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What COP28 Missed: A Realist Climate Policy

What COP28 Missed: A Realist Climate Policy

January 8, 2024

Coming out of the latest UN climate conference, it is clear that while hopeful promises are easy—like declaring “the beginning of the end” of the fossil fuel era—effective action is much harder. For that, we badly need a Realist climate policy. What does that look like?

In the broadest terms, a Realist climate policy would recognize the reality of climate change, agree we must act, and channel action into policies that are effective, efficient, and sustainable over the long term—economically, environmentally, AND politically. The green transition we need will require a clean energy system that is as cheap as the current dirty one, and that performs just as well. But we need a Realist policy to get there.

Realism would explicitly reject the “kitchen sink” approach that throws all available resources at every action that might mitigate climate change. There is a finite political appetite for addressing climate change, and it may already be reaching limits: Failed efforts to institute carbon taxes are the test case here. Realism also requires a global context: Policies that work in the rich world likely will not work in poor countries, where the bulk of emissions will come from.

Donald Rumsfeld said you go to war with the army you have, not the one you might want. Realist policy too works with the world that we have, not the world we want or hope for. High aspirations are absolutely necessary, and simplification helps to mobilize action, but objectives and pathways must be grounded in the real world that we inhabit today.

IPCC climate models demand decarbonization. But there is nothing magical about the year 2050, and the world obviously will not fully decarbonize by then. Assuming that we must decarbonize everything by 2050 or the world will collapse around our ears does not actually help. It leads to panicked policies demanding immediate emissions reduction everywhere. But this ignores the hard trade-offs and tough choices that are completely unavoidable, and it gives short shrift to steps we can take now that might pay off later.

NetZero is a great meme. It is easy to understand, it is a fantastic call to action, and it encapsulates a mission objective in a single word. It’s been unbelievably successful. Unfortunately, a meme is not a strategy. NetZero proponents start from a commitment to NetZero by 2050, and then work back to define the steps that “must” be taken to reach that goal. But many of those steps are currently impossible or unsustainable; it’s just magical thinking to imagine a conclusion and then assume the world will fall into place to reach it.

NetZero proponents say, for example, that we must decarbonize steel now. Green steel costs $100150 per ton more than regular steel. Switching to subsidized green steel would cost China more than $100 billion annually. Can the West force those decisions on China and India, which account for more than 60 percent of world steel production? Not likely. Low-income countries need steel to grow—India expects to triple production by 2050 (almost none of it green)—and paying a large green premium is beyond its means. Green steel will grow as the technology improves, and government support for R&D and for scaleup (when the time comes) can help, but assuming that steel will go green by 2050 confuses the objective with the pathway, which is a devastating mistake.

Instead of magical thinking that starts with a conclusion and works backward, we need a strategic framework that encourages smart decisions on priorities and maximizes the return on scarce political capital, a strategy that connects the economics, technology, and politics of the green transition.

That Realist climate strategy should be built around 10 core axioms:

1. Climate change is real, it is a major challenge, and human activity strongly influences climate change. Realists are not climate deniers.

2. Climate change is global and requires global solutions. Eliminating emissions in the rich countries will not be enough.

3. Shame and blame won’t work. We would all like to be greener, but few among us will stop driving, flying, or eating meat. And expecting people in low-income countries to give up first-world aspirations is both a pathway to failure and fundamentally immoral.

4. Forcing transitions through regulatory mandates will fail politically. They have no chance in poor countries with other pressing priorities (e.g., food, housing, electricity), and won’t be sustainable in rich countries either. Backlash is already very visible in the United Kingdom, United States, and much of Europe.

5. All policy mechanisms will be needed. Realists have no ideological commitment to “market forces” or against regulation or subsidies. What matters is what works to solve specific problems. Market forces offer the most powerful lever for speedy change at the necessary global scale, if clean technologies can be developed that are cost- and performance-competitive with dirty ones.

6. Innovation will be critical. We absolutely do NOT “have all the tech we need”—not at the right price. And market forces alone won’t be enough: Private investors capture too little of the social benefit from innovations and are often too impatient, while slower-moving incumbents have huge advantages and plenty of incentive to slow down change. So, we will need much more government funding across the entire product development cycle, from basic research to scaleup.

7. Government resources are finite, so policy must be both effective and efficient. Prioritization and trade-offs are not just inevitable, they are mandatory. Simply maximizing emission reduction without sustainable economics and sufficient political support won’t work.

8. Government capacity to support innovation must improve. That innovation-oriented strategy requires an appetite for risk, a capacity to assess risk, mechanisms to distribute risk, the courage to act, and an acceptance that failures are inevitable. Those capabilities are hard to develop but nonetheless necessary.

9. Information must flow freely. Market-oriented strategies will need constant monitoring and often adjustment. Expecting to get it right immediately is ridiculous, so strong feedback loops must be built in. The existing consensus that protects both government agencies and corporate secrecy must be replaced by transparency as the default option. Understanding failure is indeed the first step to success—but that’s possible only with full transparency.

10. Within the Realist framework, technology, politics, and markets connect to illuminate pathways through the green transition, ensuring that hope does not replace analysis and thus avoiding expensive and time-consuming dead ends. We need plans for specific technologies in defined target markets that address local geographies and communities, plans that are also subject to deep and continuous scrutiny. That is the core capability that can drive an effective green transition.

It’s hard to make green policy in our highly polarized environment. So, it’s tempting to just sign up for anything that could possibly move the needle on decarbonization. But that’s not how we will find our way to a decarbonized world. A Realist climate policy can be both enormously ambitious and sufficiently skeptical at the same time. It will need to be.

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