In case we need more evidence that an urgent economic transformation is required to avoid catastrophic climate change, it can be found in a new study commissioned by World Wildlife Fund International.
Conducted by Climate Risk Pty. Ltd. of Great Britain and Australia, the study concludes:
Runaway climate change is almost inevitable without specific action to implement low-carbon re-industrialization over the next five years [emphasis added]… World governments have a window that will close between now and 2014. In that time they must establish fully operational, low-carbon industrial architecture. This must drive a low-carbon re-industrialization that will be faster than any previous economic and industry transformation…Today, only three out of 20 industries are moving sufficiently fast enough.
By “low carbon re-industrialization”, the authors mean energy efficiency and clean generation technologies, low-carbon agriculture, and sustainable forestry. They have identified 24 critical resources and industries the world will need to develop quickly to avoid climate catastrophe. Among their conclusions:
- By itself, emissions trading will not be enough to cause the necessary re-industrialization of the world economy. We will need massive private investments; tens of trillions of dollars from the investment community; and more aggressive government action to create a stable long-term investment environment.
“Starting with the least-cost mitigation solutions and working our way forward to higher-cost solutions as carbon prices rise – that approach will take too long,” says Sean Kidney, Climate Risk’s manager in Europe. “We need to tackle all solutions at the same time.”
- To achieve an 80 percent reduction of greenhouse gas emissions by mid-century, the world will have to invest $400 billion annually in green industries by 2025. Every year the economic transformation is delayed will increase its costs and the rate of low-carbon industrial growth required for de-carbonizing industry.
- Due to the large economies of scale created in the transition, the average production costs of renewable energy technologies will become less than energy produced from fossil fuels. The cost “cross-over” will start as early as 2013 and all renewable industries will be independently viable by 2050, even without a price on carbon. This will deliver energy savings of $47 trillion by 2050.
“We can harvest these enormous future savings now to create an income stream that funds the capital expenditures we need,” Kidney says. How? Kidney and his colleagues are working on a number of ideas for new bonding mechanisms designed specifically to finance low-carbon investments.
What is government’s role? The Presidential Climate Action Project has submitted several re-industrialization proposals to the Obama Administration and Congress. Among them:
- Stabilize federal incentives for the development of green markets and industries. The federal government’s on-again/off-again incentives for solar and wind development are an example of disruptive rather than constructive government intervention. Uncertainty about the stability of those incentives in recent years put renewable energy companies on a roller-coaster ride rather than a stable up-ramp for development.
- Make aggressive commitments at the federal and state levels to decarbonize government supply chains. At last count, the federal government had more than 500,000 buildings, 600,000 vehicles and $18 billion in energy expenditures each year. Establishing low-carbon requirements for the companies that supply those products will help produce the economies of manufacturing scale that drive down costs for the rest of society.
- Update and revitalize the Department of Energy’s (DOE) Industries of the Future program. That Clinton-era initiative helped America’s most energy-intensive industries create technology roadmaps to a future of much greater energy efficiency and much less pollution. The roadmaps guided federal R&D and industry investment. In its new incarnation, the program should be expanded to all of our most carbon-intensive industries and to define each of their paths to a low-carbon future.
- Expand DOE’s Industrial Assessment Center program and include carbon audits. In this program, graduate engineering students and faculty at participating universities conduct free energy audits for small and medium industries. If carbon audits were added, students would learn some of the engineering skills they’ll need in a low-carbon economy, while providing small manufacturing companies with the technical help they need to thrive in a carbon-constrained market.
- Dedicate a significant portion of cap-and-trade revenues to the reinvention of American industry, including tax credits for businesses that install, manufacture or service the products necessary to reduce the nation’s greenhouse gas emissions. Include transition incentives for small businesses – our largest source of new jobs and innovations.
- Regularly update the Federal Trade Commission’s Green Guides – a set of guidelines first issued in 1992 to discourage corporate greenwashing. In the wide-wide world of sustainability, consumers already face a daunting array of green labels: the recycled-content logo, various forest-certification systems, Green-E certification for renewable energy, LEED for buildings, the Green Press Initiative logo, the Ancient Forest Friendly initiative, Green Seal, USDA’s National Organic certification, EPA’s Energy Star label. Canada has an EgoLogo program, the EU has the EcoFlower label, Germany has the Blue Angel label and five Nordic countries use the Nordic Swan label. As green products increase in popularity, we can expect more of these programs. We may not come up with a universal green label, but government can establish the standards by which green labels are judged.
- Support the United Nations’ Global Green New Deal initiative, which is working to quantify and promote the potential of green industries to alleviate poverty, reduce environmental damage and create new jobs worldwide. The World Bank has just estimated that developing economies will need as much as $100 billion annually until mid-century – double current foreign aid from developed nations – just to adapt to climate change. That means new demand for the products and services of companies that can help nations cut their greenhouse gases and cope with the climate changes already on the way.
We will not avoid climate catastrophe merely by tinkering around the edges of industrial society or by counting on a slow evolution of technologies and markets. As businessman and environmentalist Paul Hawken puts it, “There isn’t one single thing that we make that doesn’t require a complete remake.”
Alex Steffen, the executive editor of worldchanging.com, says: “The magnitude of the crises we face, the speed with which they are unfolding…mean that the solutions we need to embrace are not going to be the same sort of solutions we’re used to thinking of now…Faced with the need to reinvent the material basis of our civilization, we argue paper or plastic.”
Can we reinvent world industry in only five years? The rapid redirection of U.S. industry during World War II suggests that it may be possible – but not without intense collaboration between governments and industries. There must be a third party in the deal, too: the citizen-consumer. In my next post, I’ll suggest how government, industry and consumers can collaborate in a new social contract for economic transformation.
– Bill Becker
[JR: I would note that if this statement is true -- "To achieve an 80 percent reduction of greenhouse gas emissions by mid-century, the world will have to invest $400 billion annually in green industries by 2025" -- the U.S. share is about $100 billion a year, which is just about what the climate and clean energy bill would result in (see "The only way to win the clean energy race is to pass the clean energy bill"). I actually think we'll need a bigger investment, maybe twice as big by 2025.]
RSS
Subscribe by Email
Follow Climate Progress on Twitter
The article states: “To achieve an 80 percent reduction of greenhouse gas emissions by mid-century, the world will have to invest $400 billion annually in green industries by 2025.”
It’s worth noting that the nations of the world currently spend around $1.3 TRILLION annually on the military, of which approximately half is the US share.
Secular Animist, Yes and If in fact the Nation was dedicated to truly helping the world populations achieve a sustainable existence as opposed to our greed and resource depletion currently practiced perhaps we would defuse some of the hatred that is directed our way. Thus minimizing the need for the military in the first place. Perhaps even in time we could eliminate the military all together…
I often come to climateprogress.org and get a glimmer of hope, of good news. But not today. 5 years? Sigh.
I am -not- going to go see The Road in theaters; I’m afraid we’ll see it with our own eyes soon enough.
That $400 billion per annum does seem light. The IEA 2008 World Energy Outlook suggested $26 trillion in spending 2007-2030 (albeit with significant overlap which includes spending on fossil fuel exploration, power, etc.)…
I believe this month’s Scientific American article “A Plan for a Sustainable Future – How to get all energy from wind, water and solar power by 2030.” suggested $100 trillion in spending… I recognize that is not an apples to apples comparison (i.e. 80% reduction in carbon emissions by 2050 versus 100% reduction by 2030), but it just seems that the $400 billion seems light… Even in the WWF report that Bill is discussing here, they talk about required investment of $6.7 – $7.0 trillion over the time frame, but on the very next page state: “The investment community must commit tens of trillions of dollars”…
I haven’t looked at this in detail, it’s just that it seems off given some other contexts. Would appreciate some clarification. And, would LOVE it if we can get it done for $400Bill per annum…
One thing for sure is we get NO where without taking some action. Another is that that the savings in energy thru efficiency as well as the GDP of the investments seldom get computed into these costs as they tend to be much more foggy.
The investments that have to be done are incredibly big, that point has been clarified many times and is seen as an objection by some parties. However, as also has been proven, the costs of not investing right now are even many times higher. Therefore the realization of governments and private investors has to be there that we have to act now, for our climate and for our economy.
For more info on the environment, have a look at this Green News.
the recent Deutsche Bank Climate Advisors report also makes the point that current policies, (including proposed US energy legislation) will still leave us 7-14 billion Tons CO2e short of needed reductions by 2020. But if there is going to be hundreds of billions of dollars of investment globally a year, it’s important that the US (and other countries) share the benefits, and all the jobs and technology don’t end up in China – The Deutsche Bank report paints a worrying picture for the US and UK, and this is backed up by recent news stories. See my blog post: Clean Energy Competitiveness in a Global Economy http://climateinc.org/ 2009/ 11/ clean-energy-competitiveness-in-a-global-economy/
What is the Climate Risk Pty. report saying about total investment through 2050, and what is the return? Here is their (summarized page 5 of 11 of ref above) description of the total investment required:
“The investment required to cover the
additional cost of renewable energy
relative to fossil fuel energy is about
US$6.7 trillion in the minus 63%
scenario and US$7.0 trillion in the minus
80% scenario. If the ongoing costs of
CCS out to 2050 are also included, these
costs would be increased by as much as
US$10 trillion.”
and here is the (summarized) return on investment:
“The scale of renewable energy savings
from 2013 to 2050 is expected to be in
excess of US$41 trillion for the minus
63% scenario and US$47 trillion for the
minus 80% scenario.”
To put this in perspective, last year, according to the IEA, investment in oil and gas exploration alone was US$400 billion. Finding capital on a similar scale for the renewables/efficiency wedges shouldn’t be too hard, since the ROI in future decades is reasonable.
All this, the authors say, is before a carbon price.
They identify 2014 as the “point of no return” based on an upper limit of 30% industrial growth–work back from the goals for 2050, and their models show we have to be started by 2014. “…does not get underway until after 2014, then the probability of exceeding 2°C of warming and the risks of runaway climate change
occurring will exceed 50%.” Nice graphic showing this very clearly on page 7.
imho, this report sets new standards in pulling together top level information from across all the sectors. Very welcome are the adapted figures from Meinshausen et al, the refreshed wedges presentation, the detailed appendix, and much more.
The full report is here: http://wwf.org.au/ publications/ climatesolutions2/
We need to do more than just help these industrial companies with assessments/audits. We need to help them do the detailed engineering necessary to actually implement all the energy savings ideas. Too often a consultant/auditor walks through a plant, offers up a list of ideas and then nothing happens. Until a project is understood in detail, who’s possibly going to finance the implementation?
Eric, in regard to the five-year timeframe: There’s a very thin line between creating a realistic sense of urgency and depressing one another. I apologize if my piece pushed you over the line. I teeter myself. What gets me crazy are those people who say the transition to a virtually fossil-free economy is unattainable, unaffordable and impractical — when we really haven’t even tried. We’ve made no credible effort to institute economy wide energy efficiency, no serious effort to meet market capacity with renewable energy technologies, no substantive and consistent tax incentives for those technologies. Nothing we’ve done in public policy to create incentives for solar and wind power, for example, comes close to our history of subsidies for nuclear and fossils. My attitude, even in the fact of shocking deadlines like the five years in this study, is this: It may seem unlikely we can meet the deadline, but we will never know if we don’t start acting like we can. We may surprise ourselves.