With the oil shock, climate change, and credit/finance crisis, we’ve reached a kind of historical/economic pivot point in which various interconnected systems that used to work reasonably well are no longer functioning, and each malfunction reverberates through all the systems – energy, financial, climate, environment, social/political. It’s quite a predicament, for which there’s no real precedent and no obvious solution. Lower interest rates to juice the economy and the dollar falls, oil prices rise, inflation goes up. Etc. It’s like the wiring on a sound system is all screwed up – turn up the volume, and you get a terrible screech instead. Energy prices are especially worrisome. The U.S. government has precious little say over them, and while there are obvious policy solutions (such raising the price of carbon emissions, building more mass transit, underwriting new technologies/alternative fuels) they seem likely to cause short-term pain with an uncertain long-term payoff.

Still, I became somewhat less morose after reading Daniel Yergin’s testimony before Congress’s Joint Economic Committee. There’s quite a lot to it, and it’s worth a read, but I’ll mention just one thing. Yergin has been speculating for a while about the “break point” – an oil price high enough to force a definitive break with oil – i.e., apparently where we are right now. Obviously such a “break” would be a very, very good thing, and there’s some evidence it’s already underway:

…there is much talk about “peak oil” supply these days. However, we think something else is at hand— “peak demand” —at least in terms of U.S. gasoline consumption. In our view, 2007 may well have been the top, the peak, in terms of U.S. gasoline demand. Both because of changes in the minds of consumers, and the response of automakers in terms of the efficiency of vehicles, gasoline demand may well now be in decline. This has worldwide effects. For the 9-plus million barrels of gasoline that the U.S. uses every day is larger than the total oil consumption of any other nation, including China.

The reality of the current oil shock behooves us, as a nation, to consider what would be required to double our energy efficiency over a certain number of years. Today, there are tools in terms of information technology to support greater energy efficiency that were simply not available in earlier decades. In terms of the nation’s gasoline consumption, savings of 7 to 10 percent—as much as 900,000 barrels per day—may be available with little or no penalty or burden on drivers.

Of course, “energy efficiency” is not a “thing”, unlike a power plant, an oil well, a windmill, or a solar panel. It is embodied in other things—changes in behavior, in technology, and in the capital stock. It can be stimulated by regulations, information, and prioritization. But, in a market system, price itself is a powerful driver, and energy efficiency will get much higher priority now than in years when energy was cheap. It is not surprising that sales of SUVs and other light trucks took off in the late 1990s. In 1998, owing to the collapse in crude prices, gasoline prices were the lowest in real terms that they had ever been.

This suggests that our systems don’t have all their wires crossed, and that we may be able to adapt relatively quickly, if not painlessly, to an oil-poor world. Of course, this will require some affirmative, aggressive policy fixes from Washington, and in Washington it’s still the 1990s in many ways, the 1980s in others. When Dick Cheney said that energy conservation “may be a sign of personal virtue,” but was otherwise useless, he was articulating a widely-held belief among the political class, one that current circumstances have probably not eroded all that much – yet. Check back after the election.

There’s an important debate underway about whether governments ought to – or even can – try to control carbon emissions to mitigate climate change. There are two variations on this theme. One is the “uncertainty” argument advanced by some conservatives, including the National Review’s Jim Manzi:

As far as I can see, proponents of emissions reductions will respond with four arguments: (1) inflate the analyzed costs of global warming by claiming the science actually now says things will be even worse than we previously thought, (2) inflate the analyzed costs of global warming by embedding indefensible discount rate assumptions in the black box of econometric calculations used by economists to conduct the cost-benefit analysis, (3) deflate the analyzed costs of emissions mitigation by claiming a free lunch – that there is a cost-free or low-cost way to radically reduce emissions, and/or (4) turn this into a moral crusade asserting that we have a moral duty to the poor of the world because of our past sins of emission. I have laid out responses to each of these objections: 1, 2, 3 and 4. When considered carefully, emissions mitigation proponents have no persuasive arguments.

In other words, given the unknowns here – both the scale of the problem and the costs of fixing it – we should do nothing. There are several problems with this. The first is that this is not a new argument at all. It is the MO employed by business interests and anti-big government conservatives every time action is proposed on some environmental problem: “we don’t know enough, it will bankrupt us.” This is a recipe for political paralysis – and that’s exactly the point, as Manzi’s post acknowledges. And it has been disastrous – just look at the state of fisheries, to cite a prominent example. Fishing interests managed to tie regulatory agencies in knots for years, saying we didn’t know enough to restrict fishing. Many fish populations collapsed and the fishermen went out of business.

Our experience of the past generation – the past decade especially – argues for being more proactive, not less, especially on gigantic problems. What about the notion that cap-and-trade will sink the economy? It will clearly have at least a modest impact on growth – and it should, because growth is the problem. But businesses always argue that new costs will kill them, while history shows that they usually manage to innovate and adapt.

Finally, Manzi’s argument itself has the whiff of disingenuousness, as if he started not with the goal of actually addressing a problem, but to devise a political strategy and talking points that would allow conservatives to acknowledge the reality of global warming – and thus not seem crazy – while continuing to do as little as possible. It’s situationalism, not a genuine grappling with the issues.

The other argument, advanced by Schellenberger and Nordhaus, the proprietors of the Breakthrough Institute, is that the horse is already so far out of the barn that any global agreement to cap CO2 emissions will be both bureaucratically nightmarish and outrageously expensive – and will ultimately fail:

The entire global framework for reducing carbon emissions, and indeed the entire conceptual and policy framework for addressing global warming, is a failure, based on an older paradigm of pollution control that won’t slow global warming.

At bottom, global warming is not so much a pollution regulation challenge as it is an energy development one. To understand how different this challenge is from past pollution quandaries, consider that by 2050 global energy consumption will more than double, even as we face the challenge of reducing greenhouse gas emissions by 50 percent. This transformation will not be accomplished by affixing scrubbers on smokestacks or catalytic converters on tailpipes–technical fixes that required little change to the underlying processes and technologies that they mitigated. Rather, it will require fundamental changes to the underlying technologies and fuel sources that power the global economy.

The problem with Kyoto, cap and trade, and most other policies aimed at enacting this transformation is that they focus primarily on the pollution problem, not the energy supply problem. As such, they attempt to enact the necessary transformation of the global energy economy through the indirect mechanism of pollution regulations and carbon markets, rather than through the direct deployment of new clean-energy technologies.

I’m sympathetic to these ideas – after all, they may be right. Carbon emissions are escalating, the world is changing, and there’s nothing resembling a global consensus on how to address this. Even starting now, we may never catch up; and even if we can, cap-and-trade may turn out to be unworkable. But I think the argument fails on two counts. First, global politics can change; cap-and-trade may work. It seems silly to just give up based on the experience of Kyoto, which for all intents and purposes was conceived and executed in a different era. Second, their solution is to direct massive government and private investment to technology. Surely, we need this. But if you’re skeptical about government regulation, you ought to be even more skeptical about government subsdies to private interests, which are, well, pork. In other words, our political system is not set up to dole out billions in a rational, strategic manner.

I don’t see why we can’t do both: try to control carbon emissions while also greatly boosting public and private investments in alternative fuel technologies. (And, of course, the proceeds from cap-and-trade auctions can be directed to do exactly that.) We should be using all the tools at our disposal. Now.

In this ad, which is pretty good, John McCain plays up his distance from Bush on the environment:

But over the past few days, McCain keeps circling back into the Bush orbit on the environment. He declared that the “cap” in his cap-and-trade carbon proposal was not mandatory, something that will please the oil, gas and coal industries, and large industry as a whole, because it makes the entire proposal meaningless. This was a little too reminiscent of Bush’s rescinded 2000 promise to regulate CO2 emissions.

Yesterday, he came out for lifting the ban on offshore drilling, and Bush has enthusiastically climbed on board. Obviously: pushing for more oil production is inimical to a policy focused on reducing carbon emissions. It doesn’t matter where you stand on global warming or energy policy – just from the standpoint of coherence this is a bloody mess. As it usually is with McCain, we don’t know if he is playing politics with carbon and trying to reassure Republican big business that things will go on as they always have, or if he is genuinely unaware of the contradiction. Or some muddled version of both. This again points to a basic problem with McCain’s candidacy, which is that we really don’t know which diametrically opposed promises he will choose to honor if elected; he probably doesn’t know himself at this point.

In the realm of carbon-neutral consumer items, there’s the biodegradable furniture made by Artishok, a team of Dutch design students. It’s based on the Cradle to Cradle philosophy, whose central idea that industrial processes and products can be engineered so that waste is all but eliminated; everything is either recycled or rots:

The Artishok design studio embodies this perfectly, creating furniture from corn based plastics. Artishok’s products look no different than other designer stuff and the advantage of the Artishok items is that they virtually do not contribute to your carbon footprint. After use, you can safely throw the furniture on your garden’s compost heap without polluting the soil even 1%. That means that the eight students are about as close as any designers to replicating the natural cycle directly. There’s likely strong demand for such items because other than recycled materials, 100% natural materials effectively eliminate the garbage problem. C2C based items can be ´fed back´ to mother nature no questions asked! Artishok buys its materials from Biopearls http://www.biopearls.nl, another Dutch enterprise which makes biodegradable polymers.

C2C has turned the design world on its head in some ways. Everybody agrees that the throw away society must be stopped, but C2C appears to clash with durable design. Because unlike durable designs which seem to deny a product’s end point, C2C is sold primarily because of its ‘rotting away’ value. Critics say that it’s the trash heap nightmare, and not nature, which inspires this and that C2C is merely a marketing ploy. Some people also believe that nature doesn’t need extra compost. That might very well be true, but [C2C gurus] McDonough and Braungart aren’t too extreme. They say that so long as you create stuff that can be re-used by industry, you might consider it on equal terms with biodegradable materials. Every item that´s not ending up in a rubbish dump helps solve the landslide problem.

This is psychologically a bit disconcerting; as noted above, people like to buy things that last, not necessarily things that are compost-ready. This conjures up images of mushrooms growing under the cushions, nature surreptitiously crossing the threshold of the home – a bulwark against the wild – and waiting to erupt. (This may be the reason that though my wife bought me the C2C book a couple of years ago, I have yet to read it.) But those kinds of associations are part of the problem – the idea that we can erect walls that separate us from nature is a fallacy. If economically viable, the compostable couch is a great idea. The only problem is, I don’t know any suburban compost heaps big enough.

Reihan Salam watches Discovery’s new Planet Green channel and observes a fundamental problem with green consumerism. For all the current appeal of green consumer technology – it offers the opportunity to save the planet by buying more trendy stuff – this approach is less carbon friendly than actually giving stuff up and living more modestly. If you must drive, don’t buy a new Prius – better to get a small, old used car (though his Prius-bashing is an exaggeration). Don’t outfit your detached, single family home with solar panels – live, as densely and communally as possible, near an urban center. In other words, it’s not merely the way people live now, but the whole social trajectory of American life during the postwar period, the idea of ever-bigger and better cars and homes as status symbols, that’s the problem. The carbon footprint is a status footprint. And it will be hard to shrink using technology that appeals to the same impulses that gave us sprawl and SUVs in the first place.

On the other hand, this argument is also constructed a bit deceptively. Even though using green consumer items may in the short term amount to tooling around the margins of the problem, there’s little evidence that they, in themselves, do more harm than good. Or, for that matter, that starting out this way can’t lead to bigger, more fundamental choices down the line. Salam’s conclusion similarly presents a false choice between our current profligacy and unappealing forms of carbon-friendliness:

No single policy lever can reverse this trend. Steeper progressive taxes might help, curtailing the mortgage interest deduction would definitely help, but there’s no silver bullet. The only lasting solution is for individual families to take it upon themselves to drop out of the positional arms race, to make do with better and with less.

Yes, but any effective approach to limiting carbon emissions will employ not a single policy lever, but many. In addition to government working to change incentives on how and where people live, changes in objective circumstances – e.g., rising fuel prices – will also push both technology and personal choices in more carbon-friendly directions. So the notion that we will all have to live huddled in shabby, multi-family flats while driving 15-year-old Ford Fiestas around isn’t any clearer a picture of the future than you’ll get watching Planet Green.

Robert Samuelson is a symptom of the dead-tree industry’s woes: one of those columnists who keeps going and going, saying the same thing over and over in slightly different ways – the Richard Cohen of economics. His attitude is grumpy, his thinking linear. Today, Samuelson makes a hash of carbon cap-and-trade programs, warning that won’t work because, essentially, the government cannot compel private industry to limit carbon emissions without causing massive economic, and political, blowback:

This is mostly make-believe. If we suppress emissions, we also suppress today’s energy sources, and because the economy needs energy, we suppress the economy. The models magically assume smooth transitions. If coal is reduced, then conservation or non-fossil-fuel sources will take its place. But in the real world, if coal-fired power plants are canceled (as many were last year), wind or nuclear won’t automatically substitute. If the supply of electricity doesn’t keep pace with demand, brownouts or blackouts will result. The models don’t predict real-world consequences. Of course, they didn’t forecast $135-a-barrel oil.

As emission cuts deepened, the danger of disruptions would mount. Population increases alone raise energy demand. From 2006 to 2030, the U.S. population will grow 22 percent (to 366 million) and the number of housing units 25 percent (to 141 million), the Energy Information Administration projects. The idea that higher fuel prices will be offset mostly by lower consumption is, at best, optimistic. The Congressional Budget Office has estimated that a 15 percent cut of emissions would raise average household energy costs by almost $1,300 a year.

Samuelson quotes some optimistic cap-and-trade rhetoric in order to knock it down, but no credible advocate has ever said this was going to be easy or smooth. And Samuelson, whose default position is skepticism toward regulation of any kind, offers no real alternative to address a brewing global environmental disaster. He suggests a carbon tax instead, which has the virtue of simplicity. But in economic terms, a carbon tax and cap-and-trade are different means to identical ends: putting a price on something that companies now do for free. So he ends up back where he started, without acknowledging it, which is that government attempts to regulate carbon will precipitate a massive economic disaster. Which is just idle, knee-jerk speculation; private industry does respond to incentives and adapt to new realities, whether created by governments or changes in material circumstances.

But I do have some sympathy for him on this point:

Meanwhile, government would expand enormously. It could sell the allowances and spend the proceeds; or it could give them away, providing a windfall to recipients. The Senate proposal does both to the tune of about $1 trillion from 2012 to 2018. Beneficiaries would include farmers, Indian tribes, new technology companies, utilities and states. Call this “environmental pork,” and it would just be a start. The program’s potential to confer subsidies and preferential treatment would stimulate a lobbying frenzy. Think of today’s farm programs — and multiply by 10.

Carbon cap-and-trade programs are, in essence, an enormous global experiment that has yet to succeed anywhere. They are complex, and our government is already terribly compromised by special interests that have a direct hand in writing legislation. It’s not clear that Congress and the executive branch can make this work w/o screwing it up. That’s the best argument for a carbon tax. But, contra Samuelson, government is the biggest and best tool we have to address climate change relatively quickly. To argue, 1980s-style, that government is always the problem simply ignores this broader reality.

NASA photo

I agree with this:

The magnitude of the crises we face, the speed with which they are unfolding (as we’re just beginning to understand) and their interconnectedness and interpenetration into every aspect of human society mean that the solutions we need to embrace are not going to be the same sort of solutions we’re used to thinking of now.

The discussions we see today — whether we’re talking energy sources, farming practices or fashion choices — are not even the right kind of debate. Unable to mentally grapple with the idea that we need to be aiming for total sustainability right now, we talk to death the same series of inadequate baby steps. Faced with the need to reinvent the material basis of our civilization, we argue paper or plastic.

If you want truly dangerous bright green ideas, go way out beyond what the conventional wisdom thinks is possible. The conventional wisdom’s sense of the possible is irrelevant to reality; it’s being melted by climate change and planetary crisis faster than an Alpine glacier. Think, instead, of the implications of ideas like zero energy, zero emissions, zero waste, closed loops, true-cost accounting for the value of ecological services, product-service systems, visible flows, totally transparent backstories, open innovation, green infrastructure, etc. These concepts are really weird, full of new insights and critical uncertainties — and they, or ideas like them, are very quickly going to become the operating principles of our entire society. If we want to avoid a catastrophic collision with ecological reality, we need to change our thinking.

Our ideas of what’s normal, or even what’s possible, will not outlast the next decade.

Most of the solutions being proposed today for climate change and energy shortages are small-bore fixes, but because they involve some modest economic pain, our political systems (in the developed world, especially the U.S.) can barely handle them, and those of the growth-crazy developing world not at all. Even the programs that are both ambitious and politically viable, such as cap-and-trade/carbon offset markets, aren’t really working yet, and address only a slice of the multiple ripple effects we’re already seeing in the environment, water, food, and general living conditions around the planet. Here’s the question – how do you reinvent government and redefine our collective relationship with the environment on the fly, as material conditions are changing and our expectations – economic, ecological, social – can no longer be trusted?

NASA photo

Follow

Get every new post delivered to your Inbox.