A new paradigm shift for sustainable and equitable clean growth is needed, according to Achim Steiner, the head of the United Nations Environment Programme (UNEP), and governments can start by intervening to end fossil fuel subsidies.
Achim Steiner is the executive director of the United Nations Environment Programme.
He was talking to EURACTIV’s environment and energy editor, Arthur Neslen.
Do you agree with the view that the world is facing a civilisational crisis, involving a perfect storm of rising prices for food, resources and commodities, declining water supplies, energy source depletion and climate change?
That’s a very heavy word to use. I would not frame it in doomsday but rather in ‘civilisational challenges’ terms. Every civilisation evolves with conditions, opportunities and shocks and what we’re facing today, with a world population of 7 – soon 9 – billion people, is that the model by which our civilisation has defined economic growth and the pathway towards human wellbeing is increasingly being challenged by the notion of sustainability and also, equity issues. But ‘civilisational challenge’ is too uniform a concept because some people on this planet consume 15-20 litres of water a day while others consume 2000 litres a day. You can make the same analogy for energy. So I think we are facing a historic challenge of an increasingly unequal world that has to work out how it is going to coexist with its current consumption production models.
You say that resource use should be decoupled from economic growth. To do this, you propose a ‘massive investment in technological, financial and social innovation’. But the short term returns on these are typically not enough to tempt Europe’s private or public sectors. How can that circle be squared?
First of all, we should not refer to the private sector as one group. In a city like Brussels or Washington, a group of private sector actors will invest in a particular technology or business model. They are, understandably, not interested in disruptive change to that. In the political space, you also have a private sector which is perfectly willing to invest in the next generation of a technology. It is usually smaller and not as vocal. That is why you often have this imbalance between opportunities and public interest and the corporate interest of maintaining a particular policy. I think the way around it is not new.
Governments are able to give expression to public and social choice in setting the kinds of regulations and public and fiscal policies – subsidies – that allow us to make different consumer choices. Lets be honest, the consumer also has a short term interest in this, because they’re not necessarily going to buy a product that is 30% more expensive because they want to help the next generation. We have to ask ourselves how we can correct the market signals that allow us, as entrepreneurs or consumers, to always err on the side of a cheaper and less beneficial product? Why should a person who buys a car with a hybrid system have to pay more, when the total price of that car to society is much less over its lifecycle?
When you can correct these distortions, consumers will act rationally for the long term. We should be aligning economic incentives and pricing, to reflect public choices. To some that sounds like government is being asked to intervene in every aspect of our lives. Well, governments do intervene in every aspect of our lives. We pay value added tax. We have laws which prohibit us from smoking in buildings, or whatever. When it comes to environmental sustainability and inter-generational responsibility, people tend to act as though this was some great new paradigm. No, we just want to take the knowledge that science has given us, relate it to the economic realities of the different life cycles of different products, and costs to society, and make sure that consumers are not punished for buying the rational product. I guarantee you that 95% of people in front of a supermarket shelf will choose the less damaging product over the more damaging one, for the same price.
Can you give me two examples of where you think that governments should intervene more?
Fossil fuel subsidies; we currently spend roughly $600-700 billion a year as a global community to make fossil fuels cheaper than the markets would supply. If you remove those subsidies, other power-producing technologies for electricity and mobility will quickly make their way into the market. If you don’t believe that, just look at the feed-in tariffs – in which Europe has been a leader. They created a market and lowered the consumer threshold. On the back of that, we have seen a massive expansion in deployed renewable technology. There are those who argue that we are terribly wasting our economic resources by subsidising these. But whether you take Denmark which has grown its economy by 6-7% over the last 15-20 years (without increasing its actual electricity consumption), or Germany with now 17% renewable energy, hundreds of thousands of jobs…
Which fossil fuel subsidies are you talking about specifically?
Well, oil in particular…
Direct or indirect subsidies?
Both, producer and consumer subsidies. In the US you have a fascinating debate right now on the tax rebates for the oil companies, where they are actually negative taxpayers. They get more back than they pay in taxes.
Should there be a tax on kerosene for airplanes?
If you are trying to correct a consumption pattern, then it’s not a matter of picking out kerosene alone. The question is: ‘Why is kerosene for airplanes exempted in our global economy?’ But I think this is more a question of: ‘How do you deal with competitiveness issues?’ You have to do it in a global context. I mean just watching the debate right now, and to me the rather regrettable efforts by airlines – even European airlines – you know so-called world carriers to work against the EU’s legislation on carbon pricing for air travel is deeply regrettable. Airlines in Europe should be at the forefront of a global scheme that would allow all airlines to have to charge a uniform price for their carbon emissions.
Some environmentalists say that economic growth itself is incompatible with preventing climate change. That view may not be widely shared but how much economic growth do you think is too much?
There is always a question of nomenclature and ‘What do we mean by growth?’ Just growing GDP is indeed a very crude and oversimplified way of measuring economic and societal progress. That’s why I think we are increasingly coming to a point where the world will say “measuring our economic wellbeing, the health of our economies, through the GDP indicator is simply not viable as a proposition.” You know the analogy that an oil spill is good for economic growth because you have to clean up afterwards?
I think however that in a world of seven billion people of whom one billion live below a dollar a day where – for sometimes 80% of the population in Africa – there is no access to electricity, to argue that we do not need to grow the capacity to produce electricity would be naïve. The key is: How do we grow the availability of products and services, without having the kind of natural resource consumption that has become associated with it? Now, the simplest thing is to conserve and reduce waste. We throw away 30-40% of everything we grow on this planet, as wasted food from the field and farm, right up to the supermarket and the fridge at home. This is irrational when we have a food security challenge.
Ten years ago the amount of electricity we would have needed to light this room would have been roughly 8-10 times higher than it is today. Energy efficient lightbulbs are the next frontier. With LEV (Light Emitting Diode) lamps, you can produce the same amount of light today with one tenth of the electricity or even less. So the decoupling of providing light from electricity consumption is a matter of technological progress. Another example is moving to a recycling economy where you can significantly reduce the amount of energy needed to have metals available for our economy by not having to dig them out.
‘Growth’ is to some extent a destructive debate if it is carried out at too simple a level. The people who say that we do not need growth in our economies are reacting to the GDP definition of that. But we do have to confront the fact that we need more food. We will need more energy. We will need more mobility in our economies, and we have to figure out how we can provide those with an ever reducing carbon footprint. It is not just relative. There is a perspective that says we can’t just make an efficient event in relative terms. We have to decouple absolute numbers and that’s why the quantum leap in terms of LEV lightbulbs shows what needs to be done.
The problem is that the companies which are first to invest in energy efficiency often find themselves at a short term competitive disadvantage against companies which wait. There may be great gains to be made from efficiency savings but in Europe, arguably, experience shows that without binding targets, the investments just won’t be made.
It’s true and I think that the historians will one day write off the decade of 2010-2020 as one of the tragic moments of indecision of both an international community and a world economy that was perfectly capable of moving to another level of carbon emissions trajectories but didn’t choose to do so for what will then seem perhaps, completely extraneous reasons. Having said that, let us also acknowledge that, notwithstanding the challenge of reaching a global climate agreement right now, the economy is actually proving remarkably resilient in moving towards a low carbon direction. It is nowhere near the scale and pace we need but those who thought after Copenhagen that everyone would go back to business as usual have already been proven wrong. Even those who were treating the carbon price last year as an indicator that the carbon markets might collapse have also had to eat humble pie as the price of carbon is going up. We are living in an age of improvised policy reform and reorienting of our economies and unfortunately by not having clear signals agreed and defined internationally, yes we are holding progress back.
Do you think a deal is possible at the Durban climate summit in December – and if so, what compromises will be necessary for it?
I think anybody who saw Cancun as a moment where we regained momentum in the international climate cause – or at least a commitment to re-engage – has to be concerned about the prospect of what is on the table at this moment for Durban. I think for international climate negotiations and a global climate policy, the signs are pointing to a very critical moment in the history of international climate negotiations. At this point, everyone should be extremely concerned about what we will walk away with from Durban.
Having said that, even if Durban does not deliver the next big step – which will cause major disappointment and frustration across the board – maybe the synchronicity of negotiations and the response in our economies and our lives perhaps have a level of tolerance at the moment, where that may not be the end of an effort to have a global climate change policy. At the end of the day, we can make incremental progress without a global climate agreement. We will never be able to achieve the levels of emissions reductions that are needed and all that is happening with every year that passes is that the time window is getting narrower. The window of what we will have to do in the future in a shorter period of time is a much greater risk to the global economy and national economies and to human wellbeing.