The new climate narrative


Nobel Prize-winning economists Robert SchillerAnd the Abhijit Banerjee, And the Esther Duflo argued eloquently in Last WrotePolitical debate and economic policy are driven by simple ‘narratives’ rather than complex and nuanced theories or models. What matters are plausible “stories” that have broad intuitive appeal and thus can influence public opinion.

This is certainly true of climate policy. Modeling global warming is a very complex task based on “probabilistic” physical relationships and huge amounts of data about natural and human activities over many decades or more. Centuries. But relatively direct messages still dominate political discussions.

When the climate policy debate began, the prevailing narrative was that economic growth faced a new constraint in the form of the carbon budget, and that exceeding it would lead to an unwanted amount of global warming. So policy makers will have to consider the trade-off between more economic output in the near term and the damage caused by global warming in the longer term.

What once appeared to be a political suicide mission can now yield significant benefits to those who led it.

It is not surprising that the academic debate – embodied by work From Nicholas SternAnd the William Nordhaus, And the Martin WhitsmanIt focuses heavily on how the costs of climate change mitigation paid in the present compare with the benefits accrued in the future. so called “Social discount rateIt is based on two components: a rate of ‘pure time preference’ which generally places less weight on the welfare of future generations than that of current generations (although some believe that ethical considerations require it to be zero), and a term that reflects the degree of diminishment due to welfare in relation to The higher discount rate makes ambitious mitigation policies in the short term seem less desirable.

Another dimension of the story is the fact that climate change mitigation is a biblical example of the global common good. Since there is only one atmosphere, reductions in emissions of any country result in the same reduction of carbon dioxide in the atmosphere and therefore the same dilution, from which no country can be excluded. This gives rise to the problem of the free rider: every country has an incentive to allow others to dilute, and thus reap the benefits without incurring the costs.

Besides the discount rate, much of the climate debate has focused on how to handle the issue of the free rider—for example, by trying to negotiate a binding international agreement linking rewards and penalties to mitigation performance. The bottom line is that mitigating climate change was necessary but involved some significant upfront costs that would – for a while at least – lead to lower growth.

Compare that grim novel with Stern’s main first sentence at the end of his last speech Report Upcoming G7 Summit in the UK: “The transition to a zero-emissions, climate-resilient world offers the greatest economic, commercial and business opportunity of our time.” This is an upbeat and rewarding green transformation story, not one of costs or burdens.

This new framing reflects the enormous rate of technological change, which the old narrative was largely assumed to be constant or at least exogenous. Green innovation is now not only fast, but also internal. production cost Renewable energy From sun and wind, and from Battery storage To solve the intermittency problem, it has already been greatly reduced.

This progress, as well as moves toward greener transportation and urban design, is in part a response to policies that stimulate carbon-saving economic activities and discourage carbon-intensive activities. These policies are justified by the fact that emissions controls are a public good whose social benefits outweigh private returns.

The new, optimistic story can only be fully achieved through such policies, which now have a much better chance of being widely adopted. After all, politicians clearly prefer to advocate climate measures built into the vision of global growth and a profit-enhancing technology wave to try to convince their masses that cutting growth now is necessary for future generations.

Many countries are already deploying these green technologies, but continued innovation (and thus cost reduction) critically depends on more and stronger political incentives. Recent commitments of systemic importance by United States of America And the China To become carbon-neutral by 2050 and 2060, respectively, these incentives prepare and solidify these incentives. Such pledges are becoming more credible as more countries supplement them with short-term commitments contained in 10-15 year action plans.

The new win-win story, if true, implies less need For a binding international climate treaty, because national gains and commercial profits can drive progress now. While green technology will continue to produce positive externalities, there will be plenty of private profits even without these additional societal benefits. The “Paris method” of relying on NDCs with enhanced scope effects appears feasible if it includes strong political commitments.

But there are three caveats in place. First, like all waves of technological change, the green shift will produce winners and losers. Governments will need to compensate the losers, not as an afterthought but often to ensure that their climate change mitigation programs are politically viable in the first place. Perhaps most importantly, the focus on employment-oriented public policy rather than incentives for capital intensity can influence to some extent the speed at which this is done. economies Create Decent new jobs, Such as Daron Acemoglu And the Dani Rodrik confirmed.

Second, many adjustments will require large upfront capital investments that are difficult for developing economies to regulate. This will place them at new competitive disadvantages, adding to and interfering with the already threatened digital divide. A significant amount of long-term development finance is needed not only for quota reasons but also because these countries combined account for nearly a third of global carbon dioxide emissions.

Finally, ignorance, denial, and then very slow progress in the past means that humanity’s race against potentially devastating climate change will be intense even under the most optimistic scenarios. Thus, more policies that encourage green technologies are necessary

But the new, more positive climate narrative must make rapid progress toward a more feasible deep green transition. What once appeared to be a political suicide mission can now yield significant benefits to those who led it.

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