03 August 2011

Wanted: Less Spin, More Informed Debate

Bob Ward, a public relations spokesperson for the LSE Grantham Institute, has a post up in the UK Huffington Post ostensibly criticizing the recent essay on Climate Pragmatism by The Hartwell Group.  I say ostensibly because I can't actually find a coherent criticism in it.

Ward's "critique" centers on a false charge: that a recommendation to start with a low carbon price means no carbon price at all. In fact, a core argument of the Hartwell Group has always been that if you want a high carbon price, then political and economic realities mean that the only possible way to get to a high carbon price is to start low.

Ironically, the rejection of proposals that suggest starting with a low carbon price is thus a pretty good guarantee against any carbon pricing at all.  It is rather remarkable to see advocates for climate action arguing against a policy that recommends implementing a carbon price, simply because it does not start high enough for their tastes.  For some, idealism trumps pragmatism, even if it means no action at all.

Ward writes:
. . . climate change is the result of a number of market failures, the largest of which arises from the fact that the prices of products and services involving emissions of greenhouse gases do not reflect the true costs of the damage caused through impacts on the climate. . .

All serious economic analyses of how to tackle climate change identify the need to correct this market failure through a carbon price, which can be implemented, for instance, through cap and trade schemes or carbon taxes. . .

A carbon price can be usefully supplemented by improvements in innovation policies, but it needs to be at the core of action on climate change, as this paper by Carolyn Fischer and Richard Newell points out.
This line of argument is incoherent for two reasons.

First, the criticism is off target. A low and rising carbon price is in fact a central element to the policy recommendations advanced by the Hartwell Group in Climate Pragmatism, the Hartwell Paper, and as well, in my book The Climate Fix.  In Climate Pragmatism, we approvingly cite Japan's low-but-rising fossil fuels tax and discuss a range of possible fees or taxes on fossil fuels, implemented,
not to penalize energy use or price fossil fuels out of the market, but rather to ensure that as we benefit from today’s energy resources we are setting aside the funds necessary to accelerate energy innovation and secure the nation’s energy future.
In the Hartwell Paper (the much longer analysis from which CP is derived) we have a lengthy discussion of the role of carbon pricing, and we write:
The proposed hypothecated [carbon or fossil fuel] tax would be used to conceive, develop and demonstrate low-carbon or carbon-free technologies. It would provide a dependable and secure means of financing R&D essential to decarbonisation. The slowly increasing nature of the tax provides a forward price signal that incites firms to take up the lower-carbon technologies and in turn to develop any particular firm-specific adjustments.86 These two characteristics of the slowly rising hypothecated tax allow for the most rapid path to a low-carbon economy.
So Ward is either uninformed (a common feature of would-be debaters on this topic, I am learning) or practicing the dark art of PR spinmeistering.

A second incoherence, and one that might be best characterized as an "own goal," is that the RFF paper (PDF) by Fischer and Newell that Ward cites in support of his argument actually reenforces the arguments in Climate Pragmatism. In that paper, Fischer and Newell write (emphasis added):
The environmental economics literature on induced innovation has focused on the role and effectiveness of environmental policy in stimulating innovation in environmentally friendly technologies . . . However, these studies have primarily focused on comparing Pigouvian emissions pricing policies, like emissions taxes and auctioned or grandfathered permits, rather than a more pragmatic, broader set of policies such as those using performance standards and supporting renewable energy technologies.
More pragmatic -- couldn't have said it better myself.  Fischer and Newell continue (emphasis added):
. . . R&D is the key for dealing with climate change and that an emissions price high enough to induce the needed innovation cannot be credibly implemented. We show that an emissions price alone, although the least costly of the single policy levers, is significantly more expensive alone than when used in combination with optimal knowledge subsidy policies. Although a high future emissions price may not be credible, the required emissions price is more modest with the combination policy. However, if one believes that even a modest emissions price is not politically feasible, an R&D subsidy by itself is not the next-best policy, and the costs of that political constraint are likely to be quite large and increasing with restrictions on the remaining policy options. It should be kept in mind, however, that we focus on reductions over the near-to-mid term and incremental improvement of existing technology, rather than breakthrough technologies that might achieve deep reductions. It seems likely that policies focused on R&D have greater salience in the latter context . . .
Almost ... Hartwellian!

Here is another debating lesson -- before engaging in public not only should one read the materials that they are critiquing, they should also read the materials that they cite in support of their own arguments.

This is not the first time that Bob Ward has put out misleading information related to my work.  Ever since we debated in public at the Royal Institution, Bob has adopted guerrilla tactics, lobbing nonsense into the public arena and then hiding when challenged to support or defend his views.  As readers here know, I am all for open and respectful debate over these important topics.  Why is that instead, all we get is poorly informed misdirection and spin?

Despite the attempts at spin, I'd welcome Bob's informed engagement on this topic. Perhaps he might start by explaining which of the 10 statements that I put up on the mathematics and logic underlying climate pragmatism is incorrect.