The challenge of climate change

The UN Climate Change Conference in Copenhagen in December is expected to forge a new international treaty committing all signatory countries to broad reductions in domestic emissions. Industries will be expected to show their commitment towards protecting the environment through sustainable business growth. ACHIM STEINER reviews the challenges facing the sector and the opportunities offered by a green economy.

The challenge of climate change

Still Pictures/UNEP

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Rethinking the economy
Beyond its immediate consequences, the economic crisis is indicative of flaws in patterns of growth and development that have relied excessively on investment in financial capital without paying equal attention to investment in human and natural capital. The world economy has grown over the past 50 years: global Gross Domestic Product (GDP) doubled between 1981 and 2005. At the same time, 60% of the world’s ecosystems have been degraded or unsustainably exploited, according to the Millennium Assessment Synthesis report released in 2005. The continual neglect of investment in conserving and regenerating natural capital is increasingly undermining the basis of livelihoods and wealth creation. This particularly affects the poor and most vulnerable segments of society. The imbalance in patterns of investment in economic, human, and natural capital represents a challenge for long-term sustainable development, and must be given due attention in the global effort to rebuild economies.

These challenges and contradictions will not disappear if economic growth resumes in a ‘business as usual’ manner. Once global growth resumes, the price of oil is expected to rise to US$180 a barrel. The impact will be felt throughout the global economy, and especially by the poor. In 2008, rising fuel prices cost consumers in developing economies US$400 billion in higher energy expenditure, and US$240 billion in more expensive food. The rise in food prices in 2007 is estimated to have already increased global poverty by between 130 million and 155 million people.

Tackling climate change
A world economic recovery that revives fossil fuel consumption will accelerate global climate change. Greenhouse gas (GHG) emissions are expected to increase by 45% to 41 gigatonnes in 2030, with three-quarters of the rise generated by China, India, and the Middle East. The International Energy Agency warns that the atmospheric concentration of GHG could double by the end of this century, and lead to an eventual global average temperature increase of up to 6°C. Such a scenario is likely to cause a sea level rise between 0.26 and 0.59 meters, and severely disrupt ecosystem services. According to the Stern Review of the Economics of Climate Change, with 5-6°C warming, the world economy could suffer losses equivalent to 5-10% of global GDP. Poor countries will suffer costs in excess of 10% of GDP. Reports by the Intergovernmental Panel on Climate Change indicate that by 2020, rain-fed agricultural production in several sub-Saharan African countries could decline by over 50%. Changes in agricultural productivity will not only hit GDP growth expectations, but also exacerbate many of the agricultural and food security challenges already facing the world’s poorest countries. Across cities worldwide, about 40 million people are exposed to a one in 100 year extreme coastal flooding event. According to the OECD, the top ten cities in terms of exposed populations are Mumbai, Guangzhou, Shanghai, Miami, Ho Chi Minh City, Kolkata, Greater New York, Osaka-Kobe, Alexandria, and New Orleans. By the 2070s, the size of the exposed population could rise to 150 million.

In response to these challenges, and taking the current economic crisis as an opportunity, in October 2008 the United Nations Environment Programme (UNEP) launched the Green Economy Initiative which makes the economic case that the right policy actions can stimulate recovery and improve the sustainability of the world economy. These policies – “The Global Green New Deal” – could create millions of jobs, improve the livelihoods of the world’s poor, and channel investments into dynamic economic sectors.

The Green New Deal was released in the wake of unprecedented economic stimulus packages (over US$3000bn announced in 2008 and 2009) in December 2008. A subsequent Policy Brief to G20 heads of states urged them to turn the crisis into an opportunity: a global green economy driven by massive job creation based on a more efficient use of resources; energy-efficient building and construction; widespread use of modern clean public transport; the scaling up of renewable energy; sustainable waste management; and sustainable agriculture reflecting the latest thinking in ecosystem management, biodiversity and water conservation.

Investing in green industries
The production of energy-intensive industrial goods has grown dramatically – for example, between 1970 and 2007, the global annual output of cement increased by 271%, aluminium by 223%, and ammonia by 200%. Production is expected to continue growing as population and per capita income increase.

Responding to these challenges requires transformative change in the way the economy’s resources are allocated. There is a growing indication that investment in the so-called green industries could offer solutions to today’s myriad of environmental, economic and social challenges. During 2008, UNEP, the International Labour Organization, the International Organisation of Employers, and the International Trade Union Confederation, jointly commissioned Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World. This is the first comprehensive report on the emergence of a “green economy” and its impact on the world of work in the 21st Century.

The report showed that employment could be affected in at least four ways:

  • Additional jobs will be created – as in the manufacturing of pollution-control devices added to existing production equipment.
  • Some employment will be substituted – as in shifting from fossil fuels to renewables, or from truck manufacturing to rail car manufacturing, or from land filling and waste incineration to recycling.
  • Certain jobs may be eliminated without direct replacement – as when packaging materials are discouraged or banned and their production is discontinued.
  • Many existing jobs (especially such as plumbers, electricians, metalworkers, and construction workers) will simply be transformed, and redefined as day-to-day skill sets, work methods, and profiles are greened.

Enabling a green economy
Aware of the challenges facing the industrial sector in transitioning to a greener economy, especially in developing countries, UNEP promotes resource use efficiency throughout the life-cycle of goods and services through its longstanding partnership with the United Nations Industrial Development Organization (UNIDO). The new Joint Resource Efficient and Cleaner Production Programme builds on the existing capacities to advance sustainable industrial development, and sustainable consumption and production in over 40 developing and transition countries. Through this synergistic, joint programme, UNIDO and UNEP are developing and strengthening national capacity services to businesses, governments, and other organizations. The programme enables them to implement the concepts, methods, techniques, and policies necessary to reduce pollution and waste intensities, and to improve efficiency of their natural resource use. Key focal areas address construction and buildings, transport, waste, and industrial water use.

UNEP’s Green Economy Report, due for publication in late 2010, will make a macro-economic case for increasing public and private investments in 12 “green sectors” including energy-intensive industry sectors like cement, steel, chemicals and refineries. It will also show how improvements can be realized through product design and development, material substitution, process modification and control, energy substitution and efficiency, new clean technologies and processes, and technology transfer measures.

UNEP is committed to work with governments, civil society, and the private sector to identify the most promising work streams for enabling a green economy. Through these initiatives, UNEP is seeking to motivate and enable policy-makers, business executives, and stakeholders at large to invest in sustainable industry measures that are supported by necessary policy and institutional reforms.

Achim Steiner is the Executive Director of the United Nations Environment Programme (UNEP)

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