On Sunday, 300,000 activists took to the streets of New York for the People’s Climate March, the biggest climate protest in history, and the United Nations on Tuesday held the Climate Summit. In the spirit of Climate Week, we’re presenting insights from members of Harvard Business School’s Business and Environment Initiative. The common theme: Why business leaders need to address the stubbornly touchy topic of climate change.
BY JOSEPH LASSITER
On September 4, the US Energy Information Agency (EIA) published its 2014 International Energy Outlook. Earlier this year, the International Energy Agency (IEA) released its latest World Energy Investment Outlook. Both watchdogs tell us the same story. Energy efficiency programs, intermittent renewables, biomass, carbon capture and sequestration, hydroelectric, and nuclear are all losing the race with fossil fuels and are expected to keep losing.
Fossil fuel use is surging around the globe. With that surge, economic well-being, education, and life expectancy are improving at record rates, at least in the short run. But with that increase of fossil fuel burning comes an ever-escalating cloud of CO2 emissions destined to linger in our atmosphere and oceans for hundreds, even thousands of years.
Unless those CO2 emissions are stopped, that growing cloud will all too soon increase global temperatures, raise sea levels, acidify ocean waters, and disrupt weather patterns, impacting our biological, social and economic systems in ways that could well present unknowable threats to many of us. The threats are not certain. The victims are not known. But a fire is burning, and the smoke is swirling.
The EIA/IEA reports also tell us-by country and by source- exactly what to expect in terms of fossil fuel use and CO2 emissions stretching to 2040. The story is scary.
The world’s governments—the United States, the European Union, Japan, China, India and the rest—are telling us that they fully expect their citizens to continue burning fossil fuels and releasing CO2 emissions at rates that by 2100 will far outstrip the cumulative amount of atmospheric CO2 needed to increase the average world temperature by 2 degrees Celsius—if not 6 degrees. And after 2100, the world will have to live with elevated temperatures and acidified oceans for hundreds of years, according to the latest scientific understanding.
The US, EU, and Japan are watching while the smoke swirls. They are rich enough to keep their CO2 emissions relatively flat, but China’s CO2 emissions are soaring to drive economic growth and the well-being of its citizens. Even as Chinese Premier Li Keqiang welcomed a “war on air pollution” in China’s eastern cities, which involves utilizing synthetic natural gas, this comes at the price of huge amounts of coal-fired energy and huge increases in China’s contribution to global CO2 emissions.
The real costs of all the renewables, nuclear, demand management and other low-carbon technologies are better understood by the Chinese than any other nation. The Chinese know more because they are building far greater numbers of solar, wind, carbon capture and nuclear plants than anyone else in the world. They are not hampered by democratic institutions as they implement their demand management programs or dictate the design of whole new cities to meet energy targets.
Yet, even with all of China’s “advantages,” the EIA/IEA reports tell us the same story. In China, fossil fuels are winning, are expected to keep winning and, by the time any relief arrives, the CO2 from those fossil fuels will be in our air and in our oceans for hundreds of years. The Chinese choice tells that they believe that the certain better life today offered by low-cost energy is more valuable to their citizens than a possibly better life tomorrow offered by low-carbon energy. As soon as India can execute a plan as bold as China’s, I bet they will do exactly what China is doing.
The only thing that will change China’s plans quickly is an energy miracle, a new energy source that can beat coal-fired power on price in China and can be installed in volume there in five to ten years. The EIA/IEA forecasts tell us, however, that the Chinese do not see miracles that can beat coal or capture coal’s CO2 emissions in their energy future.
We need an energy miracle before the Chinese, Indian and developing world coal-fired power plants and synthetic natural gas plants are built, not after. Instead of sitting by watching, we should be asking different questions. What can we do soon enough so that it matters? What can we do that is cheap enough to beat coal in Asia and even natural gas in the US? What would our world look like if we could have US levels of electricity available at affordable prices for every person on the planet for a thousand years?
I expect that miracle comes in the form of “New Nuclear” power plants—not the traditional nuclear plants that are clearly losing to coal-fired plants in China today. The US, EU and Japan have the technology infrastructure and the dynamic, startup companies to bring New Nuclear to the table quickly. Three such startups are Martingale, Inc., of Tavernier, Florida; Transatomic Power, of Cambridge, Massachusetts; and TerraPower, of Bellevue, Washington. Each is working on New Nuclear reactor designs that can be much safer even than today’s newest reactors; potentially competitive with coal in Asia; and run on today’s uranium as well as radioactive waste fuels, such as thorium (a waste product of rare earth mining) and depleted uranium (the waste product left in spent nuclear fuel rods). I am sure that there are other good candidates in the US as well as in the EU and in Japan.
The barriers to rapid progress in New Nuclear are not technical, not even economic. The barriers are in the outdated nuclear regulations that scare off private investors and in the nuclear industry-regulatory culture that accepts timelines measured in decades as normal. The world needs a New Nuclear miracle today.
Entrepreneurs in the US, EU and Japan have the ideas. China and India and every other developing economy have the clear and compelling need. But to convert these new ideas into real alternatives, the world’s governments need to act. They must redesign their nuclear regulatory practices and provide physical facilities for prototype evaluation that will let private capital take on the tasks of technical innovation, experimentation, and rigorous stress testing, even as the eventual permitting authority remains with public regulators. Innovation and regulation must proceed hand-in-hand, but regulators must allow entrepreneurs to pursue their innovations with a relentless urgency that matches the severity of the unknowable threats that the world faces from global warming and ocean acidification.
The EIA/IEA forecasts are not preordained. I hope the world’s leaders come to agreement on ways to price carbon emissions and to calm the energy security fears of nations. I fully expect we will have some miracles, but we need a miracle today…not tomorrow. We need to let New Nuclear’ s driven entrepreneurs and private investors have a solid shot at delivering that energy miracle, verified by rigorous and transparent testing. We can’t afford to sit by and watch all that fossil fuel just go up in smoke.
About the author: Joseph Lassiter is the Senator John Heinz Professor of Management Practice in Environmental Management at Harvard Business School.