How Can the Economy Survive Without Fossil Fuels?

The earth’s climate has been warming and, in our lifetimes, we have seen undeniable evidence of climate change, from tragic severe weather events such as forest fires, hurricanes, and flooding, the melting of glaciers and sea ice to reveal rising sea levels and the quickening drop in the numbers of various species due to ecosystem changes. The World Health Organization states that climate change is expected to cause 250,000 additional deaths per year from 2030 to 2050 due to climate-sensitive diseases, and this number is only derived from disease-related impacts of climate change and not from deaths from severe weather disasters such as hurricanes. The direct economic damage from the health implications of climate change is estimated to be between a whopping $2 to $4 billion USD per year by 2030.

It is true that the climate has constantly fluctuated in time through glaciation and glacial-retreat, but through anthropogenic activities, the data is looking a lot more sinister. Small variations in atmospheric carbon dioxide levels occur naturally due to the variations in the earth’s orbit, but since the industrial revolution (when carbon emitting technologies and practices began to rise exponentially), carbon emissions have skyrocketed well past natural levels in the environment. Carbon dioxide levels are increasing more than 250 times faster than they did from natural sources after the last ice age (See graph below).

It is no wonder why we need to be tackling this issue as soon as possible. But why are these changes to mitigate climate change so slow moving? From the Great Depression to the Cold War and other drastic global events, climate change was not really deemed priority for governments and individuals. Some people would also argue that the huge hit the global economy would take while battling climate change is hardly worth the investment. It does not help that the production of fossil fuels are generating significant profits and that more sustainable options in the past and today require huge investment with minimal immediate return on investment in part due to the lack of government funding. Now that we are seeing with new eyes what kind of economic disaster global climate change is producing, we are now becoming more responsible than ever to mitigate the severe damage it can cause to social, political and economic frameworks.

But how can we mitigate climate change effectively while ensuring it does not do significant damage to the global economy? Since fossil fuels are a major contributor to our livelihoods, first we must understand the effects climate change has on our economy in order to qualify a purpose for taking action in the first place.

A recent report stated that, in 22 sectors of the economy in the U.S. alone, a 2.8C global temperature rise would cost the U.S. $296 billion, and a rise of 4.5C would cost them an incredible $520 billion each year. This is not a new realization, as North America has forked out $415 billion for climate disasters from 2016 to 2019, mostly due to wildfires and hurricanes. In 2017, Hurricane Harvey totalled up a loss for Texas of $125 billion and Hurricane Sandy caused $71 billions of damage in 2012. Environmental economist Geoffery Heal, a professor in the Columbia Business School, has stated that, “Sea level rise could potentially cause a loss of value of assets in the trillions of dollars—probably anywhere from two to five trillion dollars USD—by the end of the century”. As previously stated, the health costs of climate change-related diseases are also vastly immense and on the rise.

In the farming and agriculture sectors, Nebraska lost $440 million worth of cattle and Iowa had suffered $1.6 billion of agriculture due to flooding. These losses due to increased rain fall and erosion of land will reduce crop yields and impact the production of food supplies and profits immeasurably. Due to climate change impacts, the Midwest is projected to lost up to 25 percent of its current corn and soybean yields by 2050. For regions with money, this profit loss is tragic for the economy, but for impoverished regions, this could mean the priceless loss of life and livelihood. Some commodities such as corn, soybean, wheat, rice, cotton and oats do not grow above specific temperature thresholds, which could mean a global food crisis. As farmers struggle to survive this changing market, prices of food will likely increase for the average consumer.

What is at stake in our economy due to warming is our agricultural sector, health care, re-building infrastructure, tourism, human productivity and endless other sectors that will be severely damaged by this reality.

So what can we do to make it easier on the economy for integrating mitigation measures and emission reduction for climate change? It is obvious that we cannot keep running the ‘business-as-usual’ model for our actions… but how can we change our actions efficiently with significantly less economic damage to implementing these measures? Let’s get real for a second: 250 years of growth from the fossil fuel industry has brought us real benefits. From great economic benefits such as job creation and creating profit for our usual ways of life, it hasn’t been so bad compared to the pre-industrial revolution lives people used to live. The growth in the improvement of living standards and economic gain would have not happened without the exploitation of fossil fuels. Although it got us this far, with the rising human population of the earth, this will absolutely not be sustainable in the future.

The possibilities may sound bleak, but the rising wave of new technology and opportunities has arisen and we must hear it’s call. For this change to happen, we must begin by setting the goal to make our economic growth less-carbon reliant. This goal has to be met through the combined effort of governments, businesses, stakeholders and the public.

Governments

The responsibility of governments and government organizations to control the emissions of companies is more needed than ever. Policies and restrictions must be made to enforce real change among businesses, and make them realize the consequences of not complying with environmental regulations. One way that the government is doing their part is in the recent carbon taxing and cap-and-trade market-based measures for reducing fossil fuel consumption in businesses. Now businesses can make and save money by reducing their carbon footprint, and companies that produce carbon over the maximum threshold can purchase carbon credits which offset their carbon emissions, making them generally carbon neutral. This ensures that companies have an incentive to reduce their carbon emissions and take responsibility for their emissions by investing in carbon sequestering practices such as reforestation. Public procurement and an increase in research and development budgets should also be on their list of to-dos.

Governments need to start addressing and taking action towards a healthier planet for its people by regulations, policies and taking more of a green stance on how the economy is going to run in an ever warming and changing world. People are noticing that more governments are putting in the time and effort to discuss these action items with the public, and it generally makes them more likeable amongst the younger generations. This will be a huge factor in how public votes are cast in the future, especially when climate change causes more damage, sickness and environmental damage and the public begins to realize its governments aren’t in their best interest. These changes are a great way to increase the public’s affection towards the government, and the governments that don’t take a stance toward emissions reduction and environmental sustainability will soon see a steep decrease in people voting them in. This should be the clearest indication that their priorities need to include the environment.

Businesses

Businesses should encourage reduced emissions through informing the public on the effects of climate change and boosting their reputations if they are those businesses who are meeting and going beyond the requirements of environmental sustainability programs and policies. This way, the public may switch from buying products and services from a non-sustainable company to a sustainable one, therefore providing more incentive for businesses to step up their game in order to avoid lost revenue.

Businesses should also take a look at their budgets and how they can allocate some of their revenue into becoming a greener business. Each investment in green technology and operations has a myriad of opportunities for growth and can bolster the buying effect on consumers when the company is one of the leading businesses that are striving for change. More and more we are seeing the green movement grow, especially among younger generations. This environmental stewardship attitude will soon be the future of consumerism, as younger generations grow older and begin to take over the bulk of the consumer market. Companies that fail to implement new, greener technologies will be the ones left behind ahead of an increasingly growing demand for sustainable production. Even if investing in a higher-cost technology or operations change in a business, it is clear that the benefits will pay off down the road, focusing not on price of the technology at the time of buying, but the profits of the future of business from introducing such technology.

Shareholders

Once shareholders understand that governments and businesses are serious about taking action against climate change, they will most likely begin putting investments in low- or no-carbon emitting technologies. This gives an incentive to put money into green-economy and can be very profitable.

Public

As discussed above, younger generations are more aware of what companies are, and are not, doing for the environment. Many of these reasons are why people choose to buy or not buy products from specific companies; some people don’t buy products with palm oil in it and others support businesses in which some of the profits of their purchases go to environmental or social charities. This is a growing revolution of people beginning to take a look at their everyday actions and look more deeply into the dollars spent on the products they buy. And guess what? These are the people that will be supporting the economy in the next 10 to 20 years.

Governments and businesses see these changes in attitudes and a lot of them are trying their best to keep up with the demand of people needing businesses to be ethically and environmentally sound, or governments to start addressing human right issues and climate change. These generations are beginning to, or are going to be, putting their votes in to what they think is right. This should scare some businesses and governments, and that should be enough to change their minds on how they should run things.

Concluding Thoughts

The economy has hope in recovering in the future by means of eliminating or reducing fossil fuel use by market-based measures, creating sustainable jobs and giving people opportunities to invest in or purchase products and services that they believe in. Although this sounds like a wonderful plan, this will never happen unless there is a collective effort between governments, businesses, stakeholders and the ever-growing public. The world’s people need to wake up from hibernation and take action instead of making empty promises. There needs to be a solid foundation, research and planning for this all to happen without creating chaos among businesses and governments. We need to remember that it may take a while for the train to get rolling, but once it does, it will be going full speed towards a better future for everyone.

We are seeing a world that is changing. It is not only changing environmentally, but also in the mindsets of the people, technology’s fast-paced growth, and the opportunities we now have the chance to seek as individuals and organizations. This should not be thought of as something bad or tragic. This should be seen as something to look forward to. Changes are everywhere, and to see it, all you have to do is look around you and see all of the good things people are doing towards taking action against climate change. It is a chance for people all around the world to unite towards a common goal. And if that doesn’t sound beautiful to you, I don’t know what does.

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