 A terrifying overnight escape. Natural disaster on a shocking scale. Water levels there have dropped 15 meters since last year. Winds reaching 150 miles an hour. We still have time to stop the most catastrophic outcomes. It's not too late. 2021 may well prove to be a watershed with respect to the climate crisis. The year was marked by wildfires from California to Greece to Siberia with their attendant health impacts, ecosystem disruption and property loss. The year was marked by hurricanes and record floods and record-setting heat. In the United States, the summer of 2021 was the hottest in 126 years and globally, July was the hottest month in recorded history. Asia also hit records in July. Local temperatures reached 50 degrees centigrade in a number of places, endangering human life. 2021 was a year of portentous danger. Consider the path of global emissions over the last 30 years. The salient fact here is a persistent failure to control them. Outside of a few brief moments of decline associated with collapses and economic activity, emissions have continued to rise long after awareness of global heating has become widespread and nations have pledged to combat it. Even the pandemic lockdown did not result in a permanent decline in emissions. During the pandemic, the G20 countries contributed more investment dollars to fossil fuel production than they did to clean energy. Now, 2021 was also a watershed for another reason. The Intergovernmental Panel on Climate Change published its sixth assessment report in which the world's climate scientists ratcheted up the urgency and noted that not only are the impacts of climate disruption widespread, they are rapidly intensifying. The globe has experienced just over one degree centigrade of warming already and we're feeling it in many ways. But this is just the beginning. We're on a path for more than a global average of about three degrees of warming if we don't bend the emissions curve and get some vigorous action going. And while I'm using the word we here, it's important to recognize that climate destabilization has structurally inequitable causes and impacts. Those who have done the most to cause the problem are the most privileged in terms of race, economic class, and gender. Conversely, those who are already and will in future be most harmed are black, brown, and indigenous, poor and lower income, and more likely to be women. This pattern holds true within countries and across them. And these inequalities are part of why climate emissions continue to rise and why climate destabilization has not yet been stemmed. Those who gain from polluting and destroying the climate have had the power to keep doing so. Those most at risk have the least ability to stop it. Economics and economists have been central to the failure to respond to the climate crisis. In fact, flaws in their approach have undermined pressures for action. Now an easy way to understand where we are and what we have to do is what is called the carbon budget. The budget, which was adopted by the IPCC in its fifth report, sets a target for temperature increase, say 1.5 or 2 degrees centigrade, and figures out how much carbon and other gases can accumulate in the atmosphere while still giving us a chance of achieving the target. It measures the greenhouse gases that have already been emitted and subtracts those from the total. What's left is called the carbon budget. Now using that method, the IPCC finds that for an 83% likelihood of remaining within 1.5 degrees of warming, the safer target, we have only 300 gigatons of CO2 remaining in our budget. And right now humans are emitting about 40 gigatons a year in addition to about 20 more if land use changes are considered. That means we have fewer than eight years to reduce carbon emissions to zero. And since global equity requires that poor countries rightly should have a larger share, that makes the task for wealthy nations even more stringent. Now in fairness, rich countries and rich people should have stopped emitting already, indeed long ago, given that they've already used up their fair share of the world's carbon budget. But we are currently on pace to produce more than twice the level of fossil fuels by 2030 than is consistent with the 1.5 degree temperature increase. The bottom line is that we've got a Herculean task to decarbonize immediately and especially those of us in wealthy countries. Can it be done? Well, we don't know for sure. But we do know that it's imperative that we try and try our hardest. That means figuring out what we're doing wrong in terms of analysis of the problem and the range of solutions in play. And perhaps most importantly it means coming up with additional actions that haven't yet been seriously considered for only an all hands on deck and all viable and safe options approach will work. So let's consider the kinds of diagnoses and approaches that dominate the debate today and see where they go wrong. The first most prevalent attitude is technocentrism, the idea that technology will be sufficient. Let's start there. The first problem with conventional approaches is an almost magical belief in technology or what some have called technofetishism. Both the policy and economic conversations have been rooted in the assumption that the solution to climate changes through technology, whether it's by the use of carbon capture and storage to keep burning fossil fuels, a shift to renewable energy, increased efficiency in the use of energy via design, smart grids and artificial intelligence, or even geoengineering. Now some of these things are absolutely necessary, for example renewables and more efficiency. Some are unnecessarily expensive and impractical in the short run, carbon capture and storage, and some are downright dangerous geoengineering. What they share is the assumption that all we need to do is change technology. In particular, they don't realize that we need to control energy demand and they don't acknowledge the need to change the way our economic system works, either through who has economic and political power and resources or the fact that we must address the overall ecological footprint of humans on the planet. Now an often unspoken assumption of technofetishism is that publics won't accept changes, that they're wedded to economic growth for reasons of jobs or lifestyles or maintaining the status quo. But these assumptions are not only problematic, they may be fatal. Technology is necessary but hardly a sufficient response to climate change. One reason is rebounds. Merely changing in energy technology, especially if it lowers the effect of price of energy as efficiency improvements do, may in some cases even lead to increased demand. Rebounds vary a lot by the type of energy use. For example, between 1993 and 2005, new air conditioners in the U.S. increased their efficiency by 28%. But by 2005, homes with air conditioning had increased their consumption of energy for their air conditioners by 37%. In transportation, rebound effects are estimated at about a third, meaning that much of the original efficiency gain is reduced by increased travel. Even households that put in solar panels have been shown to experience rebounds. About 20% of the benefits are eroded by increased energy use. First round or microeconomic rebounds are generally found in the neighborhood of 20 to 40%. When we also factor in economy-wide impacts, the effects are even larger. Now another issue is that renewables, while absolutely necessary, don't automatically reduce emissions as the technological approach typically assumes. There's increasing evidence that without controlling energy demand, they often complement rather than substitute for fossil fuel energy sources. Overall, studies of how the installation of renewables have affected emissions failed to show a consistent reliable reduction. So as we ramp up the installation of wind and solar, we also need to make sure it substitutes for fossil fuel use rather than adds to it. And it's also important to remember that access to new technologies exhibits the same historic inequities we see in other areas, inequities by class and race. For example, just as there are food deserts in which predominantly black and Latinx urban areas lack grocery stores, researchers have identified EV charging deserts in these same neighborhoods in comparison to availability in white neighborhoods. Similar inequities exist in other climate-friendly technologies such as solar panels, air source heat pumps, and the like. The bottom line is that just changing technologies doesn't solve the problem. Or, like economists like to say, technological change is a necessary but not sufficient part of the solution. To make a successful transition to renewables will need state policy and plenty of it. For one reason, developing a technology doesn't mean it will actually be put into use. Companies can buy up technologies that compete with their business. They can resist technologies that offer lower profits as the fossil giants have done since the 1970s. Furthermore, if labor is cheap as it has been for decades, capital-intensive technologies may not be adopted. The takeaway here is that for technologies to actually end up being used, the economic policy and regulatory context matters a lot. History also provides reasons to center the state and climate policy. Past infrastructural transitions in energy, water, transportation have all occurred because the state took a leading role. In some sense, the concept of infrastructure itself points to why. Infrastructure is an area where it is necessary to provide capital because private firms can't or won't do that to set standards for actors to follow because you need common standards and to provide incentives or mandates. The state also has to take measures to control energy demand. Finally, the tech-centric approach takes us down the path to dangerous geoengineering. There are increasing calls for risky and costly approaches to altering the planet's basic chemistry. And history is filled with examples of the unintended consequences of technological developments. Consider the Columbian exchange, Columbus's voyage to the Americas. The technology of ocean-going vessels made those voyages possible. But it also led to the introduction of diseases in the Americas that wiped out the native populations, a completely unforeseen consequence. And climate destabilization itself is an unforeseen consequence of the shift to a steam engine and later the internal combustion engine. Finally, technocentrism fails to address one of the key issues with respect to climate. Who benefits from continued carbon pollution and land use changes? Who pays the cost? The conventional approach has favored people with the means to purchase new green technology, not the billions who don't. Now the second major flaw in the conventional approach is its misdiagnosis of the problem. Scholars in economics and political science have mainly settled on collective action failure as the explanation for climate inaction. The argument is that actors, in this case countries, can't come together to solve the market failure because they're worried about each other not cooperating. This is called defecting and freeriding to use the language of game theory. When there are a lot of players in the game, as there are countries, each player thinks their non-cooperation or freeriding won't matter and that they'll get the good outcome rescuing the climate without having to pay for it. So the problem is that the collective good climate action isn't lined up with the incentives faced by individual countries. This is a classic market failure, which can only be solved by a powerful entity who can force a solution. In this case it would be a global government, something that doesn't exist. This rarely questioned diagnosis dominates scholars' ideas about why global climate change hasn't been seriously tackled. William Nordhaus, who received the Nobel Prize in economics in large part for his work on climate change, began his Nobel lecture with this diagnosis. Why have landmark agreements such as the Kyoto Protocol and the Paris Accord failed to make a dent on emissions trends, he asks? His answer? The reason is freeriding. This analysis of the failure to enact serious climate mitigation is pervasive in the academy and beyond. For example, a Google Scholar search for climate change and freeriding yields more than 20,000 unique hits. But this is a misdiagnosis. One obvious point is that a very small number of countries do the vast majority of the world's emitting. The top five emitters, China, the US, the European Union, Russia and India, are responsible for two-thirds of total emissions. It's not so difficult to get five countries together as it is to corral 193. Furthermore, as scholars Michael Alken and Matto Mildenberger have argued, there's considerable evidence that freeriding is not a barrier to climate action. The European Union proceeded on its own to set up emissions trading. Quite a few countries enacted carbon taxes on their own. The state of California and the Northeast states in the US also enacted emissions trading, even though most other states haven't. Subsidies for renewables have been enacted all over the world. When the US, at that point the world's largest emitter, pulled out from Kyoto, it didn't prompt other countries to pull back on their climate commitments, nor did the Trump administration's withdrawal from the Paris Treaty. If anything, countries responded with increased activity. Chinese action on climate, which is very vigorous, given where the country started, is frequently unilateral. So if it's not a coordination problem, what is it? It's an interest problem, and specifically a self-interest problem. The absence of climate action is not because countries or groups within countries want it, but can't figure out how to cooperate to get it. It's because there are powerful interests, including countries, who really don't want to decarbonize. Climate change introduces a whole new calculus into economic behavior and creates new winners and losers. Economic development has been based on fossil fuels since the second half of the 19th century, with the shift to coal first in Britain and then elsewhere. Fossil fuel companies have been massive beneficiaries with enormous power and influence during most of the last 50 years since climate change was first publicly identified. For example, in 1988, the year James Hansen first testified to Congress about the dangers of greenhouse gases, six of the top 10 companies in the US were fossil fuel or automotive entities, and eight of the top 10 globally were the same. 20 years later in 2008, not much had changed. In the US, there were still five of 10 in this category and globally eight of 10. Now, these numbers dropped during the pandemic in part because of the collapse of the economy, but also because the fossil giants are on the defensive in part due to social movements to address climate change. In the US, ExxonMobil is the only one remaining in the top 10. Hey, we've made some progress. Climate and action is due more than anything else to the economic and political power of these companies. They prefer no response. It's not the inability to coordinate agents who want action but prefer not to pay for it. It's the fact that the most powerful actors in the global economy have done all they can to force stall action, including capturing governments to do their bidding. It's also important to recognize that there's a racial component to cause some benefits. There's a global divide in which white populations of the global north have been historically high, what we call legacy polluters, and populations of color in the global south are and will disproportionately suffer from the harms wrought by climate destabilization. Within countries, this gap also exists. Wealthier whites in the US have polluted more and poor black brown and indigenous groups are disproportionately affected. We've already seen this in hurricanes, I think Katrina, in heat waves. The 1995 Chicago heat wave killed black men at a much higher rate than any other group and in disaster assistance. Studies of emergency help from the US government show that the aid not only goes unequally to white families, but that aid increases inequality more generally. Now, the third problem with the conventional approach is the view that markets can do it all. That all we really need to do to solve climate change is to get the market signals right by introducing a carbon tax or creating a market in carbon pollution. The argument here is that the problem of climate change arises because there is no cost to the polluter. Fossil fuel companies are permitted to put as much carbon and other greenhouse gases into the atmosphere as they like. This is called an externality, something external to the workings of the market. Although I must say the dependence of the market itself on fossil fuels for nigh on 200 years means that use of the term externality is a little misleading. The standard solution to the problem is to internalize the externality by creating a market in pollution via tax or making polluters pay via a carbon market. What could be simpler than this and how could it not be the solution? It's common sense. It's also the dominant position among economists who weigh in on these issues. But a carbon tax or market is inadequate and may even be the wrong way to go. Decades ago, it might have worked along with support for alternative energy and government transition activity. A progressively rising carbon tax might have gradually weaned the world off fossil fuels. Although we still have needed that state intervention I mentioned earlier to put a new energy and transportation infrastructure in place. But now there are a number of reasons to doubt the efficiency of a carbon tax. First, the price needs to be so high that it is too disruptive to the markets to be enacted on its own. The IPCC, Intergovernmental Panel on Climate Change Special Report on Limiting Temperature Increase to 1.5 degrees centigrade produced estimates ranging from $135 per ton of carbon all the way up to $5,500. Most of that range is so high that it would cause massive disruption in the markets and require significant government intervention to avoid disaster. The problem is that we've gone decades without significant action on emissions and now need a crash course to get to where we need to go. Another issue is that markets take time to mature, time we don't have. There's also the fact that setting a carbon price doesn't ensure emissions reductions. Market demand may not be sensitive enough to the price. Now another problem is that carbon taxes are not very popular. Studies of places that have instituted them show they are vulnerable to backlash phenomenon that can stall or reverse climate action as research by political scientist Mato Mildenberger has shown. Australia is an instructive case. After decades of conflict that stalled a carbon trading scheme This House of Representatives moved from words to deeds. The country finally instituted a program to tax carbon pollution in 2011 Utter betrayal of the Australian people. But by 2013 a change of government led to the world's first reversal of a carbon tax. Furthermore, groups with an interest in the status quo have been able to constrain the influence of carbon taxes. Norway was an early adopter instituting a tax in 1991 but it was a modest one, didn't rise much over time and failed to achieve its goals. Government audits reveal that not only did the tax not transition the country away from fossil fuels they haven't even reduced the carbon intensity of Norway's economy. In contrast, there's a lot more public support for using the government to promote a clean energy transition. In the U.S., for example, where views on climate action are highly polarized by political party large majorities in the 70-80% range consistently approve of government funding and support for renewable energy. Finally, it bears noting that a small carbon tax is the preferred approach of energy corporations like ExxonMobil who have no intention of putting themselves out of business. It's become a diversionary tactic on their part. In 2021, an Exxon lobbyist was caught on camera explaining exactly that. Nobody is going to propose a tax on all Americans. And the cynical side of me says, yeah, we kind of know that but it gives us a talking point that we can say, well, what is ExxonMobil for? Well, we're for a carbon tax. It's an easy talking point to say, look, I'm for a carbon tax. That's the talking point. That is, in my mind, an effective adequacy tool. The inadequacy of the carbon tax approach can also be seen as we consider what we need to do to decarbonize on the required time scale. To see why transition is not just a matter of the price of fossil fuels relative to green energy, consider trends and prices. The price of fossil fuel has been fairly stable in real terms for the last 140 years while the prices of renewables, solar, wind and batteries have dropped exponentially over the past half century by almost 10% a year. There's a learning effect which makes deploying a new technology progressively cheaper as more and more innovation comes into play. But even though renewable costs are now below fossil energy in some places, we're still seeing drilling for oil and gas, pipeline expansion and even the construction of coal-fired plants. In fact, this is part of a larger problem of environmental cost-benefit analysis. Studies show that costs are consistently overestimated and benefits underestimated, leading to a bias in the field against protecting the environment. There's also the issue of vested interest in considering to use fossil fuels. It's important not to underestimate their hold on our economy, political system and even culture. What's also at work here are other kinds of externalities in the climate and energy space, as some economists have begun to emphasize more. The best recognized are what are called the co-benefits of emission mitigation, such as fewer bad health impacts of pollution like asthma and other respiratory diseases when fossil fuel use is reduced. A second important externality has to do with innovation. Many of the benefits of the transition to clean renewables accrue to society as a whole and aren't captured by the entrepreneur or the company initiating the innovation. As a result, there's too little of it. Government needs to do a lot to expand the level of green innovation. And there are also what are called network externalities, which can cause chicken and egg problems. People will buy more electric vehicles when there are more charging stations. Private companies will add charging stations when there are more EV purchases. Government can get us from a low EV equilibrium to a high one. To use economist language, climate change is the biggest market failure of all time. In fact, it's the existential market failure. It will only be solved by a commensurate intervention by the government. This fact is also why no matter what economic models may calculate, it is always efficient, i.e. worthwhile, to correct the failure. The final problem with conventional thinking is cost-benefit approaches themselves. It turns out they're committing an order of magnitude failure. That is, they're off by a huge amount. To see why, we need to look at the underlying framework used by economists to try and figure out how to address climate destabilization. The conclusions of this line of analysis should be a huge red flag about the way many economists have been approaching the problem. The preeminent economist of climate change is William Nordhaus. As I noted earlier, he won the Nobel Prize in economics, the first such awarded for research on climate change. In his Nobel lecture, he laid out the problem from a scientific and an economic point of view. And then he came to the baffling conclusion that a 3° increase in warming by 2100 and about a 4° increase by 2130 was the optimal path for the planet. His claims were based on the use of what are called integrated assessment models, or IAMs, which pair estimates from climate science with standard economic growth models. Now, why does Nordhaus think we should aim for 4°? Because it gives the biggest gap between the costs and benefits of reducing emissions. But here's the baffling part, the divergence between this economist's view of what we should do and that of scientists. It's glaring. What does scientists say about a 4° increase world? That it's hot house, hell house earth. In a world with 4° of warming, most of the tropics and subtropics would be too hot for human habitation. Nordhaus says in his lecture that, quote, rising temperatures are not the major concern regarding the impacts of climate change. And while it's true that there may be other more dangerous impacts, his disregard for the fate of large numbers of humans and other species in the tropics is unacceptable. With 4° of warming, large agricultural zones will become unproductive due to changing temperature and rainfall patterns. There'll be sea level rise of 20 to 40 meters, drowning coastal cities. And the maximum carrying capacity of the earth has been estimated at only 1 billion humans. What accounts for the big divergence between the science and the kinds of models that Nordhaus and others have constructed? First, there's a massive underestimation of the impacts of warming. What are called the damage functions or the damage from climate change to the economy are grossly off because the relation between temperature and gross domestic product GDP is misspecified. In Nordhaus's model, a 4° increase in temperature reduces GDP by less than 5%. Even 10° of warming causes less than a 25% reduction. Second, the model ignores dangerous tipping points which cause runaway climate destabilization. And third, Nordhaus's model and others like it overstate the cost of reduced emissions by failing to adequately model the rapid reductions in the costs of alternative energy sources that we've seen already and that are highly likely to continue. And amid this discussion, it's important to remember that we are already at 1.1° increase and we are experiencing very big negative impacts. An instructive voice on economist treatment of the climate is that of British economist Nicholas Stern. Stern wrote an influential report in 2006 in which he argued that the costs of inaction exceeded the costs of action. He was roundly attacked, not only by Nordhaus but even by economists who shared his desire to act more forcefully. He was called alarmist, a charge he now rightly calls laughable. And while Stern's report did help to shift the median economist's view on climate policy a bit, the ensuing years have been a climate failure. Emissions continue to rise, the profession has failed to step up. In the fall of 2021, just before the nations of the world came together to negotiate in Glasgow, Stern spoke out more forcefully than ever, charging that economists have, quote, grossly undervalued the lives of young people in future generations and are guilty of, quote, cavalier treatment of risk and missing very rapid technical progress. Economist models, he argued, have been profoundly misleading. We need a whole new approach. Let's hope economists are more willing to follow Stern's lead this time than 15 years ago when he issued his landmark report. It's crucial that we roll up our sleeves and get to work decarbonizing, just transitioning and transforming. To do that, we need to address the misdiagnoses and false solutions that have dominated the debate and address what rather who's really preventing change.