Climate Crisis Economics

Description

Climate Crisis Economics draws on economics, political economy, scientific literature, and data to gauge the extent to which our various communities – political, economic, business – are making the essential leap to a new narrative and policy approach that will accelerate us towards the necessary transition to a decarbonized economy and sustainable future. The book draws out policies and practices with both national and local examples, which will demonstrate various complementary approaches that are empowering states and people as they seek to pursue the carbon neutral goal. The author delineates a climate crisis economics approach that is fit for purpose and which can help achieve necessary climate change goals in the decades ahead. Ensuring economic and ecological sustainability is neither easy nor cost-free; there is no single solution to the climate crisis. All aspects of our economies, policies, business, and personal practices must come into alignment in order to succeed. Frustratingly, we know what is needed and we have many of the technologies and systems to make the leap to a carbon neutral economy, yet we still fail to act with alacrity. Leaders, communities, and businesses must shift their narratives in how they talk about and think about the climate crisis. In doing so, in making the narrative leap to a new understanding about what is possible and necessary, we can stop endangering our common future and single, fragile, global habitat, and instead set the stage for Green Globalisation 2.0 and a new, sustainable industrial revolution. Climate Crisis Economics will appeal to academics, students, investors, and professionals from varying disciplines including politics, international political economy, and international economics. Written in an accessible voice, it draws on work in fields outside of and in addition to politics and economics to make a case for climate crisis economics as an approach to addressing the climate change challenge ahead. Cover Endorsement Half Title Title Page Copyright Page Dedication Table of Contents Illustrations Boxes Acknowledgements Abbreviations Prologue: An Imagined Vision of the Near Future Without Action On Climate Change 1 Crises as Crucibles for Change Covid-19 Lessons for Our Climate Change Responses Leadership in Crises is Always Crucial Coordination is Crucial to Collective Response Delay is Costly – Act Now In Crises, What Was Once Impossible Becomes Possible Governments Are Our Last-Resort Actors When Disaster Strikes Institutions and Trusted Experts Matter in Crisis Policy Responses A Great Weight Can Be Borne By All Once a Crisis is Understood Individual Responsibility is Required to Achieve Our Goals Fairness is Essential and Demanded We Need to Find Ways to Communicate a Sense of Urgency to All Facts Matter and Must Be Defended and Reiterated Crises, Once Recognized, Can Vastly Accelerate the Rate of Societal Evolution Markets, Once Galvanized, Can Act and Act Fast Firm-level Commitment and Engagement Matter Crises Force a Reappraisal of What we Value The Structure of the Book Note References 2 Obscured Horizons and Middling Models Extend Our Horizons Understand the Limits of Our Models Is a Model Supporting the Policy Goal? Worry More About Fat Tail Risks Integrate Economics With Ethical and Moral Judgements A Tragedy of Horizons No Examples Outside Myth, Archaeology, and Ancient History Economic Stories Inform Our Personal and Policy Actions Climate Change Models – Their Limitations and Uses Models Are Apolitical; Our Inputs are Not Rolling the DICE The Discount Rate Problem The Intergenerational Inequity Problem: We Value Future Generations – Don’t We? Will We All Be Wealthier Tomorrow? The Growth Assumption Problem The Rising Cost of the Economic Catastrophes to Come: The Damage Function Problem Ecosystem Collapse is Not a Minor Matter Unbearable Heatwaves Rising Tides and Howling Typhoons Not Only the Poor Pay for Climate Denial Wildfires Scorch the Globe Fat Tails and Tipping Points: A Pessimists’ Confession Sudden Leaps and Nonlinearity Are Not an Economist’s Best Friend Climate Change is Slow, Then Fast Some Locations Already Have Experienced Tipping Points Climate Crisis Economics Must Include Local Tipping Points and Global Fat Tails Time to Act, Test Models, and Use All Available Policy Levers A Return to Adam Smith as Moral Philosopher We Need a Homo Economicus Sympatico Appendix 2.1 Notes References 3 Setting Targets, Pricing Carbon, and Punishing Laggards Set Ambitious Long-Term Targets and Match Them With Clear Interim Steps and Plans Europe’s Regreening and Rebuilding A Chinese Commitment With Potentially Momentous Impact Biden’s Green New Deal – a Start, Finally Leadership at Last California’s Demonstration of What is Possible With Leadership What of the Laggard States? At COP26, Governments Must Make the Leap On Enforceable and Rising Carbon Pricing Pricing Can Trigger Rapid Changes in Behaviours Time to Announce a ‘C-Day’ The Price of Carbon – Set a Minimum, a Timeline, and an Adjustable Glidepath Cap-and-trade Schemes Europe’s ETS – the World Leader, Despite Troubles China’s ETS – a Lot of Room to Grow Whither the US On Carbon Pricing A Thin Regional Patchwork, With Some Successes A National US ETS is Needed Learn Lessons and Apply Them Globally and Locally Carbon Prices: How High is High Enough? COP26 and Carbon Pricing’s Tipping Point Can We Get Agreement at COP26? Construct a Coalition of the Willing Free Riders Should Be Punished With a Carbon Border Adjustment Tariff Could It Be Done? Enforcement Will Be Necessary for Consensus Or Coalition Strike the Deal, Delegate National Market Regulators to Act, and Report and Review Shifting Incentives Across All Sectors Note References 4 Demographics, the Changing Investment Narrative Landscape, and Market Incentives The Gen X and Millennial Green Wave New Investors Demanding a Greener Future Shifting Signals: Green is Becoming Synonymous With Sound Investments A Green ESG Wave No One Can Ignore Firms Need to Get On Board and Set Net-Zero Goals Finance and the Net-Zero Transition Business Leaders Are Waking Up to the Net-Zero Requirement and the Rising ESG Wave Shifting Business Strategies Towards Net-Zero Goals Pays Off Ensuring the Markets Bend the GHG Emissions Curve Towards Net Zero Disclosure and Transparency – What’s Not to Like? Make TCFD Mandatory Across the Globe Metrics Matter for the Economy and the Planet New Markets and Opportunities – Parental Oversight Required The Urgent Need for Reliable Offset Markets Vigilance Against Abuse and Misuse Emerging Markets and Green Investments An Evolving Market, Properly Overseen, Will Draw Us Towards Our Net-Zero Goal Appendix 4.1 Appendix 4.2 References 5 Building a Decarbonized World: Institutional Innovations That Reinforce Market Outcomes Green Institutions for a Sustainable Tomorrow Self-reporting and Monitoring Without Enforcement Are Not Enough We Should Create a World Carbon Organization Replicate WTO Success in the Carbon Pricing Space The WCO Could Adjudicate and Establish Norms Monitoring New Markets Why We Need National Carbon Banks Creating Strong, Independent NCBs in Every Country Would Have Many Benefits The Importance of Independence Accountability … of Course Institutional Innovation in Support of Green Globalization 2.0 Searing Reality Intervenes Build the Architecture of a Green, Decarbonized Tomorrow Notes References 6 A Greening of Industrial Policy: Speeding Diffusion and the Achievement of Net Zero Public Policy as Enabler, Supporter, and Backer Diffusion Rates, Technology Costs, Innovation, and the Net-Zero Transition Diffusion Comes in Waves Innovation is Not Episodic But, Rather, is Progressive and Iterative Major, Dramatic, and Ongoing Shifts Are Needed in All Industries and Sectors An End to Fossil Fuel Subsidies An Energy Transition Underway Coal is (Almost) Down and Out – in Some Markets A Sunnier and Windier Outlook Wind is Now Competitive Without Subsidies First Movers With the Wind Behind Them An EV Transport Revolution in Motion Battery Costs Are Falling Fast, Speeding the Transition and Steepening the S-Curve Agriculture and Farmers Find the Transition Tough Adaptation and Technology Improvement Scrap That Old Tractor New Crops to Lower Emissions Growing Rice But Limiting Methane Better Farming Practices Mean Better Outcomes Align Incentives With Environmental Goals We Need to Change What We Eat Industrial Manufacturing and Processes Taking Concrete Steps Proves Difficult Flying Must reflect the Cost of Convenience Slowing and Shifting Shipping’s Route A Steepening Glidepath Before Us All A Steeper S-Curve is Possible References 7 Greening Our Stories Internationally, Nationally, and Especially Locally New Narratives Create New Realities Debate and Ownership Common Understanding is Essential and Possible Regions and Cities Must Lead the Way False Narratives and Tackling Climate Change The Luntz Memo’s Deleterious Effect Beware the Danger of False Narratives and Rabbit Holes Social Media and Amoral, Unthinking Algorithms Talk About It: How Conversations Can Change Minds and Advance the Green Consensus Sewerage, Libraries, and Taxation Pension Demographics and Longevity Scotland’s Big Climate Conversation Talking Together Changes Our Story and Our Outcomes Create Narratives That Resonate With a Locale and With Your Community Narrative Shifts Can Be Slow Until They Are Sudden The Greta Effect Extinction Rebellion’s Direct Effect Climate Change Narratives Are Also Spiritual Declaring an Emergency Shifts the Narrative Americans Are Changing Their Climate Story The End of the Luntz Effect The Biden Administration Policy Shift Supports a Global Climate Break Point Devolution of the Climate Change Dialogue and the Ability to Act The UK Example Cities as Hubs of Green Innovation and Sustainable Liveability Cities and the Built Environment Transport, Mobility, and Our Cityscapes Powering Our Communities A Better, Localized, Green, Sustainable, Liveable Future Constructing New Tales and Travelling With Them Into the Future References 8 On Decarbonization, Economic Growth, and a Just Transition Growth Or No Growth Optimism Or Doom and Disaster – a False Choice New Contours for a Green Tomorrow Constructing Green Globalization 2.0 Green New Deals for All of Us Governments Can Afford to Invest in Green Reseeding A Greener, More Productive Economy But What of the Cost of GNDs? A Response to Debt and Deficit Hawks GNDs as Policy Accelerators Sustainable Growth is Possible and Essential Renewed Green Globalization 2.0 as a Partial Answer to Populism Biden’s Government-Wide, Green Policy Leap Getting Policies Aligned Triggers Rapid Corporate Responses General Motors Stuns the Car Industry A Growing Green Economy Targeted Expenditure Can Lead to Faster Growth, More Employment, and Higher Productivity Europe’s Green Narrative Shift Underway Japan Signals That It, Too, Will Leap China, Starting Slower … But watch this Space Johnson’s Churchillian Moment? Fifty Shades of Green Addressing Degrowth Rebranding Degrowth Degrowth is Not a Successful Narrative Take What Works, Refashion It, and Move Forward Fairness, Trust, and Opportunity For the Climate Change Burden, Fairness is Essential as We Reseed and Regrow Fairness and Greater Equity Are Necessary to Secure and Fund Our Planetary Goals Time to Rebalance Address Rising Extreme Inequality Adjust Taxation to Address Issues of Equity and Fairness Loopholes Big Enough to Drive an SUV Through Apple’s Sour Tax Aftertaste Corporate Giants That Avoid Their Responsibilities International Coordination to Avoid Abuses Supporting the Green Transition, Boosting Common Resource Commitments Double Counting, Miscounting, and Other Failures A Global Future Fund Or the ‘Thunberg–Attenborough Plan’ Is Such Collective Greater Fairness and Generosity Possible? Donor Country Voters Think They Spend a Lot On Aid – But They Don’t A New Conversation Based On Facts and Common Objectives A Coming Resource Stress Test for Leaders Let the Transition Begin in Earnest Notes References 9 A Race of Tipping Points Leadership Always Matters Act Now Stop Discounting the Future On Pricing Carbon, Convergence, and Shifting Incentives Time for a Coalition of the Willing Time to Tax the Freeloaders to Force the Pace of Change It is Time to Support Market Movements to Signal a Climate Narrative Break Point On Building Institutions to Oversee Our Greening Economy On Speeding the Rate of Innovation and Diffusion Our Climate Story is Changing Let’s Talk About It On Devolving to Deliver for the Climate On Constructing Green Globalization 2.0 On Fairness and Equity Change is Coming References Postscript: Change Happens Slowly and Then Fast Index