BOGOTÁ – Two major events last week bear directly on global debates about climate change and how to address it. The first was the release of a report from the United Nations Intergovernmental Panel on Climate Change (IPCC), which sets out precisely what must be done to achieve the objectives of the 2015 Paris climate agreement. The second was the announcement that Yale University economist William Nordhaus will share this year’s Nobel Prize in economics for his work “integrating climate change into long-run macroeconomic analysis.”

The first event should serve as a wake-up call for the international community. The IPCC report appeals to governments to take urgent action to reduce greenhouse-gas emissions significantly within the next decade. It warns that if average global temperatures are allowed to exceed 1.5°C – or, at worst, 2°C – above pre-industrial levels, the consequences could be catastrophic, and they will be felt as soon as 2040.

Worse, the report shows that the Nationally Determined Contributions set voluntarily by signatories to the Paris accord are vastly insufficient. Even if they are met, the increase in average global temperature will surpass 3°C by 2100, and will continue to rise still further after that. Clearly, when policymakers revise their countries’ NDCs, they must raise them significantly.

But substantive action needs to come well before 2030. Otherwise, the world will suffer irreversible damage in the form of rising sea levels, loss of biodiversity, and deterioration of both land and marine ecosystems, including the potential extinction of the world’s coral reefs. These developments will have far-reaching implications for water supplies and the health and living standards of the global population. And, needless to say, the greater the warming, the more severe these effects will be.

The selection of Nordhaus for the Nobel Prize is a more welcome development. Even so, it is worth noting that his approach to addressing climate change tends to be rather conservative, which is to say gradualist. Nordhaus relies on traditional economic analysis, which “discounts” the present value of future consumption by the return on capital, or interest rates. In other words, $100 a half-century from now is worth $15, $10, or even less today, depending on the assumed interest rate. But, because the costs of any initiative to combat climate change must be borne in the present, they are necessarily higher at present values. The implication is that they must be incurred slowly.

The problem with this approach is that it is inequitable toward future generations, which, of course, have no say in decisions that we make today. By definition, their welfare is being discounted. Yet were we to take intergenerational equity seriously, the leading factor to consider is that future generations will have better technologies than what we have today. Therefore, the appropriate social rate of discount should be equal to the rate of technological change, which is much lower than market interest rates.

One could also argue that the traditional economic analysis is even inequitable toward individuals, in addition to future generations. Just ask an older person with an inadequate (or nonexistent) pension whether his present welfare is worth less than his past consumption.

A much better approach has been developed by Nicholas Stern of the London School of Economics. In his now-famous “Review on the Economics of Climate Change,” Stern was calling for accelerated action to combat climate change as early as 2006. In his view, the costs of dealing with runaway global warming would far exceed the expense of addressing it early.

Another alternative has been developed by Martin Weitzman of Harvard University. Weitzman relies on analytical tools similar to those used by Nordhaus, but his work also accounts for the catastrophic risks associated with climate change. As such, his approach is also similar to that of the IPCC and the UN Environment Programme (UNEP), both of which have concluded that global warming above a certain level will have truly disastrous effects.

To my mind, the Nobel Committee should have recognized not just Nordhaus but also some of these other economists of climate change, particularly Stern. The fact is that humanity cannot afford to act gradually on this issue. The Stern Review, the latest IPCC report, and the UNEP have all concluded that current efforts to reduce emissions must be stepped up substantially. That means accelerating the global transition to clean-energy technologies (including in transportation), improving the efficiency of energy production/consumption, reversing deforestation, improving land use, and promoting technological innovation to facilitate all of these processes.

The message from the IPCC report is clear. All countries must raise their emissions-reduction targets and strengthen their commitments under the Paris agreement. And the country that is historically responsible for the largest share of greenhouse-gas emissions – the United States – must return to the agreement and show leadership on this issue once again.

LONDON – In 2004, German households installing rooftop solar energy systems received a guaranteed price of €0.57 ($0.68) per kilowatt hour (kWh) generated. In Mexico last week, a large-scale energy auction was won at a bid price of $0.0177 per kWh. Even comparing similar-size projects, solar costs have fallen 90% in ten years. Improvements in photovoltaic technology make further reductions inevitable: within five years, we will see a price of $0.01 per kWh in favorable locations.

This stunning achievement has been driven by huge private-sector investment and cutting-edge innovation. But it would never have occurred without strong public-policy support.

Publicly sponsored research ensured basic scientific breakthroughs, and large initial subsidies, in Germany and then in other countries, enabled the industry to achieve critical scale. Solar now costs less than coal in many countries, because initial public subsidization unleashed a self-reinforcing cycle of increasing scale, continuous learning, and declining cost.

All economists who accept the scientific reality of climate change support policy interventions to address “externalities” – costs that polluters impose on others but do not pay. But many free-market economists are inherently suspicious of direct support for specific investments, instead harking after the pure and simple market solution – a carbon price set either by taxation or by competition for permits within an emissions trading scheme. Carbon pricing, it is said, avoids the dangers of picking winners, unleashes a market-driven search for the best technological answer, and ensures least-cost emissions reduction.

But explicit carbon prices played almost no role in driving down the cost of solar power, or in achieving a similarly dramatic decline in the cost of wind power and batteries. In the real world, direct investment support can sometimes be more effective than theoretically appealing carbon prices.

Low-carbon electricity – whether from renewables or nuclear – entails very high upfront capital investments but near-zero marginal operating costs. As a result, its economics are strongly influenced by the cost of capital (the required rate of return), which reflects assessments of risk. Direct support for initial deployment – with guaranteed prices for electricity delivered – reduces risk and thus lowers required returns.

Carbon pricing alone, by contrast, does not. With carbon prices as the sole policy instrument, risk assessments of renewables investments would reflect highly uncertain forecasts of fossil fuel and marginal electricity prices far into the future. As a result, the cost of capital would be higher, and the pace of deployment and cost reduction far slower.

Fixed-price contracts for certain delivery are a more effective policy to stimulate renewables investment than carbon prices. Auctions for such contracts should remain a key feature of renewables markets, even now that the prices set at auctions often undercut the likely future cost of fossil-fuel-based power generation.

Straightforward regulation is also sometimes more effective than price-based instruments. The plummeting cost of LED light bulbs – also down more than 90% in the last ten years –reflects the effect of outright bans on inefficient incandescent bulbs, public procurement policies, and, in India, the public sector’s role as a bulk buyer and low-cost distributor.

In economic theory, household light bulb purchases reflect net present value calculations of lifetime bulb and electricity costs for alternative bulb types, which could be influenced by taxes on incandescent bulbs, or through carbon prices on electricity. But normal human beings, unlike economists, do not make such calculations. In the real world, direct regulation can drive technological investment and cost reduction better than price can.

As for the dangers of trying but failing to “pick winners,” we need to distinguish between what is uncertain and what is clear. True, we cannot know the precise mix of technologies and investments that will deliver a low-carbon economy at lowest cost. But we do know that there is no feasible pathway to low-carbon prosperity without rapid decarbonization of electricity, followed by electrification of as much of the economy as possible.

Policies that directly support low-carbon electricity generation are therefore clearly justified. So, too, is public research expenditure to support further progress in battery technology.

That said, carbon prices still have a vital role to play, and their importance will likely increase over time. In power generation, the objective is clear – lower carbon per kilowatt generated – and it is certain that some mix of a relatively small number of known technologies can solve the problem.

But in steel, cement, and plastics production, the routes to decarbonization are less clear, may differ between locations, and may involve complex combinations of different techniques. A significant and rising carbon price is therefore essential to unleash a market-driven search for optimal solutions.

Carbon prices are also essential because the same technological progress that is driving rapid reduction in the cost of renewables is also enabling dramatic declines in fossil-fuel production costs, particularly in the shale industry. In a world where energy prices may decline across the board, a significant carbon price is essential to ensure that the feasible path to a low-cost low-carbon future is not impeded by falling fossil-fuel prices. Higher prices for carbon-based energy would also usefully strengthen incentives for energy efficiency, reducing the danger of “rebound effects,” whereby falling energy costs increase energy consumption.

So price instruments are a vital part of the policy armory. But collapsing solar, wind, battery, and LED prices show that other instruments are also required, and in some cases more effective.

NEW YORK – It’s old news that large segments of society have become deeply unhappy with what they see as “the establishment,” especially the political class. The “Yellow Vest” protests in France, triggered by President Emmanuel Macron’s move to hike fuel taxes in the name of combating climate change, are but the latest example of the scale of this alienation.

There are good reasons for today’s disgruntlement: four decades of promises by political leaders of both the center left and center right, espousing the neoliberal faith that globalization, financialization, deregulation, privatization, and a host of related reforms would bring unprecedented prosperity, have gone unfulfilled. While a tiny elite seems to have done very well, large swaths of the population have fallen out of the middle class and plunged into a new world of vulnerability and insecurity. Even leaders in countries with low but increasing inequality have felt their public’s wrath.

By the numbers, France looks better than most, but it is perceptions, not numbers, that matter; even in France, which avoided some of the extremism of the Reagan-Thatcher era, things are not going well for many. When taxes on the very wealthy are lowered, but raised for ordinary citizens to meet budgetary demands (whether from far-off Brussels or from well-off financiers), it should come as no surprise that some are angry. The Yellow Vests’ refrain speaks to their concerns: “The government talks about the end of the world. We are worried about the end of the month.”

There is, in short, a gross mistrust in governments and politicians, which means that asking for sacrifices today in exchange for the promise of a better life tomorrow won’t pass muster. And this is especially true of “trickle down” policies: tax cuts for the rich that eventually are supposed to benefit everyone else.

When I was at the World Bank, the first lesson in policy reform was that sequencing and pacing matter. The promise of the Green New Deal that is now being championed by progressives in the United States gets both of these elements right.

The Green New Deal is premised on three observations: First, there are unutilized and underutilized resources – especially human talent – that can be used effectively. Second, if there were more demand for those with low and medium skills, their wages and standards of living would rise. Third, a good environment is an essential part of human wellbeing, today and in the future.

If the challenges of climate change are not met today, huge burdens will be imposed on the next generation. It is just wrong for this generation to pass these costs on to the next. It is better to leave a legacy of financial debts, which our children can somehow manage, than to hand down a possibly unmanageable environmental disaster.

Almost 90 years ago, US President Franklin D. Roosevelt responded to the Great Depression with his New Deal, a bold package of reforms that touched almost every aspect of the American economy. But it is more than the symbolism of the New Deal that is being invoked now. It is its animating purpose: putting people back to work, in the way that FDR did for the US, with its crushing unemployment of the time. Back then, that meant investments in rural electrification, roads, and dams.

Economists have debated how effective the New Deal was – its spending was probably too low and not sustained enough to generate the kind of recovery the economy needed. Nonetheless, it left a lasting legacy by transforming the country at a crucial time.

So, too, for a Green New Deal: It can provide public transportation, linking people with jobs, and retrofit the economy to meet the challenge of climate change. At the same time, these investments themselves will create jobs.

It has long been recognized that decarbonization, if done correctly, would be a great job creator, as the economy prepares itself for a world with renewable energy. Of course, some jobs– for example, those of the 53,000 coal miners in the US – will be lost, and programs are needed to retrain such workers for other jobs. But to return to the refrain: sequencing and pacing matter. It would have made more sense to begin with creating new jobs before the old jobs were destroyed, to ensure that the profits of the oil and coal companies were taxed, and the hidden subsidies they receive eliminated, before asking those who are barely getting by to pony up more.

The Green New Deal sends a positive message of what government can do, for this generation of citizens and the next. It can deliver today what those who are suffering today need most – good jobs. And it can deliver the protections from climate change that are needed for the future.

The Green New Deal will have to be broadened, and this is especially true in countries like the US, where many ordinary citizens lack access to good education, adequate health care, or decent housing.

The grassroots movement behind the Green New Deal offers a ray of hope to the badly battered establishment: they should embrace it, flesh it out, and make it part of the progressive agenda. We need something positive to save us from the ugly wave of populism, nativism, and proto-fascism that is sweeping the world.

MALMÖ – Even climate activists increasingly recognize that the lofty rhetoric of the global agreement to reduce greenhouse-gas emissions, concluded in Paris just over a year ago, will not be matched by its promises’ actual impact on temperatures. This should make us think about smart, alternative solutions. But one such alternative, geoengineering, is a solution that many people refuse to entertain.

Geoengineering means deliberately manipulating the Earth’s climate. It seems like something from science fiction. But it makes sense to think of it as a prudent and affordable insurance policy.

Climate summit after climate summit has failed to affect global temperatures for a simple reason. Solar and wind power are still too expensive and inefficient to replace our reliance on fossil fuels. The prevailing approach, embodied by the Paris climate agreement, requires governments to try to force immature, uncompetitive green technologies on the world. That’s hugely expensive and inefficient.

The Bill Gates-led Breakthrough Energy Ventures fund announced last year provided reason for hope. At the center of any response to global warming, we need to focus on making renewable energy cheaper and competitive through research and development. Once innovation drives the price of green energy below that of fossil fuels, everyone will switch. Much more research funding is needed.

But such innovation will take time. That’s where geoengineering could play a role.

This year, for the first time, the US government office that oversees federally funded climate studies is formally recommending geoengineering research. The move has the backing of President Barack Obama’s former science adviser John Holdren, who has said that geoengineering has “got to be looked at.” Last year, 11 climate scientists declared that the Paris agreement had actually set back the fight against climate change, saying that, “Our backs are against the wall and we must now start the process of preparing for geoengineering.”

The crucial benefit of investigating geoengineering is that it offers the only way to reduce the global temperature quickly. Any standard fossil-fuel-cutting policy will take decades to implement and a half-century to have any noticeable climate impact. Geoengineering can literally reduce temperatures in a matter of hours and days. That is why only geoengineering, not investments in renewables, can be an insurance policy.

Moreover, geoengineering promises to be exceptionally cheap, making it much more likely than expensive carbon cuts to be implemented. This also means that it is more likely to be deployed by a single country or even a rogue billionaire. Given this, it is essential that we seriously investigate its effects beforehand, to ensure that it works and doesn’t deliver unexpected, negative results.

To be clear, I am not advocating that we should start geoengineering today or even in this decade. But it merits serious research, especially in view of the limitations of the Paris climate agreement.

So, what exactly should be studied? Many methods of atmospheric engineering have been proposed.

The most talked-about process takes inspiration from nature. When Mount Pinatubo erupted in 1991, about 15 million tons of sulfur dioxide was pumped into the stratosphere, reacting with water to form a hazy layer that spread around the globe. By scattering and absorbing incoming sunlight, the haze cooled the Earth’s surface for almost two years. We could mimic this effect through stratospheric aerosol insertion – essentially launching material like sulfur dioxide or soot into the stratosphere.

The most cost-effective and least invasive approach is probably a process called marine cloud whitening, whereby seawater droplets are sprayed into marine clouds to make them slightly whiter and reflect more sunlight. This augments the naturally occurring process by which salt from the oceans provides the condensation particles for water vapor, creating and boosting the whiteness of clouds.

Research for the Copenhagen Consensus, the think tank I direct, has shown that spending just $9 billion on 1,900 seawater-spraying boats could prevent all of the global warming set to occur this century. It would generate benefits – from preventing the entire temperature increase – worth about $20 trillion. That is the equivalent of doing about $2,000 worth of good with every dollar spent.

To put this in context, the Paris climate agreement’s promises will cost more than $1 trillion annually and deliver carbon cuts worth much less – most likely every dollar spent will prevent climate damage worth a couple of cents.

People are understandably nervous about geoengineering. But many of the risks have been overstated. Marine cloud whitening, for example, amplifies a natural process and would not lead to permanent atmospheric changes – switching off the entire process would return the world to its previous state in a matter of days. It could be used only when needed.

The case for serious research into geoengineering is compelling. As a growing number of scientists are recognizing, the planet needs more opportunities to address global warming. With a climate outcome as weak and costly as the one implied by the Paris agreement, such opportunities cannot arrive too soon.

WASHINGTON, DC – As concentrations of atmospheric carbon dioxide surpass 400 parts per million, the costs of the climate crisis – in terms of economic losses, environmental impacts, and human lives – continue to rise. Last October, the Intergovernmental Panel on Climate Change (IPCC) warned that global temperatures approaching 1.5°C above pre-industrial levels will have serious consequences for humanity and biodiversity. Anything beyond that level will be catastrophic.

To avoid crossing the 1.5°C threshold, the world must nearly halve its CO₂ emissions by 2030, and reach net zero emissions by 2050. This will be possible only if we completely eliminate fossil fuels from the economy within the next few decades. Attempts to circumvent that reality will only make matters worse.

We’re at risk of doing just that. A growing number of people are now considering the once-unthinkable strategy of geoengineering our way out of the climate crisis. Proposed approaches vary widely, but all share a few key features: they are technologically uncertain, environmentally risky, and more likely to accelerate the climate crisis than to reverse it.

Proponents advocate two main geoengineering strategies: carbon dioxide removal (CDR) and solar radiation modification (SRM). Both – along with most other geoengineering strategies – would depend on the widespread deployment of so-called carbon capture, utilization, and storage (CCUS), in which a suite of technologies captures CO₂ from industrial waste streams and stores it underground, in the oceans, or in materials.

On its own, this would raise serious environmental and social risks. But, economically, CCUS is viable only if captured carbon is pumped into old oil wells to force out more oil, into abandoned coal mines to produce natural gas, or into refineries to produce yet more plastic. This would benefit the fossil-fuel industry – and hurt everyone else.

The specifics of each strategy only reinforce the dangers of geoengineering. Consider CDR, which aims to absorb carbon from the atmosphere after it has been emitted. The most widely discussed approach – bioenergy with carbon capture and storage (BECCS) – would mean clearing large stretches of intact forest, displacing food crops, or both, to produce more burnable fuels. This would not only threaten food security and land rights; the clearing of forests could cause more carbon to be released than BECCS ever absorbs.

Another major CDR technology – direct air capture (DAC) – would suck CO₂ from the air by installing what are essentially huge air filters around the planet. To pay for this extremely energy-intensive process, proponents want to use the captured CO₂ to produce diesel and jet fuels, which would then be burned and re-emitted in an endless cycle. Put simply, DAC is a very expensive means of turning renewable energy into gas.

The other major geoengineering strategy, SRM, seeks to mask rather than reduce atmospheric CO₂. The most widely discussed approach involves injecting sulfur dioxide (SO₂) into the upper atmosphere, producing a temporary cooling effect.

But burning coal, oil, and gas – which also produce large amounts of SO₂ – has the same effect, while also causing acid rain and depleting the ozone layer. Proponents of SRM thus argue, perversely, that we should protect the planet by producing more of the pollutants that are already destroying it.

The explanation for this apparent cognitive dissonance is simple. As a new analysis by the Center for International Environmental Law shows, many of those advocating geoengineering have worked for, been funded by, or stood to profit from the fossil-fuel industries that created the climate crisis in the first place.

The oil, gas, coal, and utility industries have spent decades researching, patenting, and promoting geoengineering technologies – including, for example, CCUS – with the goal of safeguarding the dominant role of fossil fuels in the economy. And our research shows that the primary effects of geoengineering would be to entrench that role further, contribute to increased CO₂ emissions, and lock in fossil-fuel infrastructure for decades or even centuries to come.

This is clearly a counter-productive strategy for addressing the climate crisis. But that does not matter to geoengineering boosters, many of whom – including the American Enterprise Institute, US Representative Lamar Smith, and former US Secretary of State (and ExxonMobil CEO) Rex Tillerson – are climate-change deniers who oppose mitigation policies. If global warming ever does become a real problem, they argue, we will just geoengineer our way out of it.

But what is expedient for vested fossil-fuel interests is out of line with reality. The cold truth is that we have less than a decade to reduce CO₂ emissions dramatically, and less than three decades to eliminate them entirely. The world simply cannot afford to waste any more time and resources on geoengineering myths and fantasies.

We have the tools we need to tackle the climate crisis. Promoting renewable energy and energy efficiency, protecting and restoring natural forests and ocean ecosystems, and respecting the right of indigenous peoples to act as stewards of their traditional lands are all workable, cost-effective solutions to the climate crisis that can be deployed and scaled up now. All that is needed is the political will to embrace them – and the will to reject specious strategies devised by those who should be fixing the problem, rather than dreaming up new ways to profit from it.