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Sustainability Strategies and the Problem of the Rebound Effect Read chapter Read first chapter

2018 | OriginalPaper | Chapter

Intergenerational Choice Under Uncertainty: The Case of Future Energy Technologies—Legal and Economic Perspectives

Author : Stephan Meyer

Published in: Energy Law and Economics

Publisher: Springer International Publishing

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Abstract

Should we care about future generations? This question has been plaguing philosophy, economics, and the law for a long time. At least in practical terms, agreement seems to exist today that governments should indeed pursue intergenerational sustainability. This article focuses first on some remarkable similarities between legal and economic reasoning when it comes to justifying this contemporary policy goal. It discusses necessary features of sustainability policy, chief among which is “keeping options open”. Subsequently, a particularly intricate issue of sustainable public policy is presented, using electric transportation in Germany as a contemporary example. As it turns out, keeping options open for future generations (through climate protection, for instance) may require diminishing future options elsewhere. It seems the present generation simply cannot “do it right”, despite best efforts. This article finally explores how to deal with this dilemma.

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previous chapter Energy Market and Policy Revolutions: Regulatory Process and the Cost of Capital
next chapter Creating Social Norms Through Media, Cascades and Cognitive Anchors: Judicial Activism and the Quality of Energy Law from the Perspective of Behavioural Law and Economics
Footnotes
1
See, e.g., Kleiber (2014), pp. 5–6.
 
2
Justice Robert Jackson, W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624, 638 (1943), referring to the purpose of the Bill of Rights.
 
3
Article 20a of the German Constitution [Grundgesetz]. However, the precise legal relevance of the express mentioning of future generations remains somewhat dubious, see Kleiber (2014), pp. 30–36.
 
4
Article 109(3) of the German Constitution [Grundgesetz]. Mückl (2007), pp. 189–193 for an overview. See also Kleiber (2014), pp. 19–21, 36–38.
 
5
However, in a very long term, any predictions about future preferences are not in order. See the remainder of the article for a more thorough examination of this point.
 
6
Mückl (2007), pp. 200–201; Appel (2005), pp. 77–78 for a brief discussion.
 
7
Currently, a specific period’s public health care expenditure is covered by the total fees paid during that very period. Thus, no capital stock is ever built. In contrast, private health insurance commonly employs a capital funded system. Relatively high premiums—as compared to the individual’s actual health costs—at young age allow for savings that will cover health costs at old age. In essence, each generation is self-sustaining. Converting German public health insurance into the latter system would require a transition period during which insurants pay twice: The traditional fees and payments that start create a capital stock. Therefore the transition period would have to be extraordinarily long. One estimate states 50 years, Henke and Borchardt (2003), p. 7; see also Grabka et al. (2003).
 
8
Birnbacher (2008), p. 26; see also Barry (1977), pp. 274–275.
 
9
It could be argued that the money wasted on the system’s inefficiency could otherwise be spent on environmental protection or the like. However, such reasoning would keep the present generation from pursuing any resource-consuming policy and miss the balance described in the text above.
 
10
A similar paradox is attached to safe nuclear waste disposal. Such disposal is a means of protecting future generations; however, once a disposal site is chosen and waste being dumped, this decision is practically irreversible, see for discussion Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], 10 November 2009, Neue Zeitschrift für Verwaltungsrecht [NVwZ] 114 (116, para. 30), 2010 (Ger.).
 
11
Potential Pareto efficiency (a.k.a. Kaldor-Hicks) will do.
 
12
See, e.g., the contributions in Roemer and Suzumura (2007). It is another story whether the regulator possesses the proper policy tools for exacting behaviour from economic agents necessary to approximate this equilibrium, see Lind (1990), pp. 20–21; see also Beaucamp (2002), pp. 57–70.
 
13
Henderson and Bateman (1995); cf. Cropper et al. (1992); contra Frederick (2003).
 
14
Suggested, e.g., in Henderson and Bateman (1995).
 
15
This only holds true if the same discount rate is used for exponential and hyperbolic discounting.
 
16
Loewenstein and Thaler (1989), p. 192, citing an alleged economists’ view of the research on the psychology of decision-making.
 
17
See Felser (2010) for an overview of anchoring and other cognitive biases. For example, an experiment found that participants are willing to spend significantly more money for a meal in a restaurant named “Studio A, 97th Street” then in a restaurant named “Studio A, 17th Street”, the street number being the random anchor for judging how much an acceptable bill would be. The number 97 sets a relatively high anchor, so a higher bill seems acceptable, Dogerlioglu-Demir and Koçaş (2015), p. 611.
 
18
Discussion at Cansier (2008), pp. 65–67; Kleiber (2014), p. 189 et seq; Mathis (2011), pp. 169–171.
 
19
See, e.g., Parfit (1984), p. 357: “At a discount rate of five per cent, one death next year counts for more than a billion deaths in 500 years. On this view, catastrophes in the further future can now be regarded as morally trivial. As this case suggests, the social discount rate is indefensible.”; see also pp. 480–86. See also Davidson (2008), p. 472.
 
20
See Mathis (2011), pp. 168–169.
 
21
Pres. Thomas Jefferson: Jefferson (1816).
 
22
Contra d’Arge et al. (1982), p. 251.
 
23
Cf. Cansier (2008), p. 59.
 
24
German Federal Government (2009), p. 3.
 
25
German Federal Government (2009), pp. 8, 17.
 
26
GIZ GmbH (2016), p. 34.
 
27
GIZ GmbH (2016), pp. 34–53; Berger (2015).
 
28
German Federal Government (2009), p. 19.
 
30
European Commission, State Aid SA.46574 (2016/N)—Germany, C(2017)753 final (not yet published in the Official Journal) (“Förderrichtlinie Ladeinfrastruktur für Elektrofahrzeuge”, [“Funding Guidelines for Electric Vehicle Charging Infrastructure in Germany”]).
 
31
NOW GmbH (2011), p. 10.
 
32
Förderrichtlinie Elektromobilität [Funding Guidelines Electric Transportation], 9 June 2015, Bundesanzeiger Amtlicher Teil (Federal Gazette Official Section) 29 June 2015 B3.
 
33
Förderrichtlinie für Maßnahmen der Forschung, Entwicklung und Innovation im Rahmen des Nationalen Innovationsprogramms Wasserstoff- und Brennstoffzellentechnologie. Phase II (Schwerpunkt Nachhaltige Mobilität) [Funding guidelines for measures in the areas of research, development, and innovation within the framework of the National Innovation Programme Hydrogen and Fuel Cell Technology. Phase II (focus sustainable mobility)], 26 September 2016, Bundesanzeiger Amtlicher Teil (Federal Gazette Official Section) BAnz AT 29 September 2016 B4.
 
34
Richtlinie zur Förderung des Absatzes von elektrisch betriebenen Fahrzeugen (Umweltbonus) [Funding Guidelines for the Support of the Marketing of Electric Vehicles (Environmental Bonus)], 29 June 2016, Bundesanzeiger Amtlicher Teil (Federal Gazette Official Section) 1 July 2016 B1.
 
35
Sec. 3d Kraftfahrzeugsteuergesetz [KraftStG] [Motor Vehicle Tax Act], 26 September 2002, BGBl. I at 3818, last amended by Gesetz [G], 23 December 2016, BGBl. I at 3234, art. 19 para. 8 (Ger.).
 
36
See, e.g., OECD (2008), pp. 22–23.
 
39
Meyer (1995), pp. 63–64; Klodt (1994), pp. 10–14.
 
40
See Dose (2008), pp. 156–158 for a more general discussion of this policy approach.
 
41
Without the environmental bonus, electric vehicles are more expensive.
 
42
BAFA (2017), p. 2.
 
43
NPE (2016), p. 14.
 
45
GTAI (2015/16), p. 19.
 
46
The failure of Tesla’s pilot project is most likely owed to the fact that recharging at Tesla stations is for free, while there was a charge for the battery swap. Also, the battery swap required making an appointment in advance. Given these unfortunate circumstances, the failure is not surprising and, in my opinion, does not suggest consumer resentment in general.
 
48
See Meyer (1995), pp. 68–70 and Gerjets (1982), pp. 64–65 for a general analysis of the connection between uncertainty, indivisibility and project size.
 
49
Reply of the Federal Government to an inquiry from Parliamentary Representatives (Green Party), Bundestagsdrucksache [Federal Parliament Doc.] 18/11295 (23 February 2017), p. 5 (reply to question no. 20), available at http://​dipbt.​bundestag.​de/​dip21/​btd/​18/​112/​1811295.​pdf [accessed 23 February 2017].
 
50
Decision “Energiewende retten, Verkehrswende einleiten” [“Save the Energy Revolution, Start a Transportation Revolution”] of the Green Party’s 40th Federal Assembly, November 2016, at p. 6, available at https://​www.​gruene.​de/​fileadmin/​user_​upload/​Dokumente/​BDK_​2016_​Muenster/​EV-01_​Energiewende_​retten_​_​Verkehrswende_​einleiten.​pdf [accessed 3 March 2017].
 
51
Deutscher Bundesrat [Federal Counsel = the Upper House of Parliament, representing the German Federal States in federal legislation], Bundesratsdrucksache [Federal Counsel Doc.] 387/16 (Beschluss) (23 September 2016), at p. 4 (no. 4), available at http://​www.​bundesrat.​de/​drs.​html?​id=​387-16%28B%29. Unfortunately, a common misinterpretation of the statement has been that the Counsel would suggest a legal ban. However, this is clearly not the case.
 
52
Cf. OECD (2008), pp. 38–42.
 
53
Crude oil is not only the notorious raw material for plastics, but also for pharmaceuticals.
 
54
Solomon et al. (2009), p. 1704.
 
55
Davidson (2008).
 
56
See Wolf (2005) for an overview; see also Williamson (2015).
 
57
Meyer (2015), p. 75.
 
58
Meyer (2015).
 
59
Case T-13/99, Pfitzer Animal Health v. Council, 2002 E.C.R. II-3305, para. 143 et seq. See also Case C-269/13 P, Acino AG v. Comm’n, 2014, para. 57 (http://​curia.​europa.​eu); Case C-192/01, Comm’n v. Denmark, 2003 E.C.R. I-9693, para. 49; Case C-236/01, Monsanto Agricoltura Italia SpA et al. v. Presidenza del Consiglio dei Ministri et al., 2003 E.C.R. I-8105, para. 106; Case T-70/99, Alpharma v. Council, 2002 E.C.R. II-3495, Rn. 156.
 
60
Kolmar and Stolte (1996) for a different resolution of the dilemma.
 
61
Often used for illustration is a time bomb to be set to go off in a distant future. This amounts to attempted murder. The illustration is commonly attributed to Feinberg (1986), p. 154. See Jodoin (2010) for the role of criminal law in intergenerational justice.
 
62
In the United States, e.g., transportation accounted for 28% of total anthropogenic greenhouse gas emissions in 2006, https://​climate.​dot.​gov/​about/​transportations-role/​overview.​html [accessed 3 March 2017].
 
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Metadata
Title
Intergenerational Choice Under Uncertainty: The Case of Future Energy Technologies—Legal and Economic Perspectives
Author
Stephan Meyer
Copyright Year
2018
Book
Energy Law and Economics

Print ISBN: 978-3-319-74635-7

Electronic ISBN: 978-3-319-74636-4

Copyright Year: 2018

DOI
https://doi.org/10.1007/978-3-319-74636-4_9