Need portfolio approach to climate risk

August 13, 2016
Need portfolio approach to climate risk

By G. Leonard Baker Jr. and Gernot Wagner

Much like outright climate denial on the right lacks a portfolio approach to climate action, ignoring the scenarios that might lead to a need for albedo modification is a kind of denial on the left.

Climate science isn't settled. Stating otherwise does a disservice to science — and to sensible climate policy. To be clear, there is a strong scientific consensus that the world is warming, that humans are to blame and that the consequences will be grave.

But "consensus" does not equal "certainty." And in any case, saying so does little to advance the debate. No science is certain, and neither is much else in life.

We cope with life based on probabilities. We buy homeowners' insurance though our houses probably won't burn down. We buy stocks and bonds because we think the odds favor a good investment return; no one expects investment returns to be guaranteed.

If more than 95 percent of scientists agree that we're headed for catastrophic warming, and if you're a skeptic, how certain are you that they're wrong? Would you bet everything? Wouldn't it make sense to consider the likely range of outcomes and buy some insurance? In addition to wholesale efforts to cut carbon emissions, the smartest insurance we can buy today is research into a range of technologies that could directly combat dangerous warming.

Most talk of climate change focuses on the midpoint of a range of outcomes. Reaching 450 parts per million of carbon dioxide in the atmosphere is supposed to lead to two degrees Centigrade of global average warming. Two degrees, in turn, is supposed to lead to certain predicted sea-level rises, crop failures, heat waves and other extreme weather events.

Every one of these predictions involves a probability distribution. The range of reasonable possibilities is fairly wide. We might get lucky, and things might be better than we expect. Or we might get unlucky.

The best climate insurance is mitigating carbon emissions. And indeed, we must reduce net emissions to zero to have any hope of stabilizing the world's climate. But we cannot stop there.

Climate change is a bathtub problem. It is the carbon dioxide already in the atmosphere — the tubful of it — that is causing the problems, rather than the annual inflow of emissions. Even if the entire world were to decide today to be as aggressive as possible to reduce carbon dioxide, trash trillions of dollars of capital stock and consumer durables like cars in the process, and somehow instantly create the industrial capacity and technology to supply all energy carbon-free overnight, global average temperatures and sea levels would still rise for decades and even centuries because of the carbon that's already there.

It is this already committed climate change that all but demands an entirely different insurance approach. Fortunately, science — and nature — have shown us the way. Volcanoes cool the planet by throwing tiny particles into the upper atmosphere that reflect sunlight back into space — thus modifying the Earth's albedo.

Models suggest that we can put reflective particles into the stratosphere and achieve the same cooling effect, which could protect us from the worst impacts of climate change. The good news is that we can do this with existing technology, at a fairly cheap cost, and deploy it quickly. No one believes solar geoengineering is a climate change cure-all. And, like almost all innovations, it has known and unknown side effects. For one thing, it doesn't deal with ocean acidification. For another, we don't yet know enough about its effects on atmospheric ozone, for example, or on rainfall, or how it might help one region and hurt another.

But we do know several things. First, we might find a way to make this technology a several-decade bridge to a zero-carbon future that would save the planet. Second, such a cheap technology could be deployed by an individual state, or even a non-state actor. Third, we know that the governance problems for doing this are complex; no one knows who should decide and what should be decided. Fourth, neither efficacy nor risk is well enough understood; there is plenty of further research to be done.

Finally, we know that this is a "third rail" issue. Because of this, little research is going on and discussions about governance are just beginning. Ironically, many of the stumbling blocks to research on the topic appear to be on the political left. Much like outright climate denial on the right lacks a portfolio approach to climate action, ignoring the scenarios that might lead to a need for albedo modification is a kind of denial on the left.

Albedo modification cannot be the sole fallback plan for climate action. But it might be part of our portfolio of options, and we need all the options we can get. This means researching the topic -- now, so we'll have some answers by the time we need them.

G. Leonard Baker Jr. is a partner at Sutter Hill Ventures, a Silicon Valley venture capital firm. Gernot Wagner is a researcher at Harvard University and co-author of "Climate Shock."

Published by The Mercury News/East Bay Times on August 13th, 2016.

See also: Gernot Wagner, Op-Ed