The Future of Philanthropy in a Post-Cap and Trade World

In an effort to develop a truly effective post-cap and trade climate strategy, policy is not the only aspect that requires deep reflection - philanthropists, too, must reconsider the best way to channel grants in order to successfully fund solutions to climate and energy challenges. Breakthrough's Director of Climate and Energy Policy Jesse Jenkins recently spoke to a foundation about re-thinking philanthropic efforts in a post-cap and trade policy environment, offering insight into how policy makers, activists, and philanthropists, alike, must re-orient away from the focus on limits and toward an approach that harnesses human ingenuity to directly confront the scale of the global climate and energy challenge.

The transcription of the talk is below:

Thanks for having me. This is an opportune moment to have this conversation. Today, those of us who take the problem of global climate change very seriously face a moment of critical transition.

All around the world, the Pollution Paradigm is in collapse. By that I mean the notion that global warming could be understood and best addressed in the same way as past pollution problems such as acid rain or ozone depleting chemicals -- by establishing binding limits on the offending pollutant and requiring the adoption of readily available technologies to phase out pollution.

In global climate change we now face a challenge altogether different, orders of magnitude greater in both complexity and scale than the prior pollution challenges deftly overcome by older environmental policies. Despite its long legacy of past success, the Pollution Paradigm today fails us.

The Pollution Paradigm is the logic at the heart of the cap and trade policy strategy that this summer failed in the United States for the fourth time in a decade. It is also the logic behind the series of international UN climate talks, which have, for nearly two decades, sought to negotiate global targets and timetables for the reduction of greenhouse gases. The failure of this framework and these talks is most evident in the dramatic collapse of negotiations in Copenhagen last December, and the face-saving but largely empty Copenhagen Accord advanced at the 11th hour.

From Australia to Britain, the story is much the same elsewhere in the world. Even the European Union, which will likely meet its Kyoto commitments, will do so primarily through tricks of accounting, and thanks to the collapse of eastern bloc economies in the early 90's, which occurred after the 1990 baseline year used to gauge their "progress." Calculated on a consumption basis rather than a production basis, EU emissions have almost certainly risen during this period.

While the lack of climate policy progress is unquestionably bad news for a still-warming world, we will hopefully look back at the collapse of cap and trade and the analogous failure in Copenhagen as both the end of something and the beginning.

This year should mark the demise of the notion that we would solve global warming through a single global treaty to reduce carbon emissions. It should be the end of the idea that carbon caps, regulations, and markets would be the primary driver of the clean energy revolution that will be necessary to address climate change. And, the end of the idea that the central obstacles that we face in addressing this issue are political, not economic and technological.

Ultimately, this year should mark the beginning of a new era in which those of us who cannot accept another episode in the serial failure of the Pollution Paradigm begin to think quite differently about both the nature of the problem and what will be necessary to address it.

So let us move on now to those questions.

We must begin by considering the sheer magnitude of the challenge at hand.

Let's start with population and economics, before turning to questions of energy and carbon.

Today we are a planet of more than six billion humans. By 2030, there will be nine billion of us and by 2050 there may well be 10 billion. As a result, global energy use over this period will probably double or more by mid-century, even as we are told by the UN Intergovernmental Panel on Climate Change that we must cut global carbon emissions in half to maintain a hope of averting the worst consequences of global warming. And lest we think efficiency offers a path to flatten global energy demand growth, I must note that these forecasts already build in an unprecedented pace of energy efficiency improvement, roughly double historic rates of progress to date.

What this means is that by 2050, we will have to functionally decarbonize the entire global energy economy. Even if global energy use only doubles over this period, cutting global emissions to half those of 1990 entails reducing the carbon intensity of the energy we use by 75%. To achieve that kind of deep global emissions reductions will require a profound technological revolution, allowing us to produce most of our energy from technologies that emit zero carbon dioxide.

The second thing to observe is that these levels of emissions reductions will not be achieved through conservation or lifestyle changes. There may well be many reasons to downscale our economic aspirations and dematerialize our consumption but climate change is not among them. The simple math of global population and global economic development is unrelenting and unforgiving.

Let's accept for a moment the much contested 'happiness threshold' -- the argument that once people are able to meet their basic economic needs, at around an annual income of $15,000, additional wealth does not result in much additional well being. Even achieving such a level of prosperity for a global population of nine billion would require the global economy to roughly triple in size, even if we redistributed all of the "excess" income that is today in the hands of developed world populations. A philosophy of steady state economics thus offers us little promise.

In order to meet the basic human needs and aspirations of our growing global population, the global economy must expand substantially. Doing so in a way that does not run afoul of real ecological and natural limits will not be an exercise in limiting our activities, but rather unleashing innovation and ingenuity to make such constraints irrelevant. After all, the limited capacity of the atmosphere to absorb carbon dioxide matters little to a global economy fueled by clean and affordable energy, nor do limits to the supply of oil matter much to a society fueled on renewable sources of electricity.

Finally, we must consider the question of energy technology itself. If we accept that we are unlikely to substantially alter the basic demographic trajectory of the global population, that attempting to constrain the pace of global economic growth that basic human dignity demands would be both immoral, not to mention impractical, and that even if we use energy vastly more efficiently over the next several decades, we will still use vastly more of it, then we are left with the question of how we are going to produce all of that energy while deeply cutting emissions?

The scale of the energy technology challenge is once again daunting. Yet to truly address climate change, we must put aside any illusions that this problem is soluble through the application of magic "market forces" or even binding regulation, or the oft-repeated myth that we "have all the technologies we need to solve these climate crises," and simply must muster the proper political courage. We must face the energy technology challenge head on.

Put in the simplest terms, the scale of the energy challenge demands that the world bring online the equivalent of one large nuclear power plant's worth of zero-carbon power somewhere in the world every single day from now to 2050. Each day that goes by without that kind of progress requires us to double our pace some day in the future.

Unfortunately, efforts to rapidly scale any of today's low-carbon energy technologies are plagued by cost, reliability, and infrastructure challenges, as well as other obstacles, including frequent NIMBY opposition to any large-scale energy development projects.

While only a greater understanding of our shared interest in building a clean energy system can confront NIMBY concerns, both incremental and radical improvements across the full suite of clean energy technologies are necessary to bring down costs, improve reliability, and enable a rapid transition to a low-carbon global energy system.

Thus, while technology innovation cannot change the fundamental scale of the clean energy challenge, it is the best tool we have to address it. To have any hope of averting climate disaster, we must tackle this challenge directly, through a focused effort to make clean energy cheap, and make it abundant.

To succeed today, we must look to the past. History shows that technological transformations do not occur through modest shifts in market price signals, as cap and trade policies have aimed to do. We didn't tax the telegraph to get telephones or put a cap on typewriters to see the birth of the personal computer, as Breakthrough's founders Michael Shellenberger and Ted Nordhaus often note.

Instead, time-and-time again, the most reliably successful driver of new innovation and transformative technology changes has been an active partnership between private-sector entrepreneurs and innovators and a public sector acting as both an initial funder and demanding customer of new, cutting-edge technologies. This is the history of radios, microchips and the Internet; computers, jet engines, and GPS; countless biomedical innovations, and every low-carbon energy technology now in use today.

Proactively driving a new clean technology transformation will demand an unprecedented level of public investment in clean energy innovation and the accelerated adoption, scale-up, and improvement of a full suite of clean energy technologies.

Such a strategy can begin to cut emissions in the near-term, but most importantly it will be absolutely essential to establish the technological and economic foundations for deep emissions cuts in the long term.

So even as committed activists and organizations work to block new fossil energy infrastructure that would further solidify the already daunting challenge ahead, what is needed most now is a set of policy thinkers, advocates, and philanthropic organizations committed to moving past failed efforts to wield the Pollution Paradigm against an unyielding climate challenge, and begin the hard work at hand: developing a new framework and strategy capable of dissolving the technology challenge and making clean energy cheap and abundant, organizing a political constituency to turn this framework into reality, and funding and supporting the organizations and actors who will lead this critical effort.

This is the undertaking we are finally prepared to begin, as we abandon fading hopes that markets or carbon prices or legally binding caps have magical transitive properties that make all the difficult details go away without any need to actually attend to them. What the climate challenge demands of us is imagination, fresh thinking, and a new route forward. It demands that we get on with the hard and collective work of inventing and engineering our way to a clean energy future. It demands that we get started.

(Keen readers will note that this talk owes some of it's language to Ted Nordhaus' speech at the World Climate Solutions conference in Copenhagen.)