Mitigation of Climate Change

The purpose of this post is not to debate the evidence for climate change, because climate change is a fact, not a debate. There is absolutely no other conclusion to draw from even the most cursory examination of information on the subject, and the fact that it has been characterized as a debate is, in my estimation, damn near criminal. I am not going to address the revolting campaigns of misinformation which the oil, gas, industrial, and automotive lobbies have conducted, nor will I address the shameful conduct of the media in their coverage of the issue and their spreading of this dangerous misinformation. You see, I don’t think it much matters what you are I think about global warming. I don’t think anything you or I or ten million or a hundred million people like us do, even if we manage to reduce our carbon emissions to zero. I have no intention of constructing an argument to win over people unconvinced by the overwhelming scientific evidence. Instead, I want to argue why immediate, decisive action on the parts of government and industry is good not only for our survival as a species, but for their own interests.

Perhaps you’ve seen Al Gore’s movie, which seems to have done an admirably alarmist job of bringing the issue into the cultural consciousness.

The most persuasive piece of data in Al Gore’s film is the chart of vehicle emissions standards by country, which shows the United States at the absolute bottom and indicates that it is therefore impossible to sell American automobiles in most of the rest of the world.

Now let’s think about that for a minute. Here you have 1.3 billion Chinese people and 1.1 billion Indian people who are industrializing and developing enormous middle classes, and American automakers don’t want to be in a position to sell them cars? Why on earth would any capitalist voluntarily deal themselves out of the two largest emerging markets in the world? Why would they not be tripping all over each other to dominate those markets immediately? Why do they not put two and two together and see that while General Motors has been busy losing money at a truly epic rate, Toyota made $185 billion last year.

This is not good capitalism.

Now, much has been made about the onerous costs that would be incurred in arresting climate change right now. The heaviest estimates rate the cost of stopping global warming at 3.5% of global GDP (the lowest estimate is .2%), and decreases each year as changes become systemic. Of course, the global economy grows by between 2.1 and 3% per year, so it’s more a case of having the economy not grow at all for a year, rather than be heavily reduced.

According to the US Energy Information Administration, just reducing emissions gradually (as in accordance with the National Commission on Energy Policy, which stipulates a 5% reduction by 2015 and 7% by 2025) would cost a whopping .15% of GDP. The costs of just meeting the Kyoto Protocol would be .5% of GDP.

What’s interesting is that two reports have indicated that the benefits of following these measures would add roughly 5% to global GDP, and would scale upwards from there as time went on. This is mainly due to more efficient, longer lasting, more renewable products, resources, and production techniques, all of which seem like good ideas to me.

In order to gain a perspective on just what those numbers mean, the United States’ GDP was about $13 trillion last year. Our GDP growth was 3.4%. If indeed the cost was 3.5% of GDP, and there were no gains whatsoever, we’re talking $455 billion. The Iraq War, as of September 2006, has cost $379 billion in US expenditure. At a rate of an extra $2 billion a week, the Congressional Research Service recently estimated the total expenditure has crossed half a trillion. Joseph Stiglitz, Nobel Prize winner in Economics, has predicted the total cost to the American economy will be at least $1 trillion, possibly more depending on its duration. And to think, instead of killing half a million people, we could have solved the greatest crisis we as a species have faced since the invention of the atomic bomb.

I guess what I don’t understand is why any capitalist anywhere thinks this is a bad idea. When has progress ever proven to be bad capitalism in the past? Explain to me how a loss of 3.5% and a gain of 5% is a bad idea? Why, when the price of halting climate change is only going to increase the longer we wait, would we not want to take action now, when we have less to do and less to pay to get it done? I mean, if I were a capitalist and I saw that there will be a massive captive market emerging in the near future, I would want to position myself to dominate that market and bring it into existence as soon as I possibly could.

Of course, there is some evidence that this is already going on. There have been a few articles in The Economist lately alluding to my prediction that green-friendly technologies are going to be the next big boom industry, and that smart investors are getting in now and trying to produce as many effective, efficient environmentally-friendly ideas as they can come up with. As well they should.