The State Of Climate Mobilization Today
The global fight for clean energy is just getting started.
Recently I read a fascinating book, Freedom's Forge, about U.S. industrial mobilization during WWII. It struck me as similar to what's needed to meet the climate challenge today: an all-out global mobilization to replace fossil fuels with clean energy.
Just like in 1939 and 1940, we've started to gear up, but aren't yet close to the speed and magnitude we'll need to win. Here's my big-picture take on where things stand now, and the key dynamics at play.
The fight to vanquish fossil fuels is on
A massive, global struggle is underway between fossil fueled products and their non-fossil fueled competitors, which are improving quickly and winning many battles. The question is rate: is this a slow ground war against an entrenched competitor that will grind on for decades, or are there accelerators coming (innovation, cost reductions, other adoption drivers) that could shift the balance much faster?
Solar and storage are throwing knockout punches
Solar and grid storage are today's prizefighters in the fossil fight; they're throwing knockout punches to fossil fuels on the grid faster than anyone expected. They've gotten so good and so cheap - and so well productized - that they're rapidly taking market share away from coal and gas based on market economics alone in places as varied as Texas, Australia, Germany and China. This is all really exciting, and promising.
EVs are in a dead heat with ICE vehicles
EVs have made great progress in breaking out and scaling, but are still locked in a dead heat market matchup against internal combustion (ICE) engines and hybrids, which keep getting better. EV battery and drivetrain technology is improving, and costs are dropping, but not yet fast enough to break the stranglehold of internal combustion over most car and truck markets (though half the vehicles sold in China are now plug-in). This will change: EVs will tip the scales decisively... the question is when.
Other solutions are moving slower
Other solutions feel like a slog right now. Wind has broken through in Europe, but has major issues scaling elsewhere. Building decarbonization is hard to make attractive to the supply side. Agriculture and heavy industry are slow to change and have little financial incentive to do so. New technologies like geothermal and green hydrogen are promising, but years away from really scaling. Smart people are working on all of this, but the power of the fossil fuel status quo is real. We need more investment, more breakthroughs, more productization, more scaling.
Fossil fuel investment is massive (and on autopilot)
Fossil fuels are a $4 trillion business globally, generating roughly $1 trillion in profit. These profits drive about $1 trillion a year in new capital investment in fossil fuels (financed by banks, corporations, governments, all kinds of investors), locking in emissions for decades to come. The market sees fossil fuels as a proven, reliable source of profits, and automatically forecasts decades of continued robust demand. These forecasts may prove very wrong, however, as non-fossil alternatives eat into fossil fuel demand.
Clean energy investment is massive (but uncharted territory)
Investment in clean energy outstripped fossil fuel investment in 2023, according to the IEA. This includes renewables, grids and storage, efficiency, EVs and electrification... and both private sector and government investments. Margins are slimmer than in fossil fuels however: clean energy may well be deflationary and eat the profits of the less-efficient, fossil-fueled economy. So the return outlook is uncertain; this is a 'show me the money' story, which will come into better focus as the non-fossil economy keeps scaling.
China's moving fast; that's good and bad
China has far outpaced the rest of the world in innovation, deployment and low-cost production of key climate technologies, from batteries to EVs to solar panels and their entire supply chains. China's not only reducing its own emissions rapidly, but providing the rest of the world the tools to do so as well. That's great, but nobody wants to be so dependent on one country for the key technologies of the future. So the west is torn between buying cheaply from China or paying up to compete with them (with massive new investments in innovation, supply chain, and manufacturing).
Security's a rising priority
China views clean energy as key to its national security (unshackling itself from foreign oil and gas imports). But other countries are less forward looking, and are doubling down on fossil fuels, which have been synonymous with national security ever since WWII (when access to oil won the day). Large players like Japan and India are taking this to an extreme; while others (e.g. in Europe) are hedging their bets, having experienced pipeline and shipping disruptions from the wars in Ukraine and the Middle East.
Populist sentiment is pro-fossil
Fossil fuels have lots of populist support today. Jobs are one reason: decarbonization's a threat to millions of jobs in oil and gas, transport, automotive, etc. Climate denial's another; many people can understand climate science but don't want to, it's too scary. Finally, people are comfortable with what they know (oil and gas); new high tech climate solutions may make people feel powerless and more dependent on remote corporations and elites. This could all change as fossil alternatives get better and cheaper; people have to see and feel the wins for themselves.
Extreme weather is a wildcard
Climate-driven extreme weather, heat, fires and flooding are accelerating, sweeping the planet, and affecting more people than ever. This has huge implications for human health, quality of life and migration; not to mention huge and unpredictable financial costs. But whether this will motivate people and countries to go faster on the energy transition and to stop burning fossil fuels, who knows. It may also be a (legitimate) distraction that causes the world to spend more on mitigation than on climate solutions.
The natural world is... hanging in there?
The natural world isn't doing great, although it is amazing and also very resilient. Deforestation keeps happening, driven by economic gain from cattle and agriculture. Species extinction is accelerating. Permafrost melting is happening, releasing more and more methane. The glaciers are melting. And the ocean is warming and acidifying, and plastics and microplastics are everywhere. Again, the question is rate, and can we change human behavior and stop increasing atmospheric emissions in time to slow and reverse some of these trends?
The planet has talent on its side
The best minds of our generation are working not on fossil fuels, but on decarbonization, the energy transition, climate innovation, solutions, finance, policy and activism. This is what gives me hope: the army of millions of talented people tackling this with urgency, every day, and the capabilities they're working with. It's nothing short of a worldwide mobilization, an all-hands on deck effort akin to a world war, but with people working together from every country. So stay tuned for more progress, faster!