Tuesday, November 3, 2009

Just some thoughts on where we are at

It is clear that when it comes to climate change issues there are several clear camps of people:

  • The Armageddon crowd - the world is coming to an end and we have to end modern life as we know it now. These people really are the zealots that want to see an end of the world come because they are glass half empty group. Y2K and the rapture are some other events that have the same sort of believers
  • Time to change crowd - there is a crisis and we need to do something about rising levels of greenhouse gasses and this is best done through efficiency, market mechanisms, and targeted government regulation. This is were most of the rational environmentalists and scientists fall.
  • It is not happening crowd - this group believes that there is no climate change underway and nothing needs to happen.
  • It is happening but do not worry crowd -this is the second largest group in the scientific community, but they are very, very quiet as they have become pariahs in the world.

The group that is missing from the above groups is the mass of the public. It seems that the mass of the public is convinced that there is some sort of climate change going on but it is not real for them. Most people are not taking any action because the effects and impact of climate change are too far off to seem like anything urgent to people.

When the mass of people do not change their behaviour, it is unrealistic to think change will happen. It is because of this that carbon taxes are crucial so as to have any impact on CO2 emissions. A rise in the price of fuels will cause people to vote with their wallets. It will also raise the funds needed to be able to allow CO2 to captured and stored.

The typical family car in Canada uses about 3000 litres of fuel and this costs about $3000 a year. At $2 a year this rises to $6000 and at $4 it becomes $12 000. These costs are clearly enough to make people rethink the fuel economy of their car. At the moment the majority of the cost of car is the price paid to buy it. One can assume about a $5000 a year in loan payments and a total cost of having that car of about $9000 a year.

At $4 a litre this same vehicle would cost $18 000 a year, twice as much as today. This is high enough to have people change to a much more fuel efficient vehicle. It is realistic to be able to buy a suitable family vehicle that uses about 40% of the fuel of the typical family car at the moment - many people with small families buy minivans or SUVs and could easily live with a sedan. This change would bring the annual cost down to about $10500, not that much more than now. It also means that even with gasoline at $4 a litre, for many people the cost of fuel will still not be the majority of the cost of operating a vehicle.

This high and radical price of gasoline would be a great market signal for the general public and will fuel the demand for smaller and more efficient cars. You could not get there quickly, it would have to be phased in over years. To be able to do this you need a carbon tax.

The same can be done with home heating fuel and for non-green electrical power. Do this and you will see people figure out how to keep their homes warm and cool without using as much energy.

The reason we still use as much non-green energy in our society is because it is still rather cheap to use.

No comments: