Saturday, January 24, 2009

Comment: Time for a green industrial revolution

Video: Green industrial revolution

Read the accompanying news article: Launch the green economic revolution - now

AS THE world faces up to the worst global financial crisis since the 1930s, the economic case for tackling the global climate crisis is more compelling than ever. Fortunately, our ability to respond has also increased as we embark upon a technological revolution that will drive sustainable growth and development of a low-carbon global economy.

Since my colleagues and I published the Stern Review on the economics of climate change in 2006, it has become apparent that the risks and potential costs are even greater than we originally recognised. Global emissions of greenhouse gases are growing more quickly than projected, the ability of the planet to absorb those gases now appears lower than was assumed, the potential increases in temperatures due to rising gas concentrations seem higher, and the physical impacts of a warming planet are appearing at a faster rate than expected.

So, whereas our review recommended that atmospheric concentrations of greenhouse gases should be stabilised within a range of 450 to 550 parts per million of carbon dioxide-equivalent, it now seems that our target should not exceed 500 ppm. That's if we are to keep down the risks of potentially catastrophic impacts which could result from average global temperatures rising 4 °C or more above pre-industrial levels. Over the longer term, it is important to limit concentrations more tightly still.

This means that annual global emissions must peak within the next 15 years before falling to half their 1990 level by 2050. Beyond that, we will need to limit human additions to atmospheric greenhouse gases to under 10 gigatonnes of CO2-equivalent per year, compared with the current 45 gigatonnes.

Such reductions present a significant challenge, but they are affordable and manageable, costing about 2 per cent of global GDP each year. Indeed, with good policy and increasingly rapid technical progress, the costs may be considerably lower. The leading industrialised nations are due to meet in December this year in Copenhagen, Denmark, at the next annual gathering of the parties to the United Nations Framework Convention on Climate Change, and if they agree to cut their emissions by at least 80 per cent by 2050 compared with 1990, this will be an essential step towards meeting the challenge. That agreement must be effective (on the scale required), efficient (keeping costs down), and equitable (recognising different resources, skills and historical responsibilities).

The key to these major reductions in emissions - whilst maintaining development and growth - is the rapid dissemination and use of low-carbon technologies. Already, innovation is advancing in many areas at a faster pace than anticipated in our 2006 review. But such progress needs to be accelerated: we will need a revolution that surpasses the scale and impact of previous world-changing technologies such as railways and personal computers.

This requires policies and measures that remove barriers and provide incentives for technological development over three timescales.

First, action is needed to further spread existing low-carbon technologies, such as "green" household appliances. This can be done by creating carbon markets in which the price of emitting carbon reflects the potential impact of those emissions, and by introducing energy-efficiency standards to incentivise innovation, for example.

Second, we need more support for the development and scaling-up of technologies that could become commercially viable within the next 15 years, such as second-generation biofuels - which do not directly affect food production - and carbon capture and storage.

CCS is crucial for countries with fast-expanding economies, such as India and China, which currently rely on coal-fired power stations for growth. We need about 30 CCS demonstration projects, on a commercial scale, carried out in developed and developing countries over the next 10 years. This technology needs to spread through international and public-private collaborations.

Third, more effort is required to stimulate new breakthrough technologies that will lead to major cuts in emissions beyond 2030. A well-functioning global carbon market would drive these, but public funding for energy research and development should be doubled now from its present global level of about $10 billion per year, with a medium-term target of around 0.1 per cent of world GDP, or about $50 billion per year.

While the global economic downturn could distract us from the bigger task of tackling climate change, it is also an opportunity to bring forward investments in low-carbon technologies while costs are lower. It can provide job opportunities in the short run in key sectors where resources are idle, such as construction. Investments that improve energy efficiency will also yield benefits when power and heating prices increase again during economic recovery. In the long term, investments in low-carbon technologies could provide sustainable and well-founded economic growth, in contrast to the recent booms, and eventual busts, driven by flaky dotcom ventures or inflated house prices.

Continued unchecked, emissions and high-carbon growth are not sustainable. In 2009, we have a real chance to set a path towards a low-carbon future. It is the only realistic future for growth and for overcoming world poverty.

Read the accompanying news article: Launch the green economic revolution - now

Nicholas Stern is chair of the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy

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