The Case for Climate Optimism: A Response - Management Business Review
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The Case for
Climate Optimism:
A Response
Kieren Mayers,
Sustainable Operations Initiative (SOI),
INSEAD In response to Yossi Sheffi’s article, “The Real
Jonathan G. Koomey, Inconvenient Truth,” Mayers and Koomey argue
Researcher, Author, Lecturer, and
Entrepreneur
for the use of a variety of urgent measures
to address climate change, rather
than focusing primarily on
long-term development
and dependency on
carbon capture and
storage. Citing the
now competitive cost
of renewable power
and the success of
several countries in
enacting programs that
address climate change,
they urge the need for
optimism.
MBR | Winter 2021 | Volume 01 | Issue 01 125
W
e would like to respond to Nations has identified a number of and pollution. Although these ben-
Yossi Sheffi’s article, “The Real additional means of reducing emis- efits are difficult to estimate pre-
Inconvenient Truth,” which sions and meeting climate targets.2 cisely, they are expected to help
pessimistically suggests that These measures can all be achieved counterbalance mitigation costs
most current efforts to reduce without bringing misery to consum- and support alternative economic
carbon emissions will be unsuccess- ers: growth.
ful and will involve too much “sacri- • Expand renewable energy e.g.
fice and deprivation” for consumers wind, solar, and biofuels
to stomach. Sheffi’s article argues that • Electrify end use of energy e.g. Generating and storing
nuclear power expansion could have transport, heating electricity from wind and
solar power installations
played an important role if campaign- • Improve energy and fuel effi-
ing environmental activists had not ciency e.g. transport, industry,
acted as “their own enemies.” In the buildings is now cost-competitive
short term Sheffi recommends that, • Incentivise use of low carbon with power generation
from fossil fuels.
ideally, companies should focus on products and services e.g. pub-
developing ecotechnology (includ- lic transport
ing renewables and energy efficiency • Increase efficiency of using ma-
measures) but suggests that the ef- terials with high carbon impact
fectiveness of such technologies will e.g. cement, iron, and steel Renewable Power
be limited by consumer willingness to • Phase out energy production The improved economic outlook for
pay. Sheffi argues that the solution is from coal renewables is particularly encourag-
a longer term “moon shot” investment • Link energy access to emission ing and is only getting better. Over
in the capture and storage of carbon reductions for 3.5 billion ‘energy the last decade the cost per unit of
from fossil fuel power generation, poor’ people renewable energy has fallen rapidly
industrial processes, and the atmos- • Prevent clear-felling of forests as we have gained experience and
phere itself (direct air capture). This • Reforest and grow plantations learned from new innovations (see
perspective is not particularly new; on unforested lands figure below). Generating and stor-
it’s fairly common amongst sceptics • Adopt soil conservation practic- ing electricity from wind and solar
of current climate action.1 es in farming power installations is now cost-com-
These are undoubtedly big tasks to petitive with power generation from
organise on a global scale and will fossil fuels.6 If we take an only slight-
Although carbon capture require international financial in- ly optimistic view, at the current
and nuclear power are both vestments. But they will not cause trajectory of adoption, renewables
economic development to grind to have the technical and economic po-
important in tackling climate a halt. According to estimates from tential to deliver a substantial chunk
change, ultimately they the Intergovernmental Panel on Cli- of the reductions needed.7 Targeted
can only produce part of mate Change (IPCC), taking steps use of natural gas also plays an im-
to address climate change would portant role, because it is highly ef-
the necessary reduction in reduce annual global economic ficient, relatively inexpensive, and
emissions, and expanding growth by only a tenth of a per- responds quickly to demand. It is
renewable energy is cent, roughly (about 0.04%-0.14% therefore an excellent counterbal-
per year).3 This expense would be ance to the variability of renewable
cheaper, hands down. considerably less than the sub- power generation.
stantial and incalculable economic
Fortunately, for those who look be- damages of a 3oC warming scenar- Carbon Capture and Storage
yond anecdotal examples, there io.4 The current COVID-19 crisis The various technologies for captur-
is reason for greater optimism. provides a stark example of how an ing and storing carbon dioxide are
Although carbon capture and nu- uncontrolled global crisis can play still in their infancy and are compar-
clear power are both important in out, with the global economy pre- atively expensive. Their widespread
tackling climate change, ultimately, dicted to actually shrink (-3% GDP development and adoption would
they can only produce part of the growth) in 2020.5 By contrast, these substantially increase the cost of
necessary reduction in emissions, proposed steps will create employ- fossil fuel fired energy generation,
and expanding renewable energy is ment opportunities and marketable and with it the cost of energy to con-
cheaper, hands down. The United innovations while reducing smog sumers:
126 Volume 01 | Issue 01 | Winter 2021 | MBR
• Carbon capture from coal-pow- of the global electricity supply.13 Nuclear Power Generation:
ered electricity generation: These demands make the wide- Admittedly, it is relatively cheap
In 2019, building new coal spread adoption of carbon cap- to generate electricity with exist-
plants with carbon capture ture almost inconceivable. ing nuclear reactors (around $29
and storage cost about $152 • Carbon capture from bio-ener- per MWh).18 Shutting down those
per MWh. Installing new com- gy fuels: Carbon capture from reactors would certainly slow
mercial solar and onshore biofuels (not specifically men- progress towards emissions re-
wind generation cost only $32- tioned in Sheffi’s article) could duction targets. The main barrier
42 and $28-54 per MWh respec- remove CO2 from the atmos- to nuclear expansion, however, is
tively. 8 phere more economically than the rising cost of new reactors,
• Direct carbon capture from air: direct air capture. Plants cap- not a minority of environmen-
Coal plant chimney gases can ture carbon, which is burned tal naysaying campaigners and
have CO2 concentrations of to produce energy, and the NIMBYists. Reactor costs have
around 15 percent.9 In contrast, resulting CO2 is then captured increased by 20 percent over the
CO2 is present in the atmosphere and stored. In theory, this ap- last decade, largely because of in-
only at a trace levels (around proach could reduce emissions dustry specific expenses like the
0.04 percent by volume),10 which by up to 22.5 Gt of CO2 equiva- need for better safety measures.
makes it difficult and expensive lent14 (out of 33 Gt of total ener- The cost of electricity from new
to extract directly from air. The gy-related emissions in 2019) .15 nuclear installations is therefore
extraction alone can cost up to It would also, however, require much higher than that of elec-
$1,000 per ton of CO2 captured the conversion of 80 percent of tricity from new wind and solar
before the additional costs of cropland and would push the facilities (at $118-192 per MWh). 8
storage!11 To put this price in planet’s limits for freshwater Furthermore, the International
context: even by a recent opti- use, soil health, and biodiversi- Energy Agency (IEA) estimates
mistic estimate,12 meeting 2030 ty. Consumers would also see a that doubling nuclear energy out-
global emissions reduction substantial increase in energy put globally would produce only
targets through direct capture costs because biofuels are per- one seventh of the carbon emis-
would incur costs equivalent sistently more expensive than sion reductions needed.19 Nuclear
to as much as 4 percent of the gas and diesel.16 Meanwhile the fusion, rather than fission, might
worldwide economic output be- additional costs of carbon cap- theoretically do better, but it does
fore storage. It would also con- ture are estimated at $30-280 not present a foreseeable solution
sume the equivalent of a quarter per ton.17 anytime soon. 20
Figure 1: Transitions driven by technology
Solar PV module prices Onshore wind turbine prices Lithium-ion battery prices
$/W euro/W $/kWh
5 1.40 1,200
4.5 1.30
-94% since -37% since 1,000 -85% since
4 2008 1.20 2008 2010
3.5 1.10 800
3
1.00
2.5 600
0.90
2 28 %
lear 0.80 11% 400 18%
1.5 ning le ar ni lear
r a te ng r ning
1 0.70 a te r a te
200
0.5 0.60
0 0.50 0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2010
2011
2012
2013
2014
2015
2016
2017
2018
Bloomberg’s Energy and Mobility Transitions.
MBR | Winter 2021 | Volume 01 | Issue 01 12731st, 2020),22 decided to remove from Encouragingly, entire coun-
Carbon capture is not a its portfolio all companies generat- tries have enacted successful ef-
magic bullet that can solve ing more than a quarter of their rev- forts and, in so doing, provided
climate change by itself; enue from thermal coal production, leadership on how to proceed. For
and to push for the removal of CEOs example, the latest third quarter
we must acknowledge the who fail to act on climate risks.23 figures from 2019 show that renew-
interdependency of our The book “Cold Cash, Cool able energy accounted for 38.9
paths towards a solution. Climate: Science-based Advice for percent of the UK’s electricity sup-
Ecological Entrepreneurs” is a use- ply and that the percentage sup-
ful reference for anyone looking plied by coal was in single digits. 26
Sheffi’s article presents a relatively to navigate this field and plot a Costa Rica has been recognised as
pessimistic view of our current ef- serious course to tackle climate UN Champion of the Earth for its
forts to reduce carbon emissions, change.24 We can and are redesign- ambitious commitments to the
even going so far as to label them ing systems. We can improve both Paris Climate Agreement. Ninety-
“pretend sustainability.” It advo- products and services, like electric eight percent of its energy is re-
cates the long-term research and vehicles or intelligent heating / cool- newable, and its forest cover has
development of carbon capture and ing systems, while simultaneously been restored to 53 percent of its
storage as the solution. If, as Dr. lowering emissions. These improve- land area after decades of intense
Sheffi suggests, emissions continue ments are not one-off reductions, deforestation. 27 These achieve-
to rise despite our best efforts, then as Dr. Sheffi’s article suggests, but ments prove that there is a way,
carbon capture will not be able to will continue to keep emissions low where there is political will. We
run on renewable power and will, it- for years to come. Meanwhile, in- consider that good enough reason
self, generate additional snowballing novation is opening new markets for optimism over pessimism, for
emissions that must be captured. In while new knowledge is reducing action over inaction. Let us then
this eventuality, the costs of halting the cost of adopting new emerging proceed on the basis of both em-
climate change would escalate to technologies at scale. Addressing pirical evidence and scientific ex-
truly untenable proportions. Carbon climate change does require urgent pertise. Academic research gives
capture is not a magic bullet that commitment and action by govern- us vital insights with which to bet-
can solve climate change by itself; ments, industry, and individuals (as ter inform and educate govern-
we must acknowledge the interde- highlighted at the recent United Na- ments, industry, and society on
pendency of our paths towards a so- tions Climate summits in New York the path ahead.
lution. Sheffi’s article also misses a and Madrid in 2019). We do need
very important point: we can’t wait to move our discussions beyond Kieren Mayers. BSc
for an expensive long-term gamble ‘sustainability theatre,’ as Dr. Sheffi (HONS).EngD is an exec-
utive in residence at the
on carbon capture and storage - rightly points out, and it’s true that INSEAD Sustainable Op-
we need urgent action in the short current commitment and action fall erations Initiative (SOI)
term. Let us consider the impact of short. But none of this means that with over twenty years’
climate change on living standards our actions have been or will be en- experience in managing
if we don’t take sufficient action over tirely futile. For example, the failure sustainability issues in
the electronics industry. Kieren.mayers@
the next few years. This impact is of any regulation to hold individuals insead.edu
proportional to the overall accumu- or companies to account, like the
lation of CO2 in the atmosphere. If emissions scandals in the automo- Jonathan Koomey is a
we are to avoid an escalation of the tive sector, does not justify inaction. researcher, author, lec-
type of crises prevalent all over the Instead, it underlines the need for turer, and entrepreneur –
a leading international
world in recent years, substantial more effective government policy expert on the economics
reductions in carbon emissions are and enforcement. Regulators have of climate solutions and
needed soon (50 percent over the certainly not been idle in this re- the energy and environ-
next decade to keep warming from gard. In the case of VW, executives mental impacts of IT.
rising more than 1.5 or 2C from pre- have resigned and been charged jon@koomey.com
industrial levels).21 It is not only a mi- with criminal offences, fines and car
nority of passionate environmental rework costs have run into several
activists that recognise this need. billions of dollars, and VW share Acknowledgements
Blackrock, a company managing prices fell by more than a third as The authors would like to thank Tom Davis and Prof. Luk Van
$6.47 trillion in assets (as of March the news broke in September 2015.25 Wassenhove for their input and proofreading help.
128 Volume 01 | Issue 01 | Winter 2021 | MBREndnotes 1. See the Skeptical Science website, an excel- 8. https://www.lazard.com/perspective/ en.wikipedia.org/wiki/List_of_coun- 19. h t t p s : / / w w w. t e c h n o l o g y r e v i e w. lent scientific resource. https://skepticalsci- lcoe2019/ tries_by_electricity_consumption): com/s/537816/why-dont-we-have-more- ence.com 9. https://editors.eol.org/eoearth/wiki/Fos- - $232 per t of CO2 direct air capture nuclear-power/ 2. See in particular UN Emissions Gap Reports sil_fuel_combustion_flue_gases cost * 15 Gt CO2 emissions gap in 2030 20. https://www.bbc.co.uk/news/science- for 2019 and 2017: https://www.unenvi- 10. h t t p s : / / w w w. n e w s c i e n t i s t . c o m / = $3.48 trillion cost to ‘capture the emis- environment-50267017 ronment.org/resources/emissions-gap- article/2191881-carbon-dioxide-levels-will- sions gap’. $3.48 trillion / $80.27 trillion * 21. J. Rockström, O. Gaffney, J. Rogelj, M. Mein- report-2019 soar-past-the-410-ppm-milestone-in-2019/ 100 = 4.3% of Gross World Product in 2017 shausen, N. Nakicenovic, H. Schellnhuber, “A 3. IPPC, “Climate Change 2014 Mitigation of 11. House, K. Z., Baclig, A.C., Ranjan, M., van - 366 kWh per t CO2 direct air capture roadmap for rapid decarbonization”, Science, Climate Change. Working Group III Contri- Nierop, E. A., Wilcox, J., and H. J. Herzog, Eco- electricity use * 15 Gt CO2 emissions gap Vol. 355, Issue 6331, 1269-1271, March 2017 bution to the Fifth Assessment Report of nomic and energetic analysis of capturing in 2030 = 5,490 TWh total electricity to 22. https://www.blackrock.com/sg/en/about- the Intergovernmental Panel on Climate CO2 from ambient air, Proceedings of the ‘capture the emissions gap’. 5,490 TWh us Change”, Cambridge University Press, New National Academy of Sciences of the United / 21,776 TWh * 100 = 25% of 2016 global 23. https://www-edie-net.cdn.ampproject. York, 2014. p 16 States of America, December 2011, 108 (51), electricity use org/c/s/www.edie.net/amp-news/7/Black- 4. https://www.yaleclimateconnections. pp. 20428,20433 14. https://www.imperial.ac.uk/media/impe- Rock-s-Larry-Fink-to-CEOs---Purpose-is- org/2019/11/new-report-finds-costs-of- 12. Cost of $94-$232 per tonne and electricity rial-college/grantham-institute/public/ the-engine-of-long-term-profitability-/ climate-change-impacts-often-underesti- use of 366 KWh per tonne CO2 captured publications/briefing-papers/BECCS-de- 24. J.Koomey, “Cold Cash, Cool Climate. Science- mated/ (Keith, D.W., Holmes, G., St. Angelo, D., and ployment---a-reality-check.pdf based Advice for Ecological Entrepreneurs”, 5. International Monetary Fund, World Eco- K. Heidel, A process for capturing CO2 from 15. https://www.iea.org/articles/global-co2- Analytics Press, El Dorado Hills, CA 2012. nomic Outlook, April 2020: https://blogs. the atmosphere, Joule, Vol. 2, Issue 8, August emissions-in-2019 25. https://en.wikipedia.org/wiki/Volkswa- imf.org/2020/04/14/the-great-lockdown- 2018: pp 1573-1594) 16. https://www.iea.org/data-and-statistics/ gen_emissions_scandal worst-economic-downturn-since-the- 13. 2019 UN emissions gap = 15 giga- charts/biofuel-and-fossil-based-transport- 26. Department for Business, Energy & Industri- great-depression/ tonnes of CO2/yr by 2030, Gross World fuel-production-cost-comparison-2017 al Strategy (BEIS), “UK Renewable electricity 6. https://www.lazard.com/perspective/ Product in 2017 = $80.27 trillion, world- 17. https://www.imperial.ac.uk/media/impe- capacity and generation, July to September lcoe2019/ wide electricity use 2016= 21,776 TWh rial-college/grantham-institute/public/ 2019”, London, September 2019 7. A. Lovins, D. Ürge-Vorsatz, L. Mundaca, D. Kam- / yr (https://www.unenvironment. publications/briefing-papers/BECCS-de- 27. https://www.unenvironment.org/news- men, and J. Glassman, “Recalibrating climate org/re sourc e s/emis sions-gap -re - ployment---a-reality-check.pdf and-stories/press-release/costa-rica- prospects”, Environmental Research Letters, port-2019; https://en.wikipedia.org/ 18. https://www.lazard.com/perspective/ named-un-champion-earth-pioneering- vol. 2, No. 12, December 2019. wiki/Gross_world_product; https:// lcoe2019/ role-fighting-climate MBR | Winter 2021 | Volume 01 | Issue 01 129
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