Developing countries often turn to coal because it is a relatively cheap fuel to burn for electricity. Coal is plentiful and easy to mine in many parts of the world, and electricity from coal-fired plants is available all the time, unlike electricity generated from solar or wind power. China’s copious coal supply, for example, has fueled its rise to become a global economic power. Moving away from that would reduce the country’s competitiveness and burden it with high transition costs to new power plants. So, seriously fighting climate change now would dramatically reduce China’s economic growth and that of other poor countries trying to catch up to the West. Predictably, these countries are not willing to lock in Western economic dominance.
This circle could be squared if Western countries were willing to pay the developed world for its compliance with climate goals. That’s where Biden’s pledge comes in. He promised to work with Congress to double U.S. financing for combating the effects of climate change abroad to $11.4 billion annually. That may sound like a lot, but it’s nowhere near what is needed. Climate activists say that the United States should be giving up to $49 billion a year. The 10-year cost of that would be roughly on par with new spending included in the bipartisan infrastructure deal, and not a penny would go to U.S. projects. It’s inconceivable that Congress would appropriate that much money, especially when polls have shown for decades that foreign aid is the type of federal spending most people want to cut.
Moreover, these countries don’t just need aid to battle the effects of climate change; they need money enabling them to be economically competitive in the carbon-neutral world the West wants to build. That will take hundreds of billions annually from public and private sources, with many investments hopelessly unable to earn a reasonable rate of return. Wealthy climate activists such as billionaire Bill Gates could pledge their entire fortunes to the cause and still barely make a dent in the problem.
Climate activists will lament the paucity of world leaders’ promises. But the cold, hard fact is that efforts to seriously battle climate change would reduce the world’s standard of living, especially in the developed world, in the short to medium term. The faster developed countries want to cut greenhouse gas emissions, the sharper the drop. Keeping developing countries from taking on some of the burden will cause an even sharper drop. There is no political will do this, nor will there be in any democratically governed country.
A more realistic approach to climate change focuses on technological breakthroughs that make renewable energy generation and storage much cheaper and more reliable than it is today. Wind and solar energy production prices have been dropping in recent years because of such advances, but reliance on those technologies is still held back by the limitations and cost of battery storage. That means boring projects such as creating iron-pellet batteries are more important to the long-term global climate change battle than any headline-grabbing speech at the United Nations.
Climate activists have shied away from telling the world the truth. Instead of selling sacrifice, they peddle exaggerated claims of job growth and economic gains, conveniently omitting the pain that shutting down fossil fuel plants and changing energy consumption for billions of households will entail. Going green is cool — until you start taking away people’s hamburgers and flights to the Bahamas.
The iron law of scarcity applies as much to fighting climate change as it does to all other areas of economic endeavor. We cannot have limitless supplies of everything we want all the time. Actually fighting climate change requires painful tradeoffs. Until leaders such as Biden and Xi tell us that, all their words are merely hot air.