Towards net zero technological progress is on the cusp of making decarbonisation economically viable

Towards net zero technological progress is on the cusp of making decarbonisation economically viable

There was a virtual climate summit organised last week by the UK, France and the UN on the occasion of the fifth anniversary of the Paris Climate Agreement. It took place against the backdrop of 126 countries either having formally enshrined or planning to achieve net zero emissions by the middle of the century. Notably, China recommitted to a target of carbon neutrality by 2060. The overall message was that we are on the cusp of an era where it will make economic sense to transition to cleaner technologies.

The aim of the Paris Agreement is to ideally limit global warming to 1.5°C compared to pre-industrial levels. Once the US under the Trump administration walked out of the accord, there was a sense of despair. This is misplaced and not just because the incoming US administration has committed itself to mitigating the impact of climate change. What is often underestimated is the change in the economic dynamics of technologies that will help us transition to decarbonisation, or an economic system which lowers CO2 emissions.

India’s story on solar energy encapsulates the economic argument to switch to cleaner sources of power generation. At the end of 2019-20, the solar capacity was 34.62 GW, of which 65% was set up in just the last three years. This trend is bound to be durable because the incremental addition has been accompanied by a fall in the price of electricity that is expected to be generated. The most recent auction for solar energy received bids of a record low of Rs 2 per unit. It is this trend across the board which gives cause for hope. A transition to an economy with net zero emissions no longer involves contentious tradeoffs between economics and sustainability.

According to the Energy Transitions Commission, energy demand could be lower by up to 15% by 2050 without a compromise in living standards. If a lot of technological innovation is coming from the private sector, it does not mean that governments don’t have a role in nudging the transition process with appropriate policy frameworks. And if there was a silver lining in this otherwise bleak year, it is the fall in emissions. According to UNEP, global CO2 emissions this year will be 7% lower than 2019 on account of lockdowns. As economies go through a reset to catalyse recovery, governments should weave in policy options that incentivise decarbonisation. Net zero is an achievable goal.