In the past year, we have seen deadly fires consume forests from the west coast of the US to New South Wales in Australia. The average extent of sea ice in the Arctic has dropped by 13% every decade since 1978. An estimated 4.5 million people died in 2018 because of the pollution caused by the burning of fossil fuels. So, should anyone describe me as a climate alarmist, I am guilty as charged.

All this is happening because of the CO₂ emissions released by the burning of fossil fuels. The costs that we are paying as a planet are global – and global cooperation on climate solutions so far has been wanting. Both the Kyoto Protocol and the Paris Agreement have failed after the US withdrew from them – with no costs associated with their actions.

But this is a problem that we cannot afford to delay action on. The first step to a solution is an international treaty that has teeth. One way of achieving this is to follow Nobel laureate William Nordhaus’ idea of a club of nations that commit to curbing emissions and levy tariffs against those that refuse to participate.

What should this club focus on? First, migrating all sources of energy to electricity, from heating to mobility; then, focusing on decarbonising electricity through massive investments in wind and solar power.

By my personal calculations, generating all the world’s energy from renewables and nuclear will cost $1.3trn annually for 40 years – around four times what we spend now.

Generating all the world’s energy from renewables and nuclear will cost $1.3trn annually for 40 years – around four times what we spend now

This would be funded by a ‘climate bond’, guaranteed by the club nations, leading to a low coupon. How would borrowers pay back the money? In a recent paper in Nature, a team led by Professor Yi-Ming Wei of the Beijing Institute of Technology estimated that global gross domestic product could be up to $600tn higher by 2100 if decarbonisation were to happen commensurate with a well-below 2℃ case in line with the Paris pact.

The money needs to be directed not just towards the installation of new power generation facilities, like wind and solar arrays, but to creating an energy system that can effectively utilise and transmit them.

The European case is a perfect example. The two major renewable energy sources on the continent are wind and solar. Wind is strongest around the peripheries and the coastline, while solar is strongest in the Mediterranean. This leaves much of Central Europe bereft of viable sources for renewable energy. So, to keep Europe functioning as a coherent political unit, there needs to be a way for sustainable energy to be transmitted across the continent.

I estimate that Europe will need 900GW of offshore wind power and the same installed capacity of solar. These two great energy systems need to be built and linked – by a grid that doesn’t yet exist. To make this happen, a large part of the grid – that serves offshore wind – needs to be underwater. It needs to be meshed so that there are multiple routes to the customer in case of failures.

A grid is also necessary to avoid localised peaks and troughs of electricity capacity that are inherent to renewable energy generation. In the European case, strong northern winds can power the continent in the winter while the Mediterranean sunshine takes up the burden in the summer. The grid also allows those areas of Central Europe without ready natural renewable resources access to the electricity they need.

This is the future of European energy supply if we are to decarbonise. And we need to decarbonise, which means that focusing on the continental-scale grid is critical. While I welcome government and policy attention on developing new renewables capability, and ‘building back better’ from Covid-19, it needs to be accompanied by sustained investment and innovation around the grid.

Europe is already one of the leaders of the global energy transition, with initiatives such as the European Green Deal spearheading the decarbonisation effort. There is no better way for Europe to truly show the way towards a world powered completely by renewable energy than by investing in grid infrastructure – and developing technological and political solutions that this will require.

· Eddie O’Connor is chairman and founder of international renewable energy developer Mainstream Renewable Power. This is an abridged version of a speech he made at the recent EY Entrepreneur of the Year Virtual CEO Retreat

Transition

'The $42tn investment for a clean-energy powered planet pays itself back many times over'