Where are we on Climate Change?
Mike Greenstone @UChi_Economics gave a great talk @chicagobooth. I will post a few of his charts.
1. Including battery back-up, cost of electricity from renewables is 3x/4x more expensive than from fossil fuels.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485441547689984
2. Same for cars. Oil prices need to be quite high for EVs to be less costly: you need oil price at €129 for battery powered car to be more economical.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485444580151296
3. Fossile fuels will not just run out on their own.
On the contrary we are finding oil faster than we can use it:
We had 30 years worth of oil in 1980, 40 years today. Huge reserves of coal and gas.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485447948181504
4. Hugely heterogenous effect of climate change- e.g. as seen on mortality.
Difference is that "red places"- those with big increases in mortality, are where the bulk of population currently live.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485450859024390
5. There is no getting around that there will have to be large reductions in emissions from poorer, middle income economies.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485454675857409
6. Paris agreement etc. did make a difference. Worse case scenarios are being avoided. We are on path to a bit over 2 degrees of warming.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485457746104321
7. IRA will make a difference to US emitions. But not enough.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485460933742594
Solution?
We must Price Energy at its full social cost- pollution should not be free.
Social cost of carbon is estimated by Greenstone at around $200. If we fully priced emissions we would find that Coal is MOST EXPENSIVE TECHNOLOGY!
Also (Germany!) nuclear is the cheapest.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485463634882560
However, only a few places have carbon taxes. And those that have it set it way below $200 (at $4 on average!)
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485469087481856
Why is it so difficult to price carbon? Is it because of distributional consequences?
Economist answer: simply redistribute the revenues- poor will be much better off.
Example with carbon tax at $52, collecting $2.1tn for government in next decade.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485472065429504
Innovation will help, but fossil fuel innovation is also very significant (e.g. shale oil and gas recovery increasing!).
In sum: we need significant policy change.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485475106291717
This is even more the case if we include the health cost of particulate matter. Coal really should stay on the ground.
🐦🔗: https://n.respublicae.eu/lugaricano/status/1648485465769787392