Friday, June 22, 2012

Rio+20 Needs An Ideas Overhaul To Address Global Challenges

Question: Rio +20 is occurring as we enter a phase of planetary emergency - we've recently surpassed 400 ppm in the Arctic, biodiversity loss is occurring at an exponential pace and global warming is magnifying global abnormal weather conditions. The political will to be proactive about these conditions seems to have evaporated. So how do we respond? Is it even possible for us to solve these challenges while maintaining and expanding current energy access levels?

For advocates of all things “green”, the Rio+20 Summit is supposed to charter a new path forward for the world to address its biggest challenges: reduce greenhouse gas emissions, eradicate poverty, end hunger, limit environmental destruction and increase access to clean water. But like recent climate change negotiations, the conference will result in little more than vague frameworks for future discussions and promises that will surely get broken. Instead, if the world wants to truly spur sustainable development, innovation must become the centerpiece of negotiations.

But before that can happen, international negotiators need a wakeup call: It’s time to stop pretending that ill-equipped and divisive policy tools will solve our global challenges. We’re a planet of seven billion people growing to 9 billion by midcentury. We’re a 60 trillion dollar global economy that must continue to grow to move billions from poverty. The threat of dangerous global climate change looms larger with each passing year. And over a billion people still don’t have access to energy, clean or dirty, say nothing about a lack of abundant food and clean water. In other words, we need consumption to grow while drastically reducing that consumption’s impact on the environment. Of course this is no simple task, but it is possible. Yet so far international negotiators are bringing the policy equivalent of a knife to a grenade fight.

Let’s just look at one area of sustainable development under negotiation to see why: reducing global greenhouse gas emissions by building a green economy. The fundamental goal is transitioning the global energy system from fossil fuels to clean energy. The dominant policies discussed at Rio+20 aimed at doing just that include subsidizing existing energy and adaptation technologies through a Green Climate Fund or other financing mechanisms and setting voluntary sustainability and development goals. Here’s the problem: these solutions will either fail to reduce overall growth of emissions and will only marginally increase clean energy adoption.

The main reason why is because clean energy is still more expensive and offers less performance than fossil fuels. It’s cheaper for developing countries to build a coal or natural gas plant to provide cheap energy access than to build a solar array or wind farm with the requisite energy storage. It’s cheaper and easier for people moving out of poverty to purchase a gasoline vehicle than an electric alternative. And it’s cheaper to do all of these things in not just developing countries, but developed countries as well. As a result, if we want to deploy existing clean energy worldwide, it requires continuous government subsidies for clean energy production and consumption or costly mandates to require their use. Developed countries are increasingly turning away from subsidies and are implementing only very limited mandates because it’s too costly to do otherwise, especially in a time of stretched government budgets. And few developing countries have the funds to subsidize more expensive clean energy. Creating an international Green Climate Fund to, in part, continue subsidizing the same technologies would run into similar budget issues (e.g. limited buy-in from rich countries) and limited deployment by developing countries due to high costs.

Rather than clean energy handouts, international policy should instead incent and invest in clean energy innovation designed to get the unsubsidized cost of clean energy cheaper than fossil fuels. We should seize on the apparent understanding that new and better clean energy technologies are needed (and possible) and overhaul international negotiations to reprogram money to technology development, not just deployment, including investments through the Green Climate Fund. But international policymakers should go farther and negotiate clean energy RD&D intensity targets as an alternative to carbon caps or the voluntary sustainability agreements being discussed today. As an alternative to agreeing to carbon caps or negotiating new subsidies, countries instead could sign up to increasing clean energy RD&D investments and incentives, which ITIF analysis shows would increase annual global investments in innovation by at least $20 billion if even modest goals are set. This dedicated and directed stream of revenue in innovation would accelerate the development (and thus the deployment) of cheap clean energy in all countries, rich and poor alike, while implicitly boosting productivity and economic growth of countries that agree to the RD&D intensity targets.

Only by repositioning our global sustainability challenges from subsidies and handouts to innovation is it possible to increase global economic growth and energy consumption while drastically reducing environmental and climate impacts. But however earnest participants in Rio de Janeiro’s aspirations and creative their proposals, they should recognize that meeting our global sustainability challenges are doomed without bold new approaches. Dramatic changes in how we produce and consume energy and natural resources are only going to come with aggressive direct efforts to spur clean energy innovation. Let’s get countries as committed to the clean energy innovation race as they are to making earnest but ultimately futile pledges to subsidies and sustainability targets.

By Matthew

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