Short treatise on climate change

Quick reference sheet for climate change and solutions

  1. Global warming is real.
  2. The largest contributor to climate change is carbon dioxide emissions.
  3. Carbon dioxide emissions come from a wide variety of sources, primarily from electricity generation, transportation, and agriculture.
  4. The ratio of which source is the most important differs by region.
  5. The 2 most important sources of carbon dioxide emissions in the United States and most developed countries are from electricity and transportation.
  6. The main thing we need to do in order to reverse climate change is to reduce carbon dioxide emissions as quickly as possible.
  7. If governments want to increase an activity, let’s say the number of people going to college, the most straight forward, efficient, and fair policy to increase education is to subsidize it. We do this because there education generates positive externalities for society.
  8. If governments want policies to reduce consumption of a good which is causing negative externalities, then we should do the opposite of a subsidy which is a tax. This will encourage people to move from the activity which is bad for society to an activity which doesn’t negatively impact people around them.
  9. Governments have little to no control over how the substitution effect will work. While subsidies for one form of renewable energy or another will make some impact, its almost impossible to control how much of the substitution effect will just switch investment from one renewable source to another. One example is how anti-nuclear protests which have successfully shut down nuclear plants often end up with that electricity coming from dirty energy. While there will probably be some impact on global warming from subsidies, this is governed solely by regional market forces.
  10. The ratios of which sources are the largest contributors in one area vs another varies widely by region. Around 20% of electricity in Washington state comes from dirty energy, roughly 70% of electricity in Texas comes from dirty energy. A one size fits all subsidy approach will simply not work in a country as large as the United States which has such different sources of electricity by region.
  11. Transportation became the largest source of carbon dioxide emissions in the 2010s, and mostly from individual cars. We need a policy which reduces emissions in cars substantially as fast as possible, while also cutting emissions from electricity.
  12. While climate change is obviously important, we also have many other issues which need attention, such as education, health care, and other important programs. It is important to be efficient in how we use our resources. Even if we just print all the money we need, we will never have infinite people to administer programs. This is why it is important to be direct in policies to maximize efficiency.
  13. If the goal is to reduce CO2 significantly than we need a federal policy which will work in all states and not be susceptible to the substitution effect simply switching from one renewable source to another. We need one which is also agnostic when it comes to which activity is generating the CO2. Given how power lines do not respect state boundaries, while state by state policies are better than nothing, we will eventually need an aggressive federal policy.
  14. There is one policy which targets CO2 directly, regardless of source, regardless of activity, and will not simply substitute wind for solar. That policy is called an exemption free carbon tax.

References:

EPA US sources

EPA global sources

EIA Texas Overview

EIA Washington Overview

Substitution effect in action regarding closing nuclear plants

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