Is a report from McKinsey, according to the Graun. Normally I think McK would be evil multi-national consultants, but here they're saying what the Graun wants to print, so they're fine. Reaching net zero climate emissions by 2050 will require a “fundamental transformation of the global economy”... estimates that $9.2tn will need to be invested every year for decades to limit the global temperature rise to 1.5C and end the climate emergency. The sum is a 60% increase on current investment levels and equivalent to half of global corporate profits. And, says McK itself, and one-quarter of total tax revenue in 2020, 15 percent of gross fixed capital formation, and 7 percent of household spending.McK provide a large number of words and lots of numbers that I have no intention of reading unless someone forces me; I'm more interested in the broad-brush question of whether this is all plausible. Current world GDP is about $81T, so on their numbers they are asking for more than 10% of GDP investing in green transition (there may be some GDP-keeps-growing stuff in there, though, because their own calculation is more like 7.5%)1.
Anyway, I don't want to pretend to analyse this stuff in detail, just draw attention to it; because these numbers seem a little on the high side to be practical, to me.
Notes
1. If you think their numbers are larger than some others, you are probably right. They explain: Other research to date has largely focused on estimating required energy investment. Here we expand this to include additional spending categories such as assets that use energy (for example, the full cost of passenger cars and heat pumps), capital expenditures in agriculture and forestry, and some continued spend in high-emissions physical assets like fossil fuel–based vehicles and power assets. As a result, our estimates exceed to a meaningful degree the $3 trillion to $4.5 trillion of annual spending for the net-zero transition that others have estimated.
Refs
* Nuclear power and renewable energy are both associated with national decarbonization - bit weird this needs saying, but you know some people. This is a response to Sovacool, who appears to have form.
* Hanania Highlights by Bryan Caplan: Public Choice Theory and the Illusion of Grand Strategy and Sanctions and Asylum.
* If writing down your ideas always makes them more precise and more complete, then no one who hasn't written about a topic has fully formed ideas about it. And someone who never writes has no fully formed ideas about anything nontrivial - Paul Graham.
* Ford and GM: Bearers of Socialist Culture? by Pierre Lemieux.
* Marmalade Training Camp - JEB
* Overestimating the Human Influence on the Economic Costs of Extreme Weather Events - Patrick T. Brown critiquing the "Fraction of Attributable Risk" of Myles Allen (2003) used in Frame (2020) for Harvey; via Twatter.
* R E S T A R T I N G UK SHALE GAS by Tim Worstall via the Evil NetZeroWatch people.
* Link blog: docker, container - Paul Wright
* Should We Expect More from Our Elected Officials? - Volokh, 2018.
* Legal Systems Very Different from Ours
* Australia's biggest coal-fired power plant to shut in 2025
The top figure shows it’s a 10% increment on current spending in these sectors over 30 years, which doesn’t seem unreasonable. If it was 100% more that would be out of reach; if it was only 1% nobody would be arguing about it. So reasonable and perhaps unsurprising at the order of magnitude involved.
ReplyDeleteWhatever happened to the goal being 'under 2C, hopefully 1.5C?' I mean, if you're going to have a political goal rather than a scientific one, why not allow a margin?
ReplyDelete> 10% inc
ReplyDeleteBut I'm not sure how that is compatiable with "a 60% increase on current investment levels" which is rather closer to your "out of reach" 100%.
> under 2C
I've somewhat lost track of that. I'm not sure how important it is.
So the bottom line is that we can't afford enough mitigation to keep us below 2C and we're stuffed.
ReplyDelete"Other sectors could see overall cost decreases. Our analysis suggests that the total cost of ownership for electric cars could be cheaper than for ICE vehicles in most regions by 2025, and even sooner in some regions."
ReplyDeleteTo which I'd add, replace your gas cooking stove with an induction one. Cleaner, better for your health, nicer to cook on.
> we can't afford
ReplyDeleteWell, it is more a matter or preferences, than a hard "afford" limit.
> Other sectors could see overall cost decreases
It would be odd if there weren't some.
" Here we expand this to include additional spending categories such as assets that use energy (for example, the full cost of passenger cars and heat pumps), capital expenditures in agriculture and forestry, and some continued spend in high-emissions physical assets like fossil fuel–based vehicles and power assets. As a result, our estimates exceed to a meaningful degree the $3 trillion to $4.5 trillion of annual spending for the net-zero transition that others have estimated."
ReplyDeleteSo doesn't this make the whole exercise a bit meaningless? I mean if I spend $40,000 on a car, but now it's electric, that doesn't really change what I'm spending or mean that society is somehow wasting money. And that money that needs to be spent will be creating new jobs; infrastructure or more efficient goods etc. So this seems like it is more changing the direction of the economy, not taxing and burning money. Why is this not just filed under "much ado about nothing"?
I do not pretend to have understood all their methodology but... I think they're trying to measure the total spend, not just the additional spend on top of what we would do anyway. If their numbers were purely additional, that would be depressing, since they would then be so large. I think they / you compute the additional spend by subtracting from their number the would-have-spent-anyway number. In which case, they have to include costs of e.g. new cars, even if they are electric replacing petrol.
ReplyDeleteI feel uneasy with all these numbers, though, because they just treat resources as money. I'm not sure they consider, e.g., capacity to produce solar PV. Although to some extent, and given time, spending money will conjure resources, because people will flock to it.
Dude, time for a new post, don't you think?
ReplyDeleteI was thinking that, indeed. I wouldn't want to go an entire month with no post, my public might forget me. I did start a post entitled "Johan Rockström is a tosser" based on Of all tasks, the phasing out of #FossilFuels is the easy one but then I thought nah, he's not worth it. And I did finish Switzerland 2021 if you like mountains.
ReplyDeleteI'm not a fan of Rockstrom, but my wife, strangely enough, is. She has been watching a set of videos on climate change (trying to better understand both it and my interest in it) and she really likes what he has to say.
ReplyDeleteThe Ted Talks are Countdown, or Climate Countdown, something like that. I watched a couple with her--some of them aren't bad, actually. But planetary boundaries, or climate wedgies, or whatever the Potsdam Institute is peddling this year, leave me quite cold.
Thanx for the Switx pix and commentarx.
ReplyDelete