Sunday, January 17, 2010

The Politics of Climate Change

Climate change is one of those issues that when push comes to shove politics rules. (Perhaps this is like most things.) We might all have grand ideas about doing things for the environment - like recycling, having shorter showers, driving smaller cars - but when it comes to sacrificing our way of life then we tend to think in terms of collective action problems - "there's no point in acting unless everybody else does".
A major collective action problem concerns China. Supporters of an ETS didn't like the argument that all of Australia's efforts to reduce emissions would count for nought if China continued to grow at a rapid rate. The problem for advocates of an ETS was that it was undoubtedly true, so other arguments were necessary. These related to how an ETS would encourage market propensities to shift away from emission intensive economic activities.
A better argument revolved around the notion that Australia should be at the forefront of developing green technologies. The development of cleaner forms of energy would lessen the problems of emissions. This is what really matters. The way that electricity is produced really matters. But how to make this happen is the issue.
Think about electric cars. While it undoubtedly would be better for pollution in cities if we had electric cars, the total equation must include the costs of producing the batteries of those cars and most importantly their source of electricity. If brown coal powers electric cars in Australia then this will lessen the benefits of electric cars. The same could be said about the shift of emission intensive production to countries that have a comparative advantage of a greater propensity to pollute!
Advocates of an ETS often argued that increasing the cost of carbon through a (constructed) market mechanism would encourage (eventually) a shift in resources to more energy efficient production and perhaps the development of green technology. The surprising thing about this is that many advocates of an ETS don’t trust markets in other circumstances, but trust this financialised market process to save the earth!
The ETS to me seemed to be a way to delay real action. Its complicated nature made it difficult to explain, but maybe this was part of its appeal. The preferred solution of a tax had the problem that it was a direct tax. Tony Abbott would have easier time calling a carbon tax “a great big tax”, but it would have simpler and more adjustable by governments over time.
Another important aspect of the politics of climate change concerns the political economy of development.
To think that China would make commitments that could undermine its rapid growth was naïve. While China is not a democracy, it is still subject to societal demands and pressures, perhaps even more so. On what basis does the Chinese Communist Party control China? Largely its hold on power is determined by rapid growth or in the absence of that attempts at authoritarian control or appeals to nationalism (it is this latter possibility that should be the major worry).
So am I surprised that Copenhagen failed? Not in the least. What I am surprised about is the faith that so many people seemed to have in the process. It’s time to give up on this process and for individual countries to think about ways to encourage shifts towards greener energy production. Just think if all the expenses of all the politician, bureaucrats, environmental activists and so on had been put into research into the development of non-carbon-emitting energy technologies then we would be further down the road towards a real solution to global warming.
An emissions tax that was hypothecated into green energy research and environmental cleans ups would have a double benefit. It would encourage shifts away from emissions intensive activities and provide money for research into the things that could replace them.

If the ETS was the answer, then the question was wrong.

1 comment:

  1. Dear Tom,

    Excellent post, I would agree and argue that the debate over ETS is misplaced. Much better would be how Australia is going to integrate itself into the ever developmening global economy.
    Exactly as you have pointed out, we are missing out and have dropped the ball on a huge opportunity - green technology.

    Whilst we have under Labour and Liberal governments placed our economic faith in selling public assets or thanking our lucky stars we happen to sit on massive piles of valuable dirt and rocks, others have been developing technology to adapt to climate change. The debate over an ETS is not the issue, Australia should be at the forefront of developing energy technology away from fossil fuels. A country that contains as much uranium and sunshine as Australia should be the world leader in Nuclear and Solar technologies as the world scrambles to build these types of energy facilities. Why we haven't developed smart grid technology and invested in R&D for all of this is ridiculous. A country as large as Australia needs a smart grid, it needs alternative technologies.

    China is waking up to the fact that it is going to choke to death if they continue developing using the dirty energy they currently import(from Australia amongst others). Why then isn't Australia developing nuclear and solar technology that they are increasingly turning to? They will continue to buy our coal and iron ore, but wouldn't it be better if they bought our solar panels and new nuclear technologies as well?

    So, whilst Australia debates an ETS, the Chinese are splashing money on the world's largest solar generated power facility with technology from Pasadena, CA. and South Korea is winning nuclear power plant contracts in Dubai.

    All that Australia continues to do is export dirt and rocks.

    Craig T.


Please be civil ...