We're in this together

Al Gore’s mansion, located in the posh Belle Meade area of Nashville, consumes more electricity every month than the average American household uses in an entire year, according to the Nashville Electric Service. Source

An informed discussion here looks more closely at some of the details: Mr Gore buys carbon offsets, the number of people in his household is (probably) larger than average, but the costs of the offsets are tax deductible, and policymakers are couching the problem of anthropogenic climate change ‘in moral terms and by their own standard acting highly immorally.’ And then, what is Mr Gore supposed to do? ‘apparently the only way for him not to be a hypocrite is to move into a cave’. All these points are interesting, and seem quite valid to me. But they don’t really address the issue: for whatever reason, we are all in this together.

It’s easy to forget this, because we have left it all to government, and that has come up with a one-size-fits-all, top down, imposed pseudo-solution – Kyoto – with high up-front costs, and very little in the way of benefits. Most people, with justification, instinctively resent this sort of policy.

We desperately need people to buy in to solving the climate change problem. Kyoto doesn’t do this. Kyoto has become politicized; so much so that anybody who questions it is assumed to be an environmental vandal. (This itself is indicative of Kyoto’s limitations: people who are secure in their beliefs don’t feel threatened when those beliefs are questioned.)

It is for all these reasons that I believe Climate Stability Bonds would be an improvement over Kyoto. Climate Stability Bonds would be backed by the world’s governments. They would be redeemable once a specified climate stability goal had been achieved and sustained. They would be freely tradable and their value would rise or fall as the targeted goal become more or less likely to be achieved. The goal could be specified as a combination of climate and other indicators. The bonds would not prejudge the best ways of achieving their goal. They would reward the achievement of climate stability, however it is achieved. Investors in the bonds would have incentives to respond quickly and appropriately to new knowledge about what is causing climate change and to new ways of dealing with it. Governments would be the ultimate source of finance for achieving climate stability, but the private sector would allocate society’s scarce resources.

A Climate Stability Bond regime would express its aims in terms that people can understand. Its explicit goal would be climate stability. If people understand what a policy is all about, they can participate more in its development, refinement and implementation. This matters hugely when, as with climate change, we might have to rein in activities to which we have become accustomed.