Paris Is Burning: How The 1.5C Climate Goal Never Really Took Into Account How Economies Work [View all]

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Among the outcomes of the Paris climate conference was the directive that the IPCC develop a report outlining the climate impacts of warming past 1.5 degrees. The Special Report on Global Warming of 1.5 °C, published in October of 2018, contained sobering depictions of a world thrust into the pits of climate disaster: widespread crop failures, water scarcity, deadly heat waves, and the spread of viruses from animals to humans. Preventing these outcomes, the panel wrote, would require “systems transitions” of an “unprecedented” scale, including “effective planning” in urban areas and “a marked shift in investment patterns.” In the U.S., as with other mega-emitters, such a system overhaul has yet to transpire. The Biden administration has poured millions into everything from solar and wind development to the more controversial carbon capture technology, and yet, fossil fuel development continued apace, defying, it would seem, traditional economic logic. Why?

“The first place to look would be the base, not the superstructure,” Carton and Malm write in the introduction to the second part of their book. Here, the authors reference a classic Marxist concept that divides society into two parts: the means of production (the economy, in other words) and the relationships and ideas that follow from that system (i.e. culture, institutions, ideology). Located in the economic “base” are the investments that financial institutions and oil and gas companies have made in fossil fuel infrastructure, sunk costs that would result in massive profit losses if a speedy shift toward renewables were to occur. The logic of overshoot thus is born from an economic system deeply invested in fossil fuels — in pipelines mid-completion, in liquefied gas terminals only just coming online, in deep-water oil fields that have not run out.

This is perhaps the greatest takeaway of the book, that the prospect of “stranded assets,” or fossil fuel projects rendered unprofitable before the end of their expected economic lives, are the primary force holding the world back from beating climate change. Carton and Malm argue that stranded assets are a typical feature of capitalism, since technological innovation often drives modes of production out of service, but fossil-fuel assets are a different beast entirely. Oil and gas are so deeply baked into every sector of the global economy that asset stranding on a massive scale would cause convulsions throughout the entire system, costing fossil fuel producers anywhere from $4 to $185 trillion dollars if warming were to be capped at 1.5 degrees, according to studies that Carton and Malm cite.

Asset stranding may explain why current fossil fuel projects can’t be abandoned, but what about the new ones in the early stages of planning and development? Why are Shell and Total Energies not choosing to build solar farms instead? Here, the authors reach for some fairly thorny economic theory. To summarize: even if it costs less to develop, renewable energy will always be less profitable than fossil power, because it requires significantly less labor to produce, and labor (human labor, more specifically) is the key ingredient to extracting value from a commodity in a capitalist system. Without something like a fracking ban or a carbon tax to make new pipelines or drill sites more cost prohibitive, we can probably expect the trend of the past several years — expanded fossil fuel use — to continue. Indeed, it is hard to imagine, in our fossil-driven world, the political success of an economic policy that drives up oil and gas prices. The recent election of Donald Trump, who ran on a platform of returning the country to the days of “drill, baby, drill”, should be sufficient evidence that such a policy would be hugely unpopular among the American electorate. It’s much easier, then, to kick the proverbial can down the road, to entrust human ingenuity with getting us out of this mess once it’s fully upon us, accepting that for many, it will by that point already be too late. That’s why we get an endless succession of integrated models ceaselessly computing new paths to 1.5 degrees. It’s also why the negotiations at COP29 in Azerbaijan, which officially ended on Friday, involved, like many U.N. conferences before it, more bureaucratic hand-wringing over climate finance than actual planning to cut fossil fuels.

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https://grist.org/economics/how-the-world-gave-up-on-1-5-degrees-overshoot/