18 November 2013
Existing renewable energy hurts economies. We should follow Japan and find cheaper forms of clean power
The last twenty years of international climate negotiations have achieved almost nothing and have done so at enormous economic cost. Japan’s courageous announcement that it is scrapping its unrealistic targets and focusing instead on development of green technologies could actually be the beginning of smarter climate policies.
Japan has acknowledged that its previous greenhouse gas reduction target of 25 per cent below 1990 levels was unachievable and that its emissions will now increase by some 3 per cent by 2020. This has provoked predictable critiques from the ongoing climate summit in Warsaw. Climate change activists called it “outrageous” and a “slap in the face for poor countries”.
Yet Japan has simply given up on the approach to climate policy that has failed for the past 20 years, promising carbon cuts that don’t materialise — or only do so at trivial levels with high costs for taxpayers, industries and consumers. Almost everyone seems to have ignored the fact that Japan has promised to spend $110 billion over five years, from private and public sources, on innovation in environmental and energy technologies. Japan could — incredible as it may sound — actually end up showing the world how to tackle global warming effectively.
Unfortunately, the Japanese model is not even on the agenda in Warsaw. The same failed model of spending money on immature technologies remains dominant. That involves the world spending $1 billion a day on inefficient renewable energy sources — a projected $359 billion for 2013.
A much lower $100 billion per year invested worldwide in R&D could be many times more effective. This is the conclusion of a panel of economists, including three Nobel laureates, working with the Copenhagen Consensus Center, a think-tank that publicises the best ways for governments to spend money to help the world.
Yet climate summits persist in hoping for a globally binding agreement on cutting carbon emissions. This was
the essence of the failed 1997 Kyoto protocol. Most of the big CO2 emitters (China and India) had no Kyoto-imposed limits, or left the process (the US) or didn’t keep their promises (Canada).
Since Kyoto, the will has not been there. After the Durban 2012 talks, India’s environment minister said that “India cannot agree to a legally binding agreement for emissions reduction at this stage of our development”. The day after the conference, Canada withdrew from Kyoto, which Russia and Japan had already refused to extend.
Only the Europeans and a few others remain devoted to significant expenses for tiny outcomes. The EU is committed to cutting carbon emissions by 20 per cent below 1990 levels by 2020. This will, according to an averaging of all the available energy-economic models, cost $250?billion per year. By the end of the century (after a total cost of more than $20 trillion) this will reduce the projected temperature increase by a mere 0.05°C. Moreover, a significant part of the EU cuts are simply pushed elsewhere. If making a product in the EU costs extra because of higher energy costs, it becomes more likely that the product will be produced somewhere else, where energy is cheaper, and then imported afterwards. From 1990 to 2008, the EU cut its emissions by about 270Mt of CO2 per year, but increased imports from China alone implied an almost similar 270Mt extra emissions outside the EU. Essentially, the EU had simply shipped parts of its emissions offshore while feeling good about itself.
There will be great headlines from Warsaw about new pledges and targets but remember previous “breakthroughs”. At Kyoto, Canada famously promised a 6 per cent reduction from 1990 levels, but ended up with a 24 per cent increase. At the Copenhagen summit in 2009, Japan pledged its phenomenal and now abandoned reduction target of 25 per cent. China, likewise, has promised cuts of 40-45 per cent but these are not actual cuts in emissions, but cuts in emissions per dollar produced, the so-called carbon intensity. As China’s economy develops, it will inevitably shift to less carbon-intensive industries as most other countries do. Although 40-45 per cent sounds heroic, International Energy Agency figures show that China is expected to reduce its carbon intensity by 40 per cent without new policies. Essentially, China promised to do nothing new at all.
The trend in human civilisation has been away from renewables. In 1800, the world got 94 per cent of its energy from renewable, mostly wood and wind. Today, it is just 13 per cent. But much of what is classed as “renewables” means poor people using wood and waste: Africa gets almost 50 per cent of its energy from such sources. China’s renewable energy share, for instance, dropped from 40 per cent in 1971 to 11 per cent today as it became more prosperous.
Rich countries install wind turbines and solar panels, which emit less CO2 but remain expensive and provide intermittent power. As David Cameron is discovering, ever increasing utility bills are a recipe for political trouble, and the total costs of UK climate policy will hit at least £21?billion per year by 2020. Such expensive policies are not sustainable and we are kidding ourselves if we expect poorer countries to adopt more costly and less reliable energy sources on a similar scale.
Despite all the summits and the trillions spent on inefficient green technologies, CO2 emissions have risen by about 57 per cent since 1990. We need to look at a different approach instead of backing the wrong horse over and over again. An innovation-focused approach would push down the costs of future generations of green energy sources to levels below that of fossil fuels. The innovation could focus on much cheaper wind and solar, but it would also deliver much less costly storage systems for when the wind doesn’t blow and the sun doesn’t shine. It could also involve wild ideas such as algae soaking up sunlight to produce oil, essentially growing CO2-neutral oilfields off our shores. Most of these ideas will fail, but the beauty of innovation is that we only need a few ideas to come true. They will then power the rest of the 21st century.
If green technology could be cheaper than fossil fuels, everyone would switch, not just a token number of well-meaning rich nations. We would not need to convene endless climate summits that come to nothing. A smart summit would encourage all nations to commit 0.2 per cent of GDP — about $100 billion globally — to green R&D. Analyses show that this could solve global warming in the medium term by creating cheap, green energy sources that everyone would want to use. Instead of criticising Japan for abandoning an approach that has repeatedly failed, we should applaud it for an approach that could actually meet the challenge of global warming.