On magical, mythical, market unicorn fairies

Or how we can get effective climate policy without government intervention

I don’t usually respond to op-ed columns, but the column by Bret Stephens in the New York Times on climate policy yesterday is so …. foolish that I think it needs a response. And more to the point, the foolishness in the column can help illuminate some of the major problems that have developed as we think about policies responses to our climate crisis.

To recap, Stephens laments the recent protests in France over an increased gas tax enacted as a climate policy by the government. And (here is the one grain of truth in his column) he notes that the protests do demonstrate the real risks for climate policy that imposes costs on the public that they cannot bear or avoid, and that have bad distributional outcomes. But then he moves to ask that the proponents of climate policy “first propose something serious to do?,” presumably instead of a gas tax and other carbon pricing efforts.

From there, Stephens argues that existing policies such as the Paris Accords are inadequate and ineffectual, that technologies such as carbon sequestration or energy storage are not yet deployable, and that nuclear power is an effective and proven carbon-free power source that the French had imprudently decided to reduce.

So after rejecting all of these proposals, what does Stephens propose? Not that we should “give up,” but instead that we should be:

placing medium-sized bets on potentially transformative technologies not funded by regressive taxes or industrial subsidies, and not dependent on future breakthroughs that might still be decades off, if they happen at all. Let thousands of climate-startups bloom—and let markets, not governments, figure out which ones work.

Let’s unpack that. Stephens apparently rejects carbon pricing – at least, he rejects regressive taxes (which appears to be a stand-in for carbon pricing) and he nowhere endorses this policy (and it would be odd to do so in a column in which he excoriates the French gasoline tax). And he rejects industrial subsidies to support new technologies. Instead, the market will support the new technologies.

Ahh, the magical market. Which will of course deliver new, carbon-free sources of energy in response to a vast amount of potential payments for carbon-free sources of energy – payments that won’t come from a price on carbon or industrial subsidies, but instead, I guess, from thin air, or perhaps magical, mythical market unicorn fairies.

Stephens has apparently forgotten that the reason we have a climate change problem is that our current systems of private property rights and capitalism do not put a price on carbon emissions! So there are no incentives to avoid the carbon emissions – unless you create property rights or charges to do so (but that would be carbon pricing, which is bad).

So I find it ironic that at the end of writing a column that basically rejects all existing proposed solutions, and proposes instead an improbable, mythical, solution, Stephens wraps up with “To have a diagnosis is not to have a cure, and bad cures can be worse than the disease. Those who think otherwise are also living in denial.”

But there is a lesson to salvage from this disaster of an op-ed piece. I think that Stephens is very right that carbon pricing is politically challenging to enact, in part because of the broad costs it might impose on society. I’ve already elaborated on that issue before, and I plan to do some more writing on the topic here soon – both on the political challenges, and possible solutions to those challenges by using tools other than carbon pricing (like – gasp – industrial subsidies!).

5 Replies to “On magical, mythical, market unicorn fairies”

Jan Galkowski says:

December 7, 2018 at 4:49 pm

It’s clear my continuing to decision to leave my New York Times subscription cancelled is correct. I original was a subscriber, but when Stephens first appeared, I nixed the subscription in explicit protest.

Nevertheless, he’s but a symptom of a culture, country, and mindset which just doesn’t appreciate the severity of penalties in the corner we are collectively painting ourselves shut, and, by that broad sweep, I include many progressive environmentalists who think that, at this point, we can still have everything.

The Socolow wedges are diminishing in number, and the slopes on those remaining are getting steeper. Because people and governments don’t seem to understand lags in systems, whatever the scale, it appears that nothing substantial will be demanded until the public are faced with no other alternative. There is a telling and revealing podcast at The New Yorker from 9th November 2018 which speaks titled “The Financial Crash and the Climate Crisis” which demonstrates this starkly. Yes, a Carbon fee per Nordhaus of hundreds of dollars per tonne (Carbon or CO2) and escalating is what it will take now. But I, as some, think that what that needs to be saved for is clear air capture of CO2 after emissions are nearly zeroed, since there’s no evidence in hand humanity will successfully change their behaviors to mitigate the problem. Given that scrubbing costs, at scale, a recurring $100/tonne in itself, with a whopping start-up cost, it seems about right.

What should be imagined, and what Stephens and many others fail to appreciate, is the financial impoverishment which will attend the generations which not only need to rapidly and belated do what he doesn’t want to do, decarbonize, but also pay for hits to the chin from climate change impacts, and set up a system to decarbonize. Optimistic estimates of costs of that technology put start up costs at multiples of Gross World Products.

What Stevens and everyone should realize is that there is a climate-induced economic depression coming, caused entirely by our inaction on mitigation, and a continued worshipping of the Carbon false idol. Sure, it was important and good once upon a time, but we’ve known for a long, long time this had to change. And governments have done nothing. And people have sailed along, pretending it wasn’t there.

Some of us have tried to point this out. Loudly. And we continue to struggle.

But I think it’s going to take that depression for people to pay attention.
1. bqrq says:
  
  December 9, 2018 at 6:04 pm
  
  Jan said;
  “……everyone should realize is that there is a climate-induced economic depression coming, caused entirely by our inaction on mitigation…..”
  
  Dear Jan,
  You failed to explain how mitigation would avoid the “climate-induced economic depression” (perhaps its not true).
  
  You do not know how to mitigate climate and neither does anyone else. We are sick and tired of these never-ending stupid lies about climate mitigation. We demand proof of mitigation. Put up or shut-up!!!
bqrq says:

December 7, 2018 at 5:29 pm

Eric said;
“….So there are no incentives to avoid the carbon emissions – unless you create property rights or charges to do so…”

Dear Eric,
The best incentive for avoiding carbon taxes is public recognition of the fact that such taxes fail to mitigate global climate and cannot achieve the intended purpose of controlling climate. It is foolish and dishonest to focus solely on carbon dioxide emissions while ignoring solar radiation, water vapor, earth tilt and orbit, natural cycles, etc. (junk science).

Climate-control (mitigation) schemes are a hoax with many forms and variations. Corrupt public fraud is the best incentive for rejecting and opposing carbon taxes and climate ripoffs.
Sam Bleicher says:

December 7, 2018 at 5:58 pm

Stephens says “bad cures can be worse than the disease.” Just what “cure” (e.g. increased taxes on fossil fuels?) does he think is worse than our present course of doing almost nothing to avoid the progressive uninhabitability of large swaths of the earth and the slow destruction of a large proportion of the human population?
Michael G says:

January 7, 2019 at 8:38 am

I agree a carbon price would be nice but I don’t see it happening any time soon. The tech fix is coming and will make the whole thing moot by 2025 at the latest.

The falling cost of renewable energy means that by 2025 it will be cheaper to install new solar wind and batteries than to keep existing fossil fuel generators going. Just search on “falling cost of renewable energy”, select images and you should see lots of charts showing crossover points when RE becomes cheaper than coal and gas.

I collected some EIA charts here:
https://meetingthetwain.blogspot.com/2017/06/the-future-of-energy-in-20-charts.html

Those were from mid 2017. Things are actually moving a little faster now as costs have declined faster than projected.

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