Deal With The Climate
Deal With The Climate
Wisdom Letter #33 | The one about the other crisis
(click here to read this post in Hindi)
Why do you think the climate is changing irreversibly?
OK, we all know the story of carbon by now, how burning fossil fuels releases carbon dioxide which in turn traps heat into the atmosphere, leading to rising temperatures across the world, melting ice caps, and endangering species.
We know that, intuitively it makes a lot of sense also.
But the question I am asking is, why does it happen at all? Why do we keep letting it happen even when the dangers are so obvious?
After all, we know precisely the reasons why it happens, and we have known these reasons for quite some time now, close to 30 years, and yet we still continue to burn more and more carbon year after year.
I mean, a saner species might have already stopped their emissions by now and moved onto cleaner energy. Then why havenāt we done it yet?
After all we are an āintelligentā species. Or so I have been told.
Turns out, changing behavior is hard for us humans, especially if the benefits of that behavior change are far away into the future, and the pain to be caused is immediate. And if that change can hit our wallets really badly.
The pain can be really unbearable for a considerable population of our species.
But why is that pain so immense? Can we not slowly ease into cleaner energy sources and go carbon neutral over the next 30-40 years maybe?
And what exactly will we have to do? Why do the changes sound so ominous? What changes are necessary to the way our economic systems work, how the world works?
Today on The Wisdom Project, we try to find out what needs to be done to tackle this towering beast, what has caused the problem to balloon the way it has.
And we take a look at what impact is this issue causing on Generation Z, the teenagers of today. After all they are the ones who will have to fight the crisis head-on in this century. (And no, we are not talking about a certain Swedish teenager)
Read On.
#1
Need for a new Financial System
This Graph tells a story.
These are greenhouse gas emission numbers over the last 2000 years. And the curve starts to go straight up in the early to mid 18th century period. (Another curve we must flatten if we want to survive)
Thatās sometime around the start of the industrial revolution.
Strangely enough, to solve the climate crisis we must look at our economy, and the way it has taken shape over the last couple of centuries.
The idea of capitalism has baked into it, the idea of continuous conspicuous consumption, decade after decade. That is how a modern economy functions in our world.
(Checkout this cool video from hedge fund investor Ray Dalio to understand how the economic machine works. Also checkout Wisdom Letter 11 where we talked in detail about how money runs in our system.)
In short, the economy runs on debt. Or credit in fancier terms. āBankers minting money out of thin airā in crude terms.
Debt is essentially a bet on the future, its a bet that our children will grow at a faster pace than we ever could, and pay it off by increasing the size of the overall economic pie.
Currently, if we donāt double the size of our economy every 20 years then we face economic collapse, global panic, recessions and depressions. Its a tight rope we are walking.
Credit, as some might say, is a tax on the future.
And the only way the future generations can pay this tax is through more and more growth and consumption.
But what fuels this growth? Who bears the toll of this consumption?
The Earth of course.
Think about it, any material thing that you consume is ultimately sourced from the planet and its natural resources.
The planet is a finite resource, its HUGE, but still, its finite, and one day it will run out of stuff to fuel the infinite growth our economy seems to deem necessary.
This article from The Guardian dives deep into this problem and offers a few solutions as well. It argues that to save the planet, we must completely change our financial system.
Its short, to the point, and controversial.
Check it outā
To deal with climate change we need a new financial system
#2
A Proposal
So what changes do we make specifically?
How do we even think about this problem?
The time for incremental changes is over and we must take radical actions now if we want to save the planet.
A policy think tank in the United States came up with a āGreen New Dealā sometime last year. It was backed by a couple of democratic politicians.
It gathered momentum in the public sphere and might become a poll issue in this yearās presidential elections in the country.
But its a polarizing proposal. It has split political opinion across the world. There is little space for nuance when you are arguing about the green new deal with someone. But very few people actually know what the deal is all about.
Its a simple 14 page document, and it has two basic arguments.
We must drastically reduce our carbon emissions as soon as we can(like right now).
There will be major economic consequences when we do that, so we build in protective tools to safeguard the ones who will be hit worst.
Sounds quite reasonable. Right?
You can also read it as a dreaded socialist policy document, depending on how you choose to look at it.
This video from VOX does a great job of explaining what the deal is. And the politics surrounding the deal.
Take a look ā
The Green New Deal, Explained
#3
A German Solution
OK, so the Americans might find it hard to get the green new deal through.
But what other option do we have? Countries have tried imposing carbon taxes as well over the years. But they have come to be so loathed that politicians around the world are afraid to use the word āCarbon Taxā in any climate change policy.
Take a look at this hilarious video from the Canadian parliament where prime minister Trudeau tried to explain the importance of āCarbon Pricingā and mistakenly used the word Tax. The response from fellow parliamentarians is amazing.
Jokes apart, its a fact that if we have to move to greener sources of energy then someone in the economic system will have to take a hit.
It is going to pinch peopleās wallets for sure. How do we decide who gets hit the most and by how much?
The Germans found an interesting way to deal with the issue in the form of a āFeed - In Tariffā policy.
Essentially any German citizen can put up solar panels on his roof and generate electricity and sell it to the government at fixed price. This fixed price is higher than the average price in the country, and is valid for a fixed period of time. So the panels pay for themselves in due course.
The price difference is borne by the citizens who donāt shift to greener energy.
Economics is the study of incentives. It implores us that to affect behavior change we must align peopleās incentives to the results we want to achieve.
People act on incentives. Period.
The āFeed in Tariffā system in Germany incentivises green energy and disincentivises electricity produced through carbon. Some may even call it a āCarbon Taxā. Nevertheless it seems to work, it has led the Germans to produce about 50% of their energy through renewable sources. Its a system that can be emulated across the world.
Listen to this podcast from Planet Money to understand the policy better.
Das Green Old Deal
#4
Battles of GenZ
I am not sure whether we can achieve the massive overhaul of our systems and behaviors that is needed to solve this problem.
But I can live with the uncertainty because I know I wonāt live long enough to see the worst of it.
But what about the kids these days. The Gen Z teenagers who are just studying about climate change in school right now. What must they be thinking about their elder generationsā inaction to deal with the issue.
What an overwhelming thought it is that the burden of fixing this humongous problem lies with the delicate generation of humans who havenāt even come of age so far.
What do we even teach them about climate change? The sheer magnitude of the problem is causing the kids anxiety and depression.
Do we not keep climate change in the syllabus to prevent them from this āEco-anxietyā ? Or if we do, do we give them false hope that slow incremental changes will solve the problem in the long run?
This article from the Washington Post grapples with issue of eco-anxiety and the challenges that Gen Z is facing in coming to terms with the climate change problem.
A bone chilling passage from the article goes like this ā
āEco-anxietyā or āClimate depressionā is playing out in real terms among young people, sometimes in extreme ways: A 2008 study in an Australian medical journal chronicled the case of a 17-year-old boy who was hospitalised after refusing to drink water during a nationwide drought, in what the authors called the first case of āclimate change delusionā.
A psychiatrist I interviewed told me a patient had confessed that she secretly wished a pandemic would strike to ease the stress on the planet.
The article dives deep into the challenges faced by teenagers, their parents and teachers, and the conundrum of how do we keep their hopes up without misinforming them about the magnitude of the problem.
Its a long, interesting read, check it out ā
The Environmental Burden of Generation Z
#5
Signing off for the weekend, hereās a quote worth thinking about
"Climate Change: Dont undermine the science just because you donāt like the economicsā
-Brian Cox | Physicist
Science is a study of nature. Nature has its own rules which keep its systems running. It does not need your belief to function. Climate change is a natural phenomenon that this planet has witnessed many times in its long history.
Human intervention has accelerated this phenomenon this time. The only way to slow it down now, is to change the systems which caused this acceleration in the first place.
It does not matter weather this reversal is economically viable or not - that is something for human ingenuity and human innovation to figure out.
Donāt be in denial.
Donāt try to save the planet.
Just try to Save yourself.
Think about it!
If you care about climate change, you might also like Wisdom Letter 10- The Carbon Conundrum. Check it outā
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Aditi & Ayush
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