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Moral Hazard and Geoengineering

Let's talk a bit about moral hazard. Moral hazard is when people engage in risky behavior because the incentive to avoid that behavior is borne by someone else. The classic example is a person who recklessly drives a rental car on the grounds that it's only a rental. If they crash the car, it's the rental company that will have to pay to replace it.

Moral hazard often comes up in discussions of carbon capture and sequestration (CCS). The theory here goes that, if power companies can capture their CO2 emissions, they won't have any incentive to stop using fossil fuels. This is a problem, because fossil fuels have a lot of other issues (like the story that broke a few days ago about how decomposing oil from the Deepwater Horizon disaster is mimicking a crab sex hormone, drawing in thousands of lonely crabs and poisoning them.)

I tend to be extremely skeptical of this argument, because it ignores two things. First of all, power companies are already free to emit as much CO2 as they want while facing few if any repercussions. Second, and more importantly, CCS is expensive, which makes electricity from natural gas with CCS less competitive than cleaner alternatives. (This is likely to be true even in extremely favorable scenarios for CCS, as I discussed in my earlier post on the Allam cycle.) (The argument for CCS as moral hazard is stronger if it's being subsidized, which is why carbon pricing is better than sequestration tax credits.)

Solar geoengineering, however, may constitute a much better example of moral hazard, because of the extremely low cost. As James Conca explains:

"A few grams of particles in the stratosphere can offset the radiative forcing of a metric ton of atmospheric carbon dioxide. At about US$1,000 a metric ton for aerosol delivery, that adds up to maybe a billion dollars per year, not the trillions of dollars it will take to replace all fossil fuels with hydro, nuclear and renewables."

In 2018, Chevron, Shell, and Exxon had combined net incomes of almost $60 billion. And it could cost as little as $1 billion for them to completely neutralize the warming from that year's CO2 emissions. That's really not a whole lot. In a scenario where the world starts taking serious steps to get off fossil fuels (which would annihilate those three companies), it could end up being a good business decision for them to unilaterally begin solar geoengineering projects, stopping global warming (and the fight against the fossil fuel industry) in its tracks.

On the one hand, that would be pretty cool. Global warming is an existential threat to human civilization. If global warming stops, so does that threat. However, geoengineering is not a permanent solution. It counteracts the main symptom of rising CO2 levels, but not perfectly, so it would lead to environmental changes that are hard to predict. If done for long enough, it would also lead to decreased light levels, which could potentially affect plant life. And all the while, atmospheric CO2 levels would continue to rise. It's easy to cancel out the warming from CO2 levels of 415 ppm. It's a lot harder to cancel out the warming from CO2 levels of 930 ppm. And if CO2 levels get that high, and we decide that geoengineering is no longer a viable option, the problem of climate change will be exponentially more difficult to solve.

Make no mistake, we do still need to research geoengineering. As James points out, if we fail to reach the emissions reduction targets set out in the IPPC report, we're likely to experience a temporary temperature overshoot as we finish getting to net zero and then remove excess carbon from the atmosphere. Geoengineering may play an important role in sparing us from the worst effects of that overshoot.

But it constitutes a clear moral hazard. We need to have geoengineering available as an option, but it needs to be an option of last resort, not an alternative to reducing emissions. That means we need a robust international legal framework to ensure that no solar geoengineering projects are initiated except for in emergency situations. If Chevron starts spewing aerosols over the Pacific while loudly proclaiming that they've solved climate change, we need a way to drag them into court and make them stop. Yang's proposal for an international summit on geoengineering is a good start, but we're going to need to go a lot further than that.

Climate change is an international problem, and the eventual solution is going to require international systems and structures. We're going to need a far more robust version of the Paris Agreement in order to reduce emissions around the world. At some point, we're going to need an international carbon finance system to either manage the relationships between local carbon pricing schemes and carbon import tariffs, or to unify those into a single global price on carbon. We'll need an international financing framework to manage carbon dioxide removal at a massive scale. And we need a system to govern, and in most cases prevent, the use of geoengineering, and to have a transparent, unified decision making process in case we ever decide to start.

References

Solar Engineering
https://www.forbes.com/sites/jamesconca/2019/09/10/solar-geoengineering-...

Deepwater Crab Study
https://www.cnn.com/2019/09/10/us/crabs-deepwater-horizon-study-scn-trnd...

Allam Cycle
https://www.facebook.com/marshall.lewis.7543/posts/3166728986685791

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