If an industry’s business model is dedicated to PERMANENTLY degrading the livable world for EVERY SINGLE baby born today, tomorrow, next year, next decade — even the next century, then it’s a no-brainer that we ought to act sooner rather than later to stop it, especially because we ALREADY HAVE the technology to solve the problem and already have a good idea about how to do it right.
Should we have a PITY PARTY for those who have been profiting from the permanent harm being done to the human habitat? No. Instead we should provide a humane way for EVERYONE to transition to a cleaner and less destructive economic model. This can be done by changing the incentive structure, so that each person can be rewarded for decarbonizing their lifestyle in a way he or she finds to be the most suitable. But now the financial incentive structures in the US are designed precisely to do the opposite — to reward bad behavior. Perversely, last year fossil fuel companies in the US received $500 billion in subsidies so they could extract and sell even more polluting energy. Eliminating tax breaks for fossil fuel companies would go a long way to improve this perverse incentive structure.
Many people who have become rich from this destructive business model will claim — FALSELY by the way — that “carbon pricing” will translate to higher taxes for everybody. Sure, carbon prices does increase the price on bad behavior — that indeed is the point. But most carbon pricing plans actually refund 100% of carbon taxes to consumers — indeed, taxpayers who decarbonize faster than everyone else can end up making a nice profit.
Sometimes people who understand the dangers of climate change worry about the costs of making the transition. Actually though, it is relatively easy for individuals and organizations to transition to clean solutions if they have enough lead time. If carbon reductions were gradually phased in over 10 years, that would minimize the economic disruptions. If you knew you had 10 years to transition to a carbon-free lifestyle, you would have adequate time to replace your vehicles, appliances and energy provider without needing to spend a lot of money. On the other hand, if Americans keep putting off agreeing to an emission target, that will only reduce the time they have to prepare for the transition — and end up forcing them to incur additional costs associated with a rapid transition. Worldwide, the IEA estimates that every year of delaying a climate policy costs the world $500 billion more in infrastructure costs. That’s a reason for enacting an emission target plan sooner rather than later — you have more time to spread out the cost. The most recent estimates say that emission targets — if agreed to today, would reduce the world’s economic growth rate by 0.6% per year. But waiting as little as 10 years will end up tripling the annual costs in order to reach the exact same emission target.
Actually though, this projected 0.6% reduction in GDP does NOT take into account the health and economic benefits which will accrue as a result of an emission policy. Decarbonizing brings huge health and economic benefits. Every year air pollution from fossil fuels causes 200,000 premature deaths in the US. Lowering these medical costs would improve the size and efficiency of the workforce and therefore the country’s economic health. Economists usually say that decarbonizing produces a net increase of jobs. Maybe this surprises you because you constantly hear fossil fuel companies touting the jobs produced by their industry. In fact, fossil fuel industries are NOTORIOUSLY BAD at generating jobs. One study found that 1 million dollars invested in clean energy companies produces THREE TIMES the number of jobs than if you invested that million in a fossil fuel company. Environmental lawyer Robert F. Kennedy noted that historically when countries have significantly decarbonized their economy, they almost always experience an instant economic boom immediately afterwards.
Some have said that it’s futile to set emission targets in the US because China emits more. It’s true that China’s emissions now exceeds that of the US. But China is already in the process of adopting carbon pricing and transitioning to a cleaner economy at a faster rate than we are. The reason we don’t see this decline in the data is that China is still growing 3 to 4 times faster than the US economy — and it’s making up for decades of lost growth — having started at a baseline so low that modernization itself is causing a rapid increase in energy consumption. As soon as China’s growth rate becomes comparable to other nations, China’s substantial efforts to transition to a clean economy should be reflected in the data. Keep in mind also that a significant percent of China’s emissions come from factories which export products to the west. In fact, the typical Chinese per capita emissions are still relatively low when compared to Europe and the US. When the US agrees on an emission target, hopefully that will also cause American consumers to buy greener products — and put pressure on Chinese factories to manufacture greener products as well.
We already know that fossil fuels are causing PERMANENT HARM to the livable world of all future humans. The sad thing is that the people who will suffer the most from global warming also happen to be the people least responsible for causing it in the first place. A 12 year old girl living today in Bangladesh did almost nothing to cause climate change. Most likely she does not own an iPhone or has ever ridden in a Hummer. Neither did her family or friends or previous generations of Bengalis. Compared to the typical American, the typical Bengali has an almost trivial carbon footprint. Yet according to several environmental reports, Bangladesh is the country most likely to experience the most devastating effects of climate change. Food supplies will be disrupted; flooding and sea level rise will render large portions of its coastal regions to be uninhabitable. Most likely the effects of climate change will trigger several waves of climate refugees from Bangladesh into nearby countries, aggravating the region’s economic and political tensions as well.
Imagine that this 12 year old Bengali girl spoke perfect English and could skype you directly. Imagine her question: “Your scientists had been telling you for over 20 years that fossil fuels had been causing permanent harm to the planet and especially countries like my own; why on earth haven’t you done anything yet ? Do you really think my life and my country are so unimportant? Do you really believe that I have less of a right to grow up and make a living in my own country than you did when you were born? Why have your people been so unwilling to take even modest steps to reduce the harms of climate change being done on countries which never caused it in the first place? Is this what human civilization boils down to — allowing entire states to collapse in order to preserve one nation’s precious right to drive gas guzzlers and blow up mountains to sell coal?“
Update #1. I am not naive about China’s escalating CO2 emissions (or India’s); indeed, any observer will observe that the dangers from China’s dangerous air pollution is a much more urgent national emergency than climate change. But at least China has a climate policy (albeit a top down one). In a conference about carbon pricing, Bill McKibben acknowledged the China/US problem in pricing carbon at the border, but made the point that setting a domestic climate policy is the necessary first step to negotiating a viable bilateral or multilateral agreement. Other countries will not take America seriously about climate change unless it first demonstrates an ability to adopt a domestic climate policy. Thefore, the US should try to lead by example. Unfortunately, our leverage in persuading others to enter into a global agreement is diminishing with every passing year. Five or ten years ago, the economic power of the United States still overshadowed China’s; but as the years go by, our leverage decreases just as China has been increasing.
At the same time, China’s energy profile has always been different from ours; Western countries are indirectly responsible for a sizable portion of China’s emissions because American companies are exporting the dirty manufacturing processes to there. It’s conceivable that multinational companies and global consumers can demand better safety and production standards for the products they use. Again, it’s all a matter of having the right financial incentives in place. Given the national emergency in China and the widespread support in China’s leadership for better environmental policies, perhaps domestic pressure will be sufficient to reduce the carbon intensity of manufacturing processes in China.
Update #2 (July 2015). A new IMF STUDY finds that Energy Subsidies in 2015 are 5.3 trillion for the world (or 6.5 percent of world GDP). The US fossil fuel industry would like to thank the American taxpayer for being so generous/stupid to give their industry a subsidy totalling $2176 per American. This Excel spreadsheet breaks down the subsidies more. Out of that $2176 per American taxpayer, $41 go to pre-tax subsidies, $682 go to harms caused by global warming, $643 go to local air pollution, $458 go to congestion (traffic!), $181 go to accidents, $29.50 go to road damage, $141 go to “foregone consumption tax revenue.”
Update #3. At the bottom is a great chart illustrating the consequences of various emission scenarios.