Is it time to give up on 1.5°C?

MILAN — Net-zero commitments are all the rage. Countries, companies, and others worldwide have committed to eliminating their net greenhouse-gas emissions by a particular date — for some, as early as 2030. But net-zero targets are not tantamount to limiting global warming to the Paris climate agreement’s goal of 1.5°ºC — or any particular level of warming, for that matter. It is the path to net-zero emissions that makes all the difference.

This is well understood among experts. A 2021 report by the International Energy Agency, for example, charts a detailed path, divided into five-year intervals, toward achieving net-zero emissions by 2050 — and giving the world “an even chance of limiting the global temperature rise to 1.5°C.” The most striking feature of this analysis, at least to me, is the magnitude of the decline that is required by 2030: roughly eight billion tons of fossil-fuel-based emissions, taking us from the 34 gigatons carbon dioxide today to 26 Gt.

To achieve this, emissions would have to decline by 5.8 per cent per year. If the global economy grows at a conservatively estimated annual rate of 2 per cent over that period, the global economy’s carbon intensity (CO2 emissions per $1,000 of GDP) would need to decline by 7.8 per cent per year. While carbon intensity has been declining over the last 40 years, the trend has been nowhere near this rate: from 1980 to 2021, carbon intensity fell by just 1.3 per cent per year, on average.

That rate was not high enough to keep CO2 emissions anywhere near constant, let alone cause them to decline. In fact, with global GDP growth exceeding the rate of carbon-intensity decline by about two percentage points, emissions roughly doubled during that period. One reason is precious little effort was made to reduce carbon intensity for most of that time. The decline that occurred was largely a byproduct of emerging economies becoming wealthier. (More developed economies have lower carbon intensities.)

To be sure, as climate change gained more attention from policymakers, the rate of decline did accelerate, averaging 1.9 per cent per year since 2010. And with supply-side constraints now encumbering the global economy — annual growth could well run at just 2 per cent in the next few years — a modest further reduction in carbon intensity could be enough to put the global economy at or near the peak of its total CO2 emissions. Higher global growth might not even set back efforts to reduce the economy’s carbon intensity, if it is fuelled by the proliferation of digital technologies.

An emissions peak would be an important milestone. But unless it was followed immediately by a sharp decline, we would still be pumping some 34 Gt of CO2 into the atmosphere each year. While the IEA report does not address what would happen if we fell significantly short of the first two interim targets (2025 and 2030), one can probably assume that it will be next to impossible to avoid crossing the 1.5ºC threshold.

We have the tools to reach the IEA’s targets. As the report makes clear, no new technological breakthroughs are needed in the first decade. Moreover, the costs do not appear to be prohibitive. The prices of wind and solar energy, for example, have declined substantially in recent years. But there would have to be huge changes in almost every corner of the global economy, and those changes do not appear to be occurring nearly as fast as the IEA timeline would demand.

The sobering fact is that the IEA report’s target of 26 Gt of CO2 by 2030 is not within reach, because the global economy’s carbon intensity is declining at barely a quarter of the required rate. A sharp discontinuity in this variable is possible, and perhaps some would argue that 26 Gt remains a useful aspirational target. But it does not seem particularly realistic.

Is it better to cling to an unattainable target, because it represents the best path for people and the planet, or revise that goal to something more feasible? Can continuing to tout an unrealistic goal hamper progress, as people become demotivated or simply stop viewing the effort as credible? Or is it worse to acquiesce to the consequences of abandoning the ambitious path, including the risk of crossing irreversible tipping points?

Whichever route the world chooses, the challenge will remain the same: reduce CO2 emissions dramatically — and fast. Of course, that is easier said than done. The world economy comprises 195 countries with different cultures and political systems and at different stages of economic development, as well as countless businesses of all sizes and types, and eight billion individuals. Complicating matters further, the widespread distributional effects of both action (rapid energy transitions) and inaction (climate change) are difficult to address, especially in international negotiations.

But there are ways to simplify the challenge. Half of global  greenhouse-gas emissions come from just seven economies: China, the United States, the European Union, Japan, India, Canada, Australia, and Russia. The G20 economies account for 70%. A concerted and coordinated effort in these large economies would make a material difference in emissions trajectories and, perhaps more important, generate the technologies and management approaches that will be needed to reach the net-zero goal.

Michael Spence, a Nobel laureate in economics, is professor of Economics Emeritus and a former dean of the Graduate School of Business at Stanford University. He is senior fellow at the Hoover Institution, senior adviser to General Atlantic, and chairman of the firm’s Global Growth Institute. He serves on the Academic Committee at Luohan Academy, and chairs the Advisory Board of the Asia Global Institute. He was chairman of the independent Commission on Growth and Development, an international body that from 2006-10 analyzed opportunities for global economic growth, and is the author of “The Next Convergence: The Future of Economic Growth in a Multispeed World” (Macmillan Publishers, 2012)