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Len Baker ’64 on climate strategy

Climate Strategy

by G. Leonard Baker, Jr., ’64

September 14, 2020

I agree with what Tony Lee, Tom Barnard, and Sam Francis said in their recent posts on the ’64 class website in News about the urgency of tackling climate change. I spend the bulk of my non-profit time and money on environmental issues, particularly this one. I’ve been a board member of the Environmental Defense Fund for a dozen years and support other such efforts.

I think that creating awareness is largely behind us; climate change is much more widely accepted than it was a decade ago. Today’s issue is what to do. How do we solve the problem?

Many prevailing ideas are bad ones — divestment for example. It’s easy to make the problem worse by pursuing well-intentioned, but misguided, strategies which sow division, misdirect resources, and demonize needed allies.

My personal view is that there are five pillars of a winning climate policy. They are:

1. PRICE CARBON

Every dollar we spend on climate should go to where it will have the most impact. The cheaper we make carbon mitigation, the more society will buy of it. Yale economics professor and Nobel Prize winner Bill Nordhaus shows that pricing carbon is twice as cost-effective as command-and-control, top-down regulatory attempts to mitigate climate-forcing emissions.

If the social cost of carbon were directly to impact those who emit the carbon, people would make better choices. Even those of us who want to make good choices cannot really do so without clear price signals. More importantly, entrepreneurs who want to develop carbon-saving technologies today lack a business model to justify the capital they need. A price on carbon would create clear incentives and unlock dollars for innovation; those dollars, over a decade, would accomplish surprising things; Nordhaus underestimates this effect in his models.

Pricing carbon can be done either by a carbon tax or by a cap-and-trade system. Each system has pluses; the important thing is just to do it, one way or the other.

2. BI-PARTISAN SOLUTIONS

Large bi-partisan majorities passed most early environmental legislation, much during Nixon’s presidency. The world’s first cap-and-trade program, mitigating acid rain, became law during the Bush-41 administration.

Twin tragedies have come to afflict climate politics. On the one hand, Republicans have denied and abdicated the problem. On the other hand, Democrats have adopted the problem but then bundled it together with an exogenous ideological agenda, an agenda which creates political polarization and, if adopted, would likely make the problem worse. Biden’s climate platform, for example, contains expensive and divisive mandates that have little to do with climate; yet it says nothing about pricing carbon.

We need a bi-partisan solution; the two parties must stop using the problem as a tribalist attack weapon.

If the Democrats were to pass a single-party version of a climate program, it will just become the target of endless attack, likely to be rolled back when power changes hands. Republicans propose a revenue-neutral carbon tax; it might attract Democratic support if some of the revenue from a carbon tax could be devoted to social causes.

3. A GLOBAL SOLUTION

The world has one atmosphere; we all share it. A ton of carbon from anywhere hurts as much as a ton from anywhere else. The U. S. is only about 15% of world emissions; we are leveling off, so our share of the problem will decrease over time. Any U. S. action will be swamped by lack of action elsewhere. China emits 1.5 to 2 times what we do, though I know from my work on climate in China that the Chinese are working hard on their problem; they are now aggressively deploying solar, wind, and nuclear energy and implementing a carbon-pricing program. India is a small emitter now, but will be the leading climate polluter in a couple of decades. Africa’s population will expand from 1.2 billion to 4 billion by the end of the century and its per capita emissions will rise with its incomes.

We need to motivate all countries, including poor ones. Poor countries can cut carbon more cheaply; rich countries could pay them to mitigate through a market-trading system; both parties would be better off. Poor-country incentives based only on politically mandated subsidies will inevitably break down and be captured by corruption.

4. PUSH TECHNOLOGICAL INNOVATION

I see many on-the-horizon technologies that, together, could change the game. Here is a sample.

  • Solar and wind energy are cheap but intermittent. We need grid-level storage and better grid management to match supply and demand.
  • More than a dozen firms are developing small-scale, safe, modular, nuclear-fission reactors.
  • Batteries, due to inherently limited energy density, will never power long-range flights; we need a way of making high-energy fuels from non-fossil sources. Yale is actively working on converting solar energy to hydrogen-based transport fuel.
  • Since we will never completely eliminate fossil fuels, we must find ways to remove carbon so we can offset what we emit. Yale is also working on methods for this. One promising but under-resourced idea is to soak up carbon in rock formations such as basaltic lava from volcanoes.

5. ADAPT AND DEVELOP RESILIENCE

When carbon goes into the atmosphere it stays for millenia. Temperature rise is caused by the total stock of carbon, not annual emissions. There is a built-in lag; even if carbon emissions fell to zero tomorrow, temperatures would still rise for years. We are in for large climate-change effects no matter what we do to mitigate emissions.

This means we must adapt and prioritize. We must make tradeoffs. We cannot let the perfect be the enemy of the good. We will not be able to save all species or all shoreline property. Farmers will have to grow different crops and use land differently. Species habitats will move away from the land we are saving for them. If we don’t design smart tradeoffs, we will make bad ones.

Finally, we must ask what are the chances of success? What are the odds that we will control temperature rise to 2 degrees C? Even if we do so, how sure can we be that this level of warming will not do irreversible damage? Once we melt the Greenland ice sheets, they will not grow back for centuries.

The Intergovernmental Panel on Climate Change says that aerosols and other non-carbon pollution actually COOL the planet by ½ to 1 degree C. This pollution causes 4-5 million premature deaths globally every year; human welfare compels us to clean it up. However, If we do so, we will add a 1 degree temperature rise to the 1 degree that we already have, immediately hitting our 2 degree limit, even absent any further carbon emissions. This fact is seldom discussed.

It seems to me that the chances of controlling warming to 2 degrees or less are well less than 50/50; some data argue that chances are close to zero.

So, we desperately need a “Plan B.” I can think of only one: solar-radiation management. We know that when large volcanic eruptions spew particles into the atmosphere they cool the planet by 1-2 degrees for a year or two until the particles fall to earth. Harvard has a project which aims to duplicate this effect using airplanes to emit small quantities of reflective particles (hopefully alkaline) into the stratosphere. It is early-stage and high-risk, but the models say that, for $5-10 billion per year we could cool the planet by 1 degree. It would be quickly reversible if bad surprises unfold. This is not proposed as a permanent solution, rather an interim fix for a couple of decades while we track on a realistic transition to zero-to-negative net carbon. As the cost of climate change mounts, I predict that there will be a strong political mandate to do something like this. I fear we may not have enough research done in time to be ready to consider this sensibly. That’s why I’m supporting this project; it is grossly underfunded though it is beginning to attract modest government dollars.

In summary, we need to get practical, use all the tools we have, especially technology, economics, and data, and stop using climate as a weapon to accomplish unrelated political goals.

Len Baker is managing director of the venture capital firm Sutter Hill Ventures and a director of a number of public and private companies. His service to Yale has included membership on the advisory board of the School of Management, the Development Board, the Investments Committee, and the AYA Board of Governors. He was a successor trustee of the Yale Corporation from 2000 to 2012. He received the Yale Medal in 2013. He is a board member of the Environmental Defense Fund.