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Clean energy sources amid a futuristic landscape.
The false trade-off between climate action and economic growth
World leaders are flooding New York this week for the 78th United Nations General Assembly and Climate Week NYC, less than two months before the landmark COP28, the UN Climate Change Conference, is set to begin in Dubai. With climate being at the top of the agenda and top of mind, I thought I’d use today’s newsletter to debunk a myth that pervades an annoying amount of climate doomerism.
Most climate change discussions frame the issue in cost-benefit terms. Would we rather save the planet or keep our living standards? Save the planet or increase profits? Save the planet or lift people out of poverty? In other words, how much are we willing to sacrifice to stop climate change?
In rich countries like the US, both sides of the aisle assume this tradeoff between climate action and economic prosperity exists. The difference between them is that most of the political right wants to prioritize growth at the expense of climate action, while the “de-growth” and anti-capitalist parts of the left want to halt growth for the sake of climate action.
Meanwhile, the consensus in developing nations – which today account for two-thirds of global carbon emissions but are only responsible for about one-fifth of historical emissions – is that poorer countries have the right (indeed, the obligation) to put economic development above climate action. This view is also premised on the assumption that economic growth can only be powered by fossil fuels, and therefore, that saving the planet requires economic sacrifice.
But that is a false dilemma. In 2023, there is no longer a systemic trade-off between decarbonization and economic growth.
A technological revolution in the making
The reason for this is that technological advances have made clean energy – especially solar power, wind power, and battery storage – cheaper than fossil fuels.
Until quite recently, high-polluting fossil fuels (especially coal) were by far the cheapest sources of energy available. Renewables didn’t come close. But in the past decade, the unsubsidized price of electricity from solar and wind declined by 89% and 69%, respectively. And the cost of lithium-ion batteries – which are needed to smooth out the intermittent supply of solar and wind energy – has declined by 90%. As a result, new solar power plants have gone from being 710% more expensive than the cheapest fossil-fueled plants in 2010 to being 29% cheaper now, and new onshore wind plants have gone from being 95% more expensive to being 52% cheaper than the cheapest fossil-fueled plants in the same period.
Today, when you compare the lifetime cost of building and operating new power plants, renewable energy sources like solar and wind are already the cheapest options for most of the world. In some places, building new solar and wind plants is even cheaper than keeping existing coal plants running!
This price advantage explains why the world’s largest carbon emitters are quickly moving away from coal and toward wind and solar power, and why renewable power has more than tripled as a share of global power generation in the last decade. In Europe, wind and solar generate more power than coal and gas. And solar, wind, and battery storage account for 82% of planned generating capacity additions in the US this year.
Interests trump politics
A common refrain is that these renewable technologies are being forced on unwilling Americans and Europeans by woke politicians and activists. But ask yourself, why would countries like China and India, states like Texas and Florida, and companies like BP and Total be building so much solar, wind, and battery storage capacity if not out of self-interest?
China and India certainly have little inclination to make national sacrifices for the planet’s benefit. Texas and Florida are Republican bastions — not exactly tree-huggers. And, like all corporations, BP and Total seek to maximize profits for shareholders. If you think Greta Thunberg is pushing developing countries as diverse as Brazil, Chile, Vietnam, India, and Morocco to deploy solar power at scale, I’ve got a coal mine to sell you…
The truth is that the world is adopting clean energy because it’s cheaper than the alternative. Even countries and companies that don’t care about climate change at all are finding it worthwhile to switch to renewables. And thanks to these technologies’ uniquely steep learning curves, the more they get deployed, the cheaper they’ll become, and the cheaper they become, the more they’ll get adopted everywhere.
At the same time that the increased adoption of renewables will reduce carbon emissions and deadly pollution, falling energy prices will lead to a rise in real incomes and standards of living. The advent of cheap, abundant, and widely available energy will free up income for people to spend on other things and allow poor countries to turbocharge their development while leapfrogging fossil fuels. If it sounds like a win-win, it’s because it is.
The invisible hand still needs a policy push
Although technological ingenuity and self-interest are making the energy transition an unstoppable reality, these forces alone aren’t enough to get the world all the way to net zero emissions in time to avoid some of the worst impacts of climate change.
For starters, there are still powerful vested interests and inertia holding back decarbonization, despite its increasingly obvious economic advantages. Many actors with political pull benefit from the carbon-intensive status quo, which generates up to $2 trillion in economic rents every year. These incumbents – ranging from petrostates and Big Oil to retail gas stations and fossil fuel workers – are fighting tooth and nail to slow down the energy transition and latch on to their power. Moreover, fossil fuels still make up 77% of the world’s energy production, and for now the cost of operating existing fossil fuel plants is lower than the cost of building new renewable plants in most (but not all) places. Absent policy action, that will remain the case for some years yet.
Then there’s the fact that electricity – the problem that solar, wind, and batteries solve – only accounts for about 40% of global carbon emissions. Cutting the remaining 60% will require addressing the other sources of emissions: transportation, commercial and residential buildings, and industrial processes. Some of this can be achieved by electrifying more of our energy use – like we are already doing by switching to electric vehicles, heat pumps, and induction stoves – while continuing to decarbonize electricity. But some – such as greening harder-to-abate, heat-intensive processes like cement and steel production – will require investment and incentives to invent, develop, and adopt new technological solutions.
Finally, while switching to renewables pays for itself in the long run, building new infrastructure while retiring fossil-fuel assets early can bring large upfront costs. This problem is especially acute for developing nations, which will generate most of the demand for new electricity in the coming decades but lack the fiscal space and access to long-term finance needed to meet the upfront costs of deploying clean energy systems. It’s in these countries’ economic interest to lock in low-carbon infrastructure now rather than get stuck with fossil-fuel assets that are already being phased out in the developed world and will be stranded in a matter of years. But they will need massive financing from rich countries to do that.
The bottom line is that although there’s a lot governments can do to help speed up the energy transition, even without government action the transition is most definitely happening. And it is happening without a reduction in our living standards. You don’t have to stop driving or ration electricity or eat bugs. Poor countries don’t have to stay poor. The opposite is true: stopping climate change will make most everyone richer.
That’s great news because if the fate of the planet depended on everyone agreeing to voluntarily impoverish themselves, you can bet your sweet bippy humanity would be 100% cooked.
What the US and Canada really want from each other
US President Joe Biden and Canadian Prime Minister Justin Trudeau finally had their COVID-delayed summit in March 2023. Biden and Trudeau clearly get along, and US-Canada ties are as strong as ever. Yet, some thorny issues still need to be ironed out.
The two neighbors see eye-to-eye on things like immigration or pushing back against China and Russia. But there's friction on Haiti and especially on the US Inflation Reduction Act, whose subsidies are wooing Canadian green biz south of the border.
On GZERO World, Ian Bremmer discusses the bilateral relationship with David Cohen, the US ambassador to Canada, and Kirsten Hillman, Canada's Ambassador in Washington. Then, Ian asks Canadian Defense Minister Anita Anand why she won't let her kids use TikTok (amongst other pressing national security questions).
- Is the US exporting its toxic politics to Canada? ›
- Podcast: How healthy is the US-Canada relationship? ›
- US-Canada can and will extract critical minerals sustainably, says top US diplomat ›
- Will US-Canada border deal mean riskier future for migrants? ›
- US green subsidies pushback to dominate Biden's Canada trip ›
Trudeau lays out plan to grow Canada’s clean economy
On the heels of his recent meeting with US President Joe Biden in Ottawa, Canadian PM Justin Trudeau took to the stage at the US-Canada Summit in Toronto on Tuesday to woo Bay Street — Canada’s version of Wall Street — and voters with a clear message: The future is bright for Canadian (green) businesses and workers.
Referring to Biden’s Inflation Reduction Act, which been a source of friction over fears it’ll see investment flee south of the border, as a historic investment to fight climate change, Trudeau spotlighted his own plan to invest in the clean-energy economy.
The PM hopes that the Canada Growth Fund, a new $15 billion investment vehicle announced in last week’s budget, will help scale the clean-tech companies that might otherwise have moved to the US owing to IRA-linked subsidies. This, combined with billions in foreign direct investment, he said, will help “Canadian workers and Canadian industry stay competitive.”
Trudeau’s plan will also ensure that Canada offers a reliable supply chain feeding the US trading partnership. “Global economies are seeking stable trading partners and reliable supply chains in the face of geopolitical uncertainty,” he said.
The PM acknowledged that globalization has failed to deliver increased wealth for all, resulting in disillusioned masses who remain skeptical of the establishment. Political forces today, he warned, are trying to leverage this economic pain, promoting isolationism and dangerously sewing distrust.
“Profits only come when people are doing well,” he said.
Whether he can deliver on pledges to improve Canadian competitiveness will be up to voters to decide. Trudeau must face the electorate before Oct. 2025.
Trudeau spoke at a US-Canada summit in Toronto co-organized by Eurasia Group and BMO, a top Canadian bank. The event brought together government and business delegates from the two countries to talk issues like US-Canada politics, trade, tech innovation, security, energy, and climate change. Among the guests were US Sen. Chris Coons, Michigan Gov. Gretchen Whitmer, Ontario Premier Doug Ford, and Ambassadors Kirsten Hillman and David Cohen.
- Testing Trudeau's star power ›
- US green subsidies pushback to dominate Biden's Canada trip ›
- Buddy Biden and budget: Enough to boost Trudeau? ›
- Biden-Trudeau talks focus on immigration and defense ›
- Inflation Reduction Act will lower energy costs & bring back jobs, says US energy secretary ›
- Podcast: How healthy is the US-Canada relationship? - GZERO Media ›
- India-Canada standoff heats up while US seeks a compromise - GZERO Media ›
Dambisa Moyo: Europe's energy transition needs more than a "band-aid solution"
Most countries around the world understand that sooner or later they will need to transition to using more clean energy. But in the meantime, they still rely on over a hundred million barrels of oil per day.
What's more Russia's war in Ukraine has underscored our dependence on fossil fuels for energy.
“We hadn't anticipated that there'd be a war that would create these shocks. And that puts us slightly offside,” renowned economist Dambisa Moyo tells Ian Bremmer on GZERO World.
And what's the right way to move forward? For Moyo, Europe needs to ditch what she calls "industrial band-aid solutions" instead of the structural reforms needed to kick the Russian energy habit.
Watch the GZERO World episode: Struggling for economic progress as global recession looms in 2023
Moroccan fans gather on the Champs Elysees in Paris to celebrate Morocco s qualification for the semifinals of the World Cup.
What We're Watching: Morocco plays French politics, 11th-hour EU/Hungary deal, big energy milestone
Atlas Lions vs. French far-right
When reigning champion France takes on underdog Morocco in the World Cup semifinals on Wednesday, French President Emmanuel Macron will be in the stands. And whatever happens on the pitch it’s almost certain to cause tremors for him at home. The “Rocky Balboa” success of Morocco’s “Atlas Lions” – the first Arab or African team ever to make it this far in a World Cup – has struck a chord with millions of first- and second-generation French citizens of Arab and African origin. The worry is that a small minority of those fans may riot in the streets after the match — regardless of whether Morocco wins or loses — as they did last weekend in Paris after first Morocco beat Portugal and then France defeated England in the quarterfinals. Popular far-righters like TV provocateur and former presidential frontrunner Éric Zemmour will surely seize on any unrest to advance their calls for tighter restrictions on immigration. And that will cause a problem for Macron himself, who’s under pressure from the French right to pass a new law targeting illegal immigrants.
Orbán-EU draw
Another round of confrontation between the European Union and perennial EU gadfly Viktor Orbán has concluded. Once again, the Hungarian prime minister and Europe have each made concessions. This is not a surprise. Hungary’s economy and currency are struggling, and the EU has money that Orbán’s government badly needs. But Orbán knows how to pick fights with Brussels that boost his standing at home and force the EU to compromise in order to get his support for urgent European priorities. Late Monday evening, Hungary dropped its objection to an 18 billion euro ($19.15 billion) EU aid package for Ukraine and a 15% minimum tax for big corporations. In return, Hungary will get 5.8 billion euros in badly-needed COVID recovery money, and the European Commission has agreed to unfreeze 1.2 billion euros of the 7.5 billion euros it had previously withheld over concerns about corruption and rule-of-law violations in Hungary. Both sides will claim victory, but the battle will continue: the EU is still demanding reforms in Hungary that would strengthen judicial independence and anti-graft oversight. This ain’t over.
Fusion breakthrough
Well, it lasted only a few trillionths of a second, but what a few trillionths of a second they were. In a historic breakthrough, US government scientists announced they’d successfully carried out a burst of nuclear fusion, a clean energy process that (mindbogglingly) generates more energy than it requires. The long-term implications for energy, climate, and geopolitics are huge. But first, let’s set your mind at ease — after all, “nuclear fusion” sounds scary. Fusion is different than fission. Fission is what powers today’s nuclear reactors (and atomic bombs). It works by splitting atoms in a way that releases huge amounts of energy, but also generates radioactive waste and the occasional nuclear plant meltdown. Fusion, on the other hand, is the opposite: a controlled process of mixing atoms together in to produce energy. No waste. No meltdowns. But also, for now, no guarantee it can replicated at scale outside of a lab. Still, if it could it would open the way to a world-changing source of clean and sustainable energy. China and the US are already locked in a high-stakes race to develop fusion for military and civilian purposes. That viability is decades away, but all decades start with a few trillionths of a second.An image of Elon Musk is seen on a smartphone placed on printed Twitter logos.
What We're Watching: The end of Twitter (as we know it), climate reparations at COP27
Quo vadis, Elon?
Elon Musk is taking disruption to a whole new level as the CEO of Twitter. After firing half of his staff on Friday, the world's richest man has lit another fire with plans for an $8 subscription service to get verified on the social media platform. Before Musk took over, the coveted blue check was free for public figures, companies, and journalists, but now technically anybody can get it. That raises the stakes for all sorts of misinformation mayhem, though the rollout has now been delayed until after Tuesday's US midterm elections. Major corporate advertisers responded to the brouhaha by pausing their ads, with Musk admitting a big drop in revenue, which he blamed on firms caving to activists' demands. So, what’s next? Ian Bremmer — who tussled with Musk over Russia-Ukraine just weeks before the gazillionaire bought Twitter — hinted that the platform's new boss might have a shorter tenure than disgraced former British PM Liz Truss, who famously lasted less time than a head of lettuce in her last days in office. For Russia, Bremmer noted, "buying a few thousand verified Twitter accounts at $8/pop to promote disinfo feels like a no-brainer."
Will rich countries compensate poor ones for climate change?
This year’s COP27 climate summit, which kicked off Sunday, will likely be a tense and sweaty affair — and not only because it’s being held in the balmy Egyptian resort town of Sharm El-Sheikh. A group of 77 developing nations, led by flood-ravaged Pakistan, is expected to make a passionate plea for “loss and damage." That's code for developed countries paying “reparations” to nations that are suffering from climate change despite contributing the least to global warming. This is the first COP to formally have this item on the agenda, a year after the US and the EU challenged a similar proposal at COP26. But the environment — actually and politically – has paved the way to at least have a discussion. Meanwhile, there’s also an economic shadow hanging over the conference. New data indicate that global warming will worsen health inequalities between rich and poor countries. Yet, there is still (some) hope: Rising inflation has propelled governments to cut back on fossil fuels, making the International Energy Agency optimistic that COP27 might be a “turning point” in the global transition to clean energy.
How Russia is both hurting & helping climate action
Under the Biden administration, the US wants to become a global leader on climate change. But the energy crisis from the war in Ukraine has put climate lower on the list of global priorities.
Still, the main climate lesson learned from the invasion is that countries need to become energy-independent by embracing renewables, US climate envoy John Kerry tells Ian Bremmer on GZERO World.
America, he adds, is ready to help other nations follow that path.
One thing that can facilitate the transition to clean energy is new technology. The problem is scale, but Kerry says to watch out for some breakthroughs on carbon capture and fusion.
Watch the GZERO World episode: Gustavo Petro: the guerilla-turned-president who wants to "develop capitalism"
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- The “authoritarian honeymoon” is over, says John Kerry - GZERO ... ›
- Kerry: Putin has bigger problems than Ukraine - GZERO Media ›
- Nations don't need carbon to grow their economies, says John Kerry ... ›
- Podcast: Authoritarians won't defeat American values, says John Kerry ›
- Ukraine is a diversion from climate crisis, says John Kerry - GZERO ... ›
How Biden's climate bill moves the US towards clean energy
Despite its name, the recently passed US Inflation Reduction Act won't do much to tame rising prices. But it will do a lot to fight climate change by slashing carbon emissions from power generation and transport, Ian Bremmer explains on GZERO World.
Interestingly, the bill offers more carrots than sticks to encourage American families and businesses to use more clean energy, Ian Bremmer tells GZERO World. Also, it responded to the Supreme Court's ruling against the Environmental Protection Agency by reaffirming the EPA's authority to regulate greenhouse gas emissions.
Of course, there's a lot of stuff that climate activists which didn't make it into the text.
But overall, the biggest takeaway is that the US government now sees itself as a helping hand for the private sector to lead the way in the battle against climate change.