Let's Improve on Net Zero

What is Net Zero??A state where the greenhouse gases a country puts out into the atmosphere equals what it absorbs back.?Reaching this state is the western world's pig-headed solution to the world’s climate change problem.?Many of these countries are forcing it down the world’s throats.?The core problem with Net Zero is not just its inherent unfairness and exploitative nature, but its non-effectiveness.?Yes, Net Zero will have zero impact on the climate change problem. Read on.

Global warming is occurring due to all the excess CO2 and other greenhouse gases that have been released into the atmosphere in the last century or so.?The developed world and now China released most of this.?From here onwards the fast-growing developing countries (India included) will add most to the additional greenhouse gases.?

For those of us who are perpetually battling the weight problem, this is quite easy to understand.?That obnoxious and persistent mass of fat that shows up in that mirror will get worse with time if we don’t act on it.?And therefore, we address the problem in two ways.?First, we consume fewer calories to ensure that we don’t add to the problem.?And second, we exercise more to reduce the excess that we put in the past.

Now back to climate change.?To address the ‘we don’t add more’ problem, someone came up with the Net Zero solution.?Most countries are promising that after year X they will not add to the carbon in the atmosphere.?The problem with this solution??Climate change will not wait till 2060 (China) or even 2050 (western countries).?By then the irreversible damage would be done.

You might then argue, we really can’t do much about the damage from the greenhouse gases released in the past, that’s already done. ??Let us at therefore address the future problem today through a Net Zero commitment. And that’s where Net Zero scores.?Right??Wrong.?

Recall that Net Zero is mostly a commitment for the future.?It's not a promise to be Net Zero from now.?So going back to the fatty belly example, Net Zero is merely a commitment that we will not consume a fat increasing diet after (say) 2050.?But till then we can do pretty much what we feel like.?China used this to great effect when it promised a 2060 Net Zero date and promptly announced the setting up of a few new coal power plants!?It is being said that India will come up with a 2070 date.?That would mean India can then set up many coal power plants over the next decade and then run them for 30-35 years each.?Western countries have committed to a 2050 date.?That’s easy, a coal power plant typically lasts for thirty years.?So by 2050, these plants would die out anyway.?No pain lots of gain for them.?What is the point of such a commitment? It is of no consequence.?It’s like saying I will go on a diet three decades hence.?We know where that will take us.

Now consider another joke.?China, the USA, the EU, and India are going to need to put up massive renewable energy generation capacities. And typically, almost all of the developing world will need to do so too.?Where will those funds come from??And who will pay for the capital??In the case of India, for instance, till 2030 about USD 500 bill would be required reportedly to keep to its internal targets.?It seems the developed world is trying to put together credit on easy terms to the developing world.?Therefore, on a global scale, trillions of dollars of debt will need to be taken by the developing world from the developed world to help mitigate a problem that the developed world created!?

If the western countries were truly well-meaning and believed in fair play, they would fund all of this not as interest-bearing credit where future generations in developing countries are left to bear all the climate risk and economic and financial risks of that debt.?They would have considered other instruments where the risk is borne by the giver.?That means, what we need are long-term interest-free loans, grants, and even equity.?We have seen none of this yet.?And it does not seem likely either.?

Yes, Net Zero is a farce, those that make the mistake of getting on that bandwagon will get into a lot of trouble.?Which gets us to the next question, if not Net Zero then what??There is a global warming problem after all.

As every potential groom and bride knows, a commitment for the future is no commitment at all.?Like every dieter also knows, a commitment to lose weight in the future never works.?You have to start today.?And the world needs, we need, to commit to stop increasing our carbon footprint, and also start reducing it NOW.?Even if a Net Zero commitment is honest, too many events can push countries off track.?Some may get financially constrained (like Sri Lanka today) or face a power crunch (like China today and maybe India in the future) or face internal or external war (like Afghanistan), or may elect an ostrich (Like the USA sometime back), etc.?Indeed, there are many possible challenges that make it impossible to keep to long-term global commitments. ?I demand three a pronged global commitment that starts now.?That is, no more thermal power plants, interest-free credit for RE investment, and an international initiative to sequester carbon.

First, the only commitment that works well is one that is immediate.?Therefore we can't agree to a commitment of Net Zero in the future but a determination of Date Zero today, of no increase in carbon emissions from now onwards.?For India, that’s actually not too difficult for three reasons.?One, we have overcapacity built up in the past.?Two, capacity utilization for most of our power plants is fairly low and can be improved.?And three, India has fairly high T&D losses which could be reduced.?With some effort, we can go for a few years with no major thermal power capacity increase.

Second, humanity needs to stop the operations of all thermal power within this decade – let 2030 be that D-date, not 2050, 2060, or 2070.?This requires two elements.?One, investment in a low-cost alternative such as solar/wind power combined with battery storage.?And two, a mechanism to replace the trillions of dollars worth of coal power capacity with renewable energy (RE) capacity.?That would be feasible if new RE + battery units yield higher returns than the old coal power plants. If that occurs it would be in the interest of financial markets to fund the replacement of older coal-based power units with newer RE + battery power. units. This is not impossible given current technologies, fiscal innovativeness, and well-designed financial instruments.?

Image: Amazon

Here as well India has significant opportunities. Pure RE power now costs about Rs 3 per unit to produce by RE producers.?Power storage in batteries costs Rs 1 to 1.5 per unit.?While power is currently sold at Rs 6 to 8 a unit and even higher depending upon location and type of use by distribution companies (Discoms). The difference is not profits of Discoms (most of which make losses) but inefficiencies in the system including transmission and distribution (T&D).?In other words, if the public sector Discoms got their act together, we can replace coal power plants with RE+ storage and supply green power with today’s process or even lower.?

There is no need to do so quickly.?We can take our time, plan out the rollout of RE over the next 10 years, clean up the mess that Discoms have largely become, and then move fast using even better and cheaper RE technologies than those available today.?If we do this right, at the right time, we may achieve far superior outcomes by the next decade.?Why should we commit to a second-best outcome now when thoughtful action can help us do much better at a lower cost tomorrow?

That gets to the investment required.?As of now, India has slightly less than 400 GW of thermal power capacity. ?Since renewable plants typically work at about a third of the time, we need three times that much capacity.?It costs less than USD 1 mill to put up an MW of RE capacity (solar is cheaper, wind a bit more expensive currently) and another 20 percent for battery capacity.?Together therefore we would need about USD 1 trillion or thereabouts to eliminate India’s current coal power capacity and replace it with RE+battery at current costs.?And this would be much lower a few years hence.

Who would fund such large amounts??Not me, you, or the government.??Nor should it be our children which it would end up being if we take massive IMF or commercial loans to fund new RE + storage plants.?That USD 1 trillion is what the affluent countries need to fund in three ways:?(i) grants (ii) interest-free credit and (iii) equity investment.?

Finally, the reduction of excess GHG and its climate warming impact is important.?Whether it is carbon sequestration (through biological, chemical, or physical means) or reflection of sunlight, or some other mechanism, it is these methods that will finally save the planet.?Are they feasible??We don’t know, we are too busy arguing about whether the Net Zero date is thirty or forty or fifty years away.?Too little, too late.

Yes, there is a solution staring at us.?It will benefit all.?It lies not with the developing world, but the developed world.?All they need to do is fund global capacity for renewables.?But not charge for it.

?

***

For those of you interested in a technical analysis of problems with Net Zero do check Rahul Tongia's work here.