Tuesday, December 15, 2015

The Climate Deal Won't Do Anything

You likely heard loud pronouncements about success in the climate change talks over the past weekend. For instance, there was this piece in which the agreement is described as a "historic accord"* and Obama apparently described it as a "turning point for the world". Secretary of State John Kerry also claimed that it would transform the economy and create jobs.

Meanwhile, on the other side of the aisle (and noted in the same article), you would hear Republicans claiming it will raise energy costs and kill jobs.

The problem here is that both sides seem rather confused on the issue since the deal itself doesn't appear to do much of anything. Let's consider this summary offered by the BBC, which notes a few stark details:

  • The countries agreed on desired warming limit (2 degrees Celsius), but did not agree on any emission targets or mechanisms.
  • While the countries have committed in principle to achieving the goal of capping warming, there is nothing legally binding about it. 
  • The countries will revisit the issue in 2018 to discuss progress and next steps
  • The only apparent tangible thing is the commitment of wealthier nations to create a $100B pledge to help developing countries move to alternative energy technologies, but that doesn't start until 2020 according to the article. And it's also not clear whether this is binding in any way.
In other words, the "deal" that is being hailed amounts to little more than a series of unenforceable, vague promises. I guess the alleged achievement is getting 200 something countries to agree climate change is a problem worth addressing. Okay. But if no one has committed in a legal way to do anything about it, how is that historic? A bunch of politicians expressed a desire to solve a problem without taking any meaningful steps to do it. That's not an accomplishment. That's just every day ever.

Coincidentally, though, we should note that the Republican's assessment would be correct if this deal actually did do something to stem climate change. Yes, it would raise energy costs--that's kind of the point after all. If we're trying to get people to use less of something, it needs to be more expensive. If one considers the threat of climate change to be serious enough, they could make the case that this cost is worth it. But to pretend this cost doesn't exist is a bit absurd.

Of course, this is precisely what Kerry is doing. Kerry is adopting the premise that the deal did something when he says it will create jobs. In a technical way, he is not wrong about this. Yes, making fossil fuels more expensive will create more jobs in the alternative energy field, as those technologies become relatively more economical. This is true, but unimportant. These new jobs are created only by pulling resources from a different field. Perhaps the new workers will come directly from the oil and gas industries that have become relatively less profitable or perhaps workers will be attracted from a different industry. Changing the relative incentives in the economy does not create new wealth, and thus there is no reason to think it will create net new jobs. In the short run, the more likely outcome is that more resources (labor and otherwise) will be dedicated to producing these new alternative energy sources than were used to produce the same amount of energy from fossil fuel, say 50 people at an oil refinery versus 100 now working to develop the same amount of energy from solar. And since the amount of energy we get is the same, this means there will be less resources in the economy left over to produce everything else besides energy. All things equal, total production falls and our standard of living becomes lower than it would otherwise be. This is the cost of climate change legislation. And again, it's conceivable to make a case that such costs are justified if you believe the threat is imminent, but ignoring those costs and pretending it will be a boon to the economy is deeply dishonest.

*Technically, I understand that the correct article in front of "historic" is "an" not "a", but I find this convention to be asinine and I refuse to follow it. An is supposed to be used in front of words that start with vowels to make things less silly to pronounce, try saying a apple and the usefulness of such a rule is obvious. But it has quite the opposite effect in front of "h" where it serves only to make the unsuspecting reader sound like a second-grader who still struggles nobly with unintentional pauses. No thank you. 

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