We Can Avert Irreversible Climate Change

Financial Times - Martin Wolf

Action is both essential and affordable — but it demands international leaders’ co-operation

© James Ferguson

Author Martin Wolf is chief economics commentator at the Financial Times, London. He was awarded the CBE (Commander of the British Empire) in 2000 “for services to financial journalism”.

A renewed presidency for Donald Trump is likely to be nowhere more consequential than for climate change. The coming decades will determine whether the threat of damaging and irreversible change is averted, or not.

Without active US engagement, success seems inconceivable. Even with it, it would be unlikely. But, crucially, it would be conceivable. We know what to do and we know, too, that it is affordable. What is unaffordable is not to do what we need to do. But will we? That is the question.

It is indicative of the shift in the perspective of the global policy establishment that a chapter of the IMF’s October World Economic Outlook focuses on “mitigating climate change” — that is, preventing it — via “growth-and-distribution-friendly strategies”. In brief, the IMF insists that humanity can have its cake and eat it: both higher incomes and a safe climate.

As a result of rising concentrations of greenhouse gases in the atmosphere, global average temperatures are already about 1C above pre-industrial levels. On present trends, this could reach around 1.5C in a decade and 2C half a decade later. At that point, warn climate scientists, dangerous and irreversible tipping points in the climate are likely to be passed. Most governments do at least pretend to agree. Thus, in the Paris accords of December 2015, they committed themselves to keeping temperatures below these levels, even if their promises fell short of what was needed to achieve this.

As the IMF notes: “Sizeable and rapid reductions in carbon emissions are needed for this goal to be met; specifically, net carbon emissions need to decline to zero by mid-century.” If this is to happen, emissions need to fall sharply this decade and keep on falling thereafter. That would represent a huge turnround from previous trends.

What sort of programme might deliver this outcome? The answer, suggests the fund, is a combination of front-loaded green investments, aggressive funding of research and development, and a credible long-term commitment to rising carbon prices. This is in line with other studies, notably Making Mission Possible: Delivering a Net-Zero Economy, a September 2020 report from the global Energy Transitions Commission. The latter also emphasises complementary regulation, to accelerate changes in behaviour. Compensation of poorer losers against the higher fuel prices will be needed as well.

Is a move towards zero net emissions by 2050 affordable? The answer is: surprisingly so, particularly given the economically depressed post-Covid starting point. The IMF estimates that achieving this aim might lower world output by 1 per cent, relative to its “baseline” under unchanged policies, once one adds in the benefits of damages avoided. Even so, this must be put in the context of expected cumulative global growth of 120 per cent over the next 30 years. It also ignores the benefits of far lower local pollution.

Some estimates suggest that temperature increases of as much as 5C by 2100, in the absence of mitigation, might lower global output by 25 per cent. This does not take account of the massive non-economic disruptions to humanity, indeed all life, to be expected from such an unprecedentedly rapid upheaval in the climate.

Given these estimates of the modest short-term cost of mitigation against the far greater long-term costs of failure to do so, the argument for action is overwhelming. It becomes more so when one allows for the scale of the uncertainty created by unmitigated climate change, as well as its irreversibility. 

Taking action might make sense even if the costs were many times as large as now expected. So why is it not happening? One explanation is that it involves changes in lifestyles, which we dislike. Another is that it requires thinking in decades, which is unnatural. But the most important explanation is that it requires long-term co-operation, which we usually find impossible.

Co-operation among five players — China, the US, the EU, India and Japan — would deliver a huge part of what is needed. Unfortunately, this hardly looks likely right now. A shift in the US presidency towards someone sane would be a big help. Without that, sanctions against the US might be necessary. But a more aggressive shift by China than planned will also be essential.

If needed policy shifts are to happen soon enough, it will take statesmanship of a high order indeed. Domestically, programmes must compensate the most vulnerable losers, which is a good reason for using a carbon tax. Internationally, leaders must co-operate far more effectively than they did even on the Paris accord. If they are to do what is needed, leaders must overcome two other obstacles to wise action: the fossil-fuels-forever resisters; and the ecological fanatics, who argue in favour of a revolutionary overthrow of capitalism and the end of growth — by tomorrow, please.

The only realistic hope is technocratic problem-solving and co-operative policies. These must be guided by moral purpose, but not infused by fantasies of revolutionary transformations. Cries of “repent, for the end of the world is nigh” will not solve this emergency. Humanity is at its best when it uses its head. Climate is at bottom a crisis of technology and behaviour; it can be tackled only by changing incentives throughout the system.

As I have argued before, this is now extremely urgent. If we want to prevent a dangerous shift in the planet’s climate, we need to act far more decisively than hitherto. We are drinking fossil fuels in the earth’s last-chance saloon. The time has come for humanity to sober up.

Links

• Martin Wolf: Inaction over climate change is shameful
• Martin Wolf: Last chance for the climate transition
• FT - Climate change: how China can achieve its pledge of zero emissions
• FT View (Editorial Board) - More capital needs to flow to greener activities
• FT Analysis: Climate change: China’s coal addiction clashes with Xi’s bold promise
• IMF World Economic Outlook, October 2020: A Long and Difficult Ascent
• Energy Transitions Commission - Making Mission Possible: Delivering a Net-Zero Economy
• NASA: How is Today’s Warming Different from the Past?