A dark moment on CO2 control
Business Standard, 17 March 2025
This is a truly gloomy moment on the problem of global warming. The case for concern is made in four steps.
- Many of us grew up on Daniel Yergin's 1990 book The prize, which was about the oil industry. Writing in the Foreign Affairs, Yergin / Orszag / Arya recently argued that the energy transition is not going well (even before the policy shifts derived from Trump taking charge on 20 January). They remind us that the share of hydrocarbons in the global energy mix has only dropped slightly, from 85% in 1990 to 80% today.
- Two megatrends of the world -- populism and climate change -- are interacting in a peculiar fashion. We are able to now look back, and understand the chain of events, where the Internet gave us social media, which influenced the thinking of the people. This created greater extremism. When people look to their peers, this is a recipe for being swayed by conspiracy theories and pseudo-science, and the process of Sanskritisation is impeded [EiE Ep42 Populism]. Under the Trump administration, the US government has thrown its weight with governments like Russia and Saudi Arabia with opposition to decarbonisation.
- Controlling CO2 emissions was always a global public good. It required a collaborative global order, where foreign policy engaged in give and take, to get all countries to put their shoulders to the task. In the new environment of governments controlled by autocrats (Trump, Putin, Xi Jinping) doing more strategic autonomy, it has become hard to engage in the quiet sophisticated work of foreign policy and economic diplomacy. The world is absorbed in more urgent problems like Putin's invasion of Ukraine and Xi Jinping's hopes of invading Taiwan.
- The world is warming, and a range of harms upon human societies are visible in the news and the data. Scientists had long warned against breaching the 1.5 degrees C mark on the increase in the global average temperature, when compared with pre-industrial conditions. It now appears that 1.5 degrees C will be breached, and maybe 2 degrees C will also be breached.
The stalwarts that brought us to this state of maturity in the field, through all the steps of the policy pipeline, are shrouded in fear and despair. How should we make sense of this situation? What is the path ahead? Are we headed for a runaway climate change dystopia or can we do better?
The possibility of breaching the temperature target calls for a greater accent upon climate adaptation. Regardless of your beliefs on whether and how CO2 emissions should be stopped, it is efficient to understand that the world is warming, and think through the profound impacts upon our lives. The warming world perspective has far-reaching implications for the strategy of every individual, firm and government organisation. E.g. we should all be more cautious about the valuation of coastal real estate.
What about decarbonisation? Is this a lost cause? Should we just give up, burn coal and plan a human future on Mars? While recognising that the present moment is a bad one, the future is likely to get better for four reasons.
- In the past, CO2 emissions were connected to future harm through scientific reasoning. It required intellectual capability to understand the looming threat. But standing in 2025, the changes in the world are readily visible to all. Agricultural and livestock yields in India are being harmed on warm nights: this has gone from the concern of academic scribblers to the lived reality of practical people. Hence, while the populism and propaganda pushed through social media is indeed a problem, more people are understanding the harm than ever before.
- Yergin / Orszag / Arya are correct in looking back and being disappointed. But looking forward, we have to engage in exponential thinking. The prices of renewables and storage are in the midst of `Wright's law', the immense gains through learning curves with scale [EiE Ep87 Moore's laws]. That genie cannot be put back into the box by the governments of the US and Russia. Understanding straight lines in semi-log graphs suggests that even though the gains in the past have been slow, there are massive gains in the near future. In India, we have a bounty of sunshine, and self-interested decisions favour the world of clean energy, over and beyond the objective of eliminating CO2 emissions.
- We should not overstate the durability of the American right wing. Opinion polls, consumer sentiment measures and financial markets are showing a sharp loss of optimism. If the political rivals manage to find centrist positions, the control of the legislature could be wrested away in 2026. Going beyond the question of the 2026 elections, the excesses of the American right constitute education on the democracy and public policy for many people who were earlier in the vortex of social media fuelled extremism. There is room for hope that after this, there will be a better centrist environment.
- For a long time, the concepts around CO2 emissions involved the phrase `global public goods' and `free rider problems'. For Sri Lanka, self interest involves unrestricted CO2 emissions, because Sri Lanka's contribution to global emissions is small. But for a large country like India, the calculation changes. India is at around 10% of global emissions. The cost-benefit analysis for India now changes: 10% of the problem of global warming is made in India. Indian self-interest motivates reducing emissions as the harm caused by global warming for the Indian population is very high, and the cost of reducing emissions is not that high. Such reasoning applies for the four big economic blocks of the world: the US, China, the EU and India. While the US is trapped in a bad political moment, the other three are not. As an example, movement in the EU and the UK towards the carbon border tax will continue.
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