Individual Climate Action Is a Chicken and an Egg Problem
Individual climate action is reliant on the basic economic principle of demand and supply. In an ideal market, if there is demand, the companies try to meet it by supplying goods and services. But in climate markets, this demand is low because sustainable goods come with a green premium tag that drives the prices high for the sustainable version of the same product that would not burn a hole in the consumer’s pocket. Since there is low demand, companies are not willing to invest in innovation and infrastructure which could lower the premiums. Thus, getting caught up in a vicious loop where the opposite party is waiting for the other party to make the move. (Source: [1])
As consumers, we have influence over the demand side of things and that is where our individual climate action can make an impact in the market. If all individuals start to follow a sustainable lifestyle that helps in reducing our carbon footprint, we will be able to collectively send a signal to large companies. This signal will not only highlight the demand for products that have a low or zero-carbon footprint but also our willingness to pay for such alternatives. If this demand is substantive enough, the corporations will invest both money and time to meet the demand for low emissions products thereby lowering the prices down. Low prices of such products will in turn lead to more demand and will have a trickle-down impact on the entire value chain.
Take the example of solar panels, if someone wanted to purchase a solar panel for their residence ten years ago, it would have cost the person close to $50,000 whereas the same will cost a person around $16,000–$20,000 for installation at present. The price of solar panels has fallen by more than 60% over the years thus making it more affordable than it was 10 years ago. At the same time, the efficiency has increased by close to 45% for solar panels reflecting that the money spent on innovation was worth it.
A similar trend can be seen for electric vehicles. With an increase in demand for EVs and innovation in battery technology, the prices of battery packs used in the EVs have fallen from $1160 to $150 in the last decade and are expected to fall further. The future drop in prices is going to accelerate the adoption of electric vehicles, one that will be a significant individual climate action.
This demand signal is not just for companies but for governments as well as investors. If there is a significant amount of demand for a product, investors will be confident in funding companies that are working towards innovating the existing technologies in certain sectors. Similarly, the governments will invest more in such companies boosting business opportunities for people looking to meet the supply side of things. The COVID-19 vaccine is a successful example of the public-private partnership where a lot of money was invested in the R&D of the vaccines and the results as we all know were astounding.
Now, realizing the power that we as consumers hold in our hands, one should exercise it to the fullest. Not mentioning any specific steps that people can take as there are lots of examples available on the internet that helps in the adoption of a more sustainable lifestyle. People can try a few of those with which they are comfortable and make their contribution towards the fight against climate change.
Sources:
- ‘What each of us can do’ from the book ‘How to Avoid a Climate Disaster’ by Bill Gates
- Solar Panel statistics: https://news.energysage.com/solar-panel-efficiency-cost-over-time/
- Statista: https://www.statista.com/chart/7713/electric-car-battery-prices/
