The Paris Climate Talks

ECONOMIC IMPERATIVES OF
THE PARIS CLIMATE TALKS

One analogy used in characterizing global climate change is: “Earth has a fever”. To extend the analogy a little further, when a body has a fever it’s expedient to provide a diagnosis, prognosis and, if possible, therapy. In this case, the diagnosis has been determined to be greenhouse gas emissions, particularly CO2, and the prognosis is that Earth’s climate system will change with consequences detrimental to human society. As for the therapy, that’s where the politics, rhetoric and posturing begin, with rationale, logic and common sense often being the first casualties.

Environmentally-entrenched alarmists and politically-entrenched opportunists have leveraged, perhaps even exploited, the complex topic of climate change to the extent that both sides can play the public however they choose and, in the process, appeal to our worst biases as they promote their causes. Consequently, the climate change issue is mired within the muck of activist and political rhetoric and has polarized society into two opposing camps—believers and deniers. And these camps generally align with political affiliation; those being, the environmental left and the industrial/capitalist right. For those not aligned with one of these groups, there is perhaps a third group—the tired, indifferent and oftentimes confused average person. This need not be the case as there are pragmatists in this battle who accept the science on climate change, but who also understand the tremendous complexities and technological challenges of addressing it. We don’t usually hear these voices because they’re busy trying to actually do something productive. What we do hear are the loud noisemakers on the extreme fringes because they have plenty of time and financial support to march, protest, and promote their agendas.

November 30, 2015, world leaders, along with their sharpest energy and environmental advisors,  convene in Paris, France in an attempt to forge a global agreement to reduce carbon emissions over the next 35 years. The Paris talks will not involve discussions of whether or not global temperatures are increasing, or whether or not climate change is real, or even whether or not mankind is the source of the emissions leading to increased temperatures and climate change. These matters will be considered settled. What will be discussed are ways forward that will curb CO2 emissions over the long-term with the ultimate objective being to set in place measures that will bend the carbon emissions trajectory downward in hopes of avoiding a 2.7oC increase in global temperature by 2050. This UNFCCC Paris climate meeting is a culminating event that, within the ranks of climate change activists, represents the best, if not last, hope for setting civilization as we know it on a path that will avoid our own annihilation or an apocalyptic reduction of mankind to hunter-gatherer status. I don’t say this with any sarcasm because in the camp of climate change alarmists, global catastrophe is the prediction for a world where global temperatures reach 2.7oC and ultimately approach 5oC. Personally, if global temperatures increase 5oC, I’m deeply concerned that there will be social and political outcomes at the global scale that extend beyond U.S. control and will impact our own national and economic security; and I base this on U.S. defense and intelligence studies, not climate models. Climate models predict climate. The US DOD and US security and intelligence agencies predict human response to all sorts of events, including environmental catastrophes. Given that climate change presents a potential risk to U.S. security, then it warrants our attention as well as action by the global community.

Consider how you arrived at your own conclusion regarding climate change. From whom, or where, did you get your information and how did you vet that information? If you say that you read the IPCC AR5 report, and you’re an average citizen, then you should be congratulated. The report is over 1500 pages of excruciatingly technical documentation compiled by scores of science experts, and is a couple hundred floors above the average person’s place of intellectual residence. The best that most people can do is read the Summary for Policymakers, which is only 32 pages long. Nonetheless, the physical science that underpins this summary is in the full AR5 report, which is simply beyond the reach of most people. Unless you’re in that category of individuals who can consume and assimilate extremely technical scientific information, then you may very well have drawn your conclusions from your own research based on the writings and opinions of others; and, currently, there is no lack for information or disinformation on climate change. Again, unless you’re capable of comprehending extremely complex scientific climate data, information and models, you eventually decided to believe or accept the argument of one side or the other.

While this is arguably one of the most complex issues ever to be addressed by the global community, the salient aspects can be distilled out and the stumblingblocks to reaching a global accord can be clearly identified. This by no means simplifies the task of coming to some sort of carbon reduction agreement that will stave off a 2.7oC-5oC temperature increase. It does, however, force the noisemakers out of the room so that rationale, logic, common sense, and reality can be brought to bear on the issue at hand. Therefore, this commentary is not an attempt to disregard concerns about the potential impacts of severe climate change nor is it to promote a business-as-usual path forward. Rather, it is to provide a degree of clarity to help frame the climate change issue within a realistic context—and that context is not simply climate change, alone.

First, there are some indisputable and verifiable facts that all policy decisions and global agreements will take into account. These are:

  1. Global CO2 emissions are increasing annually;
  2. Atmospheric CO2 concentration is increasing;
  3. CO2 is a greenhouse gas that absorbs radiation emitted from Earth’s surface, which theoretically could result in a warmer atmosphere and, thus, result in increased global temperatures; and
  4. Average global surface temperature, relative to 1951-1980 average temperatures, is increasing;

Equipped with these simple facts, climate change activists regularly sound the alarm that unless the industrialized world does something soon to curb, and eventually zero out, carbon emissions, then life on planet Earth as we know it will cease to exist. Their unyielding position is, the world must do one thing: wean itself off of fossil fuels immediately, if not sooner, and switch over to renewable energy resources. This seems simple enough because we have the technology for solar PV, wind turbines, hydroelectricity, wave energy, tidal energy, geothermal energy, biomass, etc. And, it’s a fact that, “Enough solar energy reaches Earth in one hour to meet the world’s energy needs for a year”. This old saw makes it out to be a simple issue of just choosing to switch over to renewables and that it is environmentally and socially derelict on our part to not take advantage of such free and abundant energy resources. Such statements as this, which oversimplify something as complex as a global energy transition, only distract from the enormous challenges of harnessing renewable energy on a global scale to support not only existing multi-trillion dollar economies, but also newly industrialized economies and about 1.5 billion people who currently have no access to electricity. There’s also enough water on Earth to meet all our water consumption needs, but the problem is that most of it is salt water. The issue with solar and other renewables is the same as that of water supply—it’s about quality, reliability and geographic availability, not just quantitative amounts.

Setting aside the rhetoric and end-time prognostications, the climate issue is much deeper and far more involved than simple quantitative facts associated with carbon emissions, temperature, and the amount of solar energy reaching Earth’s surface every hour. While carbon and temperature represent causes and symptoms, they aren’t the upstream drivers of climate change, and while solar and other renewables will be part of the solution, they aren’t the answer. Beyond the quantitative facts of carbon and temperature, complex socio-economic issues, dreams and hopes are embedded in the aspirations of a globalized world desperately seeking economic opportunities, and these aspirations will not yield to environmental rhetoric and overly simplistic slogans such as, “Go Green”, or “All Renewables”, or “Beyond Fossil Fuels” or “Kill Coal”.

With this said, a few core realities will likely dominate the background of the Paris climate talks and these realities need to be understood by those of us in the U.S. so that substantive, productive and realistic steps can be taken by the global community to avoid potential long-term climate change consequences:

  1. China is the leading emitter of CO2, having surpassed the U.S. in 2005;
  2. India has a population of approximately 1.31 billion people with about 23% (~300 million) living below the poverty line;
  3. India has critical resource and infrastructure issues (severe drought, inefficient food and agricultural productivity, the aforementioned poverty, insufficient ground and surface water supplies, power generation shortages, and an insufficient transportation system for connecting its factories with the global economy);
  4. India’s largest economic sector is its service sector while its industrial sector has yet to fully engage and its agricultural sector lacks the efficiency to sufficiently support its population;
  5. India will pursue an economic development path forward focused on lifting its 300 million citizens out of poverty, boosting industrial output, and positioning India on the global stage of fully industrialized countries;
  6. India will consume fossil fuels in order to achieve its economic development objectives; and
  7. India’s economic growth and development pathway to full industrialization will likely result in it surpassing the U.S. in CO2 emissions and, perhaps eventually, China;

India has positioned itself for economic development and expansion, and the technology and global resources are available for it to establish its industrial base, lift its poor out of poverty, and assume a stronger position on the global economic stage. However, what currently stands to oppose India’s socio-economic goals is the Paris global climate summit, which, by design, will work toward curbing the consumption of the very fossil fuel resources on which every other industrialized country built its economy and on which India believes it must also be allowed to build its economy. The following figures illustrate the classic distribution of agriculture, industry and service sectors in mature industrialized economies (U.S., France, Australia, and Japan) that have evolved from agrarian to industrial to service economies (primary to secondary to tertiary). It’s important to keep in mind that during the expansion of a country’s industrial base is when energy consumption is most intense.

Industrialized GDP Sectors
Respective shares of agriculture, industry and services sectors in mature economies.

Similar consideration of China and India (graphs below) indicate that China is perhaps in the initial stage of transitioning to a tertiary economy, having spent the past 30-40 years building its industrial base. However, since 1975 India’s leading economic sector has been its service sector and only recently, around 2000, did its industrial sector surpass its agricultural sector. This leaves India with strong incentives to expand its industrial base, which will require intense energy consumption as it is home to 17% of the world’s population. The U.S. and other highly industrialized countries have already solidified their agricultural and industrial economic bases and now function as tertiary economies while China’s economy is currently trending in a similar orientation. India, however, is at a completely different stage of economic development.

China India GDP Sectors
Respective shares of agriculture, industry and services sectors in China and India.

Economic development of existing industrialized nations was based on fossil fuels and nuclear and there is no precedent for developing an industrialized economy on anything other than these energy resources. This is not to say that it can’t be done. It’s only to say that there is no precedent for it and any proposals to do so are speculative and theoretical. As such, the core issue that needs to be discussed at the Paris talks, and subsequent to these talks, should not be something as oversimplified as, “How do we reduce carbon emissions in industrialized countries?” Rather, the core issue is: “How do we create economic and technological opportunities for newly industrialized countries to grow and develop their economies under a new set of energy constraints?” While curbing emissions in the U.S. and China will certainly be part of the discussion, the U.S. and China are at fundamentally different economic stages than India. The U.S. is a mature, fully-fledged industrialized nation with stable industrial and agricultural base sectors, while China, though not as economically mature, is certainly highly industrialized, is well on its way to becoming an economic superpower and is transitioning from highly engaged industrial growth to development of its service sector. As China’s upward emissions trajectory is steep, curbing emissions will have measurable impact; but, this alone isn’t the greatest concern as China’s train of industrialization has left the station and China is well on its way to fully-fledged economic industrialization. While China is the leading CO2 emitter in the world, its current economic strength also affords it the luxury of focusing on broader, external environmental issues such as climate change. This is not to imply that climate change is not an internal issue for China. The point simply is that countries with economies that are more mature than those of other countries have the economic capacity to marshal and direct resources toward addressing environmental issues. By comparison, curbing emissions in the U.S., where emissions are stable, will be less impactful over the long term, although helpful. This is not to imply that the U.S. shouldn’t engage in emissions reductions. It is, rather, to bring into focus the core issue at hand. That is, India is poised for economic growth and its attention is rightly focused internally on the current and future welfare of its own people—not the global environment. This is not to say that India shouldn’t be concerned about the impacts of severe climate change. It is, however, a reality, and an understandable reality, that India will focus on its immediate socio-economic concerns related to poverty, unemployment, industrialization, energy and power generation, infrastructure, food and water shortages, etc. and then address the longer term consequences of climate change when, and if, those consequences arrive.

Reducing CO2 emissions in a mature, industrialized tertiary economy, such as that of the U.S., does not compare with, nor does it translate to, the task of precluding CO2 emissions in the industrialization stages of a country such as India. While the U.S. should work towards curbing its own CO2 emissions based on economically feasible strategies, its greatest contribution would be to closely partner with India in the technological development of new energy and power generation systems that can meet India’s economic objectives while at the same time minimizing emissions. Moreover, it is absolutely critical that this partnership include the development of carbon capture and storage technology, nuclear power, and innovative power generation systems that are hybrids of fossil fuels, renewables, and energy storage technologies. As these systems are developed and implemented to scale in India, they can then be integrated to scale in U.S. systems and in other industrialized countries. As such, India represents an unprecedented opportunity in the history of human society to strategically and appropriately couple the high density energy resources of coal, natural gas and uranium with the intermittent renewable resources of solar, wind, water, and others, in the growth and development of an industrialized economy, within emerging climate change constraints. Incorporating low-carbon or zero-carbon technologies into a mature, $16 trillion economic superpower is not the world’s most critical need right now. Incorporating low-carbon technologies and strategies into newly industrialized countries poised to grow and development economically with associated sharp increases in CO2 emissions is where the global community’s attention must be focused.

US-China-India CO2
A comparison of CO2 emissions for the U.S., China and India illustrates the relationship between industrialization and CO2 emissions and highlights where emissions are stable, growing and about to start growing.

SUMMARY

Global climate change has potentially serious consequences, yet the public debate oftentimes borders on asinine. It’s a fair point made by climate activists when they tell skeptics to back away from belittling sound science and accept the facts for what they are. It’s also a fair point for energy industry experts who don’t reject the science, but instead are being pragmatic about how to move forward with solutions, when they tell climate activists to stop belittling their pragmatic concerns about the ramifications of switching the entire industrial energy base over to zero- or low-carbon energy resources. While climate-challenged politicians may know little-to-nothing about climate science, climate activists know little-to-nothing about providing energy and power for multi-trillion dollar economies. Moreover, as long as this continues to be cast as a climate issue alone or oversimplified as a carbon and global temperature issue that has been brought about by Big Oil and King Coal, then the core issue will be missed; that is, this is about countries positioning themselves to leverage energy resources in order to feed their people, provide jobs, afford themselves the social and political environment that will facilitate peace and security for their society, and eventually allow them to step onto the global economic stage as participating members.

In keeping with the originally proposed diagnosis, prognosis, therapy analogy, the therapy for limiting future global temperature increases must focus on those areas on Earth where the source of the problem is growing (e.g., China) and where the source is about to start growing (e.g., India and other newly industrialized countries), and to a lesser extent on areas where the source has stabilized (the U.S. and other fully-fledged industrialized countries). This is not to preclude industrialized countries from reductions; it does, however, correctly focus attention and resources where they can have the broadest and most extensive impact.

In closing, this is not a climate issue; this is an economic development issue with climate implications. More expediently, this is about economic development in India and how to grow and mature an industrial economy under new constraints for energy consumption. With this said, the Paris talks will be about carbon and climate targets only in so much as they constrain or facilitate economic growth in India and other countries positioned to begin their own economic development campaigns. But, all eyes will be on India—it is the center of attention in the climate change discussion, as well it should be.

david gattie

…ilyh…

 

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