We have no choice in the matter: the world must act to combat the climate crisis. However, the economic cost of cutting climate damaging CO2 emissions is most likely being underestimated.
Governments have made commitments to reach net zero emissions by 2050. To achieve these ambitious goals, we will need to allocate spending differently. Currently, the economy is weighted in favor of current spending with consumer goods, healthcare, pensions and travel taking most of the money. We will have to lower this spending and put more money into long-term capital spending such as electricity generation using renewable energy, updating—and, where needed, even changing—the electricity grid and improving public transport.
The nations of our world are concerned about such lavish long-term capital expenditure. Yet we will inevitably have to invest heavily in flood and drought prevention schemes to adapt to the effects of climate change. The level of greenhouse gasses such as CO2 and methane is already so high that climate change is baked into our future.
This capital spending to adapt to climate change—adaptation spending—will inevitably mean lower current spending. In an era of higher interest rates, governments will have to follow a more restrictive fiscal policy. They will have to sacrifice some programs to release funds for climate-related policies. Politicians and leaders will have to prepare public opinion for such policies.
While we are familiar with the environmental costs caused by burning coal, extracting oil and drilling for natural gas, we are less aware of the environmental costs arising from renewable energy systems. Clean energy is often not as clean or green as it is made out to be.
For example, an onshore wind plant requires nine times more mineral resources in its construction than a gas-burning plant producing the same amount of electricity. By 2040, solar and wind power generation will increase demand for some minerals by 300% to 700%. Copper supplies would need to double if we are to meet our targets for substituting electricity for hydrocarbon-based fuels. Furthermore, a typical electric car battery requires 8 kilograms (kg) of lithium, 35 kg of nickel, 20 kg of manganese and 14 kg of cobalt. Mining causes immense environmental damage. Therefore, to exploit these minerals sustainably, require careful deep-sea and on-land mining processes.
Much of the mining will likely be done in poorer countries. It may damage local water supplies and interfere with local agriculture, warranting compensation for local people. The location of this mining—especially open cast—is very controversial. Legal, political, and personal objections to mining are inevitable, even in poor countries. Because of these objections, opening mines may take twice as long as expected. These delays will add to costs. They will have to be financed by somebody.
The International Energy Agency (IEA) expects global oil demand to reach a record high in 2023. At the same time, Russia has cut its oil supply and OPEC+ has not raised production levels to meet the shortfall. It is clear that there will be supply shortages and volatile prices for energy and gas.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
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