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An equitable transition
Global agreements matter. They can establish an ambitious shared global commitment to clear goals, and set the rules of the game. But the transition to a global economy that respects planetary limits will come primarily as a result of national and regional action. There is a great deal already happening to tackle emissions, develop technology, and transition to a low-carbon economy. But far, far more is needed.
For wealthy countries, this requires a rapid shift towards a new low-carbon energy and transport infrastructure, as well as new financial mechanisms that can both incentivise this shift and finance low-carbon development in poor countries. With the right policy frameworks this shift can be an engine for equitable growth.155
For emerging economies, the opportunity is one of leap-frogging the resource intensive patterns of production that have been so socially and environmentally damaging, and to secure global economic advantage. There are huge opportunities for those that get there first.
For the poorest countries, the imperative will continue to be employment and wealth creation to benefit the poorest without damaging the environment on which their future prosperity depends. Fortunately there are many strategies to pursue pro-poor sustainable growth. As we have already seen, the sustainable intensification of agriculture offers big opportunities to increase incomes and food security, build resilience and conserve natural resources. And reducing dependency on fossil fuels is a hugely attractive proposition, as some poor countries spend up to six times as much on importing oil as they do on essential services such as health.156
Vertiginous oil price forecasts mean the poorest oil importing countries are staring into an economic abyss: recent research estimates that they could lose 4 per cent of GDP due to future price rises.157 Hard economic realities such as these, coupled with the fact that they are also the countries on the front lines of climate change, has prompted Ethiopia and the Maldives to completely decarbonise their economies within the next 10–15 years.
Left to themselves and the vested interests that govern them, markets will not deliver a new ecological future. Governments must intervene to speed up and direct the transition. They can invest in public goods such as R&D in clean energy. They can create incentives through the use of subsidies and tax breaks to guide private capital to where it is needed. They can tax undesirables – such as greenhouse gas emissions – to direct economic activity towards desirable alternatives. And they can regulate: for example, to stop companies polluting or to encourage them to provide goods and services they otherwise would not.
So far governments have tended to back down from regulating big businesses, and have proved better at delivering handouts to well-organized interest groups (see Figure 24) than directing money to where it is needed. But with sufficient public pressure for public money to go towards public goods, this will change.
There are growing numbers of examples where the right kinds of government action are taking place, each making a contribution to the larger transition we all need. India has implemented a new carbon tax on coal producers which it will use to fund renewable energy. The European Union is seeking to bring aviation into its Emissions Trading Scheme. Deforestation in Brazil has fallen to its lowest level on record following concerted government and civil society action.158 China’s twelfth five-year plan contains a host of targets and measures to increase renewable energy consumption and tackle emissions.
To help guide this transition, we need to start measuring it, but our current yardstick is fundamentally flawed. GDP includes defensive expenditures, such as oil spill clean-ups, while ignoring many valuable social goods such as unpaid caring work in the home and community. Devastatingly for the environment, it counts consumption of natural resources, such as cutting down a forest for timber, as an income, but not as the loss of an asset. Any business run on this basis would fast lose its investors. One major study159 estimated that including the costs of environmental damage in GDP would show that global output160 is 11 per cent smaller – or $6.6 trillion less, considerably more than the size of the Chinese economy. On our current course, this ignored cost will have spiralled to $28.6 trillion by 2050, or 18 per cent of global GDP. The food sector was found to be one of the very worst offenders – coming behind only the very dirtiest polluters: power generators, oil and gas, and industrial metals and mining. Simple arithmetic should tell us that we cannot continue to run down an ever increasing proportion of our assets without going bust. It is time to mainstream some of the many new accounting measures for productivity and wellbeing to properly include the social and environmental costs of our activities.
The institutions and policies to deliver a new ecological future can and must be built over the next decade. Starting now. But the power to make this transition is currently held by those who benefit from the status quo. It’s time to grasp it from them. To date most governments have failed to stand up to vested interests. To make the new prosperity a reality for those who need it most, we must add our voices to the struggle for a better way.