Consumers—not voters—will ultimately drive climate policy

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Appeared in the Calgary Sun, January 15, 2020
Consumers—not voters—will ultimately drive climate policy

Last week, the Calgary-based oilsands producer Cenovus Energy announced plans to help fight climate change by reducing per-barrel greenhouse gas emissions by 30 per cent by 2030, and reaching net-zero emissions by 2050. At least one environmental group has criticized the Cenovus announcement as not going far enough, but at this stage in the public debate over what to do about climate change, these types of voluntary initiatives may be the best compromise when the citizenry is so hotly divided on the appropriate response from government.

As reported by CBC, in response to Cenovus Energy’s announcement, Keith Stewart of Greenpeace Canada complained the company was only promising to keep its total emissions flat through 2030 (because lower emissions-per-barrel would be offset by greater total production). Stewart illustrated his concerns with an analogy: “I liken it to saying the captain of the ship has spotted the iceberg and has pledged to maintain course and speed.”

The problem here is that many people, including experts, sincerely disagree that human-caused climate change is analogous to a ship heading for an iceberg. For example, the 2018 Nobel Prize in economics went to William Nordhaus for his work on climate change policy. Nordhaus’ work suggests that even if all governments implemented an “optimal” carbon tax, cumulative global warming by the year 2100 would be reduced from about 4.1 degrees Celsius (the no-policy baseline) down to 3.5 degrees Celsius (the “optimal” amount of warming to allow). Contrast Nordhaus’ optimal 3.5 degrees of warming with the UN’s aspirational goal of 1.5 degrees.

My point here isn’t to hold up William Nordhaus’ work as gospel, but rather to show that this recent Nobel laureate doesn’t come anywhere close to supporting Greenpeace Canada’s iceberg analogy. This contrast is why a political approach to climate change is so elusive. Citizens around the world are being asked to suffer higher electricity and gasoline prices to avoid a future nightmare scenario. Because the pain is evident here and now, when the public starts to hear that these future scenarios might be exaggerated, they then elect political officials who weaken or overturn the political commitments. This has happened in Australia, the United States and here at home.

In this context, voluntary industry pledges—which may themselves be partially motivated by pressure from large investment funds—represent compromise. If companies can make modest improvements in emissions without causing undue hardship to investors and customers, then they can do so and advertise these achievements to the public. Then consumers can decide if they want to pay slightly more for goods and services delivered in a more “socially responsible” fashion. Company investments in new technology will move us along the learning curve, making it cheaper to achieve even more emission reductions, if desired.

In this framework, environmental activists can focus their attention on getting more of the public to alter their buying patterns, rather than trying to maintain a string of victories at the ballot box and forcing their vision on society for decades into the future. Convincing one household at a time is a better long-run strategy than a political approach. Indeed, the truly “sustainable” reduction in emissions will occur with new technologies that emerge from voluntary industry and customer decisions.