05 June 2014

Clueless Krugman

Paul Krugman, the Princeton professor, NY Times columnist and Nobel Prize winner, has put up a post today at the NYT in response to my letter in today's Financial Times. For years, Krugman has called me names and hid his critique behind vague allusions to my moral turpitude. In typical Krugman fashion he does that today too -- now I'm accused of pretending to hold views that I don't. Um, OK.

But let's set the drama aside and look at some data and analyses, because for the first time Krugman has engaged the substance of one of my arguments. And what he displays does not reflect well on his understanding of the nature of carbon dioxide emissions. So let's look at these issues in some detail.

The Kaya Identity is the centerpiece of the analyses found in The Climate Fix and a lot of my work. It is a very powerful tool for understanding the challenge of emissions reductions. It holds that carbon dioxide emissions are influenced by four factors:
  • population 
  • GDP per capita
  • energy intensity of the economy 
  • carbon intensity of energy
As an identity, it is expressed --> CO2 = P * GDP/P * E/GDP * CO2/E 

(where P is population and E is energy consumption).

Now, the combination of population and per capita GDP is just GDP. Energy intensity reflects technologies of energy consumption (like cars and buses) and carbon intensity reflects technologies of energy production (like power plants and solar panels). Often it is useful to combine EI and CI into a metric of CO2/GDP, or the "carbon intensity of the economy."

The math here is simple. Increases in GDP, all else equal, mean that CO2 emissions go up. Improvements in technology (that is decreases in EI or CI) mean (all else equal) that CO2 emissions go down. Thus, we have two big levers with which to affect emissions - (a) GDP and (b) technologies of  energy consumption and production.

Since my letter to the FT was about proposed hard caps on total CO2 emissions in China, let's illustrate the Kaya Identity with data from China (from 2011, where I find the most recent data). 
Using the Kaya Identity in crude fashion tells us that China's CO2 emissions should have increased by ~8.1% in 2011 (that is 11.1 - [0.6+2.4]).  Data from EIA shows an increase of just under 9%. So very close.

In order for China to "cap" CO2 emissions would require that the GDP growth rate equal the combined reductions in EI and CI. This can be achieved in two ways. 
  • by bringing GDP down 
  • by accelerating decreases in EI and/or CI
I have long argued that policies designed to purposely reduce economic growth by any meaningful amount are just not going to happen. On this point Krugman would seem to agree. But he also seems to think that increasing the combined rates of EI and CI to 9% per year can be achieved by pricing or some sort of voodoo. It can't because the needed price to achive such drastic rates of decarbonization would impact economic growth. Hence, the iron law.

To emphasize, placing a "cap" on emissions means that EI and CI together must total to the GDP growth rate. For emissions to be reduced, they have to exceed the GDP growth rate. The math here is as simple as it is inevitable.

I explained this in the FT today:
Thus, by definition, a “carbon cap” necessarily means that a government is committing to either a cessation of economic growth or to the systematic advancement of technological innovation in energy systems on a predictable schedule, such that economic growth is not constrained. Because halting economic growth is not an option, in China or anywhere else, and because technological innovation does not occur via fiat, there is in practice no such thing as a carbon cap.
In his response, Krugman displays both a lack of reading comprehension, and utter ignorance of the Kaya Identity, when he translates this as:
Pielke isn’t claiming that it’s hard in practice to limit emissions without halting economic growth, he’s arguing that it’s logically impossible.
Wrong. I clearly explained the logic of the KayaIdentity as I have many, many times, and it has levers beyond economic growth. Strike one.

Krugman also seems to think that my letter has something to do with Obama's power plant regulations:
Still, the power plant policy is what’s in the news and motivate Pielke’s letter.
Wrong again, Paul. The letter was motivated by China's mythical "carbon caps" and in fact was written well before the EPA proposal was even on the table. Here is what I wrote earlier this week about the EPA regulations:
First, lest there be any confusion, I support the regulations and hope that they are implemented. 
Wrong again. Strike two.

Krugman keeps it up:
Even more important, there are many ways to generate electricity: coal, gas, nuclear, hydro, wind, solar — and the alternatives to coal are more competitive than ever before. That doesn’t mean that reducing emissions has no cost — but again, the idea that, say, a 30 percent fall in emissions requires a 30 percent fall in GDP is ludicrous.
Indeed, it would be ludicrous had anyone actually said that. I certainly didn't.  Strike three.

What we can do is use the Kaya Identity to quantify, for various assumptions of improvements in energy intensity of GDP (e.g., via efficiency gains) how much carbon-free energy needs to be deployed in order to hit a specific concentration target for CO2 emissions.

I did a lot this math in The Climate Fix and in various peer reviewed papers, but you don't need to believe me. Here is Caldeira et al. in Science in 2003:
To achieve stabilization at a 2°C warming, we would need to install ~900 ± 500 MW [mega-watts] of carbon emissions-free power generating capacity each day over the next 50 years. This is roughly the equivalent of a large carbon emissions-free power plant becoming functional somewhere in the world every day. In many scenarios, this pace accelerates after mid-century. . . even stabilization at a 4°C warming would require installation of 410 MW of carbon emissions-free energy capacity each day.
Get that? A nuclear power plant-worth of carbon-free energy per day, every day until 2050. How's that rate of deployment coming Paul?

I'd love to see Krugman's alternative math here -- for hitting a China emissions "cap" or for stabilizing carbon dioxide at a low level. Krugman is very good at calling me names. His analysis of carbon emissions not so much.

Show me some emissions math, Paul.