Have you noticed that in the past few years climate change has sped up pretty drastically. Now I don’t know about the exact facts and figures about this, but I do notice weird weather patterns. There are rains when it should not be raining, snowing of all of a sudden, cold summers sometimes. There are droughts in different places of the world, there are forest fires and there are glaciers which are melting pretty quickly.
Now you might wonder, how is climate change related to the economy. Well, the current economy that we operate in is mostly dependent on fossil fuels. We all know what happens when we burn fossil fuels, it pollutes the environment.
Lets look at some industries that we see in our day to day life. Take transport industry for example, there are thousands of cars, trucks, ships and airplanes which move from one place to another everyday, these cause pollution by burning fuel.
The energy at our homes is most probably fueled by burning coal.
Ok, so now you know that fossils fuels are bad and that our economy is based on fossil fuels, so now what?
Well, we cannot move to a completely zero carbon economy. Well not at the moment at least, maybe someday in the not too distant future. But right now, we are trying to move to a low-carbon economy.
Low-carbon economy, in simple words, is an economy which is based on resources that produce a lower amount of green house gases as compared to the economy that we are living in today.
To break it down even more, moving away from the fossil fuels to more cleaner fuels or sources of energy. If the economy focuses around building itself around these cleaner sources, our carbon emissions would go down drastically.
With the Paris Agreement coming into the picture in 2015, things sped up. Its a legally binding agreement between the countries to work on keeping the global warming temperature to a 2 degree Celsius and preferably to a 1.5 degree Celsius, compared to the pre-industrial levels.
The agreement works on a 5 year cycle. It has made some progress, but how successful will it be is yet to be seen.
With nations working towards to a more greener economy, this would be a win-win situation for all of us. Well, its not a very easy task though.
You see all of our infrastructure was built on the back of the fossil fuel based economy. It will be really hard to move to a more greener and cleaner source all of a sudden.
Lets look at the ways in which we can move to a low-carbon economy.
Lets start with energy sources first. The economy requires energy for all of its activities. One cannot really take energy out an economy, because it would collapse obviously.
Countries are now spending or investing in building infrastructure while keeping these greener sources at its core.
Hydrogen is hailed as an alternative source of energy here. Its considered to be a much more cleaner source. But its not so easy to move towards it. You see, as mentioned already, we do not have the right infrastructure built around it at the moment. This would take some years to do it.
But with technology becoming even more efficient than what it was yesterday, we are making progress towards it. A lot of research and development is going towards it. To build machines and vehicles which can be powered by hydrogen.
Sounds great right? Well, it may not be so easy though. At least not until greed exists. You see there are multi-billion dollar companies which are based on fossil fuels. Hydrogen and other cleaner sources would simply mean that these could become obsolete and lose all their massive empires. Hence, they try to lobby the governments to not be so green after all.
They are afraid of disruptions, but as someone rightly said, a disruption may be bad for some companies but a great business opportunity for others.
But with public pressure mounting on the governments it looks like we might move to a low-carbon economy.
A new trend that has recently been the talk of the town is ESG (Environmental, Social, Governance) Investing. In this the investors invest in companies which also have a focus on environmental issues, at least in this case. The younger generation of investors is more concerned towards the cause of reducing global warming and stopping climate change. This too has put pressure on the companies to look into ways that they could use to operate their business in a more cleaner way.
Now, lets move to transport. As mentioned earlier transport industry causes a lot of pollution. Almost all the vehicles are manufactured in the back of fossil fuels. But this too is changing. With E-Mobility coming into the picture automobile manufacturers are now moving towards zero emission vehicles.
Electronic vehicles may still not be the greenest out there but it is a small step towards a greater goal. You see, manufacturing a vehicle is process which pollutes the environment. The electricity on which these vehicles run may also be created by burning coal. But on the bright side these cars do not emit any greenhouse gases in to the air. With advancements in technology we will see how this problem can be tackled.
We might not have the best tools yet to store these cleaner sources of energy, but with more research and support from nations, we can make them better.
Another highly polluting industry is the food and agriculture industry. You see food is grown in lets say City A. The farmer probably uses pesticides and fertilizers, which are not very good for the environment. Then once all these crops are ready to be harvested, the farmer might use machines which use fossil fuels to gather all these. Then this is transported to the market in City B, there are greenhouse gases being emitted on the way. Once these are sold to a customer, he might use a vehicle to take it back. Then there is a chance that some of this food can be wasted. Food wastage is another huge problem. This causes a lot of methane to be released into the air. This is another problem which needs to be tackled.
Lets look at some positive things that have been happening around.
Companies are now developing newer technology which is more efficient and has the concept of low carbon emissions at its core. This will lead to a positive impact on the economy and the society in the long run.
Financial instruments such as green bonds have also come into the picture. These are fixed income instruments which are used to support climate-related and environment related projects.
Governments are now framing policies which tax the companies based on their carbon emissions. They are also now focusing on wind energy and solar energy and other cleaner forms of energy sources.
Simple and innovative solutions such as an energy saving light bulb has led to a massive decline in the usage of electricity as compared to the past.
Companies have also started recycling and reusing materials. Some fashion brands have also started using sustainable materials to manufacture their products. Some are now using the plastic that is polluting the seas to create their products.
Many organizations have now come up to support the cause to fight climate change. They are focusing on important matters such as clean up drives of the water bodies, reforestation, educating people about the issues with the high carbon emissions that is being emitted and a lot more.
With all these people coming together and working together, I think moving towards a low-carbon economy or even a net zero emissions economy is possible. We just have to keep innovating and keep working while keeping the planet in our mind.
I hope you enjoyed reading this post. Let me know what you thought in the comments below.
Thanks for reading this post. If you liked it, you can also read my other posts on the Tourism Industry and my review of the book Anxious People by Fredrik Backman You can also follow me on Instagram.
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