Bibhu Mishra of Humboldt University, Berlin elaborates on Transitioning towards sustainable economy: Role of financial institutions such as Central Banks and financial systems in The Times of India.
Transitioning towards sustainable economy: Role of Central Banks and financial systems
“For peace to reign on Earth, humans must evolve into new beings who have learned to see the whole first”, said Kant.
Climate change is real; it affects and will affect everyone. Mother Nature sends its signals regularly, and most recently through the flash floods in western Germany. These signals are an urgent reminder that we need to take action now. The action must be collective, significant, timely, and futuristic because, in the long term, the risks outweigh the costs.
The Paris climate accord is one such step in the right direction. A holistic and stakeholder-driven approach would be required to achieve the target of maintaining temperature rise by 1.5 degrees Celsius. One of the most significant stakeholders in such efforts is the global financial system. The financial system’s role is pivotal because they provide finance and steer economic growth. Their actions have a significant impact on ESG, i.e., Environment, Society, and Governance.
There is a tremendous surge in investments which keeps ESG at the core of investment decisions. According to Bloomberg, ‘ESG assets may hit $53 trillion by 2025, a third of global AUM’. Despite a phenomenal rise in ESG assets in the past decade, the financial system still faces challenges like ‘short-termism’ and ‘greenwashing.’
Therefore, the role of Central Banks is vital. They look at the financial system of a country as a whole. Former Governor of the Bank of England, Mark Carney coined the concept ‘Tragedy of the Horizon’ to explain this. He argued, “the catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix.” It is a tricky paradox where the current system has little or no benefits but to save the planet in its current state or better for the coming generations.
Realizing the importance of its role, eight central banks and supervisors created (In December 2017) a ‘Network of Central Banks and Supervisors for Greening the Financial System (NGFS).’The NGFS is aimed to make coordinated efforts to combat climate change. As of June 30, 2021, the NGFS has grown to a network of 95 members and 15 observers. The Network’s purpose, in their own words; “to help strengthen the global response required to meet the Paris agreement’s goals and enhance the role of the financial system to manage risks and mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development.”
The NGFS is a significant step towards bringing central banks of different countries together and ensuring that central banks take the leadership role in fighting against the climate crisis. In its first comprehensive report (Pub 2019), It came up with the following six suggestions and floated the idea of global collective leadership.
Integrating climate-related risks into financial stability monitoring and micro-supervision
Integrating sustainability factors into own-portfolio management
Bridging the data gaps
Building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing
Achieving robust and internationally consistent climate and environment-related disclosure
Supporting the development of a taxonomy of economic activities
Additionally, the steps taken by the Central Banks of England (Bank of England) and France (Banque de France) are noteworthy and worth a mention.
Recently, the [Central] Bank of England launched a stress test for banks and insurers to understand the ability of the UK Financial system to cope with climate change. The test is aimed to examine the resilience of the UK’s 19 biggest banks and insurers. The stress test can also be looked at as an acknowledgement that Climate Change poses significant financial risks to the existing financial system. Therefore, early planning of a transition is necessary.
Moreover, ‘Banque de France,’ the central bank of France, took several initiatives to transition the financial industry into zero carbon. In June 2021, the French ACPR (Autorité de contrôle prudential et de résolution, English translation: French Prudential Supervision and Resolution Authority) published the first climate pilot exercise report an overall ‘moderate’ exposure to climate risks.
Let’s understand the risk through an example. Investing in fossil fuels may generate returns in the short term,’ but it will accelerate climate change and, hence, negatively impact the ESG. The negative impact on climate could cause erratic rains or severe drought, leading to an adverse effect on investments made in agriculture and allied sectors. One sector’s gain can be the loss of another sector, posing a significant risk before the overall financial system.
To ensure a smooth transition of the financial system towards sustainability and make it resilient from other systemic risks, early and coordinated action is needed. Central Banks and financial systems have a significant role to play in our journey towards sustainability.
Bibhu Mishra is a German Chancellor Fellow at Alexander von Humboldt Foundation and a researcher with Institute of Asian and African Studies, Humboldt University, Berlin.
Emerging Economies Must Leapfrog to Renewables – and They Already Are per Roya Sabri in this TRIPLEPUNDIT’s article.
Emerging Economies Must Leapfrog to Renewables – and They Already Are
20 July 2021
Renewables like solar and wind are quickly becoming more affordable and accessible. The International Renewable Energy Agency (IRENA) reports that the cost of electricity coming from utility-scale solar power fell 82 percent between 2010 and 2019, and clean power technologies such as solar and wind are undercutting even the cheapest coal-fired power plants. Further, a 2020 analysis from BloombergNEF found that wind and solar have overtaken fossil fuels as the most cost-effective form of new sources of electricity in most of the world.
This trend has made “energy leapfrogging” – i.e., the ability to reap a nation’s power needs from renewables such as solar, wind and geothermal at a rapid pace, bypassing heavy investments in fossil fuels and the infrastructure needed for them – ever more possible in emerging markets.
Economies, including several examples in Africa and Latin America, have been transitioning straight from what for many of their communities had been traditional sources of energy like wood, charcoal, agricultural waste and animal dung; these countries are also able to shift rapidly toward renewables as they have not invested in massive infrastructure that supports a national power grid, as was the case with what more industrialized nations in Europe and North America had done during the 20th century.
The result is that more communities within these emerging markets are forgoing conventional energy sources like fossil fuels; the same goes for other forms of energy like nuclear, biofuels and even natural gas.
A recent report from the think tank Carbon Tracker and India’s Council on Energy, Environment and Water (CEEW) highlights progress emerging nations are making in embracing renewables. The report also comes with a warning: If more nations do not leapfrog to these cleaner sources of energy, a worldwide low-carbon economy will not occur.
As the demand for energy grows, leapfrogging to renewables becomes necessary
The International Energy Agency estimates a surge in power generation in emerging nations will boom over the next decade, accounting for the majority of electricity demand by 2030. Thus, a world aiming to reduce greenhouse gas emissions has an incentive to ensure countries like India and China continue their developing infrastructure that is more conducive for renewables.
The authors of this Carbon Tracker and CEEW study find that emerging markets are already stepping away from fossil fuels. “Given the continued rapid growth rate of solar and wind, it is highly likely that emerging markets ex-China have already plateaued or reached peak demand for fossil fuels for electricity. China is likely to peak before 2025,” they write. China may still be a major coal consumer, but its solar sector is growing fast. Countries like Morocco, Nicaragua and Kenya have already made great leaps toward increased reliance on renewables.
Some nations are already leapfrogging to renewables
The Climate Reality Project details how Morocco, Nicaragua and Kenya have been able to turn their power generation sectors into ones that are more sustainable and resilient. Morocco, for one, has set a target of 42 percent renewable energy production by 2021 and 52 percent by 2030. It has stayed on track by building up its solar and wind power infrastructure. The North Africa country, in fact, now hosts one of the largest solar farms in the world.
After experiencing rolling blackouts due to energy insecurity a decade ago, Nicaragua is now on its way to sourcing 80 percent of its electricity from sources of renewables. By late 2020, Nicaragua’s burgeoning geothermal industry had brought the nation to 72 percent reliance on renewable energy sources.
Energy accessibility has been expanding in Kenya as decentralized solar has spread across the nation. The country is also making use of its geothermal power, which may reach 50 percent of its energy mix by 2040.
Clean energy can support a more resilient and healthy economy
These cases show that a dramatic shift to renewable energy can increase energy accessibility and stability. The economic case is significant. IRENA reported in 2016 that a doubling of renewables by 2030 could mean global GDP increases by over one percent, boosts social welfare investments by almost four percent and can add more than 24 million jobs.
While some nations have proved leapfrogging possible and beneficial, the authors of the Carbon Tracker and CEEW study note that there are serious barriers to building renewable energy reliance. Such hurdles include the intermittency of renewable sources, system costs, policies and deeply vested interests — but international actors can make a difference. The report recommends that international policymakers should focus their attention on countries currently dependent on fossil fuel imports that also have governments more amenable to policy solutions.
Finally, the authors contend that such nations are more receptive to a transition than countries that are more politically fragile. They are also in a stronger position than countries with economies largely driven by coal and gas exports. The result is that these countries that have found success with energy leapfrogging can become examples for their neighbors and help to bring more emerging nations closer toward a clean energy future.
Al-Fanar Media elaborates on a report where the so-called Arab narratives, about Artificial Intelligence, are explored. AI is also predicted, it could change the MENA region more profoundly than anything else before. How would that happen? Is it through using a wide-ranging branch of computer science concerned with building intelligent machines capable of performing tasks that typically require human beings’ brains? Or is it just another way of procuring the ability of a computer or computer-controlled or robot to perform tasks commonly associated with intelligent beings? Or put another way, is it needed to cover humans’ unpredictable performance by a more stable and well-controlled machine?
But what are Arab narratives?
The MENA region is culturally dominated by the Arab ethnocultural authoritarianism in the current socio-political systems and finds it difficult to get their respective populations to come up with some added value in any domain.
They might, though, have some success with the AI. Let us see.
The picture above is for illustration.
Arab Narratives About Artificial Intelligence Are Explored in New Report
CAIRO—The Middle East and North Africa region needs to be more involved in the global debate about the development of artificial intelligence-related technology, says a new report that examines the narratives about technological futures that are widespread in the Arab world.
Narratives about future uses of robots and intelligent machines—how a culture portrays them in areas including history, literature, art and films—can influence the development and reception of artificial intelligence (AI), says the report. Yet Western perspectives typically dominate AI discussions, it says, and Arab perspectives are largely missing.
It notes the MENA region’s rich history and culture and the ability of its youth to employ technology as a means of expression, by presenting literary works based on science fiction or by their economic participation in technology-based start-ups, which can help create new business models suitable for the future and contribute to providing job opportunities in an area where young people make up a large majority of the population.
Joining the Global Dialogue
“The region might not be rich in technology compared to developed countries,” said Nagla Rizk, a professor of economics and founding director of the Access to Knowledge for Development Center, who is a co-author of the report. “However,” she added, “it has a rich stock of culture and history that manifests in technological narratives in different ways.”
“Our participation in this initiative was an excellent opportunity to include the voice of our Arab region in the global dialogue platform on artificial intelligence narratives.”
Nagla Rizk A professor of economics and founding director of the Access to Knowledge for Development Center
The report comes as part of the Global Artificial Intelligence Narratives Project, an initiative within the Leverhulme Centre to build a network of experts around the world to analyze different cultures’ perceptions of the risks and benefits of AI. The initiative holds a series of workshops outside the English-speaking world, with local multidisciplinary groups of researchers and practitioners from fields related to AI narratives, such as science fiction, scientists, artists, AI researchers, philosophers, writers and anthropologists.
“Our participation in this initiative was an excellent opportunity to include the voice of our Arab region in the global dialogue platform on artificial intelligence narratives,” Rizk said.
She noted that because modern technology, especially artificial intelligence, is usually developed in technologically advanced countries in response to the needs and aspirations of their people and in a way that expresses their cultures, this can result in a kind of inequality, given that the rest of the world does not share those countries’ needs in developing this technology.
For example, technological development is being pushed at breakneck speed by the governments in the United Arab Emirates and Qatar, as well as in less affluent countries such as Egypt, Jordan and Tunisia. Such initiatives are often influenced by Western models, in contrast with the current grass-roots efforts and start-ups, which usually rely on simple technologies and local techniques that reflect the concepts of individuals.
“Stories about AI that are grounded in the realities of people living in the Middle East are the best way to explore local visions of the future using smart machines.”
Tomasz Hollanek A media and technology researcher at the University of Cambridge and a student fellow at the Leverhulme Centre
“Stories about AI that are grounded in the realities of people living in the Middle East are the best way to explore local visions of the future using smart machines,” said Tomasz Hollanek, a media and technology researcher at the University of Cambridge and a student fellow at the Leverhulme Centre. Hollanek, who is also one of the report’s authors, believes it is important for these visions to reflect the aspirations and needs of the region’s people, rather than importing ideas from elsewhere, particularly from the English-speaking West.
Fear of Reinforcing Stereotypes
The report expresses concerns that some narratives about artificial intelligence in the region will reinforce gender stereotypes in the future. It cites an example from a popular Egyptian comedy skit from the 1980s, in which a female robot named “Ruby” appears as a domestic servant who responds to orders from the play’s main male character.
In contrast, “Ibn Sina,” the first Arabic-speaking robot, created in the U.A.E., is anthropomorphized as male and is not a servant. Named after a famous 11th-century philosopher, physician and poet, the robot symbolizes the region’s scientific heritage and reflects strength and wisdom, the main traits of masculinity in patriarchal societies.
Another local example is a robot named “Zaki”—which means “smart” in Arabic. Zaki is a chatbot used in an Internet banking platform in Egypt, and thus reflects men’s control of the financial sector, the report says.
Hollanek points out that narratives can have a direct impact on how technologies are conceived and developed. For example, the representation of certain groups on screen can have a realistic effect on who performs certain jobs: the more female AI researchers appear in films and TV series, the more likely young, ambitious women will pursue a career in AI research.
“We hope for a better reality and future for Arab women, away from stereotypes, which will naturally be reflected in their portrayal in technological narratives,” said Rizk.
Obstacles and Opportunities
“We just need to be able to discover talented people and properly employ them to build a base for technology development.”
Mohamed Zahran A professor of computer science at New York University
According to Hollanek, the report reveals how post-colonial perspectives—both in the region and among MENA citizens and beyond—continue to significantly influence perceptions of the Arab region’s potential for full realization of the benefits of AI. That’s why he says it’s important to imagine a future with intelligent machines as a decolonial activity, as a way to resist the Western ideas of “progress” or “development.”
Mohamed Zahran, a professor of computer science at New York University, believes there are obstacles facing the region’s acceptance of the development of artificial intelligence. These include the fear that robots will take people’s jobs, and the fear of Western dominance in the technology market; fears the report also highlighted.
However, Zahran agrees with the report’s authors that the region will be able to overcome these obstacles, with its capabilities, talents, and emerging artificial intelligence start-ups, in addition to the ability to rent supercomputers that are now available.
While technology is Western, Zahran said, the report draws the world’s attention to the Middle East and what it can contribute to developing the future of artificial intelligence. “We just need to be able to discover talented people and properly employ them to build a base for technology development,” he said.
It’s all about Value. It’s the name of the game. Create it economically; capture it distinctively. So, a ‘value proposition framework’ for sustainable development is put forward here by Green Biz authors.
A ‘value proposition framework’ for sustainable development
Whatever theoretical economic framework (such as game theory or decision analysis) or business model you want to select, value is at the heart of it. Individuals, organizations businesses and governments act to increase value — also referred to as utility — from their perspectives.
We believe this is a key to understanding the actions of various stakeholders in sustainable development, developing new strategies for making sustainability progress and, most important, for building effective collaborations across and between stakeholders upon which real sustainability rests and relies.
Collaboration requires a desire for shared value — finding the commonalities in seeking defined outcomes, then working together to increase utility or value propositions for all involved stakeholders. Not everyone needs to like each other or agree on every outcome to build effective collaborations, but they also can’t be at odds. This requires all parties to understand perspectives and find the common ground.
Businesses — with their human, financial and capital wealth — represent an enormous (or potentially enormous) powerful force when it comes to sustainable development. Therefore, we think it critical to understand the value propositions that all businesses face — both danger and opportunity — in terms of sustainability. In the long run, their viability and success also depend upon it.Collaboration requires a desire for shared value — finding the commonalities in seeking defined outcomes, then working together to increase utility or value propositions for all involved stakeholders.
All companies have in common five primary value propositions, although not everyone regards them as a set. Each has a direct connection to sustainability:
Growing the bottom line: Profit
It’s the bottom line — revenues minus the costs — that still makes the ultimate business case.
It’s also one of the easiest cases to make for sustainability. A company can increase its profit directly by reducing costs, and for many companies, energy, water and waste costs can be significant.
Reducing these through focused measurement, process improvement and/or specific projects can directly improve the bottom line while also improving the sustainability of the overall enterprise. It is where many companies start their sustainability engagement and with good reason: The economics can be enormous.
Dow Inc., in its first set of 10-year sustainability goals, returned $4 billion to the company on a $1 billion investment in projects. Energy reduction also reduces costs and carbon emissions. Reducing its environmental “footprint” is also often the most immediate way for a company to build credibility for its sustainability efforts. Companies that talk a good game about sustainability but don’t take meaningful action to reduce their own footprint lose credibility and reputation, which hurts them in markets for products and services, talent and investment.
Growing the top line: Revenue
Revenues grow through increasing market share or successful development of new products and services in response to society’s needs and desires, and it’s clear that sustainability trends have become big drivers.
Tesla is one example of visionary and bold investment in a single, although major, sustainability driver: electrification of mobility. Tesla has been very successful in this regard, but looking across all auto companies, you see the accelerating interest — and new product announcements — to capitalize on this incredibly important driver. (It will be interesting to see if GM and Ford can make the transition to become leaders in the future of electric mobility; we like their chances).
In the water area, companies such as EcoLab have built entire platforms around the management of water, cleaning water and recycling of water. The list goes on, but the key principle here is to identify the trends, invest in R&D and new products and processes, and ride the wave all the way to successful business growth.
Attracting, developing and retaining top talent
Employees are the core of any successful company. Top talent is drawn to — and kept in — companies that are successful in developing and implementing the kind of proactive sustainability strategies for their companies that make a material and purposeful difference.
Very few top students want to join a company whose activities are viewed as making climate change worse or polluting rivers and oceans or harming biodiversity and nature. Sustainability is the new “table stakes” for attracting top talent today.
When Neil was CSO at Dow, Dow attracted thousands of new employees in China from top universities with a “Green Jobs” program where recruits could join Dow to have real sustainability impact in applying their degrees (and Dow’s retention rates for these students was much higher than peer companies). When Laura was director of communication/citizenship at Dow Corning, top students didn’t wait for on-campus recruiting. When the company launched its first Citizen Service Corps, students started calling the company’s media center.
Look at any companies on campus these days and you will see that their efforts in sustainability are featured prominently. What is more interesting is the importance of sustainability to developing and retaining top leadership talent.
Like a customer you don’t want to lose, retaining the most valuable employees is critical. The drivers for hiring new talent are really the same as “rehiring” current employees. Dow very successfully used sustainability experiences — special projects, in-field assignments, academies and simulations — to develop leadership and strategy skills, while integrating sustainability across the company. Many of these future leaders remained because of the skills that Dow invested in for them in sustainability.
Attracting and retaining investors
All companies require capital. And the pace of acceleration for consideration of environmental, social and governance (ESG) factors has increased significantly. Virtually no company can survive and thrive anymore with its investor base without addressing sustainability concerns as an enterprise.
Dow started third-party verified Global Reporting Initiative (GRI) reporting more than 15 years ago, and it learned and grew along the way; it worked with other reporting programs such as CDP as well. In 2020, Dow was named to the Dow Jones Sustainability World Index (DJSI) by S&P Global, the 21st year Dow has achieved this prestigious ranking due to its comprehensive sustainability programs. Dow became much more involved more than five years ago after the Paris climate talks when Michael Bloomberg and Mark Carney appointed Neil (then Dow’s CSO) to join the Task Force on Climate-related Financial Disclosures, part of the Financial Stability Board.
Dow helped establish the reporting criteria, but beyond that, the experience provided Dow real learning and insight into where banks, financial institutions, insurance companies, bond underwriters and investors were headed. All companies today need to pay careful attention because investors are paying careful attention. One has only to read BlackRock CEO Lawrence Fink’s growing expectations in his annual letter or observe ExxonMobil’s abrupt board member changes to see that the term “activist investor” has been redefined. Times have changed.
Collaborating for mutual success while addressing key challenges
Finding safe places to collaborate to create the healthy ecosystems in which enterprise thrives is critical: supply chains, marketplaces, workforces, communities, industries — no company goes it alone.
Finding safe places to collaborate is neither easy nor simple. Competitors have antitrust concerns. Customers and suppliers have adversarial positions relative to costs. NGOs often have adversarial advocacy positions to individual companies or to whole industry sectors, and governments view their roles as to regulate and tax companies.
All of that adversarial energy can be put to better use if the focus is on more narrow objectives, especially those that involve sustainable development of regions, countries and the world as a whole. There is usually widespread agreement that we cannot regulate or litigate to stop negative trends in nature, public health, social equity and ecosystems, and that if we work together we can accelerate progress. But to do that requires a maturity of perspective on the part of stakeholders that we can agree to disagree on many things, but still find common ground to solve more narrow challenges.Adversarial energy can be put to better use if the focus is on more narrow objectives, especially those that involve sustainable development of regions, countries and the world as a whole.
The collaboration between The Nature Conservancy (TNC) and Dow, which recently celebrated its 10th anniversary, is one such example. Finding ways to incorporate the value of nature inside the company to better inform strategic decisions was of interest to Dow, and TNC was interested in preserving nature. Both saw that valuing the services of nature would help them to meet their respective goals, and they could collaborate with integrity. It set a new standard and example for collaboration, which continues to benefit both organizations, serve as an example to companies and organizations across industries, and preserve and enhance nature, using the power of capital in a way that no mere philanthropic strategy ever could.
When Dow worked with the University of Michigan to establish the Dow Graduate Sustainability Fellows more than a decade ago, significant faculty concerns were raised about their independence and intellectual academic freedom. Together, the company and the university put in place safeguards in response to those concerns, and hundreds of Dow Sustainability Fellows have benefitted, as have the University and those communities whose projects were addressed and implemented.
Neither example would have occurred without a strong platform for collaborating on sustainability challenges. These collaborations have helped Dow advance its business strategies and helped it learn and grow, positioning the company for future success. At the same time, these stakeholders also thrived. Win-win.
Value propositions for corporate sustainability
What company does not want top- and bottom-line growth? What company does not want top talent in their sector? What company does not want access to capital that is lower cost and more plentiful? And what company does not need platforms to collaborate with their value chain, in their communities and with their governments?
This five-part value proposition framework holds that promise for companies. Nothing short of their survival and growth is at stake today.
But we also believe that the other major stakeholder groups can benefit from understanding this framework for companies, by surfacing new ideas and creating proposals for collaboration that are more sophisticated in understanding the aspirations of their prospective company partners. At the end of the day, we all want to drive more sustainable action and bringing all stakeholders into collaborations will help us accelerate progress. Show comments for this story.
Sciences News published the University of Leeds‘ Securing decent living standards for all while reducing global energy use could good news for those petro economies of the MENA region. Jefim Vogel’s proposed approach to the must-do energy transition might be helpful in that it provides little extra time for its implementation. Anyway, here it is.
Securing decent living standards for all while reducing global energy use
July 5, 2021
According to new research, fundamental changes in our economies are required to secure decent living standards for all in the struggle against climate breakdown.
Governments need to dramatically improve public services, reduce income disparities, scale back resource extraction, and abandon economic growth in affluent countries, for people around the world to thrive whilst cutting global average energy use in half.
Without such fundamental changes, the study warns, we face an existential dilemma: in our current economic system, the energy savings required to avert catastrophic climate changes might undermine living standards; while the improvements in living standards required to end material poverty would need large increases in energy use, further exacerbating climate breakdown.
The study, led by the University of Leeds and published today (30 June 2021) in Global Environmental Change, examined what policies could enable countries to use less energy whilst providing the whole population with ‘decent living standards’ — conditions that satisfy fundamental human needs for food, water, sanitation, health, education, and livelihoods.
Lead author Jefim Vogel, PhD researcher at Leeds’ Sustainability Research Institute, explained: “Decent living standards are crucial for human well-being, and reducing global energy use is crucial for averting catastrophic climate changes. Truly sustainable development would mean providing decent living standards for everyone at much lower, sustainable energy and resource use levels.
“But in the current economic system, no country in the world accomplishes that — not even close. It appears that our economic system is fundamentally misaligned with the aspirations of sustainable development: it is unfit for the challenges of the 21st century.”
Co-author Professor Julia Steinberger, from the University of Leeds and the University of Lausanne in Switzerland, added: “The problem is that in our current economic system, all countries that achieve decent living standards use much more energy than what can be sustained if we are to avert dangerous climate breakdown.”
By 2050, global energy use needs to be as low as 27 gigajoules (GJ) of final energy per person to reach the aspirations of the Paris Agreement of limiting global warming to 1.5 °C without relying on speculative future technologies to the Intergovernmental Panel on Climate Change. That means current global average energy use (55 GJ per person) must be cut in half. In comparison, affluent countries like the UK (81 GJ per person) or Spain (77 GJ per person) need to reduce their average energy use by as much as 65%, France (95 GJ per person) by more than 70%. The most energy-hungry countries like the USA (204 GJ per person) or Canada (232 GJ per person) need to cut by as much as 90%.
However, a major concern is that such profound reductions in energy use might undermine living standards, as currently, only countries with high energy use accomplish decent living standards.
Even the energy-lightest of the countries that achieve decent living standards — spearheaded by Argentina (53 GJ per person), Cyprus (55 GJ per person), and Greece (63 GJ per person) — use at least double the ‘sustainable’ level of 27 GJ per person, and many countries use even much more.
On the other hand, in all countries with energy use levels below 27 GJ per person, large parts of the population currently suffer from precarious living standards — for example, in India (19 GJ per person) and Zambia (23 GJ per person), where at least half the population is deprived of fundamental needs.
It appears that in the current economic system, reducing energy use in affluent countries could undermine living standards, while improving living standards in less affluent countries would require large increases in energy use and thus further exacerbate climate breakdown.
But this is not inevitable, the research team show: fundamental changes in economic and social priorities could resolve this dilemma of sustainable development.
Co-author Dr Daniel O’Neill from Leeds’ School of earth and Environment explained: “Our findings suggest that improving public services could enable countries to provide decent living standards at lower levels of energy use. Governments should offer free and high-quality public services in health, education, and public transport.
“We also found that fairer income distribution is crucial for achieving decent living standards at low energy use. To reduce existing income disparities, governments could raise minimum wages, provide a Universal Basic Income, and introduce a maximum income level. We also need much higher taxes on high incomes and lower taxes on low incomes.”
Another essential factor, the research team found, is affordable and reliable electricity and modern fuels. While this is already near-universal in affluent countries, it still lacks billions of people in lower-income countries, highlighting important infrastructure needs.
Perhaps the most crucial and perhaps the most surprising finding is that economic growth beyond moderate levels of affluence is detrimental for aspirations of sustainable development.
Professor Steinberger explained: “In contrast with wide-spread assumptions, the evidence suggests that decent living standards require neither perpetual economic growth nor high levels of affluence.
“In fact, economic growth in affluent or even moderately affluent countries is detrimental for living standards. And it is also fundamentally unsustainable: economic growth is tied to increases in energy use, and thus makes the energy savings that are required for tackling climate breakdown virtually impossible.”
“Another detrimental factor is the extraction of natural resources such as coal, oil, gas or minerals — these industries need to be scaled back rapidly.”
Lead-author Jefim Vogel concluded: “In short, we need to abandon economic growth in affluent countries, scale back resource extraction, and prioritise public services, basic infrastructures and fair income distributions everywhere.
“With these policies in place, rich countries could slash their energy use and emissions whilst maintaining or even improving living standards, and less affluent countries could achieve decent living standards and end material poverty without needing vast amounts of energy. That’s good news for climate justice, good news for human well-being, good news for poverty eradication, and good news for energy security.
“But we need to be clear that achieving this ultimately requires a broader, more fundamental transformation of our growth-dependent economic system. In my view, the most promising and integral vision for the required transformation is the idea of degrowth — it is an idea whose time has come.”
Originally posted on globalrhythmz: The music Aziza Brahim makes reflects both the sorrow and the hope of these people. She grew up in one of those camps in the Algerian desert, along with thousands of other Saharwai who were removed from their homes in the Western Sahara. The refugee camp was the place that formed…
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