One challenge in writing about hyper-local issues like transport infrastructure and urban planning policies is that it’s easy to lose sight of the big picture.
Planet-wise, the big picture is climate change. As California Governor Jerry Brown said in a recent interview, our environmental impact increasingly has an “uncompromising gravity”: climate change is a potential extinction event for the human race. This is difficult to comprehend:
The trouble with climate change is that you can pass tipping points, and down the road it is going to be enormously difficult and expensive to change with all the embedded infrastructure. Enormously difficult. Even though today it’s relatively trivial. To de-carbonize the economy, even though it’s massive and would take trillions of dollars, it could be done. But it would take a real mobilization….
And there’s an industry of denial, of manufactured skepticism, all for short-term gain, or because of an ideological fear of more regulation that will curb unfettered market behavior or individual consumption. So people don’t want to believe there’s an absolute out there called the environment, called the climate system. But we know there is. We didn’t make the sun shine today. It was raining for a couple days. We didn’t do that. So what made that? What made that is the whole atmospheric chemistry.
Now, can 7 or 9 billion people, can several billion cars and coal plants affect that? Most of the scientists say yes. And if they can, how are we going to un-affect it? See, that’s the simple-minded thing. Up until 1850 you never had more than a billion people. And what did they do? Run around in their little clothes and with a little bit of gunpowder here and there.
Now we have massive technology. The human impact is multiplied, is unimaginably greater. But the human capacity for wisdom has not improved an iota. So there’s the problem.
The impact of anthropogenic greenhouse gas emissions can readily be observed in the temperature record. For example, climate scientist Ed Hawkins recently made this mesmerising and worrying animated gif of 156 years of temperature deviations:
As Jerry Brown notes, durable investments like transport infrastructure, electricity generation, and the built environment in general lock in future emissions. The things we build today will shape our behaviour and constrain our options in the future.
That’s one of the reasons why it’s so important to build cities that give people the opportunity to live in proximity to jobs and urban amenities, and which offer people abundant and attractive transport choices. The alternative is travelling ever-longer distances by car, and emitting ever-more carbon dioxide.
In the long run, electric vehicles might make this tenable for the climate, but it ain’t going to happen quickly. The NZ government’s current expectation is that EVs will make up at most 2% of the fleet in 2021. (I would love to be proven wrong about this!)
However, sticking with the “big picture” theme of this post, urban form isn’t necessarily the biggest problem we face – or the biggest opportunity to do better. A consistent global approach to carbon pricing would be fantastic. More rapid uptake of carbon pricing at a national level would be almost as fantastic.
Or how about a really radical idea: Stop subsidising fossil fuel extraction and use.
The costs of fossil fuel subsidies are large, and probably outweigh the total value of carbon taxes levied on burning them. New research from UK economist Radek Stefanski suggests that subsidies for fossil fuels cost a total of 3.8% of global GDP, or $1.82 trillion per annum.
Because consistent data on fossil fuel subsidies is hard to come by – many subsidies are buried in obscure expenditure categories, or disguised as distortions in the tax code – Stefanski develops an innovative estimation technique. He observes that emission intensities – carbon emissions per dollar of GDP – follow a predictable “inverted U” shape, as shown in the following chart.
But some countries deviate from the trend: their emissions are higher than predicted by their development level. Stefanski uses that to identify the degree to which governments must have intervened in order to make fossil fuels artificially cheap.
Interestingly, this results in a lower estimate than previous studies using alternative methods, e.g. focusing on variations in prices for fossil fuels. This suggests that, if anything, Stefanski’s estimate of $1.82 trillion in fossil fuel subsidies is on the low side.
The disturbing thing is that there has been an increasing trend towards subsidising fossil fuels over the last 15 years, in spite of the fact that the evidence on the ill effects of burning them is increasingly clear. That’s illustrated in the following chart, which illustrates variations between countries that “tax” fossil fuels and those that subsidise them. Essentially, the taxes have grown smaller and the subsidies larger.
The Oceania region has also moved towards offering substantial net subsidies to fossil fuels. As Stefanski doesn’t provide a country-by-country breakdown, it’s not clear whether this trend is driven by Australia’s fetish for coal mines, or whether New Zealand also participates in the madness. But it’s not good.
Lastly, it’s worth considering what the optimal tax on fossil fuels might look like in the aggregate. (It’s almost certainly not a $1.82 trillion subsidy!)
Credible estimates of the social cost of carbon dioxide emissions range from around US$37/tonnne to US$220/tonne. (There is significant uncertainty about exactly how bad climate change will be for human civilisation.) Globally, we emit around 35.7 billion tonnes of CO2 from burning fossil fuels.
That implies that burning fossil fuels imposes a social cost – which will be experienced primarily by young people and future generations – in the range of $1.3 trillion to $7.9 trillion.
Basically, instead of subsidising fossil fuel extraction and use to the tune of 3.8% of global GDP, we should tax it a similar amount. That’s a measure of how bad current global policies on climate change and fossil fuel use are.
Something to keep in mind…