Who is the real problem when it comes to climate change?

Is it economists? Lefty activists? Musk and Gates? The voting public? Nope.

One big problem with American society is that we’re always looking for a group of people to label as “the problem”. As someone trained in economics, my own natural instinct is to analyze the incentives, find where they’re broken, and improve the incentives so people do the right thing instead. But the real question there is who will carry out this improvement. Actually implementing optimal policy requires politics, and politics is all about coalitions, and when you create coalitions, someone’s going to have to be on the outside.

The fact that America has not yet taken strong government action against climate change heavily implies that there are strong forces arrayed against action. And so there are people who stand to lose. You’d expect those people to fight hard against climate action — thus, those people are “the problem”.

But I find that discussions about the climate issue among those who do want to do something about it often degenerate into infighting and finger-pointing. Various people who all want to do something about climate change point the finger at each other and accuse each other of not really wanting to take action, or of picking solutions that won’t work. This is pretty obviously an unhelpful situation.

So in this post I want to assess who is the real “problem” when it comes to climate change. The answer, I think, is surprisingly simple and obvious. And then I want to think about how to make “the problem” less of a problem.

But first, let’s run through a list of people who aren’t the problem.

Are economists the problem?

In a long post back in April, I argued that climate economics, as a discipline, has been generally unhelpful in the fight against climate change:

I hate to say this, but climate economics has almost completely failed to be useful to the national policy discourse…

I can see at least four major ways climate economics has failed. These are:

• Simply not publishing enough research

• Putting out models that are frankly just bad

• Ignoring tail risks

• Obsessively focusing on carbon taxes

Climate analyst David Roberts gave his own indictment of climate economics — and especially climate economics punditry — more recently.

In a June article in Project Syndicate co-authored with activist Tom Brookes, climate economist Gernot Wagner — who is a really excellent economist who is working very hard to improve his field and make it more relevant — explained how he thinks climate economics can evolve to be more useful:

Nowhere are the limitations of neoclassical economic thinking – the DNA of economics as it is currently taught and practiced – more apparent than in the face of the climate crisis. While there are fresh ideas and models emerging, the old orthodoxy remains deeply entrenched. Change cannot come fast enough…

[T]he traditional climate-economic models that were developed in the 1990s…assume that there are tradeoffs between climate action and economic growth…[But the] International Monetary Fund and the International Energy Agency…have now concluded that ambitious climate action leads to higher growth and more jobs even in the near term…

[C]limate policies create many more jobs in clean-energy sectors than are lost in fossil-fuel sectors.

Wagner and Brookes are exactly right. Let me reiterate their point here for clarity. Back in the 90s and early 00s, green energy was very expensive. Thus, it became conventional wisdom that decarbonizing our economy would require a large amount of economic sacrifice. Climate economists came in and saw their job as determining the optimal amount of sacrifice — balancing the economic cost of decarbonization against the environmental benefit.

But then technology came in and changed the game. Scientists and engineers worked very very hard and made solar power, wind power, and batteries a lot cheaper and better. As a result, decarbonization no longer involves a large amount of economic sacrifice — just a lot of willpower and investment.

But economics is a hierarchical discipline where old guys rule. And climate economics is still somewhat dominated by old guys like William Nordhaus and Michael Greenstone, who did their best work in the days when beating climate change really would have hurt the economy. As we know, old scientists tend to hold on to old ideas. That means that the discipline as a whole is still too focused on analyzing long-term tradeoffs (the appropriate size of a carbon tax) instead of figuring out how to simply switch to green energy faster. The young folks like Wagner know what needs to be done, but their voices need to be amplified more.

But all this doesn’t mean economists are the problem when it comes to climate change. They are not! As Matt Yglesias points out in a recent post, even old guys like Bill Nordhaus want to do more to fight climate change than we’re doing right now:

[T]he structure of the debate is that the Nobel Prize climate economics guy thinks national governments are not doing enough to fight climate change. Most economists, however, think they should be doing even more than he does. It’s true that the climate activist community is even more hawkish on climate change than that. But so what?

And this is exactly right. Climate economics isn’t impeding the fight against climate change, it’s simply not nearly as helpful as it could be. Climate economists aren’t the problem; they’re just not (yet) a big enough part of the solution. That is changing, thanks to the efforts of young folks like Wagner.

Are voters the problem?

So who does Yglesias think is the problem when it comes to climate change? Here is where I start to disagree with Matt. As a “popularist”, Matt places the blame on the voting public:

The political system is already not doing what economists want on climate, because the public is worse informed on the science than economists are, and because the public is more short-sighted than economists think we ought to be.

Matt is right that climate change is not nearly a big enough priority in the mind of the general public. When you ask people what issues they care about, climate is pretty far down the list:

And when you ask people how much they’d be willing to sacrifice to fight climate change, the answers are laughably tiny:

So it’s easy to conclude that the real problem here is simply that voters don’t understand the sacrifices that are required of them, and that they need to be convinced to make those sacrifices.

Easy — but, I think, wrong. Because once again, technology has changed the game. Because green energy is so cheap, wwitching from fossil fuels to green energy sources isn’t going to require long-term economic sacrifices — instead, it’ll make the public wealthier, bringing forth a world of abundant cheap electricity, cheap transportation, and cheaper consumer goods.

That is what the public needs to understand. They don’t need to be convinced that we need to impoverish ourselves, or return to premodern standards of living, or turn out the lights, or give up their cars, or live in a tiny house, or any of that stuff. Because they don’t actually need to do any of that stuff. All the public has to do is embrace a big program of green investment (or if you like, a Green New Deal), so that we can be richer tomorrow than we are today.

That seems like a much easier sell. We did this with the railroads. We did it with the interstate highway system. Now we just have to do it again with green energy.

Are climate activists the problem?

Yglesias has also criticized lefty climate activists for being fundamentally unserious about the climate problem. I understand his frustrations. The Climate Left is definitely given to hand-wringing histrionics and performative protests that no one cares about. And occasionally they do things that actually hurt the climate, like advocating the closure of nuclear plants or trashing climate legislation for not being as radical as they’d like. And activists who embrace snake oil like “degrowth” are being especially unhelpful, since those ideas entrench the public misconception that long-term sacrifices are necessary to beat climate change.

But as I wrote back in July, I think these harms are more than balanced out by the good the Climate Left has done by raising awareness among liberal engineers, entrepreneurs, and regulators. The public doesn’t listen to the Climate Left, but liberal elites do. And because those liberal elites have been made acutely aware of the problem of climate change, they have dedicated their lives to creating the technologies that have made climate change a solvable problem.

Once again, let me reiterate: Technology has changed the game when it comes to climate change. Many leftist activists don’t realize that yet, and continue to frame the struggle in terms of sacrifice, degrowth, and other unhelpful frames. But by raising awareness, they have actually helped bring about a world where those frames are irrelevant.

So activists, like economists, could be more helpful than they’re currently being. But that doesn’t make them the problem.

Are billionaires the problem?

With systemic issues like climate change, there’s always the temptation to point the finger at people you don’t like anyway, and blame them — what Derek Thompson calls “reasoning from antagonism”. Though I’m generally a fan of climate analyst Emily Atkin, I think she falls prey to this temptation in a recent post where she accuses Elon Musk, Bill Gates, and Jeff Bezos of taking a “colonizer mentality” toward the climate:

When it comes to climate change, Musk, Bezos, and Gates are each trying to create a new world that can handle current human behavior. Musk is popularizing electric cars so we can keep driving everywhere. Gates is pushing carbon capture so we can keep using fossil fuels…The three men also support each other’s approaches, as they attempt to conquer the misbehaving atmosphere through sheer technological force of hand.

Elon Musk @elonmusk

Am donating $100M towards a prize for best carbon capture technology

Atkin is completely wrong here. Wanting to build electric cars is not a “colonizer mentality” — every serious analyst (including Atkin) recognizes that battery-powered vehicles are a crucial part of any decarbonization plan. Elon Musk could have dedicated his life to making money other ways, but he chose to push electric cars when almost no one else did, even though doing so came very close to wrecking his career. That changed the world.

Carbon capture technology, too, will also be part of a just solution — if we can invent ways of doing it cheaply. Atkin, like many climate activists, portrays carbon capture technology as a trick — an excuse to keep emitting carbon. But it is not. In fact, most of the scenarios where we avoid 2 degrees of warming by the end of this century involve significant amounts of negative emissions. And there’s also the matter of justice — rich countries emitted a huge amount of carbon during their industrialization process, so we ought to pay for that by pulling carbon out of the air in the future.

By funding research into carbon capture technology — which our government is not doing nearly enough of — billionaires like Musk and Gates are enabling a more rapid and just transition to a climate-friendly civilization. That is incredibly good, and not a “colonizer mentality” in the slightest.

In other words, these billionaires aren’t the problem; they’re part of the solution. Like climate activists, they get some things wrong — for example, Musk has criticized public transit, even though transit-centric cities are helpful for reducing emissions. Bashing transit is bad, just as closing nuclear plants is bad. So sure, Musk could be even more helpful in the struggle against climate change than he has been. But that doesn’t mean he, or Gates or Bezos, is the problem.

The fossil fuel industry is the problem!

So who is the problem? I’m not going to be a happy hippie optimist and tell you that no one is the problem, and we all just need to open our eyes and realize that technology can fix climate change and everything will be win-win-win. Because there is a powerful entrenched force arrayed against the climate solutions we need — it just isn’t economists, billionaires, or lefty activists.

It’s the fossil fuel industry.

This is a boring, cliche answer, because people who recognize the danger of climate change have all been yelling our heads off about the fossil fuel lobby for decades. They funded disinformation campaigns claiming climate change didn’t exist, or wasn’t a problem, or wasn’t caused by humans. They spend billions of dollars lobbying against policies to accelerate the transition to green energy. We know they’re the bad guys in this fight. This is not news.

But it’s important to reiterate this anyway, because this is still just as true as it ever was. When Texas’ power went out due to frozen coal and gas plants, Greg Abbott and other prominent Republicans went on national TV and Twitter and engaged in a coordinated disinformation campaign to blame the blackouts on windmills. GOP-controlled states have threatened to penalize banks that refuse to lend to fossil fuel companies. Republicans in Wyoming are trying to sue states that don’t buy Wyoming’s coal. In 2020, more than 80% of fossil fuel donations went to the GOP, and the industry donated millions to GOP candidates seeking to overturn the 2020 election. And the GOP has apparently succeeded in turning the fight against green energy into a culture-war issue, with Republican voters’ support for green energy in free fall.

As Yglesias points out, this is important because Republicans will tend to win a significant number of elections in the future. But the GOP isn’t alone in being beholden to fossil fuel interests. Even as we speak, West Virginia senator Joe Manchin is hard at work trying to dismantle the Clean Electricity Standard, the centerpiece of President Biden’s Build Back Better bill. Manchin has a personal financial stake in his state’s coal industry, and is a major recipient of campaign contributions from the fossil fuel industry. Thanks to his power as a Senate swing vote, the U.S. may squander its golden opportunity to accelerate the advent of cheap green energy.

It’s important to realize that this is not a case of a vigorous, highly profitable industry defending its fat profit margins against the beleaguered forces of a few tree-hugging hippies. The fossil fuel industry is a sunset industry — an old-line industry that has already been disrupted by new technology. Exxon’s stock price is down by a third since 2007, even without adjusting for inflation:

Royal Dutch Shell and BP are doing even worse. And remember Halliburton, the company Dick Cheney was CEO of? Here’s how that’s doing:

As for the coal industry, it’s been dying in America for years, and a global rout is soon to follow. Peabody Coal, the company that John Prine sang about when they strip-mined Kentucky, is facing its second bankruptcy in just a few years.

Energy companies used to be the most valuable companies in America, and among the most profitable as well. Now they’re fighting desperately for their future. Why? Because as I keep saying over and over, technology has changed the game. Electric vehicles will dramatically reduce the demand for oil. Cheap solar, wind, and storage will dramatically reduce the demand for coal and — eventually natural gas.

The oil industry won’t die — we’ll always need plastics, fertilizer, and other petroleum products. And the gas industry won’t die for a good long while — we’ll still need peaker plants until storage, geothermal, and/or nuclear gets good enough to balance out the intermittency of solar and wind. But these industries will be harshly winnowed. So of course they’re using all the political power at their command to delay the day of the winnowing.

Overcoming the last-ditch resistance of a declining sunset industry is a much less daunting task than overcoming the resistance of an industry in its prime. The fossil fuel industry is standing between the American people and a future of cheap, abundant energy — as soon as we make the country realize that fact, the resistance will crumble.

But it’s still an enormously daunting task. Even a declining sunset industry often has a lot of money and connections to hurl in defiance at the tide of its onrushing fate. And as the political economist Mancur Olson reminds us, the strength of entrenched incumbent special interests tends to lead to the decline of nations. America’s system is riddled with veto points, which gives power to individuals like Manchin. And our society is highly polarized, which helps the GOP turn green energy into a culture war issue. What’s more, it’s not just fossil fuel company shareholders who will be hurt by the industry’s decline — millions of Americans still work in the oil and gas industries, and finding new jobs will be a painful and difficult process for many of them, despite our best efforts to ease the transition.

Given the raw power of the fossil fuel industry, we should make sure that disagreements among the people who care about saving the climate don’t turn into blood feuds. Yes, economists should update their models. Yes, activists should stop fighting against nuclear. Yes, billionaires should support public transit. But ultimately, at the end of the day, if the transition to green energy is delayed, it will be delayed because of the political power of the people who stand to lose the most in that transition.

So let’s keep our eyes on the prize. Remember the key fact: Technology has changed the game. The green future is no longer one of bitter sacrifice, but one of plentiful abundance. To get there faster, we just have to overcome the last-ditch opposition of the entrenched incumbents.

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