In January, just a few short weeks after COP28, business and policy leaders met again at the World Economic Forum (WEF) in Davos, Switzerland. While climate was not the headline in Davos, these disparate global summits do share a big-picture takeaway – an emerging symbiosis that’s impossible to ignore.
It’s this: climate action needs the private sector – no other funding source is adequate to make the transition happen fast and broadly enough – and the private sector needs climate action, or its investments risk being overwhelmed by the escalating threats climate change poses to the global economy at large and to companies’ bottom lines.
And despite the myriad other concerns in C-suites around the world – from simmering global conflicts to concerns about AI – business leaders report they recognize the economic threats from climate change will only get worse.
This year, extreme weather, which is clearly exacerbated by climate change, was rated the world’s number one global threat in the much-heralded WEF Global Risks Perception Survey, which canvasses experts across academia, business, government, and civil society on current and future threats. More concerningly, threats directly tied to climate change – including ecosystem collapse and natural resources shortages – were listed as the top four threats in 10 years. Involuntary migration, which is also being aggravated by climate change, was number seven on that list.
In a perverse way, this is good news. It means the economic reality of climate change – that it can impoverish us in the short term and overwhelm economies and destroy global stability for the long term – is finally being recognized by some of the world’s most powerful capitalists.
That recognition can be an important catalyst for action. And with society increasingly calling on business to prevent escalating climate change, this symbiotic relationship will only grow stronger.
Business and climate action. Could this be the dynamic duo that changes our future?
The C-Change Conversations Team
“We will only reach net zero if we do it together. Which is why I have found it heartening to see in recent years a marked increase in sustainability leaders attending Davos, and environmental issues more prominent on the WEF agenda. Five years ago, climate change and nature represented one-third of the discussions at Davos. Today, it’s two-thirds.”
– Lorena Dellagiovanna, senior vice president and executive officer, group chief sustainability officer, CDEIO at Hitachi Ltd.
News of Hope
Last year, the U.S. economy grew robustly while emissions decreased, proving we can have strong economic growth while also decarbonizing. Carbon emissions dropped 1.9% as coal-fired electricity dropped to its lowest level in 50 years, replaced by both natural gas and renewables. This decoupling of economic growth and emissions growth is anticipated to accelerate as the incentives from the Inflation Reduction Act elevate cleaner sources of energy.
Importantly, “King Coal’s” fall from grace is a global phenomenon. The International Energy Agency (IEA) projects renewables will overtake coal globally as the main source of electricity – providing 37% – by early 2025. That’s mostly due to exponential growth in solar, which is the cheapest new form of energy on a global basis. If nuclear power is added to the mix, the IEA expects the world to generate almost 50% of its electricity from cleaner energy by 2026 – something unfathomable just a decade ago.
In the U.S., the administration is acting to meet goals highlighted at COP28. Last week, it was decided to delay approval of a major liquified natural gas (LNG) export facility and to pause approvals on LNG exports to countries without free trade agreements with the United States. Both decisions were made to allow time for a more in-depth climate analysis – and both angered fossil fuel proponents. This will elevate climate and energy issues in the national presidential election – a goal of many climate activists.
Earlier in January, the administration also announced a fee on methane leaks, the first federal fee or tax on greenhouse gas emissions. This follows December’s proposed EPA mandate that companies be required to detect and fix methane links. (Congress had previously approved funding of up to $1B to help find and repair leaks, as well as improve monitoring of the gas.) Since methane is 80% more powerful than CO2 in the short-term heating of the atmosphere, these “carrots” and “sticks” could have real impact on slowing temperature increases.
And while emissions reduction is critical, so is our ability to absorb the excess carbon already in the atmosphere. That’s why the Biden administration’s proposed end to commercial logging in old-growth National Forests – which hold significantly more carbon than new forests often populated with monocultures – is so enheartening. It still allows for maintenance that would help control wildfires and protect surrounding communities, but recognizes old-growth forests have more economic value as carbon sinks than as paper products.
Another intriguing carbon removal approach? Our ability to literally turn farm and biomass waste into facsimiles of coal and oil that can be stored in the ground. This prevents emissions from those waste products and can also plug leaky oil wells and augment our soils so they in turn will absorb more carbon. So we are extracting and burning natural oil, gas, and coal that put up emissions, and creating man-made versions to pull them down. Anyone else find that a bit ironic?
One of the biggest hits against the energy transition is the need for rare earth materials that are often sourced in environmentally dangerous ways and processed in China. But a new report tells us that we already have a significant portion of what we need – in our cast-off electronics just lying around the house. Recycling those materials could supply 40% of the rare earth metals we need for the energy transition in the U.S., Europe, and China in 2050. Right now these rich resources are ending up in landfills, but new recycling techniques hold real promise. And unlike fossil fuels that are consumed when used, rare earths can be recycled over and over once we refine the process.
And even as we look forward to using new technology, we shouldn’t forget to look back at old wisdom. We can learn a lot from cultures that have dealt with climate extremes for centuries – for instance, building techniques in hot regions that keep homes cool without air conditioning. While we wouldn’t necessarily build homes today in the exact same manner, we can apply what works in new ways to keep us safer as our world grows hotter.
News of Concern
With the COP28 resolution to transition away from fossil fuels and the Davos summit discussions of climate fresh in our consciousness, it’s really no surprise that those opposed to climate action have come out swinging. This time around, though, their tactics are different. They no longer say global warming isn’t happening – they’re bashing solutions instead.
Industry leaders have jumped right in, with the American Petroleum Institute launching a multimillion-dollar media blitz to “dismantle policy threats” to fossil fuels. This will resonate with many – fossil fuels do provide energy security in the short run (always ready to be dispatched and not dependent on wind or sun) and we need to be careful about transitioning away from them before new resources are in place. In addition, fracking, while environmentally controversial, has enabled the U.S. to become the number one producer of oil and gas in the world, and producers and investors understandably want to reap the benefits of that.
But we have to look at the big picture. Fossil fuel profits have to be compared against climate change losses.
Climate disruption is real – and real expensive. The U.S. experienced a record 28 $1B disasters last year, with the total costs approaching $100B. According to NOAA, climate change is supercharging the frequency and intensity of extreme weather such as intense drought, wildfires, extreme rain, and sea level surges from hurricanes. (In addition, extreme heat, like what we experienced across our southern flank last year, harms human productivity and health, and drives up energy and infrastructure costs.) Taxpayers pay for a huge portion of that. Even when insurance picks up some of the costs, we all suffer economically when rates go up and the costs of premiums for our homes and cars skyrocket beyond what many can afford.
January brought sobering news on several other climate fronts. Greenland is shedding 20% more ice than scientists had estimated. The melted freshwater flowing into the Atlantic Ocean can potentially disrupt the currents that help regulate our temperatures. And while there’s too much water there, one quarter of the world’s population is living in areas of drought – in many places worsened by climate change and El Niño – leading to record levels of hunger.
It’s a new year, but as of January 9, NOAA confirmed that the United States had 28 billion-dollar weather and climate disasters in 2023. What will 2024 bring?