Climate change: does only one thing matter?

 From a Twitter thread by Xavier Helgesen.

[See my take on this, below]

Everything you have been told about stopping climate change is wrong. Buying a Tesla doesn’t matter. Not flying/eating vegan/turning off lights doesn’t matter. As a serial climate entrepreneur (raised over $200 million), I speak from experience. Only one thing matters.

Let’s start at the beginning: what’s the problem? The problem is that it is free to pollute the atmosphere with CO2. Because it is free, lots of business models make sense. Examples: oil extraction, gas stations, global container shipping, international air travel, etc.

Because lots of business models ONLY make sense when pollution is free, a very well-funded PR and lobbying machine sprang up to keep pollution free. At first, they tried to convince people that climate change was not man made. They said it was a “natural climactic cycle”. Eventually this became untenable.

So they settled on a more durable strategy: climate change is a matter of personal responsibility. If you think about it, this is absurd. Just because I didn’t personally spill oil in the Gulf of Mexico doesn’t mean it’s ok if BP does. Unfortunately, it worked. Green became cool, electric cars became cool. People had climate guilt and bought offsets. Urban liberals convinced themselves they were doing something about the biggest problem of our age.

But they weren’t. Because pollution was still free.

Let’s take your Tesla. You retire your gas guzzler and go electric: you reduce your personal emissions. But what happens systematically? That incremental gallon of gas is still sold. All you have done is slightly decrease demand. Congrats, you just made gas [petrol] cheaper.

There is only one solution to this problem. And as much as entrepreneurs hate to hear it, it is a political solution. There must be a high and predictably escalating price on carbon pollution globally. That’s it. Nothing less, nothing more. All fossil fuel business models rely on relatively long-term (20+ years) business plans. A predictably escalating price on carbon destroys these business models.

It also creates a dramatic financial incentive to put carbon back in the ground. Some carbon emitting activities, like international flights and Kobe beef, can withstand a high price on carbon.

There are low carbon, carbon neutral and carbon negative substitutes for nearly everything in our lives. What is missing is the economic incentive. Make it untenable for a politician (left or right) to run for office without solving this problem economically. On the left: we don’t need a “green new deal”. That doesn’t solve the problem. We need a clear economic incentive to not pollute. On the right: carbon pricing is a transparent incentive for business to do the right thing for the planet. Even Exxon supports it.

To conclude the thread, I think many people underestimate how smart and evil the opponents of global action on climate change have been. They have effectively co-opted the goodwill of smart people who care into irrelevant solutions. Let’s get smart on this and let’s solve it.

My thoughts on this:

If you use an EV, you are reducing demand for petrol/diesel, everything else being the same.  And this will reduce the price of petrol, which in turn will increase demand elsewhere.  But the author has confused a shift in the demand curve with a movement along an unchanged demand curve.   Look at the chart below (from EconomicsHelp).  

The chart is a classic supply-demand graph.  Quantity (Q) is shown on the horizontal axis, and price (P) on the vertical axis.  The supply curve slopes up from left to right, because at higher prices, producers are willing to provide more supply.  The demand curve slopes down because at higher prices, less is demanded.  Where the two curves intersect is where the price and the quantity supplied/demanded is in equilibrium.  Now, if EVs take up more of the market, at every price less petrol will be demanded.  The demand curve D1  has shifted to the left, to D2.  The new equilibrium has shifted from P1/Q1 to P2/Q2.  And yes, P2  is below P1, just as Helgesen states.  But quantity has also declined, from Q1 to Q2.  This is precisely why oil companies hate EVs, and spread lies and disinformation about them.  They don't just sell less oil as EVs grow, they also sell it at a lower price.

If you switch your electricity supplier to a 100% green utility, you reduce both the demand for and the price of coal, ceteris paribus, in exactly the same way you affect the oil market when you drive an EV.  

The same applies to other environmental shifts.  When I first became a vegetarian, 40 years ago, there were no meat substitutes for sale.  Now, in supermarkets, there are whole sections devoted to plant-based foods.  Sales of such foods are up 40% over the last year in Oz.  This hasn't happened because of government policy.  It's happened because more and more ppl want to stop animal suffering.   Of course, most ppl continue to eat meat, but arguing that because of that we should give in and eat meat with them, is just silly.

Personal and individual actions have made the world a better place.  That is not to say we don't need a carbon tax.  We do.  But individual and collective changes will work together to reduce emissions.  Both are needed, and while we wait for governments in the pay of fossil fuel companies, we can do what we can, while pressing others to do more.  As I've said before, you can take steps to reduce your carbon footprint:

1.  Buy your electricity from a green supplier
2.  Put solar panels on your roof, if you can
3.  Become vegetarian or vegan.
4.  Buy an EV, or if that's too expensive for you, a hybrid or plug-in hybrid.

And collectively, vote for the political party which will do the most to slash emissions, including introducing a carbon tax which rises every year.  The world needs to halve emissions over the next decade.  Everything we do should be directed towards that goal.