Now that the dust has cleared on the Paris climate agreement, many are asking what it means for both investing and climate policy in the United States. I’m excited to report that I’ve been involved in an exciting project for the past year now that is exploring how U.S. business can lead the way to invest in a clean energy economy that will achieve an 80% reduction in U.S. greenhouse gas emissions by 2050. The project is sponsored by the Risky Business Project, which is chaired by Henry Paulson, Michael Bloomberg, and Tom Steyer. It was formally announced at the Clean Energy Ministerial meeting in San Francisco on June 2, 2016 (http://riskybusiness.org/2016/06/02/risky-business-announces-new-research/) and it will be released by the end of 2016. The World Resources Institute (WRI) has been managing the project and I’m working with an outstanding team of experienced analysts. We are exploring both the technological and economic feasibility of transitioning to an economy that will meet the goals of the Paris climate agreement and California policy.
This work builds on similar analyses by many other researchers, but it takes those efforts further by digging more deeply into four alternative pathways to achieve such reductions and then comparing those pathways with other proposals—while also explicitly addressing some of the likely implementation challenges. Some of the latter, of course, are legal and institutional—and we take no political position on how those should be resolved. But it is very clear that policy matters, and policy is influenced by politics as well as economics and engineering. So engaging the political dimension of the problem is necessary for all of us.
For this reason, one can view the Paris agreement as either half-empty or half-full: it does not have an overall emissions limit and it has very limited enforcement mechanisms (“half-empty”), but it does represent a global consensus now that climate change is a serious issue that we all need to take action to resolve (“half-full”). I compare it to a flight on an airplane that has been losing rivets and sputtering for some time now, oil leaking out of its engines as the cockpit starts to fill with smoke and the windshield cracks begin to widen: after decades of arguing about whether we should keep climbing or go back down, everybody on the plane has now agreed that the plane is in trouble and we need to descend to survive. But there is still some disagreement about how rapidly to descend, which parts of the plane should be repaired to make the descent safer, and where exactly we should land the plane. The Paris agreement has mechanisms for the world to work those questions out, but it does not guarantee that everybody on the plane will reach agreement or that we’ll land safely.
I recently used this metaphor as a speaker on panels at the Public Interest Environmental Law Conference in Eugene, Oregon in March and the Institute of the Americas’ annual La Jolla Energy Conference in May. In both cases, I also noted that both government policies and market responses make it much more likely that we will be able to land the plane safely. From Risk to Return will show that it is not an impossible task and that there are enormous business opportunities if we pursue the transformation to a clean energy economy. That’s an exciting message that I’m incredibly proud to be a part of today.