Second, the fact that fossil fuels were specifically mentioned in this agreement. And you’d think, well, that’s crazy. Of course, we know that fossil fuels are one of the biggest contributors to carbon emissions, so you have to overtake fossil fuels if you want to reduce climate change. But the point is that the governments, because all governments can veto the project, did not want to make this mention. We now see that this is a global project that is really about moving away from fossil fuels, and everyone is okay with that now. Lots of countries are much more squirrely. Many countries will take much longer. Some because they are really committed in terms of the wealth they derive from oil and gas production; think of Saudi Arabia, think of Russia. Some because they are really poor and desperate to be able to continue to use relatively cheap energy to bring their people to the middle class, especially India, but also Indonesia to some extent. China and others.
Having said that, I think it’s pretty clear now that we’re on track for the majority of global energy consumption well before 2050 to come from renewables. And I include nuclear in that because it doesn’t lead to carbon emissions, but in other words, post-fossil fuels, not gas, not oil, not coal. The International Energy Agency estimates that this date is potentially 2035, which is wrong because it once again demands that everyone fully adhere to the stated goals. And that’s a lot of countries that don’t necessarily have a way to get from here to there legally inscribed, especially in the nearest term. But the big story is the acceleration of the effort, and related to that, the reduction of costs, the improvement of technology; the fact that on a large scale, solar and wind, and in particular solar, are increasingly cheaper than coal.
And so, once you have the funding that allows you to put new infrastructure in place, and again, it’s using the old infrastructure that is a big part of why there are going to be more. shifting around fossil fuels, you will see all countries, not just rich countries, going much faster. So, I mean, the four years since the United States and the Trump administration left the Paris Climate Agreement, renewables were getting cheaper. They were still invested inside the United States. State governments, mayors, municipal governments, many private sector actors, NGOs, they all continued to push and do more to respond to climate change, even as the federal government kicked off for four years.
The Biden administration is more disappointing than expected. John Kerry does a very solid job and doesn’t alienate or upset a lot of people in the Biden administration, which frankly surprised a lot of people, myself included. However, I mean, you see that with the $ 1.2 trillion in infrastructure and what is likely to decrease in the coming weeks in terms of social spending, a large part of the spending for the green transition will be eliminated. . So the federal government is doing less of it, but even so, you get significant effort from the United States, even in terms of moonshots. Part of the reason is that there is so much money, interest rates are so low, that investors are not happy with the idea of ââhalf a point, one point. yield every year. They are looking for returns and are much more willing to invest in untested, but potentially lunar technology.
So the fact that Peter Thiel, a company he was involved in, just raised $ 500 million for fusion energy technology, I mean, couldn’t go absolutely nowhere, but that’s far the biggest investment we’ve seen in this technology. Some of these things are moving, some of them are more gradual changes in improving things like battery technology and power transmission, with greater efficiency and less waste, in storage. All of these things are very, very important in moving the global economy away from fossil fuels.
Now, in the long run, it’s going to be very, very difficult for countries that depend on fossil fuel production. And in that regard, I think the UAE, which is looking to pump more now, but recognizing that it needs to diversify a lot more in the short to medium term, strikes me as a smarter strategy than the Saudis who, I think, believe that higher prices will persist longer and they can continue to be the cheap producer of last resort. They will, but I’m not sure it lasts as long as they are betting now, given the speed at which we see government action actually moving.
Now, of course, all of this is happening at a time when the planet is consistently breaking records and will continue to break records every year for extreme weather patterns and high temperature levels. And of course, that means larger parts of the world will be unliveable for longer periods of time. There will be more forced migration. It will be more difficult to provide agriculture to an additional billion people on the planet over the next 20, 25 years, most of whom will be in sub-Saharan Africa, which faces some of the greatest climatic stresses. This is all true. And especially true is the sharp reduction in biodiversity that accompanies all of this which doesn’t affect humans immediately and directly, but has all kinds of ripple effects that we don’t yet fully understand on the planet. And if you have a big, big extinction, even if you don’t know the science, you can usually suspect that there will be problems for the planet in the future, but that doesn’t seem like an existential threat to me anymore.
In other words, I see from COP26 that we have passed the tipping point of global seriousness on climate action. And so even if COP26 was not the point of no return; this was not the case, either we take it seriously or we fail; it wasn’t, we have to get to 1.5 degrees or its Armageddon; it was never true, but what I see is significant progress. I see a rationing of resources of intense concentration, perhaps not of coordination, but certainly of the emergency country by country, sector by sector, company by company.
And in this regard, we should come out of COP26 fully aware of the worsening global climate over the next 25 years. By 2050, much of the increase in climate change that we will see is already due to the carbon that we have already emitted. We are facing this cliff where 1.5 degrees is more and more completely inaccessible, and I do not expect that. But I am nonetheless more optimistic about the human potential and the ability to take up and respond to this challenge, the most existential, the most important, the most global challenge of our lives that we have faced so far in the world. basis of everything we have seen over the past two weeks.
So how do you start your week? Maybe a little different from the headlines you see elsewhere, but I understand if it bleeds, it doesn’t necessarily lead. But at least for me, I feel like it makes us a little less crazy like that. So, better to talk about what is really going on.
I hope everyone is doing well. I’m on my way to Singapore and will see you all from there. Be wise.