Whatever else may be wrong with economics, its starting point is correct: people do indeed respond to incentives. Suppose renewables provided the dominant technologies for energy supply; suppose, in short, that it was more profitable to use solar, wind or other renewable sources of energy than fossil fuels. Market forces would then drive the transformation of economies in a climate-protecting direction on their own.
It might still be necessary to reduce the costs of capital in emerging and developing countries. It might still be necessary to accelerate the transfer of technology. But the wind of profit would be at their back. Is this the world we live in? If not, how might we create it?
Start with a simple proposition: if something is profitable, it will be done. Asset managers may dispose of shares in fossil-fuel businesses and banks may refuse to finance them. Some investors might refuse to own or fund companies that do things they consider wicked. But my fellow columnist, Stuart Kirk, is correct that someone else will then own and finance them, provided they are profitable.
