What it takes the world to fight climate change
We cannot have limitless supplies of everything we want all the time. Fighting climate change requires painful trade-offs
US President Joe Biden and Chinese President Xi Jinping made new pledges to fight climate change in their speeches before the United Nations in recent days. Xi promised that China would stop financing the construction of new coal-fired power plants abroad. Coal is a particularly dirty source of energy because of the large amount of carbon dioxide released when it is burned. Serious efforts to rapidly reduce emissions would wind down existing coal use as fast as possible and eschew the construction of any new coal plants. A promise to stop helping others build new plants at an unspecified future date is key.
Developing countries often turn to coal because it is a relatively cheap fuel to burn for electricity. Coal is plentiful and easy to mine in many parts of the world, and electricity from coal-fired plants is available all the time, unlike electricity generated from solar or wind power. China’s copious coal supply, for example, has fuelled its rise to become a global economic power. Moving away from that could reduce the country’s competitiveness and burden it with high transition costs to new power plants. So, seriously fighting climate change now may alter China’s growth and that of other countries trying to catch up to the West. Predictably, these countries are not willing to lock in Western economic dominance.
Compliance with climate goals
This circle could be squared if Western countries were willing to pay the developed world for its compliance with climate goals. That’s where Biden’s pledge comes in. He promised to work with Congress to double US financing for combating the effects of climate change abroad to $11.4 billion annually. That may sound like a lot, but it’s nowhere near what is needed.
Climate activists say that the United States should be giving up to $49 billion a year. The 10-year cost of that would be roughly on par with new spending included in the bipartisan infrastructure deal, and not a penny would go to US projects. It’s inconceivable that Congress would appropriate that much money, especially when polls have shown for decades that foreign aid is the type of federal spending most people want to cut.
Moreover, these countries don’t just need aid to battle the effects of climate change; they need money enabling them to be economically competitive in the carbonneutral world the West wants to build. That will take hundreds of billions annually from public and private sources, with many investments hopelessly unable to earn a reasonable rate of return. Wealthy climate activists such as billionaire Bill Gates could pledge their entire fortunes to the cause and still barely make a dent in the problem.
Climate activists will lament the paucity of world leaders’ promises. But the cold, hard fact is that efforts to seriously battle climate change would reduce the world’s standard of living, especially in the developed world, in the short to medium term. The faster developed countries want to cut greenhouse gas emissions, the sharper the drop. Keeping developing countries from taking on some of the burden will cause an even sharper drop. There is no political will do this, nor will there be in any democratically governed country.
Renewable energy generation
A more realistic approach to climate change focuses on technological breakthroughs that make renewable energy generation and storage much cheaper and more reliable than it is today. Wind and solar energy production prices have been dropping in recent years because of such advances, but reliance on those technologies is still held back by the limitations and cost of battery storage. Climate activists have shied away from telling the world the truth. Instead of selling sacrifice, they peddle exaggerated claims of job growth and economic gains, conveniently omitting the pain that shutting down fossil fuel plants and changing energy consumption for billions of households will entail. Going green is cool — until you start taking away people’s hamburgers and flights to the Bahamas.
The iron law of scarcity applies as much to fighting climate change as it does to all other areas of economic endeavour. We cannot have limitless supplies of everything we want all the time. Actually fighting climate change requires painful trade-offs. Leaders such as Biden and Xi need to tell us that.