What should Australia do about a slowly warming world? Join a small group of European countries who have more permits to sell than their own industry can manage to use? Join hands with a coalition of the desperate in enacting one of the front-runner geo-engineering solutions, such as emitting tiny reflective particles high in the atmosphere in the hope of reflecting enough sunlight? Or just do nothing for the time being, perhaps researching this or that option and simply slowly adapting to the changes as they happen?
A world-wide Emission Trading Scheme that truly measures all the relevant forms of emissions and enforces a price high enough to truly bring back the stock of CO2 in the atmosphere to pre-industrial revolution levels is not on the cards. It would require a political commitment that lasts for decades, if not hundreds of years. It by necessity should involve all major countries, lest one would start to free-ride on the others and attract all the industry that is emission-intensive. It should stand firm globally, election after election in each of the countries. Within countries, the political will would have to be strong enough to overcome the temptation of provinces and councils to free-ride. To get the kind of reduction of carbon usage one would need, all things involving fossil fuels or equivalents in terms of emissions and uses (such as cooking oil!) would have to become prohibitively expensive: easily 100 to even 1000 dollars per litre at present estimates of demand elasticity. Imagine policing that in every home everywhere in the world!
In short, there would have to be a world-wide consensus on a level of emissions, a universal monitoring agency, and an international enforcement mechanism with enormous coercive powers. And don’t underestimate the needed coercive powers: if one is to keep 200 countries in line for thousands of election cycles, one really needs to be able to threaten with nothing less than a take-over. Whoever polices this scheme would thus need the power to invade large countries and to sanction all politicians at any level who might subvert the process for local gain.
If you reflect on this minimum package an ETS needs to have to ‘do the job’, you quickly realise it is a fantasy. An ETS on this scale only makes sense in an imaginary world where measurement and enforcement are easy, and political will indeed can be kept up at a worldwide level for generations. It is the sort of fantasy that underlay the communist project and, once again, reality will prove economists like Von Mises right: there are limits to what can be monitored and enforced. Indeed, I find it a little sad that so many economists and scientists allow themselves to be seduced by such command-and-control fantasies. I am yet to meet a senior politician who is naive enough to believe he could organise such a thing. Of course politicians play along -‘we, the population’ demand that they play along – but meanwhile they are simply building more coal-fired power stations, signing more coal export permits, and putting up import barriers against cheap Chinese solar panels.
What about geo-engineering, then? We do not yet know which forms of geo-engineering are the safest and most cost-effective. There is also no coalition of the desperate to join. Worse, one should expect other countries to heavily sanction us if we tried to geo-engineer on our own, and they would laugh us out of the room if we tried to set up such a coalition. We are simply too small to credibly start in that direction ourselves whilst the bigger players are not really worried.
Why are the bigger players not worried enough about this, you may ask, despite UN climate marketers using natural disaster that come along to preach us about the upcoming doom and gloom and how we are now paying the price for our wicked ways? Well, the world is not worried because the world as a whole is doing great. The world economy is projected to grow another 3% this year, heavily concentrated in the poorer regions of this world. This growth is accompanied by less poverty, longer life, better public services, and, yes, greater usage of fossil fuels. Humanity is slowly rising out of centuries of poverty and warfare, and part of that rise involves burning off our fossil fuel heritage as fast as we can dig it up. One might say we are un-sequestering our coal fields and shale oil/gas at an unprecedented pace!
Compared to the immediate benefits of economic growth, long-run environmental worries are always going to come second, politically speaking. Indeed, Australia’s last election was once again fought with both parties first and foremost promising more economic growth. This focus on growth-above-all shows you what politicians think we actually value most!
So if an ETS is a fantasy and there is as yet no coalition of the desperate in sight on geo-engineering, what should we do?
We should simply adapt to the changes as they emerge and meanwhile resist the temptation to join in the expensive symbolism of an ETS. We should hope that the huge incentives already in place for coming up with cheap non-carbon energy will deliver something useful (solar perhaps?). We should let the individual government departments worry about how they should adapt to a changing climate, hence allowing the town planners to worry about ensuring there is enough shade and high enough dikes, and the health planners to worry about air conditioning in old people’s homes, etc.
Meanwhile, we should join the Royal Society, the EU, the Gates Foundation, and others who are researching forms of geo-engineering so that we know what to try if we become desperate enough. The ‘something must be done about the coming apocalyse’ brigade will keep making noises but until they wake up to the fact that an ETS is just expensive symbolism leading nowhere, wise policy makers should ignore them as much as possible.