Understanding the Climate Challenge and the Big Job Ahead

I continue to write about the climate challenge we face because despite the flood of articles about it we do not seem to have a thorough understanding of the enormity of the problem.  As a result of this incomplete understanding, we become captives of political pronouncements, often culminating in treaties long in promises and short in commitments, and, even worse, with little mention of what it will really take to fight climate degradation.

When it comes to the climate challenge the crucial question is this: “Can humanity realize its aspirations within the safe boundaries of our biosphere?”  This quote comes from the book How The World Really Works by Vaclav Smil, Distinguished Professor Emeritus at the University of Manitoba.*  This book makes it plainly and painfully clear how much our modern world has come to depend on the use of fossil fuels and why, consequently, it will take a gigantic effort to decarbonize.  Smil is not an advocate of the continued use of hydrocarbons.  Actually, quite the opposite.  He believes though that any serious response has to start with a clear understanding of our dependence on carbons.  Only then we, ordinary citizens and politicians, can plot a realistic path out of it. 

According to Smil, the first thing we need to understand is that our modern world has been built on four pillars: ammonia, cement, steel and plastics.  Each one of them is critically embedded in a wide range of dimensions of modern civilization and consumes enormous amounts of energy that so far has been provided by fossil fuels.  For example, the production of ammonia, a critical component of fertilizers, requires hydrogen which comes from natural gas – a fossil fuel.  Thanks to ammonia-based fertilizers we have been able to feed 4 more billion of humans who might not have otherwise existed.  The Green Revolution of the 1960s became possible thanks to the widespread use of fertilizers, irrigation, mechanization, and crop protection, all of them built on the use of fossil fuels.  The tremendous efficiencies achieved in the production of food made possible the reallocation of 90% of US agricultural workers to the production of other goods and services that define modern life.  When we account for the nutritional gap in underdeveloped countries and their need to increase food production, we start to understand the additional amounts of energy required.

Cement and steel are two other important pillars of modern life.  Steel, especially, is important in the construction of means of transportation – cars, trains, airplanes and ships – that keep the world moving and have made globalization possible.  But both cement and steel are based on production methods that consume lots of fossil fuel energy.  Finally, plastics have become one of the most ubiquitous materials. From shopping bags, to construction, to a myriad of gadgets, and even medical instruments, it is very difficult to think of a world without plastics.  And their damage to the environment is double.  Not only they come from fossil fuels but, even worse, they litter the environment for centuries.

Our dependence in hydrocarbons is a modern development.  Until the early 1700s, almost all the energy came from the sun, the wind, burning biomass, and human and animal muscle power.  By 1850, fossil fuels still provided only 7% of all fuel energy.  But by 1950, fossil fuels supplied 75% of primary energy.  Today, the average inhabitant of the Earth can consume up to 700 times the energy available at the beginning of the 19th century.  

Our current alternative to energy from fossil fuels is electrical power.  But despite all the efforts, electricity supplies only 18% of final global energy.  Moreover, the production of electrical power still relies on fossil fuels, in addition to renewable energy sources.  Reducing further and appreciably the quantity of fossil fuels we use for transportation, heating, and in manufacturing requires enormous additions of electric power that would have to be produced by renewable energy sources.  And here the irony is that many of the parts used in the production of renewable energy equipment, like wind turbines, themselves consume fossil fuels.  Since the climate conference in Kyoto in 1997 and 23 such conferences later, by 2019 our global reliance on fossil fuels had declined only from 84% to 78%.

Climate scientists tell us that we need to limit the warming of the atmosphere to 1.5 – 2 C0 above its preindustrial level by 2050.  This does not imply full decarbonization but rather removing the excess carbon by natural or technical means.  Already though the present trajectory points to surpassing this limit as a result of disagreements concerning the respective obligations of countries.  Developing nations, including the two behemoths, China and India, as well countries in the Global South (South East Asia, Africa and South America) are still trying to catch up with the living standards of the Western world.  Hence, reducing global reliance on fossil fuels rests more on the transformation of the economies and life styles of the developed world where, however, political divisions make such transformation exceedingly difficult. **

Without a global accord as to how we can adjust to living patterns that can be sustained by a much lower reliance on carbons, we continue to be victims of the law of inertia, that is, we continue to extend our dependence on fossil fuels.  But as our dependence on carbons grows so does the magnitude of the challenge and the effort of extricating ourselves from them.

The difficulty of making the right adjustments sooner than later is also compounded by the fact that the actions (and their associated costs) to control the gases (primarily carbon dioxide and methane) that warm the atmosphere will not yield appreciable results within our lifetime.  Therefore, these actions represent an investment one or more generations have to make for the benefit of future generations.  This long gestation horizon of the benefits of climate rehabilitation is another hurdle we have to overcome.

Finally, according to Smil, our wishful thinking that digitalization and Artificial Intelligence solutions are going to provide an easy way out of our climate challenge is just that, a wish not backed up by any credible evidence of materializing any time soon.

So, we come to realize two things.  First, the continued unchecked use of fossil fuels poses an existential threat to life as we know it.  At the same time a high degree of decarbonization can put serious limits to the use and consumption of materials critical to our modern way of life.  Thus, we need to manage our climate problem from both the supply and demand side of energy. 

*Professor Smil has written over forty books on the environment, population change, food production, and technical innovation among others.  He has the distinction to have had more books reviewed in the leading scientific journal Nature than any other living scientist. 

**In early 2020, the carbon emissions per inhabitant per year were about 20 tons in the US, 10 tons in Europe, and more than 5 tons in China.

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Author: George Papaioannou

Distinguished Professor Emeritus (Finance), Hofstra University, USA. Author of Underwriting and the New Issues Market. Former Vice Dean, Zarb School of Business, Hofstra University. Board Director, Jovia Financial Federal Credit Union.

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