The United Nations Climate Summit in New York last week passed with many promises, but no firm pledges. Most notably, China’s vice-premier Zhang Gaoli promised his country would peak its carbon dioxide emissions “as soon as possible,” and President Obama said that next year he would publish a plan to cut U.S. emissions after 2020. On the fringes, major corporations trading in agricultural commodities grown on former rainforest land joined with governments in signing a declaration promising to halve net deforestation by 2020 and end it by 2030.
The summit was never intended to conduct detailed negotiations for a new climate treaty. Those talks will take place between now and the UN climate conference in Paris at the end of next year, which is intended to deliver the legally binding national commitments that a similar event failed to deliver in Copenhagen in 2009.
But behind the scenes, some are asking what happens if there isn’t a deal in Paris. Or even how much it matters whether there is such a deal. Failure is possible, after all. The political winds are even less propitious today than they were five years ago.
Economic stasis continues in Europe, previously the most vocal advocate of action on climate change. Earlier this month, the European Union decided to do away with a stand-alone climate commissioner in Brussels, merging the post with the energy portfolio. The new post-holder, Miguel Arias Cañete, holds shares in an oil company and, when he was agriculture minister at home in Spain, sat in a government that cut spending on renewables, in defiance of EU policy.
Meanwhile, Germany, once Europe’s climate tub-thumpers-in-chief, is in a messy transition on climate policy as it burns ever more coal, while shutting down its fleet of low-carbon nuclear power stations. Japan’s emissions are rising post-Fukushima. And Russia, the world’s second largest oil producer, is not about to cozy up to anyone on climate policy.
Nations are taking action on climate not because of international commitments, but because they want to.
It sounds bleak. Yet, strangely, all may not be lost. The answer may lie in Plan B — reframing the entire climate issue as one of national decision-making and self interest, rather than global treaty-writing. A close reading of national policies shows that many countries are taking action on climate not because they have made legally binding international commitments, but because they want to.
Plan B began to emerge in the aftermath of Copenhagen. By the following year’s UN climate conference in Cancun, Mexico, many nations with no previous formal emissions targets — including Brazil, Mexico, South Africa, and China — had made their own domestic commitments. Most were about cutting the carbon intensity of their economies rather than actually cutting emissions. But it was a start.
Some of the targets were aspirational. But Britain passed a Climate Change Act requiring future governments to cut emissions decade by decade to deliver an 80-percent reduction in emissions by 2050 from 1990 levels.
Skeptics would point out that, without international treaties to hold their feet to the fire, future governments can always repeal laws they find inconvenient. But that may be to misread what is going on. The commitments are not about burden sharing internationally, but about self-interested domestic energy policy.
Many agree with two former U.S. senators, Timothy Wirth and Thomas Daschle, writing at Yale Environment 360 last May, that national self-interest is the only likely route to cutting emissions.
For 20 years since talks began to draw up the first Kyoto protocol — whose meek emissions targets expired at the end of 2012 without being fully replaced — negotiations have taken place around “burden sharing.” Cutting emissions has been assumed to be bad for economies, so nobody has wanted to go faster than anyone else.
The United States, in particular, refused to take on any formal commitments unless emerging industrial rivals in Asia did too. But those countries said their low and recent emissions were not to blame for climate change so far. The result: deadlock.
But suppose that is exactly the wrong way to look at the issue — 20th-century thinking when the world has 21st century technology at hand. Suppose there is no real economic penalty for being a climate good guy. And suppose that going green is actually a boon to economic growth, with the short-term costs of adopting low-carbon solutions quickly outweighed by benefits from industrial efficiency, more jobs, healthier air, and more productive ecosystems.
The short-term costs of adopting low-carbon solutions may be quickly outweighed by the economic benefits.
It sounds like a utopian vision. But it is what is increasingly being argued by some economists.
Earlier this month, it was the main message of a report, Better Climate, Better Growth: The New Climate Economy, from the Global Commission on the Economy and Climate. This is an independent body chaired by Felipe Calderon, former president of Mexico, and Lord Nicholas Stern of the London School of Economics, whose Stern Review in 2006 first opened up a debate about the economics of tackling climate change. The report’s authors included researchers from two leading environment think tanks, the World Resources Institute and Stockholm Environment Institute, economists from McKinsey, and others.
Their central conclusion is that low-carbon investment is a smarter way to economic wealth than high-carbon investment. It will restructure economies and societies — and even corporations — so that they enjoy better economic growth. There is no longer a burden-sharing downside. It is a race to the top. High-tech and high efficiency equal low carbon.
The report looks in detail at urban design, energy, and land use, and concludes that “all countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change.”
Denser, greener cities have lower transport costs and reduced health bills, especially for illnesses caused by air pollution. Smog illness currently reduces GDP by 4 percent in many countries, the report notes, and by more than 10 percent in China. Meanwhile, smarter and more intensive food production that brings abandoned and degraded farmland back into productive use will deliver higher yields, bigger profits, and reduced carbon emissions as forest loss is stemmed. Finally, with the costs of renewables down 90 percent in the last decade, the report says, these energy sources are now competitive with coal for power generation.
In comments to reporters, none of the authors of the commission report said a global treaty to fight climate change would be anything other than a good thing. It would send important signals that encouraged action by governments and companies. But the report’s lead author, Jeremy Oppenheim, a London-based economist at business consultants McKinsey, said a deal in Paris “is not essential. All the things we propose are in the economic interests of countries on their own terms.”
Right now, some analysts say, the markets and governments are rigged against the optimum path to growth.
Similarly, a recent report from the respected British consultants Cambridge Econometrics forecast that the planned 60-percent cut in U.K. carbon emissions would deliver a GDP that was 1.1 percent higher than if the country stuck to a high-carbon economy. Countries, the report found, should be making these changes out of self-interest.
But just because the economics may stack up does not mean a low-carbon economy will emerge automatically. Capitalism isn’t so simple.
Right now, says Stern, the markets and governments are rigged against the economically (and environmentally) optimum path to growth. The vested interests in high-carbon are huge. They are on display in the current pushback by the U.S. power industry against Barack Obama’s June announcement of rules to cut carbon pollution from the country’s power plants by 30 percent from 2005 levels by 2030.
Estimates of the amount of government subsidies given to fossil fuels around the world range from the International Energy Agency’s half a trillion dollars a year to the International Monetary Fund’s $2.3 trillion. Even the lower figure is six times the total subsidies for renewables. According to the IMF, fossil-fuel subsidies “crowd out growth-enhancing public spending.”
Moreover, pure market forces cannot counter the hidden costs of dirty fuels, such as higher health bills and environmental damage. Such subsidies and market failures, Stern says, slow growth as well as pollute the atmosphere and cause deaths. They have to be tamed. Carbon pricing is one route, institutional investors agree. Earlier this month, investors handling trillions of dollars a year called on governments to establish a stable system for global carbon pricing. They said it would reduce the risks to their investments from climate change.
All this leads Stephen Tindale, former director of Greenpeace UK, to argue in a recent report that international climate negotiations should be focused less on setting national emissions targets and more on fixing these perverse financial incentives against a low-carbon economy.
Yet despite the dysfunctional markets, green growth may already be fitfully turning into reality. Witness how major corporations consuming agricultural commodities signed up at the UN climate summit last week to a New York Declaration on Forests — an initiative that the World Resources Institute said “could result in more emissions reductions than removing every car, bus and plane from the U.S., China and India combined.”
As part of the declaration, the companies promised to cut forest loss from their activities by half by 2020 and to end it by 2030, and to push a massive effort to restore degraded croplands — potentially preventing billions of tons of carbon emissions annually. With productive land running out, they see this as good, self-interested business as well as climate-smart.
Many governments seem to see national benefits from reducing their dependence on high-carbon fossil fuels.
Many governments, in varying manners and to varying degrees, also seem to see national benefits from reducing their dependence on high-carbon fossil fuels. China has reduced its annual rise in coal consumption from 18 percent a decade ago to almost zero. Coal burning is set to decline in China starting in about 2020, according to some analysts. The reasons include both the health costs of killer smog and the growing availability of cheap low-carbon alternatives, from nuclear to solar.
The new technology-minded Indian government of Narendra Modi is committed to bringing electricity to the 400 million rural Indians without power from the grid through the installation of solar panels. But Modi, who did not attend the UN climate summit, has a long way to go. The Global Carbon Project points out that the carbon intensity of the Indian economy is still bucking global trends by continuing to increase.
Nonetheless, the global explosion in solar power is a major reason why almost half of all new electricity generating capacity coming on stream last year was from renewables. And that trend helps explain why there has been at least a partial break in the previously lockstep rise of global GDP and CO2 emissions, which historically have increased at about the same levels.
According to a study for the European Union, in 2012 global GDP rose by 3.5 percent while CO2 emissions rose only 1.1 percent. “We are seeing a decoupling of CO2 emissions from global economic growth,” said co-author Greet Janssens-Maenhout, a researcher at the EU’s Joint Research Center. She may have been premature — the gap narrowed in 2013, according to the Global Carbon Project. But the signs of progress are there.
This doesn’t mean the end of the climate crisis is in sight. Far from it. Atmospheric concentrations of CO2 rose at a record rate last year, due in part to nature’s faltering ability to soak up the enormous amount of greenhouses gases that we emit.
And time is short. According to a new study published last week in Nature Geoscience, at current emission rates the trillionth ton of CO2 from human activity would be thrown into the atmosphere in about 30 years. That would mark the moment when many scientists say we will be all but committed to warming beyond two degrees Celsius, the presumed threshold for dangerous climate change.
If the economists who note the benefits of moving to a low-carbon economy are right, and if we fail to halt the danger, then politics will be more to blame than economics. But if self-interest is the route to saving the climate, then maybe we still have a chance.