Readers of recent news reports may think it’s news that U.S.
emissions of carbon dioxide, the main global-warming gas, are at an
all-time high. The real news would be if they dropped steeply,
which could only occur with a very warm winter (less space
heating), a very cold summer (less air conditioning) or a huge
recession, because it takes energy to make things.
Carbon dioxide has been called breath of our civilization, and
as we are technologically constituted, it most certainly is. We
burn fossil fuels (which combust mainly to carbon dioxide and
water) for manufacturing, to go places, and to produce electrical
power. While we could certainly substitute in more nuclear fuels
for power production, the same forces that are so exercised about
global warming being caused by carbon dioxide, in general, won’t
permit the nuclear option. (That being the definition of
environmental insincerity.)
So it is not news at all that our emissions are at a record high
along with GDP. What is more newsworthy is how the emissions per
unit of GDP — the economic bang for the energy buck — continue
their steady decline. We now produce a constant dollar’s worth of
goods and services with only 78% of the energy we used in 1990. In
1990, we used about two-thirds of the energy we used in 1970 for
the same dollar’s worth. These are remarkable increases in
efficiency in the last 35 years.
The New York Times recently reported that the 2004
change in overall emissions was nearly double the annual average,
neglecting to report that single-year statistics are virtually
meaningless. If one had taken the average of the last five years
and compared that to figures generated back to the mid-'90s,
percent changes in emissions of carbon dioxide turn out to be
remarkably constant.
For 1999-2004 the increase averaged 0.8% per year. From 1996
through 2001 the change averaged 1.0%. Given year-to-year
fluctuations, these numbers are indistinguishable from each
other.
The same applies on a global scale. Our computer models for
global warming have assumed, for decades, that carbon dioxide would
increase at 1% per year in the atmosphere. For those decades the
real rate of increase has been quite constant, and less than half
of 1%. In the ten years ending in 2004, the average rate of
increase was 0.49%. Ten years before it was 0.41%, and ten years
before that, 0.42%. This is why climate models have generally
predicted too much warming, too fast — about twice as much, in
fact.
Taken together, all of these facts mean that most of the
assumptions about the growth of global warming gases in the
atmosphere have to be thrown out. There’s little, if any,
exponential increase, and the vibrant economies continue to produce
more and more things with fewer increments of carbon dioxide.
But, if carbon dioxide is the cost of economic growth, it would
seem obvious that it will continue its upwards ascent for the
foreseeable future.
Will it? The answer lies in the well-established trends towards
increasing efficiency in economies such as the United States’
(despite the large number of SUV’s panting in increasingly long
traffic jams). This did not happen here because of concerns about
global warming — because no one really gave much of a care about
it until New Orleans got smacked by a Category 3 (yes, it’s been
downgraded) hurricane.
Instead, the increases in efficiency resulted because businesses
compete with each other to produce things that cost less to run and
build. And, if they are built, people will come. And so do
investors.
As an example of this process, get on your Yahoo financial
tracker and plot the stock performance of Honda, Toyota, GM and
Ford for the last two years. You’ll find the share price of the
producers of the Accord and the Camry up an average of 40% while
the American companies have dropped 50% in value.
This creates a snowball effect in a warming world. People in
vibrant economies have capital to invest in increasingly efficient
companies, which rewards them with more capital, which is
re-invested, etc.
The prospering companies are efficient in many ways. They use
less energy to produce cars in their newer plants. Their cars use
less energy on the road. Their labor forces tend to be relatively
young and they haven’t been promised the moon in benefits and
retirement with 40% of their time on earth left to run.
As these companies accumulate capital, they have been
reinvesting it in development of even more efficient vehicles, some
of which may emit no carbon dioxide at all, which means that some
day the pressures for efficiency may indeed drive carbon dioxide
emissions down. But, without investment in those technologies —
made by private individuals in publicly traded corporations — be
assured that development of the clean machines of the future will
be delayed until the planet gets warmer than some might want
it.
(Disclosure: The author owns shares in Honda and Toyota,
sold all of his shares of Ford in 2002, and a GMAC bond in
2005.)
