Popular resistance has not caused a retreat from net zero – the process is now unstoppable

The decarbonisation process has accelerated with capital expenditure on clean tech soaring

The dogs bark, the caravan moves on. Beyond a superficial wobble in Europe, there has been no retreat from the post-fossil transition across the world.

Bloomberg New Energy Finance (BNEF) estimates that capital expenditure (capex) investment in clean energy was $1.2trillion (£952bn) in 2021, $1.5trillion, and $1.8trillion last year, despite a stiff increase in interest rates and a credit crunch for green start-ups.

The total is now over three times as much as upstream capex on oil and gas.

You would scarcely know it from the political noise but the pace of decarbonisation accelerated last year, and has crossed a critical threshold.

The renewable roll-out is running near 800 GW (gigawatts) a year, greater than the 700 GW annual increase in power consumption. The International Energy Agency and Rystad forecast that fossil use in electricity generation will decline this year in absolute terms. From there it is a one-way street.

The West has woken up to the technology threat from China, pulling slightly ahead last year with combined capex spending of $718bn on cleantech and the mineral supply-chain. Clean capex rose 38pc in Europe, reaching $341bn in the EU and $74bn in Britain.

“It is simply a technology battle at this point. There are three key races in clean-tech and China is winning all of them,” said Kingsmill Bond from the Rocky Mountain Institute. “The US and Europe are massively behind, but last year was the year they got back into the game. There is an exponential growth story taking place across the leading regions and sectors of the world,” he said.

Global capex on electric vehicles (EVS), fuel-cell vehicles, and charging infrastructure rose 36pc last year to $634bn. Spending on energy storage has risen fivefold in two years. There is now enough investment in the pipeline for solar, batteries, and mine production to meet the world’s immediate CO2 target by 2030.

All those stories predicting a shortage of critical minerals seemed to assume that miners sit on their hands and that technology is static. The greater likelihood is a glut. There are already as many solar panel factories as could possibly be needed this decade. Hence the drastic deflation in solar prices.

One should not read much into Labour’s retreat from its £28bn green plan. The party is still committed to 100pc clean electricity by 2030, easier than it once seemed given the arrival of sodium-ion batteries promising to slash grid storage costs by two thirds. Britain will still need gas with carbon capture and some green hydrogen to back up wind power during the dunkelflaute doldrums. But it is doable.

Rishi Sunak has hurt Britain’s reputation by breaking the cross-party consensus on climate policy. He has set back the City’s ambitions to be the world’s green finance hub. Tory recourse to anti-green pub-bore tropes as a “wedge issue” has been squalid.

But nothing substantive has changed. The five-year delay in the ban on petrol and diesel sales is irrelevant. Britain’s zero emission vehicle (ZEV) mandate is still there, requiring that 22pc of all cars sold must be zero emission this year, ratcheting up to 80pc by 2030. Mr Sunak has increased the heat pump subsidy to £7,500. He has ended the de facto ban on onshore wind. He is still aiming for 50 GW of offshore wind and 95pc clean power by 2030.

Both parties know that it would be suicidal for Britain to shut itself out of the greatest economic growth story since the industrial revolution. They are covering their flanks until the election is over and fuel bill fury has subsided.

I wager that Labour’s plan will exceed £28bn annually as excess savings in China again flood the world with capital and cut borrowing costs to pre-covid levels. That would create an extra £50bn “headroom” even under Britain’s flat-earth budget framework.

Within 18 months the picture will be different. By then the long-awaited “€20,000 EV” will be flooding Europe’s market, just in time to fend off an existential challenge from China’s BYD.

Technology will have added 100 miles to driving range, even before solid state batteries change everything again in the late 2020s.

I am keeping my old banger for a bit longer until these models arrive, and I imagine others are doing the same. Even so, EV sales in Europe did not collapse last year. They rose by 37pc in 2023, according to the car lobby ACEA. The drop in December was due to a 48pc crash in Germany after Berlin suddenly ended its subsidy after a ruling by the German constitutional court.

Europe has made a mistake by relying on green coercion. America’s Inflation Reduction Act (IRA) uses the carrot of tax cuts to lure investment. It is “technology-neutral” so long as it is low-carbon. It does not pick winners and losers. The result has been spectacular.

Goldman Sachs estimates that it set off $282bn worth of clean-tech projects in the first year, and will ultimately unleash $3 trillion. Furthermore, the IRA pays for itself. The US Treasury estimates that it will generate tax revenues over time that are roughly equivalent to the cost.

This column does not normally stray into climate science, but if you have read the latest research on the gulf stream published by the journal

Science Advances, you may be relieved to know that the world is getting on with decarbonisation quite nicely.

It warns that the Atlantic meridional overturning circulation (AMOC) is closer to a tipping point than feared because of Greenland ice melt, which dilutes seawater salinity and weakens the ocean gyres.

The collapse could come at any time, it could be non-linear and sudden, and it could lower average temperatures in northern European cities by 5 to 15 degrees – turning Britain into southern Alaska. It would set off a global chain-reaction and destabilise rainforests. It is not a remote tail risk. It is more likely than not. Worth a read.