Our chance to fight back

Stories have the power to reinforce important themes and enable people across the globe to pass on their collective life experiences on to generation after generation. No story is as uplifting to me as the classic tale of the underdog. Take the high-school bully narrative for instance; the new kid in school (our underdog), seen as small and powerless, gets picked on by the established, powerful, and fear-inspiring bully. All while, our underdog knows that no matter how ingrained a belief or habit is and no matter how afraid we are, change is always possible (“The Karate Kid” is a prime example of one such underdog, and is a must watch).

There is a parallel between the high-school bully narrative and the conflict between the world’s fossil fuel addiction and the clean energy transition. Fossil fuels are ubiquitous in contemporary society and are ingrained in our lives in ways we don’t often realize. Society has come to accept fossil fuels as a way of life, and it will be a monumental challenge to globally transition from this belief. However, the technological and economic progress made in clean energy over the last decade is truly inspiring and is positioning us to take on the fossil fuel industry once and for all.

I am team underdog. So here are three pointers in facing the fossil-fuel ‘bully’ in a post COVID-19 world.

#1. COVID-19 has proven that humanity can act decisively and collectively in the face of global threats. Our approach to climate change requires a similar approach.

Many parallels can be drawn from the response to the COVID-19 pandemic and the response required to combat climate change.

  • First, we can act collectively. The COVID-19 pandemic has proven that individuals, corporations and governments can take collaborative approaches to mitigating the spread of the virus. Similar to the spread of COVID-19, climate change recognizes no physical or social borders, and will require the same degree of collaboration to mitigate its effects on the world.
  • Second, our governments can act decisively. Governments are implementing the most significant economic stimulus packages ever seen in peacetime. Climate change is global, fast moving and irreversible, and governments must respond appropriately with adequate financial support.
  • Third, we have the power to change. In response to COVID-19, businesses did not waste time with red tape or internal politics — they stepped up and made a change. In the face of overwhelming evidence that climate change can have deadly consequences on a large scale, business can and should be inspired to take a similar approach.

Although one might argue that climate change is different than COVID-19 because it has a heterogeneous impact on certain populations / geographies, it is selfish to use this as an excuse not to act.

#2. Remember that this is a transition, and transitions take time. Fundamental change won’t be easy but that shouldn’t stop us.

The transition to net zero emissions is not only expensive, but disruptive. To illustrate this, take the US electricity sector as an example, which is currently ~63% driven by fossil fuels and would require >$4.5 trillion in clean energy investments by 2030 to be 100% renewable.

  • Challenge #1: People — The US electricity sector directly employs 1.1 million Americans in traditional thermal coal, oil and natural gas fired generation. Behind each worker are families and communities that have historically been economically dependent on the fossil fuel industry. Simply divesting from and extinguishing these industries is not fair to those families who rely upon the industry for their livelihood. A “just transition” will require integrating “greener skills” into mainstream education and a focus on building transferal skills for those who seek it.
  • Challenge #2: Technology — The transition goes beyond the simple replacement of fossil-fired electricity. Integrating GHG-free generation (think: solar, wind, geothermal) will require grid flexibility (think: battery energy storage, smart thermostats), and should be supported by upgraded transmission and supporting infrastructure (think: High-voltage transmission, grid monitoring, resilience solutions). Now imagine what is needed to get us to a net zero-emissions world beyond the grid: transportation and shipping, construction, agriculture, heavy industry, and more.

These challenges are substantial, but that can’t stop us — climate change is a problem we need to solve. To quote Marc Andreessen’s recent piece ‘It’s time to Build’: “The problem is desire. We need to want these things”.

#3. We have witnessed extreme volatility of oil prices. Benefits of reducing our dependence are broader than reducing GHG emissions.

The level of oil price volatility is unacceptable for such a key component in the cost structure of the global economy and should not be normalized as part of our “way of life”. The most recent shock from COVID-19, comes at a time when oil majors (e.g. Shell, Total, BP) are embarking seriously towards emission reductions and diversification of their businesses. Until now, there has never been as large of a disruption to the status quo to enable serious re-thinking of the way we power our world.

  • A case of extreme decline in oil prices: On an annual average basis, IEA expects global demand to be 9.3 million barrels a day lower this year than last — this is equivalent to losing the entire consumption of India and the whole of Africa. To make matters worse, the political tensions and resultant price war between OPEC and Russia added downward price pressures. While we might be happy filling up gas at a price <$1.00/L, the low price of oil has dire impacts on certain communities (e.g. the average Albertan) and entire economies that depend on it (e.g. the Canadian economy).
  • A case of extreme increases in oil prices: When the price of oil went over $70 per barrel in mid-2007, the price increase was passed down to consumers as the of cost of goods and services across the entire global supply chain began to rise as well. When the price of oil passed the $100 per barrel mark, spontaneous protests and riots broke out in 22 countries due to the sharp increase in the price of real grains (e.g. tortilla protests in Mexico and rice riots in Asia). Not only do extreme increases in oil prices increase the price of regular goods, they reduce wealth and increase uncertainty about the future.

Since renewable sources of energy (with the exception of biomass) do not require purchased fuel, the operating costs over time are highly predictable. Further, as renewable energy sources become increasingly cost competitive, they serve as a strong case to move us away from the current outdated, carbon-intensive and unsustainable economic model.

Facing our fossil fuel ‘bully’ is bigger than continuing to spend summers hiking, winters skiing and travelling this beautiful world. Climate change is a “threat multiplier” and will have disproportionate humanitarian and economic impacts on the most vulnerable people in the world. We have no option but to beat our fossil fuel habit. We can and will succeed.

I am rooting for the underdog. Are you?

Note: The views expressed above are my own. I welcome your thoughts and perspectives (always interested in a healthy debate)

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Som Ghosh

Som Ghosh

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Passionate about supporting progress towards a clean economy (Oliver Wyman, Ex Rockefeller Foundation)