Ask CFR Experts

PrintPrint CiteCite
Style: MLAAPAChicago Close


What is the impact of the economic crisis on the climate change debate?

Question submitted by Soumaya Maghnouj, from Sciences-Po, March 22, 2013

Answered by: Daniel P. Ahn, Adjunct Fellow for Energy


The global economic crisis and the subsequent attention to economic and budgetary issues have monopolized the political debate. With the aftermath of the crisis still being felt, there is not much political will for policies that may create short-term economic pain for long-term benefits. These include policies to combat or adapt to climate change.

The status of international climate change negotiations was hardly in good shape even before the crisis. Pledges by the industrial nations to contribute $100 billion a year to a Green Climate Fund by 2020 to help finance mitigation and adaptation have not yet been realized.

However, some local efforts have proceeded. For example, Australia recently introduced a carbon tax scheme. In the United States, the Obama administration pushed ahead with vehicle mileage standards while California introduced a local cap-and-trade scheme.

Furthermore, by reducing overall economic activity and incentivizing efficiency, the crisis has ironically helped some countries meet emissions targets. For example, the United States made progress in meeting a pledge to reduce carbon emissions by 17 percent from 2005 levels (though credit must also go to the shift from coal to natural gas).

The lackluster economic environment may also spur businesses and governments to develop cost-saving "green" industries. For example, China has invested in local renewable energy industries. The crisis may also change the political calculus around climate change in more subtle ways. For example, Michael Levi and I have argued that an oil tax may be less economically painful than alternatives, given budget austerity.

Thus, while addressing climate change seems a distant priority, there may be opportunities to jump start climate change action by adapting to the new realities unleashed by the financial crisis.