Saturday, September 23, 2017

A Carbon Footprint Problem

Let's assume that you take this global warming issue seriously.

You decide that you are going to reduce your carbon footprint. You purchase an electric car. You make sure that your own energy comes from renewable resources - solar panels on the roof, you sign up to purchase wind power from the energy company, you walk or ride your bike a lot. You purchase locally grown foods (which require less transportation). You go all out, and so you are using much less carbon-based fuels.

What happens?

Well, the demand for carbon-based fuels drop. Somebody else, who cares more about price (and there will always be a lot of people who care only about price) buys the carbon-based fuels you would have used, uses them, and put the carbon into the atmosphere. And - for all of your sacrifice - you have accomplished . . . nothing.

Your decision not to consume carbon fuels does not keep those carbon fuels in the ground - unused. It simply makes them available for somebody else to use. So, your efforts to cut back on consumption isn't actually doing anything to prevent global warming. The best that you can tell your children is that you are not one of those who created the problem. Somebody else is responsible.

Benjamin Hale discussed this problem in "Nonrenewable Resources and the Inevitability of Outcomes” The Monist, vol. 94, no. 3, pp. 369–390.

He also mentioned another, similar problem. Assume that you are an executive for an oil company with a few tens of billions of barrels in reserve that you intend to sell for the highest price possible. You read in the paper that researchers may come up with a breakthrough that will increase the efficiency of solar cells. You should realize that it would not be wise for you to sit on those reserves while the price gets undercut. Your best move is to cut the price immediately. You will still get more than the anticipated future price. Plus, you will be undercutting the demand for this new product since you have made it much less cost effective (relative to your new price). Again, carbon extraction goes up.

It would seem that we can't win.

There is an argument that we can't win so far as it is the case that there is carbon in the ground that can be sold for a price that is higher than the cost of extraction. As long as this is true, there is a profit to be made. The final consequences is: All of the carbon-based fuels that can be extracted and sold at a profit, will be extracted and sold at a profit. All of it. As long as it is legal to do so.

As the price drops, there will likely be some reserves that are too expensive to harvest at those prices. That carbon will stay in the ground - for a while. However, even if it is consumed at a slower rate, the less costly reserves will get used up, and the price will eventually rise, opening up those reserves that are more costly to extract. Eventually, it will all get used. It will all end up in the atmosphere (causing warning) or in the oceans (causing acidification).

Hale argues that insofar as individual action is ineffective when it comes to climate change, we cannot rely on getting people to take action based on the good that they will do. We need to convince them to act on some other type of reason - a reason that does not depend on the good we will do. We refrain from lying, theft, and other types of wrongs even when they have a chance of doing some good. We would find it odd if somebody were to tell us, "Go ahead and lie. It won't hurt anybody."

Perhaps, given the effects of carbon emissions, we can convince people to give up activities that produce carbon emissions for the same type of reason - because it is wrong in itself, rather than because it will do some good.

Yet, this reduction in demand will still be ineffective, whether it is done from a false belief that it will be effective or from an attitude that it is wrong in itself. if somebody is looking for something to do that would be effective, they would need to look elsewhere.


Doug S. said...

The solution, then, is government action: put a tax or other disincentive on the act of digging up carbon and burning it, so that it is no longer (as) profitable to do so.

faithlessgod said...

Excellent post

Rather then tax, that might work to some degree, Doug, don't forget regulation and international regulation to boot

Justin said...

Also consider that the person buying solar panels, an electric car, wind power certificates is increasing demand and putting money into those products which helps develop that technology and build the underlying infrastructure for those renewable sources of energy. This will l in turn reduces the cost of these technologies, and makes them more appealing to customers who otherwise don't give a crap about their carbon footprint. If the cost becomes comparable, then regular people who wouldn't know the difference, when test driving, will find the electric equivalent far superior. There's simply no contest, only price.

There's an analogy with Telco, where mobile and alternative voice services diminished long distance rates until they were practically nil and forced those old Ma Bell carries to integrate those technologies into their infrastructure and ultimately rely on them to deliver service. Technology, once provided enough consumer support, will supplant older technology. I'm hopeful that the current trends toward renewable energy and electric vehicles have reached a point where consumerism will drive the reduction of carbon based fuel sources.

When you evaluate a persons carbon footprint, you aren't looking at the carbon they are saving today, that will obviously get used, you have to look at the aggregate effect on the carbon market and how that unused carbon shows up on the ledgers in the future.

There are also many ways to convince stubborn Americans to adopt these technologies and practices. Comparing efficiency is one, and I've seen die hard Trump fans and "anti-environmentalists" grumble about a new technology one year and then start using it the next and, as long as you don't point that out because they will deny it, they will usually talk about it's efficiency: "It's not that I care about the environment, but recycling is just more efficient, that's why I truck out my recyclables."

Consider the death of the incandescent bulb. First it was CFLs and then LEDs even took those over. Incandescents are pennies on the dollar compared to LEDs, but the technology has advanced so fast that not only is the cost difference negligible, but the newest designs have people buying them on accident because they look just like incandescents! All it took was early consumer investment in the technology. Banning 100watt incandescents didn't hurt but most LEDs sold aren't 100watt equivalents anyways.

It's the same for electric cars, soon people won't be buying them because they're electric and eco friendly, they'll be buying them because they don't know any better and even if the electrics are still a bit more expensive, a test drive will often make the electric version a winner. That's the bulging middle of the market that needs to be breached and the cars that are coming out now and soon are doing that.

I could go on about solar panels and how buying those renewable certs is also building that infrastructure, but the point is, that while these activities won't stop reserve carbon from getting dumped, it should give those companies that are going to drill for more incentives to follow the carrot on the stick and retool their companies for where the market is heading.

In the current political climate, we aren't going to see positive legal action to combat climate change. The current markets, however, will far outpace any political means, and most of the people who would oppose any legislation that would tax or regulate these industries are likely going to be using the same technologies that will supplant them, and they won't even realize it.

David Jacquemotte said...

There is a much more effective long-term solution, though it would difficult to carry out: Convince people to stop making consumers. That is, promote the desire to abstain from procreation. A person has a larger carbon footprint than a fleet of Hummers.

Andy said...

Just because the price drops doesn’t mean the same quantity is consumed. In economics, If the demand curve shifts left, both price and quantity will drop.

Also, even slowing the usage rate is good since it gives the environment less pollution to deal with at a time. I recall your bathtub analogy. It is good to slow the rate the water is entering the tub so it doesn’t fill quickly.

I agree one person buying an electric car won’t make much of a difference. Many people can though despite Hale’s arguments.