The Challenge of Managing Both Climate Change and Developing Countries' Growth
by Jeremy Elton Jacquot, Los Angeles on 12.16.07
Image courtesy of kevindooley
If there's one thing we learned from the botched climate talks in Bali - other than the fact that, even under pressure, the best we can hope for from the U.S., as Paul Krugman put it, is that it agrees "not to actually do anything about climate change, but to talk about doing something about climate change" - it is that accommodating both developing countries' economic growth and emissions concerns remains as thorny an issue as ever. Indeed, unless a climate change policy is seen as being consistent with the growth needs of countries like China or India, it is not likely to go very far.
Economist Paul Klemperer of Oxford University believes that carbon taxes or a cap-and-trade system won't be able to do the trick; the key, he argues, is to find a "cheap clean substitute" to the fossil fuels of this world through innovation. Because developing nations are not "going to give up the immediate aspirations of their (often growing) populations for climate-change benefits that are largely in the future," the U.S. and Europe will need to work with them to ensure that they adopt emissions-lowering technologies, such as Carbon Capture and Storage (CCS), and cleaner renewable sources. Even nuclear energy may need to be on the table if they continue to develop it - more as a way for the West to resolve any storage and handling issues that may arise than for its actual usage.
And this is where the real challenge, as Klemperer sees it, lies:
"If large-scale nuclear power is politically unacceptable, substantial investment in clean energy R&D is the only alternative. But the private sector will not do this unaided . . . So it is catastrophic that public expenditure on energy R&D has been falling in most countries over the last 30 years, and it is shameful that Europe spends a much smaller fraction of GDP on public energy R&D even than the USA and Japan. The UK is one of the worst offenders . . . Finding a clean energy source that is cheaper than those currently available is the only politically-plausible way of curbing continuing growth in developing nations’ emissions."
This, of course, makes the U.S. Senate's recently approved energy bill all the more disappointing, as the LAT underlined in a recent editorial:
"Most disappointing, a mandate for the country to get 15% of its electricity from renewable sources like the sun and wind was removed. Also deleted were provisions that would have helped pay for all that clean energy by revoking tax breaks previously doled out to the oil and gas industry . . . The bill's approach to renewable fuels is its most troublesome element, though there are good points along with the bad. It requires 36 billion gallons of biofuels by 2022, compared to roughly 6 billion gallons produced today -- the vast majority of the current supply being ethanol made from corn. The mania for corn ethanol is already driving up food prices, polluting waterways and having other negative effects on the environment, and the energy bill will only worsen the problems."
Via ::VoxEU: What is the top priority on climate change? (blog)
See also: ::China Launches $3 Billion Fund For Clean Projects, ::UN Backs Down on Strict Guidelines as Leaders Reach Tentative Agreement, ::China To Top U.S. in Greenhouse Gases This Year
Why can't people give facts on this site instead of fiction. The energy bill did not "keep" giving new tax breaks to oil companies, it merely did not allow "new" taxes on them. This is just a way for environmentalists to force people off of fuels by making them so expensive that normal people cannot even afford to drive to work.
Everyone with a business degree knows that oil companies have a margin of profit that they will operate at. If we raise taxes it does not lower their profit as they merely raise prices. When you tax the oil companies you merely tax the people.
When they raised prices on cigarettes did the tobacco companies "eat" the tax increase? We all know they did not. They merely passed it on and keep the same profit percentage per pack as before....except when a pack costs $4.00 and they are making a 10% profit it means they make 40 centst per pack. When they make a 10% profit and taxes were lower and a pack cost only $2.00 the companies made 20 cents a pack. Tell me who is making out now....the cigarette companies. That is what is going to happen with oil. If they take in 100 billion in revenue they will make around 7 billion. If we raise taxes and the total revenue taken in is 111 billion they will lmake $7.7 billion. Do you think they care. They will sell the same amount of fuel but make $1.4 billion more in profit while the government takes the $10 billion and finds new ways to waste money. The only one losing in this whole deal will be the consumer. 19% higher gas prices while the government claims a victory because they are taxing the oil giants who in turn just turn around and tax us. What a deal. Are we all that stupid? We have got to stop thinking thinking that taxing something ever fixed a problem. The only way we are going to reduce oil consubmption is through technology and innovation. We meed to move from the oil grid to either a wind or solar grid for our principle needs. Local commuting in a newer more sophisticated electric vehicles that are powered principally from a solar grid or wind grid would be ideal.
All this crap about building newer technologies for emerging countries is just a redistribution of wealth. Do you think we cannot see that. I am not paying a tax to any socialist group just because I can afford to drive my car or heat my home. What a bunch of hogwash. The left has this new angle to redistibute wealth and it is not going away easy. What percentage of the thousands of delegates concerning global warming were actually soientists "WITHOUT" a tie to some environmental group that funds them is some form or another. Less than 1%. So I am supposed to believe a bunch of beggers with their hand out trying to tell the US that we need to pay for our damage to the world.
If it were not for the US there might not even be a world. We ended both world wars through manufacturing and innovation. When do we get the credit for that?
I was referring to your previous post on corn-based ethanol and how heavily depending on these biofuels will cut off grain/crop supply, drive up food prices, and even increase greenhouse gas production due to nitrous oxide releasing fertilizers and tractors that run on fossil-fuel energy. Considering how developing countries will adopt environmental regulations on a trial and error basis, they need guidance from EPA representatives that specialize in foreign policy to avoid catastrophes like shifting 70% percent of fuel usage to corn-based ethanol. In fact, the US needs to invest in this department with as many resources and as much funding as it does in the dep of homeland security!
Hey anonymous,
Say all you want for the next 13 months, because our lives will change for the better, and yes even yours.
You're right anonymous. Charging companies more taxes does pass that tax onto the consumers... who consume less and thus reduced the amount of that product produced. I know people who have quit smoking because of the taxes and you can look at the recent corporate history of tobacco companies to realize that their extensive efforts to diversify their operations came after the taxes.
If you want to reduce our dependence on foreign oil (and it sounds like you do) you have to discourage the waste of oil. You can do that indirectly by taxing people or directly by forbidding waste (i.e. raising CAFE standards and classifying SUVs as cars rather than work vehicles). When have people ever made the right choice entirely on their own?
You bring up the world wars as an example of technological progress without raising taxes. You're right, but there was extensive rationing and funding through war bonds. I think rationing and investment is a far better way to go, but you try to convince people to do the right thing when they have no incentive to do so.