HUW MCKAY: Could harnessing solar power from space be humankind’s next leap forward?

Donald Trump has again withdrawn the USA from the Paris Agreement on Climate Change; repealed the Green New Deal, which included generous subsidies for electric vehicle uptake, greening of heavy industry and the on-shoring and friendshoring of the electric vehicle value chain; erased energy efficiency standards, including the 2035 vehicle fleet emissions standard that would have put the US on a path to relatively rapid fleet electrification; removed the social cost of carbon from Federal project approval protocols; ended the granting of leases for offshore wind power; while promising to “drill, baby, drill” to alleviate what he has declared is an “energy emergency”.

Where does this bevy of actions leave global climate action, and commodity markets, short term and long term?

First and foremost, all else equal under existing technology and likely sectoral pathways, a pause or even a slowdown in the US’s efforts to decarbonise for the remainder of this decade will make even a 2C warming scenario much more difficult to achieve, let alone an outcome between 1.5C and 1.75C.

That is because the sum of national objectives submitted prior to Trump’s withdrawal pointed towards an outcome a tick warmer than 2C, in large part due to China and India pursuing carbon neutrality in 2060 and 2070 respectively, rather than 2050, like most wealthy countries.

Pushing back the 2050 net zero objective of the US can only leave us further away from a 2C world, even if we manage to avoid backsliding from developing countries in the wake of the US’s decision.

Secondly, a less-green global economy for at least the remainder of the 2020s brings dangerous tipping points in the Earth’s climate system closer. Climate tipping points are not black swans (fundamentally unpredictable events that loom into view from beyond our consciousness): they are grey rhinos (events we know will occur at some stage, we just aren’t sure exactly when, like major earthquakes along the San Andreas fault line, or the next global pandemic).

Probabilistically speaking, the planet is a more dangerous place, physically, with higher greenhouse gas concentrations accumulating sooner than previously anticipated.

Third, the repeal of the variety of policy infrastructure that sponsored efforts to decarbonise transport and industry in the US will feed back into Australia. With the IRA repealed, it will be more difficult for the beleaguered global nickel market to return to balance in the late 2020s.

That is because the combined impact of the mileage and performance demands of US motorists, and the very high rates of protection used to keep Chinese batteries and EVs from accessing the market, meant that high-nickel battery chemistries were almost certain to dominate the US’s EV roll out.

But with the subsidy regime in tatters, and Trump preceding with a tariff war that seems to have the reshoring of auto production at its core, a swift recovery for nickel demand based on a steep uplift in US sales seems unlikely.

The removal of subsidies for industrial decarbonisation, such as tax credits for low-carbon hydrogen (and derivatives like ammonia) and carbon capture technologies, will also be generating a strategic rethink from companies gearing up to access that largesse, including Australian operators.

Are there any silver linings? Perhaps. With climate change scenario construction and benchmarking having become an industry in its own right, there is a danger that the world has been narrowing down its options too soon by being excessively prescriptive on precise policy and technology pathways.

There is an alternative argument that says we could be diverting far more of our scarce resources away from incrementalism and towards fundamentally transformative technology — silver bullet solutions — that vault society into a new paradigm as fundamentally different from what we experience today as the industrial paradigm was to the neolithic.

A new paradigm that transcends the terrestrial realm and harnesses 24-hour solar irradiation in the outer orbit, thereby unlocking the next great step in human progress. This is not a flight of whimsy.

Australian complexity theorist Graeme Snooks first put these ideas forward in the 1990s, and has recently developed them in the context of our fascination with the colonisation of Mars. And the Australian Space Agency has (savvily) put funds behind a local start-up called Extraterrestrial Power that is attempting to dramatically lower the costs of solar panels that are robust enough to withstand the harsh conditions experienced in space.

If we get further and further behind on the conventional pathways produced by organisations like the IEA and IRENA, where a percentage point either way on hydrogen or nuclear use in 2050 generate fierce debates among technical experts, then literal and figurative moonshots (or Mars shots) may become more and more attractive.

Another silver lining is that the global clean energy market is much larger than the US and the Green New Deal.

China is the largest consumer and producer of green hardware by far, with Europe a comfortable number two. According to the IEA, North America accounted for just 17 per cent of the $US2 trillion invested in clean energy in 2024 even with IRA tailwinds, with the remainder of the developed world, plus China, accounting for two-thirds of the total. This remains a massive and rapidly growing global value chain, with huge opportunities for entrepreneurship: if we get the incentive matrix right.

A third silver lining is that when I cast my mind forward to what might come after the current political cycle in the USA, an inter-generational demographic tipping point is looming. That is the moment at which people born after 1980 become the single largest voting bloc across western democracies.

While the exact year varies by country, the average timing centres on the early 2030s. We know from formal surveys and informal data gathering exercises like social media web scraping that the post-1980 generations place a significantly higher priority on climate action than their predecessors.

When this group becomes the dominant voting bloc, populism may assume an entirely different meaning. It is reasonable to assume that these beliefs will hold, to an important degree, even as these people age and move out along the conservative spectrum.

Dr Huw McKay is a Visiting Fellow at Australian National University’s Crawford School of Public Policy and former chief economist at BHP