Climate change policy: another way of subsidising the rich

I will persist in believing that, if governments were serious about doing anything to combat climate change, they'd target for reduction some of the adverse impacts of climate, and either legislate appropriately, or put in place some incentives that would help mitigate those impacts. That they are not serious, can be clearly seen by the UK Government's Zero Emission Vehicle (ZEV) mandate, which...:

...sets out the percentage of new zero emission cars and vans manufacturers will be required to produce each year up to 2030. [Eighty] % of new cars and 70% of new vans sold in Great Britain will now be zero emission by 2030, increasing to 100% by 2035. Source

 There are some loopholes, of course: 

 If a manufacturer fails to meet this target, it could be fined £15,000 per car it sells that’s outside the allowance. This is unlikely to happen, though, as there are several ways to avoid this. Non-compliant manufacturers can buy ‘credits’ from manufacturers that do comply, for example. Manufacturers that do comply can also ‘bank’ sales that can be traded in years where they may not comply. This system was introduced in 2023 as a part of the ban on fossil-fuel powered cars being pushed back from 2023 to 2035. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

 and subsidies to that fortunate part of the population that can afford to own cars and vans:

The government’s schemes to lower the upfront and running costs of owning an EV [Electric Vehicle] includes the plug-in van grant of up to £2,500 for small vans and £5,000 for large vans until at least 2025 and £350 off the cost of homeplace chargepoints for people living in flats. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

This is the usual complex, faintly corrupt, totally ineffectual policy that, sadly, is the norm. It might do something to change the ratio of EVs to other vehicles, but it is guaranteed to do nothing positive for the climate. Our politicians are more concerned with placating large corporations (those that make, sell and service vehicles), and motorists; and, as in agriculture (just one example), continuing to transfer funds from the poor to the wealthy. At least there's some consistency: amidst the tax hikes announced in the UK's budget today, we read that: 

Fuel duty stays frozen

Rates on fuel duty – a tax included in the price you pay for petrol, diesel and other fuels – will be kept the same in the next financial year. The temporary 5p per litre cut introduced in 2022 will remain for one more year. Autumn Budget 2024, 'Which? News' 30 October 2024

What would a meaningful attempt to combat climate change look like? First, we'd have some idea of what we want our policies to achieve. My thinking is that our goals would be expressed as an array of scientific, social and financial indicators of the climate and its impacts, each of which would have to fall within an approved range for a sustained period before they could be deemed achieved. What we have today is an exclusive focus on atmospheric composition. The plethora of policies supposedly aimed at influencing  that over the years have had precisely zero effect: 

 

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September 2023

For my suggestion as to how we can combat climate change or its adverse impacts on plant, animal and human life, please see the papers linked to here.

 

Now let's try to solve terrestrial problems

The Economist explains how NASA is reducing costs and enhancing efficiency in space exploration:

Over the past ten years NASA has started to move away from the time-honoured model which sees it tell private industry exactly what it wants built and then pay the price, with a handsome guaranteed profit added on. Instead NASA tells companies what it wants done; lets them say how they would do it, how much new stuff they will have to develop and what that will all cost; and then offers fixed-price contracts to the best bids. The enlightened goal is to build up a thriving competitive market in such services. SpaceX is NASA’s biggest lunar rival, the 'Economist', 17 October 2024

This is exactly the model I've been advocating for many years: stipulate the outcome and let market incentives decide who shall achieve it and how they do so. As it's working successfully for space exploration maybe we could think about applying it to terrestrial problems. I'm not sure why we don't. It could be that the politicians and bureaucrats who control spending on social and environmental problems are reluctant to relinquish the power to determine which bodies receive government funding and how they go about achieving our goals. But they would still have the remit to help articulate society's goals and raise the revenue for their achievement. Democratic governments are quite effective in doing those things, but they will persist in dictating both which bodies receive their funding, and how they are to go about achieving our social and environmental goals. That model can work well when the causes of our social problems are easy to identify, but it's less successful when our problems are inescapably complex and long term in nature. Such problems include crime, poor health, climate change and - most deadly of all - war. They probably all require a wide range of diverse, adaptive approaches to their solution, and these are exactly the approaches that government cannot follow. Nor can any single conventional organisation, whose stated goals inevitably get forgotten over time in favour of self perpetuation. 

Social Policy Bonds would do what NASA's doing: contract out the achievement of our long-term social and environmental goals to investors in the bonds, who would have incentives to co-operate with each other with the sole aim of achieving these goals. When the bonds are issued, I envisage that a new sort of organisation will form, whose every activity will be devoted to maximising the efficiency with which investors solve, or pay others to solve, society's problems. Society's goals and those of investors would exactly coincide.

Climate and the environment: it could have been so different

Several years ago Michelle Nijhuis reviewed Losing earth: the decade we almost stopped climate change, by Nathaniel Rich. She wrote about missed opportunities to address climate change in the 1980s. In 1980 the US National Commission on Air Quality convened a meeting of climate and energy: 

[W]hen it came time to commit to specific solutions, the experts began to hesitate. China, the Soviet Union, and the United States were all accelerating coal production; [President] Carter was planning to invest $80 billion in synthetic fuels. Proposed laws or regulations would focus attention on the costs of emissions reduction, instantly politicizing the issue. “We are talking about some major fights in this country,” said the economist Thomas Waltz. “We had better be thinking this thing through.” By the third day, Rich recounts, the experts had abandoned solutions and were even reconsidering their statement of the problem, loading it with caveats. (Were climatic changes “highly likely” or “almost surely” to occur? Were said changes of an “undetermined” or “little-understood” nature?) In the end, the meeting’s final statement was weaker than the language the commission had used to announce the workshop .... Early warnings, Michelle Nijhuis, New York Review of Books, 27 June 2019

Then, as now, politicians' priority is to avoid difficult 'fights'. Much easier to move on to other, less contentious, issues. 

One of the advantages of Social Policy Bonds is that they put in place positive incentives. They channel self-interest into the public good. Sure, bondholders could lobby in favour of public funds being diverted to their target goal, but there is nevertheless a presentational advantage. With Climate Stability Bonds, people would be rewarded for avoiding climate change and its negative impacts. The climate goal could be expressed as a range of physical, ecological, financial and social indicators, all of which would have to fall into an approved range for a sustained period before the bonds would be redeemed. Importantly, the bonds could work well regardless of whether people believe or disbelieve (or say they disbelieve) that the climate is in fact changing. As with other goals that Social Policy Bonds could target, what matters is that the goal is achieved, not the effort required to achieve it, which means that, if the climate were somehow to revert to that deemed to be acceptable, bondholders would be paid out, even if they merely held the bonds and hoped for that outcome. Of course, if a bond regime were to target a goal seen as likely to be achieved, the float price of the bonds would be close to their redemption value. 

I say all this knowing that it's unlikely Climate Stability Bonds are ever going to be issued. They would require a huge redemption fund, backed by governments the world over, and there's no will now for such an initiative. The missed opportunities abound also for other environmental issues. Thus, the current Economist tells us that:

One study found the average size of wildlife populations had shrunk by 95% since 1970 in Latin America and the Caribbean - more than in any other region of the world. The drug lords' side-hustle: smuggling macaws, jaguars and frogs, the Economist, 10 October 2024

It's to be expected that vested interests will oppose policies that threaten their short-term financial goals. It's more of a tragedy that those who should be showing leadership back down in the face of such opposition. The Social Policy Bond principle, with their focus on rewarding meaningful social and environmental outcomes, could help, but inspired leadership would still be required. I'm not holding my breath.

Useless organisations

Adam Kogeman writes to the Economist:

 [T]he UN does some good through the provision of humanitarian aid, but it is a net negative contributor to global peace and prosperity. [It] prevents no conflicts and brings about no peace. Millions of Rwandans, Ukrainians, Sudanese, Lebanese, Syrians, Iraqis and Israelis, among others, can attest to that. It doesn’t follow through on its grandiose but unserious pledges to heal the environment and improve the lot of the world’s poorest. It provides diplomatic cover to the world’s worst human-rights abusers and physical cover to terrorist groups. It is consumed by a rabid obsession with denigrating the world’s only Jewish state. ...America’s occasional inability to hold sway at such a compromised, ineffectual institution is a reflection of the UN’s dysfunction and illegitimacy, not an indictment of its unmatched geopolitical influence. Letter to the editor, Adam Kogeman, the Economist, 26 September 2024

Whatever their founding intentions, I believe that every institution, be it public- or private-sector, including government (at any level), trade union, church, university, charity or large corporation, eventually, inevitably, becomes consumed by one over-arching goal: self perpetuation. Vested interests get bedded in, acquiring the power to oppose meaningful reform. (See one of my previous posts here about how, despite the many efforts of many organisations to reduce greenhouse gas emissions, nothing has been achieved.)

[T]the National Institute on Drug Abuse in Washington has sometimes claimed greatly to have advanced human understanding of addiction, largely thanks to itself, at the same time as the country in which it is located has suffered from an unprecedented epidemic of deaths from overdose—of drugs of addiction. The total of these deaths far exceeds that of all American military deaths since the end of the Second World War, two major wars included. ...The vast increase in the study of crime has not resulted in the diminution of crime, on the contrary, though it has certainly increased the number of criminologists. ... Another field of study whose academics and practitioners have made claims to great strides in understanding is psychology. This study too has undergone a vast expansion, indeed out of all recognition. Psychology is now the third most popular subject in American colleges and universities, and no doubt elsewhere as well. ...Despite unprecedentedly large numbers of psychologists, the psychological condition of the population does not seem to have improved. Finding a cure for psychology, Theodore Dalrymple, Quadrant, 30 September 2024

Whereas large private-sector corporations at least, in theory, are subject to the discipline of the market (which they do their best to undermine), those organisations whose supposed goals are to solve our social and environmental problems face no such restraint. All of which means, to me, that we need a new type of organisation: ones whose every activity is dedicated to achieving their stated goals. A Social Policy Bond regime, targeting broad, long-term goals, would lead to the creation of such organisations. They'd be driven entirely by financial incentives, which need not be as mercenary as it sounds. We pay people to teach, for example, or to care for people, but that doesn't mean those professions should be regarded with the disdain that many feel when the concept of paying people to achieve social goals - a la Social Policy Bonds - is mentioned. 

A bond regime would work by raising funds to pay investors in the bonds only when a targeted social goal had been achieved. Incentives would cascade down from investors to all those contracted to work to achieve the goal. In the long run, a new type of organisation would evolve with the sole function of funding the most promising approaches to achieving the goal and, importantly, terminating those that are failing. Payment is thus inextricably linked to achievement of the goal. For more about such an organisation see here.