The climate crisis is no longer a future concern; it is a present-day emergency. Multiple reports from leading global bodies such as the IPCC, the World Meteorological Organization, the Copernicus Observatory, NOAA and others consistently warn that we must use every tool at our disposal to combat it.
The IEA and IRENA are among those suggesting solutions using the technologies we have and must develop by providing roadmaps to net zero by 2050, in general there is a plethora of such roadmaps and outlooks.
This isn’t bad, of course, but the path forward is far more complicated than identifying solutions. It’s about ensuring those solutions are genuinely effective and deployed to reduce or remove emissions.
The complication lies in the fact that the available technologies are often immature and reliant on emerging markets. This creates a significant gap between the solutions we need and their real-world application. However, even if the perfect solutions are not there yet, inaction is not the answer.
Financing Climate Solutions
One stark issue is the hidden cost of carbon, which impacts health, agricultural productivity, property damage, and ecosystems.
The European quota system, for instance, has seen prices of approximately $100, while recent studies, such as Adrien Bilal and Diego R. Känzig’s 2024 paper in the NBER Working Paper Series, suggest the actual social cost of carbon is an astounding $1,065 per ton for a one-degree increase in global temperature. So, who pays the gap of $900? We are far from paying the real cost.
For the average diesel or petrol car, this equates to a social cost of approximately $9 per US gallon. While European fuel prices already include significant taxes, implementing the true social cost would more than double current prices. This would be deeply unpopular, yet it’s a sobering reality: fuel taxation is the only area where we’re even close to covering the full social cost of carbon emissions.
Even with a wide confidence interval of $690 to 1,799 per ton, the key takeaway is that the social cost is far higher than the cost currently levied on emissions. This gap is paid by everyone, especially those who are most vulnerable and have the least resources and no government can afford to cover the difference.
The results also show that climate change effects have been around for a long time, hidden in our underlying growth numbers. The authors claim that the world GDP would have been 18% larger than it is today had we not experienced one degree of global warming since 1960.
The reality is that paying the full social cost of carbon seems unfeasible, but mounting evidence shows that the costs of inaction are even higher. For instance, former EU Commissioner for Science and Research and later Environment, Janez Potočnik, recently highlighted at a conference that the devastating floods in Slovenia last year cost the country an amount equivalent to 16.9% of its national yearly revenue in 2023. This is just one stark example.
As we look ahead to COP29 in Baku, the question of how to finance this climate burden will take center stage. But while nations scramble to find funding mechanisms, the climate crisis is racing ahead of us.
The situation mirrors the Great Depression in its sheer scale of wealth and productivity loss—a shock that only climate finance can begin to address.
Getting Stuck In The Details
Meanwhile, we find ourselves caught up in debates over the finer details—focusing on imperfections in strategies like carbon capture and storage (CCS) or hydrogen production—while the climate crisis continues on its destructive path.
In Europe, for example, the debate over the cost, maturity, and need for CCS has dragged on for more than two decades. Only now are real projects being deployed.
The European Commission’s latest strategy aims for 50 million tons of CO2 to be captured annually by 2030, scaling up to 450 million tons by 2050. While this is highly commendable, it’s hard to see it materializing at the current pace. If it takes another 20 years to scale up CCS, we’ll miss the targets of climate neutrality altogether.
A similar story is playing out with hydrogen. Production and use have fallen short of expectations, as highlighted by the International Energy Agency (IEA) in their COP28 stocktake.
While hydrogen is seen as critical to the energy transition, we are not reaching the necessary benchmarks. The disagreement in Europe over the use of natural gas to produce hydrogen is symptomatic of the larger issue: the solutions available are either too expensive or mired in technical and safety concerns.
For instance, the use of natural gas to produce hydrogen via reforming or pyrolysis—methods that create either concentrated CO2 for storage or solid carbon—is under scrutiny. It should be, but why not use footprint assessment to guide the solutions rather than undermining the solutions even though some of them are transitional?
Recent articles, such as one published in The Guardian, have raised concerns about the maturity and safety of these methods. But while the debate continues, the climate crisis marches on unchecked, and with an extremely high price to be paid.
When Will We Hit The Panic Button?
In its progress report on COP28 targets, the IEA starkly reminds us of our commitments. Despite pledges to triple investments in renewable energy by 2030 and double energy efficiency, the world is far from on track.
While emissions growth has slowed compared to 2022, we’re still increasing emissions when we should be seeing reductions similar to those that occurred during the COVID-19 pandemic.
Take, for example, advancements in electric vehicles (EVs). While one in five cars sold is now electric—a major improvement from just a few years ago—this success isn’t enough on its own.
China, by responding quickly, has taken the lead in the global EV market, while in the U.S., EVs remain more of a lifestyle or political choice than a mobility necessity. The other extreme is in Norway, where the latest new car sales figures show a 96.4% EV share.
Battery technology is improving, and photovoltaic (PV) systems are becoming more widespread and at prices nobody would have believed just ten years ago. But even these gains are insufficient when juxtaposed against other critical areas like CCS and hydrogen technology.
Energy efficiency, too, remains elusive. Even though there is acceleration in solar and wind power, it barely covers the growth in energy use per annum.
Short-Term Action for a Long-Term Crisis
We cannot afford to let short-term issues obscure the bigger picture. We are already seeing the impacts of climate change, from rising sea levels to food shortages and uninhabitable land.
The time to act is now—before we reach the tipping point where recovery is no longer possible.
COP29 kicks off in November. All eyes will be on this global gathering to see if bold decisions are finally taken. Perfect solutions aren’t necessary to take immediate, meaningful action that incorporates the real cost of climate change and nature loss.
