Built Environment takes a major leap in Race to Zero

Built Environment takes a major leap in Race to Zero



Built Environment takes a major leap in Race to Zero with new joiners and sector progress

4 May 2023

The built environment sector is responsible for almost 40 per cent of global energy-related carbon emissions and 50 per cent of all extracted materials. Because of this, the sector is critical for climate action. Critically, the long lifespan of built assets highlights the need to act now to avoid ‘locking-in’ emissions and climate risk long into the future.

The role of the Built Environment extends beyond emissions reduction. As the ‘stage’ on which our lives are played out, the Built Environment is the platform through which a resilient, equitable and nature-positive future is delivered.

In recognition of this, the Climate Champions have been supporting the sector to reach net zero emissions by 2050. As part of this work, the Built Environment team has been tracking the progress of ‘major’ businesses in the Race to Zero campaign across four sectoral stakeholder groups, which include architects and engineers, construction companies, real estate investment companies, and real estate asset managers.

The team found that 49% of major architects and engineers by revenue have joined the campaign, while only 16% of major construction companies by revenue have joined

Furthermore, 19% of major real estate investment companies by revenue and 29% of major real estate asset managers by revenue have joined the campaign, indicating that the sector is making progress towards decarbonization.

In April alone, six new companies joined the Race to Zero, including Kerry Properties Limited, a Hong Kong-based real estate company, and Daito Trust Construction Co., Ltd., a Japanese real estate company. Both of these companies are significant joiners and will contribute to the sector’s efforts to achieve net-zero emissions.

The Built Environment sector has also seen progress in terms of policy, with Dubai announcing its Climate Action Plan to reach net zero and reduce emissions. The WorldGBC has launched its Global Policy Principles, which are driving action in the sector towards achieving net-zero emissions.

In finance, UNEPFI’s Finance Sector Briefing has shown that over 50 major banks and investors have a developed understanding of the physical and transitional risks of real estate. This report paves the way for the finance sector to price the cost of non-resilient and inefficient buildings into their funding decisions.

The sector has several strategically important events coming up, including the World Circular Economy Forum in Helsinki, Finland, and the EmiratesGBC Annual Congress, which will discuss the road to COP28.

Notwithstanding the positive signals of change, currently the Built Environment sector is not on track to achieve decarbonization by 2050. UNEP’s 2022 Buildings Global Status Report shows that whilst decarbonisation efforts have increased since 2015, these efforts are swapped by the growth of the sector globally.

Addressing this call-to-action will require accelerating ‘radical collaboration’ across the value chain, to drive market transformation. The upcoming ‘Buildings Breakthrough’, due for launch ahead of COP28, will provide a forum for driving international collaboration to unlock climate action on buildings.

The Built Environment 2030 Breakthrough Outcome

Our dedicated Built Environment 2030 Breakthrough Outcome page provides information and resources for anyone interested in tracking the sector’s efforts to achieve net zero.

The page highlights the importance of the sector’s transition to a sustainable, low carbon economy and provides updates on the progress being made by key stakeholders, such as major architects/engineers, construction companies, real estate investment companies, and asset managers.

The page also features a list of new members who have joined the Race to Zero, along with relevant events, policy developments, case studies and partners, such as ​​the Buiding to COP initiative.




High Tech Innovations Are Key To A Greener Economy


In a Forbes Business Development Council article, it is held that High Tech Innovations Are Key To A Greener Economy.  Syed Alam 5 Ways To Ensure A More Sustainable Future.  

Environmentally Responsible and Resource-efficient in the MENA region, was and still is concerned for anything green that were second to that fundamentally frantic development of buildings and all related infrastructure to nevertheless greater and greater awareness of their various environmental impact. 

The image above is Getty



High Tech Innovations Are Key To A Greener Economy: 5 Ways To Ensure A More Sustainable Future


Syed is Accenture’s High Tech global lead, helping clients reinvent their business, optimize supply chain and create new revenue models.

The high-tech industry is central to moving the sustainability agenda forward and enabling a greener planet through the design of more sustainable products using the rise of smart sensors as a way to better manage energy consumption.

At my company Accenture, we have already seen great progress in a wide variety of products, from smart thermostats and solar-powered smart watches to electric vehicles and more power-efficient CPUs in data centers. These products are not only more sustainable and good for the environment, but they are also good for business and future growth.

A recent study from United Nations Global Compact and Accenture shows strategies and business models with sustainability at their core are not only a climate imperative but also the foundation for better security, growth and resilience. This is supported by another recent study’s indication that the supply chain is key to fighting climate change, as supply chains generate up to 60% of global emissions.

While many companies have mastered Scope 1 emissions, most companies lack visibility into the upstream supplier base, called “Scope 3” emissions. For high-tech companies, 86% of upstream Scope 3 emissions sit outside their Tier 1 suppliers.

High-tech companies are deploying strategies to help the industry meet environmental sustainability goals. The Semiconductor Climate Consortium is one excellent example of semiconductor companies coming together to collaborate and align on common approaches and technology innovations to continuously reduce greenhouse gas emissions.

In this article, I will outline five strategies high-tech leaders can adopt to ensure a more sustainable future both within their own organizations and across the supply chain.

1. Recycling Products

E-waste, driven in part by consumers upgrading to the latest smartphones and data centers swapping out servers to keep up with the demands of AI, is both damaging to the planet and costing high-tech companies money. According to the United Nations, global e-waste volumes grew 17% between 2014 and 2019, with over 53 million tons of e-waste in 2019.

High-tech companies are in a unique position to help reduce e-waste by designing products for reuse, resale, repair, refurbishment and remanufacturing, which Accenture and the United Nations study shows can boost operating profit by 16%.

Many technology giants already have successful recycling programs in place that encourage partner participation. In 2022, Accenture partner Cisco launched the Environmental Sustainability Specialization (ESS), a program to educate customers, promote product takeback and assist in the move to circular business models.

As many companies have proven, this can constitute a great opportunity to save money and create new revenue streams while reducing carbon footprints by avoiding single-use inputs and designing for refurbishment and longevity.

2. Selecting Cleaner Raw Materials

As the demand for more sustainable materials rises, more companies are starting to use cleaner minerals such as copper, lithium, nickel and cobalt. Fortunately, materials suppliers have stepped up efforts to deliver eco-friendly solutions to enable companies to make this transition.

Accenture partner Solvay, a supplier of alternative materials, has been developing new solutions to reduce waste materials generated by semiconductor manufacturing. Its products are helping customers recycle polyvinylidene fluoride, a byproduct of chipmaking.

3. Adopting Greener Manufacturing Processes

Many manufacturing companies are making strides in reducing electricity consumption, recycling water and adopting greener manufacturing practices.

Accenture partner Lam Research invested in LED lighting processes and improvements to HVAC equipment such as air compressors. Likewise, companies such as Winbond are using a new low-temperature soldering (LTS) process to reduce the temperatures needed for the assembly of components. These lower temperatures can lead to faster manufacturing throughput while also lowering temperatures to reduce carbon emissions.

Leaders continue to adopt solutions capable of streamlining production processes, using digital tools and deploying more efficient supply chains to save energy and optimize logistics to reduce truck rolls, which can help lower carbon footprints.

Accenture partner Hitachi’s Lumada Manufacturing Insights is a perfect example, as it is helping manufacturers develop data-driven operations, increase supply chain visibility and enable smart factory solutions to improve productivity and lower asset downtime.

4. Designing More Power-Efficient Products

At this year’s CES, we saw many energy-efficient products come to life as companies introduced products focused on managing home energy usage, including battery packs, solar panels and EV chargers. Accenture partner Schneider Electric released the “Home” energy platform to monitor energy usage, manage backup power during an outage and connect to utility programs for savings on electricity bills.

The industry migration to the cloud has also helped significantly reduce global power consumption. Because the cloud supports many products at a time, it can more efficiently distribute resources among users. Companies like Accenture partner Google have made inroads in making their cloud services power efficient, with claims new data centers are twice as energy efficient as a typical enterprise data center—delivering five times as much computing power for the same amount of electrical power as five years ago.

5. Embedding Sustainability Into Supplier Selection And Management

As companies source new suppliers and optimize existing ones, they should embed sustainability in every step of the supply chain management process. This includes analyzing the supplier base to determine the biggest source of emissions and having data-driven conversations with suppliers to reduce emissions.

Digital tools such as digital twins can be used to map physical material flows to uncover sub-tier suppliers and risks. By proactively working with suppliers on an ongoing basis, high-tech companies can identify bottlenecks within the supply chain and help mitigate disruptive events while improving their own decarbonization performance.

Social Innovations Without Waste

While the industry has made great strides toward global sustainability, there is still much work to be done. With the value of global sustainability assets rising above $220 billion, it is increasingly evident that investing in sustainability is not just morally responsible but financially savvy.

Organizations must reduce massive surges in energy consumption, water usage and CO2 emissions and develop sustainable products and services to help customers in their own sustainability transformations. The transition to sustainability presents a tremendous revenue-generating opportunity for companies that act quickly to develop—and adopt—greener technologies.


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Building a better world: Transforming with sustainability & innovation


Heather Polinsky, Global President, Resilience

Our world today is faced with significant challenges. Less urban spaces for growing populations. Energy supply disruptions and increasing energy bills. Hotter summers and harsher winters. Rising sea levels in coastal zones and heightened drought conditions in other areas. With so many shared challenges, there are opportunities to overcome them if we remove the constraints that are holding us back. Are we standing in our own way?

The last five years have seen the dawn of a new reality for the design, engineering and consultancy industry. While the pandemic slowed down projects, impacting budgets and forecasted work in some industries; our sector saw the decades-long traditional business operating model pushed to evolve, leading to new revenue streams and subsequently, the demand for an evolving, highly skilled talent base.

And with fast-approaching net-zero targets and new policies and regulations around environmental, social and governance (ESG) considerations, our industry is faced with increasing pressure to adopt new technologies and sustainable practices at pace with the transformation ahead.

We are at a critical juncture, and there are also huge market opportunities to thrive in tomorrow’s world. To truly change, global collaboration and integrated projects are the way forward. Practically this would mean moving beyond ‘time and materials’ contracts to explore more agile and attractive business models. We can’t do it alone.

Our efforts as designers, engineers, scientists and consultants to action transformative progress can only be fruitful if clients too are willing to evolve and incentivize change. It makes business sense too. Over the last five years, stock funds that were weighted towards companies with positive ESG scores have outperformed across global markets1. Inaction today will not only hurt the world, but also our collective ability – clients and consultants alike – to benefit from investing in tomorrow.

An evolving industry landscape

There has been some progress. From the increased adoption of technology and automation in projects, to shifts in consumer preferences for sustainable and socially conscious businesses and purchase decisions. While all this has led to changing expectations around types of services, it hasn’t yet shifted the dial far enough on ‘delivery’ mechanisms, how we are contracted to work and business partnership and incentive models to meet these trends. Therein lies the biggest opportunity for us to move the needle.

Digitalization – reshaping processes and solutions

According to PwC2, by 2030, up to 45% engineering activities could be automated using advanced technologies like Artificial Intelligence (AI), likely leading to significant productivity gains and cost savings. The Economist’s World Ahead 2023 analysis unpicked ‘Mixed Reality’ as an important trend. Advanced language models too, can be particularly beneficial in consultancy work in identifying data patterns, and generating insights for informed recommendations and decision making3. Are we ready to unlock the full potential of fast-evolving developments like this?

Data analytics and innovative technologies can improve project delivery, providing opportunities for improved decision making, collaboration, communication, and greater accuracy. In cities, for example, implementing AI systems will reduce water waste and predict demand more accurately, with smart meter installations expected to grow 28% by 20264. At Arcadis, we are already seeing promising pilots in the City of Canton, Ohio. By integrating data sources and running AI models, we have developed digital twins that create a virtual model of the utility company’s water distribution system, helping them reduce water loss by analyzing data to identify leaks in real-time, significantly earlier than could previously have been found.

ESG considerations

Sustainability and ESG considerations have been driving forces for the transformation of various sectors. For example, as the demand for renewable energy increases aligned with net zero goals, engineering and design firms are increasingly advising on decarbonization strategies and projects related to solar, wind, and other forms of clean energy. The automotive industry is also undergoing a significant transformation as electric and autonomous vehicles become more prevalent. And the built environment sector is seeing a trend towards green buildings, retrofitting existing buildings and livable urban spaces.

An integrated project approach

Mega trends like climate adaptation and rapid urbanization are pushing businesses to realize that solutions to these problems cannot be achieved in isolation. For example, to solve decarbonization and reduce energy use, we are seeing much greater collaboration and integration between energy users across all sectors, including buildings, transport, and industry, with power producers and utility providers. Projects too are moving in a similar trend, with fast-changing regulatory, societal and market environments adding pressure. Clients are looking for partners who can work shoulder-to-shoulder with them through all stages of a project, from co-creating strategies through to implementation, making sense of the evolving landscape and the business case for investment. In the UK, for example, we are supporting Transport for North which covers cities including Manchester, Liverpool and Leeds with their decarbonization strategy, providing them with confidence that they are future proofed as they look to act on climate change.

Shifting mindsets

All this is also leading to a shift in mindset – from focusing purely on siloed projects to wider solutions that integrate responses to water, energy and climate challenges. There’s a huge benefit in this integrated, systems-thinking approach. By 2050, the integration of sectors such as energy, transport, and buildings could result in cost savings of up to €200 billion per year in the European Union5 alone. And, from a socio-economic perspective, the integration of services such as water, wastewater, and climate resilience is key to achieving sustainable resilience in cities, posing a strong future business opportunity6, as demonstrated by the Wuhan Sponge City program.

While we have certainly transformed over the last few years, the question remains: are we moving fast enough? What practical steps can we take to adapt today so that we can continue thriving in the future?

The biggest opportunities of our time

Let’s be honest, the biggest needle movers of our time are sustainable practices, powered by innovation and digital tools that build resilience into our cities. As an industry, we have a significant opportunity to help mitigate the impacts of climate change through a focus on sustainable development and operations. However, with the IPCC warning that we are already falling behind, urgent action is needed to accelerate efforts. Projects need to have a more holistic, integrated approach, also considering the impact on society, particularly as challenges like climate change, water scarcity and energy affordability disproportionately affect vulnerable communities. This urgency requires immediate action from all stakeholders to create a more sustainable future for all. Considering nature and biodiversity, carbon emissions, and social impact in the planning and implementation of projects should be a given. Planning resilient cities will be key.

There is no single solution or organization that has all the answers. But collective working and partnering with other like-minded organizations can help the industry progress. For instance, digital disruptors bring to the table new technologies and a unique understanding into consumer buying behaviors and preferences. These present data and pain point insights which, if used effectively, will not only bring value at various stages of the project, but also help create better, more inclusive solutions for all. And we need to be bolder about the risks we take. New solutions like ChatGPT may seem intimidating, but if used effectively, can enhance processes and free up time for value added work. Working together and putting aside differences to achieve these common goals, supported by modern technologies, can help truly accelerate our industry’s transformation.

Transforming our industry for the future

How are we creating the right environment, business models and opportunities for the transformation needed?

Building a strong talent pool, into the future: By 2028, one-third of skilled workforce will retire at a faster rate than younger workers enter the field to replace them, leaving more than 3 million skilled trade jobs unfilled7. Our industry and clients are seeing the greatest workforce transition of our time – with capability availability, early retirement and gig working being areas of concern that we need to anticipate and be ready for. These pose both a challenge, and a prospect. While there’s loss of institutional knowledge, there’s also an opportunity to drive ground-up change and new ways of thinking. Focusing on an agile workplace with space to develop and upskill will be key in creating employer attractiveness and ensuring we have the right people working on the right projects. We too are seeing this transformation and are taking steps to stay ahead. Arcadis’ Global Collaboration Policy, for instance, removes barriers to collaboration, cross teams and cross borders. And, through Arcadis programs like Digital Base Camp, Sustain Abilities, the Energy Transition Academy and Quest, powered by the Lovinklaan Foundation, we are investing in a learning platform for people to upskill in sustainability and digital, and also, expand their skillsets and learn-on-the-job from other teams through funded experiential project work.

But that’s not enough. We need to relook at how our industry operates, and get more hands-on-deck to help lead our industry’s transition. Consultants and clients alike need to be comfortable with being uncomfortable, taking measured risks with new ways of working and business models. To create space for sustainable practices, innovation and development, our traditional business model needs to shift from purely billable hours towards recognizing the value provided by employees. And leverage partnerships to go further. Finding partners to co-create with us can provide access to complementary skills, shared resources, and help us expand our market reach. Together, we can spark new ideas and solutions that may not have been possible otherwise, like our eCATS team in the Netherlands did when developing an innovative solution to transform redundant natural gas infrastructure for renewable energy storage.

The challenge ahead may seem daunting, but the time to act is now. We must be open to taking risks and testing new pilots and technologies, bold in our commitments around sustainability and willing to try new partnerships to accelerate our industry’s transition. Thriving in tomorrow’s world requires action today – no one organization has all the answers, but collectively, we can create solutions for a sustainable future.

Looking ahead, we’ve taken the best ideas, innovations and examples of integrated projects to shape six strategic pillars that can be considered to thrive in carbon neutral and prosperous cities of the future: Explore our perspective: ‘Charged up for Change




High Oil Prices Fueling Middle East’s Renewable Energy Boom


This article by Alex Kimani was on oilprice.com and republished on The Tide‘s OIL & ENERGY.  It concerns how High Oil Prices Fueling Middle East’s Renewable Energy Boom, which is elaborately assessed.

The image above is of OilPrice


High Oil Prices Fueling Middle East’s Renewable Energy Boom


In a fairy-tale turnaround that few could have foretold, oil prices have soared to multi-year highs, largely aided by strong post-Covid-19 demand, surprise OPEC+ cuts and the disruption caused by Russia’s war in Ukraine.
The petrodollar windfall has really given a boost to previously battered Gulf economies, allowing some Gulf Arab states to pay down debt and others to diversify their oil-reliant economies in very big ways.
All the six Gulf Arab states – Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman – are on track to post budget surpluses, many for the first time in a decade, thanks to buoyant oil prices and years of fiscal reforms.
But it’s not just the Arabian oil giants that will be enjoying the good times. In its latest forecast, the World Bank has predicted that in 2023, the entire Middle East and North Africa (MENA) region will grow 3.5%, more than twice the global average growth rate of 1.7%, thanks mainly to high energy prices and increased oil production.
GCC growth is expected to stabilise at 3.7% this year after expanding at a blistering 6.9% clip in 2022.
Although hydrocarbons remain the backbone of MENA’s economy, the realities of climate change, and wild oil price swings have been forcing Gulf nations to restrategise and diversify their economies away from oil, and Saudi Arabia is leading the way, again.
Although Saudi Energy Minister, Prince Abdulaziz bin Salman, recently made waves in the oil community after telling Bloomberg News that Saudi Arabia intends to pump every last drop of oil and is going to be the last man standing, Saudi Arabia has crafted one of the most ambitious clean energy blueprints: Crown Prince Mohammed bin Salman’s Vision 2030 economic plan.
In the economic plan, Saudi Arabia has set a target to develop 60 GW of renewable energy capacity by the end of the decade, which compares with an installed capacity of roughly 80 GW of power plants burning gas or oil.
So far, Saudi Arabia has only made limited progress deploying renewables with just 520 MW of utility-scale solar in operation while 400 MW of wind power is under construction.
With its sun-scorched expanses and steady Red Sea breezes, Saudi Arabia is prime real estate for renewable energy generation.
Last year, Saudi Arabia’s national oil company, Saudi Aramco, sent shockwaves through the natural gas markets after it announced that it was kicking off the biggest shale gas development outside of the United States.
Saudi Aramco said it plans to spend $110 billion over the next couple of years to develop the Jafurah gas field, which is estimated to hold 200 trillion cubic feet of gas.
The state-owned company hopes to start natural gas production from Jafurah in 2024 and reach 2.2 Bcf/d of sales gas by 2036 with an associated 425 million cubic feet per day of ethane.
Two years ago, Aramco announced that instead of chilling all that gas and exporting it as LNG, it will convert it into a much cleaner fuel, Blue hydrogen.
Saudi Aramco has told investors that Aramco has abandoned immediate plans to develop its LNG sector in favor of hydrogen.
Nasser said the kingdom’s immediate plan is to produce enough natural gas for domestic use to stop burning oil in its power plants and convert the remainder into hydrogen. Blue hydrogen is made from natural gas either by Steam Methane Reforming (SMR) or Auto Thermal Reforming (ATR) with the CO2 generated captured and then stored.
As the greenhouse gasses are captured, this mitigates the environmental impacts on the planet.
Last year, Aramco made the world’s first blue ammonia shipment, from Saudi Arabia to Japan.
Japan, a country whose mountainous terrain and extreme seismic activity render it unsuitable for the development of sustainable renewable energy, is looking for dependable suppliers of hydrogen fuel with Saudi Arabia and Australia on its shortlist.
The Saudi government is also building a $5 billion green hydrogen plant that will power the planned megacity of Neom when it opens in 2025.
Dubbed Helios Green Fuels, the hydrogen plant will use solar and wind energy to generate 4GW of clean energy that will be used to produce green hydrogen.
But here’s the main kicker: Helios could soon produce green hydrogen that’s cheaper than oil.
Bloomberg New Energy Finance (BNEF) estimates that Helios’ costs could reach $1.50 per kilogram by 2030, way cheaper than the average cost of green hydrogen at $5 per kilogram and even cheaper than gray hydrogen made from cracking natural gas.
Saudi Arabia enjoys serious competitive advantage in the green hydrogen business thanks to its perpetual sunshine, wind, and vast tracts of unused land.
Germany has said it needs “enormous” volumes of green hydrogen, and hopes Saudi Arabia will become a key supplier.
Two years ago, Germany’s cabinet committed to invest €9B (about $10.2B) in hydrogen technology in a bid to decarbonise the economy and cut CO2 emissions.
The government has proposed to build an electrolysis capacity of 5,000 MW by 2030 and another 5,000 MW by 2040 over the next decade to produce fuel hydrogen.
The European economic powerhouse has realised it cannot do this alone, and will require low-cost suppliers like Saudi Arabia especially as it doubles down on its green energy commitments following a series of devastating floods in the country.
Back in 2021, the Emirates Nuclear Energy Corporation (ENEC) announced the commissioning of the country’s first-ever nuclear power plant, the Barakah Unit 1.
The 1,400-megawatt nuclear plant has become the single largest electricity generator in the UAE since reaching 100% power in early December, and is now providing “constant, reliable and sustainable electricity around the clock.
“ENEC says Barakah unit 1 is “now leading the largest decarbonisation effort of any industry in the UAE to date.”
Following in the footsteps of Saudi Arabia, the UAE is also laying a strong foundation for the energy transition.
Masdar, the clean energy arm of Abu Dhabi sovereign wealth fund Mubadala, is building renewable capacity in central Asia after signing a deal in April 2021 to develop a solar project in Azerbaijan.
Since its inception in 2006, Masdar has built a portfolio of renewable energy assets in 30 different countries, having invested about $20bn to develop 11GW of solar, wind and waste-to-energy power generation capacity.
And now Masdar says it intends to apply the lessons gleaned abroad to develop clean energy capacity back at home.
“Solutions we have developed in our international operations will definitely have applications here in the UAE”, says Masdar’s El-Ramahi.

By: Alex Kimani
Source from Bloomberg News

Risk and resilience in the era of climate change


In its article on Risk and resilience in the era of climate change, Brookings concludes that the ‘need is more significant than ever for regional and global cooperation in generating climate finance and scaling up investments in climate mitigation and adaptation’.

Risk and Resilience in the Era of climate change


By Vinod Thomas, Distinguished Fellow – Asian Institute of Management, Manila. Former Senior Vice President – World Bank


Once thought to be sporadic and only affecting faraway places, the profile and timetable of climate change have changed dramatically to be on the calendar of every country. Take the forecast that sea levels along the U.S. coastline will rise by a foot over the next 30 years—as much as the increase in the previous 100 years—wreaking havoc in low-lying regions. Faced with such trajectories, it will no longer be enough to cope and build back after disasters, but governments, businesses, and individuals need to anticipate and “build forward”—the central message of “Risk and Resilience in the Era of Climate Change,” published on April 4.

That the climate danger no longer lies over the horizon is vividly shown by extreme weather aggravated by climate change already destabilizing energy supplies and creating shortages (Figure 1). This, coupled with the demand for more cooling during unseasonably hot summers, is stoking energy insecurity, prompting even greater fossil fuel use—as Europe and South Asia have seen in recent months—driving up effluents and worsening the climate crisis. If this continues, “circuit breakers,” such as a cross-country moratorium on new oil, gas, and coal projects will be needed—and accompanied by a very aggressive push for renewable sources—to avert a full-blown climate catastrophe.

Figure 1. Climate, energy and a downward spiral

fig 1

Source: Author

Precious decades have already been lost to decarbonize to a level that will avert catastrophic climate change. Now, nothing short of transformational change is needed to alter the pattern of economic growth to a more environmentally sustainable one. That includes mainstream economic policy—and the theories that go with it—to abandon the obsession with short-term gross domestic product (GDP) growth. The targeting of this at all costs led to a mentality in which any type of growth, including an ecologically destructive pattern, is deemed good. A point in case is the East Asian “miracle” during 1970-90.

The focus must shift to truer measures of growth that deduct the spillover harm from carbon-polluting industries and environmental and ecological degradation from the growth process. Ranking countries based on measures that net out this damage will help emphasize the quality of economic growth and encourage more sustainable patterns of investment.

Far-reaching change will occur only with clear accountability being assigned to the sources of the climate conundrum. It is vital to attribute climate change squarely to the relentless emissions of GHGs from using fossil fuels. Equally, it is key to communicate this link to the public and policymakers precisely when climate disasters strike. The public everywhere increasingly identifies climate change as a top global risk, but nowhere does it flag climate change as the highest priority for domestic investment, which must increase in the era of climate change.

Policymakers will need to use the economists’ toolkit to alter the trajectory of climate change. The economics of spillover harm or negative externalities, usually a section in economics textbooks, needs to become a staple of growth economics. Making it so would signal the merits of decarbonizing economies. It would, for example, motivate the use of carbon pricing via a carbon tax levied on the source of  pollution—as South Korea and Singapore have done, or through carbon trading—as the European Union and China are doing.

The economics of spillover harm has wide-ranging implications for development projects. All projects must pass a test of resilience to climate change and be accompanied by legal covenants on mitigation and adaptation. Development programs should avoid the use of fossil fuels, in addition to doing away with subsidies for this pollution source. High-income countries should provide vast climate financing to low-income countries, following the minimal progress achieved on this at COP27. Climate financing would be helped if the world’s multilateral development banks were to strike an alliance on climate action—particularly those with new climate agendas, such as the International Monetary Fund, the World Bank, the Asian Development Bank, and the New Development Bank.

Global dangers from pandemics to geopolitical conflicts to global warming, when taken together, paint a picture of low-probability but high-impact risks (the so-called “black swans”) becoming high-probability and high-impact ones (“gray rhinos”). Accordingly, building resilience needs to go beyond simply coping with disasters to preventing them. Innovative approaches to resilience, such as pooling resources across boundaries and getting financing approvals ahead of disasters, are needed as countries face severe shortages of trained staff and financial resources to cope with risk and resilience challenges.

The need is greater than ever for regional and global cooperation in generating climate finance and scaling up investments in climate mitigation and adaptation, much as exhibited during COVID-19. That vast sums can be quickly mobilized to fix global problems, if public opinion is supportive, was dazzlingly demonstrated in the trillions of dollars—$ 15 trillion, by one estimate, in stimulus spending in 2020 to fight COVID-19. In the wake of the existential challenge from runaway climate change, the same political resolve and public support are called for.