Lowering Carbon Won’t End Climate Change

Carbon emissions and climate change are often synonymized: lower the former and the latter will go away. Simple, right?

If only!

All else being equal (pity it never is!), higher carbon emissions warm the earth’s surface. Warmer surface temperatures can, and often do, exacerbate some climate events: they do not, however, cause them. Excessive rain and wind, droughts, and even prolonged heat waves have many causal factors beyond the earth’s surface temperature, some of which are far more profound. In the short run, for example, so-called El Nino-El Nina patterns drive extreme weather in ways that overwhelm carbon’s longer-term warming influence. 2026 is experiencing one of the most powerful El Nino’s ever recorded. It is forecast to continue into 2027, meaning more challenging weather events are sure to follow. For reasons we don’t quite understand, though, El Nino-El Nina’s relation to carbon is the opposite of what most might expect: if anything, they appear to be inversely correlated to carbon emissions.

Climate is complex. Solar variabilities, volcanic eruptions, Milankovitch cycles (relating to the earth’s orbit and axial tilt), plate tectonics, and other cosmic activities (think asteroids, like the Chicxulub impactor which hastened the extinction of non-aviary dinosaurs) are significant short term and long term contributors to changes in the earth’s weather events. Not one of these has any relation to carbon or human activity.

Since lowering human carbon emissions offers no guarantee that future climate calamities can be avoided, some think we shouldn’t try. This is also incorrect. Given human-led carbon emissions exacerbate weather events, we should not be indifferent to our carbon emissions any more than we should be indifferent to our use of polyfluoroalkyl substances, or so-called forever chemicals. All else being equal, humans should strive to keep our carbon emissions down.

But all else is never equal! Rushing to net-zero without measuring its costs to human development, global poverty and individual national security is a fool’s errand. Pope Francis wisely summarized the complexity of our challenges in his environmental encyclical, Laudato Si:

We are not faced with two separate crises, one environmental and the other social, but rather one complex crisis which is both social and environmental. Strategies for a solution demand an integrated approach to combating poverty, restoring dignity to the underprivileged, and at the same time protecting nature. 

So, what exactly should we do? Understanding the complex relationship of carbon and climate; the urgent need for more, cheaper energy in developed and developing countries alike; the equally urgent need for greater energy resilience at both communal and national levels; as well as a preference for lower carbon emissions, wherever possible – what course of action would make the most sense?

One salient course of action my colleagues and I at the Impact Evaluation Lab advocate is to energetically pursue carbon-reducing investment strategies that simultaneously produce clear, corresponding financial benefits, like lower costs and/or higher profitability. According to our research, over the past decade, one can find clear successes and failures using this approach. For example, multiple private investments in smarter grids, more efficient energy storage, and other energy efficiency/ management strategies have respectfully generated consistent, annualized returns of +33.7%, +29.1%, and +20.7% annually, since inception. Some other scalable waste and recycling strategies have also scored positive double-digit, annualized returns since inception, of +14.3%. All these results are well in excess of broad stock market indices over the same period. Given investors have helped reduced carbon emissions while generating above-market returns, these efforts have all been proverbial win-wins.

In contrast, over the same period, most institutional, private investments in solar and wind power manufacturing have generated negative annual losses, of -4.7%, -8.7%, respectfully according to our sources. Private investments in bio-fuel strategies have performed even worse (-10.0% annually since inception). While there may have been carbon benefits to these investments, they have been financially disappointing.

Red ink is not green. Investing in something that is not financially sustainable is not sustainable over time.

As the world gathers in NYC this week to address climate concerns, we will hear platitudinous warnings that humanity is destined for extinction unless we recommit to Net Zero goals at any cost. These claims are well-intended – and wrong-headed. They certainly do not represent the best way forward.

Humans are not masters of the earth’s land, air and waters; we are their stewards. To protect current and future generations, we must all become better caretakers, and we must all become better prepared for more extreme weather outcomes. How and what we consume, the regulations we adopt, our transportation and agricultural production methods, and our chosen energy sources all matter. Greater mindfulness will be rewarded.

One way to be more mindful is to energetically pursue all double-bottom-line opportunities since these benefit both people and planet. If we do, the ideals of Laudato Si could be achieved.

Terrence Keeley is the Chairman and CEO of the Impact Evaluation Lab, and author of Sustainable.

This article was originally published by RealClearEnergy and made available via RealClearWire.