Riding Growth to a Climate Solution

Economic growth may be less of an enemy to climate action than we thought.

Editor's note: In the face of the monstrous challenge of global warming, a futility narrative has taken root: “For decades we’ve done nothing to address this problem, and there’s no way to stop it now.” We’ve gathered three sage strategists to convince you that both parts of that statement are dead wrong.

Read Tom Peterson's take here. Read Jigar Shah's take here.

With the world’s population and middle class increasing each year, nations and investors are focused on economic growth. Counter to some conventional thinking, this isn’t necessarily a bad thing for action on climate change. In fact, given that we have to continue satisfying our food and fuel needs, the only viable way to address the climate challenge is by maintaining growth in a resource-constrained world. It’s for this reason that many countries in both the developed and developing world are already investing heavily in a low-carbon future. Private and public investments in the low-carbon economy are delivering profits, reducing emissions, and building resilience to energy and climate shocks.

Based on our work at Climate Policy Initiative advising policy makers around the world on how to scale up low-carbon growth, here’s a three-part roadmap for how effective action can best be fostered and accelerated globally.

Stick With What Works

The notion that not much is happening to address global warming is a myth. Each day, roughly $1 billion is invested worldwide in concrete actions to fight climate change. Notably, most of this money comes from the private sector, with government policies playing an important role in facilitating this investment. Keeping that private-public cooperation functioning smoothly is the first step toward a low-carbon future.

Exhibit A: In Brazil satellite monitoring and law-enforcement policies that protect the Amazon counter more emissions each year than all the renewable energy in Europe combined. By continuing to improve monitoring and enforcement, Brazil can build on these gains. At the same time, to grow its economy while protecting the rainforests—and thus the climate—Brazil is now also pursuing ways to raise agricultural productivity on existing land.

Exhibit B: Globally, coal plants account for about 45 percent of energy-related CO2 emissions; phasing them out can go a long way toward achieving the emissions reductions needed to meet the International Energy Agency’s target of limiting average global temperature increase to no more than 2 degrees Celsius, a widely accepted threshold for truly perilous climate change. The Environmental Protection Agency’s proposed rules to reduce power emissions 30 percent below 2005 levels, if finalized, would augment the policies the United States and Europe already have in place to get this process under way.

Scale Up—and Export—Success

Because many existing approaches demonstrate a win-win for the regions that have pursued them, we can improve on or expand them into new regions and scale up incrementally. In some cases, we need to continue to address barriers that stand in the way.

Exhibit A: California’s cap-and-trade system could be expanded to other states, and has already linked with Quebec’s. Such systems could help lower states’ costs of meeting EPA proposed regulations; many states are considering these options.

Exhibit B: India has high potential for wind and solar power given its location and geography. With costs going down, the country also has ambitious targets for expanding wind and solar to reduce dependence on coal imports while meeting growing power needs. Recently, the government of India announced plans for an additional one gigawatt of solar in the next year—about half the capacity of the Hoover Dam and enough to meet the energy needs of two million people. However, financial barriers such as the cost of debt add up to a third to the cost of renewable energy in India compared with the United States and Europe, making it harder to meet these goals. By making it cheaper to borrow, for example, India can actually save up to 78 percent on subsidies for renewables while deploying more of them. And other emerging economies, many of which have similar issues, can learn from and adopt these policies.

Think Ahead, Build the Future

Existing policies and incremental improvements can get us only so far, however. In the energy sector, many countries can successfully reach 20 percent or even 30 percent renewable energy in their power mix as it’s currently structured. But that’s not enough. And trying to fit more change into an existing system built primarily for fossil fuel energy may increase costs beyond what’s feasible or necessary. We must rethink the electricity system and redesign it for renewable energy. The technology is there; it’s the systems that lag, including how we transmit and set prices for energy, balance demand and supply, and deal with customers. The challenge for both energy and food systems will be to optimize our use of resources through a combination of efficient systems and new technologies that are supported by good policies.

Exhibit A: Moving from extensive agriculture that uses up more land to intensive agriculture that generates more yields on existing land will require not just better technology but also new and better infrastructure. For example, in Brazil, poor roads make transportation costly: Carrying a ton of soybeans from one of its leading soybean production municipalities to its point of export is almost three times more expensive than carrying the same amount of soybeans over a similar distance in the United States. Implementing next-generation technology and system improvements to boost productivity while continuing to combat illegal deforestation will allow agricultural nations to keep up with growing world demand in a sustainable way.

Exhibit B: New smart-grid and micro-grid systems for giving customers control are also just emerging in the electricity sector. Imagine being able to save money on electricity each month by choosing when to charge your electric vehicle based on when demand is lower—much as you can monitor data usage on your smartphone. Similar systems could increase efficiency, support renewable energy, and save customers, investors, and taxpayers billions.

Thomas C. Heller is the Executive Director of Climate Policy Initiative (CPI), a global team of analysts and advisers who work to improve the most important energy and land-use policies in the world, with a particular focus on finance. CPI is also a lead contributor to the New Climate Economy report—a project of the Global Commission on the Economy and Climate chaired by former President of Mexico Felipe Calderón—which will be released in September.

Read Tom Peterson's take here. Read Jigar Shah's take here.