Dutch climate policy and the importance of systems thinking


21-02-2021

Hiske Overweg, department of environmental sciences, Wageningen University and Research

You can also read this post in Dutch.

The experiment

In a previous blogpost I conducted a thought experiment. We imagined what would happen if the whole world would implement the policy from the 2021 electoral programme concept of the Dutch prime minister’s party. What would be the consequences for the climate? Is the VVD ambitious enough to meet the targets in the Paris Agreement?

I tried to answer these questions using the En-ROADS climate simulator, made by MIT Sloan School of Management and the thinktank Climate Interactive. The simulator has been calibrated by 6 “integrated assessment models”, the best climate models available in science.

I estimated that applying the VVD policy on a worldwide scale would lead to a rise in temperature of roughly 2.2oC, so their plans don’t meet the Paris target, but perhaps this wasn’t the most important message. In this post I’d like to highlight a few more conclusions which can be drawn from the thought experiment.

No magic potion

There is no magic potion against climate change. As we saw in the thought experiment, many interventions are needed to meet the targets of the Paris Agreement. The En-ROADS simulator shows that we can still meet our target in a number of ways however, as long as we act now. Here is the simulator, please try for yourself!

Too good to be true, unfortunately
Orders of magnitude

Admittedly every little bit helps [1], but it is important to understand the relative impact of different measures. [2] How does the effect of a carbon tax compare to the effect of massive afforestation, for instance? You can try it out yourself using the En-ROADS simulator. Orders of magnitude also matter to understand the potential impact of interventions. Take the example of recycling frying fat in biofuel. It is a good way to recycle residues, but in 2011 estimates indicated that we can collect about 8 L per person per year, so we’d have to eat many more French fries (or Mars bars, if you’re Scottish) to replace a significant amount of the gasoline and kerosene we use.

The importance of systems thinking

When considering policy measures to tackle climate change, it is essential to take into account the entire system in which these measures are applied. We tend to think in simple event-based structures, as sketched below.

Event-based view of the world. Source: Business Dynamics, John D. Sterman, figure 1.3

The tricky aspect of complex systems which we tend to overlook is that these systems react to our actions. Two examples from the VVD climate policy:

Preventing traffic jams

According to the VVD we are in need of more roads in the Netherlands. This conclusion is based on the (pre-corona?) observation that our roads are too crowded, which leads to undesirably long journey times and traffic jams. The system will respond to the solution of creating more roads however: people will drive more, which in the long run potentially leads to even more traffic jams. This is a rather simple side effect which is overlooked in the event-based view.

Fighting traffic jams in an event-based view
Subsidizing renewable energy

The VVD mentions subsidies for renewable energy in its electoral programme. The goal is redution of CO2 emission. The reasoning behind this measure is that subsidy of renewables will lead to an improved competitiveness with fossil fuels.

Reduction of CO2 emisison in an event-based view

The shortcoming of this approach is easily visible in the En-ROADS Climate simulator. Scenario link Subsidizing renewables makes energy cheaper (blue line, left hand graph) compared to the baseline scenario (black line, left hand graph). This leads to increased energy consumption (right), which is why this measure on its own only has a small influence on reduction of emissions. The temperature in the year 2100 will only be 0.2oC lower than in the baseline scenario.

The effect of subsidizing renewables in En-ROADS
Feedback loops

It is evident we should see beyond the end of our nose. But even if our nose would be as long as Pinocchio’s, that wouldn’t suffice! Our mental model needs to be adapted to the dynamic world in which we live. It should look more like this:

Mental model of the feedback view. Source: Business Dynamics, John D. Sterman, figure 1.4
Lots of feedback mechanisms

I gave two simple examples to demonstrate the shortcomings of the event-based view. What makes reality even more complicated is the interaction of many feedback mechanisms, which even change in time. This is why a model like En-ROADS, in which many feedback loops are accounted for, is extremely convenient. As an example, the systems diagram of GDP in En-ROADS looks as follows (and this is only a tiny part of the entire climate model!).

System diagram of GDP. Source: En-ROADS reference guide

Fortunately you don’t need to go into the details of all these diagrams to use En-ROADS – complicated chains of causes and effects are automatically modeled in the background.

Carefully consider your goal

One important aspect of a complex system is that policy makers need to consider carefully which behavior to reward. We’ve seen already that subsidizing renewables on its own has only a moderate effect on reducing emissions, because it stimulates energy use. If our goal is to reduce emissions, the best thing we can do is to directly reward emission reduction. This can be done with a significant carbon tax, which has more impact on temperature than subsidizing renewables: the tax can reduce the increase in temperature by 0.7oC compared to the baseline scenario. Scenario link

The effect of a significant carbon tax in En-ROADS, introduced gradually between 2020 and 2030.

Also in this case it is of critical importance to consider side effects – without further measures a carbon tax will hit the poorest people hardest.

To sum it all up
  • We’ll need to intervene in many ways to counteract climate change. There is no magic potion which will solve everything.
  • Orders of magnitude matter when considering the relative impact of measures. The En-ROADS climate simulator can help with these.
  • When proposing a new policy, it is important to consider all feedback loops in the system.
  • The En-ROADS climate simulator is a great tool, because the simulator contains a large amount of feedback loops.
  • When formulating policies, it is useful to carefully consider the end goal. A reward mechanism which directly supports the goal is oftentimes more efficient then a reward mechanism which does so indirectly.
Feedback

Let me know which assumptions don’t make sense to you! What is your favorite En-ROADS scenario? Do you know any good illustrations of shortcomings of event-based thinking? You can reach me at enroads [at] his.ke or via LinkedIn.

More info on systems thinking

Climate Interactive offers an introduction in systems thinking to tackle climate change. Donella Meadows wrote an introduction to systems thinking. The book Business Dynamics by John D. Sterman dives deeper into the material.

More info on En-ROADS

Curious about the En-ROADS climate workshop? Participate in the workshop on the En-ROADS website (mostly in English), watch a long or a short workshop recording on YouTube or contact an En-ROADS climate ambassador for an interactive workshop in your preferred language.

[1] In this essay Rutger Bregman explains clearly why small scale individual action also matters.

[2] David MacKay wrote an informative book about this. It is freely available.

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