Gernot Wagner - Geoengineering

First, cutting CO 2emissions may not be as costly as often assumed. 30Solar photovoltaic costs alone, for example, have famously declined by around 90% in the past decade alone. That might, in fact, be the most important caveat to our game here, and a hopeful one at that. Much of the delay in climate action, after all, may not be because of the lack of international coordination but because of domestic political obstacles. 31There, too, of course, solar geoengineering might play a role, invoking a type of moral hazard, or its inverse (see Chapter 7), though that’s not the type of interaction modeled here.

Another important caveat is that it may indeed be in some countries’ self-interest to pursue more ambitious policies around cutting CO 2in order to persuade others to do the same. That might happen through traditional channels around carbon pricing policies. 32It might also happen via supply-side channels, for example China wanting to dominate the market for carbon mitigation technologies, thus moving the energy world from one being dominated by “petrostates” to “electrostates.” 33

If we do take the climate mitigation game as a given, however, solar geoengineering might add a particular wrinkle to these discussions. Assume that each country has one additional move: G. That option is both fast and cheap. Yes, it’s highly imperfect, too, but the first two properties alone might lead G to sweep the board. Table 1.2 shows the seemingly inevitable outcome.

The free-driver effect, in short, doesn’t ask if solar geoengineering might one day be used. It points to it simply being a question of when . Table 1.2 shows the scariest of possible outcomes: solar geoengineering not just being used in addition to ambitious CO 2emissions cuts, but possibly even instead of them. A little bit of tradeoff between G and H might well be rational and all-but inevitable in its own right. A total substitution surely is neither rational nor inevitable. Then there’s a potentially more consequential twist.

Table 1.2. Climate policy with a solar geoengineering (G) option. Without G, low mitigation (L) dominates high mitigation (H). G dominates both.34

As a rule, there’s little use in introducing game theory, if it doesn’t lead to some seemingly counterintuitive results. The 2×2 matrix here might show why climate mitigation action is hard, but that’s about it. It doesn’t point to any solutions to the dilemma. The 3×3 matrix, with G for solar geoengineering, does the same. It shows how G will dominate, nothing more. There’s no more guidance other than to say that everyone should just agree to cut CO 2considerably – pick H – and get on with it.

Failing to act on cutting CO 2emissions – picking L – is scary for the planet as a whole. Slithering into solar geoengineering might be scarier still. With that setup, and with a bit more work to understand what’s behind Table 1.2, there may well be a way out of this dilemma.

Focusing on H, L, and G alone has lots of limitations. That’s for sure. But sticking with that logic for a bit longer, let’s try to rank countries’ preferences once again. There are those ranking H ≻ L. (Read the squiggly “≻” simply as saying “preferred to.” No other magic there.) That implies large climate concern, at least larger than those not ranking H first. It might also imply that, for this particular player, cutting CO 2is relatively cheap, again at least relatively speaking. Either way, this player would clearly prefer H.

For those ranking H ≻ L, there are now three options for where G could go: first, second, or third. First implies that G dwarfs all else: G ≻ H ≻ L. That ranking would be bad, for at least two reasons. First, solar geoengineering would win, to the exclusion of any other climate policy; clearly a bad outcome. It also makes the game-theoretic model moot. No need for a 3×3 matrix, the outcome is clear: G wins, unless, for example, nations agree on a strict, enforceable moratorium (see Chapter 8).

G going third, H ≻ L ≻ G, is similarly boring. Now even the low-mitigation scenario is preferred to any solar geoengineering use. That’s clearly a possible preference ranking. The more fundamentalist elements of the German Green Party come to mind. They might prefer H to L and, thus, abhor anything that appears like a technofix to the much larger, structural problems of the current fossil-fuel economy. I call this position “boring” not because the position itself is. Far from it. It calls for a radical reorganization of society as we know it. But it does now mean G is sidelined in favor of an exclusive focus on cutting CO 2emissions.

A third possible ranking is H ≻ G ≻ L, one that ranks G second, possibly far behind H but still (reluctantly or not) above L. Even, or perhaps especially, ardent environmentalists might support this ranking in a fit of desperation, given how far unchecked climate change has proceeded.

As in any game-theoretic setting, a good deal now depends on what the other player does. There, too, are three possibilities. We already know that this player ranks L ≻ H. Once again, G can either go first, second, or third.

With G first, we already know what will happen. Ranking G ≻ L ≻ H yields the same outcome as the other player G ≻ H ≻ L. G dominates. Once again, the only way to prevent solar geoengineering in this scenario is to attempt to ban it: a global moratorium of sorts (see Chapter 8).

What, then, if G is ranked second, implying L ≻ G ≻ H for this player. This now quickly gets more complicated, though not prohibitively so. Table 1.3 shows the complete picture.

Table 1.3. Climate outcomes based on each player’s complete preferences. Availability of geoengineering (G) could lead to high mitigation agreement (H, in bold), despite one player preferring low mitigation (L) to H.35

In Table 1.3, go to the third row, which has “L ≻ G ≻ H” as player 1’s preference. The only outcomes are L and G: