Norway is making the world’s fastest transition to zero emissions road transport. Over half of all cars sold in the country are electric vehicles (EVs), about ten times the share that EVs have achieved in most major markets, and twenty times as high as than the global average.
The UK is making the world’s fastest low carbon transition in the power sector. Coal power, which made up 40% of the generation mix just eight years ago, is now close to being eliminated. Over the last decade, the rate of decarbonisation in the UK power sector has been twice as fast as that of any other major economy, and about five times as fast as the global average.
As Tim Lenton and I show in our new research paper, what these two examples have in common is that they involved the activation of tipping points. A tipping point occurs where a small push leads to a large change in the state of a system. Imagine leaning back in your chair as you read this article, pushing with your feet so that the chair pivots on its back legs while the front legs go up in the air. Up to a certain point, if you stop pushing, the chair will go back to its normal position. Beyond that point, the chair will fall backwards and you will find yourself in an entirely new state – lying on your back with your feet in the air, looking like an idiot. That point is the tipping point.
In Norway, a combination of tax and subsidy made it cheaper to buy an EV than an equivalent petrol car. This appears to have activated a tipping point in consumer preference, leading most people to decide that EVs were a better option, instead of sticking with gas-guzzlers.
In the UK, a fixed carbon tax in the power sector made electricity from gas cheaper than that from coal. This switched the position of those two fuels in the market, meaning that gas would be called on to generate before coal, instead of afterwards. The result of that small change in relative pricing was a large change in the amount of revenue that coal power could earn. Along with the direct impact of the carbon tax on the cost of coal power, this activated a second tipping point, ‘flipping the economics [of coal power] over from barely profitable to loss making’, in the words of one utility analyst. Utility companies increasingly decided they were better off blowing up coal power stations than continuing to operate them.
A tipping point is not a magic solution to all our climate change problems. Technologies like solar power, wind power and batteries have to be researched, developed and deployed before tipping points such as those described above become available. A range of other policies are important too: there is no point having cheap EVs unless you have the charging infrastructure. Still, the fact that tipping points can lead to such world-beating rates of change surely gives us grounds for hope.
One reason we do not see more of these examples could be that traditional economic advice has not encouraged governments to look for them.
A single carbon price across the whole economy has often been recommended as the most efficient policy, on the basis that it would equalise the pressure for change in all sectors. The problem is: each sector that we need to decarbonise is different. It is easier to tip over a plastic deckchair (the power sector) than a heavy armchair (the steel sector). A single economy-wide carbon price would be too low to activate a tipping point in some sectors, and unnecessarily high in others. In practice, the desire to avoid such a carbon price being too high in some sectors would be likely to result in it being too low in all of them.
If we understand the economy not as a machine to be ‘optimised’, but more like an ecosystem to be tended so that it grows in ways that are beneficial to us, then it becomes natural to look for tipping points when we want to find efficient ways to achieve rapid change.
Tim Lenton is known for his pioneering research on tipping points in the Earth system that could be crossed as a result of climate change. One of the most concerning possibilities he has brought to light is the risk that the activation of one tipping point could increase the chances of activating another, and then another, creating a cascade of change towards a new and less hospitable state of our planet.
What we realised when we talked about it together was that a similar phenomenon could occur in the global economy. In fact, it already has: tipping cascades are visible in past industrial revolutions, and more recently in the global financial crisis.
In our paper we sketch out the ways in which our two examples could contribute to tipping cascades in the global economy – accelerating low carbon transitions through industries, across borders, and between sectors. Small groups of countries working together may be able to make this a reality, and through our COP26 campaigns, the UK and our international partners will give it our best shot.
The fast transitions of the past have often involved government, business and civil society working together, reinforcing each other’s actions. We surely need that kind of collaboration now. If we want to tip fossil fuels out of the global economy fast enough to keep a safe climate, we had better join together in doing the tipping.
Simon Sharpe is Director of Economics for the Climate Champions Team, and a Senior Fellow at the World Resources Institute.