Al Gore Changes His Mind?

I picked this up at the Daily Dish this morning.  It’s a reference to a post by Shellenberger and Nordhaus at The New Republic on how Al Gore, in a recent missive to president elect Obama, has subtly changed his message regarding climate change and carbon emissions.  The shift is in priority, away from putting a price on carbon to emphasising investment in green technology.  This strikes me as a tactical decision by Gore.  In order to retain relevancy in an uncertain economic environment, he has shifted his rhetoric away from taxation and regulation towards the ever hopeful idea of new technologies.  In this case, he might have been taking notes from the recent federal election in Canada where Dion’s carbon taxing initiative was a political  millstone; it confused voters, was hard to explain and difficult to justify to the public how a new tax was necessary.

The writers at the New Republic have picked up on Al Gore’s shift as it fits their world view and their belief that new technology is necessary and simultaneously the best way to deal with the problems of climate change and carbon emissions.  I am ever hopeful in new technology as well but, historically, new technologies that deal with old problems, well, they tend to develop problems that are unique and troublesome in their own right.  To paraphrase that old expression, technology happens.

Here’s a response and a criticism of that piece over at The Bellows by Ryan Avent.  He suggests that regulation is already happening in a rather awkward and scatter shot way, by various levels and branches of government.  He also criticizes Shellenberger and Nordhaus.  The money quote,

But it should be clear that pricing and investments ought to go hand in hand. Pricing provides information about where and how to invest and incentives to adopt new technologies, while investments in research ease the transition off fossil fuels as carbon prices slowly ramp up over time. That’s the necessary carbon policy. And it’s hard to see how we get to where we need to be without both.

I am fully on board with what Avent is saying here.  There’s not one solution, there are many and they need to be explored simultaneously.  Government investment in technology is problematic in that you have people making decisions about what to do with the dollars involved.  If those people are subject to lobbying, you might get questionable bridge technologies such as ethanol.  Using markets to find what is desired at a societal level removes decision making from potentially flawed individuals in favor of what is going to work in the market.  With a properly designed price environment, the market will find solutions to the problem.

As a matter of political signalling, I find the whole situation to be fascinating.  I have not examined the leanings of these writers, but I am assuming the writers at the New Republic are on the right.  Indicative of this is their fear of regulation, the holy belief in the saving power of technology, and the uncertain embrace of state sponsored spending bailouts and investment that is sweeping governments around the world. 

Alternately, Avent appears to be more left leaning than Shellenberger and Nordhaus, but he’s the one advocating for using the power of markets (historically the domain of the right) and the effective pricing of externalities, in this case carbon emissions.  This just goes to show, when dealing with a complex issue, ideas of left and right are quite useless.  A complex problem requires complex solutions, with contributions from all over the spectrum.

So, did Al Gore change his mind? I don’t think so. It looks like this is case of some writers wanting to say “I told you so!”, when all Gore wants to do is to keep the issue on the front burner before it’s relegated to the dustbin by current economic events.  Avent is more in tune with what is necessary to move forward on climate change and carbon pricing, but Gore has got a message and a speaking tour to maintain.

Revisiting Fossil Fuels and Peak Oil

Wealth of oil in Arctic, report says

This link refers to estimates of 112 412 billion barrels of oil that is undiscovered in the Arctic.  The report was issed by the United States Geological Survey, and is an example of why ‘Peak Oil’ is a fringe theory.  Now the question is, should we be drilling for oil in the Arctic?  And on the strategic level, who’s oil is it?  Hence the jockeying for position in the North.  Plenty of smart people, governments and corporations are preparing for the time when the Arctic melts and new resources become accessible for exploitation.  Notice what this means for future expectations of global warming, in that it is being planned for at the highest levels.  Climate change skeptics, please pay attention.

The Carbon Tax and Canada Day

The BC carbon tax goes live today and Canada turns 141.  Both causes for celebration.  Unfortunately the carbon tax is coming in at a time when we are already seeing record high (nominal) prices at the pump.  The price of gasoline is the most widely quoted spot price of a commodity.  Everyone knows what the price of gas is.  I remember the belly aching 3 years ago when it cracked the $1.00/L mark for an extended period.  Wooo boy, now we’re ready to break $1.50/L in BC.  This is making Gordo’s carbon tax harder and harder to stomach for the average person, and the NDP are attempting to portray the carbon tax as a gas tax.  It is a gas tax, but it’s more than that, and the unfortunate timing of high energy prices and the introduction of an important economic lever might be a problem.

On the other hand, high energy prices are having a strong effect on consumer behaviour, exactly what is trying to be accomplished with the carbon tax.  SUV sales in the US are down substantially, while compacts are being snatched up.  Bicycle stores have 3 week wait times for tune ups and bike mechanics have all the work they want.  Locally, our transit provider, for the first time ever, ran out of 3 zone transit passes and had to make a second print run for the month of June.  There is evidence of a drop in gasoline consumption; economically speaking, we are seeing demand destruction in response to higher prices.    People are feeling the pinch and adjusting behaviour.  This is exactly what should be happening, a little bit of pain is causing people to rethink and reorganize their lives.

All of this will make it more difficult to maintain a carbon tax, as people shift their top concern from the environment to the price of energy, which is already underway in Canada.  Over time, consumers will adjust to the higher prices and it will become less and less of a concern.  Prices will eventually come down (if you believe my post on Peak Oil).  It’s at this point where a steadily increasing carbon tax should be well established in order to maintain a small amount of price pain so that the changes in consumption we are seeing today are maintained and encouraged to continue.  If this does not occur, the pendulum will swing back and gas guzzlers will return to the roads.  As prices stabilize in the future, the government and regulators should be on hand to make sure we do not get complacent about energy again.  Keep that tax coming Gordo, we need it now and we’ll need it even more in the future.

Carbon Taxes

Climate change is a big problem requiring varied and well planned solutions.  One of these will be a carbon tax.  It can be a simple market device to affect consumption.  If carbon emissions have been over produced or under costed, then adding a tax onto carbon will make it more expensive and that will bring down production.  This is how a tax designed to affect behaviour works.  In BC, this is going to happen by taxing fuel, first just a little bit, but then gradually ramping up over time.  This rising revenue stream will be offset by a reduction in income taxes. 

By making carbon more expensive, there will be choices and opportunities created.  As a consumer, I can decide to properly insulate my house to reduce fuel costs, for example.  Corporations can gain a competitive advantage by reducing their carbon emissions.  Old and carbon intensive processes will be either phased out or priced out of the market.

These kinds of changes won’t happen overnight, and they shouldn’t.  Rapid and sudden changes can be particularly destructive and if they are not necessary, they should be avoided for the undue suffering they cause .  If carbon emissions slowly and steadily become more expensive, the economy will be allowed to adjust at a measured pace and wrenching changes kept to a minimum.  This is the plan put out by Premier Campbell and the Liberals of BC.  It appears the public is onboard, although we’ll find out for sure at the next provincial election.

On the federal level, Dion is going to be releasing his own carbon tax, no doubt based on and inspired by Campbell’s initiative.  Harper and the Conservatives are already bashing it through attack ads. You can read more about this here. I urge Dion to stick to his guns and take the higher ground on this by ignoring the politics around this issue.  I believe Canadians are ready and willing to tackle the problem of climate change and carbon emissions.  If that awareness is there, then the Conservatives will look rather silly and out of touch with the voters on this issue, forcing them to either get on board or to get out of the way. 

Canadians have been known to accept difficult measures in the past in order to deal with big problems.  The budgetary deficits and public debt problem of the 90’s is a good and recent example.  At the time, there was talk of Canada slipping into third world financial problems.  Chretien’s Liberals slashed spending and raised taxes to deal with the deficit.  Typically unpopular moves, but they saw re election and the last majority governments in this country because the public was on board and ready to accept tough medicine.  Canada is once again faced with a big problem, a problem this time shared by all countries, and we are ready to step up and move forward on carbon emissions.  The federal Liberals led by Stephane Dion have an opportunity to do a great thing for this country and the world by honestly addressing this problem.