Contributors
Simon Sharpe
Simon Sharpe is Director of Economics for the Climate Champions Team, and a Senior Fellow at the World Resources Institute.
The Sinai is falling away beneath me, and the sound of overcrowded conference halls is clearing from my head. I’m flying out of COP27 and, I suspect like many others, pondering our position.
A presentation by Cameron Hepburn at the China pavilion earlier this week reminded me of a strange thing about clean technologies: they seem to be following both Moore’s Law and Wright’s Law. Moore’s Law suggests that costs fall predictably as a function of time. Wright’s Law suggests that costs fall predictably as a function of cumulative deployment. For both to be true at once, deployment must be predictable as a function of time.
How could that be true? To any of us close to policy or campaigning, that seems the opposite of our experience. Deployment of clean technologies can be fast, slow, or non-existent, depending on actions taken or not taken.
The explanation, I think, lies in the way we are all caught up in the reinforcing feedbacks of technology development. When one country pushes forward with deployment, performance improves, and costs come down. The better and cheaper technology attracts the interest and support of other countries, and when the first one loses interest, these new supporters pick up the baton and push forward. Their efforts, in turn, make it easier for others to follow. While at any point in time, some countries are pioneers and others are laggards, globally and over long time periods, it roughly averages out.
This fits with the story told by Greg Nemet in his book, ‘How Solar Energy Became Cheap’. The USA led the way in developing solar photovoltaics in the 1960s and 70s, and again in the 1990s; when it slacked off in the 1980s, Japan made the running. In the 2000s, Germany moved to the fore; then in the 2010s, China took over. Each of these leading countries drew on its unique strengths to improve the technology and cut its costs, making it more attractive to the next. Now that solar costs one ten thousandth of what it did when it was first deployed, we are all on board. Solar accounted for more power capacity additions globally than any other technology last year. According to recent analysis by the International Energy Agency, the solar industry’s announced plans for increases in manufacturing capacity over the course of this decade are consistent with the levels of deployment we need in a 1.5°C scenario.
This is cause for hope, because it suggests we could be on track for a near net zero emission global energy and industrial system by mid-century (that is, eliminating three quarters of global emissions – everything except land use), and for saving $12 trillion in the process.
But it is not cause for complacency. The line of global deployment over time might look roughly straight (on a logarithmic scale) over half a century, but within the space of a decade, it has major fluctuations.
A fluctuation up or down this decade can be the difference between keeping a just-about stable climate, or waving goodbye to the Greenland ice sheet and saying hello to uninhabitable heat.
There’s an obvious conclusion: if we want to go fast, acting one after another is not good enough. We need the big players to act at the same time. Twice as much deployment each year means twice as much cost reduction. Not only that, but we need them to act together. Coordinating their actions in each emitting sector to shift global markets more quickly towards the clean technologies that we have, and to develop the new technologies that we still need.
One morning this week, I visited in turn the ‘pavilions’ (over-decorated, under-soundproofed, plastic stage-and-seating arrangements) of the world’s three largest emitters. At the US stage, energy secretary Jennifer Granholm was talking about the half-a-trillion dollars that her government is throwing into clean technologies of all kinds, from hydrogen to heat pumps. City mayors spoke about how they were working with trusted local community organisations to promote uptake of subsidies and grants that would give people lower energy bills, warmer homes, and cleaner air.
At the China pavilion, long-serving climate envoy Xie Zhenhua said he wasn’t worried by the recent increase in coal-burning in Europe. He knew it was only a temporary blip in response to a crisis; Europe’s trend away from coal power, and its broader commitment to decarbonise, were perfectly clear. China, similarly, would be unwavering. The recent Communist Party Congress had left nobody in doubt that the work to plan for carbon neutrality must continue. Renewables and energy efficiency were already becoming engines of job creation and growth in the Yangtze River Delta area. In the heart of Yellow River coal country, 100 GW of renewables were under construction in the desert. Energy storage and hydrogen were priorities for innovation. An American academic said there was good evidence that China had followed through on Xi Jinping’s commitment a year ago to end the financing of coal plants in other countries. As a result, around 21 GW of planned coal plants have been cancelled.
In the room that India had almost managed to make look like the inside of one of its own government departments, the talk was of the new bulk public procurement programme for electric buses. The government was aiming to replicate the spectacular success it achieved with LED lighting, where bulk procurement cut costs by 85% within four years, kicking inefficient lightbulbs out of the market and bringing electric lighting to many homes for the first time. The signs were good: the procurement of the first 5,000 buses earlier this year had gone so well that the government was now planning to buy 50,000. Officials from the states of Haryana, Kerala, and Maharashtra said they were keen to expand their fleets. An independent expert said the scheme was so impressive that the European Commission had come to ask India for advice, and the World Bank was looking to replicate it elsewhere.
These were moments to raise anyone’s spirits. But, you may say, aren’t there people in each of these countries who oppose the transition – vested interests looking to slow it down, or even reverse it if they can? Yes, and in a way, that is exactly the point. No country is a monolithic block of national interest. In every country, as the authors of the brilliantly titled ‘Prisoners of the Wrong Dilemma’ point out, the pace of the transition is the outcome of many battles between interest groups ranged for and against it. The true game of climate diplomacy is for the actors in different countries who favour transitions to find ways to help each other. To make each other’s tasks less difficult.
If you followed the media coverage of the formal negotiations at COP27, you will have heard reports of acrimonious arguments about compensation (‘loss and damage’). Wholly justified though these claims are, it can look less like collaboration, and more like a depressing stalemate.
As ever, though, real cooperation was happening outside the negotiations bubble. Most of the people at COP really were there to learn from each other, and to help each other.
Anyone who attended could give a different list of examples. Perhaps the most prominent this year was the Just Energy Transition Partnership that Indonesia agreed with a group of supporting countries and private investors. Expected to mobilise $20 billion in investment, it would help Indonesia roughly double the amount of renewable power it deploys this decade, and move more quickly away from coal.
In the heavy industrial sectors, the best news was that the US and Japan had joined India, Germany, the UK, Canada, and UAE in the Industrial Deep Decarbonisation Initiative. These countries will use public procurement to create the first markets for near-zero emission steel and cement, together creating a far stronger incentive for industry to invest in the new plants to make those materials than any of them could by acting alone.
African countries were at the forefront of many initiatives to scale up renewable power and develop green hydrogen. Egypt and Morocco each played notable leadership roles. In the Green Grids Initiative, backed by 90 countries, the multilateral development banks, and a host of experts, were making progress towards agreeing the top priority electricity interconnectors to move forward, connecting regions of high renewable supply with those of high energy demand, as part of the African Union’s continental power system masterplan.
In transport, there was good progress on cars, with France and Spain joining 39 other countries and 14 vehicle manufacturers in committing to making all new car sales zero emission by 2035. Even more welcome was the commitment of 25 countries to make all new trucks and buses zero emission by 2040 – up from 15 countries a year ago, and none the year before that.
But, for the second year running, it was shipping that provided my favourite COP moment of cooperation. Shipping burns the dirtiest of all liquid fuels, and for decades its discussions on decarbonisation were as sluggish as an overloaded tanker. In the last few years, however, the sector has come to life. Independent analysis from the Global Maritime Forum showed that governments, ports, cities, ship owners, and operators – including eight companies responsible for 85% of global container shipping capacity – were making real progress towards establishing green shipping corridors. This is not easy, and the first zero emission vessels on long-distance routes are only expected to be operational by 2027. All the better, then, that the right actors are working together in detail to figure out how to do it.
I learned that one of those green shipping corridors is being developed between the cities of Shanghai and Los Angeles – a route that carries 40% of all the goods that go from China to the US. While Presidents Biden and Xi grandly announced this week that their countries were once again talking to each other, apparently their port operators had never stopped. It seems nobody had told them they were supposed to be enemies. They had, as my old boss used to say, just buggered on with what they were doing.
Support is growing for the idea that we should not be leaving such collaboration to chance. It should no longer be a side-event; it should be the centre of our efforts. At COP26, forty-five countries committed in the Breakthrough Agenda to work together to make clean technologies and sustainable solutions the most affordable, accessible and attractive option in each emitting sector before the end of this decade. Recently, leading thinkers from India, China, the US and EU called for climate diplomacy to shift more firmly in this direction.
In September, the IEA, IRENA, and UN High-Level Climate Action Champions published the Breakthrough Agenda Report 2022, recommending ways for countries to work together to make faster progress. At COP27, countries representing over half of global GDP responded by agreeing a set of priority actions that they would take jointly in power, hydrogen, steel, road transport and agriculture, over the coming year, working through a wide range of initiatives. France, Morocco and Canada proposed adding to the Agenda the sectors of buildings and cement.
This is what we need: countries, and companies, getting serious about getting organised.
‘So what?’, the critics will say. ‘What does it all add up to?’. The truth is that nobody really knows. The pace of system change is hard to predict. But here’s one last reason for hope. The IEA, not known for the optimism of its clean technology forecasts, now predicts that peak demand for fossil fuels will be reached before 2030.
What happens then? Well, probably not a linear decline. Something more like an upside-down S-curve – the mirror image of the clean technology growth path. Just as renewables are boosted by the reinforcing feedbacks of development and diffusion, fossil fuels will be plagued by the reinforcing feedbacks of decline. Falling demand will disincentivise investment, increasing the cost of capital, pushing up costs, contributing to further reductions in demand. A process that appears slow at first will soon accelerate, outpacing people’s expectations. As Churchill might have said, peak fossil demand won’t be the beginning of the end, but it might just be the end of the beginning.
So, as I come in to land at lovely London Luton airport, I’m thinking that by the time I fly to COP35 (in the year 2030), it will be on a plane whose jets burn sustainable aviation fuel. Its metals will have been made with heat from hydrogen, produced with electricity from solar and wind. Its plastics will be made from advanced biofuels, and its staff will be serving plant-based burgers that taste just like beef. Unless I’m on Wizz Air again, in which case there will still be no proper food.
Simon Sharpe is Director of Economics for the Climate Champions Team, and a Senior Fellow at the World Resources Institute.