The New Way to Fight Climate Change

Over the last three decades, diplomats from around the world have convened 26 times at the annual Conference of the Parties to plot out their fight against climate change. On Sunday, they will begin the latest such gathering, COP27, in Egypt. It is well timed, coming in the middle of an active hurricane season and after a summer when heat waves broke records across the world, a drought in Africa put 22 million people at risk of starvation, and floods submerged one-third of Pakistan.

At the conference, people will mostly pay attention to what is sure to be a grinding process of global diplomacy, where decisions are made by consensus across 197 nations. Governments will fight over how much richer countries should pay to help poorer ones, including how to compensate developing states for losses and damages caused by increasingly severe climate-related disasters. They will argue about which countries are behind on their pledges and which are doing the most to fight the climate crisis. There will be endless discussions of process, which will often eclipse the actual substance of controlling emissions and managing climate impacts. It won’t help that policymakers will be distracted by an unusually long list of other global concerns: the ongoing pandemic, growing geopolitical tensions between the United States and China, a looming global recession, high energy prices, and, of course, a land war in Europe.

Cooperation will certainly be essential to curtailing emissions coming from the global economy. But curtailing emissions doesn’t have to hinge on global consensus. Many activists and some governments have begun to adopt a new theory of climate collaboration that avoids seeking consensus across all the nations—nearly always a recipe for the lowest and slowest common denominator. Instead, this new approach focuses, sector by sector, on the technologies, businesses, and policies that are essential to creating a cleaner economy. It requires cooperation, at least initially, among industrial leaders, investors, workers, and governments that are most aligned for a faster transition away from carbon. When green technologies are not yet mature, or for the parts of the global economy that lack experience with implementing deep cuts in emissions—which is true for most sectors in most of the world—the new approach relies on cooperation within small groups of highly motivated governments and firms to draw up and test solutions. As these technologies mature, their costs will come down and people will become more familiar with how effective they are. Cooperation can then expand as more economies adopt these superior, cleaner technologies.

This hopeful vision is already taking root. The 2015 Paris climate agreement, designed for flexibility, allowed different countries to pursue diverse approaches to cutting emissions. And last year, at COP26, there was unprecedented engagement by business and financial firms, as well as by governments that, in varying ways, subscribe to this new theory of change. Thanks in no small part to private-sector contributions and side deals—backed by national policies and announced at COP26—the world has accelerated its investment in renewable power generation, increasingly shifted to electric vehicles, invested in carbon capture and storage systems to clean up conventional fossil fuels, and made other changes to create a new, clean economy.

To be sure, there is still a role for global diplomacy in the fight against climate change, particularly when it comes to issues that smaller groups simply cannot address—such as setting overall expectations for financial and technical assistance to poorer nations and agreeing on broad global emissions goals. On these subjects, governments will have conflicts and a global consensus will be hard to achieve. But the process is unavoidable and worth the effort.

On many topics that have dominated global climate diplomacy, however, the endless wrangling has not generated much benefit. The world should not have spent seven years debating reporting rules, and it should not now have a lengthy debate over the definition of “climate finance.” In fact, the last two decades of global negotiations have made it clear that trying to fight climate change through sweeping global agreements that cover every sector and country is more likely to produce acrimony and gridlock than anything else. In Egypt, then, it is important not to be demoralized by inevitable diplomatic fissures on top-line negotiations, such as on how to compensate countries for the damage of climate change—important as such negotiations (and issues) may be. Activists must put a newfound emphasis on what’s been on the sidelines, where governments and companies will be making decisions that can also reshape the planet.

GETTING TO ZERO

The chief culprit in climate change, carbon dioxide, is an intrinsic byproduct of the entire world's energy use, and it lingers in the atmosphere and the oceans for thousands of years. The more carbon that enters the atmosphere, the more sea levels rise, and the worse storms, droughts, and other consequences of global warming become. Stopping climate change requires cutting emissions to near zero within the next several decades.

Eliminating carbon emissions will require radically transforming most industries, from airlines to agriculture. Each sector has its own business models and its own problems, and so each will need a unique strategy to make the shift. Some sectors, such as farming, will require multiple distinctive approaches. Reducing deforestation requires reworking land-use policies in part so there are stronger incentives to protect forests and so that agricultural crops and ranching don’t invade forested areas. Cutting emissions from fertilizer production, however, necessitates a big push for precision agriculture (so that less fertilizer is needed), along with testing and production methods that can capture emissions from fertilizer factories before they escape to the atmosphere.

For years, global negotiators ignored the reality of these sectoral and contextual nuances. Instead, they focused on aggregate goals and targets—such as global emission cuts—which in effect imposed a one-size-fits-all approach that was bound to fail. That started to change with the Paris agreement, which allowed more experimentation. Rather than trying to set emission targets and timetables that would apply to each country, the Paris architects allowed each nation to set its own goals and plans—and then adjust them with evolving experience and shifting political preferences. But the Paris agreement was still largely a product of the old system: a multilateral endorsement of unilateral action. It was, by itself, not a framework for practical international cooperation.

Finally, at COP26, held in Glasgow last year, the new approach was on full display. There were groups of governments and industrial firms in multiple sectors—including aviation, electricity, finance, forestry, road transport, steel, and shipping—that unveiled major plans to slash emissions. In each industrial sector, leading countries and firms recognized the importance of working together, but in manageable numbers. In steel and cement, small groups of governments and companies agreed to establish standards for zero-emission products and to use both public procurement and private purchasing to send clear signals to producers to invest in cleaner production methods. It worked; companies are already delivering the first tons of clean steel to the auto industry in Sweden. More will follow. In shipping, a group of 20 countries are cooperating with leading businesses to create the world’s first green shipping corridors, where pairs of ports coordinate standards and investments so that new, green ships can cleanly sail between them. In agriculture, a collection of states that produce and consume large amounts of products that prompt deforestation agreed to work together on transparency and traceability systems, to support small farmers, to promote innovation, and to improve their systems of trade—factors that will better protect forests while furthering local development.

Notably, none of these private or public programs were developed through the global consensus process. Instead, they emerged independently. Some of these initiatives were born at international gatherings, but most were created in smaller “plurilateral” groups, and outside the limelight. That hasn’t stopped them from becoming major forces in the fight against greenhouse gases. The International Solar Alliance, for example, was announced on the sidelines of Paris in 2015, with just a few participating countries. Now it has 110 signatories.

LEAPS OF FAITH

Central to this new theory of change is the idea that industrial transformation is often risky and steeped in the unknown. The level of risk—and thus the policy strategy—depends on the stage of technological development, which can vary by sector and application.

Generally, new technologies are expensive to create and test, requiring highly motivated inventors and entrepreneurs. The best ideas are unknowable at inception, and so spending on them is usually a gamble. To develop green technologies, then, policymakers must not only find ways to identify promising new ideas and actors but also create portfolios to diversify the investment risk. Handling these challenges requires a nimble industrial policy that varies by sector and need. Governments and firms must collaborate—often across borders. For example, the United States and the European Union have created a partnership to advance clean steel and other metals, making it clear to their leading firms that successful innovation in metals will be rewarded in multiple markets. The potential returns, along with direct government support for promising technologies, lower the risks of experimentation.

When these technologies mature, the best role for government shifts from incubating inventions steeped in uncertainty and learning how to use novel technologies in different contexts to helping companies scale the options that work best. This shift in strategy is evident, for example, in how solar power has emerged from a fringe technology to one of the least expensive ways to generate electricity. Early on, governments in California and Japan poured money into diverse technological options for solar power. Soon, other states, including Germany, were investing, as well. They learned which technologies worked and which did not. Starting in the 2000s, the best options became clear and the production frontier shifted to China, where the government scaled up manufacturing, driving costs even lower.

One lesson from this experience is the need to constantly evaluate experiments and to test technologies in different contexts to see whether they really work. Another is that an international approach to developing and testing technology is often the most effective because it expands the scope for experimentation, learning, and application of new ideas. By following this logic, India and many other countries are now also leaping forward and deploying solar power on a massive scale.

Perhaps the most important target for aggressive regulation is coal.

Electric vehicles are on the cusp of similar supercharged growth—something that leading firms and governments, in collaboration, can again foster. Nine percent of all new passenger cars sold in 2021 were electric or plug-in hybrid. These vehicles’ market share has more than tripled since 2019 and continues to grow rapidly. Governments have helped foster the growth of the industry by spending hundreds of billions of dollars on manufacturing incentives and policies that encourage investment in extensive networks of charging stations, and regulating to require ever lower emissions per kilometer. Electric vehicles and charging systems will become even more popular if governments can harmonize their regulations to require that nearly all vehicles achieve zero emissions—an effort that would require coordination among only a small number of states. The world’s vehicle market is highly concentrated: the G-7 countries, Brazil, China, and India cover over three-quarters of all sales. And in Glasgow, an alliance of regulators from the largest and most advanced car markets laid the foundation for going to zero by creating the Zero Emission Vehicle Transition Council.

In many other domains, a similar story is unfolding. The production of clean hydrogen, for example, has attracted much attention because hydrogen could at least partly replace conventional natural gas. Hydrogen also has chemical properties that could allow it to cut emissions from industries—such as steel and plastics—that have so far proved difficult to control. Industrial policies in India, Japan, the United States, Europe, and several other places are backing experiments to mass produce, ship, and market carbon-free hydrogen. What the world needs next is an active effort—led by these pioneer governments and the firms they back—to assess which of these approaches are most promising and to coordinate the rules and standards for the production, storage, transport, and use of clean hydrogen. But to work, this regulatory process needs to be done within small groups of these most motivated actors, not forums that demand global consensus, such as COP.

But perhaps the most important target for aggressive regulation is coal. The black stuff is still essential to the global power grid, but it is responsible for roughly a fifth of all global carbon dioxide emissions, and so it must be jettisoned (at least in its present incarnation). Over the last two years, multiple governments, international organizations, nongovernmental organizations, and private-sector advocates have been working together to help countries build new clean power plants and move away from coal. Last year around the edges of COP26, France, Germany, the United Kingdom, the United States, and the European Union agreed to provide South Africa a multibillion dollar package of loans and grants so that it could quickly move coal out of its energy system. The use of coal is in decline elsewhere in the world, as well. The war in Ukraine has prompted some countries, such as Germany, to temporarily shift back, but the future of coal is clear.

Eliminating coal, of course, could economically ravage some local communities. It is a prime example of why, when activists rightly speak of a “just transition” to a future clean energy system, they are calling for a transition that takes care of the people (and places) harmed by pollution control. That’s why the best programs—the effort to cut coal in South Africa, for example, or the new green energy loans and grants from the European Bank for Reconstruction and Development—include not just funding for coal alternatives but also programs to help the communities hit hard by the shift.

SEEDS OF CHANGE

Besides energy production, the sector most in need of climate reform is agriculture, which accounts for roughly 25 percent of global emissions. It pollutes in a wide variety of ways, from fertilizer production and forest clearing to large emissions of methane—a strong greenhouse gas—from rice cultivation and livestock.

But much like electric power, agriculture is ready for transformation. For decades, inventors have developed inexpensive ways of dramatically cutting farming emissions. For example, advanced techniques to grow rice and produce meat can reduce methane emissions by half or more. (If people ate less meat, especially beef, it would also help.) With new techniques, agriculture could even suck carbon dioxide from the atmosphere. Plants eat up the gas through photosynthesis, and scientists have been able to engineer crops that put some of the gas into their roots. If farmers use these crops and avoid immediately tilling the land, the carbon would accumulate in the soil rather than in the atmosphere, which could lessen global warming.

Such changes will not be easy to make. One-quarter of the world’s working population is farmers, and so the sector is full of vested interests and ingrained methods that are difficult to break. States also haven’t given the industry incentives to widely test and apply the new techniques. But there’s a solution, and it’s the same one that applies to the climate fight at large: carving the sector into smaller units to make it politically and administratively tractable. States and firms, for example, could have teams that focus specifically on fertilizers; other teams could work on advanced crops, including those that sequester carbon in their roots; and so on.

This process will be especially critical to stopping deforestation. Nearly all forest clearing stems from institutions that allow bad land management practices, including poorly designed rules governing property rights, as well as regulations that undermine human rights. (Many forest dwellers in the tropics are indigenous communities, and too many states make it easy for agricultural businesses to evict them from their homes.) But vested interests make it impossible for the world to create effective global agreements about forests. It would be much better to take a plurilateral approach focused on the small number of countries—including those that account for the vast majority of deforestation. If the deforestation coalition includes enough economic heft, it could create penalties, such as trade barriers, for countries that do not do enough to protect their trees. Indeed, a modestly sized coalition of countries has already pledged $12 billion to help protect forests. What’s critical now is that these governments spend that money wisely across a diverse array of possible solutions and frequently evaluate what’s working.

GREENING THE GLOBAL ORDER

In the aftermath of World War II, political leaders worked together to transform the way major powers interacted. To prevent another Great Depression, for example, they created new financial institutions, such as the International Monetary Fund and the General Agreement on Tariffs and Trade—the precursor to the World Trade Organization.

To confront climate change, the international community must again rethink how diplomacy and institutions can foster cooperation. First and foremost, it must recognize that stopping carbon emissions requires sectoral progress. For all the talk about the need for global solutions and policies that reach across the world economy, progress on deep decarbonization is best made through individual industries. Governments must provide these industries with the resources and incentives to experiment and test green strategies and technologies. If they work together internationally, they can create much stronger incentives for investment, including by establishing global markets that yield much larger economies of scale.                            

Businesses, too, should think about working within smaller groups to fight emissions. The aviation industry, for example, is doing much to advance greener fuels, aircraft designs, and engines. But the International Civil Aviation Organization, the intergovernmental body responsible for air travel, is too big for its members to reach a workable consensus, and so it is not pushing the technological frontier. Instead, the sector would be better off if its members worked through more manageable coalitions that are focused on specific problems, such as one dedicated to making sure that sustainable aviation fuel is scalable and actually sustainable, or one that enables the first commercial use of electric propulsion and hydrogen airplanes. Similarly, one reason the many different global initiatives on forest protections have yet to yield real progress is that they tend to be big and sprawling, inviting a lot of talk rather than action. If environmental activists want to invent a workable way to save the world’s trees, they should downsize these initiatives.

Deep decarbonization is best done through individual industries.

But the composition of small groups can be critical. Deep cuts in emissions, for example, won’t spread around the planet unless the world’s four great geopolitical poles—the United States, China, the European Union, and India—all find a way to engage. Each of these power centers has something to contribute. They must do more to cooperate, including by identifying technologies for a low-carbon economy in which their scientists can work together.

This new theory of change—with its focus on starting small—may suggest that COP27 is less critical than widely thought. After all, the gathered states are unlikely to arrive at a top-line agreement that will seriously advance the fight. Instead, their overall package will probably be riven with disagreements and feature plenty of hollow calls, as has been the case in the past. As a result, activists could write off the whole process as a failure.

Yet even if the overarching agreement falls short, the conference can still be a success—or at least not impede momentum already in place. That’s because what matters most in Egypt won’t be big-ticket multilateral diplomacy but, instead, the practical, sideline convenings of governments and firms willing and able to force change. To make the conference a success, the industry-focused coalitions doing the most should host events focused on credibility, demonstrated action, and system transformation. This process will show where technology, business, and agricultural practices are headed; why that trajectory is believable; and what governments can do to support sectors as they transition. If the world wants to decarbonize, it should pay attention.