Solutions for economy and climate

By Yu Kun-ha
  • Published : Jan 19, 2012 - 21:07
  • Updated : Jan 19, 2012 - 21:07
At the turn of 2012, the world continues to be in the grip of a two-fold crisis: an economic downturn and widespread job losses on the one side and accelerating global warming and extreme weather events on the other. So far, Asia has been less vulnerable than other regions to the economic slump, but has been arguably the most prone to natural calamities. 

While both economy and climate demand urgent attention, political leaders fear that dealing with climate change will hurt recovery efforts. In reality, mitigating and adapting to climate change can also offer opportunities for economic growth. Yet attempts to deal simultaneously with both crises have run into a seemingly intractable stalemate ― as seen at the year-end climate summit in Durban, South Africa. So here we propose actions in three areas that can promote growth while dealing with climate change.

First, energy has a vast influence on both the global economy and climate. Energy expenditure represents about 8 percent of GDP worldwide. It accounts for about 40 percent of global greenhouse gas emissions through its use in electricity, heating and industry, which has been rising steadily, especially in relatively fast growing Asia. No solution to the climate crisis is possible without a fundamental shift to low-carbon energy.

As seen in the experience of Korea and elsewhere in Asia, governments can make gains through energy efficiency, which can both drive growth and make a dent in emissions. China, the world’s second largest economy, has employed investments, penalties, rewards and awareness-raising activities to slash energy use among its largest 1,000 companies. These actions prevented the release of 265 million metric tons of carbon dioxide between 2006 and 2009.

Phasing out fossil fuel subsidies, meanwhile, although politically challenging, would spur global clean energy development and generate growth. Countries spent a staggering $409 billion in fossil fuel subsidies in 2010.

Second, forestry represents around 12 percent of global greenhouse gas emissions, while presenting a major economy-boosting opportunity. From Brazil, the largest economy in Latin America, to Indonesia, the largest in Southeast Asia, ranchers and loggers routinely fell a hectare of forest to create a pasture worth a few hundred dollars while releasing hundreds of tons of carbon dioxide into the atmosphere. One win-win solution is to prevent deforestation where the land is worth more with trees than without. At prices of $10 for every ton of unreleased emissions, those groves could potentially generate several times more from carbon markets than from pasture or deforestation.

Another solution is to restore already degraded lands. In Niger, one of the poorest nations, land tenure reform and a nationwide tree regeneration program have benefitted 4.5 million people. Brazil and Indonesia, meanwhile, have vast tracts of degraded forest lands with potential for restoration and job creation without clearing forest. In much of Asia, reversing deforestation, soil erosion, the loss of coral reefs and rising pollution can be a vital part of reducing the damages from floods.

Third, transportation also generates about 12 percent of global GHG emissions and represents an opportunity for a more sustainable and profitable path. In Asia, car ownership is booming, along with an expanding middle class. This dynamic is creating severe urban gridlock and deteriorating air quality, as well as increasing emissions. While an expanding auto industry can be part of economic recovery, investments in cleaner public transport have been found to generate even greater economic returns.

In the United States, stimulus dollars spent on public transport yielded 70 percent more job hours than those spent on highways, according to Smart Growth America. Meanwhile in Mexico, the government is pursuing an innovative transportation approach with policies and investments to scale up bus rapid-transit networks across the country.

Moving away from the old approaches of economic growth will not be easy. Even where energy reform, sustainable forestry, and investments in public transit can be shown to be beneficial, powerful special interests are blocking progress in many countries. To overcome these entrenched interests, countries ― and especially the top greenhouse gas emitters in Asia and the West ― need to address climate change is in their own national interest. Equally, in Korea and other countries, adapting to a changing climate is becoming essential as well.

Willingly or not, Asia and the world will, of necessity, eventually move to a low-carbon future. But it is the countries with the political courage to act boldly and urgently today who will be best positioned to reap the rewards.

By Manish Bapna and Vinod Thomas 

Manish Bapna is interim president at the World Resources Institute. Vinod Thomas is director general for independent evaluation at the Asian Development Bank, and previously director general and senior vice president at the World Bank. ― Ed.