Wednesday, October 17, 2007

Follow the Money on Climate Change

I have no idea who’s right about climate change. I’ve heard very convincing arguments for and against popular theories about global warming, melting ice caps, etc., and realize that there is a consensus in the scientific community with only a few holdouts challenging the various points relating to climate change.

But that isn’t particularly convincing in and of itself. Experts are wrong all the time, and it often seems that the more people who agree, the more likely it is they’re all wrong. Not good enough to disprove their theories, but enough to justify taking everything with a grain of salt.

This much is certain, however. Like every other major policy issue, climate change and the potential legislation and regulation we would enact to address it, will make some people winners and others losers – whether it’s real or not. Setting aside the cataclysmic effects of rising sea levels, altered weather patterns, crop failures, disease, etc., there are also going to be major financial repercussions from climate change, including plenty of folks getting very rich off of it. That has already begun.

If climate change is real, companies will bid on projects to mitigate its effects, provide new housing and other infrastructure for displaced populations, and do countless other tasks I am not creative enough to envision. If it’s not real, companies will continue to make money producing the goods and services we think we need to address the “problem” up and until we actually figure out it’s not really a problem. Toyota has been cleaning up (forgive the pun) on its Prius, and solar panel manufacturers have received so many new orders in the past few years that the price of silicon is skyrocketing. Certainly such success stories are related to the scarcity of energy supplies at least as much as they are to desire to slow global warming, but they do illustrate how so-called clean technologies and business models create new opportunities to make money.

Universities and government agencies are in the money, too. Top research schools and the graduate students who pay tuition to them collect sizeable grants to study the effects of climate change. Government agencies and intergovernmental bodies get budget increases when their work is seen as critical, and at the moment little seems as important as dealing with the potentially catastrophic consequences of global warming. And all of this makes sense. Who would lavish scarce research funding on a university or agency looking into the status quo? You can bet that a grant proposal seeking to money to affirm that everything is OK probably isn’t going to be met with the same kind of urgency as one that proposes to deal with a huge problem threatening the livelihood of millions. Potential death and suffering are understandably more salient. In fact, my former next-door neighbor in University Village at UC Berkeley told me quite frankly that many of the grant proposals coming out of his department (either chemistry or chemical engineering, I can’t recall) were flimsy at best, but that climate change was such a hot seller that any research addressing it had a better chance of getting funded. This fellow went on to earn his PhD a few months after our conversation, so I suspect he knows a little something about what he was saying.

Considering the money at stake, it’s no wonder there's been such widespread scientific consensus, and it’s no wonder that some firms are finding ways to cash in. It’s tempting to think that Big Oil could simply fund some positive “research” to combat the climate change consensus, but they’ve been big gainers themselves in all of this. The number one supplier of solar panels has become BP Solar, a subsidiary of British Petroleum. Oil companies and coal producers must realize that even if we all want to buy clean energy from wind farms, nuclear plants, etc., the world’s appetite for energy is so immense that only their mainline “dirty” energy products can realistically meet the demand over the near term. In other words, they’re going to get theirs. They will get paid. No worry for them.

So what if climate change is all just part of a cynical hoax put on by universities looking to get paid and companies looking to cash in? Personally, I think it makes sense to err on the side of caution. Assume the doomsayers are right, and clean up our act as much as we can. What’s the harm, after all, in mandating lower automobile emissions and higher fuel efficiency? Climate change or no, I don’t have any affinity for noxious fumes, and I wouldn’t mind driving further on a tank of gas. More trees would be nice, and who would argue with better insulated buildings, less landfill dumping (thanks to material recycling), improved traffic (associated with better planning and mass transit), etc.? Those all seem like pretty cool things to me.