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Dan O'Brien: 'Why technology and taxes could save the planet'

Much higher carbon taxes are inevitable, writes Dan O'Brien, and new technologies have the potential to slow the damage of climate change


MAKING THEIR VOICES HEARD: Thousands took part in climate protests around the country on Friday, including in Dublin’s Merrion Square. Photo: Conor Healy/Picture It

MAKING THEIR VOICES HEARD: Thousands took part in climate protests around the country on Friday, including in Dublin’s Merrion Square. Photo: Conor Healy/Picture It

MAKING THEIR VOICES HEARD: Thousands took part in climate protests around the country on Friday, including in Dublin’s Merrion Square. Photo: Conor Healy/Picture It

There are more people alive today than ever before. Every region of the world and almost every country is consuming more. That includes more services, such as education and health, and more physical goods - from food to smartphones.

The big downside of the world becoming more populous and more prosperous, is the pressure it is putting on the planet. Last Friday, people marched across this country and across the world to demand more measures to counter climate change and environmental degradation. Starting tomorrow at the UN's New York headquarters, world leaders will discuss various aspects of the issue.

As someone who does not have expertise in climate change, I defer to those who do. Among climatologists, there is overwhelming consensus that the planet is heating up. If the trend continues, it will have more impact on the lives of more people. In a worst-case scenario, a tipping point will be reached, causing runaway warming. If that happens humanity, and many other species, will be in serious trouble.

Economists can bring some insights to issues around climate change. One is on carbon tax.

Nobody wants to be landed with bigger bills. Bigger bills for essentials which are hard to avoid, such as transport and home heating, are particularly unwelcome. But the prices of transport, home heating and many other goods and services do not reflect the costs of the environmental damage that they cause.

Fossil fuels are front and centre in this regard. Despite the massive advances in renewable energy technologies, and large-scale deployment of these technologies - wind turbines seem to be everywhere - they have not made much of an impact, as the accompanying graphic shows. Oil, coal, gas (in that order) account for 87pc of the world's energy. That is as high as it has ever been and up from 84pc at the turn of the century. If there has been progress at all it is that the use of coal, the dirtiest of the big energy sources, is slightly down in recent years in absolute terms and well down as a share of the total.

Carbon taxes at a level to ensure that the full economic and environmental costs of fossil fuels is reflected in prices will mean much higher prices for some things. Much higher prices will change behaviour in numerous ways. One is that they will make us find ways to use less fossil fuel - we will be more inclined to buy more energy efficient cars, boilers and bulbs if energy prices rise. That has happened to some extent, but it hasn't happened nearly enough.

According to the OECD, only four countries have carbon taxes at a level that prices in the environmental costs of fossil fuel usage in non-transport sectors (Ireland is not one of these countries).

Another important incentivising effect of a carbon tax is for entrepreneurs and businesses. Higher fossil fuel prices cause a change in relative prices with renewables. That will result in greater demand for the latter, thereby incentivising businesses to invest more in new technologies. This will accelerate advances in, for instance, solar technology - panels capable of extracting energy from light in even the loftiest of latitudes will probably cover all roofs in Ireland in the decades to come.

Another reason higher carbon taxes must be part of the solution is the abundance of fossil fuels. This might sound odd to those who remember 'peak oil' theories. Seemingly plausible people, who got much media coverage in the past, claimed that global oil production was on the verge of terminal decline. Because oil is a finite resource and ever more of it is being used, imminent peak oil seemed like a reasonable thesis.

Those who made the claim made two mistakes. First, they got their geology wrong - there is much more oil under deserts and oceans than they thought. Second, and of more relevance to the discussion here, they underestimated the capacity for technological innovation. Advances in extraction technologies have made oil, that was once too expensive to pump out, cheaper. It has also made some previously unextractable reserves extractable.

All this means that there is no shortage of fossil fuels. That, in turn, means that supply constraints won't drive the price up in a way that would lead the world to use less of them. If prices won't go up of their own accord, then taxes to reflect environmental damage will be needed.

Higher carbon taxes are coming. It is only a question of when and how high they will go.

Another aspect of innovation that is relevant to the climate debate is food and food production. Again, and contrary to many people's intuition, there is no shortage of food in the world. Global agricultural output continues to rise, thanks in large part to a vast range of innovations at every stage in the production process, from higher-yielding grains at one end to better waste reduction techniques at the other.

This is reflected in real food prices globally, which peaked in the mid-1970s according to the UN's Food and Agriculture Organisation. That, as it happens, was just a few years after the rate of global population growth peaked - although there are ever more people on the planet, the rate of increase has been slowing for half a century.

The current upheaval in Ireland's beef sector is linked to global trends. Meat prices have declined in real, as well as nominal, terms in recent years. Prices in Europe are higher than the world market price because of EU intervention in the market. The industry exists as it currently does in Ireland only owing to subsidies (direct payments) and protection (tariffs and quotas on imports of non-EU meat).

As is well known from the discussion around Brexit, production is focused on supplying the British market.

Although agricultural interests have frequently exaggerated threats in the past, if post-Brexit UK removes barriers to agricultural trade with the rest of the world, the Irish beef industry will shrink rapidly and by a large amount.

But even if this does not happen, other trends mean that this heavily subsidised industry will shrink. Its high level of greenhouse gas emissions will sooner or later become a matter of greater public and policy concern. The shift towards vegetarianism, driven in part by climate concerns, will reduce demand for beef. Rapid advance in synthetic meat technology are yet another reason why those involved in the industry need to be looking at other outlets for their energies.

Technological advances can be disruptive, but overall they tend to be strongly positive. The white heat of technology gives cause for climate optimism. So do past successes on the environment. Many rivers, in Ireland and elsewhere, are no longer the open sewers that they were before environmental protection laws became increasingly commonplace. A global accord on ozone-depleting gases proved effective decades ago. The Paris climate accords are an awful lot better than nothing. The rising political salience of the environment will make it easier for governments to implement measures that voters would normally reject.

However, all these factors may not be enough to halt environmental degradation.

Nobody knows where the tipping point to runaway climate change is. But the world is moving closer to it.

Sunday Independent