Truth Spill: Gulf Disaster Brings Home the Real Costs of Fossil Fuels

James K. Boyce

“An upside-down faucet, just open and running out.” That’s how an oil-spill expert at the Woods Hole Oceanographic Institute describes the massive release of crude oil into the Gulf of Mexico that began April 20th at British Petroleum’s Deep Horizon oil rig off the coast of Louisiana. [See live video feed of the spill here.]

The disaster has opened an information faucet, too: every day, more truth about the real costs of fossil fuels is emptying into public view. Desperate efforts to control both spills are underway.

After its 450-ton blowout preventer failed, BP tried burning the oil slick, creating the macabre spectacle of the ocean on fire.

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Socializing Risk: The New Energy Economics

Frank Ackerman

Despite talk of a moratorium, the Interior Department’s Minerals and Management Service is still granting waivers from environmental review for oil drilling in the Gulf of Mexico, including wells in very deep water. Until last month, most of us never thought about the risk that one of those huge offshore rigs would explode in flames and then sink, causing oil to gush out uncontrollably and befoul the oceans. The odds seemed low, and still do: Aren’t there lots of drilling rigs in use, year after year? Twenty years ago, your elected representatives thought that you’d be happy to have them adopt a very low cap on industry’s liability for oil spill damages.

Nuclear power was never quite free of fears; it was too clearly a spin-off of nuclear weapons to ignore the risk of a very big bang. Yet as its advocates point out, we have had hundreds of reactor-years of experience, with only a few accidents. (And someday when Nevada’s politicians aren’t looking, maybe we can slip all of our nuclear waste into a cave in the desert.) Again, the risks are so low that you’d be happy to learn about a law limiting industry’s liability for accidents, wouldn’t you?

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Climate Change and the Immigration Debate

Lyuba Zarsky

Arizona’s draconian anti-immigration law has galvanized popular protest and reignited demands in many quarters for an overhaul of US immigration policy. For those hoping that Obama’s next big legislative battle would be over climate change, however,   the immigration firestorm could not have come at a worse time. Besides eclipsing climate change in public debate, the shadow of Congressional action on immigration scuttled the support of a key Republican, Senator Lindsey Graham of South Carolina, for a Senate climate bill. Without Lindsey, the climate bill doesn’t have a prayer.

But apart from political minefields, are immigration and climate change such separate policy issues? Not if climate change is understood, as it should be, as a problem requiring urgent action both not only to reduce carbon and other greenhouse gas emissions but also to adapt to much more volatile local and regional climatic conditions driven by global warming.

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Global Environmental Governance: Lessons in Herding Cats for Rio+20 Negotiators

Adil Najam

The first PrepCom negotiations for the 2012 United Nations Conference on Sustainable Development (popularly being called EarthSummit 2012 or Rio+20) began in New York at the United Nations on Monday and will end on Wednesday. One of the two themes for Rio+20 is institutional frameworks. I have already argued here that Rio+20 needs to shift the focus towards global governance for sustainable development. In order to do so, however, Rio+20 will also need to understand how we got to where we are in terms of global environmental governance.

In this video (made for the International Institute for Sustainable Development in 2008) I highlight the lessons of some of my earlier research on global environmental governance (GEG). I suggest that (a) GEG is like herding cats and if you want to herd cats you need to be nice to them; (b) the evolution of GEG is, in fact, a good story – it is not the story of a system that failed, it is the story of a system that has outgrown its design; and (c) better global environmental governance will necessarily require a redefinition of what we mean by “global environmental governance.”

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International Climate Change Lottery: a financing mechanism that could actually be agreed in Cancún.

Miquel Muñoz, Guest Blogger

It is increasingly evident that a comprehensive climate change agreement is unlikely at the next climate change meeting (COP 16) in Cancún, Mexico, on December 2010. Finance – that is how much money will be provided, where will it come from, how will it be used, and who will hold the strings of the purse – is one of the main obstacles to agreement, compounded by deep distrust between developing and developed countries. While a comprehensive deal is unlikely, there are financing instruments that could conceivably be agreed upon in Cancún; for example, an International Climate Change Lottery.

The idea of an international goal-driven lottery has been regularly raised since the 1970’s. A good starting point is work by Addison and Chowdhury in 2003 analyzing the prospects of harnessing the world lottery market (worth US$126 billion and generating US$62bn in gross profits) for the purposes of development.

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Getting Ready for Rio+20

Adil Najam

Officially speaking, the preparatory process for the Rio+20 Earth Summit to be held in Brazil in 2012 begins on Monday, May 17. But by real measures the discussions – even negotiations – on Rio+20 have now been going on for many weeks.

Certainly, the recent meeting of the Commission on Sustainable Development (CSD-18, 3-14 May, 2010) was largely consumed by the shadows of Rio+20.

The world has already decided that there will be a “Rio+20” conference: the official title is “The United Nations Conference on Sustainable Development.” They seem hesitant to call it a “Summit,” let alone an “Earth Summit” just yet, but it is nearly certainly that eventually they will. It is, after all, the 20th year commemoration of the Rio Earth Summit of 1992, which itself had marked 20 years since the 1972 Stockholm conference.

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Ask an Economist: Carbon tax or permits?

James Boyce

Triple Crisis Blog invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Do you think that carbon/pollution/energy taxes could be a mechanism that helps us reduce our use of fossil fuels, while bringing funds to the governments that need them to pay their climate debt?

Boyce: Pricing carbon – via taxes or permits – is crucial to reduce the use of fossil fuels. Taxes and auctioned permits are equivalent: the only difference is that taxes set the price and let the quantity of emissions vary, whereas permits set the quantity and let the price vary. Both yield revenues to governments.

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Estimating the Social Cost of Carbon

Frank Ackerman

For the first time, the U.S. government is working to limit carbon emissions – most notably through new fuel efficiency standards unveiled April 1. To inform cost-benefit analyses of proposed policies, the Obama administration has relied on an interagency group’s estimates of the “social cost of carbon,” the socioeconomic impact of every ton of carbon dioxide that goes into the atmosphere. The higher the social cost of carbon (SCC), the more stringent the regulatory standards that will be deemed to be worthwhile.

So far, no definite SCC has been set, but the interagency group has proposed $21 per ton. In a new Economics for Equity and the Environment (E3 Network) white paper, Liz Stanton and I analyze the economic models used by the interagency group. They find significant shortcomings, and show how they lead to substantial underestimates of the risks and costs of climate change.

Will America Buy a New Climate Policy?

James Boyce

Without much fanfare, U.S. legislators last December unveiled a new climate bill that just might succeed in breaking the political gridlock that has blocked action on global climate change. The bill, co-sponsored by Senator Maria Cantwell (D-WA) and Susan Collins (R-ME), is a sharp departure from the cap-and-trade bill that passed the House of Representatives last June but subsequently died in the Senate.

The Carbon Limits and Energy for America’s Renewal (CLEAR) Act proposed by Cantwell and Collins is a “100-75-25-0” policy:

  • 100 percent of the permits to bring fossil carbon into the U.S. economy will be auctioned. Polluters won’t get any permit giveaways, and there will be no scope for speculation and market manipulation by Wall Street traders.
  • 75 percent of the auction revenue is recycled directly to the public as equal per-person dividends. The majority of households will receive more in these monthly dividends than they pay in higher energy costs.
  • 25 percent of the auction revenue is dedicated to investments in energy efficiency, clean energy, adaptation to climate change, and assistance for sectors hurt by the transition away from the fossil-fueled economy.
  • Zero offsets are allowed. In other words, polluters can’t avoid curbing use of fossil fuels by paying someone else to clean up after them.

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