Can the World Change Course on Climate Change?

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Wharton's Brian Berkey and UC Berkeley's Daniel Kammen discuss the new UN report on climate change.

A new United Nations report warns that the severe impacts of global warming would occur by 2040, or in the lifetime of today’s working-age people. In order to avert that scenario, global warming must be contained at 1.5 degrees Celsius above pre-industrial era levels, the U.N.’s Intergovernmental Panel on Climate Change (IPCC) said. The report has been met with a mixture of hope and despair. Some point to the dramatic changes that would be required to hit that mark – even as the U.S., the world’s second-largest emitter of carbon dioxide, rolls back measures designed to slow climate change — while others say that the report affirms that meeting the target is still possible.

The IPCC report said global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45% from 2010 levels by 2030, and reach “net zero” around 2050. Accomplishing that goal would require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport and cities,” the report added. “Every individual, company and country needs to participate in this solution.”

The Goal Is Achievable, But …

“This goal is achievable, but it will require enormous commitment by governments, businesses and nonprofit organizations to mobilize support,” said Eric W. Orts, Wharton professor of legal studies and business ethics and faculty director of the Initiative for Global Environmental Leadership. “What is desperately needed first is an effective strategy for education and persuasion — ‘marketing’ to use a business term — to convince the public in places like the U.S. that climate change is real and has to be confronted as one of the most serious challenges facing humanity as a whole.”

Orts said “special interests,” such as the fossil fuel industry, especially oil and coal companies, have a strong economic incentive to disbelieve climate science and its warnings. “They want to burn the coal and oil that they currently own and are developing. If the public can be convinced about both the reality and the urgency of the problem, then I believe that we can mobilize, as a society, to address the problem. It won’t be easy, but it is possible.”

Traditional fossil fuel companies have the ability to convert to cleaner energy technologies, according to Daniel M. Kammen, professor of energy at the University of California Berkeley. Kammen served in the Obama administration as science envoy for the U.S. State Department, and he has been part of the U.N. panel since 1999.

“No one has more expertise in energy systems and big engineering projects, has more PhDs, and more engineers that are experts in this field than the traditional oil and gas and coal industry,” Kammen said. “Because the technology costs have come down, they’re in the ideal position to do financially very well while greening their mix.” He noted that firms including BP and Shell have made some efforts toward that.

“The fossil fuel industry is in the ideal position to do financially very well while greening their mix.”–Daniel Kammen

All Hands on Deck

In addition to calling for policy changes, the emphasis in the report on actions at the individual level is significant, according to Brian Berkey, Wharton professor of legal studies and business ethics. “The report highlights that we’re also going to need a major cultural shift, in particular in wealthier countries,” he said. “People are going to have to be more willing to use public transit or at least share cars rather than driving on their own all over the place. They need to do things like eat less meat and other animal products, live in smaller homes, and cool their homes less — it’s hard to get people to be willing to [take those actions].”

For sure, everybody has to chip in to meet the new goals, according to Orts. “Everyone can begin to adopt lifestyle choices that can contribute to solutions. Businesses should also do their part. Climate change is a problem, though, that requires government to get involved. Economic markets and ‘business as usual’ cannot solve the problem because the system does not take into account the immediate and long-term risks of climate change when making everyday decisions that involve carbon and other greenhouse gas emissions.”

At a state level, California has been exemplary in demonstrating the results of corrective actions, Orts said. He noted that the state has already reduced greenhouse gas emissions (mostly carbon dioxide and methane) by 13% from its peak emissions. “And the economy in California is doing well at the same time,” he added. “What we need nationally in the U.S. is to scale up successful experiments such as regulations in California.” He endorsed the calls for a Green New Deal in the U.S., which envisages an end to fossil fuel subsidies, taxes on carbon dioxide emissions, and incentives to produce renewable energy.

Kammen and Berkey discussed the takeaways from the U.N. report on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

Where governments fall short, many businesses have stepped in, said Berkey. “One thing we’ve seen in the U.S. is the business community has been more interested in recent years in taking steps to address climate change than the current administration.”

However, businesses need “regulatory certainty” to meaningfully commit to making the right investments, said Kammen. Among the required moves is “a smart, sensible transition to [a carbon tax] that starts earlier and gives them more certainty.” It helps that technological innovation has made solar and wind power and energy storage much less expensive. Orts added that technology is a wild card here. “We have seen major breakthroughs in solar and battery technology, for example, and these may continue or we may see breakthroughs in other areas, too.”

“People are going to have to be more willing to use public transit or at least share cars rather than driving on their own all over the place.”–Brian Berkey

The absence of regulatory pointers was in stark evidence at a recent meeting of international oil company executives that Kammen attended. He noted that at the meeting, the non-U.S. companies — mostly European and Chinese — were in favor of putting a price on carbon emissions of $30 or $40 a ton. “The [U.S.] companies all said no. That was not because their executives weren’t as thoughtful or smart as the Europeans and Chinese. It was that they were in a regulatory environment that had not pushed them on that path. That means they’re primed to do this, but they have not yet really taken the lead on this green transition.”

The Costs of Inaction

The 12-year window set by the IPCC to reverse climate change (between now and 2030) “comes from the really unfortunate, simple and painful calculation that when you make energy infrastructure choices, such as billion-dollar investments in dams or power plants or buildings or highways, you’re stuck with them for a very long time,” said Kammen. “We know now that we are going to have to reduce emissions by 80% by 2050 or ideally earlier, but that means that our choices in 2040 and 2035 are effectively going to be made ahead of time. Every dollar that goes into the technologies we ultimately need to get rid of is a dollar not going into creating new innovative companies, building out energy efficiency, solar power, wind power and energy storage. And that equation [is pushed out] further and further as you don’t make choices now.”

Kammen said he expects a dismal picture in achieving the previously agreed-upon goal to contain global warming to 2 degrees Celsius, when countries gather at the U.N. climate summit in Poland in December. “We’re going to find out that country after country has not gotten anywhere near where they thought they would be three years after the Paris accord.”

If global warming exceeds the 1.5 degree Celsius threshold by 2030, it would lead to a sea-level rise that could devastate animal and plant life, accentuate droughts and flooding, exacerbate poverty levels, damage up to 90% of coral reefs, and more. Berkey noted that meeting the 1.5 degree Celsius goal would mean about $15 trillion less in economic damage, and a significantly smaller increase in food and water insecurity, especially for people who live in the tropics.

More than the predicted damage, the big worry is around unpleasant surprises if timely action isn’t taken, according to Kammen. He said the adverse impacts could go far beyond predictions of Greenland melting, drops in fish productivity and disrupting the livelihoods of whales and sea otters. “Anytime you deviate a system from its normal state, which we are doing, the surprises are likely to be larger than the predicted changes,” he added. “The number of worries to human health and ecological health just multiply with every little bit of deviation away from our current climate.”

According to Kammen, the iconic images of starving polar bears “are literally the tip of the iceberg” of the damage that could occur, “some of which we expect such as changes in agricultural productivity and bird migration. But we’re also going to see impacts that we don’t expect, which is really the big worry.”

Kammen added that unbridled global warming would not only have impacts closer to home such as exacerbating California’s wildfires, but also have ripple effects across the globe. “We’ve seen India, Russia and Australia have huge impacts both in terms of ecological health, but also food production and food prices,” he said. “The more one region suffers, the more global trade prices go up. When California suffers agricultural losses, it will affect prices nationwide. The same thing [would occur] when we have losses in Chile and elsewhere.”

Hurdles to Overcome

Political obstacles to combating climate change are among the biggest, since they impede effective policy moves. The most recent threat is the likelihood that Brazilians will elect as their next president Jair Bolsonaro, an avowed critic of the 2015 Paris climate accord. Bolsonaro has been compared to President Donald Trump, who has said the U.S. will exit the accord as soon as legally possible.

“We’re seeing the rise of conservative parties in a number of places that are threatening the progress that was made at Paris,” said Berkey. Bolsonaro has also threatened to exit the Paris accord, and supports opening up parts of the Amazon rain forest to setting up power plants and reducing environmental controls.

According to Orts, the big fossil fuel companies have been “a huge impediment” to addressing climate change effectively, particularly in the U.S. “We don’t see the big energy companies … shifting to make serious, large bets on renewable energy. Instead, they are directly lobbying and making political contributions to halt regulatory progress. There is indeed a lack of certainty regarding energy policy in the U.S., and what we need are clear signals — including a price on carbon emissions that reflects its long-term costs as an externality — that will force transformation of energy companies.” Orts noted that natural gas could serve as a “bridge” fuel from coal and oil to renewables, but that will only work if the “bridge” takes place within a larger policy structure.

Another worry is China’s mixed record in combating climate change, Kammen noted. “We’re seeing both good and bad with China,” he said. “China was everyone’s favorite whipping boy in the sense of how polluting it is, that China is building a coal-fired power plant every week, and that it has the worst air quality in the world. And in very short order, China has dramatically improved its air quality, and has shifted very strongly to cleaner energy.” China has emerged as the world’s largest producer of solar panels, wind turbines and batteries for electric vehicles, he added. At the same time, as part of its One Belt, One Road initiative that links China to Africa, the Middle East and Europe, it is financing coal plants in those countries, he added. “They are financing some of the dirtiest projects while getting credit for greening at home.”

“If the U.S. can return once again to be a political leader on this issue in the world, then we have the opportunity to come close to achieving this goal.”Eric Orts

Calibrating Policy Moves 

Even as the U.S. plans to pull out of the Paris accord, all is not lost, according to Orts. “The Trump administration and the hard shift of the entire Republican Party into a political position of climate denial has been a huge setback not only for the U.S., but the world,” he said. “Every other nation-state on Earth had signed on to the Paris Agreement, and it was a major success in at least starting the process of an effective plan to address climate change.”

Orts said the U.S. “has to turn around” on the climate goals in order for it “to try and meet at least the Paris Accord’s goals of containing global warming to 2 degrees Celsius above pre-industrial era levels. “If the U.S. can return once again to be a political leader on this issue in the world, then we have the opportunity to come close to achieving this goal. It is possible, as Michael Bloomberg and others have said, that the U.S. could still meet the Paris targets with state-level plans and business initiatives. But this will be difficult, and we need the federal government to turn around and take the issue seriously.”

Policy-wise, renewable energy needs more support, according to Orts. “We were on the right track at the tail end of the Obama administration in terms of providing better incentives in renewable energy,” he said. “Even after the election, in 2017 solar accounted for 75% of new energy sources in the U.S. electricity system compared to only 0.2% for coal. Much more needs to be done.”

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