Climate Feedbacks and Climate Change Denial

The NY Times recently ran an article titled Clouds' Effect on Climate Change Is Last Bastion for Dissenters. What was interesting to me about the article was not only the right wing's reasoning behind climate denial but also the rather sophisticated appeal to climate change feedbacks as a reason not to worry about CO2 emissions. We've come a long way from arguing that GHG emissions don't cause global warming to the "last bastion" of climate change denial, the Iris Effect proposed by Richard Lindzen.

As the directed graph above shows, the right wing has now conceded that CO2 emissions increase global temperature. However, Lindzen argues that warming will increase rain at the equator, depriving cirrus clouds of the moisture necessary for their formation. Since cirrus clouds have the effect of warming the Earth by preventing heat from escaping to space, fewer cirrus clouds could mean a cooler Earth as the Iris opens.

Unfortunately, there is no data to support Lindzen's arguments. Although the feedback effect might exist, it is either (1) too weak to deal with the massive amount of CO2 that is being pumped into the atmosphere as a result of fossil fuel burning or (2) actually a positive loop.

The good news is that, supposedly, this is the right wing's last best argument. The bad news is that we're probably going back to one of the old irrational arguments.

Right Wing Fixation on Fertilization

The NY Times ran a comprehensive article today (here) that explores the important role of the world's forests in controlling CO2 emissions and global temperature. The causal diagram below summarizes the article (click to enlarge).

CO2 emissions from fossil fuel burning enter the atmosphere where the greenhouse effect increases global temperature. At the same time, atmospheric CO2 concentrations are absorbed (Co2 sequestration) by the oceans and by the forests. Co2 fertilization increases the growth rate of the forests, but wild fires, insect infestations and water deficits created by global warming decrease forest biomass as does outright deforestation and poor forest management techniques.

The article details how the right wing has latched on to C02 fertilization to argue that global warming (if it really exists) will benefit the planet. Unfortunately, the forces reducing forest growth are overwhelming the CO2 fertilization effect.

In addition to being sinks for carbon emissions, the forests and the oceans provide biodiversity (fish, animals and plants) that are threatened by ocean acidification and forest die-off. The article concludes that we cannot count on natural feedback effects to control climate e.g., there are limits to how many trees we can plant on the available land as a way to absorb Co2 emissions. The only option is to reduce CO2 emissions.

Integrated Assessment Models: PNNL GCAM

The IPCC is in the process of developing the next generation of emission scenarios. The scenarios are used to generate anthropogenic radiative forcings that drive Global Circulation Models. The so-called Integrated Assessment Models (IAMs) are being developed by government agencies and research laboratories in the U.S., the Netherlands, Japan and Austria. It is worth trying to understand and simplify these models because they are critical to conclusions the IPCC is drawing about climate change.

In the U.S., the Pacific Northwest National Laboratory (one of US DOE's ten national laboratories) has developed the Global Change Assessment Model (PNNL GCAM) which will be used to generate scenarios for the next release of IPCC documentation.

The PNL GCAM model is essentially the same partial equilibrium model you saw in introductory economics textbooks. Basically what these models (and their big brothers, general equilibrium models) do is compute long-run equilibrium prices. Partial equilibrium models look at one market (energy) while general equilibrium models look at all prices. Actual prices are assumed to be deviations from rationally determined long-run prices.

In partial equilibrium models, population growth, technology and gross domestic product are given exogenously. All the model does is calculate energy prices. The existing capital stock is assumed fixed.

It's hard to understand how a partial equilibrium model would be of much use in studying global climate change. Wouldn't there be impacts on food prices from oil prices and fertilizer prices? Wouldn't food prices have an impact on population and production? Wouldn't energy prices have an impact on technology and the existing capital stock e.g., replacing gasoline with electric vehicles?

These models were originally used to help the DOE study energy demand. They were recruited by the IPCC for the study of climate change.

PNNL also has a computable general equilibrium (CGE) model or Second Generation Model (SGM) that is described here. I'll talk about that model in a future post. CGE models are not necessarily an improvement.

Top Performing Companies Welcome Environmental Regulation

Yesterday on CNBC (video here), Tim Solso, CEO of Cummins, Inc. (CMI) was interviewed on Fast Money. Cummins is one of the year's top S&P performers. Mr. Solso had some very interesting things to say about environmental regulation.

"In the 1990's, we saw regulation as a challenge and a problem. But [...now...] we think we're the technical leaders. We invest in key technologies... The tougher the emissions standards and the faster they're implemented, [sic] gives us an advantage. It's a barrier to entry for other engine manufacturers ... Emission regulations are going all over the world ... We're already starting to get ready for the 2014 CO2 regulations with better fuel economy which will benefit consumers. Regulations are a good thing for us and it's a good thing for clean air and a clean environment."

The quote demonstrates that the top performing companies welcome regulation. It's their weaker rivals that are the first to seek regulatory relief. And, the purpose of Capitalism is to sort out and eliminate the weak competitors. Smart environmental regulation is an essential part of the process. Next time you hear politicians complaining about the effects of regulation on "small business," remember that they really mean "weak" businesses.

Back to Cummins, they're stock price history is displayed in the first image (above) along with step-ahead model predictions. The predictions are based on a best-fit model and, in this case, the best fit model is based on secular and cyclical trends in the US economy (the USL20E model). Unlike GM (here), the Cummins stock price is not a random walk.
Over time, there have been periods where Cummins stock was both over- or under-valued. The graph above plots the USL20E model predictions without external shocks, that is, the equilibrium position for Cummins stock price. Right now, at the end of 2010, Cummins stock is about at its equilibrium value.
For the future, the model predicts (above) that Cummins will have a pretty good run at least until 2015. However, there is a lot of variability in the prediction (the dotted lines are the upper and lower 98% prediction intervals), so there is plenty of both potential upside gain and downside loss if you're interested.

Controlling Carbon Emissions

On November 10, 2010 Nature published an article updating CO2 emissions for the world. The article noted that "global CO2 emissions from fossil fuel burning decreased by 1.3% in 2009 owing to the global financial and economic crisis that started in 2008; this is half the decrease anticipated a year ago." In other words, if there is any doubt about the link between CO2 emissions and economic growth, the global financial crisis provided a natural experiment proving the link. It's very difficult (OK, impossible) to run experiments on the world system, so the result is an important finding.

The study goes on to note that once the global financial crisis is over, the economy is expected to resume growing (the IMF, here, expects the global economy to grow by 4.8% in 2010) and emitting at the same pace. The only hope for reducing carbon emissions then is to reduce the carbon intensity of the global economy, that is, quickly shift to low-carbon forms of energy (solar, wind, nuclear, etc.). To me, the shift seems unlikely (cars, buses, trucks and trains are unlikely to run on low-carbon fuel any time in the near future--even all-electric cars will run on energy from coal-fired power plants).

But, the global financial crisis may have been a blessing in disguise, at least for climate change. The time series graph above (the y-axis is CO2 emissions in PgC per year for fossil fuel burning and cement manufacturing) takes the new emission data from the Nature study and forecasts it out to 2020 assuming that the world economy grows by 4%. Although the financial bubble and collapse are clear from the data (and are predicted quite well by the model), the future growth of emission is relatively flat. Small reductions in economic growth would go a long way to stabilizing CO2 emissions. Experience with the financial bubble just might lead to more modest growth than the IMF anticipates. And, slower growth would provide some breathing room to reduce the carbon intensity of the global economy.

The Nature article also has updated analysis of the global carbon cycle. I'll analyze some of that in future posts.

Should We Sequester Carbon?

When people talk about "clean coal" (for example, President Obama) they're really talking about carbon sequestration, a geoengineering approach for the long-term storage of carbon dioxide. Let's see if this is a good or even practical idea.

Here's a simple model taken from Nikiforoff (1959). The dark lines show combustion of fossil fuels and the sequestration of atmospheric CO2. These are industrial, capital intensive activities that work in parallel with natural processes that deal with atmospheric CO2.

QUESTION: Why do we have to rely on carbon sequestration when there is a perfectly good process already in place called the natural carbon cycle? Natural systems already do a better job of carbon fixation. Living matter converts CO2 in the atmosphere into organic compounds (usually sugars) through photosynthesis. Living matter also returns CO2 to the atmosphere through ecosystem respiration. When living matter dies it turns into humus through the process of humification (the stuff you eat with pita bread at a Middle Eastern restaurant is hummus) and then returns to the earth through carbon fixation.

ANSWER: Neoliberal economists have convinced us that capital can always be substituted for natural resources. Here's an example involving natural ecosystem services where it doesn't work. The natural carbon cycle is in equilibrium. Data from the 1990's suggests that we would need to sequester about 6.4 Gt/yr of carbon to bring the systems back into balance--every year for the rest of eternity even if we cap emissions at today's levels (if we don't cap emissions, the 6.4 Gt/yr number will increase exponentially). Does anyone other than a neoliberal economist think this is a practical idea?

A somewhat better response is the UN REDD program (Reducing Emissions from Deforestation and forest Degradation). Unfortunately, reforestation competes with other land uses: food production, livestock grazing and living space for further economic growth (for example, parking lots so that the projected world population of between 5 billion and 14 billion people in 2100 can all have three automobiles and a place to part them).

A better response would be to reduce exponential growth rates and give the environment some time to recover and give us some time to figure out how to live in balance with the biosphere (sometimes called the precautionary principle). The alternative response is to look at sequestration as a marginal part of of a "policy wedge" approach, which would seem to be the way the Obama administration is going. If they play the Stabilization Wedge Game they have until 2056 to get back to 2006 emission levels and then from there get to sustainable emission levels. Do you think they will be successful?

Cap-and-Trade Market Failure

The NY Times recently editorialized on the collapse in the price of carbon on the European Climate Exchange (the ECX system of emissions trading) after the Copenhagen Conference. Although the price of carbon emissions has collapsed to $18.20 per ton, the Times is optimistic: "Fortunately, there is good reason to believe the price of European emission permits will rise over time. Their price tends to fall when the price of oil or the economy slows---dynamics that reduce energy usage and naturally cut emissions of carbon. As the world fell even deeper into recession last year, the price of permits tumbled from a peak of around $45 per ton in July 2008."

The graphic above shows the three relvant time series and a forecast for each. The upper panel shows total volume on the ECX and the second panel shows the price of futures contracts for carbon emissions in December 2010 (data from the ECX). My business-as-usual (BAU) forecast is for a continued price decline and a rebound next year. The bottom panel shows World Oil Prices (data from the US EIA). In the model as in the Times analysis, futures prices of carbon emissions and world oil prices are intimately related. And, my BAU forecast is for increasing oil prices (this shouldn't be a surprise).

The other part of the Times analysis, however, is equally important. Everything depends on what happens in the world economy.

If Europe manages to disconnect from the world economy (no carbon leakage) and fix CO2 emissions, the forecast above would suggest the ECX would be on the path to developing an effective cap-and-trade system.

However, if Europe continues to be linked to the world system (more likely?), there will be continued instability in emissions with no evident cap. If that happens, the cap-and-trade system would probably collapse.

In 2008, the GAO did an analysis of the ECX and concluded it wasn't working as anticipated and made a number of other interesting points I'll discuss in a future posting. Through all this hand-wringing, however, it's important to remember that the best proven way to limit carbon emissions is to control the growth of the world system (best in that controversial cap-and-trade markets are not need, proven in that we've just seen slowing growth of the world system reduce emissions and least likely given the political reality of growth mania).

A Future for Nuclear Power?

The New York Times is reporting that a US DOE loan program combined with cap-and-trade legislation may give new life to the moribund US nuclear power industry. However, the future of nuclear power is not very bright given the problems, to include: "high relative costs; perceived adverse safety; environmental and health effects; potential security risks stemming from proliferation; and unresolved challenges in long-term management of nuclear wastes." A study in the Bulletin of the Atomic Scientists is equally pessimistic given problems with the existing fleet of nuclear power plants.

My own forecasts (using a three-factor index model of the US economy) are more optimistic. Net generating capacity (the top panel above) peaks after 2040 at about a 30% share (lower panel) of total electricity generation.

My forecast should be contrasted with the very pessimistic forecast from the US EIA (the solid line above) compared to my forecast (the dotted line) for net generation in billion kilowatt hours. The EIA forecast is based on an analysis of plans and goals of the nuclear power industry. Time will tell; no one knows the future. The EIA forecast seems more reasonable.

P.S. The first new uranium mill built in the US in 25 years is about to come on line...

Cracks in Climate Policy

In today's keynote address at the Winter Simulation Conference, Undersecretary of Science Ray Orbach highlighted three major challenges for computer simulation: modeling cracks that form in the containment vessels of nuclear reactors, taking a systems approach to CO2 generation and absorption (a fixable flaw in the Kyoto Protocol and the U.S. Cap-and-Trade plans) and including human behavior in Global Circulation Models (GCMs). Each of these problems will require immense amounts of computing power and the U.S. Department of Energy has the computing power available through its Innovative and Novel Computational Impact on Theory and Experiment (INCITE) program.

I'll pick up these topics in later posts. Back to the conference...

Stabilizing Emissions with Policy Wedges

Robert Socolow and Stephen Pacala have a plan to keep carbon emissions in check (as discussed in today's Global Warming Debate). The plan is based on a divide-and-conquer strategy: divide the total emission reductions needed into manageable pieces ("wedges") and propose existing technologies to tackle each wedge.

Total carbon emissions are forecast to be 14 billion tons a year by 2056. To get back to the 2006 level of 7 billion tons per year you need seven billion-ton-a-year wedges for the next fifty years. Pacala and Sokolow actually propose 15 wedges covering end-user efficiency and conservation, power generation, carbon capture and storage (CCS), alternative energy sources and agriculture and forestry--an ample menu of existing technologies to choose from. And, after 2056, we can implement another 3 wedges to get us back to 4 billion tons a year which is around the amount of carbon that the existing earth systems can effectively absorb.

Essentially, Pacala and Sokolow take the Emission Equation and focus on carbon intensity, energy intensity and population growth (it could be one wedge if reduced) while leaving output per capita (economic growth) alone. This is a very attractive formulation (it's even been applied to controlling the US health care system). Electric cars, wind turbines, solar panels, new CCS coal-fired power plants, super-insulated homes, etc. all create economic growth and improve our standard of living.

There is even a Stabilization Wedge Game that can be used as a teaching tool. Actually, the game has drawn more criticism than the scientific articles: the costs are underestimated, the implementation time is underestimated and the demand side (population growth and economic growth) is ignored in favor of technological "fixes".

My problem with Stabilization Wedges is that they ignore the systemic aspects of the environment. Carbon is not the only problem facing the world system. Demand has increased our ecological footprint beyond sustainable levels and there is no quick technical fix for creating more ecological capacity than our current Earth system can provide. We will need both supply and demand solutions.

Carbon Accounting and Policy in Copenhagen

The challenge for policy makers at the upcoming (Dec 7 - Dec 18) UN Climate Change Conference in Copenhagen can be seen from some simple carbon accounting and one equation (as discussed today in the Global Warming Debate).

The Figure above (from IPCC 2007 WG1 Ch. 7 Fig. 7.3) displays the estimated carbon cycle for the 1990's. What's important to notice is the equilibrium flows (up- and down-arrows). The black arrows indicate pre-industrial "natural" fluxes and the red arrows indicate "anthropogenic" (man-made) fluxes. The question here is how much carbon will the biosphere and the oceans absorb relative to how much is emitted. If you add together all the net fluxes for Weathering, Respiration, Land, and Oceans you get 4.4 GtC/yr of carbon absorbed by the biosphere and the oceans. Of course, notice the 6.4 GtC/yr unbalanced emission from fossil fuels.

To say it another way, the biosphere and the oceans are capable of absorbing about 4.4 GtC/yr (+/- 20%). The figure above shows the actual world carbon emissions from 1950 to 2010. In 2008, we emitted 8.59 GtC/yr which is about twice the absorptive capacity of the biosphere and oceans. In other words, sometime in the 1970's or early 1980's the world's carbon cycle went out of equilibrium. Ultimately, that equilibrium has to be restored.

The "Emissions Equations" shows our policy choices:

CO2 = (N) x (Q/N) x (E/Q) x (CO2/E)

(CO2 Emissions) = (Population) x (Output per capita) x (Energy Production per capita) x (Carbon Intensity)

(CO2 Emissions) = (Population) x (Output per capita) x (Energy Intensity) x (Carbon Intensity)

If we want to control CO2 emissions we can (1) reduce population growth, (2) reduce output per capita, (3) reduce energy intensity or (4) reduce carbon intensity. Since reducing population growth is off the table (only China has tried population control) and since reducing output per capita (economic growth) is off the table, we are left with the technical challenges of reducing energy intensity (heavily insulated buildings, electric cars, mass transit, etc.) and reducing carbon intensity using renewable energy sources (solar, wind, geothermal, etc.)

If only it was a "simple" as totally changing out our existing energy systems. The figure above shows a plot of the World's Ecological Footprint (EF), a measure of human demand on all the Earth's ecosystems. The figure above is calculated as a ratio of the number of Earths needed to support human demand over the number of earths actually available (one Earth). Interestingly enough, we exceeded the Earth's ability to meet human demands at about the same time in the 1970's that we exceeded the ability of the biosphere and the oceans to absorb our carbon emissions.

There is no immediate, quick fix technical solution (heavily insulated buildings, electric cars, etc.) for the EF problem. However, both the EF and the carbon cycle have to be brought back into equilibrium. To be successful in Copenhagen, policy makers will have to find a way to take us back the the 1970's in terms of our carbon emissions and our demands on the Earth's ecosystems. With population growth and economic growth taken off the table, they don't have a chance.

A Lens on Climate Change

Had enough charts and box diagrams explaining climate change? Here's a great video site, Consequences by the NOOR climate change project (scroll down the page for video and photography about the pine needle infestation in British Columbia; sea-level rise in the Maldives; the burning coal fields of Jharia, India; nomadic Nenet tribes under threat from global warming; the Canadian oil tar sands; Somalia's environmental refugees; and more).

Scientific Consensus and the Precautionary Principle

Since scientific consensus is never infallible, how do we respond to the debate between the Intergovernmental Panel on Climate Change (IPCC) and its critics? One approach is to adopt the precautionary principle: in the absence of infallible scientific consensus, do nothing that might harm either the public or the environment. The burden of proof is then on the critics.

Applying the precautionary principle in practice can be difficult. For example, higher gas prices will reduce CO2 emissions but place an added economic burden on drivers. Rather than applying the precautionary principle issue-by-issue, let's take a broader look at slowing down the overall growth of the economy. One positive benefit of the current Subprime Mortgage Crisis is that reduced economic growth has led to reduced CO2 emissions.

Our current economic system is caught in a vicious positive feedback loop: population increase (either through natural increase or through immigration) leads to greater consumption which leads to greater resource exploitation and more production, which leads to larger emissions and more people seeking a higher standard of consumption. Politicians are also hooked on growth. Today's new programs are funded by future tax revenues resulting from growth. When the system collapses, as it did during the Subprime Mortgage Crisis, public spending programs become unsustainable.

An economy with a slower growth rate or even a steady-state economy would concentrate on development rather than growth: improve the energy efficiency of existing homes (rather than sprawling into the suburbs), increase recycling, improve the quality and durability of products, replace the existing fleet of inefficient vehicles with electric vehicles, replace coal-fired power plants with renewable sources, improve population health and education, etc. Minimally, slower growth would buy time while new, carbon neutral technologies are developed. Or, we could get off the growth treadmill entirely and focus on improving the quality of life for the existing population.

Does Dane County Need an RTA?

In 2009, the Wisconsin State Legislature passed legislation enabling Dane County to create a Regional Transit Authority (RTA). The justification for the RTA was provided by the Transport 2020 Report. A careful reading of the report can be quite frustrating for those who have tried it. There are many inconsistencies, questionable assumptions and illogical conclusions. However, for me the "Summary Problem Statement" in Chapter 2 provides the easiest way to understand what's going on.

The graphic above is my summary of the issues. The problem is that population growth and other factors are putting pressure on the Dane County transportation system resulting in increased congestion, decreased air quality and decreased safety. Adding or expanding the road system is not an option since land is locked up in the Isthmus that runs between Lake Mendota and Lake Monona.

The rest of the report discusses the policy response comparing solutions based on either Rail Transit or Bus Rapid Transit (or both). The big questions left unanswered by the report are whether either response will actually reduce transportation system pressure and what will be the (1) sales tax consequences (since the RTA can levy a county-wide sales tax), (2) land use impacts and (3) CO2 reductions?

Another question left unanswered is what will happen if we do nothing. Will negative feedback from transportation pressure reduce population pressure and other factors creating transportation problems?

Since Dane County is in the middle of wrestling with these and other RTA-related issues, I'll have more commentary if future posts.