This interview is from SEE magazine on newsstands in Brazil. Translated from the Portuguese by Climate Policy Initiative.
The new world order is green
Veja, January 13, 2012
Professor Thomas C. Heller, Climate Policy Initiative and Stanford University, is one of the world’s most influential experts on environmental policy. A member of the UN panel of experts who estimated the effects of climate change and shared the 2007 Nobel Peace Prize with former Vice President Al Gore, Professor Heller has been asked to assist in the formulation of sustainability programs in ten out of ten emerging countries. His pragmatic approach is music to the ears of governments in Brazil, China, and Indonesia. The Chinese plan to reduce carbon emissions and the Brazilian law that cut transfers of federal funds to municipalities that deforest are examples of programs that Climate Policy Initiative, a nonprofit institution founded by Heller and funded by financier George Soros supported. Professor Heller says: “It is up to the emerging countries to lead the transition to a new world order where being sustainable will be a tremendous competitive advantage.”
The last attempts at international agreements on behalf of the environment, such as the Kyoto Protocol and the round negotiations at Durban, have failed. What is needed for these negotiations to start producing concrete results?
First of all, it is necessary to form a true consensus around the idea that one can no longer underestimate the value of a serious and coherent environmental policy – if not by conviction, at least for pragmatic reasons. This assumption has long stopped being a typical claim of romantic environmentalists. The interdependence between the economy and the environment has reached its peak. As proof of this, the price of commodities and energy is high and should remain so indefinitely. From now on, progress depends on us using natural resources as efficiently and productively as possible. It seems obvious that, in the next stage of human development, being green will increasingly become a tremendous competitive advantage. Still, governments are reluctant to face the environmental issue as a fundamental aspect of the economic agenda.
Why does this happen?
The great majority of nations still treat the money spent on sustainability as lost investments, which, of course, is a serious mistake. Since its return usually occurs only in the long term, it is very difficult to persuade countries in crisis, such as most developed economies today, to allocate large amounts to environmental programs. This is one of the reasons why the establishment of targets for reducing carbon dioxide emissions and the creation of the 100 billion dollar green fund were postponed to 2015 and 2020, respectively. These resolutions were expected to be approved immediately, but many countries were reluctant to make a commitment that they know will be costly to fulfill. What most analysts did not realize is that a new world order began to take shape, in Durban, led by emerging economies like Brazil, India, and China.
Of what new order are you talking?
The scant progress made in Durban was only possible because the emerging economies fronting the negotiations joined the proposed goals and forced the signing of an agreement. Seven years ago, when the Kyoto Protocol entered into effect, such leadership was unlikely. Henceforth, however, it will be increasingly evident, and for one simple reason: developing countries will have to create ways to raise – by a large amount – productivity in their economies, to support the inclusion of 3 billion additional members of the middle class in the next twenty years. This means developing more public policies to encourage sustainability and investing heavily in innovation and urban planning – something that the emerging economies are in a position to do, since their finances were not eroded by the global crisis.
Are you not being too optimistic? The new members of the middle class will want to consume more food, fuel…
It depends on how the question is dealt with. Indeed, a huge number of people are hungry for consumption, and they will go from a daily income of 10 to 15 dollars to one of about 50, even 100 dollars per day. All of these people want to buy better meat and take their children to school, which will have a strong impact on the environment. But emerging economies have no choice but to commit themselves to mitigating this impact. If we look closely, we see that it is already happening. In CPI’s global landscape of investment in green initiatives, made in 2011, we found that 22% of resources devoted to this type of project have come from emerging economies. In my travels, I have noticed a growing concern among governments about the damaging effects of climate change. Many of these countries, after all, are strongly dependent on their resources.
Yes, precisely – the most emblematic case is China. Despite being the biggest polluter, the country is also currently the biggest investor in renewable energy. This is not only to improve the country’ss image in the world, but also because the Chinese know they cannot be so dependent on coal, a scarce natural resource, to move their production. Since 2005, China has dedicated 400 billion dollars to clean energy projects and energy efficiency. This will increase the proportion of wind energy that the country consumes from 1.5% to 3% of the total by 2015. This is quite an achievement, considering that this will enable a reduction of some 400 million tons of carbon dioxide released into the atmosphere every year – 5% of what is currently released. There are several other initiatives, such as a massive program to expand public transportation and water treatment plants for water reaching the cities. According to an assessment we did for the Chinese government last year, although China has not yet managed to reduce its total emissions of greenhouse gases, it has reduced by 20% its level of pollution in relation to GDP.
But China is a dictatorship. It has much more power to drive the economy than India or Brazil, for example…
We need not go to China to find signs of change. In Brazil itself, there are interesting stories. Take the case of Mato Grosso. Statistics show that the rate of Amazon deforestation is decreasing – the amount of forest cleared fell 74% between 2004 and 2010. Radical environmentalists do not like to admit it, but in the case of Mato Grosso, this reduction was directly attributable to productivity gains in agribusiness. The logic is elementary: the more cattle that can be bred in the same area, the greater the wealth produced per square foot, and the lower the environmental impact of the economic activity. Moreover, by creating more jobs, agribusiness prevents people from harming the forest to ensure their livelihood. This only proves that, contrary to what the more radical environmentalists usually preach, progress, if well managed, is indeed very beneficial to the environment.
Does this logic only apply to the countryside or can it also be applied to cities?
It applies to both. For rich countries, incidentally, it is within cities that the greatest opportunities for gains in sustainable initiatives are found. And, in the case of emerging economies, this is where the enormous mass of new consumers that I previously mentioned will live. The cities, therefore, need to be at the center of a revolution – one that will change not only how people consume, but also how they live. This will mean considering as assumptions of urban planning data such as each individual’s travel time to places of purchase and the distance between home and work, in order to reduce costs and streamline the use of time. If planning can make cities more productive, they can become more densely populated without becoming urban infernos. On the contrary, they will be more green and pleasant and will also help reduce the number of people living in the suburbs, and therefore the number of car trips and emissions.
How can this be done in practice?
There are several projects being tested. The most promising seem to be green buildings, which have still not been disseminated to housing, but are already very popular among companies. Companies, generally far more advanced in understanding the economic benefits that sustainability can yield, know a green building may cost 5% to 10% more than ordinary buildings. However, they have also inferred that, after a few years, it is up to 50% more economical. It uses less energy and water and even manages to improve air quality. Not to mention that, to get these buildings up and running, you need to develop new technologies, creating a virtuous cycle of innovation that tends to spread to many other sectors.
Are you one of those who believe that there is no sustainability without innovation?
I’m sure of it. All significant advances in human history resulted from great technological leaps. There is no reason to think that this time will be different. This was the case with the Industrial Revolution, which allowed the acquisition of consumer goods on a large scale, the emergence of power distribution infrastructure, and the creation of public transportation systems. More recently, in the 1960s, we had the so-called Green Revolution, an amazing jump in productivity caused by the use of pesticides, fertilizers, and modern techniques of cultivation. Without such radical changes in the production process, we would not have been able to assimilate the planet’s population growth over the centuries. In order to successfully make the transition to this new world order that I speak of, another technological leap will be necessary, as deep as or even deeper than the great revolutions of the past.
You’ve worked with governments for decades. Do you really think they are capable of making this transition?
Innovations capable of assuring a more sustainable future will not start with governments. As in the past, these advances will be driven by private initiative, by entrepreneurs. But it is not possible to think about such comprehensive progress without governments assuming their role, which is to promote the creation of such ventures. We saw this happen in California, where I live, in the 70’s and 80’s, when the information technology industry flourished. What happened then was a combination of positive forces: a group of bright young people, endowed with unique creativity and entrepreneurship, who received infrastructure to open their businesses and government support for the creation of lines of credit within the private sector so that they could thrive. The same can and should be done now, with the adoption of tax incentives and funding sources for companies that intend to create products or technologies that reduce damage to the environment.
What drives companies to be so far ahead of governments in the adoption of environment-friendly projects?
Unlike governments, which are constantly pressed by budget constraints and tend to be overly cautious when they are required to adopt electorally unpopular measures, companies are driven by profit. Large corporations realized more than a decade ago that turning to a sustainable operating model gives good returns. For these companies, their savings in use of water or light or recycling of waste have come to represent not only a source of extra income, but also the chance to improve their public image – which, of course, has helped them close more profitable deals. At the end of the day, it’s all about finding creative ways to manage the available resources as efficiently as possible and preferably before one’s competitors. It is this logic that has to inspire politicians wishing to make their countries drivers of the planet’s economic development in coming decades.