The COP26 summit is now over and the question remains, where do we go from here?

Although progress has been made—a “big step forward” said U.K. Prime Minister Boris Johnson and perhaps even “a historic achievement” touted COP26 President Alok Sharma—we can now see, with stark clarity, the long road that lies ahead in restoring the safety of our planet.

The fundamental challenge is not the failure of particular nations or institutions or businesses or civil organizations, but rather the interaction between our economic, political, and social systems, which generates environmental outcomes that are incompatible with the 1.5 degrees Celsius target. Economic prosperity and political success have become decoupled from social and environmental prosperity.

The systemic nature of the problem is also commonly overlooked. Policymakers often think in terms of their ministerial silos. Business leaders often believe that they can address the problem on their own by pursuing stakeholder value. The business literature is full of inspiring stories of green businesses that represent “a ray of hope.” Investors address the problem on their own by decarbonizing their portfolios. Consumers try to change the world through environmentally responsible habits. The underlying reasoning is that “every little bit counts,” “every journey is taken one step at a time,” and “the whole is the sum of the parts.” While there may be value in this, we need to understand that, given the scale of the problem at hand, the whole may be greater than the sum of the parts.

Remarkably, we know what needs to be done to achieve collective mobilization, since we have observed what people do when they successfully achieve collective goals (such as establishing irrigation systems, maintaining groundwater basins, and protecting forests and fishing grounds). On this basis, the Nobel laureate Elinor Ostrom formulated eight core design principles (CDPs) for managing their commons, which have been generalized to all collective goods, such as emissions abatement. Let’s apply these principles to derive conditions for effective climate action.

Shared identity and purpose (CDP 1). Stopping global warming is an inherently global goal since greenhouse gases (GHGs) emitted anywhere affect people everywhere. Thus, we need to develop a sense of shared identity regarding this goal, as members of a common humanity striving to protect our planet. It should become a moral obligation of everyone—politicians, businesspeople, civilians—to stop global warming, similarly to the way we have come to consider the abolition of slavery a universal moral value.

COP26, along with the other international forums on climate action, is not engaged in promoting a shared identity and purpose with respect to climate action. Instead, national interests become naturally pitted against one another in the climate negotiations. This is not an unlucky coincidence; the structure of the negotiations—around national governments as the parties to the “Conference of the Parties” (COP)—makes this outcome inevitable. Nor do politicians within these countries aim to promote a shared human identity with respect to climate action.

Equitable distribution of costs and benefits (CDP 2). We know that if all countries and people of the world cooperated in climate action, in accordance with their abilities and needs, we and all future generations would be better off. But this possibility is not enough. Policymaking must ensure that the costs and benefits of climate action are actually distributed so as to make everyone better off. This principle should guide the climate negotiations between developed and developing countries, as well as the policymaking within each country.

But this principle is not the basis for the COP negotiations. On the contrary, there was predictable consternation when national interests were pursued to the detriment of others, such as when China and India watered down the wording of the Glasgow Climate Pact from “phasing out” coal to “phasing down” coal, or when the rich nations refused to pay for a standalone fund to help pay for damage from climate change in poor countries.

The same problem exists within countries. Most experts agree that efficient decarbonization would require a global carbon price aligned with the Paris Agreement. Since a ton of carbon emitted anywhere does the same damage to the environment, it makes sense for everyone to face the same carbon price. This would avoid the problem of “carbon leakage,” which occurs when carbon emission reductions in one country lead to increased carbon emissions in another country. The same holds for businesses. BlackRock chief Larry Fink called carbon leakage between public and private companies “the biggest capital markets arbitrage of my lifetime.”

But implementing a global carbon price—say, through carbon taxes or emission rights trading—may be socially unsustainable. The poor and middle classes may find it difficult to afford the resulting prices of carbon-intensive goods and services. The resulting employment decline of carbon-intensive sectors may leave workers without jobs and lead to the implosion of local communities. Though the resulting disempowerment and loss of social cohesion do not appear in our GDP statistics, they are nevertheless important costs of climate action. The COP26 negotiations have given them insufficient explicit attention.

Furthermore, global carbon pricing may undermine our intrinsic motivation. After all, if carbon emissions lead to natural destruction and death, then emitting carbon should be deemed immoral and carbon emissions should be pronounced illegal. In that case, fines—rather than taxes or emission right sales—would be more appropriate.

Next, successful climate action calls for fair and inclusive decisionmaking (CDP 3), so that all nations and social groups are involved in the decisions that affect them. For this purpose, we need a rejuvenation of participative democracy with regard to climate action. This does not mean that all nations and social groups need to make their decisions in consensus. There is room for a wide variety of decisionmaking rules—from qualified majorities to coalitions of the willing—so long as the relevant groups are involved in the rule-making process. The massive demonstrations at COP26 bear vivid witness that such a fair and inclusive process has not been achieved.

In fact, the most prominent crticism of the COP26 process from civil groups is the system’s exclusion of those arguably most affected by the impending climate catastrophe. Those in positions of power (characteristically the elderly, white, advantaged males) have a vested interest in keeping it that way. This means that those most affected—typically young people from developing countries and marginalized cultures—are disempowered, even though they frequently have the insight, local knowledge and, most of all, the sense of urgency that comes from the prospect of facing the most immediate consequences. COP26 is far from the fair and inclusive decisionmaking process that is called for.

Having agreed on the decisionmaking rules, successful climate action requires measurement and reporting of clear outcomes, year after year, permitting the monitoring of agreed-on actions (CDP 4) and graduated rewards for helpful actions and graduated sanctions for unhelpful ones (CDP 5).

Beyond that, the climate action process requires fast and fair conflict resolution mechanisms (CDP 6), with the help of trusted impartial mediators. The authority to self-govern (CDP 7), via the principle of subsidiarity, should be recognized at the supranational level, in all relevant international forums and organizations.

Finally, the successful implementation of the above principles will require polycentric governance (CDP 8), whereby multiple layers of governing bodies—at the international, national, regional, and local levels—interact to make and enforce agreements coherently. Thereby national policies remain in line with international agreements, and similarly for the subnational levels.

Needless to say, fulfilling all these requirements is a tall order, requiring systemic change. We cannot expect this to happen overnight. But what the people of the world—and our unborn generations—have a right to expect from us is that we try.

It is now high time to rise to the challenge of transforming our socio-political-economic system, with the aim of recoupling economic and political prosperity with social and environmental prosperity. In broad outline, we know what is to be done. Our natural world is not giving us much more time to do it.

      

We have been involved in climate negotiations and policy for nearly two decades. In that time, we’ve never seen so many new scientific analyses or so much media coverage. Street protests in Glasgow and elsewhere include angry calls for greater ambition, amid an awakening of young voices calling for intergenerational climate justice and responsibility. The Glasgow summit of the last two weeks was hyped as the world’s last best hope to save the climate, but such a lofty goal was never going to be achieved at one event. There is much more work for leaders to do before next year’s climate summit in Egypt.

Every speech or article cites terrifying data. The planet is already 1.1°C warmer than in pre-industrial times, and the temperature is rising. According to the United Nations Environment Programme, there is a fifty-fifty chance that global warming will exceed 1.5°C in the next two decades. Even if countries fulfill their pledges under the Paris Agreement, global warming is estimated to reach 2.7°C at the end of the century. The remaining carbon budget to limit warming to 1.5°C is 400 gigatons of carbon dioxide (GtCO₂), but the current global emission rate is 40 GtCO₂ a year, implying that drastic emissions reductions must occur in next decade if we are to achieve the goal.

The World Bank estimates that if climate change is left unchecked, it will push 132 million people into poverty in the next decade and by 2050 displace more than 216 million people from their homes.

Experts repeat the same prescription time and again. We need to halve global carbon emissions by 2030 and reach net-zero emissions by 2050. But achieving these goals requires an effort unlike any that humanity has undertaken before. Meanwhile, poorer countries who have contributed the least to cumulative emissions have the most to lose from a changing climate. These issues were largely overlooked in the slow, consensus-based process at Glasgow, but will be crucial for the world to avoid the worst effects of climate change.

1. No more coal-fired power projects

Phasing out coal-fired power plants is crucial to decarbonizing the global economy. The world has better ways to produce electricity; a recent study showed that in the United States, 80% of existing coal-fired power plants are more expensive to run than to swap out for new renewables. Nonetheless, coal continues to be an important fuel for power generation, especially in Asia and in the developing world, where plants tend to be younger and thus cheaper to operate.

Recently announced commitments to stop funding coal-fired power plants are encouraging. This year the governments of China, South Korea, and Japan, the three largest funders of coal-fired power plants, announced that they would stop funding such plants outside their borders. The G-20 countries made the same commitment at their recent summit in Rome. However, more than 80% of coal-fired power projects worldwide are private investments unaffected by this announcement. At Glasgow, India insisted on a last-minute change in language to pledge to “phase down” instead of “phase out” coal, a discouraging result, but still the first time that fossil fuels have been explicitly mentioned in a global climate agreement.

2. Stop fossil fuel subsidies

According to the International Monetary Fund, governments provided $5.9 trillion in implicit and explicit subsidies to fossil fuels in 2020, equal to 6.8% of global GDP. Most of this number is the implicit subsidy of underpricing the externalities of fossil fuel use, such as local air pollution and greenhouse gas emissions. Still, fossil fuels received $472 billion in direct subsidy in 2020.

The staying power of subsidies and the lack of pricing for externalities (such as a carbon price) demonstrates the challenge of pricing fossil fuels to reflect their true costs. The resulting increase in energy prices would be challenging for low-income consumers, who spend a greater portion of their income on energy and related services, like transportation. And in countries where fossil fuel subsidies prop up domestic energy production, as in India’s coal industry, are governments prepared to deal with the job losses and economic upheaval that could result from a recalibration of energy prices? At COP26, a group of wealthy countries agreed to an $8.5 billion partnership to help South Africa phase out coal, an effort which may provide an example for other developing countries to follow.

3. Stop expanding oil production and help oil-dependent economies

Oil is the dominant fuel in the transportation sector and is particularly difficult to displace. However, the International Energy Agency recently stated that no new oil and gas fields need to be developed if the world is on a path to global net-zero emissions by 2050. Moving away from oil depends on replacing oil’s primary role in transportation. Switching to electric vehicles is great when it comes to passenger cars and trucks that are frequently refueled, but long-distance shipping or aviation will require new solutions.

Despite the urgency to limit greenhouse gas emissions, some oil-producing countries are expanding oil extraction, for example, in the Ecuadorian Amazon. In oil-dependent developing countries, such as Angola, Azerbaijan, Congo, South Sudan, Timor-Leste, and Venezuela, more than 60% of fiscal revenues come from oil exports. How will these countries find a substitute for this income in only 10 to 20 years? Can any aid package or financial program provide energy security, and socio-economic development? According to U.N. Secretary General Antonio Guterres, “[o]ver the past 25 years, the richest 10% of the global population has been responsible for more than half of all carbon emissions, and the poorest 50% were responsible for just 7% of emissions.” A fair green transition must help fossil fuel-dependent economies adapt to the change.

4. Make sure the post-pandemic recovery is climate-friendly

The world’s largest economies are spending trillions of dollars to help their economies recover from the COVID-19 pandemic. However, advanced economies are not investing enough in the much praised ecological energy transition and green recovery. According to the latest U.N. Environment Programme Emissions Gap Report, of the $16.7 trillion that has been spent globally to May 2021 on COVID-19 recovery packages, only $438 billion is likely to reduce greenhouse gas emissions.

The Intergovernmental Panel on Climate Change estimates that at least $1.6 trillion per year are needed through 2050 to stabilize the climate at 1.5°C, but current investment levels are only 20% of that figure. The fiscal stimulus provides an opportunity for investment in a greener future, but thus far that investment is not occurring.

5. Speed up the deployment of renewable energy

Global energy consumption will increase 50% by mid-century, mostly to meet the needs of developing nations. The world needs not just low-carbon energy, but more energy overall. Renewable energy solutions are critical, but they are not an easy fix. We are told that renewable energy projects will create jobs, decarbonize economies, and protect the environment. In truth, it is difficult to phase out fossil fuels and satisfy growing energy demand at the same time.

The first step to a decarbonized economy is to decarbonize the electricity sector and electrify as many energy uses as possible. The costs of renewable electricity generation have plummeted in recent years, making it more affordable in the developing world where demand is growing. Nevertheless, electricity storage or other forms of generation are needed for when wind and solar generation are not available, and not all forms of energy use can be easily electrified. Wealthy countries must develop, pilot, and commercialize technologies to deal with these situations and share these technologies with the developing world.

6. Fix the debt crisis and fiscal stress in the Global South

The profound economic consequences of the COVID-19 pandemic have left developing countries with looming debt and less room to maneuver in their policies and finances. External debt of developing countries reached $10.6 trillion in 2020, the highest level on record and nearly a third of their GDP.

The pandemic made clear that curving climate change requires solutions that involve the whole of society and a realistic assessment of how far and fast we can go. It is not enough for wealthy countries to commit to aggressive emissions reductions and pledge to help developing countries with low carbon technology and capacity building. Nor is it enough to combine climate finance with debt relief and liquidity to ease the fiscal pressure for developing economies. Nor to respond to the needs of the most vulnerable by connecting poverty eradication, resilience building, and climate mitigation. Instead, all these actions must be taken at the same time, to achieve climate goals and the 2030 U.N. Agenda for Sustainable Development.

Wealthy countries must fulfill their commitment to mobilize at least $100 billion annually to support developing countries transition to green, sustainable, and resilient economies. This funding should be complemented with knowledge and technology transfer to boost renewable energy production capacity in the global south and devote 50% to adaptation and resilience building, especially for least developed countries and small island developing states.

What Happens Next

COP26 in Glasgow offered world leaders a unique chance to address the sticking points impeding progress, not only reducing greenhouse gas emissions, but also addressing the economic inequalities and fiscal stress that limit developing countries’ capacity to move towards post-carbon economies. Instead, the closing of COP26 included apologetic words from the COP president, disappointment from the countries that are paying the highest price for climate impacts, and anger from activists and civil society. The Glasgow climate pact must be boosted by greater action from the larger emitters.

Egypt, the host of COP27 next year, has homework to do. Multilateral responses and solutions are the only way forward. Achieving the goal to “keep 1.5 alive” can only happen through solidarity, shared but differentiated responsibilities, and the recognition that a healthy, stable earth system and climate are our most valuable assets. Even if the G-20 and G-7 are able to lead ambitious efforts to achieve the Paris Agreement goals, the UN and the Climate Convention Conference of the Parties must also deliver universal, balanced, and actionable results. Stabilizing the climate is about protecting human lives and livelihoods now. The future starts today.

      

As the climate change conference concluded last week in Glasgow, one thing set it apart from all the other conferences before: The world’s bankers were there in force. In recent years, the world’s leading financial centers, and their regulators, have been talking a lot about climate change.

For all the attention to climate in the world of capital, investment dollars still too often aren’t moving in the right ways. In particular, the world of finance is flying blind on how the physical risks of climate change will affect the value of assets. When that changes there will be surprising, possibly massive, shifts in capital.

When bankers talk about climate change, they nearly always focus on the capital-intensive process of cutting emissions. That’s critically important, of course, and there’s some evidence that as attention to climate change rises, the share price of highly polluting assets slides. Markets are beginning to signal a transition to low pollution futures.

We must continue to urgently press ahead with deep cuts in emissions, but this alone misses the looming harms posed by climate change. The world is in for a lot of warming, regardless of the final communiqué from Glasgow. For capital, that means repricing the risks from all the physical impacts such as wildfires, floods, and droughts that will follow.

What Bankers Need to Do

Bankers must team up with policymakers to fix this problem. One area of reforms, already advancing and broadly supported, is robust mandatory disclosure of physical risk exposure. Regulators and asset managers must do more, including stress testing against extreme climate impacts. Central bankers, who are already doing some stress tests, must pay closer attention to how physical climate impacts could destabilize markets. Too many financial assessments either ignore physical risks altogether, or don’t explore the so-called “fat tails” of possible severe climate impacts — events that have low (but rising) probability but could be catastrophic. The science suggests the tails are getting fatter.

Another is a hard look at the ways that government policy actually invites firms and households to do dangerous things, like living in floodplains knowing that government will pay the cost when disaster strikes. Here, too, progress is being made — including with the new U.S. infrastructure spending program and big efforts in Europe to make societies more resilient in the face of climate impacts. Lastly, regulators and policymakers should identify pathways to work together in response. Mechanisms like expert and federal agency working group convenings are well-established avenues to share and incorporate best practices across governments and should be urgently employed.

Grasping the Scale of Climate Risk

It is easy to misunderstand just how quickly those dangers are rising. Already the world has warmed nearly 1.3 degrees Celsius above the pre-industrial levels. A new survey of the world’s leading climate researchers finds that half think the world is on track to warm by at least three degrees. Shockingly, that’s progress. Only a decade ago the worst case scenarios foretold much higher emissions that might cause twice that warming.

In the run-up to Glasgow, nearly all the world’s governments made new pledges to cut pollution that might shave warming a bit more. Unless there is widespread adherence to promises that are still not yet concrete policies, the Paris Agreement goal of “well below” 2 degrees is unlikely to be met. Glasgow delegates still largely embrace the aim of 1.5 degrees, even though few climate experts think that goal is in reach.

Ambition is important, but asset managers must be somber in evaluation and prepare for worse case scenarios. Yet only two years ago, a large survey of asset managers suggests they are doing the opposite. About 60% of the bankers say warming will stop at less than 2 degrees, despite managing portfolios consistent with 3 degrees.

How Climate Change Will Affect the Global Financial System

Over the last several years, we have led two teams of scholars, at the Brookings Institution and Environmental Defense Fund (EDF), who have looked closely and quantitatively at the ways climate change could affect the health and stability of financial systems across the globe. What we found is that the markets know a lot about the transition risks that will arise as the world shifts to pollution-free technologies. That transition is now underway, although efforts must dramatically accelerate.

Brookings research has concluded that where capital is flying blind, for the most part, is on how the physical risks of climate change, such as floods and heatwaves, will threaten infrastructures and other assets — whole countries, in some cases. These dangers are underassessed: Climate-related financial disclosures are about half as likely to look at the physical impacts of climate change compared with transition risks.

This does not mean that climate risks are unforeseeable. EDF research, conducted jointly with Columbia Law School’s Sabin Center, has identified specific, concrete steps that industry should undertake to gird for the physical harms created by climate change. Indeed, a whole array of new companies — along with existing companies that have new analytical techniques — is emerging to provide the information about risk that is needed. And when you look closely at places where those risks play out — for example, the extreme weather that shut the Texas grid last February, or the U.S. municipal debt markets that pay for much of the country’s infrastructure — the financiers are closed off from the information necessary to understand how climate will affect assets.

This is the challenge asset owners, and the trillions of investment dollars they manage, face. Financial systems must account for clear-eyed assessments of climate impacts. That means taking a harder look at the mounting physical risks posed by climate change.

Finally, the world must do a better job helping the communities that capital is leaving behind. One of the sticking points in Glasgow was how to deliver $100 billion dollars annually in new climate aid to developing countries — money long overdue. That’s important, as is more attention to spending that money well. But looking at the money that’s already flowing reveals the bigger problem: only about one-quarter is dedicated to the reality that the poorest societies are already facing big climate changes.

      

Twelve winters ago, as a Wall Street Journal reporter, I spent two dark weeks in Copenhagen covering a round of global-warming negotiations billed as existentially important to the planet. The 2009 Copenhagen climate talks sought to lock down commitments by industrialized countries to bankroll a clean-energy transformation in developing ones. The summit ended as a dud — more chest-thumping by partisans on all sides of the decarbonization debate than an attempt to build a coalition for an environmental transformation.

Since then, however, technology has advanced in ways Copenhagen climate campaigners only dreamed of. For any number of green machines — solar panels, wind turbines, batteries — costs have plummeted and installations have soared. In many parts of the world, studies calculate, installing renewable energy now is cheaper than building coal-fired plants. Renewable energy is ascendant.

There’s just one problem: So, still, are carbon emissions.

Through the end of this week, the movers and shakers of the international economy are gathered at another climate conference, this time in Glasgow. The ambitions have grandly grown; today, governments and corporations are promising, somehow, to slash their emissions to “net zero” by mid-century. Yet the focus in Glasgow remains largely the same as it was in Copenhagen: getting the biggest economies to invest more in clean energy in the countries whose emissions are growing the fastest.

But the history of the past dozen years shows that laboratory progress and overseas investment aren’t enough decarbonize growth in the nations that matter most for the future of the climate — countries such as Indonesia, Malaysia, and Vietnam, and others beyond Southeast Asia, including in Latin America and Africa. Just as important as gear and cash, and harder to deliver, are workable strategies to rewire these countries’ political economies.

Despite the drop in the cost of cleaner energy, these emerging and developing economies, like the world’s leading economic powers, have failed to meaningfully change their resource-consumption patterns. That’s largely because they have potent sectors and populous regions that sensibly see their interests as yoked to continued and unconstrained carbon output. Offered financing for solar panels and wind turbines, they don’t turn them down. But absent viable futures for their investors and citizens whose livelihoods have long relied on burning fossil fuel, they won’t meaningfully change. Something more foundational has to shift.

To illuminate both that challenge and a way around it, several students at Stanford University, where I teach, and I have spent months harnessing new data to analyze who is calling the carbon-relevant shots in the developing world, and how they’re doing it. Our focus has been infrastructure: the big projects, such as power plants, that will lock in emerging-economy emission trajectories for decades and will thus determine the future of global climate change.

Our findings, published last month in a research article in iScience and explained in a guest essay yesterday in the New York Times, provide new insights into how money is changing the climate. They lay the groundwork for a next stage of inquiry in what we call the Stanford Climate of Infrastructure Project: clarifying why these actors are investing the way they are and how they might be induced to meaningfully change.

Our examination harnesses two sets of data that the World Bank has collected and we have helped bolster. The data includes, for infrastructure projects throughout the developing world, details about which institutions are providing finance, how much they’re providing, and through what financing structures they’re providing it. One of the World Bank data sets has been publicly available for years. The bank provided the other to our Stanford team for analysis and expects to publicly release it by next summer.

Together, these two data sets include approximately 80% of infrastructure projects underway in emerging and developing economies, the World Bank estimates. In other words, it’s a comprehensive look.

As a first pass at the data, we assessed one type of infrastructure: power plants, both because they so significantly dictate future-emission trajectories and because accepted methodologies exist to project, based on this sort of data, long-term power-plant emissions.

Plugging those methodologies into the data led us to some intriguing findings. Some support, with new granularity, long-held assumptions about the carbon pathway of developing-world infrastructure. Others buck those assumptions. Three are particularly noteworthy.

One clarifies the enormity of the climate challenge. We estimate, based on our data, that 52% of the new electricity generation “executed” in emerging economies from 2018 through 2020 is too carbon-intensive to comport with the goal of keeping the average global temperature within 1.5 degrees Celsius of pre-industrial levels. “Executed” is World Bank jargon for having received sufficient financing to proceed. Those three years are the ones the World Bank data allows us to track, but they’re particularly illuminating. They constitute the carbon-intensive status quo — one that many of the governments and corporations now promising to slash their emissions over the next quarter-century have, at least until last year, been quite happy to finance.

Another finding helps clarify why the new infrastructure is so carbon-intensive. Scholarship increasingly has sought to understand the carbon implications of financing for infrastructure in emerging and developing economies; much has focused on coal-fired power plants, because coal is the most carbon-intensive of fossil fuels. But our analysis suggests the focus on coal is increasingly outdated. As institutions finance fewer power plants that run on coal, they are financing ever more that burn natural gas.

We project that, among power plants that were executed in emerging and developing economies from 2018 through 2020 and are in our database, those fired by natural gas will emit 80% as much carbon dioxide over their lives as will those that burn coal. And essentially none of those gas-fired plants are expected, at least anytime soon, to capture and dispose of their carbon emissions. The prevailing tendency to focus on coal as the signal bogeyman in infrastructure development misses the increasingly relevant issue of gas.

A third finding helps to explain the other two — and suggests a way to meaningfully decarbonize infrastructure investment in the developing world by accelerating a transformation of political economies. It rests on the increasing agency of emerging economies themselves in determining the carbon intensity of infrastructure projects built within their borders.

Just as much of the past analysis of the climate impacts of developing-world infrastructure has focused on coal, it has focused on financing from investors overseas — from places, such as China, Japan, South Korea, and the United States, that have extensive domestic industries with interests in selling carbon-intensive equipment and services abroad. But our analysis finds that the emerging economies in which the bulk of global infrastructure is being developed have growing agency over the carbon intensity of that activity.

We find that 44% of electric-generating capacity executed from 2018 through 2020 in emerging economies came not from foreign sources but from domestic ones. Indeed, domestic financiers bankrolled as much new coal and natural gas capacity as foreign financiers did. We also find that, though a given overseas financier tends to fund infrastructure projects of widely differing carbon intensities in different countries, a host country tends to use overseas money for projects of a similar carbon profile.

Both these conclusions suggest that host countries have more power than has been previously recognized to call the shots that will shape climate change.

In one sense, this finding is disillusioning; it indicates that local investors thus far have been no more inclined to go green in a given country than faraway investors have been.

In another sense, though, it offers reason for hope. It shows that domestic institutions could prove a powerful force for decarbonizing infrastructure investment in the nations where the biggest portfolios of those projects are being developed.

Emboldening those domestic institutions to assume that role would require, among other things, policies to cushion the blow to industries and people long reliant on high-carbon endeavors. Effecting this sort of structural change across myriad political economies is a different type of challenge — in some respects, a harder one — than innovating a more-efficient solar panel or persuading an overseas financing institution to send a fatter clean-energy check. But trying to confront climate change without it hasn’t worked.

Since the 2009 Copenhagen climate conference, the cost of renewable energy has cratered, and investment in it has soared. Yet carbon emissions still are on the rise. Realizing today’s promises of net-zero emissions by mid-century will require more than cleaner technology and bigger checks. It will require a more sophisticated capitalism. Molding that new political economy will be messy. And the Glasgow conference doesn’t appear likely to do much about that. As the focus in the climate fight shifts back from Scotland to emerging and developing economies around the globe, policymakers and investors need to get their hands dirty.

      

The 26th U.N. Climate Change Conference (COP26) is scheduled to take place in Glasgow from October 31 to November 12, under the co-presidency of the United Kingdom and Italy. Brookings scholars from around the institution weigh in on how what does (or does not) happen at the conference will impact their area of expertise. 

Climate change finance at the macro level

AMAR BHATTACHARYA
Senior Fellow, Center for Sustainable Development

Earlier this year, Special Presidential Envoy for Climate John Kerry described COP26 as “our last, best, chance on climate.”  Since then, evidence has mounted on the costs of climate change and the urgency of action. Most compellingly, the United Nations’ 2021 Intergovernmental Panel on Climate Change report amasses the scientific evidence on the rapid acceleration of climate change, dramatically narrowing the window for limiting global warming from 2°C to 1.5°C and underscoring the imperative to reach net zero emissions by 2050.

The U.K. COP26 presidency aims to respond to this urgency through four priorities: secure global net zero by mid-century and keep 1.5°C within reach; adapt to protect communities and natural habitats; mobilize finance; and work together to deliver. In each of these four areas there has been a substantial ramp up in ambition.  But this progress still falls short of what is needed.

One hundred and thirty countries have committed to net zero, and several — including the G-7 — have set much more ambitious targets for emission reductions by 2030. But many major emitters have not, and the aggregate commitment will fall far short. Many donors have stepped up their climate finance commitments, and a new delivery plan indicates that the $100 billion of climate finance per annum by 2020 commitment will be met no later than 2023. But we now know that around $1 trillion per annum will be needed in developing countries other than China, to accelerate climate investments at the pace needed.

All efforts must be made at COP26 to press for ambitious, concrete deliverables. Inevitably though, much more will need to be done. It will be a success, not a failure, for COP26 to clearly recognize the shortfalls and set a path that can allow us not just to deliver on climate goals but also realize the growth and development opportunities that lie in a low-carbon future.

China’s economic calculations on climate

DAVID DOLLAR (@davidrdollar)
Senior Fellow, John L. Thornton China Center

China has put itself in a tough situation heading into the Glasgow conference. It has created problems in its own power sector for reasons not directly related to climate change. It stopped importing coal from Australia because that country called for an independent international effort to find the origins of COVID-19. Strong rebound in China’s economy in the first half of the year then led to a surge in the price of coal. But prices for electricity were kept at arbitrary low levels, so that it was not economically efficient to use coal to generate power. The result has been the worst power shortages in 20 years, and still high prices of coal as China heads into the winter season.

Meanwhile, the world is looking to China — by far the largest emitter of greenhouse gases — to lay out bold new measures and targets for carbon reduction. But it is difficult for the government to make concrete commitments as long as its immediate energy crisis continues. With the right policies, Beijing could address both short and long-term issues at once. Most important would be a higher price for power and energy more generally, which would discourage wasteful use and solve the immediate power shortage. China has ambitious plans to increase reliance on solar, wind, hydro, and nuclear to generate power, and to transition its vehicle fleet to electric vehicles. But its plans still rely on coal for a long time. More commitment to energy efficiency and use of gas as a transition fuel would significantly reduce its near-term carbon footprint.

Biodiversity

VANDA FELBAB-BROWN (@VFelbabBrown)
Senior Fellow, Center for Security, Strategy, and Technology and Director, Initiative on Nonstate Armed Actors

Coming on the heels of the first part of COP15 to the Convention on Biodiversity, COP26 is an opportunity not only to implement meaningful climate commitments, but also to integrate them with biodiversity conservation. Climate change is one — but only one — manmade cause of critical biodiversity loss. Our current rate of biodiversity loss is the highest since the extinction of dinosaurs, and about one thousand times the historic average. Climate change compounds the extinction of species, yet biodiversity loss also hampers the planet’s natural climate control systems. In other words, the greater the biodiversity loss, the more the planet will heat up. This is merely one example of how many of the planet’s self-sustaining ecological systems are undermined by biodiversity loss.

Yet biodiversity protection has been the poor relation of climate mitigation efforts in international diplomacy. Worse yet, many proposed and even implemented climate mitigation measures ignore biodiversity protection, such as when they predominantly focus on urban areas and do not focus on preserving natural ecosystems like forests.

Some presumed climate mitigation measures even directly contradict biodiversity conservation. Take, for example, subsidized programs for planting trees. If such programs do not also provide funding for the conservation of mature and diverse forests and their biodiversity — and if such payments for conserving ecosystems are not significantly higher than the subsidies for cultivating new trees — local communities or industries frequently tend to fell existing forests (thus undermining or destroying the entire ecosystem) to qualify for subsidies for monocrop plantations. The resulting carbon capture is smaller, and biodiversity is lost.

Security around the Arctic

JEREMY GREENWOOD
Federal Executive Fellow, Center for Security, Strategy, and Technology

It’s been well-documented that the Arctic is the bellwether for how global warming is impacting our planet. So, it’s no surprise that leaders gathering for the 26th U.N. Climate Change Conference in Glasgow next week have been laser-focused on the Arctic.

Russia is often accused of doubling down on its future in fossil fuel development, much of it from its melting northern coastline that is rich in offshore oil and gas deposits. That same melting ice has opened up a transport corridor that Moscow has unilaterally formed as a maritime “toll road” — known as the “Northern Sea Route” — which has the potential to decrease sailing times from Europe to Asia by 40% compared to traditional Suez Canal routes. Moscow seems to have bet part of its future on these two cash cows, despite the worldwide focus on limiting carbon emissions from fossil fuels and preventing the very ice melt that is opening up this speedy shipping route.

With Russian President Vladimir Putin’s announcement that he will not attend in person, most have consigned the Russian delegation to a spoiler role, for which there is much evidence to support. But it might behoove Moscow to think a few steps ahead, as the melting Arctic may bring more chaos than treasure in the long run. Rampant climate change is likely to bring severe weather to the very offshore rigs that float in treacherous waters, and international law may eventually strip them of the thin veil by which they portend to control the Northern Sea Route. A recent major oil spill in Norilsk demonstrated the risks posed by melting permafrost to even land-based industrial activities. Meanwhile, Article 234 of the U.N. Convention on the Law of the Sea only allows coastal states to adopt regulatory measures for passing ships “where…the presence of ice covering such areas for most of the year create obstructions or exceptional hazards to navigation.” It’s only a matter of time until Russia’s northern coastline is not covered by ice most of the year, a planetary climate warning that terrifies most of the COP26 delegates and, if they had a longer vision beyond the increased shipping traffic, should also scare Russia.

The energy transition

SAMANTHA GROSS (@samanthaenergy)
Director and Fellow, Energy Security and Climate Initiative

COP26 is facing the highest expectations of any climate meeting since Paris in 2015. This marks the five-year point in the Paris Agreement, when countries are expected to renew and deepen their commitment to fighting climate change.

The United States and Europe, along with a varied slate of other countries that together account for most of the world’s emissions, have pledged to achieve net zero greenhouse gas emissions by mid-century. Even China and Saudi Arabia are pledging net zero emissions by 2060. But the burning question in my mind going into Glasgow is whether countries are on track to achieve those long-term commitments.

For now, the answer is no. The formal goals at Glasgow are for the near term, through 2030. If countries achieve these goals (Nationally Determined Contributions, in the lingo of the Paris Agreement), emissions in 2030 will be 16% greater than they were in 2010. To be on a path that limits warming to 1.5°C, the level scientist say is necessary to avoid the worst impacts of climate change, we need a 45% reduction in emissions instead.

My hopes for the COP are twofold. First, I hope to see a spirit of cooperation to encourage further action to reduce emissions. The real action here won’t happen at Glasgow, but afterward, when leaders go back to their capitals to establish policy to actually implement their emissions goals. Sharing technology and policy successes among countries could help. Second, I hope to see a renewed commitment from wealthy countries to fund the low-carbon transition in the developing world, along with funding for resilience projects to help these countries adapt to our changing world. Using public funding as leverage to encourage more private investment will be particularly important to achieve a just transition.

Maritime security in Asia

SHUXIAN LUO (@joy_shuxian_luo)
Post-Doctoral Research Fellow, John L. Thornton China Center

There is a maritime security dimension as to why it is an imperative for leaders gathering in Glasgow to act collaboratively to tackle climate change. Global warming and the resulting rise of sea level is likely to affect Asia’s maritime security landscape in at least three ways.

First, available fish stock may further decline as ocean warming can cause fish populations to be less productive and/or migrate to other regions, aggravating the problem of fish depletion, intensifying fishery-related disputes and conflict, and negatively impacting millions of marine workers in coastal states who rely on fishing for their livelihood.

Second, it can alter the nature of a land feature in a way that raises questions about the maritime zones that the feature is entitled to. For example, a “high-tide elevation” is entitled to the surrounding 12 nautical miles as territorial sea (and an exclusive economic zone or continental shelf as well if it is capable of sustaining human habitation or economic life). But as the sea level rises, the feature may become submerged at high tide and remain above water only at low tide, making it “a low-tide elevation” which is not entitled to a territorial sea if it is located outside an existing territorial sea.

Third, and related to the second point, states might be tempted to protect their land features from being submerged by engaging in more land reclamation activities, which would likely exacerbate maritime environmental degradation and further complicate Asia’s existing maritime territorial disputes.

U.S. economic and financial implications of climate policy

SANJAY PATNAIK (@sanjay_patnaik)
Fellow, Economic Studies and Director, Center on Regulation and Markets

One of the most important aspects of climate change is that it is fundamentally an economic issue and a problem of risk management. Therefore, climate change itself, and any climate policies (and the lack thereof) will have significant implications for our economic and financial system. As the rest of the world and especially the EU move quickly to facilitate a transition towards a low-carbon economy, it will become even more important for the United States to follow the same path. Policy measures like a price on carbon, mandatory climate risk disclosures for publicly traded companies, and climate stress testing in the financial system are being implemented in countries around the world. These policies are critical to prepare countries for a low-carbon future, and are also significantly shaping global markets.

Without implementing a policy plan at home that can credibly lead to the reductions in greenhouse gas emissions needed to reach the Biden’s administration’s stated goals by 2030, the U.S. will have a difficult standing in Glasgow. Importantly, without credible climate policies, U.S. firms’ ability to remain competitive when operating in global markets will be impeded and the potential for the U.S. to become a leader in new, low-carbon technologies and industries will be reduced. It is therefore more critical than ever that the Biden administration and Congress implement a wide range of carrot and stick policies that address climate change and bring us in line with other developed nations. This will also strengthen our negotiating position at COP26.

Climate as a threat multiplier in the Middle East

NATAN SACHS (@natansachs)
Director and Fellow, Center for Middle East Policy

COP26 is an instance of the gaping disconnect between Middle Eastern stakes in climate change and the marginal role Middle Eastern countries assume in combating it and adapting to it. The region is already one of the worst affected by climate change, and the potential for future damage is huge. The Nile Delta for example, with dozens of millions of people, is at direct risk of rising sea levels, with the city of Alexandria facing potential inundation. Water insecurity throughout the region could worsen dramatically, necessitating costly and energy-intensive desalination, and fueling political crises in and between states. Millions could find themselves living in areas where working outside during the day becomes impossible due to heat. And many millions will likely find themselves seeking refuge in new places, exacerbating the already-acute refugee crises in and around the Middle East.

The challenges are truly immense. Yet in many countries, the political structures are incapable or unwilling to meet them, busying themselves instead with geopolitical, ideological, and especially domestic rivalries. There are a few exceptions where capacity or resources allow for efforts to combat climate change on a serious scale, including the Gulf States and Israel. But the wealthiest countries in the Gulf, who could finance regional efforts, are also the major producers of fossil fuels, creating a conflict of interest on mitigation. So far, they’ve also exhibited vastly insufficient efforts on adaptation, as they prepare for a potential change in energy markets away from the oil and gas that provide their wealth and sustain their political model. As a result, most Middle East countries will not feature prominently at COP26 — a telling sign of historic political failure.

U.S. as a global leader on climate

TODD STERN (@tsterndc)
Nonresident Senior Fellow, Energy Security and Climate Initiative

The central measure of success for COP26 in Glasgow will be whether countries have ramped up their Paris emission targets enough in 2021 to “keep 1.5 alive.” This COP coincides with the first of the five-year cycles for countries to ratchet up their targets. And it is all the more important because the broad consensus of climate opinion has shifted since Paris from embracing a below 2°C temperature goal to embracing a limit on temperature increase of 1.5°C. This is an enormously challenging target, thought to require net zero global emissions by 2050 and a roughly 50% global emissions cut within this decade.

There has been some striking progress this year. The U.S., EU, and U.K., among a number of others, have announced 2030 emission reductions at the right scale. But other big players have not cranked up their Paris targets consistent with a 1.5°C effort, and the biggest and most important is China, responsible for 27% of global CO₂ emissions — more than all developed countries put together. A strong move by China would also encourage other big emitters to follow their lead. However, if, as is likely, China does not make a serious move in Glasgow, it will be vital that the COP outcome send a clear message that 1.5 must still be kept alive and that countries who have not yet met their climate responsibility will be expected to do so in 2022. Failing to act in Glasgow should get no one off the hook.

India, net-zero, and equity

RAHUL TONGIA (@DrTongia)
Nonresident Senior Fellow, Energy Security and Climate Initiative

There is immense pressure on India to announce a carbon net-zero pledge at COP26. With emissions under half the world average, it would be rational for Delhi to avoid doing so just yet. India could announce a later date than China, which pledged net-zero by 2060. Or it could make sectoral plans, such as the aim to more than quadruple renewables in 10 years, or even to peak use of coal in the power sector. However, some plans could be conditional on global support, especially finance.

India, with others, will argue that we cannot entirely ignore equity issues. This is likely to come up in contentious issues like Article 6, which will set the rules for markets, transfers, and offsets. A number of countries are banding together for negotiations. The Like Minded Developing Countries (LMDCs), including China, India, and a few dozen others, have the clout of representing some half the world’s population, but it’s also questionable to speak of Saudi Arabia or China, who are not “low-emitters,” in the same vein as Mali or even India.

Once again, India risks being pegged, unfairly, as possible spoilsport. Delhi will have to walk a tightrope to show its actions, with or without a net-zero pledge, are globally leading but also don’t cap inevitable growth in emissions in the coming years. More meaningful than a grand ambition decades out is what India (or anyone else) does in the short and medium term. Watch for that.

Innovation and decarbonization

DAVID G. VICTOR
Nonresident Senior Fellow, Energy Security and Climate Initiative

Diplomacy will be in the spotlight at COP26 — along with a lot of posturing about which countries are making big enough efforts to cut emissions. But diplomacy, for the most part, is overrated. At best, it sets a general direction for cutting emissions. When the diplomats reach consensus, as they usually do, they make legitimate the efforts to push governments and firms to make deeper cuts in emissions.

But what really matters is innovation that disrupts old industries. As new technologies get cheaper they also rewrite the politics of decarbonization — making it easier to build and hold together the political coalitions for supporting policies.

COP26, while formally a diplomatic event, will also be a watering hole for the firms and governments that are doing the most to back innovation. Leaders from industries on the front lines — such as oil and gas, electricity, and transportation — will show up, keen to show serious plans that take decarbonization seriously. The bankers will be there too, for capital is already shifting into decarbonization.

A technological perspective helps explain why most people overestimate how quickly the world economy will decarbonize in the short term — disruptive change is slow to take hold, and the incumbents don’t leave quietly — but underestimate just how transformative all the changes will be over the long haul. And when you look at entry of new low-carbon technologies you see quite a lot of hope. This hope comes from working on decarbonization sector by sector, not pretending that a global diplomatic committee will do the job.

      

What a difference a decade makes. Ten years ago, during the runup to what became the Paris Agreement, it was cooperation between the United States and China that largely set the direction for global efforts on climate change. The two countries funded joint research projects and exchanged best practices with regulators and academics. Most visibly, in 2014, just a year before the Paris Agreement was adopted, U.S. President Barack Obama and Chinese President Xi Jinping held a summit in Beijing at which the two nations pledged to each other the actions they would take. That pledging approach is a centerpiece of the Paris Agreement — today, nearly every country on the planet has a pledge, and most have updated them to reflect new efforts.

Today that cooperation is gone. The only high profile actions between the world’s two most powerful nations seem to involve acrimony and disagreement, like the angry confrontations in March when U.S. and Chinese officials met in Alaska to take stock of their relationship or the repeated efforts by U.S. officials, including Special Presidential Envoy for Climate John Kerry, to get China to commit to more climate action. There are hints that quiet diplomacy is making a bit more headway — it usually does, especially when diplomats need to signal to interest groups at home that they are being tough — but the toxicity between the nations is palpable. For the U.S., the road to climate cooperation no longer runs through Beijing. And it doesn’t help that the U.S. itself is having a hard time putting together its own credible plan for emissions control.

All of this is terrible news for serious action on climate change, but what can be done? In this month’s edition of Issues in Science and Technology, the magazine of the U.S. National Academy of Sciences, I offer some answers in an essay co-written with Valerie J. Karplus and M. Granger Morgan. Our interest is in finding places where the two powerhouses in science and technology can cooperate — a big agenda that includes much of what is most important for progress on climate change.

Although less visible than cooperation on topics like arms control and trade agreements, science and technology is the centerpiece to making progress on topics like climate change. That’s because deep cuts in emissions are impractical without a lot of new technology. And while the whole world benefits from that technology, progress in just a handful of markets defines the global technological frontier. With only a few places that matter most, cooperation in principle should be much easier when compared with efforts to forge global agreements that require consensus from nearly every nation. (The 2021 United Nations Climate Change Conference or COP26 taking place in Glasgow over the next two weeks will put a spotlight on those global efforts; even for agreements with little content, progress will be slow). And for both China and the U.S., the benefits from successful science and technology cooperation are palpable and huge. These benefits are important incentives because in these times any effort to cooperate — no matter how worthy — will face political headwinds.

To assess the potential for cooperation on various issues in science and technology, Valerie, Granger and I outlined a framework that works in two dimensions, as shown below. Along one dimension are the joint gains from cooperation. Places where both nations have comparable skills and operate at the frontier offer the greatest prospects. Along the other dimension are the political risks. Many areas where cooperative gains could be huge — whether joint investigation on the origins of COVID-19 or technologies known as “geoengineering” that might let us manipulate the climate directly if warming gets out of control — are politically toxic not just bilaterally but also in how they create suspicions for important U.S. allies.

The trick is to pick and choose — and the more the U.S.-China relationship deteriorates overall, the more choosy the architects of cooperative arrangements must become. The good news is that there are many topics in the low-political risk, high-social gains sweet spot that could advance the climate for cooperation. One is the testing and deployment of carbon capture and storage (CCS) technologies that would make it possible to keep using some fossil fuels while capturing and safely disposing of the carbon pollution that all fossil fuels make when burned. There is a long record of failure with CCS — not because the idea is technologically flawed but because we lack much real world experience with large scale CCS projects that can test a variety of approaches. Joint demonstrations and learning could help commercialize and scale CCS — and other new technologies — faster than either country would on its own. As the U.S. struggles to cut its emissions, it would benefit directly from a more viable CCS industry — along with other low carbon industries such as those that will emerge with demonstration of the next generation of nuclear reactors.

New technologies are important because they open new industrial and business opportunities for cutting emissions. When solar panels got cheap, for example, more countries adopted them. Interest groups that previously saw disruption and cost in the new industry were refocused on the gains from bigger market shares for solar. Politics that had been nasty, brutish, and gridlocked opened up. In industry after industry the same story repeats — technology changes politics, and cooperation changes technology faster.

A strategic approach to science and technology cooperation won’t stop climate warming by itself, but it is a necessary condition. And success offers something important for the two countries beyond making progress on joint problems like climate change: a way to cooperate on practical topics when broader cooperation is impractical. During the Cold War, the U.S. set up a similar technical cooperative approach with the Soviet Union — creating an invaluable community of experts on both sides of the Iron Curtain that made it possible to keep talking even when top government leaders couldn’t. I went to graduate school just as the Cold War ended and one of my most formative experiences was working alongside Soviet scientists at one of those curtain-crossing institutions, the International Institute for Applied Systems Analysis in Vienna.

In an earlier era, before the unraveling of the last decade, U.S. and Chinese scientists could cooperate because it was easy. Ideas abounded. Partnerships flourished not only because there were gains but also because many of the key scientists knew each other — many of the key Chinese academics were, in fact, educated in the United States.

Today, cooperation is perhaps even more important but harder. (That so much Chinese education is leaving the U.S., and that both sides are vilifying each other, are bad news for our long-term cooperative prospects). The U.S. and China have both promised the world they’ll do something serious about climate change. Both now face the world’s ire for not doing enough. Strategic cooperation around the topics where cooperation is possible and useful is a way forward.

While it is unfashionable to be a globalist these days, when it comes to the technology revolutions needed for deep decarbonization, a large dose of globalism is essential. The great visions for new technologies to address climate change are based on the opportunity for technological advance through collaboration and economic improvement through scaling to global markets. That’s how solar got cheap and global. And that’s the same story now playing out in many other technologies, from electric vehicles to electrolyzers that make hydrogen, possibly one of the fuels of a clean energy future. It all starts with globalism in technology and with the two biggest players — the U.S. and China.

      

The recent Intergovernmental Panel on Climate Change (IPCC) report highlighted that we need to end carbon emissions by 2050 to keep global average temperature rise below 1.5°C. Even before the United Nations released this report, a number of countries announced “net zero” pledges. These pledges are powerful, visible, simple… and utterly insufficient. At best, we still over-emit. At worst, these discriminate against poor, low-emitting countries, and could even push greenwashing — creating the false impression that countries’ policies are more environmentally friendly than they actually are.

The problem with net zero pledges

There are several major problems with these so-termed “net zero” or “carbon neutrality” pledges that we need to fix.

First, what does “net” mean? Will carbon emissions really be zero, or are they “net” through not just futuristic offsets (which are expensive or unproven at scale) but offsets that are unfair or, even worse, based on accounting tricks?

Offsets can span a wide range of possibilities. Some are based on pulling out carbon through land-use changes (afforestation, or establishing forest on previously unforested land, and more), but others aim to use more exotic and expensive technologies including direct air capture. The act of simply planting a tree — which we should be doing anyway — takes years or decades to bear fruit (no pun intended), not to mention a lot of land. Today’s proven carbon capture technology at the point of emission has a high imputed carbon price, except where there is a specialized user of the CO₂ such as for enhanced oil recovery.

Other offsets rely on avoiding future emissions. There are carbon credit instruments where a high emitter takes credit for helping someone else avoid a future emission. If only my dieting could also involve other people eating less! While these techniques reduce the growth of carbon emissions, many of them are accounting tricks because they still don’t get us toward global zero. Offset markets are favored by corporations announcing net zero plans, but for national accounting they remain contentious, and were a sticking point at the 2018 United Nations Climate Change conference at Katowice (COP24), under Article 6 of the Paris Accord. The issue isn’t just how efficient or effective they are, but also who should get the credit: the person paying for the carbon offset, or the person avoiding the emission.

Proponents of offsets postulate that all carbon is equal, but the cost of avoiding carbon isn’t equal — the rich are benefiting from the carbon space of the poor. Claims of economic efficiency are skewed when we recognize that the cost of abating carbon varies by technology or application. Some low hanging fruit is very cheap (or even net-positive), like solar panels, but the tail end of the abatement cost curve, which includes industrial emissions, is very expensive to abate. Offsets end up helping the high emitters bypass the obligation to get rid of their tail end of emissions, which are disproportionately expensive to abate. While there is some value to such partnerships, the poor should get the credit, not the rich.

Second, even if one does reach zero, what is the shape of the trajectory to get there? Most countries are conspicuously quiet on the details, but the good news is we are seeing see more pronouncements of 2030 or other interim targets. The shape of the curve would determine the cumulative emissions over time, which is what really matters.

Most importantly, how should any global zero be distributed across countries? Not everyone can be expected to reach zero at the same time, but to allow current low emitters (who tend to have fewer resources) some time to reach zero later, this means today’s high emitters should get to zero before 2050 — but they’re not even on track to reach that goal, despite pledges or intentions of the same. This is distinct from concerns by low emission countries over fairness, where zero by 2050 for a high emitter means they will still emit well more than their fair share of emissions based on almost all apportionments of the remaining global carbon budget. This is after being generous and writing off all historical emissions, even though carbon dioxide lingers in the atmosphere for centuries.

A richer framework: Area-under-the-curve (instead of just “date of zero”)

Reaching zero is important, but there is no universal consensus on when the date of net zero should be. The “sooner the better” remains a common refrain.

To address many of these issues, in a recent paper published by the Center for Social and Economic Progress, I present a framework to create a yardstick for cross-country comparison and incentivize countries to lower their cumulative emissions. This framework focuses on the area under the curve of the trajectory, and, thus, the cumulative emissions. It also tells us the country’s date of zero, but provides a richer analysis, because it not only directly indicates if a country is behind schedule and likely to bust its budget, but also tells us how much time a low emissions country has before it must hit peak emissions.

High Emitters: Decline immediately; Low emitters: Flatten the curve

A richer framework helps us understand how different countries must act. High emission countries must decline rapidly in an absolute sense (leaving aside offsets). For low emitters, they should reduce their growth of emissions before peaking. In fact, this framework encourages them to flatten the curve.

Flattening the curve: Cheaper and lower emissions

The COVID-19 pandemic taught us to flatten the curve of infection, to avoid the exhaustion of medical capacity even if the total infections over time remain the same. In terms of carbon emissions, a pure flattening of the curve would similarly not change total cumulative emissions. However, thanks to falling costs over time, a later but lower peak would mean measurable cost savings.

The good news is that low emission developing countries should also be able to lower their total emissions because of greater decoupling of their GDP from emissions over time — as their economies develop, they will not need to emit as much carbon, and technologies are continually improving. An area-under-the-curve framework is also superior as measuring cumulative emissions removes any incentive to front-load emissions, which could happen if a country only cared about the date of reaching zero. Instead, this framework encourages countries to push for any low-hanging fruit of reduction up front. This could buy them time for pushing back a small tail of residual and hard-to-abate emissions.

We need universal but different action

Low emitters can’t think “not my fault” equals “not my problem”. Not only will they be worst hit by the effects of climate change, they must also be introspective about whether their collective carbon space should be used up by their elites.

The poorest of the poor need electricity access and quality supply, without worrying about its source. We need global support to fund the infrastructure of wiring up the homes that lack connections. Electrification is especially important given the warmer temperatures and thus minimal heating requirements in many developing countries. If one billion people were given modest electricity supply, even if entirely from coal as a thought exercise, it would only add 0.25% to present global emissions. While their electricity use may grow, electricity is decarbonizing faster than other sectors, and renewable energy is already the cheapest source of energy in most countries.

What low emission countries really need is the technology and finance to avoid future carbon lock-ins, and help flatten the curve. This should start with the $100 billion of support pledged by the rich at COP15 in 2009. Such funding has to be aid, not just loans for solar panels that would be built anyway. One tool is to leverage such funding to only pay the viability gap for cleaner technologies — the difference in costs between traditional (cheaper) and cleaner solutions, and not the entire cost. With support, lower effective interest rates could accelerate the crossover to clean energy sources that require high upfront investment.

While developing regions are important, they are an easier part of the puzzle. The real challenge remains the high emitters, especially if we do proper accounting. High emitters have no time left before they must rapidly reduce emissions, and they also cannot ignore the tail end of their emissions. By tackling all emissions, they would pay the learning-curve costs for solutions that would eventually trickle down to the poor, including carbon capture and sequestration, direct air capture, green hydrogen, and so on.

The biggest problem isn’t the ambition to come to zero, but how we’re planning to get there. Most people understand climate change and want to avoid catastrophic climate changes, but are they willing to shift their lifestyles and spending patterns? Unfortunately, we’re like the person who really wants to lose weight but hasn’t yet gotten around to dieting and exercising. Scientists now believe that weight loss isn’t just about total calories, but which type of calories, when, etc. Analogously, we can be innovative in not just technologies and emissions but also instruments to encourage shifts, minimize shocks, and reduce regressive outcomes. Unfortunately, unless we are cautious in accounting norms, we risk greenwashing, especially given how many Environmental, Social, and Governance (ESG) funds are currently set up. But as Scott Galloway points out, we can’t shop our way out of climate change. One saving grace is the world’s problem isn’t lack of money per se, but how it’s directed.

With COP26 around the corner, there is pressure on India to join the “net zero” pledges. While it’s the third largest emitter, that’s because of its population — its per capita emissions are less than half the world average. Some 89% of emissions are from countries with higher per capita emissions. In contrast, China was over 50% above the global average in 2019. Everyone must reach zero — but the real focus should be on what we’re doing in the short term. India should focus on peaking coal and decarbonizing its electricity sector. Normalized for scale, it already has the most ambitious renewable energy targets in the world for 2030.

The poor and low emitters aren’t the problem, and while they’re part of the solution, they cannot be the world’s salvation. Net zero pledges should be enhanced with details and given tight accounting norms, and high emitters should face stricter norms and earlier timelines. As they accelerate their reductions, innovation and finance should flow to low emitters, and all countries can become even more ambitious in lowering their cumulative emissions. A focus on the area-under-the-curve can also make the global zero more equitable.

      

Thant Myint-U, the noted historian of modern Burma and grandson of former United Nations Secretary General U Thant, has documented the myriad ways in which China and India compete for resources and influence in what he’s termed “the new crossroads of Asia.” The features that make Myanmar attractive to both these two Asian giants are two: large estimated reserves of energy, both onshore and off; and the country’s long Andaman Sea peninsula. From China’s position, access overland to Myanmar’s coast would give them a new opening to the Indian Ocean, one that bypasses the Near Seas and the Malacca Strait — and the U.S. fleet. But should China secure such a route, it would put India’s navy on the front line of dealing with the People’s Liberation Army Navy. The Nicobar Islands are India’s farthest outpost and the place that the Indian navy first encounters their Chinese counterparts as they sail out through the Malacca Straits. But both nations face a challenge in developing Myanmar’s geography for strategic purposes — because both Myanmar and the Nicobar Islands face potential devastation from the changing climate. Of all the places in the world most likely to be profoundly harmed from rising sea levels and increased frequency of storms, the Bay of Bengal and the Nicobar Islands are the most likely to face sustained, wrenching change.

One such storm struck on May 1, 2008, when what was officially known as an “Extremely Severe Cyclonic Storm Nargis” blew across the Bay of Bengal, swamping several of the Nicobar Islands, and gathering speed. It hit the western shore of Myanmar on May 2. The U.S. Navy/Air Force Joint Typhoon Warning Center estimated its maximum wind speeds at 130 miles per hour. Hitting the low-lying delta of the Irrawaddy River, it pushed a storm surge an unimaginable 25 miles inland. By morning, 138,000 people had been killed.

It was not the first time the Bay of Bengal had been wrecked by a cyclone. Nargis was not even the deadliest cyclone to visit the bay in recent times; in 1970, the Bhola cyclone swept through the Bay of Bengal, made landfall in eastern Bangladesh, and killed an estimated five hundred thousand souls. Still, the scale of devastation caused by Nargis was immense, and changed the course of Burma’s history. In the wake of the devastation, the regime had no choice but to open the country to the hundreds of NGOs and dozens of U.N. agencies clamoring to help. It opened the floodgates of Western money and influence. Among other effects, it caused Thant to focus his attention, and that of his NGO, on a different kind of vulnerability that Myanmar faced; not just the new “imperial” competition from its giant neighbors, but from climate change.

Sea-level rise and storm surges are bad enough; but with advanced warnings, planning, and adaptive measures, the effects on human life and economic infrastructure can be mitigated. But Thant saw Myanmar experiencing a different phenomenon as well, a change in the patterns of the monsoon rains and alluvial flooding, one of the effects that arises from a complex, but by now well-mapped, interplay between melting sea ice in the world’s poles and changing temperatures and salinity of waters worldwide.

Throughout Myanmar’s recorded history, monsoon flooding predictably hits what’s known as the “dry zone” during the months of June through September. Moisture blown in from the Andaman Sea and the adjacent Arabian Sea accumulates in the highlands of the Himalayas and Myanmar’s northern mountain ranges. Then the winds change course and pull that moisture down through Southeast Asia’s great floodplains, the Ganges and the Irrawaddy, in normal years flooding as much as 40% of Myanmar’s landmass. This creates the necessary conditions for growing rice — the primary source of caloric intake for 2.7 billion people in Asia, supplying as much as 58% of the energy intake of several of the region’s populations. But the patterns of rain appeared to be shifting.

Myanmar was feeling the effects of a series of interlocking oceanic phenomena unraveled by a remarkable piece of oceanographic detective work undertaken by researchers at the Bigelow Laboratory for Ocean Sciences in East Boothbay Harbor, Maine, and at the Naval Postgraduate School, in Monterey, California. At the Bigelow lab, a scholar named Joaquim Gos had funding from NASA to use satellite observations of chlorophyll and sea-surface temperature readings to develop a map of nitrate concentrations in the oceans — part of NASA’s contribution to global circulation modeling. His mapping found unusually large blooms of phytoplankton in the Arabian Sea (on the other side of the Indian subcontinent from the Bay of Bengal and the Andaman Sea). That led to the discovery that the Arabian Sea had been cooling, affected by changes in the upwelling of cold bottom waters. Careful forensics showed that increased upwelling was related to wind patterns over the ocean, themselves a function of changing patterns of the Asian summer monsoon. Further research showed a strong link between snow patterns in the highlands of Europe and Asia and monsoon patterns—a link that had been theorized as early as the late 1880s, but never demonstrated.

Using advanced climate modeling, the team found a clear set of patterns: a decline in snow coverage in Europe and Asia from the early 1990s onward meant warmer air over these continents, which was affecting glacier formation in the Himalayas, which was affecting rain concentration in the Asian highlands, which was affecting the timing and strength of the monsoon rains. And leading to increased flooding.

In a normal year, up to 40% of the Ganges and Irrawaddy river deltas flood from the monsoon rains, and over centuries, the local populations have built up their farming and infrastructure around that predictable floodplain. But in flood years, up to 70% of the deltas can flood, with devastating effects. And in the last decade, the timing of the monsoons has been increasingly unpredictable, and floods increasingly common.

For the rice farmers who depend on the predictability of the monsoons to prepare their rice fields, these fluctuations were debilitating. And so many of them left the dry zones and decamped to other parts of Myanmar — becoming, in effect, internal climate refugees. They ended up at the edges of parts of Myanmar historically dominated by different ethnicities, and recently torn by more than 50 years of civil war. Myanmar’s fragile young democracy was already coping with increased frequency of cyclone and storm-surge damage, dramatic global fluctuations in energy prices, and intensifying competition between China, India, and the West. Adding in a loss of productivity in the rice crop — the production and trade of which accounts for nearly half of Myanmar’s GDP — as well as large numbers of internal climate refugees, and Thant was becoming worried that Myanmar’s political system might not be able to cope. “I’m worried that Burma could become the world’s first climate-induced failed state.”

The effects would not be limited to Myanmar’s population of 56 million. On the western side of Myanmar, China has begun to invest billions of dollars in Rakhine State, to build both an oil pipeline and a deepwater port at Kyaukphyu, at the northern tip of Ramree Island. Kyaukphyu has a natural harbor and has long been an important outpost for the trade in rice between Myanmar and India. If fully operationalized, the port would realize China’s bid for an equivalent to the Suez Canal — a passageway that would connect Chinese rail and trade directly to the Indian Ocean, bypassing the Malacca Straits. But instability on land and rising sea levels threaten the viability of the project.

All of this is impacted by oceanic dynamics playing out as far away as the North Atlantic and the Antarctic. In the largest sense, the oceans are one, as the Royal Navy used to say, and so is climate change. It’s for this reason that climate change is usually viewed as a “we’re all in one boat” problem that will logically drive cooperation between governments around the world. But what’s equally true is that every sea, and every shore, is distinct; and climate change is playing out very differently in different waters of the world. That reality of variation is not driving cooperation, but rather adding to the competition over command of the seas.

      

The Securities and Exchange Commission (SEC) is considering making important changes in disclosure requirements to reflect the growing recognition that climate change poses significant risks to the U.S. financial system.

This week, hundreds of investors, companies, and concerned Americans responded to the SEC’s request for public input on climate change disclosure.

Recent Brookings analysis co-authored by one of us on the intersection of climate change and financial markets has shown that a significant blind spot for financial institutions is how the physical impacts of a warming world affects assets. But, outside of insurance, relatively little has been said about financial vulnerabilities stemming from extreme weather.

The massive storm that hit Texas in February — known as Winter Storm Uri — highlights the dangers of ignoring the physical risks of climate change. Frigid temperatures and ensuing blackouts led to the deaths of more than 150 people and caused billions of dollars in damages. The blackouts also disrupted dozens of public companies, hundreds of small businesses, and millions of lives, raising a slew of questions for public officials.

In our new report, we focus on one of those questions: What did the financial markets know about the odds and impacts of a storm like this before it happened? Our report looks at SEC regulatory disclosures made by publicly-traded electric utilities and suppliers in Texas, and offers a clear answer: not much.

Even though Winter Storm Uri was foreseeable, and many firms, to varied degrees, had weatherization plans, existing SEC disclosure requirements did not elicit filings that conveyed the good, the bad, and the ugly in preparedness by utilities, power generators, and regulators. The tragic events set in motion by Uri highlight the need for significant improvement. Part of that improvement should come in the form of SEC rules that mandate the disclosure of specific and decision-useful climate information, built on the Task Force on Climate-related Financial Disclosure (TCFD) framework and aligned with leading climate science. Better climate disclosures can help investors analyze, manage, and price climate risk, which can in turn enable companies to embrace further climate resilience measures and therefore mitigate the destruction of extreme events like Winter Storm Uri.

The foreseeability of Winter Storm Uri

To analyze investors’ ability to incorporate the risk of an event like Winter Storm Uri into decisionmaking, we reviewed the 10-K reports of seven companies operating in the Texas power sector: three publicly-traded power generators and four publicly-traded utilities. The SEC requires public companies to file 10-Ks annually to provide investors and the market with details on corporate financial performance. 10-Ks undergird investment decisionmaking and are the bedrock of financial risk evaluation. Because climate change presents clear financial risks to companies, we would expect discussion of climate-related risks to appear in 10-Ks, no different from traditional financial risks. However, they rarely do.

Texas power generators and utilities, in particular, have good reason to address climate-related physical risks in their 10-Ks given both past encounters with extreme weather and increasingly sophisticated climate science and risk modeling available to the electric sector. In 2019, Texas accounted for seven of the United States’ 14 billion-dollar weather and climate disasters. In 2017, Texas faced significant power outages due to torrential rain and intense winds from Hurricane Harvey. In 2011, cold temperatures caused electric failures that impacted 3.2 million Texans, prompting the Federal Energy Regulatory Commission and North American Electric Reliability Commission to issue a report calling for Southwestern power generators and utilities to winterize their operations.

Based on those past environmental disasters and existing climate science, the increased intensity and frequency of extreme weather events like Winter Storm Uri are increasingly knowable to companies, with a level of uncertainty common for many financial risks.

The existing disclosure regime failed to prepare investors for Winter Storm Uri

Despite this foreseeability, existing SEC regulations did not elicit company submissions of specific, useful physical risk information in reviewed 10-K reports. Limited risk disclosures in turn undermine investor decisionmaking and overall market function.

Our research found that 10-Ks considered extreme weather, but only in vague ways — with little connection to impacts of and preparedness for events like Winter Storm Uri. More concerning, 10-Ks framed the freeze as a rare, point-in-time event unlikely to recur. With climate change, however, such events could plausibly become more common or extreme or both.

Moreover, although Winter Storm Uri caused billions of dollars in damage, reviewed 10-Ks were barely altered from previous years, with disclosure practices between 2020 and 2021 near-mirror images of each other. For instance, only 3% of words differed between the 2021 and 2020 climate-related physical risk sections of one major power company’s 10-Ks.

The need to strengthen SEC regulation is made particularly apparent by recent advances in climate science and risk analysis. The SEC should consider, for example, that many firms currently have access not only to large-scale climate models but downscaled projections that indicate company-specific and even asset-specific risks. Consolidated Edison, for example, undertook a Climate Vulnerability Study in 2019 that helped the utility estimate specific climate vulnerabilities. With these tools, companies can learn a lot about their physical risk exposure from year to year, especially after facing extreme weather.

Our finding that 10-Ks failed to incorporate new insights and learning reveals a concerning trend: Current SEC rules do not ask companies to remember key lessons from past weather events nor imagine the potential future impacts of climate change on their businesses. Companies’ collective inability to provide dynamic, useful information to investors highlights the need for new disclosure regulation.

How the SEC can protect investors from future extreme weather events

While we look, in our study, at individual companies, what’s clear is that thin disclosures are an industry-wide phenomenon. Companies’ sparse 10-Ks reflect widespread practices for disclosure, and that’s why the SEC needs to act. Through updated rulemaking, the SEC can help ensure that investors and others are prepared for extreme weather events.

Based on our findings, we encourage the SEC to:

1. Require the disclosure of climate-related information that investors and other market participants need to make informed business decisions. Winter Storm Uri shows that existing voluntary disclosure practices do not provide investors with sufficient climate risk information.
2. Make mandatory and build on the TCFD framework, recognizing that the current voluntary standards do not ensure specific, decision-useful climate disclosure. Because both TCFD-aligned and non-TCFD-aligned companies in Texas failed to disclose adequate climate information, we believe that SEC regulation should not rely entirely on the TCFD to yield improved disclosure practices.
3. Align disclosure requirements with advances in climate science and risk analysis. To ensure that companies imagine the forward-looking ramifications of climate change on their business, disclosure guidelines should keep pace with both macro climate science and more micro innovations in climate risk analysis, both of which continue to evolve.

At last, it seems, the U.S. is getting a lot more serious about climate change. Part of the policy answer lies with the SEC — requiring the disclosure of needed climate information to improve capital allocation and avoid inefficient, and in some cases deadly, market instabilities. Updating disclosure rules to protect investors, companies, and the public is long overdue.

      

Global climate politics in 2021 is focused on generating more ambitious climate pledges from member countries of the Paris Agreement before the Conference of the Parties meeting in November. With the addition of the United States, about two-thirds of greenhouse gas (GHG) emissions come from countries that have committed to reach net-zero emissions by mid-century. These countries must now adopt policies to deliver those emissions reductions; a complete reworking of the of the world’s energy system in just three decades. With a recent court ruling, Germany has become ground zero for this challenge, as German law will now require an extremely ambitious schedule for change.

Climate as an issue of intergenerational equity

For most of history, successive generations have been better off than those that preceded them. The march of technology has provided benefits to humanity, giving people more goods to choose from, conveniences, and options in living and working.

But climate change threatens to change that. The Earth’s climate is changing faster than anytime in human history, and we may soon be living in a vastly different environment. Some of the strongest voices in today’s climate movement come from youth, who claim that the changing climate is robbing them of their future.

For years, governments have tended to “kick the can” on climate policy, putting off action while the concentration of GHGs in the atmosphere continues to climb. Climate is exactly the kind of problem that humans are terrible at dealing with — a tragedy of the commons that pits future generations against the present and developing countries against the wealthy world. Nevertheless, the costs of inaction are becoming clearer, and in recent years many countries have become more serious about cutting greenhouse gas emissions.

German high court’s landmark ruling

Against this backdrop, on April 29, 2021, the German Federal Constitutional Court made history, ruling that Germany’s Climate Action Law does not sufficiently protect the freedoms of the youth and future generations. The 2019 law obliged Germany to cut GHG emissions 55% by 2030, compared to 1990 levels. It also set out annual limits for emissions from sectors including energy, transport, buildings, and agriculture.

The court’s decision is based on a 1994 amendment to Article 20 of the German Basic Law, which added protection of the environment to the fundamental principles of constitutional order (democracy, federalism, rule of law, etc.) It states: “Mindful also of its responsibility toward future generations, the state shall protect the natural bases of life by legislation…” The German constitutional lawyer Christian Calliess commented that the court’s ruling had “kissed awake” Article 20 and turned it into a benchmark for judging the sufficiency of legislative action. The court argued: “One generation must not be allowed to consume large portions of the CO₂ budget while bearing a relatively minor share of the reduction effort if this would involve leaving subsequent generations with a drastic reduction burden and expose their lives to comprehensive losses of freedom.” Essentially, the ruling relies on the carbon budget theory of emissions, which states that spending too much of the budget now will leave an insufficient budget for the future, causing undue hardship.

The ruling opens new ground about intergenerational equity in climate law. This finding goes further than a case decided in the Netherlands in late 2019, which was the first to order a state to reduce its greenhouse gas emissions, on the basis that inadequate action on climate change can violate human rights. However, this case did not involve goals after 2020 and did not focus on the issue of intergenerational equity. Likewise, the current climate court cases in the United States focus on companies that produce fossil fuels rather than on government response to the climate challenge.

The Merkel government responds with ambitious pledge

German politicians are now playing a blame game. The various parties are blaming each other that the 2019 law did not go further, in a country that cares deeply about the climate with federal elections coming up in late September. However, there is some revisionist history here. The law was a delicate compromise achieved after months of debate that split the ruling coalition of the Christian Democratic Union and Christian Social Union (CDU/CSU) and the Social Democratic Party (SPD). The environment minister, a member of the SPD, pushed hard for a stringent law with sector-specific emissions reductions. Members of the more conservative CDU/CSU complained during the negotiations that the sector-specific provisions aimed to harm industries overseen by ministries under their parties’ control. The opposition Green Party leader in the parliament complained that the law didn’t go further, saying that, “You have failed in humanity’s task of protecting the climate.” Ever the pragmatist, Chancellor Angela Merkel noted, “Politics is what is possible.”

Just two weeks after the ruling, Merkel’s government approved an update to the Climate Action Law that aims for a 65% reduction in GHG emissions by 2030 and net-zero emissions by 2045, five years earlier than the previous goal. If approved by the parliament, these would be among the world’s most ambitious goals, with only the U.K. aiming for greater reductions — 68% by 2030 and 78% by 2035, on the way to net-zero by 2050.

There may be no example of a government legally bound to achieve a more difficult task. Americans like to compare reducing GHG emissions to the moon landing. President John F. Kennedy announced in September 1962 that the United States would put a man on the moon within the decade and that goal was achieved in July 1969. However, the task that Germany is taking on is far more difficult, involving changing the basis of the entire German economy within a decade rather than a Herculean effort by a group of engineers. Plus, the moonshot goal was not legally binding.

A victory for climate action, but the devil is in the details

Ambitious goals are one thing, but achieving those goals is another. Germany has a long history of investing in renewable power as part of its “Energiewende,” literally meaning “energy transition or turnaround.” However, the Energiewende also includes a phase-out of German nuclear power, with the last nuclear plants scheduled to close at the end of 2022. The German public also opposes carbon capture and storage. These two technologies are expected to be important in U.S. efforts to decarbonize but are largely off the table in Germany. In conversations over the past months, government, industry, and NGO representatives alike have focused on renewable power and green hydrogen (produced from renewable power) as the path forward. These are great technologies, but the timeframe for implementing them at scale is longer than the court ruling and the updated Climate Action Law allow, especially in the important German steel, chemical, and transportation industries.

What if Germany misses its goals? In that case, the federal government must buy emissions allowances from other countries, the responsible ministry must establish an emergency program to reach future targets, and the government will then establish remedial measures. The remedial measures needed to achieve such ambitious goals could be very harsh indeed. Will German politicians be able to implement them? Will the German public accept them? European governments generally have more ambitious climate policies than those in the United States, but we have seen backlash when they affect citizens’ everyday lives — the yellow vest protests that erupted in France in late 2018 after a fuel tax increase provide a good example. Policies to achieve Germany’s climate goals will likely test the resolve of German society.

The climate ruling could affect other equity issues as well. A rapid transition to a zero-carbon economy will require vast investment in buildings, transportation infrastructure, and industrial processes. Government support will be needed for some of these processes. For example, the German steel industry intends to transition to using hydrogen in its process. This change will be expensive and will require government support for both capital and operating expenditures, even though today’s steel production faces a European carbon price of more than €50 per ton. Large government expenditures will require debt financing, which also has implications for future generations. Germany has a “debt brake” in its Constitution that caps the federal government’s borrowing at 0.35% of GDP. The debt brake can be suspended in times of crisis, but will investing in decarbonization be considered a crisis? Or will the concept of intergenerational equity in the recent court ruling work against such investments, as it will leave future generations saddled with more debt? There are no easy answers to these questions.

Scientists and activists pushing for very fast emissions reductions are running headfirst into the reality of how difficult this task can be, especially once the easier emissions reductions in the power and light transportation sector are achieved. The climate ruling makes Germany a key test case in the transition, with very rapid reductions now enshrined in law. Godspeed and good luck.