The Green Paradox, a book by Hans-Werner Sinn, provides a detailed and informative view on the economic repercussions of global warming policies that seek to curtail carbon emissions. The book presents how global warming is influenced by economics, and why current policies to reduce global warming are counterproductive. This book was well-researched, and includes many sources, as well as opposing theories. The author also presents a solution that acknowledges both the positives and negative consequences, and how this solution would affect the economy and the environment. I read this book as a newcomer to the world of economics, not yet understanding how consumers and producers influenced each other, and I felt this book explained it perfectly, with a focus on environmental policy.
Learning about the Green Paradox theory helped me become more aware about the influence of policies on the environment. The policy measures taken so far by many different countries to battle the demand of fossil fuels are sending danger signals to the resource owners. If the policies are implemented, it means the destruction of future markets for fossil carbon. This causes the resource owners to extract as much carbon as they can in the present, furthering global warming, which means more policies by the government are made to combat the worsening climate emergency, and it’s all one big, nasty cycle called the Green Paradox. The more fossil fuels extracted from the Earth means more carbon in the atmosphere, oceans, and biomass, which increases global warming. If we slow down the removal of carbon, every decade in which the extraction is postponed means another decade without the amount of damage that repair would cost.
One part of the Green Paradox theory that I’m skeptical about is the idea that policy makers aren’t really in control of carbon extraction – the resource owners are. Policy makers could break the Green Paradox cycle in a few ways, including taxing the resource owner’s financial assets if they extract too quickly. Adopting a policy that initially pursues an intensive regulation that reduces consumption drastically, then allowing this policy to taper gradually, relaxing the emission caps, could also disrupt the cycle. Currently, policy makers are making policies that start out lenient, and gradually becoming stricter, but this gives resource owners more time to extract fossil carbon.
Sinn wrote at great length about the many possible solutions for the climate change problem, and then he gave his opinion about how effective that solution would be. All of the solutions presented either had a negative aspect that would make the climate situation worse instead of improving it, or it would just be too complex or expensive to achieve. However, this book was published in 2012, and in the span of eight years, new, helpful green technology has been developed, and it’s important to look at the efficacy of this technology as well, to see how far we’ve come since this book, and how far we still need to go. Shortly after this book was published, engineers at Oregon State University made a breakthrough in the performance of microbial fuel cells that can produce electricity directly from wastewater. This new technology can now produce ten to fifty more times the electricity per volume than most other approaches using microbial fuel cells. However, it wasn’t until 2016 that the first wastewater plant was made to provide energy for the city Aarhus, Denmark’s second largest city. As a result of this plant, the city generated seventy percent more than it needed in 2016. These new projects help make green technology more reliable and useful than they were in 2012. The growing investment in green technology is also making a big impact. For example, global investments in renewable energy increased by 2% in 2017. The industry ended 2018 with new investments of $279.8 billion and transactions totaling $393.8 billion. The world is always changing in the topic of climate change, with new inventions, discoveries, and increasing financing, it’s important to stay informed on new green technologies and how it can help the environment.
Similarly, it is necessary to recognize the impact of who are the current policy-makers and government leaders. In 2012, Barack Obama was president of the United States when this book was written. Former President Obama issued the Clean Power Plan, to limit carbon pollution from power plants. When this plan was passed in 2015, carbon emissions in the US decreased by 132 million metric tons. When Donald Trump entered the office, he rolled back 125 climate plans, and withdrew the US from the Paris Climate Deal in 2017. From 2017 to 2018, carbon emission in the US increased by 150 million metric tons. However, in 2020 emissions dropped by 10.3%, but not without great economic cost, most likely due to the global pandemic. There are signs that the emissions drop was only temporary, and it is up to President-elect Joe Biden to stop them from rising again. The change in government leaders does influence climate change policies, therefore affecting emissions, and it is imperative to be aware about how each policy taken affects the environment.
Another piece of information that the author demonstrated, is how biofuels, the most direct substitute for fossil fuels, creates global starvation as they compete with food production. This is alarming because many government policies are promoting the use of biofuels, which shows how counterproductive current policies are. Biofuels have given rise to significant greenhouse gas emissions because of the cutting and burning of trees for land. Growing energy crops on soils that have to be cleared by burning brings no advantages, however while growing crops on already cleared land could be an option, it creates a higher demand for land, resulting in higher food prices. Since gas prices are corresponding with food prices, this means higher gas prices as well. This is a big problem, as evidenced by the The Tortilla Crisis of 2007. When the price of corn tortillas increased, people started to riot. The tortilla crisis came after a rise in the cost of corn, itself induced by growing ethanol consumption and growing demand in emerging countries. There was widespread violence and conflict as a result of this increase in food prices. This would only be a foretaste of what would happen if we don’t fix the biofuel problem.
Sinn explains that he thinks it would be beneficial for environmental policy to shift focus from the demand of fossil fuels to the supply of fossil fuels. One problem with that shift is how do we induce resource owners to leave more carbon underground and extract it more slowly? Sinn argues many possible solutions, including a “Super-Kyoto” system which combines all consumer countries into a seamless demand cartel using a worldwide cap and trade system. I agree that we should shift focus from demand to supply, it would be more productive than current policies. We could also try to focus on increasing forest cover at the same time. Trees reduce carbon already in the cycle, further lowering the impact of climate change, and possibly even speeding up the process of lowering carbon emissions.
This was a very thought-provoking book, and I noticed the author’s personality show up in some parts of the book, making it very entertaining to read. This book wasn’t like a textbook, it wasn’t drilling fact after fact into your brain; it was like a rollercoaster, taking you along for the ride about global warming and economics. It kept me reading, wanting to go deeper into how the environment, resource owners, policy-makers worked together. The author made many fascinating connections that made sense, and backed up his words with plenty of data and statistics. This book was written in a way that I could understand and easily relate to. The author took the time to explain the characteristics of each chart and graph, and it helped me understand countries’ use of carbon, and how each policy taken to battle global warming is influencing those countries’ economies.