Great piece and a clear argument to frame policy to regulate directly for the outcomes you want. In this case it's not so much the easy access to means to do physical work that is a problem (cheap energy), it the often-attendant emissions of GHG gases that is. Thus the correct economic solution is an escalating carbon tax, and that solution is mostly a non-starter politically in many regimes. So arises the pragmatic need to 'incentivize' low-carbon energy - it's the other economic approach that is less efficient (because it economically indirect) but politically possible. The analogy in housing politics is that a direct land value tax would most clearly state political values through economics, but such tax increases are heavy political lifts. Inclusionary zoning levies 'seem' fair to voters, and are assessed on the parties seen to profit from each individual increase in development density. So though economically inefficient in many ways, inclusionary zoning requirements and commercial linkage fees clear the political hurdles necessary (in some US cities) to partially fund social housing programs. I found that working in public policy required tending to political realities as if they were as material as economics or engineering, which can be quite frustrating. Changing what is possible politically often has much longer time-frames than the immediacy of a community's needs.
When we found oil, we stopped hunting whales to obtain whale oil for lighting.
Once you learn to use energy to do work, you tend to go bigger and better, wider and longer and stronger so more of everything gets used. It's not that you have a fixed requirement for energy.
As the price of natural gas rose in Britain and Holland last winter, the price of coal increased by more in proportion. A Kg of gas releases 60% more energy than a Kg of black coal but the coal is possibly cheaper per megawatt hour of power produced than gas. Coal can also be accumulated more readily. The cost of storage is less.
The modern environmental movement doesn't look at the data when they assert that warming is occurring, it tends to discount the effect of cities, discount the effect of falling vegetation cover and discount the impact of the sun on where the wind is coming from. Ecologists don't seem to do numbers very well. As for the models, there are lots, and every one of them different.
I need time to look closer at this piece but that said, where you write "If you’ve read Elinor Ostrom’s approach to resource management, you will get what I mean". I do get what you mean and often make similar arguments myself.
Interesting discussion, but isn’t it true that per capita consumption of fossil fuel resources has been declining over time? That would seem to suggest that as population growth slows in places like China then overall consumption of fossil fuels will rise. Obviously Africa is still growing briskly, but they seem to be a smaller overall consumer of resources.
Also, you say “technology won’t reduce our use of materials” but what about dematerialised technology growth? I’m thinking specifically about work from home becoming much more popular. Do you think that is a form of technology that could decrease overall resource consumption?
Sep 3, 2023·edited Sep 3, 2023Liked by Cameron Murray
But it is quite silly to think of coal or oil being "finite." There is just a cost of production that varies with technology of extraction. "Decarbonization may or may not the equilibrium point of taxing CO2 emissions and falling cost of using non-CO2 emitting energy sources to run direct air capture and sequestration of CO2. We shouldn't care how much unoxidized carbon remains in the ground. What we care about is how much stays on the atmosphere.
This makes sense generally. Although we still need to reconcile this with what is happening in the electricity sector in Aus. In the NEM, all new investment is going into renewables, storage, and a bit of gas peaking. Coal generators are exiting and not being replaced. Supposedly, the cheaper cost of renewables should lead to increased use of coal? Yet we aren't seeing that in the NEM. The only reason I can think of is the perceived risk of coal makes it uninvestable for new projects, and state subsidy of renewables infrastructure etc.
Clearly, there is some sort of political culture that acts as a de facto agreement to prohibit coal. But perhaps the point is this only works in jurisdictions with that agreement. Whereas developing countries will be able to continue to use and access coal at increasingly cheaper prices as we voluntarily curtail our own demand, until they also undertake that voluntary agreement.
Great piece and a clear argument to frame policy to regulate directly for the outcomes you want. In this case it's not so much the easy access to means to do physical work that is a problem (cheap energy), it the often-attendant emissions of GHG gases that is. Thus the correct economic solution is an escalating carbon tax, and that solution is mostly a non-starter politically in many regimes. So arises the pragmatic need to 'incentivize' low-carbon energy - it's the other economic approach that is less efficient (because it economically indirect) but politically possible. The analogy in housing politics is that a direct land value tax would most clearly state political values through economics, but such tax increases are heavy political lifts. Inclusionary zoning levies 'seem' fair to voters, and are assessed on the parties seen to profit from each individual increase in development density. So though economically inefficient in many ways, inclusionary zoning requirements and commercial linkage fees clear the political hurdles necessary (in some US cities) to partially fund social housing programs. I found that working in public policy required tending to political realities as if they were as material as economics or engineering, which can be quite frustrating. Changing what is possible politically often has much longer time-frames than the immediacy of a community's needs.
When we found oil, we stopped hunting whales to obtain whale oil for lighting.
Once you learn to use energy to do work, you tend to go bigger and better, wider and longer and stronger so more of everything gets used. It's not that you have a fixed requirement for energy.
As the price of natural gas rose in Britain and Holland last winter, the price of coal increased by more in proportion. A Kg of gas releases 60% more energy than a Kg of black coal but the coal is possibly cheaper per megawatt hour of power produced than gas. Coal can also be accumulated more readily. The cost of storage is less.
The modern environmental movement doesn't look at the data when they assert that warming is occurring, it tends to discount the effect of cities, discount the effect of falling vegetation cover and discount the impact of the sun on where the wind is coming from. Ecologists don't seem to do numbers very well. As for the models, there are lots, and every one of them different.
They mistake intermediate objectives for final objectives.
I often make the whale oil argument too.
I need time to look closer at this piece but that said, where you write "If you’ve read Elinor Ostrom’s approach to resource management, you will get what I mean". I do get what you mean and often make similar arguments myself.
Interesting discussion, but isn’t it true that per capita consumption of fossil fuel resources has been declining over time? That would seem to suggest that as population growth slows in places like China then overall consumption of fossil fuels will rise. Obviously Africa is still growing briskly, but they seem to be a smaller overall consumer of resources.
Also, you say “technology won’t reduce our use of materials” but what about dematerialised technology growth? I’m thinking specifically about work from home becoming much more popular. Do you think that is a form of technology that could decrease overall resource consumption?
But it is quite silly to think of coal or oil being "finite." There is just a cost of production that varies with technology of extraction. "Decarbonization may or may not the equilibrium point of taxing CO2 emissions and falling cost of using non-CO2 emitting energy sources to run direct air capture and sequestration of CO2. We shouldn't care how much unoxidized carbon remains in the ground. What we care about is how much stays on the atmosphere.
This is a fantastic book that goes into just how many 'rocks' we move around. The 1st world has externalised production of goods & we don't see how the world really functions. https://www.goodreads.com/book/show/119305139-material-world
This makes sense generally. Although we still need to reconcile this with what is happening in the electricity sector in Aus. In the NEM, all new investment is going into renewables, storage, and a bit of gas peaking. Coal generators are exiting and not being replaced. Supposedly, the cheaper cost of renewables should lead to increased use of coal? Yet we aren't seeing that in the NEM. The only reason I can think of is the perceived risk of coal makes it uninvestable for new projects, and state subsidy of renewables infrastructure etc.
Clearly, there is some sort of political culture that acts as a de facto agreement to prohibit coal. But perhaps the point is this only works in jurisdictions with that agreement. Whereas developing countries will be able to continue to use and access coal at increasingly cheaper prices as we voluntarily curtail our own demand, until they also undertake that voluntary agreement.