A position on climate change

If you expect another article on why we need to act because time is running out then brace for a surprise.

I have come to accept climate change as unavoidable. In order to vet my conclusion and to derive guidance for my own actions I started some 2 years ago to put my thoughts in writing, knowing that this process helps tremendously to clarify my own thinking on any topic. It turned out to be a frustrating undertaking as I did not like my own conclusion. I abandoned the „project“ half finished. Now I have taken up the pen again and have finalized the text, which is called „A position on climate change“.

Cost immeasurable

There are currently three broad main positions towards climate change:

1. Those who choose not to believe in climate change
2. Those who accept climate change, but maintain its effects to be benign or at least manageable
3. Those who accept climate change and maintain its effects may be catastrophic in the long run

The Stanford Institute for Economic Policy Research, in an excellent primer about the economics of climate change and climate policy (1), puts the annual direct cost of climate change for the US at between 0.5% and 2% of GDP by 2080, depending on the scenario considered (See „Fact 1“ of (1)). Thereby it is not even clear if this recurring cost has a significant impact on economic growth. This seems totally manageable. It seems people who belong to group 2 above are right. However, the same primer („Fact 3“ of (1)) also puts the recurring cost of climate change in % of GDP per capita by 2100 to above 50% (!!) for developing nations (including India, Africa and most of south America). Climate induced mortality in those regions will also rise, adding the cost of many lives to the price tag of climate change. The resulting inequality will almost certainly lead to mass migration or related conflicts, thereby also generating significant indirect costs of climate change to developed countries, such as the USA. In addition, if that were not enough, the trend extrapolations to the year 2100 make it clear that, if not acted upon, climate change will make things much worse in the coming century. This may seem far in the future, but a baby born today may live to see it. Such considerations put me in group 3 of the above list.

Hope is dead

First let me clarify my starting point. I have come to accept the following facts:

1. Climate change is happening
2. Climate change is primarily caused by human activity
3. Climate change cannot be averted within the current scientific, social and political global set-up

Let me briefly expand on why I think the above three points hold true and thus have boldly labelled them „facts“ (and I am the first person who wants these points being disproved).

1. The first point is the least controversial. As Greta Thunberg pointed out: „in the USA you either believe in climate change or you don’t. In Europe we know it is a fact“. There is abundant evidence for a rapid and historic increase in global average temperatures and atmospheric Co2 levels. On an anecdotal note (I’m aware that this does not count as evidence) there recently was the first „burial ceremony“ for a glacier in the Swiss Alps. Swiss glaciers here are melting at record speed and will be gone in a few decades.
2. There is IMO also conclusive evidence on the second point. Fist of all causal climate computer simulations cannot explain what is currently happening without human activity, such as Co2 emissions, as a necessary key driver for climate change (see for example also (1)). Furthermore, the current pattern of climate change is not consistent with what one would expect from natural climate variations in the geological and paleontological record (2). As a side note: we are currently in the middle of a great mass extinction event, caused by humans and potentially on par with the five historic paleontological mass extinction events (3).
3. The third „fact“ is certainly the most controversial. I maintain it is true for a number of reasons:
   First there are plenty of solutions for addressing climate change, such as the half-earth proposal (4), whereby half of the earths land mass is set aside as off-limits to humans, or the various proposals to regrow vast areas of forest (5), eg. in the former Soviet Union, or the „2000 watt“ idea (6), that we should transform into an energy efficient society. These „solutions“, if implemented, could indeed alleviate or even avert climate change. However they all have one huge caveat in common: a big „one only has to“! They don’t address implementation. In fact many statements I have read implicitly assume that implementation is easy, even automatic. I suspect that often this omission is owed to the fallacy of extrapolating individual behavior to emerging dynamics on a systemic level, e.g. if an individual can do it it should be possible to achieve an outcome corresponding to the individuals behavior on a global scale. For me such „solutions“ are not at all solutions. A real solution has to come with no conditional and has to include a viable strategy for implementation. I have seen none so far. The closest is the ESG movement (see below).
   
   Second: the problem is not static. And the question is not to reverse a static „delta“ to an optimal state. In fact if we — humanity — were climate neutral right now, we still would have to act on climate change, because we would not remain climate neutral. This is simply because total population on the (finite) planet is still growing. Furthermore there is mounting evidence of self-reinforcing, potentially runaway, dynamics. Think of the methane released by melding permafrost (7). To counteract this we would need (on a per capita basis) to become ever more energy efficient. Worse, with India and China there are two huge nations, comprising some 30% of the planets population, ramping up their Co2 emissions tremendously on their growth journey. (BTW: „we only have to“ abstain from economic growth …).
   
   Third:Climate change is truly global. Any action by an individual country will not solve it. It requires a global answer. Yet there is no global leadership. Efforts at global regulation have some merit, but fall short of what is needed, at least in terms of effectiveness (8).
   
   Fourth: Climate change is extremely long-term. It is much longer term that the time horizon of any politician or company. Short term needs are easy to prioritize over long term trends, especially if people have more pressing immediate needs.

One can argue that being fatalistic about something is not helping and is even a cowardly act of complacency and self-pity. But what if fact number three is just that, a fact? Hope dies last. But what if hope is all there is? Is acting on misguided hope meaningful?

The impotent agent

People, like never before, see the implications of their cumulated individual actions on a systemic and even global level. You see the suffering of Chinese children producing clothes that we buy to (cheaply) satisfy our vanity. You see the implications of climate change that you contribute to when driving to work in your car. Yet, if you stop buying Chinese clothes or driving a car, nothing will change. This is the chagrin of modern society. The frustration it generates fuels powerful (political) forces as people try to vent their impotence. The climate movement being one such force. All those protest marches: wasted time and energy.

If your own actions do not change the world, why act on global pain points at all? There are a number of deceptive arguments that serve to justify ones actions:

There’s the „if everyone were to“ argument: „If everyone were to heat with oil, as some do, then of course we cannot avert climate change“. Therefore one should not heat with oil. This is arguably the weakest of the arguments. It implicitly assumes that everyone (or a sufficient majority) can be persuaded not to use fossil fuels.

Related to this argument is the „moral“ argument. „How irresponsible of you to heat with oil!“. How can an individuals action be irresponsible if it has no impact? The moral argument therefore is more a social phenomenon and increases the social cost (e.g. reputational damage) to anyone heating with oil.

More refined is the argument of „marginal impact“: If you don’t eat that cow then one cow less has to be produced and therefore has to suffer. But that argument does not hold for climate change. Why? Because fossil fuels are limited. If I quit driving my car, less gasoline will be burned to CO2. Therefore, one might think, climate change might be mitigated marginally. Yet global oil reserves are limited and will be burned, if not by you then by some Chinese guy. Give or take a few years of time saved will not make any difference in the end.

Related to this is the „voting“ argument: the impact of not driving a car can be compared to the impact of casting a vote in public elections. Both impacts are marginal. So if you support democracy by casting votes, in order to be consistent, you should also abstain from driving cars to support global action against climate change. However this ignores the very different individual costs of those actions: casting a vote comes cheap, abstaining from driving a car costs a lot of time and energy.

All these arguments (and maybe some more I have missed) serve only one purpose: to justify ones actions on climate change and thus to put ones minds at ease.

Alas, individual relinquishment will not safe the world.

Hope reborn?

I have to say though, that I am not totally fatalistic. In my view there are a least three avenues for changing things to the better in the future: economic viability, cultural change and global regulation, each of which potentially fueled by technological advances. Let me expand on each of those briefly:

Global regulation: Even though I am not optimistic about global regulation it merits praise as it has achieved some victories in the past. Global regulation, such as the global climate accord, has thereby arguably helped slowing down the pace of developments. It may, and probably will, celebrate further successes in the future.

However, as stated in „fact 3“ above I do not think it will succeed to avert climate change on the basis of the current global political, social, economic and technological state of things. There will always be opportunistic behavior by individual nation states and their leaders, as is painfully obvious in these days. World leaders could make a difference if coherent in their objectives. But think of the likes of Trump, Putin, Bolsonaro, etc. Opportunistic behavior to harvest „dirty“ economic benefits on the back of others and on behalf of ones own interests is a strong incentive that cannot be overcome, in my view, within the current global political set-up. Increased economic interdependencies, such as the banking system, trade dependencies, the internet etc, may help, but sanctions have not, so far, proven to be sufficient. As a side remark it seems clear to me that local regulation will not solve climate change and can even be detrimental if unreflected (see last section).

Economic viability: future technological innovations may provide real solutions to climate change that are not currently viable or that we don’t even dream of at present. For example, technological advances could render existing technological solutions economically viable or — even better — desirable. Existing carbon efficient technology could be made so cheap that it outcompetes other, less climate friendly technologies (dream of cheap solar energy vs. expensive carbon based energy). Moreover technological advances could lead to totally new avenues for addressing climate change. For example by providing a path for cheap, safe and controlled geo-engineering (9).

Cultural change: advances brought about by technology could initiate or catalyze changes in in societal behavior and culture. Novel means of generating transparency could reverse behavioral incentives detrimental to climate change. Think, for example, about the social credit system being developed (and employed) by china to align the behavior of its citizens with the interests of the regime (10). While abominable, a similar system could be designed to support societal transformation by focussing on targets for improving environmental protection.

A more benign and interesting point in case is the ESG movement, which currently changes the investment world (11). In some ways it represents a mixture of the above three areas. ESG, which stands for Environmental, Social and Governmental, promotes the investment only in „good“ investments, which adhere to humanistic, sustainable and climate friendly criteria.

I consider it the most promising effort so far to address climate change. Why? Because it employs the raw power of financial and consumer markets. How? First regulation enforces transparency and with it accountability regarding the carbon footprint of undertakings. Transparency allows consumers to judge undertakings accordingly. Undertakings are thus incentivized to improve their carbon footprint. Institutional investors increasingly see their value proposition or reputation erode if they do not invest according to ESG criteria. Consider a life insurer who does not invest green. It may lose its customers to the competition. In the case of a pension fund it may be the reputation of the related employer on the job market that forces the pension fund to abide by ESG investment principles.

The ESG movement has gained tremendous momentum recently via this reinforcing triangle of enforced transparency, social pressure and market dynamics. Alas the impact of ESG will depend on the market penetration it can achieve on a global level and on the effectiveness of ESG criteria and the related application practice (already now there is a lot of „greenwashing“ going on).

How to act

It seems clear that if, as argued for above, climate change cannot be prevented, then one should rather focus on the problem of dealing with the effects of climate change.

Dealing with the effects of a global phenomenon can well be done locally and have local answers. What remains the same though ist the very long-term time horizon. While sustainability in its environmental sense cannot be achieved, reactions to the long-term implications of climate change need themselves to be sustainable over a long term.

Actions therefore should not be disruptive (as the outcome of disruption rarely is predictable let alone controllable) but rather transformative.

Paradoxically actions taken to address to the long-term effects of climate change may often take a similar form to what one would expect if the intent were on preventing climate change in the first place.

For example it is clear that fossil fuels will no longer be available in the long term. One reaction to this could be to set public policy on supporting climate neutral technologies and related innovation, thereby ensuring a path to future competitiveness and resilience of the own local economy.

Other actions could be to anticipate long term demand shifts and direct innovation in this direction. For example new solutions are needed for hot regions to cope with increasing temperatures and aridness.

Ill advised, IMO, are actions that ask for a disruptive short term change, such as material tax increases on fossil fuels or related modes of transport. For example some current political initiatives in Switzerland are aimed at regulating air traffic. The most extreme proposal being to limit flight mileage per capita and year. This will not solve the problem, as people will circumvent any such regulation by flying from airports of the neighboring countries, thereby increasing travel mileage and Co2 emissions. Even if such actions were to have a short term effect on local output of greenhouse gases, they likely will not result in a long term global benefit. Instead they come at the cost of damaging the competitiveness of the local economy.

To conclude, it seems to me that actions aimed at supporting the local economy to innovate and increase long term competitiveness in dealing with the effects of climate change are our best policy choice going forward.

References

1. https://www.brookings.edu/research/ten-facts-about-the-economics-of-climate-change-and-climate-policy/
2. IPCC, 2007: Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
   https://aambpublicoceanservice.blob.core.windows.net/oceanserviceprod/education/pd/climate/factsheets/canwarming.pdf
3. https://en.wikipedia.org/wiki/Holocene_extinction
4. https://www.half-earthproject.org
5. https://climate.nasa.gov/news/2927/examining-the-viability-of-planting-trees-to-help-mitigate-climate-change/
   As a side remark: the world is currently losing net forest area at a pace of 5 million hectares per annum. Twice that amount succumbs to deforestation. https://ourworldindata.org/deforestation.
6. https://en.wikipedia.org/wiki/2000-watt_society
7. https://graphics.reuters.com/CLIMATE-CHANGE/PERMAFROST/oakveelglvr/
8. see for example: https://www.cfr.org/backgrounder/paris-global-climate-change-agreements
9. https://e360.yale.edu/features/geoengineer-the-planet-more-scientists-now-say-it-must-be-an-option
10. (10)https://en.wikipedia.org/wiki/Social_Credit_System
11. (11)https://en.wikipedia.org/wiki/Environmental,_social_and_corporate_governance