Fossil Fuel Addiction and the Consequences for Climate Change. by Steve Suranovic The George Washington University

Transcription

1 Fossil Fuel Addiction and the Consequences for Climate Change by Steve Suranovic The George Washington University

2 The Objective What can an economic model of addiction tell us about the perceived addiction to fossil fuels? How are the problems the same, how are they different? Will use a particular cigarette addiction model developed by Suranovic, Goldfarb and Leonard.

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4 The Decision to Smoke Assume an individual weighs the costs and benefits over time. Makes a period by period decision. (bounded rationality) Weigh current benefits, future health costs, and the costs of quitting. See graphical depiction...

5 The Decision to 15

6 The Decision to 15

7 The Decision to 15

8 The Decision to 15

9 The Decision to 15

10 The Decision to 15

11 The Decision to Smoke

12 The Decision to 40

13 The Decision to 40

14 The Decision to 40

15 The Decision to 40

16 The Decision to 40

17 The Decision to 50

18 The Decision to 50

19 Is Fossil Fuel Use an Addiction? To some people, the continued use of cigarettes or drugs in the face of serious health consequences is irrational. Similarly, to some, the continued use of fossil fuels in the face of looming environmental catastrophes is also irrational.

20 Is Fossil Fuel Use an Addiction? Addiction to cigarettes or drugs is difficult to impossible for some to give up Similarly giving up the use of fossil fuels may be difficult, or impossible to accomplish.

21 Model Transformation Cigarettes to FF Redefine variables for fossil fuel addiction and climate change problem Retell the quitting story Note similarities and differences.

22 Model Transformation Cigarettes to FF Current Benefits

23 Model Transformation Cigarettes to FF Future Costs

24 Model Transformation Cigarettes to FF Quitting Costs

25 Cigarettes vs. FF Future Effect Incidence Cigarettes Mostly self effects Family impacts 2 nd hand smoke Fossil Fuels Mostly external effects Next generation in developing countries

26 Cigarettes vs. FF Future Effect Probabilities Cigarettes Health Impacts are well-documented Still, probability of negative impacts is much less than one Some smoke until age 100 Fossil Fuels Temperature effects well-documented Climate effects are uncertain Economic impacts (costs) are even more uncertain Who will be affected is very uncertain

27 Cigarettes Cigarettes vs. FF Quitting Costs Opportunity cost of not smoking Seemingly small Physical withdrawal effects Could be large Depends on past usage Fossil Fuels Opportunity cost is the cost of alternative energy Could be large No withdrawal effects But maybe there are.

28 FF Withdrawal In the US the FF-reliant capital infrastructure is over $4 trillion. Gas powered autos Oil and coal power plants Suppose demand dramatically shifts to battery cars As gas cars become cheaper Opp Cost of battery cars rises like a withdrawal effect!

29 Ending the FF Addiction The Individual Decision Opportunity and Withdrawal Costs of quitting FF usage is very high One Individual s long term impact on climate is infinitesimal Thus, there is virtually no individual incentive to stop using fossil fuels.

30 Ending the FF Addiction The Need for Collective Action To solve the prisoner s dilemma, governments can intervene But any one country s actions also likely to have small global impact Thus, need to forge an international agreement with all major carbon emitters participating

31 Ending the FF Addiction The Need for Collective Action National Action and International Commitments will require citizen support (majority > 50%) in democracies.

32 Ending the FF Addiction Will it Work Consider cigarette addiction interventions Public health pronouncements Media and public school campaigns Higher taxes Regulations (indoor smoking, etc) Legal actions against cigarette companies

33 Ending the FF Addiction And yet. Will it Work In US smoking incidence at 21%; down from 44% in 1950s (good, not perfect) Daily teen use increased by 50% between 60s and 90s 1.3 billion people use tobacco every day Male smoking in some countries above 60% (Belarus, Greece, Russia, China)

34 Ending the FF Addiction Conclusion FF Addiction much harder to break than Cigarette Addiction No individual incentive to quit National Collective decisions may require majority support International agreements may be harder to come by On the other hand.

35 Ending the FF Addiction Conclusion An Intl Agreement (like Kyoto) is much like a cigarette smoker vowing to quit five years from now! There is no credibility; no guarantee Politicians have incentives to reach such agreements Especially when costs are backweighted!

36 Ending the FF Addiction The Better Alternative Reduce Adjustment Costs Cheaper non-carbon fuels Reduce Negative Impact of FF Carbon capture technology Geo-engineering