Undercover Economist

The kettle conundrum

The problem of saving the environment, then, is also the fundamental social problem: how do we come together and co-operate?

I owe Lucy Mangan an apology. Seven years ago she wrote a column for The Guardian about the folly of overfilling your kettle. Ever since then I have harboured the unspoken thought that it was one of the most wrong-headed things I have ever read.

Now, however, the International Monetary Fund itself has planted the banner of economic cost-benefit analysis firmly on the side of Mangan. Perhaps I am the one who was wrong-headed.

Mangan’s point was that the green movement has become “hog-tied” by its insistence that doing the environmentally responsible thing is a selfless act. Greens should point out that we’re constantly doing idiotic things that not only damage the planet but waste our own money. Throwing away one-third of the food that we buy is one of them. Over-filling our kettles is another. Mangan concluded that if you and I would “stop being such a frigging idiot”, the planet would be in much better shape.

That sounds like a simple plan. Alas, thrifty kettle-filling will not help much: the physicist David MacKay, author of Sustainable Energy – Without the Hot Air, reckons that kettle-boiling represents about half of 1 per cent of the typical British household’s energy use. As for one-third of food being wasted, Mangan was misled by a statistic produced by the anti-waste organisation Wrap. In “throwing away food”, Wrap included a failure to compost kitchen scraps and used tea bags. In fact, while it is easy to identify ways to reduce carbon emissions, it’s not quite so easy to find the things that both help the planet and save self-centred individuals time, trouble and money.

This is because the central, defining quality of all environmental problems is that they’re problems of shared resources. Driving a car clogs the streets for other drivers; burning coal dumps acid rain on someone else’s forests; above all, emitting greenhouse gases chiefly harms other people, many of whom have not yet been born. The problem of saving the environment, then, is also the fundamental social problem: how do we come together and co-operate?

Enter the IMF, with the astonishing claim that dealing with climate change can be a self-interested business after all. Two IMF researchers, Ian Parry and Chandara Veung, along with Dirk Heine of the University of Bologna, have been trying to find more credible examples of the overfilled kettle problem – that is, opportunities to be better off right now that would cut carbon dioxide emissions into the bargain.

The Montreal Protocol of 1987 was an international agreement to phase out chlorofluorocarbons, or CFCs. According to a recent analysis by The Economist, this single agreement has done about as much to limit greenhouse gas emissions as all nuclear and hydroelectric power generation put together. The striking thing about the Montreal Protocol, though, is that its purpose was to protect the ozone layer. (It succeeded.) The fact that CFCs are also a potent greenhouse gas was a happy coincidence.

The IMF researchers do not mention the Montreal Protocol but they argue that national governments are leaving similar opportunities lying on the pavement, waiting to be picked up. Let’s say, for example, that the US unilaterally introduces a tax on carbon dioxide emissions of $50 a tonne. That move would raise tax revenue, allowing other taxes to be cut. It would also raise the price of anything that embodied carbon dioxide emissions. Driving would become slightly more expensive, and this would reduce congestion and traffic fatalities. Coal-fired electricity would suffer a competitive disadvantage, and this would encourage a switch to cleaner energy, improving local air quality and saving lives. All these benefits would be enjoyed within US borders.

Is $50 a tonne of carbon dioxide emissions a big tax? Yes and no. It is several times higher than the EU’s emissions trading scheme price; it may even be high enough to serve as the main policy for dealing with climate change, although it is hard to be confident of that. It would also add about $900 to the taxes paid, directly or indirectly, by the typical US citizen, and roughly half that if introduced in the EU. These aren’t trivial sums but they are small enough to be offset with reduced taxes elsewhere.

On the other hand, the tax would add less than 10 per cent to the cost of a return flight from London to Sydney; slightly more than 10 per cent to the cost of petrol in the US, and less than a penny to the cost of overfilling your kettle 20 times a week. Life could, and would, go on.

In short, the IMF researchers are presenting us with the mother of all overfilled kettles: policies that governments could introduce that would promptly help their own citizens, while only incidentally making a major contribution to slowing climate change. What makes this plausible is that while individuals and companies do not habitually waste their own resources, we all understand that governments engaged in political rough-and-tumble waste national resources all the time.

So I apologise to Lucy Mangan. The next round of climate change negotiations should focus on governments encouraging each other to stop overfilling their own kettles.

Also published at ft.com.