The landmark report makes it clear that delivering decarbonisation is all about choices. Political and business leaders need to ask what kind of future they want to invest in
You would be forgiven for feeling confused. On one hand there are yet more credible reports highlighting the unanswerable wisdom of green growth and sustainable economic development, and on the other there are yet more warnings about the escalating climate risks we face and the deeply flawed environmental policies we are lumbered with. In the past week the cognitive dissonance with which everyone working in the green economy lives has reached deafening levels.
The landmark New Climate Economy report, released today and backed by a battalion of leading economists, financial institutions, and businesses, provides the most compelling insight to date into how we can decarbonise the global economy in a way that actually helps us meet other economic goals such as development, security, and poverty alleviation. Its findings largely echo those of the UK-wide analysis published last week by WWF, which similarly showed how decarbonisation and economic growth are not only compatible, but extremely desirable when you consider the health and security benefits that are often ignored through narrower economic impact assessments.
And yet these encouraging bookends to the past week bracketed the usual flurry of deeply depressing environmental stories. New figures confirm global concentrations of atmospheric carbon dioxide are higher than ever before and there are worrying signs that emissions are spiking again as the global economy recovers. At the same time, a major new study by those notorious hippies at PwC reiterates yet again that the pace of decarbonisation is nowhere near fast enough to avoid dangerous levels of climate change. Meanwhile, at a national level, MPs are slamming the government for failing to deliver on green promises and analysts are warning the renewables investment climate is worsening.
All of which raises some important questions: if the economic benefits of aggressive action on climate change are so self-evident – and there is a growing body of credible evidence to suggest they are – why are we still failing to take the necessary action? How can politicians hymn the need for climate action one minute and promise to build a nation on maximised oil production the next? How can businesses identify climate change as an existential risk and pledge to invest in developing a technology-led response and then reportedly fail to deliver on those investment pledges?
With next week's People's Climate March and UN meeting in New York and Naomi Klein's high-profile new book on climate risk about to be released, climate change is enjoying one of its periodic media "moments" and as such there are plenty of potential answers to these crucial questions doing the rounds. They range from Klein's contention that the current neo-liberal capitalist system is incompatible with effective action on climate change to the charge that we simply face a failure of political and business leadership and as such the right mix of leaders can deliver the carbon pricing and clean technologies we urgently need within the current economic framework. Consequently, we face a similarly wide spectrum of recommended courses of action, ranging from (peaceful) revolution to one last push to prove the viability of clean technologies and ensure green economic arguments win out.
For what it is worth, my view is that the main stumbling block remains our deeply vexed relationship with long and short termism. You may wish to contest some of the New Climate Economy's claims that green growth is more cost effective than business-as-usual, but it is impossible to contest the evidence that shows energy-efficiency measures and agricultural best practices deliver massive savings, higher yields, and economic benefits. We've always known this, and yet we still live in a world where billions of dollars' worth of energy and food are wasted every month. Why is this? Because there are always more pressing short-term problems to deal with before you can get around to insulating the loft or installing better irrigation systems. It is the exact same 'put it off until tomorrow' mentality that sees a country neglect constitutional issues for generation after generation, until part of that country decides it has had enough and suddenly converts those self-same issues from a long-term to a short-term concern. Yes, we're talking about you, Scotland.
Overshadowing all these arguments is the rarely acknowledged reality that decarbonisation and climate adaptation is so staggeringly hard to deliver. Some environmentalists are occasionally guilty of forgetting that we are talking about the rapid re-organisation of an entire global economic and technological system. It is remarkable this even needs saying, but decarbonisation is not a small undertaking. In fact, it is unprecedented in its scale and complexity. There are encouraging precedents for drastic socioeconomic change, but none faced the intricacy of a modern global economy, nor quite such an imminent deadline.
What is so interesting about the New Climate Economy report (and, in fairness, other recent reports on green economics such as last week's WWF report) is that it understands this complex context and doesn't simply re-tread the arguments in favour of decarbonisation, instead focusing to a large extent on how best to deliver this transition. And it is in its framing of the next 15 years as a succession of choices between high and low-carbon development paths that the report is both at its most compelling and has the greatest resonance for business leaders.
According to the report, $90tr (£55.5tr) will be invested through to 2030 in new urban, energy and land use infrastructure and our ability to avoid dangerous levels of climate change depends on the choice we make between investment in new clean technologies or investment in the dirty technologies of the past century. Inevitably, the technologies of the past century are cheaper up front, but they are also less functional and fail to deliver the long-term savings and benefits offered by clean technologies. We are being asked to choose between an iPad and a second-hand typewriter from a charity shop. Or, to make the analogy more explicit, between ultra-efficient LED lighting in your office or traditional strip lighting. In this context, it is remarkable that so many of us are continuing to make dumb choices.
As the report makes plain, "business-as-usual" is an illusion. The past is not always the best guide to the future, new technologies and risks means economic and development models can and do change. There may be reassuring comfort in investing in technologies and infrastructure that worked in the past, but faced with a choice between a cleaner, better and more cost-effective technology and a polluting and insecure incumbent technology, no rational person would opt for the status quo. The New Climate Economy report crystallises the realisation that many political and business leaders have made in recent years that a greener economy is not just greener, but better.
Of course, the necessary low-carbon investment choices become a lot simpler if the cost of clean technology continues to fall and if governments deliver effective and stable decarbonisation policies backed up by consistent rhetoric, and as such green businesses must continue to increase investment in clean tech R&D and lobby long and loud for better policies. But the report makes it blindingly clear that the right choices can and should be being made now in cabinet rooms and boardrooms around the world, not least because in the short and long term green investments deliver better returns for all. Greener city-planning makes sense, more sustainable agricultural practices make sense, switching off coal-fired power stations makes sense, just as more efficient offices, electric vehicle fleets, and onsite energy generation make sense at an individual business level.
The contradictory developments that dominate environmental headlines may be confusing, but make no mistake, the arguments in favour of the green economy are being won, as the World Bank, the IMF and the vast majority of the world's governments and multinationals now accept. For all its complexity, the climate change challenge now for business leaders is simple: they need to make the right choices.
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