I was at a climate protest, and I saw a poster that said, in big letters, "Burn capitalism, not coal." How many of you agree that to tackle climate change, we should stop burning coal? Raise your hands. Almost all of you. And how many of you agree that to tackle climate change, we should burn capitalism? There are a few hands, but not as many.
I'm a journalist, and I write about climate solutions. And when I ask this question of people, I get the full range of answers, from those who say that the system that got us into this mess can never get us out of it, to those who say that the only answer is to unleash market forces for the innovations we need. But who is right?
I wanted to find the answer for myself. So I started on the rooftop of my childhood home in India. I wanted to get solar panels for my parents. It took two days to get quotes, two weeks to have those shiny devices up on the roof, ready to capture the sun's energy. The payback was quick. Electricity bills fell, and my parents have recovered the investment in five years. For the next 15 years, they can enjoy solar power for free.
So what has capitalism got to do with it? Well, India did not invent the technologies that go into solar panels. Even today, India manufactures only a small fraction of what it deploys. And yet, a country with less than 3,000 dollars of income per person per year is able to benefit from what is now one of the world's cheapest sources of energy. This has happened because profit-seeking companies want to sell all of us more and more solar panels. But it has happened because governments created that market through subsidies and regulations. We know the more we build, the cheaper it gets.
And it's not just the story of solar. Between 2009 and 2019, the price of solar fell 90 percent. Wind -- 70 percent. Lithium-ion batteries -- 85 percent. This is what I call “climate capitalism.” Climate emergency is forcing governments and businesses to change how capitalism works, to use its forces for creating the solutions we need rather than making the problem worse.
And look, it's not happening everywhere, or at the pace at which we need. There are still companies that are profiting from pollution. However, in country after country where I've had a chance to report, I've found that a combination of people, policy and technology, when they come together, climate solutions do work.
Now the primary motivation to deploy these solutions does not have to be tackling climate change. Other pressing issues, such as air pollution or energy security, or global competitiveness, can garner even more support. How exactly? Let me tell you the story of Wan Gang. You've probably never heard of him, but he has done more for the global rise of electric cars than Elon Musk. Wan was born in China. He trained as an auto engineer before moving to Germany and working for Audi. There, he saw the lifestyle that Germans lived, and realized that, perhaps, Chinese people may never be able to experience it. That's because in 2000, China burned about one barrel of oil per person per year. Germans burned 12 times as much. So he made the case to the Chinese leadership that the country needed to work on an alternative -- and that he was willing to lead the charge. So he was given a chance to work on a government program.
Wan's team, in a period of eight years, built hundreds of electric cars and buses that were used at the Beijing Olympics. In those same eight years, the country's oil bill ballooned, and its cities became globally infamous for air pollution. But Wan had shown that an alternative could work. If China could scale the manufacturing of electric cars, air pollution would be cut, oil imports would be cut. And most importantly, China would create a new industry that could compete with other countries.
So Wan was made the science minister, and the government started giving out tens of billions of dollars in subsidies for the manufacturing of electric cars and lithium-ion batteries. The government also started putting regulations to make it harder to buy fossil-fuel cars. Even today, if you’re in Shanghai and you want to buy a gasoline-powered car, you have to enter a lottery and win it. If you want an electric car, you can just go to a showroom and buy one. The Chinese government provided direction, but it was the practitioners of capitalism that made a small electric-car industry into the global giant that it is today.
One of those investors was Warren Buffett. He invested in a little-known company then, called BYD. Today, BYD sells more electric cars than Tesla.
Now you might think what China did cannot be replicated by democracies. But as it happens, China took inspiration from the paragon of capitalism: the USA. Throughout the previous century, the US has used the instruments of government to redirect investments toward national priorities. Take the semiconductor industry, the reason why California is home to Silicon Valley. It was created with generous contracts from the Department of Defense. It's also a similar case for biotech, for airlines, for the internet. All of them have fingerprints of the government from [their] birth. In fact, China's electric vehicle policy is a modified version of California's Zero Emission Vehicle mandate. That policy was crucial in keeping Tesla afloat by providing subsidies. That, by the way, is George W. Bush in a hydrogen-powered electric bus in California in 2006.
But now that China has a lead on all sorts of green technologies, the US is being forced to catch up. The Inflation Reduction Act, passed in 2022, is one response. It will see the US government provide hundreds of billions of dollars of subsidies towards all kinds of solutions, from green hydrogen to heat pumps. That will be multiplied by matching private investment.
But climate capitalism isn't just about putting government subsidies to work. That's because the climate crisis is the greatest market failure of all time. Governments around the world have allowed corporations to pollute for free, and all that pollution is causing damages to all of us, in the form of climate impacts, health inequalities, dislocation of communities. In some parts of the world, leaders are starting to correct that mistake. But Europe has put a price on pollution and created legally binding targets. That has helped the continent cut its carbon footprint faster than any other. It's also changed how businesses operate in Europe.
The Danish Oil and Natural Gas Company was founded in 1972. For 40 years, it dug up fossil fuels. Then Denmark adopted a carbon price and a climate law, and suddenly, its business model became implausible. Today, you know that company as Ørsted. It transitioned away from fossil fuels starting in 2009, and it has become the largest developer of offshore wind power. This hasn't been a smooth ride. There just aren't as many success stories as the world needs. That's because the climate challenge is really complicated. India has an ambitious renewables goal, but it's falling behind. Europe has seen job losses because its carbon price has been too high. That has caused some industries to shut down and move to other parts, where there isn't a carbon price. And China's emissions last year rose despite a record clean energy build out. For climate capitalism to work, governments and businesses need to be flexible. They need to recognize when there are policies that require certainty, but if they're not working, then they must be changed.
India is now doubling down on solar, with batteries, because it's seeing a rise in electricity demand. Europe has introduced a carbon tariff that's going to put a price of pollution on imports. That will level the playing field for domestic industry and STEM job losses. And some experts think that if China can continue its clean energy build out at the same pace, its emissions may have peaked last year.
Now what’s remarkable is that some businesses are seeing that it's in their self-interest to act on climate change, with or without regulations. So far, we've looked at big, economy-wide changes. Now let's think about something as simple as ice cream. You would think that during a heat wave, an ice cream maker will turn big profits, selling lots and lots of ice cream. But heat waves are becoming so extreme that people are choosing to stay at home instead. At the same time, smallholder farmers that are the supply chain of ice cream makers are seeing their productivity fall. That's because of intense heat, drought, floods. It means the cost of making ice cream is going up. It's a double whammy. Lower sales, higher costs. Increasingly, businesses are recognizing that there are fewer profits to be made on a planet on fire.
So let's go back to that poster. Is the answer to tackle climate change to burn capitalism, not coal? I hope the examples I've shared show that the problem isn't capitalism, but how it's being allowed to run. We only have a few decades left to get to zero emissions. The fastest way to get there is to change capitalism. How to do it? Through a combination of people, policy and technology. Dedicated people, smarter policies and cheaper technologies. That is how you'll get businesses to focus on the solutions the world needs. That is how people like my parents in India, and all of us around the world, will get access to those solutions, and that is how the world will finally stop burning coal and all other fossil fuels.
Thank you.
(Applause)
