The Puritans still don’t understand the meaning of the word “waste”

Apparently households are “wasting” as much as £18 a year by continuing to use tumble driers even in the summer months. We’re told that we should all be out there hanging the stuff up from a washing line instead. Quite apart from the fact that a British summer is not a period of guaranteed dryness this is showing a depressing ignorance of the meaning of the word “waste” in an economic sense.

There is one indication of how much richer we all are now though:

Official statistics show that more than 16.5m UK households own either a washer-dryer or a tumble dryer.

Sales of tumble dryers in particular have soared in the past decade. Almost 12.5m households in the UK owned a tumble dryer as of 2013, an increase of 3m since 2003. By contrast, in 1970 just 138,000 homes owned one.

This is all part of that great economic emancipation of women that has been the signal change of the past two generations. As running a household becomes ever more mechanised then both the gender division of labour and the restriction of women to largely household duties simply fade away. But about that waste:

The declining popularity of the traditional washing line is costing British families at least £120m a year, as tumble dryers are routinely used throughout warm summer months.

More than half of all households who own a tumble dryer use it at least once a week during the summer, according to the Energy Saving Trust.

The organisation, a charitable foundation which offers advice on cutting energy bills, said that a typical household could save £18 from their annual electricity bills “by line drying clothes instead of tumble drying” during June, July and August.

It would be rare to find a household that had a budget constraint that bit harshly on £18. And as to whether the spending of that £18 is waste or not is really up to those spending it rather than some bunch of puritan prodnoses. The actual budget constraint that none of us is ever free from is that on our time. And so the question becomes whether, in the minds of those doing it, the time spent with a tumble drier is worth the £18 as against the longer period of time used with the washing line. We’ve good authority as to how to measure this in a theoretical sense too. The Sarkozy Commission (including the laureates Stiglitz and Sen) pointed out that such household labour should be valued at the rate for “undifferentiated labour” or, in more understandable terms, minimum wage. That £18 is 3 hours of minimum wage labour. If using a tumble drier saves three hours over an entire summer as opposed to the alternative washing line then it’s an entirely rational allocation of time and money. It’s simply not waste at all.

Why Roger contradicts himself

Most of us know someone like Roger.  His speciality is that he opposes policies that would achieve his objectives, and supports policies that achieve their opposite.  Roger supports what he calls ‘clean’ energy, yet is adamantly opposed to nuclear power which is among the energy sources with lowest environmental impact.  He is also among those who protest against fracking, even though the gas it produces enable us to phase out the coal-fired power stations that are more than twice as dirty as gas-powered ones.  He argues that fracked gas is a non-renewable fossil fuel, which it is, and is therefore fast running out, which it isn’t.

Roger feels passionately about the plight of the world’s poor, and is concerned that they should not go hungry.  Yet he campaigns to ban the genetically modified crops that can aid their farmers with crops that are more resistant to pesticides, drought and salt water, and can produce increased yields with less chemical fertilizers.  He expresses his sympathy with children in poorer countries, yet opposes the ‘golden’ rice modified with vitamin A that can save hundreds of thousands of third world children from death or blindness every year.  He supports using food crops to make ethanol, a renewable fuel.

He supports buying locally and campaigns against the ‘food miles’ that use energy to transport, even though it is by having us buy their products and crops that poorer countries can lift their populations out of poverty.

Roger is worried that greenhouse gases might be heating up the Earth, yet opposes all proposals that might offer technical solutions to this.  He is against even an experiment to seed areas of ocean with iron to generate algae blooms, increase fish stocks and sequester carbon.  He opposes all proposed ways to sequester carbon, saying it is more important not to emit it in the first place.  He wants experiments banned that would spray fine salt water mist into the lower cloud layers to increase their reflectiveness to incident solar radiation.

Roger’s argument in the above examples is that they act against ‘behavioural change,’ which he says is the only solution to our problems.  Ways that enable us to solve those problems and carry on as we have, growing richer, miss the point in his eyes because he does not want us to be doing that.

If we were to take the objectives at face value, it would be illogical systematically to oppose the means of achieving them.  In the case of Roger, and maybe some others like him, however, I think I detect signs of a deeper, more fundamental motive.  At heart Roger is conservative.  He dislikes the pace and complexity of modern life, and yearns for the measured rhythm of a simpler life.  He has constructed a somewhat fanciful picture of the past which overlooks some of the disease and squalor that accompanied it.  Roger wants us all to live more simply because at heart he dislikes change and the unsettling effect it has on people like himself.  Those of us who are comfortable with change and the benefits it brings will beg to differ…

Will fracking lead to a UK energy renaissance?

Jared Meyer, policy analyst for Economics21 at the Manhattan Institute, wrote an op-ed for City AM detailing the barriers that still prevent the UK from taking full advantage of fracking:

For the first time in six years companies are able to bid for natural gas exploration licenses in the United Kingdom. The UK became a net importer of petroleum and natural gas last year and domestically-produced natural gas now accounts for only a third of consumption. Prime Minister Cameron’s decision to go “all out for shale” is a welcome sign and will aid in reversing the trend away from energy independence. If done correctly, increased energy exploration will also help the economic recovery gain strength.

Three problems still inhibit the UK from taking full advantage of potential gains from fracking. First, the energy exploration permitting process is far too time-consuming. Second, private landowners do not own the mineral rights beneath their lands, leaving them with little incentive to support energy exploration in their backyards. Addressing both these issues will help overcome strong environmentalist opposition, the third obstacle.

This article was originally published in City AM. Read the full article here

Climate change is three times worse than we thought, apparently

A new paper tells us that climate change is actually three times worse than we thought. For there may be tipping points, catastrophic changes, that cannot be worked back from and this shows that the carbon price should actually be three times higher than it is:

Climate policy aims to internalise the social cost of carbon by means of a carbon tax or a system of tradable permits such as the Emissions Trading System set up in the EU. But how do we determine the social cost of carbon? Do we take everything into account that should be taken into account? Most integrated assessment models (Nordhaus 2008, Stern 2007) calculate the net present value of estimated marginal damages to economic production from emitting one extra ton of carbon caused by burning fossil fuel.

However, global warming has many non-marginal effects on both the economy and on the carbon cycle. Climate catastrophes can occur that lead to sudden flooding, hurricanes, desertification, water shortages, etc. Many of such changes may be irreversible. Other catastrophes such as reversal of the Gulf Stream or sudden release of greenhouse gases from the permafrost lead to a sudden and long-lasting change in the system dynamics of the carbon cycle. Such changes in the system dynamics of the economy and/or the carbon cycle are called regime shifts. When such a shift takes place, this is called a tipping point. Scientists predict that at some point, structural changes will occur with effects that are very difficult or even impossible to reverse. The usual marginal cost-benefit analysis of existing integrated assessment models then puts us on the wrong track. The problem is much more serious than we think.

This argument seems, superficially, to have some legs. However, it doesn’t really hold up for their conclusion is:

If the potential tipping point is ignored, our calibration yields, in steady state, a social cost of carbon of $15 per ton of CO2, which is about the same as in well-known integrated assessment models. If the potential tipping point is not ignored, the social cost of carbon increases to $55 or $71 per ton of CO2, depending on whether we take a constant or an increasing marginal hazard rate as a function of the stock of atmospheric carbon. These are big potatoes, we would say. The precautionary returns are 0.6% per year and 0.5% per year, respectively. The need for precaution indeed decreases when emissions are reduced more with a higher tax on carbon.

Splitting the social cost of carbon into the three components provides additional insights. For example, the $71 per ton of CO2 is split into $6 for the marginal damages, $52 for the risk-averting component, and $14 for the raising-the-stakes component. The risk-averting component is by far the largest, and it is clear that ignoring potential tipping points is putting us on the wrong track when discussing climate policy to curb greenhouse gas emissions.

The problem here is that public policy is not based upon a carbon cost of $15. Rather, it’s based on the Stern Review result of $80. Which means that we’re already doing enough to cover the new findings of this paper.

In fact, we’re actually doing too much. The fuel duty escalator has led to us taxing petrol as if the correct carbon price is $160 a tonne CO2-e. The truth is we’re doing too much to avert or mitigate climate change even if (or perhaps especially if) we take all of the scientific consensus about the subject entirely seriously.

The solution to climate change killing all the little fishies

News today that climate change is going to kill off all the little fishies off Alaska. The rise in atmospheric CO2 leads to a similar rise in the ocean where it forms carbonic acid and thus reduces the alkalinity of the water making it hard for various species to operate. This ending up with a reduction in fish as the lower parts of the food chain suffer. The part of all of this that we might have difficulty getting our heads around is that there’s a known technique to deal with this problem: it’s just that the UN insists that we don’t use it. Odd that we’re not actually allowed to do something that will mitigate both climate change itself and also alleviate one of the effects of it.

The story about the fishies is here:

Alaska’s fishing industry could soon be threatened by increasing ocean acidity, says an NOAA-led study to be published in the journal Progress in Oceanography. The acidification is due to increasing carbon dioxide release, which is absorbed by the ocean

Molluscs, such as the aforementioned Red King crab may struggle in acidic water, and find it difficult to maintain their shells and skeletons. As well as this, it has previously been shown in studies that Red King crabs die in highly acidic water, and both it and the Tanner crab grow more slowly in acidic water.

Alaska is particularly threatened by ocean acidification for a number of reasons: cold water will absorb more carbon dioxide than warm water, communities in certain parts of Alaska, namely the South-East and the South-West are reliant on fishing, and there are fewer other job opportunities in these areas than other parts of the state.

OK, is there anything we can do to deal with this?

When a chartered fishing boat strewed 100 tonnes of iron sulphate into the ocean off western Canada last July, the goal was to supercharge the marine ecosystem. The iron was meant to fertilize plankton, boost salmon populations and sequester carbon. Whether the ocean responded as hoped is not clear, but the project has touched off an explosion on land, angering scientists, embarrassing a village of indigenous people and enraging opponents of geoengineering.

The iron did fertilise plankton, there was an algal bloom, fish numbers increased and at least some of that carbonic acid was removed from the local waters, all at the same time. There was even some amount of the CO2 being deposited as nascent rock on the ocean floor and thus it being sequestrated for geologic periods of time. All in all it sounds like a most wonderful technology really, doesn’t it?

The project was also on uncertain legal grounds. Ocean fertilization is restricted by a voluntary international moratorium on geo­engineering, as well as a treaty on ocean pollution. Both agreements include exemptions for research, and the treaty calls on national environment agencies to regulate experiments. Officials from Environment Canada say that the agency warned project leaders in May that ocean fertilization would require a permit.

Other than this, probably illegal, experiment the last official one was done 10 years ago. It’s just great that everyone’s working so hard to find even a partial solution to what we’re generally told is the greatest problem of our times, isn’t it?

We’ve spoken to one of those who studied, in detail, that last official experiment and there’s no doubt that it works, would be extremely cheap and is capable of not only increasing fish numbers but also of sequestering some 1 gigatonne a year of CO2 into rock. But the powers that be won’t let anyone actually do it and there are no further officially approved experiments in the pipeline either. It’s almost as if people don’t want solutions to climate change, isn’t it?