“There is a misconception amongst people that climate change is a separate ‘sector’ instead of something that concerns virtually everything we do. In fact, all authorities are working on establishing monitoring and reporting systems for emissions, examining the effects of climate change policies in their respective fields, or creating plans for the future — all while staying on top of their core duties.
One of the main issues in all sectors is that it is way too cheap to pollute. For decades, economists have been trying to say we need to put a price on carbon, and the message is finally sinking in. This has been the key flaw in our economies so far: pollution is a negative externality, and thus a market failure we can, and know how to, fix.
In other words, we know what to do to mitigate climate change and the necessary change is happening, but the pace is not quick enough.
A fight we can win
Governments and authorities consist of multiple ministries, agencies and organisations. They all have their own responsibilities, and all of them address climate change in different ways. For some, such as water treatment or forest authorities, it may include developing plans for how to deal with the consequences of climate change. For others, such as the Ministry of Economics Affairs and Employment, working on low-carbon development plans is a core activity. Even the Ministry of Foreign Affairs takes climate change into account, since their work includes considering ecological responsibility in foreign aid or co-financed projects. Climate change is on everyone’s table and it has been there for quite some time.
At the moment, there is an ever-increasing amount of climate legislation popping up across the globe, with new initiatives including carbon taxes and emissions trading systems. Over half of the global GDP is now covered by planned pledges for carbon neutrality in 2050, and businesses in countries with less stringent climate policies are worried they will be left behind in global trade, with for example the EU implementing the Green Deal.
The question is whether our economies will look the same and function the same, once the needed amount of legislation is in place. And how will we get there?
I’ve always thought that humanity can solve any problem we face, given that people come together to do it. To me, economics is a way to understand how society works, since I look at humanity as a huge organism with certain common traits: we care for our loved ones, enjoy our hobbies and free time, and hopefully have jobs to get us by. All this makes the economy, building from the bottom up on every decision we make on how to use our time and what might make us happy.
Future economies will mirror the society we create
If I could decide on one thing right now for the benefit of our future economy, I would make sure all efforts are made to ensure the EU emissions trading system functions properly, by making the annual cap on emissions stricter and improving the Market Stability Reserve, which is designed to adjust the emissions trading system to external shocks in the economy. By doing these things, we can count on our energy sector decarbonisation, and focus society’s resources on more complex issues, such as decarbonising mobility and industry.
Future economies will mirror the society we create together — it’s hard to predict exactly what it will look like. My expertise lies in climate policy, so painting a picture of how the combination of for example digitalisation, the effects of climate change and demographic changes will affect us isn’t really something I’m able to do! One thing I think will happen though is that we will rely on low-carbon electricity for virtually all our energy – smart systems and energy storage will become essential and local solutions will in part replace centralised systems.
I hope that in the future, due to extensive carbon pricing, emission-intensive activities and products will become relatively expensive. This would make it easier for all of us to make climate-friendly choices in our day-to-day life and increase the amount of climate-friendly options available. I also hope that acknowledging the fundamental risks for societies due to climate change will permanently induce more investments in all kinds of research and development, which are currently lagging behind the recommended levels, especially in Finland. A society with curiosity in understanding how the world works is also a society that has something to contribute.
Thirdly, I hope that we can trust in our political systems to represent what voters think society should focus on. I still think that voting for what we want our society (and our economy!) to look like is the most effective way to make a change, though I understand how frustrating the seemingly slow pace of decision making may seem!
One thing is certain – the world is deliciously complicated, and there are countless interlinkages between things. My work for the Finnish Climate Change Panel has helped me understand why there isn’t always a quick or straightforward fix for mitigating against climate change, and why patience, perseverance and precision are the way to change things for the better.”
Quick questions for Sally:
- What book are you currently reading?
I’ve got two books on the go: Agatha Christie’s “A Murder Is Announced” and Bill Bryson’s “A Short History Of Nearly Everything.”
- What do you do in your spare time?
My favourite things are to meet up in the pub for a laugh and a chat with my friends and go out on birdwatching walks. If I’m stuck at home though, I love watching murder mysteries.
- Any podcast / Ted-talk / documentary recommendation?
For Finnish speakers I would recommend the Docventures series from YLE including the discussion session afterwards. The Docventures series introduce a range of topics, including climate change, via documentaries and bring in specialists for a post-documentary discussion on the subject in a refreshingly honest way.
- If you weren’t an economist, what would you do?
I would either be an engineer prepping low-carbon projects for their commercialisation or run a noisy but cosy neighbourhood café.