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The New Climate Economy Report: Does it go far enough?

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The report of the Global Commission on the Economy and Climate is measured, well-researched and optimistic: technically rich and politically astute. But what is new? And what are the implications for developing countries? – asks Simon Maxwell of the Climate and Development Knowledge Network (CDKN).

The report consists of an Overview, seven substantive chapters and a Global Action Plan. The substantive chapters cover three ‘economic systems’ described by the report as ‘critical’, viz cities, land use and energy; and then deal with the economics of change, finance, innovation and international cooperation. Country cases and working papers are promised on the website, but are not yet available. It helps that there is an extended Overview and a separate 70-page (and very well-written) synthesis report (SR).

Much of the story is familiar. Climate change will have high and rising costs, affecting especially the poorest. There is a strong case for early action. Government policies need to change. That needs leadership. A global deal is essential.

On the other hand, there are innovative elements. Prime among these is the argument that the economics of climate action have been transformed, first by technical change, and second by better understanding of the co-benefits associated with different growth trajectories.

As far as technical change is concerned, the best example is solar, where costs have fallen by nearly 90% in twenty-five years, to a point where solar is close to competing with coal and natural gas. As to co-benefits, the report points particularly to the health benefits of reduced air pollution, which is said to cost an average of 4% of GDP in the fifteen largest emitters, with the figure in China being 11% and that in India over 6%. Put these together and we are offered a strong conclusion:

‘There is a perception that strong economic growth and climate action are not, in fact, compatible. . . . The evidence presented in this report suggests that the low-carbon growth path can lead to as much prosperity as the high-carbon one, especially when account is taken of its multiple other benefits: from greater energy security, to cleaner air and improved health.’ (SR: 15-16).

In turning these key ideas into action, the report focuses on the three critical sectors and on three key drivers of change, viz. resource efficiency, infrastructure investment and innovation. It also deals with financing, arguing that a green growth path might actually be cheaper than the alternative – perhaps $1tn cheaper to 2030. This is because of savings by virtue of higher energy efficiency, reduced distribution costs, and reduced operating expenditure.

Of course, not everything is straightforward. A key point is that losers need to be supported in order to achieve a ‘just’ transition.

This brief summary cannot do justice to the report. However, it triggers six quick thoughts.

First, it is true that the ‘new economics’ is not that new. However, the new Climate Economy Report gives new prominence to these issues, is systematic in its treatment, and, sometimes bravely, makes quantitative estimates. This is useful. It is interesting, however, that saving on adaptation or relief costs do not feature in the report as a quantified benefit.

Second, I really like the emphasis in the report on deep structural changes that will take place in the world economy over the next generation, with or without climate change – not surprisingly, perhaps, since this is a core theme of CDKN’s model of climate compatible development.

Third, and another theme of my own work, I of course like the idea of a ‘just transition’ which compensates losers in this process of deep, structural transformation. This was point 3 of my five-point plan on ‘How to Win the Argument on Climate Change’. As I pointed out, there is a literature on this, which yields many useful insights. However, it is in the realm of political science, so perhaps was not thought to count.

Fourth, I find myself unsure about the focus on cities, land use and energy as the three ways to cut the sectoral cake. There are some semantic and category issues to worry about. Is ‘land use’ an economic system, for example? Do cities not use energy? I wonder why the Commission didn’t focus on ‘industry’ for example, or transport? One reason for doing that might have been to speak more directly to sectoral ministers who hold sway in national governments.  Now they have to dip in an out to find relevant material that applies to them.

Fifth, and now we are getting more serious, there is very little in the Synthesis Report about what any of this might mean for particular categories of developing countries. There are general references to the fact that emerging economies ‘fear getting stuck in an outdated model of economic development’ to the fact that the poorest people are likely to bear the highest costs of climate change, and to the need for additional finance.

In practice, different developing countries could be expected not just to have different growth paths, but to be affected very differently by the structural changes taking place in the world economy, by how technical or policy change elsewhere in the world might affect their own comparative or competitive advantage, and of course by the location-specific co-benefits that might arise.

Finally, and as so often with this kind of report, it would be so much better if the politics were brought out of the shadows. Frankly, stirring calls to cut fuel subsidies don’t really carry much weight without more political analysis, even when reports, as this one does, mention the importance of compensation to poor consumers and the need for safety nets. I did not see much here, for example, about stranded assets and the power of the large oil and gas companies or oil-dependent countries. I haven’t checked, but I don’t suppose Naomi Klein is referenced. Nor, because it came too late, is there mention of the Rockefeller family’s decision to disinvest from fossil fuels.

Does it matter that there are these gaps? Up to a point, I think. On the one hand, an optimistic report with a fairly broad brush approach is politically astute and probably appropriate in terms of the global negotiations. On the other hand, the devil for individual countries is in the detail, and it does not help them to over-promise win-win options. I don’t know whether climate change ‘changes everything’, as Naomi Klein alleges, but it certainly changes enough to make it hard – just like development, in fact.

Simon Maxwell is the executive chair of the Climate and Development Knowledge Network (CDKN), an initiative that aims to support decision-makers in developing countries design and deliver climate compatible development.

Photo: CIAT via Flickr

Further reading:

$310bn energy efficiency market saved a continent’s worth of energy

Campaigners call for climate refugee protection as migrant deaths reach record high

France pledges $1bn to Green Climate Fund

Sustainable Development Goals need to consider poverty and climate change

Development banks pledge to increase finance for climate change action

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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