It seems just yesterday that the squares of half of the world were filled with young people demanding concrete climate action. Increasing evidence of the damages caused by climate change and these mobilizations have spurred the climate crisis narrative into the media, political, and corporate agendas.
In 2020, with the advent of the pandemic, attention shifted to a perception of the crisis as more “urgent,” or simply unexpected and with immediate and directly observable impacts. But today, due to Russia’s invasion of Ukraine and the resulting geopolitical crisis, even the pandemic has been pushed aside.
One crisis drives out another, “one pain drives out another”. In this paradoxical historical period, in which we go from one emergency to another, the scientific community, with the publication of a new section of the sixth IPCC report on climate change sounds yet another alarm bell on climate.
The IPCC is the United Nations body that oversees climate science. With this new publication it brings a message of alarm but also of hope. Alarm for a window of action that, as we already know, is closing fast: we are not doing enough to combat the climate crisis, the damage is becoming increasingly severe and irreversible, and the time for action is almost over. Current policies would lead to a warming of 2.7°C or more by the end of the century while current commitments of zero net emissions would still produce a warming of about 2.2°C.
But also hope, because solutions to counter the climate crisis and limit its current and future impacts exist today. Just to name a few: a targeted application of energy efficiency measures, investments in renewables and revision of mobility would bring positive impacts on economy, employment, and health. However, to date, there is a lack of political will and, above all, of a political and institutional leadership for a just and rapid transformation of our economies that is independent of vested economic interests.
The message from the new IPCC report is clear: it is necessary to close power plants, transportation facilities, coal, oil and gas storage centers. We need to plan energy and industrial policies immediately: act and plan today to avoid creating social and employment crises tomorrow.
However, we rarely hear clearly, for example, that gas sources are a problem for the climate. Yet the international scientific community leaves no room for interpretation on this:
- Existing fossil infrastructure alone will make it impossible to meet the 1.5°C target.
- Even without a new expansion of fossil fuels, global emissions by 2025 would be 22% too high to stay within 1.5°C, and 66% too high by 2030.
- The planned and currently deployed fossil fuel energy infrastructure already “forces” the world into about 846 GtCO2 of additional emissions, more than two times the amount left in the carbon budget to meet the 1.5°C target.
These findings confirm those of the International Energy Agency, namely that meeting climate goals requires an immediate end to new investments in fossil fuels to build a zero-emissions global power sector by 2040. G7 countries, including Italy, must aim to have a zero-carbon electricity sector by 2035 to be on track with this trajectory and the global 1.5°C target.
Talking today about new gas pipelines or regasifiers is therefore not only anachronistic, but highly risky. Who would invest in infrastructures with ten-year amortization plans that risk losing their value in a few years? This is exactly how the so-called “stranded assets” are created, i.e. investments that cannot be repaid and generate economic crises in those who support them, whether they are nations or companies (public or private). Even in the face of a scenario in which the Russian fossil fuel transportation infrastructure is no longer used, the combination of clean alternatives – if activated promptly and with determination by politicians and institutions – and existing infrastructure would make it possible to avoid using new infrastructure.
The scientific community has been extremely clear and confirms that the recipe for mitigating climate change contains among its ingredients: renewable energy, energy efficiency and the electrification of transport. The consumption of coal, oil and gas must immediately embark on a trajectory of rapid decline in favor of an energy system (not only electrical) that pivots precisely on renewable energy, storage systems and energy efficiency.
Renewables in some countries, including Italy, are still perceived as “long-term solutions.” Data shows otherwise: 2020 saw 280 gigawatts of new capacity added, a 45% increase over the previous year and the largest annual increase since 1999. Moreover, the costs of these technologies continue to fall rapidly, and the recent gas price crisis has shown how much our system needs to disengage from imports and fossil sources, even from an economic sustainability standpoint.
In Italy the potential is great and largely underutilized. This is demonstrated by requests such as that of Elettricità Futura, the main association of companies operating in the Italian electricity sector with 518 member companies and 40 thousand employees, which has said it is ready to realize 60GW of renewables in three years. An acceleration not only possible, but absolutely necessary.
The government recognizes the stalemate in the sector, due in large part to slow and uncertain authorization processes which drive away investment capital and generate a sense of mistrust by both citizens and companies. A situation that has been going on for years, and that needs a strong political direction to be unlocked.
The IPCC does not overlook the fundamental role of energy efficiency, a key tool in both the short and long term. The International Energy Agency’s net-zero emissions pathway shows that global energy intensity must decline by 4 percent per year between 2020 and 2030 – more than double the average rate of the last decade.
Removing carbon dioxide from the atmosphere also remains an option on the table. But there are limits to how far this is possible and, as a result, the IPCC scenarios strongly emphasize rapid and deep cuts in emissions. Indeed, most carbon removal technologies are still highly speculative, while others, such as BECCS (i.e., biomass combined with carbon capture and sequestration), risk severely compromising biodiversity, food security, human rights, and ecosystems unless done carefully on a limited scale. Focusing too much on tree planting is also very risky. In fact, achieving net zero emissions by 2050 through it alone would require at least 1.6 billion hectares, equivalent to all the land now farmed on the planet. The underlying message is that no single option or combination of carbon removal replaces the need for deep cuts in emissions, due to the immature stage of these technologies and their significant limitations.
Even more so in this period of energy and geopolitical crisis it emerges the need to emancipate from fossil fuels and dependence on other countries, not just Russia. Italy also has great potential in this area in the public and private sectors. According to our analysis, through a series of interventions on efficiency, savings and renewables, it is possible to reduce Russian gas imports by up to 50% in the short term (one year). While the remaining 50% can be replaced with increased imports through existing transport infrastructure without recourse to new infrastructure, new domestic gas production and reignition of coal-fired power plants.
The role of capital
This energy transition obviously needs supporting and guiding policies, but also public and private capital. This is not unknown to politicians, companies and investors, but the actions are still far from sufficient.
The amount of money promised and actually put on the table by the richest countries for climate mitigation and adaptation remains well below the $100 billion per year promised in Paris.
The increase in investment capital on climate has been wholly insufficient over the past decade, reaching about $579 billion in 2017/2018. This figure is about ten times less than the estimated $6.3 trillion needed annually by 2030 to stay aligned with Paris.
Private funding has outpaced public funding in the energy sector and increasingly in the transportation sector, reflecting a more mature renewable energy market and showing that investor confidence is high today. However, there is a lack of proper assessment of climate-related financial risks, which continue to be underestimated by financial institutions and policy makers. In Italy a first step can be taken by three major public financial institutions, as we have proposed through the transformation of CDP into a Climate Bank, SACE as a Climate Credit Agency and Invitalia as a Climate Bank of the South.
Interconnected crises, interconnected solutions
The crises we are currently experiencing have, for the most part, a common thread linking them. The good news is that the same is true for the solutions.
Emancipating from Russian gas – and from fossil gas in general – will allow Italy to escape the energy blackmail that other countries can bring to bear, and at the same time will allow the country to pursue its climate goals and relaunch its economy.
Similarly, countering the climate crisis also through a change in diet, agricultural production and livestock means would make it more difficult to mutate species and create new viruses.
This is, in a nutshell, the just transition we talk so much about.