It’s Our Fault, You Spend: Why Asia Needs to Spend on Climate Change
A conversation about climate change is a conversation about carbon emissions is a conversation about energy use: production, efficiency, and research. Abysmally, since the 1980s when the first oil crisis resulted in cheap prices, research funding for alternative energy has never been lower, since then funding has been overall reduced by at least half. If Lord Stern's prescription is to be followed, a flow of funding needs to be initiated.
One percent of global GDP is needed if we act now to stabilize at 550ppm of CO2e by 2050 (Stern Review). Some countries contribute more than others to global GDP, but it also means that they produce more carbon emissions. A quick breakdown of global GDP as of 2008: US 23%, China 7%, European Union 30%, Latin America 4%, Japan 8%, India 2%, all other countries 26%. The 2008 global GDP was $61 trillion, a 1% GDP suggests an annual spending of $610 billion. Breaking that down per country equates into the US spending $140 billion, China $43B, European Union $183B, Japan $49B, India $12B, and all other countries $158B, annually. Clearly, the US and the EU are most responsible for climate change, but right now everyone's strapped for cash.
With the current economic downturn it has been put into question where all this money will come from. Recent comments from US Federal Reserve Chairman Ben Bernanke called for more spending by Asian countries stating that: "âAsia appears to be leading the global recovery.... Recent data from the region suggest that a strong rebound is, in fact, under way.â Bernanke continues to further the idea that consumption will get us out of the economic hole. But consumption is what got us to our currently mountainous levels of emissions causing climate change.
In a previous post I outlined green consumerism as a viable solution to climate change. Although energy efficient consumption is the first step to a global solution, the bigger picture always has renewable energy in the center.Â Unfortunately every renewable energy source in the world must be subsidized. It is necessary to have government sponsorship, tax breaks, grants, and incentives because in a free market fossil fuels would win- fossil fuels are simply too cheap. It is imperative that there be a price set per ton of carbon emissions.
If Asia is to lead the economic recovery, consumption might not be the best way to go. A more appropriate response by Asia would be to invest (which would follow cultural norms of saving) and invest into renewable energy technology and emerging companies. While it is a moot point to discuss what could have been had the world invested more into renewable energy thirty years ago, it is clear investments should increase now. A boom in the renewable energy sector would be a boom in the economy. Green energy makes for a greener economy, pun intended.
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