Panel, Conference Presentation
The Economic Implications of Climate Change
Milken InstituteSusan Goldburg, Gérard Araud, Amy Christensen, John Cochran, Mark Tercik, John Holdren, Peter Passell, Matt Boghossian, Lawrence Bender, Mark Scotland, Michael Sterling
- The 2015 Paris conference is expected to be the defining moment for global mobilization, with a strong anticipated message from the business community and a summit scheduled for May 20 in Paris to set corporate goals.
- Economic projections include solar energy growing 10 times over the next 15 to 20 years, with investors targeting 15 to 20 percent returns on renewable energy project finance led by major banks.
- Carbon pricing mechanisms are predicted to start at $16 annually, growing 5 percent per year until 2050, potentially driving a 33 percent reduction in emissions, though an 80 percent reduction target by 2050 remains difficult to achieve.
- Fossil fuels are expected to remain incredibly cheap for 20 to 30 years due to the fracking revolution, creating financial strain for some companies unless prices rise, while natural gas is viewed as a pragmatic focus if methane leakage is addressed.
- Technological advancements in carbon capture and sequestration are anticipated to eventually succeed, despite current challenges regarding high costs and siting, mirroring precedents like the catalytic converter.
- Corporate strategy is shifting from blame to competing for clean energy opportunities, with major entities like Walmart and ExxonMobil making 100 percent renewable energy commitments or investing based on internal carbon costs.
- Policy shifts are expected where U.S. action prompts international follow-up, local authorities move from debate to implementation, and governments adopt sophisticated mixes of gray and green infrastructure.
- China is projected to continue building coal power plants while simultaneously engaging in nuclear and renewable solutions, driven by the necessity to address local air pollution and maintain social viability.
- Risks include small island nations being forced to relocate populations due to rising sea levels, climate impacts exacerbating conflicts in regions like Africa into security situations, and taxpayers acting as insurers of last resort for climate disasters.
- Social and political risks involve potential riots in France due to uneven gas tax distribution, the insufficiency of voluntary U.S. business efforts without policy change, and the long-term necessity of prioritizing mitigation because greenhouse gases have a life exceeding 100 years.