With apologies to Charles Dickens: It was the best of times (never had so many lived so well), it was the worst of times (never had our home been more imperilled). If we’re going to hit our 2030 targets to stave off runaway global heating, we needed to dial down global emissions by 4% in 2022. Instead, they went up by almost 1%, reaching record levels of 36.8 billion tonnes of carbon dioxide.
We are not too late to safeguard a future worth living in. Every second and fraction of a degree matters.
The solutions to climate change are taking off. A new growth story is beginning. Over the next five years, the world will meet more than half the tipping points for green tech, according to British economist Nicholas Stern, meaning we’re off to the races.
But it will take a quantum leap in climate action to speed things up or global heating will start a fire that sucks all the oxygen up.
If we listen to the fat cats from the oil sector bulging with profits like never before (ExxonMobil should put Vladimir Putin on its Christmas card list): oil is prosperity; it is unrealistic to turn off the taps overnight. Our energy bills would go through the roof, making life even less affordable. Of course, we need to address climate change, but nice and slow, by 2050 or so. While some environmentalists preach that the only option is to atone for our sins, sacrificing our quality of life, and to stop having kids. They both sound out to lunch to me.
First off, fossil fuels as an asset class are like swampland in Florida. It might be a banner year for oil company profits, but make no mistake: oil is a dog – and not a good one. We recently analyzed 14 of Canada’s largest pension funds to see how oil and gas stocks had contributed to their returns over the past 10 years. In every case, they were a substantial drag, draining tens of billions of dollars from people’s retirement accounts, even accounting for the record profits the oil and gas stocks had in 2022 because of the Russian invasion of Ukraine.
When you look at the stock market performance of the 74 industries that make up the entire economy over the 10 years leading up to the end of 2022, oil and gas stock returns were bottom of the barrel, coming in at number 62. And with electrification about to reduce global oil consumption by millions of barrels per day, the smart money is not betting on the black stuff. Contrast this with the returns of the 430 “green flag” stocks (with a market value of more than US$16 trillion) Corporate Knights tracks, which delivered a cumulative 10-year return of 368% – quadruple what oil and gas managed over the same period.
We know that we have the tools to do it, and that we can move much faster than almost anyone thinks is possible (multibillion-dollar energy companies like Ørsted and Enel have made complete U-turns in half a decade that were supposed to take 30 years).
The economic solutions to global heating are growing faster than the problems. We are replacing cows, coal and cars with plant protein, green power and electric vehicles (including bikes).
We also know that switching out polluting problems for emissions-free solutions is quite often cheaper and better, with fewer moving parts.
Green is not a luxury good. To settle for anything less would be uncivilized. As my six-year-old son, Zia, recently said, “An electric car shouald be $5,000 to $20,000 or else I am telling the boss to fire himself and I will do it myself.”
In Canada for instance, average household energy bills will be lower in 2050 thanks to the transition away from fossil fuels, the Canadian Climate Institute estimates. Consider that an average Canadian driving around 15,000 kilometres will pay about $2,000 a year for gas (ignoring the price spikes seen in 2022) but could recharge an electric vehicle for $350 a year for the same mileage.
Corporate Knights research director Ralph Torrie estimates that aggressively embracing electric vehicles and energy-efficient smart buildings would generate energy savings of $32 billion per year by 2030. That works out to $2,091 for every Canadian household (all 15.3 million of them), not to mention the deflationary benefits of removing 1.5% of GDP costs from our economy permanently.
In short, our world needs climate action on all fronts – it starts by electrifying everything, everywhere, all at once (to borrow the phrase from this year’s big Oscar winner).
Every country, every company and everyone must be part of the solution.
As UN Secretary-General António Guterres recently emphasized, “Demanding others move first only ensures humanity comes last. We have never been better equipped to solve the climate challenge – but we must move into warp-speed climate action now.”
