It’s January in New York, 22 degree Celsius, and people are walking around in T-shirts at a time they are usually shoveling snow. In India, people are shivering in freakishly frigid weather.
But the strange weather patterns around the world are not simply explained by the vagaries of day-to-day meteorological phenomenon. They are part of longer-term climate changes wrought, for the most part, by growing greenhouse gas emissions. This is making the weather in all parts of the world far more uncertain. In fact, the world is warming, and will continue to warm if greenhouse gas emissions continue to rise. It is quite clear now that greenhouse gas emission reductions on the order of 60 to 80 per cent will be needed by the year 2050 to avoid even more drastic climate change.
It’s a global problem that needs a global solution. And it’s a problem that has the potential to seriously damage the world economy. But how do we reach a global consensus when many developing and developed countries see greenhouse gas reduction as antithetical to economic growth?
I believe we must all recognise that the overriding interest of developing countries is still economic growth and poverty eradication. Action under a future climate change regime must respect these goals and put in place economic incentives that allow developing countries to reduce greenhouse gas emissions while growing their economies and lowering their energy bill, all at the same time. Because of this, industrialised countries, which are historically responsible for a large part of the current level of greenhouse gas emissions in the atmosphere, must continue to take the lead by signing up to stronger commitments.
This does not mean that large emerging economies must not also take a leading role and act fast to rein in their burgeoning emissions. India’s Environment Minister A. Raja recently told Parliament that India’s emissions are insignificant compared with those of richer nations. This is true on a per capita basis, but given India’s large population, the country as a whole is already the fifth largest polluter in the world. According to the International Energy Agency, India’s carbon dioxide emissions increased by a third between 1992 and 2002, and greenhouse gas emissions are steeply on the rise.
On the one hand, India is developing at such a rapid pace that within the next decade, it is very likely to have eclipsed many of the current richest economies of the world — together with the other three countries of the so-called ‘Bric’ group: Brazil, Russia and China. The investment bank Goldman Sachs sees India as the only member of this group that is likely to sustain breathtaking growth until the middle of the century.
On the other hand, India is an example of a country that is making use of existing incentives for economies to grow along a greener path. The Kyoto Protocol’s clean development mechanism (CDM) allows industrialised countries to generate emission credits or allowances through investment in emission reduction projects in developing countries.
India already has 155 registered projects, with another 400 in the pipeline. These range from a biomass plant in Rajasthan to a wind power plant in Karnataka. These are expected to generate about 300 million certified emissions reductions (CERs) by the end of 2012, each representing a tonne of carbon dioxide equivalent that can be traded on the international carbon market. Whilst it is clear that the Kyoto Protocol’s CDM is working in India, it is also clear that more of these incentives are needed to have a significant impact on protecting the world’s climate.
What the world urgently needs is ‘global compact’ to fight climate change. Carbon finance has already shown it can be used to green that growth, while catalysing very significant investment multipliers. If industrialised countries met half of the emission reductions they are expected to achieve in a few decades, it could generate up to $ 100 billion a year in green investment flows to developing countries. This amounts to less than a half per cent of the economic output of industrialised countries. But it is enough, according to a recent analysis by the World Bank, to green the $ 16-17 trillion of energy investment projected for the next 50 years.
What we now need is leadership on climate change. While there are practical solutions to the issues that now cause us to procrastinate, the international process has not yet been able to respond to the urgency and has failed to make a critical breakthrough on developing longer-term global climate change policy. Creating major financial incentives to reduce pollution can only happen on a global scale. But the Indian example shows that economic growth and climate protection are far from being mutually exclusive.
Yvo de Boer is Executive Secretary of the United Nations Framework Convention on Climate Change.