The War on Global Warming
Climate change presents a unique challenge for economics: it is the greatest and widest ranging market failure ever seen. The Investment Proposition: If we start investing 1 per cent of our annual global GDP today, we can avoid GDP losses of 5 to 20 percent tomorrow.
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“Everybody talks about the weather but nobody does anything about it” – Commonly attributed to Mark Twain, 1897
That was true back in 1897, but not anymore, according to the most recent Intergovernmental Panel on Climate Change (IPCC) report. The report, which is an expert-reviewed synthesis of the most up-to-date scientific research published on climate change from around the world, upped the ante. It concluded that it is “very likely” humans are causing global warming, or, in quantitative terms, more than 90 per cent certain (up from “likely,” or more than 66 per cent certain, in 2001).
So now that we have proved Mark Twain wrong, what are we going to do to fix it?
Most people, from the leader of the Green Party to the chief executive of the Canadian Council of Chief Executives, as well as our current Prime Minister, genuinely agree that it is time to pull back on the high-carbon throttle and carve out a new low-carbon path for our economy.
Just after the IPCC report was released, Prime Minister Harper made clear which path Canada would take: “I think the first realistic step in any such plan will be to try over the next few years to stabilize emissions and obviously over the longer term to reduce them.” A few days later, the usually laissez-faire economist told an audience at the Canadian Club in Ottawa that he was going to crack down on industrial polluters and automakers with tough new regulations, concluding with the high-handed statement, “The era of voluntary compliance is over.”
But when you ask “how fast and at what cost?” the consensus fades fast. Rhetoric enters. Reason leaves. The topic of greenhouse gases leads to vast expulsions of hot air from politicians and pundits. Meanwhile, the climate warms, as carbon dioxide spews out of smokestacks and human-generated toxic emissions singe the hallowed halls of parliament.
On one side, you have the Conservative Minister of Environment John Baird, saying: Whoa, not so fast, “Canadians don’t want the country to face economic collapse.”
On the other, you have Stephane Dion, the Liberal Leader of the Official Opposition, saying: “We will make megabucks by reducing megatonnes [of greenhouse gases].”
They both sound delusional to me.
This is a war, a fight against old wasteful lifestyles and carbon-intensive ways of doing business in order to avert catastrophe and make the world safe through clean economies. Winning this war against greenhouse gases is not about economic boom or bust. It is about re-engineering the DNA of our economy. And like any fundamental change, there will be winners and losers.
Each one of us will have to give something up.
We should not sugarcoat the nature of the existential challenge facing our planet. When Sir Winston Churchill rallied the English-speaking world to defeat the Nazis in WWII, he didn’t talk about seizing export markets and profit-making opportunities. He talked about the high stakes of preserving our civilization against dark forces and the high price, “blood, toil, tears and sweat,” he personally would pay to prevail. Or, as John F. Kennedy might put it, “Ask not what your climate can do for you, but what you can do for your climate.”
It’s true that our economy might reap big dividends from early and accelerated action on implementing low-carbon technologies, efficiency improvements, and conservation measures, but we have to be ready to pay first. Trying to enlist public support with a sugarcoated version of reality is counterproductive and unnecessary. Who cares if support for action on climate change is a mile wide, but only an inch deep? As soon as gas prices rise, heating bills climb, and a few factories close down or shift their operations abroad, public support will crumble. The talisman of tough action on climate change will turn into a hot potato that no one wants to touch.