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Can the World Avert Climate Catastrophe?

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Beginning October 31, delegates from all over the world will meet in Scotland for the next UN climate change conference, COP26. The goal: to collectively take more aggressive steps to slow global warming. With climate-related disasters regularly dominating the headlines, the pressure is on for leaders to act quickly. But do they have the political will to address the problem before it becomes more catastrophic?

Ahead of this pivotal summit, Foreign Affairs Executive Editor Justin VogtProfessor of Environmental Policy at Tufts University Kelly Sims Gallagher, Nobel prize-winning economist William Nordhaus, and former White House Chief of Staff John Podesta had a discussion about the prospects of meaningful international cooperation on climate policy. 

SPEAKERS

William Nordhaus

William Nordhaus

William Nordhaus is Sterling Professor of Economics at Yale University and a recipient of the 2018 Nobel Prize in Economics. Read his Foreign Affairs essay "The Climate Club.”

Kelly Sims Gallagher

Kelly Sims Gallagher

Kelly Sims Gallagher is Academic Dean and Professor of Energy and Environmental Policy at the Fletcher School at Tufts University. From 2014 to 2015, she was a Senior Policy Adviser in the White House Office of Science and Technology Policy. Read her Foreign Affairs essay "The Net Zero Trap.”

John Podesta

John Podesta

John Podesta is Founder and a Member of the Board of Directors of the Center for American Progress. He served as White House Chief of Staff from 1998 to 2001 and Counselor to U.S. President Barack Obama, overseeing climate and energy policy, from 2014 to 2015. Read his Foreign Affairs essay with Todd Stern, “A Foreign Policy for the Climate.”

Justin Vogt

Justin Vogt

Prior to joining Foreign Affairs in 2011, Justin Vogt was the managing editor of World Policy Journal. Earlier, he worked on the editorial staff of The New Yorker and as an associate producer on documentary films for Frontline. His writing has been published by The New YorkerThe New York TimesSlate, and other outlets. Follow him on Twitter @Justin_Vogt.

Transcription

VOGT: Good morning, everyone. Welcome. My name is Justin Vogt. I’m the executive editor of Foreign Affairs.

We’ve got a terrific group of three top minds on a really pressing issue of climate change, pressing and timely as well. I’m not going to bore you by giving you their official biographies. You have their titles and their professional affiliations in your invite.

What I am going to do instead is tell you a little bit about why we’ve asked each of these people in particular to join us today.

William Nordhaus is one of the most important economic thinkers on the subject of climate change. His work on how to factor climate change into our economic models, on how to tax carbon, and on how countries can band together to really force themselves and others to behave more responsibly in a more economically sound fashion, is precisely the kind of policy-relevant scholarship that we really value at Foreign Affairs. It’s thinking that, you know, takes into account where the rubber hits the road.

John Podesta is sort of all about where the rubber hits the road. As the high-level adviser to President Obama and chief of staff to President Clinton, he’s sort of been in the room his entire career sort of guiding these big questions of policy into the real world.

And then bridging those two worlds of sort of policy and politics and scholarship we have Kelly Sims Gallagher, who is herself a distinguished scholar in this field but also someone who has spent time at high level in government, specifically as an adviser during the Obama administration.

So welcome to all three of you. Thank you so much for joining us. I really look forward to hearing your insights and allowing you to share them with our audience here.

What I thought I’d do actually is just to kind of start with a bit of a confession, and the confession is that, you know, at Foreign Affairs I think that we sometimes struggle to cover climate change as well as we would like to and I think this is something that’s not unique to Foreign Affairs.

I think this is true at other publications and throughout media, and I think the reason is sometimes it feels like the most bold thinking, the really creative ideas, seem a little pie in the sky or a little disconnected from reality, where the most sort of, you know, practical stuff it gets bogged down in the weeds. It can be a little boring. It doesn’t seem high stakes enough.

And I think all of that, behind all of that and amongst our readers is, well, there’s a kind of—sort of kind of pessimism and maybe even a fatalism about this problem that is frustrating because I feel like, and I’m sure you all even more so feel like, we’ve been talking about this problem, and talking and talking and talking and meeting and negotiating for decades and decades. And it’s not—this is not true, but it often feels as if either progress isn’t being made or worse, you know, things are getting worse.

So I guess what I’m going to start with is to ask the three of you to give me and our audience members, who I suspect may feel similarly to the way I do, some reasons for optimism. Why should we—what’s out there—what’s happening today that should give us some reason, you know, for hope on this?

And I’ll start with you, Kelly. Maybe you can start us off.

GALLAGHER: Well, thanks, Justin, and it’s really a pleasure to be here.

I guess I would confess that I swing from optimism to pessimism on any given day. But I do find sources of optimism, really, in three main areas. I think the first is that we’ve seen, historically, that when the United States can lead and particularly when it can lead with China, we can initiate a virtuous cycle.

And if you look back on the U.S.-China joint announcement from 2014, when the two countries came together, presidents stood side by side, announced their commitments, it triggered a snowball effect where many, many other countries followed, and I think it signaled to smaller countries—smaller emitter countries—that it was worth it for them to join in and contribute to what is fundamentally a collective action problem because the two biggest emitters had done something. So we know we can induce these virtuous cycles.

The second source of optimism is technological innovation. We’ve made tremendous progress over the last twenty years on innovation and in clean energy technologies. If you go back and look at the SunShot Initiative, which was established in 2011 by the Department of Energy, they set a goal of reaching six cents a kilowatt hour for solar with this idea that solar would become cost competitive with fossil fuels, and it was achieved three years ahead of schedule and they’ve now halved that again in a new goal that they’ve set for 2030.

And I think the third thing is that we see there are countries and regions even within the United States that are achieving steep emissions reductions and proving that it’s possible to do that, that we have the policies that work and that it can be done without economic harm.

So these are all sources of optimism. I get pessimistic when I see us induce vicious cycles, like President Trump withdrawing from the Paris Agreement. But I think, really, there’s a lot of reason to be optimistic.

VOGT: What about you, Bill?

NORDHAUS: Well, I think the glass is half full and half empty. I’ll talk about the full part and then the empty part.

I think, as we read the papers and we read—look at what—current events, we tend to forget how much progress has been made, not just in the technological area that Kelly just mentioned but in our understanding of the underlying problems that are—that we face, both politically, economically, and then also in terms of the science.

If you were to go back twenty years from now, we would be unlikely to be having this conversation in-person or remotely. The idea of taxing carbon or pricing carbon would be one that would raise eyebrows or puzzle people when they thought about it. It wouldn’t be something that would ever be discussed in a New York Times editorial or—it wasn’t discussed in Foreign Affairs, I should say, very early in the day by Dick Cooper.

VOGT: Right.

NORDHAUS: But if you look at the combination of both hard science due to physics on the one hand, our understanding of the impacts of climate change, our understanding of what the tools and instruments of policy are, we’ve come a long way. We’ve also come a long way in terms of the politics in different countries. You may remember that the Kyoto Protocol by the—was—the Clinton administration was told by the Senate by a vote of ninety-seven to nothing—ninety-seven to nothing—not to send a treaty up.

So, well, we’ve gone from ninety-seven to nothing to maybe fifty-fifty. But that’s a pretty long way to go and it’s heading in the direction where something might eventually happen. So I think those are some of the reasons for, I’d say—I won’t say optimism, but there’s some of the things that have taken place that are allowing us to get a better grip on the problem.

VOGT: It’s interesting—

NORDHAUS: But I think—I’ll just add, but I think in some ways we’ve gone backwards in terms of our policies and particularly the international policies, moving away from something where you have binding agreements toward ones where we’re now in voluntary agreements with unanimity. I think in that respect we’re going, I think, in the wrong direction. So that’s one view of it.

VOGT: And but part of what you’re describing to me sounds like, you know, great progress in sort of shifting the Overton window, as it were, or changing public consciousness but there’s a—policy is kind of a lagging indicator or just lagging in general. That’s an interesting way of looking at it.

John, how about you? Any reasons for optimism? Any reason for hope?

PODESTA: Yeah. Justin, let me comment a little bit on your intro into the question first and then I’ll tell you my reasons for optimism.

You said—you framed this as kind of devolving into a relatively technical discussion, hard to capture your readers with it. You know, I look at it as the greatest threat to human security that we’re going to face over the next many decades.

VOGT: Fair enough.

PODESTA: So from that perspective, Foreign Affairs has got to grab their—you know, their readers and their contributors and think about it, I think, in those terms. But and I think if you think about what the task is, I always go back to the IPCC 2018 1.5 report, where they described what was necessary as the largest transformation of the global economy to ever occur in human history.

So it’s kind of an audacious thing that climate campaigners are, you know, up to, but I don’t know if you purposely scheduled this event for today but it turns out this morning is a reason for optimism. The president last night, I think, forged a deal. Hopefully, it will stick. It’s still a little bit rough around the edges, but will—it appears that both Senators Manchin and Sinema have signed off on a reconciliation package, which will be the largest investment in clean energy that we’ve ever seen in this country.

The tent pole of this set of policies is not carbon pricing but carbon—but tax support for deployment of clean energy and clean vehicles and clean buildings, but it’s very substantial. You know, we rely a lot on Rhodium’s analysis that was released last week, but Resources for the Future had a similar analysis. It is likely to result in the power sector shifting to probably 70-plus percent clean by 2030. We need to get to 80 (percent) so we’re not done. And that needs a little bit of help from the EPA and from regulation. But that’s very substantial.

The electric vehicle sector, which now is about 3.5 percent in the U.S.—actually gone up at a—you know, at least at a pace that’s relatively rapid—is likely to reach 40 (percent) to 50 percent, maybe more, maybe as much as 60 percent by 2030. And I think that’s in part because the private sector has swung around, too, and so that’s another reason, I think, for optimism. These are not just idle statements. You know, we call out greenwashing. But I think most companies are very serious about planning their futures in a context that’s both consistent with the Paris goal of trying to get as close to 1.5 degrees as possible and on their way to net zero, and I think that’s true across a vast swath of at least European corporates and American corporates, that they’re actively planning for that.

They’re building investment strategies around that, not the least of which is in the auto industry itself where that commitment to invest in electric future, which needs to be powered by zero-carbon energy, is—you know, kind of goes hand in hand.

So, look, I think we’re—I described this as are we going to experience catastrophe or apocalypse, and I’m, like, moving the dial back towards—(laughter)—catastrophe away from apocalypse. So, you know, that maybe is—to use Dr. Nordhaus’ expression, I guess that’s half full for me. (Laughter.)

VOGT: That counts as half full. Look, it’s always nice to hear that things that are happening at U.S. Congress are actually a source for optimism or that there’s good news.

PODESTA: Correct.

VOGT: So I like that. It is rare. So there’s action happening there. The timing of this actually was more tied to what’s happening elsewhere, what’s happening in Glasgow, of course, at COP26, and I’d love to ask you—and Kelly, I’ll turn to you on this—I’m curious, you know, we—this is just the kind of latest in this rolling international dialogue, you know, with names of cities attached to various things—Copenhagen, Paris, now it’s Glasgow.

In this particular instance, what should we be looking for to come out of this conference? What do you hope to see for—what do you expect to see from it? How will we know whether this has moved the dial or, you know, pushed the dial, as John said, away from—away from apocalypse and towards catastrophe?

GALLAGHER: Well, I’m looking for four things out of this COP. The first is I want to see as many near-term emission reduction commitments backed up by real policy commitments as possible. I think we—there’s been a lot of mushy commitments that I’ve seen announced in the run up to this COP and I would like them to be made more concrete and more ambitious.

Second, I’d like to see a very robust launch of the global stocktake process. This is a process that was built into the Paris Agreement where every five years countries are supposed to take stock of progress, and to John’s point, in my view, we’re not anywhere close to being on track to achieving that 1.5-degree goal.

And so this stocktake process needs to be serious. There needs to be an independent review built into it. And I haven’t heard a lot of discussion about it so I will be really focusing on that going into the COP.

Third, climate finance. You know, we didn’t meet the goal of a hundred billion dollars. I think we need to be looking at different structures and reform of development finance institutions. The COP may not be the place—

VOGT: And just—Kelly, just for folks who might not know, that goal you’re describing of a hundred billion dollars, what—

GALLAGHER: This was a goal that was set, actually, prior to Paris but enshrined in the Paris Agreement that developed countries would mobilize from public and private sources a hundred billion dollars a year in climate finance to support developing countries with the low-carbon transition and with adaptation, and particularly helping, you know, the most vulnerable countries to adapt to climate change.

VOGT: But it hasn’t gotten—

GALLAGHER: So the fact that the industrialized countries didn’t hit the goal is really being perceived as a breach, and I think it is important to get to that hundred billion dollars. But, really, that’s just a floor. The actual finance needs are orders of magnitude larger. And so, in my view, the existing structures just aren’t working.

And then, finally, we need to, once and for all, finish the Paris rulebook. These are, like, the rules of the road for the Paris Agreement. And it’s a shame that it’s taken so long but, of course, we had the pandemic interrupt this process of finalizing the rulebook. So that’s just got to get done.

VOGT: So I’m curious, you know, you’ve followed these negotiations but you’ve also written about them in a sort of critical way, and one of your great contributions has been this idea of shifting away maybe from these kind of really large multilateral forums and creating what you’ve called climate clubs.

Could you just sort of briefly—well, maybe I’ll kind of define what I understand and then you can elaborate a little bit on it. I mean, as I understand it, this is—the idea here is that countries that are really going to commit and pledge to do things differently, whether it’s reducing emissions, helping the adaptation, should sort of band together and enforce their view of things, essentially, on others with all kinds of strategies like tariffs. Basically, create incentives for people to join the club if they get their acts together.

I guess I’m wondering whether you see that as something that could replace the kind of large multilateral dialogue that’s going on now in Glasgow. Should it complement it? What’s the relationship between that idea and what we currently have?

NORDHAUS: Yeah. So the basic point is that we actually are making very—if you look at what’s happening—what has happened, not what the promises are, not what the goals are, not what the aspirations are, we’ve made very little progress in our emissions reductions to date.

If we look at the latest data, the latest useful data are through 2019. The decarbonization of our global economy ratio of CO2 to output has been declining at a steady rate of about—a little—around 2 percent a year since 1990 and there hasn’t been any change in that after any of our major agreements—after Kyoto, after Copenhagen, after Paris.

Now, it’s going to be two or three years before we can actually—after we get out of the pandemic whether we see, in fact, some much—some things are going on but—that we don’t know about yet. But up to now, the fact is even though there are all the meetings, all the COP meetings, all the treaties, all the commitments, we’ve not made any serious progress in terms of actual reduction of CO2 emissions.

So the reason is, I think and others who look at this think, is the problem of free riding, that you have some countries who are doing—reducing it, but others who are not because it’s too costly. So Europe is really the only region that’s serious about this. But on the other hand, you have Australia ramping up its coal exports. You have China scrabbling around for coal because of their energy shortage. All of these are, basically, because of low prices of energy and low prices of carbon, and not to mention subsidies, which are much larger than the carbon prices.

So to get around the free riding problem, we would need to—in this audience, you know all about foreign affairs—we need to look at international agreements that have some kind of binding carrot to them. Probably the best we could look at is the WTO where you make commitments, but you also—there are penalties if you don’t meet your commitments. And that’s the model for the climate club.

I would say in terms of what analogy I would look at, I would look at the European Union. The European Union is a club of the kind we’re talking about. It is a large club with many things in it. It has free trade within it. It has single market. But it also has a unified climate policy, and some of the countries, particularly the ones in Eastern Europe, don’t like that and they argue against it, just as Greece argued against the euro.

But the benefits of being in the EU as a club are sufficiently strong that they will take what are really quite increasingly stringent climate policies. So that’s the model, basically, something like the EU, something like the WTO, and the reason is because if we don’t do that, we continue to have voluntary agreements—aspirational agreements—without any consequences when countries don’t meet them.

And I think we’re going to find that Paris is actually better than—we’re not going to make Paris even, and even if we did make Paris we would only get to probably two, three degrees C by the end of the century. So that’s a short version of it.

VOGT: One of the fun things about being an editor of Foreign Affairs and hosting something like this we can get a really interesting idea like that from an academic, from a Nobel Laureate no less, and then I get to ask somebody like John Podesta, who has sat in the White House, talk about—you know, talk about this with me with something like a climate club. What would be—how would that play, you know, in a meeting of White House advisers about climate change?

How has it played? Maybe you have discussed it. Does that sound like something that could practically get done? What would stand in the way?

PODESTA: Well, I think I’ve got to actually answer that direct question, which is there would be concern, I think, that particularly the people who feel more vulnerable in the developing economies would feel left out of that. So you’d have to find a way for people to participate in a way that felt democratic in a—not in a governing sense but that you’re permitting people in who—and then the question is what’s the criteria for getting in.

In a voluntary way, this was sort of the structure and the theory around creating the Major Economies Forum and the Clean Energy Ministerial. But I think, as Bill notes, it’s all voluntary. So there’s no penalty for not, you know, participating.

I actually think the idea is one that’s worth pursuing and there might be an opportunity in a tangential way to find a path forward to do exactly what Bill is suggesting because the European Union and the United States are both arguing that as they take steps to decarbonize their economies, they need to protect from free riders their industrial base, and the mechanism for doing that is a carbon border adjustment mechanism.

You know, China’s very nervous about that. They want to see that negotiated on a bilateral basis. But I think—

VOGT: John, can you tell me what that means? What is a—what is a carbon border adjustment mechanism?

PODESTA: So you would either in a—look, for example, in the EU system, which uses carbon pricing, you would apply the price that European industrial manufacturers are paying to be able to take up a piece of the carbon budget and you’d apply that to imports.

So it’s, essentially, an import tariff to equalize whatever the carbon price is in the home jurisdiction, if you will. The EU has a proposal on the table now to do that, but it’s at the very early stages. The United States has—and the Biden administration have embraced the concept, but right now they’re talking about imputing a carbon price from a suite of regulatory requirements and standards that are being placed on U.S. manufacturers.

There’s the big question about whether either one of these schemes is WTO compliant, but put that as aside. I think one of the things that is going to likely take place over the next couple of years is the effort to either harmonize a U.S. and an EU approach or we’re going to get into a major trade dispute between the U.S. and the EU.

If those systems could be harmonized, you’ve really got the basis of what Bill’s describing as a carbon club which will put pressure on other countries—read into that China—to, essentially, join the club or be facing high tariffs for at least products that have a high CO2 content associated with the manufacturing of the profit—of product.

So I think we may have a real-time experiment that’s about to take place in Bill’s structure, and I think the administration would be well to listen to Bill about how that should be structured.

VOGT: OK. Well, I’m going to jump off of one thing you just said for the last question I’m going to ask before we turn it over to some audience Q&A. You mentioned, you know—hint, China—in your answer there about where the pressure needs to be applied in some ways.

Kelly, I want to ask you, you know, there’s some debate about U.S.-China relation and how it affects climate change, and I think the way it generally breaks down is what would be better, should the United States look at China and say, well, in order to confront climate change we need to cooperate with the Chinese, or should the United States look at China and say, well, if we really want to confront climate change we need to compete with the Chinese? We need to sort of get ahead of them.

How do you see that debate? Where do you fall on it and do you think that’s the right frame? And then once you folks in the audience—once Kelly has shared her ideas on this, we’ll move to your questions.

Kelly?

GALLAGHER: Well, there’s no getting around the fact that we’re in a competitive relationship with China today. I think that’s just a fact. But I think we can still partner for the public good whether it is in addressing global pandemics or global climate change. I think it is essential for the two countries to be able to maintain a clear channel of dialogue, regular dialogue and consistent dialogue, so that we can understand what’s happening in each country and avoid misunderstandings, misperceptions, and mistrust to emerge.

I would strongly advocate for the U.S. and China to start working together on greening global development finance and global development aid. I think this is something the two countries could do in partnership and co-mobilize the kind of finance that’s needed to help developing countries move to a greener cleaner pathway so we can avoid a big growth in emissions in the developing world.

VOGT: John, quickly—John and Bill, before we take a question do either of you want to weigh in very, very briefly? Compete or cooperate, or is that the wrong paradigm? Briefly.

PODESTA: Well, the administration has an incomprehensible framework of compete, confront, and cooperate. We’ll figure out whether the American public really understands that. I think I largely agree with Kelly. I think we are in a period of competition, particularly in technology development.

But I think that we have to keep a solid lane of understanding open between the U.S. and China. Kelly and I worked together, of course, on the 2014 joint statement that President Xi and President Obama made. We’ve had significant experience in dealing with the Chinese, and at a minimum at a technical level, knowing what each side’s strategy is, trying to harmonize, trying not to sort of interfere with the deep carbonization efforts but, rather, to accelerate them will be important.

Right now, it’s really more or less a jawboning exercise of trying to get China to begin to retire its coal fleet earlier than it is committed to. They just laid out a platform that probably has their peaking emissions in around 2027 or so. Kelly could correct me if she thinks that’s wrong.

But I think that the cooperation at the technical level remains important, but I think in terms of industrial production, we’re going to be in a highly competitive environment for, you know, the foreseeable future.

VOGT: Right.

Bill, any quick thoughts on that before we turn to questions?

NORDHAUS: Yeah. I think we’re letting our concerns about national security and military strategy dominate our thinking here particularly with respect to climate change. The problem far extends beyond China. Australia is the world’s largest coal exporter and they’re a—could be easily brought into a cooperative agreement. India is a huge country, growing rapidly, has a huge coal base. So there’s no reason to think they won’t be a big emitter—a big and growing emitter as well. I won’t mention Africa, which is a whole another situation.

So I think—just to come back to the earlier discussion, I think we should view much the way John said of getting a common policy, a harmonized policy, as a cooperative—part of our cooperative arrangements with other countries, not as an extension of our military or security competition or alliances, because that’s—you’ve really got to bring all of the major countries in in a way that they feel is fair, and part of the design of the club is with policies that are harmonized.

The trade issues, essentially, disappear because it’s a level playing field for different countries and that’s one of the great advantages of having something. It’s something we’ve done in the world trade—in the multinational tariff negotiations for decades now and that’s a kind of model.

But it’s also a reminder that these things take lots of time. They take time to understand. They take time to—for people to learn about them, and then they take many, many years to negotiate. You say we don’t have time. That’s true. But we need to do something that’s effective.

VOGT: All right.

With that, let’s turn it over to our audience and see what they’d like to know.

OPERATOR: (Gives queuing instructions.)

Our first question is a written submission from Ertharin Cousin, who says the IPCC has recognized the significant role of agriculture and the food system on greenhouse gas emissions, also alerting the world of the food systems’ vulnerability to climate crisis.

Yet, food and agriculture are absent from the official COP26 agenda, nor have the panelists mentioned this important issue. How do we raise this important issue as a priority alongside transportation, energy, and even housing?

VOGT: Interesting. Anyone want to—any of you want to take a particular crack at that one?

NORDHAUS: I’ll just say one simple thing, which is, if you have a comprehensive economywide policy, it would cover agriculture. If you have carbon pricing, it will cover the emissions from agriculture—carbon and methane pricing. There are other things that you can’t (let ?). So land use is much more complicated, deforestation. But that’s one of the values of having a comprehensive—you have an industry policy is you don’t leave out important sectors.

PODESTA: Well, I’ll just add a couple of things. First of all, we should have invited Ertharin to our panel—(laughter)—and natural solutions, I think, are taking up a much larger part of the conversation in the U.S. and I think, actually, in Europe as well, and transformation of the food system, in particular, to, basically, reduce emissions from that sector are a top tier topic, I think, as both domestically and internationally.

It’s another—Kelly mentioned development finance. This is another area where I think U.S. and China are both trying to—they have a big problem with emissions. They could cooperate at a technical level to try to develop common strategies.

I think this is also linked to the nature crisis and the—trying to harmonize approaches we’re taking on climate with what’s happening in the Convention on Biodiversity will be, I think, something that governments are trying to, you know, think about.

Can you get win-win solutions in terms of—in terms of natural solutions that will both absorb carbon but also begin to protect nature more extensively? That’s what’s behind the 30 by 30 Initiative that the United States has embraced and is being pushed at a global level.

So, you know, we left it out and it was a mistake for us to leave it out. It’s a very important topic and critical to success on climate.

VOGT: Let’s go to—let’s go to the next question.

OPERATOR: Our next question will be from Michael Meyer. Please unmute your microphone and ask your question

Q: Good morning, everybody. Thank you for such an interesting and informed conversation.

This alludes to John Podesta’s remark just now referring to biodiversity. Biodiversity—when you lose 70 percent of your insect population, say, in the United States or Europe or elsewhere in the course of two decades, you’ve got an existential problem, one that could hammer civilization even more quickly and, perhaps, more dangerously than climate change itself. A related issue to climate change, but distinct.

Maybe, John, you would want to address this. Should we dial the biodiversity issue into debates about climate change, and how?

PODESTA: Well, yes, I think we should. You know, if you look at reports that are coming from the U.N. in addition to the IPCC reports, the planet is in crisis when it comes to—you mentioned the loss of insects. We’re looking at an eighth of the species on the planet going extinct by the end of the century. That’s going to have profound snowballing effects on human wellbeing as well as the well-being of the planet.

And so I think having—you know, fundamentally, I think we have to begin to think about this as how do we create sustainable economies that respect planetary boundaries, that respect equity, that bring everybody to the table, and that needs sort of a common framework for ideas. And that may make—may seem you’re making the problem impossible by making it even more complicated. But I think it really fundamentally goes to what kind of economies can we build globally over the—you know, over the next ten and twenty and thirty years and into the future.

It also goes to this—to the previous question about listening to people who are where—on the ground where they are and the solutions that are going to be adoptable and adaptable to build that kind of sustainability framework. And, for me, I think of that in the context of the SDG framework, which still remains a viable set of targets for all countries to pursue in a universal way. But it requires, I think, a spirit of kind of solidarity to be able to get there.

VOGT: Thanks, John.

Let’s take another question.

OPERATOR: Our next question is a written submission from Sarju Ganatra, who says, I am a physician in Boston, USA, and environmental enthusiast. While many other sectors are under the radar, health care is relatively untouched and kind of hiding behind the good cause. How do we try and hold the health care sector accountable and try to fix the greenhouse gas emission related to the sector? Thank you very much.

VOGT: That’s interesting. It’s so under the radar and hidden that I myself have never really considered that. I’ve not thought of the health care sector as a particular bad actor when it comes to climate.

But if any of you have any thoughts about that, I’d be curious to hear them, and maybe you might want to talk also just more broadly about sector-specific reforms or how to go about fixing one particular part of the economy, whether that’s possible, or as we’ve been talking about what you really need is a more comprehensive strategy. Anyone want to weigh in on those questions?

NORDHAUS: I’ll just say one word. Sixty percent of our problems are under the radar. They’re you, me, health care, education, telecommunications, not to mention most of manufacturing. We need something that will cover all these under-the-radar things without diverting the physicians, the teachers, the educators, the manufacturers, from their job.

One of the problems with a sector by sector approach is actually it’s extremely both policy intensive, labor intensive, and expensive because you have to tailor it industry by industry. You have to do something for the electric utilities. You have to do something for automobiles. You have to do something different for airplanes—airliners, something different for agriculture. Now maybe we have to do something for hospitals as well. So that just takes up the whole agenda, which is already overly full.

Just to say the same thing again, that’s one of the reasons we need measures that can cover the entire economy rather than industry by industry specifics. I would say that doesn’t mean we leave out the industry by industry specifics because there’s some network effects like electric charge stations that won’t get started up quickly enough to do the job.

But many of the things, particularly the under-the-radar things, whether it’s health care or education or telecommunications, they need to get the same message but they don’t need to have the message blasted out. They can see it through the prices that come through carbon pricing and similar kinds of measures.

GALLAGHER: I’d just add a couple points.

I mean, the first point I would make is that the health care sector is impacted by climate change already. We’re seeing that, you know, hospitals have to respond to extreme weather events. Every time there’s an extreme heat event, you know, there’s a lot of impact on the health care sector.

Even here in Boston we were affected by the wildfires in the West, and I know that one of our hospitals had to close its emergency room because they were getting so many admissions from people suffering from smoke inhalation, you know, thousands of miles away from where the wildfires were taking place.

So I think hospitals need to be thinking about and, in general, the health care sector how to be more resilient to climate change because it’s already here and now. We are already experiencing record extreme weather events. So there’s an important role to play there.

And, of course, in their own operations there are ways that they can reduce their emissions. Overall, buildings in the United States account for about 70 percent of electricity consumption. So, certainly, taking measures to reduce emissions from their own operations is a way they can contribute.

All that being said, I agree a hundred percent with Bill that, you know, ideally, we would take a(n) economywide approach and couple it with sector-specific measures where appropriate.

VOGT: Yeah, that’s interesting, Kelly, to talk—think about it. I think what the question was asking was how do we—you know, how do we deal with our own emissions in this—in the sector I’m in. But, of course, as you point out, in every sector there’s the other side of the equation, too, which is how was your business or your sector affected by the externalities, right, the harms?

Can we get another question?

OPERATOR: Our next question will be from Jennifer Hillman.

Q: Hi. Thank you very much. I’m Jennifer Hillman, a senior fellow at the Council on Foreign Relations.

I wanted to touch on or ask a question related to kind of the combination of this idea that in Europe and in other places the approach is, largely, going to be around an emissions trading system or a price on carbon, whereas in the United States the approach appears to be, largely, around regulations that would ban or place restrictions on certain technologies, accompanied by subsidies in order to promote the development of green technologies.

And anytime we talk about that, there seems to be a need for an inherent sort of trust that what the United States is doing, this combination of regulations plus subsidies, is going to be the equivalent of a carbon price of X amount in Canada or an ETS price with a border adjustment mechanism in Europe that is the equivalent of X dollars per ton.

And I’m just curious whether this group thinks do we have that sort of requisite level of trust or could we develop it in the world where there would be an acknowledgment that even though you are getting to a goal of net-zero 2050 in a very different path than I am, I’m going to acknowledge that they are equivalent, or in the absence of that trust are we going to have the kind of trade wars and disputes and other things because each country is choosing a different path to get to net zero?

NORDHAUS: Quickly on that, I think we are not alone in using regulations. In fact, the Guinness Book of Record belongs to France. France is in process a number of regulations. I think, like, two hundred different regulations on daily life, such as whether you can use heaters in outside restaurants, such as whether you can fly short-hop airplanes on domestic routes, on and on and on. So we’re not alone in that.

Most of the European countries have heavy regulatory impact in the energy sector as well. So I think this is—but the question—and some of those are probably overdone and some of them are extremely appropriate. But the difference is that almost all these other countries—to the north of us in Canada, to the south of us in Mexico, to the east of us in Europe, and to the west of us, Japan and Korea—are using carbon pricing along with the regulatory—regulations that they’re putting in place.

All countries in the world have automobile—everyone I know has automobile emission and constraints and automobile mileage restraints. So these are not new and these are not unique to the United States.

VOGT: I think it’s a great question, though, and I’d love to hear John and—or Kelly weigh in on this, on the question that Jennifer raised about trust, about—you know, because that relates to—so much of what we are talking about has to do with a kind of deficit of trust or the absence of trust in this.

Do either of you have anything to add to that, to what Bill said?

PODESTA: Yeah, I—well, let me give a little bit of background and then I’ll directly answer the question.

You know, the United States kind of introduced the concept of pricing and trading in Kyoto, and as Bill noted, just before that happened the Senate voted ninety-seven to nothing to kind of reject that framework. We spent a lot of time trying to move forward with a national trading system under the Waxman-Markey framework in 2009. The Senate couldn’t pass that.

Come forward to 2012 in Copenhagen, most people thought that was a negotiation that kind of, essentially, ended with no success. But there was a shift at Copenhagen which, in essence, was harvested in Paris that said, essentially, we need everybody in the system, but everybody has different restraints, constraints, approaches so we’re going to rely on a combination of nationally determined commitments plus transparency and, essentially, guilt tripping, to see if we could keep ratcheting forward ambition.

That’s the system we have now, and I think that Jennifer’s pointing out something really quite critical, which is the U.S., because of its political circumstances, I think that there are a lot of people, probably a lot of Democrats, who would like Bill’s solution to be, you know, adopted if it could happen. The politics in the United States make it very difficult at a national level.

We’ve seen trading adopted in RGGI in the Northeast, in California. But it’s a very difficult challenge to do it nationally. Biden is trying a different approach. The question is—I think the fundamental question right now is can the EU and the U.S., who have shared values, shared interests, shared strategies about what a decarbonized power/industrial/transportation sector look(s) like, can they harmonize their system, create the club that—(audio break)—suggested. And, you know, the framework for that is carbon border adjustment.

I think, you know, the jury is completely out on that question. I’ve had, you know, extensive conversations with European colleagues on it and they—with American colleagues. It is very unclear whether this is a project both the EU and the U.S. will embrace towards getting the happy ending that I think would come from creating a carbon club that was pushing decarbonization of the overall economy in the same direction simultaneously.

VOGT: Thanks for that. Let’s take another question.

OPERATOR: Our next question is a written submission from Steven Koltai at MIT, who asks, can you talk more about innovative technology approaches to climate? We at MIT have a very large and active climate change innovative initiative, and I’m curious of the panel’s view of funding options to support such efforts.

VOGT: Kelly, do you want to take a stab at that?

GALLAGHER: Yeah. Sure. I’m glad to jump in on that.

Well, in my view, investments in technological innovation are essential to, you know, solving the climate crisis. They can’t be done in isolation. This won’t work if we just, you know, take a push approach, trying to push cleaner technologies into the marketplace. I mean, I think that was the—that was, essentially, the philosophy after Kyoto.

That was the philosophy of the George W. Bush administration was sort of a, you know, let’s hope technology will save us. And I’ve already acknowledged that technological innovation has been important, but it’s not sufficient.

I’m a big advocate and have written for many, many years about the importance of public investments in energy technology innovation. It’s equally important for the private sector to be doing that. We don’t really understand what the private sector is investing in.

There’s, as Bill Nordhaus has written, asymmetric, you know, information here and that’s a challenge for governments because they don’t know what the private sector is doing so it’s hard for them to make wise choices about what they should invest in.

But, nonetheless, this is really important, and kind of getting back to the U.S.-China competitiveness question, one area where China has really made tremendous investments is in increasing its investments in clean energy RD&D. And depending on which categories you count, whether you count nuclear or don’t count nuclear, the Chinese are either number two or number one now in the world in public investments in clean energy RD&D.

So there is going to be a race for these technologies and I think it’s very important for the United States to stay in that race and, really, this can be a race to the top, right. This is one of those—another virtuous cycle where we can actually really try to compete to dominate these markets globally.

And I would—I would argue that the United States needs to couple those investments with industrial policy and workforce development in the United States so that we retain more of the economic value from the inventions and investments in innovation than we have to date.

NORDHAUS: I would agree with Kelly. We spend a lot of our time talking about sticks and not on carrots, in particular in this area. We talk about what kinds of policies we can have, whether it’s carbon pricing or cap and trade. But I think just as important—and I’m glad you brought it up, Justin—is the need for enhanced innovation, invention, technological change on green energy.

And this came home to me particularly over the last year and a half when we saw what creative policies could do with respect to the COVID vaccine and, in my mind, there’s little doubt that if we hadn’t had the kind of incentives that we had put in place during 2020 that it would have been longer—how much longer I don’t know—before we had the vaccine. You may remember they said, we’ve never developed a vaccine in less than three or four years, but actually it was less than a year.

So I think one piece of background that’s interesting, if you look at the investments in—the federal investments in green energy technologies, the latest data from the National Science Foundation suggests they’re about $2 billion a year. Two billion dollars a year in a trillion-dollar industry.

By contrast, military R&D are about—is about $60 billion a year. So $2 billion a year will not get us where we’re going, and I think one of the areas we should particularly emphasize is fundamental research, applied research. The downstream development and commercialization is extremely important.

But what we really need if we’re going to make a transition to a low-carbon technology or zero-carbon technology is a completely new energy infrastructure with completely new energy technologies, not new in the sense they haven’t been dreamed of or even in the bench scale but new in the sense of the commercialized trillion-dollar investments or hundreds of trillions of dollars of investments.

So I think we’ve—I don’t think we’ve paid enough attention to the need for a dramatic upscale in our investments here but also the use of new techniques and some of the new ideas for stimulating investments such as the ones we saw during the pandemic.

VOGT: I think there’s probably a—

PODESTA: Can I get—can I get three words, Justin?

VOGT: Yeah. Please go in. Please.

PODESTA: Storage and green hydrogen. (Laughter.) So you asked where should we put money. I would put it right—I would put it in those two technologies.

VOGT: Why? Quickly, why?

PODESTA: Because we’re going to need breakthrough in both the economics and the pricing of storage to get to a full hundred percent clean energy grid by 2035 because of the intermittency problems that are, you know, caused by renewables, and I think in terms of solutions for, particularly, marine transportation, air transportation, some heavy industrial uses, driving down the price of green hydrogen as opposed to going down the path of gray or blue hydrogen are going to be really necessary to get to a net-zero future.

VOGT: Well, we could have a—it strikes me we could do an entire session like this just on some of these new technologies, actually. So I’m glad that we’re sort of ending there. Gives me some food for thought.

This whole conversation has actually given me some grounds for a little bit more optimism than I might have felt earlier. I hope that others feel the same way, or at least that we have a better understanding of why we’re pessimistic and not just that of a knee-jerk sense of nihilism or fatalism.

Thank you, all three of you. It’s been really illuminating. Really appreciate your insights and all the work that you’ve all done on this, and thanks to everyone else for joining us.

Take care.

(END)

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