Carbon Captured by Matto Mildenberger

Carbon Captured is another book in the vein of Leah Stokes’ excellent Short Circuiting Policy and Making Climate Policy Work by David Victor and Danny Cullenward. It examines the political economy of climate policymaking over the last ~30 or so years starting mostly in the late 1980s when the issue started showing up on national policy agendas.

The central idea of the book (as Mildenberger repeats many, many times) is that carbon-intensive power centers enjoy political representation on both the Labor and Capital ends of the political spectrum that organizes most national parties. Mining and industrial unions as well as the owners fossil-fuel based businesses have all fought climate policy, and this means that no matter who is in power, someone is going to me working against the energy transition. Before 1990 carbon intensity just wasn’t a dimension anybody thought about in politics. In most places it’s still not a dominant political axis, though in the US it seems like the parties tried very hard to turn climate action into a partisan litmus test for the time being.

On top of this idea of “double representation” Mildenberger layers a couple of additional dimensions: how “corporatist” vs. pluralist are a country’s policymaking institutions, and whether the Labor movement has a deep, direct connection to leftist political parties (he ignores the analogous variable on the right, since he found that conservative parties are universally deeply tied to the interest of capital). With these variables in mind he explores the climate policy trajectories of 7 wealthy countries: the US, Australia, Norway, Germany, the UK, Japan, and Canada.

The idea is that a country’s level of corporatism vs. pluralism, and how tightly integrated Labor is with the left-leaning political parties will strongly influence what kind of policy trajectory the country takes. Countries with political institutions that reinforce the double representation of carbon interests will tend to take weak action earlier, with little public engagement, while those with less institutionally entrenched interests will tend to have more open conflict, likely resulting in later — but potentially more aggressive — policies. I wasn’t particularly convinced of this on the basis of the 7 case studies he explored.

It was kind of tragicomic that he chose the Clean Power Plan as the US example of “late but costly” climate policy, given that it was immediately repealed and never implemented, and then the policy targets were met anyway ahead of time with net cost savings. In contrast to his predictions, to me the IRA seems more like a policy implemented late but which is entirely composed of carrots rather than sticks (with the possible exception of the methane fee).

Regardless of whether this hypothesis is valid it was still very interesting to read these condensed policy histories. It definitely gave me some surprising wider context.

Carbon Captured Chaos

I was much less familiar with the political history of climate in countries outside the US, and disturbed by how much of a mess it was. I’d like to believe that the US has been uniquely bad, but that seems untrue. All of the policy trajectories traced in the book read like pure chaos. The policy instruments and level of ambition fluctuates wildly from year to year depending on who is in power. Nobody seems to have any idea what level of action is either politically reasonable or necessary. It seems like people are just throwing stuff against the wall to see what sticks. And almost nothing sticks.

Often it seems like politicians are fighting over whether to successfully pass a policy that has been approved by the carbon lobby and therefore does nothing, or to fight for a meaningful policy that is doomed to fail because the carbon lobby has a lot of power and will fight to the death to kill it. Ironically these options tend to end up splitting climate advocates, some of whom want to see any action at all even if it’s symbolic, while others are unwilling to accept an empty policy win.

One strategy that seemed to recur frequently was that carbon interests would seek to deflect policy costs away from producers and onto consumers. They would frame this as a relatively neutral choice, maybe within the mythology of freedom consumer choice. This ends up making policy costs salient for the population at large, while allows carbon-intensive producers to easily bring policy conflict into the public sphere, and stoke widespread opposition, even in cases where there are other policies meant to offset consumer impacts (since normal people have no clue how policy works). This seems like a very intentional strategy.

Another sadly consistent feature of all these histories is just how ineffectual environmental activists in general and green parties in particular have been. Only in exceptional circumstances (as when the Greens were kingmakers in Australia’s parliament) do they end up having any power or relevance. Mostly they’ve been treated as outsiders and ignored, or even viewed as toxic.

The Inefficiency of Inaction

With the benefit of hindsight, it seems clear that many of the policies that people fought for or against so passionately ended up being pretty inconsequential. They were weak, or they didn’t get passed, or went unenforced, or were quickly repealed. While policies that have ended up most profoundly reshaping the technological, economic, and political landscape were seen as minor, non-threatening side-shows at the time, not even really worth being opposed by the carbon interests.

Policies like the notoriously uneconomic feed-in-tariffs for solar power in cloudy Germany began the process of scaling up the global market for solar power, which drove costs down further than anybody could have imagined. Technological changes drove economic changes which are still fundamentally reshaping the landscape of political power. They affected what kinds of energy systems are self amplifying, vs. which ones might be expected to decay away.

Can that kind of thing be done again, now that we know how it might turn out? Or would carbon interests block these kinds of forward looking technological investments? With the passage of the infrastructure bill and the IRA, it seems like the US is trying to do the same kind of thing with batteries, hydrogen, electrolyzers, carbon capture and storage (CCS), direct air capture (DAC), and advanced nuclear. But are all of these technologies susceptible to the same kind of cost reductions? Are CCS, DAC, hydrogen and nukes just in there to soak up fat subsidies for a decade or two while setting up new constituencies that end up in conflict with renewable energy? I guess we’re gonna find out!

In the light of this experience, the longstanding obsession with short-term economic efficiency to the exclusion of intentional long-term reshaping of the landscape of political power seems like some kind of conspiracy intent on policy failure. Power is not evenly distributed, and policymaking that ignores the distribution of power (as has often been the case with carbon pricing) is doomed.

Sharing the Savings not the Costs

In all of the national case studies, efforts to “impose significant costs” on carbon-intensive economic actors fail and then rise from the dead to try again. I found this “cost” framing both annoying and confusing. It was often unclear whether he was talking about imposing a direct cost to erode the economic standing of incumbents (for example, an emissions trading scheme where nobody gets free credits). Or conversely, a policy that broadly imposes a cost on society, but with individual carbon interests both shielded and given an economic incentive to change their behaviors. (For example, an emissions trading scheme where a coal dependent electric utility is given free emissions credits).

More than that ambiguity, the “high cost of climate action” framing feels very stale. In the US it’s now been a full decade since (some) new renewable energy has been cheaper than just operating (some) existing coal plants. In 2013 it was just the cheapest high-plains wind beating out the most expensive coal plants, but in 2023 essentially the entire US coal fleet costs more to operate than newly constructed wind and solar — so much so that with the net savings from replacing all existing coal, we could afford 150GW of 4-hour battery storage. Displacing a substantial fraction of existing fossil fuels with renewable electricity and the electrification of transportation and domestic thermal applications would mean dramatic improvements in energy efficiency, lower energy costs overall, and lower volatility in energy prices. On top of that there are huge local and regional public health benefits resulting from reduced air pollution.

So while there are big “costs” when we look at the energy transition through the lens of distributional effects — coal, oil, and natural gas are going to be impacted, unavoidably — it doesn’t feel appropriate to frame the entire question in terms of how we allocate costs to different political actors. Even if we totally ignore the climate benefits and global free-rider problem, we can instead have a debate about how to allocate the economic benefits of climate action. What fraction of the real cash money savings should go to rate payers vs. bribing utility shareholders to go along vs. softening the blow to communities that are currently dependent on fossil fuels for their livelihoods? This is the kind of discussion we’ve seen playing out in conjunction with state-level utility asset securitization.

Land vs. Anti-Land

This book is framed almost entirely in terms of the interests of Capital and Labor, and the way in which climate happens to cut across that weirdly pervasive one-dimensional representation of politics. In this story about their signature issue, the Greens are a political non-entity because they wield almost no power.

But whenever I read about economics, I can’t help but think about Land, and at a fundamental level, I think the Greens are a Land party. I first came across Land as a set of economic interests distinct from Labor and Capital in the context of US housing and land-use policy, and I haven’t been able to stop thinking about it.

Classical economists thought about land as one of the primary factors of production, mostly in the context of agricultural productivity, since that was top of mind in the 17th and 18th centuries. But the underlying attributes that make Land distinct from Labor and Capital show up in other things we might not label Land. Land is a natural monopoly. It’s a natural form of wealth in the world that exists outside of human control and you can’t make more of it. We’ve decided (especially in the US) that it should be an extremely rivalrous, excludable good. If you have “good land” (whose definition will vary depending on the context) then you can capture monopoly land rents determined by how much better your land is than other marginal land.

Fossil fuels are a quintessentially Land like asset. They’re an inequitably distributed natural resource, with wildly varying “quality” determined almost entirely by their physical nature: energy density, sulfur content, ease of extraction, etc. They are perfectly rivalrous: if you burn a gallon of gasoline, nobody else can ever burn it. Low cost producers like Saudi Aramco can extract massive rents because it costs them $10 to produce a barrel that might cost a deep offshore well $50.

Georgists are the anti-Land polity in an urban context, opposing the Landlords who privatize locational value that is produced by the community at large. I’d argue that the Greens are another kind of anti-Land polity, who oppose the extraction and privatization of value from the preexisting wealth of the Earth and similarly also oppose the destruction of the intrinsic value of the natural world through actions like dumping trillions of tons of carbon dioxide into the atmosphere radically and permanently altering Earth’s climate.

But you know what else is Anti-Land? Information. Informational goods can be both extremely non-rivalrous and non-excludable. Once a book is written, especially in digital form, the cost of a 2nd copy or another million copies is zero. Look at the persistence and widespread use of resources like Wikipedia, the Open Street Map and the insane success of open source software, or even of totally illegal information sharing services like Sci-Hub and Z-Library.

The economic dynamics of informational wealth — knowledge and technology — are the polar opposite of single-use natural resources like fossil fuels. The accumulation and global diffusion of knowledge and knowhow is why computer processing, disk storage, solar PV, heat pumps, genomic sequencing, and batteries have all been able to get onto learning curves and sustain their exponential cost declines as deployment scales up, sometimes for decades on end.

Obviously renewable energy is not a “dematerialized” technology. It still consumes silicon, lithium, copper, aluminum, cement, and steel. But the dynamics driving its commercialization and rapid deployment at ever lower costs and larger scales are driven for the time being by how information works, which is the opposite of how Land works. As the share of value in these technologies that’s made up of materials increases (because the technology costs decline over time) there will be ever increasing pressure to increase material efficiency to remain competitive. A similar dynamic existed historically with fossil fuels, but you just can’t build a gas turbine that’s much more than 60% efficient, and the vast majority of the material inputs in a fossil fuel energy system are the fuels themselves, which are consumed permanently. Whereas in renewable energy systems the materials become persistent capital stock that sticks around for decades and can (at least potentially) be recycled and used again.

It’s just a completely different game, and I’m very interested to see where it goes and how fast we can get there.

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Zane Selvans

A former space explorer, now marooned on a beautiful, dying world.

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