Technological innovation that will increase greenhouse gases?

Ralph Winter has a new draft paper out, Innovation and the Dynamics of Global Warming, which warns us that well-intentioned technological innovation reducing greenhouse gas emissions may perversely increase the probability of climate change. This counter-intuitive result derives from two factors: (1) the "rebound effect" of emissions-reducing technological changes, in which emissions reductions are partially offset by resultant cheaper fossil fuel prices and concomitantly greater utilization, and (2) the possibility that in the short term, a rebound could be so severe as to create a "backfire" in which the rebound more than offsets the first-order emissions reductions, it increases emissions. Winter's dynamic model is very interesting. What he has done is model the long-term expectations about fossil fuel prices in the wake of a technological innovation; in his model, if the innovation is significant enough, and the long-term expectations are fully capitalized in fossil fuel prices, the result really could be a temporary uptick in fossil fuel usage. There has been much work on the rebound effect, but Winter's model is unique in incorporating this long-term capitalization effect.

And if there is an uptick, even a temporary increase in greenhouse gases could trigger a positive feedback effect that causes global warming to increase. What is an example of a positive feedback effect? There are many, but one is that warmer temperatures will cause northern Arctic systems to release more methane, which is much more powerful greenhouse gas than carbon dioxide, and which would further warm the planet. This incorporation of positive feedback effects is the other new idea in Winter's paper. What he is essentially saying is that technological innovation, even if it produces a temporary increase in fossil fuel utilization and a temporary increase in greenhouse gas concentrations (carbon dioxide is effectively resident in the Earth's atmosphere for almost a century) could produce a runaway feedback effect that would not have occurred without the technological innovation.

How realistic is the model? It is hard to say. Most rebound effect research seems to find that the effect less than completely offsets the first-order emissions reductions, and that backfire is rare. But much of this research has focused on fairly marginal improvements in vehicle fuel efficiency. What if we are talking about one of these "game-changers" that are supposed to magically rescue us from climate change, like biofuels, that could displace petroleum-based gasoline? A big change in that technology could shake up the energy markets of the world enough to increase emissions. Also, it is worth noting that rebound or backfire should not occur if the technological innovation only came about as a result of a price signal, and not a government subsidy. If a carbon tax were instituted, and technological innovation discovered thereby, emissions would not increase, because the innovation would never have taken place if emitters were going to have to pay more in carbon taxes thereby (I hedge with the words "should not" because I can imagine an exception for those with very low discount rates, but I can't imagine anybody with a very low discount rate).

So let's not go out there and pick winners, ok? Just price carbon emissions.