Monday, December 20, 2010

Letter to FT on Lomborg's false dichotomy

The following letter was published in the Financial Times today (20 December, 2010), in response to this article by Bjorn Lomborg (from the FT, 9 December, 2010).


In the article “Time for Europe to show real vision on climate” (FT, 10th December), Bjorn Lomborg argues that "We will never succeed in making fossil fuels so expensive that no one wants them [...] Instead, we should make green energy so cheap that everyone wants it". There is an inherent inconsistency in this line of reasoning, as the decision to switch from burning fossil fuels to some alternative depends on the relative prices of each.

The figures quoted in the article seem to suggest that emissions reduction is very expensive, while developing green tech alternatives would be relatively cheap. These cannot be simultaneously true. If cheap alternative energy sources are developed then emissions reduction becomes cheap as a consequence. Incidentally, it is notable that no reference is made to the assumptions and uncertainties inherent in the types of estimates to which the author refers.

As regards his policy recommendations, Lomborg advocates supply side solutions to climate change without specifying how the necessary investment might be stimulated. Does he envisage governments giving large-scale subsidies to the green energy sector? Such schemes are unlikely to be cheap.

Private sector investment in green energy alternatives is constrained partly by uncertainty, which pushes up the risk premium required by investors. One way of reducing this uncertainty - and thus stimulating greater investment - is to formulate more coherent climate policy, something which Lomborg seems to think is no longer worthwhile.

The simple, but false, dichotomous interpretation of the available policy options presented in this article may be a good way of getting media attention, but it is not a good way of thinking about complex socio-economic or scientific policy issues.

Yours etc.

Tom McDermott & Stefano F. Verde, Trinity College Dublin

Tim Laing, LSE

and Aurelie Mejean, CIRED, Paris

Update: Lomborg's response to our letter is here.

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