By Tim Mullaney
First, yes, the transition to curtail climate change will begin with $850 billion to $1 trillion globally in wasted assets, Chopra said. Almost a third of that is writing off coal-fired electricity plants, which will happen anyway because cheap natural gas has already cut coal’s share of the US electricity market by two-thirds. Along the way, the great coal phaseout has also doubled the U.S. share of electricity from renewable sources, to 17% last year, while electricity prices rose slower than inflation and carbon emissions fell.
Another $530 billion represents gradual writedowns of natural gas and oil wells, plus coal mines, as the role of fossil fuels declines sharply, replaced by renewable electricity doing both jobs.
Before getting bummed, wait: This is a small number in context, Chopra explained in an interview. Global gross domestic product is about $88 trillion this year, according to the World Bank, so a trillion over a few years is a quarter of a percentage point of GDP.
Then comes the big push in spending: $10 trillion to $14 trillion globally over about 20 years on a new electrical grid, new power plants and new infrastructure away from coastlines. Buildings also must be retrofitted, and many may need to be raised a meter or two off the ground, Chopra said. The government may help do this, but won’t do it directly
“One third of all real estate value is climate exposed,” Chopra said. “Cities need to be climate proofed.’’
It’s a bargain
How much money is this, really? Last year, companies and governments raised $7.4 trillion in the U.S. bond market alone. So, $700 billion a year isn’t that much for a big, global task done by millions of people and thousands of companies. U.S. companies alone spent $823 billion on stock buybacks in the 12 months ending in June, Yardeni Research says.
The thing to keep in mind — and it’s pretty good news — is that the solutions to all of this are nearly all here, and cost-effective. They are similar to things we want, or need, to do anyway.
If it’s infrastructure replacement we need, Trump has been promising an infrastructure package forever. Utilities already spend heavily on renewables, if only because President Barack Obama’s Clean Power Plan will likely be revived if Trump loses re-election. Xcel Energy /zigman2/quotes/200626850/composite XEL +1.14% vows to have 80% carbon-free electricity by 2030, and 100% by 2050 as electricity-storage technology improves. It’s readily doable.
Another big chunk is the cost of new cars and trucks — but we replace those anyway. Policy makers can use tax credits to convince people to switch faster to electric vehicles made by Tesla /zigman2/quotes/203558040/composite TSLA +0.16% or General Motors /zigman2/quotes/205226835/composite GM +6.06% , but the real issue is how fast they can become cheaper than gasoline-powered rivals without tax breaks.
Aggressive estimates put that in the early-to-mid 2020s, though other experts are skeptical.
Do the two things Chopra talks about — get cars and as many trucks as possible using electricity, and generate electricity cleanly — and you solve climate. Do them aggressively, and Mercer argues that it will even be a net macroeconomic benefit. Lots of jobs and ways to invest will come from all that spending, whoever does it. (And, yes, you should be dumping any coal stocks now, and your Exxon Mobil /zigman2/quotes/204455864/composite XOM +4.08% and Chevron /zigman2/quotes/202718987/delayed XE:CHV +0.01% soon).
Do that, and Democrats don’t have to promise the moon on climate — they just have to deliver on what they do promise.