The Free Market’s Response to Climate Change and How Government and Individuals Can Address the Consequences of a Carbon Economy

Jack P. Carroll ’24

News Editor

At the close of 2020–a turbulent year that was defined by a highly infectious virus, crippling unemployment, and unimaginable human pain and suffering–a new and alarming report by NBC News reminds us of yet another global crisis that we will have to continue to address in a post-pandemic world: climate change. 

In the roughly 45 minute news segment, NBC News “examines the devastating impacts of climate change, following a year of unprecedented climate and weather extremes.” The recording includes footage of scorching fires, orange skies, record floods, and melting ice caps across three continents from last year alone. 

In November, leaders from across the world are on track to discuss solutions to these crises at the United Nations Climate Change Conference in Glasgow, Scotland. It is important to remember that government action alone will not sufficiently address the growing consequences of a carbon economy. 

If we are to offset a 1.5°C increase in global temperatures in the upcoming years and 3°C by the end of the century, the efforts of governments worldwide need to continue to be supplemented by the ingenuity and investment of the single most powerful force that has proved to be essential in combating the spread of COVID-19: the free market. 

Amidst the continued spread of the coronavirus and its more infectious variant, the private development and mass production of two highly effective vaccines within a nine month timeframe reveals the extraordinary progress that mankind is capable of making when unified and dedicated towards achieving a common goal. 

Nevertheless, many people continue to deny the efficacy of the free market and private research in resolving modern issues. Some may recognize the previous example of vaccine development as flawed given the recurrence of record high hospitalizations, death, and positivity rates despite continued reports of governmental failure to successfully distribute the vaccines nationwide. 

In fact, many people (especially those among my peer group) perceive the free market and capitalism as synonymous with Big Oil, pollution, and a Marxian-envisioned dystopia of a doomed future controlled by fancy-suited businessmen who blithely smoke cigars from their high-rise offices and devise new methods to “oppress” the world. 

While it is no mystery that fossil fuels have served as the backbone of the global economy since the onset of the Industrial Revolution–as well as the fact that their use has had a ruinous impact on the environment–the growing demand for renewable energy throughout global markets suggest that this will not remain reality in the years to come. 

A recent article in the Wall Street Journal indicated that the global shift towards renewable energy over the course of the past decade has posited green energy majors NextEra, Enel SpA, and Iberdrola Sa in close competition with the most established oil companies in the energy market. 

In the same source it was reported that Italy’s Enel, which currently operates projects in 32 countries, has a market value over $100 billion and is currently the world’s “largest renewable energy producer outside China.” 

Also, Spain-Based Iberdrola was pitted as the world’s “second largest energy generator outside of China.” Iberdrola currently functions projects in 30 countries and plans to spend the equivalent of “$91 billion” on “renewable power capacity” over the next five years. 

The same source described Florida’s NextEra as “America’s largest renewable energy producer.” NextEra is reported to have significantly increased its profits from $2.9 billion in 2016 to $3.8 billion in 2019. 

NextEra is one of the major companies in the U.S. that is expected to benefit from the Biden administration which plans to push forward a $2 trillion proposal that is focused on “creating a nationwide emissions-free electricity grid in just 15 years.” 

In addition to these green energy titans, Elon Musk’s Tesla Inc–which produces popular electric cars, solar panels and roofs, and other renewable products–have experienced huge financial gains in 2020: the company’s shares are reported to have gained 743% and in August the price per share rose beyond $2,000. 

These gains come as no surprise given that Tesla is reported to have delivered a record 499,550 vehicles globally in 2020. In addition to producing its Model Y SUV and plans to sell vehicles in India, Tesla is aiming to open a factory near Berlin, Germany, and one outside Austin, Texas, in the near future. 

Beyond the previous market-led efforts, Amazon CEO Jeff Bezos recently distributed $791 million (from an allocated total of $10 billion) among 16 groups fighting climate change including the Environmental Defense Fund, the Natural Resources Defense Council, the World Resources Institute, and the World Wildlife Fund.

Also, The New York Times recently documented ongoing efforts to upgrade nine apartment buildings with renewable energy in New York City. 70% of carbon emissions in NYC come from its apartment buildings.

Further, the $20 million “retrofit” project, known as Casa Pasiva, will install “a wall-mounted electric heater and air-conditioner” within each of the 146 apartments of the nine buildings that are being improved in the Bushwick neighborhood in Brooklyn. These heaters and air-conditioners will be “connected to a system of ducts and refrigerant lines that snake up walls and eventually connect to an energy recovery ventilator, a rooftop machine that purifies and circulates air.” 

The Casa Pasiva project is part of a broader effort to reduce carbon emissions by 40 percent by the year 2030 under the mandates of the Climate Mobilization Act of 2019. 

Speaking of government, co-founder of Microsoft Bill Gates–who is expected to publish his new book How to Avoid a Climate Disaster: The Solutions and Breakthroughs We Need soon–put forth a new and innovative approach to the climate change crisis that the federal government could pursue in a December 2020 blog post

In the post on his website GatesNotes, Gates proposes the following effort: To reduce duplication, focus the government’s efforts, and get the most innovation out of every dollar of funding, we should create a new organization: the National Institute of Energy Innovation

According to Gates, the structure of the National Institute of Energy Innovation should be based upon the National Institute of Health which he describes as “the largest single funder of biomedical research in the world”: Why is the NIH so successful? It has a clear and specific mission. It has apolitical leaders who let independent researchers follow the science, rather than political staff who change priorities every few years. It’s organized in a way that empowers each of its separate institutes and research centers. And it has strong bipartisan support from policymakers and the public. 

Gates further indicates that the National Institute of Energy should meet the following criteria: 

  • It should be made up of separate institutes that focus on specific areas. 
  • Each institute be tasked with working on every aspect of getting new products to market
  • The institutes should be located all around the country 

In addition, Gates advocates for other government-led efforts which influence market activity and innovation in green energy development including “tax incentives” and “clean energy standards.”

On a separate note, I urge my readers to also reconsider and reduce their own energy consumption in their own lives. 

Instead of solely scrutinizing oil companies and derelict governments on social media, one should make an active effort to alter one’s own daily habits which (when repeated on a global scale) are capable of having a damaging effect on the environment. 

One can easily reduce one’s energy consumption through pursuing the following measures: 

  • Limiting the number of times one drives on a daily and weekly basis
  • Carpooling and taking advantage of carbonless transportation (e.g., bicycles) 
  • Unplugging electronic devices (e.g., phone charger) when they are not in use
  • Turning off the lights in rooms that are not unoccupied
  • Reducing the amount of time one spends on leisurely activities which require electricity (television, video games, social media, etc.) 
  • Pursuing recreational activities that do not require the use of electricity (exercise, outdoor sports, etc.)
  • Limiting the amount of time one spends showering (e.g., 5-7 minutes) 
  • Shutting off running water when not in use
  • Reduce air conditioning and heat consumption at home
  • Avoiding unnecessary air travel (e.g., overindulgent vacations, non-emergency purposes, etc.)
  • Not frequently hosting gatherings which require the travel of a large number of people
  • Utilizing renewable energy as frequently as possible

While recommending alterations of normal human behavior is bound to evoke an emotional response, it is nevertheless necessary in developing habits that are capable of conserving the amount of energy one uses and reducing the damage that one’s lifestyle can leave on the environment. 

As all of the previously documented efforts (which hardly scratch the surface of all the modern research and innovation in renewable energy) indicate, we are in a position to significantly reduce carbon emissions and ensure the wellbeing of our planet for years to come. 

However, in order to make further progress towards a more sustainable future we, as a global society, need to be unified in our efforts. 

As the effects of climate change become more severe, it is crucial that we avoid the “blame game” and put an end to the harmful practice of assigning responsibility for the current condition of the planet to everyone but ourselves.

Climate change is not the fault of the “1 percent,” capitalism, any one government, or the actions and innovations of our predecessors. Climate change is human fault, and we must treat its consequences as something that we are all collectively responsible for resolving. 

As vaccines are further circulated and we begin to slowly emerge from the COVID-19 pandemic, the many crises of climate change await. 

We must continue to live and advocate for a more sustainable future.  

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