COP21: A Nobel Prizewinner Speaks

This article was originally published in French at
where, as nearly always at the French edition of their blog, no-one comments except me. Since the Conversation very decently allows free use of its articles, and since the author is a Nobel Prizewinner for Economics, it seemed only reasonable to translate his thoughts and make them available to a wider audience.
Unlike the Conversation, we don’t receive funding from universities and charitable foundations set up by dead billionaires. Nor do we censor comments because they quote “unreliable” sources. But we do have an intelligent, though sceptical, readership who I hope will provide Professor Tirole with the conversation he didn’t get at the Conversation.

The Paris Agreement: Still a Long Way to Go

The COP21 was meant to result in an effective, fair and credible agreement. Mission accomplished? The agreement is ambitious. The goal is now “well below 2°C” and the world should not produce net emissions of greenhouse gases after 2050. The funds for developing countries after 2020 will exceed the100 billion dollars a year that had been decided at Copenhagen in 2009. Unfortunately, in practice, the compromise agreement falls far short of the aims.

From the point of view of effectiveness in the fight against global warming, carbon pricing, recommended by the vast majority of economists and many decision-makers, but a red rag for Venezuela and Saudi Arabia, was quietly dropped by negotiators, seriously jeopardizing the achievement of the climate goal, as noted by the Nicolas Hulot Foundation.

However, we need a universal carbon price consistent with the objective of a 1.5–2°C temperature rise. Proposals for differential pricing according to the country open up a Pandora’s Box, (who pays what?) and, furthermore, are not environmentally friendly for the most part. Emissions growth will come from poor developing countries, and under-pricing the carbon emitted by these countries will not achieve the objective, especially as a high carbon price in developed countries will encourage the location of GHG emitting production in countries with a low carbon price, thus canceling out the efforts of rich countries.

From the point of view of justice, developed countries have not detailed their contributions to developing countries, leaving the latter dependent on the generosity of the former. It’s notorious that collective promises are never kept. It’s essential that these transfers are specified and are in addition to existing promises, and not existing aid redirected to green projects, or vague promises of loans or transfers which may never materialise.

And what about credibility? The agreement pushes back a concrete commitment of countries to reduce their emissions to a later date. The strategy of “wait and see’ and voluntary commitments to reduce emissions (INDC) won the day. The undertakings are not comparable, they are insufficient, would be costly to implement, and it’s a safe bet that, since they are not binding, they will not be implemented anyway (A promise is only binding on he who believes it).

The negotiation on the subject of transparency was also a failure. It is difficult to understand why countries of the southern hemisphere should not be subject to the same monitoring, reporting and verification as others. Northern, developed countries should be generous, but not close their eyes.

Finally, the idea that we will adopt a more virtuous path through revising targets every five years ignores what economists call the ratchet effect: can we be sure that a country will improve its future negotiating position by faithfully respecting its promises rather than “dragging its feet”? We always expect more from the best behaved student.

Three failures? In fact they come down to one and the same. It is futile to seek ambitious commitments on green funds from developed countries, without also establishing a mechanism for achieving climate goals. And we can’t expect developing countries to make the necessary efforts without a credible compensation. It takes two to tango.

What Now?

This bleak picture should not obscure the reasons for optimism. First, public concern has been growing in recent years. Secondly, all the countries present at the COP21presented predictions for their pollution trajectories, contrary to what happened at Kyoto in 1997. It’s a symbolic progress.

Finally, more than 40 countries, including theUnited States, China and Europe, have markets for trading emission rights, albeit with ceilings which are too generous, resulting in very low carbon price. But at least they show willing to use a rational policy against global warming. These carbon markets will one day be connected together to form a more coherent and effective global market although the question of the correct exchange rate* will remain thorny. We have to build on this dynamic.

While it is important to maintain a dialogue at a global level, the UN process has shown its very predictable limits. Negotiating among 195 nations is incredibly complex. We have to create a “climate coalition” including major polluters both current and future. I do not know if this should be the G20 or a smaller group (for example, the five biggest polluters: Europe, the United States, China, Russia and India, representing 65% of global emissions). The coalition members would put pressure on the World Trade Organization, which, in the case of “environmental dumping,” could authorize a border tax on countries refusing to impose a carbon price in line with climate targets.

Finally, it should simplify the negotiation arranging subjects in order from the simplest, which should be officially recorded, to the more complex, which should be the real subject of negotiation. The fight against global warming is not an economic problem (we know how to do it), but a geopolitical one. The difficult but unavoidable, questions involve respect for agreements and, even more, of financial transfers between countries. Let’s stop beating around the bush.

* It has to be established whether a right to emit one tonne in a particular system is equivalent to the same right in another system. The most “virtuous” countries – those having issued fewer rights – might then feel disadvantaged.


  1. I don’t appreciate this wording, because it is both physically and morally false: “We have to create a “climate coalition” including major polluters both current and future.” CO2 is not a pollution, quite to the contrary, it’s a trace gas absolutely vital to an organic life on earth. An earth lacking of CO2 would just be bare rocks.

    Even developing countries benefit from the technological evolution that was only possible because the developed world found an developed(!) abondant and affordable energy ressources and used it to improve the life span and living conditions of humanity. Thanks for that!

    Liked by 1 person

  2. The professor wants carbon pricing, as does Hansen. The economic idea is that if the price is raised, less will be consumed.
    There are several problems with this that neither the professor nor Hansen discuss.
    1. Energy demand is quite inelastic. This is especially the case for electricity and transportation fuels. Some simple examples. You cannot turn off the lights in an office building and still have functioning offices. The price of gasoline may influence driving and car buying decisions on the margin, but not much. Gas is four times as epensive in Europe because of taxes, yet people still drive like in the US.
    So raising the proce won’t do much.
    2. Undispachable intermittent renewables are no substitute for reliable electricity generation no matter the price of electricity.
    3. Artificially raising energy prices acts as a highly regressive tax. This is already clear in the UK and Germany.
    4. There is no anthropogenic warming problem to solve. The pause falsifies the climate models and anthopogenic attribution. So does the natural warming from ~1920 to ~1945, which is statistically indistinguishable from ~1975 to ~2000. SLR is not accelerating. The weather has not become more extreme per IPCC SREX itself. Arctic sea ice is cyclically recovering and will likely do so for about another 25-30 years. The planet is greening thanks to the beneficial impact of more CO2 on C3 plants, which includes all food crops except maize and sugarcane. Effective sensitivity is observationally between ~1.5 and ~1.7, not 3 as AR4 would have it, or 3.4 as the CMIP5 ensemble would have it.
    5. The ‘just in case #4 is wrong’ precautionary mitigation principle is opposite of sound economics. It is ruinously irrational.
    6. As Lomborg has long pointed out, adaptation if, when, and where eventually necessary is far more economic than CO2 emissions mitigation by any means, carbon price, renewables, or otherwise. The only exception might be nuclear power. But it by far more preferable for electricity to do USC coal with scrubbers, or CCGT where natural gas is available, while waiting to implement whatever preferable gen 4 nuclear comcepts emerge to solve the intrinsic safety and radwaste issues. Molten salt and travelling wave reactors, more speculatively high beta mag confinement fusion. Essay Going Nuclear explores this in more depth.

    Liked by 2 people

  3. The “well below 2°C” goal won’t seem so ambitious if natural factors predominately determine global temperatures and CO2 sensitivity turns out to be negligible. Have any radiative-convective models ever been experimentally verified?


  4. The professor like the UN and EU has come up against the annoying fact that most of the countries expected to “donate” their wealth are democracies answerable to the poor saps who will have to pay it. So far bread and circuses have kept them diverted and so far the feathers have been plucked a few at a time with no great pain.
    The trick is how do you ramp this scam up without awakening the plebs? The politicians are pragmatic enough to play the game of keeping the wailing activists’ noise levels just below maximum and at the same time playing the preening self-righteous morally superior role they think will gain them some kind of kudos within their group – or a Nobel Prize or two.
    BUT they are desperate to retain power (why bother being a politician otherwise) and they have to “sell” the concept of naked geese being a desirable trait, to the electorate. Quite a difficult task when the electorate place “global warming”, “climate change”, or whatever it’s called this week, somewhat below “…what’s for dinner love”?
    So, put off the “wolf” crying until you’ve completed getting rid of “democracy” and then, hey, as part of the politburo you can fight over the spoils with the rest of the committee.


  5. I have seen no reasonable evidence of a global warming problem. I realize that since about 17,000 years ago the glacial advance ceased and much ice melted. Modern civilization had nothing to do with this. Why is it assumed that the global temperature of 1850 (or whenever) is the temperature that Earth ought to be? A couple of degrees of warming is not going to destroy the planet, assuming it happens, which it is not doing. But, if it can happen why not talk about the many benefits? And what if the world cools for 30 or 60 years?
    There are problems in the world. Bjorn Lomborg has covered these issues well. He thinks global warming is happening but suggests other problems are more important. There is no need, here, to go over his material. I strongly agree with that part of his thinking. Still, I do not see a global warming problem.
    The fancy parties in Paris and elsewhere [search for Climate Action 2016] are not needed and are very costly
    Professor Tirole should listen to Richard Feynman: If your theory doesn’t agree with experiment – it’s wrong. The global warming models produce temperature
    scenarios that are too warm, and the discrepancy between models and measured temperatures get greater each year. See this:


  6. Your analysis of COP21 is interesting to me because you are coming at it from a perspective very different from my own one. For example, I do not see the widely-anticipated failure/fiasco/farce of COP21 as bleak. Although it was expected, it still came as a qualified relief. It would have been a delight if it had by some miracle chosen to puncture the balloons and bubbles of the apparently still burgeoning bureaucracy of those happy to conform to the ‘settled science’ school of thought. That nothing binding was agreed provided the relief, but it is qualified by the failure to put any roadblocks in way of campaigners. Instead it has managed, by virtue of grand language and noble-sounding goals, in granting such people a licence to keep working away: they did not get the solemn and binding agreement of their dreams, but they have not been deflected from their direction of travel towards something like that some day. Their bureaucracies may even be dramatically increased – see

    You seem to be firmly in what might be called the climate-conformist camp, since I see not the slightest hint in your essay that you might ever have questioned the scientific, and not so scientific, developments which underpin the political drive which keeps the COP show on the road, year after year. You are happy to presume that it is within our power to control global mean temperature for example, and that our emissions of greenhouse gasses provide the control-knob of choice. I do not share that perspective. For me, it seems more plausible that our additions of CO2 etc have had, and will continue to have, a quite modest effect on climate. As for ambient CO2 levels, our relatively tiny annual contribution (a few per cent of the total) would be readily swamped by a modest change in any of the major sources or sinks. Our estimates of climate history point to CO2 levels being far more of an effect than a cause in the climate system, and the complete lack of anything extraordinary happening to that system since those levels began rising over the 20th century is consistent with this. The rising temperatures, and the rising CO2 levels seem to have been generally beneficial. On the other hand, either falling temperatures or declining CO2 levels would be far more unsettling if sustained for several decades.

    My perspective is that of someone unconvinced that we are facing a climate crisis of our own making. The gentle warming we have enjoyed since the Little Ice Age looks good to me, and I am also pleased to see CO2 levels climbing away from levels which have been low compared to those during which plant life evolved to thrive on. In my perspective, the fossil-fuels have been a huge liberator of mankind from massive toil and poverty, and will continue to play that role for at least the next several decades. But they do pollute, and their recovery from the ground is often dangerous. It would be good to wean ourselves off them, and we can see ways of doing that over that sort of time period. Rushing to do so prematurely could, however, severely harm billions of people, and severely weaken our ability to cope with climate variation, whichever way it goes next.


  7. Good questions have been raised to which answers from Prof Tirole are richly deserved. But to extend him the benefit of the doubt, let’s presume there’s a language barrier at work. So for le Professeur’s sake, I think it’s time to translate this page, above and below the line, back into French. It ought to be the work of a mere moment for the indefatigable Monsieur Chambers.
    Cheers dude!


  8. “We have to” is one of the favourite phrases of the pontificating authoritarians from whom the Nonversation solicits articles; or equivalents such as “must”, which appears 8 times in this article by Andy Hoffman. Hoffman is one of my favourite characters there, calling himself the “hopeful environmentalist”, always fooling himself into believing that a dramatic change in worldwide opinion towards embracing climate activism is imminent, as a result of what the Pope said, or the Paris meeting.

    The article by Tirole contains no new ideas. He says ‘we need’ (that attitude again) a carbon price – but then explains that it can’t really work. He says the commitments are vague, not binding and won’t be kept.
    Then at the end he shows the same naive self-deluding belief as Hoffman. A glance at almost any opinion poll would show him that public concern has not been growing in recent years.


  9. RISTVAN (at 16 Dec 15 at 8:14 pm) makes some good points, that are more than sufficient to undermine the case for mitigation. But there are some more general points to be made.
    Point 3 looks at the case for no significant global warming – which I largely agree with. However, whether it is sufficient to reject AGW theory should be in the context of the form of the AGW theory. In a weak or trivial form (rising human emissions lead to rising levels of GHG gases, which lead to some warming), the evidence does not falsify the theory. But in a strong form (Doubling of CO2 levels – or equivalent GHGs – leads to 3C of warming with strong net adverse consequences) then I believe the theory is falsified. In economics there has long been a debate on how to compare theories against the evidence. Climate has similar levels of complexity. My own preference is for multiple methods. Short-term predictions are very hard to achieve, so a single failure (such as Arctic sea ice disappearing by 2013) does not the falsify the whole theory. But a meaningful scientific theory should have a better predictive success rate than a dumb extrapolation from recent trends. It is what FA Hayek in his Nobel Prize lecture referred to as “pattern predictions”. AGW theory has been a failure on this front.
    Another method of evaluating theory is on bold predictions – something that 1976 Nobel Laureate Milton Friedman was very keen upon. His ideas of methodology dominated economics for a generation. AGW theory states that if human GHG emissions increase, so will the rate of warming. Post 1998 emissions increased at unprecedented rates. Global average temperatures stopped rising. The temperature response to increasing emissions was the opposite of the theory.


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