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Ahead of UN Climate Summit, Environmental Report Sees Economic Opportunities

Report says economic growth is possible even while tackling climate change.

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Renewable energy is booming in China, as seen at this wind farm in Tianjin. A new report says such investment should be ramped up.

A week before heads of state meet at the United Nations to discuss climate change, a major report on Tuesday from global political, environmental, and industry leaders says it's possible to grow the world economy while tackling global warming.

Global leaders "realize there is serious risk of climate change in the future," former Mexican President Felipe Calderón, who chaired the group behind the report, told reporters Thursday. "However there is a general perception that taking responsible actions in order to tackle climate change could reduce economic growth and the creation of jobs or other goals."

"Yes, it is possible to get economic growth and tackle climate change," he said.

The key, the report said, will be revising national economic policies in the next 15 years, when the global economy is expected to grow by more than half.

The report is a project of the Global Commission on the Economy and Climate, an independent group commissioned by the governments of seven countries: Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden, and the United Kingdom. The group comprised more than 100 economists, politicians, academics, and leaders from the business and nonprofit sectors.

Titled "Better Growth, Better Climate: The New Climate Economy Report," the report calls for adjusting policies so that the trillions of dollars that will be spent on infrastructure and development in coming years are shifted from high-carbon systems to low-carbon systems.

By investing in renewable energy, energy efficiency, smart growth, and cleaner transportation, the report says, the world can grow the economy while staving off the worst impacts of climate change. "The wealth of evidence presented by the report shows that there is now huge scope for action which can both enhance growth and reduce climate risk," the report says.

It comes one week before world leaders meet in New York to discuss global warming at the United Nations Climate Summit.

"If we don't take action in the coming years it will be more expensive and more difficult [to address climate change]," said Calderón.

Taxes and Subsidies

One of the most controversial aspects of the report is its call for a carbon tax on emissions, with different countries introducing emissions trading markets. Such markets already exist in Europe, in parts of China, and in California.

A carbon tax has met stiff opposition in the U.S. from congressional Republicans and conservative groups, and even many environmental advocates say the idea is not politically feasible in the near term.

Additionally, the report calls for a phaseout of subsidies on fossil fuels, noting that renewable energy receives about $100 billion in subsidies around the world, while fossil fuels still get $600 billion.

Mark Kenber, an environmental economist who was an advisor to then British Prime Minister Tony Blair, says that leveling the playing field would be easier in some places than others. The lowest hanging fruit is in developing countries like Egypt, where direct subsidies attempt to make energy cheap for everyone.

That has strained budgets and led to some "perverse" effects, says Kenber, including subsidizing luxury items like swimming pools and crime like illegal exports.

The Work Ahead

Environmentalists applauded the report, with Kenber, who is the CEO of the nonprofit institute the Climate Group, calling its findings about economic possibilities "absolutely right."

"It would be naïve to say it will all be plain sailing, but there are huge economic opportunities in the transition to a low carbon economy," he says.

Kenber praised the report for calling on improvements in energy efficiency as a way to stimulate growth and reduce greenhouse gas emissions. He said the opportunity was particularly great in the developing world, where many aspects of infrastructure remain inefficient and out of date.

Improving electricity service in India through expansion of renewable sources, for example, would go a long way toward stimulating business investment in the country.

The report also points to the important role of cities, noting that cities generate around 80 percent of global economic output and use around 70 percent of global energy use.

Improving efficient, smart development in cities over the next 15 years could therefore save more than $3 trillion in capital infrastructure expenses, says the report. Many cities could see additional benefits in decreased health costs and increased productivity as air quality and congestion improve as a result, Kenber adds.

The report also calls for governments to pursue smart land-use plans and invest in agricultural technologies and restoration of damaged lands, with the possibility of slowing deforestation even as food production increases.

"A core message from the report and the work we and others have been doing over the past decade is that if you put climate change not as an afterthought but as central to your planning you can kill several birds with one stone, including reducing emissions," says Kenber.

Skeptics Raise Questions

The conservative Heartland Institute, which recently hosted a convention of self-described global warming skeptics in Las Vegas, calls attempts to move away from fossil fuels "job killers."

James Taylor, the group's senior fellow for environmental policy, says the report was prepared "by the usual front groups of environmental activists," including such advocacy groups as the World Resources Institute, the Global Green Growth Institute, and the Stockholm Environment Institute.

"Prescriptions that try to force the world from affordable, efficient energy sources to highly expensive, unreliable sources like solar and wind are completely incompatible with economic growth," says Taylor.

Individuals and companies are already investing in efficiency technologies that make financial sense, so it's not government's role to try to stimulate that, says Taylor.

Kenber disagrees, saying governments can help ease the transition.

He points to the fact that renewable energy accounted for 56 percent of all new power capacity installed last year. "Chinese companies plan on investing half a trillion dollars in renewables by next year, and they are doing that because they see it as a good business opportunity," Kenber says.

Jobs in the U.S. solar industry grew ten times faster last year than in the economy as a whole, he adds. And overall, the clean technology market grew 11.8 percent per year from 2007 to 2010, versus 2.4 percent per year for the overall global economy.

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