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Volans’ Richard Roberts says the world needs to dramatically increase GDP per ton of CO2 to avoid the worst of climate change. It's possible, but there's no time to waste
In 2008, McKinsey published a paper showing that reducing greenhouse gas emissions fast enough to meet climate goals, whilst maintaining economic growth rates deemed acceptable by politicians, was a 10x challenge. That is to say, the global economy’s carbon productivity (defined as gross domestic product created per ton of CO2 emitted) was going to need to improve approximately tenfold by 2050.
Today, the challenge is even greater. Sluggish progress over the last decade means that what was a '10x by 2050' challenge a decade ago has become a '15x by 2050' challenge today.
This new 'climate math' has many implications and it will require radical new thinking to meet the challenge ahead
Since 2008, global emissions have gone up, rather than down, meaning the required rate they need to fall is now much higher. According to the global carbon law, a term coined by Johan Rockström of the Stockholm Resilience Centre, it is necessary to halve global emissions every decade from 2020 to 2050 in order to meet the 1.5 to 2C goal set out in the Paris Agreement. This equates to roughly 7% a year. Meanwhile, global GDP is forecast to grow by 2.6% a year between now and 2050, according to analysis by PwC.
Calculating the required rate of carbon productivity growth is then a matter of simple arithmetic: 7 + 2.6 = 9.6. Over a 30-year period, a 9.6% compound annual growth rate amounts to a whopping 15-fold increase.
This new “climate math” has many implications and it will require radical new thinking to meet the challenge ahead . As a starting point, here are six steps both business and policymakers need to take:
To stand a fighting chance of achieving this 15x transformation, governments must put climate goals at the heart of economic and industrial policy. The goal of reducing net emissions cannot be treated as separate from efforts to boost productivity and growth. Whatever your views on the specifics of the “green new deal” being touted on both sides of the Atlantic, the recognition that economic and climate policy are inextricably linked is an important breakthrough.
Addressing the root of the problem is key and that means we need to focus on reducing our use of fossil fuels across the board. Anyone familiar with the story of how we phased out ozone-depleting CFCs or tackled lead pollution knows that the key to success is to focus on eliminating the so-called “pollution precursor content”. In the case of climate change, this means decoupling from fossil fuels, not just as an energy source, but also as a raw material for other industrial processes like plastics manufacturing. Ultimately, CO2 emissions are a symptom of our economy’s addiction to fossil fuels and will not be mitigated until we break our dependence on fossil carbon.
- Improving anything by 10% a year, every year for three decades, is a Herculean task. We need a lot of incremental improvements to move us in the right direction, but it won’t be possible to do this unless we also manage to take some transformative leaps forward. That means we need more innovators across all sectors to adopt a “15x mindset”. Only by aiming for the seemingly impossible will we create space for the radical new ideas that are now necessary.
- These transformative leaps will not, for the most part, be brought about by brilliant individual entrepreneurs or companies. Entire industries need to rapidly decouple from fossil fuels. This will require companies that are traditionally competitors to collaborate in radical new ways to allow the requisite level of investment to flow into creating new systems, processes and products. Companies acting individually won’t be able to move fast enough.
Breaking free from fossil fuels will, in many industries, go hand-in-hand with a shift towards a more circular economy. Displacing virgin fossil fuels with renewable sources of energy and carbon is a key priority for the plastics industry in particular - both to address climate breakdown and to tackle the issue of plastic waste leaking into natural ecosystems. As plastics manufacturers become more reliant on recycled, CO2 -based or bio-based inputs, this will help create market drivers for better waste management, CO2 capture technologies and sustainable biomass production.
As we start to bend the global emissions curve and chart a course towards net zero and beyond, that word “net” is going to become increasingly important. Reducing emissions will get us a long way, but to reach net zero and beyond we also need to remove carbon from the atmosphere at considerable scale. Again, this challenge cannot be separated from the imperative of creating a thriving economy, and the best way to scale carbon removal is to leverage the power of markets. That means pursuing innovation that can become “carbon negative, dollar positive” as Dr. Volker Sick, director of the Global CO2 Initiative at the University of Michigan, puts it.
There’s no doubt that a 15-fold increase in carbon productivity in 30 years is a very tall order, but we remain convinced that it is feasible – technologically, economically and politically. What’s more, if we’re successful, raising carbon productivity so rapidly will provide a major boost to global living standards, whilst also allowing us to leave a liveable planet for future generations.
Richard Roberts is inquiry lead at Volans.