As global corporate, political, and civic leaders gather in California this week for the Global Climate Action Summit, another significant threshold has just been breached.
The Mercator Research Institute in Berlin hosts a countdown clock showing how long we have left until we’ve poured more CO2 into the atmosphere than is consistent with maintaining average global temperatures at or below 1.5°C above preindustrial levels.
Based on a medium estimate of the climate’s sensitivity to greenhouse gases, we officially ran out of time on September 8. In other words, there is now no way to deliver on the stated ambition of the Paris Agreement through mitigation (climate-speak for reducing emissions) alone. We must build a new carbon economy that sequesters more carbon than it emits. And we must do it fast.
So where to begin? In a paper published this week–“Our Carbon Future: reversing global warming while delivering shared prosperity”–we spotlight six priorities to focus on.
1. Make the story of a new carbon economy accessible and inspiring
To flourish, the new carbon economy needs broad-based support that translates into different choices about what and how we consume, who we vote for, and the behaviors we model.
A common language would be a good start. The fact that today we can’t even agree on whether a product that removes carbon from the atmosphere is “carbon negative” or “carbon positive” is symptomatic of the tangled, jargon-laden mess that is contemporary climate-speak.
Simplicity and possibility should be our watchwords. The new carbon economy needs to make sense to those who don’t know their CCUS from their DAC. And we must shift the focus from the problem to potential solutions. Naive optimism doesn’t help shift behaviors, but neither does apocalyptic dread.
2. Enable investors to see climate opportunity as well as climate risk
Rather than asking of plans to reverse global warming–“what will it cost?”–we must learn to ask “what will the return on investment be?” Project Drawdown’s analysis of 80 solutions that would together reduce atmospheric CO2 by more than 1,000 gigatons estimates that the lifetime savings of those solutions (spread over the course of 30 years) would outweigh costs by almost $45 trillion.
For sure, Project Drawdown’s analysis of costs and savings is imperfect and incomplete. But, as an indication of the overall investment opportunity at stake, it’s a good place to start. The challenge now is to design business models and investment vehicles that allow individual companies and investors to capture the value associated with implementing these solutions.
3. Close the gap between economic and environmental policy
Many governments pay lip service to “clean growth,” but too often economic and environmental policies exist in separate silos. On the economic front, GDP growth is, for better or worse, the primary yardstick by which governments measure success. Meanwhile, somewhere else in government, a different group of people is focused on reducing emissions.
In 2008, the McKinsey Global Institute published a report on “the carbon productivity challenge,” which argued that, in order to meet commonly discussed climate goals while sustaining economic growth rates, GDP per ton of CO2 would need to increase tenfold by 2050, equivalent to roughly 6% a year.
To get a sense of how ambitious that is, consider that, globally, carbon productivity improved by just 1.4% a year between 2000 and 2016. There is no historical precedent for a decoupling of emissions from growth on the scale we now need to achieve.
For governments to play their part in a successful transition to a new carbon economy, they need to fully integrate climate goals into economic policy. That means adopting carbon productivity as a key performance indicator for the economy, much as labor productivity is used today.
4. Equip companies to monitor and manage progress toward “climate positivity”
The reason companies are good at getting stuff done is because progress is incessantly monitored, managed, and incentivized. So how do you monitor and manage progress toward becoming “climate positive” (i.e., being responsible for a net reduction in atmospheric CO2)?
Setting a climate positive goal–as Ikea and Interface have done–is a step in the right direction, but it’s only the beginning. Becoming climate positive requires companies to focus not only on reducing emissions across their operations but also on:
- Creating products and services that, across their life cycle, avoid more CO2 emissions than are generated in production/delivery.
- Removing carbon from the atmosphere and sequestering it in natural or man-made carbon sinks (or closed-loop cycles).
A whole suite of new management tools and metrics will undoubtedly be needed to help companies track their full carbon impacts. As a starting point, the Carbon Productivity consortium (of which Volans is a member) has developed two prototype tools for industry.
One is a set of metrics to track the financial and environmental “return on carbon employed” (FROCE and EROCE) of different products. FROCE measures revenues per unit of nonrenewable carbon input. EROCE looks at the emissions avoided (or forced) by a company’s products in use and after use compared with the emissions generated in making the product.
The other is a Carbon Productivity Improvement Framework, which identifies nine intervention points across a product’s life cycle for optimizing return on carbon employed. (There are actually 10 intervention points, but the use of input materials or production processes that sequester carbon is not properly addressed in the prototype version of the tool.)
These tools–along with other emergent methodologies such as carbon handprinting–are only a starting point. Lots more experimentation, iteration, and refinement are needed to properly equip companies to manage the process.
5. Evolve disclosure standards and practices
Over the past couple of decades, extraordinary progress has been made in developing a robust infrastructure for disclosure of emissions data. More than 6,300 companies and 500 cities disclose emissions data to CDP. Investors with assets worth more than $87 trillion make use of that data–as do corporate procurement teams with collective purchasing power of more than $3 trillion.
Now we need to build the same level of transparency, backed by rigorous standards, around carbon removal and emissions avoidance. The key methodological issues to be resolved are to do with the permanence of some removal techniques (for example, soil sequestration) and the identification of credible “business as usual” scenarios against which to benchmark when assessing avoided emissions.
6. Forge closer links between companies and the academic R&D community
Academic interest in carbon removal solutions is growing fast. In May, Gothenburg played host to the first ever international “negative emissions” conference, attended by 250 researchers from around the world. In the U.S., the New Carbon Economy Consortium, run by the Center for Carbon Removal, is working to organize the field around a shared set of research priorities.
The next step is to start bridging the gulf between what’s happening in research laboratories around the world and the companies that will ultimately be critical to commercializing and scaling new solutions for carbon removal and emissions avoidance.
The hard work begins now. Over the next two years, Volans is convening a select group of pioneering companies to work with us and other partners to deliver tangible progress on the six priorities. We’re certainly not going to get all the way there in two years, but if we don’t start building the next generation of corporate climate leadership today, the next generation of humans won’t forgive us.
Richard Roberts is project breakthrough lead at Volans and coauthor of the white paper, “Our Carbon Future.” His work is focused on helping businesses develop climate solutions commensurate with the 10X nature of the challenge.