Has climate business done the maths?

Two pieces of climate legislation have been pushed recently in France and Germany. The former is contemplating higher tax on heavier cars. The latter is targeting aviation. They both address transport, a major source of greenhouse gases, but they have another thing in common: a first policy of less. They’re not promoting innovations or co called “cleaned tech”, but instead are advocating the idea that lighter or fewer cars and planes will always be better for the environment than heavier or more cars and planes, however clean they are. The reception of these taxes have been a less than enthusiastic mix of sarcastic comments about fiscal creativity. But that doesn’t make them less promising as a new direction in CO2 reduction. Why so? To understand we need to look at the alternative policies on the table. 

The corporate world is embracing the sustainability imperative. Many saw this as the beginning of the solution – what if we could make profit whilst making the planet cleaner? If we could turn the fight against global warming into a business, surely we could innovate our way out of it? There are signs that this is partially having an effect : large investments into renewables and other green technologies are bringing costs down, and consumer pressure is successfully pushing corporates to restrain some harmful practices. Rooftop solar panels, electric cars, lab grown meat! All steps in the right direction. But are they? Is climate business a net contributor in the right direction? 

Let’s start with electric cars. They’re often presented as a real lever to decarbonize our economies, as individual cars emit about 4 Giga Tonnes of CO2equivalent (that is 8% of total emissions that we generate). The economy, however, can be as ‘carbonized’ as it wishes in the vacuous abstractosphere maintained by much business rhetoric. Do electric cars help decarbonize the atmosphere? Truth is for electric cars to have a net benefit on the greenhouse gas balance their manufacturing and utilization must not require steps in the wrong direction. First, the electricity used to charge the car’s battery has to be CO2 free and produced either by renewables, hydraulic or nuclear. Second, the manufacture of the car itself has to use clean energy. Where are these cars made? Well, the essential component—the batteries—are mostly made in giga-factories like in Poland and China, which massively burn coal to produce their electricity. Third, the raw material for the batteries is Lithium, Nickel, Manganese or Cobalt. That needs to be extracted, transported and stored using CO2 free industrial processes. None of the above conditions are impossible, but they are likely to worsen the economics of the electric car. Even under current conditions, total cost of ownership of electric cars will cross that of fossil fueled cars only in 2023. And yet, we would need those same electric cars to be competitive enough to take an overwhelming share of new car sales in order to slowly replace the entire fleet and achieve the emission reduction – today less than 5% of the cars sold in Europe are electric. 

Let’s look at another example : wind turbines and solar panels. They’re seen as a promising lever as they’re addressing another major source of greenhouse gases : replacing all coal fired power plants by CO2 free sources would reduce our emissions by around 12GT of CO2eq. But these solutions can’t make up an entire electric network and have to be balanced with batteries or gas power plants. We can also apply the same technique of looking at the manufacturing process to reveal the CO2 emissions embedded within solar panels and wind turbines. Worked out per mega Watt hour delivered, there is about one hundred times more steel in a wind turbine than in a conventional power plant. We can go even further and think about changes in land use. Does it make sense to deforest an area to cover it with solar panels fixed to cement? What is the impact on the water table? On the chances of local flooding? All electric networks have environmental costs. 

For each of the big decarbonizing levers to provide a meaningful step to the right direction - at best the 2 levers above would just got us shy of 2/3 of what is required to come to be on a +2 degrees pathway, they require conditions that business alone is not likely to provide. To save money: count the pennies in, count the pennies out. To lose weight, count the calories. To save the planet, count the carbon. The maths tells us: there is simply no scenario where we reach the +2 degrees pathway emissions objective from the IPCC without also changing significantly our consumption patterns and food habits, and considering unpopular or competition-free solutions. Hence the recent regulations are good, but not ambitious enough: common sense starts with carbon arithmetic. Climate might not be such a good business after all. 

Written by Frédérik Jobert, Olivia Davies, Jo?l Hazan