Climate Crunch - Making the Economics Fit

The erstwhile environmental campaigner, journalist and broadcaster Jonathan Porritt gave an impassioned talk on the politics and economics climate change at the LSE tonight. We are in a period of extraordinary turmoil in the global politics of climate change. Here in the UK, support for the idea of man-made climate change is actually lower at the end of 2009 despite one of the most expensive government information TV and cinema campaigns ever launched. But by and large, people seem to be turned off by the warnings of scary apocalyptic misery.

Changing lexicon of climate change from 1992 to 2007

Scientists and Non-governmental organisations have changed their language over the years moving from referring to the impact of climate change from being

Dangerous…. to…..Non-linear….to….Runaway….and more recently “Irreversible”

In short climate change scientists have been aggregating up the risk for human-kind just as the contrarians have been moving in the opposite directions using their favourite denialist media outlets such as Fox News and the Daily Express.

10 year imperative - carbon intensity in the world economy

In 2007 the world emitted 768g of CO2. for each $1 of economic value created. In the UK we see 347 gCO2 emitted for each $1 of economic value created. There is a well published aim for 2050: 36 gCO2 emitted for each $1 i.e. reduce CO2 intensity. But we will need to move even lower to 14gCO2 if we want to reduce relative poverty in world (allow developing countries a large amount of income convergence whilst at the same time stablizing emissions)

The targets for moving towards a huge reduction in carbon intensity are incredibly ambitions. But from a macroeconomic viewpoint there is are huge opportunities for smart investments, faster innovation and trade in emerging green industries. Much of the disruptive innovation will come from emerging market economies - China is ramping up investment in renewable energies to a remarkable degrees - e.g. breakthroughs in battery technologies - they will export these to us! In other words technology transfer will happen in an opposite direction to what the conventional wisdom would suggest.

De-carbonisation

Progress in these four areas below can make a huge difference over a 10-20 year horizon (Porritt focused on the first two tonight)

1/ Energy efficiency

Focus on the low hanging fruit by increasing efficiency in homes, retail stores, factories - makes perfectly good macroeconomic sense too! Requires changing the incentives for suppliers in the energy markets. Has a big (positive) effect on inequality because energy inefficiency hits poorer households most.

Obama is spending $61bn on sustainability investments out of total recovery package of $787bn e.g. $15bn on smart-grids for electricity networks. Aiming for 250,000 - 700,000 new jobs. Multiplier effects + stimulus to innovation and productivity. Reduced energy dependency. Green economic growth / a green recovery?

2/ Renewables

New technologies are now getting traction e.g. concentrated solar power plants e.g. the six solar farms outside Seville in Spain designed to make Seville a 100% solar panel. There is the possibility of moving to total “real-time” sources of renewable energy. This threatens the rental value (monopoly profits) of the oil companies in the energy market.

3/ Carbon capture and storage - every power station will need this kind of CCS investment (costly)

4/ Reducing emissions from deforestation and degradation (hugely important, complex and costly but capable of making enormous differences to meeting emissions targets)

Jonathan Porritt concluded by looking at well-being and equity issues / and gaps in well-being across different countries - drawing attention to the work of the recent book by Wilkinson and Pickett - The Spirit Level (2009) which has provided firm evidence that health and social problems are worse in more unequal countries. There are strong correlations between inequity and aspects of a broken society / the collapse of social capital.

Questions from the floor included

1/ UK Car scrappage scheme not linked to environmental aspects - a missed opportunity
2/ Transition towns now taking off - more than 200 of them
3/ UK Feed-in-tariffs - 20 year guarantees will cause farmers to turn into power stations and move away from producing foods. “Tesco is genetically pre-disposed to crushing farmers!”
4/ Governments as enablers - to encourage a bottom up approach will have more impact in the long run