Whether COP21 will be a success or not remains to be seen. What is certain is that climate change is still an urgent problem. Energy efficiency, renewables and sustainable mobility provide the solutions, writes Rolf Wüstenhagen.
Rolf Wüstenhagen is Professor of Management of Renewable Energies. He teaches and conducts research at the Institute for Economy and the Environment of the University of St. Gallen (HSG), in Switzerland.
For the 21st time, politicians from all over the world are meeting for the annual UN climate summit in Paris. In the two decades during which they have been struggling for binding international climate policies, the problem has grown faster than the approaches to its solution. When the Kyoto Protocol on reduction of greenhouse gas emissions was signed in 1997, global CO2 emissions amounted to 24 gigatons per year.
But Kyoto remained a toothless tiger. Rather than decreasing, carbon emissions have actually increased by half since then. As a consequence, 2015 is well under way to marking yet another record as the hottest year in living memory, and extreme weather events are increasing worldwide.
Climate risks on the financial market
What would have to be done is actually crystal clear. Thanks to decades of climate research, we now know that before exceeding the two degree target, the atmosphere can probably cope with an additional amount of carbon dioxide that corresponds to burning 230 gigatons of carbon. That is approximately one fiftieth of what is still stored in the form of coal, oil and gas under the surface of the earth. In other words, if we want to avoid dangerous climate change, about 98% of fossil fuel resources will have to remain in the ground.
This straightforward insight has far-reaching consequences. The Bank of England’s Governor, Mark Carney, recently warned institutional investors against the bursting of a ‘carbon bubble’ on financial markets. What is currently considered to be valuable on the balance sheet of coal, oil and gas firms might turn into a stranded asset tomorrow. An increasing number of institutional investors, including German insurance group Allianz and the Norwegian government pension fund, have reacted with an announcement that they intend to divest from coal.
To reduce dependence on coal, oil and gas, further progress is required in three key areas: power generation, construction and transport. The good news is that in all three areas, there are technologies today which allow for low-carbon prosperity. In the electricity sector, solar and wind plants provide energy in a similar cost range as new gas-fired or nuclear power plants in many countries. In countries like Switzerland, hydropower, with its storage capacity, constitutes an ideal complement to these renewable energies.
In the construction sector, an increasing number of low-energy and energy-positive houses demonstrate how buildings can be efficiently trimmed to low energy costs. In combination with solar modules and heat pumps, the net energy balance can even be positive. And in the field of transport, we can see more and more electric bicycles and cars, which allow for a quantum leap in energy efficiency, prevent local emissions and reduce energy import dependence.
Think global, act local
Sounds like a promising starting point for solving the climate problem, right? Is a breakthrough to be expected at COP21 in Paris, then? The history of two decades of international climate policy suggests that one has to be prepared for at least two scenarios.
In the optimistic case, there will actually be a binding global climate agreement, which may have many loopholes but will offer valuable guidance and thus send a strong signal to national policymakers in many countries. In the pessimistic scenario, the world’s political leaders will demonstrate once again that they are incapable of solving the problem.
Either way, our climate future will not be decided in Paris. Instead, keeping the planet safe will be a matter of successfully implementing energy efficiency, renewable energy and sustainable mobility projects on the ground.