An Economist’s Guide to Spending Bezos’s Billions on Climate Change

Jeff Bezos just announced he will commit $10 billion to fight climate change. That’s both a lot, and not much at all.

It’s a lot compared with other private climate funding. In fact, it’s more than anyone else is currently spending on climate. By comparison, the Hewlett Foundation, the single largest private climate funder before Bezos, gives around $100 million per year. Total private U.S. climate giving is around $500 million. Bezos’s commitment, if run as a foundation, would double that amount—more if spent down over time, a good idea in itself.

$81.​9B Renewable power investment worldwide in Q4 2019 0 6 5 4 3 2 0 3 2 1 0 9 0 7 6 5 4 3 .0 4 3 2 1 0 0 0 9 8 7 6 0 6 5 4 3 2 0 9 8 7 6 5 0 3 2 1 0 9 0 2 1 0 9 8 Parts per million CO2 in the atmosphere

50,​820 Million metric tons of greenhouse emissions, most recent annual data

Dhaka, BangladeshMost polluted air today, in sensor range -3.​92% Today’s arctic ice area vs. historic average +1.​14° C Jan. 2020 increase in global temperature vs. 1900s average

It’s relatively small compared to the overall challenge. Even $10 billion, spent wisely, won’t “solve” climate change. The U.S. government alone spends over $2 billion per year on climate-related research funding. Transitioning the global economy away from fossil fuels takes orders of magnitude more.

Bezos, of course, knows that. His brief announcement of the $10 billion commitment says: “It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals.”

Looked at it slightly differently, it takes both policy and technology—guiding economic forces away from fossil fuels and toward cleaner alternatives. That, at least, is for cutting CO2 and other greenhouse-gas emissions in the first place. Adapting to what’s already in store is another massive undertaking entirely.

How, then, to spend the money?

Bezos himself provides some guide, saying his money will fund “scientists, activists, NGOs — any effort that offers a real possibility to help preserve and protect the natural world.” The span of scientists and activists is a good start, and it implies two distinct strategies:

First, actively engage in raw climate politics, especially in the U.S. The climate war is just that. That does not mean simply transactional politics. It takes a groundswell of support, as political scientist Theda Skocpol has argued forcefully. Today’s youth-led uprising might well be just such as movement.

Nobody knows when that next opening for a big U.S. federal climate policy push is, or whether the “3.5% rule” applies to the climate movement (that’s the idea that no social campaign supported by more than 3.5% of the U.S. population has failed). But as Barack Obama told Jerry Seinfeld, politics is a lot like American football. That means two things: being ready for when there is a political opening, and helping create that opening in the first place. Surely, $10 billion can help do both.

Practically, in U.S. tax lingo, that likely means creating a 501(c)(4) charity, rather than a 501(c)(3). The “(4)” allows for direct lobbying—and lobby it must.

Yes, we need campaign finance reform. Yes, there is too much money in politics. But given where we are—especially how time is not on our side—having the first grants go out this summer is not a day too soon. It might still be too late for this election cycle, but the calculus is simple, and it is very transactional: 51% for an ambitious climate policy in the House; 51 votes in the Senate, ideally 60. A climate champion in the White House, too, of course.

All that also means raw partisan politics. There are clearly some worthwhile efforts on the Republican side—and the final outcome may well involve some bipartisan support, but only some. Current Republican proposals of climate policy without pricing or regulating CO2 won’t cut it. All that is unfortunate. It is current political reality. It is also where I should end.

Pushing climate policy to price carbon and to leverage public coffers for a concerted push on research, development, deployment, demonstration, and diffusion of new, cleaner, leaner technologies—the vaunted RDDD&D—is the most high-leverage way to make $10 billion go even further. It might also take much less than $10 billion.

What to do with the rest? That’s the second priority, and it’s the one that directly includes the (natural) scientists on Bezos’s list of intended recipients: direct private philanthropy aimed at making individual alternatives to fossil energy cheaper.

That is also where things get hard, even compared to climate politics. There is no easy answer, and I won’t pretend to have them—beyond also involving activists, NGOs, and social scientists, well beyond just lab scientists. Technologies aren’t operating in a policy vacuum, after all. The beauty of Bezos’s billions is that the money allows for quite a bit of experimentation, including the inevitable failures.

There are plenty of dangers along the way. One is to focus too much on one technology, or only one element in the long chain from idea to market. There is similar danger in distorting the overall climate policy and technology landscape with one person’s preferences. Imagine a (crazed) billionaire spending $1 billion on deploying solar geoengineering now. Serious research to the tune of $10 million or perhaps $20 million per year is more than justified. Even “just” $100 million could tilt advocacy much too quickly into one direction.

Similarly, Anand Giridharadas, author of Winners Take All, has some potent critiques pointing to many more problems every step along the way. For one, the lack of democratic accountability of individual’s philanthropy is a real issue. And yes, a further problem is the public subsidizing philanthropic giving via tax breaks, without any direct say in how the money is spent.

It takes a lot of effort to spend money wisely. One oft-overlooked inefficiency in philanthropic giving is how much effort it takes to attract funds. Many recipients vying for limited funds almost surely means that those recipients try to outspend each other. For some universities like Harvard, famed for their fundraising prowess, that means hundreds of staffers working on fundraising strategies and events. Most university presidents and deans, and leaders of NGOs, spend more time on fundraising than on anything else.

It should indeed cost some money to get money. But if nothing else, Bezos’s $10 billion, at once doubling current U.S. climate philanthropy, should take a huge burden off those vying for funds. That alone might make a large difference in the climate fight, where time is of the essence.

Bezos’s $10 billion alone cannot do it all. Nothing alone does. But despite all the very real limitations and problems, the one thing the climate movement needs to be able to do is take a win, and move on to the next level.

Gernot Wagner writes the Risky Climate column for Bloomberg Green. He teaches at New York University and is a co-author of Climate Shock. Follow him on Twitter: @GernotWagner. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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