Thank you. Hi. Thank you for having me. It’s great to be here. Paris is one of my favorite places in the world. It’s actually, on the first trip that I went out of South Africa, Paris, that was where I went when I was a little kid. My parents brought me when I was like 6 years old. I’ve loved Paris ever since. Thank you for having me.
What I’m going to talk about today is just in general terms, [04:00] what is needed to address the climate crisis. This is the thing that if we do, what actions can we take that will accelerate the transition out of the fossil fuel era. Where we are today is … See, if this is working or not.
All right, we have the present era where we have the carbon cycle. My apologies if some of you already know all about this, but I think some of these things may be not as obvious as they may seem. There’s a certain amount of carbon that is circulating through the environment. It’s going into the air, and then getting absorbed by plants and animals, and then going back into the air, and this carbon is just circulating on the surface. This is fine and it’s been doing that for hundreds of millions of years.
The thing that’s changed is that we’ve added something to the mix. This is what I would call the turd in the punch bowl. We’ve added all this extra carbon to the carbon cycle and the net result is that the carbon in the oceans’ atmosphere is growing over time. It’s much more than can be absorbed by the ecosystem. It’s really quite simple. We’re taking billions of tons of carbon that’s been buried for hundreds of millions of years and is not part of the carbon cycle, taking from deep underground and adding it to the carbon cycle.
The result is that a steady increase in the carbon in the atmosphere and in the oceans, which doesn’t look like much if you look at it on this chart, but when looked at in the context of history, it actually looks like this. So the [06:00] carbon parts per million has really been bouncing around the 300 level for around 10 million years. Then the last few hundred years, it went into a vertical climb. This is the essence of the problem. This is very unusual and a very, very extreme threat as you can see from this rate of growth.
Then this is accompanied by a temperature increase as one would expect. This temperate increase, people talk about 2 degrees or 3 degrees, it’s important to appreciate just how sensitive the climate actually is to temperate. It’s important to look at it in terms of absolute temperature, not in degrees Celsius relative to zero. We need to say what is the temperature change relative to absolute zero? That’s how the universe thinks about temperature. That’s how physics thinks about temperature. It’s relative to absolute zero for small changes result in huge effects. New York City under ice would be minus 5 degrees. New York City under water would be plus 5 degrees. Looked at as a percentage relative to absolute zero, it’s only a plus/minus 2% change.
The sensitivity of climate is extremely, extremely high. We’ve amplified this sensitivity by building our cities right on the coastline and most people live very close to the ocean. There are some countries, of course, that are very low lying and would be completely under water in a climate crisis. We’ve essentially designed civilization to be super sensitive to climate change [08:00].
The important thing to appreciate is that we are going to exit the fossil fuels era. It is inevitable that we will exit the fossil fuel era because at a certain point, we’ll simply run out of carbon to mine and burn. The question is really when do we exit the era, not if. The goal is to exit the era as quickly as possible. That means we need to move from the old goal with the pre-industrial goal, which was to move from chopping down forests and killing lots of whales. The old goal was to move from chopping wood and killing whales to fossil fuels, which actually in that context was a good thing, but the new goal is to move to a sustainable energy future. We want to use things like hydro, solar, wind, geothermal. Nuclear is also a good option in places like France, which aren’t subject to natural disasters. We want to use energy sources that will be good for a billion years.
How do we accelerate this transition away from fossil fuels to a sustainable era and what happens if we don’t? If we wait and if we delay the change, the best case is simply delaying that inevitable transition to sustainable energy. This is the best case if we don’t take action now. At the risk of being repetitive, there’s going to be no choice in the long term to move to sustainable [10:00] energy. It’s tautological. We have to have sustainable energy or we’ll simply run out of the other one. The only thing we gain by slowing down the transition is just slowing it down. It doesn’t make it not occur. It just slows it down.
The worst case however is more displacement and destruction than all the wars in history combined. These are the best/worst case scenarios. Then we have about 3 percent of scientists that believe in the best case. About 97 percent that believe in the worst case. This why I call it the dumbest experiment in history ever. Why would you do this?
The reason that transition is delayed or is happening slowly is because there is a hidden subsidy on all carbon-producing activity. In a healthy market, if you have say 10 Euros of benefit and 4 Euros of harm to society, the profit would be 6 Euros. This makes obvious sense. This is where the incentives are aligned with a good future.
This is not the case today. If you have the incentives aligned, then the forcing function towards a good future, towards a sustainable energy future will be powerful. In an unhealthy market, you have your 10 Euros of benefit, if you have 4 Euros, but the 4 Euros isn’t taxed. You have an untaxed negative externality. This is basically Economics 101. You have basically unreasonable profit and a forcing function to do carbon-emitting activity because this cost to society is not being paid. The net result is 35 gigatons of carbon per year into the atmosphere [12:00].
This is analogues to not paying for garbage collection. It’s not as though we should say in the case of garbage, have a garbage-free society. It’s very difficult to have a garbage-free society, but it’s just important that people pay for the garbage collection. We need to go from having untaxed negative externality, which is effectively a hidden carbon subsidy of enormous size, $5.3 trillion a year according to the IMF every year. We need to move away from this and have a carbon tax.
This is being fought quite hard by the carbon producers. They’re using tactics that are very similar to what the cigarette industry or the tobacco industry used for many years. They would take the approach of even though the overwhelming signs of the consensus was that smoking cigarettes was bad for you, they would find a few scientists that would disagree and then they would say, “Look, scientists disagree.” That’s essentially how they would try to trick the public into thinking that smoking is not that bad.
The solution obviously is to remove the subsidy. That means we need to have a carbon tax and to make it something which is neither a left nor a right issue. We should make it probably a revenue neutral carbon tax. This would be a case of increasing taxes on carbon, but then reducing taxes in other places. Maybe there would [14:00] be a reduction in sales tax or VAT and an increase in carbon tax so that only those using high levels of carbon would pay an increased tax.
Moreover, in order to give industry time to react, this could be a phased-in approach so that maybe it takes five years before the carbon taxes are very high so that means that only companies that don’t take action today will suffer in five years. There needs to be a clear message from government in this regard because the fundamental problem is the rules today incent people to create carbon and this is madness. Whatever you incent will happen. That’s why we’re seeing very little effect thus far.
Depending upon what action we take will drive the carbon number to either extreme or moderate levels. I think it’s pretty much a given that the 2-degree C increase will occur. The question is whether it’s going to be much more than that, not if there will be a 2-degree increase.
Then the question is what can you do? I would say whenever you have the opportunity, talk to the politicians. Ask them to enact a carbon tax. We have to fix the unpriced externality. I would talk to your friends about it and fight the propaganda from the carbon industry. That’s the basic message I have and I’m happy to take questions.
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