Monday, October 27, 2008

From Bad to Worse

WWF recently produced a summary of recent research. The main claim: “Global carbon dioxide (CO2) emissions released as a consequence of human activity have been accelerating, with their growth rate increasing from 1.1% per year between 1990 and 1999, to more than 3% per year between 2000 and 2004. The actual emissions growth rate since 2000 was greater than any of the scenarios used by the IPCC in either the Third or Fourth Assessment Reports. Over the past 15 years, about half the CO2 emissions arising from human activity have been absorbed by land and ocean. However, the capability of these natural ‘sinks’ is declining at a greater rate than forecast in earlier studies. This means that more of the CO2 emitted from human activities will stay in the atmosphere and contribute to global warming.” The full report is available at: http://assets.panda.org/downloads/wwf_science_paper_october_2008.pdf

Monday, October 20, 2008

Now what?

With the economic down-turn, there are rumblings from both Europe and the United States that climate change policy has to be put off. Reinvigorating economic growth is the priority. Some are arguing that policies like cap and trade are growth promoting and hence there is no conflict. This strikes me as naive. The Polish economy's dependence on its domestic coal supply is not going to benefit from such a program even if others do. And even if others do, those economic benefits are not going to operate in the short term. I think the more telling policy is that all climate policies are long term policies. They are irrelevant to short term economic interests and neutral in their short terms effects. The worst thing one can do is to mix up the two. Relying on climate policies to promote short term economic growth simply leads to the temptation distort what needs to be done over many years into an excuse to spend a lot of money now. The result may benefit the economy but will disappoint when it comes to controlling greenhouse gas output.

Monday, October 13, 2008

Valuation

Suppose I tell you that buying a car with side-impact bags improves you survivability in a crash by x%. Crashes are low probability, high cost outcomes. The cost is high enough so that when you multiply it by the probability, it likely still outweighs the price of the side-impact bags. So it would seem to make sense for everyone to buy them. Not so fast! If I am really poor, suppose that money may be what I need to a health insurance policy. And, fair or not, having a health insurance policy will be important not just in a crash (unless it is fatal) but other times I get sick as well. When you take into account scarce resources, the calculus begins to look less obvious. As with cars, so with climate. Here is an argument I heard recently in India from a prominent government climate negotiator: if there is a trade off between economic growth and limiting climate change, being better off, if you are really poor, may put you in better shape to deal with climate change – even if the change is worse than it would have been without that growth. There has to be a limit on this argument – it could not be right for extreme climate change where survival in imperiled. But short of that, is there a range on climate change in which it does apply – say a 550ppm world as opposed to a 450ppm world? You might complain that this is a false polarity – if the Developed World cuts back on carbon output there would be lots of room for the Developed World to grow economically within safe limits. But as I discussed in an earlier post (on July 7th below), that is far from obvious.

Monday, October 6, 2008

Lackner's Trees

Klaus Lackner and his associates have been working on a model to capture climate from the air rather than the smokestacks of coal fired power plants. That has many many advantages if it works and is cost effective:
1. Lots of CO2 comes from places other than coal fired power plants.
2. Capturing CO2 from them is going to be next to impossible.
3. To put it politely, not everyone running a coal fired power plant is necessarily going to actually capture the CO2 given the additional costs of doing so, even if they say they are going to.
4. Separating out who and where CO2 is produced and where and when it is captured allows the Developed World to clean up some of its historic output.
I spoke to Lackner recently, and he is cited figures of $200 a ton going down to $30 a ton for the operating such a system at scale. This includes the cost of manufacture and the power needs of the system but excludes the costs of sequestration. He envisages deploying small units (the size of shipping containers) that each remove 1 ton of CO2 a day. Like all carbon capture, this approach uses power, so unless you use renewable energy as a source, it adds to the problem as it works to solve it. Cleaning up the CO2 that a coal fired power plant produces requires you to burn 30% more coal to produce the energy for the clean up. On the other hand, with an ambient system you could locate Lackner’s units in a desert and run them with solar power. How many would you need? If each extracts 1 ton of CO2 a day, 3 will take out roughly 1,000 tons a year. The world currently puts out about 27 gigatons (billion tons) of CO2 annually and we need to reduce to 18 gigatons to stabilize atmospheric CO2 at 450 parts per million. Lackner is about to publish data on his work which has been eagerly awaited by the scientific community. If it holds up, the real fly in the ointment of the whole scheme may be the sequestration of the carbon. But one way or another, there is no getting around the urgent need to test sequestration for safety on land or in deep sea locations. There is too much coal available to burn.