The supply-side solution developed in the Bright Lines exercise, drawing on Bill Hare's Greenpeace International paper "Climate Protection: The Carbon Logic" (PDF), won little support from first readers. It is included in this proposal as a concept to be explored because no other solution could be determined to meet the dictates of the climate timeframe -- and the strong responses it provokes are evidence of its strong narrative value.
A supply-side response -- imposing a cap on extractions in 2015 with 10 percent reductions at 5 year intervals until emissions are stabilized at pre-industrial levels, as shown in the accompanying chart, for example -- is the ideal climate policy. A cap and phase-down would set clear market parameters for fossil fuels phase-out and establish future economies of scale for renewables and efficiencies, encouraging early investment and driving innovation. Capping extractions would, in effect, move forward the global response to exhaustion of oil and gas reserves, a great challenge even if climate change were not a problem.
A supply-side solution would employ a minimum governmental intervention to maximum effect, defining broad parameters within which market forces would determine how best to the meet the challenge, driving rather than requiring technological innovation and social change. Lost opportunity costs would fall in direct proportion to benefits already derived by companies and nations from exploitation of fossil fuels (and almost certainly buffered by incentives and limited buy-outs of fossil fuel corporations). Remarkably, a supply-side policy is a fair, free-market solution.
Two critical advantages of a cap and phase-down over any other response are:
- It is the only mechanism by which emissions reductions can be guaranteed.
- It is the only effective action that can be taken in the small window of opportunity that will be opened by significant climate change impacts and closed when the bright line is reached.
Fossil fuel extractions, transport, and refining are large industrial operations concentrated in a few known locations, many in remote regions, easily monitored. 50% of the world's supply of oil is pumped from 120 oil fields and that number will decline as extractions are are further concentrated in the next decade. A last-minute, multi-lateral response using international policy powers to level off oil, gas, and coal supply is a far more logical and plausible course of action than the alternative, which probably entails draconian governmental rationing and sharp mandatory emissions limits, massive programs of untried carbon capture and, potentially, techno-crackpot schemes like lofting a giant Mylar umbrella into geostationary orbit between earth and sun.
Under what conditions might the drastic measures of cap and phase-down be considered?
If the world relies on the present mix of energy efficiencies, emissions reductions, alternative energy, and carbon-capture proposals assumed in current international treaty negotiations and advanced in the U.S. climate agenda, a functional international plan of action must be put in place by no later than 2015, based on energy market emissions projections and 15-year timeframe of the Stabilization Wedges analysis. There is no evidence to suggest that a functional global response will be put in place within the eight years remaining.
The small window of opportunity which may open when present efforts fail is within the twilight zone between political and climate bright lines, designated on the accompanying chart by two red stars. A fossil fuel supply cap and phase-down, imposed as a desperate measure in the twilight, would be a hardship measure, but environmentally sound and not civilization-wrecking, and so infinitely preferable to the chaos of abrupt climate change.
Bringing the world's largest and richest corporations and most powerful, nuclear-weapon equipped nations to such drastic action strikes most people as fantastical and is easily dismissed, even by most environmentalists. The impact of a supply-side solution on energy corporations and nations with large fossil fuel reserves is indistinguishable, however, from any successful effort, other than massive carbon sequestration, which must reduce fossil fuel demand at precisely the same rate as a supply-side cap. Any other assumption is to compare apples and oranges. Supply-side is not impractical compared to other global solutions; there are no functional global solutions.
Considerable strategic and narrative advantages are gained by endorsing a last-minute supply-side option.
Policy. An extractions cap complements other proposals and can provide an umbrella for a variety of functional climate policies. Ross Gelbspan proposes a three-point international response in a closing chapter of Boiling Point, for example, including:
- subsidy shift from fossil-fuel supports to clean-energy sources by developed nations;
- technology transfer of clean-energy technologies to developing countries, funded by a small levy on global commerce, and;
- incorporating a Fossil Fuel Efficiency Standard, rising by 5 percent per year, in the Kyoto treaty.
This is a simple, comprehensive global solution that would work if sufficient political will were mustered. Greenhouse Development Rights, advanced by EcoEquity, is another comprehensive proposal aimed at breaking the impasse between first world and developing nations.
A supply-side solution of last resort is compatible with both approaches (indeed it strengthens them by contrast) and can be advanced as an overall umbrella policy, enabling advocates of Greenhouse Development Rights, Gelbspan's platform, and other comprehensive proposals to act in concert, bypassing debate on the finer points of policy and focusing attention on the key questions of politics and power.
International Strategy. A supply-side cap squarely targets the fossil fuel extractions industry and the handful of nations with large oil, coal, and gas deposits, permitting environmentalists to shift away from the myriad of national-level campaigns to join forces in a focused international campaign and clarifying who the bad guys are.
Narrative. Finally, and perhaps most importantly, a climate story that incorporates the supply-side solution is simple, clear, and compelling.
Defining Our Goal. Capital investment trends and timelines provide independent support for the <10 year climate science timeframe for global action. The International Energy Administration (IEA) recently boosted its estimate of investment requirements to meet global energy demand in the next 25 years to $20 trillion (PDF), equal to total 1990 gross global product, with just $500 billion allotted to renewables, or 3 percent of total global investment.
Interestingly enough, the cost of inaction on climate change is also pegged at $20 trillion in a Tufts University report [Climate Change: the Costs of Inaction, Report to Friends of the Earth, F. Ackerman, E. Stanton, 2006, PDF], and capital requirements for a crash global program to develop oil alternatives are also estimated to cost $20 trillion in a recent U.S. Department of Energy study (PDF) on peak oil.
The levels of capital investment now in contention are miniscule by comparison. The Bush administration argues that $3 billion/annual expenditures, primarily on carbon capture technology, is sufficient, while the recent UN panel report calls for spending in the range of $45 billion or $60 billion/year.
Development timelines for major fossil fuel energy projects run to a decade or longer. If the ratio between investment in fossil fuel and renewables is not reversed within ten years, the colossal weight of capital invested in oil, gas, and coal will preclude investment in alternatives and our last chance will be lost.
Double digit growth in the renewable sector looks good compared to past performance, but will accomplish no more than maintaining a miniscule market share. Only exponential growth -- of a kind only possible by direct governmental intervention in the global market -- can possibly achieve the necessary results. The climate action goal may, therefore, be stated as ...
... preventing the planned investment of $20 trillion to increase fossil fuel supply, substituting in its place a crash global program -- capitalized at the same level -- to cut emissions, improve efficiencies, and develop renewables within a decade.
Ask Umbra on bike helmets
Ask Umbra on buying carbon offsets
Comments
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Gar Lipow Posted 8:12 am
20 Apr 2007
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Energy745 Posted 10:53 am
20 Apr 2007
..such drastic action strikes most people as fantastical and is easily dismissed...
is very true.
Such a plan if proposed would be fought by every means available, it is pure fantasy, not based on clear thinking.
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GonzoDon Posted 11:59 am
20 Apr 2007
Short of Peak Oil -- in effect, a supply-side policy that will be imposed by Mother Nature, against whom there will be absolutely no option of appeal -- I don't see how the teeming masses of humans scrambling over the surface of our planet will somehow miraculously decide to voluntarily reduce their fossil fuel consumption.
Call me a pessimist, but there is no evidence to date that the competitive, self-serving nature of the human race has ever responded proactively to issues of this magnitude.
It's gonna be painful, it's gonna be ugly when Peak Oil hits. But it's gonna be less painful and less ugly for us if it hits sooner than later. Then, at least, greenhouse gas emissions may actually be curtailed.
So pray that Peak Oil is upon us. Or will be shortly. Otherwise, we're toast. Literally.
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Sam Wells Posted 1:34 pm
20 Apr 2007
If there is a counter-argument, it is that the consumers really rule the market because if they didn't buy all that stuff they'd just diversify and lower production because they couldn't store the crap anywhere, and it would be worth much less if flooded on the market. This is called DEMAND REDUCTION. and is the direct antithesis of supply reduction.
Reduction of demand starts with us greedy Americans who consume so much energy ... and that when explained and educated, rational folks will make a concerted life-style change to reduce consumption of electricity, gas, and whatnot. True enough, most literate Americans now think that Global warming is a least worthy issue to discuss, pro or con, and of those a growing proportion of the populace thinks it is high time to reduce our consumption and diversify into stuff like wind energy.
The only problem with demand reduction as I see it is that if the US population never grew, conservation by itself could cut Global Warming gases by a significant and substantial amount - but we keep growing at like 2-3 percent and everyone wants a piece of the American Dream and the emissions keep growing. Any growth could off-set any voluntary reductions.
Demand reduction will work. It might take a few more minor wars, droughts, infestations, and horrible cyclones to prompt people to reduce their energy voluntarily, along with these infamous "brown-outs" and service disruptions, but I have the faith and don't need BIG DADDY telling me what to do (need I talk about riots in the streets?). The good part is that many people are doing good things right here today to help reduce energy use in their homes and businesses.
The one thing that really pissed me off about President Bush ... well lately ... was that he said he would support a voluntary Global Warming program in view of the Supreme Court decision - but that if China went overboard on its emissions then all bets were off.
Can you imagine how stupid this sounded? Us Americans consume more energy per capita than anywhere in the whole world, and we should be leading by example, not by following the EU and China (nevermind chasing its tail in Iraq).
So some policy wonk comes along without a good understanding of these and a myriad of other details and says "heck, cut all production by five percent per year." Folks, if there was a way to sound more stupid than President Bush, you won that raffle ticket.
Oh no, I am not done yet. The "supply reduction" argument assumed that you can actually control any production outside the US. The first issue is that the US needs MORE production in the interim to not be so dependent upon foreign hydrocarbons, with maybe a secondary that we should make sure we have excellent relations with Canada and Mexico because they are our American neighbors - and they have the juice.
But the matter of fact is that most branded companies such as Exxon-MOBIL and others are shell corporations for overseas and offshored companies that when controlled by THEIR COUNTRY OF OPERATION must produce or not produce "x" amount of hydrocarbons. In other words, Exxon cannot control the Gulf of Nigeria or Maricaibo, Venezuela because those matters are completely out of its hand. In OPEC nations, they must produce what the authorities or kingdoms day, or they can pack sand and go home. You and I and our little trifling computers cannot tell them they have to reduce any supply anywhere, no-how.
To do so would possibly involve World War III. Please stay with me, because this is how I think the supply-side argument is not only stupid but belligerent, arrogant, and war-like. To actually tell everyone in the producing countries to stop producing so much, which are a lot more than your simplistic assessment of 120 oil fields, you'd have to invade them and take them over, moat of them at least.
At the end of the day, we will see that such an approach is ultimate folly, much like Wolfowitz's Neo-Con argument that oil could pay for the battle of Iraq. What are they burning, like ten million gallons of fuel oil a day over there just hanging out? Well Wolfy-baby is soon to be history and his silly supply-side arguments will hopefully go home with him as well. Or to hell. /sammie
Onward through the fog
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Gary Gifford Posted 5:17 pm
20 Apr 2007
Tax it now with a revenue neutral tax, and vilify all carbon fuel. A tax will make the marketplace work. If it isn't doing what its supposed to in 3 years, get rid of the "neutral" part of the tax, and invest in alternatives.
Pessimists will not save the planet.
Cheers,
Gary Gifford
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sensato Posted 1:12 am
21 Apr 2007
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Sam Wells Posted 3:38 am
21 Apr 2007
Milton Friedman if alive today would become unglued by such talk of social engineering at either end, requiring cuts in supply or demand. He would scoff at the Ethanol Subsidy. None of that stuff works, and if it does, nearly always leads to disaster. I guess I don't trust the government on this one, right?
-sammie
Onward through the fog
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Gar Lipow Posted 6:08 am
21 Apr 2007
Sam Wells. The free market has had plenty of time to reduce energy consumption on its own. There are various reasons the "free market" will never reduce energy consumption without major interventions - carbon taxes, permitting systems, regulations. You "just don't trust the government" but you trust Exxon and Walmart? We have to work through untrustworthy institutions no matter what. But at least we have something to say about how the government runs. Incidentally are you still drving on those government subsidized roads? Is your home in an area where nasty government financed fire departments will put out the flames if it catches on fire. Are there evil goverment financed or subsidized emergency services in your area? How about that horrible red tape that lets you summon help by dialing 911 in a crisis? Want to do without that. Were you educated entirely in private schools, or did evil government money hlep pay for your education?
Milton Friedman was perfectly happy to help support murderers in Chile after the coup. So I don't care whether the policies required to solve the global warming gives him a moment of comfort in whatever pit he is burning in.
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GreyFlcn Posted 7:11 am
21 Apr 2007
Instead they should provide "buydowns" of the cost of a socially desirable commodity.
For instance, flu shots, or college education.
And in this case, renewable electricity, energy effecient vehicles, and appliances.
But please leave the government funding out of the R&D process. Thats what venture capital is for. "Market effeciency" is a polite way of saying that "9 out of 10 of these businesses won't make it"
Basically:
Governments should set the goals for a socially desirable products.
Businesses should find the methods to achieve those goals through the products they sell.
Governments should then make sure those businesses get rewarded proportional to their sale of those socially desirable products. (Either through targeted possitive incentives or broad negative incentives)
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sunflower Posted 8:32 am
21 Apr 2007
Most of my applied research came from basic research exclusively funded by the feds. The suppression of renewable energy came via r&d budgets zeroed-out. Reagan did a lot more than just removing the solar hot water collectors from the White House roof.
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GreyFlcn Posted 9:32 am
21 Apr 2007
Infact the best methods are usually ones that involve both carrots and sticks.
My favorite ones being, "The crappy performers pay the uber performers"
Feebates!
That way tax payer dollars aren't even needed.
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Gar Lipow Posted 11:33 am
21 Apr 2007
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Sam Wells Posted 11:39 am
21 Apr 2007
Coal, oil, natural gas, and even ethanol is taxed and you pay the price as a consumer and the supplier even has to pay taxes too. I think what many folks would like to see is a "value-added tax" based on carbon content. I hope that makes sense.
The question is whether the tax system would be slapped on top of all the other kinds of taxes, or made fresh from scratch using a unified system. By that I only mean that states and countries would somehow align a carbon tax similar to the European VAT. This tax should be fair, equitable, and be based on a metric of heating value, carbon content, or however is best.
This would help level the playing field in the market and be completely consistent with the principle of free markets. However, if one proposes to slap on more taxes on top of the existing systems, willy-nilly, without such care as to a level playing field, I fear that would be government meddling of the worst sort. That seems to be a common proposal heard on this forum and I guess I find it objectionable.
As to the commenter about R&D investment by the government, that is never a "free market system" but is seed money used to help create new markets. R&D has a ton of permitting and tax exemptions; the only problem is that the policy wonks won't fund an appropriate mix of projects with adequate funding. That is not a failure of the system - it means you need to vote the jerks out of office!
sammie
Onward through the fog
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Zarkov Posted 1:37 pm
21 Apr 2007
Hope you are right, BUT I think y'all are totally deluded.
LOL, how about 10 years to phase out coal, oil, gas and all life on Earth.
Each day from a long time ago, the global climate problem becomes more and more intractable. Even if a solution is found soon enough, there will still be a mammoth fight to the death if LIFE is to survive
There is no time left to talk... the real cause of global climate change is still being DELIBERATELY sidestepped ...... really really pathetic, and unbelievably irresponsible.
Live now, don't care about the future, eh? LOL
Caught in a trap, and can't get out....All y'all can think about is fuel for your car.
Action NOW
omegafour.com
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Gar Lipow Posted 4:21 pm
21 Apr 2007
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Zarkov Posted 5:27 pm
21 Apr 2007
sorry for misinterpretation... good to see you are deeply committed.
>> if free market was going to solve the problem, it would have. >>>
LOL, mmmh.
omegafour.com
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