The world of investment gets more complicated by the day, so I was thrilled to accept an invitation to the Walter Scott conference in Edinburgh earlier this month. Walter Scott is a long-established and highly respected fund manager with over £80 billion under management, much of it on behalf of large pension funds.
The highlight was a 50-minute presentation by Bjørn Lomborg, President of the Copenhagen Consensus Center, on what is probably the most controversial and publicised topic in the world today – climate change.
He approached the subject from three basic premises: man-made climate change is real, its potential effects have been grossly exaggerated, and we are tackling it in the wrong way.
Think about the doom and gloom forecasts. In 2000 Karl Mallon of WWF estimated the point of no return to be 2014, and in 2007 Climate Commissioner Tim Flannery predicted that the nation’s dams would never be full again. In 2009 the Prince of Wales said we have just 100 months left to save the planet.
Lomborg spoke about the incredible progress mankind has made in the last 200 years in taking most of the world out of poverty, and doubling the average life expectancy. He pointed out that the real environmental killer today – the one nobody talks about – is indoor air pollution.
Right now, over three billion people are absorbing the equivalent pollution to smoking two cigarette packets every day, because they have no electricity and no option but to cook inside poorly ventilated dwellings using materials such as animal dung for fuel.
For these people the only way out of this life-threatening situation is for governments to provide cheap electricity.
I appreciate that renewables are all the thing, but Lomborg points out that we are many years away from having the majority of our power coming from that source. Right now, just 0.19% of power comes from solar generation, and 0.06% from wind. Even if the world focuses on these two sources the numbers may rise to just 2.1% and 1% respectively in the next 20 years.
If all nations meet their targets under the Paris agreement – which is most unlikely – the most optimistic realistic target for renewables is 19% by 2050. Obviously, gas and oil will continue to provide the bulk of our power for the next 50 years.
Not only that, the best we could hope from the Paris agreement is to limit global temperatures to a 1.5% increase for a cost of over $5 trillion. Lomborg believes we would be far better off to scrap the Paris agreement, and commit to $100 billion a year in R&D for green development.
He pointed to the amazing green technology already happening. One city in Norway has moved its data processing centre to the middle of town and is using the heat generated from data processing to power the entire city. Norway is also about to launch an emission-free self-driving cargo ship, the “Yara Birkeland”, which will eliminate the equivalent of 40,000 truck journeys a year. In Wales an office block is under construction that will generate more electricity than it uses.
After his speech he was surrounded by members of the audience. One asked, "What you say makes so much sense – why do we keep hearing such pessimistic forecasts?" He replied, "The world has always had something to worry about. Think of the Y2K bug, Ebola, HIV, and flu pandemics, just to name a few. I have absolute faith in the ability of mankind to handle its problems.”
And of course, he is right. Surely a major priority right now should be getting power to those three billion people whose lives are currently at risk from indoor air pollution.
- Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. Email firstname.lastname@example.org