23 April 2011

The Technological Egg and Regulatory Chicken

A few bloggers (e.g., here and here and here) have rediscovered an interest in the case of ozone depletion, apparently via a desire to try to impeach Matt Nisbet's new report in any whichway possible. Nisbet makes a very brief reference to The Hartwell Paper's discussion of ozone policy. The lessons of ozone depletion policy are well worth understanding, so this post is a useful follow up.

In The Hartwell Paper (PDF) the only discussion of the lessons of ozone depletion policy were to characterize it as a "tame" problem amendable to a technological fix, as compared to climate change with is a classically "wicked" problem:
Originally described by Rittel and Webber in the context of urban planning, ‘wicked’ problems are issues that are often formulated as if they are susceptible to solutions when in fact they are not.28 Technical knowledge was taken as sufficient basis from which to derive Kyoto’s policy, whereas ‘wicked’ problems demand profound understanding of their integration in social systems, their irreducibly complexity and intractable nature.. .

The consequence of this misunderstanding was that there was a fundamental framing error, and climate change was represented as a conventional environmental ‘problem’ that is capable of being ‘solved’. It is neither of these. 
The key here is that ozone depletion was a "tame" problem in the sense that it was not only amenable to being solved, but being solved via a technological fix.  Climate change by contrast has more in common with issues such as poverty and conflict, in that such problems cannot be solved once and for all -- but we can do more or less well on them -- and, we argue, they certainly cannot be "solved" via a simple technological fix.

OK, back to the claims now being advanced about ozone.  Apparently some people want to believe that regulation in the case of ozone depletion caused technologies to emerge, almost instantaneously, and that from this lesson we should take (apparently) something relevant for climate policy, perhaps that regulation (if only we could pass it) would also spring forth an immediate technological fix.

The Hartwell Paper formulation is being challenged in current blog discussion by Edward Parson, a professor at Michigan, who wants to take issue with the idea that technological alternatives to CFCs helped to move along CFC regulations. He writes that it was science, and science alone, that led to regulation: "this was ALL about responding to scientific evidence for the risk, not a bit about availability of [CFC] alternatives."

It is my view that Parson claims are way overstated. Consider that DuPont, the world's major producer of CFCs at the time with 25% market share had patented a process for manufacturing HFC-134a (the leading CFC alternative) in 1980 after identifying it as a replacement to Freon in 1976 and had applied for more than 20 patents for CFC alternatives immediately before and after the signing of the Montreal Protocol. Du Pont saw alternatives as a business opportunity, e.g., its Freon division head explained in 1988: "''there is an opportunity for a billion-pound market out there.'' The fact that ozone regulations  focused on production, and not consumption, meant that there would still be a market for conventional CFCS into the 1990s, slowing down the deployment of substitutes, and making the transition easier for industry. Du Pont's decision to back regulation was motivated more by economic opportunity -- an opportunity that existed solely because of substitutes -- rather than exclusively about scientific arguments, though there is no doubt that the science played a role in the process.

In The Climate Fix (pp. 26-28) I argue that incremental technological advances on CFC alternatives (really starting in the 1970s) helped to grease the skids for incremental policy action creating a virtuous circle that began long before Montreal and continued long after (see this paper in PDF for a more in depth discussion).  In her excellent book on ozone depletion policy, Ozone Discourses, Karen Litfin explains (p. 95):
The issue resembles a chicken-and-egg situation: without regulation there could be no substitutes but, at least in the minds of many, without the promise of substitutes there could be no regulation.
This is indeed very much my view. It seems fairly obvious that the ease of deploying technological fixes can help to make it easier for regulations to be put into place, and the history of environmental (and other) regulations bears this out.

But for the purposes of discussion, let's take Parson's view as if it were  true. He explains:
The crucial technological advances that demonstrated the viability of alternatives all came after, not before, the political decision to impose 50% CFC cuts -- and the effort to generate these advances was motivated by the imminent threat of these regulatory restrictions -- not the reverse.
If we are to believe this, then we must also conclude that the chemical industry, notably DuPont, started working on technological substitutes no earlier than 1986 and within 3 years had not only demonstrated their viability, but had done so in a manner that began to allow rapid deployment displacing conventional CFCs (see figure at the top of this post).  If this was the case then the ozone issue was even more tame than we have argued in The Hartwell Paper -- it was in effect technologically trivial.  If Parson's history is correct then it leads one to conclude that the ozone case is even less relevant to climate change than we have argued (unless one wants to advance the fantasy that decarbonization of our economy is technologically trivial, awaiting only the regulatory magic wand).

Parson does not explain explicitly why he thinks his revisionist history matters in the context of climate change, but presumably it is because he and others want to believe that (a) a battle for climate regulations should be waged through arguments over science, and (b) that winning such battles over regulations can make technologies magically appear after those regulations are committed to by governments.

I write in The Climate Fix that if the ease of technological substitution for our fossil fuel-based energy system was as easy as it was on ozone that we wouldn't be debating the issue as it would have been solved already.  No amount of revisionist history can change the magnitude of the challenge of decarbonizing the global economy.  One lesson that I take from the ozone history for climate change policy is that pricing or regulating carbon, through whatever policy mechanisms, will be far more possible politically to the degree that technological substitutes are effective on performance and price.

UPDATE: Here is Richard Benedick, chief US negotiator, on the lessons of the ozone experience as related to climate change (emphasis added):
It is worth recalling that the 1987 Montreal Protocol on Substances That Deplete the Ozone Layer, later characterized by the heads of the UN Environment Program and the World Meteorological Organization as “one of the great international achievements of the century,” was negotiated by only about 30 nations in nine months, with delegations seldom exceeding six persons and with minimal attention from outside observers and media. I doubt whether the ozone treaty could have been achieved under the currently fashionable global format.

We might draw some useful lessons from the ozone history. In the late 1970s, the ozone science was actually much more disputed than the climate science of today, and the major countries that produced and consumed chlorofluorocarbons (CFCs) were hopelessly deadlocked over the necessity for any controls at all. In this situation, the first international action on protecting the ozone layer was neither global, nor even a treaty. Rather, it was an informal accord among a loose coalition of like-minded nations, including Australia, Canada, Norway, Sweden, and the United States, to individually and separately ban the use of CFCs in aerosol spray cans.

This measure alone resulted in a temporary 30% drop in global CFC consumption (temporary because these “wonder chemicals” were continuing to find new uses in numerous industries.) But the action was nevertheless significant for the future. The resultant technological innovations demonstrated to the skeptics (in this case the European Community, Japan, and the Soviet Union) that controls were feasible, at least for this class of products. It also gave the United States and other proponents of a strong treaty the moral and practical high ground in later negotiations to restrict all uses of CFCs. Yet, if anyone had actually proposed a 30% reduction target, it would surely have been rejected as impossible.

An important lesson here is that a specific policy measure, not an abstract target, could stimulate unanticipated technological innovation. The policy measure drove the agreement on targets in the later ozone protocol, not vice versa. In contrast, the half-hearted performance of most governments with respect to climate policy measures has not matched their political rhetoric about the urgency of targets.

Another important lesson from the Montreal history was that not all countries need to agree in order to take a substantial step forward. It is also relevant to note that, in contrast to Kyoto, developing nations did accept limitations on their CFC consumption, but only when they were assured of equitable access to new technologies. Technology development is the missing guest at the Kyoto feast. . .


  1. Roger:

    I agree that Parson exaggerates the research problems. Synthesis of HFCs is not a challenging problem in any respect. Their vapor pressure curves likewise are not unusual. He's trying to pretend undergraduate-level organic and physical chemistry problems were somehow substantial research barriers that had to be overcome.

  2. Also, note the relationships at the time amongst DuPont, the Bronfman family, Maurice Strong, and the Montreal Protocol.

  3. Roger --

    If anything, you are understating the problems with Parson's position. The U.S. was not willing to sign on to the Montreal Protocol until the industry opposition ebbed, and industry opposition ebbed once it was clear how the goals could be met.

    Threat of regulation certainly encourages DuPont and others to invest in CFC alternatives -- just as the threat of regulation encourages lots of companies to invest in alternative energy now -- but absent such technologies the likelihood of enacting regulatory measures is small.

    Another example you could use is the SO2 trading program under the Clean Air Act Amendments of 1990. This didn't drive technological innovation either. Rather, the emission caps set under the program were based on what regulators knew could be achieved with existing technology.

    Jonathan H. Adler

  4. -3-Jonathan

    Thanks. Yes, SO2 is another good example. And yes, Parsons argument is deeply flawed.

  5. A better small model perhaps were the simultaneous regulation of automobile emissions CO, HC AND NOX and fuel economy standards starting in the early 1970's. By the early 1980's the price of the average car had skyrocketed. It was referred to as "Sticker Shock".It also caused a surge in product quality issues as re-engineered models were rushed to production. Those gains were still easy compared to AGW demands.

  6. Adding to my earlier comment. During the '80's V8's almost disappeared from cars. However there was consumer backlash against small cars or under powered cars. In the '90s V8's made a comeback with the emergence of SUV's. This may be the efficiency rebound. The lesson here is don't expect strong consumer acceptance of electric cars.

  7. The real lesson from the CFC replacement policy should have been that they were replaced by leaky HFC's - ie very powerful greenhouse gases - which in turn have also been banned as environmentally unfriendly, to be replaced by propane and/or CO2 would you believe, (in turn explosive and highly pressurised and therefore more directly dangerous to humans). It should have been an object lesson in unintended consequences. Of course, skeptics had pointed this out at the time and had been ignored once again.

    At the time I swallowed the stories and supported the CFC ban. Now, having seen Prof. Lovelocks condemnations of the CFC modeling studies, the grudging admissions that the Antarctic hole is largely, if not entirely natural, the sheer blind stupidity and hubris of the scientific community in forcing the wrong policy based on truly flimsy science and the largely ignored real data that says the lab-obtained data is not to be relied upon, I frankly doubt now that there ever was any problem in the first place.

  8. jgdes,

    Don't look at the ozone hole, look at stratospheric temperature. The loss of ozone in the stratosphere led to fairly rapid cooling. That cooling essentially stopped in 1995. Not coincidentally, stratospheric chlorine concentration peaked in the mid-1990's and has been very slowly declining since. Expect temperatures in the stratosphere to increase in the next decade as the chlorine level starts to drop faster. The increase in ozone will outweigh any cooling from increasing CO2.

  9. I'm with jgdes: It is not at all clear to me the ozone hole 'problem' (to the extent there is one) has been "solved."

  10. .

    What a surprise. Just as DuPont was in favor of regulation that steered business its way, G.E. is all in favor of wind mandates.

    Corporations may be only so so as to knowing what is good for the environment, but they are really good at recognizing what is good for the bottom line.

    Likewise, politicians may be only so so as to knowing what is good for the environment, but they are really good at recognizing what is good for the bottom line of their cronies and constituents.


  11. Canada has a national medical program called "Medicare" which is a single payer medical insurance program. The cost of this program has always been an issue and a whole school of health care economic advisors have grown up around it.

    These health care economists discovered the concept of "supplier induced demand" or SID. With SID, a supplier who has more control or knowledge than a purchaser can induce the purchaser to buy more than they need. So the idea was that doctors would recommend more examinations, tests and medications than the patient really needed to support their own income.

    SID naturally led to the idea that Medicare costs could be controlled by limiting the number of doctors. Doctors would take on more patients since they did not need the recommend the superfluous procedures, examinations etc that they were doing previously. Costs would be limited for the same degree of care. As a result, the number of positions in medical schools was severely limited in the early 90s along with the provision of Medicate licenses to graduating physicians.

    This was all supported by peer-reviewed articles in learned journals and attested to in recommendations to government by learned professors of economics.

    The result of these peer-reviewed recommendations is not controled cost for Medicare but of a massive shortage of doctors. Out of a population of about 33 mullion about 5 million have no family doctor. Specialist appointments take months to arrange and then more months to wait. Even cancer patients are forced to wait for treatment.. If your family doctor retires then you cannot get a new one.

    So perhaps reliance of quick ideas from the peer-reviewed literature and recommendations from learned professors is not so good after all. As demonstrated with the SID work in Canada, these ideas could just be all hogwash. When I hear the talk of problems in climate science and the solutions proposed by learned climate scientists, I always think of SID.

    Problems that look tame can be very complex and easy answers can be just that - easy. Groups of learned professors can just be packs of fools blathering on about topics about which they know very little. Health care economists please take note and discuss this with your climate science colleagues.

  12. SO2 is not an appropriate analog. SO2 scrubbing technology was mandated by EPA-- even if a utility chose to switch to low sulfur coal it had to install scrubbers.(There are often special interests involved and the technology mandate was a gift to the United Mine Workers who represented eastern high sulfur coal)

  13. Received by email by a reader who wishes to remain anonymous:

    "Parsons' account of the non-existence of an alternative to CFCs prior to the mandate would be news to those of us who had to lobby those issues back then.

    Within the broad automotive industry lobbying groups, (I was an attorney working for an aftermarket trade association in 1987) it was widely known prior to the Senate vote on the Treaty that (a) CFC substitutes existed (b) they would be more costly and (c) probably would not perform quite as well in AC devices but that our industry would be able to tool up to handle the change, albeit without enthusiasm.

    There was some talk of trying to seek a delay in order to improve the quality of the alternatives but that dissipated once Reagan decided to lead on the issue and support the measure.

    If there were no viable CFC alternative known to industry (with catastrophic consequences for any and all economic activities that required refrigeration or cooling in the event of a ban) there is no way in hell the Senate would have voted unanimously to put the Montreal Protocol requirements into effect right away and, I suspect, no way Reagan would have moved so unequivocally to endorse the Montreal Protocol.

    The idea that the technological substitutes only materialized later in response to a legislative mandate is utter fantasy. Dupont had already made them and their customers (manufacturers) knew about them and what was required to adapt to their use. Trade groups representing the aftermarket guys who fix auto air conditioning already had a dollar figure estimate for the impact on consumers and the industry well before the treaty was signed. The Senate knew precisely they were voting for not-quite-as-good but serviceable, still affordable alternatives when they voted for the treaty."

  14. Given the vital needs that are met by refrigerants it would have been catastrophic (and wreckless) to ban them unless there was a known replacement. No politician would have taken this risk-- and one could question whether the loss of refrigeration was a bigger threat than the supposed loss of the ozone.

  15. "SO2 scrubbing technology was mandated by EPA-- even if a utility chose to switch to low sulfur coal it had to install scrubbers."

    Do you have a supporting reference for this? As far as I know, the majority of Phase I reductions in SO2 came from switching to low sulfur coals, particularly Powder River Basin (PRB) coal.


  16. markbahner:

    The mandate to install scrubbers was a political compromise so that low-sulfur coal-producing areas (e.g., Wyoming) did not have a market advantage over high sulfur coal (e.g., West Virginia--i.e., Robert Byrd). The mandate was put in precisely to prevent a precipitous shift to low-sulfur coal.

  17. Scrubbers were mandated for new and modified power plants by the EPA New Source Performance Standards (Subpart Da) established in 1979. The SO2 standards there required scrubbers regardless of sulfur content. The Acid Rain program established in the 1990 Clean Air Act Amendments established SO2 emission standards for power plants but did not require that scrubbers be installed. Many complied by switching to low sulfur coal.

  18. Another reference point wrt to whether regulatory action depends on viable alternatives is methyl bromide.

    An exceedingly powerful ozone depleter, but still not totally banned because of its value as a fumagent and no viable alternative.

    Indeed, the Montreal Protocol specially states:

    "The protocol allows for 'critical use exemptions' to be granted from the methyl bromide phase-out where end users meet certain strict criteria, and where they can demonstrate that viable alternatives will not be available to them by 2005."


    Other ozone depleters are similarly on different phaseout schedules specifically because of the difficulty in finding alternatives.

  19. "The mandate to install scrubbers was a political compromise so that low-sulfur coal-producing areas (e.g., Wyoming) did not have a market advantage over high sulfur coal (e.g., West Virginia--i.e., Robert Byrd). The mandate was put in precisely to prevent a precipitous shift to low-sulfur coal."

    Please provide a reference for the "mandate to install scrubbers". I am aware of no such federal mandate.

    Here is a description of the paths chosen by utilities to meet the Phase I requirements of the Acid Rain Program:


    "Utilities also took advantage of their flexibility under Title IV to choose less costly ways to reduce emissions, such as switching from high- to low-sulfur coal, and are achieving sizable reductions in their sulfur dioxide emissions. More than half of Phase I plants opted to switch to low-sulfur coal, and 16% chose to install scrubbers. Air scrubbers are treatment devices placed on the exhaust or smoke stack and used to reduce the particulate matter and other contaminants in plant emissions. Only 3% of plants initially planned to purchase allowances. Not surprisingly, the market for low-sulfur coal is growing as a result of Title IV, and the market for high-sulfur coal is decreasing."

    It says that more than half (more than 50 percent) *chose* to switch to low sulfur coal and only 16 percent *chose* to install scrubbers. So more than 3 times as many plants chose to switch to low sulfur coal than chose to install scrubbers. This account does not mention any plants that had an Acid Rain Program mandate to install scrubbers.

  20. markbahner:

    The Clean Air Act (1970) mandated reduced sulfur output leaving the choice (cleaner coal or scrubber) to the plant operator. It was cheaper to use low sulfur coal than refit. That is why in 1977, when the CAA was next amended, the mandate for all new plants to install scrubbers was enacted at the behest of eastern coal states.

    You can see some of the politics well summarized here in this federal case about states attempting to protect high sulfur coal production: http://caselaw.findlaw.com/us-7th-circuit/1432535.html

  21. oldhoya:

    If you look carefully at the material on the webpage you provided, you'll see that the sulfur dioxide provisions of the 1990 Clean Air Act Amendments (aka, the Acid Rain Program) did not mandate scrubbers. Utilities were allowed to choose. The case being discussed is an attempt by the State of Illinois to mandate scrubbers for utility plants within Illinois, not a federal mandate for scrubbers within the federal Acid Rain Program.

    The EPA's Acid Rain Program website makes it clear that compliance options to meet the requirements of the Acid Rain Progam can be chosen:



    "Compliance Options: Freedom to Choose"

    "The Acid Rain Program allows sources to select their own compliance strategy. For example, to reduce SO2 an affected source may repower its units, use cleaner burning fuel, or reassign some of its energy production capacity from dirtier units to cleaner ones. Sources also may decide to reduce electricity generation by adopting conservation or efficiency measures. Most options, like fuel switching, require no special prior approval, allowing the source to respond quickly to market conditions without needing government approval. For NOx, the source may meet the performance standard on a utility-unit basis, enter into an emissions averaging plan, or apply for an alternative emissions limitation."

    "In either case, the program allows affected utilities to combine these and other options in ways they see fit in order to tailor their compliance plans to the unique needs of each unit or system."

    Wonderful Wikipedia ;-) also agrees:


    Pat Moffitt was simply wrong in comment #12, when he implied that the Acid Rain Program (part of the 1990 Clean Air Act Amendments) mandates scrubbers. It does not. And in fact, most of the SO2 reductions to meet the requirements of Phase I of the federal Acid Rain Program came from measures other than installing scrubbers.

  22. Markbahner:

    You don't seem to grasp the legislative history of the CAA.

    The 1970 provisions created an economic incentive to use only low-sulfur coal.

    The 1977 amendments sought to protect eastern coal and thus did in fact mandate scrubbers on all new power plants (or maybe you should tell the US Court of Appeals for the 7th Cir that they misinterpreted the CAA in the case I cited for you when they also found the existence of express mandates in the 1977 amendments).

    The 1990 amendments introduced credit swapping and wider choices of solutions to meet more stringent targets and in recognition that newer technologies (pre-scrubbing e.g.) were available.

  23. Markbahner:
    SO2 controls have a history that goes back to the 1970 Clean Air Act. The 1970 CAA did not include a technology standard which as said by Oldhoya caused many utilities to switch to low sulfur "compliance coal". This pitted high sulfur eastern union mined coal against non-union and low sulfur western coal. This set up a battle between western interests and eastern coal interests with the east being represented by Robert Byrd and UMW political muscle. The 1977 amendment to the CAA in a bow to eastern political pressure required all new and upgraded facilities to install scrubbers - as protection against the more cost effective western coal. A number of perverse consequence arose for over a decade as a result leading up to the 1990 amendment.
    A suggested source to read on this topic is a Kennedy School of Government Case Program (C15-99-1514.0)"Cleaning up the “Big Dirties”:
    The Problem of Acid Rain" The battles over SO2 in many ways shaped the environmental movement.

  24. 22-oldhoya-"You don't seem to grasp the legislative history of the CAA."

    I have a firm grasp of the legislative history of the CAA. Air pollution research is what I do for a living.

    Pat Moffitt was simply wrong when he implied in comment 12 that the Acid Rain Program of the 1990 Clean Air Act Amendments requires scrubbers. It most assuredly does not. Even the source that you referenced made that clear.

    23-Pat Moffitt-"The 1977 amendment to the CAA in a bow to eastern political pressure required all new and upgraded facilities to install scrubbers - as protection against the more cost effective western coal. A number of perverse consequence arose for over a decade as a result leading up to the 1990 amendment."

    Yes, and the 1990 Clean Air Act Amendments did *NOT* require scrubbers. Go back and read Jonathan Adler's comment in #3, and Roger’s response in #4:

    Jonathan Adler wrote: "Another example you could use is the SO2 trading program under the Clean Air Act Amendments of 1990."

    Roger responded: “Thanks. Yes, SO2 is another good example.”

    Both Jonathan Adler and Roger were talking about the emissions trading program under the 1990 Clean Air Act Amendments...which did *not* mandate scrubbers. That's what you were responding to. You and oldhoya need to read more carefully.