Carbon: Tax, Trade, or Deregulate?

What has happened to the excellent Ronald Bailey? In reason's July issue, he gives a thoroughly sensible argument against some silly creationist film ("Flunk This Movie") but then in a feature on global warming ("Carbon: Tax, Trade, or Deregulate?") he writes: "Anyone still holding onto the idea that there is no global warming ought to hang it up. All data sets-satellite, surface, and balloon-have been pointing to rising global temperatures. In fact, they have all had upward-pointing arrows for nearly a decade."

This argument for man-made climate change is nonsense on two counts. First, temperatures have not been going up for a decade. Temperatures since 1998 have been lower than they were that year, and in the last 18 months there has been a dramatic plunge in global temperatures, bringing record cold at locations around the world and record ice cover to the Antarctic. Second, there is no good evidence to suggest that the undisputed (although uneven) general rise in temperatures in the 20th century has been caused by rising carbon dioxide. Temperatures do not match carbon dioxide increases, but they do closely match changes in solar activity. Indeed, carbon dioxide has never been shown to drive temperatures (although temperatures certainly do drive carbon dioxide, which dissolves more readily in seas at lower temperatures). The 20th century was rather warm simply because the sun was very active.

A great mass of evidence from satellite temperature measurement, cosmic ray measurements, and paleoclimatic studies is destroying the always-flimsy argument that man is changing the climate in a dangerous way. During the Medieval Warm Period of about 900 A.D. to 1200 A.D., temperatures worldwide were rather higher than now while carbon dioxide was lower than it is now. More and more observation supports the theory that the primary driver of temperatures is low clouds, which cause cooling and which are seeded by cosmic rays, which are diverted by the solar wind. The more solar wind, the fewer low clouds and the warmer it gets. The pattern continues, as confirmed by recent measurements of temperature in the troposphere by satellite instruments and measurement of incoming cosmic rays.

Recently the sun has been inactive, and at the same time global temperatures have dropped. Let us pray this is just a blip because if the cooling continues it will bring far more grief than the warming ever would. Science overwhelmingly disputes anthropomorphic global warming. Politics, journalism, and ideology overwhelmingly support it. Could Ronald Bailey explain why he has joined the ideologists?

Andrew Kenny
Cape Town, South Africa

Ronald Bailey says that the science of global warming has finally lined up for him. He claims that perhaps more relevant than the "air of triumphalism" among attendees at the U.N. conference on climate change in Bali was the fact that a "lot of the climatologists who were there sounded very scared." Neither triumphalism nor fear is a solid standard for evidence. The Canadian environmentalist and columnist Lawrence Solomon, of the National Post and the Toronto Financial Post, has written a series of columns in the last few years on the subject of scientists who have developed research data that refute many of the claims of the warming catastrophists. The series, called "The Deniers," is available online and has been turned into a book of the same name this year. Early on, after describing the views of several of these scientists on such topics as the (in)famous hockey stick graph, hurricanes, and Antarctic ice sheets, Solomon tells us that all of them assume global warming is real and is caused by human activity-based on the reports of other scientists. They each know that the evidence they have observed refutes specific claims for anthropogenic global warming in their area of expertise.

That says a lot. The evidence relating to climate issues comes from many highly specialized areas of scientific research. If each, or most, or even a significant subset of the evidence for warming is questionable and justifiably disputed by reputable scientists, then having everyone assume that everyone else knows what he is doing in claiming dangerous warming is like seeing a forest when no individual trees are in evidence.

John Kannarr
Glendale, AZ

reason's panel discussion on global warming was a great disappointment. Merely accepting the existence of global warming is no justification for supporting a massive government intervention. Anyone who respects "free minds and free markets" should recognize the vast difference between privatizing a common-pool resource, such as the CO2 in the atmosphere, and nationalizing it, through carbon taxes or other government-mandated limits. Lynne Kiesling correctly observes that privatization is impractical when there are very large numbers of participants. She fails to realize that this is even more true for bureaucratic solutions, even though she acknowledges that the only known success story for cap-and-trade regulations, in the area of sulfur dioxide emissions, involved a rather small number of companies.

The political shenanigans Ronald Bailey describes in Europe's carbon cap-and-trade schemes are not just incidental to the system. They are not easily correctable flaws. The public choice theory of James Buchanan and Gordon Tullock strongly suggests that all such schemes, like all carbon taxes, will be manipulated to serve the personal interests of the politicians who create and administer them. Any resulting global cooling will be an accidental, and probably temporary, side effect, while the augmentation of government power will be massive and irreversible.

Astonishingly, Bailey and Kiesling also assume that government intervention will be necessary-that the free market will never find solutions on its own. Bailey even says, "If it were already easy to create low-carbon energy, inventors would have done it. It would be here now." They have, and it is. Nuclear energy is already more economical than any fossil fuel for baseline electrical power generation; we do not have more of it today because the federal government has imposed onerous and costly regulations and has permitted frivolous lawsuits by not-in-my-back-yard environmentalists.Solar photovoltaic power follows the learning curve known as Moore's law, the most reliable record of continuous cost reductions in the history of technology; within 20 years it will almost certainly be less expensive than fossil fuels for peak daytime air conditioning loads. The demand for plug-in hybrid automobiles already greatly exceeds the supply; manufacturers can use the resulting profits to finance further improvements in battery cost, capacity, and longevity, which will further augment demand. The most serious limitation on these carbon-reducing technologies is that they require greater up-front capital investment than fossil fuels, so they can be implemented rapidly only in a wealthy nation.

The biggest mistake we could make, therefore, would be to impoverish ourselves first, through carbon taxes that divert the necessary capital into nonproductive (or counterproductive) government channels or through cap-and-trade schemes that transfer wealth to an industry of traders with a vested interest in blocking non-fossil-fuel energy. Furthermore, the politically powerful petroleum industry receives huge government subsidies for adding more CO2 to the atmosphere-$250 billion a year, according to one estimate. Should we not end these market-distorting subsidies, and see how this affects our CO2 output, before we assume that new market-distorting penalties are needed? It is likely that the best policy for the government, as usual, is simply to get the hell out of the way.

Finally, the panelists failed to note that climate forecasts always contain a fundamental error: the assumption that in the absence of human-induced change, today's climate will continue indefinitely. In fact, Mother Earth is not a place of perfect harmony; the most constant feature of the global climate is constant change. The last century's climate would have been unusually warm, even in the absence of any human-induced greenhouse gases, due to upward fluctuations in solar output. We have no models to predict these fluctuations.

At any time, the sun's output could drop to the mean level from 1200 to 1850, an era called, with good reason, the "Little Ice Age." This decidedly unpleasant period featured much shorter growing seasons in Europe and much of North America, long-sustained droughts in what is now the southern and southwestern U.S., and stronger and deadlier winter storms. I suggest we should wait until we understand this solar phenomenon better, rather than throwing away our money and freedom on policies intended to make Earth colder-policies that our shivering and starving grandchildren may regret.

John DeJager
Milford, OH

Ronald Bailey replies:

First, I want to thank my readers for their insightful criticisms. Let's start with the science. Considerable uncertainties bedevil climate science, and new information comes in all the time. Increasing global temperatures, higher arctic temperatures, melting mountain glaciers and permafrost, thinning sea ice, higher sea surface temperatures, and earlier springs all coincided with rising carbon dioxide levels during the last 40 years. Trends in storminess, hurricane strength, and the ice mass balance in Greenland and Antarctica are hotly contested. People have honest disagreements about how to interpret these trends. Everyone has to make up his own mind as he weighs the uncertain evidence. As Andrew Kenny points out, there is recent countervailing evidence, including a steep drop in average temperatures. And if the sunspot cycle calms down as predicted, we should find out in a decade or so if solar activity is the culprit.

I cheered in December when researchers at the Hadley Center predicted that global average temperature would rise by 0.3 degree Celsius between 2004 and 2014, and that half of the years after 2009 would be hotter than the hottest year in the modern instrumental record, 1998. At last, a firm prediction by which to evaluate the climate models. But an April study by climate modelers at the Leibniz Institute of Marine Sciences suggests natural climate changes will offset any warming caused by increased greenhouse gases for the next decade or so. If true, that means the world's governments will largely be trusting the outputs of computer models as they try to devise policies to address projected climate change. That's very troubling.

On to policy. I described the shenanigans to which John DeJager alludes precisely to highlight the huge public choice implications of cap-andtrade schemes. I favor a carbon tax because I think, perhaps erroneously, that it would offer less scope for shenanigans and could be used to reduce income taxes. Furthermore, raising the price of carbon fuels would encourage inventors and entrepreneurs to hurry along the beneficial technological trends that DeJager identifies. (Note: Plug-in hybrid automobiles are not currently available.)

Since the reason debate, the presidential campaign posturing over higher gasoline prices has pretty much persuaded me that carbon taxes are politically impossible. Who's going to vote for the guy who promises to double the price of their gasoline and their electric bills? Both McCain and Obama would raise energy prices behind the smoke and mirrors of a corrupt cap-and-trade scheme and sell it as a "market" solution. In public policy terms, probably the cheapest and least economically intrusive way to address climate change would be to fund research and development for low-carbon energy. But given the government's sorry record on energy R&D, that's likely to be a waste of time and money.