Economic crisis and climate change: two problems, one solution

While world leaders struggle at UN talks in Doha to agree on measures to halt climate change, governments at home are facing difficult decisions on the austerity measures needed to tackle the current economic crisis.

It might appear like these two issues are pulling at the opposite ends of the same string, competing for scarce resources, but that does not need to be the case.

Addressing climate change can stimulate the economy, create jobs and pave the road to recovery and a sustainable future. Considering the economic crisis to be a priority, but ignoring the climate emergency will only lead to greater disaster.

Creating a green economy will require investments to reduce CO2 emissions and although this will involve initial up-front costs, these investments also represent a stimulus to economies and will build modern and more resilient infrastructure for the future, so these costs will eventually be recouped.

Greenpeace’s Energy Revolution “shows that with only 1% of global GDP invested in renewable energy by 2050, 12 million jobs would be created in the renewable sector alone; and the fuel costs savings would cover the additional investment two times over.”  

Solar and wind power in many cases is already cost competitive or even cheaper than fossil fuel-based power generation.

A UN Environment Programme study also shows that investments in know-how and education will be repaid in job creation exceeding the loss in ‘non-green’ jobs. Germany’s renewable energy success already employs more than 380,000 people.

Voices from the debate “austerity v stimulus” would say that our governments are struggling to contain, maintain and repay existing debts and cannot afford to invest in renewables.

But if you look at what they spend subsidising the fossil fuel industry, with taxpayer money, you might start to see things differently. 

To put things in perspective, the International Energy Agency said in its World Energy Outlook 2012 report last month that fossil fuel subsidies rose 30% in 2011 to about US$523 billion. Renewable energy attracted just $88 billion in global subsidies.

The IEA also warned that limiting global warming to 2 degrees Celsius is getting more difficult and costlier every year.

If we don’t address climate change an even worse economic – and humanitarian – crisis could be triggered due to extreme weather, devastating storms, rising sea levels and resource or food scarcity.

A report issued in Doha by NGO Germanwatch, Global Climate Risk Index 2013 report, warns of losses and damage resulting from climate change – losses which are “expected to further increase, potentially with large-scale dangerous impacts” if we do not immediately scale up action to mitigate climate change.

In the past few days, an unprecedented typhoon tragically killed hundreds of people in the Philippines. And this comes just weeks after Hurricane Sandy battered the US and flooding hit the UK – both which brought the issue of disaster insurance into the political agenda.

According to Richard Ward, Chief Executive of Lloyd’s, 17 fast-growing countries are severely exposed to catastrophic events and underinsured by around 100 billion pounds. State funds created to cover for seldom occurring natural disasters will find it hard to cope with more and more events of this kind.

Even PricewaterhouseCoopers, one of the world’s largest financial advisory groups, warned businesses and governments that action must be taken to adapt to and to mitigate climate change.

And while some were heard to cheer for the “extra boost to U.S. auto sales” due to Hurricane Sandy, New York Governor Andrew Cuomo estimated the cost of repairs in New York to total $42 billion, $30 billion in New York City alone.

And there are areas at much bigger risk.

Referring to the Asia Pacific Region, for example, the Asian Development Bank estimates that every dollar spent to reduce risk will save at least US$4 in future relief and rehabilitation costs.

Adding to the data, Australian economist John Hewson has also warned that climate change would be the next sub-prime meltdown.

But can our economies, in their current state, withstand a blow of such magnitude? Will the austerity-budget approach and ‘business as usual’ approach – in which the market forces rule – prove shock resistant?

We need to break free from the shortsighted business as usual approach and invest in a sustainable economy. But to do that, we must see that ecological and economic welfare are two sides of the same coin.

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