The Encyclical is a mix of the pope’s vision of a reimagined society and suggested nuts and bolts for how to get there. The vision is derived from his moral and religious convictions. The nuts and bolts comprise a series of proposals about how he believes we can and cannot achieve the goals he describes. Here, social science can provide some useful insights.
What markets can and cannot do
Pope Francis emphatically states that markets are not the solution to climate change. As a global society, he says, we are far too sanguine about the ability of markets to fix our problems. Rather, they are a way for the rich to continue overconsuming, under the guise of paying for their sins. As such, Pope Francis urges us “to reject a magical conception of the market.” Moral arguments aside, he also asserts that markets will not work because they “may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.”
But empirical evidence is not nearly as definitive as the pope’s words. Pollution markets can be effective regulatory tools, though they do not always succeed. For example, in 1990 the U.S. Congress passed amendments to the federal Clean Air Act that created cap-and-trade markets for sulfur dioxide and nitrous oxides. These rules allotted emitters, such as power plants and cement producers, a certain number of allowances, which they could then buy and sell to meet their targets for reducing emissions. These markets were widely hailed as a success, dramatically reducing pollution without onerous command and control regulation. This success provided the model for the markets of the Kyoto Protocol, which aims to control emissions of carbon dioxide and other greenhouse gases, in part through market solutions.
Carbon markets have not worked as seamlessly as the U.S. program. The European Union has the largest and oldest cap-and-trade market for carbon dioxide, established in 2005. By putting a price on carbon, governments hope to incentivize increased energy efficiency and, eventually, cultivation of other renewable forms of energy. However, the price of carbon in the EU system has been extremely volatile, and has dipped as low as €2.60 (or roughly $2.90, at today’s rate) per ton—which is not enough to encourage conservation. By contrast, the White House estimates that the “true” social cost of carbon—when all the environmental, social and health damages of emissions are included in the price—is closer to $40, or roughly €35.70, roughly 13 times the low point on the EU exchange.
Low prices in the EU market are mostly due to a large oversupply of emissions allowances—the “currency” of a cap-and-trade system. EU governments are trying to raise prices by removing more than two billion allowances, the equivalent of taking money out of circulation. Despite government efforts to reform the system, 2014 prices ranged between €4-7 per ton, still well below any price that would effect meaningful changes in emissions.
More important, the proliferation of carbon markets across the globe has not resulted in a drop in carbon emissions. In 2013, roughly 40 countries and 20 sub-national jurisdictions put a price on carbon dioxide emissions, either through cap-and-trade systems or carbon taxes. But carbon emissions continue to rise to record levels, as does the global average temperature.
Based on their track record to date, Pope Francis may be right to be wary of carbon markets, but other pollution markets have been successful.
The ideal vs. the reality of sustainable development
Second, the pope also calls for a reckoning of the ecological debt that the North has incurred. He notes that “the export of raw materials to satisfy markets in the industrialized north has caused harm” both locally, where extracted, and to the developing world more broadly. He further critiques the focus on short-term profit maximization, which should be rejected in favor of an “integral ecology” that “breaks with the logic of violence, exploitation and selfishness.”
To achieve this goal, Pope Francis calls on the developed world to support policies that promote sustainable development in the global South. Sustainable development, growth that does not compromise future generations’ growth, has long been the mantra of many international treaties and organizations. While countries have repeatedly agreed that the principle of sustainable development should guide international action, policies have fallen short of this goal.
For example, the World Bank and the UN created the Global Environment Facility in 1991 to promote sustainable development in the global South. However, the Facility only funds the “incremental” costs of a project—that portion deemed to have global environmental impacts. This not only reduces the total amount of funds available, but subjects all projects to a rigorous and lengthy accounting process, which slows the release of funds. Similarly, the Green Climate Fund, created in 2009 during the UN’s multilateral climate negotiations in Copenhagen, aims to help developing countries reduce their emissions and adapt to the effects of climate change. The Green Climate Fund was intended to be the centerpiece of a larger effort to raise $100 million in climate-related aid, but it has yet to disburse any funds.
No one would disagree with the pope that sustainable development is a laudable goal. Indeed, countries have pledged time and again to help the global South develop in a sustainable way. The problem, however, is the practical application of this principle. And here states’ collective record has been mixed at best.
The limits of international law
Third, the pope asserts that international law is critical to tackling climate change. Climate change is a global problem, and thus can be addressed through international treaties negotiated among states. He points to successes in international environmental law such as the Basel Convention, which restricts international trade in hazardous waste, and the Montreal Protocol, which phased out the production of ozone-depleting chlorofluorocarbons, as evidence that traditional intergovernmental approaches are useful.
While international environmental law has had some successes, there are equally impressive failures. Despite ongoing climate negotiations and the creation of a number of carbon markets, carbon dioxide emissions have increased by an average of 2.5 percent per year over the last decade. There are almost 200 multilateral treaties on fisheries, and yet one study predicts that the global fishing industry will collapse by 2050. Some of the earliest environmental treaties aim to protect biological diversity, yet today UNEP estimates that up to two-thirds of species in some taxa are now threatened with extinction.
At best, international law has a spotty record on environmental protection.
Given that most treaties are negotiated by consensus, this is not surprising. Treaties are easily weakened or hijacked entirely by one or two dissenting parties. Moreover, recent research shows that environmental treaties rarely contain enforcement mechanisms because countries are loath to make laws with real sanctioning power. Pope Francis notes that “enforceable international agreements are urgently needed,” but the political consensus required to achieve them is largely absent.
Setting goals vs. figuring out how to reach them
Pope Francis’s message has underscored the urgency of acting on climate change. This is a laudable goal. But his aspirations don’t square with empirical reality. Yes, sustainable development is needed to help the global South and to avoid catastrophic climate change. But thus far, countries are unwilling to fund these policies in a meaningful way. Yes, international environmental law is the way that we traditionally seek to address global environmental problems. But in many instances, it has not achieved the desired results. And yes, we should be wary of the “magical abilities” of markets, but in some cases, when properly policed, they can be effective regulatory tools.
“Laudato Si” is perhaps best understood as a set of objectives, rather than a roadmap about how to achieve them.
Jessica F. Green is assistant professor of environmental studies at New York University.