Thoughts about economics and the environment

Another year lost for effective global climate action
Six months ago, I reviewed evidence showing that the Paris Agreement is already on the way to failure. Now, end of 2021 there is little reason to be more optimistic. The evidence is devastating, and the Glasgow Climate Pact once again underlines the allround voluntariness built into and onto the Paris Agreement. I don't believe it is going to work that way. It's another year lost for effective climate action. But hope dies last.

If we continue like this, the Paris Agreement will fail
We are approaching the fifth anniversary of the Paris Agreement's enactment. So, how is mankind doing in pursuing the treaty's goal of limiting global warming to well below 1.5 degrees centigrade compared to pre-industrial levels? Let's have a look at the data. Spoiler: It's just not enough, by far. If we don't start talking clear, being bold, and acting, the Agreement will fail, and climate change will be out of control.

Why removing the German renewables levy will help the climate
Around one fifth of the gross electricity price paid by German consumers is due to the so-called EEG levy, which is used to subsidize green electricity plants. The German Federal Ministry for Economic Affairs and Energy intends to scrap the levy and fund the subsidy entirely from the tax revenues. This would not only be an improvement in terms of burden-sharing fairness, but doing away with the levy would also help the climate. For two reasons.

This year's Sveriges Riksbank Prize in Economic Sciences goes to Paul R. Milgrom and Robert B. Wilson "for improvements to auction theory and inventions of new auction formats". Stuff for geeks and Sotheby's? Sure, but you should be interested, too. Their work is already affecting you. The standard examples aside, Paul's and Robert's thought has left a footprint in a domain that you might not come up with when confronted with the term "auction". Your environment.

I am following up on a post in which I have taken a look on how Europe is doing regarding its own climate action commitments for 2030 and 2050. Bottom line: Not too good. But there are good news hidden in the historical data. Let me explain.

With the 2030 Climate and Energy Framework the European Union (EU) sets itself a binding target to cut greenhouse gas (GHG) emissions by at least 40% below 1990 levels by 2030. Consistent with the Paris Agreement the EU aims to be climate-neutral by 2050. I wondered what those goals really mean in absolute terms, and whether we are anywhere close to "on track" with the current trend of emissions?

Replacing power-hungry appliances is kind to the wallet - but not generally to the climate. Under actual conditions it even leads to more CO2 emissions. But consumers and politicians can do something about it.

Should emissions trading be extended from the energy and manufacturing sectors to transportation and buildings, as Chancellor Merkel seems to prefer, or should a carbon tax be introduced instead? In the controversy over the right instrument, too little consideration is given to the fact that it must fit in with the measures and policies already in place.

At 44 percent in the first half of 2019, the share of renewables in German electricity consumption was higher than ever before. Correspondingly, the emissions of harmful greenhouse gases from electricity generation fell by around 15 percent. This is a good contribution to achieving the climate action targets. Or not?