What difference will the lack of a climate treaty have on clean and renewable energy?

Recent news reports (e.g. Sydney Morning Herald 22 November: ‘Rich nations give up on climate treaty’) suggest that there is little likelihood of the upcoming Durban climate talks agreeing a legally binding climate treaty and even that such an agreement is unlikely to enter force before 2020.

But is this likely to have any great impact on continued innovation in the area of clean and renewable energy technologies – or, indeed, other technologies that may inevitably be required to mitigate or reverse the impact of global warming?

First, let’s look at the impact on clean and renewable energy. I would argue – though many might disagree – that certain areas of renewable energy have already or very nearly reached the ‘critical point’ where the technologies have been proven to the extent that cost parity with fossil fuels is within grasp and that there are profits to be made on large scale investment.

A key point about parity is this – energy costs will in the short to medium terms continue to rise, but less because of the higher cost of renewables than the continuing upward trend in fossil fuel prices, most notably oil and gas. However, in contrast, the price of renewable energy, most notably solar and wind, is set for a downward trend due to falling costs of production and increasing efficiency. As such, the question is not so much “will parity be achieved?” than “when will it happen?”

Of course, the oil majors will continue to exploit every last drop of oil so long as there’s profit to be made, while the mining companies, now rebranding as ‘energy companies’ will seek to exploit their shale and coal seem gas reserves for the same reason.

The main problem facing renewable energy is likely to be that the pace and scale of investment are, respectively, slower and smaller in the absence of a legally binding climate treaty. However, given the current state of the developed economies of the US and Europe, it may well be that renewable energy offers a solution to the urgent need to find a new motor of economic growth, without which the US and Europe face growing political instability from a rising tide of unemployment and inequality. It’s a different story in China, of course, where renewable energy manufacturing and innovation is clearly defined as a key driver in that country’s inexorable rise as the world’s most powerful economy.

But let’s assume that the pace and scale of clean and renewable energy investment are slower and smaller than they might be, and that the demise of fossil fuel based energy and transport systems are less rapid than they need to be to prevent climate change becoming irreversible and potentially catastrophic. What happens then?

Well, possibly, the need arises for another type of technology – geoengineering solutions aimed at addressing climate change directly, such as enormous space-based mirrors and atmospheric ‘seeding’ to reduce the amount of solar radiation reaching the Earth’s surface and, of course, radical agricultural innovation to ensure a supply of food.

It might all seem far fetched, but it’s not too hard to imagine a situation 40 – 50 years from now where mankind is harnessing renewable energy and geoengineering in tandem in an attempt to maintain the Earth’s fragile equilibrium. The financial cost of geoengineering would be absolutely enormous, but the implementation of clean and renewable energy may help keep that cost in check. Of course, a legally binding climate treaty would be the better option.