Special Report: Climate Change

Innovation Will Not Solve Climate Change

Thanks to incentives protecting the status quo, market "innovation", far from helping us with climate change, has made it worse.

By John Loukidelis
Published January 14, 2019

During the last weekend in 2018, Ontarians were subjected to the humiliating spectacle of Progressive Conservative MPPs - on cue and in lock-step - tweeting about the wonderful gift of low gas prices bestowed on the province by their Dear Leader. The PC claim that Premier Doug Ford gave us lower gas prices was bogus, of course, but the real harm of the circus-animal routine was more subtle: it had some nasty implications for our struggle to confront the climate crisis.

The underlying message of the tweets was something like the following (I'm paraphrasing):

Don't worry about that climate change stuff. You won't need to make any real changes in your lives. Keep buying those gas-guzzling light trucks and SUVs. Keep using them to commute long distances to work and short distances to drop your kids off at school or to pick up a bag of milk at the corner store. We'll make sure you can continue to drive those roads and burn that fuel indefinitely, and, if we can help it, we'll make that cheaper and easier to do.

Is that message consistent with doing anything serious about the climate crisis? Absolutely not. Is it consistent with conservative messaging on climate? Absolutely.

Two Pillars of Conservative Climate Messaging

It's the first of the two pillars of modern conservative messaging on climate. It's the "Don't worry; be happy" pillar. Climate change is happening, the Tories admit, in public, but it isn't serious. There's no need to be alarmed. It's better not to talk about it. Go back to sleep.

Some of us sleep uneasily when it comes to climate, however, and "some of us" are natural conservatives who would otherwise be inclined to vote for the PCs. But we won't vote for the PCs if they promise only climate inaction. The PCs, then, need to be seen to be Doing Something.

Enter the second pillar of conservative messaging on climate: "Innovation will solve the problem!" Ford Nation tells us we don't need any of that carbon pricing nonsense. Instead, the government will create a Carbon Trust to leverage private investment with public money to create synergy with multipliers. Or something. It's all a little vague, to put it charitably, but the basic idea seems to be that we can meet the climate challenge through "innovation".

"Innovation will save us" is right out of the US Republican playbook (or the playbook of those Republicans with some connection to the real world, anyway). If they're not denying climate change - too many of them still do nowadays - then US Republicans are promising that Tom Swift and His Carbon Vacuum will solve the problem.

Take Senator Ben Sasse, for example. He is supposed to be a conservative "moderate". He does not appear to be a denier. Nevertheless, he criticizes "alarmism" about climate, and he promises us that "innovation" will deal with the problem.

Jeb Bush, another supposed Republican moderate and "smart guy", said that the free market would some how address the climate issue while he was running for President in 2016. "There's someone in a garage somewhere that's going to have a clue...to have an answer to this."

Predicting Innovation

Gwynne Dwyer is very much connected to the real world, and in 2008 he also thought that innovation might help. His 2008 book, Climate Wars, is a useful, if somewhat dated, discussion of climate change and its geo-political consequences. The book included a number of 'scenarios' about the future consequences of climate change.

One of the scenarios imagined the US addressing the climate crisis by investing heavily in third-generaton biofuels. According to the scenario, as a result of this investment, by 2015 15 percent of the US's transportation fuel needs were to have been met by biofuels, the use of which was set to grow at 4 percent per year. By 2018, total US oil consumption was to have dropped dramatically, and only one-third of it was imported compared to two-thirds a decade before.

Why these dramatic changes and the important strides toward an emissions-free future? By 2013, according to the scenario, oil was to have reached USD $250 a barrel. The US innovated, and it adopted the innovation, because of economic necessity: it was cheaper to begin to use biofuels instead of oil.

None of this happened, of course. What actually happened to oil prices and imports in the years from 2008 to 2018 was dramatically different because of innovation. In 2008, the US domestic price for a barrel of oil was USD $103.67 (in 2017 prices) on average. In 2017, the average price was US$42.63.

In November, 2018, the US became a net exporter of crude oil and fuel for the first time in its history. US crude oil production surged from about 5 million barrels per day (BPD) in 2008 to about 11.7 million BPD in 2018.

Innovation Accelerated Fossil Fuel Production

According to Forbes, "Of the 10.3 million BPD of new oil production since 2008 [worldwide], the U.S. supplied 6.2 million BPD (60 percent)." US production has grown by almost 2 million BPD in the last year alone.

"Innovation" did affect the climate in the period from 2008 to 2018, but not in a good way. Rather, innovation created the US shale oil boom, which made oil cheaper and more plentiful.

As the Forbes article notes, "If the shale oil boom in the U.S. hadn't happened, OPEC and Russia would have enjoyed the fruits of $100/bbl oil for the past decade. The U.S. trade deficit would have ballooned" (as in Dyer's scenario). Instead, US emissions will grow in 2018 (after declining slightly for three years in a row).

Meanwhile, global "output from fossil fuels and industry will grow by around 2.7% in 2018, the largest increase in seven years" (carbonbrief.org). The freight train heading toward us, rather than slowing down appreciably over the last ten years, has gathered speed.

Dyer's scenario was premised on high oil prices, but high prices by themselves did not guarantee or even favour innovation that was climate-friendly. Our infrastructure, especially in the area of transportation, is built around fossil fuels. High oil prices in 2008, combined with our continued reliance on fossil fuels, favoured innovation that would produce more and cheaper fossil fuels.

The US's innovative firms had little incentive to look for alternatives. Given our existing infrastructure, and given high oil prices, it only made sense for profit-seeking firms to pursue innovations that made money using that infrastructure. It only made sense to pursue innovative technologies that would produce more oil.

Innovation Follows Price Incentives

"Innovation", far from helping us with climate change, made it worse. The incentives in place spurred the production that continues to make oil relatively cheap to burn. As a result, Ontario gas prices in December, 2018, could be lower than a buck a liter and Ford Nation could sing hymns about it and ask for our thanks and praise.

And why should those incentives change? Doug Ford is really telling us it shouldn't. He has sworn we won't have a carbon tax, if he can help it. In fact, what he promises us is cheaper and more plentiful gas. Under Ford, we'll get more messages from Twitter bots masquerading as MPPs telling us about the wonders of cheap gas.

But cheap gas is beneficial to us only if it can be used in the infrastructure we've already got. Cheap gas is useful to me only if I own a gas-guzzling vehicle rather than an electric one, or if I need to drive everywhere, or if governments continue to spend enormous amounts of money on road maintenance and construction to facilitate driving. Cheap gas is useful only if the infrastructure facilitates burning more gas.

The real PC message, then, is that the infrastructure won't change. But if the infrastructure stays the same, the incentives provided by that infrastructure won't change - and so the chances are that innovation, rather than helping with the climate crisis, will do nothing to solve it or will only make it worse.

John Loukidelis is a Hamilton lawyer who resides in Ward 1. He cycles to work every day and takes the bus when it's too cold or wet outside.

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