Philosophy Discussion Forums | A Humans-Only Club for Open-Minded Discussion & Debate

[Steve3007]

Any tax on carbon fuels will have that effect, automatically. And, yes, it would be justified on libertarian principles.

Good. So I think, notwithstanding any differences we have on other political issues (which we've discussed in other topics), the only disagreement we might have on this one is the extent to which climate change is actually a problem and how urgent it is. That would be a difference about empirical science, not a difference of political opinion. If we agreed as to the facts of the severity of the problem I think we'd broadly agree as to the kinds of solutions required.

Yes. Again, a carbon tax would have that effect.

Those incentives should not take the form of advance grants to producers of "green" alternatives, however, since that invites political favoritism, padded R&D budgets, and frivolous "research." Tax credits awarded after a product has been produced, is market-ready, and meets specific targets (such as higher density storage batteries) would be preferable.

Fair enough, provided it doesn't delay things too long. Hopefully the financial incentive - the carrot - of the reward would spur innovation.

All businesses taxes are ultimately paid by consumers. But levying them directly on consumers, rather than having them hidden in the price of the product, allows them to see exactly what their choices are costing them.

Fair point.

---

In that case, how can we survive our own inability to act? Compromise will deliver far too little, far too late. [Note that I don't argue with what you say, only with its consequences.]

Well, what I've said so far in the last couple of posts in our conversation is based on the premise that I agree with you as to the seriousness and urgency of the problem. In reality, I don't. For one thing, I think it's a mistake to conflate different problems. The steep reduction of the number of wild animals in natural habitats which we discussed a while ago, for example, is not the same as the climate change problem. And, as I said in the previous post to which I linked recently, I think it's a mistake to lump all environmental "pollutants" together as if they're the same problem, with the same solution.

On the specific issue of climate change, I think it needs action, but not to the extreme extent that you seem to think, such as reducing CO₂ levels back to pre-industrial levels.

[Steve3007]

In any case, unless climate change became so severe that a runaway greenhouse effect left the Earth with an environment like that of Venus, I don't think it's literally an existential threat to the entire human race.

[GE Morton]

If we accept, as I do, that Climate Change (and all the other environment-related issues) threatens the very existence of our species, other priorities fade in comparison.

It is true that the magnitude of a risk determines what mitigation measures are justifiable, with higher risks justifying more drastic measures. But there is utterly no evidence that the current warming trend would threaten the very existence of our species. Even the most dire predictions (which are not supported by current trends) forecast temperature increases less than the differences already present between different parts of the planet, all of which humans inhabit quite happily. For example, the mean annual temp in Stockholm is 7.3C; Edmonton, 3.1C, Cairo, 22.1C, and Jakarta, 26.4C --- a difference of 23C. So a mean temp increase of 3-4C will hardly make the world uninhabitable by humans (though it would present some serious problems for some people).

[GE Morton]

Here is one paleo-climate reconstruction. The IPCC's "worst case scenario" places the temp increase around 12C by 2300. But the difference between tropical and subarctic areas of the Earth, all of which are inhabited by humans, are twice that.

paleoclimate.jpg (326.5 KiB) Viewed 1318 times

https://news.ucsc.edu/2020/09/images/cl ... lg-cap.jpg

[Robert66]

Man, hoist with his own petard, blown at the moon like Rosencrantz and Guildenstern, cries out his final words:

"I may disapprove of what you say, but it matters not, for we are as toast".

[Sy Borg]

Why are they receiving subsidies at all?

Well, the discussion seems to be about whether they are actually receiving subsidies or not. As I said in my post in which I cited a Guardian article and the WTO and IEA definitions of "subsidy", it seems to depend on which definition you use. As I said to GE, it seems that the WTO definition includes "tax revenue forgone" as one thing that it defines as a subsidy. So, as I said there, according that definition, it seems that any deviation from normal tax policy in a given country could be counted as a subsidy. For example, the UK government's decision not to increase fuel taxes in a given year, when there is an established policy of doing so, could be seen as a form of subsidy in that particular jurisdiction, even though fuel taxes there are already relatively high.

No, the concessions for fossil fuel companies is special.

https://www.brookings.edu/research/refo ... operation/

In doing so, countries need to accurately measure all types of support offered to fossil fuels and devise solutions accordingly. This means that they need to identify and tackle both production and consumption subsidies. Production subsidies increase the profitability of extracting and transporting fuels, usually by offering tax breaks, production credits, or accelerated depreciation for capital investment. The Organization for Economic Cooperation and Development (OECD) found that production subsidies increased by
30% in 2019, reversing a five-year downward trend. On the other hand, consumption subsidies, which make energy products cheaper for end consumers, declined on average but rose in key economies like India.

How can you give them money to cover research into "clean coal" when they have had decades to work on pollution mitigation and did precious little, despite being given billions every year? That's akin to the government giving me the money needed to fix a property after a fire audit.

I haven't looked into that so don't know the details of the sense in which governments give companies money to research "clean coal". Maybe you could view it as analogous to government grants which pay for people to have their lofts insulated to reduce the amount of heating required (and therefore reduce the use of fossil fuels). We have that here. Although there have recently been protests by groups who want it to be done more (I think they want more taxpayer funded insulation in social housing), which have involved things like gluing themselves to roads.

https://www.abc.net.au/news/2017-02-02/ ... ed/8235210

[GE Morton]

No, the concessions for fossil fuel companies is special.

https://www.brookings.edu/research/refo ... operation/

No, it isn't. We covered this in another thread. Here is breakdown upon which Brookings relies:

https://www.eesi.org/papers/view/fact-s ... etal-costs

We covered those here:

viewtopic.php?p=399400#p399400

[Sy Borg]

The US has reduced its subsidies but you may be surprised to learn that the US is not actually the entire world. Other countries exist too.

For instance, Australia has lifted their subsidies: https://reneweconomy.com.au/australia-l ... says-bnef/

Australia’s financial support of fossil fuels increased by 48% over the five-year period between 2015 and 2019, the biggest increase in fossil fuel subsidies among G20 nations, and putting the country well behind its peers in supporting the goals of the Paris Agreement.

Meanwhile, fossil fuel subsidies in Asia are vast:

Iran $86.1 billion
China $30.5 billion
Saudi Arabia $28.7 billion
Russia $24.1 billion
India $21.9 billion

[Steve3007]

Well, the discussion seems to be about whether they are actually receiving subsidies or not....

No, the concessions for fossil fuel companies is special.
https://www.brookings.edu/research/refo ... operation/

That Brookings article is interesting enough but it still doesn't go into any detail as to what actually constitutes a subsidy, and that is what seems to have been one of the main bones of contention in your conversation with GE. It does discuss production and consumption subsidies. So, taking consumption subsidies first, my understanding is that a major factor in deciding the extent to which a consumption subsidy is present is the amount a given government taxes oil products used in things like transport and heating. As we know, that varies a lot around the world. In most European countries it's relatively high. Slightly lower in Australia. Very low in the US. Almost free (by European standards) in Saudi Arabia.

As I said in previous posts, the WTO defines a subsidy as, among other things, "tax revenue forgone". But that presumably leads to the curious conclusion that any failure to keep increasing tax on petrol, or reducing it (even if reducing it from a previously high level to a still-high level) constitutes a subsidy. So, for example, in the UK for several years there's been this "fuel duty escalator" policy whereby governments have a policy of annually increasing the duty (tax) on petrol and diesel. So any failure to keep doing that, even if it still means the tax is very high by international standards, would count as a subsidy under the WTO definition. All this means that when I'm told that such and such a country subsidizes oil by so many billions of dollars, I don't really know what I'm being told. Obviously any number involving billions sounds like a lot. But of course when considering entire countries, with up to 1.4 billion people in them, figures are generally going to be in the billions of dollars.

Another thing about consumption subsidies, as pointed out in the article:

For consumers, removing consumption subsidies immediately raises the price of energy. And when energy prices increase, the cost of many other goods and services also goes up. Opposition to such inflation is evident by the waves of protest and public unrest in response to an increase in electricity prices in Morocco in 2015 and gasoline price hikes in Mexico in 2017. Knowing this, politicians are unlikely to push for reform since people’s dissatisfaction will negatively impact their chances of reelection.

...is that it's electorally difficult for governments to increase the tax on petrol/diesel (and therefore the cost of everything that is transported using it, such as food). And governments, if they want to get anything done, have to try to make sure that they remain in government and don't get kicked out. So where I live, for example, domestic gas and electricity has a much lower rate of sales tax (VAT/GST) than most other products partly because it would be very unpopular to put it up and cause some people to struggle to heat their homes in winter. Obviously what they should be doing is subsidizing better home insulation. But with older housing stock there's a limit to how well insulated a house can be made.

Another incidental thing about fuel taxes is that in countries with a high flat-rate per-litre tax on fuel they're less sensitive to fluctuations in the oil price than other countries. So in the US (low tax) the pump price goes up a lot, in percentage terms, when the oil price goes up. Much more than it does where I live, for example. So consumers notice it more, they get annoyed, political leaders worry about their poll ratings, and the strategic oil reserves are opened up to soothe those consumers. But, of course, there's no way that most Americans would tolerate fuel taxes as high as they are in most European countries, or even as high as they are in Australia. No US presidential candidate who proposed that would get elected.

[Steve3007]

Interestingly (back of a fag packet calculation), since the global oil price is currently around $80 per barrel and a barrel is 42 US gallons, the wholesale cost of a US gallon of crude oil is currently about $1.90. I've read that 42 gallons of oil when refined makes about 20 gallons of gasoline. So you'd think that would make the rock bottom price (zero tax, zero refining transport and storage costs and zero profit for anyone downstream from the extractors) of gasoline in the US about $4. But I've also read that the current average cost to the consumer of gasoline in the US is about $3.40. (First time I ever drove in the US I think it was about $1.20. To me, that was virtually free!)

So maybe that gives us a better idea of consumption subsidies, per gallon, for gasoline in the US.

[Steve3007]

So, on this scale, on the basis of the above calculations, I guess we could say that every country above (roughly) Mexico can definitely be said to have consumption subsidies on gasoline/petrol. And every country below, let's say, Kenya, probably doesn't.

[Steve3007]

*The above would be according to the IEA ""reference price minus full cost of supply" definition of subsidy. Not the WTO or any other definition.)

[GE Morton]

Interestingly (back of a fag packet calculation), since the global oil price is currently around $80 per barrel and a barrel is 42 US gallons, the wholesale cost of a US gallon of crude oil is currently about $1.90. I've read that 42 gallons of oil when refined makes about 20 gallons of gasoline. So you'd think that would make the rock bottom price (zero tax, zero refining transport and storage costs and zero profit for anyone downstream from the extractors) of gasoline in the US about $4. But I've also read that the current average cost to the consumer of gasoline in the US is about $3.40. (First time I ever drove in the US I think it was about $1.20. To me, that was virtually free!)

You seem to be assuming that the remaining 22 gallons from the barrel is discarded, but that is not the case. Nearly all of it is refined into other marketable products, some of which sell for more than $1.90, some less. So the wholesale price of gasoline at the refinery can be anywhere in that range, but somewhere well below $4.

[Steve3007]

You seem to be assuming that the remaining 22 gallons from the barrel is discarded, but that is not the case. Nearly all of it is refined into other marketable products, some of which sell for more than $1.90, some less. So the wholesale price of gasoline at the refinery can be anywhere in that range, but somewhere well below $4.

Ah yes. Good point. I was stupidly forgetting that! It's true that all kinds of products are made from that barrel of crude oil when it is fractionally distilled. So I guess a better approximate break-even price, with oil at £80 per barrel, would be about $2 per gallon. In that case, on the scale I linked to earlier, the balance point between net tax and net subsidy would be more like Bahrain than Mexico. Quite near the top of the scale - the part almost entirely populated by countries whose major export is oil.

[Steve3007]

(I meant $80 per barrel, not £80.)