The economic and environmental impacts of the US fracking boom are hotly debated. This column argues that there’s been a large positive impact on the US economy, estimating that the benefits to producers and consumers totalled $48 billion in 2013, or around one-third of 1% of US GDP. The climate change impacts have been large, but they do not outweigh the private gains. However, a lack of data on the impacts to water, air, and seismic activity hamper policymakers effectively targeting the areas of greatest concern and hamper them drawing up effective regulation.
Catherine Hausman, Ryan Kellogg, Friday, May 15, 2015
Jason Furman, Ron Shadbegian, Jim Stock, Wednesday, February 25, 2015
The cost of delaying climate action has been studied extensively. This column discusses new findings based on a meta-analysis of published model runs. A one-decade delay in addressing climate change would lead to about a 40% increase in the net present value cost of addressing climate change. If anything, the methodology used in this analysis could understate the cost of delay. Uncertainty and the possibility of tipping points provide a motivation for more action as a form of insurance against worse outcomes.
Carlo Carraro, Saturday, February 7, 2015
China and the US have recently agreed to reduce their greenhouse gas emissions. This column asks what quantifiable impact the new targets will have, whether they are any better than previous approaches, and if so, whether they are enough to avoid dangerous climate change. While insufficient for keeping temperature increase below the 2°C limit, the US and China’s bilateral commitments are a step in the right direction, and form the basis for a stronger international agreement in Paris later this year.
Jean-Marie Grether, Nicole A. Mathys, Caspar Sauter, Saturday, January 31, 2015
Spatial inequalities in territorial-based greenhouse emissions matter in terms of regulation, both at the international and subnational levels. This column decomposes these inequalities worldwide for the two major greenhouse gases over the period 1970–2008. Within-country inequalities are larger, and rising, while between-country inequalities are smaller and falling. Moreover, social tensions arising from the discrepancy between the distribution of emissions and the distribution of damages appear to be larger within than between countries, and larger for carbon dioxide than for methane.
Valentina Bosetti, Jeffrey Frankel, Monday, November 24, 2014
Many countries have announced emissions targets for 2020. To evaluate which countries are doing their fair share, this column proposes a ‘scorecard’ approach based on three principles of fairness in climate change mitigation: latecomer catch-up, progressivity, and cost. The authors find that most countries’ targets, including those of China and the US, are in line with what such a scorecard would suggest.
David F. Hendry, Monday, October 27, 2014
Climate change has been the main driver of mass extinctions over the last 500 million years. This column argues that current evidence provides a stark warning. Human activity is producing greenhouse gases, and as a consequence global temperatures and ocean heat content are rising. Such trends raise the risk of tipping points. Economic analysis offers a number of ideas, but a key problem is that distributions of climate variables can shift, invalidating stationarity-based analyses, and making action to avoid possible future shifts especially urgent.
Rick van der Ploeg, Aart de Zeeuw, Thursday, July 31, 2014
Many ecological systems feature ‘tipping points’ at which small changes can have sudden, dramatic, and irreversible effects, and scientists worry that greenhouse gas emissions could trigger climate catastrophes. This column argues that this renders the marginal cost-benefit analysis usually employed in integrated assessment models inadequate. When potential tipping points are taken into account, the social cost of carbon more than triples – largely because carbon emissions increase the risk of catastrophe.
Emanuele Massetti, Elena Ricci, Wednesday, July 23, 2014
Concentrated solar power generation in Northern African and Middle Eastern deserts could potentially supply up to 20% of European power demand. This column evaluates the technological, economic, and political feasibility of this idea. Although concentrated solar power is a proven technology that can work at scale, it is currently four or five times more expensive than fossil fuels. Concentrated solar power could play an important role in Europe’s energy mix after 2050, but only if geo-political challenges can be overcome.
Richard S J Tol, Friday, April 25, 2014
The IPCC’s Fifth Assessment Report estimates lower costs of climate change and higher costs of abatement than the Stern Review. However, current UN negotiations focus on stabilising atmospheric concentrations of greenhouse gases at even lower levels than recommended by Stern. This column argues that, given realistic estimates of the rate at which people discount the future, the UN’s target is probably too stringent. Moreover, since real-world climate policy is far from the ideal of a uniform carbon price, the costs of emission reduction are likely to be much higher than the IPCC’s estimates.
Pascal Lamy, Ian Goldin, Friday, March 28, 2014
Excessive short-termism is always a problem for policy, but the Global Crisis has brought it sharply into focus. This column introduces a report that discusses how a shift to longer-term solutions is necessary and possible. A key message is that businesses as well as governments need to take a longer-term view. The report identifies ways to overcome the current impasse in key economic, climate, trade, security, and other negotiations.
Enrica De Cian, Samuel Carrara, Massimo Tavoni, Sunday, December 22, 2013
After the Fukushima incident in 2011, many countries decided to shrink their nuclear power programmes. This article presents recent research on the optimal role of nuclear power in reducing carbon emissions. Phasing out nuclear power would be costly, since it is currently the cheapest low-carbon alternative to fossil fuels. However, these costs would be largely offset by the implicit subsidy to R&D in renewables, which suffers from innovation externalities. Still, carbon pricing and explicit R&D subsidies would be a more efficient way of determining the future of nuclear power.
Arik Levinson, Friday, August 9, 2013
Efficiency standards appear to be at the centre of US climate policy. But is this policy effective? This column argues that, thinking laterally, evidence suggests that there are reasons to be suspicious. If the US is to focus so heavily on energy efficiency, we ought to have a better understanding of its effectiveness.
Geoffrey Heal, Antony Millner, Thursday, June 13, 2013
Uncertainty is intrinsic in climate-change economics. This column argues that it’s here to stay. There will be no accurate predictive tool for predicting economic growth, the emergence of clean-energy technology, or economic vulnerability in light of climate change in the near future. But this is not an excuse not to think about climate economics. Research and policy would do well to be more explicit about what we don’t know. We should avoid subjective guesses, and focus more on credible forecasts from empirically sound, if uncertain, models.
Aaditya Mattoo, Arvind Subramanian, Saturday, May 4, 2013
Global climate cooperation has collapsed but the need for action has not disappeared. This column argues that only radical technological progress can reconcile climate-change goals with development. It argues that four changes in WTO trade rules could facilitate climate-change action and technological advances without unduly damaging trade.
Johannes Emmerling, Massimo Tavoni, Wednesday, April 17, 2013
Implementing comprehensive policies to reduce greenhouse-gas emissions has proved to be difficult. Such sluggishness has increasingly led analysts and researchers to consider geoengineering – the deliberate reduction of the incoming solar radiation – as a viable alternative. Geoengineering used to be seen as somewhat of a ‘last resort’ in terms of climate policy because its implementation would reduce the urgency for current abatement efforts. However, under uncertainty, research suggests that substantial abatement in the short and medium term remains optimal due to the long lead-in time needed for geoengineering projects.
Richard Schmalensee, Robert N. Stavins, Thursday, March 7, 2013
Not so long ago, cap-and-trade mechanisms for environmental protection were popular in Congress. Now, such mechanisms are denigrated. What happened? This column tells the sordid tale of how conservatives in Congress who once supported cap and trade now lambast climate change legislation as ‘cap-and-tax’. Ironically, conservatives are choosing to demonise their own market-based creation. The successful conservative campaign that disparaged cap-and-trade means it may now be politically impossible to promote it in the US. The good news? Elsewhere, cap and trade is now a proven, viable option for tackling large-scale environmental problems.
Klaus Desmet, Esteban Rossi-Hansberg , Wednesday, January 16, 2013
There are two ways to deal with climate change: mitigation and adaptation. This column argues that in order to adapt, we need to take another look at an age-old coping mechanism: migration. Indeed, if overall hotter temperatures lower productivity in hot regions but raise productivity in what are currently cooler regions, the negative economic effects of climate change are likely to stem from frictions preventing the movement of people and goods. Without these frictions, adapting to climate change becomes that much easier. Climate change policy ought to aim at alleviating mobility frictions.
Corrado Di Maria, Ian Lange, Edwin van der Werf, Sunday, January 6, 2013
By promising to reduce fossil fuel demand in the future, some claim that climate policies will induce supply side responses today; firms will pump out emissions now before demand restrictions tighten. However, this column argues that the ‘green paradox’ is a red herring. Evidence from US coal prices suggests that, in industrialised countries, there is little danger of an increase in domestic emissions in response to imperfect climate policies.
Simon Dietz, Carmen Marchiori, Alessandro Tavoni, Wednesday, December 5, 2012
In keeping with expectations, recent multilateral climate change talks in Doha have achieved very little. Yet, the good news is that unilateral action is on the up. This column argues that the existing literature explaining unilateral action on climate change by and large neglects the influence of lobbying. Recent research shows that the combined presence of national interests and increased lobbying pressure -- from both business groups and environmentalists -- may create much more scope for unilateral action than previously thought. Yes, getting a ‘broad and deep‘ international treaty remains difficult, but we can look forward to increased unilateral action on climate change, spurred on by lobby groups.
Richard S J Tol, Tuesday, November 27, 2012
The 18th UN Conference on climate change negotiations has just started in Doha. This column suggests that the probability of success is a mere 2.3%. Recently, over $100 million per year was spent on fruitless negotiations. Having flogged, ever harder for 18 years, the dead horse of legally binding emission targets, the UN should close that chapter and try something new.