Guest essay by Eric Worrall
According to Bloomberg, China and India would need to spend $21 Trillion of their own money to save the world from Climate Change; enough money to build an entire fleet of starships. Though doing nothing about climate change means we’ll only be 434% richer by the year 2100.
The Cost of Cutting Carbon Is Sure to Shock Investors
Like any major economic event, getting to net-zero emissions will bring investment opportunities. But as is often the case, initial enthusiasm may soon give way to disappointment. By Gary Shilling +Get Alerts6 December 2021, 22:00 GMT+10
The goal of net-zero carbon by 2050 is almost certain to be drastically curtailed by its costs and lack of feasibility.
The International Renewable Energy Agency, an intergovernmental body, estimates that the world needs to invest $115 trillion in clean technologies such as solar and wind power and electric vehicles to limit global warming since 1900 to 1.5 degrees Celsius, the goal of the 2015 Paris climate agreement that was signed by 195 countries.
Much of the reduction would have to come in India and China, which would need to invest $21 trillion to overhaul transportation and construction while building nuclear, wind and solar facilities to reach zero net carbon emissions by 2060, according to the Wall Street Journal. But 57% of China’s energy consumption in 2020 was supplied by coal, and its consumption of that commodity is forecast to rise 6% from 2020 to 2025. With coal-mining a big employer in China, coal power plants heavily indebted and electric power needed for economic growth, the nation is reluctant to phase out coal before the 2040s. Coal supplies half of India’s energy needs and its share of world coal consumption is expected to rise from 11% to 14% in 2030.
The United Nations estimates that even if no country does anything to slow global warming, the annual damage in 2100 would be the equivalent of a 2.6% cut in global GDP. Since the UN expects the average person to be 450% richer in 2100 than today, the average falls only to 434% if the temperature continues to rise unimpeded. Relative to better health and economic growth, the effects of climate change are minimal.
I can’t help thinking China and India might find other uses for that kind of money.
Where do I get the “fleet of starships” estimate from? Back in the 1950s, the Manhattan Project wanted to find a peaceful use for atomic bombs. One of the solutions they came up with was to use atomic bombs to power a spaceship. The most powerful design could have been used to launch a manned mission to Alpha Centauri – at a cost of around $2 trillion in today’s dollars (look up “Momentum Limited” on the Project Orion website).
Of course $2 trillion only buys China and India an impulse drive, so even a short interstellar journey takes over a century. But $21 Trillion is 10x the cost of a base starship build. Who knows, maybe the additional $19 trillion buys you a warp drive.
Or they could spend $21 trillion creating a new energy system which delivers no significant benefit over their existing energy system. Or building world class armed services. Or making that AI or nuclear breakthrough both India and China are spending big to achieve.
What a tough choice.