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Can the world shrink its emissions footprint without immiserating its population?

We’re seeing a brutal real-world experiment on that front right now. The coronavirus pandemic has caused the the biggest drop in emissions in history. It has also resulted in more than a million deaths and the worst economic downturn since the Great Depression.

That’s just a foretaste of what’s to come, though. To remain within the carbon budgets needed to give a 50-50 chance of keeping global warming below 1.5 degrees Celsius, the world would need to repeat the 7% annual decline in emissions seen in 2020 every year until 2050. Think this has been a bad year for human welfare? The coming decades risk being even worse unless we can rapidly sever the centuries-long link between economic growth and carbon pollution.

One argument that’s gained ground in recent years is that growth itself is the problem. The issue is one of “capitalism versus the climate,” to quote the subtitle of a 2014 book by Canadian journalist Naomi Klein. “All you can talk about is money and fairy tales of eternal economic growth,” Swedish activist Greta Thunberg told a 2019 U.N. summit: “How dare you!”

Perhaps instead of trying to make the climate subservient to the needs of expanding gross domestic product, we need to cut our economic coat according to our atmospheric cloth?

The International Energy Agency’s latest World Energy Outlook provides one reason why that’s unlikely to work.

The outlook, released Tuesday, is structured around scenarios reflecting different policy settings and how they’ll affect energy consumption and emissions over the coming decades. This year, two are new: one illustrating the path to net-zero emissions by 2050, and one showing how a delayed recovery from the pandemic might alter the picture.

Such a recession would indeed reduce emissions in the near term. Until 2023, the Delayed Recovery Scenario sends less carbon into the atmosphere than the Sustainable Development Scenario, which is meant to model the path to keeping global warming well below 2 degrees Celsius.

After that, though, things fall apart. Thanks to ongoing economic weakness, governments and businesses lose the capacity to carry out the spending needed to remake the world’s energy system. Investment in fossil fuels falls by 10% relative to expectations under current policies, but spending on renewables and nuclear drops by 5% as well, so that $2.2 trillion less is spent by 2030.

Rather than investing to replace our power plants and appliances with lower-carbon alternatives, we eke out their polluting lives a little bit longer. By 2030, annual emissions are about 29% higher than they would be under Sustainable Development.

This desktop model of how the world could develop reflects a profound truth. The atmosphere can accommodate about 500 billion metric tons more carbon dioxide to give an even chance of keeping warming below 1.5 degrees — but the world’s current industrial base is currently pumping out roughly 33 billion tons a year, and will continue to do so unless we can replace it.

Retrofitting the world’s energy systems is going to require vast sums of money. Renewable power alone will need an average $569 billion of investment every year over the coming decade under the IEA’s Sustainable Development Scenario. That’s almost twice the rate seen over the past five years, and not far behind what the entire oil and gas sector would spend under the same settings. If anything, the world needs a target that’s more ambitious still.

If we can get up to speed, that volume of spending will create its own momentum. One justified complaint of anti-capitalist climate activists is that our political systems frequently put their thumbs on the scale to favor powerful incumbent businesses, which at present are mostly the polluting ones. But a system where investment dollars are flowing away from fossil fuels and toward decarbonization is one where power, too, is shifting away from the carbon economy.

Even under the IEA’s less ambitious Stated Policies Scenario, the $15.14 trillion that gets spent globally on fossil fuel generation and production by 2040 is smaller than the $15.97 trillion spent on renewables and nuclear — and doesn’t include the amounts that go to energy efficiency and grid networks.

Under the Sustainable Development Scenario, which has historically often been a better guide to the path of the energy transition, low-carbon power ends up with $2.70 of spending for every $1 going to fossil fuel extraction and generation. That’s a world in which renewables will increasingly set the rules of the game, encouraging governments to remove the remaining subsidies that support oil, gas and coal.

Since the industrial revolution, the fossil-fueled engine of capitalist growth has conspired to put the world in its current climate crisis. Harnessing that power to drive the carbon transition is now our best hope of turning that disaster around.

David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

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