Carbon trading for down under?
The Australians may be making headway towards their own carbon emissions trading scheme with the publication of a new report from economist Ross Garnaut. Here is the link to the Garnaut Report web site. And this BBC news video provides coverage from the world’s driest continent.
Cartoonists and Climate Change
Some stunningly good cartoons here in the Independent.
Oil dependency and market failure
Chancellor Alastair Darling offered us these brave words
““If we we don’t reduce our dependence on oil ... we will continue to expose ourselves to the uncertainty of the oil market…..It is important that we reduce our dependency far more quickly than perhaps people thought was necessary.”
It is a shame that the government has wasted over eleven years in producing a credible and coherent energy policy. I was chatting to a guy on the train down to London this morning. He had over twenty-five years experience in the energy industry, much of the latter part of his career was within the nuclear sector working as a senior engineer. He made a rather pertinent point that, once we realise that moving decisively to nuclear is inevitable, we will run into major shortages of the skilled personnel needed to construct the new nuclear power stations. Most of those required have long since retired from the industry and we will be dependent on nuclear engineers from the USA and far east Asia.
Anatole Kaletsky was on good form in the Times today writing about three market failures in the oil industry
1/ The huge gap between the marginal cost of producing oil and the marginal cost of supplying oil substitutes
2/ Monopoly power in the oil business - controlling the supply of oil - “there is nothing efficient about the level of prices set by the market”
3/ The ramping up of oil prices by institutional investors and the incentives to invest in oil exploration rather than much needed investment in non-oil new technologies
The rest of Anatole’s article can be found here
Stern warns that cost of tackling climate change has doubled
Nick Stern - perhaps the most famous economist alive in the world today? His talk at the RES Annual Lecture in November 2007 was one of the highlights of my year and no doubt his diary is full for the enxt couple of years at least! Lord Stern of Brentford is quoted as saying that the cost of tackling climate change has increased significantly since the publication of the Stern Report in October 2006. Speaking at the launch of the Carbon Ratings Agency he is quoted in the Guardian as saying that said evidence that climate change was happening faster than had been previously thought meant that emissions needed to be reduced even more sharply. The rest of the Guardian article is here.
Weigh less - pay less
More than one student has asked me in the past why airlines so not link some of the cost of a ticket to the actual weight of the customer? After heavier passengers might be expected to have a detrimental effect on fuel economy and perhaps on the volume of carbon emissions?
read more...»Backbone needed for a carbon tax
Tim Harford makes a case for the carbon tax as a catalyst for energy-saving innovation
“The Financial Times has been calling for a credible price to be put on carbon emissions, either through a carbon tax or a serious cap-and-trade scheme. Most economists – including this one – would agree.”
The rest of his article can be found here
Protecting the Natural Health Service
“Under siege from climate change, development, pollution and aggressive new farming methods, the country’s biodiversity is already significantly less rich than it was 50 years ago.” The Independent continues to promote it’s environmental agenda today with a striking front cover and leading article on the threats to the UK’s natural habitat and heritage. There is a strong economic and social case for a holistic approach to protecting and improving our natural resource base including paying farmers an income for their environmental husbandry and stewardship.
read more...»Flood defences, cost benefit and opportunity cost
Money spent on flood defences both here in the UK and overseas raises plenty of interesting questions relating to the use of cost benefit analysis and the opportunity cost of public money. What are the external costs and benefits of flood defence schemes? Are flood fences a pure public good? Who should pay for them? There have been several excellent news articles and video clips on this issue on the BBC web site in recent days - here is a selection
read more...»Revision: Climate Change Policies
A brief revision PowerPoint used in a lesson on climate change policies .... I kept the analysis diagrams outside of the presentation
PowerPoint
Climate_Change_Policies.ppt
Carbon Trading - News Update
Here are three good articles on carbon trading for students wanting to be up to date and have some more arguments to hand:
BBC: “Carbon market’s value hits $64bn”
Nova Scotia News: “Canada may hook up with the EU carbon trading scheme”
Reuters: “British government shelves plans for personal carbon trading”
Jeffrey Sachs on Carbon Trading
Jeffrey Sachs features on “You ask the Questions” in today’s Independent. There are loads of interesting questions and answers - Sachs remains positive about China’s growth potential although he expects it to decelerate to around seven per cent in the years ahead. Here he is on a question about carbon trading .... good evaluation here for students preparing for a question on carbon trading versus carbon taxes versus other policy measures:
“There is a good case for putting a price on carbon emissions but it is more straightforward to do it as a tax rather than a system of tradable permits. It would be easier to tax carbon at source – coal, oil, and gas companies. Tradable permits or carbon taxes will not help develop low-emission technologies. We need to combine carbon pricing with initiatives to promote sustainable energy and farming technologies.”
Catch the remainder of his article here
The external costs of food waste
Over 4 million apples and over a million and a half bananas are thrown away in Britain every day. This video from Newsnight is excellent on the external costs of the food we throw away - estimated by some to be worth around £8 billion a year. Should we actively encourage food scavengers? What are the strategies we should be adopting to reduce the amount of food thrown away? This is a good topic to use to teach evaluation skills for AS microeconomics.
Unsustainable world
BBC’s Newsnight has been running an excellent series of programmes - Unsustainable World” - here is the link to the relevant web site
Simple ideas work best
Sometimes the simplest ideas work the best especially when it comes to environmental policy. Today the Campaign for the Preservation of Rural England launches its Stop the Drop campaign in a bid to raise awareness of the impact of litter and fly-tipping. And Government minister Joan Ruddock is quoted in today’s Times saying that she is receptive to the idea of restoring compulsory deposits on plastic drinks bottles and aluminium containers as a way of incentivising people to take bottle back for recycling and reducing the volumes heading for landfill. It has worked in the past - ask the good people of Oregon. What is stopping the government? Get on with it!
Bio-fuel curse and cure
Today marks the introduction of the new EU Renewable Transport Fuel Obligation and there has been a huge amount of coverage about the economic and environmental impact of the switch towards biofuel production.
read more...»Al Gore’s new presentation
In Al Gore’s brand-new slideshow he presents evidence that the pace of climate change may be even worse than scientists were recently predicting - previewed here on Ted. Clearly a work in progress and heavy on rhetoric but a taste of his follow on presentation from An Inconvenient Truth.
read more...»Gone fishing?
The Marine Bill comes before parliament today and yesterday the latest statistics were published on the state of the UK marine fishing industry. It is a good example of a sector in long term structural decline affected greatly by EU fishing quotas and also by the collapse in fish stocks brought about by over-fishing in years gone by.
Some snippets on the industry
read more...»Carbon prices head higher as emissions targets start to bite
There was some important information this week from over 10,000 power generators, steel, cement and aluminum manufacturers. The effectiveness of carbon trading in creating the right incentives for power users to cut emissions depends on there being a scarcity of carbon permits reflected in a price high enough (and sufficiently predictable in the medium term) for investment in improved fuel efficiency to be commercially viable. A couple of years ago the market price of carbon collapsed when it became clear that the EU had been overly generous in handing out free gifts of carbon permits. The criticisms were valid and the long term future of the carbon trading scheme was called into question.
But the signs for the second phase of this innovative market mechanism look more promising.
read more...»Tim Harford takes a dig at green taxes
VAT on gas and electricity too low? Excise duty on petrol and diesel too high? Yes says Tim Harford in his Undercover Economist slot this week. “Green taxes have been fussy and poorly-targeted, by turns too stringent and too lax ... This government – like most governments – likes to use the tax system as a way of expressing its moral views: hooray for pensioners, down with Jeremy Clarkson. Cheap politics for them, less so for the taxpayer.”
The rest of the article is here
A new era for air travel
Today marks a momentous triumph for competition over protectionism. Anti-competitive practices dating back to the 1944 Chicago Convention will finally be scrapped for the new Open Skies agreement between the European Union and the United States. Currently, only British Airways, Virgin Atlantic, United and American Airlines are legally allowed to offer direct flights from Heathrow Airport to the US. But after the deregulations of transatlantic air travel, the market will at last be open to competition from challengers.
read more...»Interrelated markets and climate change
An article in The Times recently explored the economic implications of reducing demand for oil and energy in the West.
read more...»Fashionable changes in preferences
A few weeks ago I blogged about information failure and the demand for plastic bags. This BBC news video clip considers just how powerful fashion statements can be in altering our preferences - there are signs that high street retailers are moving decisively away from the default option of offering a plastic bag to all customers.
Fragile Earth Gallery
A picture tells a thousand words. The Guardian’s new Fragile Earth picture gallery provides some wonderful and often disturbing images of our fragile natural resource base and the impact of man on the environment. This could be a good resource to turn to when teaching environmental economics? The paperback version of Fragile Earth: What’s Happening to Our Planet? is now available from Amazon and other main street booksellers.
Europe’s 20-20 vision
Political leaders of the 27 EU nations are meeting to discuss proposals to make deeper binding commitments to CO2 emissions. This BBC news article provides good background for AS students looking at the issue for their AQA unit 3 paper and it is also relevant for A2 students covering environmental policy. I am always slightly suspicious of grand design statements, as always the devil is in the detail. It might be worth getting your students to take this interactive test available on the BBC web site.
“Aside from cutting emissions by at least one-fifth by 2020 from 1990 levels, EU states have agreed to use 20 percent of renewable energy sources in power production and 10 percent of biofuels from crops in transport by the same date.”
The Big Question looks at carbon trading
Plenty of environmental economics in today’s edition of the Independent. The regular Big Question feature looks at the costs and benefits of carbon trading in the wake of the government’s support for fresh investment in coal fired power stations. Read The Big Question: What is carbon trading, and will it help in the battle against climate change?
Their editorial lays into Chancellor Alastair Darling for being ready to sacrifice environmental targets because of a faltering economy.
“Environmental levies need two key features. The first is that they be substantial enough to change behaviour. The second, and no less important, is that the proceeds are seen to be channelled into green schemes, or to provide tax breaks for those who make more environmentally friendly choice.”
Read: Make the polluters pay, and give the others a break
Finally there is a feature on how the effects of climate change tend to hit disproportionately the poorest communities around the world - the costs of adapting to climate change are enormous and some regions and communities are least able to cope.
More environmental news and features in the Independent are available here
“10 Grand” Design
If, like me, you dream of living in a modern home of the like seen in Grand Designs, this link from the BBC gives you hope - and perhaps offers a solution to the UK housing shortage.
read more...»Information failure on plastic bags?
The Times yesterday carried an article on a dispute among scientists about the true scale of the risks facing marine life from the deluge of plastic bags find their way into our seas and oceans. The article came at the end of a week when Marks and Spencer introduced a 5p per bag charge for food sales and Gordon Brown threatened government action unless the supermarkets take fresh steps to lower the volume of plastic bags used annually.
read more...»The Economics of Food Waste
There was a terrific programme on the economics of food waste on BBC Radio 4’s Food Programme this lunchtime. “The Food Programme investigates the food waste created by restaurants, food manufacturers, supermarkets and airline caterers.” Details of the programme are available here.
If we believe them, the scale of the mountain of uneaten food is vast and a stunning waste of scarce economic resources. Food waste comes from household bins, supermarkets, pubs, restaurants, airline caterers and other commercial food producers. From printing errors on packaging to errors on sell by dates, from food that is delayed in transit for just a few days to the dumping of wasted products from supermarkets that have failed to meet their sales targets, we are serial disposers of millions of tonnes of food waste. How can we move towards a more sustainable future for our food industry? The methane gas from food waste accumulating in landfill sites is a significant and growing contributor to global warming. The programme offers rays of hope - there is money to be made from kitchen scraps that can be collected and converted into electricity and compost - but the scale of this is minute at present. A cultural change is needed - not least a change of behaviour by consumers and a move away from knee-jerk marketing from food retailers which take them away from longer term planning about how much food they need.
Growing food waste mountain blamed on get-one-free offers
Debating Climate Change
The LSE runs an extensive programme of external lectures which often attracts ‘celebrities’ from the world of academia.
Podcasts and transcripts are available from the LSE website and in October last year Bjorn Lomberg and Simon Dietz debated the issue of climate change.
read more...»Learning Lessons from: Sir Stelios Haji-Ioannou
[Editor’s note: this is the first of a new series called Learning Lessons, detailing the author’s exploits on the London lecture circuit. For further details about the mailing list, contact .(JavaScript must be enabled to view this email address)]
Last night Sir Stelios Haji-Ioannou returned to the stage of the LSE. The founder of easyJet (of which I’m sure you’ve all learnt plenty about in case studies about price competition in contestable markets!) is a world-renowned entrepreneur and received a knighthood at the tender age of 39. The title of his talk was “Brands, Serial Entrepreneurship, the Environment and Giving Something Back!”
read more...»
