May 5th, 2016

Speakers

Chair, Center for Climate Change Economics and Policy, London School of Economics

Founder and Managing Partner, The Westly Group

Description 

The numbers for moving the economy from fossil fuels are big, really big. Some experts argue that it will be too expensive to decarbonize the economy, flouting the idea of stricter regulations or carbon taxes. But Citi produced a report with a decidedly different conclusion—inaction will cost even more.  The true cost of either keeping or ditching fossil fuels was up for discussion at a recent Climate One event.

At the Climate Change Conference in Paris last fall, Former World Bank Chief Economist Nicholas Stern noticed a shift in attitude. People around the world came to Paris equipped with a deep understanding of the issues, including the current impact of climate disruption and the risks of a warming planet. They were hungry for examples of cities that were functioning in a sustainable way, and what they saw were cities that offered an abundance of benefits to their residents. “For me, the key change was the understanding of the real attractiveness of the alternative route,” says Stern. “The investments that you make, you shouldn’t see [them] as ‘costs.’ You should see them as investments with very powerful returns.”

Silicon Valley entrepreneur Steve Westly also felt inspired by what he saw at the talks in Paris. Two elements that he saw intersect for the first time were galvanized political movements promoting sustainable energy and the breakthroughs in clean energy technology necessary to make those goals cost-effective. “If you think about it, we’re that close to having a world where you may not be having to pay a penny for electricity at home if you buy low-cost solar,” Westly predicts. “You may not even be paying a penny for gas ever again. When you’re not paying for electricity or gas? Wow, that is a whole new world.”

California is a hub for much of this clean technology innovation, being home to companies like Tesla. Westly invested in the electric car company in its early days, believing that it would “revolutionize the global auto industry.” Tesla is well on its way, having just announced a $30,000 car with a 200 mile range, alleviating both the financial concerns and range concerns that many potential EV buyers have.

The swift trend away from oil has been felt globally. Countries in which vast reserves of petroleum have acted as economic bedrock, are preparing for a future in which their main asset has little value. In light of this possibility, the Financial Stability Board, which monitors the health of the global economy, asked Mike Bloomberg to create a protocol for reporting financial risk due to climate disruption. For any one company, this protocol takes into account not only the physical effect of extreme weather on the company’s buildings and the legal accountability for the company’s emissions, but more importantly, according to Stern, “the risk that the assets you hold, which have a strong fossil fuel element in them, are not going to be worth very much.”

Despite massive innovation in California, venture capitalists are not widely investing in clean technology. “Look,” says Westly, “the simple reason is, if you look backward people lost a lot of money because they came in too early.” He points to Tesla. Their first car was $120,000 and too compact to be comfortable. Now they’re unveiling a spacious, affordable car. “There’s an inflection point in every area of the economy and I’m here to tell you we’re hitting that inflection point in renewables now.”

While efficient renewable energy is absolutely vital for a sustainable future, Stern sees another critical element. “We always jump quickly to replacing the fossil fuels and we must. But a big part of that story is just using energy much more efficiently than we have in the past.” Most people have behaviors they could change in order to curtail their personal carbon footprints, for instance cutting back on air travel and using devices such as Nest to make their homes more efficient. However, the onus, according to Stern, is also on our cities and governments. “Designing cities that work… it’s fundamental.”


 

Related Links:

China Development Forum

Why Are We Waiting: The Logic, Urgency, and Promise of Tackling Climate Change by Nicholas Stern

 

Written by: Ellen Cohan

Photography by: Jane Ann Chien