Successful Decarbonization Requires a Radically Different Mindset
On Wednesday May 17th, I listened to Karl Husker of the World Resources Institute present the report From Risk to Return: Investing in a Low Carbon Economy during a Global CCS Institute webinar “Can the US Achieve a Low Carbon Economy by 2050?” The presentation covered the question of whether and how the United States can achieve economy wide reductions in CO2 emissions of 80% below 1990 levels by 2050. You can read the report here.
I commend this report because it aims to answer important questions like:
“Is creating a clean energy economy technologically and economically feasible?”
Yes. Of course, the transition is not free. It makes assumptions that more research, development, and demonstrations of technology innovations will drive down the costs of certain pathways. Notably, it assumes that carbon capture and storage and bioenergy with carbon capture and storage will work at scale in order to negate emissions so that the models add up. Under the pathway that considered mixed resources, they found that investments over the next three decades could generate the following:
Annual Capital Investment (Billions) Annual Savings (Billions) 2020–2030 $220 $70 2030–2040 $410 $370 2040–2050 $360 $700
Technologically it will require three basic pillars.
(I would argue there’s a missing forth pillar. More on that later.)
“What are the investment needs of this transition and how might specific economic sectors be affected?”
Plenty. It considers four different pathways for decarbonization, one with high carbon capture and storage, one with high nuclear, one with high renewables and one with mixed fuel use. Here is a graph that shows the investments over time in the mixed fuel use scenario in different US regions. Investment needs are highest closer to mid century.
“What are the opportunities and challenges for business?”
Several. Lots of jobs in the low carbon sector can be created. Businesses that are locked in to high carbon infrastructures will be stuck with stranded assets when freely dumping CO2 into the atmosphere becomes illegal. Those that invest in carbon free infrastructures will come out ahead. Market leaders in the low carbon economy will get rewarded. Unless policy doesn’t follow at pace, in which case early market leaders who rely on policy alone will get crucified. More renewables will put a stress on grid variability which is a hot and getting hotter topic. One way to deal with this is to build more transmission lines. Another way is to create grid scale storage or systems which can consume excess power for industrial processes.
“What is the role of policy in this transition?”
Ample. Without effective policies in place we wont get there. There is policy innovation needed on a federal level with carbon pricing. Policies need to set the framework for a massive transportation infrastructure overhaul, energy use in buildings, how utilities operate, how we produce food, and how states with different goals can work together. Policies must also consider what is happening in the rest of the world and align to the collective effort to decarbonize. Global climate change is a global problem.
There is an easy seduction to believe these extremely optimistic models. If only we invested a little bit more of the GDP into low carbon technologies and put the right policies in place, we would get there. Carbon free energy everywhere. Electrify everything. Efficiency all over the place. But let’s be serious. Even with top-down investments and technologies that work, is the US on track to achieving a Low Carbon Economy by 2050?
Without radical change? Not even close.
This climate art reminds me of an Einstein quote: “We cannot solve our problems with the same thinking we used when we created them.” I would argue that technology and finance got us into this mess. While we need technology and finance to get out of this mess, it is fundamentally a mindset problem. So what could enable a mindset that puts us on a track to meet the needed target? Below is are four ideas that could contribute to the accelerated pace of solutions to solve climate change.
Create an insurance policy that motivates zero carbon
Models which make technology predictions are usually wrong. In the case of climate change this is a problem because solving it is a stock issue, not a flow issue. In other words, as a world, we can’t just reduce the amount of garbage we dump into the atmosphere, when in the future we are already committed to pulling it back. If we take more time to reduce the flow of CO2 to the atmosphere, we are stuck with a greater stock. This will cause greater pain. Therefore, the three pillars of energy efficiency, carbon free energy, and carbon free transport — while all critical — have no stick to motivate them if they don’t happen at the needed pace. Restoring the carbon balance must be part of the calculus of decarbonization models.
As methods to capture and store carbon dioxide from the atmosphere — also known as Carbon Removal — begin to prove they can scale and demonstrate affordability and permanence, their existence can play a critical role in facilitating the goals. Already, there is an unsustainable amount of CO2 in the atmosphere. From the climate balance, for every ton of CO2 we emit, we are committed to putting another one away.
In contrast to some academic arguments who have called concepts of large scale CO2 storage “a moral hazard” because their existence gives the emitter no reason to change, the effective use of negative carbon emissions could give emitters are two options — 1) pay for the offset or 2) decarbonize. Setting the marginal cost for carbon remediation value to the externality could not only motivate the emitter to decarbonize, innovate ways to not emit the carbon in the first place via commodization of a carbon product, or switch to a zero carbon fuel, but also provide the backstop needed when we are committed to large scale negative emissions.
The mindset shift therefore requires a recognition of carbon removal as a waste management service that we leave our children to clean up after ourselves. If we only focus on slowing down our waste, but somehow fail, then there is no insurance policy to fall back on. Climate change has been coined a “super wicked problem” because
- We are running out of time — too much CO2 accumulating in the atmosphere without the ability to balance it
- There is no central authority — even if the U.S meets targets, other countries might not and it would still affect everyone
- Those causing the problem are trying to solve it — we rely on car companies and fossil fuel emitters who are historically responsible to immediately change
- We discount future generations irrationally — as shown by the model, we think we’re better off letting a fossil asset keep it’s entire life time than considering the social cost of carbon and harm that might cause to future generations
An insurance policy that considers options which do not lock us in to path dependent technologies, but in fact can reverse climate change, removes the super wickedness of the challenge. It buys us time. It creates the ability to assign emitters of a ton of carbon with the responsibility of paying for a ton of carbon removed, therefore allowing for a central authority to manage the total amount of emissions via certifying offsets. It puts the agency of solving climate change in the hands of new companies and methods which are not historically responsible for causing it. And it assigns the cost of carbon remediation in today’s dollars and not to the future therefore holding society accountable to the social cost of carbon.
The utility model (also) needs to change from the inside out
The utility sector has a critical role to play in the decarbonizing efforts because they are responsible for the dramatic shift in carbon intensity from today’s 509 kg of CO2 per megawatt hour to 2 kg of CO2 per magawatt hour in 2050. It is clear that the current utility model is not amenable to that goal. I’ll believe in top down federal reform from utility sector when I see it. In the United States there are around 3,000 utilities. Each one operates a little bit differently, has different ways to accept interconnection onto the grid, and responds to different state regulatory agencies. Each state is trying its own approach to driving low carbon energy. New York State is approaching this through an overhaul of the energy approach through the Reforming Energy Vision to try to get utilities to think like a business so that they can benefit from low carbon cost savings. California has a more mandated approach. While there are positive trends on the state level that could ideally create replicable models, the states don’t really talk to each other or share best practices. The Federal Energy Regulatory Commission (FERC) which is responsible for the regulation interstate transmission of electricity, natural gas, and oil could help. However, with recent appointees nominated by President Trump, don’t be shocked to see a reversal of “unfair” federal mandates that hindered fossil fuel extraction and helped renewables.
The shift could come from the inside where the utilities who realize the urgency of saving their lives by leading and innovating the way to zero and ultimately negative carbon. The mindset shift from the utilities needs to fully internalize the price on carbon, consider the attributes of clean energy, and start thinking about how they can actually accrue benefits from energy savings through efficiency and renewables. In other words, just as they have a mandate for providing stable electricity, they should have a mandate for providing carbon free electricity. To go a step further, since negative carbon emissions are a factor that will come increasingly into play, forward-thinking utilities should actually consider how they can offer negative carbon emissions as a public good.
Stop hoarding, start sharing
As an innovator, if you have a great idea and you want (and deserve) to make a ton of money on it, so you protect it with as many patents as you can. You believe that you are better off keeping that idea to yourself so no one else does it better. If anyone gets their hands on your great idea before you’ve taken it commercial, you run the risk of diminishing the asset value of your patent portfolio. And you lawyer up — which adds to the expenses of running your business and investing in further innovation. In the short time I have worked in academia and with start-ups I have seen this be the case for a number of potentially breakthrough technologies — specifically in the direct air capture and carbon capture utilization and storage space. This creates a number of challenges and bottlenecks when trying to scale new technologies quickly.
For one, silos occur. This creates a limited amount of coordination between research efforts that could commercialize new low, no, or negative carbon technologies. Fragmentation of technology platforms occur. Academic researchers who are trying to contribute to the science are stymied. Companies stay in stealth mode longer than is healthy. As a result, the broader community doesn’t really understand what you’re doing. The economists don’t include your technologies into their models. The policies aren’t there to help you. And the established industry players who could potentially provide scalable distribution access are unaware of how your existence might help their business model.
I’m no lawyer, but it seems to me that the open approach pursued by Tesla should be a case study for some companies that might want to build a more sustainable future in specific industry verticals. There are numerous industry consortia which take up this model, but oftentimes they require grant funding to even start the conversation. Industry consortia are usually profit centered and not inherently climate centered. It could be worth thinking through how any technology that contributes to a decarbonization goal might fit into a patent pool mandated by the government — like the RCA. This is not to advocate for complete open innovation for everything. But getting to a place where technology innovation can move more quickly to scale requires a mindset shift that requires a win-win attitude that is more amenable to idea sharing.
Create societal feedback loops
A feedback loop is a critical part of getting societal input to design systems that engage all stakeholders to move a community as a whole to the desired outcome.
Unlike China, which has a technocratic regime able to deploy massive infrastructure changes with little societal input, the United States is a democracy. In the race to solve climate change, China is winning and (along with India) has surpassed the US as the most attractive renewable energy country. A major reason is because they don’t have to ask anyone for permission. In the US, we need to deal with issues like siting and public acceptance which will vary from region to region. Gathering this data from people may radically change the models and assumptions of what is actually possible. However it will also streamline a process for site approval and the ability to deploy systems that are necessary for change. An effective feedback loop could even open up more options that create decarbonization opportunities that were not previously apparent because at the end of the day it is people, not technologies, who are the root of the problem.
Do you have other ideas of what could shift our mindset? Please share them in the comments below!
Originally published at Carbon A List.