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Interview – Dynamics of Net-Zero Targets



 

Interviewee: Thomas Fröhlich

Energy Review, Vol 4. Issue 9. 2022


Energy Review: Harnessing renewable energy is being progressively incorporated into energy policy by governments to fulfil net-zero targets. How do you think self-reliance in energy production (whenever it is to arrive) going to affect the interaction of international actors (read states) in the larger international geopolitical scenario? Will it contribute to a shift in geopolitics as we know it today?


Dr. Thomas Fröhlich I do not think that net-zero necessarily means self-reliance in energy production. Imports might decrease and the traded commodities might shift, but if we look at one of the most ambitious net-zero related energy projects, the EU’s hydrogen strategy, there is little evidence that this will make the EU less dependent on energy imports. Even though we currently see and feel the downsides of global markets – and interwoven energy markets, in particular, the overall benefit of international specialisation and free trade cannot be denied. And this will be the case in a net-zero world as well. Some countries might be able to produce solar- or wind-based hydrogen at more competitive rates than countries with high demand and different geological conditions – why should these countries not aim to export their energy? And it would be a foolish choice by large energy consumers not to buy foreign energy sources at competitive rates. Keep in mind that comparative advantages in production still lead to an overall gain. But that does not mean that the geopolitical landscape will remain unchanged. We see this change already. On the one hand, producers of the technology metals necessary for the energy transition can greatly benefit. But whether a country like Bolivia with vast lithium reserves manages to become more akin to Norway or to Nigeria remains to be seen. Domestic politics and leadership play a crucial role as is evident when looking at the large hydrocarbon producers today. On the one extreme, there is Russia which appears to be extremely unprepared for a post-carbon world with its prospects for prosperity in any sensible time horizon dwindling away. The Russian war in Ukraine might inadvertently lead to faster innovation in the EU and quicker achievement of net-zero than previously expected. It is also doubtful that China will pick up enough gas exports within a five-to-ten-year timeframe to give hope to the Russian economy. On the other hand, there are the countries in the Middle East that recognize the reality of decarbonization by slowly starting to diversify their economies, while still benefiting from ongoing hydrocarbon extraction. Recognizing and preparing for structural change in highly carbon-dependent societies are the first steps. What needs to follow is a domestic discussion on how to use new technologies and revenues to maximise welfare. The result can vary from sustainable development to a 21st-century resource curse, which in turn will have significant effects on the geopolitics of the post-carbon age.


ER: What are the main challenges, in your opinion, in the achievement of net zero targets?


Dr. Fröhlich: The main challenges in achieving net zero are access to raw materials, slow legislative processes, vested financial interests, and narratives that present economic welfare and climate action as opposites. We need to recognize that a net-zero emissions world does not mean zero consumption. For a net-zero world, we will indeed require vastly larger amounts of certain materials than we are using now. Some are so-called tech metals, others rare earth elements and the European Union published a list of critical materials. Akin to the energy trilemma, we need to ensure that societies have sufficient access to these materials, at affordable prices, while not destroying the environment and societies in the producer countries. This requires a global effort in norm and standard setting, which leads to the second problem: democratic processes are slow. While the international system is not exactly democratic, the negotiations to set such necessary standards also require time. On top of that, national legislation to facilitate the roll-out of renewable energy is lagging in most countries. And this is not only about reducing fossil fuels subsidies and incentivizing investment in renewables but rather about smart energy market designs, streamlined permitting processes and a long-term perspective for renewable energy investors. Energy transition cannot succeed without private investment. And at this point, fossil fuels and polluting industries still constitute a large and profitable share of the market that many institutional investors cannot easily avoid. While there are laudable initiatives to divest from such industries, the investment opportunities need to be scaled up so that institutional investors like pension funds can truly do well while doing good. Seeing that decarbonization and clean energy are worthy investments, and that structural change can create better jobs would also transform the public debate surrounding this whole issue, in turn accelerating the political process towards a net-zero world.


ER: Where and how do you place economic de-growth as a viable barricade to climate change?


Dr. Fröhlich: De-growth is certainly an option to reduce emissions and thereby contribute to climate action. The concept, however, comes with several inherent problems. Our current understanding of the economy and development suggests that we try to grow the pie to afford larger pieces for poorer people. Economic growth is the driver for economic development which in turn improves lives, not only for the poor globally but also in industrial societies. And no-one really can doubt that even in countries like the US, the situation of poor people is unacceptable, and we need to offer solutions to materially improve their lives. In a de-growth scenario, this welfare for the poor would rely on redistribution at a very high scale, something that one can find good or bad, but either way appears to me to be a political non-starter. Not to discuss the neo-colonialist connotation when privileged thinkers and activists from the Global North suggest that people in the Global South should forfeit their right to a good life or define what a good life means on their behalf. Another issue that I see with de-growth is that we will need (or at least want) some level of industry to continue our modern lives and it is unclear to me, who is to decide and on what basis, which industries to maintain and what level of industrialization to be considered acceptable. In this sense, I recognize de-growth as an interesting concept and a very important thought experiment but also warn against seriously putting it into practice.


ER: How tuned, in your opinion, are international policies and plans like ‘net zero by 2050’ or ‘30 by 30 target’ to the common person’s energy aspirations?


Dr. Fröhlich: First of all, there are vast differences between the “common person” in, let’s say, urban areas of Germany and rural areas in India or Sub-Saharan Africa. It is absolutely legitimate and understandable that people do not want to compromise on their standard of living and – even more so – want to improve their access to energy and their overall standard of living in developing countries. My expertise in the latter is limited, so I would like to make a few remarks on the former. My research in regions affected by structural change due to the phasing-out of coal shows that people understand the impact of their work on the environment at large. The much-stressed “coal culture” does not mean that miners disregard the adverse effects mining has on the environment and on the workers. There are two factors, however, that make it harder for these populations to accept the inevitable change: Firstly, employment in the fossil fuel industry provides high income for comparatively low-skilled workers that cannot easily be replaced. Employment in e.g., the tourism industry does not offer the same range of income as a mining job. While health risks tend to be lower in tourism, it is understandable that family income is of primary concern to (former) employees of the fossil fuel sector. Smart regional development strategies need to be deployed to offer similar levels of income to the affected populations – a non-trivial task.


Secondly, these alternative development strategies and the management of structural change need to be developed and implemented with strong bottom-up components. It is completely justified that local populations do not appreciate external experts that are parachuted into their communities to re-string the wires of the local fabric – especially if this comes with a sense of moral superiority. Instead, I recommend setting up local consultation mechanisms, encouraging local entrepreneurs to think broadly and invest with long-term prospects in their home regions, and painting a picture of the opportunities that lie ahead on the path to decarbonization.


When talking to people on the ground, they recognize the negative effects of fossil fuel production and extractivist practices more broadly on individual, societal, and environmental health. It is important though to include these people in the decision-making process, to deploy tools of community participation, and generally be better about communicating the need for decarbonization and structural change. In this sense, I am convinced that the net-zero targets that we have seen so far have broad support in the wider population and probably could even be more ambitious.


(Dr. Thomas Fröhlich is a research fellow at the Department of War Studies at King’s College London, a visiting fellow at Academia Sinica in Taiwan and a former DAAD-AICGS fellow at Johns Hopkins University in Washington, D.C. His most recent book analyzes Brazil’s international ethanol strategy. To get in touch, reach out to Thomas on twitter.)■□■