No snowflake ever feels any responsibility for an avalanche:
SOME ways of cutting carbon are cheaper than others. So, at different carbon prices, different sorts of methods of abatement become worthwhile. Vattenfall, a Swedish power utility, has tried to quantify which ones would be worth undertaking at what price (see chart 3).
The result is a testament to economic irrationality. The measures below the horizontal line have a negative abatement cost—in other words, by carrying them out, people and companies could both cut emissions and save money. At a macroeconomic level they would boost, rather than reduce, economic growth…
Compared with pursuing greater energy efficiency, the abatement measures into which so much money is now being poured look rather expensive. Carbon capture and storage and wind and solar power, for instance, all have positive, and relatively high, abatement costs.
But the cheapest sources of abatement are difficult for policymakers to get at. Billions of different actors are involved. They cannot be targeted in the way that a few hundred factories can. What is more, a moderate carbon price is not likely to be effective, since people clearly do not care enough about cost…
Energy-efficiency standards, such as building regulations, are another option. Economists generally prefer to avoid rules that specify what companies can produce and how, because they require governments, rather than markets, to allocate resources, and markets tend to do a better job. But if, as in this case, a public as well as a private good is involved, and the market does not seem to be doing its job properly, there is an argument for governments giving it a nudge. (emphasis mine)
There are lots of energy-efficiency regulations in place already, and they are being tightened. Incandescent light bulbs are the top target at the moment. Both the European Union and Australia said earlier this year that they are planning to ban them. But the man in the vanguard of this green revolution is Fidel Castro, who started phasing them out two years ago.
The Economist, 31 May 2007, Irrational Incandescence: People can’t be bothered to make easy energy savings
That’s The Economist calling for government regulation of energy efficiency standards, folks – a real-live conservative magazine. But they can read the writing on the wall, or in this case on the climate. They’re not blinded by ideology.
In the meantime, I’m all for windmills, nuclear power plants, biogas generation, and synfuels as long as they’re not made from food crops. But by FAR the biggest bang for the buck is in conservation. And these are choices we can make. Next time you buy a light bulb, get a compact flourescent. Next time you buy a car, make it one that gets over 30 mpg. Recycling just three aluminum cans saves over a kilowatt-hour of electricity. Buying a house? Get close to your job… and so on. Don’t wait for politicians to act!
First off, that’s a very good graphic, but it’s not surprising that you chose to link it in.
My only issue is that while the point of the article (and the graph) is to illustrate the cost/benefit value of various carbon reduction schemes, this inherently simplifies things, perhaps a bit too much in certain cases. In particular, forestation appears to be not a high value strategy. Within the frame of reference (carbon reduction) that seems to be true, assuming the data to make the calculation is valid.
Yet forestation has other benefits that have little or nothing to do with carbon reduction, such as reducing erosion, reestablishing lost habitat, etc. With regard to the cost/benefit calculation for forestation, was the ancillary benefit of reducing ambient temperature in urban areas (and the follow-up reduction of energy use for air conditioning) part of the calculation?
I agree that simplification for the sake of clarity and to make basic choices is absolutely necessary. I just hope we don’t get tunnel vision and focus on only one part of the ecology of our planet.
You’re suggesting a broader analysis and of course that’s where we should end up. But a broad analysis (to be worth a damn) must be built on the data outcome of a number of narrow analyses like this one (which is strictly about carbon balance of the thing itself).
So if you’re making an argument for forestation, you’d say; “Yes, forestation is in the high end of cost vs. abatement balance, but here are five other reasons why we should do it anyway.” Better than making claims based on assumptions that turn out to be wrong, and being shot down by… well there’s always a contingent that seems to want to grind up the Earth as fast as possible, isn’t there?
For clarity, re: the wink in my post … DOF, you are a champion of well-designed, thoughtfully executed graphics. When I saw this one, it reminded me of our discussions on that topic many years ago, and that those discussions and the examples you showed me influenced my perspective on design.
You are absolutely right in your reply to my comments. I wanted to make the point because in our Faux News generation, “sound byte analysis” seems to be about the limit of the general public’s attention span and range of thought right now.
Sigh… you’re right, complexity is way out of fashion. I’m starting to think that schools should stop trying to make “well rounded people” and let students dive really deeply into fewer subjects. Mainly so they can understand depth as an attribute of any subject.
My problem with the graphic is the fear that people will shun away from wind and solar energy use/development because of it’s high cost. But it has a potential to do many great things: dissolve our dependence on foreign oil, reduce carbon emissions, generate a new economy that people and businesses can take advantage of, etc.
I understand economics and the graphics, but one way or another our society is going to have to spend money to fix the problems we generated.
The graphic is just information, clearly presented. It helps us know, for instance, what the easy, cheap, and effective things are that we should begin rolling out immediately on a massive scale, and which things we need to research and subsidize to bring down the cost. It’s extremely valuable in that respect and we can’t shy away from it because some knothead might use it to say “no wind!, no reforestation!”
Your absolutely right and I agree with you 100%. But I am sure there are politicians out there looking for “good” reasons to say why we shouldn’t use wind, solar, and other means to salvage the planet.
I just hope the point you made was also made by the creator of the graphic.
No, they didn’t make a point about how the reader should use the data; it is a magazine for intelligent people which probably excludes congressmen.
Someday I’m going to write a filter so you can’t use the word “but” in a comment
I would consider the writers of Freakonomics to be very intelligent and some of the brightest in the field of Economics. But when it comes to Global Warming, well as I always say, “Everyone got their Gris Gris.”
Which is why when magazines present data about Global Warming the point should be made that this presents a reason for looking into how to make the technology cheaper. Some people do not look at Global Warming data the same why you and I do. But the end result is key and should be stated; the world is warming up and it is not a good thing. We need to do something because there is a problem and it is not going away.
I worry about the conservative slant of the Economist magazine and Economists in general.
Yes, you’re right, Webs; every article in every publication should always contain a section that tells the reader what to make of the data and what should be done about it. Because we wouldn’t want to ever present any data and leave any readers wondering what it all means or what they should do; they might reach the ‘wrong’ conclusion. We can’t take that risk!!!
Once more, real slow: people who want to be told what to do in every article, do not read The Economist; they read The Progressive or the National Review or some other polemical rag. And I don’t know what you mean by a “conservative slant” – when you’re toying with the economies of entire nations and the whole of humanity, you better be conservative (not to be confused with the current political label).
Bog, you wear me out sometimes.
Glad to see my point came across
I meant conservative as in the political label. And unfortunately with the Economist, their political slant drives some of their articles.
There was an article in the New Yorker a couple of months ago about Amory Lovins’ Rocky Mountain Institute. Lovins told a tale which well illustrates one of the major problems in implementing improvements: the shortsighted focus on today’s bottom line, at the expense of tomorrow’s; or my bottom line as opposed to the rest of the world’s.
Some of these details may be wrong, but the gist of the story was this: a skyscraper built in the seventies in Chicago had enormous heating costs in winter and enormous cooling costs in summer because of poor insulation. When it came time to replace the glass and renovate the heating and cooling systems, the owners consulted the Rocky Mountain Institute. They found a reflective glass that would insulate so much better than conventional glass that the building would have been able to get by with a much smaller heating/cooling system, with much lower energy costs. The extra expense of the reflective glass would have paid for itself within months.
But the owners turned down the plan and went with conventional glass. Why? Because the whole building was leased- the renters, not the owners, paid the utility bill, so the owners had no financial incentive to improve the insulation, and the renters had no say in the decision.
I suspect that much of the opposition to the blindingly obvious things that could be done immediately to improve energy efficiency is related to this kind of financial reckoning.
Ouch! A perfect example of market failure, and probably quite common. Hence the need for governments to step in and regulate building materials.
Sorry DOF I think I had too much caffeine yesterday :gulp:
Speaking of Skyscrapers have you heard of the Bank of America Tower in New York. It breathes in the crappy New York air and filters it!
“My problem with the graphic is the fear that people will shun away from wind and solar energy use/development because of it’s high cost. But it has a potential to do many great things: dissolve our dependence on foreign oil, reduce carbon emissions, generate a new economy that people and businesses can take advantage of, etc.”
I’m somewhat skeptical that use of solar and wind power by themselves will eliminate dependence on foreign oil—they would mostly displace other methods of electricity production, notably natural gas and clean coal technologies (the most expensive currently used large-scale energy production technologies.) Most of the raw materials for gas and coal are produced on this continent, not in unstable countries, while oil is used mainly for transportation and heating. Switching to more fuel efficient vehicles and increasing insulation will do much more for our dependence on foreign oil.
I also find the notion of “generat[ing] a new economy that people and businesses can take advantage of” somewhat odd. What conceivable benefit could there be to a more-expensive, more labor intensive method of power generation from an economic perspective? Everybody wants power to be cheap except power companies—I just don’t see any economic benefits to using these technologies *outside of their environmental benefits*. Those *may* justify the increased cost, but our money would be better spent trying to implement the programs on the left side of the above curve. Isn’t it better for the environment all around if we just didn’t need to produce that much power in the first place (say by using energy efficient lighting, better insulation, etc.)?
I think there is an important distinction between power-generation technologies (which generate a commodity and hence need to be evaluated in strictly realist economic terms—environmental damage, cost, political impact etc.), and other programs listed above (e.g. reforestation) which have benefits other than their cost of implementation (e.g. the aesthetic appeal of forests).
I don’t think it’s that big of a stretch that solar, wind, and other eco-technologies couldn’t help to eliminate our dependence on foreign oil. With better eco-technology comes more interest by the public and others. Which helps innovation. With electric cars comes solar power stations and vice versa. But you are correct. Solar and wind by themselves will not help at all.
I am making the assumption that eventually people will realize that the cost of coal is a lot more than what it currently costs due to adverse health impacts of releasing carbon into the atmosphere, plus the fact that carbon contributes greatly to global warming. Between now and a later point in time Wind will become cheaper since it is renewable and has little adverse health impacts, if any, and the fact that governments will likely start to subsidize it’s use.
With all of this a new, I guess economy is the wrong word I meant market, will be created around alternative energy. Wind will likely be one of the sources along with solar and devices used to capture the motion of waves and turn it into energy (something already being done in Norway on a large scale).
Which is why I think it would be wise for companies and people to start investing now because more sustainable practices need to be used if we want to continue to flourish on this planet. Even if there is a small or no economic gain. I wouldn’t mind paying a small increase in taxes if it went to subsidize eco-technology.
I’m not saying that renewable energy sources are a priori a bad idea or anything like that. I think that their benefits, however, will not directly accrue to consumers or producers of energy—from that perspective, there will only be a downside. There is no upside to having a large market and labor force devoted to something, even if that thing is itself good. What you’re saying is like saying that hurricanes, earthquakes and floods are good for the economy because without them, the reinsurance market wouldn’t exist.
Obviously we need to implement low-carbon production methods, but fearing “that people will shun away from wind and solar energy use/development because of it’s high cost”, is nonsense. What other method do we have for determining whether to use them? This is why I think that a carbon tax is a much better idea than subsidies for specific technologies. The government will usually make the wrong decisions about which technologies are good (e.g. Bush’s idiotic, doomed hydrogen economy pipe dream), whereas increasing the price of carbon (from $0/ton to something nonzero) makes renewables more attractive, and gives people the incentive to conserve.
DOF & WeeDram: I don’t think the graphic is very well-implemented. I can’t figure out how the bottom scale is supposed to be interpreted—taken literally it says that changes in insulation has zero potential to abate carbon in 2030—a somewhat dubious claim.
You know, that’s a good catch. I bet some photoshop jockey at The Economist screwed up the X axis and someone missed it in proofing. Vattenfall’s website is loading too slowly here at the coffee shop so I’ll have to check it at home to see if that is the case.
BTW The Economist very much endorses a carbon tax to associate a cost with greenhouse gas production.
Chopping down an orchard is good economics, because you can pick the fruit more easily. Just sayin’.
This also applies to landlords of basic living quarters. Why upgrade appliances (stove, fridge, washing machine) and building materials when the costs will be borne by the renters. There was a study of this recently. Change won’t happen unless the government steps steps in and taxes the landlord based on their property as rented. Fact is, we subsidize cheap dwellings with overconsumption and overutilization. The prices of many items in the US are way below world standards relative to our income.