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July 2016, Volume 22, Number 3

Climate Change

In December 2015 in Paris, leaders of 195 countries agreed to reduce carbon emissions by developing voluntary national emission-reduction plans by 2020. Global leaders signed the agreements at the UN in April 2016. The Paris agreement becomes effective when 55 countries representing 55 percent of global greenhouse gas emissions ratify it.

Country plans are expected to reduce emissions as clean technology improves, so that after 2050 there will be fewer carbon-emitting activities than in 2015. Wind turbines and solar panels supplied about 10 percent of the world's electricity in 2015.

Many US renewable energy firms are struggling. SunEdison, worth $10 billion in summer 2015, filed for bankruptcy in April 2016 after expanding too rapidly in a quest to take advantage of low-interest rates and government subsidies. Most renewable energy firms must make large investments before getting a return, and many go bankrupt before they can turn a profit.

Scientists who warn that, to avoid climate disasters, the earth's temperature should not warm more than two degrees Celsius (3.6 F) from pre-industrial age levels, say that the plans developed in Spring 2016 are too modest. They emphasize that the world has already warmed one degree Celsius, that new coal-burning plants are being built in China, India and elsewhere, and that oil and gas companies continue to search for fossil fuels.

Most economists and scientists favor carbon taxes as the best way to reduce emissions. The World Bank and IMF promise assistance to countries that want to use carbon taxes to reduce emissions of greenhouse gases, asserting that climate change increases the poverty they want to reduce. World Bank and IMF assistance includes advice on tax rates for fossil fuels and cap-and-trade systems that allow trading in emissions permits issued by the government. About 40 countries, including the 28 members of the European Union, have carbon-pricing plans.

Optimists assert that switching to clean and renewable energy can create jobs, so that economic growth and slowing climate change can occur simultaneously. They warn that delaying investment in clean and renewable energy will slow economic growth as changes in weather patterns damage infrastructure, and that pollution from burning fossil fuels increases health care costs. The IMF estimated the cost of fossil fuel subsidies at $5 trillion a year globally, with three-fourths of these costs attributable to leaving out the cost of pollution and climate change.


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