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The Department of Duh

19 Jun 2019 | News Roundup

There’s no way to pretty up the dilemma alarmists say we face. Barring the development of important new fuel sources or a willingness to exploit nuclear at least for our electricity needs, the way to have fewer GHGs is to use less energy. And using less energy means using less energy. And as Canada’s Parliamentary Budget Officer (PBO) pointed out in a new study, making us stop using so much gas will require a significantly higher tax on the stuff. There are reasons to be skeptical of the pseudo-precision of such studies as the decimal points proliferate, but this one was so obvious we can safely accept its conclusions.

Modeling the economy, like modeling climate, requires taking an almost infinitely complex feedback system and reducing it to a manageable set of variables and functions. Ten years ago there weren’t iPads. Who saw that coming? And on energy alone, how do the boffins in the PBO know what alternative technologies will come along, or won’t? Or what other policies will be adopted, wise or foolish? Will the economy boom, driving up energy use, or slump, reducing it? They don’t know, of course, so they guess. They’re smart people and their guesses tend to fall within the range of recent history. But before believing the details, ask yourself who’s the last person whose 10-year forecast of economic conditions got it right?

The PBO starts by assuming that we will need a further 79 megatonne reduction to meet our Paris commitments. Which is only true if current projections of emissions are roughly correct. They then conclude that we would need an additional tax of $52 per tonne by 2030 (for a total of $102), raising the price of gas by 23 cents per litre. But that conclusion is crucially dependent on assumptions about the “price elasticity of demand” for gas, which is how economists say “how much less we’ll buy for any given increase in price”.

For many products the elasticity is fairly high. If the price of apples goes up, we can buy oranges. But there’s no substitute for gas in our cars, and not much substitute for our cars, so the elasticity of demand is low. And it falls fast because after cutting out the most dispensable, even frivolous trips, and walking or cycling the short ones especially in summer, it gets harder and harder to stay out of the car.

That consideration leads in the end to a conclusion painfully obvious and painfully true: It’s going to take a much bigger tax to pry our fingers off the gas pump. And it’s going to do so because we need gasoline really badly to live comfortably. All these things are so obvious that only in politics would they be controversial, or to coin a phrase, denied.

We talked about these issues in our Paris Accord video Part I and Part II. What really matters for a “soft” transition is for new sources of energy to become competitive with fossil fuels or for new CO2 abatement technology to become inexpensive. And the real hurdle in raising gas taxes is that neither seems likely any time soon.

If you want to know what the future of green energy is meant to look like, just download the artist’s impression of how the local new light rail station will appear when it finally does appear: the sun is shining, the grass is growing, there’s no litter and nobody’s overweight, unshaven or exhausted; instead a bunch of fit young people gaze enthusiastically at theiir exciting future without limits. But if you want to know what the world will actually look like if we get rid of our existing source of energy before having a reliable replacement in hand, visit a poor part of Africa or Asia or, indeed, somewhere the government has succeeded in destroying prosperity like Venezuela.

If you’re still a committed climate alarmist, please come back determined to build modern nuclear plants.

5 comments on “The Department of Duh”

  1. The price elasticity of home heating fuel is even lower in Canada than for gasoline. No winter heat, you die. So no matter how high the carbon tax goes, it will have almost "net-zero" effect on consumption.

  2. I am so tired of hearing how this is all settled, and there is no need for debate or discussion. I feel like I am watching a third world criminal trial, where only the prosecution gets to present a case.

  3. Canada's electrical power generation is 81% emission free, consisting of 63% hydro,17% nuclear and wait for it, 1% unreliables (solar and wind from a necessarily much larger nameplate capacity). The remainder is from fossil fuels (decreasingly coal and increasingly natural gas). The ongoing metaphysical self-flagellation of a carbon tax along with the war on Western Oil and gas and consequently on Canadian prosperity, is essentially a war on the reality of a widely disbursed population of an energy intensive resource-based economy of a nation with a cold climate. Canada alone is being sacrificed on the alter of green theocracy for the benefit of the virtue signalling of smug elites.

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