Climate action will stall until financial issues are resolved

Climate change update

The author is an analyst at UBS

The climate debate can be summarized into three simple questions: Is there an emergency? Will we solve it? Who should pay the fees?

The first problem seems to have been solved The latest IPCC report The conclusion is that we may experience global warming of 1.5 degrees Celsius within 20 years, as the Paris agreement hopes to avoid.The second one should be in November this year COP26 Climate Conference, where For the first time in American history, Europe And China Will reach the path that has been promised to achieve zero emissions. Therefore, it seems almost unthinkable to repeat the 2019 meeting without any notable agreement. This means that we are facing the last and most difficult problem today: how to pay for the green transformation.

This is no longer a problem in the energy sector, where clean technologies have matured for decades. Our research shows that if we can simply convert the capital that we still invest in coal, oil, and natural gas every year (recently about $1 trillion) into green projects (our spending has decreased a lot), we can at least double it Our clean energy budget has put us roughly on the track of 100% clean energy supply.

But clean supplies are not the only thing we need. In addition, we need clean needs. Ultimately this means that we will have to replace all the assets in the economy, such as buildings, boilers and cooking utensils, which are built with or for the use of fossil fuels. Our research shows that this is where a lot of money is needed.

Take Class A household refrigerator freezer as an example. If it runs on a typical power source, it may cause 175 kg of carbon dioxide emissions per year. To eliminate these emissions, you need to plug it into a renewable power source. As the premium for renewable energy has approached zero, this will soon become an option in many places.

What is even more difficult to imagine is how you will replace the refrigerator when it fails. Then you will need many things that do not exist: zero-carbon metals, plastics, rubber, glass, paints, adhesives, electronics, refrigerants, insulating foaming agents, and so on.

You will need to produce, transport, and assemble these things through a zero-carbon supply chain. Employees in this supply chain need to work in zero-carbon offices and factories around the world. When a new appliance is on the market, you need to buy it on the Zero Carbon website, which provides a delivery service in recyclable packaging, and it is best to choose to recycle old appliances.

It’s real to you, it’s real to everyone. There are 1.5 billion household refrigerators and 200 million new refrigerators in the world every year. What applies to refrigerators also applies to all other products from blenders to pencil sharpeners. Overall, we believe that as much as US$300 trillion in additional investment may be required to realign the global economy with assets that can be manufactured, distributed, operated, and ultimately recycled using clean energy alone.

Putting it in context, human investment expenditure (for everything we do) today is approximately USD 2 billion per yearIt may not be impossible to find another $30 billion in 30 years. But starting tomorrow, our investment budget needs to be increased by 50%, and the increased funds must be funded in some way. The choice is to increase debt, increase taxes (Including property tax) Or adopt a wartime mentality and sacrifice living standards. None of them are politically attractive, and this is at a profound level the reason why financial problems remain unanswered-the climate crisis has not been resolved either.

Another possibility is that we have set big goals today, but have not achieved them. We observe the development of the more extreme temperature scenarios outlined by the IPCC.If we want to avoid That terrible result, Then we must urgently solve the problem of how we will pay better fees.

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