I was in England recently and I met an Extinction Rebellion member who believes in blocking roads and other extreme measures.
This particular person seemed to be in a desperate mood - the world is coming to an end -nobody is doing anything . Politicians are venal, and economists useless. At that I drew a line. Being an ex-economist, I rose to the defense of my old profession. I said to her that actually most economists are quite clear about what can be done about climate change. So calm down and stop irritating everyone with over-aggressive demonstrations.
The issue is actually not that complicated. In fact it's almost surprising that environment economists have failed so poorly to get this message clear to the general public.
There are possibly three very simple principles in economics which are very helpful for climate policy.
#1.Tax things you don't like.
We tax the consumption of tobacco because it kills people and fills our hospitals. We can tax the use of gas / petrol because their emissions pollute and fills our roads with too many cars. Similarly, we tax systems which produce greenhouse gases. Energy can be taxed according to the amount of carbon dioxide equivalent that it emits. Most economists believe that a carbon tax is the most effective way internationally in every country to reduce carbon greenhouse gases.
#2. Subsidise the things you like.
The US government has introduced the inflationary reduction act which has a substantial amount of its monies devoted to supporting renewable energy technologies. Generally, governments are not very good at choosing which technology is the next best thing. But if government supports basic university research and the building of prototypes which the private market is not willing to investing in, the government can play an important part in bringing new risky important climate changing technologies into the market. This may include technologies which require substantial international corporation. A good example is the geoengineering ideas where artificial veils are put in the stratosphere deflecting or absorbing the sun’s radiation.
The over-riding message is do not expect people to voluntarily just stop using products which are energy wasteful . That doesn't work well. We need market forces to make it happen.
#3 Support international trade.
Economists love trade. It invariably increases welfare and generates peace. There are certain countries which find it much easier to produce renewable energy than others. They should trade more. An interesting example is North Africa which has lots of space and sun. The Maghreb countries would like to send hundreds of gigawatts of power across the Mediterranean. Let’s subsidise them.
So my message is – let’s not block roads or do other actions which drive other citizens crazy. Climate campaigners need to nurture an image of responsibility and care. Instead speak to politicians and encourage to carry out responsible climate policies.
David Waimann is VP Energy at OurCrowd Investments and executive director at five water and renewable energy tech companies. drw@ourcrowd.com
This article is part of a series of more than 20 posts discussing climate policy and technology.
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