Maine economist: Businesses must lead in carbon-reduction efforts

Screenshot / Courtesy, Maine Climate Table Economist Charles Colgan, top, said businesses are well-positioned to lead in carbon-reduction efforts. He’s seen here, with moderator John Hagan, speaking at a Maine Climate Table webinar on climate and the economy.

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By Laurie Schreiber

If mitigating climate change is cheaper than adapting to it, businesses have an opportunity to lead the way in the transition to carbon neutrality — and make money while doing so.

That was a key point made by Charles Colgan, an economist who spoke Thursday about climate and the economy during a webinar hosted by Maine Climate Table, as part of its series “Maine Businesses and Climate Change.”

“Adaption is necessary because we’ve waited too long and now we have to deal with unfamiliar risks,” Colgan said. “But there are ways to deal with them if we make the specific decision that climate change is something we have to build into our decision-making.”

Colgan is professor emeritus of public policy and planning at the University of Southern Maine and director of research for the Center for the Blue Economy at Middlebury Institute in Monterey, Calif. Before joining the University of Southern Maine, he served in the Maine State Planning Office and was Maine’s state economist.

Founded in 2013, Maine Climate Table is a broad partnership of individuals and organizations from the business, nonprofit, philanthropic and government sectors that aims to create a state-based model for climate initiatives.

Its webinar series explores the opportunities for climate mitigation and adaptation in Maine’s business sector.

The state of Maine has set a goal of an 80% reduction in greenhouse gas emissions by 2050. Approximately 84% of Maine’s economy is generated by the private sector.

To achieve the state’s goal, participation and leadership of Maine’s business community will be needed, said Colgan.

How should businesses think about climate change?

“What economists are trying to do these days is to show people the alternatives they face and what the costs and benefits are of taking no action versus taking a series of possible actions,” said Colgan.

Major costs of climate change are incurred through disasters such as the California wildfires and hurricane and flooding in Louisiana and Texas.

“It’s guaranteed that reducing climate change effects in the future will be much cheaper, by orders of magnitude, than trying to adapt to climate change that will otherwise occur,” he said.

Businesses are accustomed to the kind of long-term thinking needed to tackle carbon reduction, Colgan said.

“Businesses might think, ‘If I invest in new facilities, can I survive a recession?’” he said. “Recessions are systemic risks. They’re outside our control. Climate change is now a systemic risk. If this year doesn’t teach anything about the meaning of systemic risk, things that are outside of our control but can hugely affect your business, then you haven’t been paying attention.”

Businesses can lead the way in the economic transition needed to reduce carbon emissions, and there’ s a lot of money to be made in that transition, he added. Colgan cited the early 20th-century transition from horse-drawn transportation to the automobile.

“There was a huge amount of money to be made,” he said: People who embraced the transition made money while others who stuck with horse-drawn technology were left with no opportunity for growth.

The pandemic yields lessons that can be applied to climate change, he said. Although climate models warn that warming temperatures may result in more, increasingly frequent pandemics, there’s some optimism in the way human activity used technology to shift “spatial relationships” and maintain economic activity during the current health crisis, he said.

“There’s a huge debate in the economic field: Do we need to gather in physical spaces in order to interact with each other, or will technology liberate us to have the same kind of interactions but at a distance?” he said. “That’s happened because, in a very short period of time, the technologies were all in place to keep much of the economy moving without physical presence.”

That has implications for the spatial economy and for how people can live and work, he continued. By extension, the technology that enabled that shift — working from home to achieve physical distance — has implications for energy use and for human interactions with climate.

“All of the technology is in place,” he said. “It needs to be improved, but we did a lot very quickly. And that has implications for the future, because we have this urgent need to reconfigure buildings, transportation and our use of space in order to get climate change under control.”

Previous climate models, he noted, designated thresholds for when climate change would become unmanageable and accelerate on its own.

One example put the tipping point for the melting of the Greenland and Antarctic ice shelves, which could raise seal levels by as much as 10 feet, in 2040 or so.

“We now know many of those tipping points are likely to happen much faster,” he said. “So the need to move aggressively and get toward carbon neutrality on a much more aggressive schedule is that much higher. The next decade is the critical one.”

The Paris Agreement set a goal of limiting global temperature increase to well below 2 degrees Celsius, while pursuing efforts to limit the increase to 1.5 degrees.

The world has already passed 1 degree Celsius, Colgan said.

“Most climate models said we’ve got to make major decisions this decade or there will be an unrecoverable catastrophic result,” he said.

He continued, “This is something that the business community has to be a major voice on. You can’t leave it to academic voices like me. It’s going to be cheaper to avoid the problem than keep fixing it. There’s not enough money to adapt our country and our infrastructure and our society to the level of threat that we face from climate change.”