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Correct. This is a place where regulation could play a role if the market is large enough. For example: If the Netherlands would prohibit coal for steelmaking,

Correct. This is a place where regulation could play a role if the market is large enough. For example: If the Netherlands would prohibit coal for steelmaking, it would just bankrupt the 1 steel mill they have. If however, the EU would prohibit coal for steelmaking, _and_ introduce a carbon tariff/tax on imported steel that was made with coal, it would be a significant enough market for companies to still compete for. It would likely kill the export market for basic steel from the EU, as well as raise steel prices across the continent. Long term benefit might be that the EU could position itself as a technological leader on coal-free steel. No easy options I suppose.

ben_w 4y ago
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?
- londons_explore 4y ago
  The price of steel feeds into the price of lots of other things. Cars, buildings, bridges, etc. 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".
  - ben_w 4y ago
    Feeds in yes, but how significant is it as an input cost? Would doubling the price of steel increase general inflation 0.1% or 10%? (Even as a vague number; economics is never going to be my job).
    - roenxi 4y ago
      In theory, either the price will go up so much that people use less steel or other goods will stop being produced to free up more energy for steel production so that it stays level. Possibly some combination. If governments make steel production harder there aren't a lot of other ways the story would end. It is impossible for the process to be less efficient without prices moving enough to change behaviour. Something has to give.
- throwaway4aday 4y ago
  Someone else mentioned that prices in general would go up, this is correct but there is also another factor. Steel is the primary material used to build manufacturing equipment and there aren't any good replacements when you need something big, heavy and cheap enough to finance that can be used to mass produce other goods. This equipment has to be durable, have well known properties and you need to be able to make it using existing machine tools and processes. So if steel becomes much more expensive not only will everything become a lot more expensive, you will also negatively impact the creation of new businesses and innovation in manufacturing. 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.
  - deleted 4y ago
    [deleted]
  - zopa 4y ago
    > The economy is a giant Jenga tower […] 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.
- ZeroGravitas 4y ago
  This is similar to carbon taxes for airplane fuel. From all the fuss you'd assume plane ticket prices would be tripling or something, but some estimates are like 8% total price increases, since you still have to pay pilots and ground staff etc. so fuel is a major cost, but not the only cost.
- HPsquared 4y ago
  Diamond/water paradox comes to mind.
- apexalpha 4y ago
  >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? Yes but most likely way less than the damage of climate change.
fwungy 4y ago
China and India are going to consume any excess fossils at decreased costs. Decarbonization is tricky. We should be thinking more about next gen nuclear and mitigation strategies.

ben_w 4y ago

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?

londons_explore 4y ago
The price of steel feeds into the price of lots of other things. Cars, buildings, bridges, etc. 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".
- ben_w 4y ago
  Feeds in yes, but how significant is it as an input cost? Would doubling the price of steel increase general inflation 0.1% or 10%? (Even as a vague number; economics is never going to be my job).
  - roenxi 4y ago
    In theory, either the price will go up so much that people use less steel or other goods will stop being produced to free up more energy for steel production so that it stays level. Possibly some combination. If governments make steel production harder there aren't a lot of other ways the story would end. It is impossible for the process to be less efficient without prices moving enough to change behaviour. Something has to give.
throwaway4aday 4y ago
Someone else mentioned that prices in general would go up, this is correct but there is also another factor. Steel is the primary material used to build manufacturing equipment and there aren't any good replacements when you need something big, heavy and cheap enough to finance that can be used to mass produce other goods. This equipment has to be durable, have well known properties and you need to be able to make it using existing machine tools and processes. So if steel becomes much more expensive not only will everything become a lot more expensive, you will also negatively impact the creation of new businesses and innovation in manufacturing. 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.
- deleted 4y ago
  [deleted]
- zopa 4y ago
  > The economy is a giant Jenga tower […] 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.
ZeroGravitas 4y ago
This is similar to carbon taxes for airplane fuel. From all the fuss you'd assume plane ticket prices would be tripling or something, but some estimates are like 8% total price increases, since you still have to pay pilots and ground staff etc. so fuel is a major cost, but not the only cost.
HPsquared 4y ago
Diamond/water paradox comes to mind.
apexalpha 4y ago
>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? Yes but most likely way less than the damage of climate change.

fwungy 4y ago

China and India are going to consume any excess fossils at decreased costs. Decarbonization is tricky. We should be thinking more about next gen nuclear and mitigation strategies.