Yes – Choices Made Now Will Shape Global Economy For Decades To Come
The most important question facing us right now is not whether we can deal with the Covid-19 crisis and climate change at the same time, but rather whether we can afford not to. do written Christiana Figueres.
We have learned many lessons from the pandemic, but the main one is that high-probability, high-impact risks must be addressed in a timely manner – and delays are costly. Healthcare professionals have warned of the devastating effects of Covid-19 at a very early stage; however, only a few governments have acted in accordance with the risks. Countries like Japan, South Korea, Singapore and Costa Rica that have taken preventive measures quickly seem much better than those who have waited.
The age-old saying that prevention is better than cure is widely adopted in the context of health and is also true for climate change. We have known about the high risks for years. Morgan Stanley estimates that 16 weather and climate disasters in the United States cost $ 309 billion in 2017 alone. Global losses from natural disasters in the past decade have amounted to $ 3 billion. However, climate action remains insufficient. As Mark Carney, then Governor of the Bank of England, warned in 2015: “Once climate change becomes a critical issue for financial stability, it may already be too late.” Concerned about increasing risk, BlackRock CEO Larry Fink recently wrote that “we are about to fundamentally reshape finance.” But will this overhaul arrive in time?
Despite laudable efforts, we have not reduced our greenhouse gas emissions in accordance with scientific advice, making it the most critical decade of all time. The next 10 years will determine whether we have a chance of preventing the worst impacts of climate change, orders of magnitude worse than the disruption of Covid-19. If by 2030 we have not halved the world’s greenhouse gas emissions, we will not be able to avoid devastating tipping points that would break the global economy and pose existential human threats. The costs of inaction are staggering – $ 600 billion by the end of the century.
The crux of the matter is that the pandemic-induced financial decisions made in the next 12 months will shape the global economy over the next decade, just when we need to cut our emissions in half. Recovery plans will cost thousands of billions of dollars. Governments are unlikely to have the resources to direct capital on such a scale to other urgent global needs for years. We cannot jump from the pandemic frying pan and enter the heat of exacerbated climate change. By then, we will no longer have fire hydrants.
The Covid-19 pandemic collided with the urgency of climate change. We must integrate the solutions to the two crises in a coherent response. After immediate health, security and social protection measures, inclusive stimulus packages must propel the global economy towards sustainable growth and increased resilience.
Fatih Birol, head of the International Energy Agency, says “We must not let today’s crisis jeopardize the transition to clean energy.” Governments should cut $ 400 billion from fossil fuel subsidies and support energy efficiency, as well as clean energy and infrastructure. Stéphane Hallegatte, the World Bank’s chief economist on climate change, discusses other potential investments, such as restoring degraded land, sanitation and sustainable transport infrastructure. We can create millions of short-term jobs, stimulate innovation, support economic diversification and reduce both carbon and air pollution, improving public health.
Investing in a resilient recovery has never been closer. Over the past 10 years, onshore wind energy prices have fallen by 70% and solar photovoltaic by 89%. Energy storage technologies are following a similar trajectory. Major investors have set a target of zero net issues, including an alliance of large asset owners with $ 4.6 billion under management. A large group of business and political leaders urge the European Commission to prepare a comprehensive recovery plan integrating the green transition and the digital transformation. As we rebuild, we can open our eyes to the risks and opportunities on the horizon. We can recover better and choose the future we want.
The author is a former head of the UN climate secretariat.
No – Carbon taxes and green policies hurt economic growth and jobs
The close relationship between real gross domestic product, employment and energy consumption for less developed and more developed economies means that policies to reduce greenhouse gas emissions would reduce economic growth and employment . The reason is simple: they would greatly increase the cost of conventional energy, writes Benjamin zycher.
Environmentalists argue that the “safe” limit for temperature increases driven by people by 2100 is 1.5 ° C. The Intergovernmental Panel on Climate Change calls for carbon taxes for 2030 with a mid-range of $ 30 per gallon of gasoline in 2019 dollars, up sharply over the century. Taxes on other forms of conventional energy would be just as economically destructive and politically absurd.
Proponents of the fight against climate change try to avoid this reality by arguing that conventional energy substitutes are cost competitive and that a global shift to a radically different renewable energy sector would strengthen growth by generating new investments and new jobs in “green” industries.
But unconventional energy is not cost competitive; if not why were massive taxes, subsidies and guaranteed market shares necessary to make it viable? The unreliability of wind and solar energy, the unconcentrated energy content of air flows and sunlight, and the theoretical limits of converting wind and sunlight into electrical energy are the reasons why larger market shares for renewable energy have led to higher electricity prices in Europe and Europe. United States.
The argument that investing in green energy leads to higher growth ignores the serious negative effects of reduced investment and rising energy costs in other sectors. Favoring unconventional energy will destroy a substantial part of the economic value of the preexisting energy use and production stock of physical and human capital. Earthquakes cannot produce economic benefits; the same goes for policies that wipe out the value of large parts of the economy. Expensive energy and reduced economic growth cannot be compatible with new job growth after the pandemic.
The International Energy Agency predicts that the economic recession of Covid-19 will reduce greenhouse gas emissions this year by 8%. If this decline continues for the rest of the century, a climate model funded by the US Environmental Protection Agency predicts that the temperature drop in 2100 would be just over 0.1 ° C. Using the same model, future effects on the temperature of much larger reductions in greenhouse gas emissions are at a level that I consider insignificant. The Paris Agreement of 2015, which can be easily eluded by the participating countries: 0.17 C by 2100. Zero greenhouse gas emissions by the entire OECD: 0.3 C. A 30% reduction in greenhouse gas emissions worldwide: 0.6 ° C. There is no plausible benefit / cost test that would justify such policies.
Inexpensive energy is necessary for the economic progress of the world’s poor and to recover from the staggering economic effects of Covid-19. Ideological opposition to fossil fuels is an anti-human position which views ordinary people not as sources of ingenuity to solve problems, but only as mouths to feed, causing environmental damage. From this point of view, most investments in people – education, health, etc. – make things worse by increasing the demand for energy.
Many environmental left activists applauded the reduction in greenhouse gas emissions caused by the Covid-19 recession, and did not express the hope that growth would resume, but fear that emissions increase again. They say an “existential climate threat” is looming. The effects of increasing greenhouse gas concentrations are real, although small; but allegations of “crisis” are not supported by evidence and are based on models based on implausible underlying assumptions.
Prioritizing climate policy will affect the ability of most people to improve their living conditions, especially after the terrible economic shock caused by the closings. In addition, if countries have less wealth, they will have fewer resources for protecting the environment. Don’t ask if proponents of greater economic growth hate the planet. Instead, ask if environmentalists hate humanity and the planet too.
The author is a resident researcher at the American Enterprise Institute