Has climate change run its course??

A curious article appeared in the Wall Street Journal recently, written by Steven Hayward from the University of California, Berkeley, arguing that the climate change issue had run out of political steam.

The author notes early on;

A good indicator of why climate change as an issue is over can be found early in the text of the Paris Agreement. The “nonbinding” pact declares that climate action must include concern for “gender equality, empowerment of women, and intergenerational equity” as well as “the importance for some of the concept of ‘climate justice.’

Hayward claims that the descent into the abyss of social-justice identity politics represents the last gasp of a cause that has lost its vitality. But it’s hard to agree with this as a piece of evidence in favour of the argument. Climate change is a problem related to the global commons, so confronting it and finding a way forwards will always require the broadest range of actors and at least some consideration of all views. Further, the Paris Agreement itself doesn’t actually seek gender equality, it simply lays out what the Parties to the Agreement must do to manage emissions and adapt to change. The above references to gender equality come from the accompanying Decision text, in effect the preamble to the Agreement which sets out the context and provides instructions for implementation. Given the range of governments and interest groups involved in the Paris Agreement, it is hardly a surprise that inclusive language appears in the Decision text, but the Agreement text remains almost completely untouched by such wording.

The author also argues that ‘most national governments are backing away from forced-marched decarbonization’, a claim that is difficult to align with what can be observed in the world. Certainly, the intended actions set out by national governments fall short of the actions required to see global emissions immediately fall, but as each day passes small steps forward are being made, quite the opposite of backing away. Various carbon taxes, vehicle mandates, coal levies and assorted carbon related policies continue to emerge, albeit at levels not yet sufficient for major change, but nevertheless still being implemented. In the United States, a new tax credit has been legislated which will offer direct support for carbon capture and storage and may well result in substantial developments over the coming decade.

The author then states that the high cost of action will ultimately lead to the undoing of the issue, yet here again the evidence does not support the proposition. The cost of many of the energy technologies required over the coming decades has fallen dramatically, or is in the process of falling. Solar PV, offshore wind, batteries and even carbon capture and storage have all seen cost reductions, with some renewable power generation technologies now out-competing fossil energy systems. As recently as the publication of the Wall Street Journal article itself, a group involved in the development of air capture of carbon dioxide announced a steep fall in cost to as little $100 per tonne of CO2. While air capture remains a nascent technology, such articles and findings are becoming increasingly common across a broad range of mitigation technologies. Even for CO2 capture and storage technologies which will always be seen as an immediate cost to society, that cost over time will remain small when compared to the total cost of providing energy for the global economy.

Nevertheless, there may be one aspect of climate change that is over, although the author didn’t mention it in the article. Such is the change in energy technology costs over the past decade in combination with an underlying growth in low carbon and air quality related energy policies,  that the potential extent of change in the climate itself could now be limited. In other words, the prospect of runaway change might have passed.

While the policy landscape is far from complete in terms of meeting the goals of the Paris Agreement, the IEA New Policies Scenario indicates that global emissions have little remaining upside before reaching a plateau. In the Shell Oceans scenario, which sees widespread adoption of solar as costs fall, a plateau in global emissions in the 2030s is followed by a gradual fall from 2040 to 2060, with an acceleration thereafter towards net-zero emissions shortly after 2100. While these scenarios do not encompass sufficient change to meet the goals of the Paris Agreement, they nevertheless indicate that energy system emissions could fall to very low levels simply through the combination of technology development and some policy implementation.

This has important implications for the climate system. Early scenarios published in the IPCC 3rd Assessment Report included cases such as the A1F1 and A2 scenarios, which saw CO2 emissions rise towards 100 Gt per annum late in the century, but with the  more optimistic scenario (A1T) seeing a plateau and then slow fall in emissions that is similar to, albeit even a little above, what now looks very plausible. A1T sees a temperature rise of just over 2.5°C in 2100, with a range from several models of 1.8-3.3°C.

High fossil fuel use scenarios such as A1F1 and A2 led to the very real concern of not just 3-4+°C temperature rise by 2100, but conceivably 5-6+°C of temperature rise or possibly more, which in turn could result in changes in the climate that would be very difficult or even impossible to manage and adapt to. This in turn led to climate alarmism, which the author of the Wall Street Journal article compares to a continually blaring car alarm which people then ignore.

In 2009 the MIT Joint Program on the Science and Policy of Global Change published an analysis of climate policy targets under uncertainty. The analysis demonstrated that even a modest attempt to mitigate emissions could profoundly affect the risk profile for equilibrium surface temperature. They looked at five mitigation scenarios, from a ‘no mitigation action’ approach to a very stringent climate regime (Level 1, akin to a 2°C case). In the ‘no mitigation action’ approach, mid-range warming by the end of the century is some 5°C compared to the late 20th century, but with a wide distribution, which means that there is a small probability of warming up to 8°C or more – an unacceptably high outcome even when accounting for the small probability that it might occur. But even modest mitigation efforts, while not shifting the mid-range sufficiently for an outcome close to 2°C, nevertheless radically change the shape of the distribution curve such that the spread narrows considerably, with the highest impact outcome dropping by some 3-4°C. As mitigation effort increases and the mid-range approaches 2°C, the distribution narrows further such that the highest possible outcome is limited to 3°C.

Quite possibly, through the current actions of governments, the advance of technology and the first steps along the path laid out by the Paris Agreement, the ‘no mitigation action’ outcome is now off the table and the future risk profile is quite different to the one faced in 2001 when the IPCC 3rd Assessment report was published. While this is good news, it isn’t yet cause to stop and celebrate, given that there is now greater clarity on long term impacts such as sea level rise, which could be several metres even at 2+°C. But it could usher in a more matter-of-fact debate about climate change and mitigation, without the background cacophony.

Arguably, the space between 1.5 and 3°C may be where the real story now lies.

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in http://www.shell.com/skyscenario.