Incentives for Victory: On Climate Change Success

The ozone layer is recovering, and that’s great news. The Montreal Protocol that phased out chlorofluorocarbons (CFCs) was originally signed in 1987, about 13 years after a landmark paper claimed these chemicals used in coolants, aerosols, and packaging were damaging ozone in the stratosphere above Earth.¹ Numerous updates since 1987 have brought more nations on board and adjusted targets to be even stricter. 

Why was the Montreal Protocol so successful when other climate summits and treaties have produced lackluster results? 

One major reason is incentives. 

Incentives, Not Idealism

I’m reading Limits to Growth: The 30-Year Update, written by Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers. It’s a largely depressing read because humans didn’t step up enough to protect Earth’s resources in ways the authors hoped when the book was published in 2004.²

The 30-Year Update presents a positive and (in my opinion) idealistic view of the original progress toward the Montreal Protocol: 

“Scientists sounded the first warnings about the disappearing ozone layer and then organized across political boundaries to develop an effective research effort…. Consumers organized quickly to reverse a harmful trend, but their actions alone were not enough for a permanent solution to the problem. Governments and corporations at first acted as footdraggers and naysayers, but then some of them emerged as courageous and selfless leaders…. The United Nations in this story showed its capacity for passing crucial information around the world and providing neutral ground and sophisticated facilitation, as governments worked through an undeniably international problem. Industrializing nations found in the ozone crisis a new power to act on their own behalf, by refusing to cooperate until they were guaranteed the technical and financial support they badly needed.”³

This framing, I believe, under-emphasizes a key reason why the ozone-protection effort succeeded whereas other climate agreements have not moved the needle nearly as much. Here’s one small nod to that reason: 

“Because of the 1978 ban in the United States, manufacturers had already adopted other kinds of aerosol propellants, most of which proved less expensive than CFCs.”⁴

In other words, there was a financial benefit for getting on board with the Montreal Protocol. CFCs were already on the way out, and companies could both signal environmental consciousness and make more money. It was profitable for at least some companies to support the Montreal Protocol—and not just in the very long run.

A 2020 paper in Nature Communications titled “Unfinished business after five decades of ozone-layer science and policy” also touches on this: 

“Why has the ozone treaty been so successful? Some say it was the manageable number of sources of ODSs, whereas others highlight the actions of industry to produce practicable and profitable alternatives to ODSs. Financial assistance from OECD nations may have also encouraged all countries to participate in the treaty.”

And the abstract for a 1998 paper titled “There’s money in the air: the CFC ban and DuPont’s regulatory strategy” has this bold start: 

“DuPont, the world’s dominant CFC producer, played a key role in the development of the Montreal Protocol on Ozone Depleting Substances. We argue that DuPont’s pursuit of its economic interests, along with the political impact of the discovery of an ozone hole and the threat of domestic regulation, shaped the international regulatory regime for ozone-depleting substances. International regulation offered DuPont and a few other producers the possibility of new and more profitable chemical markets at a time when CFC production was losing its profitability and promising alternative chemicals had already been identified.”

So, is this bad?

I’d argue absolutely not. Kind of the opposite: the Montreal Protocol was successful and has likely prevented millions of cases of skin cancer by reducing the amount of UVB radiation that reaches Earth’s surface. It’s also reduced greenhouse gas emissions and is an inspiring outlier in the overall climate-change mess. So, the identification of incentives as a key to its success can serve as a guide for organizations and governments that struggle to translate increasingly dire climate warnings into concrete and coordinated mitigation. 

Corporations and many individuals will need incentives to buy in fully to climate protection efforts. Acknowledging that and seeking paths that provide those incentives is probably the fastest and best way to succeed. No one enjoys being lectured or berated or penalized; that is not the way to win hearts and minds or achieve goals. 

The way to win is to create win-wins. The Montreal Protocol was a win-win. 

Okay, let’s talk win-wins.

What additional win-wins might be available in our current climate? One possibility is for governments to offer massive tax incentives for corporations and individuals that adopt green technologies and practices. The Inflation Reduction Act in the US takes a few steps down this road, and it’s a promising start. 

Another possibility is to increase the flow of public and private (e.g,. VC) funding to companies that develop less-toxic chemicals, processes, energy sources, and products, and to invest in:

• Lowering the cost of these alternatives below competing options.

• Raising the profitability of these alternatives above competing options.

This will likely be especially effective in areas where traditional options are already decreasing in profitability. Alternatives must be profitable or must be made profitable in comparison to traditional options. If incentives are not aligned, initiatives will fail. 

Numerous climate summits and agreements that have fallen short of targets illustrate this likelihood well. Most entities, whether corporations or individuals, are not purely or even primarily altruistic. However, many more entities will choose a path that provides societal and planetary benefits if they can do so profitably. Climate advocates would do well to accept the centrality of incentives in driving behavior and to focus on areas where incentives already support or could relatively easily be adjusted to support green action. 

We’re out of time for idealistic rhetoric. Let’s look at what worked, understand why it worked where other initiatives have failed, and do that again. 

1. That meant more UVB radiation could reach Earth’s surface, since ozone in the stratosphere absorbs harmful UV rays.

2. In fact, a 2020 paper by Gaya Herrington projected that the overshoot-and-collapse scenario is still a likely outcome.

3. Meadows, Donella H., Meadows, Dennis L., and Randers, Jorgen. Limits to Growth: The 30-Year Update. Chelsea Green Publishing, 2004, pages 181-182.

4. Meadows, Donella H., Meadows, Dennis L., and Randers, Jorgen. Limits to Growth: The 30-Year Update. Chelsea Green Publishing, 2004, page 199.