POTSDAM –The leaders of the G20 countries head to Osaka this week for their annual summit. United Nations Secretary-General António Guterres will address them before traveling to Abu Dhabi to finalize the arrangements for September’s UN Climate Action Summit. These meetings should set the world on course for the fastest economic transition in history. Yet both are likely to deliver incremental action, at best.
Consider the G20 summit, where the agenda includes using “breakthrough innovation” – such as carbon capture, utilization, and storage technologies – to accelerate “a virtuous cycle of environment and growth.” As laudable as this goal may be, these solutions will reach scale only around 2030, or even later. Moreover, while they are an essential insurance policy, these technological fixes are a small part of a more profound transition.
The reality is that the agenda for both meetings must put the world on course to halve greenhouse-gas emissions within the next decade to avert the most catastrophic effects of climate change. This means deploying market-ready, scalable solutions now, and that will require bold governmental action.
The good news is that a growing number of countries are recognizing the need for more far-reaching policies. Just this month, the United Kingdom set a legally binding target of net-zero greenhouse-gas emissions by 2050 – a move with historic implications more profound than Brexit – and German Chancellor Angela Merkel indicated that she is backing the same goal for her country. Norway is already legally bound to achieve this target by 2030, while Finland and Sweden are aiming for 2035 and 2045, respectively.
Many European Union countries are calling for a shared commitment to achieving net-zero emissions by 2050, though opposition from coal-dependent Eastern European countries will, for now, prevent the target from becoming official. Worldwide, 21 countries are now considering setting the same goal.
Achieving net-zero emissions within the next few decades is possible, both technically and economically. Already, rapidly declining costs are enabling alternative energy sources like wind and solar to compete effectively with fossil fuels. More than 100 cities worldwide rely on renewable sources for at least 70% of the power they use. Electric cars are now beating traditional vehicles on performance and reliability. By the early 2020s, they will also win on price.
A decade ago, the UK Committee on Climate Change estimated that it would cost 1-2% of GDP per year to reduce emissions by 80% by 2050; today, that is expected to be enough to achieve net-zero emissions. Every dollar spent on this cause can bring an estimated $7 in benefits to the economy, human health, and other areas.
As these trends increasingly disrupt traditional emissions-heavy business models, they are creating virtuous circles that drive momentum toward a zero-emissions future. In much the same way that the number of transistors on a computer chip doubles every couple of years – in keeping with Moore’s Law – the performance of low-carbon technologies will continue to improve exponentially, causing costs to plummet. In many regions, we are passing the point where fossil fuels make logistical or economic sense.
To accelerate the inevitable transformation, governments need to change the rules of the game. For starters, that means shifting fossil-fuel subsidies to renewables immediately. Whereas fossil-fuel subsidies rose to over $400 billion in 2018, new investments in renewables fell to less than $290 billion. Agricultural subsidies – which exceed those for fossil fuels – should also be redesigned to encourage farmers to store more carbon in soil, plant trees, and protect biodiversity.
Governments must also end investments in deforestation and fossil fuel infrastructure. As Christiana Figueres, former executive secretary of the UN Framework Convention on Climate Change, recently noted, “Almost every coal plant that goes ahead today is reliant on public money, almost universally from Japan, China, or South Korea.” Chinese finance is behind more than 50% of all coal power capacity under development worldwide. We need a moratorium on coal and deforestation, no more new investments, and rapid phase-out plans.
In the private sector, just 15% of Fortune 500 companies have established climate targets that align with the goal, established by the 2015 Paris climate agreement, of keeping the average global temperature from rising more than 2°C above pre-industrial levels. Far fewer are pursuing changes in line with the 1.5°C limit advocated by the Intergovernmental Panel on Climate Change. The G20 must put its weight behind persuading Fortune 500 companies to commit to halving their emissions by 2030 or sooner.
Furthermore, all G20 countries should introduce carbon pricing, targeting a price of at least $120 per ton of emissions by 2030. As it stands, over 20% of greenhouse-gas emissions globally are subject to pricing. At the same time, tightening emissions standards is crucial. But, as France’s ongoing Yellow Vest protests – triggered by a fuel-tax hike – have shown, such action must be planned carefully to ensure that the costs are distributed fairly and that ordinary citizens do not suffer disproportionately.
One country that is likely to resist doing what is needed is the United States. President Donald Trump’s administration has proved hostile toward reason, science, and logic – particularly when it comes to the environment – and cavalier about the wellbeing of future generations.
But even in the US, there are signs that progress is possible. The much-discussed Green New Deal, introduced by Representative Alexandria Ocasio-Cortez, reflects the needed scale and ambition. While Republicans continue to resist the GND, some prominent party members now support a “climate dividend” plan. State and local governments have also taken the initiative on climate change.
Last year, Larry Fink, the chairman of the US investment-management company BlackRock, predicted that “sustainable investing will be a core component for how everyone invests in the future.” Fink has seen the writing on the wall: the world is entering an era when sustainability is not only good for the environment, but also highly lucrative. Those attending the G20 meeting and the Climate Action Summit should see it, too, and align their economies with the 2050 goal. We need to move from incremental to exponential action, with countries, cities, and companies setting hard targets immediately and redirecting the flow of capital toward these goals. The fate of the planet depends on our success or failure.
Johan Rockström is Director of the Potsdam Institute for Climate Impact Research.
Copyright: Project Syndicate, 2019.