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Price hike needed in cost of emissions
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OUR planet is warming dangerously.
And, as the 2013 report by the Intergovernmental Panel on Climate Change makes clear, our carbon dioxide emissions over the past half century are extremely likely to be to blame.
A more robust approach to global warming is needed if we are to avoid catastrophe. Unlike the recent financial crisis, there is no bailout option for the earth’s climate.
Three years ago, at the United Nations COP 16 climate change meeting in Cancun, countries agreed to reduce their emissions by 2020 to a point that would prevent the average global temperature from rising more than 2 degrees Celsius above preindustrial levels.
However, UN estimates show that current trends would bring the world only 25-50 percent of the way to this target.
This is why I am calling on all governments to be more ambitious — to aim for zero net emissions from fossil fuels by the second half of this century.
Just this week, the European Commission unveiled new energy and climate targets for 2030 — calling for a 40 percent reduction in the bloc’s greenhouse-gas emissions from 1990 levels, with 27 percent of energy to come from renewable sources. This is an important step, and more countries should follow suit.
To be sure, we will encounter huge obstacles. Two-thirds of electricity generation, and nearly 95 percent of the energy consumed by the world’s transport systems, comes from fossil fuels.
Our energy security is increasingly tied to the exploitation of unconventional fossil fuel deposits like shale gas, especially in the United States.
Carbon-intensive technologies remain more profitable than low-carbon alternatives in many cases. And cash strapped governments continue to encourage oil and gas exploration.
Three things to do
But change is possible. We can make substantial progress by setting a direction on three issues:
1. Put a price on carbon.
More than 40 countries have already implemented some form of carbon tax or emissions trading scheme. Trading schemes are often politically more attractive, because they can be flexible (although their design and implementation could be improved in many cases).
But we can be bolder. Several governments have successfully introduced carbon taxes without adversely affecting growth.
2. Cut fossil fuel subsidies. The OECD estimates that fossil fuel subsidies in member countries amounted to US$55-90 billion annually from 2005 to 2011. And the International Energy Agency estimates that in 2012 fossil fuel subsidies worldwide grew to US$544 billion. Most of these subsidies should be scrapped.
3. Clarify policies. Governments must address inconsistencies in their energy strategies, consider the links with broader economic policies, and stop sending mixed signals to consumers, producers, and investors.
These steps will signal that the price of emissions must rise substantially if we are to reach our goal of zero net emissions.
The transformation will not be costless, and governments must be frank with their electorates about its social and economic impact.
But a low-carbon, climate-resilient world will also offer new economic opportunities.
Angel Gurría is Secretary-General of the OECD. Copyright: Project Syndicate, 2014.www.project-syndicate.org. Shanghai Daily condensed the article.
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