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Econ 050: How to avoid climate catastrophe

Date:25 March 2019
Podcast Econ 050 covers the economics and business news that matters to the Netherlands and the wider world.
Podcast Econ 050 covers the economics and business news that matters to the Netherlands and the wider world.

If climate change is global, why do so many countries, even those at direct risk of its consequences like the low-lying Netherlands, still seem to see it as a zero sum game? How can politicians, including those in the far right Forum for Democracy who won a large share of the vote this week, and companies be made to look beyond their own national borders and coffers to make change now?

Associate professor Pim Heijnen has been researching ways to avoid climate catastrophe through cooperation, and he explains why it seems so hard for individual countries to put long term global interests above short term national interests. Listen to the full interview now in this episode of Econ 050.

What is abatement?

Pim Heijnen: It just means we are reducing emissions of greenhouse gases. So what I don’t really specify in my papers is how government should actually accomplish this. So there is of course one issue where you say within the country, we have all kinds of policy measures that could be used to actually reduce stuff. That could be raising taxes on anything that increases CO2emissions. It could just be forbidding certain types of activities. It could be anything, essentially. It could also be subsidies.

On how committed European governments are to holding polluting industries accountable – or not:

Heijnen: If you want have an economic argument, if you look at what we're currently emitting, you see that there's a couple of big industries that are emitting a lot of CO2. I think it would make sense to actually focus attention on these, because they give the biggest bang for the buck. But that's also like the efficiency argument: if you want to reduce emission, first start with thing which has lowest marginal cost and then work your way up to the things which are most difficult to change.

Traci White: From a pain point standpoint, that kind of makes sense, but in terms of making the biggest impact, it seems that you should switch that around.

Heijnen: Well the biggest impact means of course reducing emissions versus how much money you spent on it. So it could still be that if have a big metal works like the one we have in Ijmuiden here in the Netherlands, which I think accounts for 25 percent of all Dutch CO2 emission, if you could make a big gain there, it might cost a little bit of money, but you could definitely reduce emissions in those kind of sectors more than if you're only looking at how to make houses more efficient in terms of heating.

On the impact of citizen-led lawsuits against the government (like URGENDA) to improve climate policy:

Heijnen: It is mainly symbolic action forcing the Dutch government to get working in that direction at least, and then you could wonder, do you actually want lawsuits on this or not? Because ultimately, it seems like a political question. If Dutch citizens really wanted the Dutch government to reduce CO2 emissions, I mean we have regular elections. They could have chosen a different party than the current one.

On three-term Prime Minister Mark Rutte’s party, the VVD, and their stance on making environmental policy changes:

Heijnen: I think in traditional terms, they are like a center right party, and they're not an unreasonable party, I think. So it’s at least nice that our Prime Minister's not denying climate change. But if you look at their voting base, I always think of it as the pro-car party. They want people to own cars and drive them over nice highways. So what I don't see them doing, or what they have basically been blocking for the past decades, is attempts at getting people out of the car into public transport. So they don't deny that the climate change is here, but they've never taken a very active stance to reduce CO2 emissions. So there is indeed some continuity in Dutch government, but the parties that want to reduce CO2 emissions have never had a very prominent role in these governments.

On how to get countries to see themselves as part of a global ecosystem instead of just worrying about what is happening within their own borders:

Heijnen: The first best outcome would be where everybody cooperates and there you see that the burden is shared quite equally. What will happen in a sort of second best framework is where countries at least write up a treaty that is individually optimal for them to sign, then of course the Netherlands, if we take that as a country which will be impacted highly, they will take a large share of the burden, which is not as efficient, but it makes sense from an individual country perspective. And this is not a bad thing, per se. The fact that we are hit more and maybe also means that we should contribute more.

On why it’s better to take action even if you do not believe in climate change than letting it run its course:

Heijnen: What about the consequences if you get it wrong? Well I would argue that if you do nothing and get it wrong, it will be a much bigger catastrophe than the other way around. So even if you do something, you'd actually make society slightly more sustainable, and it could well be that the benefits of this are smaller than you expect them to be and they could be potentially centuries into the future, but at least generations after us will actually profit from this. So that may be wasteful in the short run, but it won't be so disastrous 40 years from now, at least.