When it comes to climate, we need to start thinking about Plan C

The author is president of BeyondNetZero, a climate growth equity firm. He was CEO of BP and is the author of “Make, Think, Imagine”. He writes in a personal capacity

In 1997, I was the first CEO of a major oil company to recognize the risk posed by climate change, accept that we were part of the problem, and commit to becoming part of the solution. My peers at the time accused me of having “left the church.” Whatever church it was, it is now dwarfed by the size of the congregation that showed up in force in Egypt last week for COP27.

As far as international diplomatic conference clichés go, Sharm el-Sheikh did not disappoint. Motorcades blocked roads, hotel prices skyrocketed, and lunch and water were in short supply. But talking to ministers, NGOs, businessmen and activists, many important things emerged. The ambition to limit global warming to 1.5 degrees is at grave risk. Reducing greenhouse gas emissions – “climate change mitigation” – is proving very difficult because the incentives to change behavior and reallocate capital are still largely missing, even though they have been talked about for 30 years.

We have the technologies we need to reduce global emissions by up to 70%, but we don’t have the right price signals (in the form of a carbon tax) or risk appetite (in the form of balanced public sector risk sharing and private) which would accelerate investment in their diffusion. As a result, warming could approach 3 degrees, even if today’s net zero pledge range is maintained.

Even if they dare not whisper it, most COP attendees know that the investment to deliver the technology may not be implemented in time to stop this trajectory. That is why the conversation has leaned more strongly towards “plan B” of adaptation to climate change. This is good news: it could be Plan B, but it’s also a practical necessity as efforts to reduce greenhouse gas emissions fall short of what is needed, putting more and more lives and livelihoods at risk.

But the bad news is that adaptation is likely to be even harder to finance than mitigation. This is because it involves investing in infrastructure that would work perfectly in the absence of climate change; and because it generates long-term, unquantifiable and indirect returns. In other words, it represents an even greater public financing challenge than reducing emissions.

If both plan A and plan B fail, what about plan C? I was one of the few voices at this year’s COP calling for the world to pay more attention to ocean and atmospheric geoengineering. This is undesirable, is fraught with risk, and shouldn’t be done right away. But it deserves more reflection and consideration, especially since it will take at least a decade to establish the scientific and bureaucratic institutions necessary to govern this activity.

This is our insurance policy against the failure of plans A and B and against the risk of reaching irreversible tipping points. The world cannot afford to hope for the best while ignoring it.

The glue that could unite mitigation, adaptation and geoengineering into a coherent system is, of course, the price of carbon. We remain a long way from that, but we now have real-world examples of incentives and adequate levels of risk sharing coming together to make progress. The US Inflation Reduction Act is an important example of massive fiscal and industrial policy for the net zero age. Another is US climate envoy John Kerry’s proposal to collect and transfer the proceeds of a almost carbon tax in the global South.

At COP27, I also noted a welcome sense of urgency around the need to establish carbon credits that are robust, tradable and insurable, thereby generating reliable sources of revenue that can be channeled back into financing mitigation and adaptation efforts. The Integrity Council for the Voluntary Carbon Market and the Voluntary Carbon Markets Integrity Initiative are leading this, as is Bloomberg Philanthropies who plan to establish a carbon credit oversight body called The Global Carbon Trust.

There is much more that can be done to turn isolated examples of progress into systemic change. But until then, it’s up to all of us to go the extra mile with flawed markets and flawed institutions. Risk-averse multilateral development banks, for example, can be sidelined in favor of alliances between private investors and regional development banks that have a more realistic approach.

Meanwhile, greenwashing and newly discovered “green hushing” should be consigned to the past, replaced with a practical set of mandatory environmental, social and governance disclosure requirements. Pragmatism done in haste is better than perfection delivered too late. A motto for COP28, perhaps?

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