Less carbon can mean more growth

Jeroen van der Veer, Straits Times 9 Mar 09;

DESPITE the global recession, the world must continue to focus on the threat of climate change. Policy can serve the twin goals of stimulating growth and fighting global warming.

The broad outlines of an effective response to global warming are clear: A system to cap carbon emissions and trade emission allowances would channel resources towards the most cost-effective reduction measures. And widespread adoption of efficiency standards for appliances, vehicles and buildings would help us use less energy. Several specific policy initiatives could help us control the emission of greenhouse gases.

# Agreements among groups of key countries to reduce emissions in specific industrial sectors.

# Incentives to capture carbon dioxide and store it safely underground.

# Funds to support the development and demonstration of new technologies, such as advanced biofuels, with high potential for lowering carbon dioxide emissions.

Until now, negotiators have aimed for a global deal palatable to developed and developing countries alike. While that remains the ultimate goal, it has proven devilishly complex to formulate. A stepping stone would be agreements between pivotal countries to cap emissions in high-emitting sectors. Such agreements could be building blocks for a broader deal. Sectors to focus on include power generation, which accounts for about 35 per cent of global carbon emissions. For example, a pact on the emissions of coal-fired power stations might include large users such as China, the European Union (EU), India, Japan and the United States, which together account for about 80 per cent of global coal-fired capacity. Such a deal could include mechanisms for transferring clean coal technology from developed to developing countries.

The need is urgent. Asia will build about 800 gigawatts of new coal-fired generating capacity over the next 10 years, equal to the EU's total electricity generating capacity today. Once built, the plants will emit four billion tonnes of carbon dioxide each year - about the same as the EU's total energy-related emissions.

Climate negotiators should also give carbon capture and storage (CCS) high priority. While renewable and nuclear energy will help reduce emissions, they will not be able to keep up with energy demand. Fossil fuels will remain the world's main sources of energy for decades. 'Cleaning up' carbon is thus a vital bridge to a low carbon future. CCS may contribute up to 55 per cent of the reductions in emissions that scientists believe are necessary.

But firms are reluctant to invest in CCS as it adds substantial cost and generates no revenue. Policymakers should promote CCS. They can put a price on carbon emissions; and CCS can be recognised within the Kyoto Protocol's Clean Development Mechanism, through which developed countries can invest in emission reduction projects in developing countries.

No one knows if the economic crisis will last months or years. But a good outcome at the United Nations climate change conference in Copenhagen later this year will serve the world for decades to come.

The writer is the chief executive of Royal Dutch Shell.

PROJECT SYNDICATE

Asia needs to commit itself to clean energy
Dennis Posadas, Straits Times 9 Mar 09;

ASIANS need to adopt clean energy quickly if they wish to avert the adverse consequences of climate change. Climate change threatens Asian countries with a rise in sea levels that may destroy low-lying coastal areas. And it will increase the intensities of the storms that pass through countries like the Philippines annually.

Fortunately, many Asian governments have now started to legislate clean energy mandates similar to those in Europe and the United States. These mandates often feature incentives to spur the development of clean energy and require power utilities to purchase a certain percentage of their power from such sources.

Unfortunately, even with such laws in place, there is a lack of commitment to clean energy. From being a top priority when oil cost US$140 a barrel, it is once again an afterthought. This resembles what happened in the 1970s and 1980s: After the Opec oil crises had passed, the solar panels that had been on the roof of the White House were removed. Blowing hot and cold on renewable energy is not the way to encourage its development.

Mandate or no mandate, it would be difficult for utilities to justify large capital investments in clean energy if consumers are not willing to commit themselves to it. The utilities may try to comply minimally with the mandates but not go all out. Investors will find it difficult to justify funding research and development in renewable energy if the market demand for clean energy fluctuates. It is only when the price of electricity is expensive that clean energy sources are competitive.

A steady growth market for renewable energy, decoupled from the price of oil, needs to appear. Otherwise we will not see that combination of economies of scale and innovation, which saw the price of personal computers and semiconductors drop, repeat itself itself in renewable energy.

The writer is the author of Jump Start: A Technopreneurship Fable.