Ten years ago this week, at the world premier of An Inconvenient Truth, Al Gore was possibly the gloomiest man in America, explaining to a blithely unaware world how climate change was dooming the planet.
Today, many of those global warming consequences–record-breaking droughts, thousand-year flood events, fires–are already coming to pass. “Every night on the television newscast, it’s like a nature hike through the Book of Revelation,” he told an audience at the United Nations, at the Investors Summit on Climate Risk on Wednesday. (The most recent example is the Zika virus in Latin America–a complicated story that, he says, could have climate change connections.)
Yet he is feeling pretty good that the world is finally waking up. What gives him hope?
December’s climate deal still leaves him “glowing,” despite the huge gap between emissions cuts that science says are needed and the pledges actually offered by 196 nations. Most importantly, it establishes the “direction of travel”–the answer to the question that businesses have of whether the world will actually change.
Gore believes it’s important to focus on what is mandatory in the Paris agreement: the fact that every country has to review their pledges every five years and “ratchet” it up. “These regular reviews will give people who are concerned about the human future an opportunity,” he says. Improving technologies and lower renewable costs will make it easier for nations to be more ambitious at each review period, he believes. “The practical ability of nations five years from now to say, ‘you know we can do more,’ is going to be greatly enhanced.”
Gore has spent a lot of time in Silicon Valley in recent years (he’s on Apple’s board and is a senior partner at a venture firm, which might contribute to why he’s feeling so good), and he now believes that several renewable energy technologies will follow a version of Moore’s Law for integrated circuits–their price could drop exponentially over time. Moore’s Law is what allowed personal computers to go from a room-sized mainframe to an even more powerful, affordable pocket-sized smartphone in a few decades.
“Solar energy has been coming down in cost at a rate of 10% per year, and these mathematical curves can be drawn very precisely,” he says. “When it becomes cheaper without subsidies in the majority of nations around the world it really is game over for the old way of producing electricity.”
At Paris, business and investor leaders were involved in like never before, says Gore. At the World Economic Forum in Davos this month, a survey of a leading group of 750 economists for the first time said that climate change-induced catastrophe was the greatest threat to the world economy in 2016. “The conclusion is not surprising. … but the fact that this particular group would say that so boldly and clearly was yet another sign that we are really at a turning point,” Gore says.
At the summit, investors talked about taking carbon risk into account in making investing decisions–whether through the more extreme strategy of divesting from fossil fuel firms and other high risk companies, or a more measured approach of engaging with firms as shareholder advocates. Gore advocated that all companies should have an internal price on carbon, whether or not their government creates one for them.
The flipside is the opportunities that clean energy investment provides. A new report from Bloomberg New Energy Finance, presented at the conference, marked 2015 as a world record for clean energy investment: $330 billion (including renewable energy, energy efficiency, power storage, but not nuclear, hydropower, or natural gas). A third of that investment occurred in China. The figures, says Bloomberg New Energy Finance’s Michael Liebreich, are a “stunning riposte” to those who thought new investment would stall in the face of crashing oil prices, the strong dollar, and the continued weakness of Europe’s economy. Liebreich forecasts that 2016 will continue another record.
It’s estimated that an additional $1 trillion a year in clean energy financing through 2050 is needed to make emissions cuts. Bank of America CEO Brian Moynihan, which has committed $125 billion to environmental finance by 2025, noted that post-Paris, the biggest challenge will be “how to make it a reality.” “It’s a challenge, but it’s there now, rather than needing the incentive.”
Gore likes to compare fossil fuels to the sub-prime mortgages that were at the heart of the 2008 financial collapse. Sub-prime mortgages were given to people who were at a very high risk of defaulting on their loans, yet Wall Street was under the “mass delusion” that if they packaged thousands of bad mortgages together and sold them, the risk would go away. When people started to default, the house of cards collapsed on a massive scale. He believes many fossil fuel assets are “sub-prime carbon assets”–resources that exist on a paper that have much less value in reality. As more governments create climate regulations and the cost of alternative energy falls, these fossil fuels will become unburnable or their value will crash. “The analogy is frightening exact,” Gore says, and the day of reckoning won’t be far.
He believes success in Paris was partly due to rising global awareness about the existential threat that climate change poses. “We need to achieve escape velocity from the forces that are dragging us back,” he says. “This is a moment of extraordinary hope–because the business community is moving, because the investor community is leading, because the technologists have given us this dramatic new vista of ever-declining costs for pollution-free energy. It’s also true that the new generation is in many ways profoundly different than their predecessors.”