Political and economic realities Having read Paul Krugman
(6) If I invest $5 billion to build a nuclear power plant that will operate for and be paid off in 40 years, how much mortgage per year will I be paying in capital and compound interest at a 5% rate? If I produce 1010 kW-hr of electrical power each year, how much must I charge my customers per kW-hr to service my debt?
Are these truths evident?To whom? • Finite and peaking fossil fuels • Increasing CO2 emissions • Increasing CO2 in the air • Temp. and sea levels rises • Possible sudden feedbacks, phenomena • Bad effects
Krugman • No doubt about fossil fuels, CO2, warming, climate change • Leave as much as possible to the market, techniques to respond to imposed standards. • How to react to uncertainty? • It will cost us all to limit CO2.
Uncertainty and Pascal’s Wager • What to assume?
Gallup poll • www.gallup.com/poll/107569 • ‘Climate Change Views’ • 29 May 2008 • ‘effects of global warming have already begun to happen’ All Americans—61% ‘yes’ All Democrats --76% now, 46% in 1997 All Republicans-- 41% now, 47% in 1997
A political line in the sand Climate change and what to do about it has become a political diving line. US did not approve the Kyoto pact, and opinions/plans have hardened since. Due to better information? Better understanding? Of what?
clickers • Same questions
Copenhagen, Dec. 2009 Developed nations pledge $30B over 3 years for developing nations to adapt and pursue clean energy Provisional promise of $100B by 2020 to adapt Emissions reduction to hold to 2 deg. C Commit to emissions reductions Goal to review own progress Diplomatic Space for China and US Complete assessment of these accords by end of 2015
The problem- • Actions to curb greenhouse gas emissions will 1. be expensive 2. cost jobs 3. change the established rules 4. perhaps not be effective 5. let others win 6. move the problems elsewhere, but on the same planet
The opportunities- • Changing the rules on GHG emissions will 1. Create new kinds of jobs 2. Let American ingenuity prevail 3. Create new technologies 4. Defer a big problem 5. Show the world we care and will lead 6. Improve our energy security
What would RJP do? • Cap and trade for coal, increasing the price. • Tax electrical consumption, rising • Tighten CAFÉ standards a bit, add a fuel tax (oil security) • Subsidize renewable winners-wind, nuclear • Drop dead ends-fusion, corn ethanol • Seek research miracles-PV, cellulose • Add a carbon tariff to imports
Using the new income • Use our skills, technologies, management to increase exports • Invest in adaptation • Deals for investments in efficiency
Next week • Monday –China and India • Wednesday—changes at the poles, in alpine regions, and in the oceans • Friday-team presentations • FINAL 0730 Thursday May 6 About half since exam 2, about half cumulative 35% of the grade Advice next week