A response to economists who doubt our capacity to decarbonize while maintaining robust growth In this piece, Michael Grubb responds to INET research by Gregor Semieniuk, Lance Taylor, and Armon Rezai and Enno Schröder and Servaas Storm , arguing that “conditional optimism” rather than pessimism is how economists should view the prospect of growth under decarbonization. 1. Introduction The Paris Agreement on climate change, the escalating evidence of direct, observable and damaging climate change impacts, and the IPCC’s recent report on “1.5 degrees” have stimulated a new surge of economic analysis. When INET invited me to write a response of two new papers on the topic, I jumped at the chance because both are by top-level economists, notable for injecting rigorous new analysis and evidence into sometimes sterile debates.
Both papers express a profound concern about the seriousness of climate change, and indeed reveal barely-concealed anguish at the path they find us to be on. For their analysis leads both teams to the – only slightly caveated – conclusion that the emission reductions required to the deliver the Paris Aims (“well below 2 deg.C”) are implausible, by almost any standard of macroeconomic evidence – and still more so for the most ambitious “1.5 deg.C” end of the spectrum. The paper by Schröder and Storm – “.. paved with good intentions” – breaks the problem down into components and examines the maximum rates of changed historically observed in each, finding that the IPCC scenarios represent wholly unprecedented rates of change. The paper by Semieniuk, Taylor and Rezai finds that the energy demand reductions central notably to the IPCC 1.5C scenarios – are implausibly and “ overly optimistic about global productivity growth”, based on a more explicit macro model. To try and dilute the pessimism they seek refuge in the hope […]