Climate seminar highlights solutions

Contrary to popular belief, there is currently sufficient financial resources, political will and technological know-how available to ensure a green future – if used wisely.

“I’m glad that you invited optimists here today because, well, I’m not one of them,” quipped Ulrik Vestergaard Knudsen stubbornly when he took the podium after being welcomed by Professor Thomas Bjørnholm, who is on the Climate Committee of the Royal Danish Academy. Bjørnholm had just presented the day’s seven-hour programme, which comprised presentations and activities by national and international researchers, business people and climate innovators.

Ulrik Vestergaard Knudsen, who is the Deputy Secretary-General of the Organisation for Economic Co-operation and Development (OECD), briefed the audience on current geopolitical trends and spoke about the European Union (EU) and OECD as part of the new global “disorder”. Because the world is changing. He pointed out five development trends that make up the basis for the kind of world the green transition is taking place in. In general he did not view the developments favourably as he believes that the world is moving exceptionally fast geopolitically and that we in the West are locked into a self-image that is far removed from the image others have of us. He presented five points that he called tectonic trends to outline the situation:

First, the international system is more porous than previously, especially because the US is currently weaker. The UN Security Council lacks important members, for example the world’s largest country, India. Moreover strong economies like Germany and Japan are not represented. The World Bank has similarly weak representation.

Second, open markets are no longer plan A in the EU, the US or China. In addition trade barriers and protectionism are beginning to emerge. We are heading towards partial deglobalisation and regionalisation, asserted Vestergaard Knudsen.

Third, the Global South is gaining momentum and where we see the greatest population and economic growth.

Fourth, the climate constantly seems to end up last on the world’s most serious agendas, after war, disaster and disease.

The fifth trend is the only one that Ulrik Vestergaard Knudsen believes shines some light in the darkness. The rise of generative AI represents a new technology that is transforming economies and societies, which may lead to major advances in the green transition.

Then, after the applause and a thoughtful silence, Professor of Environmental Economics Jon Hassler, Stockholm University provided a dose of much-needed optimism by addressing some of the measures that his research indicates work.

Hassler maintains that the key is to pursue a robust climate policy, which means that enough climate action must be taken today to avoid the regret of not having done more. If enough is not done at this stage, it could be exorbitantly expensive to adapt in 30–40 years. In short it is better to invest money now.

Hassler’s research shows that pursuing this type of robust transition means that reaching global net-zero emissions is possible within around 30 years but will require systems to phase out CO₂. One of the most effective ways to do this is through quotas, for example by using CO₂ rationing cards issued by the EU to individual countries and industries that do not permit them to emit more than the cards allow. From 2040, ration cards would be discontinued because CO₂ emissions would be a thing of the past by then and the fossil fuel era would be over. According to Hassler the transition to a fossil-free society need not be astronomically expensive if technology continues to develop. He concluding his presentation with the words:

“I remain optimistic!”

What about the money?

Naturally much of the day’s discussion revolved around how to finance the green transition. Peter Mølgaard, chair of the Danish Council on Climate Change, outlined the economic reality. A United Nations Intergovernmental Panel on Climate Change report estimated that, with a 1.5°C increase, global gross domestic product will be 1.3–2.7% lower in 2050. That represents a vast amount of money and is the reason why investing now will be much cheaper than waiting.

“It’s better to have than not have an ambitious climate policy since it can serve as an insurance policy,” explains Mølgaard, echoing Hassler’s earlier presentation. Doing so, however, will of course not be free just because a potential cost today is lower than it will be in the future.

Danish climate goals call for a 70% reduction in CO₂ emissions and that Denmark is a net-zero nation by 2050. According to the Danish Council on Climate Change most of the transition does not require revolutionary technological breakthroughs. The Council believes that a 90% reduction in CO₂ emissions can be achieved with already available tools, for instance by switching to electric cars and storing CO₂ underground. The difficult part will be reaching the last 10%, which will require new initiatives, such as innovative technologies.

The question, as always, is who will foot the bill for the green transition. The audience asked Mølgaard whether the tax burden would be passed on to consumers or to manufacturers.

The Danish Council on Climate Change recommends taxing manufacturing but also some form of consumer tax because changing behaviour, such as eating habits, is easier.

Major international investments and the overall plan

Chair of the board at CBS, the CIP Foundation and the Danish Foreign Policy Society, Thor Möger Pedersen has a broad international outlook and is involved in awarding sizeable grants worldwide for the green transition. Convinced that a lack of private investment will not be a stumbling block for the green transition he is also optimistic, at least in terms of financing the transition as he sees significant international appetite to invest. Testimony to this is the fact that green energy is currently seeing a higher level of investment than black. In addition the competitiveness of green technologies is important because it reduces the need for subsidies.

Despite the enthusiasm, major challenges still exist nationally and internationally. Denmark does not have a comprehensive plan for the green transition. As Henrik Stiesdal, one of the grand old men in the Danish transition to green energy and a pioneer in the wind turbine industry, reminds us the state naturally plays an important role. Stiesdal brought up Denmark’s success and key role in the global development of the wind turbine industry, a story that is often brought up to demonstrate how new technologies can have a huge impact on the climate. Many ideas originated in Denmark but a comprehensive government plan was required to shift wind turbines from the drawing board to production. This primarily meant that the government wanted it to happen; where there was a will there was a way. The state then ensured solid, long-term framework conditions for wind turbines and the industry. Conditions have changed, however, and getting a building permit takes 5–6 years today compared to 1–2 in the 1990s, which represents a hefty obstacle to the green transition.

At the end of the seminar Royal Academy Climate Committee member Thomas Bjørnholm took the floor to remind us of the peculiar dilemma that many people believe that others must take action, that the transition is not possible and that living standards will drop drastically. Nonetheless, as the seminar showed, opportunities and solutions do exist. Perhaps even in a world where climate change is not at the top of the agenda.