THE momentous challenge involved in remaking the world’s energy and food systems to prevent catastrophic climate change can make it feel like all efforts are hopeless.
“Concentrations of carbon dioxide are at their highest in at least 2 million years,” United Nations Secretary-General Antonio Guterres said on Monday, announcing the latest report from the Intergovernmental Panel on Climate Change (IPCC). “The climate time bomb is ticking.”
Efforts seem to be getting nowhere. About 42% of all carbon emissions in the industrial era have happened since the IPCC first tried to get a grip on the problem in its First Assessment Report in 1990 (this year’s report is its sixth). Annual emissions in 2019 were 54% higher than they were back then. With the policies currently in place, the IPCC thinks we’re likely to see warming of around 3 degrees Celsius in 2100, compared to the levels of 1.5 degrees or 2 degrees the world is targeting.
And yet the scale of the task ahead of us risks blinding us to the immensity of what’s already been achieved. Consider how far we’ve come since the Fifth Assessment Report in 2014.
Then, the IPCC’s baseline assumption was that current policies would keep greenhouse gas pollution rising through most of this century, before levelling out at about 100 billion metric tons of carbon dioxide-equivalent emissions* in 2100. Global temperatures would climb by 3.7 degrees to 4.8 degrees.
That was based on a technological outlook where low-carbon alternatives would struggle to compete with fossil fuels. Hydro, geothermal, and onshore wind were the only renewable technologies seen as being competitive for grid power, and then only “under favorable conditions.” Electric vehicles received a cursory, dismissive discussion, as it was assumed they would remain too costly and niche for the foreseeable future. (In practice, it was conventional combustion engines whose sales peaked just three years later in 2017, since then they’ve been in decline.)
How times have changed. The baseline assumption this year still puts climate stability well out of reach — but in contrast to 2014’s picture, where emissions stabilize at around 100 billion tons a year around 2080, they’re now expected to level off at 60 billion tons a year around 2040.
That’s been driven by rapid cost declines and rising deployment of solar and wind power, lithium-ion batteries and electric vehicles. Even before you factor in any benefits in terms of avoided climate impacts and reduced health problems, switching to a low-carbon pathway is now reckoned to be the cheaper option in terms of up-front direct expenditure.
At a carbon cost of less than $100 a ton — comparable to the current prices of emissions allowances in Europe and tax credits in the US — there’s feasible technology out there capable of cutting emissions by half during the current decade, according to the IPCC.
None of this is enough to get us where we need to be. We must invest three to six times as much this decade in building low-carbon infrastructure as we are at present. Lifting that pace of spending was always going to be hard. With US inflation at its highest level in three decades and interest rates around their highest since the mid-2000s, the prospect was looking daunting even before large sections of the US and European banking sectors seized up over the past month.
Those problems are also now the biggest barrier to carrying out the decarbonization that’s needed. Financial crises are often the result of previous bad investment decisions finally catching up with us — making unrealistic assumptions about the value of US tech startups or subprime mortgages, for instance. One common way of averting such seizures is to prop up existing assets by squeezing value out of future ones, raising the costs of new investment and reducing the productive potential of the economy. That’s what happened to the Soviet bloc and Japan when they entered stagnation in the 1970s and 1990s.
It remains a potent threat in the world’s energy systems. Existing and planned fossil fuel infrastructure will emit enough carbon to eliminate almost any chance of keeping warming below 2 degrees, according to the IPCC. Changing that picture by replacing it with cleaner technology might be cheaper in financial terms as well as better for the climate and human health — but it would impose enormous write-downs on
incumbents, who are often in a position to influence regulations to their benefit.
Those financial and regulatory issues will be the climate change fight of the coming decade — but the good news is that many of the technical difficulties that loomed over previous IPCC reports have already been solved. With fossil fuel emissions set to peak within two years, what matters now is not whether our carbon footprint shrinks — but the pace of the decline.
*Carbon dioxide equivalent emissions adjusts non-CO2 emissions to show a comparable global warming potential to CO2, which forms the bulk of humanity’s greenhouse pollution.
BLOOMBERG OPINION
