How the Economy Has to Radically Transform to End Fossil Fuels in 20 Years

To avoid the worst of climate change's disastrous effects, humanity needs to slash carbon emissions and remove carbon from the atmosphere at a pace and scale often said to be eye-wateringly difficult, expensive, and even unlikely given the continued failure of political will. That’s the implication of the IPCC’s report, published this week, which concludes that a 1.5 degrees Celsius rise in global average temperatures is now inevitable in 20 years. 

The IPCC’s "best-case" scenario concludes that if we act fast, we might be able to gradually reduce temperatures back down to 1.4C by 2100. Yet this would keep us in the 1.5C climate danger zone for decades, which could risk triggering tipping points that could lead to irreversible and even more dangerous shifts in the climate system. Against this background, the Biden administration’s infrastructure bill has offered a watered down set of policies that simply won’t contribute to the scale of change required. 

But a new report by technology forecasting think-tank RethinkX finds that the scope for change could be far larger and faster than either the IPCC or powerful governments like the United States realise: because the most powerful fossil fuel-based industries in the world—oil, gas, and coal; livestock farming; and combustion engines—are going to become obsolete purely due to extant economic factors well within the next 20 years. According to RethinkX, they are being increasingly disrupted by a cluster of clean technologies in the energy, transport and food sectors, which are rapidly becoming cheaper, more efficient, and as a result, more ubiquitous. 

If the world recognizes this dramatic shift and ends protection for incumbent industries, as well as invests strategically in the most optimal sectors and technologies, humanity will be able to eliminate 90 percent of global carbon emissions within the next 15 years, and reach net zero by 2040 or even well before 2035. This is far faster than most conventional analysts (including both the IPCC and the US government) believe possible, saving trillions of dollars in the process, and ushering in a new era of post-carbon prosperity.

But if governments, banks, and powerful corporations choose to obstruct this coming transformation (as the U.S. Senate appears to have done), we will find ourselves in the climate danger zone: going above two degrees Celsius and breaching the "safe limit" ratified by governments around the world under the Paris Agreement. 

This year, I worked with RethinkX as an editor on the newly-released report, which is called Rethinking Climate Change: How Humanity Can Choose to Reduce Emissions 90% By 2035 through the Disruption of Energy, Transportation and Food with Existing Technologies. Using a complex systems approach recognizing the ‘nonlinear’ dynamics of societal and technological change, our report found that widespread pessimism about the prospects for a post-carbon transformation is unfounded.

Conventional climate mitigation and adaptation strategies consist of a scattershot mix: flying less, investing in hydrogen, rolling out electric vehicle charging stations, insulating homes, eating less meat, capturing carbon from polluting industries, and so on, which when taken together seem hugely expensive and complicated to pull off. 

However, RethinkX's new report—co-authored by my colleagues venture investor James Arbib, environmental social scientist Adam Dorr, along with serial entrepreneur and Stanford university lecturer Tony Seba—argues that focusing attention on a handful of well-positioned technologies will have greater bang for the buck. Their report shows clearly that the only path out of the climate danger zone involves a targeted, determined approach to scale the right mix of technologies and infrastructure in the way that is most conducive to the systemic transformation we need: a path that so far most decision-makers have failed to understand. The IPCC has reinforced what is at stake. According to RethinkX, however, we don’t need to wait until 2100 to get out of the climate danger zone: we have everything we need to do it right now.

Horses were the dominant mode of transport for millennia. Landline phones and analogue cameras were in place for over a century and a half. There were huge regulatory, political, and emotional barriers to anything else. But cars, smartphones and digital cameras all achieved mass adoption within as little as 10-15 years after their invention. 

These disruptive technologies experienced exponentially improving cost reductions and efficiencies, which can be mapped using “cost curves,” enabling them to fundamentally threaten the economic viability of incumbent products. This drove incumbent industries into a vicious cycle of economic decline, becoming comparatively more inefficient, expensive, and less profitable. Eventually, it made no economic sense to buy the old products and their business models became obsolete. 

Rapidly declining costs of disruptive technologies drive mass adoption rates that grow along an "S curve": they increase slowly at first, then accelerate toward an exponential growth rate that levels off as the product dominates the market. Along the way, previous technologies become relics of history, and entire infrastructures are transformed.

In 2013, a landmark study of 62 different technologies from solar panels to microwave ovens by the Santa Fe Institute found this pattern so consistent, it can potentially be used to accurately forecast technological progress. Our new report uses such cost curves to predict how quickly disruptive technologies could transform the most problematic sectors, namely energy, transport, and food which are responsible for over 90 percent of global carbon emissions.

According to our report, the cluster of technologies already following these cost curves are: solar, wind and batteries (SWB); electric and autonomous electric vehicles (A-EVs) operated as an on-demand service; and microbial protein factories based on precision fermentation (PF). If they continue to follow the same pattern of exponential improvement and mass adoption we’ve seen consistently across dozens of disruptions, then over the next 20 years SWB, EVs, A-EVs and PF are on track to become not merely cost-competitive, but 2-10 times cheaper than oil, gas and coal, privately-owned automobiles based on internal combustion engines, and industrial livestock farming. As this takes place, they will increasingly penetrate markets and drive those industries to collapse, leading their carbon emissions to decline dramatically.

The report therefore concludes that today’s fossil fuel-dependent industries in the energy, transport, and food sectors will simply not survive the next two decades of rapid economic change. The big question is how fast or slowly these disruptions will occur—which depends on whether society encourages and adapts to them, or resists them, resulting in chaos and crisis. 

Instead of dispersing our efforts haphazardly across a huge multitude of sectors, our report shows that greater emissions reductions than previously thought possible can be achieved by removing market barriers to these disruptions. But with the wrong choices, carbon-intensive industries may survive long enough to guarantee dangerous climate change—and when they collapse, they may take large chunks of civilization-as-we-know it with them. The only way we can stop that from happening is by governments, business leaders, companies and others fully recognizing this reality and shifting away from these industries as decisively as possible.

That means, for instance, breaking up rent-seeking energy utility monopolies, shutting down huge subsidies and public investments into the incumbent fossil fuel, legacy road transport, livestock, and commercial fishing industries, and creating new rights for individuals to produce and trade energy, transport and food services in the disruptive industries. 

If we wanted to get even more serious, we would need to do things like invest in key infrastructure, such as subsidies for electrification of heating; break-up intellectual property monopolies by shifting to transparent, collaborative, open-source information systems; and provide concerted support to scale up carbon withdrawal methods like active reforestation.

The energy revolution

The largest opportunity for emissions reductions is in the energy sector, which we calculate currently accounts for some 57 percent of global carbon emissions. RethinkX’s previous research has shown that solar photovoltaics, wind power, and lithium-ion storage batteries (SWB) will be capable of providing 100 percent of society’s energy needs far cheaper than conventional power plants in most regions of the world. SWB cost curves have already outperformed conventional forecasts, and at this rate will become orders of magnitude cheaper to both produce and consume than fossil fuels by 2030. As this process unfolds, RethinkX says, it will increasingly make less economic sense to both investors and consumers to keep getting energy from fossil fuels, driving them into an economic death spiral.

But exactly how the energy disruption unfolds is not set in stone. It could be done haphazardly with suboptimal and self-defeating results, or in a way that creates a system far more advanced than our existing fossil fuel infrastructure. Recent research shows that building out overcapacity of solar and wind to 100 percent if not higher allows less reliance on batteries in providing energy during the winter, making extremely large surplus quantities of energy available for free. Modelling by RethinkX in 2020 demonstrated that with the right optimization of overcapacity and batteries, the new clean energy system can produce what the think-tank calls ‘Super Power’: at least three times as much electricity as the current fossil fuel-based system at near-zero marginal costs for most of the year. 

This would in turn completely upend existing energy business models, paving way for the total transformation of the energy system, making it possible to cleanly power a vast array of public services from wastewater treatment to recycling, while also making feasible entirely new ways of running businesses in much the same way that the marginal cost of producing information thanks to the internet enabled dramatic new innovations. 

But Super Power won’t happen automatically: it needs appropriate thinking and planning to optimize deployment, including the transformation of the regulatory landscape to facilitate decentralized energy rights, which will entail a vast social and political realignment.

The coming collapse of fossil fuel industries also implies that the huge global network of logistics, shipping and freight for the heavy transport of oil, gas and coal around the world will no longer be needed. This will contribute to greater localization, dramatically reducing the need for international transport and the demand for materials for these industries.

The transport revolution

A similar revolution is underway in transportation, which according to the report accounts for 16.2 percent of global emissions. Unlike other analysts, RethinkX was largely alone in correctly forecasting in 2017 that the exponential cost-declines and efficiency improvements of electric vehicles (EVs) would lead sales of traditional internal combustion engine cars to peak by around 2020. 

RethinkX has found that because EVs last seven times longer than gasoline vehicles, costs per mile of transport especially for ride-hailing and freight are bound to plummet even without autonomous technology. This alone will be enough to make a new model, often referred to as transportation as a service (TaaS), so cheap it will no longer make economic sense for most people to own and run their own car. 

The disappearance of private vehicle ownership of gasoline-cars will drastically reduce the number of cars on roads, further transforming demand for materials. Coupled with the collapse of fossil fuel industries, this will make their associated global infrastructures obsolete. A vast repository of metals like steel, aluminum, copper, nickel and beyond will be available for recycling to build out the new post-carbon infrastructure. 

The food revolution

The third major opportunity is in the food sector, which according to the report is currently responsible for 18 percent of global emissions. RethinkX’s previous research found that dairy and cattle industries will be disrupted by rapidly advancing precision fermentation (PF) and cellular agriculture (CA) technologies. 

PF uses microbial hosts like yeast or fungi as "cell factories" to produce ingredients like proteins and fats. Dairy protein DNA sequences are programmed onto the microorganisms placed in fermentation tanks like those used to brew beer, where they are fed simple plant-based nutrients and sugars to grow. Fermentation causes these microbes to produce proteins identical to those found in dairy milk—without the cow. This process can be used to create a vast diversity of animal proteins without the animal.

A new study in the Proceedings for the National Academy of Sciences found that if powered by solar electricity, this process can be vastly more efficient than conventional industrial agriculture with minimal environmental impact. It could, for instance, produce five times more soya beans per hectare than plants even in a country with low sunlight like the UK—and up to 10 times more in better conditions.

Driven by improvements in biological and information technologies, as well as huge efficiencies introduced by economies of scale, the costs of these technologies have already dramatically declined. In 2000, the costs of production including equipment and expertise for a single kilogram (kg) of one type of protein molecule was around $1 million. By 2020 this was reduced to around $100, and according to RethinkX will fall below $10 by 2025. By 2030, PF will become five times cheaper to produce than livestock farming, and ten times cheaper by 2035. 

Our new report confirms this is happening faster than RethinkX previously predicted: the latest data shows PF costs already down to $15 per kg, suggesting they are on track to cost $1 per kg as early as 2030. This will disrupt dairy and cattle industries quicker than anyone thought possible, creating the possibility of feeding the world cheaply and cleanly through local forms of production aided by global information sharing.

But it won’t stop there. The collapse of livestock farming would free up to 2.7 billion acres of land from animal-based agriculture. This will create an unprecedented opportunity for reforestation, species conservation and rewilding at scales that would have been unthinkable without the disruptions. 

It's up to us

The most important finding of RethinkX’s new report is not that fixing climate change and saving the world is inevitable, or that capitalism or the "economy" will handle it if left to their own devices. Rather, it’s entirely up to us whether we squander or make the most of these trends. While the disruptions themselves appear largely inevitable, societal choices by national and local governments, business leaders, investors, corporate decision-makers, as well as citizens, will determine their ultimate consequences. 

The disruptions will eventually lay waste to conventional jobs in incumbent fossil fuel, combustion engine, and livestock farming industries. But they will also create massive openings for new job generation in the rapidly emerging clean industries. In this sense, the technologies are neutral. The key is to understand and prepare for their impacts. The new RethinkX report recognizes that governments ought to protect people working across these industries; but this should not be confused with protecting doomed carbon-intensive industries.

If policymakers prop up incumbent industries through subsidies, grants, market incentives, regulation and other policies, this would significantly obstruct the disruptions, but not prevent them from pulling the rug out from under the incumbencies. Societies choosing this path will be unprepared for the devastating economic consequences as those industries enter death spirals of declining profits, diminishing returns, bankruptcies, and stranded assets. The economic shocks could further derail the disruptions themselves.

And the environmental consequences would be devastating. RethinkX projects that this approach would see carbon emissions rise dramatically over the next five years, pushing us into the danger zone of a 2C world. The new IPCC report has given us a terrifying flavour of how this would further lock in a wide range of catastrophic consequences—vast areas of the Middle East and North Africa would become uninhabitable from 2040 to 2050; key food producing regions in southern Europe, the Mediterranean, southwest United States and southern Africa would enter dust-bowl like conditions; and pivotal climate tipping points such as in the Amazon and the Arctic might be triggered with little to no prospects of reversal. The crossing of such tipping points in turn could lead to further amplifying climate feedbacks that, at worst, trigger a "hot house" earth scenario and a largely uninhabitable planet, although no one knows for sure how close we are to this risk.

On the other hand, it’s important for policymakers to recognize the momentous opportunities. The intimately interconnected nature of these disruptions will trigger second and third order cascading consequences allowing us to transform the entire global economy. Like the internet and the myriad of innovations it paved the way for, trillions of dollars of new business opportunities based on new models will open up.

One of the most exciting findings of the report is that the combined impact of the disruptions will bring down the cost of withdrawing and sequestering carbon from the atmosphere to around $10 per ton of CO2 by 2040. Instead of relying on unviable and expensive carbon withdrawal technologies right now, we should focus on deploying the key disruptions across energy, transport and food which will pave the way for us to later begin carbon drawdown using both natural and technological methods quickly and efficiently. This will allow us to deal with intractable emissions from aviation, construction and so on through offsets, going beyond zero by taking carbon out of the atmosphere. 

In our scenario of global accelerated action, we can do this well before we hit 1.5 degrees Celsius: we could hit net zero by around 2033, and begin rapidly drawing down and safely capturing 20 percent of the carbon currently accumulated in the atmosphere by 2040. 

The extraordinary dynamics of the new post-carbon system could therefore allow us to reduce the material footprint of human civilization to operate safely within planetary boundaries, while creating new forms of clean prosperity: finally breaking the historic cycle of civilizational growth and collapse. 

This new post-carbon energy, transport, and food system will have entirely new properties to the old industrial paradigm. But to make it work will require us to completely reorganize our societies and economies. Prevailing political and economic structures will be completely dysfunctional for this new system. We will need new decentralized, networked and non-hierarchical structures and institutions to distribute and maximize the benefits.

The stakes could not be higher, and the path ahead is fraught with peril. But with this compelling evidence that we have everything we need to solve the climate crisis, there is simply no excuse for inaction.