COP 15: Growth vs. climate?
COPENHAGEN -- When it comes to climate change and how to combat it, one of the fundamental questions asked by critics and supporters alike is: Who will pay? It is also one of the toughest issues being negotiated right now in snowy Copenhagen. Developing countries demand financial and technology transfers from the rich nations. The EU has pledged $10.8 billion to help developing nations combat climate change, and the United States have also announced that they would be willing to pitch in.
However, the debate in the EU over who has to shoulder the majority of the burden has been heated, it is still unclear if the pledged amount is indeed enough and the US have been keeping their cards close to their chest. Also, the pledged amounts are short-term, running only for a couple of years. In times of economic crisis, the hesitation is understandable. Is this really the time to invest in green technologies? Aren't they too costly? Will they create jobs? All these questions concern the public, and understandably so. However, there are two strong arguments to be made for investing in green technologies, and investing in them now. First, ever since the now famous "Stern Review" by Lord Nicholas Stern and his team, evidence has hardened that we need to act now (= combat climate change by investing in clean technologies) if we want to combat climate change and not miss out on economic growth at the same time. Stern estimates that two percent of global GDP per year are required to be invested in order to avoid disastrous consequences of climate change. And more importantly, the cost of inaction could be a global GDP that is 20% lower than it otherwise might be. Critics might answer to this that we still don't know for certain what consequences climate change will have; that we are better off investing the money in innovations that we know will actually pay off. The examples of Denmark and Germany suggest that investing in green technologies would do just that. Clean technologies are not only good for the climate; they can actually create jobs, drive innovation and make a country more competitive on a global scale. Germany and Denmark are at the forefront of global green innovation. German companies export their solar panel around the world, and the Danes and the Germans are world leaders on wind parks, being the only countries that can build the facilities for large-scale offshore wind parks.
For an export nation like Germany and a small country like Denmark, being at the forefront of innovation is crucial to be able to compete in the global market place. Not to mention the fact that having your own wind parks and solar panels makes you less reliant on foreign resources. The US are looking at these developments very closely and many in the United States say that investments in green technology have to happen now if the US doesn't want to miss out. In addition, green technologies are crucial for developing nations. As it is undisputed that they have a right to growth, ways must be found to uncouple this growth from dirty technologies such as coal plants. Creating innovative solutions to energy demands in the developed world is the only way to solve the riddle of growth and development in the developing world that do not harm our climate. While this all sounds good, there is a caveat. Investment and thus innovation in green technologies has been sluggish. A recent paper by Brussels-based think tank Bruegel that was co-funded by the German Marshall Fund finds that green growth hasn't taken off yet, and will not happen at the levels necessary to avoid dangerous climate change, even with a strong carbon price. Many investments are still going towards dirty technologies. The authors of the paper suggest that in order to kick-start innovation in green growth, both a tax on carbon emissions and subsidies from governments are needed. They, like Nick Stern, argue that we need to act now €“ to drive innovation, to safe costs and last but not least to help developing nations choose a path of growth that doesn't kill our climate. The talks in Copenhagen are slow, but progress is being made. Green technologies could be one of the items that bring the world together in its global effort as they have the potential to provide gains for everyone.
The views expressed in GMF publications and commentary are the views of the author alone.