As of 2021, though, there still isn’t enough food at the Paris potluck. Some guests have large appetites, while others are near starvation and have little to offer. Current pledges don’t match the reductions we need to hold warming below 1.5°C or even 2°C. Only some of the food we need is on the table.
So how do you get more food? A few countries are already bringing enough. Some countries are barely bringing a single serving. And then some countries, which sadly number some of the largest emitters in the world, are bringing nothing to the table at the national scale, according to the Climate Action Tracker. Until 2021 these included the U.S., and they still include Russia, Ukraine, and Saudi Arabia. Yet they’re still expecting to eat, because climate action benefits us all, regardless of who implements it. In environmental economics, this is what’s known as “free-riding.” It’s like a wealthy miser who shows up empty-handed to your holiday dinner, then tries to leave with all the leftovers and half your wine rack.
PLANNING FOR THE GLOBAL POTLUCK
This is the last and perhaps most serious implication of the global commons. If enough of the “guests” don’t carry through on their promises to bring food, the meal will be sparse and the world will go hungry. If it were really a potluck dinner, you could show people to the door. But you can’t show entire countries to the door when we share the same planet. So how do you enforce a global target?
The first resort is often peer pressure and shaming. The biggest of the COP or “Conference of the Parties to the United Nations Framework Convention on Climate Change” meetings—like the one in Copenhagen in 2009, Paris in 2015, Glasgow in 2021, and beyond—provide ample opportunity to publicly highlight each nation’s commitments and capabilities. One country’s reductions, which may have seemed ample and sizeable back home, may suddenly shrink when displayed on a global stage side by side with other efforts from similar economies. Others may improve on comparison.
Peer pressure and shaming can be effective, under two conditions that are just as true of countries as they are of individuals. First, does the opinion of those applying the pressure matter to those being pressured? And second, do those being pressured believe there are viable ways for them to do what’s being asked of them? Few enjoy being publicly vilified as the person who dragged out the single-serving tart from the back of the freezer while their neighbors brought a fresh-made pie for twelve. Similarly, winners of the Climate Action Network’s “Colossal Fossil” award, handed out each day of each COP, probably aren’t overjoyed to receive it. But unfortunately, in the case of many of the most recalcitrant countries, the answer to both of those questions above is still largely no. Shame has not caused them to deviate from their course.
Another option is to impose economic mechanisms such as border tariffs and sanctions. These can be structured to provide economic incentives to a country to comply with its Paris targets. But they could also run the risk of backfiring economically on the countries imposing them. Having other organizations, such as multinational corporations, exert their influence might help. Perhaps most effectively, though, there’s self-interest: recognizing how climate change affects each country, and how much it might actually benefit that country to act.
MOTIVATING COUNTRIES TO CARE
This last option is why I and my colleagues spend so much unpaid time, time that we can ill afford to spare from our own research, on the big national and international assessments such as the IPCC reports and, in the U.S., the National Climate Assessments. These reports draw on thousands of individual scientific studies. Authors meticulously categorize and quantify the impacts of a changing climate on each region and sector, just as our California team did for that original study so long ago. Today, pointing out the difference in impacts between higher versus lower future emissions is de rigueur; the IPCC 1.5°C report released in 2018 took this even further, distinguishing the impacts of 1.5 versus 2°C of warming.
The Fourth U.S. National Climate Assessment was authored by over four hundred federal and academic scientists. It had taken us three years to write. Nearing the end of 2018, we hadn’t heard anything from the Trump administration about when or even whether it would be released. The Monday before American Thanksgiving I was at my in-laws’ house, in full pie production mode. The counter was covered in apple peels and flour, and so were my hands. My phone chimed. It was a message from a federal colleague. “We’ve been told the report is to be released this Friday!” it said. “Sending proofs right away!”
I immediately reached for my laptop. With floury fingers, I opened the PDFs to see what I had to do and try to figure out how long it would take. The pies went straight into the freezer and the next sixty hours were a flat-out marathon for all of us, with emails and phone calls through the day and well into the night. I finished my own final checks in the car on the way to Thanksgiving dinner and sent off my documents in the next pocket of phone coverage we found driving through rural Virginia.
“Black Friday,” the day after American Thanksgiving, is traditionally a “dead” day when it comes to the news, so I was suspicious that the Trump administration might have chosen it on purpose. My suspicions weren’t allayed when, in response to Volume 1, White House spokesperson Raj Shah stated, “The climate has changed and is always changing,” and when Volume 2 was released, White House spokeswoman Lindsay Walters claimed it was “largely based on the most extreme scenario, which contradicts long-established trends.” In reality, as you now know, according to natural cycles the temperature of the Earth should be gradually cooling at this time, not warming. And regarding the likelihood of various scenarios, one of the chapters I led concludes, “The observed increase in global carbon emissions over the past 15–20 years has been consistent with higher scenarios.”
The National Climate Assessment’s more than two thousand pages exhaustively document how and why climate change matters to every aspect of the U.S. They also show how our choices will determine the future. Even if the federal government wasn’t listening, though, others were. When Trump announced he’d be withdrawing the United States from the Paris Agreement (a move reversed by Biden hours after he was sworn in as president in 2021), it spawned the We Are Still In movement. Now known as America Is All In, it has grown to include over two thousand businesses, five hundred cities and counties, twenty-five states, twelve tribes, and many other institutions. Its members represent 65 percent of the U.S. population and are committed to meeting their Paris goals. One recent recruit is the city of Houston, home to many of the U.S.’s largest oil and gas companies. In April 2020, Mayor Sylvester Turner announced the Houston Climate Action Plan, a comprehensive strategy for the city to reach net zero carbon by 2050. It also laid out the city’s approach to build resilience to rising seas, stronger storms, and the expected changes in extreme heat and heavy rain that were my own contribution to the plan.
HOW COUNTRIES CAN CAP CARBON
Once a country understands it’s in its own best interest to act, policies to manage the global commons can be legislated, implemented, and enforced much more effectively. For each country, sector, or region, there are two main economically efficient policy mechanisms that can be used. The first is known as “cap and trade,” the second as “carbon pricing.” Both have been studied by economists for decades. Both have already been implemented in different parts of the world. And both offer a way to engage the economy in climate solutions.
Under cap and trade, each company is allocated allowances (or increasingly, buys them at auction) to emit carbon up to a certain limit. When they reach the limit, they can pay a hefty penalty or buy allowances from other businesses that still have some in hand. If one company is able to reduce its emissions affordably, it might do more than required. It could then benefit financially by selling the remaining “credits” to another company for whom reductions were more costly. In this way, reductions happen where they are cheapest first. It’s like one guest at the supper who’s not a great cook paying another to bring a contribution on their
behalf instead of making it themselves.
In 2005, the European Union set up the world’s first international emissions trading program. The cap-and-trade system covers eleven thousand companies in power generation and heavy manufacturing plus the airlines that fly between their countries. These sectors represent around 45 percent of E.U. greenhouse gas emissions. To cut sectoral emissions, the cap (total number of rights to pollute) is reduced every year, and companies are fined heavily if they exceed their allowances.
Although it took a while for the system to start working as planned, by 2020 emissions from sectors covered were estimated to be 21 percent lower than in 2005. Even earlier, a cap-and-trade approach successfully helped reduce North American sulfur dioxide emissions from coal-fired power plants that were causing the acid rain in the 1980s and 1990s. A similar approach has been used to reduce carbon emissions in the U.S. Northeast since 2009, and in California since 2013.
HOW COUNTRIES CAN PRICE CARBON
Cap and trade fixes emission reductions by letting the price of carbon adjust. But it’s also possible to fix the price of carbon, and let emissions adjust. And that’s why there’s a second mechanism that’s being applied today around the world: to simply pay for what you eat at the potluck. If someone brings more food than their share, they get to collect a reimbursement for the extra from the pot.
As economist Kate Raworth explains in her book Doughnut Economics, classical economists treat the economy, or the “dinner table,” as a closed system. They assign no value to either the external resources that power it, including fossil fuels, nor the waste that comes out of it, including the pollution and heat-trapping gases that drive climate change.
To correct these market distortions, over a century ago British economist Arthur Pigou introduced the concept of taxing an “externality,” as economists call a cost or benefit that occurs outside the economic system. Carbon taxation is based on the premise that we need to be paying the full cost of using fossil fuels—and we are not. Putting a price on carbon emissions levels the playing field for clean energy, can potentially neutralize subsidies, and can even assign a value to removing carbon from the atmosphere.
In 2018, economist Bill Nordhaus received the Nobel Memorial Prize for applying cost-benefit analysis to calculate the number you’d need to implement a Pigouvian tax on carbon emissions. That number is the social cost of carbon, and it’s intended to represent the economic damage from heat-trapping gas emissions, in units of dollars per ton. Today, simply due to existing regulations, the U.S. already effectively operates with a carbon price of $17 per ton. In Canada, which has explicit carbon pricing legislation, carbon is currently priced at $40 Cdn per ton, and will increase by $15 Cdn per year starting in 2022. Globally, the average price is just $2 per ton. Clearly, this number has a long way to go if we want to meet our Paris goals.
Nordhaus’s model estimated an appropriate cost of $40 per ton would be enough to prevent dangerous levels of climate change, but that was in 1992. Today, that value is woefully inadequate. As the late economist Marty Weitzman pointed out, such a low cost fails to account for how climate risks can circle back and bite the economy in the rear, so to speak. When those risks are considered, as Weitzman and coauthor Gernot Wagner write in their book Climate Shock, there is literally no way to get a carbon price that’s less than $100 per ton—and many analyses come up with far higher numbers. “Nordhaus’s model implicitly assumes that climate damages are worse when we are richer, and that we should start low and increase the price of carbon over time,” Gernot told me. “But what if climate change makes us poorer every step of the way?”
Economists recommend putting a price on carbon that starts low and increases every year until it reaches the true social cost of carbon. This sends a price signal. Instead of paying $1 for a cheap burger at a fast-food restaurant or $3 for a gallon of gas in the U.S., where it is very cheap, we would (eventually) pay the actual price, one that takes into account how much carbon was put out into the atmosphere to create that beef patty or that will be produced when the gallon of gas is burned. If that beef came from Brazil, the price would take into account the Amazon rainforests that are being cut down to make more room for grazing cattle. If it came from North America, the price would reflect our agriculture system, where most cattle eat feed that was grown and processed using equipment powered by fossil fuels. So if we wanted to save money, we might eat less beef and more chicken and vegetables. Similarly, the price for gas at the pump would be higher, so much more that when we did the math, a used electric car might save us money compared to the gas-guzzler we currently drive.
A key component of carbon pricing is how the funds are used. From an ethical perspective it is essential to ensure lower- and middle-income families who spend a greater proportion of their income on food and gas and bills are not harmed by the carbon price. Some of the income can also be used to address environmental justice concerns and invest in and accelerate efficiency improvements, public transportation, and other carbon reduction strategies.
DO THESE POLICIES WORK?
A comprehensive analysis comparing the CO2 emissions of forty-three countries that have some sort of carbon price at the national or subnational level with ninety-nine countries that don’t have one showed that carbon pricing slowed emissions’ average annual growth rate by about 2 percent. For each dollar increase in the cost of carbon, the country’s emissions growth rate decreased by about 0.25 percent.
The Canadian province of British Columbia introduced a price on carbon in 2008, opting to return all the proceeds to taxpayers. Fossil fuel consumption decreased by more than 17 percent in just five years. Most of the decrease came from efficiency improvements, with some contribution from increases in clean energy. Personal provincial income tax rates dropped to the lowest in Canada, corporate tax rates were some of the lowest in North America, and BC’s economy slightly outperformed the rest of the country during that time. From 2007 to 2019, Alberta priced the carbon produced by large emitters. In 2017, this price was extended to the entire economy in the form of sales taxes. All lower-income and many middle-income households, about 60 percent in total, received direct tax rebates to offset their increased costs of living. While I was there in 2018, I spoke to some of the government workers whose job it was to travel around the province to talk to people about the new carbon price. Many communities whose economy was based on the oil fields were hostile, they told me; until they learned that some of the revenues would be used to help people retrofit their houses to increase their energy efficiency and save on fuel bills. Then, enthusiasm was sky-high. People could see the individual benefit to themselves: the carrot, not just the stick. By the time a federal price on carbon was put in place across Canada by Prime Minister Justin Trudeau in 2019, there were four provinces with a price on carbon—BC, Alberta, Ontario, and Quebec—and these four led the country in economic growth.
As of 2020, according to the World Bank, sixty-four carbon pricing initiatives have been implemented in forty-six countries worldwide. These represent a total of 22 percent of global greenhouse gas emissions. There is surprisingly bipartisan support for this approach in the U.S. The Climate Leadership Council bills itself as “an international policy institute founded in collaboration with a Who’s Who of business, opinion and environmental leaders to promote a carbon dividends framework as the most cost-effective, equitable and politically-viable climate solution.” Founding organizations include ExxonMobil, Chevron, BP, and Shell (yes, you read that right), as well as AT&T, Microsoft, and Santander. For the U.S., their carbon pricing plan aims to cut carbon emissions by 57 percent by 2035—consistent with the 1.5°C Paris target—while creating 1.6 million jobs. Most people would agree that sounds like a pretty good deal.
Here’s the problem, though: unless every country participates, legislation that cuts fossil fuel demand, and therefore lowers prices, can indirectly encourage nonregulated countries to up their consumption. German economist Hans-Werner Sinn calls
this “the green paradox,” and it explains, in part, why global carbon emissions continue to climb even as more and more climate policies are put into place. Thanks in great part to its health impacts, China’s coal consumption largely plateaued after its rapid growth in the early 2000s. But China’s coal production continues to grow. So at the same time as it’s investing trillions in wind, solar, and even long-term technologies like nuclear fusion at home, China is also building hundreds of coal-fired power plants in other countries, like Pakistan and Vietnam, so it can sell them its coal.
That’s why our potluck really has to be global. If not, it won’t succeed.
15 EVERYONE NEEDS ENERGY
“Energy managed wisely gives us health and wealth; managed unwisely, it makes us sick and poor.”
MICHAEL WEBBER, POWER TRIP
“They’re installing my wind turbines this week. Me and my neighbor Mattie, we’re going to take our folding stools and our lunches out and watch them do it. I’m so excited!”
THIRD-GENERATION TEXAS LANDOWNER TO KATHARINE AFTER A TALK
Energy poverty is real—770 million people, representing 10 percent of the world’s population, lacked access to any form of electricity in 2019. Another 2.6 billion cook their meals on open fires or lack access to clean cooking fuels. So when scientists caution that 75 percent of global warming is being caused by fossil fuel combustion, and the only way to stabilize climate is to reach net-zero carbon emissions, a common response is that fossil fuels are a moral necessity. “We need them for energy here,” I often hear people in North America say, “as well as to help poor nations develop like we did. Getting rid of fossil fuels will increase suffering, not decrease it!”
Saving Us Page 16