Looking Ahead

08 Looking Ahead
08 Looking Ahead

Stark realities

The rich countries of the world have been digging up fossil fuels and burning them prodigiously since the late 18th century. They are, as a group, largely responsible for the high levels of carbon dioxide in the atmosphere today. Those emissions are already having profound effects on the climate, and the situation is rapidly getting worse. This year, with an El Niño weather pattern riding atop the human influence on the climate, is blowing away all historical temperature records.

Line graph displaying day of the year along the x-axis, and temperature anomaly on the y-axis. The pale blue lines show temperature each day since the beginning of the record in 1958, with the previous record warm year, 2016, highlighted in yellow and the current year, 2023, highlighted in red. 3 65 1 3 8 75 112 149 1 8 6 223 2 6 0 2 9 7 3 3 4 - 1 . 2ºC - 1ºC -0.8ºC -0.6ºC -0 . 4ºC -0 . 2ºC 0 0 . 2ºC 0 . 4ºC 0.6ºC 0.8ºC 1ºC D a y o f th e y e ar T empe r a t u r e ano m a l y

This year appears likely to beat 2016 as the warmest year in the historical record. The graph shows daily global mean surface temperature anomalies, using a 1991 – 2020 baseline period. The pale blue lines show temperature each day since the beginning of the record in 1958, with the previous record warm year, 2016, highlighted in orange and the current year, 2023, highlighted in red. 

The big breakthrough of recent years was that the countries most responsible for where we are today finally committed themselves to the energy transition. Much more remains to be done, but nearly all of them are moving in the right direction. The United States, with its high consumption of all fossil fuels and its particular thirst for oil to power large automobiles, is responsible for more historical emissions than any other country. It was by far the most important holdout, but with the passage of two major climate and infrastructure bills in two years, the United States is finally on board with the global salvage effort.

What about the developing world?

China’s economic growth of recent years has been so rapid that it is overtaking the rich countries of the West. It became the largest single emitter of greenhouse gases in 2006, and its emissions are now more than double those of the United States. Its total historical emissions will exceed those of the 27 countries of the European Union within the next few years, and its emissions per person already exceed those of the EU. If China continues on its current trajectory, it will surpass the United States as a cumulative historical emitter by 2050.1 The country has pledged that its emissions will peak by 2030 and begin to fall, but it is not committed to reaching net-zero emissions until 2060.

Figures beyond 2022 are forecasts based on current economic trajectories. 

China’s development aspirations are shared by many other countries, of course. India has recently surpassed China in population to become the largest country in the world.2 Its emissions are only a quarter of China’s, but they are rising. And billions of other people in the developing world aspire to higher living standards, too, which means they need the benefits of modern energy. Nearly 800 million people are still not connected to the electrical grid at all, concentrated in South Asia and in Africa south of the Sahara Desert.3

If all these countries were to replicate the high reliance on fossil fuels that powered the Industrial Revolution in the West, any hope of maintaining an equable global climate would be lost. This means the fate of the planet will be decided in the developing world. If these countries can leapfrog the fossil era and go straight to clean energy, the goals of the Paris climate agreement may yet be achievable.

China stands alone as a powerhouse in both manufacturing and deploying clean energy equipment. No other country comes close to its achievements, even though it is also burning more coal than any country in the world. Clean energy and dirty energy are thus in a race in China, running neck and neck at the moment, but if China makes the decision to speed its deployment of clean energy, it has the capacity to do so.

The developing world outside of China presents a far more worrying picture. Now is the time, we think, to consider the broad implications of this picture. The rich countries have both the capacity and the moral responsibility to help the developing countries make the energy leapfrog. If they fail to do so, all humanity will suffer for it. 

A family wanders through the floods with their belongings in large bundles on their shoulders.

Decades ago, scientists predicted heavier rainfalls as a result of global warming, and now they are upon us. Heavy rains triggered flash floods and wreaked havoc across much of Pakistan in 2022, killing nearly a thousand people and displacing tens of thousands. Here, a displaced family seeks dry ground in Jafarabad, a district of Pakistan’s southwestern Baluchistan province. Image: Zahid Hussain/​AP Photo via Alamy

The problem that most urgently needs solving is that clean-energy projects are still difficult to finance in the developing countries. Interest rates for projects like wind farms and solar panels can be two to three times as high as they would be for identical projects in the developed world.4 Investors perceive risks in, say, South Africa or Nigeria that they do not perceive to apply in Britain or America, and they demand compensation for running those higher risks. To a degree this is merely perception, but some of the excess risks are real: the potential for political turmoil in poor countries, the possibility that projects will be nationalised, the chance of currency gyrations that raise the carrying costs of a project, and others.

These higher interest rates badly undercut the economics of clean energy in developing countries. An urgent effort is needed to correct the situation. We are pleased that the World Bank, under fresh leadership, is considering how to use its vast resources on this problem, but it has yet to come out with a plan commensurate with the scale of the task. 

The most promising effort so far involves special partnerships between the West and developing countries seeking to move forward on energy development, with Western money used to offset some of the risks and, effectively, buy down the interest rates of clean-energy projects. So far, such deals have been completed or are in the works for South Africa, India, Indonesia, Vietnam and Senegal. But we fear this approach is too piecemeal, and too slow.5 A much bolder international effort is needed to create conditions that favour clean-energy investment across the developing world. That might involve creating some kind of standard financing package that countries could sign up for if they meet certain conditions.

Another longstanding promise to the poor countries may finally be on the verge of fulfilment. In 2009, the Western countries promised that by 2020, they would mobilise USD 100 billion per year in public and private capital to help poor countries cope with the effects of the climate crisis. They broke that promise, with the sum hitting only USD 83 billion per year by 2020, but it appears likely the promise will finally be kept three years late, by the end of 2023. Unfortunately, the climate emergency is accelerating so rapidly that it is becoming clear that USD 100 billion a year is not enough.

In 2009, the rich countries of the world promised that by 2020, they would mobilise $100 billion per year in public and private money to help poorer countries adapt to climate change. They broke this pledge, but may now be on the verge of fulfilling it three years late. 

Source: OECD

The discussion about how to help the developing countries is likely to come to a head late this year, in Dubai, as the United Nations convenes the 28th conference of the parties of the Framework Convention on Climate Change. Controversy has swirled around the plans for this meeting for months: it is being chaired by the head of the United Arab Emirates’ national oil company. Lawmakers from Europe and the United States tried, and failed, to get him fired from the job. The chairman, Sultan Ahmed Al Jaber, has made clear that his top priorities include new financing arrangements for the energy transition in the developing world, so there is some prospect that a major new deal could emerge from the discussions.

In other respects, it is likely to be a sobering meeting. The countries of the world are due to complete a global stocktake’ of the commitments they made in 2015 in the Paris Agreement, meaning a detailed review of whether they are on track to meet their own promises. They are not, so the question becomes whether they will have the courage to admit it, and the boldness to try to get back on track.