Net Zero

What is it? Why Now? and How can I help or take advantage of it?

Every major country has agreed to a pathway to reduce their carbon footprint, and a commonly adopted approach is to set a ‘net zero’ carbon goal by a certain date, for instance 2050. The strategy is to reduce carbon dioxide and methane emissions from seven energy and land use systems i.e., power, industry, mobility, buildings, agriculture, forestry and waste. While reducing emissions, most major countries also plan to suck out carbon dioxide from the atmosphere using technologies called carbon capture, thereby leading to a ‘net zero’ emissions scenario. I had written in my earlier post that ‘net zero’ is a necessary condition, and not sufficient, since it does not address the path to limit temperature rise to 1.5 degree centigrade in a definitive way.

Photo by Ron Lach from Pexels

Why should we be bothered about it now, if Net Zero is planned for 2050, or 2060/2070?

I am going to answer that question, based on my research and the analysis that I have been doing. I am in no way an expert and I don’t attest to all my views being accurate, so please take it with a pinch of salt. Do write back to me, or leave a comment, to let me know your views.

Looking at net zero strategies, I can see that there is a very high interconnectedness between energy and land use systems that I mentioned above. E,g,. the UK is planning a transition to electric vehicles, and is banning the sale of petrol and diesel cars by 2030. Great idea, but if you look at the energy mix in the UK’s electricity production, it mainly comes from high carbon sources. Listen, burning wood chips is not fossil fuel, but it is high carbon intensive, so I don’t agree to include that as a green source of power. Do you?

So, by that analogy, the transition to EV can only be effective in reducing carbon intensity if we have green sources of electricity. I am not going into batteries and storage. I know about the cobalt scandal in Africa, but I am not getting into a conversation on that, as yet.

This transition is likely to cost enormous amounts of money, leaves many traditional occupations hanging in thin air, and can massively destroy value if you are not ready for it. Some estimates talk of an impact of 7.5% of global GDP generated between now and 2050.

But if you are a smart individual, which I assume is true, given that you subscribed to the Helix, you can make investments in the right companies, develop skills, and be ready for the transition, and make a good profit in this journey. Where there is risk, there is opportunity as well. I keep saying, that there are so many people who know how to manage risk, but very few that are ready to take risk.

To answer the ‘Why Now?’ question in your minds, it is because a lot of that spending in this transition is going to take place, in a decade from now. On one side, it sparks of opportunity, and on the other side, it is likely to exacerbate an already precarious social and economic inequality that has been battered by the pandemic. Where is the money for that transition coming from? Obviously a lot of it will be from the taxes you pay (if you do!!!), and from corporate investment which will get sucked out from you through higher pricing for the products and services you use. If you are rich, there is no need to be bothered, but for those who are on the poverty line, I don’t have good news for you.

How do you tackle that? I think we need a global Beveridge moment. We’ll discuss on this a bit more in the upcoming posts. In the meantime, hit reply and tell me what you think.