Why your smartphone and acid rain should give you hope about climate change


Earlier this Fall, the Intergovernmental Panel on Climate Change (IPCC) put the world on notice (again): Unless we make significant changes in how we get our energy and use our land, we will be committing to a future with tremendous human suffering from extreme weather, drought, and ecological damage. While the report is driving important conversations about solutions to this challenge, the average reader might feel discouraged about the changes required. Luckily, the truth is more hopeful than some recent press lets on.

On one hand, the IPCC report builds a compelling case for why we must work urgently to avoid more than 1.5 degrees C of warming (I, for one, would like my daughter to have some coral reefs on her planet and to know that we prevented the tremendous human suffering that will come at higher levels of warming). On the other hand, numbers pulled from deep within the report seem to suggest that carbon prices would have to be hundreds or even thousands of dollars per ton to avoid these severe impacts. For example, the New York Times mentioned carbon prices “perhaps as high as $27,000 per ton by 2100.” Yet these numbers –stripped from their associated caveats — don’t tell the whole story of what we know.

Try this thought experiment: imagine going to IBM in 1981 after they released their first 45-pound personal computer (for roughly $8,000 in today’s dollars). Now envision asking them to calculate the cost to equip nearly everyone in the US with a portable, pocket-sized computer roughly 90 times faster and with 2000 times more memory. What are the chances they would get it right?

You can start to see why asking a computer model to predict the costs of redesigning our energy systems over the next few decades is an impossible task. As others have noted, models are not very good at capturing the innovation and structural shifts in the economy that we know it will take to get to a clean energy future.

In peer-reviewed research I authored with a number of economic modeling experts, we noted that estimates of the carbon prices needed in the long term “likely say more about the difficulties the models have achieving these targets than the actual prices that will be needed.” Models use the behavior of the economy of the past and often outdated technology costs to predict a world that will be, in reality, innovating rapidly and structurally different.

When models spit out super-high prices, it’s not a crystal ball — it’s the computer saying: “I don’t know how to do that with the data you gave me.” The primary thing the IPCC report says with high confidence about carbon prices is that prices will need to be higher to limit the temperature increase to 1.5 degrees C instead of 2 degrees C. This isn’t really news — we know that we need far more ambitious policies across a range of sectors if we are to have any real chance of avoiding severe climate impacts.

This isn’t just a theoretical argument about models. During debates about acid rain in the US, Environmental Protection Agency modeling predicted that prices for sulfur dioxide(which causes acid rain) would have to start around $250 per ton and rise to up to $1000 per ton. Policy designers even built in a in a provision in case prices got above $1500 per ton.

Model projections of the costs to reduce sulfur dioxide pollution vs. what actually happened (adapted from Burtraw and Keyes 2018, prices in nominal dollars)

In reality, prices stayed relatively flat around $100-$200 per ton for nearly a decade as emissions fell (below). If policymakers and the public had been scared off by the model projections, we would have missed an historic opportunity to improve human health and the environment.

US-specific work already suggests that carbon prices starting around $40 or $50 per ton (similar to a recent Republican-led proposal) could reduce US carbon pollution by something like 40 or 50% below 2005 levels by 2030 with the economy growing robustly over that time. Even a more modest price will help get things moving. Technological innovations not in our current models (accelerated by the carbon price) could lead to even larger reductions. Additional policies to address other greenhouse gases like methane and certain refrigerants, or drive energy efficiency and urban planning, can buy us even more progress. The resulting new industries and cleaner air will help build the case for the next steps and give us an improved understanding of what it will cost to get there.

Getting on a trajectory that avoids the worst climate impacts still won’t be easy. The IPCC report is clear that the changes required are unprecedented in scale. This is all the more reason for voters demand that elected officials take ambitious steps, including putting a price on carbon, to reduce emissions as soon as possible. Failing to act is the surest way to guarantee that we can’t get to the world and the climate that ethics demand.