Assessing the green opportunity

The concept of trade-offs has become unfashionable. Politicians around the world like to pretend that their choices will bring us nothing but superlative benefits.

Nowhere is this whitewashing more pervasive or accepted than in climate change. There is a prevalent, comforting notion that we can have our cake and eat it too: that cutting carbon need not involve financial sacrifice.

We hear this rhetoric so often that we almost don’t notice it. In announcing plans to make the UK a global hub for “green finance,” the British minister of state for climate change and industry Claire Perry said, “The transition to a low carbon economy is a multi-billion pound investment opportunity.” Norway’s prime minister recently claimed climate change offers “an opportunity for development and growth.”

And some politicians claim that the OECD has boosted this case with a report called Investing in Climate, Investing in Growth. The Chilean environment minister Marcelo Mena says the OECD finds “climate action causes increased growth.”

The simplest response to all this is to ask: if climate policies really are economically beneficial, why do we need the expensive Paris Treaty, or urgings from climate campaigners? Why indeed does a Nature analysis find every major developed nation is failing to meet its climate promises?

If carbon cuts were good for the economy, the UK wouldn’t be struggling with increases in energy costs, Germany wouldn’t be charging taxpayers more than €25 billion for electricity, and wind energy pioneer Denmark wouldn’t have the highest electricity prices in the world.

Now, it would be fine to admit that cutting CO2 has a cost, but to argue that this is outweighed by the climate benefits. There is a legitimate conversation to be had about how much we are willing to pay for a smaller climate impact.

But we need to be honest that there is a trade-off. Solar and wind energy is not yet competitive enough to provide us with reliable, cheap energy that out-competes fossil fuels.

Although there are times when solar and wind energy prove the cheapest option — and it is likely that these will increase — they remain, on average, more expensive than fossil fuels.

That’s why the International Energy Agency recently projected that, even in 2040, even if we all entirely implemented the Paris Treaty, and even with a CO2 tax, non-hydro renewable energy will still be the costliest form of electricity generation, in poor and rich countries alike. The IEA estimates we’ll need to pay $3 trillion over the next 25 years to support uncompetitive solar and wind.