(This blog was originally published as part of the FT Moral Money Forum’s report, “Navigating the bumpy road to net zero” co-sponsored by High Meadows Institute. The full report can be read here.)
As experts note in the article above, the chance of achieving net zero by 2050 with the current approach is poor. In terms of governments, the reality is that when COP26 convenes, only one country, the Gambia, will have met its Paris commitments according to the Climate Action Tracker. Many of the world’s most important players fall woefully short. While many large, publicly traded corporations have set ambitious net-zero goals, few have said how they will achieve them. Similarly, not many have backed up their commitment with targets within their executive compensation structure which could ensure meaningful headway.
Progress is further complicated by the fact that, in the absence of a coherent transition strategy, even the current levels of commitment to net zero could result in a social backlash, especially over rising energy prices. In 2018, rising fuel prices caused by a green tax led to the “yellow vest” protests in France. China and Germany, in particular, face energy shortages and price increases because the supply of renewable energy has failed to meet demand.
The reality of the net-zero challenge is that we have to accept that a carbon-based energy sector and related petrochemical industries will remain a key part of the industrial scene for at least the next 30 years. This is especially true for those in emerging markets that can least afford the cost of transitioning and are still trying to catch up with living standards in the developed world.
As forests burn from the US to Brazil to Russia, we must recognize that forest sequestration, a mainstay of carbon offset strategies, is not viable. We need to dramatically scale up investment in carbon capture and sequestration technology and reliable energy alternatives such as nuclear power. Without this, we cannot realistically meet our climate goals while at the same time ensuring social progress and stability.
Whether sending man to the moon or coming up with a Covid vaccine in record time, investment in innovation has proven to be vital.
Our task now is to create the same urgency and desire to invest in carbon capture. There are promising initiatives but we need more funding to refine ideas and carry out the tests to ensure that these can work at scale. We also need to continue to explore new technologies.
As Bill Gates said when he launched his non-profit Catalyst Breakthrough Energy, which involves a personal investment of $2 billion: “Half the technology needed to get to zero emissions either doesn’t exist yet or is too expensive for much of the world to afford.”
While private-sector players, from Amazon to Microsoft to Unilever, have pledged billions of dollars to help address climate change, a PwC study of the $16.3 billion of venture capital invested in climate tech in 2019 found that less than 5 percent went to carbon capture technologies. Public sector investment probably has a similar proportion.
Now is the time to step up both public and private-sector investment in carbon capture technologies.