Climate challenge needs ‘outrage and optimism’

We should be outraged at the slowness of pace in winding down the old fossil-fuelled economy which has only served some, not all, and has harmed nature.

The world is on fire, and we have only a few years to fix the economic plumbing – the financial system – to preserve a fairer and free world for our species and this planet.

For the moment, our financial, energy, and food systems are regulated and supervised with a myopia that undervalues true climate and environmental costs, and perpetuates reckless extravagance.

Can we fix the plumbing fast enough to minimise any overshoot of 1.5 degrees? The answer has to be yes, and it will require a mix of what former UN climate chief Christiana Figueres – who steered through the Paris Agreement – has called “outrage and optimism”.

We should be outraged at the slow pace in winding down the old fossil-fuelled economy which has only served some, not all, and has harmed nature.

We should also be outraged when the International Monetary Fund tells us that globally we now subsidise fossil fuels directly and indirectly to the tune of $US7 trillion ($10.9 trillion) a year, which equates to about $20m a minute.

We should also be asking fossil fuel companies who ask to be considered part of the solution why they are yet to invert the ratio of investment so that for every $1 invested in fossil fuel energy, they invest $9 in clean energy, which is the ratio that the International Energy Agency says is necessary to limit temperature rise to 1.5C.

However, we should be optimistic at the pace and incline of investment growth and innovation in renewable energy, which has resulted in investment in renewables outstripping fossil fuels for the first time in 2022 in developed markets.

And we should be optimistic about the electric vehicle revolution, as well as the potential for solutions in what were once called hard-to-abate sectors.

Where legislators, regulators and supervisors have been slow to act, commensurate to the risk, a plethora of voluntary actions are under way to fix the plumbing so that it is fit for purpose to drive forward a series of just transitions.

These actions have delivered frameworks for companies to disclose climate risk and nature risk, known as Task Force on Climate-Related Financial Disclosures (TCFD) and Taskforce on Nature-related Financial Disclosures (TNFD).

They will soon deliver the Net Zero Data Public Utility, which will be an open, free, and centralised repository of key data from companies and financial institutions on their climate commitments and progress.

And they have also led to the development of rules for high-integrity, voluntary carbon markets.

Carbon credit principles have been published by the Integrity Council for Voluntary Carbon Markets, while the Voluntary Carbon Markets Integrity Initiative – which I co-chair – has published a code of conduct for corporates.

These actions are taking place in the face of a backlash against ESG and climate-positive investing in the form of co-ordinated attacks on “woke capitalism”, emanating from Republican-controlled states in the US.

The attacks are also being carried into other countries through money from largely secret sources that is used to fund climate obstructionism at the political level.

They do not alter climate science, nor do they alter the need for climate risk assessments, nor the need to fully integrate climate risk into financial decision-making.

They are the ultimate distraction. And we should not let them undermine confidence in net-zero investments and high-integrity voluntary carbon markets.

So my message is: don’t be distracted. Double-down on efforts to build a green, clean and fairer future, and demand that our politicians, legislators, regulators and financial market supervisors move at a much faster pace.

Rachel Kyte is co-chair of the Voluntary Carbon Markets Integrity Initiative. This is an extract of her Christiana Figueres Oration that was delivered on Thursday at the 10th Australasian Emission Reduction Summit in Sydney.