Klimapolitik

Germany has been one of the main drivers of international and EU policy on climate change, and hence one of the key drivers of Irish climate policy.

Until recently, there was political disagreement about whether draconian greenhouse gas emissions where needed, or drastic cuts would be enough.

In the last few months, two documents have appeared that suggest that this is changing. Both are available in German only.

The first paper, by a relatively junior researcher at think tank close to the Chancellery, suggest that (whisper it) the sacred two degrees target is perhaps infeasible, that (a few odd but not entirely crazy people have argued that) there is nothing special about two degrees anyway, and that we should perhaps keep in the back of our minds that one day we may need to consider whether a Plan B might be required. The extremely cautious tone of the paper is indicative of the scale of the heresy.

The second paper does not mince words. It is by the Scientific Advisory Council of the Federal Ministry for Finance, a body of 29 professors. The Council argues that climate change is not as big a problem it is made out to be, but that it can be solved at a relatively low cost with clever policy intervention. It further argues that the first-mover advantage in technological progress is a myth (the second mover is often better off) and that Germany should stop taking the lead as nobody else is prepared to follow.

Harbingers of change to come? Time will tell.

35 thoughts on “Klimapolitik”

  1. “it can be solved at a relatively low cost with clever policy intervention”

    Meaning what, exactly? To my shame I am unable to comprehend academic German.

  2. Excellent news! More nails in the coffin of AGW. I suspect though that the virulent Irish warmists will be the very last people on Earth to accept that AGW is a crock.

  3. I second Jim’s question – what clever policy interventions does the German Council propose and what current Irish policies should be ditched and which should be kept?

  4. That’s funny, the climate scientists I know think the problem is hopeless, and that if humanity is not about to become extinct, the number of humans on the planet is certainly going to decrease dramatically in this century. It would be amusing, if one did not have children to whom one was bequeathing this planet as their living space.

    The Germans seemed to think they could avoid the hard problems coming down the pike, with a switch to biofuels. We now know the a massive switch to biofuels would probably lead to world starvation. So perhaps they’re now trying to rationalize not even following that route.

    Shame about Venice.

  5. Ever heard of expanding earth theory? Maybe more space will be made for our troublesome oceans!

    Australia has claims on over half of Antarctica much of which is not claimed by any other country. If only the ice would melt? Wonder why we are generating more electricity from coal?

    As we enter a mini ice age, due to declining solar activity, the thought uppermost in minds devising “clever policy intervention” is not to look too stupid as they reverse course. I know, let’s blame Chaudry and the UN!

    Alan and buddy
    Why should I tell you the answer?

  6. @Jim
    The Council does not discuss instrument choice in depth, but they do come out in favour of a carbon tax and only a carbon tax.

    @Holbrook
    That would imply that Ireland should ditch its subsidies for energy efficiency and renewables.

  7. I would like to get a few of your opinions on this…..do you not think the problem of peak oil (demand greatly outstripping supply, not that we are going to run out of oil) is something that should be focusing the mind rather than climate change??

    Haven’t heard it mentioned on many discussions here so just wondering what your thoughts are……sorry if I am taking this a bit iff topic!

  8. @De Roiste
    We’re running out of conventional oil and gas. That implies that we will need to invest a lot of money in developing alternatives, and that the energy sector will be very different.

    Climate policy requires the same: a lot of investment, and a restructured sector.

    Unfortunately, the people who run climate policy have little understanding of energy. You would hear environmentalists lament that there is too much oil (climate change) and too little oil (peak oil) at the same time, apparently without a basic logical check.

    While politicians are trying to revolutionise the energy system to save the world from melting, the energy system is quietly revolutionising itself. From a climate perspective, it is worrisome that the market solution to “peak oil” seems to be unconventional oil (tar sands, ultra-deep) and gas (shale) and unconventional use of coal (liquification).

  9. @ RT: “That would imply that Ireland should ditch its subsidies for energy efficiency and renewables.” Absolutely!

    This has to be. If you cannot achieve your target without a taxpayer prosthesis, then it is not economic. It is incurring a future cost. There has to be a constitutional prohibition on the granting of tax subsidies, write-offs, etc. The granting of these tax ‘incentives’ are one of the reasons we have the level of un-repayable debt we have. The citizen taxpayer in this state, and a few others, is close to financial shut-off. When will the cent fall on this one? I guess it won’t until it is too late. The Special Interest groups have too much political influence. Reform, if it ever comes, will be involuntary.

    The energy predicament we face is one of massive, excess consumption. The first line has to be reduce, reduce, reduce. However, if you do go down this route, aggregate economic activity will go into permanent, incremental decline. Now what would that do to incomes? And what will that do for taxes? At what point do the citizens of SS Earth realise that the vessel is foundering?

    OK. Lets scrap this nonsense about doing with less. Burn on and be damned! The oil will become scarcer faster and our principal concern will then be about the supplies of fresh water and food into urban areas.

    “Unfortunately, the people who run climate policy have little understanding of energy. ” Yep. Just delete ‘policy’ and insert ‘religion’. Replace ‘little’ with ‘a vague, inadequate and unstructured’.

    @ De Roiste: Peak Oil! What Peak Oil? Oh, the one that shows that world production of liquids plateaued a few years back! And the unhelpful Export-land Model of Production depletion! This is a Political Economy blog. I hope I’m wrong, but I have a sneaky suspicion that someone may, one day, write a piece on this blog along the lines, “No one saw this (energy catastophe) coming”. Its not coming: its arrived!

    B Peter

  10. suggest that (whisper it) the sacred two degrees target is perhaps infeasible, that (a few odd but not entirely crazy people have argued that) there is nothing special about two degrees anyway

    A “sacred” two degrees, that is “nothing special”. Is one Richard Tol (of the crankversity that is the GWPF) trying to pass himself off as a scientific authority on climate change, once again?

  11. @Brian,

    I was going to post that this report would be “seized upon” by denialists. Then I thought: No, too negative, this is basically good news. Then I read your post.

    “More nails in the coffin of AGW. ”

    Now, Brian, that is not what the report said. Your “seizing upon” and brandishing the report as a club is hardly the most rational and reasonable response.

    It seems to me the report:

    – accepts the facts of AGW
    – argues that the problems that arise from AGW can be mitigated by simple policy steps.
    – argues that Germany (and by extension the EU) should “wait and see” about alternative energy technologies.

    They probably have some sensible suggestions, but unfortunately I cannot read German, so I have to try to get an English translation.

  12. I would agree that the first mover does not necessarily keep advantage. If we look at Ireland we are not a engineering nation.

    We don’t design / build / test new types of boilers or gas turbines. We don’t design / build new types of transformers or cables and we are not involved in new types of battery development.

    From previous discussions on this site it appears great emphasis has been placed on the software which is going to monitor / control the whole new super smart grid. The problem with software is that it is digital, it can be copied and transmitted in seconds. So even if we did compile a smart management program there is no guarantee that it remain in our control.
    You can bet your bottom dollar there would be a army of software programmers on the other side of the world typing away in seconds, compiling the new improved version with better fonts and easier interface menu.

    This happened to IBM and the personal computer. The IBM PC whilst a revolutionary product still used standard components produced by other manufacturers. Only one part “BIOS” was IBM technology. Within a few years this Bios was reverse engineered by other companies and IBM lost control of the industry. So no guarantees about first mover domination.

    In relation to the argument about climate change / peak oil. Irish agriculture has had a very difficult winter. Those farmers who sold their animals prior to the winter are now better off than those who kept their animals. We are having difficulty in coping as it is, let alone contemplating extreme scenarios of global warming.

  13. @Sporthog:
    You mustn’t believe everything Eamon de Valera said. Your “We are not a[n] engineering nation. We don’t […]” sounds odd to me, and might annoy several engineers of my acquaintance. Nations don’t build boilers: people (and companies) do. There is nothing inherent in Irishness that says that boilers etc can’t be built here. Recall that the modern turbine (pace Hero of Alexandria) was designed by an Irishman, Charles Parsons; that Charles Wye Williams made many contributions to the development of (inter alia) steam boilers and ship design; that Nicholas Callan of Maynooth invented the induction coil and the Maynooth battery ….

    Your “We don’t […]”, even if it is grounded on a thorough knowledge of developments in all Irish institutions of learning and research, might be better as “There are currently no large companies designing, building and testing ” but there is no reason why we must assume that that state is inevitable.

    As for the IBM PC, I was using a Victor 9000 before the IBM PC came out. Variable speed disk drives and a Winchester, no less.

    bjg

  14. Thanks Dr. Tol for pointing out these pieces for us non-German readers. I guess the first point is that the first work is written by a think tank and therefore, it is simply a conversation piece, which is usually what policy papers from think tanks are meant to be, not “a nail in the coffin of AGW” as some might hope.

    The second paper I find much more interesting. And I am curious how much of this reaction to not gaining a return on gov’t funded climate related investments is correlated to the poor state of German (and everyone else for that matter) public finances. Politically, it is much tougher to keeping dumping money in when there is no schedule of returns tangible to voters.

    Further more, if Mexico produces a stronger outcome, I wonder if Germany would switch its stance again and replay the first mover mantra of the early 2000’s?

    Implicitly, does this mean Germany no longer pushes for a 30% reduction in the EU for GHG rather than the current 20% goal?

    This should all get very interesting especially given the fact that the current US bill is in trouble due to off shore drilling provisions.

  15. @ Brian J Goggin,

    Perhaps I should have worded my comment above differently. I have a difficulty in understanding how Ireland can be world class, forefront of cutting technology in the Smart grid and the change from the traditional carbon based technology today and maintain control over this development. Its the control of the development which I don’t buy. It sounds too much like spin.

    I agree that there is nothing inherent in Irishness that means we cannot develop heavy industry here. But we all know it is uneconomical to us to do so.

    I accept that there are many Irish people who are very talented and creative in innovation etc. It was not my intention to cause offence to these groups and apologies if I ruffled a few feathers. In fact I could add another to your list, Holland the inventor of the submarine as we understand it today.

    But even if a group of several talented Irish people came together, formed a Irish company, developed innovative technologies / ideas / designs there is no guarantee that it would still be around after a number of years. These companies tend to be identified and merged into bigger corporations etc. In fact a lot of knowledge which has been accumulated by European companies is going east to China.

    Perhaps the reason being is Ireland just never reached critical mass, the market was always too small.

  16. @ Toby: I do not wish to be ‘left behind’ – you know what I mean … … get my consumption in first!!!

    Seriously, I am deeply concerned about the global issues. But just look at our legislators – their behaviour is completely at odds with their espoused beliefs. So what does a Realistic person do? I have written several times before on this site: sentiment always trumps reason, always! It will take an apocalyptic event to focus minds on survival.

    Your response is welcome. It might encourage others to re-tune their intellectual antennae. I say this more in hope than expectation. GW is indeed a problem, but our global supplies of fresh water supplies are in a very precarious state. We may well survive GW, but without fresh water we are extinct.

    B Peter

  17. @EWI
    No. It’s Richard Tol the translator.

    @Sporthog
    Note that the Council argues that Germany, home a great engineering companies, does not have a first mover advantage.

    @BJG / Sporthog
    Ireland is home to great companies and great people, but not too many. A small place can excel in a few things only. Excellence requires experience, so chances are that the Irish will be good at similar things in the future as they are today.

  18. @ Richard,

    Agreed, however even excellence based on experience is not enough anymore.

    For example.

    China has a policy of when a foreign company is based there it must work in tandem with indigenous industry.

    So a European nuclear company with a history of excellence and 60+ years of experience has to share its secrets if it wants to break into the Chinese market. For those companies which have years of experience and displayed excellence their secrets can be unveiled by takeovers, share ownerships etc.

    For these companies it is a major challenge to keep their trade secrets and still market a product for the domestic and foreign markets.

  19. I think there is actually something in the Smart Grid software thing. Nothing like enough by itself to justify what we are doing in electricity generation, but worthwhile even so.

    Software and IT services is one of the very few areas where we have a substantial cluster of indigenous businesses in knowledge-basedindustries, trading internationally. It employs about 15-16,000 people, with sales of about €1.7bn, maybe 60% of which are exports.

    In some important ways, long term prospects have improved with the downturn. Construction and the healthcare system are no longer cannibalising software by sucking in the technically and scientifically minded people, and putting upward pressure on pay.

    Some of software’s best successes have been in areas that have been new to Ireland. The interesting thing is that it is not solely, or even mainly, a matter of building one or two businesses based on proprietary IP. What actually happens is that we build up expertise in an area (such as, for example, mobile technologies) that we retain even when early flagship businesses (such as Aldiscon in the case of mobile technologies) get bought out and even closed. Alumni of these businesses go on to themselves create dozens more businesses, often employing many more than their predecessors.

    The industry has not created any lasting national champions in the mould of Nokia. It would be positive if it did, and we shouldn’t rule out the possibility that it might happen with Smart Grid technologies. I know that if I was involved in setting the direction for ESB International or ESB Networks I’d be working towards that right now. But software doesn’t need to produce a national champion to deliver the economic goods. A bunch of new SMEs will bring a lot of value to the country too.

    Developments in managing the Irish National Grid are at the bleeding edge of electricity network management internationally, because the Grid’s enormous reliance on highly variable wind power, and the rate at which this reliance is increasing. The people involved in developing the Grid are hitting and (hopefully) solving problems ahead of their counterparts elsewhere in the world. It would be wasteful not to take advantage of the know-how they are building, and doing it through software/IT services has a good fit with the competencies we already have as a country.

  20. For clarity, when I say “Alumni of these businesses go on to themselves create dozens more businesses, often employing many more than their predecessors”, I mean employing more in total rather than necessarily in individual companies.

  21. @Richard,

    Hate to throw a spanner in the works, but I’m not sure I agree with the summary of the second article.

    Nowhere – as far as I can see – in this text do the authors suggest that climate change “is not as big a problem as it is made out to be”. In the overview, they do note that that “this advisory report refrains from providing an assessment of the extent or probability of the threat” (p.3) (My translation, from the DE: “Das Gutachten enthält sich einer eigenen Einschätzung des Ausmaßes und der Wahrscheinlichkeit der Bedrohung“).

    Nor is the central point in the text that the first-mover advantage is overstated.

    The central point in the text is that mitigation strategies are, in practice, superior to prevention because the latter depends on a degree of coordination which is absent on the international stage. Mitigation strategies do not suffer from what the authors of this report regard to be an insurmountable externality problem.

  22. @Ribbit
    On your first point, the sentences immediately after the one you translated endorse the more moderate estimates of the impact of climate change.

    On first-mover advantages, I admit I was reading between the lines. I did advise them that, if anyone, Germany had a first mover advantage — and they clearly did not buy my point.

  23. @Brian,

    Many years ago I did some voluntary work in an undeveoped country which suffered from water shortages. It was actually quite a small island that had suffered almost total deforestation, so that the topsoil had washed into the sea, once-forested slopes were rocky and barren & reminded me of the Connemara Mountains of my youth.

    The island still suffers from drought, especially if the annual cyclones miss the area. However, it sea levels rise, they will find their most habitable and fertile remaining areas becoming inundated. I am not sure which would serve them best – reducing global warming, or short-term aid for their water problems. I think they are an outlying, not-very-important-group in the grand scheme of things whose voices will almost certainly not be heard.

    I am also a trifle suspicious of the well-heeled and their sudden concern for malaria-ridden and drought-stricken countries, now that a real sacrifice may be demanded over climate change. I am sure you are not one of those! There seemed to be very little interest when these problems were teh main priority.

  24. Talking of Germany and realpolitik… the Euro suddenly took a dive and there’s some talk of Germany making a unilateral move against short selling??

  25. @ Richard Tol the Translator

    A paper written in German used the English phrasing “sacred” and “nothing special”? Intriguing.

  26. @Richard Tol

    It appears to me that the only policy you are advocating to counteract GW is a carbon tax. The German paper makes mention of mitigating the effects of GW. My understanding from comments made on this blog is that you are against subsidising renewables or any govt backing for research into renewables, improvements in insulation etc. If you have the time could you let me know if there are any other policies (apart from the carbon tax) that you think the Irish govt should be implementing to counteract GW or point me in the direction of any papers or websites that put forward policies that you think are the correct ones to be following? I understand if you don’t have time to do this, but if you do it would be much appreciated by myself and perhaps by others who follow your posts. Cheers, and good luck with your work.

  27. @Holbrook
    Climate change is a single externality, so a carbon tax is sufficient.

    Research is a public good, and so should be supported by the government. There is nothing special about research into renewables, so such research should be supported from the general research budget — if it can compete on quality with research into cancer and 17th-century Irish music.

  28. There is nothing special about research into renewables

    Apart from it being generally recognised as an urgent public priority, as a combination of (a) oil has reached peak and (ii) the small matter of climate change, “nothing special” (to coin a phrase) as it may appear to certain practitioners of the social science known as economics.

  29. @Richard

    I should probably let this go, at the risk of sounding like a pimply-faced pedant trying to blow his own Trompete, but hey, it’s the internet and where else can I get away with doing it:

    “This advisory report refrains from providing an assessment of the extent or probability of the threat. However, if one considers the available studies in summary, annual costs of climate change under the 2 to 3 degree global warming scenario would be at a level of 1 to 2 percent of world GDP, whereby it should be noted that costs vary considerably across countries.

    On the other hand, if warming reaches 6 degrees – a scenario which cannot be ruled out given the current level of scientific understanding – the effects could be far more serious. Actual costs under such a scenario are difficult to estimate, because the uncertainty concerning costs increases greatly for higher temperature projections.”

    (From this DE text: Das Gutachten enthält sich einer eigenen Einschätzung des Ausmaßes und der Wahrscheinlichkeit der Bedrohung. Betrachtet man aber die vorliegenden Studien im Überblick, so verursacht der Klimawandel bei einer globalen Erwärmung von 2 bis 3 Grad Celsius jährliche Kosten in Höhe von 1 bis 2 Prozent des Welt-Bruttoinlandsprodukts, wobei sich die Kosten zwischen den Ländern ganz erheblich unterscheiden. Sollte die Erwärmung hingegen 6 Grad Celsius erreichen, was sich nach derzeitigem Wissensstand nicht ausschließen lässt, können die Auswirkungen gravierendere Ausmaße annehmen. Die Kosten lassen sich in derartigen Szenarien allerdings nur schwer abschätzen, weil die Unsicherheit über deren Ausmaß mit zunehmender Erwärmung stark zunimmt.)

    This is as a general note in the overview section of a 30 page document. I’m sorry, but this simply does not justify a summary of this report in which the principal point is purported to be:
    “The Council argues that climate change is not as big a problem as it is made out to be”.

  30. The German Finance Ministry is also concerned that it not only has to pay for Germany’s abatement strategies but also for it’s fair share of the abatement and adaptation strategies of the developing world. However even the sums mentioned for 2020 pale into insignficance in comparison to the costs to Germany of keeping the Euro intact.
    I think Richard’s point about carbon tax is undeniable though. Our overwhelming urge to be seen to be doing something results in us doing many things badly rather than a single thing well which will provide the desired results.

  31. @Richard Tol

    Thanks for your response. As I don’t speak German it would be great to know (apart from carbon tax) what “relatively low cost” “clever policy intervention” can be put in place to tackle climate change. I tried Google translator on the document but it is hard going to read through a poor translation of an academic text.

  32. I like Richard’s comment that “While politicians are trying to revolutionise the energy system to save the world from melting, the energy system is quietly revolutionising itself.”

    Indeed, the issue of climate change is not well connected with the issue of scarce environmental resources such as fossil fuels etc. I think politicians do no deliver the full picture of the problems we are facing at the moment. Though, everything is nicely written on the paper, it is not well presented for the wider public. The climate change issue is well marketed and it seems that it reached everyone’s ears, but the issue of the shrinking fossil fuel resources is left behind. Some of my friends who are not academics feel that a wording for a policy instruments devoted to tackle global warming is not right. They suggest that it would be better to have something like an environmental tax rather than a carbon tax which would reflect the both sides of the story. I agree with them.

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