Copped Out: Global Warming and Global Markets
Photograph by Nathaniel St. Clair
As is now something of an annual ritual, last month’s COP29 conference in Baku, Azerbaijan ended on a rather shabby note. Actually, one can describe its beginning the same way. Ilham Aliyev, the dictator who rules Azerbaijan, a country where fossil fuels make up 90 percent of its export revenues, opened the conference calling fossil fuels ‘a gift of God.’ This was something of a regression. Even the dictator who oversaw COP28 last year in United Arab Emirates, where fossil fuels only make up about 40 percent of exports, didn’t quite go that far.
A recent report by the Independent High Level Expert Group on Climate Finance called for developing countries to annually receive around $1 trillion in external climate funding by 2030, $1.3 trillion by 2035. The report estimated half come from public funding, half from private. The agreement reached at the conference says that developed countries, as well as public finance institutions, such as the World Bank, will put up $300 million. The majority of that money should be in the form of low-interest loans and grants, but the wording is loose enough that the commitment is hedged – it says funding could come from “a wide variety of sources, public and private, bilateral and multilateral and alternative sources”. The remainder of the $1.3tn will have to come largely from private sector investment in developing countries, with an unspecified amount to come from potential new levies on things like shipping, frequent flyers, oil and gas and other sources. That latter part is still to be flushed out and could very likely be difficult to achieve in practice.
This is especially poignant as the majority of CO2 emissions are emitted by the developing world. Of course, some arguments rage here as well. Should China still be considered a developing country? India? The University of Chicago’s Energy Policy Institute estimates that from 2023 to 2021, nearly 60 percent of the increase in air pollution has come from India where some three-quarters of electricity is generated from coal. On November 18th, a key measure of air pollution in New Delhi reached a level more than 100 times the limit the World Health Organization deems safe, according to calculations from the Centre for Research on Energy and Clean Air. Despite an impressive build out in renewables, China is still by a good margin the world’s largest burner of coal. Other Asian countries including Vietnam, Bagladesh, and the Philippines have greatly increased coal consumption. Indonesia is currently the world’s largest coal exporter.
While Britain, the birthplace of the industrial revolution, made headlines when it closed its last coal –fired power plant in September 30th, joining a third of OECD countries with coal-free electricity (needless to say all still use plenty of oil and natural gas, Britain’s imported electricity remain at a record high), coal again reached its highest level ever this year, another annual event. Consumption grew by 4.5 percent in 2022, 1.4 percent last year, and the International Energy Agency (IEA) notes in its Coal 2024 report that consumption will go up 1 percent this year to an all-time high of 8.77 billion tons. It is worth noting that this defies some of the IEA’s earlier predictions. In 2015, the organization predicted global coal demand would fall to 5.5 billion tons by 2020. In 2017 and 2020 it suggested that global coal demand peaked in 2013. Yet this past December the IEA projected coal usage will reach about 9 billion by 2027.
This speaks to the fact that energy transitions have never been smooth and never had a timeline. In fact, it may be fair to say transitions have never really happened. As described by Jean-Baptiste Fressoz in his informative book More and More and More: An All-Consuming History of Energy, there is often a symbiotic dynamic at work with energy sources rather than a competing one. For the narrative that coal replaced wood, Fressoz explains that industrial countries burned more wood in 1900 than in the early 1800s. In the case of Britain more wood was used as pit props to extract coal than was previously burned as firewood. It was the oil-power engine inside the automobile that opened up suburbia and another large market for timber.
Today, the green transition is being powered by things like cobalt, nickel, rare earths, and lithium. Solar panels already consume 10 percent of the world’s mined silver; by 2050 that number couldclimb up to half. While the future one hopes to see recycling become dominant (but at this point much recycling is expensive and quite dirty itself), at the moment these materials will be mined and mining uses fossil fuels. So does producing important materials such as steel and concrete. For instance, rare earths are not rare. Most are actually quite abundant. They are just difficult to extract and polluting to separate into their pure forms- probably the main reason why the rare earth industry, in both extraction and processing, has come to be dominated by China, though even China has grown tired of extracting some rare earths and has been importing the dirtier ones from Myamar (another less environmentally squeamish dictatorship).
Hovering over all this is the age old question of profits. The November 19th Business Section of the New York Times featured a piece titled ‘Fossil Fuels Regain Ground After Gren Energy Falters.’ Describing the upbeat mood of the oil and gas industries in the aftermath of Trump’s election, the article goes on to explain:
The difference in profits that companies can make from extracting oil and gas and what they can earn harnessing wwind and solar had already swung sharply in favor of fossil fuels in recent years. According to an analysis by S & P Commodity Insights, the median return on capital among some of the world’s biggest investor-owned oil companies…topped 11 percent last year. The median return over that same period for top renewable companies has stayed around 2 percent.
While in recent times countless pundits have rejoiced over the lower price of renewables, in a market economy it is not the price that ultimately matters, it’s the profitability. Precisely why we now need less capitalism and more public planning and investment. It is true that initiatives like carbon-free steel and concrete will provide a hefty payoff to any startup that can get there. Therefore such ventures are getting some funding. Yet as the Financial Times pointed out on November 11th ‘Transition to clean energy falters as funding falls short.’ Analysis by research company Sightline Climate finds that climate tech startups raised a total of $11.2 billion in the first half of 2024- down a fifth from last year (meanwhile 35 percent of all investments in startups is being pumped into energy soaking AI, a big reason, along with EVs and crypto-mining, why electricity demand in the U.S. and other European countries, after being flat for decades, is growing).
As Mariana Mazzucato shows in The Entrepreneurial State:
The state can and does act as a creator, not just a facilitator, of the knowledge economy…Evidence abounds of the State’s pivotal role in the history of the computer industry, the Internet, the pharmaceutical-biotech industry, nanotech and the emerging green tech sector. In all these cases, the state dared to think- against all odds- about the ‘impossible’: creating a new technological opportunity; making the intial large necessary investments.
It wouldn’t all be just a matter of replacing sources of energy. There is also efficiency. Energy is ultimately the only currency. Economies of any kind are really just systems to transform energy into productive activity and right now we are wasting a lot of it. Building consume about 20 percent of global energy, but due to poor insulation and ventilation, they waste between a fifth of a third of it, as compared to well-designed indoor spaces. SUVs need a third more energy than a common pre-SUV vehicle. Perhaps worst of all food production claims about 20 percent of the world’s fuels and primary energy, and estimates are that 20 percent of all food is lost or wasted. All this can be greatly improved.
The IEA estimates that investment in clean energy supply needs to double between now and 2035 in high-income countries. This may sound bleak, but it needn’t be. But relying mostly on the private investment would be folly. Public investment and planning are paramount. This should cover everything from carbon-free cement and steel to clearner mining and efforts to scale up recycling and reuse to nuclear and geothermal power. Such public investment can be tied to union jobs and publically-owned utilities. In other words, exactly the kind of public moonshots the Left can and should get behind. Time is running out to meet the goal of holding warming to 1.5 degrees Celsius. However, even if that is breached there is still a huge difference between 1.6 and 2.0 degrees. Every fraction matters. The battle for the future is ongoing and it can still be a bright one.
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