Disclaimer: I whole heartedly believe that climate change exists. In fact, I believe it will be the greatest challenge the world has ever faced. However, I remain unconvinced that the threats posed by climate change can be effectively used as a tool to drive renewable energy policy.
Part 1: Why does Climate Change not work as the underlying policy driver?
Firstly, many of the issues surrounding climate change are abstract, uncertain and not agreed upon. Climate change threats are abstract in that standard cost-benefit analyses are not feasible. We cannot credibly compare job creation today against the depletion of rain forests that ultimately impacts future generations. When we find ourselves weighing up firm profits against bequest values, the only answers we will find are those that confirm what we already believe. Attempting such calculations would be the refusal to acknowledge the limitations of economics.
In addition to its abstract nature, climate change threats are uncertain – every environmental NGO has produced a set of projections for future threats often without confidence intervals, but instead by combining a variety of sequential events without considering their likelihood. This, in theory, has the potential to be a useful tool for instilling fear in society, but even this has not yet yielded the needed results.
The impact that these effects will have on the world as we know it, and our ability to mitigate these effects remain heavily disputed. Economist Bjorn Lomborg is famous for his belief in the weak sustainability paradigm that does not deny climate change exists but differs in that the paradigm believes in humanity’s potential to innovate when necessary to craft new societies and adapt existing ones when we are required to do so. This ignorant view of the threats of climate change has caught on in politics, and has further hampered the ability of climate change as a mechanism to drive renewable energy policy.
Secondly, even if none of the above were true, even if we could predict with certainty that climate change would result in irreversible damage to the world by 2100 and this fact remained uncontested, I would still remain unconvinced that climate change would successfully drive policy on renewable energy. It may sound absurd, but the answer lies with what behavioral economists call time inconsistency, also known as dynamic inconsistency in game theory. This simply refers to the idea that if posed with two options A or B, an individual or society may opt for A at one point in time (T1) and B at another point in time (T2), making the choices inconsistent as time passes.
A common example of time inconsistency involves the willingness of students to pay to postpone their exam. With 80 days to go before a student’s exam, it would be ludicrous to consider paying $20 to postpone it to the 81stday. However, from experience, I can confidently say that if you offer an economics class the possibility to postpone the exam when the exam is one day away, you will be showered with money. This inconsistency stems from the fact that the students failed to prepare for the exam although it was inevitable because it seemed to be only in the distant future. This example of time inconsistency is a perfect analogy for how our actions will be inconsistent on climate change. Even if we were certain of threats arriving by 2100 (80 years away) we would still fail to prepare, and we would be throwing everything at it in the final decade to mitigate or postpone the consequences of the changing climate.
Even when one has a brief look at the history of climate agreements, the lack of urgency of the issue has kept progress from being made. Many such as Bjorn Lomborg believe that there are so many other issues that demand immediate attention that climate change can wait. The absolute dismay over the fact that Trump withdrew from the Paris Agreement has already subsided and the media is back to focusing on things which may impact our immediate future although to a smaller extent. For now, we have been happy to settle on symbolic progress. I predict that the only time a successful multilateral environmental agreement (MEA) will be made on climate change, is when we start seeing clear and uncontested evidence of climate change and its impacts right before our eyes.
The case study of the Montreal Protocol on Chlorofluorocarbons (CFCs) is evidence that supports this prediction. Scholars study this agreement as the rare case in which an environmental agreement was successfully made and implemented. Why did the Montreal Protocol succeed? People were immediately affected by the increased exposure to UV rays due to the depleted ozone. In short, it was urgent. There certainly were other factors that made the Montreal Protocol an easier deal than a deal on climate change, however this urgency was undoubtedly a dominating factor. If we would like to see a successfully negotiated and implemented deal on climate change, unfortunately we will need to wait at least another 50 years until climate change becomes ‘urgent’.
Part 2: How should policies be adapted?
This is where pollution trumps climate change. Is pollution more serious than climate change? Certainly not. However, even though pollution is relatively less serious, it may be more successfully utilized as a mechanism to drive renewable energy policy which is ultimately the only way we can stop irreversible impacts on the world as we know it.
It is certainly not that pollution has never been mentioned in renewable energy policy, but it needs to be used as the driving force rather than as a side-kick. Pollution is not hampered by the same factors limiting the success of climate change in driving policy. Pollution is tangible: we see it in the air and we feel it in our lungs. There is no doubt that living in polluted cities are unpleasant and there appears to be certainty on the health impacts of living in heavily polluted cities. According to the World Economic Forum, 92% of the world’s population live in areas that exceed safe limits, and that an estimated 6 million people die from illnesses directly connected to air pollution annually, making it almost 10 times as deadly as the mosquito, the animal responsible for the most deaths every year. In addition, for individuals more economically inclined, air pollution is a huge burden to the global economy, costing hundreds of billions annually. For those that wish to suggest that pollution is a boost to the economy instead because of its ability to generate GDP in its removal, familiarize yourself with the fallacy of the broken window.
Although time inconsistency may still play a role because the health consequences of living in a polluted city will only appear later in life, the impacts are still felt within the generation and this may in fact go a long way to mitigating the time inconsistency problem.
We have seen the effectiveness of pollution as a policy driver in China. Beijing is still today known to many as ‘the most polluted city in the world’ but it is not even close. There are cities today, such as New Delhi, that are twice as polluted as Beijing is. It once was, but they used pollution, not climate change as the fundamental driver for policy change to renewable energy. Today, in my opinion, China, and more specifically Beijing is the undisputed global capital of renewable energy.
China has huge plans for renewable energy in the future. An international organization recently formed called the Global Energy Interconnection Development and Connection Organization (GEIDCO) is the latest signal of China’s commitment to a world dominated by renewable energy. The chairman of GEIDCO, former State Grid Corporation chairman Liu Zhenya, listed pollution above climate change as reasons for this monumental undertaking. I do not believe for a second that Zhenya sees pollution as a greater issue, but rather that he too has made this connection that the fear of pollution has greater ability to drive policy and ultimately the necessary change.
I am not calling for a radical transformation on renewable energy policy, but instead I am proposing that we package it differently. We cannot package renewable energy policy so that it is only relevant to future generations, because they are not represented in elections of this generation. We should package it in a way that will make renewable energy policy relevant in today’s elections, relevant to all people living now. We must package renewable energy policy so that voters are persuaded in favor of renewable energy not only in their politically correct social circles but at the ballot box too.
If you enjoyed reading and would like to be notified when a new post is published, please leave your details here!