This is probably a dumb question but:
Given how cheap steel appears to be, would it cause any significant damage to the rest of the economy if steel prices went up because of this?
Given how cheap steel appears to be, would it cause any significant damage to the rest of the economy if steel prices went up because of this?
This is one of the major second order effects that always springs to mind when people just float the idea of increasing the cost of some material that produces CO2 as a byproduct as if just pulling a lever or adding a tax will solve the problem. The economy is a giant Jenga tower where all of the lower blocks are fossil fuel based processes. We sit way up on top where we can't see the bottom of the tower and we think "wow look at all this new stuff we've made, we sure are great! We should get rid of all that old junk so we can build more new stuff up here!" and maybe you can knock out a few of the pieces on the bottom without causing a disaster but eventually if you take out enough of them the whole thing will come crashing down.
If you want to build a carbon free economy then you need to start a new tower and you need to solve all of the fundamental problems in a new way with new technology that doesn't use fossil fuels and it needs to be as cheap or cheaper than what we can do now. That's a monumental task. And no, you can't knock over the first tower before starting the new one unless you want billions of people to die, most likely including you as well.
A Jenga tower is in unstable equilibrium. Push it a little bit away from its resting configuration and it collapses.
The economy is in stable equilibrium, mostly, more or less. Push it by increasing the price of some commodity, which happens all the time, and buyers look for alternatives and efficiencies, which dampens the effect of the push. In all likelihood things settle in a new equilibrium not far at all from the first.
It’s a much more resilient system than you’re giving it credit for. Totally different dynamics than the party game.
Rising global temperatures will also mean melting ice and rising sea levels. Low level agricultural areas, such as those in Southeast Asia will, will see the ocean encroach 30-40 kilometers onto productive rice paddies with just a few feet of sea level rise [2].
It might be fine if these people just move, but we’re talking about displacing hundreds of millions to billions. Migrations like those of Syrians moving into Europe will seem small by comparison.
I’m not going to mention the retarding economic effects of more stable regions having many more hotter days, or the impacts of more erratic weather due to arctic amplification and a more erratic jet stream. We may have to move or build new equipment someplace else.
All of this means that we will have to build a new tower anyways, but we’ll have to do it with less resources, less time, and on a table that’s shaking constantly.
Perhaps putting a tax or price on carbon will retard economic advancement, but so will unchecked climate change. The benefit of taxing carbon is that we don’t have governments directing how to decarbonize. Businesses can still innovate to be competitive, we will be pricing in an externality that we’ll just pay for in other ways, at a higher price, later on.
[1] https://www.washingtonpost.com/climate-environment/2023/01/0...
[2] https://vlscop.vermontlaw.edu/2019/11/07/sea-level-rise-food...
The places that require the highest investment, could completely ruin the life of most people, and add up to a single digit percentage of the problem (or less) are better left to research.
Carbon taxes would indeed help. More because it will let people do the calculation above than for any other reason. But trying to hijack a discussion about carbon substitution in steel making into a "we must act because the sky is falling" is in very bad taste.
Yes but most likely way less than the damage of climate change.
If steel is more expensive, then the quality of life of most people will go down, even if people don't walk into walmart and think "today I'll buy some steel".
(Even as a vague number; economics is never going to be my job).