The green paradox: a plea for an illusion-free climate policy

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The green paradox is the short title of a book published in 2008 by the German economist Hans-Werner Sinn . In it, Sinn describes his thesis that a foreseeable tightened environmental policy would act like an announced expropriation of the owners of fossil fuels . Indirectly, resource extraction and consumption - and consequently the emission of climate-damaging gases - would be accelerated and not reduced as intended. In 2012 a completely updated and revised paperback edition and the first international edition were published. Sinn further writes that the reduction in demand for z. B. fossil fuels lead to an increase in demand in those states that do not implement emission reductions. The reason is the amount offered, which remains the same. Sinn attributes this to political instabilities in some oil-producing countries and constant production volumes on the part of OPEC . Decreasing demand lowers the price of fossil fuels, and a decreased price leads to higher consumption. In this sense, every emission reduction is an indirect subsidy for consumers.

argumentation

The rationale for the green paradox begins by stating that every carbon atom that is extracted from the earth in the form of gas, coal, or oil and burned ultimately ends up in the atmosphere . Highly effective combustion processes that ensure that none of the extracted carbon becomes soot reinforce the importance of this relationship. Around a quarter of the carbon emitted into the atmosphere stays there almost forever and contributes to the greenhouse effect, which is responsible for global warming.

Apart from afforestation and similar measures, according to Sinn, the accumulation of carbon in the atmosphere can only be reduced in two ways: Either less carbon is extracted from the earth, or the carbon is put back into it after energy has been generated.

The efforts of environmental policy focus on alternative, CO 2 -free energy sources and on more efficient energy use. According to Sinn, they therefore deal exclusively with the demand side of the carbon market and neglect the supply . Despite considerable efforts to reduce demand, there has not yet been a reduction in the global quantities of CO 2 emitted . Rather, the emission of CO 2 continues to rise.

According to Sinn, the reason for this is the fact that an environmental policy, by announcing a step-by-step tightening of its measures over the coming decades, exerts ever increasing pressure on prices : the prices in the present and in the future are compared to the level they would otherwise have had would have pressed, but even more so in the future than in the present. This lowers the rate of growth in value of fossil fuel deposits and concerns the owners of these deposits. The owners respond by accelerating their production in order to increasingly convert their assets into financial capital that promises higher returns.

That is the green paradox: An announced environmental policy that becomes more and more “green” over time acts like an announced expropriation and causes the owners of fossil fuels to exploit their stocks faster, which accelerates climate change.

Countries that do not participate in the demand restraints would have a double advantage. They could not only burn the carbon that is saved by the “green” countries (leakage effect), but also the amount of carbon that would come onto the market as a result of the announced and expected price reductions due to the successively greener policies (green paradox).

As Sinn points out, a prerequisite for the green paradox is that the resource be scarce in the sense that the price will always be above the unit cost of extraction and exploration . Since new technologies would in the best case be a perfect substitute for electricity, but not for fossil fuels, this requirement is fulfilled for Sinn. The prices of coal and oil today are many times higher than the sum of the costs of extraction and exploration, and they will remain so. Although the transition to more difficult-to-reach stocks will continuously increase extraction costs, the scarcity of natural resources will also increase their prices. As long as the mineral resources themselves retain a value, it can never happen that the prices no longer cover the extraction costs. Marginal green demand policies are therefore unable to reduce resource depletion by lowering prices below costs.

Realizable solutions

An effective climate policy must inevitably take into account the previously neglected supply side of the carbon market in addition to the demand side. According to Sinn, a possible solution for achieving this goal is to levy a withholding tax on the investment income that the resource owners earn on financial investments. Such a tax takes away their desire to mine natural resources. Another solution consists in the introduction of a seamless global emissions trading system that effectively limits the worldwide consumption of fossil fuels and thereby enforces the desired reduction in carbon production.

Similar publications

Sinn's theses were sometimes compared with the similar findings, but different conclusions, of the Swiss author Marcel Hänggi , who, unlike Sinn , is assigned to the politically left-wing camp. In France, Christian Gerondeau became known in 2009 with a similar book publication. According to this, the accessible oil and coal reserves would be used up in any case, regardless of any restrictions on consumption, since if the EU were not to do so, other countries such as China and India would increasingly access the remaining resources.

development

"The Green Paradox" builds on Sinn's earlier research into supply responses by natural resource owners to announced price changes.

Sinn had presented his ideas on the green paradox in detail in advance in several scientific articles, his Thünen lecture in 2007 during the annual conference of the Verein für Socialpolitik, his Presidential Address at the World Conference of the International Institute of Public Finance in Warwick 2007 and in two working papers.

Review and scientific discussion

Hans-Werner Sinn's book The Green Paradox - A Plea for an Illusion- Free Climate Policy achieved fourth place in the FAZ section The best economic books of 2008 . Sinn's book is a "clear analysis of environmental problems and environmental policy," according to the FAZ. The TAZ writes that Sinn's economic discussion is more complex than what the nuclear power lobby usually offers. "The green energy politicians should now counter that first". The NZZ recommends the book to every citizen to read. It enables “like few publications to form one's own and independent judgment” and is thus in “the best tradition of the Enlightenment”. While Dirk Maxeiner attests on Deutschlandradio that anyone who has read through Hans-Werner Sinn's book is not necessarily one perspective richer, but certainly has a few illusions, Johannes Kaiser criticizes that Sinn all too often loves half-truths and is "populist propaganda" . The Süddeutsche Zeitung writes that Sinn uses carefully chosen words to dismantle any approaches to solving climate problems. His proposals are hardly practicable, however, and offer no perspective for the current energy problems. The Wirtschaftswoche judges, meaning analysis of the environmental policy is excellent and meet the spirit of the debate. But in the search for alternatives he also comes up against limits. The Germany radio criticized the book for it "constructed paradox" and commented sense solution of a global climate agreement with the words: "With dramatic words and by false arguments comes Hans-Werner Sinn to a correct result - just with nearly 20 years late." Marcel Hänggi says in the WOZ that sense hits the nail on the head and should be read without false fears.

See also

supporting documents

  1. ↑ a b The green paradox: a plea for an illusion-free climate policy . Econ Verlag, 2008, ISBN 978-3-430-20062-2 .
  2. ↑ The green paradox: a plea for an illusion-free climate policy. Ullstein Taschenbuch, 2012, ISBN 978-3-548-37396-6 .
  3. ↑ The Green Paradox. A supply-side approach to global warming. The MIT Press, 2012, ISBN 978-0-262-01668-1 .
  4. ↑ D. Archer: Fate of Fossil Fuel CO2 in Geologic Time. In: Journal of Geophysical Research. 110, 2005, pp. 5-11.
  5. ↑ D. Archer, V. Brovkin: Millennial Atmospheric Lifetime of Anthropogenic CO2. Climate Change, mimeo , 2006.
  6. ^ G. Hoos, R. Voss, K. Hasselmann, E. Meier-Reimer, F. Joos: A Nonlinear Impulse Response Model of the Coupled Carbon Cycle-Climate System (NICCS). In: Climate Dynamics. 18, 2001, pp. 189-202.
  7. ↑ International Energy Agency (IEA), IEA Database, CO 2 Emissions from Fuel Combustion 2007. Accessible online at: www.sourceoecd.org
  8. ↑ Netherlands Environmental Assessment Agency, Global CO 2 Emissions: Increase Continued in 2007, Bilthoven, June 13, 2008. Accessible online at: http://www.mnp.nl/en/publications/2008/GlobalCO2emissionsthrough2007.html
  9. ^ NV Long: Resource Extraction under the Uncertainty about Possible Nationalization. In: Journal of Economic Theory. 10, 1975, pp. 42-53.
  10. ^ KA Konrad, TE Olson, R. Schöb: Resource Extraction and the Threat of Possible Expropriation: The Role of Swiss Bank Accounts. In: Journal of Environmental Economics and Management. 26, 1994, pp. 149-162.
  11. ↑ S. Felder, TF Rutherford: Unilateral CO 2 Reductions and Carbon Leakage: The Consequences of International Trade in Oil and Basic Materials. In: Journal of Environmental Economics and Management. 25, 1993, pp. 162-176.
  12. ↑ J.-M. Burniaux, J. Oliveira Martins: Carbon Emission Leakages: A General Equilibrium View. OECD Working Paper No. 242, 2000.
  13. ↑ a b Resentments and half-truths. In: Deutschlandfunk. December 1, 2008.
  14. ^ Christian Gerondeau: CO2: un mythe planétaire. Les éditions du Toucan, Paris 2009, ISBN 978-2-8100-0246-7 .
  15. ↑ HW. Sinn, "Sales Taxes, Oil Extraction and the Common Pool Problem" (Sales Taxes, Oil Extraction and the Common Pool Problem), in: H. Siebert, ed., Reactions to changes in energy prices, Lang: Frankfurt and Bern 1982, pp. 83-103.
  16. ^ NV Long, H.-W. Sinn: Surprise Price Shifts, Tax Changes and the Supply Behavior of Resource Extracting Firms. Australian Economic Papers 24, 1985, pp. 278-289.
  17. ↑ H.-W. Sinn, “Public Policies against Global Warming: A Supply Side Approach”, International Tax and Public Finance 15, 2008, pp. 360–394.
  18. ↑ H.-W. Sinn: The green paradox: Why you shouldn't forget the offer when it comes to climate policy. In: Perspectives of Economic Policy. 9, 2008, pp. 109-142.
  19. ↑ http://www.cesifo-group.de/link/_ifovideo/thuenen-vorlesung-1007.htm  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Toter Link / www.cesifo-group.de  
  20. ↑ Hans-Werner Sinn : The green paradox: Why one must not forget the offer in climate policy. (Ifo Working Paper No.54; PDF; 687 kB) Ifo Institute for Economic Research at the Ludwig Maximilians University in Munich and Chair of Public Finance, January 2008, accessed on June 21, 2009 (German).
  21. ↑ H.-W. Sense: Public Policies against Global Warming. CESifo Working Paper No. 2087, August 2007, http://www.cesifo-group.de/portal/page/portal/ifoHome/b-publ/b3publwp/_wp_abstract?p_file_id=14563
  22. ↑ H.-W. Sense: Pareto Optimality in the Extraction of Fossil Fuels and the Greenhouse Effect: A Note. CESifo Working Paper No. 2083, August 2007, http://www.cesifo-group.de/portal/page/portal/ifoHome/b-publ/b3publwp/_wp_abstract?p_file_id=14562
  23. ^ The best business books of 2008. In: FAZ. December 21, 2008.
  24. ↑ Like a ghost driver. In: FAZ. January 5, 2009.
  25. ↑ Green is not always green. In: TAZ. April 4, 2009.
  26. ↑ Against the green illusions of climate policy. In: NZZ. December 10, 2008.
  27. ↑ A provocation for climate protectors. In: Reading Deutschlandradio on November 30, 2008
  28. ↑ Egoism as a way out of the climate crisis. In: Radiofeuilleton Deutschlandradio on November 11, 2008
  29. ↑ Green feeling in the climate trap. ( Memento of the original from August 14, 2009 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. In: Süddeutsche Zeitung. October 14, 2008. @1@ 2Template: Webachiv / IABot / www.sueddeutsche.de
  30. ↑ Lost World - Hans-Werner Sinn The President of the Ifo Institute warns against blind eco-actionism. In: Wirtschaftswoche. November 3, 2008, No. 45, p. 16.
  31. ↑ The green paradox - a plea for “a piece of communism”. In: The weekly newspaper. March 5, 2009.