So, now we know how to solve climate change. We turn the problem over to Abir Ershad, Mashrif Hasan Adib, and Mohtasim Bin Habib, members of “Team Khichuri” at the Institute of Business Administration (IBA), Dhaka University. There that's done and dusted and we can get on with more interesting things like when's the cricket starting?
This may sound like a joke, except that I am serious. For what the boys have done is come up with a perfectly sensible and doable idea to reduce carbon emissions. Various things rot and so produce methane, one of the more dangerous (the short term effect is much higher, the long term the same, as CO2) climate change gases. We also use CH4, another name for methane, to cook with, heat and so on. So much so that we go out and drill for it -- yet another name is natural gas.
So, collect the stuff produced from those rottings and use it to do the cooking and heating. We've turned what would merely be a pollutant into something we use, we've reduced the amount of fossil fuel that we produce and so reduced overall emissions -- we've solved, in part and in small, climate change. This won the team the “Battle of the Minds 2023” title in Bangladesh and onto the worlds!
Now, the problem with this scheme, as with so many more, is that there's a natural size to such a technology. How much stuff is there rotting in this manner? There's no point in making more stuff to rot, so the market size is limited by the processes that already happen. And the biogas market is only ever going to be -- for exactly that reason -- a partial solution.
Which is the point where I turn entirely serious about the solution to climate change. This is why economists have been shouting, if not screaming, that the solution is a carbon tax, not central planning. Central planning is simply never going to produce these small, but helpful steps. The -- if you like -- no cost solutions.
The entire economy is simply too large, too complex, for the guys sitting in an office at Agargaon to pick up on them. It's not just the Hayek idea that the centre never will have such information. We've got our own direct proof here -- three students at university came up with the idea for a competition, not the bureaucrats we're already paying for.
Therefore we want to come up with the one change that gets everyone thinking about this problem. Stick a crowbar into the price system and all 8 billion inventive little minds around the globe will be thinking about how to do something differently, with fewer emissions. Which is the very thing we want to be happening of course. We want all 8 billion trying to avert climate change -- the way to do that is in the information that everyone does face. Prices. So, change prices to cover those carbon costs.
Some will simply stop doing the more polluting things -- this is good. Some others will see that including the real costs opens up profit opportunities. One application I've seen is that the manure pits at dairy operations produce this methane that can be collected and then sold as that biogas. As we allow that manure to “mature” before using it on the fields anyway -- and the maturing is largely the release of the methane -- this is one of those no regrets activities that reduces overall emissions. Biogas won't pay the carbon tax, fossil gas will. We've opened up the profit margin there, we can expect more of this activity to take place.
But to repeat. None of these little things will be the full and perfect solution. But they all take us a step closer to that desired reduction in emissions. Which is good, right?
Which is why it is the economists shouting for the carbon tax. The economists know that the first and most important thing about life and the economy -- incentives matter. So, if everyone has the incentive to think about and do something about emissions, then emissions will fall. Which is what we're trying to achieve in the first place.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
