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The Economic Damage of Climate Denial

Posted on 3 October 2012 by dana1981

When you start talking about economics, the eyes of many a climate science geek (present company included) begin to glaze over.  However, this is a critical subject.  When you ask a climate contrarian why they won't support climate action just in case they are wrong about the science, the contrarians will invariably assert that pricing and reducing carbon emissions will harm the economy.  However, this assertion is in direct contradiction with the body of climate economics literature, which actually shows the opposite is true.

This post examines a new paper by Johnson and Hope (2012) which evaluates the overall cost of carbon emissions via climate change damages.  Key points when these costs are taken into consideration:

  • current estimates of the overall costs of carbon emissions (via damage from climate change) are generally too low
  • when those costs are taken into account, solar energy is already cheaper than coal, and wind is probably cheaper than natural gas (both are already cheaper than coal)
  • by failing to put a price on and reduce carbon emissions, and by continuing to rely on fossil fuels, we are damaging the economy

The social cost of carbon (SCC) is effectively an estimate of the direct effects of carbon emissions on the economy - it estimates how much damage our emissions cause via climate change, or how much it will cost us to adapt to climate change.  The SCC takes into consideration such factors as net agricultural productivity loss, human health effects, property damages from sea level rise, and changes in ecosystem services.

The SCC is a difficult number to estimate, but is key to any cost-benefit analysis of climate legislation.  The main argument against putting a price on carbon emissions is that doing so will harm the economy.  The only way to evaluate this assertion is to compare the costs of carbon pricing to the benefits (the avoided costs from climate change damage), and the benefits are measured via the SCC.

A new paper by Johnson and Hope 2012 (JH12) notes that the U.S. Interagency Working Group on the Social Cost of Carbon (hereinafter "Working Group") published its first SCC estimates in 2010, with a central value of $21 per metric ton of CO2, suggesting that economic analyses also be performed for SCC values of $5, $35, and $65.  JH12 note that these figures have been criticized as too conservative for several reasons.

"These estimates have been criticized for relying upon discount rates that are considered too high for intergenerational cost–benefit analysis, and for treating monetized damages equivalently between regions, without regard to income levels."

JH12 re-estimate the SCC values using a range of discount rates and methodologies they consider more appropriate for the very long time horizons associated with climate change.  As a result, they estimate the SCC is several times higher than the Working Group estimate.

Equity Weights

JH12 note that the Working Group approach did not assign “equity weights” to damages based upon relative income levels between regions.  In this approach, a dollar’s worth of damages occurring in a poor region is given more weight than one occurring in a wealthy region.  This is because as JH12 note,

"poorer regions are expected to have far less income to cope with damages than are wealthier regions, a problem compounded by the fact that they are also expected to bear more of the damages while having contributed the least to the problem"

That poorer regions are expected to be the most impacted by climate change was demonstrated by Samson et al. 2011 (Figure 1).


Figure 1: Per capita emissions vs. vulnerability to climate change, from Samson et al. (2011)

In their paper, JH12 do apply equity weights in their SCC calculations.

Discount Rates and Roberts Otters

The term 'discount rate' refers to the time value of money - how much more  a dollar is worth to us today than next year, related to interest rates.  A high discount rate means we would much rather have money today than in the future.

This is a key variable in determining the proper SCC.  The costs of emissions reductions are primarily incurred in the short-term, whereas the economic benefits of emissions reductions (the avoided costs from climate change damage) mainly occur in the future.  Thus if we say a dollar is worth much more now than in 30 years, emissions reductions costs are weighted much more heavily than the benefits of avoided climate damage, resulting in a lower SCC. 

For example, JH12 note that 25 years from now, for a 5% annual discount rate, $100 worth of climate damage has a present value of only $30 ($100/[1.0525]), due to the effect of compound interest.  The present value of $100 worth of damage falls to 76 cents 100 years in the future if using a 5% discount rate.  Thus the lowest SCC estimates, for example from economists Richard Tol and William Nordhaus, tend to result from assuming very high discount rates (3 to 5%).

There are two main justifications for using a high discount rate - the assumption that future generations will be wealthier than today's (and their increased wealth will more than offset the costs of climate change), and the opportunity cost of foregone investments (money spent reducing emissions could have been invested elsewhere).

JH12 criticize the Working Group for selecting relatively high discount rates.  The Working Group used 2.5%, 3%, and 5% (recommending 3% for estimating the SCC central value), based on current market interest rates, which they argued avoids the need for imposing subjective values.  But that's a problem because climate change has costs that are difficult to quantify economically - for example the value of human life, and thus the cost of people dying of starvation if there is insufficient food as a result of agricultural damage from climate change.  Using a 3% discount rate completely neglects the "subjective" cost of human suffering and human life.

JH12 also argue that the Working Group did not consider the full range of consumption interest rates observed in markets, nor intergenerational discount rates established in the economics literature and recognized in government guidelines.  They note that in a 2008 technical support document, the U.S. Environmental Protection Agency (EPA) suggested a discount rate between 0.5% and 3%, noting:

"A review of the literature indicates that rates of three percent or lower are more consistent with conditions associated with long-run uncertainty in economic growth and interest rates, intergenerational considerations, and the risk of high impact climate damages (which could reduce or reverse economic growth)"

As discussed above, one of the main justifications for using a high interest rate is the assumption that future generations will be wealthier.  However, as the EPA notes here, major climate impact damages could prevent that from happening, if we have to devote major financial resources to adapting to climate costs.

As one counter-example to the Working Group, the Stern Review for the British government used a 1.4% discount rate.    There are many other reasons for using a lower discount rate, for example the fact that money isn't everything, and as noted above we also need to consider the climate-related suffering of future generations.  Dave Roberts has a good discussion of discount rates along with photos of otters to keep your interest, since this isn't the most enthralling subject to read about.

bored otter

In their study, JH12 use discount rates of 1%, 1.5%, and 2%, and compare their results to those in the Working Group's analysis with higher discount rates.

What is the Appropriate Discount Rate?

So JH12 argue for a discount rate between 1% and 2%, whereas the Working Group used 2.5% to 5%, the Stern Review used 1.4%, and more conservative economists use 3% to 5%.  But which is right?

Well, the answer is somewhat subjective, which is why the Working Group decided to try and remove subjectivity and simply choose conservative market-based values.  But as discussed above, there is a very strong case for lower discount rate values.  What if we split the difference?

Weitzman (2007) in discussing the Stern Review notes that for interest and discount rates, splitting the difference is mathematically not the same as taking the average.  In his terminology, "r" is the interest rate (emphasis added):

"A chance of r = 6 percent and a chance of r = 1.4 percent are not at all the same thing as splitting the difference by selecting the average r = 3.7 percent.  It is not discount rates that need to be averaged but discount factors.  A chance of a discount factor of e−6 a century hence and a chance of a discount factor of e−1.4 a century hence make an expected discount factor of 0.5e−6 + 0.5e−1.4 a century hence, which, when you do the math, is equivalent to an effective interest rate of r = 2 percent...with the above numbers it is a lot closer to the Stern value and is not anywhere near the arithmetic average of r = 3.7 percent."

So this also strenghthens the case for using discount rate and SCC values in the JH12 range.  We should note that Weitzman (2007) ultimately argued for discount rates in the 2–4% range, as opposed to the 6–7% range.  However, now that we are considering discount rates in the 1–5% range, splitting the difference would result in a discount rate of ~1.7%.

Results and their Importance

JH12 find central SCC values of $266, $122, and $62 per metric ton of CO2 using discount rates of 1%, 1.5%, and 2%, respectively.  They also estimated SCC using declining discount rate schedules (UK Green Book and Weitzman), finding central values of $55 and $175 per metric ton of CO2, respectively.  These central SCC values exceed the Working Group central value by factors of 2.6 to 12.7.

So what does this mean?  Well, the break-even point between carbon emissions reductions' costs and benefits is estimated at around $5-10 per ton of CO2 (Figure 2), meaning that if the real-world cost of carbon emissions exceeds $10 per ton, the benefits of carbon pricing will exceed the costs.  

$10 per ton is essentially the lowest possible value for SCC, if we use a very high discount rate of 5%.  Using more justifiable discount rates, SCC is between $55 and $266 per ton of CO2.  In other words, the benefits of reducing CO2 emissions far outweigh the economic costs.

Figure 2: Costs (light blue and red points) and Benefits (dark blue and purple points) vs. SCC values ($ per ton of carbon dioxide) using two economic models (ADAGE and IGEM), from New York University School of Law's Institute for Policy Integrity.  Note the x-axis label contains a typo - SSC should read SCC.

Note that even exceptionally conservative economists like William Nordhaus - whose SCC central estimate is only around $9 per ton of CO2 (in current dollars) - argue that carbon emissions reductions will benefit the economy.  Nordhaus has frequently been cited by climate contrarians, and his work misrepresented to argue against reducing emissions.  Nordhaus recently decided to set the record straight:

"My research shows that there are indeed substantial net benefits from acting now rather than waiting fifty years [to reduce CO2 emissions]...the loss from waiting is $4.1 trillion."

And remember, those results are based on an SCC of around $9 per ton of CO2 emitted, whereas JH12 argue that more appropriate discount rates put SCC between $55 and $266 per ton.  There is simply no question that putting a price on carbon emissions will result in a net savings and benefit the economy, even under the most conservative estimates.

Which Energy Sources are Actually Cheapest?

A frequent argument from opponents to emissions reductions and carbon pricing, for example John Christy, is that "cheap" fossil fuel energy is key to the development of poorer nations.  However, in claiming that fossil fuels are cheap, this argument neglects the climate impacts from associated greenhouse gas emissions - the SCC (not to mention neglecting the fact that poorer nations tend to be most impacted by climate change, as illustrated in Figure 1). 

This raises an important question - when we include the SCC, which energy sources are actually the cheapest?  JH12 examine this question for coal, natural gas, wind, and solar photovoltaic (PV) energy technologies (Table 6), with some caveats that their break-even SCC values are conservative.

"New natural gas and wind are competitive over new coal absent any pollution costs, and therefore no SCC is required to make them cost-effective. An SCC...of $50, would justify building solar photovoltaic over coal...An SCC of $215 would justify solar over natural gas....Wind would require an SCC of $74 to be cost-effective over natural gas."

"The break-even SCCs presented here are conservative in three respects. First, the SCC grows over time, whereas the SCCs used here are for 2010.  Accounting for the growth of SCCs over time would increase the cost of generation (inclusive of carbon damages) with coal or gas for a given starting SCC, reducing the 2010 SCC that corresponds to break even generation costs. Second, technological innovation may continue to drive down costs of wind and solar in the future, further lowering the break-even SCC. Third, we do not account for externalities other than air emissions from the power plants, such as methane emissions from natural gas wells and land disturbance from coal mining."

table 6

According to their results, solar PV energy is already cheaper than coal if we use a discount rate of 2%, and the price of solar PV technology is also falling rapidly.  Wind energy is also cheaper than natural gas if we use a discount rate between 1.5% and 2%, and solar PV is cheaper than natural gas for a discount rate between 1% and 1.5%.


There are several very important points we can take from this research.

  • The current range of SCC values used by the U.S. government is too conservative.  An appropriate central estimate would be around $100 per ton of CO2, with a range between $21 and $266 per ton.
  • This central estimate exceeds the break-even point between carbon emissions reductions costs and benefits ($5-10 per ton) by an order of magnitude.  The break-even point also falls below the range of appropriate SCC values ($21 to $266 per ton).  This means we can be very confident that reducing carbon emissions will result in a net economic benefit.
  • Even the most conservative economists agree that reducing carbon emissions will result in a net economic benefit.
  • Solar PV energy is probably already cheaper than coal energy, and wind is probably cheaper than natural gas, when carbon emissions costs are considered.
  • Overall, by failing to put a price on and reduce carbon emissions, and by continuing to rely on fossil fuels, we are damaging the economy.  Those who argue the converse are failing to account for the costs of damage caused by climate change.

It's also worth noting that a new report from the Congressional Research Service concluded that a much more modest carbon tax of $20 per ton of CO2 - on the very low end of the appropriate SCC range - could cut the projected 10-year deficit in the USA by 50 percent, from $2.3 trillion down to $1.1 trillion.  Another new report by the DARA group and the Climate Vulnerable Forum, written by more than 50 scientists, economists and policy experts, and commissioned by 20 governments estimates that climate change is already contributing to the deaths of nearly 400,000 people a year and costing the world more than $1.2 trillion annually, wiping 1.6% from global Gross Domestic Product every year.  So the costs of failing to price carbon and reduce emissions are already very real.

Note: this post has been incorporated into the Advanced rebuttal to the myth CO2 limits will harm the economy.

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Comments 1 to 50 out of 54:

  1. "cheap" fossil fuel energy is key to the development of poorer nations. How is using a system of centralising physical generation of power and requiring extensive grid infrastructure in poor nations a "key" to their development? I'd suggest that one of the reasons why many countries haven't developed along this path is exactly this, rather than the fuel costs of a centralised power station. Surely one of the greatest advantages of non-hydro renewables is that they can start small at the local level and gradually scale up through regional arrangements long, long before a centralised system could possibly distribute power to remoter regions. And do it for much smaller cost. One reason to not extend a grid all the way to remoter towns and villages is that the infrastructure costs can't be recouped because poorer communities can't afford to pay enough to make it economic.
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  2. Good point from adelady on moving from a standing start w/decentralized systems. A lot of habits in developed countries w/regard to energy are hangovers from a time when our options were more limited. As well, not leaning on a grid helps to promote more intelligent consumption. Analogy is deployment of cellular telephone systems, which in many developing nations have made the emergence of anachronistic dense copper or other hard networks superfluous, unlikely ever to be capitalized.
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  3. adelady - Excellent point. We've seen that already in regards to communication systems - 3rd world phone systems are only really taking off with cell phones, which don't require the infrastructure that wired telephony does. But with the decentralized model (widely separated towers, solar chargers for phones), huge penetration has been seen for a decentralized, minimal investment model. Small investments with an incremental payoff are much easier to do than those requiring a large up-front investment before any profit can be seen. I think that is a worthwhile lesson for implementing non-carbon energy production - anyone involved with renewable energy implementation should take note.
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  4. Discount rates. It took me almost a year to understand how they work, and I still have a lot of questions. I found this paper: Intergenerational Equity, Social Discount Rates and Global Warming A key quote : "are consumption rates of interest inevitably positive? (...) standard models are inadequate for obtaining insights into social discount rates when production and consumption activities involve externalities that filter into the distant future through the accumulation of some "public bad". Since global warming is a prime example of such externalities, we will use it as a backdrop for our discussion. (…)Assume that the economy is otherwise laissez faire. If global warming is expected to lead to declines in (weighted) global consumption over some extended period in the distant future, then from expression (8): ρt = ρ(Ct) = δ + α(Ct)[dCt/dt]/Ct (8) Ct 0 is the elasticity of marginal utility we would conclude that, over this same extended period, consumption rates of interest could well be negative. For example, if : • δ = .01 per year • global consumption would be expected to decline at 2 percent a year for a period beginning 30 years from now if emissions of greenhouse gases were to continue at their laissez faire rates. • α (Ct) = 2.5 in expression The consumption rate of interest would be -0.04 (minus 4%) per year from year 30 until the end of the period in question”. I googled the keywords “discount rate” and “Ramsey rule”(the equation above). I found this book: Pricing the future: The economics of discounting and sustainable development (Christian Gollier, Toulouse School of Economics) Avaivable here That derives a similar expression to the equation 8) above and make a long discussion on the relationship between discount rate and economic growth. The conclusion is that if there is economic decline (as surely will happen if we get a monster warming of more than 3ºC) the discount rate can hit zero and even go negative. What do you think?
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    Moderator Response: [d_b] Link fixed per request.
  5. erratum: ρt = ρ(Ct) = δ + α(Ct)[dCt/dt]/Ct (8) • Ct is the consumption at time t • ρ(Ct ) is the consumption rate of interest
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  6. Hi, I have some minor problems with this.. First, a direct comparison of Solar or Wind power with Coal is not appropriate, as far as I can see. Neither solar or wind power are dispatchable (Solar thermal possibly, if not in the UK where I live). This means that once a certain grid penetration is achieved, grid balancing becomes an issue. And however that balancing is performed, it imposed additional costs, especially under the paradigm of matching generation to demand. As far as developing countries go.. I would argue that a grid is appropriate and overall much, much cheaper than a decentralized model, if we are comparing like with like. And that the insistence that every stage of a project return a profit is something of an artificial stumbling block. The problem for much of the developing world may be as much one of governance - building a grid requires a certain amount of political stability. Decentralized telecoms infrastructure is one thing. Running refrigeration, cooking and A/C quite another. And (and this is a particular concern as a UK resident), building gas plants instead of coal may sound better.. but ultimately, that gas plant has an expected life of 40 to 60 years. Building that plant pretty much locks in a big chunk of CO2 emissions over future decades. It is probably worth undertaking the exercise of determining what amount of emissions is already 'locked in' in this manner (i.e. expected annual emissions per fossil plant, multiplied by expected lifetime of that plant, for all existing plants) before we even think about building more. Finally (sorry about the rant).. the elephant in the room is nuclear power, which can replace coal on pretty much a 1 to 1 basis, with vastly lower CO2 emissions. If you are serious about minimizing emissions, then disregarding this does not make a great deal of sense..
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  7. Solutions are messy, because rather than a scientific question they are a technological, sociological, economic, and political question. Any solution which is unacceptable in any of these domains is not going to work. Technologically, I'm excited about 4th gen micro nuclear (rather than giant 3rd gen plants), but the real question is not what is possible - it is what is acceptable to the public.
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  8. Andrew I think you will find that both wind and solar are dispatchable. This only requires that output can be guaranteed for a period of about 15 minutes. Forecasting local weather for that time is not difficult. A better statement would be that they are not dependable. Obviously solar does not work at night or when there is cloud cover and wind doesn't work when there is no wind - or too much wind. In the short term that problem can be, and is, managed by some combination of gas and hydro. Coal is not much use for this because it is difficult to ramp it up quickly. Obviously in the medium term we need to move away from gas. The alternatives are nuclear, tidal, geothermal or storage methods (eg solar thermal, pumped hydro). Realistically there are two problems with nuclear. Nuclear power plants are uninsurable - no insurance company will accept the risks of another Fukishima (there may be no deaths but the economic costs of the exclusion zone and the closed fisheries must be enormous). The other problem is that no one wants a nuclear power station next door. Just look at the resistance that new wind farms face and consider what the resistance to a nuclear power station would be (particularly in a post Fukishima world). Nuclear will only get off the ground if a "courageous" government decides to make it happen. However I agree with you it is unfortunate that most left wingers have a Pavlovian opposition the nuclear and most right wingers have a similar opposition to doing anything about global warming - so nuclear gets left out in the cold.
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  9. Perhaps I'm missing something, but I see nothing in the SCC model that accounts for the fact that money cannot buy time, no matter how well the discounting cards fall. On (or in) the other hand the time cards are relentlessly falling one after the other, incurring not only costs but debts unpayable in any currency used in the human economy. Seriously, what discount rate would be required to patch up a world where temperatures are 4-6 degrees over Pre-Industrial mean, where ocean acidity is 7.8 or less, where there is no useful quantity of liquid (or other) fossil fuel, and where more than 20% of species are living with extinction debt?
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  10. Sceptical Wombat, the problem with nuclear is not just political. If you work out how much uranium is in proven reserves and calculate how long it would last if the whole world switched to nuclear for electricity generation it works out at only about 12 years! Breeder reactors (inc thorium) are a possibility but my understanding is that they only breed fuel very slowly and are currently uneconomic. More research needed maybe, but currently nuclear doesn't fly on the scale needed.
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  11. Andrew (7), Kevin (8) and Sceptical (9) Nuclear power as currently deployed has at least three quite serious problems: First, we simply do not have enough U235 resources. Nuclear proponents are generally unaware of this problem and cannot show where the resources are. A good place to start would be the Red Book. Second, as demonstrated by the Fukushima incident, there is no solution to waste storage. That is why all the spent fuel rods were still stored at that site. Third, nuclear power is the most expensive form of power despite by some measures being the most heavily subsidized. This is even excluding waste storage costs which cannot be priced because no solution exists. And it certainly excludes the cost of dealing with a Chernobyl or a Fukushima. Consider the Crystal River, Saint Lucie and Turkey Point nuclear power plant sites in Florida. These will be inundated with rising sea levels and corrosive salt water assuming only 5 meters of sea level rise (5 meters is locked in and at the low end of eventual sea level rise). They are all in the paths of future hurricanes and all store their spent fuel nuclear waste on site, as was the case at Fukushima. Crystal River has been shut down for the last couple of years because of serious cracks in the containment vessel but the utility wants to restart it and extend its life beyond the design life of 40 years. The other two sites have already been extended to 60 years. See and my other articles for references. At any rate, if you can show me where the U235 is going to come from, how to safely store the spent fuel and how to get the price down so it is competitive with other energy sources without involving even more government subsidy, you have my attention. Then we need to discuss safety and security. Best Tony
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  12. Tony: Many 4th gen nuclear reactor designs work on un-enriched uranium, low enriched uranium, thorium, nuclear waste or some combination of the above. They extract many times more energy from the same amount of ore (whether newly mined or from existing material). They also generate less and lower level waste. Facilities such as Onkalo are probably sufficient for the management of the waste. I agree that current safety regimes are shortsighted and inadequate. It does not follow that safety regimes must necessarily be so. I think the technology is probably viable. I suspect that the political, economic and sociological hurdles between them are insurmountable.
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  13. Tony - I've seen some extremely low estimates of U-235 availability, but not credible ones. Uranium is generally not a well-explored mineral. (Note: I'm a qualified geologist) In any case, several of the problems you mention - waste management, uranium availability and to some extent reactor life are down to the relatively poor technology choice used so far; once through cycles in PWR designs. Designs along the lines of the IFR and others use all the fuel (and the long lived waste), so reducing fuel requirements and waste. I agree that storing large numbers of fuel rods on-site is not a great idea. However, people protest moving them, and protest reprocessing them.. what's going to happen? I would go on about cost and safety issues, but the question is, would you accept anything I said?
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  14. From what I've read the biggest hurdle to nuclear power is cost, as well as uninsurability. I don't know anything about the micro plants Kevin mentions - perhaps the could solve the latter problem, and then the former would be the big question. Bernard @10 - not sure exactly what you mean by 'buy time', but it sounds like you're effectively talking about a low discount rate, in which case I would think the JH12 paper would at least partially address your concerns.
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  15. Electricity prices fluctuated significantly depending on demand, time of day etc. However, most people will pay an average price for the electricity they use regardless of when they use it. By using smart metering with real time energy pricing people can make choices of when they use electricity. We could even have smart appliance (dishwashers, washing machines, maybe even fridge freezers) that will use electricity when it is below a certain cost. People who have electric cars could even set them up to discharge to the grid when electricity is expensive and recharge when it is cheap. Introducing this type of smart metering would remove the peaks and troughs in electricity usage and make management of the grid much easier. It would also remove the number of power station on stand by.
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  16. Borehole disposal of nuclear waste looks to be quite promising. Ironically, thanks to the extreme efforts and liberal spending applied to the engineering of petroleum extraction the technical means to implement borehole disposal are largely understood and available. Looking at NRC incident reports, the current dominant crop of nuclear generation plants seem to be a case wherein our engineering prowess exceeds the foibles of human nature. We're capable of building these machines but arguably are barely competent to operate them. The three-way collision of nuclear plant complexity, large hazards attendant with less than perfectly scrupulous operation and the human tendency to sloth and apathy yields a result that is less than pleasing. Applying the current established track record of near-misses to a significant deployment upscaling of current nuclear plant design hints at a picture including a certain proportion of dramatic failures, assuming human nature is mostly immutable. That might be a tradeoff we need to accept. Simpler would seem to be definitely be better in this case, considering that we don't seem to be mentally equipped to operate what we're capable of building.
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  17. Unlike 2009, the 2011 decline occurred during a year of positive growth in the Gross Domestic Product (GDP) Read more here. The 2011 decrease is only the fourth year since 1990 to experience a decline in carbon intensity of greater than 3.5 percent for the economy as a whole and only the sixth year since 1990 to experience an emissions decline. Since 1990, energy-related carbon dioxide emissions in the United States have grown much more slowly than GDP – in 2007 emissions were 19 percent greater than their 1990 level, but by 2011 were only about 9 percent above the 1990 level. GDP has increased by 66 percent over that same time period. ------------------------------------------ On September 26, 2012, the Maine Heritage Policy Center and Beacon Hill Institute for Public Policy Research released a study which found that Maine’s current Renewable Portfolio Standards (RPS) Law, which mandates the minimum and maximum amount of energy consumers must purchase from various sources, will raise the cost of electricity in Maine by 8% in 2017. Read more here. ------------------------------------ The electricity system came close to collapse in June when market operator LAGHE was overwhelmed by subsidies it pays to green power producers as part of efforts to bolster solar energy. Read more here. ------------------------------------------- Search Germany & France energy problems for more links. Taxing CO2 won't work. Shoving green energy down our throat won't work. Lets say America put in a carbon tax scheme. What good would it do for GW? If anybody thinks they can force China to do anything their not thinking clearly.
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  18. Clyde @18 - US carbon emissions decreased in 2011 mainly because of the move away from coal toward natural gas. Unfortunately the methane emissions associated with natural gas drilling aren't accounted for when looking exclusively at CO2. Talking about Maine's expected slight increase in electricity prices as a result of renewable energy completely misses the point of this post - that the costs of fossil fuels are not reflected in their market price, so previous electricity rates were artificially low. Additionally, Maine and other RGGI states have thus far experienced electriciy price increases no faster than the rest of the USA. Your comment about China is an example of Tragedy of the Commons. Sorry but you haven't provided any evidence to support your assertion that pricing CO2 "won't work", or even that doing so won't benefit the economy.
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  19. Clyde, regarding your first point, you seem to be making an argument that market guidance by regulation is working as expected. I don't think that was your intention but the data you offer suggest that's the case. Concerning Maine, an odd choice. Maine already derives nearly half its electricity from renewables yet enjoys the lowest cost of electricity in New England, according to the EIA. Thinktanks don't seem to be tracking facts on the ground. Picking on Greece as a case study of fiscal norms w/regard to green energy is frankly absurd. The entire economic system in Greece is in a state of collapse. Offer a better example. China has installed an enormous amount of renewable energy capacity in the past decade, putting us to shame in that respect. Their stated objective is to modernize away from fossil fuel combustion for power generation and they're backing their words with action, far more and better than most of the rest of the world. That's balanced against an unprecedented economic juggling act; it's remarkable they're keeping all the balls in the air as it is. Lets say America put in a carbon tax scheme. What good would it do for GW? It would put a price on C02 emissions, stop us pretending that C02 costs nothing. Perhaps you didn't read Dana's article.
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  20. Lets say America put in a carbon tax scheme. What good would it do for GW?
    Clyde, I think that there's a definite lack of imagination going on when one can ask this question. The answer is quite obvious: reduce American carbon emissions fast. Set leadership for the rest of the world to follow (one can imagine Chinese global warming pseudoskeptics arguing against taking action, in a mirror image of Clyde, on account of American inaction - to say nothing of how American obstructionism empowers pseudoskeptics elsewhere, such as Australia or Canada).
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  21. Quite apart from being "green," there's the shame attendant with missing the boat. Here's a sad story of what happens when people are hopelessly entangled with the past: The world-leading UK windfarm built with little British involvement
    "We are hosting 18 French renewable energy companies here next month to show how we have helped develop two of the world's biggest windfarms. It would have been nice to have been able to show them some local [wind equipment] manufacturing."
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  22. "Lets say America put in a carbon tax scheme. What good would it do for GW?" To maintain a level playing field for manufacturers, US would also have to tax carbon on imports that werent carbon-taxed at source. Goods made with non-carbon energy become cheaper than those built with coal. Thus US buying power becomes a strong incentive for exporters to US to switch from fossil fuel.
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  23. dana1981: Could it be possible to fix the broken link (the first one in comment nº4) to: Intergenerational Equity, Social Discount Rates and Global Warming Thank you in advance. By the way, do you (or anyone else) has some comments about the cases described in the two links above (comment nº4) where the discount rates can be not only very low, but even zero or negative?
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  24. dana1981 18 US carbon emissions decreased in 2011 mainly because of the move away from coal toward natural gas. My point (perhaps made poorly) was no tax was needed to reduce CO2 in the time frame. I have no problem with govt funding for research & development. IMO the fed govt (states can do as they please) shouldn't be raising taxes on anything. A carbon tax might be will intended in the beginning, Social Security was too. The fed govt now uses SS money for things other than SS. Talking about Maine's expected slight increase in electricity prices as a result of renewable energy completely misses the point of this post - that the costs of fossil fuels are not reflected in their market price, so previous electricity rates were artificially low. There's more than the "slight increase" in electric prices in the study. That's only part of the problem. Now lets move to a nation wide carbon tax scheme. I'm guessing gas/diesel will be included at some point. Either a direct tax on fuels or a mileage tax. That will increase the cost of everything in our daily lives. Using Maine's slight increase 8% in 2017. 1. Electric bill 8% 2. Fuel for vehicles 8%. *That will increase amongst other things, the cost of public transportation. 3. Grocery bill 8% Just three things a 24% increase. Before long a slight increase becomes a big increase. I'm guessing you know that will hit the poor the hardest. *Now some will say they poor can get tax rebates to help them deal with the increase. That money has to come from somebody. Not many (if any) folks aren't effected by higher gas/diesel prices & electric bills. Do you think companies won't pass the cost of production on to the consumers? Yet another 8% increase. DISCLAIMER: I used 8% just for a visual. I don't know the actual % without seeing the actual tax. The point being everything in our daily lives will cost more with a CO2 tax. When everything cost more it's no longer a slight increase. Your comment about China is an example of Tragedy of the Commons. It might be, but it doesn't make it false. Nobody is gonna make China do anything. Do you agree that for a CO2 tax to have the desired results some claim it will have, it has to be a global CO2 tax?
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  25. Clyde, you're missing the point that we're already paying high costs due to climate change (which will only increase), which are simply not reflected in fossil fuel prices. For example, look at agricultural productivity being hit by droughts and the associated food cost increases. Your objection is basically "I don't like taxes". Fine, then propose an alternative, for example a system like the one in British Columbia where the carbon tax is offset by reductions in other taxes. Opposing all solutions won't do us any good. We'll just get nowhere as the problem gets worse and the economy continues to suffer. US emissions only fell 1.7% in 2011 which is not nearly enough, and that despite the fact that natural gas prices are at an unsustainably low level. And by the way, you can't say three 8% increases add up to a 24% increase. That's completely mathematically backwards - 8% increases in three aspects of a budget will cause less than an 8% net budget change. As for your comments about China, see doug @19. China is already working to reduce its emissions. I do agree that we need all nations to get on board in order to solve the problem, but I also think is absurd and irresponsible for the main cause of the problem (USA) to point the finger at developing countries like China.
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  26. Clyde:"Nobody is gonna make China do anything" Yes. It's not as if we have any say in the matter. Like deciding not to buy stuff from China. That wouldn't work at all.
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  27. Actually, no, China is as dependent on the world as everyone else. Right now China wants into the WTO, but won't follow the rules unless it suits them. That has to change. But China is not the huge, unstoppable economic power that everyone paints it to be. They need us like we need them, and they will suffer as much as anyone due to climate change. Acting like we can't make China do anything (not make, pressure and convince) is just one more excuse to do nothing.
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  28. Clyde: "I have no problem with govt funding for research & development." So, rather than tax those who are actually responsible for emitting carbon, you'd tax everybody so the money can then be given out as funding for R&D? What's wrong with a market-based approach rather than asking the government to pick winners? As for China: per capita it's at 1/3 the emissions of the US. Why are you talking about them? As a total they emit a lot but that's only because as a total they account for a lot of the world's population. You could draw a line around the whole world that's not the US and say "Wow, look how much they're emitting, we shouldn't do anything to reduce our emissions" and it would make just as much sense.
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  29. And the great irony, of course, is that China is doing a lot -- massive wind rollout, massive nuclear rollout, and massive hydro.
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  30. And further to Bob's comment, (and see my earlier comment), if you hit Chinese goods with carbon tax that matches that faced by local manufacturers (which you realistically have to do), then they will decarbonise as well. Or goods from places rich in renewables suddenly become more attractive than China. US can do this unilaterally. Please dont go into a "I dont wanna pay a tax so any pathetic argument will do" mode. If you dont want to pay carbon tax, then seek out the cheaper, non-carbon alternatives.
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  31. Apart from any mathematical problems with Clyde's claims, there is also the conceptual problem - addressed in the OP already - that the global poor (especially those unaffected by state-level energy pricing in Maine) will suffer enormously more due to climate change than they could from any reasonable mitigation effort.
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  32. The is one aspect missing in your article : You compare the cost of mitigation versus the – future – cost of adaptation. But not a word is said about who will pay the price in both cases. The cost of mitigation would be paid by the polluters. The cost of adaptation on the other hand would either be paid by the tax payers, or if the government completely fails to do its duty, adaptation will only be affordable for the rich elite, to protect their personal property, and the rest of us will be left in the lurch. This is also the main reason why representers of the fossil fuel industry plea for adaptation instead of mitigation. They are not really convinced that adaptation is cheaper, but it will be cheaper for their business.
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  33. For example, look at agricultural productivity being hit by droughts and the associated food cost increases. A carbon tax will not stop droughts & floods. No one can say any one drought or flood was caused by GW. Fine, then propose an alternative, for example a system like the one in British Columbia where the carbon tax is offset by reductions in other taxes. You seem to think a tax is the only solution. Let the private sector solve the problem. The advancement in fracking technology just one example. Can somebody tell me how higher taxes will stop GW? Let's say a tax is passed. Folks & companies decide to pay the tax & carry on with the status quo. Will the govt having more money stop GW? Now to China. I work for a company who sells them scarp metal. We ship them barges of scarp metal monthly. They might be trying "green energy" in their efforts to provide electric. Their also building coal plants at a much faster pace than their green energy plants. Bob Law suggests not buying stuff from them. I don't know if he means on a personal level, or the govt to stop trading with them, maybe a combo of both? Go through your house & see how many things are made in the USA only. We going to stop buying stuff from anybody who don't have a carbon tax to our liking? Sphaerica says "China wants in the WTO, but won't follow the rules unless it suits them." My point made. For those who think a trade war with China will make (pressure & convince) them to do anything is wrong IMO. It has nothing to do with right & wrong with them. It's pride/prestige plain & simple. They won't allow anybody to tell them what to do. Some of you are suggesting that just because one (or more) country won't do something doesn't mean we shouldn't. If you want to tax American's (on the basis of GW) regardless of what any other country does, good luck trying to get that passed into law on the fed level.
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  34. Clyde: Your claim "A carbon tax will not stop droughts & floods. No one can say any one drought or flood was caused by GW" fails for the same reason claiming "Regulation of smoking will not stop lung cancer. No one can say any one incident of lung cancer was caused by smoking". It is well established that rapid warming will increase both the quantity and severity of drought and flood events. The evidence reviewed on this site, in IPCC reports, and other literature make this, IMO, abundantly clear. Other evidence shows - wait for it - an increasing trend in these sorts of meteorological events (e.g. the Munich Re data which has been widely shared here and elsewhere). All other things being equal, in the absence of warming there would be no increasing trend in droughts or floods. Unless a carbon price (whether a carbon tax, cap & trade, or fee & dividend - and now that I come to think of it, why is it your only focus on this thread appears to be on a tax?) fails to reduce emissions - and given the success of, say, the sulphuric acid controls (a cap & trade system) we can be confident that a market-based mechanism (which includes Pigovian taxes such as a carbon tax) will do the job - it follows that pricing carbon will reduce emissions, hence preventing continued growth of drought & flood events. Your argument: You seem to think a tax is the only solution. Let the private sector solve the problem. The advancement in fracking technology just one example. Can somebody tell me how higher taxes will stop GW? Let's say a tax is passed. Folks & companies decide to pay the tax & carry on with the status quo. Will the govt having more money stop GW? is also, IMO, quite flawed, for two reasons: (1) Fracking enables additional extraction and combustion of fossil methane. Last I checked, methane and its combustion products (CO2 and H2O) are greenhouse gases. It is no solution to the problem of carbon emissions. (2) I find it odd that you would presume individuals, businesses, and other organizations would voluntarily pay more for the kinds of goods that would be affected by carbon pricing. As far as I am aware, in most North American jurisdictions people are pretty keen on lowering their tax burden. I can't imagine that carbon taxes or similar pricing mechanisms would not lead to similar tax-avoidance behaviour (in this case, by decarbonising).
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  35. I should add with reference to droughts and floods that we can be confident reducing emissions will reduce increases in drought & flood events for much the same reason that reducing incidence of, say, HPV (through the recently-deployed mass immunization program against that suite of diseases) will reduce the incidence of cervical cancer.
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  36. Finally, I should add that the OP and the discussion - until your comment - had hardly anything to say on carbon taxes specifically. A carbon tax is a carbon pricing mechanism, but not all carbon pricing mechanisms are carbon taxes. It seems to me that it is you, Clyde, who is conflating carbon pricing with carbon taxes and then turning on others and suggesting that they "seem to think a tax is the only solution."
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  37. As Composer notes, the post talks about reflecting the true cost of carbon emissions (the SCC) in the price of their sources. I don't care if that's done via a carbon tax or cap and trade system or other mechanism. That's where the debate should be centered - what's the best mechanism to correct this economic failure? Clyde says let the private sector solve the problem - that's exactly what carbon pricing does. It gives the private sector an economic incentive to solve the problem via the free market. bvangerven @32 also makes a good point which the post does touch on a bit in the equity weights section. Right now the costs of climate change aren't being paid by those who are causing the problem, or at least not proportionately. Most of the damage is happening in the countries least responsible for the problem, as illustrated in Figure 1.
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  38. Clyde: "Bob Law suggests not buying stuff from them. I don't know if he means on a personal level, or the govt to stop trading with them, maybe a combo of both?" Trivial to do on the personal level. Remember that you said "Nobody is gonna make China do anything". I can easily make them stop selling stuff to me, so your statement is blatantly wrong. My sister won't buy Chinese stuff on principle. Enough people making the same decision, and it adds up. Elect a government that wants to do something, and yes, the government can put restrictions on trade. Look at how many times various countries have placed trade embargoes for human rights issues and stuff. We don't have to deal with China if we don't want to, so your talking point was nothing but rhetoric: yes, China has to listen to people they want to interact with, because interaction requires two consenting groups. If they stand alone, they can do what they want, but we're a major market for them and we do have a say. Are you trying to argue to support your "Nobody is gonna make China do anything" statement, or are you trying to distract everyone from your blatantly wrong statement in the hope that something else will stick? You're not giving me any reason to believe anything you say. [and, by the way, I don't live in the U.S.]
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  39. Clyde: Still going on about China. It's like the fat kid pointing at a group of five skinny kids eating their lunch and asking why he should watch what he eats when, collectively, the five skinny kids eat more than he does! And this is despite the fact that China has 25 nuclear reactors under construction right now, and planning to have a nuclear capacity of 60 GWe by 2020, then 200 GWe by 2030, and 400 GWe by 2050; the fact that China has added 60 GW of wind power in six years and plans to add 150 GW by 2015; the fact that China has nearly 200 GW of installed hydropower; and the fact that while it is adding coal power plants, it is also decommissioning older, dirtier, and less efficient coal power plants at the same time. So not only is the fat kid complaining about the five skinny kids, he is ignoring the fact that the five skinny kids are dieting! "A carbon tax will not stop droughts & floods." Look, it's very simple. A carbon tax reduces CO2 emissions in two ways: 1. If you make something more expensive, you will reduce the consumption of it. Turning off lights when you leave the room, driving a more fuel-efficient car, installing LED or CFL lighting, etc. 2. If you make the price of fossil fuels more accurately reflect the true cost of burning them, you also make alternatives more competitive, encouraging their adoption. If you believe that capitalism works then it's hard to see how pricing carbon wouldn't reduce its emission. Then it's just a question of what the impact of reducing emissions will be. Science tells us that increasing greenhouse gasses will cause more droughts and floods, and increase their severity, and the recent history certainly seems to bear this out. Therefore emitting less carbon than we otherwise would have will logically prevent (and reduce the severity of) droughts and floods that we would have experienced otherwise. There's no magic here, it's pretty straightforward. "You seem to think a tax is the only solution." No, you seem to think a tax is the only solution. It isn't even the most common one! An ETS is in place in Europe and Australia and many other places (despite it being called a tax in Australia). An ETS even has one other trick up its sleeve: 3. You put a cap on how much carbon can be emitted, and gradually reduce that cap over time. This directly reduces emissions. "Let the private sector solve the problem." A tax and an ETS are letting the private sector solve the problem! Your proposal -- R&D funding by the taxpayer -- is the one that involves government intervention! A carbon tax and an ETS are called "market-based" solutions because the government doesn't try to pick winners, it simply makes fossil fuel solutions more expensive and leaves it up to the free market to innovate and find alternative solutions. Economists say that this is the cheapest and most efficient way to solve a problem.
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  40. Clyde, you keep asking questions (china, will tax stop warming etc). When people answer your questions, then you simply ignore and repeat your point does not suggest you are very interested in answer. A statement like "you cant stop droughts and floods because you cant attribute any drought or flood to GW" doesnt give me any confidence in your engagement. I am all for private sector solving the issue - just give them the appropriate incentive. The trouble with laisez faire for this problem is the lack of means for this generation of westerners to be held accountable for damages in other countries in the succeeding generations. When your market solutions fail, you need government. My favourite - ban all new fossil fuel power plant construction and let the private sector work out the best alternative.
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  41. Phil,
    ...lack of means for this generation of westerners to be held accountable for damages in other countries...
    In other countries? What about their own? Other generations? What about their own? The only thing that ever stopped polluters was regulation. Most industrialists will pollute the heck out of their next-door neighbors if it turns a profit, and there is no financial incentive to avoid stomping on people who don't affect your profit margin, outside of regulation. The private sector can only solve problems that involve direct, measurable profit. National defense, education, health care for the elderly and chronically ill, and pollution control have no direct, measurable profit and so cannot be handled by a free market system. Free market capitalism is not a magic wand that solves every problem. That particular conservative fantasy is going to lead to a very, very bad place.
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  42. @Bob Loblaw I thought that name sounded familar. How you doing? Trivial to do on the personal level. Remember that you said "Nobody is gonna make China do anything". I can easily make them stop selling stuff to me, so your statement is blatantly wrong. With all do respect it's your statement that's blatantly wrong. China is not forcing you or your sister to buy any of their stuff. So you can't make them stop selling you anything. You can choose to not buy anything from China, but that doesn't make China do anything. ---------------------------------- @dana1981 Clyde says let the private sector solve the problem - that's exactly what carbon pricing does. It gives the private sector an economic incentive to solve the problem via the free market. No! An "economic incentive" is a tax break or subsidy. Carbon pricing is imposing a cost on the emission of greenhouse gases. Calling it carbon pricing is a way to avoid calling it a carbon tax. Raising taxes on something doesn't encourage the free market. If the state or fed govt raises your income tax do you have the incentive to work harder? It will take some of your purchasing power out of the economy & lower your standard of living. ------------------------- Just think if a carbon tax/carbon pricing was in place. Soaring gas prices across California have forced some station owners to shut off their pumps while people change their driving habits or, in some cases, avoid driving all together. Read more here. Now if anybody thinks (not saying any of you have) the solution is to raise the cost of things so high it puts folks out of business & others to lower their standard of living is a good way to solve the problem i respectively disagree.
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  43. Clyde - "No! An "economic incentive" is a tax break or subsidy. Carbon pricing is imposing a cost..." A cattle prod is still an incentive - providing motivation to change behavior. Demonstrating the cost of leaving the field. All of your arguments in this regard ignore the "Tragedy of the Commons" cost of carbon fuels, distributed across the economy, not paid for by the emissions sources. If you properly account for the monies paid out for health, for environment, for agricultural changes, all due to emissions, renewable options are currently less expensive, and will gain in advantage as that portion of the economy expands. The various economic remedies discussed simply attempt to apply those emissions costs more directly to those who induce them, rather than forcing everyone else to pick up after them. Your path, of Business As Usual, is in reality the more expensive choice.
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  44. Clyde, with all due respect, you're just wrong. Your analogy to a income tax is totally nonsensical. I don't have much choice but to earn an income. I do however have a choice regarding how much fossil fuels I consume. For example, I can buy solar panels, I can get a more efficient car or even an EV, I can simply change my behavior to use less energy, etc. As it so happens, I personally have taken all of these actions. If you put a price on carbon emissions, it provides the incentive to reduce those emissions. Suddenly there's greater demand for low emissions products because people are aware of the true cost of their choices. It's pretty basic economics.
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  45. Clyde: "You can choose to not buy anything from China, but that doesn't make China do anything. Sure it does. It forces them to find another buyer for that item, or leave it unsold. It forces them to do without my money. They may easily find an alternative, but their world without my purchase will not be exactly the same as the one in which I buy from them. Loss of one sale may not be much, but loss of many will - it's just a matter of enough people being motivated. You're back to pretending that China is the only party at the table that can make choices. You're still wrong.
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  46. Clyde: "No! An "economic incentive" is a tax break or subsidy. Carbon pricing is imposing a cost on the emission of greenhouse gases. Calling it carbon pricing is a way to avoid calling it a carbon tax. Raising taxes on something doesn't encourage the free market." I think I'm beginning to see your problem. You can't work the issue in more than one direction. - You feel that a tax break is an incentive, because it encourages people to do the thing that the tax is reduced on - i.e. it costs people (or corporations) less to do that, so they are more likely to select that option. - yet you think a tax increase is not an incentive. That's odd, because a tax increase makes that option more expensive - and although that means a tax increase is a disincentive to do that thing, it is an incentive to make other choices; i.e., people are more likely to choose the less costly option that has not seen a tax increase. Every "incentive" to do one thing is a disincentive to choose an alternate. Every "disincentive" to do one thing is an incentive to choose an alternate. For example, your level of debate is growing tiresome. Is that a disincentive for me to continue discussing things with you, or is it an incentive for me to do something better with my time? Or is it both?
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  47. AndrewDoddsUK@13: at least in the USA uranium is a well-quantified mineral. The organization for whom I work (and have processed samples of) did a pretty exhaustive exploration and characterization of it. Info here.
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  48. Liquid Fluoride Thorium Reactors surely have to be part of the mix. I know they need some development, but a Manhattan type effort would bring the time for that development down to a few years. (Surely, the problem deserves such an effort.) They are so much safer than the current fleet. Had Fukushima been of the LFTR type, it would have been a non-nuclear event - still awful, of course, but not from a nuclear standpoint. We cannot rely on solar and wind, so if we carry on as we are and still want a stable supply, we are going to have to have fossil fuel plants to follow the loading variations they automatically create, and upgrade the grid in the process to cope with it (not cheap). The more of those ugly wind turbines we have peppering our once beautiful landscape, the more variable will be the renewable input and so the more we will have to rely on fossil fuels. It is difficult to see how that is going to do much good as far as CO2 reduction is concerned. If we go with LFTRs they automatically are capable of load following. For an interesting paper on renewables, I recommend: With small modular reactors, which LFTRs can easily be, we can distribute them so that they serve local communities. That way, we will hardly need much of a grid. They don't need the copious amounts of water that current nuclear reactor designs do, they are inherently safe (automatic shutdown), they cannot safely be used to make nuclear weapons, they use 99% of their fuel, which is ubiquitous anyway ... the list goes on. And as for being uninsurable, well, being automatically shutdown in an emergency surely goes a long way to solving that problem. All we need to do is get the Greens to shut up about nuclear for a while and we might, just might, save the planet.
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  49. funglestrumpet@48, I'll read your linked paper, BUT...this line makes me a bit suss, right off the bat. "...and let's face it, a world with no electricity at all is a lot more terrifying than one a degree warmer." That's opinion and sensationalism, not science. I'll get back to ya.....
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  50. funglestrumpet@48, I have read the paper you linked and found it interesting, but the fact that the author quotes material produced by the Global Warming Policy Foundation makes me suspect the integrity of the research. The document is full of typos that would have been picked up by peer review, so it does not impress me with its reliability. Nonetheless, it discusses some genuine problems and provides insights into the thinking of the BAU brigade.
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