5. Climate Naivety: The $50 Trillion Mirage
« 4. The Price of the Victory: 50 trillion dollars
You have seen what happens when governments are being formed - nice pictures with smiling people. And when the budget discussions start, the gloves are off and things get heated. I have seen the same happening in big companies - budget discussions can get really nasty. It’s a limited resource, makes sense.
It’s about to get nasty in the Kraken series as well. So far it has been mostly pleasant market mapping with good looking heroes. This will end here, as we will need to find the ones who will pay for this. I am fuming, pissed off and you will see why.
We've identified our Climate Kraken as a 900-gigaton monster and have assembled our team of superheroes, who require $50 trillion to defeat this foe. But is this a feasible goal? To put it in perspective, there's around $48 trillion cash in the global financial system (M1 for finance geeks), and the global GDP is approximately $106 trillion. If the numbers get to trillions, it is really hard to grasp the magnitude of the bill and whether it is realistic or unreachable. I will try to answer that (prof. Jim Carrey would say there is a chance).
Before answering I will show you three charts.
The global population is projected to rise and shine, hitting the 10 billion mark by 2050.
Our global energy consumption? It's forecasted to grow, and not by a little—over 10% by 2030 compared to current levels.
Then there's the trend of our global CO2e emissions, past and future estimates included.
Here's the takeaway: the global population is on an upward swing until 2050, energy consumption is poised to keep climbing, and CO2 emissions have been on a steady hike over the last century. But hold on...are we expecting emissions to suddenly take a nosedive?
Enter what I like to call "reduction naivety". There's a whole lot of chatter about how we can win the climate war by slashing emissions by 90% and offsetting or removing the remaining 10% of CO2e. Sounds good on paper! But when we get to the part about footing the bill, the house of cards falls apart. I would bet substantial amounts of money that by the time 2030 rolls around, we'll be scratching our heads, wondering why we couldn't cut emissions enough. To me, a realistic emissions reduction target by 2050 would be in the 50-60% range. In other words, we'll likely fall way short of net-zero.
We will miss those estimates, because we have not figured out the financing. As I have mapped out in the previous parts of the Climate Kraken series, all the superheroes need budgets to get their superpowers going. We do not have that at the moment. Saudi Aramco recorded just record profits. If they would offset their carbon footprint properly their profits would diminish by 30 billion dollars. Every year! How come we are letting them get away with this? Cases like this would create a very valuable budget for our climate fight.
Will that make gasoline more expensive? Yes, as it should be. Also, a pair of jeans would be 40 euros more expensive if we would use the CO2e cost, the average Zara product needs to increase by 4.50 euros (fast fashion sucks) and a kilo of beef would need to increase by 60% in price. Fuck growth. If you cannot do it without polluting.
The ones who pollute, need to pay.
Being a climate tech startup founder has some really dark days. The more I dig into data like this series, the clearer it is how bleak the next two decades will look for our planet.
But it is not all dark. On the bright side, governments, corporations, investors, and individuals are increasingly proactive in addressing climate change. The quickly increasing number of startups in climate tech gives me hope. I have talked to some amazing minds who have entered this space. However, the cold hard truth is that reducing carbon emissions will be costly and difficult, leading to conflicts as bills become due.
The 50 trillion budget is probably the biggest challenge humankind has ever faced financially. In the next (and final) part of the series, I will add some personal recommendations on how to start better financing the 50 trillion battle plan.