This column brings together 45 Vox columns on the economics of climate change with the aim of (1) providing an overview of some of the key issues from the economist’s perspective, (2) stimulating further research, and (3) demonstrating how CEPR is fully engaged with this central debate of our times
Submerged beneath the flood of information, initiatives,
ideas, and pronouncements, it is hard to keep sight of what is needed
for the goal of limiting global warming to 1.5°C.
Submerged beneath the flood of information, initiatives,
ideas, and pronouncements, it is hard to keep sight of what is needed
for the goal of limiting global warming to 1.5°C. This column
introduces a new eBook that brings together 45 Vox columns on the
economics of climate change with the aim of (1) providing an overview of
some of the key issues from the economist’s perspective, (2)
stimulating further research, and (3) demonstrating how CEPR is fully
engaged with this central debate of our times and how the power of its
network can promote excellent research and relevant policy.
-
-
Laurence Kotlikoff, Felix Kubler, Andrey Polbin, Simon Scheidegger
-
Francesco Caselli, Alexander Ludwig, Rick van der Ploeg
-
Davide Furceri, Michael Ganslmeier, Jonathan D. Ostry
-
Surely
there can be hardly anyone left who truly doubts that climate change is
real and that it is here. The recent experiences of severe weather
events – floods, fires, droughts, and storms – visibly drive home what
scientists have been saying for years: global warming threatens life on
a planetary scale; it is man-made, predictable and, although not
reversible, its further escalation is mitigable.
Today, it is rare to
have conversations of the ‘but there was always climate change, and who
says that this time is different’ type. Instead, both public and
private actors seem to be aggressively embracing the fight against
climate change. Rare indeed, these days, is the financial institution
that does not promote its environmental, social, and governance (ESG)
credentials. At the time of writing, world leaders are meeting for the
COP26 Conference in Glasgow and expectations are simultaneously high and
low. There are high expectations for some further progress but low
expectations of sufficient progress towards the goal of limiting global
warming to 1.5°C.
Submerged beneath
the flood of information, initiatives, ideas, and pronouncements, it is
hard to keep sight of what is needed for this goal. It is easy to get
lost, primarily because the science of climate change is complicated,
requires very long-run forecasts, and involves large confidence
intervals. The same is true of the economics of climate change: separating the signal from the noise, filtering out the quality research is hard.
Research published by CEPR and VoxEU has served this purpose for years: it filters and disseminates the economic research you ought to read.
A new CEPR eBook
brings together 45 Vox columns on the economics of climate change,
mostly published over the past 2–3 years (Weder di Mauro 2021). The
sheer quantity is testimony to the acceleration of research, knowledge,
and interest in the economics profession. I had to limit the number of
columns chosen and to exclude many interesting pieces from this
collection. The cut-off date was beginning of October 2021 and my
selection bias was for recent and solutions-oriented
contributions. However, in a few cases I have included older pieces,
those that trace some of the ‘history of thought’. Below, I highlight a
few selected insights on the economics of climate change as illustrated
in this collection, but first I want to focus on the science of climate
change.
Download Combatting Climate Change: A CEPR Collection here.
Science first: Some numbers worth remembering
To keep eyes on the goal, a few numbers from the latest report of the IPCC are extremely helpful.1 The numbers are: 40, 300 and 2,390. Forty gigatonnes represents the current yearly emissions of CO2
at the global level, 300 gigatonnes is the remaining carbon budget of
global emissions, if the 1.5°C is to be reached with high (more than
80%) likelihood, and 2,390 gigatonnes of CO2 is the estimate of cumulative historical emissions since 1850 already in the atmosphere.2 These are sobering numbers for several reasons.
First, the 2,390
gigatonnes shows the size of the historical burden. Past emissions mean
that the world has already almost exhausted the total carbon budget to
limit global warming to 1.5°C. These emissions will remain in the
atmosphere for hundreds of years to come and have already warmed the
earth by about 1°C (over preindustrial levels). It is noteworthy that
this historical burden was accumulated almost exclusively by high-income
countries.
Second, the 300
gigatonnes remaining budget is sobering because it is absolute. This is
all that remains, full stop. This is how much this and any future
generations have left if warming is to be limited to no more than
1.5°C. At the current rate of 40 gigatonnes per year, the world has
about eight years left. To my mind, this simple fact is such a powerful
illustration of the challenge: the famous race to net zero needs a fast
start if we are to limit global warming to 1.5°C.
Were the world to
give up on the 1.5°C target and set the limit to 1.7°C or 2°C, the
remaining carbon budgets would amount to 550 and 900 gigatonnes,
respectively. This would allow a bit more time to get to net zero, as
illustrated in Figure 1, but it does little to reduce the urgency to act
and the environmental costs of any further delays.
Figure 1
Source: Author[s] calculations based on Table SPM.2 . IPCC Climate Change 21, The Physical Science Base,
If we were to
translate the remaining budgets into minutes until midnight, the clock
would say that it is 7 minutes to midnight for 1.5°C, 11 minutes to
midnight for 1.7°C, and 16 minutes to a midnight of 2°C warming. It is
worth noting that although the relationship between emissions and
warming seems to be near linear, the consequences of higher temperatures
are not. Another way of looking at these numbers is to conclude that we
need to develop carbon extraction technologies very fast and at
scale. Unfortunately, this technology does not seem to be ‘just around
the corner’.
Is the economics profession rising to the challenge?
Given the size of
the challenge, what are economists doing? Not much, according to Andrew
Oswald and Nicolas Stern (Chapter 1). They look at the number of papers
on climate change published in top economics journals and conclude that
the economics profession has been failing the world. According to
their count, the Quarterly Journal of Economics (QJE), for
instance, had not published even one article on the economics of climate
change until 2019 (a quick Google search for climate and QJE suggests
that this may be unchanged, although it does reveal one QJE article
published in 1917 on climate change as an element in the fall of Rome).
Surely
there can be hardly anyone left who truly doubts that climate change is
real and that it is here. The recent experiences of severe weather
events – floods, fires, droughts, and storms – visibly drive home what
scientists have been saying for years: global warming threatens life on
a planetary scale; it is man-made, predictable and, although not
reversible, its further escalation is mitigable.
Today, it is rare to
have conversations of the ‘but there was always climate change, and who
says that this time is different’ type. Instead, both public and
private actors seem to be aggressively embracing the fight against
climate change. Rare indeed, these days, is the financial institution
that does not promote its environmental, social, and governance (ESG)
credentials. At the time of writing, world leaders are meeting for the
COP26 Conference in Glasgow and expectations are simultaneously high and
low. There are high expectations for some further progress but low
expectations of sufficient progress towards the goal of limiting global
warming to 1.5°C.
Submerged beneath
the flood of information, initiatives, ideas, and pronouncements, it is
hard to keep sight of what is needed for this goal. It is easy to get
lost, primarily because the science of climate change is complicated,
requires very long-run forecasts, and involves large confidence
intervals. The same is true of the economics of climate change: separating the signal from the noise, filtering out the quality research is hard.
Download Combatting Climate Change: A CEPR Collection here.
Science first: Some numbers worth remembering
To keep eyes on the goal, a few numbers from the latest report of the IPCC are extremely helpful.1 The numbers are: 40, 300 and 2,390. Forty gigatonnes represents the current yearly emissions of CO2
at the global level, 300 gigatonnes is the remaining carbon budget of
global emissions, if the 1.5°C is to be reached with high (more than
80%) likelihood, and 2,390 gigatonnes of CO2 is the estimate of cumulative historical emissions since 1850 already in the atmosphere.2 These are sobering numbers for several reasons.
First, the 2,390
gigatonnes shows the size of the historical burden. Past emissions mean
that the world has already almost exhausted the total carbon budget to
limit global warming to 1.5°C. These emissions will remain in the
atmosphere for hundreds of years to come and have already warmed the
earth by about 1°C (over preindustrial levels). It is noteworthy that
this historical burden was accumulated almost exclusively by high-income
countries.
Second, the 300
gigatonnes remaining budget is sobering because it is absolute. This is
all that remains, full stop. This is how much this and any future
generations have left if warming is to be limited to no more than
1.5°C. At the current rate of 40 gigatonnes per year, the world has
about eight years left. To my mind, this simple fact is such a powerful
illustration of the challenge: the famous race to net zero needs a fast
start if we are to limit global warming to 1.5°C.
Were the world to
give up on the 1.5°C target and set the limit to 1.7°C or 2°C, the
remaining carbon budgets would amount to 550 and 900 gigatonnes,
respectively. This would allow a bit more time to get to net zero, as
illustrated in Figure 1, but it does little to reduce the urgency to act
and the environmental costs of any further delays.
Figure 1
Source: Author[s] calculations based on Table SPM.2 . IPCC Climate Change 21, The Physical Science Base,
If we were to
translate the remaining budgets into minutes until midnight, the clock
would say that it is 7 minutes to midnight for 1.5°C, 11 minutes to
midnight for 1.7°C, and 16 minutes to a midnight of 2°C warming. It is
worth noting that although the relationship between emissions and
warming seems to be near linear, the consequences of higher temperatures
are not. Another way of looking at these numbers is to conclude that we
need to develop carbon extraction technologies very fast and at
scale. Unfortunately, this technology does not seem to be ‘just around
the corner’.
Is the economics profession rising to the challenge?
Given the size of
the challenge, what are economists doing? Not much, according to Andrew
Oswald and Nicolas Stern (Chapter 1). They look at the number of papers
on climate change published in top economics journals and conclude that
the economics profession has been failing the world. According to
their count, the Quarterly Journal of Economics (QJE), for
instance, had not published even one article on the economics of climate
change until 2019 (a quick Google search for climate and QJE suggests
that this may be unchanged, although it does reveal one QJE article
published in 1917 on climate change as an element in the fall of Rome)....
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