Think globally, act locally, they used to say. If it’s true, why does it matter that the US has — again — withdrawn support for international co-ordination on climate change? In the mid-20th century, the US emitted about as much carbon dioxide as every other country in the world combined. Now its share of global emissions is less than 15 per cent. It is a shame that the US administration can’t take climate change seriously, although a solid majority of Americans are concerned about the issue. But even without them, why can’t the rest of us just “act locally”?
That might seem a foolish question. The US stance undermines global agreement, and global agreement is important because climate change poses a collective action problem. Greenhouse gases emitted anywhere in the world, by anyone, mix in the atmosphere and contribute to the general problem of a warming world. It’s a little like splitting a restaurant bill between a large group. Order the Wagyu steak and vintage champagne, why not? Everyone else is sharing the cost. The trouble is that everyone else will do likewise and you’ll be paying for their extravagance, just as they pay for yours.
Finding a better way to split a restaurant bill is a topic so taxing that the writer Douglas Adams believed it needed its own academic discipline, Bistromathics. Finding a way to co-ordinate a response to climate change is even more of a challenge.
I was struck, then, by a new research paper with the intriguing title, “Does Unilateral Decarbonization Pay For Itself?” The paper, by the economists Adrien Bilal and Diego Känzig, argues that a US government entirely uninterested in global co-operation would still find it cost-effective to reduce America’s carbon emissions by more than 80 per cent. Much the same calculation applies to the EU.
If Bilal and Känzig are right, international agreements may be less important than they seem, because the major economies have selfish reasons to decarbonise. The logic behind this surprising conclusion is very simple: Bilal and Känzig estimate that the local damage from global warming is enormous. Acting alone, the US or the EU might only be able to make a modest contribution to reducing that damage. Yet they should still act, because a modest reduction of a catastrophic cost is something worth having.
The only problem with Bilal and Känzig’s argument is that it relies on their estimate of the costs of climate change. Those costs are uncertain, unknowable until it is too late, and endlessly contested. In the US, for example, the official benchmark for the social cost of carbon was $43 a ton under President Obama. The first Trump administration put it at between $3 and $5 a ton. Under the Biden administration, it was raised to $51 and then $190 a ton. Bilal and Känzig estimate it to be $1,367 a ton. Somebody who believes that the social cost of carbon is $3 a ton is not going to be much moved by the conclusions of economists who reckon it is 450 times higher.
There is, however, an alternative line of argument. Perhaps we should refrain from a diet of Wagyu beef and champagne, not because even our small share of the bill is too expensive, but because there are healthier and more interesting things to eat and drink. Or, in the case of climate change, perhaps we should decarbonise not just because it is perilous to trap more heat in the planet’s atmosphere, but because a low-carbon society offers many incidental benefits.
Some of these are obvious. Having more access to electricity from ever-cheaper wind and solar sources, coupled with energy storage, reduces our dependence on imported fossil fuels and our vulnerability to spikes in the price of those fuels — the kind seen after Russia’s attack on Ukraine. Equally obvious, if people choose to walk or cycle instead of drive, they will reap the health benefits of their physical activity.
Other benefits are more surprising. Many of the richest and most productive places in the world are big cities, but these concrete jungles have much lower environmental footprints than sprawling exurbs. Urbanites live in more compact spaces that require less energy to heat and cool and they travel by mass transit, or that most efficient of mechanised people-movers, the counterweighted elevator. Far from perceiving all this as a deprivation, many people are willing to pay a premium to live in an eco-paradise such as Manhattan. (Let’s not even start on the topic of Venice, a city whose unparalleled charms depend not only on those beautiful canals, but also on the complete absence of cars.)
Chris Goodall’s recent book Possible gives further examples. Even though petrol and diesel vehicles are much cleaner than they once were, they still cause lung diseases and a significant number of premature deaths. Electric vehicles are quieter and emit no tailpipe air pollution. Gas hobs fill the home with harmful toxins. Induction hobs do not, and are a pleasure to use. There are plenty of technologies whose initial selling point — less carbon — is just one of a list of attractions.
The battle to slow climate change would be easier to fight with the US government on side, of course. But “act locally” is not just a hippie cliché. There is plenty we can do to decarbonise, and many of the benefits of doing so are closer to home than we might think.
Written for and first published in the Financial Times on 28 February 2025.
Loyal readers might enjoy the book that started it all, The Undercover Economist.
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