Climate action needs green, not just red lights

The Guardian; April 28, 2017

In the twentieth century environmental protection centred on national government regulations and standards, often requiring emitters to install mandated pollution control equipment. This approach delivered some gains: across Europe and North America, the air is now much cleaner and rivers, streams, and lakes are less polluted. But such “command and control” regulation has not delivered much progress on some other big issues endangering the global commons, including climate change.

Despite more than two decades of the 1992 UN Framework Convention on Climate Change, emissions have continued to rise – threatening to produce global warming, rising sea levels, more frequent and intense hurricanes, changed rainfall patterns, more floods and droughts, and diminished farm productivity in many places. This failure can be traced to structural flaws in the past global response to climate change.

The 20th century regulatory model, on which the 1992 treaty builds, makes what could be called the “lawyer’s mistake” of assuming it is enough to pass a law, draft regulations, or sign an international agreement. Telling people, particularly in the corporate world, what not to do is insufficient. What is really needed is a framework of incentives that changes behaviour and induces innovation to solve problems.

If we are successfully to address the build-up of greenhouse gases in the atmosphere, and many other persistent environmental challenges, we need to move from a regulatory structure that depends on red lights and stop signs to one that also presents green lights.

These incentives to spur action and investment will signal to business leaders and creative minds where to devote time and resources, promising a marketplace return for breakthrough technologies and other innovations that address priorities in public policy. We must make clear to entrepreneurs and investors that efforts to bring forward a clean energy future and other cleantech advances will be rewarded with financial success.

Fortunately, the 2015 Paris climate agreement includes steps toward a world of green lights, with an array of 21st century regulatory tools that will help spur innovation and deliver better policy results. Its negotiators drew on ideas put forward not just by national governments but by mayors, governors, premiers, and corporate leaders. And cities, states, provinces, and companies are all poised to follow through on its commitments – representing a major break with past reliance on national governments.

In fact, presidents and prime ministers have relatively little control over their societies’ carbon footprints. Subnational government leaders and business executives have much more day-to-day influence over transit systems, economic development, building construction, infrastructure investments, and decisions about what products get produced, and how.

The relentless pushes by Paris mayor Anne Hidalgo – who chairs C40, the cities’ group that has mobilised action among mayors of 90 of the world’s biggest urban centres – and by former California governor Arnold Schwarzenegger – who launched the R20 group that has galvanised state and provincial climate change projects – demonstrate a depth of commitment on the ground that was missing from past global efforts.

The Paris agreement also leaves each country to establish its own regulatory programmes and strategies to reduce emissions, providing room for fresh thinking and new policy tools. Indeed, many of the nationally determined contributions that have been put forward reflect the trend away from command and control regulations toward economic drivers such as emissions allowance trading systems and carbon pricing. Such market mechanisms provide much clearer incentives for investment in renewable power, energy efficiency, smart grids, and other clean energy systems.

More than 1,200 companies have aligned with the World Bank’s Carbon Pricing Leadership Coalition to explore ways of using price signals to shift their internal energy decision making towards a decarbonised future. Even universities are adopting carbon pricing to change behaviour. At Yale, a $40 (£31) per tonne carbon charge has induced significant shifts in building design and energy management practices.

Business leaders across the world are developing pathways to a clean energy future. Bill Gates and his fellow billionaire backers of the Energy Breakthrough Coalition have committed $2bn to drive innovation across a spectrum of technologies that might change the energy foundations of our economy.

Companies such as HSBC, Areva, Engie, Enel, and Tata have joined a solar power alliance launched by French president Francois Hollande and Indian prime minister Narendra Modi to expand access to clean electricity in developing world villages. While business was seen as the enemy of environmental progress in the 20th century, today’s policy frameworks seek to engage it as a critical engine of innovation.

Similarly, the Paris agreement moves away from the reliance on government subsidies of past global efforts to fund investments in climate change action. It seeks instead to use limited public resources to leverage private capital through green banks, green bonds, and other creative financial instruments.

This shift has already begun to pay dividends. Connecticut’s Green Bank has increased the state’s deployment of energy efficiency and renewable power projects more than 10-fold. Britain, Malaysia, New York and other jurisdictions have similar mechanisms, while more than $90bn of green bonds were placed last year.

Finally, opportunities abound to use information technologies to sharpen incentives for solving problems that hinder environmental advances and a sustainable future. Harnessing computer power and modern communications tools makes it much easier to track emissions, charge for pollution damage, identify successful policy strategies, disseminate technology breakthroughs, benchmark government and business greenhouse gas control efforts, celebrate leaders, spur on laggards, and highlight best practices.

Though the Paris agreement lacks binding obligations and enforcement mechanisms, it does provide for evaluation and reporting on results every five years. It also demands increased commitments if progress falls short of what will be required to stem the build-up of greenhouse gases in the atmosphere.

Thus, while worries about weakening resolve over climate change in some national governments are real, there are parallel reasons for optimism. The Paris agreement – with its commitment to multi-tier governance and its engagement of mayors, governors, corporate executives, and NGO leaders – promises to be much more robust than the global community’s past efforts.

Deploying 21st century sustainability strategies and broad-based incentives for innovation relies much less on action by any one set of governments. It is thus much more likely that the world has reached an inflection point on climate change.

For more information, read Esty’s recent article, Red Lights to Green Lights: From 21st Century Environmental Regulation to 21st Century Sustainability, in Environmental Law (April 2017).

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