In today’s Irish Times
Year: 2010
Conservation and behavior change alone will not get us to the dramatically lower levels of CO2 emissions needed to make a real difference. We also need to focus on developing innovative technologies that produce energy without generating any CO2 emissions at all.
People often present two timeframes that we should have as goals for CO2 reduction – 30% (off of some baseline) by 2025 and 80% by 2050.
I believe the key one to achieve is 80% by 2050.
But we tend to focus on the first one since it is much more concrete.
We don’t distinguish properly between things that put you on a path to making the 80% goal by 2050 and things that don’t really help.
To make the 80% goal by 2050 we are going to have to reduce emissions from transportation and electrical production in participating countries down to zero.
You will still have emissions from other activities including domestic animals, making fertilizer, and decay processes.
There will still be countries that are too poor to participate.
If the goal is to get the transportation and electrical sectors down to zero emissions you clearly need innovation that leads to entirely new approaches to generating power.
Should society spend a lot of time trying to insulate houses and telling people to turn off lights or should it spend time on accelerating innovation?
If addressing climate change only requires us to get to the 2025 goal, then efficiency would be the key thing.
But you can never insulate your way to anything close to zero no matter what advocates of resource efficiency say. You can never reduce consumerism to anything close to zero.
Because 2025 is too soon for innovation to be completed and widely deployed, behavior change still matters.
Still, the amount of CO2 avoided by these kinds of modest reduction efforts will not be the key to what happens with climate change in the long run.
In fact it is doubtful that any such efforts in the rich countries will even offset the increase coming from richer lifestyles in places like China, India, Brazil, Indonesia, Mexico, etc.
Innovation in transportation and electricity will be the key factor.
One of the reasons I bring this up is that I hear a lot of climate change experts focus totally on 2025 or talk about how great it is that there is so much low hanging fruit that will make a difference.
This mostly focuses on saving a little bit of energy, which by itself is simply not enough. The need to get to zero emissions in key sectors almost never gets mentioned. The danger is people will think they just need to do a little bit and things will be fine.
If CO2 reduction is important, we need to make it clear to people what really matters – getting to zero.
With that kind of clarity, people will understand the need to get to zero and begin to grasp the scope and scale of innovation that is needed.
However all the talk about renewable portfolios, efficiency, and cap and trade tends to obscure the specific things that need to be done.
To achieve the kinds of innovations that will be required I think a distributed system of R&D with economic rewards for innovators and strong government encouragement is the key. There just isn’t enough work going on today to get us to where we need to go.
The world is distracted from what counts on this issue in a big way.
From: http://www.thegatesnotes.com/Thinking/article.aspx?ID=47
Gates is saying what I and others have been saying all along. Perhaps people will listen to him.
Following on from last week’s post on Barclay’s and their comments on TBTF European banks, it’s interesting to see that President Obama today announced that he will be proposing legislation that will limit proprietary trading activities of large banks as well as impose limits on their growth in liabilities. Pretty clearly, whatever gets proposed isn’t going to please former IMF chief economist, Simon Johnson, but it’s still good to see these issues being addressed.
I’d guess it’s highly unlikely that any such bill would get passed through the US Congress—and I would have said this even before yesterday’s Senate election in Massachusetts. Indeed, I suspect Obama probably also figures it’s a long shot and that this annoucement and the proposed bank tax are primarily smart political moves from the President: “So if these folks want a fight, it’s a fight I’m ready to have” is just the kind of language to get the currently disappointed Democratic base charged up and it’s probably not a bad fight to have lost and thus have as a live issue going into the midterm elections.
From a European perspective, I suspect this may be an area where there would be more political agreement in Europe than in the US. An optimist might hope that the calls for limits on bank size from Lord Turner and other senior figures in the UK could lead to agreement at European level. Even more optimistically, one might hope that this could be an issue on which the new European Systemic Risk Board could also make some running to show it’s not just going to be a talk shop. A pessimist might reckon that both the EU and ESRB are far too unwieldy to make progress on such a complex issue.
Today’s Irish Times carries an excellent article by Mike Casey, formerly head of economics at the Central Bank, listing questions he believes should be addressed by the banking inquiry.
(guest post by Michael Burke)
Today’s Financial Times carries an interesting piece from Martin Wolf on the severe difficulties being faced by Greece as it attempts to come to terms with its current economic crisis. http://www.ft.com/cms/s/0/eeef5996-0532-11df-a85e-00144feabdc0.html
The FT’s veteran commentator places Greece’s plight in the overall context of developments within the EU, and so has something to say about Ireland. Without minimising the problems of any country, he clearly shows that it is Greece which is an extreme case, not, as is often claimed here, Ireland.
“The problems of Greece are extreme, because it alone of the vulnerable eurozone member countries has both high fiscal deficits and high debt. Other countries with large fiscal deficits are Ireland (12.2 per cent of GDP in 2009) and Spain (9.6 per cent). But, while net public borrowing was 86 per cent of GDP at the end of 2009 in Greece, according to the OECD, in Ireland and Spain it was only 25 and 33 per cent, respectively. Meanwhile, Italy, with a net debt ratio of 97 per cent, had a deficit of “only” 5.5 per cent. Portugal is in the middle, with net debt of 56 per cent of GDP and a deficit of 6.7 per cent of GDP. Thus, the challenge for Greece is larger and more urgent than for the others.”
He also warns that those pinning their hopes on export-led growth are in perliously crowded boat in choppy waters, as they now comprise (at least) 70% of the world’s economy.
Finally, he has a very illuminating chart of unitl labour costs based on OECD data. Although the chart is small, the trend for Ireland is clear and unmistakeable. Ireland has already experienced a sharp reduction in unit labour costs relative to Greece, Italy and Spain. Of course, Germany is an outlier, with unit labour costs way below that group. But, although it isn’t stated by Martin Wolf, that’s based on the much stronger growth of German investment.