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| Climate change is one of the most pressing issues in the world . |
Encouragingly, the transition to net-neutral emissions by 2050 has become a policy priority globally, as governments implement ambitious policies to promote clean energy consumption.
However, the transition is becoming more complex and politically fraught. Global policies of higher interest rates over a longer period of time to control inflation have a negative impact on the green transition, as it requires large amounts of private investment.
Progress has also been made harder by a wave of green initiatives being rolled back, most notably in Europe, a region that has been at the forefront of climate change policy. For example, Reuters reported that Italy’s right-wing government has pushed back against a series of EU initiatives to green the economy, arguing that local businesses are not capable of meeting agreed transition targets. There are signs of slowing progress on Europe’s decarbonization.
Across the Atlantic, the US autoworkers strike has exposed the conflicts between committing to a green transition and protecting jobs in the sectors that could be most affected by it.
Faced with a growing backlash against green initiatives, some developed countries have softened their net-zero emissions pledges. Meanwhile, major developing countries such as China, India and Indonesia continue to invest in coal-fired projects, casting doubt on their commitment to decarbonizing the energy system.
Climate change policy setbacks are inevitable as governments may initially be too ambitious in their transition to a decarbonised economy without taking into account the immediate impacts on some segments of the population.
Back in 1991, Harvard University professor Michael Porter wrote that a low-carbon future would cut costs and improve social welfare over time by encouraging innovation in clean energy technologies and increasing energy efficiency. But that’s a long-term goal.
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