Mining Jobs.
Harmonious Taxes
Harmonious TaxesEmitting carbon dioxide has a social cost, as we saw in the previous module, so any actions to reduce emissions give some benefit. But, making a measurably significant difference in the future of global climate will require major reductions in CO2 emissions across large parts of the whole world’s economy, and really solving the problem will involve almost all of us. International cooperation thus is almost surely required to address global warming seriously.
Treaties
One possible approach is to use treaties or other agreements to limit the quantity of CO2 that can be emitted. The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) takes this approach, setting limits on allowable emissions from many, primarily industrialized countries. The UNFCCC commits signatories (essentially the whole world) to “…stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” (Article 2), and Kyoto attempted to start a strategy to achieve that objective (United Nations Framework Convention on Climate Change, Background on the UNFCCC.)
Kyoto can claim some successes among countries in reducing greenhouse-gas emissions. Overall, however, emissions have risen since the protocol was enacted. One could argue that the task is so difficult that we should not expect immediate success, but one could also argue that this approach is not working as well as it should.
Internationally Harmonized Carbon Taxes
Another possible approach is through internationally harmonized carbon taxes. (Again, we are leaning on the work of W. Nordhaus, among many others.) As this was being written, carbon taxes were functioning in many places including British Columbia and several European countries, and discussions were ongoing in additional countries including China. Suppose that the international community broadened this participation by negotiating use of a carbon tax in all countries. The tax rate might be targeted at the economically efficient level, possibly with variations in when it became fully active based on the status of economic development or other issues. Monitoring and enforcement would involve some discussions, as would issues of what in detail to include. For example, deforestation does contribute to global warming, so are trees included? Where Dr. Alley lives, in Pennsylvania in the USA, trees were cut down in previous centuries, and many trees have been growing back—is it right for Pennsylvania to get credit for regrowing trees when other countries are penalized for cutting down their trees?
But, start with the simplest possible model: a tax on the extraction of fossil fuels, set at an initially small level for everyone and then raised at a rate such as 2% per year. Suppose that more than half of the world’s economy initially agreed to this. They could then, perhaps through the UN, offer a deal to countries not yet participating—participate, tax your own carbon, and keep the money for any purpose except stimulating fossil-fuel use; or, refuse to participate, and the participating countries will keep the funds raised from tariffs they will levy on all trade into and out of the nonparticipating countries, and set at a level equal to that for harmonized carbon taxes. (This probably would require changes to international trade rules, but changing such rules is not impossible.) Such an arrangement might turn out to be much simpler than extending the Kyoto Protocol to greatly reduce fossil-fuel emissions of CO2. Many people will have many questions about such a plan, but it is an interesting alternative that is receiving serious if cautious support.
Problems with Treaties and International Carbon Taxes
Any international treaty runs into the issue of verification—how can a nation tell whether other nations are cheating? The US National Research Council looked into that question in 2010 (Verifying Greenhouse Gas Emissions: Methods to Support International Climate Agreements), and found that verification of compliance is practicable. This would include a combination of national inventories (econometric data; who is buying what), and geophysical techniques (satellite, airborne and surface-based monitoring of atmospheric concentrations and isotopic ratios). The small variations in concentration of CO2 around the planet reveal sources and sinks of the gas, and the isotopic composition can separate biological (higher carbon-12 to carbon-13 ratio; either recently living plants or long-dead fossil fuels) from abiological (volcanic, for example) carbon, and modern-biosphere (lower carbon-12 to carbon-14 ratio) from fossil-fuel carbon. Combining the geophysical and economic data can provide a clearer picture than is available from either source by itself.
A carbon tax rising by 2% or 4% per year cannot be a solution for government funding forever because as decades become centuries, the cost per gallon would pass the cost of the car and continue onto huge values. Clearly, policies are reexamined before decades become centuries. The goal of ultimately reaching a sustainable energy system means that taxing fossil fuels cannot continue forever. But, for decades at least, harmonized carbon taxes could supply much government revenue while reducing global warming, having little direct effect on the economy, and improving the economy if the value of avoiding the global warming is considered.
Activate Your Learning
Video: CO2 Map (1:52)
NASA AIRS satellite data from May 2013.
PRESENTER: This figure from NASA-- from the AIRS team-- shows the concentration of CO2 in the atmosphere in May of 2013. This is after a winter of lots of fossil fuel burning in the north and lots of decaying plants, and just before the plants really start growing in the spring and taking out CO2 from the air. What you see in this broad band up here is a relatively high CO2 from the fossil fuel burning and the plant decay. Whereas down here, where plants have been growing really rapidly, the CO2 is a little on the low side.
If you were to come back a few months later, these would have reversed a little bit. Now, these variations are very small. 402 was the highest, 391 is the lowest. It's barely more than plus or minus 1% about the mean because there's a lot of mixing around the planet.
CO2 goes up and down with winter and summer, and CO2 goes up and with fossil fuel burning. What's useful here is that these images, plus measurements that are made on the ground, plus economic data, tell us who is burning fossil fuels and adding it to the atmosphere, as well as what's going on naturally. If we were to have a treaty that limited fossil fuel burning, it could be verified by using available data. You can't cheat on fossil fuel burning and releasing the CO2 because the CO2 is measurable in the air.
Credit: Dutton Institute. EARTH 104 Module 11 CO2 Map. YouTube. January 13, 2015.
Source: Global Patterns of Carbon Dioxide, posted September 27, 2013, data acquired May 1 - 31, 2013 NASA Earth Observatory image by Rob Simmon and Jesse Allen with data courtesy the AIRS science team.
Policy Pile-On
Policy Pile-OnIn the previous module, we looked at the basic economic analysis showing that the world’s people will be better off if the solid scholarship on energy and environment is used efficiently. And, we mentioned that if we are close to being influenced by limits to growth, then the motivation to use the scholarship is stronger. Earlier in this module, we looked at some of the ways that policies can be used to address these issues. Next, we will briefly consider a number of issues that influence policy choices, including national security and price stability.
Extinguishing Externalities:
Any energy source that supplies a significant fraction of human use is almost guaranteed to have “externalities”—unintended consequences for people and other living things. Solar farms in the desert may shade the habitat of cacti and tortoises, wind turbines kill some birds and interrupt views, nuclear plants require long-term storage of potentially poisonous waste, fracking produces “flow-back” fluids containing possibly harmful chemicals that must be disposed of, and so on. Realistically, we have no practical hope of an energy system that doesn’t involve unintended costs and “Not in My Back Yard” (NIMBY) issues.
But, several studies have found that wind turbines are not nearly as deadly to birds as cables on radio towers, skyscrapers, cats, or the climate changes from fossil fuels that will be avoided by use of wind turbines (see Enrichment on the next page).
Want to learn more?
Read the Enrichment titled Living with Wind Turbines and Coal Exhaust.
In general, the externalities of renewable energy are quite low—covering the desert with solar cells does not use the most productive landscape, and covering roofs with solar cells replaces one human-made surface with another that has essentially the same effect on neighbors, except it generates electricity.
In contrast, recent scholarship shows that coal-fired electricity as currently practiced in the US and some other places (parts of China, for example) has very high negative externalities, from issues such as particles and mercury causing health problems. Some studies for the US (see Enrichment) have indicated that for each dollar spent by consumers on coal-fired electricity, society spends a similar amount, or more, in lost health and environmental quality. Hence, these studies indicate that there would be economic gains from additional regulations or other policy actions to clean up or reduce coal burning, even if the effects on climate change are ignored.
Earth: The Operators' Manual
Video: Yes in My Backyard (aka YIMBY!) (9:08)
To see how people in Denmark and Texas came to welcome the wind into their backyard, you can watch this clip. Beauty really may be in the eye of the beholder, and things that pay the beholder good money may look just a little more beautiful.
Yes, In My BackYard
NARRATOR: Are there other examples of communities and nations that have begun the transition away from fossil fuels? What does it take to welcome the turbines and solar farms of the new energy system, and say, "Yes, In My Backyard." This is the story of two communities that at first look very different. Samso is a small island off the Danish mainland. West Texas is a vast, dry expanse in America's South. What both have is abundant wind. At times, Samso produces more electricity than it uses, exporting surplus power to the Danish mainland. And Texas wind now generates as much power as the next three U.S. states combined. Samso and West Texas both solved the NIMBY, not in my backyard challenge that has stymied so many renewable energy projects. It's not easy, but with patience, and persistence, and the efforts of the right people, it can be done.
SOREN: Okay-- My name is Soren Hermansen, and I am the Director of the Samso Energy Academy. Samso means, in Danish, means the Meeting Island-- when you make a circle around all of Denmark, then Samso is right in the center of the circle.
NARRATOR: But it wasn't geography that brought Lykke Friis, then Denmark's Minister of Climate and Energy, here in mid-2011. It was why and how this community had turned NIMBY into "Yes, in my backyard."
LYKKE FRIIS: Well, Samso is a pioneering project, in the sense that Samso, way back, decided that Samso should become independent of fossil fuels.
NARRATOR: Before its transformation, people thought of Samso as just a cute tourist community, busy in summer, empty and desolate in winter. Now people come here not just to see the turbines, but to understand the process that got the community to welcome wind energy. After a national competition, Samso was selected by the Danish government to be a proof of concept for how to transition from fossil fuels. But it was up to individuals like Soren Hermansen, with the passion and skills to effect change, to figure out just how.
SOREN: So when we won, the normal reaction from most people was, "Yeah, you can do this project, that's OK, but just leave me out of it."
NARRATOR: Samso has a deep attachment to its past and values its traditional way of life.
SOREN: But gradually we won their confidence in establishing easy projects to understand, and also easy projects to finance. Because basically, it's all about, "What's in it for me?" Because it's not convinced idealists or green environmental hippies who lives here.
NARRATOR: Soren, a native of the island, convinced some of his neighbors to become early adopters. They found success, and spread the word. Jorgen Tranberg operated a large and profitable herd of milk cows. After initial reservations, he invested in a turbine on his own land. When that went well, Jorgen became part owner of one of the offshore turbines.
SOREN: Farmers, they have to invent new things and be ready for changes. So when they see a potential, they look at it, no matter what it is. They look at it, say, "Could I do this?" And if they see fellow farmers do the same thing, they are quick to respond to that. So even being very traditional and conservative in their heads I think they have this ability of making moves and do things because they have this independency in them. A farmer is a free man-- maybe he owes a lot of money to the bank, but he's still a free man in his thinking.
NARRATOR It was seeing what was in it for them and for their community, that won over landowners in West Texas. And it took one of their own, a man whose family had deep roots in Roscoe's cotton fields, to educate them about wind farming. Cliff Etheredge: Well, I'm really a farmer-farmer, you see. I farmed for almost over 40 years. We're in-- right in the middle of the Roscoe Wind Farm. And we've got about 780 megawatts of production, that's per hour, enough electricity for about 265,000 average homes.
NARRATOR: Roscoe had no oil and faced hard times in the early 90's, but it did have wind.
CLIFF: When this land was acquired, there was absolutely no value to the wind. Fact is, it was a severe detriment, because of the evaporation of the moisture.
NARRATOR: Cliff, like Soren, had to work with his neighbors to get them ready to accept wind turbines.
CLIFF: The first thing farmers want to know is, "Well, how much is it going to cost me?" It costs them nothing. "What's it going to hurt?" Three to five percent of your farmland is all it's going to take up. You can do what you want to with the rest of it. Then it came down to, "Well, how much money is this going to make me?"
NARRATOR: Cliff did his research and checked his numbers with wind experts and the Farm Bureau.
CLIFF: Then I was able to go to our Landowners' Association and show them, where they had been receiving 35 to 40 dollars an acre, then the landowners could expect somewhere in the neighborhood of three times that.
NARRATOR: In fact, farmers stand to make 10 to 15 thousand dollars a year, per turbine, just from leasing the wind rights.
CLIFF: There was no guarantees in it from the very beginning, but sure enough we've got, I think, in the neighborhood of 95 or more percent of our area that accepted the wind farm.
NARRATOR: In both Samso and West Texas, individuals saw economic benefits. But the whole community, beyond the investors and land-owners, benefited too.
CLIFF: Because of the wind farm, now, and the people working in the wind industry, now we've got jobs available and opportunities for young people to come back from college or from technical school or from whatever. It's just been a Godsend.
NARRATOR: For Kim Alexander, superintendent of the Roscoe school district, that godsend translates into dollars.
KIM ALEXANDER: In 2007, prior to the wind values coming on our tax roll, our property values were at about \$65 million. And then, that wind development, they jumped to approximately \$400 million, to \$465 million.
NARRATOR: The school district will get more than \$10 million dollars over a decade. That guaranteed revenue stream unlocked additional funding. School buildings, some dating from the 1930's, could be updated, and computer labs added.
CLIFF: This is an indication to me of what can be done for rural areas, and will be done, all the way to Canada-- bringing life and prosperity back to these rural communities that are suffering just like we have.
NARRATOR: The same oil shock that got Brazil started on ethanol, got Denmark started on manufacturing wind turbines, just in time to compensate for a decline in its ship-building industry.
LYKKE: And it's also good for the economy, in terms of export. I mean, 10% of Danish exports comes from the cleantech area.
NARRATOR: Energy and environment always require tradeoffs, such as clear vistas versus clean energy. It's something that communities have to make time to work through. Cliff, for one, believes it's worth it.
CLIFF: Everything, the schools, the churches, the civic organizations, all the businesses will benefit from this. It will increase, hopefully, our town's populations, and our economics.
KIM ALEXANDER: My granddad used to say, not realizing he was prophetic, but "If we could sell the wind, we'd be wealthy." Well, who would have ever thought we'd be able to sell the wind?
NARRATOR: For Samso, Denmark and Texas, clean energy brought economic benefits and energy security. But replacing fossil fuel emissions with wind power has other advantages.
LYKKE: And let's not forget, also good for climate and health, and such, and that's a very important argument.
CLIFF: We've got a constant wind resource here, that's tremendously valuable, and as opposed to oil and gas, it'll last forever, and it doesn't pollute anything.
Calming Commerce
Calming CommerceBusinesses routinely pay more for long-term, guaranteed supplies than the lowest short-term price available on the spot market. Unexpected, large price increases ("shocks") have real costs. There is, for example, a rather close relation between oil-price shocks and major economic recessions. One fairly recent study, from members of the Research Department of the US Federal Reserve Bank of Philadelphia, concluded that even with optimal policies, central banks cannot completely offset the “recessionary consequences of oil shocks” (Leduc, S. and K. Sill, 2004, A quantitative analysis of oil-price shocks, systematic monetary policy, and economic downturns, Journal of Monetary Economics 51, 781-808). Reducing reliance on oil may help offset such shocks, however, and the analogy to common business practices suggests that at least some extra cost is justified to smooth such fluctuations.
Until recently, countries with local resources of coal or gas might have relied on them; the greater difficulty of transporting coal and gas long distances for international trade has insulated them from some of the spikes in oil prices arising from the effects of Mideast political unrest or other issues. However, huge investments are being made to increase the shipping of coal and gas. This may reduce (but not eliminate) variability in oil prices, by broadening the total supply of easily traded fossil fuels, but likely by increasing variability in coal and gas prices.
Renewables and nuclear power typically have high construction costs, but low operating costs compared to fossil fuels; once built, the price of power from renewables and nuclear tends to be more predictable than from oil. Ironically, the fluctuations of renewable energy sources over times from seconds to seasons (wind dies, sun sets) are highly challenging for engineers, complicating construction of an energy system based on these sources; however, at longer times the fluctuations of fossil fuels are larger, with renewables offering stability and predictability for the financial side of the industry. The US Pentagon has stated that it is increasing its use of renewables and its conservation efforts in part to provide protection from energy price fluctuations (U.S. Department of Defense, 2010, Quadrennial Defense Review Report, p. 87,).
Providing for the Common Defense
Providing for the Common DefenseMilitaries around the world face the difficulty of defending their countries, and contributing to peacekeeping or humanitarian efforts. Changing conditions make this mission more challenging.
The US military, in its Quadrennial Defense Review (2010), made the often-quoted statement “. . . climate change, energy security, and economic stability are inextricably linked. Climate change will contribute to food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass migration.”
The importance of climate change for security was echoed by US Navy Admiral Samuel J. Locklear III, whose duties include relations with North Korea and many other Pacific nations. When asked about the biggest threat to stability in the region, he stated that climate change “…is probably the most likely thing that is going to happen… that will cripple the security environment” over the long-term (Bryan Bender, Boston Globe, March 9, 2013).
Slowing down climate change thus may improve issues that the military considers important for national security, in the US and many other countries. If national security merits investments above those for an economically optimal path, this would tend to motivate more action now to address the coupled problems of energy and environment.
Earth: The Operators' Manual
For a little more about what the US military thinks about climate change, and what why are doing, take a look at these two short clips.
Video: The Pentagon & Climate Change (4:19)
The Pentagon and Climate Change
DR. RICHARD ALLEY: So physics and chemistry show us carbon dioxide is at levels never seen in human history. And the evidence says it's all of us burning fossil fuels that's driving the increase. But what about climate change and global warming... are they for real? Here's what those who have looked at all the data say about the future.
3RD PARTY VOICE: Climate change, energy security and economic stability are inextricably linked. Climate change will contribute to food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass migration.
DR RICHARD ALLEY: Who do you suppose said that? Not a pundit, not a politician... the Pentagon.
[machine gun fire]
DR. RICHARD ALLEY: These war games at Fort Irwin, California, provide realistic training to keep our soldiers safe. The purpose of the Pentagon's Quadrennial Defense Review, the Q.D.R. is to keep the nation safe. The review covers military strategies for an uncertain world. The Pentagon has to think long-term, and be ready for all contingencies. The 2010 Q.D.R. was the first time that those contingencies included climate change. Rear Admiral David Titley is Oceanographer of the Navy, and contributed to the Defense Review.
REAR ADMIRAL DAVID TITLY: I think the Q.D.R. really talks about climate change in terms that really isn't for debate. And you take a look at the global temperatures... you take a look at sea level rise, you take a look at what the glaciers are doing, not just one or two glaciers but really glaciers worldwide, and you add all of those up together, and that's one of the reasons we really believe that the climate is changing. So the observations tell us that. Physics tells us this as well.
DR. RICHARD ALLEY: What climate change means for key global hot spots is less clear.
REAR ADMIRAL DAVID TITLY: We understand the Earth is getting warmer, we understand the oceans are getting warmer. What we do not understand is exactly how that will affect things like strong storms, uh, rainfall rates, rainfall distribution. So yes, climate change is a certainty, but what is it going to be like in specific regions of the world and when?
DR. RICHARD ALLEY: One area of particular concern to the Navy is sea level rise.
REAR ADMIRAL DAVID TITLY: Sea level rise is going to be a long-term and very, very significant issue for the 21st Century.
DR. RICHARD ALLEY: The Q.D.R. included an "infrastructure vulnerability assessment" that found that 153 naval installations are at significant risk from climatic stresses. From Pearl Harbor, Hawaii, to Norfolk, Virginia, the bases and their nearby communities will have to adapt.
REAR ADMIRAL DAVID TITLY: Even with one to two meters of sea level rise, which is very, very substantial, we have time. This is not a crisis, but it is certainly going to be a strategic challenge.
DR. RICHARD ALLEY: Globally, climate change is expected to mean more fires, floods and famine. Nations may be destabilized. For the Pentagon, climate change is a threat multiplier. But with sound climate science, Titley believes, forewarned is forearmed.
REAR ADMIRAL DAVID TITLY: The good thing is, science has advanced enough in oceanography, glaciology, meteorology, that we have some skill at some timeframes of predicting this. And if we choose to use those projections, we can in fact, by our behavior, alter the future in our favor.
DR. RICHARD ALLEY: Titley and the Pentagon think the facts are in.
REAR ADMIRAL DAVID TITLY: Climate change is happening, and there is very, very strong evidence that a large part of this is, in fact, man-made.
[Indistinct talking from military members]
DR. RICHARD ALLEY: The military is America's single largest user of energy, and it recognizes that its use of fossil fuels has to change.
Earth: The Operators' Manual
Video: Toward a Sustainable Future: "Khaki Goes Green" (4:33)
Khaki goes Green
[Indistinct talking from military members]
DR. RICHARD ALLEY: The military is America's single largest user of energy, and it recognizes that its use of fossil fuels has to change. The Pentagon uses 300,000 barrels of oil each day. That's more than 12 million gallons. An armored Humvee gets four miles to the gallon. At full speed, an Abrams battle tank uses four gallons to the mile. And it can cost as much as $400 a gallon to get gas to some remote bases in Afghanistan. Fort Irwin is a test-bed to see if the army can operate just as effectively while using less fossil fuel and more renewables. And it's not just Fort Irwin and the Army.
MARINE CORPS CADENCE: Mama, mama, can't you see...
DR. RICHARD ALLEY: At Camp Pendleton, Marines were trained on an energy saving Experimental Forward Operating Base that deployed with them to Afghanistan.
BRIGADIER GENERAL ROBERT HEDELUND, COMMANDER MARINE CORPS WARFIGHTING LAB: Before any equipment goes into theater, we want marines to get trained on it. So what are some of the things that we could take hold of right away and make sure that we can make a difference for the war-fighter down range?
DR. RICHARD ALLEY: They test out different kinds of portable solar power units. They also practice how to purify stagnant water and make it drinkable. The Army and Marines both want to minimize the number of convoys trucking in fuel and water. A report for the Army found that in five years, more than 3,000 service-members had been killed or wounded in supply convoys.
BRIGADIER GENERAL ROBERT HEDELUND: And if you've got Marines guarding that convoy, and if, God forbid, it get hit by an IED, then what are the wounded, and what are the deaths involved in that, and really, are we really utilizing those Marines and that capability, uh, the way we should.
DR. RICHARD ALLEY: Generators used to keep accommodations livable and computers running are also major gas-guzzlers.
CAPTAIN ADORJAN FERENCZY, ENGINEER OFFICER, MARINE CORPS WARFIGHTING LAB: Right now, what we are doing is putting up a power shade. It has flexible solar panels on the top, and gives us enough power to run small electronics such as lighting systems and laptop computers. It also provides shade over the tent structure. Experimenting with this equipment in Africa proved that it could reduce the internal temperature of the tent seven to ten degrees.
DR. RICHARD ALLEY: All the LED lights in the entire tent use just 91 watts, less than one single, old-fashioned incandescent bulb.
CAPTAIN ADORJAN FERENCZY: It's a no-brainer when it comes to efficiency.
DR. RICHARD ALLEY: Light emitting diodes don't weigh much, but they're still rugged enough to survive a typical Marine's gentle touch.
ZACH LYMAN, CIVILIAN CONTRACTOR: When we put something into a military application, and they beat it up, it's ruggedized. It's ready for the worst that the world can take. And so, one thing that people say is, if, you know, if the military has used this thing, and they trust it, then maybe it's okay for my backyard.
DR. RICHARD ALLEY: Renewable energy will also play an important role at sea and in the air. The Navy's Makin Island is an amphibious assault ship with jump jets, helicopters and landing craft. It's the first vessel to have both gas turbines and a hybrid electric drive, which it can use for 75 percent of its time at sea. This "Prius of the ocean" cut fuel costs by two million dollars on its maiden voyage. By 2016, the Navy plans to have what it calls a "Great Green Fleet", a complete carrier group running on renewable fuels, with nuclear ships, hybrid-electric surface vessels, and aircraft flying only biofuels. By 2020, the goal is to cut usage of fossil fuels by 50 percent. Once deployed to Afghanistan, the Ex-FOB cut down on gas used in generators by over 80 percent. In the past, the Pentagon's innovations in computers, GPS, and radar have spun-off into civilian life. In the future, the military's use of renewable energy can reduce dependence on foreign oil, increase operational security, and save lives and money.
COLONEL JIM CHEVALLIER, COMMANDER, US ARMY GARRISON FORT IRWIN: A lot of the times it is a culture change more than anything else. And the Department of Defense over the years has proved, time and time again, that it can lead the way in that culture change.
Working on a Solution
Working on a SolutionEmployment is an important and often contentious issue in most countries, with concerns about providing enough good jobs for everyone who wants one. Fossil-fuel companies unequivocally provide many jobs, and good ones. Recently, natural-gas fracking in Pennsylvania, where Dr. Alley lives, has generated many jobs (although some of them have come at the expense of coal jobs). How many? Do you count only the jobs in the industry? Or the jobs in supply industries? Or the jobs that are supported by the salaries of people in the industry and the supply industries through the money they spend? Different groups promote different numbers, which can vary greatly. Real issues underlie some of the choices—you could argue that if Pennsylvania did not produce gas, it would produce coal, or wind energy, or something, so the jobs would exist. Or, you could argue that if Pennsylvania did not produce gas, the jobs would all go to Texas or Saudi Arabia, and then you need to decide whether Pennsylvania should count jobs there or not.
With a sufficiently broad view, the most accurate assessment probably is that, if we ignore the economic good from avoided climate change, switching from fossil fuels to alternatives will have relatively little influence on employment overall, if the switch is done so as to minimize impacts or maximize gains in the economy, as described above. A small but notable body of literature points to gains in employment with a switch. And, if the advantages of an economically optimal course as opposed to a business-as-usual course are considered, gains in employment become likely. A few relevant references are given in the Enrichment. Note that although the literature on employment effects of energy choices is growing rapidly, it has not reached the level of reliability that applies to, say, the radiative effects of CO2.
Pulling a few things together
Pulling a few things togetherThe preceding sections are not a complete list of policy-relevant issues. And, as noted earlier, politics, psychology, and other issues are important. Policy choices that shift employment from one profession to another have costs for people who located, trained, and otherwise prepared for the lost jobs. And, those losing jobs have faces and names, whereas the people who will get the new jobs generally don’t know who they are, and often are still in school somewhere, so policy choices that have no effect on total employment nonetheless have real economic costs and often much larger political costs.
Nonetheless, the available scholarship shows clearly that an efficient response to climate change is economically beneficial if the costs of climate change are included. Even ignoring the benefits of avoiding climate change, the response can be made at a cost that is small compared to the whole economy (say, 1% or less, rather than 10% or more), with the possibility of the most efficient response having no effect or even yielding economic and employment benefits, while the response clearly can have benefits for national security and avoidance of negative externalities of the energy system.
The Present Policy Position
The Present Policy Position"If you find yourself in a hole, stop digging.."
We hope it is clear to everyone that inappropriate policy response can make this problem, or any other problem, worse—the discussion above assumes efficient policy responses. But, this raises the question of the current policy response—how much are we doing now to stop global warming?
Subsidies:
One measure might be to look at subsidies because their cost is probably much easier to estimate than the impact of regulations. The International Energy Agency (IEA), an intergovernmental organization established through the Organization for Economic Co-operation and Development (OECD), estimated subsidies for their World Energy Outlook 2012. They found world-wide subsidies for renewable energy in 2011 of $88 billion, or just over 0.1% of the world economy. (International Energy Agency World Energy Outlook 2012, chapter 7,). However, IEA also found that direct fossil-fuel subsidies worldwide totaled $523 billion, almost six times more, and just over 0.7% of the world economy (World Energy Outlook, Executive Summary, 2012).
The International Monetary Fund (IMF) provided a more comprehensive estimate of subsidies for fossil-fuel energy (Energy Subsidy Reform: Lessons and Implications, 2013). The IMF considered pre-tax and post-tax subsidies. Pre-tax subsidies are primarily payments or other ways that allow consumers to spend less than the market rate for fossil fuels, and are mostly found in the developing world. Post-tax subsidies include lower tax rates on sales of fossil fuels than on sales of other goods and services, and failure of tax rates to recover the externality damages from fossil-fuel use to health, environment, etc.; this includes climate change, which was calculated at the social cost of $25 per ton of CO2, perhaps on the low end but within the range typically seen in such studies.
The IMF estimated global pre-tax subsidies in 2011 as $480 billion, similar to the IEA estimate; this is about 0.7% of global Gross Domestic Product (GDP, which is roughly, the size of the whole global economy), or 2% of total government revenues. Total subsidies, including lower tax rates and externalities, were much larger, globally $1.9 trillion in 2011, about 2 ½ % of world GDP, or 8% of total government revenue. Post-tax subsidies were more concentrated in the developed world, with the US the single largest subsidizer ($502 billion, to China’s $279 billion).
Worldwide, these reports indicate that direct subsidies for renewables and fossil fuels per kilowatt-hour are very roughly equal, with subsidies relatively larger for renewables in the developed economies and smaller in the developing countries. Including the full subsidies with externalities, the data suggest fossil fuels are much more subsidized than renewables per kilowatt-hour in developing and developed economies, including the US.
Research:
Public support for research is also relevant because it helps produce the technologies that enter the market. For example, the fracking boom was commercialized by private companies, but development received notable support from funding of the US Department of Energy and other sources (see, for example, Begos, K., Decades of federal dollars helped fuel gas boom, Sept. 23, 2012, Associated Press).
Estimates of research funding are available from the IEA. As of 2010, IEA member nations (most of the big players in worldwide research) had increased funding for Energy RD&D (Research, Development and Demonstration projects) to about 4% of their total research portfolio, still a very small fraction (research on topics such as health and medicine tends to be much bigger) (IEA, Global Gaps in Clean Energy RD&D 2010, International Energy Agency). Over decades, the energy research portfolio has been dominated by fission, fusion and fossil fuels, with fossil-fuel research exceeding research on all renewables combined. By 2010, increasing research on renewables had almost caught up with fossil fuels if stimulus funds during the recent widespread recession were omitted, although fossil fuels benefitted more from stimulus funds than did renewables. Thus, over the time during which much of the research was done that is now contributing to economic activity, fossil fuels have been favored over renewables in publicly funded research (Figure 1, p. 6 in Global Gaps, IEA, 2010).
You can be confident that many people, on many sides, would argue about the discussion here. Where the IMF has identified subsidies because fossil fuels are taxed at a lower rate than, say, computers, the fossil-fuel industry is likely to view any tax above zero as a subsidy for non-fossil-fuel energy sources. In the US, money is collected from fuel sales for cars and trucks, and used to build and maintain roads. Is this a tax, serving to reduce fossil fuel use? Or, a user fee, with no net effect on fossil-fuel use? Or, a subsidy, enhancing fossil-fuel use? (By having the government build new roads, “eminent domain” can be used to force private landowners to sell property for roadways, allowing more roads at lower cost and thus more car and truck transport than would be possible under private funding with “normal” landowner rights. Similarly, when the interstate highway system was started under the administration of President Eisenhower, it was authorized by the National Interstate and Defense Highways Act of 1956, with an explicit tie to national defense; this likely made funding easier, and the roads served to greatly increase truck and automobile traffic, and “suburban sprawl”, at the expense of trains.
Video: Road Subsidy (1:06)
Road heading north towards the Waterton Lakes, Alberta, Canada side of the International Peace Park that also includes Glacier National Park, Montana, USA. Some people may argue that gasoline taxes used for building and maintaining roads such as this one are penalties against fossil fuels, or subsidies for renewables. But, such taxes probably serve to increase driving because they leverage the ability of governments to build roads that private developers would have difficulty making, and so are in some sense subsidies for fossil fuels.
DR. RICHARD ALLEY: This road is headed north into Canada just east of the Great Glacier Waterton Lakes International Peace Park that straddles the Canada, Alberta, border. The road has been built, and then you'll see that the road has been maintained. And in many countries, roads are built and maintained with small taxes on gasoline petrol, motor fuel.
When economists, policymakers talk about using taxes to reduce fossil fuel use, that would assume that the money raised is not used for purposes, such as building and maintaining roads, that actually serve to promote more use of fossil fuels. It is quite possible that the sort of tax that is used to fix the roads is actually a sort of subsidy for fossil fuel use because it encourages more use. And if you want to use a tax to reduce fossil fuel use, the money has to go to something other than promoting more fossil fuels.
Past Policies
Past PoliciesPolicy decisions made in the past are relevant as well, because business-as-usual assumes that we continue doing what we have done in the recent past, which in turn is based on policies that were adopted further in the past. Consider the case of rural electrification and wind.
As told below (click on link below) before his election as US president, Abraham Lincoln gave a speech highlighting the value of learning and inventing, and in particular pointing out the potential for wind power in places such as his home state of Illinois. Rapid development followed, with the wind power initially used primarily for pumping water, but increasingly with generators and batteries to provide electricity for remote farms.
Many people are surprised that Lincoln was a promoter of wind energy, but he believed deeply in education and the good that science and engineering could do for people. He was an inventor, the only US president with a patent to his name, as described in this clip from the Earth: The Operators’ Manual team. And, in signing the bill founding the US National Academy of Sciences, he gave the US and the world a highly respected source of unbiased information on science. Take a look at this slightly longer than 5-minute clip to learn more.
Earth: The Operators' Manual
Video: Abraham Lincoln and the Founding of the National Academy of Sciences (5:11)
Abraham Lincoln and the Founding of the National Academy of Sciences
DR. RICHARD ALLEY: We've been in this situation before: a time of war, a nation divided, and science called upon to deal with matters of national security. That's why we're here at the Lincoln Memorial. Most of us know Abraham Lincoln was a great president. You may not know he's the only U.S. president to hold a patent for an invention. He came up with an ingenious way to use inflatable pontoons to get riverboats over shallows. There's no evidence it was ever made, but it shows his interest in science and engineering and the challenges he faced. His commander in chief during the Civil War also had to deal with ships. In 1862, the Confederate ship Virginia, sides having been armored with iron plates—the origin of the name "ironclad"—sank two wooden ships from the Union Navy and threatened their arrival. The U.S. ironclad Monitor saved the third ship as the two vessels fought to a draw. It was clear that a new era of naval warfare had dawned, and everyone would need to adjust.
There were two serious problems. One is that iron rusts really rapidly in salt water, and the other, you can see here, this is a Civil War-era compass. You don't have to be an expert to know that iron interferes with it. If you're trying to navigate in battle and you're not sure whether your compass needle points north, you really are lost at sea. Lincoln and his advisors came up with a new idea. On March the third, 1863, the Senate and House passed an act to incorporate the National Academy of Sciences. Two months later, the Department of the Navy asked the new Academy to figure out how to deal with the problem of compasses onboard ironclads. Some of the nation's leading scientists took part, always volunteers and for no pay, something that's still the tradition for all National Academy panels. The solution was to use an array of small magnets to offset the effects of the iron plates, and the invention was good enough to keep the ships on course.
Some 50 years later, when Woodrow Wilson wanted advice about military preparedness, it was once again the Academy he turned to. And when President George W. Bush wanted impartial advice on the reality of climate change, it was the Academy he asked to do a new assessment. Their report included a prominent skeptic, but still, it concluded: greenhouse gases are accumulating in Earth's atmosphere as a result of human activities, causing surface air temperatures and subsurface ocean temperatures to rise. We cannot rule out that some significant part of these changes is also a reflection of natural variability, but the committee generally agrees with the assessment of human-caused climate change presented in the IPCC report. When you need a compass to steer by, as we do now in matters of energy and climate, you can't do better than to rely on an assessment by the National Academy of Sciences.
In 2007, the National Academy began to study how to reach America's energy future. Their report found that energy efficiency can provide the most immediate step forward, reducing projected usage by about one-third by 2030. They said America needs an improved electricity grid to support smart meters and integrate large amounts of wind and solar energy. Renewables could be one-quarter of the U.S. energy supply by 2035, as China's doing. The Academy supports aggressive research and development on carbon sequestration to see if coal can realistically contribute energy without pollution and CO2 emissions. In transportation, they see a continuing role for gasoline cars with better miles per gallon, but also liquid fuel from non-food biomass, plus electric vehicles.
They say next-generation nuclear should be explored if cost and safety can be handled, but overall, they find that the U.S. will benefit from long-term solutions and consistent, sustained action. America has to make hard choices, and soon. Fewer than a billion and a half people were alive on Earth to mourn Lincoln's death. More than seven billion of us now wonder how long the oil and coal will last and whether their exhaust will choke our future. But with a little help from wind, water, Sun, and atoms, and a lot of brain power, we can make Lincoln proud, greet the new century with 10 billion smiling people. For "Earth: The Operator's Manual," this is Richard Alley.
Credit: Earth: The Operators' Manual. "Abraham Lincoln and the Founding of the National Academy of Sciences." YouTube. October 6, 2012.
However, beginning in 1935, the US Government supported a program of rural electrification, providing loans and in other ways promoting centrally sourced electricity for remote farms, often with coal-fired generation systems. The advent of such centralized, subsidized power made off-the-grid systems less competitive. Many other forces were at work as well, but the government actions on topics including rural electrification and interstate highways have contributed to increased fossil-fuel use.
Video: Rural Electrification (1:07)
During the Great Depression in the 1930s, the US Government took various actions to promote rural electrification, taking electricity through wires to remote parts of the country. This was done for many reasons, and had many impacts, but one outcome was to reduce the use of wind energy in many regions.
PRESENTER: This picture from the US National Archives shows the TVA, the Tennessee Valley Authority, during the 1930s, engaged in rural electrification, bringing power to the people. They built dams to make hydroelectric power, but they also used coal, and the government helped bring the wires that brought the electricity to people.
This government decision had a lot of winners that included the people they got the power, it included people who were building coal fired power plants, and people building dams. It also had losers, including people who made windmills, because with the government supporting this centralized power coming in through the wire, getting your own distributed power from your own windmill was less favorable.And so when governments make decisions, they really do have winners and losers. And the situation we have now, with more coal than wind, in part comes from decisions that were made in the past by the government.
Activate Your Learning
So, recognize that there are more reasons for disagreement on the nature of a fossil-fuel subsidies than on the radiative effects of the CO2 from burning the fossil fuel. And, Dr. Alley would be happier reporting the current state of policies if the relevant literature were broader and deeper, with more impartial assessments.
Still, the sources cited here are reliable, and together present a clear picture. Suppose we ask where we are on a spectrum of possible policies, extending from “work really hard now to reduce future global warming” through “neutral” to “work really hard now to accelerate future global warming.” Based on the sources cited here, the best estimate of the net effect of past and ongoing government policies and government-funded research is still on the “accelerate global warming” side of neutral for the world and for the US. Policies probably are moving toward neutral, with renewables gaining in research and subsidies, but with more to do to reach a balanced approach, and even more to reach an economically efficient position. And, considering the inertia of the current system, moving well past neutral may be required to really overcome the history of fossil-fuel promotion.
For a little more Enrichment on policies, have a look at this short clip. This is a very U.S.-centered piece, and while we in this course have tried to avoid telling you what to do, some of the people interviewed in this clip were happy to offer their opinions.
Earth: The Operators' Manual
Video: Avoid the Energy Abyss (4:18)
Avoid the Energy Abyss
NARRATOR: Old energy technologies can be cleaned up. New ones can come online. Other nations are moving ahead. What will it take to keep the lights on in the United States and avoid the energy abyss. There's no question that transitioning to clean and renewable energy is going to be a huge task. But America has done similar things before. Take the Hoover Dam, and the electrification program of the 1930s. Or the building of the Interstate highway system.
JOHN HOFMEISTER, FMR. HEAD, US SHELL: Well, I am optimistic.
NARRATOR: John Hofmeister is a former oil man, based in Texas. He headed up Shell in the United States. He also wrote a book entitled Why We Hate The Oil Companies, and he's worried that today America isn't making the right decisions about energy.
JOHN HOFMEISTER: You need to think of energy in a 50-year time frame. And our elected officials are thinking of energy in two-year election cycles. That's ridiculous! And it is going to take us, as a nation, to an energy abyss, because you can't design an energy system to replace the 20th century, which is growing old, and running out in some cases, you can't replace that with two-year cycles of decision making.
NARRATOR: Other nations have changed. Look around Copenhagen and you see pedestrian walkways and bikes as a major form of transportation. In response to the Oil Shocks of the 1970s, Denmark turned away from fossil fuel and toward sustainable energy.
SOREN: In Denmark we had car-free Sundays where nobody was allowed to drive their cars on Sundays. And there was a rationing of fuel and gas.
LYKKE FRIIS: These are sort of things that people remember and well, we need to change.
NARRATOR: The U.S. also experienced the Oil Shocks, with gas lines and angry citizens. And for a while, America got serious about exploring alternatives to imported gasoline and fossil fuel. Here's the energy share of all Federal, non-defense Research and Development investment from 1957 through 2011. Investment ramped up in the Oil Shock, but then went down, down, down. And without serious new commitments, the 2009 stimulus funds for energy will just have been a temporary upward blip.
JOHN HOFMEISTER: We're not making the decisions at the national level that need to be made, in terms of the next decade, and the next several decades after that.
NARRATOR: Hofmeister and other experts look around the world and see other countries moving ahead to defend their nation's energy security.
JOHN HOFMEISTER: Places like China have a clear plan, and they are driving forward. And they are building an energy infrastructure for the 21st century, which will perhaps one day supply energy to the world's largest economy-- China, not the U.S.
NARRATOR: In America, energy policies change with each new Administration, if not sooner. Since our interview, Denmark's government has changed parties, but now former Minister of Climate and Energy, Lykke Friis, doesn't expect energy policy to change that much.
LYKKE FRIIS: Even if we are kicked out of office, this will not lead to a huge change in our energy policy.
JOHN HOFMEISTER: We need decisions that go beyond a single term of a President, that go beyond a single Congress, with a Republican or a Democratic majority. And we're not doing it. Other parts of the world are.
LYKKE FRIIS: All countries have to embark upon this transformation. And the lesson is, it can be done, because Denmark, we've had also growth rate by 80 percent since the eighties. But our energy consumption and CO2 emissions have been more or less stable.
JOHN HOFMEISTER: We're going to find ourselves as a nation, entering third world status when it comes to the reliability of our energy system, within a decade, if we don't get with a different program. And I don't see any inclination now to make hard decisions. I see divisiveness, I see partisan paralysis, I see short-term political time thinking, and I see dysfunctional government.
Discussion Assignment
Discussion AssignmentReminder!
After completing your Discussion Assignment, don't forget to take the Module 11 Quiz. If you didn't answer the Learning Checkpoint questions, take a few minutes to complete them now. They will help your study for the quiz and you may even see a few of those question on the quiz!
Discussion Question
Objective:
Learn about energy subsidies using information provided by IMF. Explore the International Monetary Fund (IMF) website's information on reforming energy subsidies and find something interesting to share.
Goals:
- Find reliable sources of information on the internet
- Communicate scientific ideas in language non-scientists can understand
Description:
The International Monetary Fund has many resources on energy subsidies. We would like you to explore them and share what you found most interesting.
First, surf on over there and have a look around the website, International Monetary Fund.
A lot of useful information is available in the left-hand column. Click to download the paper Case Studies on Energy Subsidy Reform—Lessons and Implications. Read about subsidies in one of the countries described there, and give us a brief synopsis. Be sure to describe the country you read about, what subsidies were used, how the subsidies were reformed, and what lessons were learned from making these reformations. At the end, include your own opinion on whether or not these subsidies (in their reformed versions) are a good idea, and explain your thinking.
Instructions
Your discussion post should be 150-200 words and should answer the question completely. In addition, you are required to comment on one of your peers' posts. You can comment on as many posts as you like, but please make your first comment to a post that does not have any comments yet. Once you have an idea of what you want your post to be, go to the course discussion for your campus and create a new post, including the name of the country in the title of your post.
Scoring Information and Rubric
The discussion post is worth a total of 20 points. The comment is worth an additional 5 points.
| Description | Possible Points |
|---|---|
| Summary of case study or other article read | 15 |
| Comment on whether energy subsidies are practical in the U.S. | 5 |
| Comment on someone else's post | 5 |
Summary and Final Tasks
Summary and Final TasksSummary
If we decide to take action to reduce climate change by altering our energy system, many options exist for policies. As with any issue, it is possible to pass laws that fail to reach their goals on climate and energy. However, much scholarship shows that the policy actions available on this topic include efficient options that will improve the economy.
Governments could enact regulations reducing or outlawing some fossil-fuel emissions. Or, governments could choose to send a “price signal”, making it more expensive for people to do things that change the climate.
The most commonly discussed price-signal policies involve cap and trade, or carbon taxes. Under cap and trade, a government legally limits the amount of CO2 or other greenhouse gases that can be emitted, selling (or giving away) permits for such emissions; the permits then can be traded or sold, allowing the market to reduce greenhouse-gas emissions as efficiently as possible. The most commonly discussed form of a carbon tax would simply tax the amount of carbon in a fossil fuel when it is extracted from the ground or imported to a country.
You can find a wide diversity of opinions on all aspects of this. Overall, economists seem to prefer the efficiency of price signals over regulations, and prefer the simplicity of a carbon tax over cap and trade, although in the broadest sense cap and trade can be viewed as a sort of carbon tax.
If a price signal is used, the effect on the economy depends very strongly on how the money raised is then spent. A tax swap that reduces taxes on things we like (wages, for example) would cause the impact of a carbon tax on the economy to be small, with the possibility that the tax would actually accelerate economic growth a little, even if you ignore the benefits of avoiding climate change; including those benefits in the calculation makes a carbon tax with tax swap more beneficial to the economy.
Carbon taxes can be harmonized across countries to gain international cooperation. The trade system might be used. For example, suppose that some countries decided not to tax their carbon. Other countries might convince these nonparticipants to change their minds and cooperate by offering the nonparticipants a choice: Tax your own carbon and keep the money in your own country to do good things, or have the participating countries keep the money from a tax on all trade with the nonparticipants.
If we go to the effort of developing and implementing efficient policies to deal with climate change, there are likely to be many related benefits, including greater national security, reduction in economic recessions caused by oil price swings, reduction in unintended damages from the energy system, and perhaps increased employment.
However, the available scholarship suggests that the current policy position for the world as a whole, and for many or most countries, is serving to accelerate rather than to reduce climate change and that this has been true over the previous decades. “Business as usual” then is not neutral on this topic, but serves to accelerate fossil fuel use and climate change.
Reminder - Complete all of the Module 11 tasks!
You have reached the end of Module 11! Double-check the to-do list in the Module Roadmap to make sure you have completed all of the activities listed there before you begin Module 12.
Enrichments
Enrichments azs2Coal Mining Jobs
Coal Mining JobsSuppose that we consider the fates of two people, a coal miner from a mid-latitude place such as Poland or Pennsylvania, and a subsistence farmer from a low-latitude place such as the Sahel. Suppose further that because of resource depletion and technological change including cheap fracked gas, the coal-miner's job is ultimately unsustainable; in contrast, the farmer's job was sustainable if very difficult in the face of natural weather events, but is being made ultimately unsustainable by the additional stress from climate change. (Yes, we just made several suppositions, and the individual case here may not be accurate, but the broader issues are relevant.)
In the coal miner's case, even though the job is ultimately going to be lost for economic reasons, some triggering event is likely to control the exact timing, and that event may be the start of a new government regulation to limit climate change. In the farmer's case, even though the farm is ultimately going to be lost because of climate change, some triggering event such as a weather-related drought is likely to control the exact timing. The short-term story that is easiest for news media to cover is that weather hurt the farmer and efforts to combat climate change hurt the miner; the long-term story is that the evolving economy hurt the miner and climate change hurt the farmer.
The slow nature of global warming, and the fact that so much of the damage comes from weather events that were made more likely or worse but were not completely caused by the changing climate, poses a large communications challenge. The story that is easiest to tell is largely wrong, with actions that help people getting bad press.
This example was carefully constructed, and there likely will be coal-mine jobs lost because of any serious effort to limit climate change. But, the issues raised are real.
Living with Wind Turbines and Coal Exhaust
Living with Wind Turbines and Coal ExhaustWe can't look at all of the externalities of all of the different energy sources. But, here are a few observations on wind, and then on coal.
Wind
The National Research Council (US) in 2007 looked at Environmental Impacts of Wind-Energy Projects (Washington, DC). Summarizing other research on p. 51 of the report, for the U.S.:
Collisions with buildings kill 97 to 976 million birds annually; collisions with high-tension lines kill at least 130 million birds, perhaps more than one billion; collisions with communications towers kill between 4 and 5 million based on 'conservative estimates,' but could be as high as 50 million; cars may kill 80 million birds per year; and collisions with wind turbines killed an estimated at 20,000 to 37,000 birds per year in 2003, with all but 9,200 of those deaths occurring in California. Toxic chemicals, including pesticides, kill more than 72 million birds each year, while domestic cats are estimated to kill hundreds of millions of songbirds and other species each year.
A recent study for Canada (Calvert, A.M., and 6 others, 2013, A synthesis of human-related avian mortality in Canada, Avian Conservation and Ecology 8(2), article 11) found the following rates of bird deaths from the listed causes (the mid-range estimates are shown here, with some ''lumping'' - for example, the study separates feral cats from domestic cats, but we added them together here as "cats," and made some other similar combinations; note that 'buildings' involves birds flying into buildings, not buildings falling on birds):
- Cats: 196 million
- Power lines: 28 million
- Transportation (cars and trucks): 14 million
- Hunting: 5 million
- Pesticides: 3 million
- Buildings: 2.5 million
- Hay cutting: 2.2 million
- Forestry: 1.4 million
- Communications towers: 0.2 million
- Mining: 0.2 million
- Hydroelectric reservoirs: 0.15 million
- Oil and gas: 0.025 million
- Fisheries: 0.023 million
- Wind energy: 0.017 million
Power lines might carry electricity from wind energy, but also might carry electricity made with oil and gas, or other sources.
Even increasing wind to generate 100% of our energy (something that is not envisioned) probably would leave wind turbines less dangerous to birds than some other human-caused conditions. And, again, considering the dangers of climate change to wildlife, and the potential to avoid climate change through construction of wind turbines, it is likely each wind-turbine built saves more birds than it kills (e.g., Sovacool, B.K., 2012, The avian and wildlife costs of fossil fuels and nuclear power, Journal of Integrative Environmental Sciences 9, 255-278).
Wind farms certainly make some noise, and block some views. So do many other things. Recently, much discussion has focused on 'infrasound', low-frequency noise from wind turbines. Astudy for the Environmental Protection Agency in South Australia (Evans, T., J. Cooper and V. Lenchine, 2013, (Infrasound levels near windfarms and in other environments) found similar infrasound levels at rural sites close to and far from wind farms, and generally higher levels in urban areas far removed from wind farms.
A fascinating psychological study also looked at this issue (Crichton, F., G. Dodd, G. Schmid, G. Gamble and K.J. Petrie, Can expectations produce symptoms from infrasound associated with wind turbines? Health Psychology, March 11, 2013, doi: 10.1037/a0031760). The people in the study ('subjects') expected to be exposed to infrasound, but then some were exposed to infrasound and some weren't. The subjects were shown either materials quoting scientists that infrasound at such levels is not a health issue, or first-person accounts of people claiming health impacts from wind-farm infrasound. Subjects exposed to the stories of wind-farm health impacts reported that the infrasound gave them similar symptoms, whereas subjects exposed to the scientists did not report such symptoms, with no differences related to whether the subjects were or were not exposed to infrasound. Thus, this study found that infrasound did not cause people to report health problems, but stories about the dangers of infrasound did.
There clearly is much more literature on this topic than these few examples. But, we believe that these examples tell representative stories; there are externalities of wind, but they are far smaller than for most alternatives.
Here is one more possibly relevant story on externalities of wind. As described in his book Earth: The Operators' Manual, when Dr. Alley spent a few months on Cape Cod in the autumn of 2009, wind power was in the news extensively. Dr. Alley did not conduct any formal studies, but he read the local newspaper every day, listened to local radio and TV, and talked to people. Anecdotally, wind power being used to clean up polluted local groundwater, or to lower local taxes, was primarily viewed as being highly beneficial, with few dissenting voices. However, wind power that was planned to be built offshore of the Cape, in the view of the people living there, for the primary purpose of shipping energy off-Cape, and with the people expecting little or no direct benefits, was primarily viewed negatively. When the people expected to benefit from the wind power, most of them were not worried about the externalities; when the people did not expect to benefit, many more worries were expressed about externalities.
Coal
The relevant scholarship on coal tends to show much greater externalities than for wind or other renewables. Some people who rely heavily on coal are still quite willing to experience the externalities, but overall the economic impacts of the illnesses caused by the coal can be quite large. The studies discussed below are all for the USA. Note, however, that because the regulatory situation has been changing, and natural gas has been replacing some older coal plants, the situation may be somewhat better now than when the studies cited below were conducted.
One study (Epstein, P.R. and 11 others, 2011, Full cost accounting for the life cycle of coal, Annals of the New York Academy of Sciences 1219, 73-98) estimated that a subset of the externalities from coal, such as illnesses from airborne particles and mercury, costs society at least as much as the coal-fired electricity costs customers, and probably at least twice as much (climate-change costs were estimated as less than 20% of this total). Thus, this study found that for each dollar spent on coal-fired electricity by a customer, causing the power company to mine the coal and generate the electricity, society loses more than another dollar because of health impacts and other problems.
This result is supported by the study of Muller et al. (Muller, N.Z., R. Mendelsohn and W. Nordhaus, 2011, Environmental accounting for pollution in the United States economy, American Economic Review 101, 1649-1675), who found that for the economy as a whole, '. . .coal-fired power plants have air pollution damages larger than their value added. . . damages range from 0.8 to 5.6 times value added.' Again, climate-change costs are small compared to other costs of coal, and again, this study did not assess all of the negative externalities of coal-fired electricity.
Levy et al. (Levy, J.I., L.K. Baxter and J. Schwartz, 2009, Uncertainty and variability in health-related damages from coal-fired power plants in the United States, Risk Analysis 29, 1000-1014) looked at damages from particulate air pollution (including particles formed in the atmosphere from sulfur dioxide and nitrogen oxide emissions), for 407 coal-fired power plants in 1999, considering both emissions from each plant and how many people were exposed because they lived close by. This study found that the health impacts from just the particulates exceeded the cost of the electricity for most of the plants. With a typical retail cost of electricity of about $0.09 per kilowatt-hour, the negative externalities were estimated as ranging from $0.02 to $1.57 per kilowatt-hour for the different plants. Clearly, it is possible to build coal-fired power plants with much lower impacts than from some operating plants, and the very high costs from some plants do not prove that all coal-fired power is 'bad'. But, if actions are taken to reduce power generated from such plants and replace it with almost any other source, there are likely to be large benefits to society. And, while cleaner coal plants would cause lower externalities than the older, dirtier ones, most other alternatives would lower externalities even more.
You can probably find literature with smaller estimates of damages. However, the weight of the literature does indicate that fossil-fuel externalities are notable, and especially in the case of coal are quite high compared to other energy sources, including traditional oil and natural gas. (Tar sands are being developed now, and in some ways may turn out to have certain similarities to coal. This will be an interesting story to follow to get clearer answers.)