Coping with climate change Global warming, what should we do 1 article to understand accurate information.

Coping with climate change: Global warming, what should we do? 1 article to understand accurate information.

  • Posted by admin
  • April 22, 2024

Global warming, how should we deal with climate change?

A distributed photovoltaic power station located in the Longyang Road base of Shanghai Metro. Xinhua News Agency reported that the latest report released by the World Meteorological Organization shows that 2023 will be the hottest year in the history of global meteorological records.

Facing the current situation of frequent extreme weather and increasingly prominent climate crisis, Ho Kwok-jun, director of the ESG Institute of the University of Hong Kong, gave a speech in “One Seat”, telling the urgency of climate action and what we should do from the perspectives of governments, enterprises and ordinary people. Take climate action.

“Zhang Hua became a fund manager of an ESG fund, Li Ping entered the new energy industry and became an industrial worker, and I worked part-time to monitor environmentally illegal companies after get off work: by actively carrying out climate action, our planet has a brighter future.”—— He Guojun

The essence of climate change is an energy issue

The essence of climate change is an energy issue. From the Industrial Revolution to the present, human society as a whole has used a large amount of energy, of which fossil energy – oil, natural gas and coal account for the vast majority.

From the perspective of the relationship between energy use and economic development, there is almost a linear relationship between energy consumption and our living standards. We analyze the energy consumption data and per capita income data of all countries in the world from 1990 to the present. We can see that energy consumption in almost all emerging economies in the world has been steadily increasing in the process of economic growth. It can be said that without energy, there will be no economic growth, and the energy demand of developing countries will continue to grow in the future.

In the past few decades, the world’s natural gas and oil reserves have basically maintained enough for 50 years. We heard a saying 20 or 30 years ago that we are running out of oil and natural gas. But why are there still so many after decades of use? That’s because our mining capabilities are increasing and our ability to detect reserves is also increasing. Therefore, our annual consumption of oil and natural gas has not caused a significant decline in recoverable fossil energy reserves.

Let’s look at coal again. Although there has been a huge decline in coal reserves in the past 20 years, the main reason for the decline is that most developed countries no longer use coal. These countries have found that coal pollution is particularly serious, and they have gradually stopped mining it and no longer explore it. New coal reserves have resulted in a significant decline in world coal reserves. However, even today, coal reserves are enough for human society to consume for another 110 years.

So far, the fossil energy we consume has caused global temperatures to rise by 1.2°C to 1.3°C compared to before the industrial revolution. If all proven fossil fuels and oil and gas resources are burned, global temperatures will rise by about 2°C by the end of this century.

If all coal is burned, global temperatures will rise by about 6°C. This will be a devastating blow to the entire human society. The current goal of international climate change negotiations is to control global temperature rise within 1.5°C by the end of this century.

The first difficulty we face in solving the problem of climate change is that fossil fuels are still abundant and cheap for humans, and they are still used as primary energy sources in most parts of the world.
The second difficulty is that the impacts of climate change have very significant regional differences.

In countries like Africa, India, and South Asia, rising temperatures will lead to sharp increases in premature mortality. Some countries are called fragile states (such as some Pacific island countries) for which climate change is a matter of life and death. But in some colder places, climate warming may actually reduce mortality among local populations.

For countries like China, the issue of climate change is essentially a question of how to develop. For most developed countries, the issue of climate change is whether they are willing to solve the problem and how much they are willing to spend, because slight climate change may not have any impact on them.

combating climate change
combating climate change

Is it to slow down climate change or to adapt to climate change?

To combat climate change, we have two types of policy ideas.

The first category is climate change mitigation. This requires society to save energy as much as possible, reduce carbon emissions, and not rely too much on the use of fossil energy. Even at specific time points, measures such as power cuts are introduced.

The second category is adaptation to climate change. In the future, there may be more and more extreme weather, with extremely hot summers and extremely cold winters. Climate phenomena such as floods, typhoons, droughts and even melting glaciers will become more and more common. How do we respond to these extreme events?

For example, popularize air conditioning. In this way, overly cold or overheating weather is not a big problem. We also need to improve infrastructure to make them more resilient. In this way, when typhoons and floods come, we will not suffer huge losses. But there is a very important issue here, that is, taking these measures to adapt to climate change requires energy consumption.

So, on the one hand, in order to mitigate climate change, we want to use less energy; on the other hand, in order to adapt to climate change, we want to use more energy – there seems to be a contradiction between the two.

We have conducted research on the impact of shutting down nuclear power plants after the Fukushima earthquake in Japan. After the earthquake caused a nuclear leak, the Japanese people became nuclear-phobic, so the Japanese government shut down all nuclear power plants in the country.

Japan used to be a country that relied heavily on nuclear energy. Therefore, after the nuclear power plant was shut down, the direct impact was a lack of electricity and insufficient electricity. In 2014, affected by the shutdown of the Fukushima nuclear power plant, Tokyo needed to save 12% of electricity. Later, as other nuclear power plants were shut down, power conservation was needed elsewhere. Therefore, the Japanese government calls on everyone to save electricity.

There are many ways to save electricity, and one measure that has a great impact on residents is to limit the use of air conditioners. As a result, after the implementation of energy-saving policies, in hot summers and cold winters, air conditioning cannot be fully used due to the need to save electricity, resulting in a significant increase in mortality.

Who are the main victims? Most of them are elderly people, because the elderly themselves have some chronic diseases. When it is particularly cold, if they cannot be provided with a suitable temperature environment, it is easy to cause diseases such as myocardial infarction. We estimate that every year in Japan, more than 7,000 elderly people die prematurely due to extreme weather due to energy-saving policies.

Therefore, even in developed countries like Japan, if energy use is restricted, there will be unexpected and huge health costs.

Replace fossil energy with clean energy

So, how exactly should we formulate policy?

The first thing everyone thinks of is to reduce the use of fossil energy and replace it with more clean energy. Judging from some data in recent years, I think we can already see a relatively optimistic future.

In the past ten years, the cost of photovoltaic power generation has dropped by more than 90%, and the cost of wind power generation has also dropped rapidly. By 2020, photovoltaic power generation will be cheaper than coal power generation. However, photovoltaic power generation and wind power generation are not stable.

Moreover, China’s wind and solar resources are mainly concentrated in the west, while energy consumption is mainly concentrated in the east. Therefore, coupled with the costs of transportation and consumption, the current cost of photovoltaic and wind power generation is still higher than that of fossil energy. However, I estimate that in the next few years, the cost of generating electricity from clean energy will further decrease, making it truly cheaper than fossil energy.

If clean energy became cheaper, we wouldn’t need to limit everyone’s energy use. In fact, in the process of achieving the goal of carbon neutrality, we are not trying to restrict everyone’s use of energy. This is a misunderstanding.

On the contrary, we may need to expand the use of energy so that the poor have more energy to use, so that they can better adapt to climate change. However, we must change the source of energy from polluting fossil energy to clean energy.

At the same time, the sales of new energy vehicles in China have grown rapidly in the past few years, and the cost of lithium batteries has also dropped rapidly in the past decade. Many studies predict that according to the current development trajectory, the cost of lithium batteries will further decline in the future.

It is expected that by 2025, or 2030 at the latest, the cost of owning and using an electric car will be significantly lower than that of traditional cars. In this way, electric cars will be replaced on a large scale around the world.

Calculating the economic accounting of carbon emissions

Another policy design to address climate change is carbon pricing.

The so-called carbon pricing refers to the clear pricing of greenhouse gas emissions per ton of carbon dioxide. To put it simply, for every ton of carbon dioxide produced by an enterprise, the cost to society and the future will be reflected in the enterprise’s production and operation activities.

Although companies do not bear this cost, nor do consumers, society as a whole has to bear it, so we need to do a cost accounting for corporate carbon emissions. This is the principle of carbon pricing.

There are two common types of carbon pricing mechanisms, the first is called the carbon market, and the second is called the carbon tax.

In the carbon market, the government or other regulatory agencies set total emission limits and issue or sell emission permits (also known as carbon credits).

Businesses or organizations can buy and sell these permits on the market to comply with emission limits. If their emissions are below their allocated permits, remaining permits can be sold; if their emissions exceed the limit, additional permits will need to be purchased.

A carbon tax is a tax levied on carbon emissions. It imposes a direct tax on consumers or producers of fossil fuels, usually based on emissions per ton of carbon dioxide or equivalent greenhouse gases. Carbon capture and storage methods mitigate the emission of greenhouse gases.

Europe has long been a world leader in carbon pricing policies. Europe not only has a unified carbon market, but many countries also impose additional carbon taxes. China started a carbon market pilot in 2012 and established a national carbon market in 2021.

However, carbon pricing is different in different countries and in different carbon markets. The price in the EU carbon market is between 80 and 100 US dollars, while in China it is relatively low, basically fluctuating between a few dozen yuan and 100 yuan. There are also significant differences in other countries.

Everyone will definitely ask a question: What kind of pricing is appropriate? In fact, economists have done a lot of work in this area. Here I want to talk about a new concept called the social cost of carbon. The social cost of carbon refers to the monetary value of the loss to society for each ton of carbon dioxide emitted.

In principle, it reflects a range of costs that may affect society, including the costs of adapting to climate change. Nicholas Stern is a well-known economist who estimates the social cost of carbon to be $266 per ton. According to an article published in Nature in 2022, the estimated cost from academia is US$185/ton.

In fact, many countries have already introduced the social cost of carbon into their regulation or policy-making processes. For example, in the United States, when approving a project, the government needs to ensure that its benefits exceed its costs. A large part of this cost is the social cost of carbon emissions. After adding this part of the cost, if the cost is higher than the benefit, then the project will not be approved.

Let’s take a look at the changing trends of international carbon prices. Before 2018, international carbon prices generally remained at a low level. However, as the EU began to gradually promote its carbon neutrality strategy, it placed more and more restrictions on corporate carbon emissions, and carbon prices began to rise.

In the past year or two, international conflicts have further exacerbated the rise in carbon prices, so the carbon price in the EU is now basically between US$80 and US$100. The carbon price in other countries is not greatly affected by international conflicts, and is around US$20 in most areas.

China’s carbon market is still very inactive and has poor liquidity. One reason may be that China’s carbon quotas are issued free of charge, so companies have little incentive to engage in carbon trading. When each compliance period is about to expire, companies will find that their carbon quotas are insufficient or excessive, and they will suddenly go to the market to trade. This reflects from the side that the ability of Chinese enterprises to manage carbon assets is still relatively weak.

ESG becomes a new corporate social responsibility concept

In China, only power generation companies can conduct carbon trading. In addition to power generation companies, some high-energy-consuming companies may also be included in the carbon market in the future, including steel, cement, electrolytic aluminum and other industries. So what can other businesses do?

Here we are going to talk about a concept that has become increasingly important in the past few years, called ESG – Environment, Society and Governance (Environment, Society and Corporate Governance).

The concept of ESG is that companies should not only focus on the value of the products they create and their own profits, but also need to pay attention to its impact on the environment, internal governance within the company, and broader social issues. Now, ESG has become a new corporate social responsibility concept.

The involvement of financial institutions is a very important reason why ESG has received increasing attention. According to 2020 data, global professional asset management companies consider a company’s ESG standards as an important consideration when considering their investment decisions, with 17.1 trillion U.S. dollars of investment management.

This figure was only US$8.1 trillion in 2016 and only US$2.5 trillion in 2010. By 2020, US institutional investors, fund managers, etc. will adopt ESG investment strategies for every US$3 invested. These investment strategies can directly affect the investment and financing costs of enterprises and actively encourage enterprises to adopt ESG investment strategies. Make the transformation.

A typical ESG case is Apple’s launch of its first carbon-neutral product this year – a new version of Apple Watch. The watch uses a large amount of renewable materials, and the production process also uses clean energy to minimize plastic packaging.

In order to save carbon emissions from transportation, goods are transported by sea instead of by air. Of course, this does not reduce its carbon emissions to zero, so Apple uses ecological compensation to absorb carbon emissions by planting more trees. The advancement of renewable energy technologies is crucial for addressing climate issues.

Let’s introduce another ESG case. We cooperate with the “Ele.me” platform and hope to reduce the use of disposable tableware. The “Ele.me” platform has changed the default option for food delivery to “no tableware required” in some pilot cities. At the same time, consumers can obtain a certain amount of “green energy” from Ant Forest. When the “green energy” accumulates to a certain level, There is an option to plant trees. We found that such small changes have achieved great results.

During the pilot operation in three cities, Shanghai, Beijing and Tianjin, the number of orders placed with the option “no disposable tableware required” increased significantly. Such an almost zero-cost thing can eliminate the need for disposable tableware for more than 20% of takeout orders every year. If this small change is extended to all cities across the country, it can reduce the use of 22 billion sets of disposable tableware every year.

resilience to climate change
resilience to climate change