There are many ways we could address the climate crisis. We could go into denial, despair and do nothing, or get into conflicts over resources. Or we could face the issue in a realistic manner and act on it vigorously. The course we are on now appears to be to acknowledge the problem, say we will address it soon, and continue favoring the interests of corporations.
Making sense of the cost of each possible approach is not something for the timid. Fortunately, there are research organizations that do that for us. McKinsey, a well-known global management consultancy, has recently published a report on the subject, “The net-zero transition: What it would cost, what it could bring.” The report can be downloaded from https://mck.co/3ggx8Bc.
It is not an easy report to read for several reasons. One is the fact that it puts the possibility of failure into sharp focus. We can fail. And if we do, the consequences will predictably be bad, and possibly very bad. The report says that perhaps as much as 20% of the global gross domestic product (GDP) would be in danger, unless we get emissions under control. It also says that 20% is not a worst-case. The worst case is not estimated.
To avoid devastating change, we have to put a lot of effort and money into action. Doing that, however, is not the same sort of thing as paying for climate damages. When something is damaged and needs to be replaced, the cost of doing so includes money lost. Investment into infrastructure that will reduce carbon and methane emissions, however, is not money lost; it is money invested.
Another thing to remember is that the investments we make in facilities that reduce carbon emissions will largely be made to replace facilities that need replacement anyway. For example, a coal burning power plant that is fifty years old might be replaced by an extensive solar photovoltaic (PV) system with storage instead of replacing it with a new plant powered by coal or gas.
The report says that all carbon dioxide and methane emissions come from seven systems: power, industry, mobility, buildings, agriculture, forestry, and waste. All of these systems have to be transformed.
As readers of Green Energy Times probably would know, transforming the power industry means getting the most from renewable energy sources, while we eliminate gas and coal. We address mobility in every issue of G.E.T. in the transportation section, where we advocate a switch to electric vehicles. Weatherization and such efficiencies as heat pumps are often subjects of articles in the building section. Agriculture is covered in its own section, and industry, forestry, and waste are covered in the Green Living section.
We have plenty of reasons to make the transition away from fossil fuels, even without thinking about the climate crisis. Costs for renewable energy systems have gone down to make them the least costly sources of electricity we have, and according to Wright’s Law (which is not mentioned in the McKinney report) they will most likely continue to fall. Pollution from fossil fuels is costing this country thousands of lives each year and contributing to sickness costing many billions of dollars in medical bills and lost work each year, worldwide.
Considering the cost of climate change, however, we have an entirely different set of reasons to end our use of fossil fuels. Their cost is not just what is paid for the product. It also comes as floods, wildfires, droughts and other problems that increase relentlessly, costing this country billions of dollars each year, and the rest of the world similarly great amounts. These are called “external costs.”
With that background we can look at some numbers. Exclusive of external costs, worldwide annual spending on energy includes about $2.7 trillion on high-emissions assets, $2 trillion on low-emissions assets, and about $1 trillion on reallocating assets from high-emissions to low-emissions. So, our current spending on energy is about $5.7 trillion each year.
To address the climate crisis adequately, we will have to increase that $5.7 trillion by an additional $3.5 trillion, to $9.2 trillion, each year for the next thirty years. This amounts to an average increase in energy costs of just over 60% to save the planet.
Please bear in mind, however, that the increase is not a loss; it is an investment with benefits of its own. One benefit foreseen in the McKinsey report, for example, is 15 million jobs, globally. There are economists who point out that the amount of investment, over the time during which it is to be made, could produce an ongoing era of prosperity, worldwide.
The McKinsey report is not the only one estimating the cost of dealing with the climate crisis. Other studies agree with it. But we should remember is that every day we delay makes climate change worse and stopping it more costly.