Is it possible to grow rich and go green?
The long-held belief that developing countries can’t afford to decarbonize is starting to fall apart
In this new world, delaying the switch to zero-carbon power isn't giving emerging economies a chance to catch up with richer countries - it's retarding their development by saddling them with higher-cost power when cheaper alternatives are available
For five decades, international environmental meetings have been riven by a north-south divide.
While the rich nations of the global north have led calls to rein in emissions, their less affluent counterparts have largely remained on the sidelines. The Kyoto Protocol was in essence a treaty between the wealthy Group of Seven nations, the former Soviet Union, Australia and New Zealand. Even after the 2015 Paris Agreement brought developing countries into the greenhouse-target club for the first time, emissions from the Organization for Economic Cooperation and Development fell 2.7 per cent in the four years to 2019, while those from lower-income nations grew 7.2 per cent.
The words of former Indian Prime Minister Indira Gandhi at a 1972 environmental conference have been crucial to fortifying that position. "Are not poverty and need the greatest polluters?" she argued.
By that logic, the preaching of richer countries reeks of hypocrisy. Having built their own wealth on the cheap energy provided by coal and oil, they'd seek to deny the same benefits to other countries. With less than a sixth of the world's population, they've racked up more than half of historical carbon emissions. Just as they monopolized the world's resources during their days as imperial overlords, so too have they monopolized the finite capacity of the planet to absorb carbon.
Those debates are as alive now as they were back then. Major developing countries in September branded the European Union's plans to levy a price on the carbon content of imports "discriminatory." An equitable outcome wouldn't see India's emissions hitting zero until 2075, analysts at the Council on Energy, Environment and Water, a New Delhi-based think-tank, wrote in September. Whether and when New Delhi announces a net zero target remains one of the biggest unknowns of the upcoming global climate conference.
It's time to recognize, however, that the logic underpinning this view is falling apart. When Gandhi spoke, fossil fuels were clearly the cheapest way to power economic development - but the price of rival technologies has been falling ever since, while the expenses of continuing an emissions-intensive path rise by the year.
Solar modules in 1975 cost more than $100 per watt; the same amount of power can now be bought for around 20 cents. Even spending additional money to smooth out the peaks and troughs of demand when wind and solar aren't available now results in green grids with lower overall system costs than dirtier alternatives.
India could provide 45 per cent of its energy from wind and solar in 2030, compared with less than 10 per cent in the grid at present, and still have electricity costs similar to its current fossil-dominated system, according to a March study by the US National Renewable Energy Laboratory. Committing to generating 80 per cent of power from renewables in 2040 would save $50 billion relative to a situation where they were absent, according to a separate analysis in Nature Communications last year.
In this new world, delaying the switch to zero-carbon power isn't giving emerging economies a chance to catch up with richer countries - it's retarding their development by saddling them with higher-cost power when cheaper alternatives are available.
That's not to mention the expenses that aren't paid in dollars and cents. In India, multiple studies have shown that coal plants are responsible for more than 100,000 premature deaths a year due to the health effects of particulate emissions. An August report by economists at the Indian Statistical Institute put the cost of this, along with environmental impacts from mining and haze, at 0.9 per cent of the country's gross national income.
On top of that, there are less quantifiable expenditures due to health problems that don't result in death, plus the loss of competitiveness from cities so polluted that those who can afford to leave are increasingly doing so. Yet the longer-term effects of climate change itself are most severe of all. One 2018 study put the weakening of annual gross domestic product growth in India at 6.4 percentage points if the Earth's temperature increases by 2 degrees Celsius, among the worst in the world after nations in Southeast Asia and sub-Saharan Africa.
Rich countries shouldn't take this as a reason to avoid their own difficult choices. As much as developing economies may want to decarbonize, they're still held back by the scanty availability of cash to build new power plants. The majority of the cost of running a fossil-fired generator is incurred in buying fuel over the course of its operating life, but almost all of the expense for wind or solar comes at the construction stage. That gives a lingering advantage to coal and gas because rich nations historically have been reluctant to extend the sort of up-front, long-term lending to emerging markets that renewable projects need.
If financial engineering had been moving at the same speed as mechanical engineering over the past decade, the trillions of investment dollars stuck with low returns in developed markets would be seeking out opportunities in regions where power consumption is set to surge over the coming decades. Unfortunately, the backsliding on that front is still ongoing. A blueprint for a $100 billion-a-year climate fund for emerging economies released this week still fell short of sums first pledged at the 2009 Copenhagen climate conference.
The challenge for both sides is to look beyond their pasts and glimpse the scale of opportunity ahead. India has one of the lowest rates of emissions per person of any major economy. It now has a chance to do something no comparable country has achieved before: growing affluent using cheaper, greener power that didn't exist until a few years ago, rather than at the cost of its citizens' health and a despoiled environment.
What emerging economies do now on the energy transition should be measured not by the small scale of their historic blame, but the immense scale of their future opportunity. Indira Gandhi warned of a developing world polluted by its poverty. The far greater risk is that nations will instead be impoverished by their pollution. (Bloomberg)