The Healing Ozone Layer is a Warning, Not a Blessing

Greetings friends!

The discovery of the hole in the ozone layer above the Antarctic created a global panic in the 1980s. This led to the adoption of the Montreal Protocol in 1987, the first treaty to achieve universal ratification by all countries in the world.

Now thirty-five years later, we can say the Montreal Protocol has been a rare environmental success. This is both good news and a glaring warning for the climate change movement.

I explain why below and what we might do differently to get the outcomes we want.

A Word About Ozone-Depleting Substances and Their Substitutes

This article is about how to effectively drive change in human behavior. So while we won’t go into detail on the underlying technical issues, some background will help explain the point.

The Montreal Protocol regulates the production and use of man-made chemicals that damage the stratospheric ozone layer, so-called ozone-depleting substances. The initial culprits addressed by the treaty were chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), gases used in refrigeration, air-conditioning, and foam applications.

What happened then? Well, no one wanted to stop using air-conditioning, so companies began using hydrofluorocarbons (HFCs), which are non-ozone depleting. So we solved the problem, right?

Unfortunately not. Although they’re not ozone-depleting, HFCs can be thousands of times more potent than carbon dioxide in terms of their global warming potential.

What Can We Learn from the Ozone Experience?

I think we can take several lessons:

• We can’t simply force a desired outcome because of the law of unintended consequences.
• Too narrowly defining our objectives leads to suboptimal outcomes.
• Companies and people respond to incentives, both positive and negative.
• The most effective incentives focus on both cost and benefits.

The reason the world was able to successfully reduce its use of ozone-depleting substances is that there were alternatives. We did not ask or expect anyone to simply stop cooling their factories, homes, or cars.

Yes, initially this created an even greater risk because the alternative (HFCs) had a much larger impact on global warming. But there are less harmful substitutes to HFCs as well. Again, no one expects people to go without air-conditioning.

Here’s where the picture looks darker for the climate change movement.

Reducing Carbon Emissions is Much Harder

Today, every large company is expected to know its greenhouse gas emissions and carbon footprint, and to be taking steps to reduce its impact.

By far the most effective way to do this is to substitute CFCs and HFCs for less-harmful substances. Because they have such a massive global warming potential, replacing a few hundred pounds of HFCs in one manufacturing facility has the equivalent effect of reducing many tons of CO2.

Reducing direct CO2 emissions is much harder for companies. There is no simple method to cease generating carbon emissions.

I know because I worked on it with my company. It took us over a decade of diligent effort to become carbon neutral. We implemented many hundred projects in countless areas of operation. We ultimately used carbon offsets to compensate for the direct emissions we could not eliminate.

From the ozone experience, I conclude the following:

• We cannot simply force companies to reduce their carbon footprint without creating unintended consequences (fewer goods, higher prices, etc.). There is presently no easy, cost-effective alternative to reduce much of companies’ CO2 emissions.
• The short-term benefits of reducing CO2 don’t come close to outweighing the costs. Developing countries, including the world’s largest emitter China, thus have little incentive to do so.
• An excessive focus on carbon emissions may be counterproductive. If our actual concern is global warming, let scientists and companies figure out other ways to have an impact.

We Need to Stop Focusing on CO2 Emissions

I fear the ozone experience will only embolden climate activists to increase pressure on countries and companies to reduce their CO2 emissions. “You see,” they will say. “If only the world works together, we can have an impact.”

But as explained above, the situation with CO2 is not at all like that with ozone. Ramping up the pressure to reduce CO2 emissions will likely fail: the incentives are not aligned, and the cost-benefit analysis suggests we will get serious unintended consequences.

My suggestion? Stop demonizing CO2, which is part of the problem but not the solution. Rather, unleash the world’s creativity in coming up with alternatives to the bigger problem of global warming.

Be well.

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