Last year, Nicholas Stern published an illuminating working paper about the economics of the climate crisis titled “A time for action on climate change and a time for change in economics”. It is a required reading not only for economists but also for policy makers, climate scientists, investors, and business…

Human societies are still not getting energy prices right, according to a recent report by the IMF. Global fossil fuel subsidies amounted to 5.9 trn USD in 2020, of which 8% (~470 n USD) were “explicit“ subsidies (essentially public cash infusions), whereas more than 5.4 trn USD were “implicit subsidies”…

The carbon pricing gap According to data from the Worldbank’s carbon pricing dashboard, only ~22% of global emissions (~11 Gt) are currently priced at a value of 94 bn USD, implying an average price level of ~8.5 USD/ton CO2e. This means that only ~2% of the social cost of carbon (estimated at 100 USD…

The argument against market neutrality within a dysfunctional market The recent ECB podcast “Tackling climate change as a central bank” provides insight into a central bank’s current thinking about its primary mandate (i.e. protecting medium-term price stability and its preconditions) and the possibilities and limitations implied by the principle of “market neutrality”. Given that the market has apparently failed…

What is behind climate inactivism? The climate crisis represents the defining existential challenge of our time. There is reason to believe that a failure to stabilize the anthropogenic global temperature rise at well below 2 degrees C will permanently damage the potential for human progress for millennia to come. Many climate activists thus share the…

I recently remembered reading about Isaak Asimov’s “Laws of Robotics” when I was young. In his science fiction stories, Asimov articulated the “Laws of Robotics” as critical safeguards which cannot be bypassed and that all conscious robots are designed to adhere to, in the following order: First Law: A robot…

I noticed that in everyday life, we tend to mix together two categorically different types of societal issues which call for different types of responses and priorities. One category represents existential risks to humanity — in particular the climate crisis — whereas the other category represents non-existential risks (“non-existential societal…

When “best in class” is not good enough A number of publicly listed oil and gas companies has recently committed to “netzero by 2050” decarbonization targets that actually include scope 3 emissions (with the notable exceptions of Chevron, Conoco Philips and Exxon). At first sight, this looks like a positive development, although it goes without saying that it…

The world is presently headed towards a mean global temperature increase of ~3 degrees C or more by 2100, with a risk of a continued temperature rise in the 22nd century. After having wasted almost three decades, it seems increasingly difficult, if not impossible, for human civilization to stabilize the…