So they didn’t pull it off. They didn’t beat the brutal arithmetic of the atmosphere and sign legally binding pledges to nail global warming down to 2°C. But just what did the 30,000 delegates and diplomats assembled at Le Bourget airport outside Paris manage to deliver?
Just over half of what was needed, it seems. The ask was big. To avoid more than 2°C of warming, the global economy needed to slash emissions by 15 billion tonnes a year, reducing carbon intensity by 6.3 per cent per annum every year from now ’til the end of the century.
The Paris pledges totalled reductions of just 3.7 per cent a year. Progress, sure, but that’s still a burn rate that takes us towards a world that is 3°C warmer. And what does 3°C warmer look like? One foretaste is the Lower Shabelle area of Somalia. It was here where the country’s drought was at its most severe and where Al Shabaab, the bombers of Nairobi’s Westgate Centre, rose to power. Another is Syria. According to many analysts, Syria’s four years of drought were a factor that amplified its crisis, driving 15 million migrants from the North East, the country’s former breadbasket, into its cities.
The logic is starting to from on the demand side.
This is part of a pattern of distressed migration that already, thanks to a 0.7°C rise in global temperatures relative to pre-industrial levels, takes 200,000 people a day from the broken countryside to the city.
The impacts of a 3°C rise in the world’s thermostat defy comprehension.
Protests were muted in Paris. But was the deal agreed, as many of the low-lying island states have maintained, a dud? Was it wholly inadequate to the challenge that confronts us? Do we brace ourselves for instability? Or are there grounds for optimism?
For all the shortcomings of the Paris result, there are three things that give me hope, three grounds in my mind for optimism.
The first is technological. When Henry Ford started to use the power of mass production to unlock the energy embedded in fossil fuels, the energy return on investment or EROEI – the net energy you got out after all the energy you put in to extract it – was unprecedented, an estimated 1,200 to 1 in 1919. It was almost as if all you needed to do was to stick your finger in the ground to get the oil out.
A century later, it’s a different story.
For tar sands and shale gas, according to the 2012 study by Jessica Lambert of the Next Generation Energy Initiative, the EROEI averages from 4 to 1 to 7 to 1. In other words, it takes a lot more energy to get the energy out.
Financial breakeven for the oil sector is estimated at an EROEI of approximately 12 to 1. But the energy returns of oil are in long-term decline. For renewables it’s the opposite. The surprise has been the speed at which costs have dropped, with solar panel prices down 85 per cent, according to UBS, in the last seven years alone, and the cost of batteries predicted to fall by another 75 per cent in the next 10. UBS estimates that for a household with the combination of solar power, battery storage and an electric vehicle, the savings in fuel and energy costs alone, without any subsidy, create a return on investment of 7 per cent a year. The logic is starting to form on the demand side.
The second basis for cautious optimism is political. Global subsidies for fossil fuels, according to the IMF, amount to an annual total of USD5.3 trillion, some USD10 million a minute.
What could shift these subsidies? It’s only when an alternative technology emerges that is just as cheap for the voter that it becomes politically possible to reduce them. And that’s the direction that the colliding cost curves of renewables and fossil fuels appear, more rapidly than expected, to be heading in. According to one estimate, by 2020, 80 per cent of the world’s population will be living in places where renewables are at or below cost parity with fossil fuels.
The prospect is emerging for accelerated disruption in the fossil fuel industry. On one side you could have renewables – a low capex and zero marginal cost technology, printing out free energy.
On the other you have got the prospect of unsubsidised and increasingly low-return fossil fuels. In the run up to COP21, the Rockefeller family, the founders of Standard Oil, moved their assets out of fossil fuels, spearheading a USD50 billion divestment campaign. Mark Carney, the Governor of the Bank of England, has now identified stranded oil and gas assets as a systemic risk to the financial sector.
The third and final source of optimism is practical. For all the importance of the Paris talks, what is striking is the level of national and business action independent of the COP21 process. Uruguay has already slashed its national carbon emissions by 85 per cent over the last five years. Bhutan, at one point managing to plant 50,000 trees in just one hour, has committed to be carbon negative, absorbing three times more carbon than it produces. Is it just the smaller economies? No. Germany, the world’s fourth largest economy and where renewables account for 25 per cent of its energy supply, last year uncoupled growth from carbon, reducing its overall energy consumption while simultaneously growing its economy by 1.5 percent.
This isn't about saving the planet, this is about self-interest.
As Christiana Figueres, the Head of the UN Framework Convention on Climate Change, pointed out, this isn’t about saving the planet, this is about self-interest. What we are starting to see is the intent emerging not just to pass the decarbonisation buck but to identify opportunities to do things that make economic sense. And it’s an opportunity that business is latching on to, from Bill Gates’ Breakthrough Energy Challenge, to the Indian and French plan for USD1 trillion in new solar power, to Apple’s heralded electric iCar.
Will it work? Will the combination of COP21’s legal ratchet mechanisms and the scale of the business opportunity help us close the gap and decarbonise in time? That’s the defining challenge of our generation. But think of it this way: if you were lying in bed trying to dream up an economic model to really maximise carbon emissions, well it wouldn’t look far off what we’ve got – fossil fuel-based mass production, distribution and consumption, coupled with built-in obsolescence. This is a model we have only just set our collective intelligence to rethinking. The fruit isn’t just low hanging; in terms of the economically smarter things we could do, it’s lying on the pavement.
