Climate change: Much ado about carbon reduction target

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Published 3 November 2021

In their bids to showcase climate leadership ahead of the upcoming UN Climate Summit in Glasgow (COP26), world leaders are once again talking of ambitious carbon reduction targets. The US President Joe Biden, for example, has set the goal of creating “a carbon pollution-free power sector by 2035 and net zero emissions economy by no later than 2050.” Most rich nations’ governments have formulated similar ambitions.

Unfortunately, that target will be prohibitively expensive. A new study in the renowned journal Nature shows the cost of 95 per cent reduction by 2050 — almost Biden’s net-zero — would cost 11.9 per cent of GDP or more than $11,000 present-day dollars for each American every year.

Twenty-four years have passed since the adoption of the Kyoto Protocol, the first major global agreement promising to cut carbon emissions. Since then, the world has hosted hundreds of climate summits and rich nations have reliably talked green; but emissions have kept increasing because no leaders want to stick their citizens with the huge price tag.

In a very frank analysis of the last decade of climate policy, the UN calls the 2010s a “lost decade.” It cannot tell the difference between what has happened and a world that adopted no new climate policies since 2005. Just think about that: After all these climate summits and all these climate promises, when looking at the actual emissions we can’t tell the difference from the world we’re in and a world where we didn’t care to do anything about climate since 2005.

That puts the challenge with COP26 in perspective. World leaders can choose to do what they have done over decades and contribute to yet another climate meeting in a world overflowing with well-meaning climate summits. Nation after nation will show up and make nice sounding promises like transforming its electricity sector (which is responsible for only 19 per cent of all the energy the world consumes) to renewables. There is a good chance those promises will eventually be revealed to be just as hollow as the last decades’ worth of promises, because voters will reject the bill.

Or leaders could finally go down a different path.

The real challenge with the current approach to climate policy is that as long as cutting emissions is expensive, leaders will talk a lot but do little. In the rich world, this is to avoid following in the embarrassing footsteps of French President Emmanuel Macron who had to backtrack to the Yellow Vest Movement after proposing a modest hike to gasoline prices. In the poorer world, nations have much more important priorities, like driving economic growth and getting their populations out of poverty.

What is needed is a much stronger focus on green energy research. If the world could innovate green energy that was cheaper than fossil fuels, we would have solved global warming. Everyone would switch, including Asia, Africa and Latin America. Working with 27 of the world’s top climate economists and three Nobel laureates, my think tank, the Copenhagen Consensus, found the most effective, long-term climate policy is in investing a lot more resources in green R&D.

During the 2015 Paris climate summit, more than 20 countries promised to double R&D spending on green energy innovations by 2020. Unfortunately, they are failing this promise, too.

Instead of making big and expensive promises that future governments will have to backtrack on once citizens protest rising power bills, leaders should immediately commit to spending much more on green R&D. Not only have most nations already made that promise, but compliance can be verified within 12 months. And the total cost for each nation will be much lower than current climate policies. For 2030, our Nobel economists suggested that the world increase its spending another $70 billion per year. Compare that to the $195 billion we are currently spending on subsidising ineffective green energy.

At the COP26, world leaders would be well advised to not repeat what has failed the last decades, but emphasise a cheaper, smarter better way forward that will actually help fix climate change: Invest dramatically more in green R&D to make sure we innovate technologies that can help the whole world to cheaply switch from fossil fuels.