After four years of backsliding on tackling climate change, it is good to see the US once again taking it seriously and trying to lead the world on climate action. Good intensions are necessary, but insufficient, however. The Biden Administration pledges a 50-52% decrease in CO2 emissions from 2005 levels by 2030. That sounds ambitious, and it is, but it is also not enough. It helps clarify how big the task is we have before us, but also how high the stakes are. Some recent studies also help clarify the picture.

First, a recent study yet again dispenses with the false dichotomy that dealing with climate change is about the environment vs the economy. Wrong. Climate change hurts the environment and the economy – so both of these concerns are in alignment. This study was done by a large insurance company (who are used to estimating risk and cost) and they concluded that climate change will cost the world economy $23 trillion in lost productivity by 2050 (compared to where we would be without climate change). Failing to tackle climate change is the costly option. Further, these costs will disproportionately affect poorer countries, increasing the wealth gap between rich and poor nations and likely causing political instability (not to mention a climate refugee crisis).

This does not even account for health care costs and lost productivity due to poor health from pollution. These costs are estimated to be hundreds of millions of dollars per year for the US and several billion worldwide.

Even if we just look at climate change through an economic lens, investing in clean energy is a no-brainer. Green technologies are the technologies of the future, and so it also makes sense for any country to invest in this industry to be competitive. Investing in these technologies would be a massive boost to our economy, with each dollar spent being returned many times over. Failure to do so is economic malpractice. Clinging to dirty 17th century technology is a loser’s strategy.

In fact, a major coal miner’s union just backed Biden’s green infrastructure plan. Even coal miners can see the handwriting on the wall – coal is in freefall, because of competition from natural gas, solar, and wind. It is simply losing in the marketplace – because it is old, dirty, expensive, and unhealthy technology. Why would we want to prop it up? The union calls for investment in coal country, rather than in coal. This is not a new idea, but it’s good that they are on board. Help transition locations and people dependent on a dying industry to a new economy. This is a good approach in general – economic dynamism is dependent on “creative destruction”.  Old technologies are destroyed but replaced by newer better technologies, and the economy transitions. It makes no sense to slow down progress to protect obsolete jobs. Sure, the pace of change has increased and this can be disruptive. We have also been dragging our heels on climate change and now have to play catch up, further increasing the pace of change. It is best to invest in that transition, invest in new skills and infrastructure to remain economically productive and competitive.

But again, deciding that collectively we need to tack this issue is necessary, but it is not enough because the challenge is great. Another recent study shows that we are already at 50% of the carbon emissions we would have been at if we continued trends from 2005 without making any changes designed to reduce carbon. (To be clear, not 50% of 2005 levels, but 50% of 2021 levels if we had made no changes.) When you look at the details, however, it becomes clear that the second 50% is going to be much harder than the first. We have been picking the low-hanging fruit, investing in cheap wind and solar, extending the lifespan of existing nuclear plants, transitioning coal to natural gas, and increasing energy efficiency where it is easy and cost effective.

To keep this trend going, and even accelerate it, will get harder and harder. First, wind and solar will get less cost effective as their penetration into the market increases, because they are intermittent sources of power. We will need to add overcapacity and/or grid storage to keep going. This also means a massive upgrade to the grid. This is a huge infrastructure investment.

In 20 years existing nuclear plants, whose lives have been extended, will need to shut down. Nuclear currently produces 20% of US electricity, and if we are not careful this production will be replaced by fossil fuels – which happened in Germany. Germany tried to phase out nuclear, and their CO2 emissions spiked. The debacle ended up costing them more than maintaining their nuclear infrastructure. To avoid this fate, the US will need to not just extend existing plants, but build new ones. So far the Biden administration sounds open to this idea – they appear to have heard from the experts that their ambitious goals will not be met without at least keeping nuclear on the table. Hopefully, transitioning to small, modular, Gen IV reactors will work out well. If so, they are safer, more cost-effective, and not only produce less waste they can burn waste from older reactors.

Transitioning to electric cars will also not be easy. The technology is already there, and they are ultimately cost effective, but the upfront costs are still daunting for many people. This is easily solved with subsidies. Advances in battery technology, which have been predictably linear, should take care of the rest. But the problem is – even under ideal conditions, the auto fleet turns over very slowly. The shift will take at least 20 years, likely much longer. Transitioning fast enough to meet our climate goals will take more than just some subsidies. The auto industry needs to quickly transition to all-electric. Further, we need to invest in the recharging infrastructure.

And of course, this transition mostly helps only if the energy sector transitions to green energy. And this will be more challenging because energy demand will dramatically increase because now the transportation industry is not fueled by gas but by electricity. We when we move to green energy, we have to factor in this increased demand, or again we will find it hard to wean off fossil fuels and we will miss our climate targets.

All of this will happen eventually. I have no doubt that in the future we will have zero carbon energy and transportation sectors. That is where the technology is moving, and there are advantages beyond the climate. The real question is – can we get there fast enough to avoid the worse consequences of climate change. Ideally we want to stay below 1.5C above pre-industrial levels, but we may have to settle for 2.0. Beyond that the costs of climate change become immense.

It’s great that after four years of denial and nonsense we are finally having the conversation, but we need to confront the reality. The good news is – while the investments will be expensive, they are ultimately a great investment. Doing the right thing, the best thing for our health and for the environment, in this case, is also the best thing to do economically.