An interview I recently did has been published in the newsletter of Caisse des Depots, a state-owned financial institution that performs public-interest missions on behalf of the French government. Also quoted in the interview is Patrick Criqui, Director of the Energy and Environmental Policy Department of the Grenoble LEPII. You can get the full newsletter here (PDF). It’s all about the problems posed by the long timescale climate change operates on, and is definitely worth reading.
Here is the interview:
How can we plan for the long term?
How can we take action today to fight against atmospheric greenhouse gases emissions, the effects of which will become apparent only over the very long term? We asked Andrew E. Dessler of Texas A&M University and Patrick Criqui of the LEPII Research Laboratory (CNRS – University of Grenoble).
Why is it important to engage now a longterm mitigation strategy?
Andrew E. Dessler: Owing to CO2’s long atmospheric lifetime, the impacts of climate change are the result of emissions integrated over the previous several centuries. Further, the technical and economic changes needed to reduce our vulnerability to climate change are also long-term activities, on the order of several decades for new technology to be fully incorporated into our economy.
Together, these two factors mean that if we want to head off possibly serious climate impacts at the end of the 21st century, we need to begin taking actions in the very near future. A good analogy is piloting a supertanker. Because of their immense size, supertankers turn very slowly. To avoid a hazard, the pilot has to begin turning the supertanker well before the hazard is actually reached. By the time the ship is upon the hazard, it’s too late to avoid.
What are the principal energy stakes in the next few decades?
Patrick Criqui: Sometimes I say that to achieve sustainable energy growth, like Ulysses, we have to sail between Scylla and Charybdis. The first risk is a scarcity of cheap oil and gas resources, as evidenced these days by the threat of peak oil (and peak gas). The second risk is climate change. But we can’t count on a scarcity of oil and gas resources to solve the problem of climate change.
We have abundant coal resources, and the “dash for coal” has already started. If we let this massive use of coal continue without taking adequate precautions — i.e. without retaining the CO2 — we are heading for a climatic catastrophe.
How would such a strategy impact the energy system?
Andrew E. Dessler: Because the energy business makes up such a large fraction of our greenhouse gas emissions, any significant emissions reductions will necessarily require a wholesale reconfiguration of how we generate and use energy. In particular, it is likely that some combination of renewable energy (solar, wind, biomass, etc.), nuclear, and carbon sequestration will have to be implemented on a large scale to meet our growing energy needs. Note that this will occur even in the absence of any policies to address global warming — the impending exhaustion of low-cost oil and gas will in any event force us to redesign our energy systems.
Will the European CO2 emission trading scheme change the energy equation?
Patrick Criqui: It can change the equation if it lasts, is consolidated, and most of all if it expands. The ideal would be for it to become the basis of an international system that would extend to other countries, which is why some states in the US are considering the question of “Euro-compatible” systems. An expansion to other sectors would also be desirable.
In any case, we have to find the best way to articulate the European Union Emission Trading Scheme with other mechanisms, which are taxes and standards, either by superimposing them or by finding complementarities. The merit of the European system is that it covers 50% of European emissions but involves a limited number of players. I don’t think there is any major flaw in the design of this system, although it needs to be refined to be more efficient.
We are in fact in a transitional phase, and we have to identify the distorting effects introduced by the system to try to improve it. For example, I think we cannot get around the use of a benchmarking process for the allocation of allowances, especially in the energy sector.
Are cap and trade systems such as the European Trading System appropriate tools to favour the emergence of a low carbon emission economy over the long term?
Andrew E. Dessler: We can all agree that we need the best policy to promote the development of new low-emission, high-efficiency technology. And equally important, once a new technology is developed, the policy needs to encourage adoption of the new technology.
This latter point, often ignored, is not as easy as it sounds. It is virtually certain that new, non-emitting technologies will provide energy at costs higher than today’s emissive technology (exactly how much higher, we do not yet know). It is not at all clear that publicly traded, profit-oriented companies will adopt more expensive but socially beneficial technology on their own, particularly if their competitors do not.
A binding cap-and-trade system can play an important role in solving both of these problems. By providing a clear signal to the market that emissions reductions will occur with a well-defined schedule, cap-and-trade systems provide incentives for companies to invest the necessary large sums in research and development. In the 1980s, for example, the clear signal that regulations were inevitable provided the private sector the incentives needed to develop the replacements for chlorofluorocarbons that today are helping solve the ozone-depletion problem.
Further, a cap-and-trade system also provides the necessary motivation for actors to adopt the new technology. A cap-and-trade system also allows us to achieve emissions reductions at the minimum cost by using market forces to make emissions reductions where they are cheapest.
What other mechanisms could promote the emergence of an economy that reduces its CO2 emissions in the long term?
Patrick Criqui: Structurally, we have to establish an effective combination of two strategies: the “technology push” and the “demand pull.”
A technology push is a state-sponsored campaign to promote the emergence of new technologies: definition of priorities, financing of research and development. It is in fact a very state-controlled solution which paradoxically corresponds to the current strategy in the United States. It is indeed “painless” for the economy and its major players (although of course it has an impact on the State finances). After controlling demand and promoting “Very Low Emissions” equipment, the three major technological options left in the fight against climate change are renewable energies, nuclear power and geological sequestration. We probably can’t rule out any of these three options.
Demand pull corresponds to the economic mechanisms of environmental policies that modify the market signals and thus behaviors. For example, even if we develop methods for carbon capture and sequestration, this technology will only be used if the players have an incentive to do so. This second line of action is particularly visible in current European policy. But we can’t forget that such a program is very ambitious from an economic and social point of view. When setting climatic objectives, we are confronted with a basic contradiction: what is desirable, when it comes to greenhouse gases concentrations in the atmosphere, appears difficult to attain, while what is reasonably attainable is unacceptable from the point of view of climate.