Article
Can we be more optimistic on climate?
Climate goals require the mass-scale deployment of climate technology, but most remain commercially uncompetitive, slowing rollout. Recent success in the power and transport sectors imply the tide could be turning.
A rapid transformation of the economy is necessary to keep planetary warming in line with the 2015 Paris Agreement. Many countries have set Net Zero targets for 2050,1 which today cover roughly 90% of global gross domestic product and greenhouse gas (GHG) emissions.2 Each implies a mass-scale deployment of climate technologies that can facilitate economy-wide emission reduction.
Momentum grows but progress lags
Momentum grows but progress lags
Mature climate techs are already growing at a stellar rate. Electric vehicles (EVs) expanded from 0.002% of the stock of cars in 2010, to around 3% in 2023.3 Renewables scaled from 3.5% of total electricity generation to 16% over the same period—a compound annual growth rate of 12%.4 The world does not need to wait for major breakthroughs to address climate change; all climate techs needed for decarbonization exist today, and if deployed at scale could achieve 90% of the necessary GHG emission reductions.5
However, most climate techs are too immature to easily scale, owing to combinations of technological barriers, high costs, supply-side bottlenecks, too little demand, and insufficient policy support. Despite growing momentum over the last decade, progress on improving and scaling climate techs to the point where they can outcompete incumbent solutions—a concept known as commercial maturity—remains stagnant (Box 1).
A recent review of the pace and scale of climate tech deployment established 21 decarbonization targets for different sectors, finding only one was on track. Four were off track, 14 well off track, and two headed in the wrong direction.6 In almost every sector, the pace and scale of climate tech deployment remain too low to keep warming below 2oC.
Box 1: Commercial maturity is the key yardstick to judge climate techs
Box 1: Commercial maturity is the key yardstick to judge climate techs
One way to gauge the journey of any technology from the lab to the market is the idea of commercial maturity. There are two parts: Whether solutions are technically developed enough to deploy widely, and—crucially—whether they are economically competitive with incumbents. For instance, plant-based alternative proteins are technically mature today, but they remain uncompetitive with animal-derived protein on cost and non-cost features like texture, smell, and taste.7 This means consumers are less likely to buy them, capping the speed at which they avoid GHG emissions by displacing carbon-intensive, animal-derived protein. Commercial maturity provides an important yardstick for whether climate techs can organically scale rather than relying only on “supply push” policies like subsidies. The longer climate techs remain commercially immature, the slower the transition will be—and the lower its economic benefits.
Diamonds in the rough
Diamonds in the rough
There are concrete grounds for optimism. Pockets of progress show climate tech deployment may not linearly repeat the sluggish trends we see in the rearview mirror. The power sector is a prime example: The rate of solar deployment has repeatedly proved model predictions too pessimistic—often by significant margins—due to its surprisingly rapid cost declines (Figure 1).8 The same applies to wind energy. Together they have driven rapid decarbonization in some countries’ power sectors.9
Figure 1: Consistently too pessimistic about solar cost improvement
Despite their rapid deployment, mainstream views on the buildout of wind and solar remain bearish. One way to gauge this deep-set pessimism is through the “business-as-usual” scenarios of energy modelers on how the world will deploy climate technologies, based on current trends. Despite solar and wind reflecting non-linear growth, the majority still underestimate renewables’ deployment (Figure 2).
Figure 2: The evolution of renewables
Climate tech is a broad group that spans modular technologies like solar as well as bulky, bespoke projects like nuclear. Naturally, the pace of deployment and cost decline across such diverse technologies will vary. Wider factors also shape fortunes; for instance, popular support for climate action can easily wane, and supply-side bottlenecks can quickly slow production.
Even so, the mainstream narrative on climate tech describes status quo trends, underappreciating the potential pace of their deployment and the knock-on, accelerating impact this could have on GHG emissions. If the wind and solar experience repeats, it could unleash rapid, technology-led decarbonization. Our optimism rests on three ideas.
1) Technology breakthroughs follow similar paths
Cost reductions and rapid deployment go together—developers learn ways to lower production costs, cumulatively benefitting the next leg of deployment—eventually, a new technology improves enough to outcompete an incumbent, initiating a transition. In climate the process may move even faster than historical precedents given supportive policies. It is already underway in electricity: Renewables prices have fallen 10% every year, while fossil fuel prices have barely budged for 140 years (Figure 3).10
Figure 3: Climate tech prices tumbled in the power sector
2) Rapid growth
Climate techs are a minority share of technologies today, but their rapid growth means over time they will quickly build market share. This trend is obvious in the power sector, where in the last five years renewables provided 26% of global electricity and accounted for 87% of new capacity additions.11 It is also visible in the car market, where EVs were just 3% of cars on the road in 2023, but 18% of new sales.12
3) Prevailing winds
In the past, energy transitions were a process of “better” solutions replacing “worse” ones.13 Better solutions were generally cheaper, higher quality, and sometimes benefitted from macro factors such as price shocks—a “right place, right time” effect. Climate techs are generally “worse” today than incumbents on price and non-price features beyond reducing emissions. Yet, the climate transition isn’t like the historical examples because the world is actively pushing for it. Renewables enjoyed years of public support before rapidly scaling. The same is happening with EVs, batteries, electrolyzers, and more, and such forces will only strengthen as climate change hits humanity harder and harder.
Tracking the ceiling of the possible
Tracking the ceiling of the possible
While many non-technological solutions are needed to meet climate goals, such as behavior change, a few technologies can do most of the heavy lifting. For instance, our recent report found fully deploying just 15 climate technologies over the next decade could reduce enough emissions to meet around 70% of the 1.5oC carbon budget.14
As climate techs become more competitive, the “business as usual” ceiling of the possible is constantly raised. Trends that were previously not plausible suddenly become within reach—making projections by a minority of complexity thinkers the most realistic. On current economic trends alone, climate techs could scale enough to limit warming to 2.6oC by 2050.15 Technological change provides ground for more optimism on decarbonization than mainstream narratives allow.
The author thanks the following people for their input: Jackie Bauer, David Mazaira, Richard Mylles, Mike Ryan, Rupert Way.
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