Money alone won’t address climate change goals—we need policy action

Wharton’s Eric W. Orts joins other experts to analyze the likely outcome of the 24th annual Conference of the Parties, the two-week U.N. meeting where a plan of action to reverse climate change is the goal.

For the 197 countries gathered in Katowice, Poland, for a two-week United Nations meeting to hammer out rules to contain global warming, a few subplots have demanded the most attention. “The stakes are high with numerous different pressure points,” according to a U.N. note on the 24th annual Conference of the Parties (COP24), which began Dec. 2. Topping the list is the intransigence of the Trump administration to accept climate change science, as well as its refusal to abide by the 2015 U.N. Paris Accord, which aims to cap the rise in global temperatures to 2 degrees Celsius above pre-industrial levels.

statistics written out that read 280 million more people without access to adequate water, 120 million more people exposed to major river floods, 12 million more people subjected to coastal flooding, 24% decline in global maize productivity

Another concern stems from a follow-up U.N. report in October that warned that the goal should be 1.5 degrees Celsius and needs to be achieved in the next 12 years, or before 2030. A debate is underway over whether that report should be welcomed or merely taken note of—the U.S., Russia, Saudi Arabia, and Kuwait prefer the latter. Stances on that topic will dictate how each country would respond with policy action and the money needed to combat climate change. A total of 18 nations have pledged to bring $100 billion a year by 2020, but that is not yet a certainty.

But money won’t be enough of a stimulus to meet ambitious climate change goals, experts from Wharton and elsewhere say; instead, policy action is imperative. The policies must ensure a price on carbon so that businesses factor in the “externalities” of their investments, or the impact in terms of greenhouse gas emissions, they say.

Eric W. Orts is a Wharton professor of legal studies and business ethics, and faculty director of the Initiative for Global Environmental Leadership. According to Orts, “The basic problem is that our current economic system does not take into account the externality of carbon and its equivalence being put into the atmosphere.”

All the same, “you can’t just throw money at the problem” and expect it to be solved, says Orts. He notes that with many countries subsidizing fossil fuel, “what you have is an uneven playing field.” He calls for strong action from big investors. “What you need to do to kill coal—to put it just bluntly—is you need to have policy agreements that say it’s just too dirty.”