The Ethiopian Prime Minister Abiy Ahmed Ali won the Nobel Peace Prize this year for ending a multi-decade war with Eritrea. Equally notable, he made one of the boldest moves of any world leader yet to end the war on nature. On a single day on July 29, he led a blitz to plant 353 million trees (part of a larger program to plant 4 billion), for an estimated cost of US$548 million, representing almost 1% of Ethiopia’s gross domestic product.
To put that number in perspective, if a rich country like Canada were to invest 1% of its GDP planting new trees over a period of just eight years, it could remove up to half of the heat-trapping greenhouse gases (GHGs) that have been deposited by humankind in the atmosphere since the Industrial Revolution.
Former ExxonMobil scientist Dr. M. Stanley Whittingham also won a Nobel prize this year for his pioneering work in the development of the lithium-ion battery for the company in the 1970s. In its citation for the prize, The Royal Swedish Academy of Sciences said: “This light-weight, rechargeable and powerful battery is now used in everything from mobile phones to laptops and electric vehicles. It can also store significant amounts of energy from solar and wind power, making possible a fossil fuel-free society.”
For whatever reason, after Whittingham’s initial breakthrough, Exxon put the rechargeable battery project on ice, citing high manufacturing costs and safety concerns.
That wasn’t the only time Exxon scientists developed potential breakthrough technologies to decarbonize the global economy. Exxon holds more low-carbon patents than any company on the planet, according to a Chatham House report.
Exxon’s annual sales are more than triple Ethiopia’s GDP. One wonders how different the world would be had the company invested its vast resources in a better future rather than holding it back. Exxon’s shareholders should be asking this question too. Over the past 10 years, Exxon’s stock has been a dog, returning just one dollar for every six generated by an equivalent investment in the broader U.S. stock market.
The reason for this is the best news possible: economics. The low-carbon way is now the better, cheaper way. This is true across a host of critical technologies from electric vehicles to renewable power and storage.
To wit: A recent report by BNP Paribas Asset Management (which has US$469 billion in assets under management) found that oil needs a long-term breakeven price of $10–$20 per barrel to remain competitive in mobility, which accounts for more than a third of demand for crude oil. The report concludes the “economics of oil for gasoline and diesel vehicles versus wind- and solar-powered electric vehicles are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.”
It’s good news that investors are waking up to the greatest threat to humanity, and even better news that it is for economic reasons, as that suggests the possibility of a massive scale-down of financing of climate problems in favour of climate solutions. But it’s not happening fast enough.
It’s as if our house is on fire and we are waiting for the boxing day sale on sprinklers.
We need to turn the firehose on. For decades, dealing with climate change (now a climate emergency) has been a massive collective action problem with little incentive to be a first mover, because it has been viewed as an environmental problem. Any single actor (with the exception of China or the U.S.) could not hope to make more than a dent on their own, and the benefits would not be reaped for decades into the future.
But when viewed through the lens of economics, the first mover disadvantage becomes an advantage. Those who lead the race to the rising low carbon economy stand to reap the biggest gains.
Which brings us to Canada, eh. With our energy industry on the ropes and struggling to remain relevant in what Shell CEO Ben van Beurden describes as a “lower forever” oil price world, the sooner we change our mindset to see the low-carbon economy as something to fight for rather than against the better.
Ditto for the rest of our economy — from the beleaguered internal combustion auto sector and energy-inefficient heavy industry to buildings and the balkanized electrical grid — embracing the opportunities of a low-carbon economy could bring our country together instead of driving it apart.
But it will take a serious chunk of change: about $300 billion over the next six years, according to The Capital Plan for Clean Prosperity, a Corporate Knights report for the Council for Clean Capitalism.
The simplest most effective way to move Canada to the front of the global low-carbon economic expansion would be for the federal government to initiate a large clean stimulus package backed by an annual $50 billion green bond program that would provide grants for businesses to deploy climate solutions.
As the global economy enters a period of contraction, the timing for such a stimulus could not be better.
Using the best models available, such a bold move could add as many as 900,000 jobs and $700 billion of GDP growth over six years.
Unlike Ethiopia we have abundant means to do this. A $300 billion pot of free money would focus the imagination of Canadian businesses. We should not underestimate our ability to capitalize on the awesome low-carbon growth opportunity.