BEIJING – When the Paris climate agreement was concluded in December 2015, almost all the world’s countries committed to limit global warming to well below 2° Celsius relative to pre-industrial levels, and have submitted “Intended Nationally Determined Contributions” (INDCs) describing how they will either contain or reduce emissions over the next decade. Global investment in renewable power now far exceeds investment in fossil fuel plants; battery costs are falling, and electric vehicle sales rising; and even in President Donald Trump’s America, coal-fired power stations continue to close. But despite this progress, the latest report from the Intergovernmental Panel on Climate Change (IPCC) contains a chilling prediction: on current trends, the world is heading toward 3°C of global warming by 2100, to a level not reached for more than a million years. The harm to human welfare is likely to be catastrophic. The IPCC report makes it clear that the ideal target should be to limit warming to 1.5°C. Above that level, the adverse consequences become ever more extreme. But to achieve that goal, global carbon dioxide emissions would have to reach net zero by about 2055, and still earlier if, as is unfortunately inevitable, emissions remain at current levels for several more years. The precise implications for acceptable emissions from power stations, industrial plants, transport networks, and heating systems depend on how rapidly emissions caused by land-use change such as deforestation can be eliminated, and how rapidly emissions of non-CO2 greenhouse gases (for example, methane or nitrous oxide) can be reduced. But it’s clear that unless we get to net zero emissions from energy use and industry by around 2060 – and earlier in developed economies – we will have to rely on the risky assumption that land-use changes can deliver large negative emissions in the late twenty-first century. Failing that, warming will rise significantly above 1.5°C. Getting to net zero emissions in just four decades will be a huge challenge. But as a forthcoming report from the Energy Transitions Commission argues, the good news is that it is undoubtedly technically possible, and at an acceptably low cost to the global economy. Moreover, we already know the key technologies we need to achieve this objective. All feasible paths to a low-carbon economy and, eventually, net zero CO2 emissions require a massive increase in the role of electricity. The share of electricity in final energy demand will have to grow from around 20% today to around 60% by mid- to late century, and total global electricity generation will have to rise dramatically, from around 25,000 TWh today to as much as 100,000 TWh. That electricity must come from low-carbon sources. And while nuclear power and gas generation offset by carbon capture may play a role, the lion’s share will have to come from renewable sources – 70-80 per cent in the IPCC’s scenarios. But there is plenty enough land in the world to support renewable expansion on that scale, and enough time to make the necessary investments as long as we act fast. Three other sets of technologies will also be essential. First, hydrogen, ammonia, and perhaps methanol must be used as energy carriers in transport and industrial applications and as chemical feedstock inputs. All three will eventually be produced synthetically, using clean electricity as the ultimate energy source. Second, biomass could provide low-carbon aviation fuel, or feedstock for plastics production. The total scale of use, however, will need to be carefully managed to avoid harmful impacts on ecosystems and food supply. Third, there should be at least some role for carbon capture, and either storage or use, in key industrial processes such as cement production, where viable alternative routes to decarbonisation are currently unavailable. Building a zero-carbon economy will of course require massive investment in power production and transmission, new industrial plants, and more efficient equipment. To achieve the 1.5°C objective, the IPCC estimates that the required additional global investment, from 2015 to 2050, could be $900 billion per annum. That may seem like a startlingly high figure; but, assuming 3per cent annual economic growth, global GDP, which stands at almost $100 trillion today, could reach $260 trillion by 2050. This implies that the world needs to invest less than 0.6 per cent of its income over the next four decades to avoid potentially catastrophic harm to human welfare. China alone currently invests more than $5 trillion each year, a significant proportion of which is wasted on the construction of apartment blocks which will never be occupied in cities which face static and eventually declining populations. By redirecting investment, China could build a zero-carbon economy without any sacrifice of consumption. For the world as a whole, the impact on living standards of achieving net zero emissions will be trivial. But while a zero-carbon economy is undoubtedly technically feasible and easily affordable, it will not be achieved without strong public policies and forward-looking business strategies. Governments must deliver carbon pricing and product regulation and support key technologies and infrastructures, and companies in the energy-producing and main energy-using sectors must develop strategies focused on how to achieve zero emissions by mid-century and how to begin the transition today. The alternative is another decade of only incremental progress, which will put us on a catastrophic path toward 3°C warming within the lifetime of today’s children. The writer is Chairman of the Institute for New Economic Thinking. His latest book is “Between Debt and the Devil.” Copyright: Project Syndicate.
