Thread by @KellerZoe

Decarbonisation is not a global burden to share, it’s a bonanza for those quick to seize it, a growth accelerant. Oxford sees a $26 trillion gain from #NetZero. The Wright’s Law ( i.e. falling prices ) of technology is stronger than politics.

telegraph.co.uk/business/2021/…

A team of mathematicians at Oxford University has carried out the world’s best study so far of the economic windfall to be had from a turbo-charged decarbonisation based on unstoppable leaps and bounds in already known technology. See: inet.ox.ac.uk/files/energy_t…

It concluded that the net gain is $26 trillion (£19 trillion), or $14 trillion under cautious assumptions. The faster it happens, the bigger the benefit. It can be achieved in 25 years, beating the global target of 2050. Most changes do not require state funding anymore.

“I know that some say we are going too fast. I say to them that there is a force out there stronger than government. That force is the market. And the market is going green,” said Boris Johnson, before rolling out his Net Zero Strategy on Tuesday. telegraph.co.uk/business/2021/…

Eliminate the word "cost" from the #NetZero lexicon. The relevant concept is how much we gain. With the right rules and policy signals – and seed money to bring the newest technologies to scale – free enterprise will take care of the problem, guided by Adam Smith’s Hidden Hand.

Renewables will prevail because fossil fuels cannot compete. They will slide rapidly into obsolescence so long as the market is not obstructed and authorities stop "standing on the hose", in the words of Andrew Forrest — Australia’s former polluter-in-chief and now hydrogen king.

Cathie Wood from the technology fund Ark Invest likens it to the fate of the whale oil industry in the 1860s, once the 5th-largest sector of the US economy, chief source of lighting fuel. Within a decade whaling had mostly vanished because something better came along: kerosene.

The Oxford report, by the Institute for New Economic Thinking, said global solar costs have been falling by 15% a year since the mid-1990s in a textbook case of Wright’s Law, the so-called learning curve of innovation. See: ourworldindata.org/cheap-renewabl…

The models long used by governments and agencies to predict solar performance assumed on average that costs would fall by just 2.6% a year. It is why the establishment has been so fantastically wrong.

Unsubsidised new wind and solar got parity with fossil fuels across most of the world, cheaper for most of mankind, according to Bloomberg New Energy Finance. Wright’s Law of technology still holds: they will become even cheaper, subject to the supply of critical minerals.

Ditto with lithium batteries. The "learning curve" has been 13% a year since the 1990s. See: ourworldindata.org/battery-price-…
Electrolysers are only just starting, moving from toolshed phase to factory-scale production with advanced robots. They will track the same trajectory.

However, Wright’s Law does not hold for fossil fuels. The Oxford group found that coal, gas, and oil have traded at the much same level in real terms for 140 years, with ups and downs along the way but no structural fall in cost – a "random walk", in academic jargon.

Once the cost curves cross, the game is up. The collapse becomes unstoppable. You go bankrupt two ways: gradually, then suddenly. Hedge funds and banks see this. They are shutting old energy out of the capital markets and pricing its equities for run-off.

The IEA (International Energy Agency) and the IMF can see it too. They no longer deem net zero to be a cost but rather a growth accelerant and the answer to fuel poverty, halving global energy costs from 4% to 2% of GDP.

The Treasury is at last neutral. For 15 years it fought a spoiling campaign, fighting every attempt to launch a world-class green energy industry. A luddite faction tried to sabotage Theresa May’s net zero push, mischievously alleging that it would cost £1 trillion.

Sunak’s #NetZero review this week acknowledged that green projects have a GDP multiplier of 2.2 to 2.5 (i.e. they pay for themselves more than twice over), and could raise the UK’s dismal investment and productivity rates. Hallelujah.

Yet British political debate, as in other democracies, remains stuck in a time-warp. It is still misframed in terms of exorbitant cost. The environmental establishment and its guru professors formed their views when the clean switch did indeed look like a Himalayan challenge.

10 years ago they were right to present #NetZero as an undertaking akin to mobilisation for world war. Germany’s Energiewende was a ruinously expensive warning of what can go wrong, though it did the world a favour by bringing solar to critical viability.

Still 5 years ago the picture was not so clear. Today such hairshirt pessimism is patently passé but not all seem able to shake off an entrenched habit of thinking and take a technological yes for an answer.

Those who keep harping on about cost are unwittingly aligned with vested interests determined to preserve the status quo. It would do immense damage to this country, relegating the UK to technological irrelevance as others run away with the prize.

The denialist front-groups no longer waste effort arguing over climate science, their next line is to deter action by playing up the enormity of the task. Extinction Rebellion is their useful idiot, an offshoot of the anti-capitalist group Rising Up, green outside red inside.

These Puritans make #NetZero seem hard and threatening. They want to shut down our lifestyle, dismantle the modern industrial economy. Greta is more careful but she too slips into this "de-growth" agenda. Fodder for the Kremlin bots working on social media to pollute our minds.

Labour and the Liberal Democrats must be careful too. By denouncing the Government’s plan as pitifully under-funded they too are sending the subliminal message that the costs of #NetZero will bleed us dry.

The showdown over cost wrecked the Copenhagen Cop15 summit in 2009, pitting the West against the developing world.
That could happen again in Glasgow. As long as the West continues to misrepresent decarbonisation as a global burden they invite demand of extortionate transfers.

Present it as a bonanza for those quick to seize it, and the debate turns on its head. The task then becomes a matter of steering vast pools of idle global capital to poorer countries, to finance projects with a profitable return.

The market can do it beautifully, with a tweak here or there, and with help from the established mechanisms of export finance diplomacy. None of this is beyond the wit of man or expensive in any meaningful economic sense.

Boris is right: there is a force out there bigger than the political class. It is Wright’s Law of technology.

By AEP

Summed up from:
telegraph.co.uk/business/2021/…