The next 30 years: The #GreatTransition to #NetZero<2050
Necessity, opportunity and possibility of fighting the climate crisis
This story is summarizing a climate policy discussion paper titled “The next 30 years: The #GreatTransition to #NetZero<2050”. Two questions motivated me to write this paper. The first was: What does the reality of the climate crisis mean for the role of civil society (in particular philanthropy) in the 21st century? The second was: How can trillions of USD currently drifting through global financial markets be mobilized and redirected towards climate impact investments? And could perhaps the answer to one question serve the other? Eventually, I hope that the paper can offer the climate movement a heightened level of strategic clarity regarding the challenges, choices and priorities that are going to shape our activities over the next 30 years. Moreover, I would like to encourage concerned citizens to step out of the sidelines and to take a firm stand for the protection of humanity’s future during this crucial time in human history. Overall, the paper consists of three parts:
- Necessity: The need for a #GreatTransition. This part explains why we must change and argues that it is our ethical duty, especially towards 21st century-born generations.
- Opportunity: A stroke of fate in the middle of a perfect storm. This part describes how we can change and shows how a #GreatTransition would be technically and economically feasible.
- Possibility: Making the #GreatTransition happen. This part anticipates when we will change and clarifies that we must be willing to fight for it and win the ideological struggle that is currently ongoing.
A related presentation can be found here.
Necessity: The need for a #GreatTransition.
An era that was defined by a doctrine of unconstrained global economic growth is coming to an end. Its decline is marked by a catastrophic business-as-usual greenhouse gas emissions pathway, implying a mean global temperature increase of about 3–4 degrees C (relative to a pre-industrial baseline) by 2100. At the same time, radical nationalism is globally on the rise and rejecting climate science while the reduction of the annual volume of global greenhouse gas emissions to net zero well before 2050 (#NetZero<2050) has become humanity’s most important collective outcome target. Consequently, for the next 30 years starting 2020, the impact of our personal, professional and political activities, as well as the behaviors of organizations, corporations, cities and countries, needs to be measured by their net contributions to #NetZero<2050.
It is apparent that reaching #NetZero<2050 requires a #GreatTransition, a decades long civilizational transformation project combining a rapid and deep decarbonization of the global economy with natural climate solutions, to take place as soon as possible at a global level (broken down into multiple #GreatTransistions at national and regional levels). In light of the magnitude and urgency of the climate emergency we need to rethink the priorities and challenges for purpose-driven investing and philanthropy in the 21st century, including potentially increasing present and future allocations for “transition investing” and “transition philanthropy” activities which directly or indirectly contribute to #NetZero2050.
Opportunity: A stroke of fate in the middle of a perfect storm.
In general, the #GreatTransition decribes the radical transformation of our energy supply and power grid infrastructure, wide-reaching electrification of heating/cooling and transportation, increased energy efficiency, drastically changed patterns of production and consumption, substantial support provided to emerging economies to leapfrog and cut short fossil fuel-based phases of economic development, as well as the protection and expansion of natural climate solutions. Based on a roadmap provided by the international renewable energy association, cumulative transition investments of more than 110 trn USD (not including natural climate solutions) will need to be made by 2050, (IRENA). In order to facilitate and accelerate the #GreatTransition, a combination of three climate policy instruments must be implemented as soon as possible: An effective price on carbon emissions (#EPOCE), an ambitious Green New Deal (#AGND) and a huge catalytic transition fund (#HCTF), dedicated to support transition projects beyond the impact of #EPOCEs and #AGNDs.
In connection with an #AGND, the Green New Deal proposed by Bernie Sanders, which is featuring a 16.2 trn USD public spending campaign over the next 10 years and anticipated to pay for itself over 15 years, can be considered an exemplary blueprint. Building on this example, we can make the case for a unique window of opportunity that has recently opened up in front of policy makers: The fact that the need for a capital intensive #GreatTransition and the risk of an economic recession on the one hand coincide with a zero-to-negative interest rate environment (which likely represents a “new normal”) with trillions of USD of underutilized capital on the other, can be recognized as a stroke of fate in the middle of a “perfect storm”.
In order to respond to the combined threat of a climate emergency and an economic crisis, countries with robust credit ratings have the opportunity to issue, for example, prime-rated 20 to 30-year “Great Transition bonds” at zero (or extremely low) interest rates to eager institutional investors, including pension funds, sovereign wealth funds and insurers . This way, trillions of USD could be mobilized from mainstream capital markets and transformed into long-term transition capital. Governments would be provided with the enormous financial resources needed to commission the private sector with the #GreatTransition while assuring a socially agreeable transformation process and creating millions of decent, purposeful jobs. In addition, part of the raised funds can be used to help emerging economies decarbonize their growth and increase their resilience, thereby reducing climate-caused humanitarian crises in the future and contributing to the Sustainable Development Goals (SDG) within planetary boundaries.
Possibility: Making the #GreatTransition happen.
What will it take to translate the proposed climate policy instruments into political reality? There is a need for improved and intensified changemaking activities across three level of political support building: “science and thought leadership”, “policy design and advocacy”, and “public awareness and political pressure”. With regard to the level of science and thought leadership, it is important to note that a grave modeling mistake that apparently has been made by economists from Working Group III of the IPCC. According to an analysis by Steve Keen, it appears that the potential economic damages for the business-as-usual and worst case scenarios have been severely underestimated. Together with the application of a relatively high discount rates, this has dramatically underrepresented economic risks and further delayed climate action in the past. As a result, earlier economic damage estimates from Working Group III are in urgent need of being revised.
At the policy design and advocacy level, well-crafted blueprints for an #EPOCE or an #AGND are generally known and available, although their ethical necessity and historic significance may not be well understood yet among political decision makers. In terms of public awareness and political pressure, a widely shared understanding of the magnitude and urgency of the climate crisis, as well as visionary political leaders and policy makers who comprehend the weight of responsibility resting on their shoulders, are areas where we are currently lacking the most. This shortcoming is largely owing to a fossil fuel industry-funded consensus gap between the scientific consensus and the public sphere that characterizes the early 21st century. More systemic “transition philanthropy” activities are needed in order to mobilize a critical mass of climate activists and to counteract an increasing social media outgrowth of misinformation and climate science skepticism.
Eventually, we need to recognize the fact that the fight for #NetZero2050 is at the same time an ideological struggle over political influence. Going forward, we can anticipate a new fault line emerging between an ecological-humanist movement in on the one hand, and a fossil fuel industry-funded, radical nationalist and market-libertarian countermovement on the other. By denying or trivializing the scientifically supported reality of a man-made climate emergency and by categorically rejecting regulation and public spending, the countermovement is certain to lead modern human civilization into an unthinkable global disaster. To prevent this from happening, it is imperative to encourage climate-concerned citizens (especially traditional conservatives and liberals) who have not yet taken a definitive stance or may unwittingly support the cause of the countermovement by delaying the #GreatTransition, to join our side.
Over the next 30 years, the future living conditions of the 21st-century-born generations will be determined by our ability to turn #EPOCE, #AGND and #HCTF into a political reality as soon as possible against the countermovement’s collective resistance and financial resources. We have a fairly good idea of what needs to be done to achieve #NetZero2050. We have science, ethics, everyday reality, economic rationality, the beauty of life and nature, and our love and passion for the well-being of our children and grandchildren on our side. A unique window of opportunity is currently wide open in front of us. It is time to get engaged.
 In this context, Adam Tooze suggests that public debt issuances dedicated to fighting the climate crisis should be supported by central banks (e.g. acting as a buyer of last resort or using capital requirements and collateral rules to favor transition investments) https://foreignpolicy.com/2019/07/20/why-central-banks-need-to-step-up-on-global-warming/