At the official signing ceremony a series of high-level speakers made strong statements about the need for and the potential of green growth. The Mexican Minister for Environment and Natural Resources, the Deputy Minister of Finance and the chief presidential advisor all made clear that Green Growth is the way to go for Mexico. This is very much inspired by president Calderon, who has made Green Growth one of his key priorities. Green Growth is seen as essential to improve Mexico’s competitiveness. It already drives investments in waste management and wind energy. A commitment is made to reduce greenhouse gas emissions to 30% below the business as usual levels by 2020. A new Centre for Sustainable Economy and Development has been established. A comprehensive Green Growth Strategy is being developed. When Mexico hosts the G20 meeting in June of this year the topic will be high on the agenda. In private a Mexican NGO representative pointed out however that the Mexican government is not making the necessary choices yet. In addition to green policies and initiatives the “old” policies such as building more roads and maintaining fossil fuel subsidies are maintained.   The OECD Secretary-General Angel Gurria, referring to the OECD Green Growth Strategy that was agreed upon last year said “Green and Growth can and must go hand-in-hand”. This is a major change in the OECD’s economic thinking. As a follow-up OECD recently published the Energy and Green Growth study and soon will issue the 2050 Environmental Outlook. The messages from that work are: quality of life will deteriorate if we continue on a business as usual path and economic growth will be lower than in a Green Growth scenario. OECD’s policy recommendations for a green growth strategy are: don’t delay action in climate, because it will be extremely costly; get the prices right; complement that with regulatory policies where price signals are ineffective; avoid investments that lock economies into a high carbon state (cities, infrastructure, electricity supply); invest heavily in R&D and a good innovation climate; and make the labour market as flexible as possible to accommodate the changes that need to happen.

The conference then moved to a discussion on the fundamental question if anything like Green Growth really exists. Geoffrey Heal from Columbia University presented an overview paper that tries to answer that question. The basic conclusion is: “Green policies can indeed lead to as much growth (i.e GDP increase) as traditional policies, but you have to do it right.” Economic theory supports this for three reasons: (1) all economies are in a sub-optimal state, so increasing efficiency through green policies is possible; (2) green policies can enhance the natural capital or the knowledge (green tech) that can lead to higher growth; (3) green policies can increase the optimal growth possible by creating a structurally higher rate of innovation. In addition to this it is obvious that welfare can benefit greatly, because environmental and climate damage can be avoided. Implementing green policies to maximise growth and avoid negative effects is not easy however and, if not done correctly, growth can suffer. The recipe for the right green policy package is similar to what OECD is now recommending (see above). In practice the political economy often leads governments not to follow the optimal policy approach, but to satisfy the vested interests at the same time as introducing green policies. Then growth can easily suffer.

The rest of the conference moved to a more specific discussion of the question how this green growth potential can be realised.   In a discussion on the transportation sector it was made clear that green transportation policies can have real economic benefits by reducing congestion and air pollution and increasing mobility. However, in practice rational transportation policy is rare, because governments  “manoeuvre” the political economy to get re-elected. A paper by Jose Gomez-Ibanez of Harvard University explains this very well on the basis of experiences in Ho Chi Minh City, Jakarta and Mumbai. There are additional barriers to green transportation solutions, such as the way infrastructure options are being compared economically, that disfavour green solutions.

The issue of international competitiveness and trade is often seen as a major obstacle to green growth. It is then assumed that green production in tradable goods is seriously limited by the risk of leakage and relocation of industries. A thorough evaluation of the literature however learns that this is not the case. A paper by Brian Copeland of the University of British Columbia showed that polices to get to clean production in the tradable sector in OECD countries have only a small negative effect on competitiveness and relocation of industries. There is no evidence that shielding the tradable sector helps overall economic growth. In the same vain the idea that “pollution havens” are a good way to stimulate growth has not been confirmed by studies. Weak environmental policy is not leading to a growth bonus. For cases of green policy to prevent natural capital depletion (such as deforestation) the findings are slightly different: in the short term green policies will lead to economic loss, but in the long term this is reversed. In case of global goods such as forest the way to overcome these short-term economic losses is to get compensation for maintaining the natural resource in the form of payment for environmental services.

Employment is a key issue in evaluating the benefits of green growth.  Green and renewable energy policies (wind and solar energy, energy efficiency) can create additional employment, because the activities are more labour intensive than adding large scale centralised fossil fuel power stations and to a large extent require local labour.  If this would lead to closing local labour intensive coalmines however, net employment may not change much. This was more or less the conclusion of the debate on green growth and employment: green growth can create new jobs, but it will not solve unemployment altogether. See also the paper of Alex Bowen of the London School of Economics. Another paper by Stefan Dercon of Oxford University warns that specific attention is needed to make sure green growth will not make the poor worse off, even if their living conditions may improve. Green policies generally lead to higher prices for energy and water (incorporating the externalities), which is good for a greener economy, but would require compensation for poor people. Green growth may also lead to loss of unskilled labour that poor people often rely on, so that additional efforts are required to train poor people.

Particularly interesting was a session on behavioural economics, i.e. on the question how people can accept the change necessary for the transition to a green economy. A nice overview was given by Elke Weber of Columbia University (see the paper by Weber and Johnson) of the lessons that can be drawn from psychological research into human decision making. The research clearly shows that humans seemingly do not follow rational economic arguments. “Green” decisions may be economically attractive, but that does not mean people will agree with them. But using the insights from research on human decision-making it can be explained why that is the case. People have for instance a limited attention span, they have difficulty comparing different options if these differ in many respects, they heavily discount things that happen in the future (such as long term benefits), they are sceptical about new technologies in general, they are influenced by emotions (certain words often have a negative connotation). So it should be no surprise that seemingly attractive choices for green policies are not embraced. Human beings however also have a natural desire to do “good”. Turning these insights around tells us that strategies to get general acceptance of “green” decisions or behaviour should simplify choices (by making the green alternative the default, presenting the choice as simple as possible), avoid negative connotations (by choosing the right wording), create trustworthy references (by using celebrities declaring their support), building in elements of doing good and competition (how low can I get my energy consumption compared to my neighbours?) and using rule-based approaches, such as building codes.

There is still a lot to learn on how to design and implement green policies without sacrificing growth, particularly in developing countries.  However, there is a solid basis to start making the transition to a green economy now.

As laid out in the recent UNEP Bridging the Gap report, current country pledges to reduce their GHG emissions by 2020 are insufficient to keeping global temperature increase below 2° Celsius. Global emissions levels by 2020 should not be higher than around 44 gigatonnes (Gt) CO2 equivalent, while the collective result of the current pledges will lead to emissions of 50-55 GtCO2 equivalent, depending on how countries stick to the minimum or the high-end of their pledges, and also what rules for land-use change and surplus emission allowances from the Kyoto Protocol are taken into account. A significant gap cannot be compensated after 2020, because that would require extremely costly — and thus unrealistic — draconic measures. This means long-term temperature increase likely between 2.5 and 5°, rather than 2°.

The Durban decisions have not changed anything in the pledges. The decision to extend the Kyoto Protocol with a second period has left reduction targets for developed countries and the length of the period (till 2017 or 2020) open. This needs to be decided in 2013. The US will of course stay away from committment as they have done so far. Japan, Russia and Canada will not participate (with Canada even announcing it will officially leave the Kyoto Protocol). Australia and New Zealand’s participation are unsure. So the European Union (EU)’s 27 members states and a few other countries — covering not more than 12-15% of global emissions — will likely be the only ones subscribing to the second commitment period, with their current low-end pledges that they will implement anyway. Decisions on accounting rules for land-use change and Kyoto surplus emission allowances have been postponed, making it more likely that countries can adopt their own rules rather than commonly agreed ones. Result: developed country 2020 emissions will likely be the low-end of current pledges, unless further pledge discussions in the coming years will lead to the strengthening of ambition — an unlikely outcome given the economically difficult times.

Developing country pledges for 2020 have also not been affected by the Durban decisions, since these countries will only be required to participate in a new agreement after 2020. The availability of financial support from developed countries will determine if they will reach the high end of their pledges. This is connected to the famous $100 billion-by-2020 that was pledged by developed countries in Cancun last year. No progress has been achieved in Durban on generating new sources of finance to get to this amount — remember, the decision on the Green Climate Fund in Durban was just on governance issues. So the collective effect of the developing country pledges for 2020 is unlikely to reach their maximum potential, unless — as for the developed countries — the process to further discuss ambition levels will lead to more ambitious pledges. Since developing countries have agreed to be part of a new agreement, with legally binding obligations, after 2020, it is not very likely they will raise their ambition before 2020.

The overall result is that — unless something changes fundamentally — we probably will end up with 2020 global emission levels closer to 55 GtCO2 equivalent than to 50 Gt, meaning that we would be on a global trajectory towards 3-4 or even 5° C.

Negotiations for emissions reductions in the period after 2020 are of course necessary and the fact that it was agreed to finalise those negotiations by 2015 at the latest is essential for countries to implement policies in time. However, there is no guarantee that these negotiations will be successfully completed in time. The grumbling from developing countries about the Durban decisions (see the Third World Network PDF bulletin and the relevant Scientific American article) does not bode well. And as a reminder: the Kyoto Protocol contains a clause that the emission reductions for the period after 2012 should be agreed by 2007, something that has yet to happen.

Is there no hope then for any positive development in the period till 2020? Well, actually there is some hope, but my hope lies mostly outside the UNFCCC negotiations. If the costs of solar and wind energy keep coming down as they have in the past couple of years (see this New Scientist article) and if governments [cta.int] and business [youtube.com] can be convinced that green growth strategy is more beneficial than continuing on the fossil-fuel-climate-change-causing pathway, we could see more clean energy investments and more ambitious policies to reduce GHG emissions. The big question however is if this comes in time for the narrow window we still have to keep on track to a 2°C warmer world.

So Durban might have been a giant step for international negotiations, but it is only a minor one for the global atmosphere.

It is important to integrate climate change into the main policies on development, economic growth and job creation, as discussed in chapter 4 of Controlling Climate Change (see book contents section to download). For most nations these central economic issues are far more important than dealing with climate change. By starting from the development and economic growth side the question then is how these economic goals can be achieved, while also creating an economy that has low greenhouse gas emissions, is less vulnerable to the impacts of climate change and is efficient with its water, energy and other resources. This is green growth, and it’s necessary to confront climate change.

This idea replaces the traditional thinking of seeing climate change action as a threat to economic growth into a new paradigm in which climate change, environment and resource efficiency become fully integrated in economic policy as a way to secure future economic growth. This would avoid environmental and climate disasters and scarcity of water, energy or other resources damaging growth and development.. Many countries, but also cities, are beginning to apply this new thinking. In Durban there are many events where countries present their green growth or low carbon emissions development plans.

Some examples: China was showcasing its low carbon cities and provinces programme under which strategic plans are developed for 5 provinces and 8 cities to shift the economies of these cities and provinces to a low carbon trajectory. Korea has adopted a formal green growth strategy, personally overseen by the President. It also established a Global Green Growth Institute that is charged with assisting developing countries to do the same. Brazil, Chile, Colombia and Peru are developing low emissions development plans with assistance from various institutes and South Africa. This is an interesting example of South-South collaboration, made possible by the fact that South Africa did start developing its own plan years ago and has now issued a South African national climate change response strategy. In Africa also Ethiopia, Gabon, Kenya and Rwanda are developing such plans. Follow this link to the Open Energy Info site to see an overview.

The official negotiations are in fact still based on the old paradigm (action in climate change is bad for the economy), which leads to an attitude of “you first”, “only if you act too” or to attempts to be exempted from action. The new paradigm is getting more and more support- particularly at the national level, but has not yet reached a critical mass to significantly influence the official negotiations. The hope is that the belief in and experience with Green Growth will increase and that at some point (which could be years away unfortunately) it will begin to dominate the thinking. At that moment it could lead to a very different negotiation dynamic. If Green Growth is beneficial to countries, they all want it and will seek cooperation to speed it up. That could really make a big difference.

As covered in Chapter 12 of my book, negotiations have been ongoing since 2007 and have not yet resulted in a global agreement. Is Durban going to change this?

In at the Copenhagen COP 15 meeting in 2009 many countries, both developed and developing, made voluntary pledges to reduce or limit the growth of their greenhouse gas emissions by 2020 and to provide financial support to developing countries to allow them to make a major contribution – the so called ‘Copenhagen Accord’. In 2010 at the COP 16 in Cancun these pledges were formally acknowledged in a unanimous decision by all Parties. Parties also agreed that global temperatures should not increase more than 2°C above the pre-industrial level. The major differences about a binding treaty were however not resolved.

Current trends

Two recent reports give a dire picture of where we are going. The UNEP Bridging the Gap assessment evaluated what the current pledges from countries will deliver in terms of global emission levels, in comparison to what is needed to stay on track to a 2°C target. Chapter 3 of my book discusses this issue of deep emission reductions in the short term, needed for limiting long-term temperature increase. The findings are very worrying: in the most optimistic case assuming all countries deliver the high ends of their pledges, global reductions will only be about half of what they should be, putting the world on track to about 3°C of warming. And in case countries only achieve the low end of their pledges – and that is where we seem to be heading – we are on track to warming of about 5°C, not 2°C, with very serious consequences.

The 2011 World Energy Outlook of the International Energy Agency says it differently: “2010 emissions were at an all time high” and “the door to 2°C is closing” if there are no strong additional actions taken before 2017, because current policies put us on track to 6°C warming and even with some additional action to at least 3.5°C. The WEO also points out that every dollar not invested in clean technology before 2020 will cost 4 times as much if it needs to be done after 2020. That is the price of building high-carbon energy infrastructure first that would have to be scrapped later.

Durban action

So the stakes are high for Durban. The Kyoto Protocol says that reductions for the period after 2012 would have to be agreed by 2007, in order to have sufficient time to implement policies and influence investments. That did not happen. And now it is 2011, with 2020 around the corner. You might expect that countries are now talking about how they all can strengthen their actions under the Kyoto Protocol: rich countries going to deeper reduction targets and developing countries accepting binding commitments to take actions to limit the growth of their emissions. But no, developing countries refuse to make binding commitments now and insist that only rich countries should do that, the US refuses to join the Kyoto Protocol (that they rejected from the start), Japan, Russia and Canada refuse to participate in the next phase of the Kyoto Protocol unless all big emitters (including the major emerging economies in the developing world) join. Only the European Union and a few small countries seem willing to enter into a new Kyoto Protocol phase, but only if all others accept that in 2015 a new binding treaty for all will be agreed. The US and Canada have already publicly announced they will not do that.

What will this mean for the necessary strengthening of country emission reductions? Indeed, that will not happen. Countries are keeping each other prisoner and global emissions will continue to rise. There may be some token decision at the end of the Durban meeting to continue the negotiations towards a new treaty, but that is very unlikely to deliver any short term strengthening of actions.

It is not all gloom and doom though. It is not impossible that agreement will be reached on governance and structure of the new Green Climate Fund, which will be a useful step. Some of the Cancun decisions, such as on monitoring progress by countries, might be operationalised. Some progress might also be made in organising a network of technology centres to assist developing countries in adopting clean technologies. And there are very encouraging discussions in the corridors in Durban about country efforts to realise a transition to a green and low carbon economy. More about that in the next report.

It is my pleasure to announce that Cambridge University Press has agreed to allow free PDF downloads of my book “Controlling Climate Change” (2010) via my official book website. Please go to www.controllingclimatechange.info and let your friends know as well.

A review of the book, from the British Royal Meteorological Society’s “Weather” journal: ”I can summarize this book in one word: excellent. It ought to be required reading for anyone interested in understanding what humanity can do to limit climate change.” (December 2010)

A very good explanation can be found on the European Climate Foundation website, where a video has been made explaining short- and long-term energy policy objectives.

If you like the book, please consider purchasing a hard- or soft-cover! Also, I would be honoured if this book would be recommended reading in any meteorological or climate science class.

Return soon to download the full text!