The Rise and Fall of Net Zero

The Economic Folly of Zero Emissions

The Worldwide Push

In the span of a decade, "net zero" emissions targets have catapulted from relative obscurity to become a cornerstone of climate policy in major global economies. In the wake of the 2015 Paris Agreement, ambitious pledges to achieve net zero by 2050 or 2060 were swiftly adopted by nations including the UK, EU, US, Japan, and South Korea. This rapid adoption was propelled by climate advocates and corporations seeking to demonstrate their commitment to climate leadership.

However, in the haste to establish these ambitious long-term targets, there was a notable lack of comprehensive planning and analysis regarding their feasibility, associated costs, and potential trade-offs. The consequences of this oversight are now becoming glaringly apparent. Soaring energy prices, overburdened electrical grids, and a mounting backlash against perceived elitist net zero mandates are just some of the issues emerging. As public sentiment shifts, the once-lauded net zero targets risk morphing into a political liability rather than an asset.

This article aims to chronicle the swift rise of net zero goals, the lack of robust planning underpinning them, and the growing realization that these targets require significant reevaluation to mitigate potential socioeconomic harm.

The Origin and Spread of Net Zero Pledges

The concept of net zero emissions, while not new, gained significant traction in the aftermath of the 2015 Paris Agreement. The Agreement set a global warming limit of well below 2°C, ideally capping it at 1.5°C. However, it did not lay out specific national emissions targets or timelines. The game-changer came in 2018 when the influential Intergovernmental Panel on Climate Change (IPCC) released a report. It stated that to have a 50% chance of limiting warming to 1.5°C, human-induced CO2 emissions would need to decrease by 45% by 2030 and reach net zero by 2050.

Climate advocates seized upon this finding, exerting pressure on governments and corporations to commit to the "net zero by 2050" target. The UK responded in 2019 by passing legislation that mandated net zero emissions nationwide by 2050, making it the first major economy to enshrine such a target into law. The European Union soon followed suit, incorporating the 2050 timeline into its European Green Deal. The trend continued in 2020, amidst the COVID-19 pandemic, with countries including Japan, South Korea, and China (which set a target for 2060) also committing to net zero emissions.

The momentum behind net zero pledges gained further impetus with the election of Joe Biden. On his first day in office in January 2021, Biden signed an executive order that marked the US's return to the Paris Agreement and established a goal of net zero emissions for the country by 2050. This move was echoed by other major emitters, such as India, which set a 2070 target. To date, over 130 countries have adopted net zero pledges, with the majority aiming for the 2050 timeline.

The corporate world, too, has been swept up in the net zero wave, particularly in Europe. Companies have faced mounting pressure to develop their own net zero strategies. An analysis revealed that the number of companies committing to net zero targets surged from 500 in 2019 to over 1,500 by 2021. Furthermore, net zero rhetoric featured in over 6,000 corporate filings to the US Securities and Exchange Commission in the past year. This trend has been largely driven by shareholder activism and the rise of environmental, social, and governance (ESG) investment metrics, which evaluate corporate climate policies.

The Hasty Legislation of Net Zero

Given the monumental shift that net zero represents, requiring a near-total transformation of how modern economies produce and use energy, one would expect extensive research, analysis, and reflection to determine realistic timeframes, costs, and trade-offs. However, the most striking aspect of the proliferation of net zero pledges is the lack of detailed study and preparation underpinning them.

In many countries, net zero legislation was enacted swiftly with minimal debate, scrutiny, or opposition. Analyses consistently found that politicians voting on net zero targets had a limited understanding of the scale of societal and economic changes required. Cost estimates were either rudimentary or non-existent. Little thought was given to how to distribute costs equitably or alleviate the burden on lower-income citizens. Moreover, lawmakers seemed either unaware or dismissive of the risks associated with rushing down an unproven path.

In the UK, the target of net zero by 2050 was legislated in 2019 with scant preceding analysis on feasibility or cost. A study by the Committee on Climate Change estimated a cost of 1-2% of GDP by 2050, but failed to provide details on the policies or assumptions underpinning that figure. Independent estimates, however, projected much higher costs, ranging from 3-7% of GDP. Regardless, the level of study was strikingly inadequate for such a momentous commitment.

A similar lack of depth characterized the adoption of net zero targets in the EU, Japan, South Korea, and other regions. In the US, President Biden simply declared the 2050 goal by executive order. His administration also used the $2 trillion clean energy plan in the Build Back Better bill to assert that net zero was affordable. However, serious doubts arose about these cost estimates, and the bill itself has since stalled in Congress.

The Uniformity of the 2050 Timeline

Another sign that the adoption of most net zero targets was driven more by groupthink than rigorous analysis is the uniformity around the 2050 timeline. The IPCC report suggested 2050 for net zero to have a 50% chance of limiting warming to 1.5°C. However, this 2050 date was not grounded in technical assessments of realistic timeframes for decarbonization.

Instead, momentum gathered around 2050 precisely because it seemed distant enough to avoid necessitating drastic near-term cutbacks, while being close enough to demonstrate a serious response to the IPCC's warning. However, from an engineering perspective, there's nothing particularly significant about the year 2050. It doesn't align with the lifespan of infrastructure like power plants, transport fleets, or heavy industry that must undergo turnover for deep emissions cuts. Yet, almost all net zero pledges converged on this date, regardless of differing national circumstances. This further emphasizes the arbitrary nature of these 2050 targets.

The Absence of Rigorous Planning

One would anticipate that, regardless of the shortcomings in the initial setting of net zero targets, there would be substantial subsequent efforts to chart realistic plans and policies to actually achieve those goals. However, nine years after the first 2050 pledge, few nations have detailed roadmaps for their 'net zero' vision.

In 2021, Climate Action Tracker evaluated progress in implementing net zero objectives across 40 nations, accounting for 80% of global emissions. They discovered that only 10% had a long-term strategy consistent with their pledge. Over 70% had not legislated or funded policies sufficient to meet their interim 2030 targets. Critical sectors like heavy industry, heating, agriculture, and transport were almost entirely devoid of clear decarbonization plans.

It appears that simply legislating a distant net zero year provided political cover to continue business-as-usual in the short term. Serious strategy was a secondary consideration. This gap persists even in nations like the UK with binding targets. In October 2022, the UK’s National Audit Office reported that “there is still no overarching plan” to achieve net zero and “it is not yet clear what it could cost consumers and how the transition could impact different people and groups.”

Questionable Assumptions

What led politicians, activists, and investors to so readily accept distant net zero targets without scrutinizing their underlying assumptions and risks?

One factor was what some refer to as climate reductionism - the focus on ambitious long-term carbon reductions while overlooking near-term feasibility, costs, and trade-offs. Under the banner of climate reductionism, any questioning of the wisdom of net zero could brand you as an obstructionist, even if your concerns were grounded in practicality. This mindset became widespread among climate-conscious elites in politics, business, and academia. In their eagerness to set lofty goals, they underestimated potential downsides such as higher energy costs and threats to grid reliability resulting from poorly managed decarbonization.

In this climate, anyone warning of such risks was quickly labeled an "anti-science denier." This created an environment where critical voices were silenced, and the potential pitfalls of net zero policies were largely ignored.

Proponents of net zero also displayed an unwarranted degree of techno-optimism. The most ambitious scenarios heavily rely on anticipated technological breakthroughs such as inexpensive grid-scale energy storage, widespread deployment of carbon capture to offset continued fossil fuel use, and decarbonization of aviation, shipping, and agriculture via biofuels or hydrogen.

It was assumed that these innovations would emerge rapidly to enable deep emissions cuts. However, this assumption overlooks the slow and uncertain nature of technological change. Even the rapid growth of renewables and electric vehicles required substantial government subsidies and mandates.

Hoping for a surge of new technologies to materialize by 2050 to justify distant pledges is highly dubious. Yet, political leaders were content to pretend it was likely, and few mainstream institutions questioned the optimistic narratives.

Emerging Realities

With geopolitical and economic volatility now straining multiple sectors, the gap between net zero aspirations and reality is growing. Energy crises in Europe and developing nations are undermining climate agendas globally. Let us examine some of the collision points.

Supply Chain Bottlenecks

The ambitious plans for net zero heavily rely on the rapid scaling up of low-carbon technologies such as solar panels, wind turbines, batteries, electric vehicles, and heat pumps. However, the recent experiences of supply chain disruptions and commodity price spikes serve as a stark warning. The transformation of the world's energy infrastructure necessitates a massive increase in the production of minerals like lithium, copper, nickel, cobalt, rare earths, steel, and concrete.

Models indicate that the required production of these minerals often needs to grow by over 1000%, with some key minerals needing to increase by 25-30 times. These plans operate under the assumption that these massive supply surges will occur smoothly. Yet, the turbulence of the 2020s has demonstrated that global mineral and manufacturing systems lack such flexibility. For instance, battery metal shortages were a significant factor in the underwhelming growth of EV maker Tesla in 2022. The feasibility of net zero often overlooks such bottlenecks.

Grid Reliability and Blackouts

The ambitious net zero plans hinge on a complete transition of electricity supply to renewables, while simultaneously expanding the electrification of transport, buildings, and industry. However, recent events have underscored that prematurely phasing out conventional generators before establishing adequate clean, dispatchable replacements can lead to grid instability and blackouts.

Regions like California, Texas, and Europe have all experienced power outages as a result of retiring too much coal and nuclear capacity before sufficient solar, wind, storage, and transmission infrastructure was in place. Developing nations such as Pakistan, India, and South Africa have also suffered blackouts as they prematurely dismantled base load plants while overestimating the integration of variable renewables.

As the proliferation of electric vehicles, data centers, and cryptocurrency mining drives electricity demand to new heights, maintaining supply adequacy during this complex transition requires careful timing of the shutdown of old generators. However, regulators worldwide are facing political pressure to accelerate these closures, even as clean substitutes lag behind. The result is an increased risk of blackouts that could hinder the progress of decarbonization.

Affordability and the Converging Factors

The journey towards net zero emissions is proving to be more challenging than anticipated, particularly in terms of delivering secure and affordable electricity. Several factors are converging to exacerbate this issue:

• The high costs of commodities and components are driving up the price of infrastructure necessary for a green transition.

• Capacity inadequacies are emerging as conventional power sources are phased out faster than clean energy infrastructure can be built.

• Massive investments are required in new generation technologies, network infrastructures, and storage solutions.

• The intermittency of renewable energy sources and the associated system balancing costs are proving to be significant hurdles.

• The premature decommissioning of viable plants is leading to stranded asset write-offs.

• The loss of existing plants' low operating costs is causing a rise in capital costs.

• To ensure reliability, there is a need for excess buildout and redundancies, further driving up costs.

The repercussions of these converging factors are already evident in Europe's ongoing energy crisis and are likely to spread. For instance, Britain's electricity prices are projected to be 3-4 times higher over 2022-24 than they were in 2019. Furthermore, the costs of retrofitting homes to shift heating and cooking to electricity are proving to be 2-4 times higher than governments initially advertised.

As the costs associated with net zero continue to compound, political tensions are likely to escalate over high energy bills and the public subsidies needed to enable uneconomic investments. The trade-off between affordability and emission cuts will become an increasingly acute issue.

The Backlash Begins: A Growing Public Discontent

The widening gap between climate ambitions and energy realities is beginning to stir public discontent. With energy costs and inflation reaching multi-decade highs, policies such as the European Union’s Emissions Trading Scheme and taxes on electricity to fund renewable subsidies are provoking voter ire.

The most significant backlash has occurred in the Netherlands and parts of Germany, where proposals to cut nitrogen oxide emissions from agriculture and transit in pursuit of climate goals have been met with fierce resistance. Farmers mounted disruptive nationwide protests throughout 2022 against mandates that would force some out of business.

In the UK, the expansion of ultra-low emissions zones in cities like London has triggered anger over increased costs for drivers. Politicians are also growing concerned about voter reactions when the full costs of household heating electrification emerge.

Developing nations are not immune to this backlash. Countries like Sri Lanka, Bangladesh, and Pakistan have seen riots and government ousters over energy shortages and price hikes. These crises are partly driven by premature efforts to install renewable power before the necessary grid infrastructure was ready. This global discontent underscores the need for a more balanced and pragmatic approach to achieving net zero emissions.

Just Transition or Elite Project? The Rising Resentment

The backlash against net zero policies is increasingly linked to a growing public resentment against elite institutions. These institutions are perceived as imposing excessive costs and disruptions on ordinary citizens, with minimal consultation or consideration for the consequences.

In 2018, French President Emmanuel Macron proposed higher fuel taxes to incentivize emission cuts, triggering the intense Yellow Vest protest movement. Those who felt left behind by these policies were the ones who took to the streets. Most climate policies, indeed, have a regressive impact, hitting the poor and working class hardest through higher energy bills, while providing no cushioning for these increased costs.

Political analyst John Burn-Murdoch notes, “The root cause of unrest directed against climate action is rarely outright denial but resistance to policies perceived as regressive, disconnected from the daily lives of ordinary people and part of an agenda set by remote metropolitan elites.” The public will not support policies they are never convinced are achievable or beneficial. Simply telling people the pain is “good for them” does not work, nor does scaling back climate action to avoid backlash.

The solution lies in co-creating more pragmatic, locally-driven transition plans with solutions suited for workers and consumers. This approach will ensure that the transition to a net zero future is not just an elite project, but a collective effort that takes into account the needs and concerns of all citizens.

Rethinking Net Zero

As we take stock of the current climate policy landscape, it's clear that the rush to adopt "net zero" emissions targets has led us down a precarious path. The top-down approach, which saw ambitious targets set without thorough feasibility assessments, has proven to be a dangerous game. The focus on distant 2050 goals has distracted from the immediate, concrete actions needed by 2025, creating a policy void that urgently needs to be addressed.

The backlash we're witnessing is a stark reminder that climate policy cannot be dictated from the top without public buy-in. The perception of these policies as elitist projects, which unfairly burden the less privileged, is fueling resentment and resistance. Affordability and reliability of energy, fundamental to people's lives, must not be sacrificed in the pursuit of these targets.

Moreover, the one-size-fits-all approach to net zero targets fails to account for the unique needs and circumstances of different nations and communities. The push for rapid decarbonization, reliant on technologies that are not yet mature, risks causing more harm than good if not managed with caution.

The current energy crisis serves as a wake-up call. It underscores the need for a new approach to climate action, one that prioritizes basic material needs and economic security. This shift requires moving beyond catchy slogans and focusing on practical problem-solving. Europe's pivot towards "energy security first" is indicative of this necessary change. As the costs and vulnerabilities of current strategies become increasingly evident, it's imperative that other nations follow suit, putting the pragmatic needs of their societies ahead of idealistic targets.