Skip to main content

turner59_Mike KempIn Pictures via Getty Images_extinctionrebellionbodypaint Mike Kemp/In Pictures via Getty Images

Can Capitalism Beat Climate Change?

Only clear targets can transform rational self-interest from a potentially catastrophic force into a powerful driver of beneficial change. Once investors know that the non-negotiable end point is zero carbon in 2050, they will desert any company whose plans are incompatible with that objective.

LONDON – Easter visitors to London have found some streets and buildings occupied by “Extinction Rebellion” activists, warning of climate catastrophe and rejecting “a failed capitalist system.” Followers of central bank thinking have seen the governors of the Bank of England and Banque de France warning that climate-related risks threaten company profits and financial stability.

Both interventions highlight the severity of the climate challenge that the world faces. But warnings alone won’t fix the problem unless governments set ambitious but realistic targets to eliminate carbon dioxide and other greenhouse-gas emissions, backed by policies to ensure the targets are achieved. Zero net CO2 emissions by 2050 at the latest should be the legally defined objective in all developed economies.

The central bank governors’ statement, together with steps to require clearer company disclosure of climate-related risks, has fueled optimism in some quarters that a free-market solution is possible. With falling renewable-energy costs threatening to leave fossil-fuel companies with loss-making “stranded assets,” well-informed investors will, it is hoped, withdraw funding from companies still searching for new oil or gas reserves or from automotive companies still committed to gas-guzzling SUVs.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/fSS0HEa;
  1. haass105_Gustavo BassoNurPhoto via Getty Images_amazon Gustavo Basso/NurPhoto via Getty Images

    The Amazon and You

    Richard N. Haass

    Sovereignty entails obligations as well as rights, and where compliance cannot be induced, pressure must be applied. And though positive incentives to encourage and enable compliance would be preferable, Brazil's government is showing that there must be sticks where carrots are not enough.

    1
  2. GettyImages-1151170958 ADRIAN DENNIS/AFP/Getty Images

    The Meritocracy Muddle

    Eric Posner

    Although populism in Western democracies is nothing new, resentment toward elites and experts has certainly been on the rise. Does this trend reflect a breakdown in the system, or a system that is actually working too well?

    7

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions