By Claudia Kemfert. German Institute for Economic Research
We have almost used up our emissions budget. Until 2050, according to WBGU, an advisory body to the German government, we may globally emit another 750 billion tons. On a per capita basis, this means another nine billion tons for Germany. Should we continue to emit at the current rate, our budget will be used up within ten years. Thus, we have to ask ourselves: Is continuous growth the right approach? Can we afford more economic growth? Will our economic system be able to solve these questions? Is our present economic system able to increase and sustain wealth on a worldwide scale?
Our social market economy will be able to further increase wealth – from a purely economic point of view, that is. Even free world trade can help to improve wealth and welfare worldwide. Yet, as the financial crisis has clearly shown, rampant greed, faulty rules, and self-indulgence can lead to more inequality and thus cause a crisis. It is not growth as such that is the problem, the question is: What growth? Rampant economic growth that consumes limited fossil resources is wrong. An increase in the quantity and quality of environmental protection, health, access to drinking water and clean energy, on the other hand, is important and right. The growing use of renewable energies, climate-friendly transport, health care, and technologies that provide safe drinking water can lead to an increase in wealth. With such an approach, we may be able to solve the problem of climate change – and have growth at the same time. There is no necessary link between economic growth and the use of fossil fuels. We will have to unthink the dogma that wealth can only be measured on a scale of economic growth.
Climate change proceeds unceasingly as the percentage of fossil fuels used in energy production is further on the rise. Rapidly growing economies such as China's, but also Russia's and India's, use ever-greater amounts of fossil fuels. It has to be kept in mind, though, that three quarters of all greenhouse gas emissions worldwide are caused by the developed economies in the US, Europe, and Japan. The marked increase in the use of coal is a major factor. Frequently, the use of fossil fuels is being subsidised, leading to more waste of energy.
Currently, every week, China puts about one new coal-fired power plant on line. For 40 to 60 years to come, such power plants will cause more emissions detrimental to the climate. In addition, transport is on the increase, too, and this is especially true for private transport, which predominantly relies on petrol. Each year, in China, 18 million people migrate to the cities. Within 30 years, 200 mega cities will be built in China, i.e. cities of a million or more inhabitants (Europe has 35). At present four out of 100 people in China drive their own car; in the US and Europe the figure is 80 out of 100. This shows to what degree the rapidly growing economies will affect the amount of greenhouse gas emissions.
Even today, China is already emitting more greenhouse gases than the US. Per capita emissions in China and India, though, are still far behind those in the industrialised countries. The per capita consumption of energy in the US is the highest in the world and energy saving measures there would be a simple and cheap way to reduce emissions.
China will continue to grow and is dependent on new technologies. The key to solving the problem is co-operation and innovation. Energy production and mobility will have to become climate-friendly. We need energy that is, at the same time, carbon dioxide-free, safe, and affordable; we also need new propellants and transport technologies. Germany can develop such solutions – and then offer them to the world.
Climate protection is the solution and the way out – climate protection creates jobs and growth. As it turns out, the financial crisis is not so bad after all. It has demonstrated that markets are not self-regulatory; when markets fail, we do need able political decisions. Although we should have had begun much earlier to promote innovation and to research and roll out concepts for sustainable transportation, it is still not too late. Quite the contrary. Now we will be able to tackle three crises at once: the financial, the energy, and the climate crisis. In order to do this, politicians will have to set the course towards an energy efficient, sustainable, and climate-friendly economy. Renewable energies will have to be subsidised and promoted, and there should be cash incentives for saving energy.
Buildings offer great opportunities to save energy. Financial and tax incentives and improved possibilities for property owners to shift costs could point the way. Within transport there is much room for improvement, too: Rail traffic and public transport have to be backed, air travel should be included in emissions trading, and the German car industry has to be made sustainable. Instead of paying out scrappage bonuses, car companies that introduce new climate-friendly models and propellants should be eligible for subsidies.
The current Swedish EU presidency is lobbying for more climate protection and aims to make, within a few years, energy production independent of fossil fuels. Great Britain plans to double the amount of renewable energies it produces, and even the US is spending 150 billion Euros on renewables and climate protection. China, too, is planning to expand its renewables sector and works with the US in climate protection. Everybody has grasped that it is up to politicians to offer the right incentives.
The business community has, for some time, backed climate-friendly approaches. Companies, though, need a framework that is reliable in the long-term. In sectors such as heat insulation and related energy-saving measures in construction, renewable energy technologies, environmentally friendly coal technologies, or sustainable transportation, Germany still is the world's leading economy. Yet for how much longer? The global race for the most innovative approaches is under way. Growth is a solid basis for this to succeed: Growth creates great opportunities to invest in energy efficiency, circular economies, sustainable water management, in climate-friendly energy technologies and propellants, as well as in sustainable transportation.
We will exhaust our emissions budget and nobody will stock it up again. It is thus even more important to get started today. We are faced with climate insolvency – and there are no bail-outs in sight. The financial crisis was the final reminder. Ten years remain to roll out new technologies. Climate protection is the way out of the crisis; climate protection stimulates the economy and creates jobs. If we succeed, our emissions budget will suffice. Climate protection is a great opportunity; it might well be our last chance, too.
Green New Deal / Great Transformation
- Dossier Conference "The Great Transformation" (english/german)
- Böll.Thema: Green New Deal (english)
- Böll.Thema: Going green (english)
- Böll.Thema: Going green (german)