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Denialist economics: debunking the COP caveman myth

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By Christopher Caldwell

· 5 min read

“There is no science…that says that the phase-out of fossil fuel is what’s going to achieve 1.5C. Show me the roadmap for a phase-out of fossil fuel that will allow for sustainable socioeconomic development, unless you want to take the world back into caves.”

I suppose it is incumbent upon any host to ensure that a good party has its entertainment. 

Even still, Sultan Al Jaber left a few jaws on the floor with this one. Just a few days into COP28, and the headlines reported that its President (and CEO of ADNOC) didn’t really believe in…decarbonisation?

You’d have to be living on a desert island, not to know that we need to phase out fossil fuels.

(Except that the Alliance for Small Island States immediately came out against Al Jaber’s comments, so I guess not!)

I’ll leave arguing the basic science to someone else. Today I want to take up the more pernicious argument – that decarbonisation risks holding back development, because without oil there is no growth.

Is Al Jaber right that if we want to tackle climate change, we should also start strapping our solar panels onto the nearest cave? 

Absolutely not. 

The new denial

First, let me say that there is a very real, important discussion to be had about degrowth and the limits to growth, but that is too complex to address here. So we will take it as read that growth is positive, or will be used to rebalance developing economies not yet in overshoot.

The next thing to recognise is that Al Jaber’s comments are not an isolated position. It is to our credit that outright climate denial – of the sort that oil firms like ADNOC once made their stock-in-trade – is no longer tenable. However, that resistance has not given up so much as transformed: We can’t afford the transition; it will hit the poorest hardest; it will be cheaper to solve in the future. You’ll find this economic denialism coming from a right-wing politician near you, from Trump to Sunak.

Now – onto the evidence.

Where it hurts

There’s no need to overcomplicate this. To start with, let’s underline the costs of inaction:

  • Direct cost of climate disasters already over $1 trillion per year (IMF)

  • Developing countries facing 3.6x the GDP risk of rich nations (S&P Global)

  • Global GDP 18% lower than baseline by 2050 (SwissRe)

  • Global GDP 37% lower than baseline by 2100 (UCL)

  • Global GDP 22% lower by 2050, and ‘economic annihilation’ by 2100 for warming up to 5C. (Oxford Economics)

We could go on. There are plenty of studies, with quite a wide range of final figures, but all of them point in the same direction. 

The fastest way to head ‘back into caves’ is unabated fossil fuel burning.

Meanwhile, estimates of the costs of abating climate change vary too, but are generally order of magnitude lower than the numbers above – around 1-3% of GDP. (Although every year we dither, these costs increase) 

The UKs CCC’s Sixth Carbon Budget puts the cost of abatement at just 1% of GDP. That’s half what we spend on “defence” each year; half what we spend on food waste, for no reason at all.

Unlocking the benefits

Perhaps this is the wrong way to go about the argument; focussing on costs plays into the denier’s negative framing. What about the potential benefits to GDP?

Take this study from the OECD, which says that decarbonisation could add 5% to the GDP of the G20 by 2050 – and presumably much more to the least-developed economies beyond it. 

Or this review by Deloitte for the World Economic Forum, which says that net-zero could be worth an extra $43 trillion to the world economy through to 2070 (versus $178 trillion in costs for business-as-usual).

Or this BDSC report that hitting the Sustainable Development Goals could unlock $12-20 trillion a year by 2030 – just six years away.

Regardless of whether you add a trillion here, or subtract a trillion there, the overall thrust is the same: green growth is real. And regardless of what Al Jaber and the other 2,500 fossil fuel lobbyists at COP say, it is superior to a net-zero solution that keeps fossil fuels in the mix: this Oxford study found that a high-CCS pathway to net-zero would cost $30 trillion more than a low-CCS pathway for the same outcome.

The world gets behind green growth

There is so much more we could say here. In particular, the top-line numbers say nothing about the quality of different kinds of growth. The green transition promises to be more inclusive, to lift billions out of poverty, and launch a great wave of high-quality job creation. It will touch every part of life, and spur a new generation of technological innovation. It is the next industrial revolution. 

There are real-world examples of countries like Finland who have already shown that decarbonisation and improved standards of living can go together. In the US, the fact that Biden expended the majority of his political capital this cycle passing a landmark piece of green growth legislation – the IRA – shows that other major economies are catching on. The IRA’s $369 billion in green spending will create an estimated 9 million jobs as a result. 

Even the notoriously conservative American voter is no longer buying the gloomy argument: nearly half think decarbonisation will boost the economy, whilst just 29% think it will slow things down. In contrast, the UK’s decision to ditch or delay its net-zero targets looks like yet another example of economic self-harm. 

Overall, Al Jaber’s caveman denial-onomics is little more than a myth. The world is waking up to the reality that the net-zero revolution will abate huge costs and unlock huge benefits for the economy. 

If you believe in growth, then green is the only colour left to choose from.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Christopher Caldwell is the CEO of United Renewables, where he employs his past experiences as a corporate lawyer, investment banker, and team leader to lead all aspects of the business. Chris holds a degree in business from Trinity College Dublin, an MBA from London Business School, and is currently reading part-time at the Yale Center for Business & the Environment. 

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