COP26 climate deal: Reasons for hope
Ian Bremmer's Quick Take:
Hi, everybody. Ian Bremmer here. Just about to head to Singapore, but before I do, I thought I would give you guys a quick recap on the COP26 summit, couple weeks long in Glasgow.
And I understand that it's fashionable and important to talk about just how immediate and immense the climate crisis is, and that we didn't do enough, and we have more work in front of us, and all that is true, but actually I come away from the last two weeks fairly optimistic in the sense that the acceleration of effort that we're seeing from all corners, I mean there's even more from the central governments than you would've expected, and they were the underperformers, certainly more from the private sector, more from the banks, more from the corporates. And as a consequence, right now, I mean the big headline is that we are still on track for 2.4 degrees centigrade of warming if all of the countries make good on their existing pledges, which is itself unlikely. So we're not really on track for 2.4, it's higher. And that's double where we are right now, 1.2.
Having said that, there are a number of positive things that I think are also getting baked in, not just how much carbon is in the atmosphere. One is that they have decided, the participants of COP26, that they're going to come with new goals next year, as opposed to every five years, which had been the process. So as we're seeing more effort, as we're seeing more progress, we're also seeing stepped up urgency. And the very fact that you will now have a one-year, an annual summit that becomes an action-forcing event, even if it's marked by half measures, will end up getting you a lot more progress. I think that's significant and everyone agreed to that.
Secondly, the fact that fossil fuels were specifically called out in this agreement. And you'd think, well, that's crazy. Of course, we know that fossil fuels are one of the biggest contributors to carbon emissions, and so you need to get past fossil fuels if you're going to reduce climate change. But the fact is that governments, because all governments are able to veto the draft, have been unwilling to make that mention. We now actually see that this is a global draft that is really about making the transition away from fossil fuels, and everyone is on board with that now. A lot of countries are much more squirrely. A lot of countries will take a lot more time. Some because they're really committed in terms of the wealth that they make from the production of oil and gas; think about Saudi Arabia, think about Russia. Some because they're really poor and they desperately need to be able to continue to use relatively cheap energy to bring their people up to middle class, specifically India, but also Indonesia, to a degree China and others.
Having said all of that, I think it is pretty clear now that we are on track to have a majority of the world's energy consumption well before 2050 to be coming from renewable energy. And I include nuclear in that because it doesn't lead to carbon emissions, but in other words, post-fossil fuels, not gas, not oil, not coal. The International Energy Agency believes that that date is potentially 2035, which is wrong because it again requires that everyone actually adheres fully to stated goals. And this is a lot of countries that don't necessarily have a way to get from here to there legally enshrined, especially in the nearest-term. But the big story is acceleration of effort, and related to that, reduction of cost, improvement of technology; the fact that at scale, solar and wind, and particularly solar, are increasingly much cheaper than coal.
And so, once you have the financing that allows you to put new infrastructure in place, and again, it's using old infrastructure that is so much of the reason why there's going to be more of a lag around fossil fuels, you will see all countries, not just wealthy countries, moving much faster. So I mean, the four years of the fact that the United States and the Trump administration left Paris Climate Accord, renewable energies were still getting cheaper. They were still getting invested in inside the United States. State governments, mayors, city governments, lots of private sector actors, NGOs, they were all continuing to press and do more to respond to climate change, even as the federal government basically punted for four years.
The Biden administration is more disappointing than you would expect. John Kerry doing a really strong job and not alienating or antagonizing many people inside Biden administration, which frankly, a lot of people were surprised by, myself included. Nonetheless, I mean, you see that with the $1.2 trillion in infrastructure and what is likely coming down the pike in the coming weeks on social spending, a lot of the committed green transition spending is going to be taken out. So the Federal Government is doing less, but even so, you are getting significant effort from the United States, even in terms of moonshots. Part of this is there's so much money, interest rates are so low, investors are not happy with the idea of half a point, a point of returns every year. They're chasing returns and they're much more willing to invest in untested, but potentially moonshot technology.
So the fact that Peter Thiel, a company he's been involved in just raised $500 million for fusion energy technologies, I mean, could go absolutely nowhere, but it's by far the largest investment we've seen in that tech. Some of these things move, some of them are more incremental changes in improving things like battery technology and energy transmission, with greater efficiency and lower waste, the storage. All of these things very, very important to move the global economy away from fossil fuels.
Now, long-term, this is going to be very, very challenging for countries that are reliant on the production of fossil fuels. And in that regard, I think the UAE, which is looking to pump more now, but recognizing they need to diversify far more in the short- to medium-term, seems like a smarter strategy to me than the Saudis who I think believe that higher prices for longer are going to persist, and they will can continue to be the inexpensive producer of last resort. They will be, but I'm not sure that goes for as long as they are presently betting, just given how fast we're seeing government action is actually moving.
Now, of course, all of this is happening at a time where the planet is routinely breaking records and will continue to break records every year for extreme weather trends and for high levels of temperature. And of course, that means that larger parts of the world will be unlivable for longer periods of time. There will be more forced migrations. There will be more difficulty in providing agriculture for an additional billion people on the planet over the next 20, 25 years, most of whom will be in Sub-Saharan Africa, which is facing some of the greatest climate stresses. All of that is true. And particularly true is the sharp reduction in biodiversity that comes along with all of this that doesn't affect humans immediately and directly, but has all sorts of knock-on effects that we don't yet quite understand on the planet. And if you have a massive, great extinction, even if you don't know the science, you can generally suspect that there will be problems for the planet going forward, but this no longer feels like an existential threat to me.
In other words, I see out of COP26 that we have passed the tipping point of global seriousness on climate action. And so even if COP26 was not the point of no return; it was not, we either take seriously or we fail; it was not, we have to get to 1.5 degrees or its Armageddon; that was never true, but what I'm seeing is significant progress. I'm seeing a rationing up of the resources of the intense focus, maybe not of the coordination, but certainly of the urgency on a country-by-country, sector-by-sector, company-by-company basis.
And in that regard, we should come out of COP26 fully aware of just how much worse global climate will get over the next 25 years. By 2050, so much of the increase in climate change we're going to see is already baked in from carbon that we have already emitted. We are facing this cliff where 1.5 degrees is increasingly completely unreachable, and I'm not expecting that. But I am, nonetheless, more optimistic in human potential and capacity to address and respond to this challenge, the most existential, the most significant, the most all-encompassing challenge of our lifetimes that we've faced thus far on the basis of everything we've seen over the last two weeks.
So how's that to kick off your week? Maybe a little different than the headlines you're seeing other places, but I understand if it bleeds, it doesn't necessarily lead. But at least for me, I feel like it drives us a little less crazy that way. So, better to talk about what's actually going on.
Hope everyone is well. I'm on the way to Singapore and I'll see you all from there. Be good.