By Scott Poulter
It is hard being a climate scientist nowadays. Even after the satirical movie Don’t Look Up—portraying scientists delivering news of an immediate planetary collapse—drew record numbers of viewings on Netflix, people are not getting the message that science is serious.
Take the latest report from the Intergovernmental Panel on Climate Change (IPCC). This is the United Nations (UN) body responsible for advancing all knowledge on human-induced climate change, backed by 195 countries.
It has spent nearly three and a half decades trawling through all the available scientific evidence on climate change and issuing regular reports to policy makers.
And its latest publication, the third instalment of its three-part Sixth Assessment Report, published in April, was clear: without "rapid, deep and immediate" cuts to carbon emissions, we face severe consequences.
“The results will be catastrophic," said UN Secretary General Antonio Guterres, with “unprecedented heatwaves, terrifying storms and widespread water shortages."
None of this should be news to anyone who watches the news.
Extreme weather has become an everyday occurrence, with this year already seeing devastating events such as winter storm Izzy in the US, snowstorm Malik in Northern Europe, massive flooding in Malaysia and heat waves in Antarctica.
IPCC lead author Heleen De Coninck told the BBC that “we've reached the now-or-never point of limiting warming” to 1.5 degrees Celsius above pre-industrial levels, the furthest scientists believe we can go without cataclysmic consequences.
IPCC’s concern was echoed by other respected bodies.
“The IPCC’s declaration that, without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C is beyond reach, must be taken extremely seriously," said Professor Corinne Le Quéré FRS, Royal Society Research Professor.
Yet what was the response from policymakers? The crisis in Ukraine swept aside climate concerns and prompted calls for further exploitation of fossil fuels.
UK cabinet member Jacob Rees-Mogg called for the extraction of “every last drop” of North Sea reserves and the US continued on its path towards global dominance of liquified natural gas exports.
However, sticking with business as usual makes no sense—and not just because of what the science is telling us.
The risks from not addressing climate change are too great to ignore, but at the same time the opportunities from reducing emissions are significant enough for everyone to take notice—even if they don’t care about the planet. Look at green hydrogen, for instance.
This is just one the ingredients required for a decarbonized economy, yet its potential is huge.
The International Renewable Energy Agency (IRENA) estimates hydrogen could cover up to 12% of global energy use by 2050, and more than 30% of the fuel could be traded across borders—a higher share than natural gas today.
Green hydrogen is “emerging as a game changer for achieving climate neutrality without compromising industrial growth and social development,” said IRENA’s director general, Francesco La Camera.
Similarly, we see massive opportunities for growth in areas such as battery storage, solar PV and green ammonia. Even technologies such as marine scrubbers and concentrated solar power could play an important part in reducing emissions.
Companies that embrace these and other low-carbon technologies will be part of a massive wave of innovation and growth that will last for decades. Those that stick with business as usual, meanwhile, will increasingly be at risk of stranded assets and diminishing market share.
This is not a trend that is to come. Like climate change, it is already here. According to the analyst firm BloombergNEF, investments in energy transition technologies, infrastructure and business models ballooned 27% last year, compared to 2020.
The spend on the energy transition amounted to $755 billion, BloombergNEF said, with increases in almost every sector surveyed.
While renewable energies took the largest share of investment, at $366 billion, the electric vehicle market was the fastest growing segment, increasing 77%. That figure is worth repeating: 77% growth in one year.
And BloombergNEF expects the electric vehicle market to overtake renewables in terms of volume this year.
It is no wonder that the electric vehicle maker Tesla now one of the world’s most valuable companies by market capitalization, nestling among tech giants such as Amazon and Meta (previously Facebook).
Cynics could argue that high oil and gas prices in 2022 make it reasonable to carry on producing fossil fuels. People need energy, after all, and if companies make a profit from it today, then they could use the money to decarbonise more efficiently in the future.
The only problem with that argument is that even the oil and gas industry does not seem to buy it.
Despite pressure from markets and political leaders to increase the flow of hydrocarbons, “production of oil by US energy companies is essentially flat and unlikely to increase substantially for at least another year or two,” according to the New York Times.
The main reason is that investors want oil to stay in short supply, so prices remain high. But underlying this reluctance to open the tap is a growing sense that demand for fossil fuels could soon start to drop.
Indeed, the consultancy group McKinsey & Company predicts that peak oil—the point at which production stops going up and enters a downward trend—could happen as soon as 2025.
That is great news because it is when the IPCC says we need to start decreasing fossil fuel consumption, if not sooner. The sad thing is that it will likely be market forces rather than scientific evidence that brings about the change, but no matter.
What is important is that we embrace the opportunities that come with the energy transition and look for business models that are built on sustainable operations.
These opportunities will deliver vast benefits not only for the environment and for society but also for shareholders and employees.
At Pacific Green, we see the value of supporting the energy transition because we value the future of our planet—and because it makes obvious business sense. We hear you, IPCC, and so do our stakeholders around the world.