Chapter Three - The Climate Change Response Challenge

Summary

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

—Nobel laureate economist Friedrich Hayek

The climate change response challenge is often portrayed as simple: increasing CO₂ emissions causes problems, therefore stop fossil fuel emissions. Our failure to stop fossil fuel emissions, after decades of international policies, is often blamed on a lack of political will. Well, political will is lacking at least in part because CO₂ emissions are the byproduct of dependable energy delivered by fossil fuels that has underpinned two centuries of human and economic development.

In a 2018 interim Special Report requested by the UNFCCC, the IPCC mapped out a pathway to limiting the temperature increase in 2100 to 1.5°C above pre-industrial levels. Limiting warming to 1.5°C is assessed to require dramatic emissions reductions by the year 2030 and complete carbon neutrality by around 2050. This would entail unprecedented transformations of energy, transportation, agricultural, urban, and industrial systems. However, no feasible and effective pathway has been identified to achieve any of these objectives in such a short time frame.

Human-caused climate change has been characterized as a “tragedy of the horizon” that imposes a cost on future generations that the current one has no direct incentive to fix. The possibility of delayed global rewards is challenged as inadequate justification to take action and incur immediate costs. However, this has led to the concern that we are operating a multigenerational Ponzi scheme by continuing to burn fossil fuels.

Additional background factors that influence the decisions of individual nations to participate in collective action to urgently reduce emissions include: uncertainties and complexity surrounding the underlying climate change science, the priority of economic development, and the unknown impacts of future technologies. There is substantial uncertainty about the magnitude, rate, regionality, and timing of adverse climate impacts, which is confounded by natural climate variability.

Economist Robert Pindyck argues that this uncertainty creates insurance value, pushing us towards early and stronger actions to reduce CO₂ emissions. However, the very uncertainties over climate change that create insurance value prevent determination of exactly how large that insurance value is.