Countries, companies and organisations like the International Energy Agency are calling for more to be done to address climate change. Our Climate Commission’s final report also needs to be more ambitious, writes Rod Oram
On Monday, the Climate Change Commission will deliver its final recommendations to government on carbon budgets, policies and programmes we need to reduce our emissions over the next 15 years on our way to meeting our commitment to being net zero by 2050.
In normal times, such final reports to government might add a few new proposals. But often they mainly tidy up and strengthen the proposals of their precursor drafts. Rarely do final reports deliver a big lift in goals and strengthening of the underpinning architecture designed to help deliver them.
But these are far from normal times, particularly in the climate crisis. The four months since the Commission released its draft report has seen a surge in climate actions by governments and institutions, companies and investors, and courts and NGOs around the world.
The human response to the crisis has kicked into a much higher gear. It’s imperative the Commission’s final report embraces this significant shift.
The US, for example, is re-joining the Paris Agreement and has almost doubled its emissions reduction commitment it had made under the pact. Its new goal is a cut of 50 -52 percent from 2005 levels by 2030, including land-use, land-use change and forestry.
However, it would need a cut of 57-63 percent to be consistent with the global goal of limiting the rise in temperature to 1.5C and to achieve its net zero by 2050 target, according to analysis by Climate Action Tracker, which is run by a consortium of climate science institutions. CAT is the best way to keep tabs on countries’ commitments and progress.
Among institutions, the OECD’s International Energy Agency has laid down by far the most important challenge in recent times. Its Net Zero by 2050 report lays out scenarios, replete with 400 actions government need to take, for decarbonising the global energy sector. For example, oil and gas companies must stop all new exploration projects from this year.
It details an overhaul of energy whereby coal demand would plunge by 90 percent, gas demand would halve and oil demand would shrink nearly 75 percent by 2050. Solar would become the single biggest energy source — meeting 20 percent of global energy demand.
To drive these shifts, investment in low carbon technologies would have to rise to around US$5 trillion per year by 2030, up from around US$2 tn today.
“We need a historical surge in investment,” said Fatih Birol, the IEA’s executive director, adding that this would add 0.4 percent annually to GDP growth. “The bulk of it needs to be in clean energy.”
The report was based entirely on existing clean energy technologies, ranging from those deployed widely and commercially to those in their prototype phase.
Similarly, many organisations representing business have upped their climate ambitions in a number of countries. Most notable is the Confederation of British Industry’s Seize the Moment economic plan it released this week. It identifies six key ways to remake the economy and drive green growth towards net zero emissions in a bid to realise “a decade of better economic growth and social solidarity” in the wake of a decade of austerity measures, Brexit-related disruption, and the coronavirus crisis.
“This country will never have a greater opportunity to transform our economy and society for the better than we have right now,” said Tony Danker, the CBI’s director-general. “This is the moment where we have a genuine chance to make big bets on how the UK economy will grow and compete.”
The flow of major clean tech announcements from individual companies around the world is accelerating rapidly too. Just one example comes from AP Moller – Maersk, which has the world’s largest fleet of container ships. It will launch its first carbon neutral vessel, powered by methanol, in 2023, seven years ahead of its previous target.
Maersk said about half its top 200 customers had set or were close to setting zero carbon targets for their supply chains. Maersk plans to have a carbon neutral fleet by 2050, which will require massive investment in innovation and new ships.
Companies’ performances on their climate commitments vary widely by sector and within sectors, according to a recent global study by McKinsey. Overall, electricity generators are performing the best, whereas food, beverage and agriculture companies are the worst, with fossil fuel companies. We have a similar pattern in New Zealand.
Investors are increasingly active on climate issues too. For example, the flow of money into funds using Environment, Social and Governance disciplines to help them choose sustainability-focused stocks has surged in the past two years, particularly in Europe. Globally some US$1.5 tr is invested this way, a trebling since 2012, according to research by Morningstar.
Another big pressure on companies is coming from activist shareholders, such as the coalition which won two board seats at Exxon-Mobil at the company’s AGM this week over the opposition of the board and company. The investors are fighting the oil company’s refusal to set ambitious targets to cut its own emissions and those of the products it sells, and its refusal to invest in renewable energy. In contrast, BP, Shell and some other oil majors are making greater efforts to partially decarbonise.
By comparison to such galvanising actions abroad, our responses to the climate crisis are too often timid, piecemeal, disjointed and lethargic. It’s unfair and unreasonable to expect the Climate Commission’s recommendations alone will spur us to greater ambition, urgency and effectiveness. But if they are strong, right, well-evidenced and comprehensive they will help us get our act together.
