by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The COP28 conference in Dubai, United Arab Emirates, has largely been an exercise in futility and waste.
Besides working themselves into a frenzy over the “climate emergency,” attendees have resolved on a host of anti-market “solutions” to climate change, such as government handouts to green energy firms, tax credits for climate mitigation, net zero mandates, and subsidized lending, or outright grants, to developing countries for climate projects.
That’s the wrong approach. These policies are wasteful, costly, and unnecessary. Climate change concerns and problems should be addressed through free markets.
Even if the predictions of the Intergovernmental Panel on Climate Change and the United Nations about the costs of climate change are correct, then governments should implement a simple tax on carbon emissions and let the market sort things out. Instead, we have gotten the biggest waste and misallocation of capital in recent history with the 2021 Infrastructure Bill ($1.2 trillion) and the 2022 Inflation Reduction Act (initially about $900 billion, recently forecast to cost over one trillion dollars).
The inefficiency already boggles the mind. All kinds of problems have arisen trying to ramp up the electric vehicle market. Auto manufacturers have delayed plans for battery facilities and scaled back production of EVs, even as EVs are piling up on dealership lots around the country.
If renewable energy, efficiency improvements, and net zero targets really made companies more productive and profitable, then we wouldn’t need subsidies or mandates. Companies would implement these climate-friendly practices of their own accord to increase their profits.
But if renewable energy and other climate-friendly practices do not improve companies’ productivity and profitability, then they are costly burdens undertaken for external global benefits. But even in this case, subsidies and mandates are destructive and wasteful ways of getting companies to adopt costly climate mitigation technologies and practices.