The U.S.
Something has definitely changed in the nature of the climate change narrative in America. climate change denial is now all but dead. Don't expect anyone to come along and say - oops, we got it wrong...you guys were right all along - but the story is moving.
However, there is still a gulf between the American perspective on climate change and that in the EU. The argument now is that climate change is a real problem and that action is necessary - but the global community has got the wrong approach. Forget regulation, cap and trade etc - climate change will be resolved through technology.
Exxon has moved to this position in the last twelve months. The World Bank has moved in this direction...even the White House is pretty much there now.
It still augers badly for the potential success of any Kyoto II. It seems that similar concerns are rising on this side of the Atlantic also. Nick Stern, at a talk in Oxford yesterday, raised concern that attempting to bring the entire global community down this path together with one collaborative effort may not be the right way to go. Maybe it is more cost effective and less politically energy sapping for each country to focus on its own efforts and find ways to censure nations that are simply not pulling their weight....we could be another ten years talking before coming up with a second global agreement....it might be too late by then.
Thursday, 22 February 2007
Friday, 9 February 2007
Climate change - the evolving discourse
My thought's on Bill Easterley's development theories will have to wait (again0. Too many fun things happening in the climate change space.
Two things from the media have caught my eye in the last couple of weeks. Firstly, there have been a number of responses to the Stern report in the Financial Times. This is one of the big outcomes of the Stern report - lively debate from the mainstream economic and business community.
Lord Lawson waded in again with an anti-Stern piece. It was the same piece that he wheeled out a year ago in a critique of the half completed report and the same critique that he gave when the full report came out late last year. Nick Stern appears to have lost patience and does not even dignify Lawson's comments with a detailed response.
Two more reasoned responses have come out in the last week. Martin Wolf (who's views I am increasingly attracted to) delivered an interesting piece - critical of some of the economics - but recognising the need for action - likening the cost to an insurance policy. Basically, he isn't convinced that the cost benefit analysis stands up to scrutiny from an investment perspective - but think about it as a way of potentially avoiding very high future costs (ie insurance) and it starts to make sense.
Samuel Brittan also gave an interesting perspective. He was again critical of the economics - discount rate set inappropriately - a common criticism of Stern - but he also finished with a conclusion that action against climate change was necessary anyway on standard environmental grounds - and certainly considering energy security.
Here's the challenge. Economists are now in the midst of the debate - but the debate is complex and maybe too nuanced for a solely economic argument. Security, intergenerational ethics, equality, perceptions of risk, valuations of the natural world - all these matter - all have theoretical approaches for economic valuation - but frankly, the economic uncertainties with this sort of complexity mean that ultimately tackling climate change isn't a question of economics - it is one of politics.
Before I drop the climate change tirade I really must conclude my thoughts on what is happening with the climate change debate in the U.S.
Two things from the media have caught my eye in the last couple of weeks. Firstly, there have been a number of responses to the Stern report in the Financial Times. This is one of the big outcomes of the Stern report - lively debate from the mainstream economic and business community.
Lord Lawson waded in again with an anti-Stern piece. It was the same piece that he wheeled out a year ago in a critique of the half completed report and the same critique that he gave when the full report came out late last year. Nick Stern appears to have lost patience and does not even dignify Lawson's comments with a detailed response.
Two more reasoned responses have come out in the last week. Martin Wolf (who's views I am increasingly attracted to) delivered an interesting piece - critical of some of the economics - but recognising the need for action - likening the cost to an insurance policy. Basically, he isn't convinced that the cost benefit analysis stands up to scrutiny from an investment perspective - but think about it as a way of potentially avoiding very high future costs (ie insurance) and it starts to make sense.
Samuel Brittan also gave an interesting perspective. He was again critical of the economics - discount rate set inappropriately - a common criticism of Stern - but he also finished with a conclusion that action against climate change was necessary anyway on standard environmental grounds - and certainly considering energy security.
Here's the challenge. Economists are now in the midst of the debate - but the debate is complex and maybe too nuanced for a solely economic argument. Security, intergenerational ethics, equality, perceptions of risk, valuations of the natural world - all these matter - all have theoretical approaches for economic valuation - but frankly, the economic uncertainties with this sort of complexity mean that ultimately tackling climate change isn't a question of economics - it is one of politics.
Before I drop the climate change tirade I really must conclude my thoughts on what is happening with the climate change debate in the U.S.
Friday, 2 February 2007
Climate change - the burden of proof
A quick interlude to coincide with the Intergovernmental Panel on Climate Change's publication today.
The summary linked to above probably rates as one of the most opaque and challenging reads I've seen for a long time. Why? Because political and peer scientific pressure has required such a precise reading of fairly indeterminate facts that a simple, concise and unambiguous communication is barely possible. By the way, I think a decent job has been done under the circumstances.
I'll drop my political guard for a moment....wouldn't we be living in a different world now if the same burden of proof being demanded with respect to climate change (particularly from the U.S. administration) had been required to validate the decision to invade Iraq? Funny how proof is mandated before action for one big issue with significant costs but is blithely waved away for another big issue with significant costs (but neatly fitting an ideology and set of commercial interests).
Enough said.
The summary linked to above probably rates as one of the most opaque and challenging reads I've seen for a long time. Why? Because political and peer scientific pressure has required such a precise reading of fairly indeterminate facts that a simple, concise and unambiguous communication is barely possible. By the way, I think a decent job has been done under the circumstances.
I'll drop my political guard for a moment....wouldn't we be living in a different world now if the same burden of proof being demanded with respect to climate change (particularly from the U.S. administration) had been required to validate the decision to invade Iraq? Funny how proof is mandated before action for one big issue with significant costs but is blithely waved away for another big issue with significant costs (but neatly fitting an ideology and set of commercial interests).
Enough said.
Tuesday, 30 January 2007
Development or economic growth?
What should society be aiming for? This is a question with an easy answer but a big difference between rhetoric and reality.
Development is what we should be targeting. This is a richer concept than economic growth. It allows us to enfold social objectives, sustainability and environmental features - even ethics or philosophical positions (see Sen's Development as Freedom).
Economic growth is a sterile measure in comparison - growth of GDP. Targeting economic growth is inadequate on many levels. GDP - what does it measure? Not very much (see John Kay's excellent piece in the FT today) - certainly not well-being of society in any meaningful sense. I've always enjoyed Herman Daly's stance on this issue - well worth a read for anyone that is frustrated by GDP going up when crime rises (well, we have to buy security alarm systems, have more police and prisons don't we?). The creation of the word illth may be a stretch too far for the English language (the opposite of wealth) but it gets the point across.
Then you have the implicit acceptance of the concept of wealth trickle down - it doesn't matter where the wealth in society is created as it will ultimately trickle down to the poor. I have more sympathy with this concept - certainly, reducing GDP shows a clear correlation with declining fortunes for a society as a whole - for most societies an absolute increase in the size of the economy is a necessary if not sufficient condition for development. Not sufficient because it might not work or might not work quickly enough build a stable, secure and cohesive society. Underclasses are increasingly being seen in developed countries as well as developing nations. From these dislocated underclasses may come the security problems of the future.
Wealth can't be understood in terms of averages or medians - policy focus must be given to those in greatest need. This is familiar rhetoric and no development discussion would take place without this concept being at the heart of the debate. However, when it comes to actions the development institutions remain trapped in a top down institution building, growth enhancing model that leaves the softer goals of development, particularly for the poorest to too much to chance.
Next time: more on this topic - leaning on Bill Easterley's great book The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics.
Development is what we should be targeting. This is a richer concept than economic growth. It allows us to enfold social objectives, sustainability and environmental features - even ethics or philosophical positions (see Sen's Development as Freedom).
Economic growth is a sterile measure in comparison - growth of GDP. Targeting economic growth is inadequate on many levels. GDP - what does it measure? Not very much (see John Kay's excellent piece in the FT today) - certainly not well-being of society in any meaningful sense. I've always enjoyed Herman Daly's stance on this issue - well worth a read for anyone that is frustrated by GDP going up when crime rises (well, we have to buy security alarm systems, have more police and prisons don't we?). The creation of the word illth may be a stretch too far for the English language (the opposite of wealth) but it gets the point across.
Then you have the implicit acceptance of the concept of wealth trickle down - it doesn't matter where the wealth in society is created as it will ultimately trickle down to the poor. I have more sympathy with this concept - certainly, reducing GDP shows a clear correlation with declining fortunes for a society as a whole - for most societies an absolute increase in the size of the economy is a necessary if not sufficient condition for development. Not sufficient because it might not work or might not work quickly enough build a stable, secure and cohesive society. Underclasses are increasingly being seen in developed countries as well as developing nations. From these dislocated underclasses may come the security problems of the future.
Wealth can't be understood in terms of averages or medians - policy focus must be given to those in greatest need. This is familiar rhetoric and no development discussion would take place without this concept being at the heart of the debate. However, when it comes to actions the development institutions remain trapped in a top down institution building, growth enhancing model that leaves the softer goals of development, particularly for the poorest to too much to chance.
Next time: more on this topic - leaning on Bill Easterley's great book The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics.
Tuesday, 23 January 2007
Climate change: common but diferentiated responsibility
I'm not sure how long it took to conceive the words "common but differentiated responsibility" but they are front and centre of any developing country conversation on climate change - in plain English - it's everyone's problem but the developed nations caused it so they can pay the lion's share to resolve the problem.
This is true but the dynamics of energy consumption are now pushing the other way. By some estimates, China will exceed the United States' emissions within this decade. India already contributes 5% of GHG emissions (the UK produces 2%). More importantly, there is huge opportunity for growth in energy consumption in the developing world. Over half the energy consumed in India is still traditional biomass. Almost 80% of the anticipated growth in coal consumption over the next 25 years is expected to come from China and India. China and India have the greatest potential growth in car ownership etc etc - the superlatives are easy to find.
It is true - climate change can not be addressed without India and China being on board. And, China and India are much more critical than most other parts of the developing world. India's greenhouse gas emissions are close to the total for the whole of Latin America. Africa's greenhouse gas emissions are insignificant with the exception of South Africa. The only other countries that are beginning to gain visibility as large emitters are the big oil producers - Saudi Arabia, Iran etc.
Unsurprisingly, the view from China and India is echoed in the words common but differentiated responsibility. They do not doubt the issue (and in many ways are already taking more action than the U.s. - China's car emission standards are tighter than the U.S. for example) and this is key. The developed world has no moral standpoint on which to meaningfully bring developing countries to the negotiating table whilst the U.S. remains officially skeptic. The position of world leadership comes with a price - that price is often having to be the first mover...it sort of defines the word "leader" doesn't it.
We should all be a little careful - there are alternatives to the Kyoto approach floating around that are higher cost mitigation approaches for those economies that developed early and polluted heavily (e.g. UK, Germany, USA etc). The Brazilian Proposal suggests that responsibility for reduction should be directly proportional to each country's contribution to the problem. I guess it's a good job Brazil doesn't hold a position of hegemony in the global community.
This is true but the dynamics of energy consumption are now pushing the other way. By some estimates, China will exceed the United States' emissions within this decade. India already contributes 5% of GHG emissions (the UK produces 2%). More importantly, there is huge opportunity for growth in energy consumption in the developing world. Over half the energy consumed in India is still traditional biomass. Almost 80% of the anticipated growth in coal consumption over the next 25 years is expected to come from China and India. China and India have the greatest potential growth in car ownership etc etc - the superlatives are easy to find.
It is true - climate change can not be addressed without India and China being on board. And, China and India are much more critical than most other parts of the developing world. India's greenhouse gas emissions are close to the total for the whole of Latin America. Africa's greenhouse gas emissions are insignificant with the exception of South Africa. The only other countries that are beginning to gain visibility as large emitters are the big oil producers - Saudi Arabia, Iran etc.
Unsurprisingly, the view from China and India is echoed in the words common but differentiated responsibility. They do not doubt the issue (and in many ways are already taking more action than the U.s. - China's car emission standards are tighter than the U.S. for example) and this is key. The developed world has no moral standpoint on which to meaningfully bring developing countries to the negotiating table whilst the U.S. remains officially skeptic. The position of world leadership comes with a price - that price is often having to be the first mover...it sort of defines the word "leader" doesn't it.
We should all be a little careful - there are alternatives to the Kyoto approach floating around that are higher cost mitigation approaches for those economies that developed early and polluted heavily (e.g. UK, Germany, USA etc). The Brazilian Proposal suggests that responsibility for reduction should be directly proportional to each country's contribution to the problem. I guess it's a good job Brazil doesn't hold a position of hegemony in the global community.
Wednesday, 17 January 2007
Book Review: Global Capitalism by Jeffrey Frieden
I have free access to pretty much every book published in the UK (which is a lot of books) - but I bought this one after having read it already.
Why? Well, I thought it was a book that I'd refer to over and over. It gives me a perspective. Here's why.
The full title of the book is Global Capitalism - It's Fall and Rise in the Twentieth Century...exciting stuff isn't it. A strange thing happened to me when I read this book - halfway through my life I gained an appreciation of and value for history. I'd spent 40 years wondering why anybody worried too hard about analysing events past. I thought it was basically a waste of a good brain. I now realise that I was wrong.
I'm sure people always feel they are living in interesting times, that there is something exceptional about their moment. We do indeed live in interesting times - globalization, climate change, extreme poverty - but then you open up Frieden's book and see the last century laid out before you.
Globalization isn't new. One might argue that it was a more active process a hundred years ago - albeit tainted by colonialism - has much changed? Societies have gone through waves of war, depression, protectionism or isolationism. Economic and development fads have come and gone - socialism, independence and import substitution, the Washington consensus (let us at least hope it has gone)....and still we have poverty.
Financial instability is alive and well. Or is it...it's been four years since the last major sovereign financial crisis (Argentina in 2002). Perhaps we have that one licked?
Freiden's book - deep in factual information as it is, taught me one thing - beware of hubris. Unfortunately, hubris tends to be in the genetic make-up of world leaders. They should spend a while and look back on a century of economic and political gyrations - we can be quite sure that we have not yet seen the end of history. There is nothing pre-ordained about the march of globalization, continued benign economic conditions in the developed world and progress in social development in the rest of the world. It requires concerted communal action and a recognition that, with climate change, we may actually be butting up against a constraint that restricts our options for action.
Next time: a few thoughts on why our leaders are actually right to be so concerned about the rise of China and India in terms of climate change - and a thought or two on what the Chinese and Indians think about it.
Why? Well, I thought it was a book that I'd refer to over and over. It gives me a perspective. Here's why.
The full title of the book is Global Capitalism - It's Fall and Rise in the Twentieth Century...exciting stuff isn't it. A strange thing happened to me when I read this book - halfway through my life I gained an appreciation of and value for history. I'd spent 40 years wondering why anybody worried too hard about analysing events past. I thought it was basically a waste of a good brain. I now realise that I was wrong.
I'm sure people always feel they are living in interesting times, that there is something exceptional about their moment. We do indeed live in interesting times - globalization, climate change, extreme poverty - but then you open up Frieden's book and see the last century laid out before you.
Globalization isn't new. One might argue that it was a more active process a hundred years ago - albeit tainted by colonialism - has much changed? Societies have gone through waves of war, depression, protectionism or isolationism. Economic and development fads have come and gone - socialism, independence and import substitution, the Washington consensus (let us at least hope it has gone)....and still we have poverty.
Financial instability is alive and well. Or is it...it's been four years since the last major sovereign financial crisis (Argentina in 2002). Perhaps we have that one licked?
Freiden's book - deep in factual information as it is, taught me one thing - beware of hubris. Unfortunately, hubris tends to be in the genetic make-up of world leaders. They should spend a while and look back on a century of economic and political gyrations - we can be quite sure that we have not yet seen the end of history. There is nothing pre-ordained about the march of globalization, continued benign economic conditions in the developed world and progress in social development in the rest of the world. It requires concerted communal action and a recognition that, with climate change, we may actually be butting up against a constraint that restricts our options for action.
Next time: a few thoughts on why our leaders are actually right to be so concerned about the rise of China and India in terms of climate change - and a thought or two on what the Chinese and Indians think about it.
Friday, 12 January 2007
Climate change - opening silo
There are enough blogs out there stamping their foot on this issue - on one side or another of a Grand Canyon sized chasm. I've had the fortune of having divided the last decade pretty evenly between Europe and the U.S. On this topic, there still appears to be something larger than the Atlantic dividing the two continents. I'm not going to trawl through all the facts and counter facts - go watch An Inconvenient Truth and then listen to the Fox network for a couple of days.
However, on my return to Europe - and an academic role engaged with climate change research I was amazed to see the depth and intensity of the discussion around climate change. The topic is completely mainstream. There is no dissent to speak of and the climate change cause has been taken up and accepted by the highest levels of the establishment both in government and industry.
Media coverage of climate change is at such a level that a primary concern of those engaged in climate change communication in my academic institution is societal burn out or apathy with the whole subject from the public.
A little different to the view from the U.S. I did a search on climate change on CNN today - the first result was a Chevron sponsored forum where the "is it or isn't it" debate is alive and well.
Of course, the answer to that question is not yet known. The simple truth is that European institutions in particular have chosen to take the position that climate change is real and that something needs to be done about it. They may be wrong - but they've chosen to take stance and assume a position of leadership. Take a look at the European Commission's energy proposal to see quite how mainstream climate change is. Coupled with the Stern Review from the UK government late last year (widely derided in the U.S as pseudo economics - another topic for another day) - one can see that a significant bet is being placed by European governments.
A particularly interesting part of the climate change debate yields fewer differences between the opposing sides of the Atlantic - the response of business. Businesses (with few entrenched outliers) are now engaged with the climate change issue. Significant change in society brings opportunity to nimble businesses and threat to those less nimble (there's an argument that green mutual funds are good long term bets because greener companies are those with flexible, more visionary executives that are able to better withstand shocks - environmental or otherwise). Corporations see opportunity in climate change - be it GE's Ecomagination strategy or BPs Beyond Petroleum - they are increasingly making financial investments (relatively low cost hedges admittedly at this stage) to capitalise on the opportunity that climate change and it's mitigation may bring. European governments are acting for the same reason - self interest in terms of adapting to likely lower carbon future. We are seeing similar efforts in China, India, Brazil and others.
History will tell whether their bets are sound or not - but it is interesting to see the U.S. federal government under-engaged in a potentially key revolution. Many States are now acting independently to protect their own interests - but the debate at the federal level is still against action - maybe the Bush administration is courageously making the right call here - contrarian to the consensus view?
Next time: a change of tack - a short book review - Global Capital by Jeffrey Frieden.
However, on my return to Europe - and an academic role engaged with climate change research I was amazed to see the depth and intensity of the discussion around climate change. The topic is completely mainstream. There is no dissent to speak of and the climate change cause has been taken up and accepted by the highest levels of the establishment both in government and industry.
Media coverage of climate change is at such a level that a primary concern of those engaged in climate change communication in my academic institution is societal burn out or apathy with the whole subject from the public.
A little different to the view from the U.S. I did a search on climate change on CNN today - the first result was a Chevron sponsored forum where the "is it or isn't it" debate is alive and well.
Of course, the answer to that question is not yet known. The simple truth is that European institutions in particular have chosen to take the position that climate change is real and that something needs to be done about it. They may be wrong - but they've chosen to take stance and assume a position of leadership. Take a look at the European Commission's energy proposal to see quite how mainstream climate change is. Coupled with the Stern Review from the UK government late last year (widely derided in the U.S as pseudo economics - another topic for another day) - one can see that a significant bet is being placed by European governments.
A particularly interesting part of the climate change debate yields fewer differences between the opposing sides of the Atlantic - the response of business. Businesses (with few entrenched outliers) are now engaged with the climate change issue. Significant change in society brings opportunity to nimble businesses and threat to those less nimble (there's an argument that green mutual funds are good long term bets because greener companies are those with flexible, more visionary executives that are able to better withstand shocks - environmental or otherwise). Corporations see opportunity in climate change - be it GE's Ecomagination strategy or BPs Beyond Petroleum - they are increasingly making financial investments (relatively low cost hedges admittedly at this stage) to capitalise on the opportunity that climate change and it's mitigation may bring. European governments are acting for the same reason - self interest in terms of adapting to likely lower carbon future. We are seeing similar efforts in China, India, Brazil and others.
History will tell whether their bets are sound or not - but it is interesting to see the U.S. federal government under-engaged in a potentially key revolution. Many States are now acting independently to protect their own interests - but the debate at the federal level is still against action - maybe the Bush administration is courageously making the right call here - contrarian to the consensus view?
Next time: a change of tack - a short book review - Global Capital by Jeffrey Frieden.
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