Reducing emissions isn’t an economy killer
I am a little boggled by this comment in the New Yorker, by David Owen. It’s written from the perspective of someone who seems to be bothered by the threat of climate change, but who repeatedly makes the exact argument embraced by power and oil companies everywhere — slow climate change if you will, but expect economic collapse to result. It’s really something. He writes:
So far, the most effective way for a Kyoto signatory to cut its carbon output has been to suffer a well-timed industrial implosion, as Russia did after the collapse of the Soviet Union, in 1991. The Kyoto benchmark year is 1990, when the smokestacks of the Soviet military-industrial complex were still blackening the skies, so when Vladimir Putin ratified the protocol, in 2004, Russia was already certain to meet its goal for 2012. The countries with the best emissions-reduction records–Ukraine, Latvia, Estonia, Lithuania, Bulgaria, Romania, Hungary, Slovakia, Poland, and the Czech Republic–were all parts of the Soviet empire and therefore look good for the same reason …
The explanation for Canada’s difficulties isn’t complicated: the world’s principal source of man-made greenhouse gases has always been prosperity. The recession makes that relationship easy to see: shuttered factories don’t spew carbon dioxide; the unemployed drive fewer miles and turn down their furnaces, air-conditioners, and swimming-pool heaters; struggling corporations and families cut back on air travel; even af-fluent people buy less throwaway junk. Gasoline consumption in the United States fell almost six per cent in 2008. That was the result not of a sudden greening of the American consciousness but of the rapid rise in the price of oil during the first half of the year, followed by the full efflorescence of the current economic mess.
And he closes with this line:
The ultimate success or failure of Obama’s program, and of the measures that will be introduced in Copenhagen this year, will depend on our willingness, once the global economy is no longer teetering, to accept policies that will seem to be nudging us back toward the abyss.
I’m really astonished at this. It’s mind-blowingly wrong, and dangerous to boot — the last thing we need at this juncture is for Americans to begin thinking that efforts to address climate change will plunge the economy back into the throes of deep recession. And as I can’t reiterate enough, it’s wrong.
Efficiency gains obviously make it possible to do much more with less — to emit less carbon while enjoying the kind of life to which we’re currently accustomed. Owen entertains this idea briefly before dismissing it, saying that fuel-efficiency gains will be entirely offset by increased driving. This is incorrect for several reasons. First, the rebound rate for efficiency gains is nowhere near 100 percent. Second, there are other ways to reduce driving that will improve overall social welfare — things like congestion pricing. And third, Owen seems to assume that steady increases in driving are an inherent part of the process of economic growth, rather than an outcome of a set of rules that have little to nothing to do with economic efficiency.
This line of argument also neglects other examples of efficiency in action. Measures to improve efficiency for things like home appliances have led to far more efficient goods that work as well as ever, and have hardly left Americans destitute. Other efficiency producing innovations like the development of a smart electrical grid could substantially reduce waste and could conceivably lower electricity rates. Owen would have the process of increasing efficiency be an utter waste of time, when it’s anything but.
Another part of the equation — the greening of the nation’s energy supply, is essentially ignored; Owen stops only momentarily to note that green energy sources constitute a negligible portion of Americas total energy use. This is misleading; there are obviously parts of America, and the world, that use a much higher percentage of green energy, apparently without condemning themselves to economic ruin. But he also embraces a common economic fallacy — that just because one product dominates a market it must be far superior to rival products. That need not be true at all. If one product is consistently cheaper than another, it will dominate a market, even if the cost difference between the two is small. And because there are returns to scale for many energy technologies, it’s far from clear that fully deployed alternative technologies would, in fact, be more expensive.
Many dirty fuels are cheap primarily because an enormous infrastructure has already been set up to support them. But there are gains to be had setting up an alternative infrastructure, and when that infrastructure is in place, green options will be competitive with fossil fuels (but with the side benefit of not contributing to the catastrophic warming of the earth’s climate).
On green jobs, the best Owen can do is suggest that gains in green employment will likely be offset by declines in “brown” employment. There are reasons to think this isn’t the case, but even if we accept his position we’re left with no net increase in unemployment. And looking back at our recent history, it’s clear that developed nations have steadily reduced the incidence of many formerly ubiquitous and dangerous pollutants, all while the economy somehow managed to keep growing.
And there is the greatest omission of all — that somehow jobs and economic growth won’t be threatened in the absence of action. But that’s not the case. Economic losses from climate change will be substantial, and they’ll be epically large if (as we should expect) changes begin to destabilize political systems around the world. That’s an abyss worth fearing. Perhaps Owen meant well, but this is a damaging piece based on nothing, seemingly, but the author’s erroneous suppositions. Not a very good day for the New Yorker, I’m afraid.