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Can climate capitalism work?

Published Oct 12, 2023, 4:00 AM

It is now cheaper to save the world than destroy it. But is capitalism up to the challenge of preventing the climate crisis? 

In his new book Climate Capitalism, Zero host Akshat Rathi introduces a dozen people who are already steering capitalism to solve the climate crisis: from the engineer who shaped China's electric car policies and the politician who helped make net-zero a UK law to the CEO who fought off a takeover attempt so he could stick with a sustainability strategy. Akshat argues that not only is capitalism capable of taking on the climate crisis, but harnessing it is the only way to solve the climate crisis in the time we have available. 

And yet while some improvements have been made over the past few years, the world is off track to meet its 2050 climate targets. So today on Zero, Bloomberg’s Greener Living editor Kira Bindrim sits down with Akshat to discuss his new book, and asks him: If climate capitalism is so doable, why does it seem so difficult? 

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Zero is a production of Bloomberg Green. Our producer is Oscar Boyd and our senior producer is Christine Driscoll. Special thanks to Anna Mazarakis, Gilda di Carli and Kira Bindrim. Thoughts or suggestions? Email us at zeropod@bloomberg.net. For more coverage of climate change and solutions, visit bloomberg.com/green

Welcome to Zero. I'm Kira Bendram, editor of Bloomberg's Greener Living section and a good friend of the Pod. Today is a special day on Zero because today is a day your usual host has been waiting on for months. Climate Capitalism, a new book by Akshat Rapi, is now on sale. Climate Capitalism sets out to answer an important question. If capitalist systems are set up to maximize profits, how can they also prioritize the planet. Over twelve chapters, Akshot introduces a dozen people who are already making climate capitalism work, from the engineer who shaped China's electric car policies, to the politician who helped make net zero a UK law, to the CEO who fought off a takeover attempt so you could stick with a sustainability strategy. Akshat and I have known each other for almost seven years now, and what comes across in his book is what comes across every time I talk to him. A lot of very smart and very interesting people are working on climate problems. Many of them are proof positive that the capitalist framework can be effective. As Akshot writes in the book's very first line, it's now cheaper to save the world than destroy it. I also know how much work Ashot has put into this book, so after reading it, I thought it might be fun to put him on the hot seat for once, because I wanted to ask aksha if climate capitalism is so doable, why does it seem so difficult? Akshat, Welcome to your podcast. How are you feeling nervous?

Because I don't usually get interviewed, I'm not on this side of the screen.

I'll try to be gentle. The underpinning of the book, I would say, and you can correct me if I'm wrong, is that capitalism and climate progress are compatible because they have to be. You say in the intro, changing our entire economic system and our entire energy system in the time that we need to do it to affect change with the climate is just really not feasible. And I'm curious whether you think most people would agree, Like if you sort of set out with these two things are compatible, do you think of that as a statement of fact an article of faith? Do you think you're making a provocative argument? Where do you think most people land on this question of whether these two ideas can work together?

Sadly, the answer is that most people haven't thought about it. The trouble with climate is that there are very loud voices, very few of them on opposite side of the political spectrum. Yes, there's a whole range of voices in the middle, but that's also a small population. Most people aren't thinking about climate solutions. But if we speak to the climate crowd, I think most people will not agree that capitalism can be a solution. And that's because the root of environmentalism, or the root of most people who are trying to work on solutions, has been to try and overcome this economic system that we must accept has been a part of the problem, has been driving force of profit maximization over making sure all the impacts of that process are taken into consideration. And so there is no doubt it's a provocation. That is how the publisher pitched it to me, which is, if you're going to give people something they will read, you have to be a little provocative. But as I wrote the book, and as I tried to tell the stories, it actually became easier because I wasn't trying to create something that wasn't happening. I wasn't trying to make a case for something that should happen. I ended up writing a series of stories of things that are already happening.

So the way you've structured the book, as you're alluding to, is each chapter you give us a person who is working towards climate campus is not just one person, but there is sort of an anchor person in most of the chapters. So for example, we've got Wan Gang, who is not a household name the way Elon Musk is in terms of electric cars, but has plays a huge role in ev development in China. Or we've got Brian E. Worthington, who was actually the very first guest on Zero, who was the lead author of the two thousand and eight Climate Change Act in the UK. I'm curious what made you want to approach the book in this way where it's centered around people, instead of maybe looking at a different technology in each chapter, or even a company, or even just telling the story linearly over time.

Our driving force for the kind of journalism that I've kind of learned with Yukira, starting at Qurts and then now at Bloombergreen has been to try and tell stories that have not already been told, or tell them in a way that has not already been done. Take Bill Gates's How to Avoid a Climate Disaster. Really good book makes the case for what needs to be done with some small case studies of what's already being done. Or This Changes Everything by Naomi Klein, which is in the subtitle The Climate Versus Capitalism, which is a rhetorical powerful exposition of what's wrong with the system and why we must break it down. I wanted to take the journalistic instincts of taking the story of I, really one individual, but then building out the context in which and the decades over which some of these stories play out. And my hope was that having the anchor person will allow people to read those stories in a way that they won't get lost in the abstract ideas that are all around us to deal with the climate problem.

It almost reminds me of when you're a kid and you think politicians are just like such adults and like these people that make all these huge decisions, and the older you get, you're like, right, they're just we're just humans. I'll try to figure it out, and they're just people now my age, with my level of expertise shaping policy, and there's something a little terrifying about that, but there's just some comforting that These are human beings actively working to solve these problems, who are really applying themselves to it, and they are turning the abstract into something quite tangible. Or you can affect change.

And that their actions are directed but are also shaped by the chance encounters and the chance events that they live through.

Is there anyone in your mix of people? I know you don't want to choose a favorite child, but I'm curious of the people you spoke with or focused on in the book, is there anyone you think about the most often or you find yourself relaying their story the most often when you're talking to other people.

You already mentioned his name. It's One Gang really, because it's sort of a character as a Chinese bureaucrat you rarely hear about. You know, you probably are aware Hi Jinping as the leader of the country, but you're unlikely to know very much beyond that as a general news reader. And also One Gang doesn't own a social media platform, so you get this place where this individual within a system has made a huge impact on the ev transition, getting the Chinese state to spend tens of billions of dollars in a decade to move the technology, which we are all benefiting from but people don't know who was the driving force, what are the policies, what are the massive changes that have allowed this to happen. So it's the story I bring up very often. The other one that I don't bring up that often, but I think about quite often is the story of Fati Birol. Fatti Birol is the head of the International Energy Agency, and in the set of seven year period that I have been a climate journalist, he's gone from being the character who was hated by the climate movement to being the character that is loved by the climate movement. That is reflected in how he approaches the problem, even though you know he runs an international organization, you can see he has really understood the climate problem and gone from this energy agency that was built as an organization that was very fossil fuel oriented to being this organization that really wants to drive the energy transition.

For me reading that chapter, and he was also a guest on the pod, we have another person who was a former zero guest. You're struck almost by how recent a lot of this evolution is happening, that it's all moving quite quickly, and that one agency is a good sort of stand in for how quickly the conversation changes. I want to ask you about. What I'm thinking of is like the thumbs that capitalism allows to be put on the scale outside of market forces. So I'm thinking about regulations, I'm thinking about subsidies, and as we've heard on the podcast very recently, I'm thinking about tools like shareholder activism, things you can do to affect change within a company. In your view, and having done all this reporting, do you think that those tools are sufficient to sort of check capitalism's most profit driven in individualism driven instincts.

We can answer that in multiple ways. Right There is actually no one form of capitalism in the world. The American capitalism is very different from the Indian capitalism, very different from the Nordic capitalism, to being very different from the Chinese capitalism, and each of those at the core of it have two tenets profit maximization driven in a competitive market. However, a market is never free. It's always regulated in some form if you want a market to function and do the job it needs to do for society. And to what level that is regulated is different in different countries, and we can see there are benefits to the level of regulation that may exist in a particular ccumstance versus another one.

I mean, it sounds like you're saying that you have to shape the tools of capitalism to the society and like the system you're in, and it's all about the execution.

Yeah, we probably will never have the perfect way of making capitalism work for the planet. But what we do have is a series of experiments currently happening in different parts of the world. And what we can see is things that are working well in one part work well because of a certain mix of those tools. And something I try and do in the book is to learn from the successes that are enabled in that context and whether we can translate those successes in other places where maybe there is a different form of capitalism.

So I think I agree with you that adjusting a capitalist system at the margins, or sort of finessing the nuance of it, versus trying to overthrow it, is the logical move. But for fun, just for fun, I wonder what you'd say if we found out tomorrow that we actually have another century to deal with climate change. In other words, if we could somehow remodel our econom system and energy system at the same time, would you change your answer.

In a way. We already ran that experiment, right, We knew the science was pretty certain. Early nineties, mid nineties, the latest didn't really do very much. So as a society we chose not to. And sure you can blame certain actors in society directing this, but the end result is we kind of choose. But if we do have another one hundred years and suddenly that is a possibility, I think there are a few things we could do. One is we should not try and slow down the transition in the sectors that are already on the move. The move to electric cars is a really good one. Yes, we're going to need more metals and that's a thing that we need to deal with, but we will cut air pollution in cities everywhere in the world, and that's a good thing. And you could do that for renewables. It would be a much better world to have sources of energy distributed across the world, rather than being concentrated in some places where you have to take a pipe, drill it down, get some black go out, ship it to a refinery, put in tons of energy to try and draw out energy. It's just not a good system. But the biggest advantage we will get with time is not really to slow down the fossil fuel transition. It is more that we'll have more time to do diplomacy, right, that we'll have more time for countries to actually come together and agree on something, or we'll have more time to find a way in which countries that are going to struggle can be uplifted and be brought along for the transition, rather than what is a reality for some countries getting drowned at sea levels rise.

I want to ask you one more question in the sort of high level macro capitalism conversation, and I don't want this question to come out wrong, so I hope you know that I love you and I respect you, and I don't mean anything by this, But do you think sometimes that you are too much of an up missed? Which I asked because I said in the beginning, And I think it's true, you, more than anyone I know or have worked with, have really helped me see that it is possible to reach net zero technically, scientifically, like all of those things can fall in place, but we are off track to meet net zero by twenty fifty. We are still in a place where the wealthiest one percent of humanity is responsible for as many emissions as the poorest fifty percent. We are not really succeeding at the level that we need to. So if, as you argue in the book, capitalism can solve the climate crisis, the biggest question is why does it seem to be failing at it.

It might be to do with something in my brain chemistry that I prefer to think this way, but I can also justify it, right. It's not that I have an ideological stance of only writing about optimistic solutions, right. You know, as a journalist, I do all sorts of things. I write about problems, I write investigations exposing all the flaws that companies have and people have. But I also think one aspect of journalism that is less celebrated, is less pursued, is to look at successes and what we can learn from them. So the optimism is kind of baked into doing the book because I wanted to focus on the successes. If I wanted to focus on the problems, that book's already been written. It's called The Uninhabitable Earth, And so I wanted to provide a narrative that would be more corrective to where we sit where it feels like this problem is so big that we will not be able to fight it, that we will not be able to solve it. And yet if you just look at the numbers, we are not on track for five or six degrees celsius of warming, which was within the realm of possibility as recently as twenty fifteen. And then we sign the Paris Agreement and now we're on track for three degrees celsius. It's not enough, but at least we may progress.

After the break. How exactly is climate capitalism supposed to work? I want to dig into some of the mechanics here of marrying capitalism and climate progress, and I'll start with a big question, which is we have seen arguably a recent example of capitalism succeeding and failing at the same time, which is the COVID vaccine. So, with state support, we had private companies that were able to develop vaccines extremely quickly, but the distribution was very, very unequal around the world, and we see that with all kinds of tech, where poorer countries that would benefit from a quicker access ultimately don't get it. Is it possible to address that type of inequality within the capitalist framework.

The COVID example is such a good one. It's one that we taught about as climate journalists at large as a good parallel. Shouldn't we think of what happened with COVID and apply it to climate And there are parallels to be drawn, but they are not one to one. The COVID vaccine was created to deal with an emergency in the human timescale we think of emergencies. Right, climate emergency is also an emergency, but it's not on the same time scale as a COVID vaccine. Did science and technology help us avoid what could have been an even worse disaster? One hundred percent? Right? Take any other global panamic of this kind. When you didn't have an mRNA vaccine, which just won the Nobel Prize earlier this month, we would not have been able to create a vaccine at the pace at which we did. So you could take some lessons, which is technology can help, and that global diplomacy is crucial in making a global problem solvable. But then with climate change, we have time, not to say if you have plenty of time or we have infinite time, but we have decades and that allows you to think about that problem differently. In COVID, you kind of needed one silver bullet solution, You needed a vaccine. In climate, you don't have that shortcut. You need all kinds of solutions to work. And that's a much harder problem in a way than the COVID vaccine. In some cases, we also don't kind of have the technology at scale for some of these problems to be solved. So the parallels exist, but not enough. And I don't think the failure that was COVID or the success that was COVID, because you can slice and dize it either way, will determine whether we solve the climate problem or not.

It's interesting that you fin I mean, obviously it's different timeframes, but pandemic was three four years and the next ten twenty years are like pretty important. You write in the book about how research and development responds to like a brute force strategy that like something so important happens, that everybody mobilizes around something with such urgency that just like makes it happen, And that is generally what happened with mRNA vaccines. Don't we need a brute force moment for climate? Like it does feel like if we could take a little of urgency. See that was implied by the pandemic. It would be more effective because, as you say, that is the thing that tends to move the ball forward on technology.

And we kind of have the brute force method in different places. A ban on selling fossil fuel cars by twenty thirty five, which now exists in more than twenty countries around the world, including most of the major car markets, is a brute force strategy, especially if you ask a motorist, especially if you ask somebody who loves their gasoline car. At some point, we're going to have to talk about eating less meat. That's going to sound like a brute force strategy. And so yes, there are uncomfortable choices that we have to make, and policy will have to play a role there. If you talk to utilities, they're going to tell you in the two thousands and twenty tens, it was a brute force strategy to come in and say you need to have ten percent renewables in your mix by this date. Now they look back and they're like, of course, duh, it was so easy. But at the time they also have but their lobby groups coming around and saying that's not good. We are not going to be able to make that transition work. So yes, it's not a brute for strategy in the sense of a COVID vaccine that there will be a silver bullet solution, but we are starting to apply some of those in many different parts of the transition. You could very well argue not enough parts of the transition.

Let's keep talking about timescale for a second. So also in the book, you write about how clean tech development basically operates on a longer timescale than most venture capital and one of the chapters you go in depth on Bill Gates breakthrough Energy ventures, which decided to work in a twenty year timeframe instead of the typical ten years. What other aspects of traditional investing do you think need to be rethought here or are being rethought in an era of clean tech being instead of Internet companies. The dominant thing that is getting a lot of investment.

A big missing one that I could not have written a chapter on because there isn't a successful story around is how do you move large amounts of cap We're talking tens to one hundreds of billions of dollars from developed country markets to developing country markets. If you look at the energy transition today, You can slice the numbers many ways, but one way in which you can do it is see that develop countries are actually spending as much as is needed on an zero transition. They're not spending it in the right way, not in the right places, they don't have the right policy mix available. But in terms of pure capital that money is starting to flow in developed countries. The gap with developing countries is massive, three, four or five times as much more money is needed in developing countries, in the places where energy is not accessible to hundreds of millions of people, in places where energy demand is growing, and in places where you can't tell them not to use the fossil fuels that they have in their ground. But you can enable them to transition faster if you allow for money to flow to places where solar is already the cheapest source of electricity. Except that all these cash bottlenecks and other bottlenecks, but definitely cash as one bottleneck that needs to be sorted, and there isn't a good solution. We're currently in that place where some experiments are happening. There's the Just Energy Transition Partnership, which many of the G seven countries are trying with South Africa, with Indonesia, with Vietnam. They're messy. It's not kind of working right now, but it's at least one experiment in moving tens of billions of dollars to these countries. We'll need many more of those.

When I was trying to think about to answer this question for myself, are there aspects of the investing mindset that we would need to change for clean tech? One of the things that came to mind for me is failure. And I'm thinking here of Cylindro, which, for the listener, Cylindro went bankrupt in twenty eleven, and it had received this five hundred and thirty five million dollar loan from the US Department of Energy, and it became this huge talking point for why the Department of Energy should not give out loans, even though the Department of Energy also gave Tesla a big loan which worked out quite well. Do you think that there's a lower tolerance for failure when it comes to clean tech, or at least a quicker mindset to use a failure as emblematic of like why this whole thing isn't worth doing.

I think the lower tolerance for failure exists because it is easy to use that as a political wedge. It is easy to point to a failure and say the entire project is not working, even though if you actually analyze the US Department of Energy's loan program, it's been pretty successful. And so it is easy to turn the failure of a clean tech company into a talking point. What we do know just from entrepreneurialism one oh one is that failure is baked into trying to solve a hard problem, and so while politics can make it hard, we should try and make space for more failure, both on technology but also on policy. We need many more experiments around the world trying different models for how to rein in the excesses of capitalism so it can work to tackle climate change.

Let me ask you for a second about entrepreneurs. I want to talk about the people that are starting these companies and developing these technologies. In reading the book, I found it kind of striking how many of the people we met who did not necessarily start out focused on climate change or start out focused on solving for emissions. They wanted to hedge against oil price spikes in the seventies, or maybe they just thought like that's going to be a big industry and I could make money in it. I guess my first question is do you think this is a feature or a bug? Like, does it matter if most of the entrepreneurs out there right now aren't actually motivated by climate change specifically.

It's a feature of the moment in which we are in the transition. I wasn't a climate journalist till twenty sixteen seventeen, and I am a climate journalist now. This is a story that I've heard again and again over the past decade, where people realize how big a problem this is, want to do something about it, and finally find a place in the energy trend in the future. That may not be the case, because we already have teenagers in schools going out to strike wanting to work on solutions. But is it a feature of a bug? I think it doesn't matter. I think for entrepreneurs, they need to go out and solve a problem that they are really passionate about. And currently, it turns out society is making more entrepreneurs care about the climate problem. That's a good place to be.

I mean, you're also someone that has written another book with youth climate activists and has spent a lot of time talking to them, and it sounds like you're saying, in twenty thirty years, we will look back and see that actually a greater share of people who got into this space did it explicitly because they wanted to solve the problem of climate change.

Yeah right, rather than the transition that many of the people I know today have made, which is they didn't start working on climate now they are working on climate.

Okay, let me bring this all back around to one question for you, which is, let's come back to capitalism. Everyone loves to hear that. As we talked about a little bit, China. Is this really fascinating case study because it is dominant in several aspect of clean energy, including solar manufacturing and electric cars. And it is both communists and capitalistic, which Beijing artfully refers to as capitalism with Chinese characteristics. So if we roll with this idea, I want to ask you to invent what I'm calling capitalism with climate characteristics. If we had a system that was backed up by the larger motivations of the planet, but was capitalist, what would that look like to you.

It's never a good idea to make me dictator of the world.

Just one country, okay, aach take over the world or dictator of a country.

In a way, the answer is that we are already in that place where there is capitalism with climate characteristics in different parts of the world kind of forced upon you, right, Like climate ippacts are here, you got to deal with them. And in the US you're getting an Inflation Reduction Act, which is a subsidy driven injection of capital into green solutions. In Europe you're getting the Green Deal, which is a little bit of so but mostly direction and regulation and clarity on where the money needs to be spent. And in China you're getting a jingoistic to some extent, version of climate capitalism, where China wants to build these green technologies as a way of being a leader in the world, taking advantage of it to provide the solutions that the world needs. That's why we have Chinese solar panels dotted all around the world. So is there one form of capitalism or one set of solutions that will enable us to make this work. I'm not so sure. I think nobody currently has the solution, the perfect solution, And even if we did have the perfect solution, as we did during the COVID vaccine. We are not going to be able to deploy it correctly because we're humans and refight and we gossip, and we don't do the things that may seem the most economically rational thing to do. But in that messyness of being human, I think we are starting to move in a direction which is acknowledging the problem that is climate change, acknowledging the opportunities that it presents in creating a world that will not just deal with the climate impacts coming our way, but also be a better world. Getting rid of your fossil fuel car, yes, cuts down to your two emissions, but also cuts air pollution. It's a really good thing. You should do it even if there was no climate problem. And so there are all these solutions that are going to just make the world a better place, and it's starting to happen again, not at pace, but at least there are people working on it.

You also have this great sort of through line in the book that we sort of have decoupled in our mind the economic forces and the climate forces, instead of saying that the planetary motivations and the economic motivations are the same. One of the chapters you talk about London developing its sewer system, which is fantastic history. And you have this quote from someone saying, un till people have the idea that throwing CO two in the air is like throwing poop in the street, we're not going to spend what it costs. So until we see that, we are compromising ourselves our health. But certainly like our economies with climate change, we're not going to put the money that we need to solve the problem. So if we could just put these ideas together, that capitalism with climate characteristics is just capitalism if you really think about the climate as a representation or something that has an impact on the economy, we could do the mental math a little bit.

Better, yes, but we'll always have people opportunistic enough to try and take advantage and break that consensus. The UK is a very good example of that. In the chapter, I go through the creation of the Climate Change Act as this thing that has driven the country to become a climate leader around the world, cut the most emissions amongst G seven and G twenty countries. And yet today we are led by a prime minister and a party that is trying to water down, that is trying to find vedge issues to create false narratives around a meat tax or trying to tell you not to have a fifteen minute liveable city. It's just a way for politicians to try and get some words here or there. And that's going to happen, right if it can happen in the UK, a country where people understand climate change, where there's a political consensus on trying to do something about it, and yet some politicians in powerful places are going to do things to try and slow down climate action. We are in for a messy transition.

The book is out. You've been working on it forever. How does it feel. How do you feel having this finally out in the world.

It's such a long process, a really nice one, but also you just never know whether it land by the time it comes. So I didn't know what it would be like. When I actually held a copy in my hand, and I will not lie, it did feel really satisfying. I sat down then I was like, huh, it's real.

Yeah, I made this. I want to throw to you the questions, which is, if you could put a billboard outside of your house, what would it say. You've given this thought, You've asked it like twenty times.

No, I've given it no thought. I always go back to what my dad told me. There is good in every person in the world.

That's nice. Do you wanna know what mine is?

Please?

I would do my favorite line from your book. The robots did their jobs naked. No no additional continent. Just get people thinking, you know, while they're driving. Thank you for listening to Zero. If you'd like to order a copy of Oxshot's book, there's a link in the show notes. It will make you rethink where we're at on the climate fight, and the book also makes for a great stocking stuffer. If you liked this episode, please take a moment to rate and review it, Subscribe on Apple Podcasts or Spotify. Send it to a friend or a budding climate capitalist. Get in touch at Zero pod at Bloomberg dot Net. Zero's producer is Oscar Boyd and senior producer is Christine driscoll Our. Theme music is composed by Wonderly Special thanks to Anna Maserakas and Gilda de Carly. I'm Kira Bendram and Zero will be back next week.