Gary Duncan: Economic view
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Are you one of the millions of people “turning to 30” when you load your washing machine? Or maybe you are heeding Gordon Brown’s advice and going green by spurning the supermarket’s free plastic bags?
Are you thinking of swapping your gas-guzzler for an energy-efficient Toyota Prius, or following the example of David Cameron and putting a wind turbine on your roof?
If you are doing any of these things, there is a question that you ought to be asking yourself. Why?
There are, of course, plenty of good motivations for taking all of these actions. The reality is, though, that the most compelling reasons have nothing to do with notions of “saving the planet” and have everything to do with saving our own money and with avoiding needless waste.
These incentives should have become all the more powerful in a week that has seen crude oil prices once again soar above $100 a barrel, and – on some measures at least - breaking the real-terms records set in the late 1970s and early 1980s.
Yet, if one were to ask consumers why they are washing their clothes at a lower temperature, or switching to a more fuel-efficient car, the reasons that most would give would be all about ecology, rather than economy.
By acting on the green sales pitches of savvy manufacturers who have latched on to tackling global warming – a cause rapidly becoming an article of faith across the West – millions of us hope that we are helping to eliminate the threat to mankind’s future from climate change. By cutting back our own energy use, we hope to curb carbon dioxide emissions and keep the planet’s temperature down.
Sadly, there are persuasive reasons to believe that all the energy being put into this effort is itself going to waste and that Western efforts to conquer climate change by curbing our fuel use are likely to be in vain.
The fundamental, and possibly fatal, flaw in all these well-meaning personal efforts and well-intentioned government initiatives to tackle global warming is that the West’s entire strategy is based on restraining demand for, and use of, fuels. Yet this strategy will prove entirely futile unless the result is that the extraction and supply of these fossil fuels falls back as reduced demand puts downward pressure on their price.
Moves by “green” consumers and nations to cut energy use will prove pointless if oil-producing states simply maintain production even as prices fall, so that other countries more careless of the dangers of global warming then buy, and burn, all the fuel saved, enjoying an implicit subsidy from the West as they do so. Just as we are all “turning to 30”, the growth-hungry powerhouses of China and India will be stepping up their carbon-intensive policies of rapid economic expansion, while Americans will be able cruise their freeways in SUVs even more cheaply.
Unfortunately, the perverse politics and economics of energy supply, and of the world’s oil-producing states, mean this is exactly what will happen.
These crucial implications of the neglected supply side of the climate change debate are compellingly mapped out in a new analysis by Hans-Werner Sinn in the latest annual report from the European Economic Advisory Group of Munich’s CES-Ifo think-tank.
Consider the economics first. It may seem odd to suggest that even as reduced energy demand leads to lower prices, oil producers will maintain their existing output. The reason why this can be the case is the unusual economics of a resource that is finite and non-renewable.
The economic motivation of oil producers is to maximise the total amount they can earn from reserves they control. This means that, as they decide how much fuel to supply, they will consider not just present prices, but how much they can earn based on future price levels. They have to make a choice between pumping out resources now and investing the proceeds in financial markets, or keeping the oil in the ground in the hope of higher future prices.
Oil producers must reasonably suppose that, as global warming continues and provokes ever-greater concern, restrictions on demand will grow tighter. Further alternative energy sources are also likely to be developed. So they are likely to perceive high probability of downward pressure on prices in future. The result is a strongly enhanced incentive to extract and sell resources now, to whichever country will buy them, and then to invest the proceeds. Producers may even step up production.
Professor Sinn argues persuasively that this “green paradox” may help to explain why, despite the Kyoto climate-change treaty and the environmental efforts of many countries, fossil fuel use and CO2 emissions have continued to climb unchecked. He makes the case that, unless energy-consuming nations can form a largely loophole-free united front – which seems improbable – this paradox will make a nonsense of policies such as emissions trading.
Worse, the report highlights how the unstable politics of oil-producing states in the Middle East and South America reinforces their rationale to keep pumping oil for whatever price the market sets. Since these nations’ rulers cannot be sure of staying in power indefinitely, they face an extra incentive to cash in while they can.
The planet’s fate in the face of global warming may not, alas, be in the hands of such well-intentioned leaders as Mr Brown, Angela Merkel, the German Chancellor, and California’s Arnold Schwarzenegger, but instead may lie with the likes of Venezuela’s Hugo Chávez, Iran’s President Mahmoud Ahmadinejad and rapacious Russian oligarchs.
“Turning to 30” and the like may give the West’s consumers a warm feeling, but tackling climate change effectively may require a wholly different focus on science-based measures to store carbon or remove it from the atmosphere, through policies such as reforestation.
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Because we spend so much money on oil for our energy needs, there is no money left to put into alternative energy projects. A clever strategy by the oil producing nations to delay the inevitable change to solar and other sources of energy.
Jim Wills, Brisbane, Australia
What do all you climate-change denyers say to your doctor when he tells you to give up smoking? But doctor, my old aunt Edna smoked every day of her adult life before being run over by a bus at age 100? Be more logical and say:- Doctor, I don't beleve you, I will study medicine and prove you wrong
Stuart Evans, Pilliga, Australia
Is global warming the issue or should we be more concerned about pollution? Go check out the science behind so called global warming and then ask is this more of a cyclical planetary event or are we the main contributors? You might be surprised at what you find. Or you might be blinded by belief.
ROGER BULL, BOOKHAM, UK
In my opinion the root cause of all those things believed affecting the planet and its inhabitants negatively is mankind. If "we" do not evolve past our myopic and selfish me first attitude "we" will be taken out by forces we neither understand or control. Without changing the behaviour and attitudes of people the likelihood of "success" (by any current definition excluding extinction) is extremely remote.
Theodore Fox, Creston, BC, Canada
forget wind farms: almost useless
go for nuclear and geothermal
block off all our natural harbours not use for large shipping for
hydro-electric use,, and use some of the harbours for land fill,meanwhile we must start to use shale
we won't run out of fuel this week
GE UK
geoffrey elderfield, southsea, UK
If the USA removed every single car from the road today, world co2 output would be reduced by less than 0.1%. FACT. FACT. The only (viable/modern) long term solution to the eventual stripping of the environment is population control.
chris, USA,
wasting less energy and reforesting.
huang, beijing, china
Dr. Coles, the congress you're talking about was co-organised by Exxon Valdez. Looks like the oil industrie's strategy of trying to spread doubts about man-made global warming is successful, when I read you're comment.
benjamin boutreur, antwerp, belgium
I believe that at some point in the near to mid term future oil producing nations will be incapable to maintaining production rates at current levels (which is what this article is predicated on), and will start to see production drop. This is regardless of how expensive oil becomes (and the days of cheap oil are over). OPEC recently refused to up production - I wonder if they are even capable of sustained increases in output .
Going 'green', i.e. more efficient, will help to ameliorate the worst effects of soaring oil prices. That hybrid may keep you mobile, while your neighbour with the 20mpg SUV can barely afford to turn the key in the ignition.
Paul Newbold, sheffield, uk
It's time to stop scaring the kids. There is no scientific "concensus" on climate change and CO2 as a driver of climate change has now been pretty well debunked (see the Manhattan Declaration issued at a climate change conference last week in New York attended by 500 scientists, policy makers and journalists Google: Manhattan Declaration)
...and no the conference wasn't sponsored by the oil industry....and no I don't have any affiliation with any industry. I'm a retired scientist dismayed at how easily dogma can be paraded around as science by the likes of Al Gore.
Peter, Leamington Spa, UK
David Leslie, Scotland.
Pumping water uphill to store it in a reservoir is exactly the principle used by the Dinorwic power station in Wales. Then in times of peak demand, the head of water can be used for hydro-electric generation.
Derek Power, Uxbridge, UK
Oil pumping levels in the Middle East may actually start to drop soon. This is because the pool of oil over there has been tapped on since the 40's. There was a book I saw a review on recently. The author got access to the petroleum engineers database which has notes going back to that era. He started checking them. It appears there is a good reason some of the wells in that region are starting to hit water. Even with repositioning of the wells to tap the higher spots on the pool, it appears the pool is shrinking. The book was titled 'twilgiht in the desert' if I remember correctly. I just googled it and the author is Matt Simons.
Wes Byrd, Iowa City, Iowa USA
I'm with Travis from Brisbane, sadly enough. I just don't see anyway to deal with the fact that the Chinese and Indians are putting vast amounts of CO2 into the atmosphere even with only a fraction of their population and society industrialized. The die has been cast.
That said, I would at least try to do something about it. Part of the difficulty with Global Warming-based climate change is that it isn't simply a matter of temperatures rising uniformly overall on average - certain areas will get hammered more than others, and the changing temperatures should have some unpleasantly interesting effects on other climactic issues, such as droughts and rainfall.
Brett, Salt Lake City, UT USA
Mary, Fort Worth, Texas. Windmills are great for pumping water, water can be stored, so if the pump doesn't work there isn't a problem. Windmills are rubbish for producing electricity, as electricity cannot be stored, so if the wind stops (as it does) there is no electricity. Wind is emmission free, unfortunately the turbines and all the infrastructure needed to put them in place are not, so wind production is definitely not emission free. However, you and all the other wind freaks can carry on burying your heads in the sand whilst your air-con stops working and your food melts, whilst somebody with a bit of vision builds some nuclear power stations.
David Leslie, Perth, Scotland
China is building one coal fired power station a week. Off the coast of Australia we have bulkers lines up to the horizon waiting up to a month to load up with coal to ship back to China to be burned.
Anyone who thinks that global warming is going to be stopped by the west curbing its emissions is living in a fantasy land. China and India are developing at break neck speeds and they haven't even nearly reached a fraction of the standard of living we typically enjoy in the west.
The die is cast I'm afraid to say. Responsible governments should be looking at ways to cope with climate change rather than holding out some false hope that we can avoid it by switching off the light bulbs, getting rid of plastic bags and driving hybrid cars.
Finally, think about this. You could permenantly turn off every light, stop all the cars, and ground all flights today in and out of Australia and the fall in global emissions would be replaced by growth in China's emissions in 3 months.
Travis, Brisbane, Australia
By the year 2050 there will be another 2 billion people on the planet. If all they do is breath then co2 levels will continue to rise. However they will also require food , water , somewhere to live , transport to work or education facilities, healthcare.Most of these people will be living in developing areas.Those of us fortunate enough to live in the prosperous "1st" world need to get over our tendancy to catastrophise and start to plan how we can help these people reach the living standards we take for granted and refuse to consider lowering.For better or worse we have developed systems that depend on world trade, how long do you think the UK would last if it was unable to import any food or raw materials.The challenge ahead is surly how to improve living standards globally. Ban your plastic bags if you want and force everyone onto public transport but please don't kid yourself that you are doing anything meaningful except massaging your guilt .
Michael Barnett.
ps about 3 wks
michael barnett, woodville, new zealand
The people holding the purse strings and the power are happy to keep things as they are. They cannot see that with a bit of help, nature could cure global warming and some other worldly human problems.
If fresh WATER was treated like OIL, we would stop it flowing into the sea, move it to where it is needed and plant some trees in reclaimed deserts.
The cost of this could be covered by the U.N. stopping the sale of arms around the world.
THE WORLD MUST COME DOWN TO EARTH.
Arthur Marson, Huddersfield, West Yorks.
I live in Texas and we lead the U.S. in wind powered energy. Drive out I-20 to west Texas and you'll see hundreds of windmills, churning out electricity. And the process is in its infancy. Any geographical area with strong winds would generate enough electricty to meet our needs--and wind doesn't pollute! I remember living on a farm when I was a child and we only used windmills to pump water. No cost, except a few dabs of grease now and then.
Mary, Fort Worth, Texas USA
At present everything we associate with success is environmentally unfriendly, large and/or fast cars; large houses and conspicuous consumption.
Even the Government with its focus on energy efficiency ratings for housing is not helping. The carbon footprint of every house is far more important for the environment. An energy efficient large house will probably have the same carbon footprint as an energy inefficient flat. This energy efficiency measure allows people to believe they are doing their bit for the environment whilst living in large houses with large carbon footprints.
The biggest joke so far has been the Live Earth event where some of the most environmentally unfriendly people on the planet (pop stars) where used to promote saving the environment. They arrived in their private jets and limos to tell everyone else to worry about about the environment, before heading back to their mansions.
Those at the top need to lead the way before preaching to the masses.
Keith, Ashford,
Finally, someone has made the obvious point. Plus que ca change, plus que c'est la meme chose.
Kent Charters, Midland, Canada
Kent Charters, Midland, Canada
Isn't it obvious that someone is going to use the oil/gas/coal until it's all gone...but that's really not the point. The point is we will soon reach Peak Oil - the day at which total world wide daily oil production will start to decline. Then we will hit Peak Gas and then Peak Coal. It makes sense to prepare for those days by switching from hydrocardons to nuclear and renewables asap and that swtich will be helped by more efficient use of electricity. The arguement about manmade or natural Global Warming is pointless since there's not much we can do about it - the oil/gas/coal will be used, significant CO2 capture is impractical/expensive and deforestation has happened for a reason; people like to eat . But that's no reason for not preparing for a post hydrocarbon economy and those countries that do so will be better prepared..
Jason White, Paris,
I have to say that I now do the exact opposite of anything the Labour Party recommends I do. Whilst China is bringing on stream 1 new coal fired power station per week, (surely not true?!), and Labour insist on turning the SE of England into one big airport, my turning my washing machine down from 40deg to 30deg is NOT going to save the planet.
When the Labour Party finally establish some credentials for actually getting something, (anything!!!!), right, I may just start to take notice of what they say. However, Brown, Darling and co, don't hold your breaths!
Anyone else fed up with their "don't do as I do, do as I say" attitudes
Nigel Meek, Epping, England
What's stunning is how our leaders pretend to be green while seeking to increase the supply of fossil fuels:
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1081167.ece
Nigel, London,
The only thing carbon trading achieves is large commissions for the City. Par for the course for Brown's Govt.
DickW, Aberdeenshire, Scotland
Well argued but a waste of time. The Big Green Mean Machine is in the grip of "Group Think" - the ulitimate oxymoron - and by now totally impervious to reason.
Ken Leyland, Liverpool, U.K.
It is not a matter of saving the planet. The planet will survive, as it has done many times before. But if global warming passes a certain critical point, positive feedback starts and the process will be unstoppable. This has happened before, and the majority of life forms have been wiped out. The earth recovers, after a few million years, and evolution starts all over again. So there's nothing to worry about, is there?
Dave, Wrexham,
Fossil fuels are a finite resource that is rapidly running out. Production of basic liquid crude oil hit a peak in May 2005. Because of geology the production will stay on a plateau for a few years then continuously decline year on year. There is no question of this the only question is when and by how much - my guess is one to two years. New sources such as oil sands, Alaska etc. will only serve to slow the rate of decline. It should be fairly obvious that oil has to be discovered before it can be produced - discoveries peaked in 1963 and have been declining ever since.
The real killer is that Saudi internal consumption is increasing so the amount available for export will decrease. Natural gas is also declining in many countries, so there is a double whammy.
I think Hans-Werner Sinn has missed the point that very soon demand will significantly exceed supply so there is no chance of price cuts.
tonyw, London,
I don´t see what is wrong with doing both: wasting less energy and reforesting.
Mercedes GarcÃa Lenberg, Madrid, Spain
Don't forget, it's people that create CO2. Everybody wants electricity, the mobility afforded by mechanised transport, flat screen TV etc, food produced and distributed by fossil fuels and non-renewable resources. If we didn't have the non-renewables, the world's present population could not be sustained. Indeed, our wonderful technology allows us to view the existing consequences (hunger throughout much of the world, polution etc.) of the imbalance between population and the planet's ability to sustain it.
Unfortuately we do not draw the obvious conclusion. Many of the non-renewable rescources we consume are finite and a lot of them have already been used up with the visible result of price increases as they become ever more scarce.
Human nature being what it is, nothing can stop this and certainly not the current crop of politicians who can't see beyond next week. So, before Darling puts the price up, buy in plenty of wine - it's the only thing that will make you feel better.
Doubtful Dick, Baden, Switzerland
A number of drivers are fuelling the current environmental crisis. The first is the desire of research scientists to secure reliable funding for the future. To be able to talk up a global crisis such as this is a godsend.
The second driver is the desire of governments to seek new ways to tax its citizens. By publicising and supporting the crisis, they create a willingness in the population to sacrifice and pay higher taxes.
And the crisis itself? Real scientists, the ones who actually have science degrees and are not trying to secure government research funding or maintain a university research position, know that it is variations in the activity of the sun that cause our cycles of hot and cold, and we should enjoy the warm spell while we can. It won't be long before we plunge into a cold cycle and we have to send ice-breakers out into the English Channel.
Dave, Basingstoke,
Global warming is a slight of hand for World Governments unable or unwilling to tackle the biggest issue this world faces. Over population. This will have greater negativities - Used up water, fighting, energy, not enough food etc.
But if World Governments can persuade us to save energy, it can delay this issue and they can continue to stick their heads in the sand rather then do the unpolitically correct thing of having to tell Third World countries to cut their birth rates.
If you believe in Global Warming, the most effective thing this Goverment and other World Governments can do is stop the de-forestation of rain forests. I think the left wing in this country would rather bash the middle classes and America over the head for owning cars and using plastic bags rather than resort to that; that's far more satisfying.
James, Sherborne, Dorset
Why cant we just plant masses of trees.....
buildmany more wind farms (many mnay more)
A conceted effort to plant as many trees as possible, in every country around the gloge....Sure we are creating a massive carbon sink but im sure we have cut many more trees down than we have ever planted....
Seeds are almost free....
Put a high tax on beef, and use the fields for trees..
Who likes maccas nowadays anyways?
Come on...its seems so easy...lets reforrest the world....we would see a marked improvement in five years....
MORE TREES, MORE RENEWABLES=HAPPY PLANET
Benjamin, LONDON,
The notion that eco efforts made primarily in Europe can somehow "make a difference " is just a flawed concept.
If the strength of European membership is so good for Britain then let's see more real tangible action by the Eurocrats to bring the major offending nations to the East and West of the continent of Europe to the negotiating table.
But don't hold your breath!!!
Trevor Bates, Ormskirk, England
You are wrong because you mistake the two main motivations of the global warming brigade. They are nothing to do with saving the planet - any saving we could possibly make would be taken up by moth's of doal power stations in China. They are about selfrighteousness and telling other people what to do, about the two purest and intense pleasures known to man.
Secondly there are the old lefties of the 60s and their children who, having failed to destroy capitalism by surrendering to the Soviet Union, are creeping out of the woodwork.
Peter Croft, Cambridge, UK
I am a sceptic as to the real reson why the earth is warming. When we have the opposite (i.e. global cooling) it is referred to as a 'Maunders Minimum'. This devolves fron the research of Edward Maunder in the 19th century.
He had spent years studying early medieval records to establish what had caused a Europe wide famine, caused by persistent cold that had lasted for over a hundred years. He also discovered that there had been other such occurences of shorter duration throught subsequent history.
Later he studied similar records from India and, as she opened up to the outside world, China to find that they too had suffered the same famines during the same periods. In China however he also found that they had been studying the incidence of sunspots for over two thousand years and when he compared the instances of these with those of the famines he realised that they coincided.
Only when sunspot activity increased did the climate warm again and the famines desist.
figurewizard, Hampshire, UK
It's bizarre but true that the main effects of high fuel taxes in the UK are to encourage more Chinese and Indian people to buy cars..
The tax reduces UK demand. Which reduces the price of fuel... populations which don't have cars can then afford to buy and run them.
All effectively subsidised by the tax collected at UK forecourts.
Katie, Cambridge, UK
At the end of the day all this navel gazing is pointless. The true problem is that the earth is a finite creation and the human activities on the planet are consuming more and poluting more than the world can sustain without it going into a spiral of climatic change caused directly by US. We need reduced populations, just as China has achieved with it's one child policy. Unfortunately such action produces profound demographic changes. This is the reason why we should all now consider and take acion individualy on whether large families are a good thing in any country. The result in failure to tackle this can only be more climatic change and an increase in wars over declining resorces both in food, water and other essentials. That would be a bad way to solve the problem.
David Nammory, Liverpool,
You assume they are going to have more oil available to export?
World oil production is plateauing (not liquids, crude oil extracted) the increase in demand and stagnation of supply is rapidly increasing prices. Oil exporting countries are making a fortune which is fuelling massive internal growth. Only half the oil produced is exported, the other half is used internally by producing nations. With SA and Russia increasing internal consumption without increasing production oil exports could be eliminated around 2030.
The low EROEI of non conventional fossil fuels make them a non starter (ethanol,tar sands etc)
The future is surface electric transportation with large scale wind, solar and nuclear power.
Importing massive volumes of energy to use inefficiently is trade suicide.
We are reaching geological and environmental limits
Matt, U.K,
Every bag of coal and barrel of oil that green-hearted UK does not use will be gladly bought and burnt by China.
Simon Osborne, Hong Kong,
You're not making sense in your comment about carbon trading. The point about carbon trading is to incentivize people like the villains you mention to reduce their emissions by sellling the reductions they achieve at a healthy profit. the problem is making sure that those credits are genuine. china has 100,000s of power stations and factories, it will be the UN's job to certify them. How long will that take? How credibl will it be? If it's not credibly, you will have Japanese companies paying for credits to China which is not in fact reducing emissions, but simply trousering the money. Policin this will be a nightmare.
In addition, China' ability to sell credits will be crimpes once it agrees to national reduction targets of her own, post-Kyoto. At the moment, as a developing country, China's contributions are voluntary. Russia was given a break because the country was in a recession in 98, and therefore does not have many credits to sell - hence, expensive.
Dan, Tokyo,
Over 400 World Wide Prominent Scientists Disputed Man-Made Global Warming Claims in 2007. See http://tinyurl.com/2dv6nz
Dr Coles, Los Angeles, USA
Gary, you're amazing. I agree totally with what your saying. Global warming is one of the biggest threats to mankind and oil companies should not step up production to satisfy demand. Carbon capture and reforestation are true solutions that we can identify with including higher tax on oil products and as wonderkid said, plastic bags should be banned... Thanks,
Ben, Bristol,
Yes, the main reason reducing fuel will not help climate change is because climate change is entirely natural and mostly driven by that gigantic ball thermonuclear explosions and magnetism in the sky called "The Sun".
Robinson, London, UK
Gary, I agree that these 'feel good' actions by consumers are a drop in the ocean - and to be frank, pointless. However, plastic bags on their own are appalling. They drift (hundreds of miles) towards the sea where they (and six pack beer can holders) get entangled in sea animals and birds, leading to a slow death. A good reason on it's own to ban them, world wide, overnight. (Believe me, everyone, and I mean, everyone, would still manage to go shopping and get it home. We have suffered far far greater 'hardships' in our time on this planet and survived, so an instant ban on plastic bags would be a minor - temporary - inconvenience. An alternative would arrive quickly thanks to our ability to innovate under pressure. (Moon landing, invention of atomic bomb, etc!) And onto the big issue of energy, file this for the records, the future lies with solar energy - nothing much else. The magic lies in making it a commodity, so we can continue to be driven by greed - and save the world too!
Wonderkid, Oxford, England