“RIO+20: A CRISIS OF RELEVANCY AND HOW TO RESOLVE IT”

terça-feira, 2 de agosto de 2011

By Michael Liebreich - Bloomberg New Energy Finance

The Rio Earth Summit in 1992 brought together 172 governments to hammer out a new compact between developed and developing nations. The event was seen as an historic moment in the history of the environmental movement. 108 nations were represented by their heads of state, nearly 20,000 representatives of NGOs and civil society showed up to a parallel global forum, and 10,000 journalists broadcast the proceedings to the world. It resulted in the UN Framework Convention on Climate Change and the Convention on Biological Diversity, as well as a number of other accords on forest management, environment and sustainable development.

Plans are now under way for a follow-up conference, dubbed Rio+20, and timed for June 2012, to mark the 20th anniversary of the original event. This aims, in the words of the organisers: “to secure renewed political commitment to sustainable development; to assess progress towards internationally agreed goals on sustainable development and to address new and emerging challenges”.

But things are not going well. One of the themes around which the organisers hope to focus the agenda is the “green economy” – which has taken over from “green stimulus” as the phrasedu- jour of the economically-literate environmentalist and the environmentally-literate economist. However, there is no agreement on what green growth means. Those travelling in the sustainable development caravan are suspicious that it is code for injecting the private sector into domains now cosily dominated by public institutions.

The other main theme for Rio+20 is institutional frameworks. Here the elephant in the room is the failure of the UNFCCC to capitalise on the promise of Rio 1992. It took five years to move from the o riginal Earth Summit to the Kyoto Protocol in 1997. It took another eight years to ratify the Kyoto Protocol, but the world’s then-largest emitter sat on the sidelines, and the second-largest (between them they account for over 40% of global emissions) was not required to take action. For those bound by Kyoto, its goals were modest, yet they are not on track to be achieved. And when it comes to a successor agreement, the fiasco in Copenhagen has left international discussion shrunken to the two issues of forestry and financial support for the slower-developing world. Negotiation on one is bogged down in technicalities and on the other is still at the stage of chest-beating and posturing.

Perhaps the biggest challenge for the organisers of Rio+20 is that all of this is playing out against a backdrop of economic crisis and toxic antienvironmentalism. The fact is that in most of the developed world, particularly in the US, it is politically risky to talk about the environm ent. Climate has become the C-word in American politics.

With so much uncertainty about what can be achieved, so much infighting among the insiders, and such a difficult political and economic environment, it is small wonder that no one is outlining grand ambitions for Rio+20. The G77 nations clearly relish the opportunity to restate their demands from the developed world, but few OECD countries are enthusiastic. No developed world heads of state have yet announced their intention to attend.

In many ways, the malaise around Rio+20 refl ects two broader issues: the collapse of the developed-world-rich, developing-world-poor model which has underpinned sustainable development since the creation of the UN; and the loss of confidence in the environmental movement in the face of its manifest failure to break through into the mainstream.

The organisers say they want to secure renewed political commitment to sustainable development. However, if they re ally want political commitment, then they need to understand this background, and start by accepting some home truths about the political environment, particularly in the developed world, at the start of the second decade of the Twenty-first century.

The first home truth is that action must not be predicated on reforming the world’s entire financial, political or social systems. Any proposed initiatives have to be action-oriented, scalable, and based on the sort of economics most people recognise as sensible. Rio+20 must not be hijacked by those who believe the answer is to move to a zero-growth economy; or that taxing financial transactions will somehow lead to greater biodiversity; or that the top priority is to reduce living standards in the developed world. All of these are recipes for preventing the very thing we need to achieve, namely a leapfrogging by the developing world to a clean economy, while destroying the capital formation that is needed to pay for it and leading to deadlock in the international process.

Let us be absolutely clear: any proposed outcomes from Rio+20 have to be consistent with ongoing economic growth in both the developing and developed world. Without this there is no achievement of the Millennium Development Goals, which for most people are more important than the entire environmental agenda. Ignoring this reality is utterly disrespectful towards the 3bn people using traditional biomass for cooking and heating, and the 1.4bn who lack electricity, as well as towards many millions in the developed economies who are desperate to find jobs in the wake of a savage recession.

In the case of greenhouse gas emissions, the world needs 3% to 4% real growth if it is to continue pulling tens of millions of people out of poverty each year. It must achieve this while, at the same time, reducing emissions. To do this, there will have to be action on three fronts: 1) shifting the global economy towards less energy-intensive sectors; 2) improving energy efficiency within sectors; and 3) reducing emissions per unit of energy. Achieve 1.5% to 2.0% improvement each year from each of these sources, and emissions will drop to half their current levels by 2050. Not only would this approach actually solve the climate problem (unlike, say, the Kyoto Protocol), but it would also provide tools to help us plan, and allocate resources between what we must do today with what we must be ready to do tomorrow, and the day after (unlike, say, Socolow wedges or marginal abatement curves). This is the framework on which Rio+20’s climate initiatives should be built.

The second home truth is that funding for the shift to a clean economy will come overwhelmingly from the private sector – because “that’s where the money is”. Even after the financial crisis, the global investment industry sits on assets of over $100 trillion in the form of pension funds, mutual funds, exchange-trad ed funds, insurance funds, private equity funds, hedge funds and sovereign wealth funds. Solving the climate problem – mitigation and adaptation – will take between $500bn and $1tr a year, depending on which authority you believe. The private sector will only provide funds if it receives a return on investment, not if it is being encouraged to destroy value. And quite obviously it will fight with all of the weapons at its disposal if its assets are simply being confiscated.

So one of the most important questions Rio+20 has to answer – perhaps the most important of all – is how to make investment in clean solutions more attractive than investment in dirty ones, everywhere in the world, as quickly as possible, so that private money can be mobilised at scale. If it fails, despite all the rhetoric, sound-bites and pressconferences, private money will continue to chase attractive returns in polluting industries, while public money is increasingly left to remediate the resulting mess. Since investors are also taxpayers, the same people will be meeting both bills – complete economic madness.

The current discussions about climate finance in the run-up to the COP meeting in Durban are profoundly off-track. In Copenhagen the developed world committed to find ways of routing $100bn per annum of public and private money towards climate projects in the developing world. In Cancún it was agreed that a Green Climate Fund would be set up to handle a significant proportion of the money; the Transitional Committee charged with recommending how it would be set up appears to have assumed that the bulk of the money will be from public sources – the leading contenders are global taxes on aviation, shipping, financial transactions and carbon – and that it will be centrally managed by a new development-bank like organisation. We will be publishing a White Paper shortly on an alternative approach that would mobilise large amounts of private money.

The third home truth for success is about scale and mainstreaming. Fifty years after Silent Spring, 20 years after the Rio Earth Summit, it is surely time to accept that “green”, “sustainable”, “eco” and “clean” are simply not brands that can be sold to everyone. If consumers and businesses are to be engaged across the very broadest of fronts, the challenge needs to be restated in terms that will resonate with everyone – and that means resource efficiency, not environmentalism.

Mention sustainability and survey after survey shows that around 15% of the public are engaged, 70% are passively supportive, and 15% are downright hostile. The numbers may vary – in the US right now the debate is unusually polarised – but the shape of the response does not. And guess what: business-people are no different! If a chief executive talks about sustainability and green initiatives, 15% of investors respond positively, 70% do not mind as long as the CEO is not spending money, and 15% are downright hostile. But if that same CEO talks about resource efficiency – trying to do more with less – then there is not an investor in the world who will not listen with interest.

Resources can be broadly defined to include energy, natural resources, agricultural land, water, space in landfills or clean air. Even less obvious commodities like broadband spectrum, road space, public parks and other shared amenities could be subject to the same treatment. All are scarce, all are of concern to consumers, business leaders and investors. The issue of resource efficiency can also be made to resonate in developed and developing countries alike. Those who say Africa should not yet worry about energy efficiency, only about energy access, could not be more wrong: the more efficiently you use energy, the less you have to invest in its generation. The world’s energy poor have a right to energy services: light, heat, power for their businesses; they do not have a right to build the same inefficient infrastructure as we are saddled with in the developed world.

An aggressive focus on resource efficiency would have the virtue of being self-financing, so rewards would be not only environmental and geopolitical, but also financial. It would be a classic win-win-win – except, of course, for those whose wealth is contingent on our continued profligacy.

In many ways, the 20 years since the 1992 Rio Earth Summit have been about building a body of knowledge. Learning the science of the environment and of climate; experimenting with policy approaches – finding a few that worked and a lot that did not; learning, through the disappointment of Copenhagen, about the limits of top-down, global initiatives and the opportunities offered by bottom-up, local action. The challenge of Rio+20 is to take all of that learning and make sure that there is a step change in delivery before Rio+40. The ne xt 20 years must be about scale and economy-wide change, not about awareness, experimentation and niche models.

Rio+20 offers an historic opportunity to divert the world’s economy away from its current resource-intensive, environmentally and socially destructive pathway and towards something approaching sustainability. For this generation of leaders, it may be the only such opportunity they get. Let us hope they do not blow it.