Time is running out for the world to meet climate targets

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The world is not on the path to limit the increase in temperature to 1.5C above pre-industrial levels. Its movement towards an irreversible change in the global climate does not mean the world has failed to make progress, however. On the contrary, there has been much improvement. Yet it is not enough.

The question to be addressed at the COP29 climate conference in Baku this month is how to change this unhappy trajectory.

“The last decade has seen the share of fossil fuels in the global energy mix gradually come down from 82 per cent in 2013 to 80 per cent in 2023,” says the International Energy Agency in its World Energy Outlook 2024 report.

“Demand for energy has increased by 15 per cent over this period and 40 per cent of this growth has been met by clean energy.”

In sum, demand for fossil fuels has continued to expand and its share in supply has barely fallen; we have been running fast to stand still. Will this change quickly enough in future? No.

Yes, we have already passed peak coal and are on track to pass peak oil and gas by 2030, according to the IEA. But, under current policies, in the agency’s “stated policies” scenario, known as Steps, fossil fuels would still generate more than half of all energy in 2050.

We would do far better if policymakers met their commitments, in the “announced pledges” scenario, or APS. But, even then, global temperatures would rise by some 1.7C by the end of the century. To keep below the 1.5C ceiling, “with a 50 per cent probability”, faster change is required, in what the IEA calls a “net zero emissions by 2050” scenario (NZE).

To understand the prospects for achieving the NZE scenario, we need to look at the interactions between technology, economics and politics.

Technology has made big advances, especially in the supply of relatively cheap electricity with renewables. The world owes a great deal to China, for its huge investment in supply, especially of solar panels, which have declined greatly in price. China has made clean energy much cheaper. Significant progress has also been made in wind technologies and the cost of batteries.

Adair Turner, chair of the Energy Transitions Commission (ETC) coalition of experts, told the Financial Times in July: “If you asked whether we will get to something close to a zero-carbon economy by 2060 or 2070, I think it is inevitable that we will.”

But, he added, “the difficulty is that, unless we move faster, we will get there too late”.

Thus, the combination of human ingenuity with heavy investment has transformed our ability to move to a clean energy economy. There are problems with intermittency, but advances in storage technologies make that look increasingly manageable. Moreover, this new economy will be better in many ways than the one we have today, not least via huge reductions in local pollution and increased energy independence.

Now, consider the economics. Here, too, the balance is in favour of accelerated action. A recent paper from researchers at the Potsdam Institute for Climate Impact Research found that “the world economy is committed to an income reduction of 19 per cent” by 2050, with a likely range of 11-29 per cent, given uncertainty, relative to what would have happened without climate change (the word “committed” here describes the outcome of past emissions and plausible future scenarios).

Not investing in insurance against such outcomes would be economically irrational. But upfront costs of the investment and disruption are heavy.

The IEA says investment in clean energy supply needs roughly to double between now and 2035 in high-income countries and China for the net zero emissions scenario to be within reach. This is big, but feasible. But, in developing countries, other than China, investment must rise to seven times current levels, which is far less feasible.

The great obstacle to such an increase in investments in the latter is the cost of financing. Many emerging and developing countries are in desperate need of clean, cheap and reliable energy. Yet, many of their governments are already debt-encumbered and the cost of financing such projects in these countries is prohibitively high.

Finally, there are the politics. Many people are ideologically resistant to the idea that there could be such a huge negative environmental externality as climate change, as it would violate their faith in laissez faire economics. Others have strong interests in the fossil fuel economy, or do not want to change their established ways of life.

Beyond all this, climate change is a global collective action problem. No country can solve it on its own. It requires not just co-operation, but willingness of those with the resources (who also tend to be those responsible for the bulk of past emissions) to finance and subsidise investment in the rest of the world.

In brief, despite the many benefits of making an accelerated energy transition, the combination of “the tragedy of the commons” with what former Bank of England governor Mark Carney calls “the tragedy of the horizon” — the human inability to act in advance of distant perils — is preventing action. The election of Donald Trump as US president will make this far harder.

For all the technological advance, we seem unlikely to make enough progress on climate in time. If so, this will be a tragic, and unnecessary, failure.