it is absolutely urgent that we begin calculating the cost of climate change, and pass the cost on to the people who are doing the burning and emitting. .... The number of people who die each year in China because of air pollution is in the order of 400,000. That’s a huge mortality rate, and the cost should be built into the price of fossil fuels.Why then do governments continue to subsidise fossil fuel extraction and use?
Well, it’s partially inertia. Fossil fuels play a very large role in our economies, and to phase them out would cause a lot of disruption. However, it will not be nearly as difficult as living in a world that has been ravaged by climate change. The other reason is the influence of lobbyists. In Washington, for example, there are large numbers of lobbyists who whisper in the ears of Congress in order to keep subsidies to fossil fuels in place. I believe that lobbyists are spending as much as US$250 million a month in the United States, much of which goes to lobbying on behalf of the fossil fuels.As with agriculture, fisheries and road transport, fossil fuel subsidies have always been perverse. Right now they appear to be suicidal as well. They are the sort of policies that get implemented when nobody thinks about outcomes but only about the supposed means of reaching them. The tragedy is that they don't stop even when the evidence about their perversity is overwhelming, and has been overwhelming for decades.
A Social Policy Bond regime would be different. From the start it would clarify what are society's goals, and what, like, say, cheap, easy transport, are not necessarily goals at all. And then it would inextricably link rewards to the achievement of them. A government-backed bond regime wouldn't spend billions of taxpayer funds on corrupt, insane policies that are financial and environmental disasters. It would subordinate all projects, all activities, all institutions to the goals themselves. Apart from much greater efficiency, there would be a lot more transparency. Current institutional structures, both public and private sector, would be threatened, to the extent that they impede rather than assist achievement of social goals. Mr Myers is writing a book titled How Institutions Block Our Road to Sustainability. It should make interesting reading.