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IT IS ONLY NATURAL to be skeptical when a political leader stands up and makes a promise about a goal that is far away, elusive, and lacks a clear path.
So a reaction to a report that Japan’s new prime minister, Yoshihide Suga, will commit next week to reducing the country’s net carbon emissions to zero by 2050 could be: Really?
After all, public and private Japanese banks are still financing new coal-fired power plants in Vietnam, Indonesia and Bangladesh, exploiting a loophole in Tokyo’s earlier promise to cut funding for such projects, a fact that is causing some consternation among European investment funds.
Despite all the hype garnered by South Korean President Moon Jae-in’s Green New Deal and last month’s promise of a net zero goal by 2050, Korean engineering companies are also working with Japanese funders at the Vung coal plant. Ang 2 from Vietnam.
Chinese President Xi Jinping also made many positive headlines last month for promising to bring the world’s largest emitter to net zero by 2060, but China still has 250 gigawatts of coal plants under development, more than the total existing fleets in India or USA.
The doubts are justified when so many nations are failing to deliver on their own climate promises. At the same time, it can be taken too far. The promises of political leaders have effects in the real world that we are already seeing. On the way to achieving the comprehensive and binding emissions policies the world needs, there will be many partial, vague and unenforceable promises. However, each of them establishes a new baseline that will help create the conditions for future and more ambitious policies.
Take the widely accepted goal that the world should stabilize atmospheric carbon dioxide at 450 parts per million (ppm) or less. Until relatively recently, this was generally considered the most radical reasonable option.
The 2001 Intergovernmental Panel on Climate Change synthesis of scientific research took 450 ppm as lower limit of a range of results that extends up to 750 ppm. Nicholas Stern’s influential 2006 UK government review of the economics of climate change advised targeting 500 ppm to 550 ppm. That ambition was considered bold at the time, but is now accepted as grossly inadequate. Similarly, limiting warming to 1.5 degrees Celsius was rarely considered a serious option until the 2015 Paris Agreement set a target “well below 2 degrees Celsius” at the behest of the small island states that run the world. risk of being destroyed by higher levels of warming.
What target skeptics overlook is the feedback relationship between the stated goals of political leaders and the behavior of lower-level investors, engineers, and officials whose work will help decarbonize the economy.
As should be obvious from the $ 3.5 billion a year spent on lobbying in the United States alone, the decisions of political leaders shape the field of what is possible for business. When a politician adopts a net zero ambition, and especially when, as in the European Union, those words are enshrined in law, the risks associated with carbon intensive projects increase, while those associated with low carbon technologies decrease. That is particularly the case when, as we are seeing, the path begins to be followed by leaders in various countries. Low-carbon approaches become more viable. That shift in the technological frontier, in turn, makes it easier for politicians to set even bolder goals, because the political and economic costs of doing so have decreased.
We are seeing this kind of virtuous circle develop. As we have written, the best guide to the path of emissions from the energy sector in the 2010s was not the usual policy scenario of the International Energy Agency, but one in which radical measures were taken to limit atmospheric carbon to 450 ppm.
Just over a month ago, I greeted PetroChina Co.’s announcement of a “near zero” emissions target by 2050, worrying that China could be more addicted to coal than oil. That’s still a reasonable concern, but Xi’s promise of net zero by 2060 two weeks after that column dramatically changes the picture. Within weeks of that speech, influential Chinese academic research institutes have already published a series of roadmaps that would illustrate how to put those words into action, with coal falling from nearly 70% of primary energy today to 10%. % or less in 2050.
Any goal set by politicians will be met with institutional inertia, unintended consequences, and political backlash. That does not make them useless. Political rhetoric changes reality, and even a cursory examination of recent history shows how quickly it can happen. Not a single question was asked on the subject of climate during the 2016 US presidential debates. This year, it has been one of the most discussed topics.
Turning an oil tanker takes time. That does not mean that it is impossible.
BLOOMBERG’S OPINION
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