Marianne Fay, Chief Economist, Sustainable Development Network for the World Bank Group, discussed the 2010 World Development Report, a major report on climate change and developing countries at the National Building Museum. Fay said the World Bank is focused on climate change because of its enormous impact on the way countries grow, but also said it’s important to ask: What is the impact of development on climate?
The World Development Report argues that a “climate-smart” world is possible if we “act now, “act together,” and “act differently.” Fay said the World Bank is now using the term “climate-smart” because “climate resilient” is too passive. “The development paradigm needs to change. Inertia in the system needs to change by applying new ideas, policies / regulations and financing mechanisms.” New approaches will help countries adapt to climate change. Some countries may even have a comparative advantage and see opportunities with climate change, Fay said.
On the importance of “acting now,” Fay argued that the threat of climate change is “serious and immediate.” Using IPCC data from 2001 and then 2007, she showed how the risks of unique and threatening systems, extreme weather, and large-scale discontinuities are all growing. “We are already at 0.8C above pre-industrial temperatures. Stopping at 2.0C above pre-industrial levels, which is the best we can achieve, still puts us in the danger zone.”
Inertia on many fronts is holding back change. Inertia in the built environment is the result of costs (it costs to retrofit a building, street, or entire neighborhood). Inertia in the climate system relates to feasibility. In institutions and individual’s behavior, it’s due to a lack of “political momentum.” Inertia together with uncertainty creates a situation similar to “driving in the fog heading towards a cliff” but not knowing exactly when to stop. “So we need to take a precautionary approach.” For cities, Fay said how we design communities now will impact the climate up to 100 years in the future. Power plants, which are expensive to build, last 40-50 years, but their impacts are longer. Housing stock, which gets renewed at a rate of around 2 percent per year, also has a long-term impact. The potential long-term climate impact of any new built systems must be considered in advance.
On “acting together,” Fay said poor countries will bear 80 percent of the overall impact, but are responsible for only 1/3 of the total carbon stock in the atmosphere to date. This demonstrates the “deep unfairness of the issue.” She argued that relatively smaller changes in the developed world could create “space” for increased emissions in the developing world under a safe total cap. As an example, if American SUVs applied EU fuel efficiency standards (“which wouldn’t cause too much pain”), the emission reductions would cover growing emisisons from providing electricity to 1.6 billion Africans. Currently, only 25 percent of Africans have access to electricity.
Looking at a “marginal cost abatement curve” created by McKinsey & Company, which presents the climate change emissions reductions from a range of measures including energy efficiency, renewable energy, and carbon capture and sequestration (CCS), Fay said every country has both cheap and expensive options. “All the cheap options aren’t exclusively in the developing or developed worlds.” Across the board, energy efficiency is a low-hanging fruit, and relatively cheap to implement in comparison with carbon capture and sequestration schemes.
In order to “act differently,” countries need to tap every potential energy efficiency measure. “We should target the nega-watts in addition to the mega-watts.” Fay added that nuclear energy has a role to play despite people’s NIMBY concerns. Biomass needs lots of water and land and so isn’t feasible on a large-scale given the world population is expected to swell to nine billion by 2050. Renewables “are great but provide intermittent energy and are located far from where energy is used.” Fossil fuels will continue to be used, but carbon capture needs to be scaled up. Fay didn’t mention the enormous costs (in the billions) or potential environmental dangers involved in CCS processes.
Increasing energy R&D and moving subsidies away from fossil fuels and towards wind, hydro and solar power are smart measures. “Right now, there’s only $15 billion in government energy R&D worldwide. This is equal to the amount the French spend on cheese each year, and Americans spend on pet food.” Private sector R&D investment is another estimated $60-70 billion per year. “While innovative industries put in 8-15 percent of total revenue in R&D, energy businesses spend a total of 0.5 percent.” The energy business is “fossilized.” Additionally, of the $300 billion in energy subsidies, about half of that goes to fossil fuels. Inertia also seems to be built into the global energy production system.
The Copenhagen Accord (see earlier post) was viewed as a “disappointment by most,” but yielded an agreement to increase funds for climate change mitigation and adaptation in developing countries to $30 billion. Unfortunately, the World Bank and other organizations estimate that some $275-300 billion is actually needed per year. “Some developing countries are so poor they can’t pay for mitigation themselves.” The World Bank hopes to leverage funds so developing countries can invest in clean energy like wind, solar, and hydroelectric, instead of coal plants. “We can then finance the difference in costs.” This will also help the Bank reduce those big new loans for new coal plants. A recent $3 billion loan for South Africa generated major controversy.
On the opposite scale, Fay pointed to some innovations at the local level. While the U.S. never ratified the Kyoto Accord, hundreds of cities, many of which are in the U.S., have signed on to Kyoto emissions reduction targets. In India, at the community level, “barefoot hydrologists” are using simple techniques to monitor underground water. Also, “remote sensing” technology can now be easily and widely deployed. Indeed, in a recent interview with Solutions, Elinor Ostrom, the first woman to win a Nobel Prize in economics, recently said the most effective climate change mitigation and adaptation work occurs at the local (not international) levels.
In the developed world, Fay called for increased press coverage on the negative impacts of climate change, and said marketing can help change people’s behavior. “Fifteen years ago, no one wore a seatbelt so in some cases marketing works.”
When asked about the economic and enviromental costs and benefits of retrofitting urban neighborhoods or cities wholesale to make them more energy efficient and livable, Fay could offer no positive or negative numbers on emissions. “The only cities getting redesigned on a major scale are in China. Democracy presents a real challenge to this type of work.”
Meanwhile, World Changing pointed to recent numbers on larger-scale neighborhood energy efficiency programs. However, more research may be needed on the costs and benefits of LEED-ND-style neighborhood and urban redevelopment in terms of the climate. Hopefully, retrofitting for energy efficiency at the large-scale yields a net-gain for both people and the climate, especially over the long-term.
Check out the World Development Report 2010 and the World Bank’s blog on climate change and development.
Image credit: DPI Animation House / 2010 ASLA Honor Award. Park 20/20: A Cradle to Cradle Inspired Master Plan, Haarlemmermeer, Netherlands. William McDonough + Partners.