Earning An Optimistic Scenario

Our pessimism about the future is coloured by certain biases in our thinking. If we remove these, what might the world of 2040 look like?

Optimism about climate change usually means denial. Climate skeptics cheerfully proclaim that everything is fine, while wildfires burn down half the country and floods inundate the other. Being optimistic about the climate is also possible if you are naive. We are told that we can keep our millions of cars, as long as we make them electric, and our millions of badly insulated houses, as long as we put a few solar panels on our roofs. In the face of these messages, climate scientists can be forgiven for emphasizing how bad things are, and how much worse they are likely to get. When climate scenarios accurately reflect the facts as we know them, they are almost always pessimistic.

Is it possible to imagine a positive climate scenario that is neither denialist nor naive? This is an important question, and not only because we could all use a little hope right now. By asking this question, we can unravel some significant shortcomings in traditional approaches to forecasting. These pitfalls can impact our ability to plan, in both business and our personal lives.

GRIM REALITY

Earth has a carbon dioxide budget, which we have blown through. This has caused the planet's surface temperature to rise, which wasn’t a problem until it passed what’s called a planetary boundary. For global temperature, that boundary is roughly at +1.5C. Any realistic scenario of what the Earth will look like past this boundary will include economic disruptions, sea level rise, mass extinction, food insecurity, and increasing geopolitical tension.

Temperature is just one planetary boundary that humanity is crossing. Another is the nitrogen/phosphorus boundary, which we’re violating because of modern industrial farming practices. It’s not widely appreciated by denialists and naive optimists that even if we removed 100% of the excess CO2 in the planet’s atmosphere tomorrow, we would still be facing these and other crises. They all relate to the rise of industrial society over the past 200 years. Because we rely on our industries to feed our 7.8 billion people, any scenario in which we abandon those practices would seem to doom many or most of us to starvation.

Thus we find ourselves on the horns of an apparently impossible dilemma. Any realistic projection of the next half-century seems doomed to be apocalyptic.

But, what counts as realistic?

TWO HIDDEN BIASES IN FORECASTING

In 2010, the International Energy Agency confidently predicted the future cost-curve of solar power. At the time, solar’s cost was $0.35 per kilowatt-hour. Based on its past performance and present trends, the agency predicted that in 2022, the price of solar power would be roughly $0.21/KWh. When actual solar prices began to plunge, they repeated their analysis in 2014, and revised their prediction to about $0.12/KWh

As of January, 2022, the unsubsidized cost of solar electricity in the US was about $.06/KWh.

This is far from the only energy projection that the EIA got completely wrong; they failed to predict the growth of fracking and so missed the revolution in US natural gas production. There may be many reasons why such projections fail. Most are manifestations of the inherent conservatism that comes from projecting the future based on the past—namely using data-based trends analysis.

Most trend analyses are based on what a given technology can do today, or on what is known to be in the pipeline. This strategy precludes surprises; after all, it’s impossible to predict changes in government policy, or radical technological breakthroughs. Of course, it is perfectly possible to imagine them, but imagined futures are not evidence-based, so the analyst is pressured to stick to projections for which a probability can be assigned. Typically this results in a straight projection of past curves. Nobody wants to stick their neck out by making a “what if” argument where energy policy is concerned, and the result has been that the projections of different energy forecasting agencies tend to be very similar. The happy result is that when they are wrong, they are all wrong—and better to be wrong along with everybody else than wrong by yourself.

Discontinuities are missed this way. For example, SpaceX seems on track to reduce cost-to-orbit by two orders of magnitude, or even more. The Falcon 9 rocket alone achieved a 20-fold reduction in launch cost compared with the space shuttle, and the much larger and more competitive successor, the Starship, has flown four times now. There was no reason to think this would happen based on previous trends; cost-to-orbit had remained steady, on average $18,500 per kilogram, from 1970 to 2000. A vast reduction in launch costs remained an absolute possibility, but one for which a probability could not be assigned based on historical data. Yet that absolute possibility has proven to be the scenario that came true.

The other major problem with traditional forecasting methods is that they usually fail to connect the dots: analysts miss synergies because they tend to focus on one sector at a time (eg., energy, or agriculture) while failing to note how sometimes wildly different economic sectors can affect one another. An exception to this is the consultancy RethinkX. Their August 2021 report, Rethinking Climate Change, is the clearest recent example of an optimistic but realistic scenario for the next decade. They can be both optimistic and realistic because they take into account the synergies between plunging renewable energy costs, vehicle electrification, and the very new revolution in food production signified by vertical farming, precision fermentation, and automation. Improvements in each sector impact the others, creating a virtuous cycle of change that could result in massive reductions in greenhouse gas emissions over the next ten years.

With these ideas in mind, in the rest of this post, I’ll try my hand at extrapolating an optimistic but realistic scenario for climate change—a best-case scenario. By stepping out of the comfort zone of simple extrapolation, and by looking at the synergies that are likely between different sectors in the next decade or two, we can make out an emergent future that is surprisingly rosy.