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Optimism on Solving Climate Change

Optimism on Solving Climate Change
By Tom Littler • Issue #65 • View online
As a Londoner, this year we’ve acutely felt the impacts of climate change. Execssive heat, for excessively long periods combined with minimal rain, has transformed the parks from lush gardens into barren savannahs. Lack of A/C in flats and houses combined with most of us working from home has led to some pretty sweaty days and suffocating nights.
The fact we can actually feel climate change has rightly led to more discourse. There is one common theme of nearly every conversation — pessimism.
Most people seem to think in one of a couple of paradigms when thinking about how to tackle climate change
  1. In order for us to stem climate change, consumer habits need to change (be limited). We must move to plant-based diets, stop spending on fast fashion, forgo holidays, consume less and limit travel. 
  2. We need massive government intervention. More corporate taxes on carbon, financial incentives for solar panels and EV adoption. We need top-down leadership and long-term thinking from the governments we elect.
Regarding consumer behaviour, I think it’s justified to be pessimistic if thinking that behaviour change needs to happen to solve climate change
First, consumers don’t really know what’s good for the climate and what’s not. Let’s take an example of the typical east-London yuppie who ostensibly cares about the environment (of which I’d put myself into the bucket). This type might make a few changes to his life to become a more responsible citizen. He might stop using plastic bags, and buy an organic cotton tote bag for his shopping, he’ll not purchase groceries from Tesco, moving instead to an organic-first store such as wholefoods. He’ll cook his food using some herbs grown in his garden of his victorian terrace flat, choosing this as the more environmental option than living in a cement and steel new build flat. To most these would seem like intuitively good, positive impacts. The problem is consumer decisions around carbon are nearly never intuitive. 
You’d have to use a cotton tote bag 20,000 times for it to reach parity with carbon emissions of a single-use plastic bag. Organic food is significantly worse for the planet than non-organic due to the vast amount of land it takes up (that could otherwise be left to nature). Living in a new-build flat is by far the most carbon-forward choice due to increased energy efficiency and reduced land. Educating consumers on what they need to change in order to be better climate citizens is nye on impossible, I spend hours a week reading about this topic and are still not really any the wiser on positive actions an individual can take except flying less and walking more. 
But suppose we did have a playbook for consumer-driven actions that would mitigate climate change, then couldn’t we all act together to drive some kind of change? Maybe — but it would be obscenely difficult. Perhaps in developed countries, where we’ve reached ‘peak consumerism’ something could be done to encourage people to consume less and consume more mindfully, you’d be battling against centuries of consumeristic brainwashing but it might be doable. 
But how about in developing countries? Over half the world lives on less than $7 a day (and that’s accounting for the difference in purchasing power in different countries) are we really in any position to tell these people, as they are lifted out of poverty that they can’t have access to the life improvements that the developed world has been enjoying for centuries. It’s nonsense. 
What about government intervention? Isn’t there something our elected leaders can do to prevent climate change? Again, it’s easy to see why with this view we’d be pessimistic. In the last decades, government has been grossly ineffective at thinking about any problems with any sense of longtermism. From international energy policy to the COVID response, to providing a fair education system, the government has failed on nearly all fronts. You just need to talk to any 20 or 30-something to realise that faith that government will have any meaningful positive impact on significant issues is at an all-time low. 

The only thing that really matters
After spending a good chunk of time over the last few weeks refreshing my knowledge on the clean energy space, I think there is reason for huge optimism. 
The reason is simple. With zero government impact, and zero consumer changes we can solve climate change. All we need to be able to do is produce clean energy at a cheaper cost than energy from non-renewables. 
Sure, this will inherently lead to different products being consumed. We will drive electric cars, we will use electricity that is carbon neutral and we will buy things that have an order of magnitude less impact on the environment — but these changes won’t be sacrifices. They’ll allow us to consume what we consume now (and more) without having nearly the same impact on the planet. 
These energy changes have happened many times through history, just not in our lifetimes. Let’s take a look at a few of these transitions
A history on energy transitions 
From now on I’ll be heavily referring to Tsung Xu’s guide on the clean energy transition. The guide itself is a couple of hours read, and the two books he primarily references Greg Nemets ‘How Solar Got Cheap’ and Richard Rhoes ‘Energy, A Human History’ are quite meaty — but definitely worth a read if you want some more context on the topic. 
This short essay is only intended as a primer — to shed some light on why we can be optimistic about the move toward sustainable energy. Energy is in some ways a complex topic (although perhaps not as complex as people think). Less wrong has some good recommendations for further reading. 
An aside on non-linearity
Before diving into past energy transitions we need to refresh ourselves with the concept of non-linearity / exponentially. We may all know the difference between the linear y=mx and non-linear y=x^n, but to actually grasp it inherently is quite difficult. 
I think the reason for this is that it’s so unnatural for us to think exponentially. Whenever we view our own lives we can’t help but think in linear terms. We age by the same amount each year, our careers progress at a fairly steady rate, if we want to lose weight we set a target and gradually lose weight till we reach that target. 
Probably the best example of exposure we’ve all had to exponentially was COVID. COVID went from a few hundred cases to millions in the space of weeks. This was due to the fact that COVID grew exponentially. 
From coal to oil 
The above image is perhaps one of the best examples of the non-linear nature of the adoption of a new energy form.
In 1900 there were practically no cars on the market. By 1914 car adoption had grown nearly 50% year on year. This bodes well for the movement toward electric vehicles. 
Before an ‘inflection point’ is reached. Non-linear growth and linear growth can look the same. I’d argue this is where we are with both solar/wind technologies and electric vehicles. It looks like the movement away from natural gas and coal is slow. It’s actually not, it’s exponentially growing, as we’ll see later. 
Reinforcing technologies 
The reason behind this exponential growth is that energy transitions occur because mutually reinforcing technologies arise. Oil unlocked the internal combustion energy (ICE) and also for the production of polymers. These technologies worked together allowing oil to displace coal as the primary source of energy. 
Coal also had a similar loop of reinforcing technologies that allowed it to displace wood 
  • Coal 
  • Steam Engine
  • Industrial cast iron/steel 
Likewise the move away from oil to electricity as the primary method of global energy consumption involved
  • Electricity 
  • Transition lines
  • Aluminium (ability to be produced cheaply due to cheap electricity) 
Scale up Phases
Another thing that allows the exponential growth of new technology is the (historically) predictable way that energy sources scale up. 
After the discovery of an energy source, certain niches will make use of it. The first niche for coal was for heating homes in London. In the 17th Century in England wood was scarce, and prices soared as the population of London 8x’d from 1500–1650.
Coal reached larger markets in the 1740, Coalbrookdale Company was the first to use coked coal to smelt iron, enabling viable mass production of cast iron for the first time in history. The company also used coal-powered steam engines to replace horse-driven pumps. 
60 years later the unlocking of iron and steam engines allowed the railroad industry to take off. This allowed coal to be transported from much further away. This self-reinforced iron production, which doubled every 10 years from 1780 for decades. If you’d had tried to use charcoal instead of coal to meet this production, there just wouldn’t have been enough wood in England.
How energy sources non-linearly displace each other. 
The unstoppable rise of solar 
Installed solar capacity has increased 33% year on year in the last decade. The cost of solar energy has fallen by 16% year on year in the 2010s. Let’s zoom out and see what this looks like a logarithmic (non-linear) chart
Of course, from our argument’s perspective, the actual cost of solar doesn’t matter. What matters is the cost relative to using existing infrastructure such as coal and oil facilities 
As we can see, wind and solar are already far cheaper than new-build gas plants. But they are now becoming even cheaper than existing gas plants. To make this explicit, as this trend continues it will become cheaper to install solar plants and reap the free ongoing variable energy than it will be to just use existing gas plants. 
The impact of this cost reduction can’t be understated. New power capacity added in the US since 2010 is now over 80% solar. Developing countries such as India increased their solar capacity 600x between 2010 and 2020, only China the US and Japan have more capacity. 
These are crazy statistics.
No one is bullish enough on how rapidly solar is taking over before our eyes, it has expanded into new markets faster than anyone could have imagined. We are also still very much before the inflexion point of solar. 
Solar is not constrained by raw materials, silicon is abundant. Distribution is modular (30% of Australians have solar panels on their roofs) and the cost of installation is falling year on year. 
The unstoppable rise of batteries 
One of the arguments against renewables such as solar and wind is that they are instantaneous. Energy from solar without an intermediary must be consumed, as electricity, at the moment of production. This is different to coal and gas, where electricity can be generated in a much more controlled manner, power plants can simply burn more or less gas to meet the needs of the grid at that particular moment in time. In order for solar and wind to be as reliable as oil, gas and coal, you need to be able to store the energy
The reinforcing technology for solar, that enables its mass distribution is Lithium-ion batteries. 
The adoption of Lithium-ion batteries has been staggering. It’s even higher than solar. 
This price reduction means that electric vehicles are rapidly replacing internal combustion engines. Whereas before buying a Tesla was done purely as an ethical/environmental move, and therefore only one that was available to those wealthy enough to make the sacrifice of paying more or getting a car with worse performance, electric cars are now on their way to mass adoption. 
A Tesla Model S outperforms a $3m Bugatti supercar. EVs are simply superior to ICE’s from a performance pov. While new EV purchases still only makeup 20% of all vehicles in western Europe (and 3% in America) that number is growing fast. How can you look at this chart here and not see anything but an up-and-to-the-right trend? Would anyone in their right mind seriously bet against EVs becoming the defacto choice for consumers in the next decades?
Why ineguieniuty matters 
I could spend another 5000 words hammering home the points made so far. Solar energy is already cheaper in most cases than non-renewables. Electric vehicles are already higher performance and soon will have more range and be cheaper than ICE cars. The cost of electricity has remained basically constant for 70 years, as solar and wind take more of the market, this will change, electricity will become virtually free as we find increasing cheap ways to manufacture PV panels and distribute electricity through efficient grids and batteries. 
If this is so clearly obvious, why are we all such a pessimistic bunch? In my mind, there is no doubt that human ingenuity will solve climate change. Carbon capture may even be able to reverse it. As physicist David Deutch, hammers home in ‘the beginning of infinity there is no limit to human ingenuity, there are no physical laws that put a cap on the innovations we can construe. We don’t have to change human nature, we don’t have to put faith in useless politicians, we simply need the right incentives (economic upside) and driven people working on the right problems, which is already happening. Government at this point can only serve to mess things up (like the US has done with domestic solar panel regulation), the trajectory has been set, the flippening of oil to renewables is well underway.
What I'm Reading This Week
I’ve taken to reading textbooks recently. This one on economics by Samueson and Nordhaus is meant to be the best. I’m quite enjoying it to be honest.
Thanks, and see you in a few weeks,
Tom
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Tom Littler

Tech, life, entrepeneurship

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