The idea behind net zero is noble – to halt the human influence on climate. This is mostly associated with an increasing stock of greenhouse gases (GHG) in the atmosphere coming from our fossil fuel use and agricultural activities.
The cold reality is that planet Earth keeps warming up.
Over the last decade (2015-24), the global average temperature was 1.24°C higher than pre-industrial levels. Not a lot you might think, but the tyranny of averages masks wide variability that is already threatening the existence of communities in local hot spots.
And it just keeps getting worse.
Many experts now assume the 1.5°C stretch target increase set at the 2015 Paris Agreement and the 2°C red line will both be crossed.
Paris is just the latest in a set of international treaties kickstarted by the United Nations Framework Convention on Climate Change (UNFCCC) over three decades ago.
Plenty of talk. Poor outcomes.
The reasons for this institutional failure are various. They include the difficulty of reaching and enforcing a credible international agreement when different regions are at very distinct stages of development.
Beyond that, ‘leading by example’ policies can have counter-intuitive results. To achieve domestic net zero targets, richer countries may ‘export’ industrial production to developing countries with older technologies, leading to a rise in global GHG emissions overall.
But the problem is deeper – the narrow lens through which we perceive the climate threat may lead to the very collapse we wish to avert.
Why? An important clue lies in history.
The climate debate followed an earlier energy transition focus in the 1970s, aimed at insulating western economies from oil shocks and perceived resource constraints.
- Energy policies developed 50 years ago assumed gradual technology substitution - a change from oil to gas to nuclear, with enthusiasm for fast-breeder reactors at the time. (Indeed, some thought the perceived oil constraint should be eased by increasing the production of more abundant coal.)
- Climate was assumed to be a longer-dated threat compared to the immediate oil constraint. Solve the latter with low-carbon nuclear and the climate would take care of itself.
Neither of these assumptions has played out. Forecasting was long in snake oil, short on insight.
- The climate shifted to be a shorter-dated concern, while fossil-fuel resource worries eased. To quote Professor Dieter Helm “There is enough oil, coal, and gas to fry the planet several times over.”
- Nuclear enthusiasm stalled, while energy consumption has risen. Renewables - originally a side show - are now the main driver of innovation. But with rising overall consumption, we are still a fossil-fuel-dependant global village.
- Moreover, today’s environmental challenges stretch well beyond fossil fuels and climate. Of nine planetary boundaries defined by Professor Johan Rockström, we have already crossed six.*
So, what are we to do?
A standard pushback to the ‘polycrisis’ framework is that it amounts to a counsel of despair – we might as well eat, drink and be merry, for tomorrow we die.
Well, extinction is not yet inevitable.
Our energy and environmental problems flow principally from free riding on the foundational gifts of nature. We need to stop and reverse that, urgently.
Have we the financial and human capital to make it happen in a UK context?
For funding, the recycling of ‘polluter pays’ taxation into nature recovery and the removal of environment-destroying subsidies are immediate starting points. Our environmental standards and reporting requirements are evolving positively but can be tightened. With the right governance architecture, waves of patient capital will follow.
Human talent is abundant. In an earlier post I highlighted the skills embedded in our coastal communities, built up during the fossil fuel era. For the land, we have the experience of our farmers. Many are natural allies. We also have an army of volunteers across the country, often working in charities. We enjoy academic excellence in the field. Overall, there is no doubt we have the people.
Restoring and enhancing nature on land and sea can reduce our vulnerability to the consequences of all boundary risks - protecting our homes and critical supply chains such as food, underwriting fresh water, improving our health, and much more – including those elusive climate benefits.
Nine for the price of one.
Or even ten – it could contribute to military defence – an army marches on its stomach!
Beyond these domestic benefits, it is an agenda that can unite the international community – an indirect but powerful way to meet global environmental challenges.
Moreover, it can help to foster beauty and wonder all around us – higher values that transcend easy quantification.
It is time for a wide policy lens, to open our eyes and see the wood from the trees. If we are not careful, we will focus narrowly on net zero but still end up back in the caves.
Nature positive – what’s not to like about that?
*Boundaries already crossed relate to climate change, biosphere integrity, biogeochemical flows, land systems, freshwater use, and synthetic chemicals/plastic use.
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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.
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