Combating Climate Change…

…a matter of technology, not will

The COP28 climate summit opens in Dubai today, yet it is already clear that the world is not on track to meet the climate change targets that governments set themselves in Paris in 2015. In strictly numerical terms therefore, COP28 will be a failure, like all the COPs that came before it. The likely response will be much wringing of hands and pointing of fingers as people conclude, once again, that mankind lacks the moral and political will to save the planet and itself. 

This is the wrong approach to climate change. The energy transition needed to combat global warming is not just a matter of will. It is a matter of technology. Technology holds the key to arresting climate change, and while we have a mountain to climb, the new technology required is coming on stream faster than most people realise. What we need post-Dubai is for society and its leaders to adopt a laser focus on technology and the policies needed to develop and deploy it as quickly as possible.

History suggests the response will be otherwise. After the predictable disappointment of Dubai, some will respond with cynicism, arguing it is all too late. Others will adopt a more heroic approach, calling on people to don hairshirts and slash their carbon footprints, and for governments to sacrifice other pressing policy needs on the altar of net zero. Such heroism may bring short-term gains but it soon runs out of political steam.

This is already happening. Governments across the world are stepping back from their net zero promises because inflation, the cost of living, Ukraine, Gaza and other issues make it appear too politically costly. Democratic politicians the world over are all making the same calculus: saving the planet will not get them re-elected. They cannot drop the pledge altogether so instead are adjusting the narrative and playing with the timeline.

A better mindset would be to focus on technology. This means acknowledging that the current level of technology is insufficient to deliver enough carbon abatement in a way that enables an energy system that is affordable, secure and reliable, and hence that more technological progress is required to transition the energy system without unduly burdening consumers.

It also means acknowledging the more positive side, namely that this technology is coming much faster than most people realise. Systems needed to enable a successful energy transition are now becoming available, and the private sector financing of clean energy technologies is heading in the right direction.

Look at the global spend: five years ago, $500 billion a year was spent on clean energy while almost twice that - €900 billion - went on hydrocarbons. Investment in hydrocarbons has since stayed the same but spending on clean energies has mushroomed, reaching $1.2 trillion last year and expected to hit $1.8 trillion this year. This is still well short of the $5 trillion annual investment which the IMF says is needed, but the trajectory is good.

Once we understand that the critical determinant is how quickly technology can respond to the policy-induced shock of the energy transition, it becomes clear that the right response to the bad news expected from Dubai is to take stock of the available technology: do we have the technology to deliver a politically viable energy transition that is affordable, secure and sustainable? If not, what do we need? When might it be available, how quickly can it be deployed and scaled up, what are the financial implications? What needs to change in public policy to better incentivise this shift?

The energy transition is thus not merely a matter of will. Whilst political will is necessary to drive and sustain any major policy shift, fundamentally the energy transition is a reengineering of the global economy. This transition is starkly different to any previous economic transformation: rather than the technology shocking the economy, with regulation seeking to catch up; the regulation to avoid climate change is shocking the global economy, and technology is the one playing catch-up. It would be a great tragedy if politicians abandoned climate goals just as technology catches up with policy.

Many liken the energy transition to putting a man on the moon, but the analogy is false. The moon shot was a one-off effort to make first-of-its-kind technology that could be rapidly developed to deliver the political goal – of American pre-eminence in space exploration - at any cost and with very high levels of risk. The energy transition, however, requires adopting new technology, globally and at scale, and reliably integrating it with existing energy systems, which will fundamentally transform those systems and the wider global economy.

A range of technologies to unlock the energy transition are on the way. For its part, the European Commission is on its way to a decisive policy shift too, with for example the incoming EU Grid Action Plan, supporting the roll out of renewables within an integrated and efficient electricity grid.

This technology revolution offers a brighter future for our energy system, and indeed in the longer term, energy costs and energy security. Post-COP28 policy everywhere must incentivise the development and scaling up of solutions to the obstacles that have hindered the energy transition to date. The public mood may be sceptical, but the momentum of technological change is unstoppable. As they leave Dubai, politicians should put their weight behind the latter and not be scared into inaction by the former.