Woodard et al. (2019) have calculated that climate change is sufficiently disruptive of the global economy that it will lower carbon dioxide output significantly going forward. In other words, no matter what we do about the Paris Climate Agreement, CO2 levels from burning fossil fuels are likely to fall. This might be viewed as good news…it ought to offset the existing high levels of CO2 in the atmosphere and at least stabilize things, never mind that the economy (and therefore, we) will suffer. Not so fast. The other thing that climate change is doing is heating up the oceans which reduces their ability to absorb CO2 from the atmosphere; this and other natural climate sinks are failing, so even with reduced human CO2 production, atmospheric levels are still going to rise. Plus the global economy is going to sink. This latter fact suggests that we’ll have fewer economic resources (money) to spend on adapting to the adverse effects of climate change. We know what these are: wealth inequality, crop failures, coastal flooding, etc.
I guess it’s bad news all around.
WoodardDL, DavisSJ, RandersonJT (2019) Economic carbon cycle feedbacks may offset additional warming from natural feedbacks. Proc Natl Acad Sci USA 116:759–764.
Dissou et al. (2014) provide a new assessment of the incidence of carbon taxes and their impacts on inequality. Past studies on the impacts of carbon taxes have generally focused on the effects to commodity prices. This channel usually leads to the finding that carbon taxes are regressive because a carbon tax increases the price of energy-intensive goods and these goods make up the largest portion of the total goods bought by poorer households. Using only this one channel, however, overlooks a critical aspect of the tax; factor income, income generated from selling factors of production such as labor, is also affected by carbon taxes. Dissou et al. combine both the commodity price channel and the factor price channel to get a more comprehensive picture of the effects of a carbon tax on inequality and find that carbon taxes are not as regressive as previously thought. Continue reading →
Since the Fukushima Daichii nuclear power plant disaster in 2011, the future of nuclear power generation has been challenged. A wide range of policy responses to the Fukushima incident have been employed in many countries around the world, varying from dismissal of the accident and nuclear expansion to immediate shutdowns of nuclear plants and the suspension of new plant approvals. In California, the San Onofre nuclear plant was shut down in January 2012 due to the significant wear on over 3000 different tubes in the plant. This policy decision by the California Energy Commission (CEC) naturally had a huge impact on the state of the electricity market in California; the 2160-MW San Onofre plant provided a large share of the electricity to its surrounding region. In light of this decision by the CEC, Woo et al. (2014) wanted to analyze the price impact of San Onofre’s shutdown. Woo et al. used intra-hour prices to compute average real-time market prices from roughly 24,000 observations between California’s three independent operating regions. The regression results led the authors to conclude that a $6-9/MWh increase in wholesale electricity prices occurred from the San Onofre shutdown. The authors also concluded that this price increase could be offset by reducing system load and expanding solar and wind generation. Continue reading →
On January 9th, 2015, Bloomberg New Energy Finance submitted a press release on the strong performance of clean energy investments in 2014. The overall investment in clean energy reached $310 billion, a 16% increase from 2013, but 2011 still holds the record at $317 billion. However, it was the biggest increase of new investment in clean energy since 2011. Government funded research and development increased 14% and corporate increased 15%. Private equity and venture capital investments increased 16%, but overall investment is still three times below 2008 levels. In terms of region, the most investment came from the United States, China, and Europe. European investment increased only 1% since 2013, but is still the highest at $66 billion. China increased a whopping 32% to $89.5 billion. Clean energy investment in the United States experienced a smaller increase of only 8% reaching $51.8, $15.5 billion of which went to utility scale asset finance. U.S. investment in solar increased by 39% whereas investment in wind decreased by more than 50%. India and Brazil both reached $7.9 billion in clean energy investments, an 88% increase for the former and a 14% increase for the latter. French investment increased by 26% due to the installation of Europe’s largest solar PV plant with 300MW capacity. Continue reading →
Writing in the New York Times, Burt Helm (2015) discusses the roles of Tom Steyer, Henry Paulson Jr., and Michael Bloomberg in leading the new Risky Business Project. The Risky Business Project originated as a study called Risky Business: The Economic Risks of Climate Change in the United States, which was created to determine how American business will be affected by climate change and to determine the cost of carbon emission mitigation now, as opposed to the cost of waiting. While Risky Business comprises a wide variety of members who don’t agree on much—democrats and republicans, billionaires, senators, and mayors—they do have one common goal: to show both Congress and corporations across America the impact climate change will have on the economy, a cost estimated at hundreds of billions of dollars. Continue reading →
The Social Cost of Carbon (SCC) release into the atmosphere is what you need to know if you want to make a case for reducing its output. Down the road sometime, there may be social consequences [costs] that will cause us to regret not doing something to reduce our current carbon output, but if it would cost less to do something about it then then to to make the investment now, we might as well wait. So there are two basic questions to ask: What will the social costs of our carbon emissions, if any, be? And how much more or less will it cost to mitigate them when we experience them than it would to avoid them in the first place by cutting carbon emissions? Pizer et al. (2014), writing in Nature, discuss the impact of different estimates of the SCC and the importance, if difficulty, of getting a correct estimate, observing the contrast between the estimate made by the US government in 2008 which suggested that we might as well wait, versus the one made in 2013 which showed the costs of waiting are triple those of doing something now. They also note that above all, the assumed discount rate in the economic models is crucial to the calculations, concluding that it would be ideal if both social costs and discount rates were routinely recalculated on a 5-year basis by multiple government agencies and reviewed by the National Research Council. Their goal is to use the best possible social and natural science and economics, free of political input. Continue reading →
With an average growth rate of 4.3% between 2001 and 2007, South Africa joined Brazil, Russia, India and China as the fifth member of BRICS, an association for the five emerging economies of the world in 2010. However, South Africa also joined these countries as one of the major carbon dioxide emitters, producing 1% of the world’s emissions. The environmental Kuznets curve (EKC) hypothesis states that early economic development will result in an increase in environmental degradation. This includes pollutants such as carbon dioxide and sulfur, which are considered by-products of economic activity. Eighty-seven percent of the carbon dioxide emitted by South Africa is a by-product of coal-fueled Continue reading →