The fallacy of growth: Climate change policy trade-offs
By Cleo Paskal, Chatham House
In many areas, the debate around climate change has formed well-trodden pathways, making it increasingly difficult to broaden the discussion. As a result, analysis is sometimes flawed and some viable solutions are being overlooked. A case in point is the dominant assumption that there is a trade-off between economic growth and climate change policies, especially for developing countries.
Part of the problem is the narrow definitions of climate change policies themselves. Almost invariably, the term connotes a reduction in carbon emission, usually through a reduction in the use of fossil fuels. While there are a range of other areas that produce substantial greenhouse gas emissions, including, for example, the livestock industry, they are rarely included in the discussion. Similarly, there are a range of existing, low-cost ways of absorbing emission, including urban reforestation. While that topic tends to get more attention, it is still underrepresented in the debate.
Though there are sound reasons to look at energy use, at least part of the reason for the concerted focus is that, to a large degree, much of the discussion around the politics of climate change took shape in the economies where there are existing energy security concerns. Shifts to lower imported energy use dovetails well with established strategic goals. Meanwhile, for example in a U.S. context, lowering the amount of beef consumed (which would also reduce emissions) does little for strategic goals and would carry costs with the agricultural lobby. And planting trees/green roofs might provide some local jobs, but is not perceived as a—pardon the pun—growth industry, especially in comparison with potential carbon capture and storage megaprojects.
Even though much of the developing world has differently structured economies and needs, it has been pulled into the dominant paradigm through the negotiations process, and now the vast majority of global discussions revolve around carbon emissions, and in particular those related to energy use. As a result, many in the developing world (and beyond) equate countering climate change with lowering fossil fuel use, something that is perceived to negatively affect economic development. This doesn’t take into account two factors. The first is that fossil fuel prices are likely to increase in variability, and possibly rise substantially due to other factors such as the specter of peak oil. That, in itself, can undermine economic development.
A case in point is the Kingdom of Tonga in the South Pacific. Given the nature of its economy, emissions aren’t really an issue. Per capita emissions are minimal and likely to remain so. This nation of just over 100,000 citizens imports almost 100% of its energy in the form of fossil fuels. It was very badly hit during the recent oil price spike. The innovative and forward thinking government of the country immediately decided to convert its energy use to 50% renewables within approximately two years. Once accomplished, its economic development will be substantially buffered from variations in global energy markets, giving it a substantial advantage. This clearly shows that mitigation, even if largely as a by-product of energy security, can be an economic benefit, not cost.
The second factor involves assessing the cost not only of our impact on the environment, but of a changing environment’s impact on us. While the focus is normally on promoting growth, given the disruptive impacts of environmental change, we should also be concerned about limiting loss.
Much of the world’s critical infrastructure, including the oil and gas installations in the U.S. Gulf Coast, the hydro dams powering large sections of Asia, and industrial powerhouses such as Shanghai, are in regions that are already being affected by a changing climate. Hurricane Katrina (2005) cost the Gulf Coast an estimated $100 billion and triggered spikes in global oil and gas prices. There were similar problems in the Gulf energy sector in 2008 when Ike and Gustav passed though. The increasingly unpredictable river levels in the Himalayas are causing problems with site stability and the ability to generate power. In coastal China, as a result of building in vulnerable areas and increasing climate extremes, during typhoon season there have been evacuations of hundreds of thousands of people almost every year for the past few years.
The developing world understands how destructive a changing environment can be. And, when doing their assessments, they tend to quite rightly look beyond simple climate change when trying to understand their risks.
Again, Tonga is a good example of this. In recent countrywide consultation sessions, local populations were asked about how their physical environment was changing, what it meant to them, and what their concerns for the future were. This was combined with scientific assessments on vulnerabilities. What emerged was a complex picture of a changing environment that included not only climate change but a range of interrelated factors such as subduction, volcanic activity, changing currents, El Nino, and others. Only when all these factors are combined can an effective defensive strategy be put in place.
And such a strategy is desperately needed. In both the developed and developing world, if the ‘environmental change proofing’ of infrastructure, industry, urban areas, etc., is not addressed, loss may soon overwhelm growth.
Increasing energy security and reducing vulnerability to extreme events are both necessary for economic growth. Bluntly put, there is no point putting up a solar power plant in what is now, or may soon become, a flood zone.
It is not that there is a trade-off between economic growth and climate change policies; it is that without more rounded and sound environmental change policies, there may not be any growth at all.
