The Problem
Carbon increase in the atmosphere
We presently have a long road ahead on the path to internalize the cost of carbon in our products and services. Our society needs to rapidly bend the curve of carbon emissions and the energy transition won’t be easy. Oil is cheaper than soft drinks ( Bill Gates, How to avoid a climate disaster) and has a much better energy return on investment than renewable energy sources.
Cornering oursleves into a hazardous situation:
As we rapidly approach 1.5ºC of global warming, our remaining carbon budget is dangerously decreasing and so is our reaction margin to steer the global economy and make it much less fossil-fuel dependent before most climate tipping points could be triggered. We can't just shut down the global economy to reach net zero, because we need it to service the necessary energy transition.
As a result of climate change, our society will need to allocate additional energy towards mitigating its impacts, while also undergoing a late process of decarbonization. Consequently, the energy mix will require an increased reliance on renewable sources, leading to a further reduction in the energy return on investment of these sources (Capellan, 2019). Procastination in climate action means that we're running out of oportunties to use valuable fossil fuel energy to electrify our economy while building renewable energy projects to ensure people's well being.
The carbon challenge:
Importantly, enterprises enforced to comply with regulated markets often carry the burden of higher carbon costs, facing unfair competition from industries in other countries that are not bound by compliant carbon rules and are able to sell their products and services at lower cost, contributing to the carbon leakage issue. As a result, the polluters-pay-principle is not properly enforced.
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