The Path to Climate Credibility
Green capitalism can work only if governments eventually keep their climate promises – and the current picture is one of massive credibility failure. Accelerating the green transition will require like-minded countries to form a “climate club” and impose import tariffs on trade partners not contributing to the collective effort.
PARIS – On October 25, the electric-vehicle producer Tesla’s market capitalization reached $1 trillion – more than the combined value of the next ten global car manufacturers. Even after discounting for exuberance, this is a strong indicator of how the threat of climate change is triggering a transformation of capitalism. To be sure, polluters still abound, and greenwashing is pervasive. But it would be a mistake to dismiss the changeover underway.
Governments, however, are not on track to deliver on their promise in the 2015 Paris climate agreement to limit global warming to “well below” 2° Celsius relative to pre-industrial levels. According to the International Energy Agency, meeting the national pledges made so far within the framework of the Paris accord would lead to an increase in global temperature of 2.1°C. Moreover, actual policies fall short of even these insufficient pledges: under the IEA’s “stated policies scenario,” global warming would reach 2.6°C.
Add to this the fact that – as the Energy Transitions Commission has documented – most governments have committed to achieving net-zero emissions only by 2050 or 2060, and plan to postpone major mitigation efforts until after 2030, and the emerging picture is one of massive credibility failure.