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Framing climate change in economics

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INCHEON, Oct. 8, 2018 (Xinhua) -- A press conference of the 48th seesion of the Intergovernmental Panel on Climate Change (IPCC) is held in South Korea's western port city of Incheon, Oct. 8, 2018. The IPCC, an international body assessing the science related to climate change, on Monday urged
A press conference of the 48th seesion of the Intergovernmental Panel on Climate Change (IPCC) is held in South Korea's western port city of Incheon.

October 8, 2018, brought two bits of news of a global nature. While both of them were defining pieces of news of our times, many missed the unmistakable and potent link between the two…reports Asian Lite News

INCHEON, Oct. 8, 2018 (Xinhua) -- Zhai Panmao, co-chair of Intergovernmental Panel on Climate Change (IPCC) Working Group, receives interview after a press conference of the 48th session of IPCC in South Korea's western port city of Incheon, Oct. 8, 2018. The IPCC, an international body assessing the science related to climate change, on Monday urged "rapid and far-reaching" changes in all aspects of the entire world to fight against global warming after adopting a special report on global warming. (Xinhua/Wang Jingqiang/IANS) by .
Zhai Panmao, co-chair of Intergovernmental Panel on Climate Change (IPCC) Working Group, receives interview after a press conference of the 48th session of IPCC in South Korea’s western port city of Incheon.

That nexus in reality is so powerful that it has potential to transform the global pathways for action on climate change. It also is influential driver to alter the mind and will of political leaders, including the climate-deniers as well as the stallers and breakers of the global consensus.

The first news came in from city of Incheon in South Korea where IPCC-Intergovernmental Panel on Climate Change, a UN body of climate experts from 40 countries, released ‘The Special Report on Global Warming of 1.5 deg C’.

For common man the title with its figure of ‘1.5 deg C’ sounded far from any immediate importance. But the report was requested by 197 countries of the world that have ratified the United Nations Framework Convention on Climate Change (UNFCCC) to reinforce the Paris Climate Agreement of 2015.

The raison d’etre of the Paris Agreement is a need to keep a global average temperature rise this century well below 2 deg C and to strive to limit the temperature increase even further lower to 1.5 deg C above pre-industrial levels of later part of 18th century. The challenge of restricting the rise to 1.5 deg C came mainly from nearly 60 small island countries who in reality are facing their existential threat due to sea level rise driven by global warming .

IPCC’s special report gives unequivocal message that the global average temperature rise has already reached 1 deg C. With the current speed of action, the additional rise of half a degree is just about 12 years away, within the lifetime of most of the humanity living today.

There is threat that beyond rise of 1.5 deg C, humanity would enter the era of irreversible change. Report even goes to details in quantifying the damages when the rise in temperature would be 1.5 deg C and compares that with rise of 2 deg C. It then hints at the possibility of human societies and natural ecosystems crossing certain thresholds to cause sudden and calamitous changes called ‘tipping point’. The report appears to even enter into dark and cataclysmic spaces of climate impact beyond 2 deg C.

The call for urgency is never expressed so dramatically in the 33 page summary of the report. The near impossible time lines like: the world needs to reduce CO2 emissions by 45 per cent by 2030 from the 2010 levels and reach net-zero emissions by 2050, virtually all of the coal plants and gasoline-burning vehicles on the planet would need to be quickly replaced with zero-carbon alternatives in next two decades at the latest are shattering.

Adverse impacts on the ecosystems and human societies are estimated to be much greater than anticipated earlier and the rate of decarbonisation of the world economy has been strongly suggested to be faster than what was recommended before.

Surprisingly, the report radiates some hopes that, however, belie the fact that the pledges given in the Paris agreement would lead the temperature rise to 3.5 deg C — which is beyond the catastrophe. Sadly, the negotiators of the Paris Climate Agreement are still nowhere near to finalising the rule-book for implementation of the agreement, for which the deadline is fixed at the end of 2018. The rule book is expected to include the mechanism of raising the ambitions and pledges.

Nearly two decades of similar warnings from IPCC’s five assessments have been washed away by inactions and obstructions. So why this special report would make a difference? This is where the mighty and potent link with the second news of October 8th takes the central stage.

The second news came from Stockholm soon after the first news from Incheon. William Nordhaus of Yale University and Paul Romer of New York University, pioneers in adapting the western economic growth model to focus on climate change issues and sharing the benefits of technology to address environmental issues, won the 2018 Nobel Economics Prize.

Why is this transformative news?

Because it is the first time economists have provided the practical and evidence based trigger to take action on climate change. Nordhaus was recognised for his pathbreaking assessment of the economic impact of climate change, and his advancement for the governments to tax the carbon emissions. Romer is known for his work on the role of policy in encouraging technological innovation.

During their press conference Dr Romer said: “One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist”. He went on to state the limitless capability of humans for the collective and coordinated growth in the world of globalisation, without harming the ecosystems.

This is the kind of message that dares to address the complex challenge of keeping the temperature rise below 1.5 deg C.

In short economic instruments and technology innovation are now being framed into economics, that are more appealing for the business-minded political leaders. Economists are now poised to be at the core of the climate change negotiations. The finance ministers, who are either shy or wary of climate change, may now try to fall in line of action.