10.7 C
Wednesday, December 1, 2021

Free markets and technology may yet deliver a 1.5C world

Pakistan, Bangladesh, Korea, Indonesia, Vietnam, Malaysia, and the Philippines all forswore new coal-powered plants in Glasgow. The Asian Development Bank is soon to start retiring existing coal plants. 

One should not read too much into India’s move to water down the text. Narendra Modi’s push to become a renewable superpower with 50pc clean electricity by 2030 implies peak coal use in India by the middle of this decade, much sooner than pre-Glasgow assumptions.

South Africa’s Eskom is to shut its 12GW of coal power and switch the entire system to renewables by 2030, with the help of the UK, the US, and the EU, even though coal accounts for 87pc of its electricity. Mr Sharma was right the first time when he said “we’re consigning coal to history”.

The rhythms of the capital markets are unfamiliar to the political and environmental journalists who tend to cover Cop summits, and incomprehensible to the protesters outside. 

They suspect a greenwashing stunt when Mark Carney talks of a $130 trillion alliance of asset managers and wealth funds committed to a 1.5 degree climate path.

Few understand how quickly Big Money has gone from being the careless enabler of fossil pollution and land abuse to becoming instead the arch-enforcer of the green order, pulling forward change and annihilating the old incumbency on the way. 

The Paris Agreement was the regulatory signal that led to a screeching handbrake turn. Investors could see the litigation tail-risk immediately. They could see stranded assets on the horizon. 

By dint of happy timing, green technology has in any case reached serial tipping points. There have been analogous waves of disruption before: whether canals to railways, or fixed telecom to mobile phones. Once markets can see the shape of the forward curve, and smell new fortunes, it becomes a cascade.

Mr Carney said “the money is there” to fund the trillions of annual investment needed for the Great Switch. What Glasgow has done – and perhaps only a Cop linked to the City of London could have done – was to start sorting out the plumbing of global climate finance.

It is detailed work on the nuts and bolts of green bonds and project finance for Africa and South East Asia. It is designing a global carbon market that is more than a double-counting fraud.

Markets respond to the tightening regulatory message of each Cop. If you want to pick just one thing from Glasgow that changes the trajectory of the planet, it is the pledge by countries making up two-thirds of global GDP to cut methane emissions 30pc by 2030. 

Methane has 86 times the greenhouse potency of CO2 over 20 years and accounts for a third of global warming. Satellite technology allows us to track leakage from every coal mine, gas pipeline, or landfill. It is the lowest of low-hanging fruit. 

“It is huge. If we fulfill this pledge over the next 10 years the impact is like switching all the cars of the world, all the trucks, all the planes, and all the ships, to zero emissions,” said Fatih Birol from the International Energy Agency.

Do Cop critics understand this?   

Reflect on what has already happened. The world was on a path to 4C before Paris in 2015. This was down to 2.7C coming into Glasgow. Climate Action Tracker says that if countries deliver on all binding pledges at Cop26 we are heading for 2.1C. 

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