Geopolitical dimensions of climate policy

Starting in the 1990s, climate change has become a fixation for rich country politicians and elites.

It emerged as the world had just seen the end of the Cold War. 

There was relative peace and trust across the world, broad economic growth and swift progress being made against poverty. In the capitals of Europe in particular, it felt like most of the planet’s big problems were fixed so climate change was the final frontier.

These proponents of climate action advocated with relish, the goal of ending reliance on the very fossil fuels that had powered two centuries of astonishing growth. Sure, this would cost hundreds of trillions of dollars, but there would always be more growth.

What a naïve, narrow-minded worldview. Time has not been kind to the foolish idea that climate change was humanity’s sole remaining problem — or that the planet would unite to solve it. Geopolitics and economics mean a rapid global transition from fossil fuels is impossible.

As has long been clear for many, the majority of the world never shared this myopic focus on climate change.

Despite immense progress in some countries, life remains a battle against poverty, hunger and disease. In many more countries, the top priority is to create more jobs and life-changing growth and development.

Outside the most advanced economies, climate change has understandably always been a relatively low voter priority.

Leaders from Europe and the United States talk up “net zero” as though it has global support. But this unity is quickly revealed as a mirage. For one thing, the destabilising axis of Russia, Iran and North Korea is not about to support Western efforts to solve climate change.

Indeed, according to McKinsey, achieving the net-zero target would require Russian climate policies costing $273 billion every year – around three times what Russia spent on its military last year. That won’t happen.

Challenges

The geopolitical challenges run even deeper. China’s growth has relied on burning ever more coal. It is the world’s preeminent greenhouse gas emitter, with the largest increase of any nation last year.

Renewable energy made 40 per cent of China’s primary energy in 1971, reduced to seven per cent by 2011 as it ramped up coal use.

Since then, renewables have inched up to 10 per cent. Strong climate action could cost China nearly a trillion dollars annually, hurting its journey toward becoming a rich nation.

The reality is that most of the world – including powerhouse India and emerging economies – will continue to focus on becoming richer, often with fossil fuels.

Russia and its ilk will ignore the fixation on climate change altogether. And China will make money from selling the West solar panels and electric cars, while only modestly curbing its emissions.

As rich countries irresponsibly attempt to export the cost of climate policy to poor countries through carbon adjustment taxes, they will drive a further wedge into an already fractured world.

Meanwhile, despite all the hype, wealthy countries have ever less money left for the climate fight. Annual growth per person among rich countries declined from four per cent in the 1960s to two per cent in the 1990s.

It now hovers just above one per cent. Many of these countries face pressure to spend more on defence, health care and infrastructure, as geopolitical pressures and changing demographics make their pathway to stability and growth far less certain.

Yet, across Europe and North America, single-minded zealots who were born in a world of relative calm of the 1990s continue to push for de-industrialisation and immiseration to tackle climate change – including for the world’s emerging economies.

This attempt is doomed to failure because carbon reductions need to be sustained across decades and through shifting majorities. The economics of strong climate action was always deficient— and today this is blatantly obvious.

More politicians are realising what former UK energy and net-zero secretary Claire Coutinho acknowledged: “You cannot heap costs onto struggling families to meet climate targets.”

Already in Europe, voters are turning on politicians who have argued for less growth and prosperity in the name of climate change.

With six to seven election cycles before mid-century, strong climate policies could cost each person in the rich world more than ten thousand dollars a year are doomed. 

These policies will make it more likely that voters turn to populist, nationalist leaders who will entirely abandon expensive net-zero targets. Then, climate policy will be in tatters.

Better

The world needs a better way forward. The best solution is not to push people to be worse off by forcing a premature transition from fossil fuels to inadequate green alternatives.

Instead, we should ramp up investments in green innovation, eventually driving down the cost of clean energy to be cheaper than fossil fuels.

This is much cheaper and will allow everyone, including Africa and other emerging economies, to want to make the shift.

Rich countries need to wake up and stop haemorrhaging trillions in self-inflicted climate policies that few will follow, laughed at by many and will mainly make China rich.

Spending a small fraction of the climate trillions on green innovation would fix climate change. This will allow us to focus the rest of our resources on education, defence, health care and the many other, important challenges in the 21st century.

The writer is President, Copenhagen Consensus, Visiting Fellow at Stanford University's Hoover Institution, and author of "False Alarm" and "Best Things First"