Tuesday, February 19, 2013

Don’t Take Nocera for an Answer

Joe Nocera has a rather muddled column in today’s New York Times about why, in his view, stopping the Keystone pipeline would do little to forestall climate change.  Along the way he confuses mitigation and adaptation and generally gets carts and horses all scrambled up.

Abstracting from sequestration, mitigating the buildup of greenhouse gases means just one thing, leaving fossil fuels in the ground.  The more we leave there, and the greater their CO2 equivalent, the less climate change we’ll have.  Switching to green energy, achieving conservation efficiencies and all the rest is about how we can do this with minimum adverse impact to our standard of living—how we can adapt to what we have to do to mitigate.  This is very basic stuff but easy to lose sight of.

What this means is that making it economically impossible to develop the Alberta oil sands contributes to mitigation, as long as it’s not coupled in some way with greater exploitation of some other resource.  So what happens if the Keystone pipeline is not approved?  First, no Alberta tar sands, assuming the pipeline to the Pacific is stopped too.  Second, greater scarcity of supply means some increase but certainly no decrease in the price for oil in the US.  Hence at least some of the Alberta sands will not be offset, and competing supplies at the moment have a lower CO2 equivalence, so from a mitigation perspective it’s a clear gain.

Of course, trying to keep oil in the ground one pipeline or coalfield at a time is an inefficient strategy; Nocera is absolutely right about this.  Much better would be a permit system that restricted the amount of fossil fuel entering the US economy.  Even a tax to restrict extraction and imports, as advocated by Hansen, would be a lot better.  But the US is politically incapable of passing such a law over the next two years and probably at least two more years after that, so, with the greenhouse gas clock ticking away relentlessly, we have to do what we have to do.  Stopping Keystone is a useful start, and it’s more than merely symbolic.

Incidentally, why would Nocera say that “we are far better off getting our oil from Canada than, say, Venezuela”?  Has he made a calculation about the economic good that US dollars would do in the pockets of oil sector workers and investors in Alberta compared to the social programs Chavez is funding with oil money in Venezuela?  From a purely economic point of view, what difference does it make to the US current account deficit whether we exchange our dollars for loonies or bolivars?  And if relations sour further between the US and Venezuela, does Nocera expect the Venezuelans to bankrupt themselves by refusing to sell their oil?  (Try that strategy out on Iran.)  Sorry to make such a big deal of it, but vacuous comments like this are truly annoying.

1 comment:

kevin quinn said...

Peter: he also missed the econ 101 class on the effect of a tax. At the end of the article, he says Hansen wants a carbon tax. Nocera says that this would raise the price (true), whereas discouraging production would require a lower price! Joe, the tax raises the price to buyers while LOWERING the price received by sellers. Can you say "tax wedge?" I knew you could!