mengwong - Only an Actuary can Defeat a Coal Miner

China is building a new coal plant every week. Now Europe is following in its footsteps.

This is not okay.

They say we have enough coal to last 200 years. I say the more coal we use now, the longer it'll last: if we keep up our current rate of consumption, our existing reserves might last 200,000 years. Why? Because enough people will die in the next 20 that all those new coal plants will become entirely unnecessary.

Population experts say we are at, or above, the sustainable carrying capacity of the planet. And if you've read Bill McKibben and Michael Pollan you know what "sustainable" means: we have to stop making human beings out of oil (from crude to corn to cow to Cheney) and go back to old-fashioned sunlight and air.

When you make people out of oil, if a barrel of oil costs ten times what it used to, then you can only make one-tenth the people. The lifeboat isn't as big as it used to be, and if things keep going, somebody's going to have to get off.

There are two paths forward. Both paths lead to depopulation. On one path, we stand up and head for the exits in an orderly Powerdown. On the other, the Four Horsemen of the Apocalypse await. When Silicon Valley professionals start hoarding food, famine is no longer something that happens in other countries. Famine leads to war. War leads to death. And dead people only emit carbon once. That is Nature's way of getting the last word.

Einstein says: The significant problems we face cannot be solved by the same level of thinking that created them.

There are four levels of thinking in Daniel Dennett's Tower. Each level has a patron saint: Darwin, Skinner, Popper, Gregory, named for the degree of adaptiveness available to organisms and species at that level.

At the highest level, money and markets are Gregorian tools. They let us shape behaviour using nothing more than memes. The issue of climate change is only just beginning to reach that floor of the tower, with the Kyoto Protocol.

Carbon credits aside, for most people living day-to-day, climate change is camped quietly at the level of Popperian thinking. We know intellectually that it'll be a problem in our own lifetimes; but short-term thinking (exemplified by the quarterly earnings call) beats the kind of long-term thinking we need to solve the problem, dooming us all, unwittingly, to a sort of species-wide Logan's Run. Besides, being an expert on a problem doesn't mean you're an expert on a solution; and being an expert on a solution doesn't mean you actually do it.

That's where Skinnerian thinking comes in. Your neocortex may know that a stove is hot. But your lizard brain will stay unconvinced until you actually get burned.

And huge swaths of human behaviour are Skinnerian. We are irrational in all kinds of ways. We only learn lessons when we get hurt. But that's the great thing about money. Money is a bridge that lets the higher levels reach down and influence the lower. Popper said famously that our ability to imagine futures "lets hypotheses die in our stead". Money lets us lose a fortune instead of a finger. It hurts, and we learn.

We need all the Popper, Gregory, and Skinner we can muster. The alternative is Darwin. If we allow the Earth to warm by 2°C, we're done for. As a point of comparison: if, during the Cold War, we had blown up all 70,000 warheads available to both sides, each equivalent to 500 kilotons of TNT, thus putting a total of 146 exajoules into the troposphere (which masses, say, 4E18 kg) ... an all-out thermonuclear holocaust would raise global temperatures by 0.03°C. In the last 150 years, we've already managed to raise temperatures by 1°. That's equivalent to nuking the world every day for a month. Another 1° will end the world as we know it.

We need to return to preindustrial levels of carbon emission, only with ten times the number of people on the planet. You can see why this is going to be the single biggest challenge of the first half of the 21st century. No matter which way you slice it, it's going to hurt: it'll hurt the American who has to stop driving. It'll hurt the Chinese worker who moved to the city dreaming of buying a car, and who now never will.

We need to change our lightbulbs. We need to power those lightbulbs with nuclear, not with coal. We need to eat meat once a week, not three times a day. We need to ditch our cars and walk to the train. We need to move to the city. We need to party like it's 1899. Smart people see the writing on the wall and get there ahead of the pack.

The mass media is not getting the message out. In the recent primary debate, the moderators spent more time talking about lapel pins than global warming. And Gore's recent TEDtalk says that the man on the street is still basically clueless. Let me paint a picture of Florida 2010: in the aftermath of two back-to-back hurricanes, Joe American packs his family into the SUV (bumper sticker: McCain 2008) and they drive until they run out of gas. This happens sooner than you'd think, because in 2010 Joe American can only afford to use a quarter of his gas tank. Two days later, his four kids are weak from hunger and dysentery. Joe American, trying to find food and water in a boarded-up grocery store, is shot as a looter by a jumpy National Guardsman just back from Iraq. There are many ironies here, but the greatest one is that he dies with "why?" on his lips.

Why? Because when all else fails, blind Gaia invokes Darwin.

Anyone who doesn't actually starve may yet learn the connection between demography, food shortages, biofuels, gas prices, and the Hubbert peak. They've been burned, and they'll want to know what went wrong.

In America, the band plays on. The US has one last chance to elect a president who'll sign Kyoto. The Republicans will say "we can't afford to fix the environment." The Democrats will say "we can't afford not to." Sadly, the human primate is completely unequipped to deal rationally with matters of species extinction. Some days I feel like I'm living in the wrong alternate universe. Some mistakes are educational. Others are permanent. Placing the economy above the environment leads to Collapse.

I'm glad we have the Kyoto Protocol. I worry that it's not enough. Common-pool resource regulation is one approach to the tragedy of the commons. I bet France, which switched from coal to nuclear, is making huge bank on traded carbon credits. And they're doing it with the blessing of major environmentalists. It's enough to make you want to invent a Magic Carbon Dioxide Sucking Machine and go into commercial carbon sequestration.

But regulation doesn't give us a way to deal with actors who opt out. What are we going to do if a country decides not to cut emissions? Invade?

Regulation is the stick. If you use the stick too much, the donkey runs away. We need a carrot.

I say the carrot is a new financial instrument. It takes us from Popper to Gregory. It looks a lot like insurance. Imagine a Carbon Assurance Corporation. The premium is basically a tax on carbon pollution. The coverage: if you get hit by a hurricane, or your crops wither and fail, or you die in a heat wave, Carbon Assurance pays out.

It's hard to add a tax on carbon, because the demand elasticity of energy in the first world is incredibly low: people who are entirely habituated to an hour-long commute will grumble, but they'll give up their children's education before they buy a smaller house near work.

But if we frame it in terms of risk management, we can tap in to the fear side of the equation, and if there's anything the modern media are good at, it's drumming up fear.

This model makes people want to join the system voluntarily. It makes people want to reduce their carbon usage. It should make energy agencies think twice about building all those coal plants. It even penalizes people who aren't in, by leaving them exposed to risk. And you can join at any level: personal, municipal, state, and nation.

In America, where people don't even consider their own health worth insuring, this may not go over. But in the rest of the more socialist first world, enlightened leadership may do the right thing. And developing economies have a lot to lose. They may well look at the case of China and recognize that economic growth that comes entirely at the cost of environmental devastation is not true growth at all: it is merely a loan against the future that will come due with a vengeance.

Carbon Insurance just might provide the right economic incentives to turn the ship around before it's too late.