COP21, peak oil and climate policy implementation
Surprisingly, there are still engineers who seem to be concerned about the peak oil. Jean-Pierre Jancovici - well-known in French media- made a speech last month at1 BaptistU in Hong Kong that was mainly on peak oil but with some slides on the textbook IPAT identity2 at the end of his presentation in order to reach a climax in the drama: this is the end of growth because we are depleting of oil and on the top of that, he argued, populations are going to be decimated as it is the only way to satisfy the IPAT identity.
Usually I ask such pessimistic speakers how many kids they have to check the consistency of their thinking3... Instead, I made him address the following question: “Which constraint on fossil fuels do you think is the most stringent: the one on climate change or the one exhaustibility?” Indeed the two issues are in some sort mutually exclusive: being short of oil makes it easier to cope with climate change, as less GES will be created. At least, the two problems are not reinforcing each other. He did acknowledge that it was climate change even if he seems convinced that running out of oil is already in the countries’ growth figures (or will be soon…that was not entirely clear to me).
Having engineers now convinced that climate change is the issue number one, should we be optimistic about climate policies that will be implemented in the near future? Nowadays, economists know quite well which environmental policies could allow reaching the first best (or nearly). However, they are hardly implemented. There has been a lot of talking, a lot of debates and a lot of events around COP21. It will now start soon (some will say it is already finished since to avoid a “Copenhagen scenario” a lot of things have been decided in advance) and one may wonder what to expect.
Many people do not expect that much. First note that COP21 implies that 20 COPs already happened! Second, each negotiator’s first objective is to secure the lowest targets possible for his/her country while the second one is to congratulate all participants at the end of the event for such time, energy and money devoted to trying and solve the climate change issue. This is mainly communication. However, climate change is a global issue and there is no way to avoid international negotiation. As a reaction to the expected statu quo, some economists have therefore called for a uniform carbon price in view of COP21. The rationale was to propose a very simple instrument that would then be easier to implement. However it seems quite far form a first best situation. Also note that in Hong Kong, there is nearly no environmental policy (except some environmental education). At the 4th Nobel Laureates Symposium on Global Sustainability, 22-25th April 2015, Christine Loh (under Secretary for the Environment in Hong Kong) publicly said "We now know what we should do but we cannot do it. Anybody who has any ideas should help us". It seems that the main problem is implementation, or political acceptability. Why not design an environmental economics that explicitly accounts for political constraints? For the time, let’s hope COP21 will turn out more ambitious than we thought!
1 The event was co-organized by CEFC. http://www.cefc.com.hk/fr/event/how-does-the-energy-crisis-influence-the-world-economy-and-the-geopolitical-ecosystem/
2 For a refresher: http://www.ipcc.ch/ipccreports/sres/emission/index.php?idp=50
3 Having written a book entitled “Climate change explained to my daughter”, we can infer he has at least one.