Thursday 16 December 2021

Coping with Climate Crisis : Mitigation Policies and Global Coordination


This book was published in 2018, and is a very interesting look into the momentum created at COP21 and COP22, which drove today's international effort to tackle climate change with foresightful policy and planning.
The book is designed to "synthesize" key economic research. It lives up to its claim of being "user-friendly" both for "policy-makers and scholars," opening with a forward written by Nizar Baraka, the President of the Scientific Committee of COP22. Baraka's forward is much like a retrospective already. He composes looking towards the future, examining not only progress thus far, but changes that came to ensure more effective decision-making in the process.
Remarks Baraka, “we are living today through a period of great changes toward a new world order, triggered by a profound technological shift that impacts the very way we live, (this) transforms radically our economic models as much as our mobilization and communication capabilities."
Suggesting that Kyoto failed because the top-down approach was not effective, the introduction to the book remarks that COP21 was considerably better because the approach changed and with that change came as well a change in tactic.
“The Paris Agreement is built on a bottom-up approach which includes all major actors, not just national governments...The approach taken with the implementation of the Paris Agreement is one of community rather than legal enforcement.” These thoughts on the shift in decision-making conclude, "this bottom-up approach is inevitably less coherent, but more realistic as it leverages the power of civil society and business.” The editors also remark that as a result newcomers may be surprised by “how seriously public and private organizations are taking global climate risks and are planning for the future."
For perspective, the book is edited by Rabah Arezki, Cheif Economist of the World Bank's Middle East and North African Region, Patrick Bolton, Managing Editor of The Journal of the European Economic Association, Karim El Aynaoui, Managing Director at the Policy Centre for the New South, and Maurice Obstfeld, former Chief Economist at the International MonetaryFund. It is structured into four major topics. Philip Benoit of the International Energy Agency opens topic one, "Reducing Energy Greenhouse Gas Emissions To Meet Our Climate Goals" by providing key steps required to reduce CO2 in keeping with the Paris Accord. Benoit describes the two keys: delinking GDP from Energy Supply and Decarbonizing that Energy Supply. GDP has always been driven by increased GHG emissions. Replacing fossil fuel, electricity is at the centre of low-carbon transition, while coal is the elephant in the room, so much so that it can hide the issues around gas which also creates environmental challenges. Remarks Benoit, “coal power generation produces over 9 Gt of CO2 emissions, larger by itself than the combined energy emissions of the United States and the European Union (EU); but coal-fired power plants also provide about 10,000TWh, powering businesses, households, and social services worldwide.” Benoit's assessment of the "energy landscape" is followed by Rick van der Ploeg writing on "Transitional Risks and the Safe Carbon Budget," which differs from other models of "optimal" carbon pricing. He wants to remove all fossil fuel subsidies and incentivize firms to stop using coal and gas.
The second major topic is called "Getting The Price of Carbon Right" which includes "implications of uncertainty around the pace of global warming and tipping points," and includes extremely useful input which functions from an "avoid the worst-case scenario" approach. The third major topic, Climate Agreements, addresses enforcement. The authors remark that enforcement typically involves the questions of "reputation, accountability, and sanctions." They make note that Trump's attempt to withdraw the US from the Paris Accord, rather than defeating the process, surprisingly caused additional resolve on the part of many American mayors and state governors to carry on with their Paris Accord commitments.
The fourth major topic in the book is that of Financial and Sustainable Infrastructure. Financial markets can play a major role in creating incentives for a low-carbon transition. However, financial markets cannot do it alone. It is individual governments that need to take on the role of pushing for complete carbon footprint disclosure, at times offering limited guarantees and taking on risks financial markets are not able to hold. Here the book examines the role of financial markets in accelerating the energy transition and financing sustainable infrastructure. For many developing countries, financial aid to ensure clean technology imports and participation in the energy transition will be inevitable. However, the authors remark that such aid could then offset the costs associated with the process of removing carbon subsidies and levying carbon taxes.
As per the forward written by the President of the Scientific Committee of COP22, the book describes a radical paradigm shift, one that will support us as we moving rapidly forward towards solutions. If you are fond of economic theory, this book is a collection of excellent contributions from top theorists and “economic practitioners” developing real plans to fund energy transition and safeguard the climate for future generations.

Arezki, R., Bolton, P., Aynaoui, K. E., & Obstfeld, M. (2018). Coping with the Climate Crisis Mitigation Policies and Global Coordination. Columbia University Press.