I’ve got a somewhat half-formed thought I’d like to throw out. I’m not sure I have the broad historical/academic/whatever knowledge to back it up (“What’s new?” they ask in unison), but let’s see if it resonates with anyone else.
It’s well know that actual markets don’t behave like Ideal Markets full of Rational Actors — that real-world markets are lumpy and distorted in various ways, full of high barriers to entry, imperfect knowledge, inertias of culture and habit, irrationalisms, what have you. These things can only be discovered through real on-the-ground experience in such markets, or through bottom-up, microeconomic (as opposed to macroeconomic) study.
My observation: There’s too little of that knowledge integrated in energy/climate policy discussion.
Instead you get two sorts of arguments. One is by macroeconomists (and the folks who love them), who treat energy markets like a big, abstract, and largely frictionless machine. They apply basic economic principles, adjust the right variables in the spreadsheet, and predict an outcome based on computable general equilibrium (CGE) models. It isn’t just economists that do it — these kind of arguments have filtered down into the punditosphere, big time. You constantly hear folks describe how you apply a $10/ton carbon tax on oil refineries and that price filters down through the economy, all the way down to a bag of chips on a supermarket shelf, incrementally raising the price of carbon-intensive goods and services as it goes. Just like theory says it would!
Then there are folks on the other end, with no head for such abstractions, who have a more emotional or ideological commitment to a green, equitable economy. These people advocate against fossil fuels and for renewables on quasi-moral grounds. Coal good, solar bad. Thus, let’s create a policy that hurts coal and helps solar. If the first kind of argument is abstract, this is pointillist: We like that thing there. More of that.
Now, I’m not dissing either kind of argument. I’ve used both myself, and both have their merits.
But what I’ve noticed largely missing is tangible, on-the-ground expertise from people actually in those markets, or those who study them in their details rather than at the level of The System. It seems more true of energy/climate as a political issue than it is of, say, healthcare, or education. In both those areas you have tons of people with direct experience working in or around healthcare or education, gathering that vital kind of middle-layer information which then filters both up to the abstractionists and down to the pointillists. There’s more broad education on and understanding of the specifics of those areas.
But where are the people with concrete experience reducing greenhouse gas emissions? For one thing, that’s an incredibly broad category of people with little occasion to collaborate with one another. For another, it’s a fairly nascent category — there just hasn’t been a ton of social or economic drive in that direction yet.
Point being, more so than in other areas, it seems like the subject of reducing GHGs is being debated by people who know very little about actually doing it. So you get either policy-by-macroeconomics or policy-by-shiny-technology-I-like, neither of which is as effective as one might like. There are too few policy ideas on the table that are based on the actual behavior and contours and idiosyncrasies of real-world energy markets.
Am I talking out my rear here or is there something to this?
