The Economics and Politics of Climate Change. Dieter Helm and Hepburn Cameron (eds) (Oxford University Press, Inc. 2011/2009)
This important volume of essays (34 contributors and 520 pages of text) edited by Oxford University economists Dieter Helm and Cameron Hepburn was intended as both a primer for the December 2009 Copenhagen United Nations Conference on Climate Change and an intellectual toolbox for carbon dioxide emission reductions in the post Kyoto Protocol era (2012 and beyond). Its 22 chapters are divided in five sections that deal with the economics of climate change, its impacts (both positive and negative) on various regions, realistic and more speculative low-carbon technology alternatives (from nuclear power to geo-engineering), national and international policy instruments (from carbon taxes to a global carbon credit market); and recommendations of all kinds for various governance regimes and new regulatory bodies. Despite some disagreements, all contributors—many of whom are among the world’s foremost climate economists—share a rather pessimistic outlook in which climate change is rapid, significant and largely attributable to anthropogenic greenhouse gas emissions.
A short review cannot do justice to the range of issues and options covered in this book, nor to the quality of each contribution. Suffice it to say that many authors did not shy away from some inconvenient truths, such as the fact that most policy actions on climate up to that point had been mostly hot air with little to show in terms of either emission reductions or wealth transfer from advanced to less developed economies; that many special interests had long benefitted from the climate-change pork barrel; that beliefs in “peak oil” and ever increasing carbon-fuel emissions are fundamentally incompatible; that biofuels and wind power have ultimately no redeeming qualities; that any scheme which artificially penalizes manufacturing countries (most prominently China) while letting ultimate consumers off the hook (most prominently European countries that have outsourced their manufacturing activities) is fundamentally unfair and politically unviable; and that any significant multilateral attempt to address global climate change is nothing short of the greatest collective action problem ever faced by humankind.
As many readers may remember or suspect, the 2009 Copenhagen Summit, like innumerable global conferences before or since that promoted complex, politically-driven and costly approaches to carbon dioxide emission reduction, was a complete meltdown. Paradoxically though, more progress has been achieved in terms of carbon emission reductions since the topic essentially disappeared from the political agenda in the last few years than at any time since it became a cause for concern over two decades ago. These advances, however, had nothing to do with the several complex issues raised by the contributors to this volume.
As highlighted by the editors in the preface to the paperback edition published in 2011, the coming of shale gas—which did not even warrant an index entry in the first edition—ushered in one of the most significant energy transitions in history. By allowing a massive switch away from coal in electricity production, shale gas (which emits about 45% less carbon per electricity unit produced) made possible in the United States alone annual CO2 emission reductions of about 500Mt, or about twice as much as the entire global greenhouse gas reductions that could be traced back to international climate negotiations over the previous twenty years. Remarkably, US consumers saved about $100 billion per year in the process (Lomborg 2012). Despite fears and misgivings promoted by activists who have long supported the type of measures and energy alternatives discussed in this book, the future of hydraulic fracturing (which has been used in the petroleum extraction industry for several decades without noticeable environmental damage) is promising.
Another development not foreseen in the first edition of the book but addressed in the preface to the paperback is the global financial crisis of 2008 (which, one suspects, began around the time the book manuscript was sent to production). While the worldwide economic downturn is obviously not something to celebrate, it had a noticeable impact on overall energy use and emissions, in some cases resulting in greenhouse gas emission falls in absolute terms in some developed countries and reduced emission growth in some of the less advanced ones (in the process providing a useful reminder that policy approaches—as opposed to technological advances—always had a meaningful economic cost).
Last but not least, the United Kingdom’s National Weather Service quietly released data in October 2012 that convincingly demonstrated that, despite (much) greater than expected greenhouse gas emissions during the period, there had been no discernable rise in global aggregate temperatures since 1997 (Rose 2012). (Of course, the notion that the risks associated with increased carbon dioxide emissions might have been somewhat exaggerated was not particularly welcomed in many quarters, but it can only be viewed as a good piece of news if it turns out to have been the case…)
The economics and politics of climate change are now changing rapidly, but paradoxically this impressive volume might turn out to be more of an epitaph for long-standing technological and policy approaches than a useful guide to the future.