The Most Essential Missing Ingredient in Addressing Climate Issues

By Mike Koetting October 25, 2022

Much of the discourse on environmental issues is at the level of kindergarteners arguing over toys. In reality, these are the most complex problems ever faced by human beings because, as we have painfully learned, everything is connected to everything. And the issues need be addressed at a scale never before contemplated in human history. They are not simply a series of tricky technical problems. The problems are political, psychological, even religious. And every technical problem must be addressed with some consideration of how the alternative solution interacts with all the technical problems around it—literally to the ends of the earth.

For Example, Air Conditioning

As we all know, temperatures around the world are increasing, acutely in certain regions. Air conditioning makes living in those areas more comfortable. Given our current technical capacities, however, using air conditioning materially increases the amount of carbon emissions, leading to further warming. A doom loop.

At a super-high level of abstraction, there are three solutions: get people to accept warmer temperatures; come up with ways of providing air conditioning with fewer carbon emissions; or damn the torpedoes, burn more carbon. In the short term, as we saw in California and elsewhere this summer, sometimes there isn’t much choice because we are simply unable to provide more energy. In parts of the United States, using less may be a plausible longer term strategy because people have become accustomed to much more air conditioning than is necessary for survival. This may be less true in other parts of the country and may not be at all viable for other parts of the world.

But I don’t see any forum capable of even discussing a plan, let alone executing one. There are people who will say “let the market decide”. But that is so glaringly incomplete that it is either a religious incantation or a straight-up attempt at ducking the question. Yes, the market will have an important role to play here. Ignoring it is at huge peril. But ignoring the limitations of the market is a more immediate peril.

No Simple Answers

Back to air conditioning.

There is new technology under development with considerably lower carbon footprint. But it isn’t ready for market. And when it is, it will be more expensive, particularly at first. Even within current technology, there is a reasonably broad spread of energy efficiency, although the more energy efficiency, the more expense. How much, and how, should we be willing to restructure the market to tilt to more energy efficiency?

In conventional economics, the theory would be that in response to various energy problems, energy prices would continue to rise, and, eventually, people would find it preferable to switch to more efficient units. And, with increased demand for more efficient units, the manufacturers would speed up development and production of revamped approaches.

Things will certainly move in this direction regardless. But nothing about the past 25 years suggests this is sufficient. Figuring out what to do instead, however, is anything but obvious.

We could ban less efficient AC units. But with no other change, it would price some people out of the market. We could combine this with some kind of subsidy program for more efficient units—either directly to the manufacturer or by rebates to consumers, which could be income related. All of these create additional problems, but in the absence of some relatively quick step, the possibility of a grid crash and states running out of electricity during air conditioning season grows. And, of course, if the grid crashes, it is not simply a private market problem. It is truly the destruction of the commons—as are the longer terms of climate change.

Here’s another immediate issue. While alternative energy is the high level approach to addressing these issues, we aren’t there yet. For instance, there is currently a mismatch between production of solar and wind energy and when it is most needed. During the recent California heat crisis, its energy system had to dump a huge amount of alternative energy during the day because there was neither demand nor way to store for the evening when blasting air conditioners created crisis situations. This is, to be sure, a problem. But using it as a basis to trash alternative energy sources—as too many politicians are willing to do—impedes the discussion rather than solving the problem. We need to be considering more and better batteries, an improved grid and probably better pricing structures that incentivize more efficient energy use without overly penalizing those who can’t, for whatever reason, comply. There is some role for market solutions here, but market solutions at scale may not happen quickly enough. Nor is there anything about market solutions that considers the distributional consequences. Pricing half the elderly and disabled out of air conditioning is not a viable solution.

Don’t get me wrong. I don’t pretend to know what is the right mix of market, regulation and subsidy for air conditioning…or anything else. But I am profoundly skeptical that at the moment we have a political system capable of working its way through the complexities of transitioning to an environmentally sustainable economic system. When Rick Perry says Texans would rather be cold for a few days than let the Federal government get involved in their energy, he is offering the first draft of an obituary for the environment.

The issue isn’t whether he’s right or wrong about the need for a more organized grid. The real issue is whether there is sufficient trust to undertake any proactive solution. All the available evidence suggests that simply hunkering down and pretending things will solve themself is not a good longer-term option. It seems more likely that to get ahead of current environmental threats, societies are going to have to make some huge, scary decisions with incomplete knowledge.

Thus, the Biggest Obstacles Aren’t Technical

I started writing this post with the intention of making a different point, namely that we still lacked an overall plan to make sense of our current situation. I was, indeed still am, concerned that so many environmental issues are being addressed with slogans and fragmentary fixes and there is no comprehensive plan that makes even rough attempts to model which tradeoffs we need to make to get from here to there. For huge instance, how do we weigh the emissions advantages of nuclear power against its obvious downsides?

But the more I thought about it, the clearer it seemed to me that all the technical complexities were dwarfed by the fact that there is not enough communal trust in our society to pick our way through a series of choices that will be very difficult. Only a handful of us are ever going to know enough to have even vaguely useful opinions on how the trade-offs among options will shake out. Every decision has to be made with regard not simply to environmental impacts, hard enough, but also how it relates to other initiatives, how all the initiatives are funded, and what are the distributional impacts. Moreover, it is a lead-pipe certainty that some of these will require changes in our habits, maybe even give up something. And it is equally certain that some of the decisions that get made will be wrong. Science is never perfect. Things will be tried and not work. Government will intervene and something will get screwed up. These are as inevitable as any law of physics.

But if as a society we won’t trust anyone to make those decisions, we organize our political system around cannibalizing anyone who makes a mistake, and we don’t even trust anyone to give us an assessment of where we are, we have a huge problem.

It is possible we might muddle through this with minimal damage. Although our national political process is largely stalemated on addressing these issues, reality will not stand still, even if some politicians want to make it so. The market is already responding to these issues in a variety of predictable, but perhaps unanticipated, ways. Scientists and technological wizards are fully engaged and will undoubtedly come up with some specular devices to save our bacon—or our tofu as may become more common. Individual states and other countries will take steps. And, from time to time, the nation will take some useful steps, like the measures in the Inflation Reduction Act.

On the other hand, I wouldn’t be surprised at a scenario like what is shown in the Polish television series “High Water” about the 1997 flood in Wroclaw. In the series, the leading expert asserts it is necessary to flood a rural area outside the town to reduce the pressure on the town’s defenses. The rural residents resist, the bureaucrats fumble and the politicians, worried about their short run future, acquiesce, asserting that the town’s sandbagging will be sufficient. It wasn’t and there was much greater damage and loss of life than if the initial sacrifice had been made.

A global catastrophe would be much worse.