Lomborg on Dealing with Climate Change

by Don Boudreaux on June 26, 2008

in Environment

Bjorn Lomborg writes great good sense in today’s Washington Post.

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Chris June 26, 2008 at 1:06 pm

I'm all for research and development. But at the end of the day, research and development likely won't take off until we attach a cost to carbon emission. That will allow the market to transmit signals and incentives to drive research and development on clean energy sources.

Flash Gordon June 26, 2008 at 2:50 pm

Lomborg accepts the premise that human activity is changing the climate. There is no proof of this, nor can there be any. It is preposterous. Once you accept this ridiculous premise, you've lost the argument against higher taxes, more government and less freedom.

Lomborg's arguments against the idiotic measures now under consideration to fight the hoax of global warming offer an approach preferable to McCain Leiberman, but I sure didn't see any reference to a free market in them. Lomborg or McCain, both approaches appear to be government controlled and designed by politicians.

Martin Brock June 26, 2008 at 5:47 pm

… research and development likely won't take off until we attach a cost to carbon emission.

What do you call $4/gallon gasoline?

Mesa Econoguy June 26, 2008 at 6:12 pm

$4/gal gas is not a “cost” directly associated with carbon emission, and neither is $140/bbl oil, though that futures price may incorporate that expectation currently.

There is no tax or surcharge component of $4/gal gas currently, as the global warming legislation went down in flames a couple of weeks ago.

While I agree with nearly all of what Lomborg says economically, he is operating from the premise that man is (somewhat) responsible for our recent warming trend. This is not a warming trend.

Martin Brock June 26, 2008 at 6:46 pm

$4/gal gas is not a “cost” directly associated with carbon emission …

You coulda fooled me.

There is no tax or surcharge component of $4/gal gas currently …

There's no tax on gasoline? You coulda fooled me again.

In terms of demand for gasoline and the pressure to produce alternatives, what's the difference, exactly Exxon raising the price of gasoline a dollar a gallon and the Congress imposing a dollar a gallon tax?

This is not a warming trend.

This is the alleged trend, and it's consistent with your chart, but I'm not suggesting that we need any remedy other than the naturally rising price of oil.

Mesa Econoguy June 26, 2008 at 7:26 pm

You are quite easily fooled, Martin.

There's no tax on gasoline?

That’s not what I said.

There is currently no explicit carbon tax on gasoline, that is correct. There are many other associated taxes, but no single tax component for carbon emissions.

jpm June 26, 2008 at 7:28 pm

What a crock of ignorance that there is no "surcharge". Nearly ALL the oil produced in Alaska, the Gulf of Mexico and what little is produced along the east and west coasts is/are paid royalties of 4/5ths of the whole of the barrel to the US Government, or a combination of State and US. Canada is the single largest exporter of oil to the US, and Canada receives a "Crown Royalty" of 4/5ths of the whole as well on all on shore as well as off shore drilling.

Mesa Econoguy June 26, 2008 at 7:42 pm

Again, that’s not what I said.

What percentage of royalties paid to Canada (or state & local governments) are explicitly for carbon emissions?

Are either you or Martin arguing that the price of gas is now $4.07 because the US (& Canadian) government suddenly raised gas taxes to $2/gallon? They haven’t…

jpm June 26, 2008 at 7:58 pm

That is EXACTLY what "royalty" is. Revenue. Of course, a $80 per barrel increase in revenue isn't enough for Mesa. Americans have to pay MORE because it's called "royalty", not "surcharge". The fact that we can't increase drilling along our US coasts has nothing to do with price, according to Mesa add Obama. Why! Price just "happens"!

All this has to do with the red state producing population not being dependent on government enough, so they don't vote right. They out burbs and the rural hicks need to PAY! We can't increase drilling and lower our surcharge, uh, I mean royalty payments.

Martin Brock June 26, 2008 at 8:00 pm

Are either you or Martin arguing that the price of gas is now $4.07 because the US (& Canadian) government suddenly raised gas taxes to $2/gallon?

No, I'm arguing that the price doubled because gasoline became scarce relative to demand. Perceived risks to the supply generates some of this demand, and the falling dollar is also responsible for much of the rising price in dollars. I blame the state for that, but much of the rise is simply a matter of rising demand relative to supply. The market arranges this "tax" automatically, so I see no need for another. Consumption has already predictably fallen. Investment in alternatives, like electric cars, has risen. Who needs another tax on gasoline labeled a "carbon tax"?

Mesa Econoguy June 26, 2008 at 8:50 pm

Um, I think we’re coming at this from different angles, but arriving at the exact same conclusion.

The fact that we can't increase drilling along our US coasts has nothing to do with price, according to Mesa add Obama.

Please don’t put me in the same sentence as that moron Obama. [I personally think drilling early & often is a great idea, and will most definitely help supply.] I’m simply saying there currently is no tax, nor should there be, directly on gas or oil in this country (don’t know about Canada). The very first comment mentions R&D taking off once a carbon tax is enacted, to which Martin said “We don’t have one already?” We don’t, but to Martin’s point, we don’t need one.

Interesting point about Canadian royalties – is there a carbon tax component charged to importers (us)? It looks like Quebec was the first to charge an explicit carbon tax on the consumer sales side.

Investment in alternatives, like electric cars, has risen. Who needs another tax on gasoline labeled a "carbon tax"?

Absolutely agreed (substitution effect).

But from your previous post, you implied that there was already a tax on gas devoted exclusively to carbon emissions. No such thing, thankfully, currently exists (in this country).

And don’t get me started on Carbon trading schemes….

Mesa Econoguy June 26, 2008 at 8:55 pm

Sorry, this should read:

I’m simply saying there currently is no carbon tax, nor should there be, directly on gas or oil in this country…

Sam Grove June 26, 2008 at 10:59 pm

I believe that Wikipedia graph is a bit dated. Recent corrections to the data have restored 1938 as the hottest year of the 20th century.

I suspect when surface stations have been upgraded, there may be further corrections to the data.

Martin Brock June 27, 2008 at 5:41 am

I believe that Wikipedia graph is a bit dated. Recent corrections to the data have restored 1938 as the hottest year of the 20th century.

The correction was for NASA records of temperatures in the U.S. The hottest year in the U.S. in these records is 1934, but 1934 was always one of the hottest years.

http://articles.latimes.com/2007/aug/15/science/sci-temp15

The wiki chart uses temperature measurements from the U.K. that have not been similarly revised. I don't take these temperature changes very seriously, and I don't necessarily attribute them to rising CO2, but even Lomborg acknowledges a widespread observation of warming during the 20th century, particularly in latter half.

Chris Cox June 27, 2008 at 8:50 am

"Investment in alternatives, like electric cars, has risen. Who needs another tax on gasoline labeled a "carbon tax"?"

Yes, 4 dollar gas is driving people to take closer looks at alternative energies and transportation means. But as far as reducing carbon emissions, it isn't helping in a global sense (atleast in the short term). 4 dollar gas is driving a net increase in carbon emissions. We are simply marching up the supply curve of oil.

Per Kurowski June 27, 2008 at 9:11 am

There is no question that the seriousness of the climate change issue demands serious answers and not aspirins for the bad consciences of the wealthy in the developed countries. What is needed is a green alternative for the poor not another economically inefficient solar panel or hybrid car on which the rich consumers waste the resources that they could help provide.

Now, just in case the world is just looking to make out of the whole global climate change fight just another business opportunity, I am frantically working on a line of fashionably designed undershirts, ladies too, that when used in conjunction with a low-caloric diet will permit the conscious world saviours to reduce their own contributions of body heat. The tentative name for such line is Le sans souer (for you Anglo-Saxons this is sort of French for “no sweat”)

By the way may this post, with a professor as my witness, serve as a notice to the world of the copyrights for the “Sans seuer” (no sweat , sin sudor) line and from which I am intent upon to extract my fair share of WTO approved monopolistic rents so as to also help out to improve the Gini coefficient.

Frenchy June 27, 2008 at 9:20 am

You mean: "Sans sueur"

Martin Brock June 27, 2008 at 10:25 am

4 dollar gas is driving a net increase in carbon emissions.

But U.S. consumption has fallen, actually fallen in absolute terms, at this price level, even as the U.S. population grows. The population is also aging, and older drivers may drive less. Obviously, I don't know the whole story behind the recent fall in consumption, but price certainly seems a dominant factor. Of course, the price has risen less in other countries, because the falling dollar is a significant factor in the rising price we see in the U.S.

We are simply marching up the supply curve of oil.

But this curve presumably peaks somewhere, and if global production follows a pattern similar to U.S. production in the 20th century, global production peaks in the first half of this century.

http://www.reason.com/news/show/36645.html

I became a believer in peak oil after reading this article by Ronald Bailey in Reason. Bailey is hardly an alarmist, and Reason is not exactly an environmentalist rag. In fact, this article purports to debunk peak oil.

But if you read the article closely, Bailey reports two compelling facts. First, credible sources like Exxon and the U.S. Geological Survey estimate global oil reserves at three trillion barrels. This estimate is not "proven reserves". The "proven reserve" figure is closer to one trillion. This article cites no one claiming reserves of conventional oil higher than three trillion barrels. [Exxon esimates 3.2 trillion.] This figure includes undiscovered reserves presumed to await discovery. In fact, most of the figure is an estimate of undiscovered reserves.

The article also cites current global consumption of 30 billion barrels a year. At this rate, the world consumes three trillion barrels in a hundred years. That's not the time until production peaks. That's the time until production of conventional oil ceases altogether (assuming that we could continue production at the current level for a hundred years).

The peak obviously occurs much earlier. If it occurs when half of remaining oil has been consumed and if consumption remains at 30 billion barrels a year, the peak occurs in fifty years; however, if production can expand further, global consumption shows no sign of leveling off at 30 billion barrels a year. If the rest of the world's consumption, per capita, were even close the U.S. consumption, we'd exhaust estimated reserves in much less than a century, and the peak would occur in much less than fifty years. Since rising global consumption seems inevitable, expecting a peak in the next few decades is not the least bit incredible.

That's what Ron Bailey is telling me in Reason magazine. Right?

John Dewey June 27, 2008 at 11:51 am

Martin,

As it becomes more and more apparent the supply of petroleum is shrinking, the price should continue rising. Petroleum price increases should enable development and adoption of alternatives, as well as curtail demand. IMO, estimated reserves of petroleum will never be exhausted. Petroleum will cease to be an important energy source long before that happens.

I think you will probably agree. I wasn't meaning to dispute anything you wrote, but just making a point.

Sam Grove June 27, 2008 at 12:39 pm

Ah, so it was 1934, I didn't check.

But why does wiki use data chart from the UK, which has a fraction of the area of the U.S.? …and it is widely acknowledged that the U.S. data set is the 'gold standard' for climate modeling (as bad as it may be).

Chris Cox June 27, 2008 at 1:05 pm

Martin,

Demand has been dropping in the US and developed countries, but the net consumption of oil on a global scale should still be increasing. Assuming inflation isn't the only reason behind the recent rise in oil, the market is signaling developed economies to cut back their consumption so there will extra capacity to meet the increasing consumption of developing economies. I think the peak oil theory you bring up is interesting. If we are indeed at or close to peak oil output, output is inelastic and the market will increase price to keep demand at current levels. I would also want to know if the carbon emissions that go along with that peak oil curve will cause any major negative impacts on the environment. Hopefully the answer is no. That being said, I think geopolitical uncertainty and other unknowns make predicting future oil production practically impossible.

Mesa Econoguy June 27, 2008 at 8:04 pm
vidyohs June 27, 2008 at 9:19 pm

Com'on Mesa, you can't be serious. All this flitting about in the air, going here and going there, when we should just be biking or walking to the local farmer's market for our locally grown food, and only take employment or open businesses within walking distance of our home. People just don't need to be galavanting about the continent using up fuel.

Good God, man, that looks too much like freedom!

Martin Brock June 27, 2008 at 9:43 pm

John,

I suppose the supply has been shrinking since started burning the stuff in lamps, and you're right about alternatives replacing oil and thus stretching out the supply of oil indefinitely. When I say I'm a believer in "peak oil", I'm not saying the sky is falling. I'm only saying that global production of oil will peak soon, probably in my lifetime.

The alarmist Peak Oil school says that production is peaking, and there is no alternative, and modern human civilization is doomed to revert to the dark ages after most of us ungraciously die off. I'm not in this school at all.

The sooner a rising price makes alternatives viable, the sooner oil production peaks, regardless of remaining reserves. The earlier the peak occurs, the longer remaining reserves last. The quantity of oil still in the ground may be less a factor than the rapidity of alternative developments. I think that's your point.

Carbon nanotube supercapacitors may be McCain's miracle battery already. Hopefully, he won't get to enact his Prize in time to claim credit for it. With such a battery, we still need electricity to power the personal car culture, but nuclear power has great, untapped potential limited largely by political machinations.

Unfortunately, the U.S. has now declared a monopoly not only on weapons of mass destruction but also on the development of civilian nuclear power. Never mind the nonproliferation treaty. Iranians are like the Native Americans. Treaties with them are made to be broken.

If we return to the dark ages, the McCainiacs in the state-industrial complex will blow is there.

Martin Brock June 27, 2008 at 9:59 pm

… the market is signaling developed economies to cut back their consumption so there will extra capacity to meet the increasing consumption of developing economies.

If demand is more elastic in the developed economies, you're right, and I think it is. The heavier manufacturing industries that grew in developing countries in recent decades may be more energy intensive. I know I want this laptop more than a drive to the coast this summer and more than a few degrees on my thermostat and a lot more than a hummer … well … some hummers. I never liked lying on the beach anyway.

Mesa Econoguy June 28, 2008 at 12:30 am

Vidyohs, bonus points for use of “galavanting”!

Happy Friday!

(You are now free to move about the country…)

vidyohs June 28, 2008 at 10:27 am

http://www.amazing.com/creations/link/9973

Peak Oil? Fossil fuel? Well, maybe not.

TokyoTom July 2, 2008 at 12:26 am

Great good sense? More like great nonsense: http://mises.org/Community/blogs/tokyotom/archive/2008/06/30/lomborg-s-brilliant-climate-plan-leave-ghg-externalities-alone-and-let-governments-spend-0-05-of-gdp-on-picking-winning-low-carb-technologies.aspx.

Shall we both let the externality that motivates Lomborg go unaddresed AND have government pick our pockets in order to exercise its wisdom in choosing what technologies are most promising and can be best implemented across the economy?

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