What’s the alternative to fossil fuel divestment?

Many students involved in the divestment movement have taken on board the recent disturbing study in Nature convincingly indicating the need to keep much of the planet’s remaining fossil fuels in the ground to prevent destructive climate change, and quite sensibly they seek to do whatever they are able to advance this cause.

This post is a follow-on to my recent post “Divestment will not keep carbon in the ground,” which shows that fossil fuels divestment unfortunately will not advance this goal. My purpose here is to incite student activists to instead undertake initiatives that truly do promise to advance the cause of keeping a sizable portion of remaining carbon-based fuels in the ground.

To those in the divestment movement who have come to acknowledge that their efforts are fundamentally symbolic in nature, intended to raise awareness – ethics-driven though they be – I present the following question: “Why devote your remarkable energy to initiatives destined to have little concrete effect?  Wouldn’t you rather apply your energy directly to efforts more efficacious in accomplishing the goal of keeping fossil fuels in the ground?”

What initiatives? you ask.

The True Problem Stated Coldly, but Directly

History shows that student activism based on ethical considerations can accomplish extraordinary things.

The climate change phenomenon is historically unprecedented and effectively attacking it accordingly requires unprecedented mental discipline, fanatical attention to the facts (as opposed to wishes), the intellectual fortitude to set aside peer-driven tribal dictates, and the unremitting pursuit of new, never-before-conceived solutions – precisely the things society expects from their best and brightest university students.

But there is a wickedly complex ethical dilemma first to be confronted, concisely characterized in the following assertion: You cannot deprive the world’s peoples of fossil fuels-based energy without providing a better replacement.  The “better” part of this statement is where many of the ethical dilemmas arise.

To set the stage, consider the following facts: Energy poverty remains miserably widespread among the planet’s peoples. Energy poverty perpetuates hunger, health hazards, and disenfranchisement of women by forcing women and children to gather fuel for hours on end that they would rather spend earning incomes or studying.  These peoples rely on traditional fuels such as wood, charcoal, and dung to provide their energy needs. The Asian Development Bank reports that in 2010, 2.8 billion (with a “b”) Asians relied on such traditional fuels, which provide low-quality energy while often destroying natural ecosystems and creating onerous health risks from indoor air pollution.  In the same year, 628 million Asians had no electricity and 590 million in Africa were similarly deprived.  This is clearly an ethical problem.

But on the other side of the ethical equation, the same Asian Development Bank report projects that developing Asia alone will by 2034 emit more CO2 than is believed sustainable for the entire world.

Clearly, the energy supply ethically required to counter energy poverty while preventing global climate change (which in itself disproportionately impacts the poor, according to numerous studies) must be supplied by non-fossil-based means.  Yet such supply must be completely affordable if it is to be accessible to the global energy poor.  The impoverished need more energy, not less.

It is not enough to sequester fossil fuels if this deeply humane civilizational objective is to be met.  Instead, the prescription must be to supply clean, cheap and abundant energy in its place – must be to provide a better replacement.  “Better” along both environmental and economic dimensions.

A heavy, decidedly unfair, burden placed on the shoulders of today’s generation of students.

Other Possible Solutions for Activists to Rally Around

If divestment is ineffective, what else could capture the attention of student activists? Solutions commonly offered are many, but let’s dissect a few of them with primary reliance on the ethics scalpel.

Institute Carbon Taxes or Cap-and-Trade Mechanisms

As an economist, I am in love with the idea of adjusting global price signals to take account of externalities not automatically accounted for by markets.  Make the market work for the larger good.  The benefits are obvious: Fossil fuels prices paid by consumers will rise, reducing demand; renewables will gain an economic advantage; and firms will readjust their production processes to use less energy and more of other inputs.

But this raises a prickly ethical dilemma. The energy poor (and the poor generally) will then be faced with higher energy prices.  Affordable energy access will be reduced, taking these populations a step backward instead of forward.

In principle, there are ways around this.  If the added revenues realized by governments via carbon taxes or cap-and-trade auctions are recycled back to producers and consumers in a “revenue-neutral” way, they will be no worse off, and the environment will be better off.  The Canadian province of British Columbia enacted such a scheme and it appears to be working.

However, the obstacles in the way of a worldwide agreement on a carbon tax/cap-and-trade scheme are formidable.  Multiple political entities must be brought into accord around a host of hellishly complex practical issues.

Countries and regions more heavily dependent on energy to produce their goods will complain of competitive trade disadvantages.  On the other side, revenue recycling schemes could be engineered by countries to create unfair competitive trade advantages.   Further, settling on a politically-acceptable level for the tax itself, or alternatively, the magnitude of a carbon cap, is destined to be a long, drawn out process.  Exceptions called for by this or that country or economic sector promise extended negotiations.  One only need to look to recent global climate summits to see how far away we are from any global climate agreement even on basic goals, setting aside the fact that mechanisms for achieving these goals remain undefined.

On top of this, depending on how aggressive is the program, it is unclear how effective the mechanism will be in either reducing energy use or advancing clean energy alternatives, especially in light of the fast-growing needs of the developing world.  How much carbon will actually be sequestered?  And how soon?

It is a worthy goal, deserving of the activist’s support, but it can be a knotty, byzantine and energy-draining cause to throw the weight of one’s voice behind.  And one whose likely reward is extreme frustration over perhaps decades before it bears substantive fruit.  The present situation appears far more urgent that this.

Promote De-growth

We know that economic activity and energy use are tightly (though not perfectly) linked.  This has led some to promote the idea of “de-growth,” urging the contraction of economies by scaling back consumption and the energy production required to feed it.

Any ethical argument for this idea must navigate a treacherously narrow pathway.  To one side of the path, we see a precipitous cliff plunging to a dismal, ugly valley where continued economic growth fueled by ongoing use of dirty energy will have led to climate disaster.  To the other side, we see a valley teeming with billions of our earthly cousins fatefully condemned to a condition of ongoing poverty – grinding, despairing poverty for many of them.

The valley of climate disaster is well documented.  The valley lying in the other direction, not so much.  To illustrate the magnitudes involved, consider the following thought experiment:

We have at our disposal a wizard who can magically reduce economic activity in the industrialized world by half.  The wizard can then immediately increase economic activity in emerging and developing countries to a level where economic welfare matches between the two (identical GDP/capita). Using2013 data from the IMF, we can calculate that global GDP would have to rise by over 50% of what it was before the gedanken experiment, even considering the shrinkage in industrialized countries.  And if instead we ask the wizard to leave economic activity in the industrialized world alone and increase it in emerging and developing countries to create economic wealth parity, global GDP would have to be 300% higher.  Today, that is.  This completely leaves aside the fact that emerging and developing countries’ populations are growing rapidly, thereby multiplying these numbers in the decades hence.  I leave it to the reader to impute the energy consumption consequences.

There are both ethical and practical considerations to be engaged here.  On the ethical side: Are those of us in the industrialized world really morally justified in sitting back, perched as many of us are near the top of the Maslow hierarchy, declaring to this legion of impoverished souls who share the planet with us that they should abandon hope of ever attaining our level of economic wellbeing?  Viewed through this lens, substantial global economic growth is a global ethical imperative, not some sordid infantile indulgence.

The practical implications of this prescription are even more challenging than those surrounding a call to invoke a global carbon tax.  Imagine the politics of asking those in the industrialized world to adopt a massive de-growth agenda.  (These countries, by the way, have their own poor to contend with.)  If ever there were a prescription fraught with political peril, acrimony, and barriers to action, this would have to rank near the top of the list.

A qualifier: We are talking here about a short-term problem, not the entire future of the planet (but it is a very long “short-term”).  I myself have argued that multiple generations hence the planet can realize a condition of non-growing consumption – sustainable indefinitely – along with perpetually growing welfare, and have provided evidence that private ownership economies do not need growth to function, unlike what many claim.  But this vision requires for its realization three critical things: one, that the impoverished of the world have realized a level of consumption that is satisficing (we are far from this future); two, that global population has stabilized; and three, that all resources (not just energy resources) are derived from renewable sources.  But we are not nearly there yet, and de-growth in the industrialized world has no hope of getting us there in the time frame of you or your children.

De-growth is a prescription destined for failure in its capacity to affect the picture considered in the large – not one to quickly throw your weight behind if your goal is promote the vision of a planet sustainable for all.

Promote Energy Efficiency

Another alluring prescription offers that the world can get by with far less energy of any kind if we simply use it more efficiently.  Politicians especially are enamored of this idea because it purports to provide a pathway to a world where economic growth and the environment are not in conflict: a win-win for all their constituents.  But unfortunately, the world is not nearly so simple.  Energy efficiency gains, and the technologies/initiatives that invoke them, have the consequence of reducing the effective price of energy, and so by themselves spur energy use.  A vast and burgeoning technical literature, including contributions by myself, shows that “rebound effects” from energy efficiency gains can significantly erode the energy use reductions expected from engineering solutions that merely reduce energy use per unit of delivered energy services.  International organizations have been slow to recognize this inherently natural economic phenomenon, but we now see evidence that the IPCC and the IEA are acknowledging this double-edged sword of energy efficiency technologies.

Promote energy efficiency wherever you can.  It increases economic welfare for all, and will likely mitigate energy use increases to some degree.   But no, energy efficiency gains will not solve the climate problem on their own. Not even close. Future physical energy needs globally are far too great.  Instead, the lasting prescription for you and your progeny lies on the energy supply side, not the demand side of the equation, a point to which we now turn.

So What WILL Advance the Goal?  The Scholarly Approach.

Thus far, I have painted a decidedly gloomy picture as to possible student initiatives that will truly make a difference.  I freely (and regrettably) admit this.

But student activists whom history will deem to have been successful in inducing effective change will be those who adhere to disciplined, fact-based critical thinking and who choose practical, prudent courses of action that are both intellectually valid and ethically defensible.

The best and brightest among them will choose for themselves what this is.  They will listen closely to the various prescriptions offered and will use their own minds to discern the proper course of action, courageously setting aside fervent assurances of their peer group wherever necessary, but adopting others where warranted by sound reasoning.

Part of the discipline required is careful attention to the pitfall of confirmation bias, where we humans naturally take on board arguments that reinforce our preconceptions and dismiss those that challenge them.  Another part of the discipline is avoidance of the facile device of identifying culprits – the natural tendency, when we see a problem, to place this at the feet of certain groups and attack them as representatives of the problem, the defeat of whom will somehow automatically solve the problem.

So I say to you this: If you reckon yourself a scholar, I appeal to you to always rely on yourself as the final judge, no matter how socially appealing the adjurations of others (including me) may seem at the time.

An Immodest Proposal

So what the heck are you offering? you ask.  Get to the point, you say.  So okay, I ask you to consider the following humble but heartfelt appeal from a shopworn sustainability economist:

Find a cause directly attached to the supply side of the equation.  Connect yourself to some initiative aimed at driving down the cost of clean energy and making it more practical more quickly.  Throw your weight, your mind, your soul, and all your skills at this problem.  Incite others to do the same.

Nascent murmurings of such an initiative are found in a recent beautifully-written article by Matthew Stepp and Megan Nicholson of the Center for Clean Energy Innovation, “Time to focus on innovation targets, not emissions targets, to fight climate change.”  They say:

“The climate community is backing the wrong policy and it’s running out of time. New climate leadership is needed, not to try to coax countries into agreeing to emissions targets, but to commit to targets on clean energy innovation. In other words, nations should set goals to invest a certain amount of money in research, development, and demonstration (RD&D) to make clean energy so cheap that all businesses and consumers will voluntarily replace fossil fuels with clean energy because it makes economic sense to do so.”

Sagacious words.  The supply side of the problem holds the enduring answer.  A student-led initiative calling on governments to radically increase funding for research and other policies aimed at creating and adopting clean, cheap, and abundant energy is the only prescription among those discussed in this article that stands the chance of both keeping a sizable portion of carbon in the ground and advancing the cause of bringing the earth’s indigent billions out of energy poverty.   Aim your initiatives at the vulnerabilities of politicians, and force them to listen.

This is a highly promising cause deserving of your backing, I argue.  Doubtless other means can be conceived of to advance the climate agenda on the energy supply side – where the only real answers lie. Creative minds will find them.

Conclusion

This prescription does not promise an easy road.  It is a simple task to rally support by identifying some supposed culprit and fomenting tribal rage to carry the day.  Lamentably, it is more difficult by far to rally the better angels of our nature.  Yet if the goal is delivering concrete results, I suggest to you our angels have the more enduring foundation for effective delivery.

A final and important (and regrettably necessary) warning: Should you choose to travel down this difficult road, voices will arise out of nowhere to assault you on your motives.  They will claim that your cause is entirely self-serving, calling as it does for increased funding that will benefit you via grants for your institution’s research, and scholarship funding for your own activities.  Please invoke the discipline to ignore them.  Know that the goal itself is your defining justification – your service is in the best interests of the larger good; and not just for today’s world but for all future generations.

May the better angels of your nature guide you.

This article is published in collaboration with The Energy Collective. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Harry Saunders is an energy and sustainability economist.

Image: Excess natural gas is flared at a refinery in Tula, Mexico. REUTERS.