Preventing Global Climate Collapse

With the 2015 Paris Climate Agreement finished there has been a bit of discussion on Hacker News about how effective it will be in practice. I have my doubts that it will amount to much effective action, but it did remind me about the talk I gave in 2007 on how we could solve the problem of anthropic climate change via some clever financial engineering.

My basic idea was we shift the cost of stopping greenhouse gas (GHG) emissions onto the people who will really benefit (future generations) by issuing sovereign long term zero coupon bonds. The money from these bonds would be used to buy and shut down GHG emitting assets (oil, gas, coal) and build non-emitting alternatives (wind, solar, etc).

Combining this idea with some simple game theory, we can issuing these bonds today without requiring all countries to agree at once. The basic idea is that we put off allocating costs until when the bonds are due (zero coupon bonds don’t pay annual interest) and that they are ultimately allocated on the basis of the size of the economies at the time the bonds are due (50+ years) along with a discount for a country joining early. This avoids all the problems in deciding who should pay what share today.

If anyone is interested I have attached the slides from this talk. Some of the modelling and facts are a little out of date, but the basic framework is still valid. The major changes are the cost of GHG abatement has come down as wind and solar have got cheaper, and also long term interest rates are much lower than they were in 2007. Both these changes mean that it would cost far less than I estimated back in 2007. Now if we would only do something to solve this problem, not just sign agreements that have zero enforcement.

Preventing Global Climate Collapse Slides 2007

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2 comments on “Preventing Global Climate Collapse
  1. Not enough people care about man made climate change.
    Economy is still based on “Greed is Good”.

    You are more likely to convince poor people to start using solar power because it’s free.

    Only if you have good leaders, education promoting ecology and a healthy economy you will have results (see Norway).

    Governments must decide that electric cars need to be cheaper and more robust than gas powered ones.

    Solar panels/systems need to be cheap enough and one should be able to power most electric cars by sun power.

    Gas needs to be extremely expensive. Energy from the grid also needs to be expensive, unless it comes from renewable energy sources.

    Energy storage(Li, NiFe, SuperCapacitors, Hydrogen, Compressed Air, Water Pumping, etc.) needs to be efficient for at least ten years, with minimal maintenance costs.

    Passive houses need to be cheap and mandatory.

    Biomass would be great, but it will be abused if not locally produced.

  2. Andrew yes we need to be doing all these things. The real issue is how to get over the opposition of the fossil fuel industry. We need to buy them out and for that we need a source of money and the best source is the future which will benefit from us doing something now about destroying their environment.

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