Nobel laureate: The climate issue is a time bomb, and we urgently need action

Wang Huanchao is a researcher at Tencent Research Institute

This article was first published on the "Harvard Business Review" public account

"The climate issue is a ticking time bomb. （Climate is a time bomb）”

In the February 26 live broadcast of the "Tencent Dialogue", economist and Nobel laureate in economics Jean Tirol spoke amazingly.

Since the Rio summit in 1992, scientists have been warning that the climate problem is already very serious. But 30 years have passed, and to this day, it has not been possible to form a feasible global plan that meets the interests and requirements of many parties. This stagnation is accompanied by the ticking countdown of the time bomb. "Now is definitely the time when action is urgently needed." "In order to solve this problem, everyone should take action," Tirol said. ”

The "Tencent Dialogue", co-sponsored by Tencent Research Institute, Tencent Carbon NeutralIty Lab and Tencent News, invited Jean Tilore and Lin Jinghua, Senior Vice President of Tencent Group, to discuss effective ways to promote carbon emission reduction from the perspective of economics and business practice.

· What is the rationality and necessity of setting a carbon price for carbon emissions?

· What is the international experience of the global low-carbon transition and China's path?

· What is the role of private enterprise in the low-carbon transition and technological advancement?

In this dialogue, the answers to these questions will surface.

Carbon prices are a necessary cost to save the planet

As an economist, Tyrol advocated the use of price mechanisms and coordinated market mechanisms to solve climate problems. In the book Economics of the Common Good, he argues that "economic instruments (whether taxes or markets) not only do not harm environmental policy, but are necessary for it." In the Tencent Dialogue, he proposed that all parties should focus on establishing a sound economic system, specifically, setting a reasonable price for carbon.

The good news is that the public and society are now aware of the urgency of the climate issue, but it is still difficult for most of the public to understand and welcome such a thing as a carbon tax. Even so, Tyrol argues that a reasonable price for carbon is still necessary.

Thierogell gave the example of a tomato. One consumer intends to buy "lower carbon" tomatoes, but he runs into a problem: Should I buy locally grown tomatoes? They don't go through the transportation process, but they are always grown in greenhouses, producing more emissions; should they buy tomatoes produced from countries with warmer climates? But they are transported by truck.

The same "tomato conundrum" is also testing green investors. Tyrol underscored the need for a price on carbon: "It's a very complex issue. As long as there is no carbon price, it is difficult to figure out what is happening. ”

Carbon pricing has many benefits, such as its ability to delegate decision-making power to market players, making it a very efficient way. For example, if the carbon price is $50 a ton, entities that can reduce pollution at a price below it will act immediately, but those who spend more than this price will not do it, choosing to buy a license or pay a carbon tax. After putting a price on carbon, the UK reduced carbon emissions almost overnight, while coal's share of electricity production quickly fell from 40% to 5% and then to 2%.

But in the specific implementation, carbon prices will also face many practical problems. For example, it is difficult to develop uniform carbon price standards for different emitters on a global scale. In this regard, Lin Jinghua mentioned a project he had participated in, that is, to establish a carbon emission reduction curve calculation framework. By calculating the optimal estimates for different carbon reduction levers, the total cost of achieving carbon neutrality in a country is derived. This means that, although the circumstances vary from country to country, a mechanism can be found to carry out cross-border transformation.

In addition to the price of carbon, Tyrol also talked about the issue of emissions trading systems (ETS), subsidies for research and development of breakthrough technologies, and the issue of intellectual property rights. He also mentioned that in addition to using prices as a carbon tax or enforcing cap-and-trade systems, there are other ways that can be used, such as standard-setting at the government level, industrial policies to encourage breakthrough innovative technologies, and strengthening inter-governmental cooperation across borders.

Carbon Neutrality of the 2030 Covenant

China has already taken action in addressing climate issues, especially in the area of carbon neutrality. In September 2020, President Xi Jinping announced during the general debate of the 75th session of the United Nations General Assembly that China would strive to peak its carbon dioxide emissions by 2030 and become carbon neutral by 2060.

This is China's commitment to global climate issues.

Since then, Chinese government agencies and companies have also launched their own carbon neutrality plans. Tencent was one of the first companies to commit to becoming carbon neutral by 2030.

In early 2021, Tencent announced the launch of its carbon neutrality plan. On February 24, 2022, the Tencent Carbon Neutrality Goal and Action Route Report was officially released, which established Tencent's carbon neutrality goal from two dimensions: taking 2021 as the baseline year, Tencent will achieve full carbon neutrality of its operations and supply chain no later than 2030, and at the same time, achieve 100% green electricity no later than 2030.

To achieve this goal, Tencent plans to implement four major projects:

The first is to ensure that it is carbon neutral in its own right. Tencent's greenhouse gas emissions in 2021 will be 5.111 million tons of CARBON dioxide equivalent, mostly from the electricity consumed to support data centers. The difficulty is that Tencent's business is distributed throughout China, and the electricity comes from different power grids and generating units. Tencent must look for green electricity, connect more and more green electricity to the grid, and ensure that office buildings and data centers achieve high efficiency and energy saving.

The second scenario is around technology. Tencent hopes to support the continuous development, promotion and implementation of carbon-neutral and related technologies. This has two implications: One is that Tencent plans to support green technologies that are already mature or near-mature to promote a wider range of landings; the other is to support the development of high-potential but relatively immature technologies, such as hydrogen or carbon capture and storage technologies.

Lin Jinghua introduced an example of a rural solar panel. At present, Tencent is exploring in Chinese villages, introducing photovoltaic panel installation enterprises and financial institutions, and Tencent, as the project organizer, coordinates villagers who lack funds and expertise to install solar panels for their villages, and finally achieves a "win-win-win" situation: villagers get extra income, the grid gets extra green electricity, and financial institutions win a financing project.

The third point is digital solutions. Using advanced technologies such as artificial intelligence to help different verticals improve efficiency, such as coal power plants, water treatment plants, agriculture, etc., to achieve higher productivity with lower carbon emissions. These are all digital solutions that Tencent is considering or has already developed.

The fourth is the consumer. Tencent serves a large number of Internet users, and in terms of carbon neutrality, Tencent tries to raise users' awareness of environmental protection and promote a low-carbon lifestyle. For example, "Low Carbon Planet" is a small program launched by Tencent in cooperation with the Shenzhen government to encourage citizens to record green traffic activities, they will receive small rewards, and raise awareness of how different modes of transportation affect the environment.

The theme of the game "Carbon Island" is urban construction, and players can build their own low-carbon islands. Through the way of playing, players can improve their knowledge and cognition of low-carbon lifestyles and behaviors. Tencent is looking for and exploring more and more solutions.

"Tencent is a technology company. We are fortunate that the business has a solid foundation. But we always have an idea in our hearts, that is, technology for good. As for the reasons behind Tencent's actions, Lin Jinghua explained: "We should support users and support communities, countries and the earth to move in a better direction." And we realize these beautiful ideas and values through implementable programs. The four projects of our Carbon Neutrality Initiative are based on goodwill. This is the company's "technology for good" requirement, to put it into action. ”

Bring the action together

Since the outbreak of the new crown epidemic in 2020, "Tencent Dialogue · Tencent Dialogue "uses the form of a cloud dialogue to keep an eye on, discuss, and export ideas on important issues that affect the world." Whether it's COVID-19 or carbon neutrality, these issues are closely linked to the fate of mankind, and this is the starting point of the series of dialogues.

Today, human society has entered a "climate emergency." The climate crisis is more like a boiled frog, with trends such as forest fires, melting glaciers, and rising temperatures just gradually changing, but this process reaches a tipping point and then erupts in violent and irreversible mutations.

In order to avoid accumulating problems and missing out on favorable opportunities for action, humanity needs to quickly reach consensus, build a correct understanding of climate issues, build effective cooperation, and take urgent action to stop climate change.

As Tyrol said, cross-border cooperation is necessary, and as Lin jinghua suggested, we also need to promote cooperation between policies, enterprises, technology and consumers. In particular, Tirol pointed out that Tencent's efforts are very important, arguing that companies have a comparative advantage in discovering new technologies and are a key complement to policy and economic instruments.

"Bring the action together." At the end of the dialogue, Tyrol concluded: "The optimistic and positive view is that we do have a solution to the problem, but we need to act together. During this period, we must become socially responsible workers, socially responsible companies, socially responsible investors and consumers, and strive to do our part. ”