Main Challenges of Climate Change Negotiations IV

Making an Agreement Stick

In this lecture we’re discussing the concepts of negotiation: how to have a Pareto improving outcome, where all of the parties to the agreement are better off than they would be in the business-as-usual trajectory, how to have an agreement that is efficient, mitigating carbon dioxide and other greenhouse gas emissions at low cost, how to have an agreement that is fair, that allocates the costs and benefits in a fair way, recognizing how many standards of fairness we want to apply, and how to have an agreement that is a true learning agreement, adapting not only to climate change but adapting to new science, new technology, and indeed actively promoting learning of new ways to mitigate greenhouse gas emissions.

In this chapter I want to talk about another specific aspect of negotiations and that’s how to make an agreement stick. What are the problems and challenges when an agreement is reached in enforcing that agreement and again I am going to be discussing this issue at a conceptual level, at an abstract level, because I think that the abstractions are quite helpful. And I will take the most important abstraction of game theory or negotiating theory of the last half century to illustrate the issue, and that crucial abstraction is known as the prisoner’s dilemma: a framework of interaction that will be known to many students but that is important for everybody to have some exposure to.

941So in this framework we talk about strategies of the parties to a negotiation or to an interaction and we model or map those on a 2 by 2 matrix or a 2 by 2 table.

For the rows we have the strategies of the first country, say the developed countries, and they in this simple example can adopt one of two strategies: either to have business as usual energy policy or to have mitigation policy and for country two, those are the columns of this 2 by 2 matrix, and country two, say the developing country group, also has two possible strategies: business as usual or mitigation.

The assumption is that when both parties to this interaction choose to mitigate, they’re both left better off than in the business-as-usual. That of course is the underlying assumption of climate change and the assumption that we have strongly represented throughout this course.

Now in basic game theory or in a representation such as the one you’re looking at, we can use the outcomes for example as a single number to suggest again what happens when various mixes of strategies are followed. And in this two by two box, the first number in each box is the outcome. Call it the gross domestic product for example of country one, or group one, the developed countries. The second number refers to the gross domestic product of the second country, the one whose strategies are represented by the columns of this two by two matrix.

942So look at the box of mitigation, the one that is circled here in which both country one chooses mitigation strategy and country two chooses mitigation strategy. In that case, each has a gross domestic product of 130. Again, an arbitrary number, but for purposes of illustration.

Now go directly northwest to the business-as-usual, business-as-usual box. Where country one has not undertaken mitigation policy and country two has also followed suit and not undertaken mitigation policy. In that case, the gross domestic product of these two countries is a 100 and a 100. They’re worse off by virtue of the fact that they have failed to mitigate CO2 emissions. Well so far so good.

Clearly moving from the northwest box to the southeast box according, down that diagonal is a Pareto improvement.  Both parties are made better off. It’s like the graph that we looked at earlier, depicted in a different way where one moved from the BAU point to point C, the cooperative point.943

And both parties to the negotiation are left better off.

You might say, that’s the end of the story. Unfortunately it’s not quite the end of the story. Consider the situation where both countries have agreed to mitigate and they then go home and plan their national policies. And country one follows through and says, we have a good agreement, we’ll mitigate. Country two says, you know mitigation is pretty expensive actually. And we get some of the benefits of our mitigation, but so does the other part of the world.

It spills over. What would happen if we actually reneged on our promise and we decided that we would carry on with business-as-usual. Maybe we’ll give some nice speeches about the importance of our agreement, but we’ll carry on with the old energy policy?

The outcome is then shown in the lower left-hand side of the box, in the southwest corner. In this case, country undertakes the extra cost of mitigation. Country two does not. And according to the illustration that I’ve made here, country one ends up with a GDP of 80 because it’s made a big outlay of mitigation and the other country has still contributed to wrecking the climate by not undertaking and following through on what it promised to do. The other country is left at a 150.944

Yes it bears the climate damage, but it has not undertaken the added expenses of the deep decarbonization. The outcome from a world point of view is worse. Total output is 230, adding 80 and 150. The world suffers as a whole compared to the 260 gross world product of the all mitigation box in the lower right-hand corner.

But the fact that country two reneges on its commitment has left it actually better off and left country one materially worse off. And so one would say, this is not such a stable equilibrium after all, because once the agreement is struck, if it’s possible for country two to wriggle out of the agreement then we would have as you see, a kind of arrow from the lower right-hand box to the lower left-hand box, from the southeast to the southwest. And country two is made better off.

Ah, but of course it won’t stop there. Country one asks itself a question, I have followed through, we have honored our agreement, country two has not, should we continue to follow through or should we revert to a lower cost strategy? Yes, leading to worse climate outcome, but enabling us to avoid this very heavy and very unfair burden that we’re now bearing. And so country one asks itself, what will happen if we now move to business-as-usual contrary to our agreement? Aha, now it’s true the climate is worse off even more but we also thereby escape this heavy burden of deep decarbonization and so we too are going to move from our mitigation profile to a business-as-usual profile.

And that leads the arrow up from the southwest to the northwest. And where does the world end up once again? In the business-as-usual scenario.

It seems paradoxical. Both countries are worse off than if they had followed through on the cooperation. But this is the essence of the prisoner’s dilemma. If there is no way to enforce an agreement, even a Pareto improving agreement that leaves the world with 260 in world product and leaves countries much better off in both cases compared to the business-as-usual where the gross world product is only 200 and each country is worse off than in the cooperative agreement, nonetheless it doesn’t stick.945

What is said in formal game theory parlance is that the business-as-usual path or decision-making is actually the dominant equilibrium of this game. Country one best chooses business-as-usual, no matter what country two does. Country two best chooses business-as-usual no matter what country one does. And lo and behold, both countries end up with a wrecked world climate and a wrecked national environment.

It’s paradoxical, but it is the paradox of the prisoner’s dilemma. The question therefore in cooperation in many, many circumstances is not only to identify the Pareto-improving pathway, but to insure that countries, once they reach the agreement cannot renege on it.

Now there are many circumstances where this kind of game theory, prisoner’s dilemma structure might apply. And we’ve not been powerless in the face of this challenge. There are examples one can draw in arms control for instance where both countries are better off if both sides agree to limit their armaments. But the tendency is for one country to renege on its arms control promise if the other is reneging. And both end up being driven to a continuing arms race even though both countries would be better off with a firm and solid and enforced agreement of arms control.

Does this mean that arms control is impossible? No, not at all. It means that one needs to add provisions for monitoring, for verification, for checking on interim steps, for transparency, for closing down various options to renege on an agreement, for institutionalizing a pathway of arms control in that instance or of mitigation in our circumstance so that it’s very costly for countries to make a U-turn or they are quickly exposed and quickly denounced, or in certain circumstances, there are penalties.

Now when two parties make a contract in their economic affairs, a supplier and a buyer for example, and they sign a contract that leaves each better off, perhaps there also would be an incentive for one or the other or both to renege on the contract. But when it’s a commercial contract, typically there’s a court of law in which one party can sue the other party and get enforcement.

And that is a basic mechanism of enforcement s rule of law and a third party enforcer. Perhaps in the end, the sheriff, the prosecutor and a jail sentence for violating a, a contract, or a massive fine.

In the international setting when 193 governments are going to agree on climate terms in Paris, there isn’t a sheriff, there isn’t a prosecutor, there isn’t an international court that can enforce a decision, so we need different mechanisms. What are some of the mechanisms in international treaties, whether it’s arms treaties or climate mitigation treaties?

Well there, there can be penalties imposed in some circumstances. Even financial penalties for example in violating certain trade agreements. There can be opportunities for countries to retaliate. If one country reneges on a promise, the rest of the countries can say, we will not import goods from the country that’s not undertaking climate change mitigation. We’re going to put on border taxes for example. So there are many proposals that are under consideration right now, either for penalties, for forms of retaliation, for trade policy that can help to enforce agreements.

Of course even more important than this typically is the transparency and the reputation of governments and the fact that any kind of U-turn requires a tremendous publicized effort that gives the rest of the world the opportunity to say you must not do that. It’s not foolproof for sure, after all, the United States signed the Kyoto Protocol, though it never ratified it. Other countries that signed and ratified the Kyoto Protocol didn’t live up to it and they were not hauled off to court because there was no court to haul them off.

This is a reality therefore and it is the reason that I want to emphasize that another consideration in addition to efficiency, fairness, adaptability, flexibility is the question of enforceability, reputation, even punishments or retaliation if countries don’t follow through.

We’ll be discussing those options when we talk about these issues in the global online negotiation early next year. It’s not as if there is any ironclad principle in this. But the question of enforcement absolutely will be present because countries will be making so-called legally binding contributions under COP21 and the question is what are they really binding to?


Main Challenges of Climate Change Negotiations III

What is Fair?

We’re discussing climate negotiations, but at an abstract level. The concepts of efficiency, of fairness, of uncertainty, learning, adaptability of the framework.

In this chapter we talk a little bit more about fairness. Fairness is a big important concept and it’s a loaded one because of course fairness is in the eye of the beholder very often.

What’s fair, by what standards? How can we judge? And when it comes to climate there has been no shortage of debate over these concepts.

I suppose the most intuitive and basic standard of fairness that has been presented is that countries should share equally in some sense, perhaps equal per person in the amount of the atmosphere that they fill with greenhouse gases.931

So if we have a carbon budget, that carbon budget should be an equal allocation across countries. We saw in the first chapter of this lecture that as a strict operational guideline, that could be quite problematic, because if each country is imposed upon, to have a very particular level of emissions per capita or an equal level of emissions per capita or an equal budget of rights for emission, the costs of honoring the 2-degree Celsius carbon budget could be extraordinarily high, much higher than they otherwise would be. So we already modified the strict equality of emissions which of course needs a lot of more detailed definition to account for the fact that negotiations should aim in some way to minimize the economic costs incurred in reducing the carbon load, but at the same time there should be side payments from some countries to other countries in order to share the burden in a fair way.

Perhaps some equal sharing per person could be viewed as fair. On the other hand, there are so many footnotes to defining equal emissions that we quickly enter a quite complicated and though well-trodden terrain. For example it was pointed out by the government of Brazil and others many, many years ago that since the greenhouse gases are long-lived, the flow of emissions is not really a measure of allocation, rather the cumulative emissions or the stock of carbon dioxide associated with emissions from one country or another should be taken into account.

932And this means that many countries and I think it’s a, plausible argument though one not accepted on the other side that countries like the United States which historically have been the very large emitting countries is terms of fairness have a historical responsibility that reflects the fact that the U.S. has used up a significant part of the carbon budget in the past. But there are other complications as well.

Today, many of the major emitters are industrialized middle income countries, of course China is the world’s largest emitting country. And one can point to China and say, It’s only fair now for China to cut emissions significantly.

Now this is certainly true from an efficiency point of view because without reductions of China’s emissions there’s no way to stay within the 2-degree Celsius limit. But China has another point in terms of the burden and that is China says, yes we are emitting lots of CO2 when we produce the products that you like so much and that we export to you. Why do you attribute the carbon dioxide of our industrial products that are for your use, to us?

Why not attribute the carbon dioxide from our products to the ultimate beneficiaries of those products? This has given rise to two columns of classification of CO2 emissions, those on the basis of geography of production and those on the basis of end use.

They say that if Americans import an industrial product from China and enjoy that industrial product, the emissions that were part of the process of producing that product should go into the tally of the U.S. column, U.S. responsibility, as, as opposed to China’s column. So already we can see from historical responsibility, physical geography the net trade that countries have somewhat different ideas about what is fair.

Some countries say, look we have no way to undertake this, these emissions reductions because we lack the kinds of renewable energy. Our mitigation curve is very, very steep. Don’t ask us to do much of anything. That may be again, part of an efficiency argument.

What responsibility do those countries have however from a financial transfer point of view? This again shows the difference of who undertakes which technology and systems measures and who pays for them?

That can be two distinct concepts. Many developing countries say, you miss the whole point, this is all very particular and rather arbitrary to judge fairness on the basis of accounting of carbon emissions, whether by production or consumption, historical cumulative or annual flows. We demand in fairness our right to develop. Here are rich countries that are saying we need a more expensive energy system, but we’re poor. And we feel that fairness ultimately is about our right to develop, not our sharing of a particular level of burden of mitigation.933

And there’s also a strong point here and that’s why putting the climate change negotiation within the broader framework of sustainable development and within the broader framework of the sustainable development goals is important because the right to develop is part of sustainable development.

Poor countries need to be assured that the climate negotiations are not slamming the door on their ability to get out of poverty or to narrow the income gaps with the rich countries.

But there are many, many other areas of fairness that need to be considered. What about the fairness between the present generation and the future? You might say that the current generation is being unfair in leaving a very dangerous climate to future generations. There is a lot of truth in that. On the other hand, members of the current generation, that would be us, might say, well why should we undertake all of the costs of emissions for an improved environment for future generations? Let the future pay part of the costs that we incur today. Is that possible that we incur the costs, but the future pays for them? Well it is in part, if we finance some of the mitigation efforts through public debt rather than through current outlays. In that case, future generations through their own taxes will be servicing the debt that was used to finance the current mitigation. So we have a question of fairness between the present and the future which goes in two directions.

The argument about who’s really being fair to whom, or unfair to whom is a very interesting and, and obviously extremely pertinent question.934

There’s another question that’s almost not asked at all by many countries but it’s of great concern to a few and that is what about fairness to countries that produce and export oil or gas or coal? Is it really fair just to close up our market, to crush our economy? Don’t we need some kind of compensation?

If you say, that the world can all benefit from climate mitigation, what about us in the Arabian Peninsula where we have an economy that depends on oil and gas? Or what about Australia or Canada or the United States? Or Venezuela? Or Angola? Or Mozambique? Or other fossil fuel producing and exporting countries, should there be fairness for them? Or should the mitigation efforts which will limit the demand for fossil fuels and thereby lower their market price, at least in tendency, just leave those countries worse off, maybe even crushing their economies? Or should fairness also apply to the balance of gains enjoyed by the consuming countries and the producing countries? When we allocate rights as it were per person, we’re not taking into account that issue at all. And many oil exporting countries say, no thank you.

They’re also saying by the way, we’re not even going to agree on this unless there is a Pareto improving outcome of the negotiations. Why should we absolutely suffer massively for the sake of other countries? Let’s enjoy the spirit of global cooperation where we can all benefit. So this is a kind of fairness that typically is not being discussed. What about the fairness regarding companies? We have a couple of dozen oil, gas and coal giants that are responsible for a huge proportion of the emissions in terms of the fossil fuels that they 935produce.

They’re often just on the sidelines. What is the fairness vis-á-vis Exxon Mobil? What’s the fairness vis-á-vis Chevron? What’s the fairness vis-á-vis any of these big companies, BHP Billiton or Peabody Coal and others? Don’t they have responsibilities? Isn’t it fair for them, these companies that have reaped huge profits over past decades, vast shareholder wealth, but imposing huge costs, or at least their products are imposing huge costs to bear some of the burden? It could turn out even to be a legal burden, not only a moral negotiating burden.

Often companies that have products that cause large damages, say the asbestos companies in the end face huge liabilities. These cigarette companies have paid huge damages, rightly so, it’s a killer product. And they’ve ended up paying very large taxes as what’s deemed to be both efficient in reducing cigarette smoking and fairer in terms of allocating the costs and compensating some of those who have had family members die as a result of smoking addiction or lack of awareness and, and so forth.

So the questions of fairness also come in at the individual country level. And poor countries have a different position on fairness. Their argument is we’re poor, we need help. There is a lot of merit in that. I would say every great religion in the world for 2,000 years or more has emphasized the moral commitment to help the poor. And here we have a challenge of higher costs or additional efforts needed to have a cooperative global agreement. The poor countries need help, the rich countries have acknowledged this. They’ve already promised a $100 billion dollars per year by 2020 in transfers from the rich countries to the poor countries, but they haven’t said yet, how, in what way, what specificity.

And interestingly, recent, in a recent meeting a delegate from China said in the context of negotiations, well many countries are calling for legally binding commitments on mitigation, what about legally binding commitments on financial transfers? Isn’t that also part of the fairness? So you can see that that also adds of course a, a huge layer of complexity.

Now if you are the Philippines or Haiti or Honduras or other parts of the world in the line of fire of tropical cyclones, hurricanes, typhoons, or if you are a country like Syria or, which has faced human disaster, geopolitical disaster, ecological disaster, because of increased drought frequency, all this talk about fairness limited to who is emitting what and who is mitigating what also seems beside the point. What about the damages? What about the costs? Some countries will face costs that are rather modest. Other parts of the world will face enormous costs, even within a 2-degree Celsius limit.

And that’s why at COP19 in Warsaw at the end of 2013, governments said that part of fairness is compensation for losses and damage. But they haven’t defined the mechanisms and the specificity. All of this is to suggest that when we enter into the hardcore negotiations that are coming up and we’re looking at efficient ways to stay within the 2-degree Celsius limit, we’re looking at effective ways to learn, to adapt, to develop new technologies and we are looking for standards of fairness.

We’re going to have to keep an open mind because fairness has many different dimensions, many different aspects. It includes the right to development, it includes the right for compensation of losses and damages. It includes responsibilities of companies, not only countries. It includes historical responsibility. It includes the obligation towards the poor. And all of these aspects of fairness are legitimate, they’re part of the global discourse and they will absolutely be part of the negotiations in the coming year up to COP21

Main Challenges of Climate Change Negotiations II

Basic Principles of a Global Agreement

We’re talking about the concepts of the climate change negotiations. It’s a more abstract lecture than the others. The numbers that I’m giving are made up. Of course I’m trying to use numbers that are illustrative but they’re mainly illustrative of concepts. And though it’s somewhat abstract, I think these concepts are important.

921We discussed in chapter one the concepts of Pareto improving negotiations, the concepts of efficiency and of fairness or equity as distinct aspects or gauges of a negotiating agreement.

I want to review many of what you could call as the headings or the chapter titles of a negotiation agreement. Again, not in the literal sense of how the negotiations will be written down, that we’re going to do in the global online negotiations next semester, but more in the conceptual sense.

What are the headings that negotiators need to be attentive to to reach a fair, efficient, meaningful agreement?

So let’s start with the essence of this course. The agreement has to move the world to deep decarbonization. Our theme is that when one looks at the costs of mitigation and the benefits of mitigation, staying under the 2-degrees Celsius limit is absolutely imperative. The damages of going beyond that are so great, the risks are so high that the marginal benefits of mitigation drive us to ensure that we stay within the limit.

And the technologies that we have available and that we can develop to reduce carbon emissions are sufficiently good that it makes sense for the world to negotiate on the basis of its commitment to 2-degrees C as absolutely the upper bound, the limit of climate safety. A second standard which we introduced in last lecture is efficiency. And that is that if we’re going to undertake deep decarbonization, this should be done in the least cost way.

The world shouldn’t waste resources arbitrarily in reducing carbon emissions, it should find the way to move from the business-as-usual to a safe, deep decarbonization pathway in an overall, least cost manner.

But we also discovered that simply applying a naive efficiency criterion alone isn’t enough because efficiency might leave the burden of adjustment unfairly on one particular group of countries.

So we need to introduce concepts of fairness alongside concepts of efficiency.

Efficiency think of as low cost, least cost, but fairness is who actually bears that cost in the end? And since countries can make financial transfers to each other, that’s one way of reallocating across countries some of the economic costs associated with climate mitigation.

Now a phrase that has been central to these negotiations from the very start of the U.N. Framework Convention on Climate Change is common but differentiated responsibilities.

This is the concept that the world as a whole has a shared responsibility of climate safety. All countries signed onto that from the poorest to the richest. But these are differentiated responsibilities and CBDR, (common but differentiated responsibilities) conveys within it not only different capacities, different marginal costs of mitigation, but also fairness, that countries have different responsibilities to justice, globally.

Rich countries have more financial capacity, more economic capacity, more historical responsibility and therefore they should pay their fair share. That’s not the end of the negotiations.

If this were a one-time exercise, one moment of negotiating, say a purchase and sale of a house, we might stop there, what’s efficient, what’s equitable?

But we’re talking about a complex process over many, many decades and therefore it’s not surprising that there are other headings of the negotiations. One key concept is that what we know about what to do and how much to do and the ways to do it will evolve over time.

Our understanding of the science, our understanding of the risks and crucially our technological options are going to evolve over time.

So one heading of the negotiations is about updating. We have to go into these negotiations understanding that this is a dynamic process, it’s an adaptive process. Adaptive not in the sense of adapting to climate change, but in the sense of adapting to change in global realities more generally, new information, new technologies, new awareness, new science, new understanding of what should be done. So we need systematic updating.

As the climate science changes, we may come to understand that 2-degrees centigrade is too much. Maybe we really have to aim for one and a half degrees Celsius for the true margin of safety. This is something that climate science might reveal to us in the coming years. Alternatively, we may find that 20 billion tons of CO2 emission relative to the baseline per year is too low because wonderful breakthroughs occur in solar or wind power and electric vehicles or in carbon capture and sequestration or fourth generation nuclear power that allows us to go even farther than that.

And so we need that kind of updating, resolution of uncertainties, learning and investing in new knowledge, especially investing in new technology.  And a technology blueprint process, creating a roadmap and investing in the research and development and the demonstration and the diffusion of these improved technologies will be a crucial part of any successful agreement.

More generally the parties to the Framework Convention talk about the means of implementation. They say, okay, this is all fine concepts. Two degrees no problem. They don’t say, no problem, but they say, yes we understand the concepts, we understand the concepts of sharing the burdens. But what are the real means of implementation? What do they mean by that?

They mean first, what policy instruments are going to be chosen? Will there be common worldwide instruments? It’s been a dream of some, not one that I share, but it’s been a dream of some that there should be one global market of emissions permits. And that that would set one social cost of carbon and that would drive an efficient, low-cost solution. That is an example of trying to put one single policy instrument inside the negotiating framework perhaps to reach a desirable outcome.

921Another example that’s suggested is a single price on carbon in the form of a carbon tax. Or it could be a single regulatory standard which says, no country shall engage in the construction of new coal fired power plants unless they are fully equipped with carbon capture and sequestration technology.

So policy tools are one part of implementation. Leave them to the countries or have them at a global scale.

A second of course is financing, who’s going to pay for all of this? What’s going to happen with the poor countries? How can countries that need technologies that are owned by businesses in other countries access those technologies? Do they have to pay large royalties? Do they have to pay monopoly rents to a monopoly holder of such technologies?

Then another aspect of implementation, absolutely central is of course developing the technologies that enable us to stay below the 2-degree C limit as Emmanuel Guerin has emphasized and put into tremendous detail in earlier lectures. There’s also the question of capacity building which has been part of all of the agreements.

Some countries simply need help technologically, not in the form of what’s embodied in machinery, but in the form of training of local engineers, local regulators and so forth in order to be able to implement a program or a new system or a new technology of low-carbon energy. And then finally one needs to remember that these negotiations cover not only mitigation, not only moving from the business-as-usual trajectory to the 2-degree centigrade limit, but also must cover all of the challenges of adaptation. Increasingly the treaty has incorporated concerns of adaptation. How to help countries adapt to the ongoing climate change? How to become more resilient? How countries can be insured in a way for losses and damages that they incur when they’re hit by a massive tropical cyclone or a massive inundation, or a terrible drought that, whose frequency and intensity is being increased by the ongoing climate change?

So the adaptation agenda is another chapter of the full agreement. You see we have the hands full, with all of this countries are asking what does this mean for us? What are we going to have to do? What burdens are we signing up to? Can we actually meet those responsibilities technically, legally, economically? And who’s going to pay for all of this? Just ourselves? Will we get help? What’s the basis for that kind of sharing of the economic and the financial costs? We now turn in more detail in the next chapter to this question of fairness.


Main Challenges of Climate Change Negotiations I

Efficiency & Fairness

Where I want to talk about the concepts of negotiation. We’re entering a negotiation among the parties to the U.N. Framework Convention on Climate Change, the 193 parties. A few are very decisive parties to the convention, the largest economies, the largest emitting countries. They’re going to be bargaining with each other. And the question is what is the nature of that bargaining? What are the problems, the challenges, the obstacles? What’s the right way to reach a cooperative agreement? What are the barriers to reach cooperation? That’s the subject of this lecture.

I’m going to ask you to bear with me as we introduce some economics style diagrams. You’ll have a chance to practice those in some assignments and some special problems to hone your skills on these kinds of diagrams that are standard for economic analysis.

The lecture is about the, two crucial concepts of negotiation, efficiency and fairness. And it’s important to keep these concepts distinct. And I’m going to use a lot of examples to highlight the differences of efficiency and fairness.

911We’ll start with a, an economist’s diagram that links the amount of mitigation that’s undertaken, that is the reduction of CO2 emissions shown on the horizontal axis and measures for any given level of emissions, the cost of an incremental increase of mitigation or an incremental reduction of a ton of CO2.

What you see here is a rising curve, essentially drawn as a line. The more mitigation that’s undertaken, that is the more reduction of CO2 emissions compared to business-as-usual, the higher is the cost of each incremental tone of carbon dioxide that is pulled out of the emissions or sometimes it’s called the marginal cost of the emissions. And when you see a rising curve or a line such as this, it means that the marginal cost of mitigation is increasing.

The first few billion tons of CO2 that are reduced compared to baseline don’t cost very much, maybe it’s a bit of insulation in, in the homes, a bit of energy efficiency, turning off the lights when they should have been turned off in the first place. Improving some of the efficiency of industrial operations.912

But if you want to get deeper reduction of CO2, you have to introduce new technologies, maybe not just efficiency but substituting coal fired power plants by wind or solar plants. Now those can be cleaner, they can be environmentally safer of course, but maybe they’re more expensive to implement than a standard baseline traditional coal fired power plant. And so to implement that next stage of emissions reduction or that incremental mitigation of emissions, it’s going to cost more to reduce that extra ton of CO2.

If you continue and we want to drive carbon emissions way, way down, perhaps using really very fancy technologies, the direct air capture of carbon dioxide in the air and then sequestering it geologically, at least with the technologies we have right now, each ton of carbon dioxide that is removed from emissions using that technology would be very expensive, perhaps hundreds of dollars per ton of carbon dioxide reduced.917

The result is this upward sloping schedule or curve as we would say in economics, linking the extent of mitigation on the horizontal axis with the cost of each incremental ton of carbon dioxide removed from emissions compared to the baseline. Those are the costs. What about the benefits of doing this?

Well that’s a different kind of curve. Again, we put on the horizontal axis, the extent of mitigation compared to a business-as-usual trajectory and on the vertical axis we measure in dollars per ton of carbon dioxide reduced emission, now much benefit there is.

Now why is there a benefit of lower emissions of CO2? Well that’s what we’ve been talking about for many lectures now. The climate will be safer. And the idea is that at a low level of mitigation compared to baseline, we would have a huge increase of temperature. The baseline, the business-as-usual remember is an increase of temperatures of maybe four or even six degrees Celsius. So at that point, incremental warming is disastrous. We’re already suffering massively and any further warming adds to the disaster. That means that the benefits of mitigating carbon dioxide, of reducing emissions are very, very high. That’s why the curve is at a high vertical point at low levels of mitigation.

913But suppose we’re successful, we have deep Decarbonization and a lot of carbon dioxide is reduced from the emissions flow because of a successful change of the energy system? Suppose that we reduce carbon dioxide enough so that the temperature increase is held even to one degree Celsius or one and a half degree Celsius, a very deep decarbonization of the energy system? What would the gains be of a further reduction of carbon dioxide at that point? Well maybe because the climate is already stable, if there has been a lot of mitigation, an incremental reduction of yet another ton of CO2 wouldn’t really get too much benefit for world society. And so the amount of benefit shown on the curve for a high level of mitigation, that is the marginal benefit of an extra ton of carbon dioxide removed through further mitigation would be a quite low level.

That’s why a marginal benefit curve or schedule as is sometimes said in economics would be downward sloping. At low levels of mitigation, in other words, being close to business-as-usual, every ton of CO2 is really a burden for society.

914But for very high levels of mitigation, so that the climate is already in the safety zone, further extent of mitigation would not add so much benefit. Now the trick of economics always is to put a cost and a benefit schedule on the same graph as is done here.

And the miracle of economics is where the two curves cross. Why is that? Again, on the horizontal axis we have the extent of mitigation, on the vertical axis, the costs and benefits of an incremental ton of carbon dioxide removed.

Whenever the benefit curve is above the cost curve, which is towards the left-hand side, it means that the cost of removing one more ton of carbon dioxide is less than the benefit that society enjoys by that carbon dioxide being pulled out of emissions.

915In other words, the climate safety that is the result is worth more than the direct extra costs of undertaking that mitigation through some kind of deep decarbonization program. On the right-hand side, where the cost curve is above the benefit curve, it means that further units of carbon dioxide reduction are more costly per ton than the benefits that society enjoys by having that extra ton of CO2 pulled out of the emissions stream.

916Everything measured compared to the business-as-usual. Well  What is the social optimum? What is the optimal extent of mitigation? It is where the marginal benefit of removing an extra ton of carbon dioxide equals the marginal cost of removing the extra ton. And that’s shown in this case at a level of mitigation of 20 billion tons of CO2.

Think of that as the reduction in the flow of carbon emissions, say in the year 2050 and on the vertical axis, that cross occurs at a level of $50 per ton of CO2. What does that $50 signify?

917It signifies that in terms of the cost of mitigation that is the cost incurred for that last bit of mitigation undertaken at a level of 20 billion tons CO2 removed and it signifies that the benefit of removing that CO2 is the same, also $50 per ton when you factor in how much climate damage is avoided by having that extra ton of CO2 removed.

Now we give a name for that equilibrium point. That is called the social cost of carbon dioxide. It is the measure both of the benefit of removing that ton of CO2 and in a social optimum policy, it is also the cost, because you want to go just to the point where the extra benefit and the extra cost or I should say, the benefit of the extra ton removed and the, and the cost of the extra ton removed are just equal.

Now does society benefit from undertaking that level of mitigation? It sure does, because for that level of mitigation effort, removing 20 billion tons of CO2 per year, the costs of removing that CO2 is less than the benefit, unit by unit, just up to the last ton of CO2 that’s removed.

918And you can compare the benefit level for an incremental unit of mitigation on the upper curve with the cost of reducing that level of CO2 on the lower curve and that vertical distance is the net social benefit, the benefit minus the cost of undertaking that level of mitigation.

Well if you add up all of those units of mitigation effort up to the 20 billion tons removed, each one of them has a benefit level higher than the cost level. Add up all of those and you get the area between these two lines.

When you take the total area, as we would in basic geometry, you can say, that’s the sum of society’s gains from this mitigation effort. And in the particular diagram that I have here, that would add up to one trillion tons, that’s the area of the triangle shown as the difference between the marginal benefit line and the marginal cost line. So far so good.

This is the basic economics of why we want to undertake deep decarbonization in the first place, because the benefits of the safer climate, unit for unit of emission reduction or emission mitigation are higher than the costs, unit by unit of CO2 emission reduction.

919Now comes the big issue for negotiations. If we were just one person or one country, we’d probably work out more easily, okay, let’s have a 20 billion tons reduction, our society is going to benefit and we’ll undertake these costs, the benefits will be bigger than the costs and we’ll figure out how to do that.

But now suppose we have two countries, or two regions or the developed world and the developing world. Of course it’s even more complicated. We have a 193 countries that are party to this negotiation, it’s a little hard to draw with 193 countries, so I’ll stick with just two negotiating countries. Think of them as the developed countries and the developing countries. And think of these on the horizontal axis for the moment as country one or region one.

And on the vertical axis is country two or region two. And for simplicity, think about this as the income or the well-being of these two groups. Now before we undertake the optimum deep decarbonization, there’s a certain level of income of country one and country two on the baseline or the business-as-usual trajectory. Of course that’s a path of incomes over many years but I’m compressing this to just one point of time, just to give us clarity of the discussion.

And if we graph the level of income of the first country and the level of income of the second country, just on a, a normal plane, we’d have a point which is shown as the business-as-usual point. Now we can do better than the business-as-usual.

That’s the beauty of the fact that at low cost we can reduce carbon emissions and enjoy benefits, for instance, more productivity of agriculture, better human health, more safety as a result of that reduction.

So we can actually have both country one and country two enjoy higher income than in the business-as-usual point. And indeed we can draw all of the potential levels of income of country one and country two on a downward sloping line that says if the world income is allocated all to country two, the point would be on the vertical axis, country two would have all the income, country one would have no income.

That would be pretty miserable for country one. On the other hand, if all the income is allocated to country one, we’d be on the horizontal axis down in the bottom right of that curve. And more normally, both country one and country two would have some level of gross domestic product. And the beauty of climate mitigation is that both of these countries can be better off than they were at the business-as-usual level.

So start at the business-as-usual income point for these two countries and there is a range from point A to point B of what’s possible for how to share the improvement from climate control. And point A, country one is made a lot richer through climate control and country B is left off just as it was in the business-as-usual baseline. At point B, country two reaps all the benefits from climate control and country one is left just as it was in the baseline, the business-as-usual path. Country C is the sweet spot.

It is the cooperative agreement of both country one and country two to say, let’s share the increased well-being that will come from undertaking an optimum global mitigation effort.

We’ll share the burden, we’ll both benefit from a safer climate and we’ll both be left better off than we were in a business-as-usual trajectory. That is what’s called in negotiations, a Pareto improvement. Pareto is the name of a great Italian economist and sociologist at the beginning of the 20th Century, Vilfredo Pareto. And Pareto said, an improvement in a bargaining situation is when all parties of that bargain are better off than they were in the baseline or in the business-as-usual situation. So shifting from BAU to point C is a Pareto improvement.

Now let’s try to understand how this will work at the country level. And we’re going to see a problem now.

I’ll start with a simple case and then we’re going to go to a more complicated problem. Let’s start with a symmetrical situation where these two groups of countries have the same technologies, basically the same income levels, the same potential for mitigation, the same gains from successful climate control.

So the first country, we’ll call it the developed country group, has a mitigation, marginal cost curve, like the one we saw that’s shown here. And this is a schedule of mitigation costs up to ten billion tons per year, reduced by the developed countries compared to the baseline. And I’m going to draw this curve backwards for the developing countries.

Now you go from no mitigation in the bottom right-hand origin of this curve. It’s now reversed in direction. And as you move to the left of that diagram, there’s more mitigation being undertaken by this second group of countries, country two,which I’m calling for our purposes, the developing countries.

If I superimpose these two figures and say that the world as a whole is going to undertake the optimum level of CO2 reduction of 20 billion tons, the one we found in the earlier diagram and we superimpose these two symmetric cost curves they meet right in the middle, where the developed country group reduces by 10 billion tons, the developing country group reduces by ten billion tons and the marginal cost of mitigation for each of these countries is the same, $50 per ton of CO2 reduced.

That’s also the social cost of capital in equilibrium for the whole world. So we have a situation where there is one social cost of capital that applies to both negotiating parties.

They each mitigate in this case, half of the total world need. They share the costs. They have equal benefits. And if the world were so balanced, we probably wouldn’t have any difficulty in reaching such a symmetric, balanced, obviously fair equilibrium.

Now here’s a problem. What if the cost curves are very, very different? And different in a way which is, I’m going to put it in a way which some people will object to, but actually could be realistic.

Suppose that mitigation is actually more expensive in the high-income countries and less expensive in the low-income countries? Why would that be? Well the high income countries like the city of New York where I’m sitting right now has an infrastructure that was built 50 years ago or a 100 years ago. To retrofit that is incredibly expensive. We spend billions of dollars to add a kilometer of subway miles in this city, whereas if you’re building a system from the beginning, it’s much less expensive.

For a developing country that is fast-growing, but is building its infrastructure for the first time, it may be much less expensive to build a green field plant that is clean and low emitting than to retrofit an old plant.

The result is peculiar because now we have a steep marginal cost curve of the high income, or the developed countries, that’s shown starting from the left-hand side of the graph and the upward sloping line that is quite steep. And we have a relatively flat marginal cost curve of the developing countries signifying that the cost per ton of carbon dioxide reduced just doesn’t increase all that much for the developing countries.

Now here is the paradox or the problem in terms of fairness and efficiency. What would be for this kind of world, these two blocks of countries with these distinct cost curves the least cost way of reducing total emissions by 20 billion tons?

It would be where the marginal costs for the two groups of countries of mitigation are equal. That’s where these two lines cross. And interestingly, because it’s cheaper and the marginal costs of mitigation are lower in the developing countries, the least cost worldwide formula for reducing 20 billion tons of CO2 emissions is no longer  symmetrical, it’s that the developing countries should do the hard lift.919a

They should do 15 billion of the 20 billion tons of emission and the developed countries, only 5 billion of the 20 billion tons. That way the total cost that the world would bear in reducing the emissions, which comes out to a total cost of $600 billion dollars in this example would be minimized.

But the developing countries would say, are you crazy? That is so unfair. Yes, of course we could do it more cheaply, but take a look Professor Sachs, you’re asking us to bear $450 billion dollars of the $600 billion cost, whereas the rich countries who are richer to begin with would only be bearing a $150 billion. Why should we be the ones to undertake all that mitigation? That’s not fair.

So perhaps developing countries would suggest, even given the asymmetry of costs, a solution like this. Some negotiators might say, look, fair is fair, we’ll each do ten. We’ll do half each. The rich countries mitigate by ten billion tons, we’ll mitigate by ten billion tons and that will be it.

Now if you look closely at this graph, the problem is that this is a very expensive solution for the world as a whole, though it is cheaper for the developing countries. In this case, the rich countries are spending a tremendous amount for those incremental units of mitigation, the amount of mitigation between five and ten billion tons that they are bearing compared to the previous diagram.

In fact, if this equal division is taken then in this case the developed countries would have $600 billion dollars of mitigation costs, the developing countries, $225 billion, the world total cost of undertaking climate change mitigation would therefore be $825 billion dollars compared to what was $600 billion dollars before.

Fairer? Absolutely fairer in some sense, but more expensive? For sure. So not very efficient but perhaps more equitable.

Now the rich countries would say, okay, that’s not equitable, you’re making us pay a tremendous amount for this. Yes, it’s divided 10 and 10, but you understand, we have to retrofit. You have green field, how about if we each bear an equal share of the costs? Well if you get out a pencil and paper and take the specific assumptions and solve a little quadratic equation, it turns out in the example of this diagram that the equal cost sharing would have the developing countries mitigate 13.2 billion tons and the high income countries reduce 6.8 billion tons for that total worldwide reduction of 20 billion tons.

Each of the two groups would be spending about $347 billion dollars or about $695 billion dollars for this total effort, $95 billion more than in the first example where the developing countries do more. So you might say, well that’s fairer. It’s a little bit less imbalanced. I suppose you can see where I’m about to go and that is that in some circumstances it’s possible to eat your cake and have it too. And that is, it’s possible to combine both efficiency and fairness in the negotiations. How can that be done? It can be done through side transfers.

The idea is that countries agree on a deep decarbonization pathway that minimizes the global costs of mitigation, but then countries make side financial payments to share the burden in a fair manner. So if we go back to the low cost solution where the developing countries put in 15 billion tons of mitigation, the developed countries only 5 billion tons, remember that that is the minimum cost solution for the world, 600 billion in total, the least cost all the examples. But since the rich countries bear only a cost in that case of $150 billion and the developing countries, $450 billion, one way to equalize the burden,

I’m not saying it’s the only to judge fairness, but one way to equalize the burden would be for the developed countries to say, let’s do it the least cost way and we will transfer a  $150 billion dollars per year to you, the low cost countries to compensate you for having undertaken the extra heavy lift. And in that case, each country ends up bearing a $300 billion dollar cost. The total costs are equally divided. And the total cost that is shared equally among the two sides is thereby minimized. Here is the bottom line. The bottom line is that because climate change is a disaster for the world, there are benefits, net benefits, economic gains to mitigation.

That’s the whole point of this course and it’s the whole point of the framework convention on climate change. Those benefits should be shared among countries. The idea of Pareto, that these can be benefits in which all countries gain is an important idea. So that every country sees the benefit of moving from the baseline. How do share? Well one can separate two concepts. The efficient mitigation is the way of reducing emissions at least cost for the world as a whole. The fair way is to share the costs appropriately.

We can do both if we’re smart, by having a least cost mitigation strategy worldwide and then having side transfers from rich to poor countries, if the poor countries are bearing an unfair burden in the least cost construction.

This I think I, and I hope gives some sense of the complexity of the challenge but also of the nature of the negotiations.

Countries need to formulate pathways so that we satisfy the 2-degree limit and then they need to formulate financial transfer programs so that the cost of achieving those pathways is fair.

Energy and Development V

Sustainable Energy for All

We’ve been talking in this lecture about the challenges of energy poverty and how they relate to the challenges of poverty more generally. We’ve also discussed the imperative of combining the fight against poverty and the fight against uncontrolled climate change. These can’t be put in chronological sequence or prioritized that fighting poverty comes first and climate change comes later, because as I emphasized in the previous chapter, if climate change runs out of control, if we continue with the business-as-usual path, our hopes of even basic food security, much less an escape from poverty are going to be dashed.

I’ve emphasized therefore the importance of putting the poverty agenda within a context more generally of sustainable development. Fighting poverty is part of the larger cause of sustainable development.

And in this chapter I want to put it the other way, that fighting climate change also is part of that larger effort. To have success in 2015 in COP21 in Paris, we’re going to need success at the United Nations in September 2015 in adopting a set of sustainable development goals or SDGs, which will frame exactly that holistic approach in which fighting poverty, fighting for social inclusion of women and minorities and the poor, and fighting against uncontrolled climate change are all combined into an integrated and holistic framework. 2015 is indeed a period of extraordinarily interesting and complex negotiations.

851Remember, you’re going to be a delegate to the climate negotiations in the global online negotiation that will take place at the beginning of 2015. But let’s note that there are three big negotiations that need to be completed successfully in 2015 and each plays off of the other and depends on the success of the others. Paris we know comes at the end of the year. Before Paris comes the negotiation on sustainable development goals in 2015 in September at the United Nations.

And even before that, in July 2015, will come the first major summit, diplomatically for next year and that is the Conference on Financing for Sustainable Development which will take place in July in Addis Ababa, Ethiopia. What is that conference about?

That conference is to help find the ways that poor countries can access electricity, the ways that we can help to finance the research, development and demonstration of new technologies for low-carbon energy. The way that we can help to compensate countries that experience significant climate losses, a principle that was agreed in COP19 in Warsaw, last year, that losses and damages from climate change should be compensated.

So we’ll have a conference on finance, we’ll have a conference on sustainable development in general and then we’ll have the COP21 in Paris at the end of 2015. I’m excited about sustainable development being the overarching framework. I think this is right. And I think that it is a proper intellectual framing of our interconnected challenges, but also a proper framing from the point of finding a way through the complexity that confronts us now. Of course the idea of sustainable development has been around for a quarter century. And I’m delighted to have an online course available for your viewing pleasure, The Age of Sustainable Development, to look at this concept in more detail. But here in chapter five of lecture eight I want to stress how the framing of sustainable development will help to shape the climate and energy discussions in the coming year and then of course in the years beyond.

Back in 2012 at the twentieth anniversary of the Rio Earth Summit, remember that the Earth Summit is where the U.N. Framework Convention on Climate Change was first adopted. On the twentieth anniversary the conferees looked at the results of the UNFCCC and of the other two big treaties that had been adopted at Rio, the Convention on Biological Diversity and the U.N. Convention to Combat Desertification and they said, these are good documents, we still live by them, but we’re not getting the, the global buy-in, the political will, the public energy and commitment that’s needed really to implement these three treaties. And they looked at the quite different process of the Millennium Development Goals which are not legally binding; they’re not a treaty. They were adopted as a spirit of the world, as a commitment of the world, but not in a legally binding way back in September 2000, at the start of the new millennium. So in 2012 the conferees at the twentieth anniversary of the Earth Summit said, hmm, if those MDGs are, they’re working.

They’re drawing the world’s attention to the plight of extreme poverty and to the ways that we can address and solve and overcome extreme poverty. Why don’t we use a similar mechanism, not to replace the Framework Convention on Climate Change, not to undermine the treaties, but to complement the treaties by helping to bring the challenges of sustainable development more generally to the world’s attention. And they called on the U.N. General Assembly to adopt a concise set of sustainable development goals that would cover the three main dimensions of sustainable development.

Fighting poverty and promoting economic development, dimension one. Promoting social inclusion of women and minorities especially in insuring the human rights of all individuals, of access to public services as number two. And environmental sustainability of which controlling climate change is by far the most urgent as number three. And those three dimensions of sustainable development, they noted back in 2012 need to be girded by a fourth crucial dimension and that is good governance and global partnership. So in that spirit, the 2012 twentieth anniversary of the Rio Earth Summit passed the baton to the U.N. General Assembly and said, come up with a concise set of sustainable development goals that will incorporate the fight against poverty, the fight against climate change, and the other crucial aspects of sustainable development.

852I’m happy to say that the U.N. General Assembly took this challenge on fully and has now been in two years of intensive analysis and negotiation about the sustainable development goals. And there is a, an increasingly strong chance indeed that a concise set of SDGs will be adopted in September 2015, just a few months ahead of the Paris COP21. For a while it was thought this could conflict, this could make things complicated.

But I think by now the governments understand that the two processes are complementary. They’re not contradictory. And climate change will be part of both the sustainable development goals and the COP21, not that one will negotiate different targets and different ambitions, but rather within the sustainable development context the world will reconfirm its commitment to the framework convention and to the decisions that are to be taken in Paris to ensure that in the 15 years between 2016 and 2030 in which these new sustainable development goals are the world’s guideposts, climate change will be one of the headlines of that new global commitment.

So we are now in the middle of the process of adopting sustainable development goals and I think the process is working well for exactly the themes that I’ve been discussing in this eighth lecture. Recently the working group of the General Assembly has put out a provisional list of some of these sustainable development goals. And while I won’t go through the whole list, I want to highlight some of the main conclusions of the two years of negotiation that have been underway.

First, there is general agreement that goal number one of the SDGs, SDG  number one will be end poverty. End poverty in all its forms by the year 2030. And specifically in terms of measurement, what this means is that the World Bank’s poverty line which is a $1.25 per person per day for extreme poverty. That using that line we should be able to get to near zero in terms of the proportions of households still stuck below poverty from the roughly one billion people today under the World Bank poverty line to near zero. But helpfully, as with the Millennium Development Goals, these sustainable development goals will define ending extreme poverty not only income terms, but in many other forms as well. In terms of food security, health security, schooling for children, access to safe water and sanitation, access to modern energy services, these will all be part of the commitment to ensure that everybody’s basic needs are met by the world economy as of 2030, whether through markets or whether through government or other kinds of social help, the basic needs of everybody should be met and achieved by the year 2030.

Goal number two on this new list of the U.N. General Assembly open working group is to end hunger, to ensure food security. Now remember, as we just discussed, if climate change is running rampant; this is going to be an absolutely forlorn and failed ambition. We’re going to have to improve productivity of agriculture but at the same time, ensure that the consequences of runaway climate change are, are not seen.

Goal number three of the proposed list is to ensure health for all. That’s access to health services. That means electricity in the health clinics. It means emergency transport to those health clinics. It means modern information systems, also requiring electricity,so that those clinics can run effectively. It means environmental health as well. It means that people are not choking and dying of indoor air pollution or the particulate pollution of coal fire power plants and the smog of Asia’s cities. And so again, the interconnection of the health agenda and the safe energy and climate change mitigation agendas.

Goal number four, ensure inclusive and equitable education for all children. Again, information technology, electricity in the classroom can play a very, very big role in this. And there are lots of innovations possible to bring education and information to places that right now don’t have a book but could have the world of online information opened to them.

Goal number six proposed by the open working group is to ensure access to water and sanitation. Once again, modern energy services of pumped water, solar irrigation, solar systems for water safety, even for desalination in some locations will be part of water security and therefore intertwined with energy services.

Proposed goal number seven of the open working group is specifically about universal access to affordable, reliable, sustainable and modern energy for all.

This is good. Energy is put straight on the table. And the commitment to ending energy poverty as one of the most powerful tools to raising human well-being and ending other forms of poverty is now clear and it’s linked also strongly to climate change mitigation through the very strong emphasis on renewable energy sources, energy efficiency and cleaner fossil fuel technologies, perhaps carbon capture and sequestration or other, other potential solutions.

But the point is, energy for all in a way that is compatible with the 2-degree centigrade carbon budget. Notably, proposed goal thirteen is on climate change itself. This is extremely important as I’ve been emphasizing, climate change is one of the absolute core aspects of sustainable development. This was contentious within the open working group. For a while many governments said, “don’t put in a separate goal on climate change because we have the climate change negotiations that will come just after the sustainable development goals are adopted.” But that was not really the correct way to think about this challenge.

The sustainable development goals will apply for a 15-year period, for the years 2016 to 2030. Therefore, during that whole period the signal, the message much go out to the whole world that to achieve sustainable development we need to achieve climate change mitigation. We need to honor the 2-degree centigrade goal. And the governments came to understand that the sustainable development goals are not the place to negotiate the climate change details. There’ll be enough negotiations under the U.N. Framework Convention on Climate Change, thank you, during 2015 not to confuse the negotiations with yet another venue. But the governments did come to understand that of course climate change needs to be a headline within the sustainable development goals because the sustainable development goals are not legally binding treaties, they’re not the UNFCCC substitute. They are the guideposts. They’re the compass for the world. And climate change must be there to remind the, the world every day that to achieve sustainable development, we must achieve climate change control.

And finally, I want to emphasize that the poor countries have been saying throughout these negotiations, “well that’s all fine and good, we like that goal on ending poverty. We definitely want energy services. But how, how is this going to be done?” And the poor countries have insisted therefore that one of the goals be on what is called in the jargon, the means of implementation. And this is the same jargon used in the climate negotiations as well. Where is the money on the table when it’s needed? How will research and development be financed? How can we ensure that impoverished populations, that by themselves cannot afford crucial needs on a market basis, are nonetheless availed of those needs whether it’s healthcare or access to energy, that through public services as a crucial way to meet their human needs.

And so the commitment needs to be made together with the broad aspirations that the ways to actually achieve those goals is found in terms of financing, in terms of requisite technology, in terms of building local capacities and expertise and education of the next generation of sustainable development leaders, of trade policies that facilitate these solutions, of the partnerships that are needed and of systems of data monitoring and feedback to make sure that we stay on track and when we get off track, the alarm bells go off to say we’re not achieving the goals that we have set ourselves, we have to push back onto that path.

And these are the same means of implementation that will be needed in Paris in December 2015. It will be one thing to state goals; it will be another thing to lay out pathways on how to achieve the goals.

But then there will have to be clarity about how those goals, those aspirations, those pathways can actually be achieved and issues of finance, trade, monitoring will be front and center on the climate negotiations just as they are on the sustainable development goal negotiations.

Finally, let me talk about the means of implementation specifically on energy for the poor.

One thing is clear from the experience of bringing healthcare to all that has been very successful during the Millennium Development Goal period.

For the poorest of the poor, we need to give a bit of help. For people who have nothing, asking them to buy the energy services that they need or the healthcare is a route to failure.

We need to recognize that for the poorest people in the world, an added hand-up, a helping hand, to achieve these goals is vital. In the case of healthcare, a big innovation was to create the Global Fund to fight AIDS, TB and Malaria back in 2002.

That provided some of the financing to ensure that even impoverished populations could gain access to lifesaving health technologies. I believe that we need a similar global fund for energy for all.

That the idea that this will come only through market forces could be right for even six-sevenths of the world’s population, but for the poorest of the poor, we’re going to need to do more.

We also know in the context of climate change mitigation, but also in the context of overcoming energy poverty that research and development is crucial. And research and development intrinsically is both a public and a private initiative for some of those breakthroughs in off-grid, or microgrid energy, or in tapping geothermal power, or in new forms of mobilizing solar power for irrigation and so on. Research and development can lead to significant advances and this needs to be on the list of the to-dos to end energy poverty.

We know that we’re going to need large-scale investment, $50 or $60 billion dollars for example for Inga Falls. That’s not going to come out of public money, that is going to come out of pension funds, sovereign wealth funds, insurance company funds.

And so we’re going to need institutional cooperation to channel private sector funds, perhaps with some public guarantees or some public insurance or some public sector participation in order to be able to fund the large-scale solar grids of west Africa or the large-scale hydropower grids of central Africa or the large-scale natural gas networks that could power east Africa in the coming decades.

And finally we know that all of these efforts require both the market forces, companies out for a profit, companies out to look for new innovation through market-driven incentives, as well as the cooperation of government and civil society, guided by these broad global goals.

In other words, projects like Inga Falls or projects like overcoming extreme energy poverty in Africa are complex tasks that require a considerable amount of project design, a high degree of cooperation across every major stakeholder group from the local communities, the national governments, the African Union, the international private sector, international financial institutions and the U.N. agencies.

It’s a hard job. That cooperation is vital for success. It’s at the heart of the call to end energy poverty; it’s at the very heart of the challenge of sustainable development itself.

Energy and Development IV

How Climate Change Threatens the Poorest of the Poor

And we continue on the discussion about energy poverty, overall poverty and how energy services can help Africa in particular escape from chronic poverty.

Now I’ve been privileged to be special advisor to first United Nations Secretary General Kofi Annan and now to United Nations Secretary General Ban Ki-moon on the Millennium Development Goals.

The commitments that were made in the year 2000 to help Africa and other poor regions of the world end extreme poverty. And I have been every day trying as best I can to make the point that ending poverty is within reach. And it should be both a moral and practical commitment for the world.

841In recent years I’ve been emphasizing also the importance of the battle against climate change. And it’s been interesting for me that on occasion I’ve been asked, though less frequently now than say a year or two ago, why am I putting emphasis on climate change, why not continue to focus on poverty? Don’t dilute the message, I’ve been told. When the sustainable development goals were first proposed some poverty activists said, let’s not go there to sustainable development, environment and other issues. Those are not our priority, our priority has to be to end extreme poverty.

Well I want to spend a few minutes in this chapter explaining why that point of view is understandable, but not correct. And indeed once one reflects on the enormity of the burdens that climate change is already imposing on the poorest people in the world and on the devastation that climate change can potentially impose on the poor regions of the world, you come to a very, very different conclusion. And the conclusion is, even if you’re focus is only on ending extreme poverty and that’s a pretty plausible focus of high moral and practical priority, climate change should be front and center of your concern.

I’ll put it this way, there is no way in the world that we’re going to end extreme poverty and no way in the world that if we even temporarily end it that it will stay gone if climate change runs rampantly out of control. If we exceed the 2-degree Celsius limit, if we continue on the business-as-usual path, I shudder for the consequences for Africa.

All of the hopes of the Millennium Development Goals, all of the progress that is being achieved now will easily be swept aside and tragically be swept aside by the consequences of climate change.

842This is not a hypothetical warning. And it’s not one that I make casually or idly or because you’re taking a class on climate change. It’s because I see it with my own eyes and of course it’s not just me, it is Africans who are feeling already the derangement of their climate and the incredibly severe consequences that result from that. It’s quite obvious that if you live on the edge of survival, that shocks can push you right over the edge. And when you see the consequences of a drought such as the Sahel experienced in 2012 and such as is seen by this farmer standing by a dead camel who died of lack of water in Chad and this view, this, this scene has been repeated so many countless times across the region, one begins to understand the reality.

All through Africa and especially through the drylands, which are the most vulnerable part of the world to climate change in this phase that we’re in right now, places that already by virtue of their longstanding climate always have the risk of drought and famine, are being pushed into disasters of increasing frequency and intensity.

843And moreover, because of rapid population growth in these countries, demographic pressures that are rising and rainfall that is declining is cutting these societies. Like the blades of a scissors, they’re caught between these two very powerful trends. And the result is a tremendous amount of dislocation of populations. Here are refugees from the Sahel drought and with the tents set up of migrants trying to escape from the drought in Niger. But this kind of phenomenon of people on the move, trying to survive in the face of ecological shocks is something that we have seen repeatedly and with the devastation in many parts of drylands Africa. Somalia. A country that is so bereft of basic resources with water at the start, and energy resources next, that it has not even been able to maintain a government intact for more than two decades has faced repeated droughts in recent years.
Part of a long-term decline of overall rainfall and because of warming temperatures and overall increase of evaporation of the water and therefore the drying of the soil moisture. In 2012-13, there were more displaced populations. This is a Somali mother and her children that have fled across the border to Kenya. They’re in a refugee camp, waiting for some emergency help. And this massive stream of refugees across the Somalia border to Kenya has been very destabilizing.

We work in northeast Kenya in a village area near the city of Garissa. There is a tremendous increase of violence, of lawlessness, of theft of livestock, of insecurity. And this is the pervasive spillovers when one experiences famine and drought and populations on the move as a result of this.

844This is a map of the United Nations. It’s an unfortunately and increasingly typical map. It shows the extreme drought conditions in two 2011 in Somalia, in the horn of Africa. This kind of map is of the Office of the Coordinator of Humanitarian Assistance, OCHA. And it’s the basis typically of an emergency appeal.

We need a hundred million, three hundred million dollars to help people survive the, just the latest ecological catastrophe. Well the experience is that the world doesn’t respond. Sometimes it’s called donor fatigue, although I’m not so sure how much fatigue you can get if you don’t try very hard.

845But the fact of the matter is that not only are these shocks coming in increasing frequency, but they are not met with the kind of emergency response that is commensurate with the scale of the challenge. Now the climate science tells us that it is these dryland regions that have already experienced significant declines of soil moisture, significant increases of drought frequency and severity.

Declines in many cases of overall precipitation levels. And this is one example of very notable study of a few years ago of changing drought conditions using something called the Palmer Drought Severity Index, or PDSI. And this is showing increasing drought severity during the historical period of 1950 to 2008.

Look at how much of Africa is covered by pinks and reds and purples, signifying a chronic increase of drought severity during this period. When climate models are used to project forward, the likelihood of drought severity, the picture is absolutely terrifying. These models measure estimated changes of precipitation, or projected changes of precipitation. And changes of soil moisture as the result of the higher rates of evaporation and transpiration of water in the soil.

Transpiration means the water that exits the leaves of plants, sometimes the evaporation and the transpiration are combined into the term, evapotranspiration. And what we have is declining precipitation, declining rainfall and rising potential evapotranspiration, meaning that whatever comes to the ground returns as water vapor to the atmosphere much more quickly. And the result is a chronic drying of the soils. And that chronic drying of the soils of course can have devastating effects on crop productivity.

So many studies now take the climate estimates of temperature and evapotranspiration and other climate phenomena, for example, likelihood of heat waves, or likelihood of dry spells and use those data to with the, the randomness and the uncertainty attached to them as inputs to estimates of crop production, through so-called crop models.

And those then give us a sign of where we should worry about changing crop productivity. And again, here is a map based on such a study which starts with the climate change 846models and then feeds them through crop models.

And where you see red, dark red means a decrease of crop production with high confidence of the model, saying that the model is really signaling with very high probability a decline of crop productivity. Or in just a bit lighter red, a decrease with medium confidence. And you can see that a very large part of tropical Africa is caught in that band. Not just tropical Africa, we see that large swaths of South America, of North America, of India, Australia, the Mediterranean basin, are all facing these challenges.

That’s why we’re here trying to understand how to stay below the 2-degree centigrade. But it’s why the idea that climate change is extraneous or ancillary or secondary to the concern about poverty misses the point.

How is Africa going to feed itself in a world of unconstrained climate change? The answer is there is no good answer. This map that you’re looking at is for the 2030s. Let me forward towards the end of the century on a business-as-usual trajectory. It’s terrifying. It’s terrifying because many of the food centers of the world show up in bright red. What the models are telling us is that the decline of soil moisture combined with the direct effects of higher temperatures, which by themselves reduce the photosynthetic productivity put in realistic possibility a massive crisis of food production.847

Step back and remind ourselves that we’re at 7.2 billion people now. But the  world population is continuing to rise by 75 to 80 million people every year. And by the 2080s or 2090s, we could well have 10 billion people in the world, facing a food  production catastrophe coming from unconstrained climate change

The point I think is clear, there is no way to fight poverty except by also fighting climate change. We need to put these two core needs and imperatives for the world together. That is the whole principle of sustainable development. We need a holistic approach and it is only by a holistic approach that we can find our way through this very serious bottleneck. If we do so, there is high potential at the other end with all of our technologies the ability to escape from poverty is in hand, but only if climate change is brought under control.

Energy and Development III

Energy for All in Africa

I’m continuing on the discussion about energy services for the poor. How to end energy poverty and thereby to help end poverty overall. And I’ll continue with the focus on tropical Africa which we’ve seen is a region that has a lot of poverty, but also a lot of potential where technology is now enabling Africa to break free of its chronic low levels of modern energy services.

And in this chapter I’d like to discuss some of the continent scale solutions that can be at hand given the advances of energy technologies.

831If you look at the maps here, you see a depiction of energy potential from four types of very much underdeveloped energy resources within the African continent.831

In the map on the upper left we see the hydropower potential. And I want to draw your attention to the country right in the middle of the continent, the one that is shown as having the highest hydro potential. 831hThat’s the Democratic Republic of Congo with the Congo River that offers a potential for a vast supply of hydroelectric power, but a supply that has not yet been tapped given the poverty, the disorganization, the chronic wars and violence and the difficulties of regional cooperation. I’ll return to that shortly.

If you look at the upper right-hand map, you see a corner of Africa, especially in the northeast, where there is considerable wind power potential.831w And some of that wind power is now being developed. If you look at the northwest corner, of Morocco, you see another place with tremendous wind power, even enough wind power not only to meet Morocco’s own needs, but potentially to export to Europe through long distance power transmission.

On the lower left-hand side, the continent is filled with high potential to solar power. Not surprising. 831sAfrica is tropical, it has a tremendous amount of solar radiation. And much of Africa is a dryland climate, meaning that cloud cover is relatively low and therefore solar radiation and the potential for solar energy is commensurately high. And solar power is perhaps one of the greatest breakthroughs that is possible in some of the very, very poorest parts of the world, and especially in west Africa, the Sahel, a region that we’ll look at in just a moment in more detail.

And then finally and very interestingly, if you look at a, the band of countries from Egypt in the north of Africa, shaded here in light blue, through Sudan, through the great lakes region, including Kenya, the DRC, Rwanda, Burundi, and going down into southern Africa you see a potential area of high geothermal energy.831g

What is that region? That is the Great Rift Valley of Africa. It is part of the spreading continental plates that open the access of countries along the Rift Valley to potentially very large amounts of geothermal energy. And this is now beginning to be tapped in very promising ways in Kenya, in Tanzania, in Rwanda and a lot more can be done.

All of this is to say that while Africa was poor in coal resources, the decisive primary energy source of the 19th Century and relatively poor or at least with undiscovered potential of hydrocarbons during the 20th Century, because of technological advances in renewable energy, in wind and in solar power, in geothermal, and because of increased know-how and potential on hydropower, Africa has within the continent itself a tremendous potential for a massive advance in electrification.

This is a picture of a, a power generation, hydropower at Inga Falls along the Congo River. There is a small amount of electricity being produced at this site of high hydropower potential in the Democratic Republic of Congo. But since the mid-1960s it’s been recognized that if this hydropower were tapped in full, there’s actually one of the world’s largest hydroelectric power potentials available at the Grand Inga Falls.

832Current estimates say that between 40 and 50 billion watts of hydropower are potentially available here. And by developing this hydropower, Inga Falls could transform the prospects of central Africa, of the Democratic Republic of Congo, of the Republic of Congo, of Rwanda, Burundi, and other neighboring countries that have been largely bereft of modern energy sources and electrification, but could tap into a regional grid. Of course it’s a big project.

It’s a project that perhaps requires 50 or 60 billion dollars of investment. That’s not a huge sum in macroeconomic terms. Projects like that are developed all over the world. But it is a lot of money to flow to central Africa which is a region of poverty and of instability. It’s an example of a highly promising, but rather complex project which would require regional cooperation, a regional power transmission system, regional governance because it’s pretty clear that investors are not going to turn 50 or 60 billion dollars over to the DRC or to any particular government in the region.

But it’s an example of the kind of project that if we think in a creative way, with the design of creative, multinational institutions, could get developed and could make a, an absolutely decisive difference in the, for the economies and the people of the region.

834It turns out that when one maps the potential for such large-scale projects throughout Africa, they now exist in many places with the specific local energy context taken into account. In this map created by my colleague, Professor Vijay Modi of Columbia University, he’s analyzed the areas of high potential hydropower, shown in the big blue circles, the biggest of which is Inga Falls.

Of wind power shown by the green circles on the map. And the regions of high solar energy. And across that oval of the Sahel, Professor Modi is indicating the extraordinary importance of solar power for that long stretch of very impoverished, semi-desert countries of west Africa. Mali, Niger, Chad are countries that have very, very low access to electricity but the one thing they have complete access to is sunshine.834a

And the potential now to tap the solar power of the Sahel, both at a very small scale in highly distributed microgrids or even individual solar panels for individual households and on large grid basis using concentrated solar thermal technology or massive arrays of photovoltaic fields is now at hand, given the dramatic changes of prices that have occurred for solar energy in recent decades.

835Remember that the cost of a one-watt solar cell has declined from about $77 per watt back in the late 1970s to about .70-cents per watt today by a decline of a factor of 100. And this makes it possible that in a very poor region with massive solar radiation like the Sahel there could be a mass electrification just in a few years. One of the most exciting discoveries of resources in Africa in recent years has been findings of natural gas deposits off the coast of east Africa.

Normally I wouldn’t be so thrilled with another hydrocarbon find. We’ve been emphasizing that we can’t use all the hydrocarbons we have in the world.

836That many of the hydrocarbons, the unconventional oil and gas and the, the preponderance of coal can never safely be used in the world, certainly not within the 2-degree Celsius budget. But when we’re talking about impoverished countries that contribute basically nothing of significance to the global scale challenge, a find of energy resources in those places that would enable impoverished economies to escape from the trap of poverty must be greeted with enthusiasm.

And I think that the world as it negotiates next year at COP21 will have to be clear that while many fossil fuel resources will have to be stranded, that should not occur and certainly not be mandated in the poorest of the poor in the world, when these resources make possible a decisive breakthrough out of extreme poverty.

837Well the, the biggest of these finds has been in that green circle that one sees off of the east coast of Africa, Mozambique has been identified as a place with the, perhaps, a hundred trillion cubic feet of natural gas offshore and available for development. And this again, like the Inga Falls project or like the large-scale solar energy potential of the Sahel, will require a complex analysis and project design and implementation to make it possible to use these resources for Africa’s true long-term benefit.

Why do I say this? Because the natural thing to do when gas or oil is discovered off the coast of an impoverished country has been to develop that resource and ship it off to a major market. And indeed, the first impulse of the oil companies that have discovered these large natural gas deposits off the coast of Mozambique and Tanzania has been to say, well let’s bring it to shore in a pipeline.

We’ll liquefy it, put it on a tanker, and send it to China. And the idea has been that with these vast gas resources, that that can be another resource for China. We know the problems of that. We know the problems of emissions. But the other problem is that when energy is not used for domestic development but merely becomes an enclave economy for export to high income markets, the contribution of these energy resources to Africa’s own development are likely to be lost.

And so on second thought, some of the…these companies such as Eni, the Italian large oil and gas company has thought perhaps we ought to be thinking much harder about how those natural gas deposits can also be used fruitfully for east Africa’s own development. And with the Professor Modi having a close look at this, he’s identified ways that natural gas could play a role, fundamentally in enabling modern energy services throughout the entire eastern coast of, of Africa, running from Ethiopia and Somalia through Kenya, Tanzania, Mozambique and, and other countries.

Natural gas offers the potential in this region for electrification. It enables the potential for a petrochemical industry around fertilizers desperately needed by the poor, smallholder farmers of the region. Transport, instead of being dependent on import of petroleum, can run on natural gas. And of course safe cooking stoves to replace the three-stone cookstoves used throughout this region, could enable families to enjoy modern cooking services without the devastating smoke inhalation and lung disease that accompanies the, the daily cooking chores, currently.

The point is, think creatively. In this case, we worry less about the carbon dioxide emissions per se because on a global scale they’d still be very small. But the transformative potential for this region of economic development is absolutely huge. And that’s why when we’re facing the challenges of the poorest of the poor, we have to give due attention to the core of their economic development needs.

For those places in, especially in rural Africa, far from pipelines and, and grids and even potentially so, we also have highly distributed energy potential now such as depicted in one of my favorite projects of Professor Modi, the shared solar system where a village has its own power generation in a microgrid of solar panels depicted here, shown here in one of these microgrid systems. And from those solar panels there is a distribution throughout a village, connecting 20, 30, 40 households in the village and enabling those households to have electricity, to power lights, to power perhaps small refrigerators or food processing units, a sewing machine. Other small appliances.

To charge a mobile phone. To become more productive. To increase the quality of life. To share in the benefits of modern energy services even when living in remote rural areas. If we put the pieces together, tropical Africa, the region of the world that is the poorest and that suffers chronically from energy poverty has the potential for huge breakthroughs. And we see here three and we can add the fourth.

In the yellow oval across west Africa there is the vast potential for large-scale solar. In the blue circled in central Africa, there is the potential to tap into the massive hydropower of Inga Falls and other hydropower projects. And in the large pink oval, in the east of Africa there is the potential to tap into the large-scale natural gas reserves that have been discovered off the coast of east Africa.

Add to that the fourth potential for highly distributed renewable energy through solar power, wind power, geothermal and other potential and we see that we are on a threshold in which energy poverty can be brought to an end and thereby help Africa to bring overall income poverty to an end once and for all.

Energy and Development II

A World Without Modern Energy

Welcome to lecture eight, chapter two, where I want to talk about life in an economy without modern energy services. I want to do this to make it absolutely clear that for poor places in the world, our most important mission and goal is to increase access to modern energy.

Sometimes people say, oh who needs electricity? Who needs all of these frills of modern life? But it’s nothing like this. The life in places without access to electricity and other modern energy services are not the kind of life that people want or deserve in the 21st Century. I think about this often because I have the chance to visit and work in many very poor parts of the world and especially in very poor villages in rural Africa. And I have seen and I feel the burdens that come from that, especially when I fly home to Manhattan to an affluent neighborhood near Columbia University and I experience in daily life the benefits and conveniences that seem so remote in some of the poorest parts of the world. I’m almost, feel compelled to think about this almost every day when I get my breakfast. I get a bowl of cereal and I cut some fruit into it. Fruit from a refrigerator which has kept the fruit fresh and safe. I stick it in the microwave. Press a button and within a couple minutes, I have my breakfast. Truth be told, I press another button and there is a cup of coffee and of course that’s a super convenience, but when I think about it, in five minutes

I’ve accomplished what may take a woman, a mother in sub-Saharan Africa four or five hours of arduous labor to accomplish. A woman may start her day often walking many kilometers, carrying an incredibly heavy burden of fuel wood, which she has collected on her own. And I’ve tried lifting these, I can’t do it. And the burdens that this woman and millions like her start the day with are startling. And there is the walk maybe two or three or four times a day to get water in a jerry can or in a, you know bucket like this, carrying ten or fifteen kilograms of water on the woman’s head. Baby at the side, often a one-hour or two-hour walk to a water hole or to a water point. And often a wait of half an hour or an hour to get that water. And then the cooking starts. It’s not the press of the microwave button. It’s cooking over a three-stone stove. Arduous work. But also very dangerous. Look at the smoke in, in these two pictures of women using traditional cookstoves in, in Africa. That smoke we know from epidemiological studies claims more than a million lives a year of young children. It creates lung disease, infection and death of children from respiratory causes. Of course it impairs a mother who cooks every day under these conditions. And then after hours, the woman is out in the field. There’s no machinery there. There is no tractor. She has her hand hoe and she is perhaps weeding, bent over, hunched over. Again, I’ve tried it and one day is exhausting. I have to say, this is a woman’s life every day and it’s not a matter of an option for her to feed her household, for her to ensure some minimum level of food security for her children and for her family is arduous, hours a day.

It will be broken perhaps by another walk to the water hole, by collecting fuel wood late in the afternoon, by cooking again, late in the evening. Or perhaps by a long walk carrying a child to a clinic, if there is a clinic. This is a makeshift clinic of Medicins Sans Frontieres, of the famous NGO MSF, which provides emergency medical services in places that otherwise wouldn’t have it at all. But in places that I have been working over the past 15 years, mothers often carry a child, febrile in their arms, ten kilometers to a clinic.

That clinic when she arrives doesn’t have electricity, can’t run some most basic laboratory or diagnostic equipment because of, of the lack of electricity. Often there has been no cold chain maintained to preserve vaccines. And a child’s life of course is repeatedly imperiled and that’s why millions of children in, in such poor places die before their fifth birthday of causes that are 100% preventable at almost no cost. Think of the role of energy in all of this. No transport, no access to basic lab services or to being able to provide the medicines and this is what life is like when one doesn’t have electricity.

Then comes end of the day and perhaps the child’s able to read and do a little bit of homework in the dark with a kerosene light. It’s not only expensive but dangerous for fires inside the household. The quality of lighting on the eyes is, is not good, the fumes of course are also very debilitating. This is a day without modern energy services. And it’s a day of profound hardship, a day of risk, a day when a mosquito bite can cause an end of a child’s life because of lack of transport or lack of access to life-saving health services.

When a bite of food can also be life-threatening because there’s been no refrigeration, or proper care that could be taken to keep the food safe from various kinds of pathogens and disease.

This is what it means when one lives without modern energy services. That is the grim reality still for hundreds of millions of people.

But the extraordinarily positive side of the story is that advances of technology and finally some common sense and mobilization of the world around doing something about this can help people to break free of this energy poverty and by doing so, break free of the poverty trap more generally. F

or every one of the problems that I just described, there are low cost solutions. And what’s wonderful about them is that not only can these low cost solutions be made available to households, but if they are made available, they empower the households to be far more productive. Rather than spending hours a day in basic tasks, they enable mothers and fathers to focus their attention on important, highly productive work to earn higher incomes, to improve farm productivity, to help keep their children safer and in source and thereby to provide a major lever for ending poverty once and for all.

We know now through the creative design of many engineers during the past ten years much safer cookstoves.

It can be still woodburning cookstoves, but with much lower smoke, and therefore, much more household safety and much less need for wood. It can be this kind of LPG, liquefied petroleum gas cooking that you see here, which is clean burning and a lot more efficient for this woman depicted here.

Water can be pumped now at far lower cost and avoiding the hours that women across Africa now spend in fetching water or the children spend fetching water, rather than in being in school.

Water can be pumped through low cost solar powered pumps as depicted here. And these are being rapidly improved. A lot of them are being developed in India. And they are easily adapted to the African context .And the very low wattage illumination of LED bulbs and solar power with even a modest amount of battery storage is allowing for, for illumination through electricity rather than through kerosene. And the households greatly prefer this. Gentlemen like this reports to us in a village where we’re working that it has enabled him to increase his income tremendously. He can now work extra hours in the evening, productively in his tailoring activities and earn a lot of extra income and easily pay for the costs of the electricity services that he is now buying in, instead of the kerosene that he relied on before.

There is a lot of small equipment appropriate for smallholder farming, such as this two-wheel tractor. Again, adapted from India in a wonderful case of so-called South-South Technology Transfer, where technologies now are going to enable smallholder farmers in Africa to increase their yields, to cut back dramatically on the backbreaking labor and by doing so, to find their way out of poverty for the long term. I can’t help thinking about this every day. I hope that you will think about it as well. There are more than a billion people in the world that lack access to electricity. There are a billion people or more that lack access to safe cooking energy, cooking services of one form or another. And yet the solutions are at hand. And as I’ll describe in a later chapter of this lecture, there is now fortunately, not only the technology available but there is the growing political will and the realization that by ending energy poverty we can also help end income poverty once and for all.

Energy & Development I

Energy & Poverty

Welcome to Lecture eight on energy and development. In this lecture, I want to discuss not the high income and high energy using countries of the world, but the parts of the world that are poor and energy poor, those that use very little energy, emit very little of carbon dioxide and other greenhouse gases per person and yet are bearing the brunt of global climate change.

811Today I want to talk about the poorest of the poor. The poorest of the poor are a population of around one billion people, mainly in Sub-Saharan Africa and in parts of South Asia who consume very little modern energy, who emit very little greenhouse gas emissions through their economic activities and yet who ironically bear a huge amount of the brunt of human induced climate change. So it behooves us morally, practically, ethically as part of an overall concept of global sustainable development to focus our attention on those most in need, least responsible for global climate change, absolutely desperate for modern energy resources and right now not at the center of the negotiations certainly on climate change but needing their place at the table to say,”we’re part of this, we need modern energy, we need the world to help us face the challenges that haven’t come from our part, but have become our burden through what’s happening in other parts of the world.”

812To do this, let’s start in lecture one on the whole question of the relationship of energy and economic development. And I’ll start with this iconic picture known throughout the world. It’s a great satellite shot of NASA’s satellites looking at the night vision image of the earth. And of course what’s shown here in the lights are the places with nighttime electricity and we have a very vivid image of the eastern half of the United States in bright lights.

The western half, other than all the way on the west coast, California, being sparsely populated and America’s drylands. You see the bright lights of western Europe. You see the bright lights of Japan and coastal China. And the bright lights of the eastern seaboard of Australia. And the east coast of South America stretching from Rio and Sao Paulo to Buenos Aires and the strong economic development in that region. And you also see the vast preponderance of Africa, almost without night lights.

813There is a very thin strip of electrification in the very north of Africa, the northern African countries of Morocco, Tunisia, Algeria, Libya and Egypt. There is the lights evident in South Africa. But in the whole tropical band of Africa, in between North Africa and South Africa you see very little of nighttime lights. And this is an extraordinary and very vivid demonstration of the fact that hundreds of millions of people, especially in rural Africa lack access to electricity and to other modern energy services.

We can see this in a less stylized and vivid way through a measure shown in this graphic of the amount of every use per capita in the world. And again, we see the very high use of energy in the United States and Canada and Australia and New Zealand, in the Persian Gulf, Saudi Arabia and the whole Arabian peninsula, in western Europe. But that strong area of tropical Africa where you see the greens and the blues in this depiction show that these are the countries with the absolutely lowest consumption of primary energy per capita in the world.

814Now this is a quite different map, but it looks almost the same in terms of the distribution across countries. This is a map of income per capita. And just as we have very high energy use per person in Canada and the United States and Australia and New Zealand and western Europe and Japan, here we see that these are of course the countries with the highest per capita gross domestic product in the world. And where is the poorest part of the world? Once again, it is tropical Africa. In between the northern African countries and South Africa, we see countries that are living where half the population and sometimes more is below the line of extreme poverty drawn by the World Bank at a $1.25 per person per day. Energy use and output per person and income per person all are very, very closely aligned in this world. And one can say indeed that access to modern energy is a fundamental necessity for having a modern economy.

815Primary energy use, access to electricity, access to other modern energy services for transportation, for home use, such as for cooking, for use in provisioning basic services such as clean water and sanitation, it is a sine qua non of economic development. It’s not surprising therefore that when we graph on the horizontal axis, again the income per person in countries and we graph on the vertical axis, the amount of energy per person, here measured as kilowatts per person, you find almost a straight line fitting through this scatter of countries.

On the lower left-hand side you have the poorest countries with the lowest energy consumption. And on the upper right-hand side you have the high income countries that also have high consumption per capita. This is verified in very detailed accounts, for example, the energy data that are produced annually by the International Energy Agency. And I want to draw your attention specifically to Africa. Now in the geographic classification used by the International Energy Agency, Africa in this table includes North Africa and South Africa. In a way therefore, it will tend to overstate the energy use in that tropical band which is the poorest part of the continent. But still the numbers are absolutely telling. We see that as of 2011 in the classifications use by the International Energy Agency, Africa is roughly one-seventh of the world’s population, about a billion people out of around seven billion. So Africa’s population share is 15% of the world total.

In terms of output, since Africa is poor, with low income per person, its total output is of course less than its population share. We tend to measure output when we want to make international comparisons at what are called purchasing power adjusted prices. So we look at the annual output in Africa or in any other part of the world, measured at international prices for the goods and services that are being valued. And when we use that classification, gross domestic product at purchasing power parity or the PPP that you see in the table, Africa’s economy in total is $2.8 trillion dollars according to the measures of the International Energy Agency. For the world as a whole, annual output, the gross world product at international prices was $70.3 trillion dollars. So Africa’s share of output was only 4% of world output compared to the population share of 15%. And now look at the columns on the right which measure total primary energy use and electricity consumption.

816For total primary energy measured as millions of tons of oil equivalent, taking all of the energy sources, putting them into an energy equivalence as tons of oil, we find that Africa had a total use of 700 million tons oil equivalent of energy compared to 13,000 million, 13 billion tons of oil equivalent for the world. Just 5% of the world’s energy. And for electricity consumption, measured in terawatt hours, again, even less than the primary energy use, just at 3% of the world electricity consumption. And finally, not surprisingly, given Africa’s very low use of electricity and low use of primary energy overall, Africa’s carbon dioxide emissions of course are a very, very tiny part of the problem. They constituted about one billion tons of CO2 emissions in 2010–sorry, 2011 data–and that is out of about 31 billion tons that year worldwide. So Africa’s emissions are only 3%.

Fifteen per cent of the world’s population, three per cent of the emissions, or one-fifth per person of the world average emissions. Think of the other end that we’ve been focusing on in the deep decarbonization pathways discussion. Just the five major economies of the world, China, the United States, European Union, India and Russia, just those five account for two-thirds, 65% of the world’s total emissions. So a few very big, quite wealthy economies in general are at the top end of energy use and at the top end of emissions. And a very significant part of the world and a large part of the world population, in Africa, is impoverished, using very, very low amounts of energy and emitting a very small proportion of the carbon dioxide emissions and the greenhouse gas emissions more generally.

817Now I think it’s quite interesting actually to look back historically at both how Africa’s poverty in income terms and its energy poverty, the phrase that is now widely used, have been part of the long history of the continent. And through no fault of Africa, I want to stress, one of the most telling aspects of modern economic development is that it has taken place primarily in countries that had adequate domestic energy resources. The industrial revolution took off originally in England, in a place where coal resources were vast and where the creativity of James Watt in inventing the modern steam engine at the, towards the end of the 18th Century made it possible to tap this large coal resource and help propel England and Britain to the forefront of global economic development. When one traces the history of industrialization in the 19th Century, coal is a big part of the story. If the country had it there was a pretty good chance that it could achieve industrialization in the 19th Century. The United States is an example of that. Australia is an example of that. Japan is an example of that. But notably in looking at this map of coal reserves, ironically, tellingly, there were certain parts of the world that just don’t have coal.

This isn’t a matter of their governance, their strategy, anything else, it’s a matter of their basic geology. And what you can see on this map is that the continent of Africa with the small exception of the very southern tip of Africa, the part of South Africa is essentially without any significant coal reserves. This was an absolutely decisive factor in Africa’s continuing underdevelopment in the 19th Century. Not only did it make industrialization virtually impossible in the 19th Century and even countries in north Africa that tried to industrialize found out that they couldn’t do it because they didn’t have access to low cost modern energy resources. But because the lack of coal put Africa in such a weak position, it also rendered the continent vulnerable to the total conquest by Europe towards the end of the 19th Century. It was one of the factors that made Africa vulnerable to imperial domination for about a hundred years from the second half of the 19th Century to the 1960s to ’80s. So simply the access to energy resources was a propellant of development.

And the lack of access to these resources was a pretty fundamental barrier to development. Towards the end of the 19th Century, coal became less decisive because with the invention of the internal combustion engine, petroleum became a more important resource.

And while Africa has a few pockets of petroleum resources, we find essential the same story as we found with coal, that while Africa is a bit better provisioned with oil and there are parts of Africa such as Nigeria or Gabon or Angola with significant hydrocarbon resources, measured in per person terms and looked at in the aggregate, sub-Saharan Africa is once again, relatively on the short side compared to the United States, compared certainly to the Arabian peninsula and the Persian Gulf region and other parts of the world.

We could say that fortunately there have been some important discoveries of oil and natural gas in recent years in some of the poorest parts of the world and parts of Africa, notably in Mozambique and Tanzania, off the coast, this gives a chance for domestic-based energy in very poor countries that never had it before. What’s the moral of the story?

The moral of the story is that Africa remains today impoverished in part because of the lack of modern energy services. In order for Africa to develop it’s going to absolutely require an infrastructure of modern energy.

Fortunately there are a lot more choices today for that than there were in the 19th Century, while coal was indisputably the king during the first phase of industrialization and now we’re going to see that because of the advent of low-cost photovoltaics and concentrated solar thermal energy, because of advances in potential for geothermal energy, for hydroelectric power, for wind energy, Africa now has a chance to develop modern energy services based on a much wider array of primary energy sources than ever before. And this is extraordinarily heartening.

For Africa to develop, it will need to develop the energy infrastructure. We should expect and we should build into all global forecasts and policies a significant rise of energy consumption and production within Africa to enable this part of the world, still the world’s poorest, finally to escape from the poverty trap and to achieve economic development. In the following chapters of this lecture I’m going to describe in far more detail how this can be accomplished.

Deep Decarbonization Pathways: Country Case Studies IV

Lessons for the Global Agreement on Climate Change at COP21 in Paris in 2015

I’d like to draw some conclusions from the results of the deep decarbonization pathways project. But also from the very process of the project for the official this time, international negotiations and the agreement to be reached in Paris at COP21 in December 2015. So what are these lessons?

Well in essence what the results and also the approach of the DDPP revealed is the critical importance of preparing these country-level deep Decarbonization pathways to 2050.

741These pathways and the discussion of their results, the discussion of their assumptions are essential tools for learning and problem-solving. This process is absolutely fundamental to developing a long-term vision for deep decarbonization and shaping the expectations of the different countries, the businesses, the investors about what are really the future development opportunities?

It really affords a unique opportunity to work together as we’ve done as part of the project. But we now hope this is going to become an issue for the real world. An opportunity to work together across countries to map out how the global 2-degree limits can be operationalized because we have it, but it needs to be made real and achieved at the country level.

More precisely it, it also highlights the need to introduce what I called long-term backcasting into the scope of the climate negotiations preparing COP21. Because as we have already pointed out, unfortunately the current focus of the negotiations is, is primarily and, and in fact almost exclusively on mitigation targets in the relatively short-term, maybe for the year 2030.

Some countries are even suggesting that the focus should be on 2025 emission reduction targets. Yet, as I hope we made clear through this lecture, if countries do not work with a longer-term time horizon in mind and, and backcast from this long-term target, they’re likely to adopt strategies that fall short of what is needed to stay below the 2-degree limit. So almost by its structure, by definition if you want, the current incremental approach will fail to consider the deep systemic changes that are needed and, and the key technologies that are still pre-commercial but that need to be developed to reach the long-term goal.

Surprisingly and, and to be frank, also quite shockingly, very few countries so far have developed such long-term deep decarbonization pathways which means that very few of them have looked seriously at what it means for them to stay within the 2-degree limit. Since Copenhagen, in 2009 and a year after that, Cancun in 2010, all the large emitting countries have adopted quantified targets to reduce their greenhouse gases emissions by the year 2020.

But these targets and I want to say that sometimes they have to be backed by concrete policy action plans, because it’s not always the case, but even more profoundly than that, these targets are collectively insufficient to put the world on a trajectory that would be consistent with the 2-degree limit.

In fact, most of the 2020 emission reduction targets that were adopted in, in Copenhagen in 2009 were framed as either incremental deviation from business-as-usual trends or rather small reductions in the carbon intensity of GD, or rather modest decrease in absolute emissions compared to a given base here most of the time in 1990. But by and large, these country targets were not even derived from an assessment of what is needed simply to stay within the 2-degree limit. So it should really not come as a surprise that their widely insufficient to limit global warming below 2-degrees Celsius, but if we want to succeed and to be frank, simply if we want to be internally consistent, if we want to have country targets that are consistent with the global goal, then we need to adopt a completely different approach to the climate negotiations on the run-up to Paris in December 2015.

742To conclude, I’d like to say that at least two new elements will need to be part of the global deal at COP21 in Paris. And they certainly do not cover the full scope of the agreement, in particular the need to provide adequate support, all different types of support, financial, technological and capacity building to the countries that need it to undertake the necessary mitigation and adaptation actions, in particular the poor and vulnerable countries. But I want to emphasize these two new dimensions as I think an essential component to the success of the global negotiations in Paris.

  1. First, we need a shared global commitment that each country will develop and, and make publicly available a deep decarbonization pathway to 2050 that is consistent with the 2-degree limit, but also with country and national circumstances. These pathways to 2050 as opposed to the targets by 2025 or 2030 do not necessarily have to be binding. I mean it’s not the main point of having them. They should be predicated on a shared commitment to the 2-degree limit, but also to all the aspects of the global cooperation that will be needed to achieve it in some countries, in particular the poor countries including the technology cooperation, financial support, the policy cooperation. But it’s really very important that every country has one and has one soon because it’s the only way to explore how you can make your economic growth, your development pathway consistent with our global objective of avoiding dangerous climate change. So that’s the first element, pathways to 2050 for each and every country.
  2. The second element is that we need an absolutely massive and, and sustained global public-private effort to develop, demonstrate and, and diffuse many new low carbon technologies which we discussed and are not yet technically mature or competitive but yet are absolutely key to the success of deep decarbonization strategies. They will need to be made available to all countries, so technology cooperation mechanisms, but also fund will have to be established to this purpose. But it’s also very important that businesses and governments, the national science funds for example commit to real money this time and serious action to develop these new technologies.

By the time we record this course, we have already published the interim 2014 report of the deep decarbonization pathways project. The report was received by the U.N. Secretary General Ban Ki-moon. We launched the interim report at a press conference in the U.N. headquarters on July 8 of 2014.

We’ve also submitted the report to the French foreign minister, Laurent Fabius, who will be the president of the COP21 in Paris. And we have started to discuss about the project with many different people across the globe, in particular we have discussed the project in the context of what is called the Major Economies Forum.

So that’s a political forum gathering all the largest emitting countries. And we presented the results of the project to all the energy and climate ministers attending the meeting. We’re very encouraged by the support that we received so far and we’re clearly not there yet. It’s not yet the primary focus of the negotiations.

People want to understand I’d say a bit better what it really means, what it really implies and, and how it can be operationalized in the context of the agreement to be reached in Paris in 2015. But there is clearly a momentum around this new approach. Much more effort is still needed and we count on you.

We count on your creativity to develop your own country deep decarbonization pathway, looking forward to receive them. And we count also on your commitment to put pressure on the political negotiation process to make COP21 in Paris a real success.

Deep Decarbonization Pathways: Country Case Studies III

What We Learn From Countries’ Deep Decarbonization Pathways

In the previous chapter I described briefly some of the key elements of the methodology we adopted in the deep decarbonization pathways project. In this chapter, we’re going to look at some of the results now.

So what we learned from the analysis of the 15 research teams of their respective countries’ pathways to deep decarbonization.731

Well first and, and very importantly, so let me pause a moment on that. Their results show that deep decarbonization is feasible. It’s a very important result. It shows that we can avoid dangerous climate change if we take strong and early action to reduce greenhouse gases emissions, if we invest heavily and rapidly also into some of the key pre-commercial low carbon technologies that are critical to achieve deep decarbonization at relatively low cost.

And also if we more profoundly reorient our development trajectory. I must say that the DDPP is still at an early stage. We have much more research and analysis and I hope good results coming in the upcoming months or even years. So far the country research teams have only produced a first set of interim results.

732So the precise level of emission reductions that is reached by the different pathways and that I’m going to show you is in many ways less meaningful than simply their order of magnitude. So that’s what I want you to concentrate on.

The order of magnitude of emission reductions achieved by these pathways is very substantial. As you can see on this graph, it represents an absolute decrease of emissions by 45% in 2050 compared to the level of emissions in the same 15 countries in 2010. As you can see on this other graph, it also represents a 56% decrease in emissions per capita and even an 88%, so very close to 90% decrease in emissions per unit of GDP. So the CO2 energy-related emissions divided by the GDP in 2050 compared to the level in 2010. Let’s look more closely at some of the results sector by sector.

The results also show the pivotal role played by electricity in the deep decarbonization strategies of all 15 countries. In aggregate across the 15 countries the carbon intensity of electricity, so the ratio in between the CO2 emissions and the electricity generated, measured in kilowatt hour is reduced by a stunning 94% in 2050 compared to 2010. So that’s a huge number. It means that by 2050, really electricity is almost completely decarbonized in these 15 countries taken together.

733As you can see on the graph, the carbon intensity of power generation goes from a bit more than 600 grams of CO2 per kilowatt hour in 2010 to approximately 30 grams of CO2 per kilowatt hour in 2050. So it’s really, really a huge drop and it means as I said, that essentially electricity is almost zero carbon by 2050.

That’s why electricity plays such a pivotal role in the deep decarbonization strategy, but it’s not the only one. There is another explanation and it’s because in the meantime electricity plays an increasing role in the energy system. A higher share of the electricity consumption is met through electricity as opposed to other energy carriers.

734As you can see on the graph, the share of electricity in final energy consumption increases from 19% to 35% in 2050 compared to 2010. But that was for the results in aggregate, so making averages across countries or looking at the total out of the 15 countries. But what is especially interesting is that the results also show the different options that are available to the different countries, in particular, to reach that common goal of the deep decarbonization of power generation, electricity supply.

It’s true that by 2050 all countries generate electricity almost exclusively through zero or very low carbon energy sources, but they rely on very different options to be frank to do this, as you can see on this graph. So let me just pick a few examples. Australia, Mexico, South Africa and South Korea, for example, rely heavily on solar energy as part of their power mix.

735It can be different types by the way of solar energy. It can be solar photovoltaic, or it can be concentrated solar power. It can be centralized solar energy or decentralized solar energy. But all of these countries have a very high share of their electricity that is coming from solar energy by 2050 in the pathways and developed by the research teams. Wind power plays a very important role in Canada, in China, in France, in Germany, in India, in Japan and also in the United States, where there is a significant potential for wind power that can be tapped into.

Hydropower plays a very important role in Brazil and Canada, also because there are large and sometimes still untapped resources of hydropower in these countries. Nuclear on the other hand represents a significant fraction of power production in many countries, France, the U.K., China, India, the U.S., and Russia. It plays a very little role, but, but still a role in some other countries such as Brazil and Canada and Indonesia, Mexico and South Africa. And CCS, very importantly, also plays a role in some of these scenarios.

Remember as we have discussed in the previous lecture, CCS is not yet deployed at scale, even though each and every element of the technology is a proven technology, but in the project we’ve made the assumption that as a result of a strong and sustained effort on research and development, CCS could become available and in fact many of the countries in the project with high shares of fossil fuels, so coal or gas in their power generation today felt like it was an important element of their decarbonization strategy going forward.

So you find carbon capture and sequestration in the scenarios that were developed by Canada, by China, by Indonesia, by Japan, by Mexico, by Russia, or the U.K. and the U.S. I want to mention here that these pathways and their results are of course only illustrative. I mean they shouldn’t be confused with the precise reality of what is going to happen in these countries or even what should happen in these countries, because there are many different ways in which the deep Decarbonization of power generation in particular can be achieved at the national level.

For example, in the project, the team producing the pathway for the U.S. developed not just one but three different pathways. Within the different pathways, higher shares of renewable energies for one or nuclear for the other or fossil fuels with CCS for the third pathway. And it’s very important to recognize that the most effective but also cost efficient way of achieving deep decarbonization is of subject to debates.

736First within the expert community. We had disagreements first. We tried to settle in the project, but it should also of course be the topic not only for an expert discussion but it should become the basis for a political debate within each country and each society.

So for sure, there are different options, different trajectories to deep Decarbonization in the future. But it is absolutely critical that these debates happen on the basis of detailed road maps for the deep decarbonization of the power sector, but also of the economy more broadly.

These detailed road maps need to be based on transparent assumptions regarding the availability of some pre-commercial technologies.

  • They need to be based on transparent assumptions regarding the projected cost of these technologies.
  • Also, transparent assumptions regarding their resource requirements. I mean how much water do we need to use? Or, how much land do we need to use to operate these technologies?
  • And also transparent assumptions regarding their possible side environmental and health impacts.

There are really important choices to be made regarding the best options for deep Decarbonization based on considerations regarding economic competitiveness, energy security or public preferences.

But these choices need to be made within the constraints of a global carbon budget to stay within 2-degree of global warming. The result of the pathway analysis also reveals in which sectors the emission reductions are relatively at least most difficult to achieve. Because in total, if the 15 pathways achieve an absolute reduction of CO2 energy emissions, the share of the emissions of some sectors and in particular the share of emissions from transport and industry is increasing in the pathways taken collectively.

737The analysis reveals that within the transport sector it is the emissions from freight as opposed to passenger transport which are again relatively more difficult to decarbonize.

As we have discussed, there are lots of different technological options to achieve the deep decarbonization of the freight and heavy industry sectors. Natural gas, electric hybrid, and hydrogen and fuel cells powered trucks. Biofuels or synthesized fuels for air and ocean shipping. Electrification of heating processes but also carbon capture and sequestration maybe for industry.

But it’s true that the feasibility and the scalability of these options is sometimes still uncertain and their costs are also likely to be quite high. And this is why some of the teams in some countries found it difficult to build in these technologies in their decarbonization model.

So to conclude this chapter, the pathway analysis that was developed by each of the country research teams and although their only at an interim phase at this stage, they already provide lots of very interesting insights on the country’s specific challenges of deep decarbonization, but also and most importantly the possible solutions to them. We will revise the analysis in the coming months.

We will for sure explore the potential for even deeper emission reductions because we’re not completely there yet. We will test the robustness of the analysis, add some new dimensions such as infrastructure stocks and analysis of the cost and benefits, and analysis of the policy frameworks to support the implementation of these different actions. But really you should also try to think about it yourself.

You should try to come up with alternatives to what we developed and who knows, maybe you would come up with even better solutions.

Deep Decarbonization Pathways: Country Case Studies II

The Deep Decarbonization Pathways Project

All the reasons I mentioned in the previous chapter why countries need a deep decarbonization pathway are precisely why we’ve launched the deep decarbonization pathways project. We’ve built this project as a collaborative effort to understand how countries can transition to a low-carbon economy by mid-century and how the world can meet the objective of limiting global warming below 2-degrees Celsius.

The project gathers some of the leading research institutions from 15 countries, all of them among the largest emitters of greenhouse gases emissions. Together and combined, they represent a little bit more than 70% of the global emissions. So, which are these countries? It’s Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Japan, Mexico, Russia, South Africa, South Korea, the United Kingdom and the United States of America.

It’s a long list and I can tell you it was not easy to manage a project with so many participants scattered across the so many different time zones. The day very often started with an early Skype with colleagues in China or India and finished many times with a late call with colleagues in Australia or South Korea. But it was really great fun for sure.

These 15 countries are at different stages of development. And that’s an important point. They have different historic responsibilities in climate change, also different capacities to invest in climate change mitigation. But as I said, they represent more than 70% of the global greenhouse gases emissions.

721So their strong actions are really, really important to meet the global goal of limiting global warming below 2-degrees Celsius. So what was the task of the 15-country research teams. Well each of them has been developing a deep decarbonization pathway to 2050 for its country and we’re going to look in this lecture at some of the key results coming from their very insightful analysis.

The objective was really to take into account in detail all the relevant country-specific national circumstances. As I said, their socioeconomic conditions, their model for economic growth and development going forward, their infrastructure stocks very importantly, or their natural resources endowment. Why did, did we want to do that? I mean why be so detailed?

It’s really because we wanted to make a convincing case for action at the national level, because before we started the DDPP, there were already many results of global studies produced through global models showing how to achieve deep emission reductions. And the result of these global studies provide many important insights. And we have already discussed them at length into some of the previous lectures. But on their own they’re a bit insufficient to make a really convincing case for action at the national level. And that’s at least for two different reasons.

  1. The first is obviously because they are not sufficiently detailed. And yet deep decarbonization strategies need to be based on the most precise available estimates of the mitigation potential within countries and even more than that, in different regions and locations.
  2. But there is another reason, less technical, more process related. It’s because if we want them to really become the basis for a public and a policy discussion, then the need to be developed within countries.

They cannot be imposed by an international institution or by a bunch of consultants sitting in New York or Paris. They really need to be developed by local experts and discussed within countries with all the different stakeholders that have a stake in the issue of climate change negotiation. Defining country-specific targets for deep decarbonization pathways was not an easy task I can tell you, because it raises many practical, but also political issues. And in fact, the reason why the international negotiations have made such slow and disappointing progress since the entry into force of the U.N. Convention on Climate Change is in part because of a continued disagreement about how to share the global effort of emission reductions across countries. It is certainly not the only obstacle, but it’s an important part of the deadlock, because countries have different interpretations of the principle of common but differentiated responsibilities.

One of the key principles of the U.N. Convention on Climate Change, they disagree over the criteria that could be used to share global emission reductions between countries. Should we take into account historic emissions? How can we account for the fact that some countries have high emissions because they’re exporting the carbon intensive products that are consumed by other countries? How can we account also for the fact that countries have different mitigation potentials and therefore different costs of mitigation, but also, different capacities to invest in these mitigation options? All these questions, all these unresolved issues so far have blocked the international negotiations, and they have resulted in insufficient, widely insufficient action to date to reduce the emissions.

But in a way what is even more problematic is that it has prevented countries from even looking at what it would take to limit global warming below 2-degrees Celsius. The truth is that in order to stay within the 2-degree global carbon budget, every country with the notable exception of the least developed countries, but we have a full lecture dedicated to that, every country except the poorest among the poor countries will have to achieve deep emission reductions. And in particular, all of today’s large emitting countries.

The issue of who pays for the investment cost of deep decarbonization is of course essential to ensure that the global effort to reduce emissions is shared in an equitable manner. But before looking at the issue of these investment costs and who pays for them, it is critical to explore how each and every country can transition to a low-carbon economy. We need to identify technically feasible and sustainable deep decarbonization pathways, even before we quantify their costs and benefits and discuss who has to pay for them.

So how can we do that? Well we have already explained why the convergence of per capita emissions by 2050, although it cannot be used as a criteria for the fair allocation of the global carbon budget, is still a pretty good benchmark to set the target of deep decarbonization pathways; at least one of them. It cannot be considered as a criteria for the equitable sharing of the global carbon budget because it doesn’t reflect some important considerations such as historic emissions or the fact that some countries export carbon intensive goods that others consume.

But it is nonetheless a pretty good benchmark because very few countries will technically be able to fall below the 1.6 tons of CO2 energy per capita that is necessary to have a 50% chance of staying within the 2-degree limit, or the 1.1 tons of CO2 energy per capita if we want to have a higher chance, a higher than two-third chance of staying within the 2-degree limit.

Not even the low-income countries with emissions per capita lower than this level today because the catch-up economic growth in their countries will and should drive their emissions up, even as they improve the carbon intensity of their GDP growth. So as a result a very few countries can be below the global average, then very few countries can be above.

But I should say that even more important than the precise level of emissions in 2050, it is really the order of magnitude of the emission reductions that is important and that needs to be consistent with the globally agreed 2-degree limit. And this is what we’ve been looking at in the deep decarbonization pathways project as a way to explore the options for the deep decarbonization of each and every country and in a way break the deadlock of the climate negotiations.

Deep Decarbonization Pathways: Country Case Studies I

Why Countries Need Deep Decarbonization Pathways to 2050

Today we’re going to look at some of the results coming from the deep decarbonization pathways project. We kept talking about the DDPP.

This is an important step forward in this course because it means that for the first time we’re going to discuss in detail the country-specific ways in which countries can transition to a low-carbon economy, deeply reduce their emissions but also continue to grow their economy and ultimately achieve sustainable development. So far we’ve looked at the results of a global mitigation scenario. And we have calculated by how much the emissions from each sectors, the emissions from power supply, from industry, from transports and buildings must decrease to stay within the 2-degrees limit.

We’ve also described the three pillars of the deep decarbonization of energy systems. The energy efficiency, the low-carbon electricity, and the fuel switching, which we said represents the foundations to design successful deep decarbonization strategies. And finally, we have identified the key technological challenges that must be met through directed and accelerated technical change to meet the global challenge of deep decarbonization.

But a key question remains. How can these general principles, how can these high-level strategies be applied to particular country with vastly different national circumstances?

Today we’re going to see what specific solutions are available to individual countries taking into account their different national circumstances. We’re going to take into account their different socioeconomic contexts, their different aspirations and model of development going forward, but also their different natural resources endowments. And we’re going to see how these country-specific solutions can be implemented.

Defining country-specific solutions to deep decarbonization is really essential, because if the world collectively is to meet the challenge of climate change mitigation, then every country, but in particular, all the large emitting countries in need to have a good strategy to achieve both their economic objective, growth development, but also the global goal of deep emission reductions consistent and in line with the 2-degree limit.

To do so, countries need what we’re going to call in the rest of the lecture, deep decarbonization pathways, or DDPs. What is this? Well it’s a road map or a blueprint if you want for each country to map out how they can transition to a low carbon economy in line with the 2-degree limit. So why is it so important that countries develop these deep decarbonization pathways?

Well it’s for a number of pretty simple reasons, although to be frank, they’ve not been fully grasped by many, but it is our hope that as a result of the deep decarbonization pathways project, each country will soon have one and that the global agreement to be reached in Paris at COP21 in 2015 will encourage countries to produce one. But we’re going to discuss that in further detail in the last chapter of this lecture.

Countries need deep decarbonization pathways to, mid-century, to the year 2050 because the nature and the scale of the global warming problem are such that there is unfortunately no quick or no easy fix to it. Deep Decarbonization will not happen overnight. As we’ve seen, the ultimate objective is the phasing out of the freely emitting fossil fuels, but that’s not going to happen tomorrow.

It will only happen as a result of our sustained efforts during the second half of the century. So that’s a pretty long time scale. And there is also no silver bullet to the challenge of deep decarbonization. There are many critical technologies.

And we’ve been discussing in detail some of them. Solar photovoltaic for example, wind power, nuclear for some countries, carbon capture and sequestration if it becomes available, electric vehicles for sure. A bit everywhere. But none of them is sufficient alone to deliver the necessary emission reduction.

So they need to be combined all together. Deep decarbonization is not about incremental change or small deviation from business-as-usual. And if we don’t design even the rather short-term climate change mitigation strategies with the view of achieving a long-term objective that is consistent with the 2-degree limit, then we really run the risk of being misled because we could lock in some high carbon infrastructures that could prevent us from reaching that long-term goal in the future.

711Let me simply pick one example to make this point very clear. Shifting from coal to gas as the United States is currently doing through shale gas and fracking delivers some significant short-term emission reductions, because gas is a lower carbon source of energy than coal. But it is still a pretty high carbon source of energy, at least compared to renewable energies or nuclear. So a power mix that would be primarily made of gas would emit way too much CO2 compared to the objective of deep decarbonization in line with the 2-degree limit. So the shift from coal to gas can in a way only be a matter of buying time, a bridging option if you want, towards a truly decarbonized energy system.

The deep decarbonization pathways we’re talking about therefore need to backcast from the global goal of limiting the temperature increase below 2-degrees Celsius. The need to explore the transformations that are required to reach this goal. What do I mean by backcasting? Well it’s, it’s a term I use to describe a process where a target is set for the future and then the changes needed to achieve that target are determined through the process of backcasting.

It’s very important that you don’t confuse backcasting with rigid, central planning because a process of deep decarbonization must be very adaptive. These deep Decarbonization pathways will have to be continually revised and updated based on your results from climate science, new technological innovation along the way and also the lessons learned from the early implementation phases of these pathways. But it is really essential that countries explore the changes to their growth models, to their development frameworks and in particular to their energy systems to reach the global goal of staying below 2-degrees Celsius of global warming.

There are also less technical, more process-related in a way reasons why deep decarbonization pathways are so important. They’re important because they’re an essential tool for promoting a national dialogue on climate change mitigation options, to launch what is really necessary, a process of intense and complex problem-solving. They’re really a critical instrument to enable a, a public, but also a policy discussion in every country on how best to achieve these emission reduction objectives, how to understand the possible tradeoffs in between multiple objectives, but also to identify the synergies, the win-win solutions.

The discussion over these deep Decarbonization pathways should involve all the relevant stakeholders, the policymakers, the business, the civil society. All the different types of expert communities with some knowledge on the issue, the climatologists, the engineers, the geologists, the economists, the other social scientists, they should all debate very intensively the best options for deep decarbonization, identify the bottlenecks and propose new approaches. In fact, you should try to develop a deep decarbonization pathway for your own country.

Look at the pathways that were produced in the context of the deep decarbonization pathways project, or at other studies if unfortunately your country was not part of the first phase of the project. Try to come up with different possibly even better solutions, discuss them with your professors, other experts, NGOs, business people. Even your politicians if you have access to them. Send your proposals to us. I can promise that it will not only be a very interesting assignment but something very useful to do

The Key Technological Challenges of Deep Decarbonization VI

The Role of Technology Roadmaps and Roundtables

To conclude this lecture, I want us to spend a bit of time discussing the mechanisms that could ensure the timely deployment at scale of some of the technologies we reviewed, but also the many others we did not have time to talk about, but which are also critical to the success of deep decarbonization strategies in our economies.

661Some skeptics try to discredit climate change mitigation efforts by saying that this is against progress, that this is an anti-technological innovation agenda that we’re trying to impose limits to growth, that we’re trying to limit the right to development.

The truth is I’m not even sure if they’re convinced by their own arguments. What is sure is that they’re often made by the incumbents of the fossil fuel economy and it’s probably not randomly, because they have a biased interest in more of the same technological innovation. I hope I’ve managed to convince you that climate change mitigation is certainly not an anti-technological innovation agenda. In fact, achieving deep decarbonization is a formidable technological challenge and one that will require years of sustained efforts to develop and demonstrate these breakthrough new low carbon technologies.

But what is very true is that we don’t need just any kind of technological innovation. We don’t need new sophisticated technologies to explore always deeper fossil fuel resources and new technologies to drill under the Artic. What we need is directed and accelerated technological change. Directed first because we need technological innovation and human creativity to confront to the challenge of human induced climate change and find solution, not further add to the problem.

And accelerated technological change because we have a very tight timeline to avoid the dangerous effects from human induced climate change whose effects are irreversible. So we need these critical low carbon technologies to become available quickly and to be rapidly deployed at scale.

There are pretty good reasons to believe that the necessary technologies for deep decarbonization are within reach, from an engineering and a cost standpoint. But their commercial readiness needs to be accelerated by providing the adequate policy support and also by building the necessary public and private partners. Effective global strategies for a deep decarbonization must include strategies for promoting actively the development and the diffusion of these low carbon technology.

What is interesting is that there is a great deal we can learn from the previous successful attempts to drive technological innovation in a particular direction. All these previous successful attempts share a number of important characteristics.

  • First, clear goals and timelines for technology performance were set.
  • Second, public and private actors were organized around the development of long-term technology road maps.
  • Third, the industry both competed but also cooperated to identify the promising lines of inquiry and demonstration of these technologies.
  • Four, grants were sometimes issued on a always highly competitive basis.
  • And five, and quite importantly the intellectual property of these new technology was frequently shared or at least open-source in between the different participants to the research and development efforts.

There is one element in particular I want to stress because I think it is of high relevance when we’re talking about low carbon energy innovation. It is that technology road maps and technology round tables can play a key role in driving oriented technological innovation.

They could play a key role because they could complement the more market based instruments for the transition to a low carbon economy such as putting a price on carbon through a carbon tax, or an emission permit system, or implementing all different types of regulations.

It, it’s very important that you don’t confuse these technology road maps with rigid, central planning, because this is really not what this is about. It’s very important that a technological innovation process be adaptive. It’s very important that it does not preclude any promising technology from playing an active role in future mitigation efforts.

We need to leave room for new discoveries. And therefore the goals that are set in these technology road maps should be frequently revised. They need to take into account the new developments from science, the lessons learned from the previous faces of discussions in these technology round tables.

So it’s really not an exercise to pick the winning technologies for a deep decarbonization, because eventually the market will have to reveal which are the lowest cost option. But you should look at this process of technology road maps and round tables as an essential process to make sure the market has enough winners to pick from eventually.

These technology road maps have been used successfully in, in many technology eras, including a very successful one, the semiconductor industry, but also in genetics. And they were used to identify the priorities for research and, and development. It’s really true that these road maps help mobilize and organize the public and private stakeholders and expert communities around the definition of shared priorities and, and really help insuring the effective use of, of scarce unfortunately, resources for research. So they will also really be a key tool in driving directed technological innovation for the low carbon technologies.

The Key Technological Challenges of Deep Decarbonization V

Electric Vehicles and Advanced Biofuels

Here I want to introduce to the debate some of the key low carbon technologies in the transport sector, because so far in the previous chapters we’ve been discussing mostly about promising new technologies in the power sector.

We’ve been discussing about smart grids and energy storage to operate power systems with high penetration of intermittent renewable energies such as solar or wind. We’ve been discussing about carbon capture and sequestration. We’ve been discussing about fourth generation nuclear reactors.

So mainly technologies for the power sectors. Although that’s not completely true, because carbon capture and sequestration, although its main market in the future might well be in the power sector could also and very importantly be used in industry, in the carbon intensive industries such as cement or steel for example.

652But as we saw when we were analyzing the results of the global mitigation scenario in the previous lecture, the decarbonization of the transport fleet is also absolutely fundamental to achieve emissions, reductions, levels consistent with the 2-degree limit. So it must start with the decarbonization of personal vehicles, but it must also extend to the Decarbonization of the heavy-duty vehicles, the decarbonization of aviation and also of ocean shipping.

So how can we do that? What are the options that are available to reduce emissions in the transport sector? Well there is a very wide range of cutting edge technology that hold great potential to decarbonize much or all of the transport sector. Which are the options? It includes in particular, high performance batteries, hydrogen fuel cells or advanced biofuels or even synthesized fuels. But the truth is that most of these low carbon technologies for transport are still pre-commercial or at least they’re not yet deployed at a very large scale.

Electric vehicles in particular offer great potential, especially for the private vehicles, but also for buses and even some say, possibly for trucks. But it’s important to underline here that electric vehicles can only be considered as a genuine low carbon solution for transport if electricity is produced by using low carbon energy sources.

This is why it’s so important to design comprehensive, deep Decarbonization strategies within the framework of the three pillars we have introduced. The electrification of energy consumption, in particular electrification of the transport sector must be combined with the shift to the low carbon electricity in the power sector.

651Most electric vehicles today use lithium batteries. And the performance of these batteries has already made great improvements in the recent past and it is expected to improve even further. Although the performance of that particular type of batteries, the lithium batteries is expected to improve only incrementally. But the good news is that we have many other option for electric vehicle batteries. They will be required to achieve higher energy and power density, lengthen the vehicle range and lower the upfront vehicle costs but there are many development programs currently underway.

I should stress that lengthening the vehicle range in particular is really critical to the success and the large-scale deployment of electric vehicles in the future because it would make sure that electric vehicles can be used for all sorts of purposes and not only for the short distance travels that we do within our cities.

It’s also important to understand that theuptake of electric vehicles is also limited today by the lack of infrastructure to charge the batteries of these vehicles. So to insure the large-scale deployment of these electric vehicles in the future, the infrastructure will also have to be built and not only the technology of the vehicles be improved and the, the network of the charging stations will have to be expanded insure the success and uptake of electric vehicles.

It will most likely require public-private partnerships with cities and local authorities in particular playing an important role together of course with car manufacturers and electricity companies. They should strike these partnerships to share the payment of the upfront investment costs of building this infrastructure network.

So that was for, I mean one of the most promising option of reducing emissions in the transport sector through the electrification of biofuels. There is another option potentially which is the use of biofuels. And especially liquid biofuels. They’re interesting because they offer the prospect of decarbonization of the transport sector together with the continued use of the existing infrastructure and technologies, including the internal combustion engines, but also the oil pipeline and the gas station pumps we have already built. So the fact that they use, they would use the existing infrastructure is of course a, a very big asset in favor of the biofuels.

But the truth is that the biofuels also have a very clear downside unfortunately. Or at least some of them have. Because many of the existing biofuels such as a maize based ethanol produced in the U.S. compete with other critical land uses such as food production or ecosystem needs like land and water utilization.

So it’s a serious concern. There is potentially a solution to this problem, a response to this concern and it lies in the, the development of a new generation of advanced biofuels and, who precisely aim to overcome the issue of the competition in between the biofuels, the food production and the other important ecosystem services.

There are many different types of advanced biofuels that are currently under development. Let me mention just a few. Again, it’s not a comprehensive list, but you can think of the bioengineered organism such algae or bacteria used to produce biofuels. Another example is the processing of non-foodstuff from non-arable land into biofuels and, such as cellulosic biofuels produced from wood products. And there are even efforts to produce fuels directly from sunlight, water, and carbon dioxide without using any biological organisms, a process which we call artificial photosynthesis. Although it is still at an early stage of research and focuses on, primarily on producing hydrogen.

But overall and to conclude this chapter on the most important technologies in the transport sector, it’s really important that we would further, and I would say, harder on the research, development and demonstration of these next generation biofuels to make really sure their large-scale use doesn’t induce deforestation or doesn’t compete with a food production which would be a…a terrible news for food security in a world where we expect to have 9.5 billion people by 2050.