Solution to global warming will be found in new technologies

Because of global warming, extreme storms like the one that wreaked havoc in Lahinch, Co Clare, and elsewhere in the west of Ireland last year are now likely to occur about once every 80 years rather than, as previously, every 100 years or so. This was the conclusion of research presented at a recent Environmental Protection Agency lecture by Prof Myles Allen of Oxford University.

While, for Ireland, this change in climate may not sound very dramatic, in other parts of the world, like low-lying Bangladesh, drought-ridden Africa, or Vanuatu, climate change arising from global warming is a more devastating threat.

Even if we take action now the “braking distance” to halt current climate deterioration is many decades.

If urgent action is not taken the world’s climate will get worse at an accelerated pace.

Governments rarely choose to go to their electorates and tell them they are going to make life more expensive and that there will be no go financial reward for their pain. However, it is future generations that would see the payback for higher taxes today that would encourage a reduction in greenhouse gases emissions and the introduction of carbon-saving technologies.

It is our grandchildren and great grandchildren who would benefit from applying the brakes today to bring the momentum of climate change to a slow halt.

Like development aid, action on climate change involves an appeal to altruism on the part of voters – there is little in it for people living in Ireland today.

Policymakers in Europe face a very difficult balancing act in tackling global warming. If they raise the cost of greenhouse gas emissions too much the businesses worst affected will move to more emissions-friendly locations.

While a loss of economic activity in Europe might well be considered an acceptable cost to reduce the West’s contribution to climate change, it could also be counter-productive in terms of reducing global emissions.

For example, if a steel plant moved from Europe to China as a result of a carbon tax and higher electricity prices in Europe, this would definitely reduce European carbon emissions from what they would have been otherwise.

Yet if Europe continues to consume the same amount of steel but now imports it from China the effect on global warming would, at best, be neutral.

However, because Chinese electricity production tends to emit much more carbon per unit of electricity than Europe’s does, the more likely outcome would that global carbon emissions would actually rise as a consequence of Europe’s action.

Dairy farming offers a similar example. Ireland has lower greenhouse gas emissions from our grass-based milk production. If we reduced our milk output to reduce these emissions, but if total world demand for milk remained unchanged, world emissions of greenhouse gases would be increased as production shifted to less carbon-efficient locations.

Goods from China

Over the last 20 years there has been a major relocation of world manufacturing activity with the rise of China and other southeast Asian economies. Both Europe and the US import large amounts of manufactured goods from China.

The manufacturing that has relocated from Europe to Asia tends to be much more emissions-intensive than the industry that remains. As a result, the greenhouse gas emissions embodied in the goods imported into Europe from Asia are much greater than the emissions embodied in European exports.

This pattern is also true for Ireland, where the production process for the bulk of our exports is not carbon intensive.*

In theory this pattern of trade would suggest that, instead of taxing producers of goods for emitting carbon, we should tax consumers based on the carbon embodied in the goods they consume.

This would mean that there would be no incentive to relocate production and consumers would be encouraged to reduce consumption.

While this may be a nice idea in some economists’ heads, in reality it would be utterly unworkable. Carbon inspectors would have to determine the carbon-dioxide embodied in everything from Barbie dolls to giant windmills depending on their country of origin.

In the long run the solution to global warming will have to be found in new technologies.

The alternatives – either dramatically reducing living standards to reduce consumption, or implementing a co-ordinated strategy of carbon taxes across the globe – are unlikely to prove acceptable when the governments of the world meet later this year.

Carbon taxes

So far Europe has sought to take the lead in implementing measures to slow or halt greenhouse gas emissions, but to date the policies adopted have not been very effective. The best strategy remains for Europe to gradually raise the cost of emitting greenhouse gases. Although some relocation of economic activity to elsewhere in the globe could result from higher carbon taxes, if such costs rise only slowly Europe would probably retain the bulk of its activity.

By signalling that the cost of carbon will continue to rise into the future governments will provide incentives for investors to research how best to reduce carbon. Governments can also finance research into new technologies.

Western altruism may also receive a little help from Asian economies beginning to tackle carbon pollution problems in their own self-interest. As Asian economies grow, reducing the level of air pollution becomes an important quality of life issue for citizens.

Measures to make Asian economies more energy-efficient will also help slow the growth in greenhouse gas emissions. However, the rise in global emissions is only likely to be halted when new sources of carbon-neutral energy are available. * ESRI Medium Term Review 2008-2015, page 118 http://iti.ms/1CsYvyF