Transcription
[Music] welcome to the political economy of the environment. Today's episode is about climate change.
About 50 or 55 million years ago, planet Earth was so warm that there were alligators, or the ancestors of modern alligators, living at the North Pole. The Earth was blanketed by greenhouse gases that trapped the sun's heat in the planet's atmosphere. And the most important of those greenhouse gases was, and is today, carbon dioxide.
Over the eons, plants pulled carbon dioxide out of the atmosphere, and they took that carbon and sequestered it in their own tissues. And as the plants decomposed, some of them got trapped under the Earth's surface and over the eons got converted into fossil fuels underground, underground carbon reservoirs in the form of coal, oil, and natural gas. The fossil fuels. And as they did so, as carbon was sequestered underground, taken out of the atmosphere, the planet cooled.
For the last 10,000 years, the thin slice of geological time during which human civilization evolved, including agriculture and other economic activities on which we depend today, global temperatures have been pretty stable, pretty much stable compared to how they varied over geological time. But in the last century or so, we've begun to destabilize the climate system by taking that fossil carbon out of the ground and reintroducing it into the atmosphere by burning fossil fuels, by burning coal, oil, and natural gas.
And as a result, current temperatures compared to those in the pre-industrial era have gone up by something between half a degree and a degree Celsius, as to say, roughly between a degree and two degrees Fahrenheit. And in the coming century, in the 21st century, they're going to go up even more as we continue to burn fossil fuels. How much they go up is gonna depend above all on how much fossil fuel we burn.
If we move quickly and effectively to push forward the clean energy transition and reduce our use of fossil fuels, we might be able to hold the degree to which carbon gets returned to the atmosphere and the global temperature rises to somewhere between one and a half and two degrees Celsius. That's the target that was agreed on by the countries of the world in Paris in 2015.
On the other hand, if we do nothing to reduce our use of fossil fuels, if we follow a business-as-usual trajectory, also sometimes described as the road to hell, we could see temperature increases of four degrees Celsius or more by the turn of the century.
The impacts of destabilizing the Earth's climate by pumping that fossil carbon back into the atmosphere include rise in sea levels as water molecules expand as they become warmer and as ice, icebergs, glaciers, including the ice shelves of Antarctica and Greenland, melt and collapse into the sea. They include increasing frequency and intensity of hurricanes, a phenomena that something we're already beginning to see. They include increasing intensity and frequency of heat waves, again, a phenomenon that's something we've already begun to see. They include disruptions in rainfall patterns and disruptions in ecosystems. These are big environmental costs that come with the benefits of consuming fossil fuels.
So when thinking about the political economy of this problem, we have to think, as we always do, about who benefits and who bears the harms. In the case of the beneficiaries, the producers of fossil fuels, that means the people who actually extract them and the people who own the fossil fuels in the ground, which are worth a lot of money if we continue to extract and burn them. And the consumers who get, or think they're getting, cheap energy. There are folks who benefit from consuming fossil fuels.
And the harms are inflicted on future generations worldwide, and especially on the poorest people worldwide, who are least able to protect themselves from the changes in the global environment that climate destabilization will cause.
The fact that the costs are worldwide poses a problem, a big problem, the free-rider problem, magnified onto the international scale. Because each country worries that if it acts to try to reduce its emissions of carbon dioxide, to reduce its use of fossil fuels, that other countries don't act, it will receive very little benefit. The benefit will be spread across the countries of the world, and the fact that other countries aren't reducing their emissions ultimately swamp whatever emissions reductions a single country achieves. So countries would prefer other countries to take the action rather than acting themselves. And of course, if every country in the world behaves that way, nobody acts, and the problem is not addressed. That's the free-rider problem, and it operates not only at the level of individuals but now, in the case of climate change, at the level of countries as well.
The fact that the costs are borne primarily by future generations also presents a problem, a big problem. Because to some extent, at least, we don't value what happens in the future as highly as what happens today. It's an issue called time preference. And while it may make sense for individuals to think that way, it's ethically questionable whether it makes sense for us to think that way about future generations who aren't here to defend themselves, aren't here to have a voice in what we decide to do.
That tendency to downplay future costs and benefits because they're far away, that short-sightedness or myopia, is actually incorporated into the valuation techniques used by mainstream neoclassical economists in the form of what's called discount rates, which discount future costs and benefits to get present values and in so doing melt away future costs of climate change to make them look smaller to us than they will be to the people who actually have to bear those costs.
Given those problems, the free-rider problem and the myopia problem, it becomes really important to think about what scope there is for what could be called no regrets climate policies. What do I mean by that? I mean policies that could benefit people here and now, benefit people in the countries or the states, the political jurisdictions adopting the policies, and that would make sense for people here and now in those jurisdictions to adopt regardless of whether the rest of the world moves quickly or doesn't move quickly to address the problem of climate destabilization. In other words, there would be benefits that are internal and up close for the people adopting the policy, and the long-term benefits in terms of climate stabilization worldwide would be, in effect, a side effect of the policy, a fringe benefit of the policy, but they could be justified on the grounds of internal, near-term benefits alone.
What kinds of benefits from reducing our fossil fuel use might meet that no regrets criterion? The first is air quality benefits, or what are sometimes called co-benefits, because when we burn fossil fuels, we not only emit carbon dioxide, the most important greenhouse gas, we also emit other hazardous localized air pollution that hurts people here and now. We emit sulfur dioxide, we emit nitrogen oxides, we emit particulate matter, and these things cause air pollution that is very visible, damaging people's health in highly polluted cities like Beijing or Delhi in India, but also that damages people's health even in relatively clean air countries like the United States. And by reducing our fossil fuel use, we can actually clean up our air. And the benefits from cleaning up the air are benefits that we get now, in the places we're reducing our use of fossil fuels, regardless of what other people are doing in other countries.
A second no regrets aspect of climate policy would be designing the policy to include carbon dividends. These are policies that put a price on carbon emissions as a way to limit the use of fossil fuels and as a way to incentivize the investments in clean energy and in energy efficiency that will drive the clean energy transition in the 21st century. And that take the money that consumers end up having to pay in higher prices for fossil fuels and use that money, but among other ways, by dividend-ing much of it back to the population as equal dividends for every woman, man, and child. In doing so, we can actually increase the net incomes of the majority of the population. That is to say, most people will end up with more money in their pockets at the end of the day as a result of a price and dividend carbon policy than they had before. The money they receive back in dividends would exceed the money they pay in higher prices for fossil fuels for the simple reason that the majority of people consume less than average amounts of carbon dioxide, less than average amounts of fossil fuel.
How can the majority consume less than average? It's because income and expenditure are highly concentrated among the wealthiest fraction of the population, and so the average use of fossil fuels exceeds what statisticians call the median use, that of the person in the middle of the income distribution. And by charging for the use of that limited carbon space and redistributing the money equally to every woman, man, and child, most people end up with more money in their pockets than would otherwise have been the case. In other words, you could have a climate policy that involves no regrets, at least for the majority of people, including especially the middle-class and low-income households who consume less than average amounts of carbon.
A third pillar of a no regrets climate policy is the economic benefits, including jobs and profits from the green growth of the clean energy economy, from the investments in renewable energy and energy efficiency that are considerably more labor-intensive than investments in fossil fuel extraction. All these things, air quality benefits, carbon dividends, and green growth, can help to motivate countries, states around the world to move more quickly to reduce their use of fossil fuels and help overcome the free-rider problem and the myopia that otherwise have served as big obstacles to effective climate policy.
But we need to think about the sunset industries too. We need to think about those sectors of the economy that stand to lose out in the clean energy transition. And for the people who are dependent on those sectors, especially for the workers in the communities that have depended on coal mining, on fossil fuel extraction, often for generations, we need to have policies that provide a transition for them, a transition that keeps them whole as we move into the clean energy future. Policies that are sometimes called just transition policies. Such policies can and should be part of the climate policy mix.
And we also need to anticipate and prevail against the inevitable opposition to climate policy that will come from powerful fossil fuel lobbies whose reserves in the ground will be stranded assets if they're not turned into carbon in the atmosphere. There's no way that you can prevent some people who currently benefit from fossil fuel extraction from bearing losses as we move to the clean energy economy. And while we can have just transition policies for the majority of the people, the workers, the communities that have been involved in fossil fuel extraction, for the corporations and for the governments that control energy reserves around the world, there we can anticipate intractable opposition, and we have to organize ourselves to prevail against it.
Thanks very much.