The  Climate  Challenge:  Saving  Ourselves         RM  1.12.14      There  is  no  recorded  time  in  human  history  where  there  has  not  been  some  type  of  religious  or  secular  apocalyptic  vision…..the  world  is  always  just  about  to  end  due  to  some  imminent  disaster.  In  recent  times  this  has  manifested  in  a  new  form  of  utopianism,  where  we  are  starting  to  see  new  movements  proclaiming  some  promised  land,  second  coming  or  techno-­‐utopia.  Who  knows,  they  may  be  right  but  history  shows  an  inexorable  but  snails  pace  march  forward  towards  a  better  world.  As  humans,  we  are  on  a  quest  for  both  survival  and  self-­‐improvement.  This  is  built  into  our  DNA  but  is  always  a  work  in  progress.      But  our  fascination  with  saving  the  planet,  as  part  of  this  process,  is,  I  believe  a  deeply  flawed  distraction.  Of  course  we  need  a  healthy  and  functioning  ecosystem,  in  order  to  survive  and  progress  but  the  earth  does  not  need  saving,  we  do.  The  earth  has  been  around  for  billions  of  years  and  will  likely  be  around  for  billions  more.  It  has  survived  constant  climatic  changes  and  seen  life  forms,  such  as  the  dinosaurs,  come  and  go.  Humanity,  as  we  know  it,  will  be  no  different.  The  earth,  I’m  sorry  to  inform  you,  has  no  interest  in  whether  we  are  here  or  not.  It  is  governed  by  complex  and  interactive  systems,  which  will  keep  going,  in  some  form  or  other,  regardless  of  famine,  wars,  asteroid  strikes  or  major  climate  change.  It’s  time  to  drop  this  narrative  and  get  on  with  saving  ourselves.      Now  we’ve  got  that  out  of  the  way,  what’s  the  problem?  Simply  put,  we  have  broadly  defined  some  ecosystem  limits  that  we  need  to  live  within,  in  order  to  support  our  current  life  forms  and  styles.  This  is  arguable  at  the  small  scale  but  from  a  global  perspective,  there  is  some  number  of  GHG  emissions  that  we  need  to  stay  within  in  order  to  avoid  a  catastrophic  breakdown  in  our  life  support  systems.  350ppm  or  450ppm…there’s  a  number,  somewhere,  that  will  likely  fluctuate  as  new  information  comes  into  the  global  climate  model.      As  long  as  we  have  a  number,  we  can  work  to  stay  within  it.  Currently,  we  try  to  apply  a  patchwork  of  binding  and  non-­‐binding  cap  and  trade  type  models,  hoping  that  magically  people  will  stop  consuming  as  they  are  now  and  that  countries  will  somehow  limit  their  own  emissions  without  specifying  how  they  might  do  that.  What  I  am  proposing,  and  did  so  firstly  in  a  2008  paper,  is  that  we  limit  production  of  fossil  fuels  rather  than  consumption  of  them.  In  this  way,  we  know  exactly  how  much  is  coming  out  of  the  ground  and  therefore  how  much  could  possibly  be  emitted.  We  can  then  control  the  global  emissions  profile  very  efficiently  at  the  macro  level  and  not  worry  about  what  individual  countries  end  up  emitting.    In  other  words,  we  create  a  tap  mechanism,  which  we  can  use  to  control  the  path  of  emission  reductions,  thus  knowing  we  can  achieve  any  target  we  set.  But,  how  do  we  get  an  agreement  on  production?  We  see  the  shenanigans  around  OPEC  and  their  inability  to  agree  supply  targets.  Nevertheless,  there  is  precedent  for  this  with  the  1987  Montreal  Protocol,  where  producers  came  together  and  agreed  to  phase  out  ozone  depleting  chemicals.  The  key  advantage  there  was  

that  there  was  a  small  group  of  producers  and  so  agreement  wasn’t  too  hard  to  come  by.  It  may  seem  far-­‐fetched  to  think  fossil  fuel  producers  could  come  to  any  kind  of  agreement  but  when  we  look  at  the  data,  there  may  be  hope.  As  we  can  see  the  key  group  here  is  G20,  which  is  fast  becoming  the  key  group  for  global  cooperation.  It’s  also  worth  looking  at  the  three  key  producers  who  are  the  US,  China  and  Russia.  They  are  all  permanent  members  of  the  UN  Security  Council  and  with  climate  change  becoming  more  of  a  global  security  issue.  Ultimately,  this  suggests  that  the  key  to  any  serious  attempt  to  control  global  fossil  fuel  production  lies  with  the  global  leadership  group,  especially  the  Us,  China  and  Russia.  Without  them,  no  sustainable  solution  is  likely  to  be  found.  If  there  can  be  an  agreement  on  global  production,  then  that  will  allow  the  market  to  re-­‐price  emissions  and  start  to  send  the  appropriate  price  signals  to  the  consumer.  With  a  limited  quantity  of  inputs  available,  behaviour  will  change  rapidly.      It’s  important  to  note  that  this  is  no  different  to  how  the  monetary  system  works.  We  have  had  a  25  year  inflation  targeting  program,  which  has  supposedly  kept  prices  stable  but  in  fact  has  allowed  for  enormous  asset  and  credit  bubbles  to  emerge.  It  is  no  surprise  that  money  supply  growth  and  global  emissions  are  highly  correlated.  They  are  both  a  result  of  unrestrained  consumption.  We  saw  recently  here  in  NZ  what  happened  when  the  RB  limited  the  quantity  of  credit  for  homebuyers  with  the  loan  to  value  restrictions.  Prices  in  many  regions  dropped.      Supply  has  a  big  impact  on  both  demand  and  on  prices.  The  sooner  we  get  clear  ecosystem  based  price  signals  into  the  global  fossil  fuel  market,  the  sooner  consumers  can  see  the  true  cost  of  their  activities.  Like  the  money  supply,  a  lack  of  quantity  control  does  not  impede  consumption.      And  anyone  who  thinks  price  doesn’t  matter.      It’s  the  must  effective  way  to  bring  about  change,  even  where  demand  is  relatively  inelastic.  We  will  also  start  to  see  price  signals  being  sent  by  the  insurance  market  as  the  risk  profile  around  climate  changes.      So  where  does  a  global  cap  on  fossil  fuel  production  leave  us?  I  think  there  are  3  opportunities  to  come  out  of  that.  One  is  the  opportunity  for  climate  equity  to  take  shape.  I  see  this  potentially  happening  through  domestic  tradable  quotas  and  tradable  energy  quotas,  where  people  receive  a  an  energy  quota  and  can  trade  that  with  others.      Changes  in  the  price  signal  will  allow  for  the  full  force  of  creativity  and  innovation  to  be  applied.  Currently,  we  rely  on  subsidies  to  make  alternative  energy  products  really  work.  Once  we  have  a  more  transparent  pricing  system,  entrepreneurs  and  investors  will  be  more  likely  to  enter  the  market  and  really  drive  innovation.      And  finally,  and  probably  most  importantly,  we  must  adapt  to  the  coming  changes.  There  is  no  point  waiting  to  see  what  global  agreements  manifest.  There  is  no  point  wailing  about  saving  the  planet.  What  we  have  right  in  front  of  

us  now  are  some  major  challenges  around  flooding,  coastal  erosion,  and  severe  wind  damage.  We  should  stop  worrying  about  our  emissions.  They  are  insignificant.  It’s  clear  that  any  global  agreement  will  have  to  come  from  the  major  political  players.  We  need  to  focus  on  our  own  problems  and  hopefully  drive  some  innovation  through  adaptation  solutions  we  create.  The  Netherlands  has  a  200  year  Climate  Strategy.  They  are  addressing  their  challenges  head  on.  They  are  not  wringing  their  hands  about  saving  the  planet,  as  they  are  too  busy  trying  to  save  themselves.  And  so  should  we.