A Netflix film, “Don’t Look Up”, was released last month and within weeks has become one of the studio’s most popular films ever. It’s a comedic satire about scientists who warn of impending doom (a massive comet soon to collide with Earth) and their frustration (and ultimate failure) to get people to act. It’s about ignoring a crisis until it’s too late. The film’s director, Adam McKay, says he wanted the film to be “a kick in the pants” to prompt action on today’s very real existential crisis, climate change.
As with the film’s crisis, there is an absurdity about the way the world is dealing with the climate crisis. Carbon pollution from burning coal, oil and natural gas is over-heating our planet. The devastating evidence is everywhere. Yet, clean affordable alternatives, like solar and wind power, are increasingly available and promise huge benefits, like a healthier environment, cheaper energy costs and millions of good jobs.
Still, despite scientists’ warnings that delayed action will cause irreversible impacts, governments are slow-walking the transition away from fossil fuels.
Two factors help explain how we have arrived at this absurd moment in time as well as point us toward policy solutions.
First, fossil fuels appear cheap because markets have failed to include in the prices of their products the costs to society of the disease, death and planetary disruption their carbon pollution creates.
Second, fossil fuel interests have used their enormous political and financial power to sow disinformation and delay the transition to clean energy.
Economists characterize the fossil fuel industry as an example of a market failure. This industry gets away with dumping their pollution into the atmosphere at no expense to themselves. The millions of premature deaths from carbon pollution and the catastrophic costs in life and property from the planetary disruption their products create are borne by the public. Economists call these costs “externalities.” The effect is to make coal, oil, and natural gas appear cheap.
According to former World Bank chief economist Sir Nicholas Stern, “The problem of climate change involves a fundamental failure of markets.” If the price of these dirty fuels reflected their true costs to society, clean energy alternatives would have driven them out of the market years ago.
Although records show that they knew for decades the destruction their products were creating, fossil fuel interests covertly used their enormous political and financial power initially to deny that global warming was even happening, and they now continue to obfuscate and delay any significant efforts to transition to clean energy.
Their political power in the U.S. is epitomized today as the one senator who receives the most money from them is effectively blocking climate legislation. Globally, their power was reflected at the recent Glasgow climate conference where industry representatives outnumbered the U.S. delegation three-to-one. They use their disproportionate influence to impede and delay significant actions.
Recognizing the key factors that are inhibiting the transition away from fossil fuels to clean energy helps us to identify the most effective policy solutions. Economists have long advocated correcting the market deficiency by legislating a comprehensive climate policy that includes a carbon fee, a cash dividend and a border carbon adjustment. Under these policies as the carbon fee increases the price of fossil fuels go up and their demand diminishes. With these policies the playing field for renewable energy sources is leveled, other nations are incentivized to adopt similar policies, meanwhile, tax revenue collected from the polluting industry and rebated to American households off-sets increased energy costs for consumers.
The idea of a carbon fee is not unique to the U.S., 40 other countries and jurisdictions have already proposed or enacted legislation that prices carbon. Indeed, in the last two years, more than a dozen carbon pricing bills have been introduced in Congress.
Phasing-out fossil fuels will require action on many fronts, such as eliminating subsidies and restricting future extractions. But thousands of prominent economists contend that “a carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.” It percolates through the entire economy, providing an incentive for all decision-makers (governments, businesses and consumers) to find ways to reduce emissions. As demand for fossil fuels declines the industry’s political and financial power will also diminish.
If these policies were included in Build Back Better legislation, the goal of reducing emissions in half by 2030 could be achieved and America could lead the world’s transition to a clean energy future.
Robert “Bob” Taylor is a freelance journalist who specializes in environmental issues and previously worked as an economic analyst for Shell oil company. He was a contributor to “Reaching Net Zero: What it takes to solve the global climate crisis,” published in 2021.
Craig B. Smith, Ph.D., is an engineer and former faculty member at UCLA. He is the former president and chairman of international architect/engineering company DMJM. He is the author of several books on energy efficiency and global warming, most recently co-author of “Reaching Net Zero: What it takes to solve the global climate crisis.”