This article proposes three bold actions directed at the G20 to turn around the climate crisis. The goal is to get us onto the Paris curve of 1.5°C, 7.6% of annual absolute greenhouse gas emission reductions between 2020 and 2030. Knowing that the COVID-19 crisis has led to a 7% emission reduction despite major economic lockdowns, we know that 7.6% is extremely ambitious. Thus, the global community and here the G20, representing more than 75% of global greenhouse gas emissions, need to come together and take bold action in addition to everything which is already underway to get us safely onto the 1.5° path.
Proposed Actions are:
- Measure and Report Carbon Emissions Daily (the Pandemic Principle)
- Reduce 30%+ CO2 in 3 Years for Top 5,000+ Assets (the Pareto Principle)
- Regenerate 2 tons of Carbon for 1 ton of Carbon Extracted (the 2:1 Principle)
All three actions aim to achieve substantial short-term emission reductions. Action 3 also aims to use the braking effect on atmospheric CO2 concentration by regenerating global ecosystems and using their carbon sink capacities, with impacts already visible before 2030. All three actions have major linkages to G20 focus areas, such as sustainable economic development and transition as well as managing stranded asset risks and redirecting capital flows into sustainable finance and investments. All three can be further empowered and globally boosted using digital technology and platforms. And all three have the potential to open up new space for global collaboration within the G20.
Please read the context and details on the actions proposed and engage to share and discuss them in your networks. Feel free to add your own ideas on bold actions in the comments. We need bold thinking, unprecedented courage, speed and new global collaboration across boundaries to tackle the climate crisis together.
The World Economic Forum recently held its virtual Davos Agenda Summit. Sustainability challenges were high on the agenda and high in the WEF Global Risks Report. Among the top risks, environmental challenges such as the climate crisis rank highest. While we are still in the middle of the pandemic, substantial new actions on climate from the WEF participating world leaders were however missing.
Running out of Time on Climate
It is clear that we are running out of time on climate. Mercator Research Institute’s carbon budget clock is ticking away: less than 7 years of carbon budget remains to stay within the 1.5° Celsius limit. The 1.5° Celsius path is important since it may still give us some kind of certainty that climate systems with their respective tipping points don’t go into a self-perpetuating heating process. In 2020, the world is already at 1.2° Celsius above pre-industrial levels. So we better focus our efforts now to hit the 1.5° Celsius line while we can still reach it.
The other crucial number is 7.6%: this is the amount of absolute greenhouse gas emission we need to reduce globally every year between 2020 and 2030 to stay on the 1.5° Celsius pathway, as shown in Figure 1.
Even the COVID-19 Shut-down did not Reduce Emissions Sufficiently for 1.5°C
In the pandemic year of 2020, COVID-19 forced us to ramp down economic activities in many countries with drastic economic losses. But when looking at fossil fuel and industry-related emissions, we only saved 7% in CO2 emissions. This shows what 7.6% absolute reduction per year really means. It is a close-to-impossible number, which can only be met if we almost shut down our economy or if we drastically transform our systems, solutions and lifestyles towards climate-neutrality in the shortest time possible. But wait: there are many positive developments already under way, aren’t there?
- The Paris agreement with the US rejoining gives us a global policy framework, targets, process and structures for mitigation and adaptation in the climate crisis
- The UN 2030 Sustainable Development Goals set the wider framework for all countries with additional social and environmental goals integrated with climate
- Renewable electricity is at grid parity in many countries, substituting fossil fuels
- Electric vehicles and new mobility concepts are scaling up
- CO2 prices and emission trading markets are in place in many countries
- Additional technologies and solutions such as hydrogen or digital farming are being scaled up to make sectors more climate-friendly
- The digital revolution gives us new tools and technologies to be more connected, data-smart and effective in climate protection.
However, these are all processes which work step-by-step. Step-by-step is a highly workable approach in human development and evolution. But step-by-step as the only strategy is no longer sufficient to meet the climate crisis. Not with a carbon budget for a safe path lasting less than 7 years.
Thus, what is needed now at the beginning of 2021, in addition to step-by-step are new bold initiatives to truly treat the climate crisis as a crisis and to get on the 1.5° C curve. These measures need to be as bold in terms of ambition, speed and global collaboration as those in the fight against COVID-19.
G20 as a Platform to Initiate Bold New Actions
That’s why additional bold global actions to fight the climate crisis are needed. And there is a place to initiate those. As president Xi Jinping proposed in his speech at the WEF Davos Agenda: the G20 is a powerful forum which can agree on bold new initiatives. The G20 represents more than 85% of global GDP and 75% of global greenhouse gas emissions. Also the majority of solution technologies, fossil fuel reserves, waste produced and natural capital such as forests are within G20 member states. Working with the G20 does not exclude other countries, but recognizes that bold actions require speed and focus, which is – sometimes – easier with 20 than with 197 countries.
But what can these new, bold major actions be? What is possible in addition to what’s already ongoing? Here are three bold actions for consideration.
1. The Pandemic Principle: Measure and Report Carbon Emissions Daily
One thing we learnt from COVID-19 is how global daily numbers trigger action and are crucial to navigate the pandemic. For the climate crisis, we can do exactly the same: daily numbers or at least weekly updated numbers on greenhouse gas emissions by source. Imagine if we had the Johns Hopkins University Dashboard for COVID-19 and also for CO2!
Imagine you could zoom into the global map and see greenhouse gas emissions exactly, by country, city and asset in the different sectors with daily curves, be it in energy, industry, mobility or housing. Imagine you could even include the status of the forests and carbon sink effects, updated frequently. Crazy idea? Not possible? Let’s assume it could be possible, and we would have daily CO2 numbers as we do for COVID-19. What would happen?
Daily Numbers: a Game Changer in Discussing and Acting on the Climate Crisis
Well, we would have a completely different discussion and action in politics, in the media, between investors and companies, in society.
Investors and financial markets will get unprecedented transparency and precisely updated data on the carbon emissions of financed physical assets. Carbon data will no no longer be packaged and aggregated in statistics, but directly allocatable to specific assets. And positively speaking, investors and financial markets will be able to precisely identify opportunities for sustainable finance and green investments to decarbonize assets, build and package green bonds and sustainable finance instruments as well as precisely evaluate and mitigate stranded assets risks. These are all key topics for G20 to ensure financial market stability and push the transformation via sustainable finance as e.g. already planned by the European Union via the action plan on financing sustainable growth.
The young generation could hold decision makers accountable daily for not seeing numbers go down fast enough. If we talk about a 7.6% absolute reduction per year on a 55 billion ton emission baseline as shown in Figure 1 for 2018, this means the world needs to reduce emissions by over 11 million tons, per day, every day. Imagine if the young generation could track us daily, to see if we are also flattening the climate curve by 11 million tons, as we tried to flatten the curve with COVID-19.
Ten years ago, measuring daily emissions would have been crazy. Experts would have said, “annual numbers are sufficient”, “we can’t measure this”, “we can’t do it, because Country A or Company B don’t disclose”. But today? Is there an alternative not to do so?
The Climate Crisis is not a Poker Game but an All-in Titanic Situation
We know that in the past, making one’s own emissions transparent was like showing your own cards too soon in a poker game. Countries feared losing face and negotiation power in the Paris negotiation process and being confronted with high cost burdens and economic disadvantages. But the climate crisis is not a poker game. It is a Titanic situation, where we are all on the same ship and there is only a win-win for everyone if we fully collaborate and work together, or a lose-lose for everyone. We are in the middle of the crisis where we need urgent, short term action and monitoring.
And yes, we have tons of climate statistics, for different industries, for energy only, by year, for specific countries, aggregated numbers, for a sum of assets or for sub-assets. But we don’t have clean bottom-up base numbers on a daily level, allowing full consistency, full aggregation capability and complete transparency. Furthermore, providing daily data would also help improve the quality and reliability of the data in time, partly because it is so visible and open to scrutiny and improvement. And yes, it is feasible: think through the emission sources and you will conclude: getting daily numbers today can be organized. The G20 can be the pioneer to set up such a daily CO2 monitoring process, published via a website for global access.
2. The Pareto Principle: Reduce 30%+ CO2 in 3 years for Top 5,000+ Assets
The second action is about the 80-20 Pareto Principle: a relatively small number of assets are causing the majority of greenhouse gas emissions. Coal-fired power plants, cement factories, steam crackers in the chemical industry or aluminum smelters are among them. If you look at Germany, there are around 1,800 assets registered in the EU Emissions Trading Scheme in 2019, representing 363 million tons of CO2, which is ca. 45% of Germany’s total footprint. Only 131 assets from 1,800 cause nearly 80% of the registered asset emissions, which is the Pareto Principle threshold. These are assets emitting 500,000 or more tons of greenhouse gases per asset and per year. If we extrapolate these 131 German assets to G20 level with Germany’s 4% GDP share in G20, we end up with around 4,000 assets. And considering growth, upcoming assets newly put into operation, G20 countries with more emission-intensive assets and ease of communication, let’s talk about the top 5,000+ assets with 500+ kt greenhouse gas emissions each within the G20.
G20 to Focus on Jointly Decarbonizing the Top 5.000+ Assets by 30%+ in 3 Years
G20 now can jointly make these 5,000+ high emitting assets a specific focus point for emission reduction. If the G20 manages to reduce let’s say 30% emissions in 3 years for those assets, there is a high certainty that this will bring us onto the Paris 1.5° C curve.
Manage the Financial Stranded Asset Risks together on G20 level
he top 5,000+ assets have particular relevance for financial market stability, for stranded asset risks and sustainable finance. Be it the phase out of coal power plants, the transformation of steel processes on hydrogen-based technology or the introduction of electrified steam cracker processes in the chemical industry. All these measures are highly capital and finance-intensive and the transformation comes with substantial risks and impacts on finance, but also on job losses in the regions where the assets are located. So, there should be high interest within the G20 to have a joint focus on these assets and manage the decarbonization, the financial risks and investments as well as the structural transition in a collaborative mode, since it is impacting overall system stability.
A G20-aligned CO2 Prices for the Top 5,000+ Assets
CO2 prices turned out to be effective as an economic incentive to reduce greenhouse gas emissions, as the European Union experienced with the emissions trading scheme which set an emission cap for regulated assets. Ideally, the G20 can agree on a global CO2 price, steadily increasing to incentivize decarbonization of the Top 5,000+ assets. While global CO2 prices or aligned emission trading schemes for all assets and emission categories are difficult to reach short-term, it can be easier for the G20 to agree on aligned CO2 price mechanisms for a focus group of the Top 5,000+ assets. Here, the G20 can agree that paid global CO2 prices contribute to a given G20 green innovation fund to co-finance green investments in those same assets, together with private capital. This would be a global mechanism beyond country or regional CO2 price mechanisms. Such agreements on global CO2 prices with plannable levels and time horizons e.g. for a 5-year transition period, could create the required certainty for investments and divestments in the Top 5,000+ assets, financial markets and investors.
A G20 Expert Task Force to Bring the Top 5,000+ Asset Emissions Down Short-term
In addition, the G20 can agree to concentrate a global expert task force on these high emitting assets, bringing emissions down by the min. 30% in 3 years. The expert task force would speed up the exchange of know-how on all measures that are doing the job of emission reduction: efficiency, closing down, substituting with renewables or green hydrogen, carbon capture and use as well as structural transition knowledge for affected regions.
The task force is about transferring knowledge and technology as well as enabling sustainable finance investment into decarbonization technology. The task force could have a team of 1,000 experts: engineers, energy efficiency experts, renewable energy experts, process technology experts, finance and investment experts cross-country. The task force would have the goal to help asset owners to bring down emissions by 30%+ in 3 years. It can help with energy audits, mobilizing funding or simplifying the installation of renewable energy solutions or hydrogen-based processes. Green investment potential identified e.g. by World Bank’s IFC and instruments defined in the EU’s Green Deal, such as the EU Taxonomy, to redirect private capital into green technologies, are all pieces fitting in the same puzzle to decarbonize the 5,000+ most polluting assets in the G20. Linked to Action 1, the media and public have full transparency with a global map monitoring how the assets are decarbonizing.
And of course, the specific collaborative focus on the 5,000+ assets on a G20 level is complemented by the additional efforts on country and regional level for all the other assets below the threshold of 500 kt per year and asset.
3. The 2:1 Principle: Regenerate 2 tons of Carbon for 1 ton of Carbon Extracted
Action 3 is on using global ecosystems to help us to stop the Titanic before crashing into the iceberg. The global ecosystem has tremendous potential to be an important brake in the climate crisis. The highly discussed ETH Zurich study calculated the potential of reforestation as a carbon sink, with estimated 205 gigatons of greenhouse gas emissions. This is ⅔ of all 300 gigaton (GT) emissions emitted since the industrial revolution. And these would be areas which are available for forestation, and not in conflict with other use, be it residential or food production.
Now these numbers have been highly debated and criticized, since forests can burn and carbon storage factors might have been exaggerated, or plants are already growing there. But beyond trees, there are further regeneration capacities to be used. E.g. many areas such as those in sub-saharan regions are not suitable for forests but for green, connected bush-farm systems (see Hübner). Ocean farming e.g. of seaweed, provides additional carbon sink capacities. The same holds true for peatland protection and rewetting, as stated by Project Drawdown. So whatever the numbers are: there is a significant regeneration and carbon sink capacity and we as humanity should be smart enough to use it.
Solving the Problem of Time: Start now, in Parallel, at G20 Scale
However, there are major problems. The first is time. Regeneration takes time, e.g. newly planted forests start to capture carbon when grown up only after some years. Since we need a braking effect short-term, we cannot regenerate step-by-step, but the rational approach is to use the full regeneration potential short-term, in parallel, at global scale.
So the G20 can come together, identify the suitable areas for regeneration and agree on a regeneration plan for these areas short-term. The good news is that many areas for regeneration are already within G20 countries: be it the Amazon or seaweed coastal areas in Brazil, areas available for reforestation in the US, Canada, India, Russia or China and even latest technologies for greening the desert, as in Saudi Arabia, could become part of the global G20 regeneration effort. But of course it makes sense to include further globally suited areas e.g. in Africa, with substantial positive side benefits of reaching the global Sustainable Development Goals.
There are of course many “how tos”: how projects and the right regeneration plants are defined, how local communities have a share in these projects, how technologies such as platforms, blockchains and satellites can be used, how biologist expertise can be leveraged to find the exact suitable plants growing in dedicated areas, how progress is monitored, etc. Luckily, there is already substantial experience from successful reforestation projects in China, India or Africa (see Schilk and Hübner) as well as initiatives such as the 1 Trillion Tree Initiative, Plant for the Planet or the World Economic Forum.
And technology is on our side: regeneration projects can transparently be put on a global map, project finance and management can be organized via platforms, thanks to satellites we can monitor the status of the regeneration projects down to single trees, digital drone-based plantation technologies are available to plant large parts of remote areas hard to reach in a short time, using and reactivating roots of endemic plants already in the ground which have turned out to be highly effective e.g. in areas close to deserts, or semi-desertified zones. Thus, regeneration is highly feasible and will come with enormous side benefits for biodiversity, water systems and social rural development.
Solving the Problem of Money: a 2:1 rule on Carbon Extracted to Finance Regeneration
Still, the second problem is money. We lost rainforest the size of a football field every 6 seconds in 2019. It is economically still more attractive to cut trees to use the land e.g. for agriculture such as planting palm oil trees, soy or feeding livestock. Although we see that regeneration projects are upcoming, if we really want to have a big bang on regeneration, meaning a G20 parallel effort to use all regeneration capacities available short-term, we need a different level of financing.
Our proposal is to install a 2:1 mechanism on carbon extracted on G20 level, which is known as a principle from sustainable forestry. For each ton of carbon extracted from the earth – be it crude oil, coal or natural gas – the G20 countries commit to regenerate 2 tons of carbon via regenerated ecosystems.
Let’s take crude oil. Before Corona, the International Energy Agency (IEA) estimated that 96 million barrels of crude oil were extracted per day in 2019 worth ca. 2 trillion US dollars with average prices of $57 per barrel. If you apply a 85% carbon content factor in crude oil, you end up with ca. 4 GT per carbon and year extracted. The 2:1 rule would now require to regenerate 8 GT of carbon via regeneration projects such as forestation for the amount of crude oil extracted. Assuming $5 per ton of carbon regenerated, the regeneration costs are 40 billion US dollars, which is ca. 2% of the crude oil value. So with a relatively small percentage of the crude oil extracted, the related amount of carbon could be regenerated twice in this simplified calculation.
As long as the world still uses fossil energies, the world can use the underlying economic force of fossil energies to redirect parts into regeneration allowing us to get a turnaround on overall carbon emission concentration in the atmosphere. Now, if you add coal and natural gas to the calculation, the full regeneration capacity estimated by ETH Zurich is consumed in a few years with the 2:1 formula. But this is good news: it is exactly the type of short-term bold regeneration effect and financing we would need in the 2020s before 2030. The G20 countries can agree to commit to a 2:1 mechanism between 2020 and 2030 to achieve the required braking effect on the climate crisis, while scaling up green technologies as intended with action 2.
It is important to mention that the 2:1 mechanism should be separate from carbon pricing and emission trading mechanisms. We have seen too many problems linking forestation with carbon offsetting, e.g. less incentives for industries to reduce emissions if they can use forest offsetting. Or examples of forest offsetting projects, where the forests burn and the offsets are no longer valid. So the proposal is to separate regeneration of ecosystems via the 2:1 mechanism from other CO2 and emission trading mechanisms.
These are three bold short-term actions the G20 could agree to work on to tackle the climate crisis short-term. They work in addition to all step-by-step transitions running in a decentralized way in countries and cities on their way to becoming climate-neutral.
All three actions use technology and data providing transparency and empowering action to reduce and capture emissions. In this respect, they could also work via a single platform showing the global map with daily emissions, the top 5,000+ assets including more details on the assets as well as regeneration projects. It is recommendable to run this as a public-private partnership project leveraging technology power and speed of tech companies combined with public institutions, financial markets and an associated coalition of expert partners and NGOs. All three actions require international teams working together cross-country, which opens up a new opportunity for G20 member states to collaborate on the pressing challenges of our time.
With special thanks to Phoebe Blackburn and Josephine Logisch for supporting the article and the research.