The Kasbah has been rocked, but the transition continues

Systemic stories

Nigel Topping

08 December 2016

Nigel Topping is the CEO of We Mean Business, a sustainable business advocacy group working on climate change with thousands of the world’s most influential businesses and investors.

Sitting in the crisp chill of a Marrakesh morning, sipping a cup of mint tea, I’m reminded of my favorite punk band The Clash, and their 1982 hit Rock the Kasbah.

For those of us gathered in Morocco to progress the global approach to tackling climate change, this is certainly what the election of Donald Trump has done.

Here in Morocco, we are all trying to read the rapidly shifting post-election tea leaves, but amid the uncertainty it’s worth taking stock of where we are now and why the case for accelerating the transition to a low-carbon economy remains as robust today as ever.

Below are four reasons why We Mean Business believes the transition to a low carbon economy is essential:

1. Climate action has momentum

There is a sustained momentum driving climate action forward and the broad-based support for the Paris Agreement is showing no sign of waning during COP22. From the outset of the conference, Chinese negotiators have made it clear they intend to press on with climate action regardless of uncertainty surrounding US policy.

A senior Beijing negotiator said in Marrakesh: “It is global society’s will that all want to co-operate to combat climate change.”

China’s leadership role was galvanized with its presidency of this year’s G20 summit, where they urged other countries to follow its example and ratify the Paris Agreement. With next year’s G20 summit in Hamburg, the search for new leadership voices will also focus on Europe.

While it could be argued that Germany’s energy transition, or Energiewende, does not yet go far enough or fast enough, the transition is certainly underway. The government has just approved its energy plan to reduce greenhouse gas emissions by 40% below 1990 levels by 2020, and by 80-85% by 2050 from 1990 levels. In addition the country’s Bundesrat has passed a resolution calling for a total ban on the sale of new gasoline and diesel vehicles after 2030.

The UK is also cementing its position as a low-carbon front runner. One of the first acts of the UK parliament after the Brexit referendum was to approve the 5th Carbon Budget to reduce emissions by 57% by 2032, compared to 1990 levels. It has also pledged to ratify the Paris Agreement and reaffirmed commitments to phase-out unabated coal-fired electricity generation by 2025.

Beyond the actions of individual countries, one of the critical parts of the Paris Agreement is the distributed leadership of cities, states, regions, businesses and investors.

The C40 Cities Climate Leadership Group, a network of the world’s megacities, have collectively committed to reducing emissions by 3 gigatons of CO2-equivalent by 2030. As part of the Under 2 MoU, 136 jurisdictions representing 32 countries have agreed to long-term climate commitments out to 2050. They have agreed to either reduce their greenhouse gas emissions by 80-95% or limit emissions to 2 metric tons CO2-e per capita. And on the day the Paris Agreement came into force, Walmart, the world’s biggest company by revenue, pledged to cut its absolute emissions by 18% by 2025, as part of the Science Based Targets initiative. An initiative that has grown at the rate of two new companies a week since the Paris Agreement last year.

This kind of leadership is going to become more and more important.

2. Action on climate enhances competitiveness

The economics of the transition have radically changed, with the cost of renewables reaching grid parity and continuing to fall. Battery and electric vehicle performance and costs are also improving with predictability akin to the famous Moore’s law of semiconductors.

Meanwhile, two US agreements put in place last year: a five-year declining Production Tax Credit (PTC) for wind energy and a seven-year declining Investment Tax Credit (ITC) for solar, give the country’s renewable industry a solid footing that makes strong economic sense.

And a recent report shows that in the UK onshore wind and large-scale solar plants, to be commissioned in 2025 and beyond, will have lower costs than the next generation of gas plants.

This trend represents an economic opportunity. As has been shown with China’s solar and turbine manufacturers, countries that drive the development of local markets through policy and procurement will be more likely to create the industry winners.

3. Commitments to invest in infrastructure offer opportunities to lock-in low emissions

During the year I spent living in New York one of the things that most struck me was the shocking contrast between the glitz of top-end real estate and the crumbling transport system that’s still struggling to recover from the effects of Super Storm Sandy.

The trillion dollars of infrastructure investment that President-elect Trump has committed to spending on projects including roads, airports, pipelines, the electrical grid and even high-speed trains would no-doubt be welcome in the US.

This commitment provides an opportunity to lock in low emissions as the infrastructure of the future is built. As the New Climate Economy’s report on the advantages of sustainable infrastructure shows, reducing climate risks go hand in hand with reigniting economic growth.

According to the report, the world is expected to invest around $90 trillion in infrastructure over the next 15 years. The next two to three years are crucial in securing a fundamental shift of direction for this to happen.

4. The transition to a low-carbon economy must be fair

One of the rallying cries of the election campaign that resonated so strongly with voters was the promise to bring back jobs in struggling industries like coal mining and auto manufacturing.

It highlights one of the key factors to unlocking the low-carbon future: the need to create a just transition to ensure Schumpeterian creative destruction does not leave a trail of unemployed, angry voters in its wake.

Struggling sectors and regions need help to harness the growth potential of the low-carbon economy. But misguided attempts to prop up dying industries waste government money and deprive working people of the opportunity to re-skill for the future.

I witnessed firsthand the success of Nissan in the North East of England, which showed that bold investment from the private sector into a struggling area can create growth while building a resilient, skilled labor force.

The Kasbah may have been rocked, but low-carbon transition remains irresistible, irreversible, and inevitable.

Find out how your business can make a commitment to taking action.