The US has turned its back on net zero, but all is not lost
The lurch toward authoritarianism in the US and elsewhere has brought effective climate action into question. The clean energy transition requires governments around the world to help finance and coordinate efforts toward decarbonization. But what happens when one of the major combatants in the war on climate change goes AWOL – or, worse still, aims to reverse course and double down on fossil fuels?
The transition from the Biden administration to the second Trump administration saw a radical change of course. In 2022, Joe Biden signed the most ambitious climate bill in history – the Inflation Reduction Act (IRA), which promised hundreds of billions in funding for the clean energy transition and environmental remediation. Less than three years later, Donald Trump effectively nullified the IRA, throwing into question the billions in business investment that had relied on a transition to net zero.
What are the prospects for that transition now? Will business give up on the clean energy transition? Or is the economics of clean energy too compelling to forsake?
Carbon and corporations
It has been getting a lot hotter here on Earth. The 10 hottest years on record all occurred within the past decade, and the past few years saw a particular off-trend spike in year-round temperatures.
It’s no coincidence that the concentration of heat-trapping carbon dioxide in the atmosphere has risen dramatically over the past 65 years. The Keeling Curve shows the concentration of carbon dioxide parts per million (ppm) as measured at the Mauna Loa observatory in Hawaii, providing a consistent data series going back to 1960. In that year, carbon ppm was below 320. Today it stands at 425, a level unprecedented in human history.
About 80% of annual carbon emissions come from the use of fossil fuels. Burning coal throws off 15 gigatons a year, oil produces 12, and burning gas is responsible for eight. All of these sources of carbon have increased without interruption for generations, save for a modest (and brief) decline during the early part of the COVID-19 pandemic.
The source of these emissions is remarkably concentrated in a small number of “carbon majors”. In 2019, The Guardian reported that just 20 firms were responsible for one-third of the carbon emissions since 1965. By 2023, emissions were even more concentrated.
How hard can it be to change 20 companies?
One might say, “Great! If we can just persuade these 20 companies to transition to a fossil-free energy future, our problem is mostly solved.” (If you said this to yourself, I admire your optimism.) Unfortunately, this would misunderstand the nature of for-profit business enterprises. It would also miss the fact that 16 of the 20 biggest fossil companies are owned by their governments, most of which are autocracies. The five biggest emitters were state-owned: Aramco (Saudi Arabia), Coal India (India), CHN Energy (China), NIOC (Iran), and Jinneng Group (China) – all but one in authoritarian states. Meanwhile, the top investor-owned emitters were ExxonMobil (US), Chevron (US), Shell (UK), Total (France), and BP (UK). The prospects for fundamental transformation in highly profitable corporations owned by their revenue-hungry governments are, let’s say, modest.
Perhaps we can solve the problem on the demand side by taxing carbon and letting the wonder of the free market fix things. Unfortunately, we do not have much time. Markets may be magical, but we need action now. Consider a parallel: imagine that an unnamed nation has invaded Poland, Denmark, Norway, Belgium, the Netherlands, Luxembourg, France, Yugoslavia, and Greece. Would reasonable people say, “Let’s let the market and entrepreneurs come up with a bold solution”? Not if we hoped to survive. Environmentalist Bill McKibben made this parallel explicit almost a decade ago, when he argued that the war against climate change really was a war – in effect, a third world war. “The question is not, are we in a world war? The question is, will we fight back? And if we do, can we defeat an enemy as powerful and inexorable as the laws of physics?” His prognosis was stark: we had the tools and materials we needed to take on this challenge, but it would require society-wide mobilization.