How much can we depend on "market forces" to address the climate crisis?

Often lost in the conversation about responding to the Trump administration's backing out the Paris Accords is where "markets" fit.  As several posts on ClimateX have made clear, bottom-line-oriented investors - whether in red or blue states - are diving headlong into renewables.  A recent Green Biz article "The growth of corporate clean energy in 6 charts" shows how 

In markets where wind and solar power have become cost competitive, utilities have more economic incentives to add renewable energy. Renewable resources just offer a great low price for the next 20 years — without the risks of fossil fuel price spikes.  Further on the demand side,  90 companies have committed to 100 percent renewable power. Clean energy and greenhouse gas reduction targets are the norm for Fortune 500 and Fortune 100 companies. WWF and Ceres’ Power Forward 3.0 report shows that almost half of the Fortune 500 and a majority of the Fortune 100 have climate and energy targets.

Read the full article.

It's becoming clear that States whose utilities offer renewable energy options (including a "green tariff") are more competitive when attracting high-growth corporate business, and that trend is expected to continue.  Local and especially state-level goverments can help, as the Power Forward report articulates by establishing long-term low-carbon polices that will help companies meet their clean energy targets while also helping the US meet its carbon-reducing commitments - with or without federal participation in the Paris Accords.

Seems to me that "market forces" play a critical role, but only effective within an approach that includes all the other critical players in the system.



Rick Shankman's picture

There are no "market forces"

There are no "market forces" at work in world petroleum.

 It's all a manufactured illusion to hide the truth that the military/industrial complex Eisenhower warned us about has now taken control to the point that it can use national armies and private contractor mercenaries to advance its commercial and geopolitical goals, while passing the bill onto the masses it forces to consume its products.  As an illustrative point regarding the Iraq War, see this CNN piece...

It is no accident that renewables are where they are.

Clifford Goudey's picture

The climate crisis has been

The climate crisis has been perptuated by the inability of market forces to overcome the enduring advantage of fossil energy sources in externalizing much of their actual costs.  When those co

sts are effectively passed on to others in the form of increased health costs, climate mitigation costs, and a general loss in quality of life, how can clean energy compete?

In spite of this unfairness, onshore wind is now the least-expensive form of new energy.  Offshore wind is close behind, as is solar.  If the real costs of burning fossil fuel were being paid by the person using it, then the transition to renewables would be well ahead of where we are now. 

The coal industry has thankfully tanked, as demand drops.  Similarly, demand for oil can not match the production rates of companies and countries trying not to be caught with oil in the ground when the game is over.  Even our infatuation with the magically high energy density of gasoline and diesel is fading with the advent of EVs and affordable battery technologies. 

Mark Trexler's picture

The question is a bit unclear

The question is a bit unclear as to what it means by market forces. Tools involving market mechanisms (e.g. carbon pricing, carbon taxes, etc) are key to dealing with climate change.

 But market forces in this context are only a tool and a means to an end, they are not a force unto themselves.  

What I think the question is referring to is whether "business as usual" market forces will lead us to a low-carbon transition.  And the answer is yes - we didn't leave the Stone Age because we ran out of stones.  But there is no data out there to suggest that this "natural" transition to a low-carbon economy would occur by itself in time to prevent 3-6 degrees C of climate change.  So the question is how to accelerate that transition, and that requires policy (including market mechanisms).   


As a consumer, how could I

As a consumer, how could I better advocate for green market-based solutions? Given the political climate in the States, it seems to me that consumers should be uniting to make climat

e-friendly demand from corporations. Current market shifts reflect an impending demand for clean energy... but how can we consumers act to speed up market change?

Rajesh Kasturirangan's picture

I am very suspicious about

I am very suspicious about purely market based solutions - in general, market forces haven't been good about addressing issues that come out of the tragedy of the commons.

I think some aspects of renewable energy production/distribution can be addressed by market innovation but on the whole I see the provision of global public goods as being the long term direction.