Business and climate change: a structural relationship for the straightforward reduction of carbon emissions

Do we still have time to stop climate change? How long can we take? If the question seems scientific, political and emotional, that is because it can be scary and depressing for entities that do not know how to maintain the acceptance of the process of decarbonizing the economy as a whole. This does not mean, of course, that the actual answer is uncertain; the science is very clear on this.

The Intergovernmental Panel on Climate Change (IPCC) released a report in August 2021 that answers the sobering question: “We don’t have time. We don’t have time. »

The interpretation of this statement must be taken seriously. This indicates that we are at an important moment in the future of future generations, in the sense that it does not mean that nothing can be done or that our future is completely out of our hands. Businesses and policymakers can and must take systematic action to set our economy and our world on a truly more sustainable path.

To the more significant additional heating

We really have to accept a hard truth. Due to the greenhouse gases already released into the atmosphere, the warming will continue for decades.

The use of En-ROADS, a global climate simulator developed by Climate Interactive, the MIT Sloan Sustainability Initiative and Ventana Systems, makes it possible to highlight the impact of approximately 30 policy measures such as the electrification of transport, carbon pricing and improved agricultural practices among hundreds of factors, such as energy prices, temperature, air quality, sea level rise…

En-ROADS, a systematic tool inspired by the theory of “system dynamics” implemented by Jay Forrester and John Sterman, helps shed light on the long-term effects of global climate policies and actions in an attempt to implementing fair and high-use climate solutions.

In this context, observing the status quo, the temperature in 2100 will record an increase of 3.6°C resulting in, among other things, a net increase in CO2 emissions, sea level rise, ocean acidification, melting Arctic snow, reduced agricultural productivity and loss of biodiversity (Figure 1).

Figure 1: Global warming and the effects of the status quo

Furthermore, even if we were to significantly reduce (or even immediately, which is technologically and economically unviable) carbon emissions, we are already on the road to an irreversible increase in temperature, most minus 1.5 ° C, which causes the melting of glaciers and permafrost and the progressive reduction of oxygen in the oceans, the level of which will continue to rise (figure 2). However, as shown in figure 2 regarding, for example, the pH of the oceans or atmospheric pollution, the improvements should be noted compared to the so-called status quo scenario, and the deterioration of the standards is not very fast , which shows. a more or less control of the situation in the case of agricultural production, biodiversity or even the melting of Arctic snow.

Figure 2: Global warming and rapid reduction of carbon emissions

Therefore, our actions now can make the difference between the mitigated effects and the disastrous consequences known to be the “normal” experienced this summer, with record floods, forest fires and waves of heat, get worse.

Our choice now consists of two macro-variants: do we want the inevitable aggravation to be moderate or do we want it to be severe?

Three levers are available

Most of the greenhouse gases come from the production of electricity, transportation and industrial and agricultural operations, three “levers” that we can activate to reduce carbon emissions in particular.

– Aboutvoltaic, the cost of renewable energy has fallen faster than expected. With some energies such as wind and centralized solar, we are starting to reach the threshold where it is now cheaper to build new installations than to operate existing infrastructures using fossil fuels. The fact remains that we must continue to invest in energy storage solutions that are less expensive, more efficient, and update our energy networks while finding ways to avoid some well-established lobbies. which slows the transfer of renewable energy.

– The transportation represents a thornier technological challenge. While there is little momentum to shift to greener passenger vehicles, other transportation vectors such as freight trucking, shipping, and air travel are not easy to electrify. These modes of transportation require more dense and portable energy sources. It is therefore necessary to continue developing new technologies such as “green hydrogen”, i.e. hydrogen produced by electrolysis from renewable energy, while promoting a limiting factor that is water, which is becoming rarer in many countries, regions, subcontinents and continents.

– The last lever that can be operated is onindustry and theagriculture. The industries that produce the most greenhouse gases are those that consume a lot of energy and heat, ie mainly use iron, steel and cement. For agriculture, the production of fertilizers, methane (from livestock) and deforestation are the major emissions concerns.

In the end, facing a general lack of institutional incentives, the reduction of greenhouse gases increases costs without necessarily generating a tangible benefit. It is therefore difficult for companies operating in highly competitive sectors to sustainably adopt this virtuous circle.

Carrots or sticks

Overcoming these technological, political and economic challenges will require a radical departure from the status quo.

Unfortunately, our personal actions as individuals – recycling, using public transportation, etc. – probably won’t move the needle enough for limited and controlled global warming.

Most decisions about carbon emissions are made within companies, so companies have a key role to play in moving us towards a near carbon neutral future.

On the one hand, the Sustainable Development Goals (SDGs) must be integrated in all the components and functions of organizations, instead of being placed in a department or within a team. This will ensure that every major decision is made with environmental concerns in mind; sustainability is everyone’s business.

On the other hand, institutional investors can put pressure on companies to improve their carbon footprint. As for the big companies, they are in a position to put pressure, in turn, on their suppliers, although this kind of action is also not enough.

In fact, if companies only respond to climate change to the extent that it threatens their own profits, then they are not doing enough. This is exactly what has prevailed for 30 or 40 years.

This means that companies must realize that we will all be better off if we can limit the increase in temperature, and this, especially by advocating in favor of a global carbon price that will establish the reality of the costs that forward to. to end users. They should also defend, or even co-finance, the implementation of long-term policies that support research and development of critical technologies, such as battery storage and green hydrogen for regions with sufficient water resources. In addition, since it is difficult to quickly wean our consumption from carbon-intensive materials, such as steel and cement, we also need to invest in CO2 removal technologies.

So, through a mix of incentives, regulatory instruments and coercive measures, that companies subject to direct and indirect financial incentives will not only do what is good for themselves interest, but also what is necessary and important to protect the future of the future. generations.

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