Okay, welcome everyone to this fourth seminar in the Climate Perspective Seminar series. My name is Camilla, I'm an undergraduate here at SOAS and I've been convening this seminar series with a great group of people. And I'm Ellie and I'm a postgraduate here at SOAS. So the objective with the Climate Perspective Seminar series is to approach climate change from different perspectives, thereby trying to better understand the ways in which climate change relates to our own and other societies. Three weeks ago in our Climate Change and Politics Seminar, Larry Lohman, climate researcher at the corner house, discussed the ways in which the politics of climate change have been framed in ways that largely accommodate to western points of view, but neglect the ways in which climate issues relate to the livelihoods of communities and other parts of the world in many cases. Two weeks ago in our Climate Change and Development Seminar, Dr. Andrew Neucham of SOAS discussed climate change in relation to globalization and how it's becoming increasingly crucial to address the inequality between those responsible for climate change and those most affected by it. And last week in our Climate Change and Law Seminar, Dr. Faile Sniowska illustrated how classical ideas about the purpose of law are being challenged by the uncertainty and instability emerging in our societies as a result of climate change. So tonight the seminar will focus on climate change and economics. We will attempt to understand which changes are needed and which decisions must be made in our economies to effectively reduce greenhouse gas emissions. So the talk will last approximately 45 minutes followed by a question and answer section discussion. If you want to tweet about it then you can use the hashtag climate perspectives. So I would now like to warmly introduce our speaker, Dr. Howard Haibom. Howard is a lecturer and assistant professor in global energy and climate policy at the Centre for International Studies and Diplomacy, CISD, here at SOAS. His research focuses on organizational change and innovation in global energy and climate governance, energy and climate policy in the Asia Pacific and Europe, low carbon cities and urban resource management and also low carbon finance. He convenes CISD's Masters in Global Energy and Climate Policy to which I have the pleasure of being a student this year. So without further ado please welcome Howard. All right, well thank you very much Ellie and Camilla for organizing and thank you all for coming. I should say at the start I have this tendency to pace up and down the room a little bit but I've been told that's not good because of the microphone so I'll try and stand here as best as best I can if I ever be off over there. You'll tell me to come back and also I should say I've not really timed this presentation. I've got the talk there but the thing is that at the CISD we tend to have what we do have lectures lots of two hours. So breaking it all down to 45 minutes is a challenge for me but hopefully we'll be fine. It might actually be a little less see how we go. So climate change and economics. The last disclaimer before I start is that even though it is titled Climate Change and Economics we really cannot not talk about the politics of the process because those are really two indivisible things. Is climate change really simply or primarily an economic issue as a lot of economists would have you believe? Or is it quite a bit more than that and do we need to understand political dimensions in order to then be able to comprehend the economic implications and what would need to happen economically to set us up for a better future? I'll come back to this in a bit. What I wanted to give you at the start, why might we go about thinking that this is an economic issue, is an excerpt from the Bird-Hagel Resolution which was a resolution passed by the United States Senate in the summer of 1997 before negotiations to the Kyoto Protocol went underway in Kyoto. So the Kyoto Protocol being the first treaty we had in the global climate system to help us reduce CO2 emissions, stabilize them in the atmosphere and do something about climate change. We all know that Kyoto wasn't particularly successful. The United States Senate preempted these negotiations knowing what was about to come because the process had been going on for a number of years already since the Rear Earth Summit and the foundation of the United Nations Framework Convention for Climate Change and they framed their argument against the Kyoto Protocol and against commitments internationally to do something about climate change on mainly economic grounds. That it would be a problem for the United States economy. So the United States should not be a signatory to any protocol or other agreement because it would result in serious harm to the economy of the United States and not just looking at the US economy in an isolated way but also hitting it against developing country parties, primarily China and India, which were of course projected to grow significantly economically in the years ahead and were strategic competitors to the United States economically. So it would result in serious harm to the economy of the United States and any agreement that the US would wish to be part of should make very clear where the financial costs are and where the impacts on the United States economy would be. The Clinton administration did not send the Kyoto Protocol to the United States Senate for ratification because the Boedhegel resolution had passed 95 to 0. There was absolutely no appetite in the Senate which needs to be consulted if an international treaty is to be effective within the US context. It has to sign off on it. It didn't happen. President Clinton belatedly signed the Kyoto Protocol but in 2001 the Bush administration used that same argument, the George W. Bush administration, to withdraw President Clinton's signature under the Kyoto Protocol. Now that isn't anything that had any effect as such because the United States, not having ratified, wasn't party to the Kyoto Protocol. There was a symbolic act to show that the United States really didn't have an appetite for it based on the potential serious economic harm and competitive disadvantage that it would put itself in if it were to sign the Kyoto Protocol. And it is a similar argument that the Trump administration is using now only much more extreme. It's not just the economic argument, of course the Trump administration is also questioning leading members of the administration openly questioning the science underpinning a climate change. So the first few thoughts on why we might think that it is an economic disadvantage that it pits us against economic growth and development and would be harmful to economies such as the United States economy. The first that I thought of thinking about these and there are a lot more than the three that I've put up here we can discuss those later on is that historically speaking there's been a high upfront cost for renewable energy sources. So the very sources we would need to transition away from a high emissions carbon intensive pathway to a low carbon, low emissions pathway are very costly at the start. The capital costs of renewables are in the hundreds of millions or billions depending on the size of the project. And historically of course these costs were even higher than they are now. They've come down a lot. But the difference to fossil fuels is that coal-fired power stations or gas-fired power plants are a lot cheaper to build. The cost arising from these power plants is in having to consistently buy in the resource, the coal, the gas maybe the oil if you use that for a power generation. So fluctuations in that price are going to harm you potentially in the long run. But you don't have to mobilize the kind of amounts of money that are required for renewables and that can be difficult if the banks aren't giving it if the international financial markets aren't giving it if you don't have the political support for it. So that would have been one of the arguments. The second is on the path dependency of the system. What do I mean by that? We have a system that's been built up since the Industrial Revolution based on an economic system based on the widespread use of fossil fuels. The production and consumption of energy from fossil sources coal, gas and oil. A system that's been in place when you think about oil for well more than 100 years. When you think about coal for pretty much 200 years and gas with a little less than oil, sort of the second half of the 20th century, gas expands a lot in use around the world as we're able to access gas plays and use it in an economically sensible way. So a system has grown, an infrastructure has grown, power plants, transmission grids, gas storage, mining coal and drilling for oil and gas. That is in place. That supplies us with the energy we need. We could today run all the things that we need, produce all the goods and the services that we need on fossil fuels. If it wasn't for climate change we wouldn't need or some other issues such as ambient air pollution, water pollution, etc. We wouldn't need to shift away from fossil fuels at all. A lot of money has gone into this system, a lot of costs have been sunk into it and a lot of interests have built up around it. So of course there are industries, there are companies, there are powerful players that exist and thrive and prosper in this system. Whenever you build up a business, a company and you supply someone with a good or a service, that is a high demand, you of course have an interest in preserving that relationship and keeping that going and if at all possible expanding it and getting more return for your investment. So what we have on top of the infrastructure that's in place is relationships that have built up between governments, regulators, supposedly independent regulatory bodies and the industry. Because they've shared information and knowledge over time because they've gotten to know each other very well because the government and the regulators know about the money that these companies put in to build out the system, the taxation they get from them, the employment they provide. All of that builds pretty durable relationships. In the extreme case we call them iron triangles. We also call them policy monopolies. On the basis of those shared interests, of course the government and the regulators are interested in those companies providing sufficient amounts of energy at all times and at affordable prices. That's energy security for you. You need to be energy secure if you want to have an economy that prospers and thrives and grows. If the lights keep going out, if you don't have enough energy to pursue the kind of businesses that you want to pursue, you're not going to be having a growing and thriving economy. So there's an interest there, of course, that is served from a public perspective. But on top of that have built a number of arrangements such as subsidy schemes, subsidization of fossil fuels, both on the production side and on the consumption side. So very cozy, very close arrangements but on the one hand makes sense because fossil fuels have provided us with a lot of prosperity and a lot of opportunities the fact that we get to sit here, that we get to have heating in winter. All our heating is supplied by gas primarily. All our transportation needs, flying and cars and trucks and whatnot is supplied with petrol, oil-based transportation fuels. And most of our electricity in this country fortunately is changing is supplied by the use of coal. Certainly in many countries around the world. So it's given us a lot of good since the Industrial Revolution, a period of 200 years or so. But it's also had negative consequences. But right now the system is path dependent. It is sort of staying on this trajectory and it's very hard to shift these alliances that have built over a long period of time. And the third, and that issue is related to this second, is the lobbying against climate change efforts by precisely the people that are at the core of the system that has built up since the Industrial Revolution. And that lobbying is not just to do in the way that I've just explained which is building up these relationships with policymakers and regulatory agencies over time. It is of course also trying to convince the public of the value of fossil fuels and to convince them or to at least spread doubt concerning the value and the viability of renewable alternatives or spread doubt as to the case, the very strong scientific case for climate change, mitigation and adaptation. And of course the best example here is ExxonMobil. And for those of you who followed this debate in 2015, inside Climate News and the LA Times pursued some very effective investigative reporting and found that ExxonMobil had deliberately misled the public policymakers interested parties on the state of climate science for over 30 years. But ExxonMobil knew already in the late 1970s and early 1980s that climate change was real. It was anthropogenic, that is, it was man-made. It would have serious consequences. But ExxonMobil actually used internally that information to find out that there would be better access around the North Pole for drilling for oil and gas. So far they agreed that climate change was an important thing for them because it would free up new plays. But they would say in public, they would say with policymakers and gatekeepers, they would say with gatekeepers being the ones that have influence in a particular issue area, they would say with stakeholders that it wasn't a clear cut case at all, that we weren't sure that climate change was happening first, then that it was anthropogenic, and then what the consequences might be. So a very deliberate misinformation campaign, funding think tanks, funding researchers, scientists, funding to news agencies as well, that would put out stories, that would put out reports to try and undermine the scientific consensus that ExxonMobil already assumed to be existing, to be in existence in the early 1980s. And others would have done the same. And this is not just about climate change. This is also to do with the case against renewables which are the necessary alternative to the system that currently exists, the low-carbon alternative, renewables, energy efficiency, etc. So the information you would have seen on how expensive, prohibitively expensive they are, their way to intermittent. We can't make a system work that's built on renewables. It doesn't make any economic sense, it doesn't make any logistical sense, it shouldn't even go there. Way too difficult is in part true because historically high upfront cost of renewables and yes, renewables are intermittent. If you exist in a very small area where you can only draw on one energy source, get solar for example. You'll only have that during the day if you don't have storage and backup. You won't have any electricity at night. Or if you only have wind power, well the wind doesn't always blow. But we know very well that in integrated systems, large integrated systems such as the European Union or a country such as the UK, you can pursue different renewable energy sources and you can balance the demands of a provision over the course of the day, course of weeks, months, years. And with the growth of storage technology, we're going to be able to back that up. Now that is a process. I accept that this hasn't always been an existence and there needs to be more happening in order to make that a reality. But of course it is possible. But you've got to understand, of course many of you will understand, and I know that already, that any industry in whatever line of work you might be in, whatever business you might be pursuing is of course interested in maintaining market share, ideally growing that, maintaining a privileged position if at all possible, continuing to receive governmental support. You'd be mad if you didn't do that. So you can understand why oil and gas companies and coal companies would pursue a strategy that seeks to undermine that which is a main threat to their very existence. So any business in any industry would do it. Just in this particular case, climate change is so challenging for us and threatening that we have to do something to address these issues more effectively. So, why we might think that and now what has changed since? Dramatic cost declines for renewables. The economics of renewables, which is something you need to talk about and you talk about the economics of climate change, have changed dramatically over the last 20, 30 years. The price of a solar panel has collapsed dramatically in part. This is large part. This is because governments created a demand for it. One of the leading examples being Germany, which put in place the entire schemes to financially incentivize the uptake of renewable energy sources. In this case, solar, primarily solar, also wind to some extent. That is, you pay people a premium on the electricity or independent power providers on the electricity they generate from renewable sources. You force utility companies to buy up all the electricity they generate to put it into the system. You're forcing the door open to try and create a level playing field which these new entrants that are in a disadvantaged position are trying to gain access. That has led to cost declines. Why? Because as we build out capacity, as we produce more and more solar panels, more and more places around the world install these solar panels, we learn the maturity of those, of that technology increases and the cost can decline, economies of scale, effectively. Another major push in the late 2000s, 2006 to 2009, 10, the mass production of solar panels in China in part to satisfy the demand from the German market but also from other markets around the world, places that put in place progressive policies to incentivize the uptake of that technology. Of course, there is a demand that's being created that needs to be satisfied. They produced it en masse. It led to a dramatic collapse of prices which of course is leading to great parity for solar in many places around the world already today. Wind are very similar developments. There is still wind in many places in the UK, pretty much great parity and others, it's outperforming fossil fuel alternatives because of the wind conditions. So dramatic cost declines since those days, visible impacts of climate change. So we're not just talking about the economics of climate change in some kind of an abstract sense what it might cost our economies as and when the impacts of climate change hit because in many places they're already here today. Bolivia is a great example where the glaciers have been receding more than 40% since 1985. Bolivia is facing a drought now. It has been in that situation for a number of years. The lakes run dry, the reservoirs are running dry. They don't have enough water for agricultural production. We have other impacts around the world which already scientists just read today or yesterday declared large parts of the Great Barrier Reef dead. It's not dead because it's bleached to death. That happens as a consequence of the warming of the oceans. Of course, we have a rise in global average surface temperatures, the consequence of the greenhouse effect of climate change and also an increasing acidification of the oceans. We introduced more CO2 into the ocean. Oceans are sinks just like forests are sinks. They take in and store CO2. The water acidifies. That then kills off coral reefs. Of course, those coral reefs are important because they're the nurseries of much of the global fish stock. Not just the Great Barrier Reef, other reefs too. So there are direct impacts already today. Those are just two. There are many others in China, for example, but I'm just giving you those. This is an unburnable carbon issue. Now, a few years ago, I was part of a scenario exercise run by a major energy company. You can't disclose the name of it. There were primarily economists in the room who talked about, you know, how renewables weren't credible alternatives to fossil fuels, how we could map out a future that is climate changed, how we could transition the energy system in a cost-effective way. One of the arguments raised was that of unburnable carbon, the carbon bubble. So what we have as part of the Paris Agreement is an understanding that there is a global carbon budget. That means we can only burn that much more. We can only burn that many more fossil fuels as fossil fuel combustion releases CO2 in order to stay within the two-degree stabilization pathway. So the goal of international agreements and international climate change diplomacy is that we can stay within two degrees, the two-degree rise, above pre-industrial levels. Two-degree rise in global average surface temperatures above pre-industrial levels. Since the industrial revolution, global average surface temperatures have already gone up by one degree. We haven't got a lot more time because what we continue to do every day is we continue to carbon load the atmosphere. All the emissions that we generate from combusting coal and oil and gas are going into the atmosphere. Some of it is stored in forests and oceans, but a lot of it is stored in the atmosphere. And CO2 remains there for 100 years, slightly more than 100 years. So the long-term implications of that are already factored into the system. So we can only burn that much more, and then we've reached a point where two degrees are not possible anymore. But we'll shoot beyond that to three degrees, four degrees, and potentially more. And the unburnable carbon argument basically says that if you're serious about that, that you can't burn all the fossil fuels still out there. You have to leave most of the coal, much all of the coal, but most of the oil and gas currently still in the ground right there. You'll have to leave it in the ground. You can't bring it out. You can't burn it. Because if you do, we'll overshoot our targets. And it'll be game over for the two degrees. You can argue that given the current trajectory we're on and what individual countries have submitted as their plans under the Paris Agreement, their intended nationally determined contributions is definitely not enough. Given that, we'll probably end up at three and a half or four degrees. They have to be a lot more ambitious than that. But certainly part of it has to be this argument. And so in that debate, the economists saw laughter and they said, no, this is not an issue. This is not something we concern ourselves with. It's not something that any serious company or any serious economist is giving any credence. Before years later, I read articles written by these same economists saying how important the unburnable carbon argument was to the debate and how it highlighted the economic implications of a continuum. More than that, political implications, health implications, and viral implications have continued reliance on fossil fuels. So within a short space of just a few years, this issue has become really rather important in the debate. And it has led, of course, to the divestment movement. Some of you may be aware of, to divest away from fossil fuel assets. And whether or not you believe that that movement can actually achieve significant outcomes, it certainly has installed that issue in the debate. So a negative change for fossil fuels, a positive change for renewables, and at the same time impacts of climate change becoming much more visible around the world. One last thing I'll say on this, ever since the last IPCC assessment report has been published. The trajectory that we're on and what we've seen happening over the last few years has been significantly worse than what that report predicted. The emissions being generated, the temperature changes have all played out in a significantly more dramatic way than projected because the IPCC reports are compromise, they're a compromise amongst not just scientists but the governments too that have to sign off on it. It's called the Intergovernmental Panel on Climate Change after all. So there's been change there. So you can say, overall, this is not just economics, this has got to be politics too because it is governments that have provided the framework for this to happen. Second, the economic implications of climate change. I'll speed this up a little bit. I wanted to give you a quick quote from the Stern Review on climate change. So the Stern Review commissioned by the Treasury, the UK government, comes out in 2006. It's the first major contribution in the climate change debate that has international impact that is entirely of an economic nature. Former Chief Economist at the World Bank, Nick Stearn, and his associates write this report, a report that's been criticized on the methods it's used, on the discounting rate it's used, etc. The report's general findings and general arguments are not disputed widely in the field at all. And those are, there are uncertainties as to the impacts of climate change, but we know enough about the risks in order to take early action. Why? Because early action will outweigh later costs. If we wait until later in the century to tackle climate change, because we might argue that our economies will continue to grow, will generate a lot more prosperity, will have a lot more money available at that point in time, and as a consequence, a lot more willingness perhaps to tackle the difficult issues, the costly issues. If we wait until this point, the impacts of climate change based on best available science, and the Stern Review has been updated since, I think, to the LSE and elsewhere, would significantly, still significantly outweigh that which we can mobilize at that point in time because the costs would just be so astronomical, the impacts of climate change. Ignoring it will damage economic growth and tackling climate change would be the pro-growth strategy for the longer term. The costs today, if you factor it into the system, are relatively low. If you wait longer, there's a lot more to do, it's a lot more expensive. Of course, this was 2006, that's more than 10 years ago. Since then, a lot has happened and we haven't really made that much progress. So already the price tag that comes with significant action on climate change has gone up. One example from air pollution and water pollution on the Chinese GDP. The Rand Corporation, in a report published in 2015, estimates that the losses to Chinese GDP from air water pollution amount to 6.5%. So a lot of these assessments are based on the additional healthcare costs but people suffer as a consequence of air water pollution. Think of Beijing, think of Shanghai, some of these places, smog, the health issues as a consequence of that, the environmental issues, impacts for agriculture, etc. The World Bank, the same assessment, 2007 though, 5.8% of GDP lost. Now, the 3% is interesting because that's the Chinese ministry of the environment. Of course, it would be quite as aggressive in the numbers they put out because once you assign a very high value the loss of the cost that you incur as a consequence of climate change you have to be committed to acting upon it, to doing something about it. The pressures to that act would be significantly higher than if you say, well, it's a couple of percentage points but even 3% is significant thinking of the GDP of the People's Republic. Now, 13.5% what the Chinese Academy of Sciences has recently established is the loss to the Chinese GDP. Now they're looking not just at air and water pollution, they're looking at a wider picture of overuse of resources, soil pollution, it's a much bigger picture but 13.5% in a country that is intent on continuing to provide relatively high stable growth rates over a longer period of time and needs to do that to keep the peace internally, if you will, economically speaking, socially speaking. This is something you cannot really ignore. You'll want to act on that. And this is about localised issues first and foremost. It's a particulate matter, PM2.5. It's about acid rain, consequence of sulphur dioxide, mercury poisoning. A lot of the issues that occur when you burn large amounts of coal or when you combust large amounts of oil through the internal combustion engines and cars and trucks. So that's created in that way but climate change can have very similar impacts and it exacerbates some of these. I don't have the numbers for you here but just today for a different class I was teaching. We looked at the small island states, specific island states and the impact on these small island states are natural disasters. They are the most at risk for GDP losses from these natural disasters, cyclones, typhoons. Earthquakes of course as well, we don't associate those with climate change that we're going to see a lot more of these and we're going to see more dramatic effects. They're going to be much more intense flooding events, storm events, etc. And for a country like Vanuatu, I believe it was, the cost and the loss of GDP annually from these events is 7%, almost 7%. So exacerbated by the impacts of climate change, think what that does to countries around the world. Is it too costly to transition the entire energy system? No, in one word, one word answer, but the costs we're going to incur and face to transition to renewable sources, to invest in storage, to invest in new infrastructure for electromobility, etc. are very high, they're in the trillions, of course. But every year we spend hundreds, not just hundreds of billions, but trillions already on renewing existing infrastructure, on building new energy infrastructure, coal-fired power generation, gas-fired power generation, yes, also some oil-fired power generation, nuclear power plants, giving away money in subsidies. So the question is, do you want to transition and spend money on transitioning into a low-carbon future with renewables? Or not. If you don't, you will still have to put in an awful lot of money to replace aging infrastructure. Think that the lifespan of a coal-fired power plant or gas-fired power station, the older ones maybe 30 years, 40 years, say 40 years, but at some point you need to renew that infrastructure.  The money is huge. You can make the choice to go renewable in any case. So it is not prohibitively expensive just to go renewable. It's going to cost you an awful lot of money in any case. And I think all of us would agree that nuclear, for example, is a very expensive technology, indeed, that takes up a lot more money in subsidies, government support than renewables do for each individual plant. Now they produce a lot of electricity too, admittedly, but you can't hold it just against no carbon or no carbon sources such as renewables. Now, what does the Paris Agreement mean from an economic perspective? I would put it to you that, given that the global economy is so entirely reliant on energy, energy which is primarily generated from fossil fuel sources, again, without that, we wouldn't have the economy we have today. We wouldn't have the globalized world we have today. We wouldn't be able to transport goods and services around the world we do. We wouldn't have had the growth and prosperity that we've benefited from. Okay, so fossil fuels have been very important. Energy is very important without energy security, supply of sufficient amounts and affordable prices over time, you can't have that growth. Given this, and given that the Paris Agreement and addressing climate change effectively means having to shift your energy system from fossil fuels to renewables and having to shift it in many cases, from one source to the other, but also shifting it from centralized fossil fuel power generation to much more distributed options on the renewable side. The Paris Agreement as a consequence is the world's most important economic treaty. Don't tend to think about the Paris Agreement as an economic treaty or as the most important energy treaty that's ever existed. We tend to think about it as an environmental treaty that's over there somewhere. But the implications of Paris and the international system are such from an economic perspective that they have the most far-reaching consequences much more important than individual trade agreements around the world and trade blocs that we already have in the European Union, NAFTA, and all these other agreements. The implications of this are serious and when you look at the INDCs and the concerns that countries have put forward to make a change and make a difference they all refer to the changes they're going to make in the energy system how they're going to do more on the renewable side some CTS carbon capture and storage, some nuclear but of course all of them refer to the importance of their economies shielding their economies, protecting their economies making their economies competitive for the future. So the implications are economic of this Paris agreement and political. How Paris could fail precisely on the economic front. One, INDCs are voluntary but the one thing that made Paris possible that targets all individual countries by the international community all submit what we think we can do individual countries together achieve this common goal of reducing CO2 emissions to a point where we can achieve the two degree target or ideally the ambition being 1.5 degrees but that's not really written in it's just an ambition it's voluntary so of course the Obama administration submitted a very ambitious INDC have no doubt the Trump administration will take that away and they will submit something if they stay within Paris which is possible and likely they will submit something that is meaningless you don't have to show ambition in your INDC there is no force that compels you to do so such as the state of international relations the international system we don't have a controlling legal or executive authority that can enforce that at this point in time certainly not when the biggest economy or one of the biggest economies is the one not playing ball so Trump doesn't have to leave Paris at all it can just submit an INDC that is not ambitious and that doesn't really meet the requirements of this climate trajectory so under the argument that he needs to protect the US economy and you see in a lot of the INDCs that have been submitted from Indonesia from China from elsewhere the preamble is always we need to make sure that our economic development needs and our poverty eradication needs come first and once we've addressed that we can then do all the other stuff so a lot of what we propose is conditional on first addressing this and getting finance from the international community and then we can do these things so it is in that context it could fail in that context second to refer to the importance of economic growth and development and that sort of ties it back to Larry Lowman's talk on the North-South dynamic and the different understandings of what you may wish to pursue in your systems now the UNFCCC does not have the power does not have the right to tell its parties the parties to the Paris Agreement what energy mix to pursue what economic tools and levers to put in place the sovereign decision of countries in the international system of course there's pressures on them coming from all sides multilateral development banks countries in the global north etc but this is always going to be an issue especially under this common but differentiated responsibilities approach taken under Kyoto and Paris and respective capabilities the lack of financial support or developing countries to be able to put in place measures that they would need to put in place in addition to a low carbon future now a number of reasons for why newly industrializing developing countries aren't really in many ways in many cases not keen on renewables there are problems around understanding what renewables are for and the value of them and how they can be put in place and what they can do and contribute in countries like Malaysia and elsewhere there are misunderstandings around that there is an abundance of cheap coal in Southeast Asia which I would argue is the next big thing China has decided to level off its CO2 emissions at some point peak them Indonesia other countries in Southeast Asia haven't done the same thing they've said they'll reduce the energy intensity of their production to some extent compared to a baseline scenario they're not going to peak it and most of these countries in Southeast Asia are looking at coal already a process that's underway so a lot of new coal-fired power plants are being built in that part of the world and elsewhere in sub-Saharan Africa too so unless there is financial support to transition away from that unless there's support for capacity building, know-how and therefore it's going to be tricky of course there are sums of money being transferred already today because we are building wind farms and solar farms China and elsewhere we are investing in energy efficiency we are doing all these good things but at the same time we're also still investing in the traditional ways of doing things which is fossil fuel based so addressing climate change is a political choice because you can choose to produce a policy framework and an environment within which renewables are allowed to thrive you can provide financial incentives for that and you can provide policies that very directly try to push fossil fuel infrastructure out of the system so we have market based mechanisms emissions trading I'm not going to talk about that very much now we can do that in the Q&A perhaps but all the while we have that we also have other approaches in the EU and other countries so we have feed and tariffs I've said that before to provide financial incentives for the uptake of renewables we have the large combustion plant directive in the European Union which has forced a lot of the most highly polluting coal-fired power stations in the European market already they've had to close in the UK now as well that is a top-down command and control if you will approach to it so there are other ways to address the issues other than emissions trading which doesn't currently provide the cost incentives or the price incentives to really shift to low carbon futures so what choices do we need to make when it comes to the energy system when it comes to the energy as underpinning our economic system so first renewables across the system the key here is what we've done in the last that's the last slide I'll talk to what we've done over the last decades is to build out capacity in the power sector we've built out wind farms and solar farms and maybe some geothermal and some biomass etc but actually people haven't really thought about the ecosystem that needs to exist around that the systemic implications of going low carbon 85, 90, 95% below 1990 baselines or 2005 baselines because that means going beyond the power sector it means going into transportation which is almost entirely oil-based it means going into heating which is entirely run on gas almost entirely run on gas and those things we haven't tackled at all yet it means investing much more in storage it means investing into a grid that can deal with that where we have interconnection between European countries to balance supply and demand so renewables across the system perhaps a little bit easier said than done we're good in the power sector we want electromobility you're going to have to build that out a lot more energy efficiency and savings of course demand side not just supply that's where we produce the electricity from renewables but demand side measures and I said before that those are political choices where you put money in is a political choice what you choose to support is a political choice whether or not you choose to continue in arrangements that are very cosy the industry that is to be regulated the policy maker and the regulatory agency is a political choice and can change when political change comes when elections bring in new governments it can change through pressure too but if those political choices are the ones that matter and if we think that perhaps who do we target is not achievable and currently stands in years and what are we willing to do renewables have grown in a way that those skeptics and others never expected economists never expected keep reports from a few years ago the IAEA and other leading international organizations consistently address renewables consistently address what they're able to do with the capacity both that we've seen even with those underestimates and the real development we're not going to be fast for us to not miss the opportunity to do something really really fast so apart from shutting down all coal-fired and gas-fired power generation and banning all cars and trucks from the street neither one of which I would suggest is going to happen what other solutions and options do we have and so while personally these things are achievable and doable there are of course other solutions there are other potential things that perhaps need to be done I think it's important for environmentalists to be asking themselves if on the basis of principle and this is an important principle right here understand well understand that they're opposed to this if it means either one of those two if it means overshooting the two degrees and moving into the three and a half degree world and the consequences of that if the money is available and it is available in the private sector surely but government support coming to it that is the overriding goal of achieving this two degree world and staying within the limits that the Paris Agreement have set is that stronger than the economic argument we might be able to make against those very expensive indeed are the strategic or the survivalist instincts stronger and more important and losing money on these installations I think that's an important question we need to ask right I'll leave it at that and happy to field some questions thank you very much well if you could just repeat the questions that are asked when you respond to them I'll write it down yes so I'd like to ask the first question so and one thing that's mentioned is emissions trading so and very kind of changes carbon tax or carbon trade governments should set a supply that let the market price as the emissions trading happen then markets can trade or whether you those are carbon tax where the government set a price on carbon then they let the market what general emissions trading that's you could argue that perhaps a well-designed emissions trading scheme could give us emissions reductions of course that design would require low cap and the cap that gets reduced significantly year on year or period on period but we don't have an oversupply of emissions allowances etc now more generally speaking there has been for many years a commitment to emissions trading as a tool as a major tool to achieve emissions reductions internationally and domestically so the Kyoto protocol already spells it out as a flexibility mechanism of course is introduced on behalf of the united states and lobby groups that very much push for this in the interest of industry in the interest of businesses that want flexibility in the way they approach approach emissions reductions the Paris agreement reaffirms it of course the European Union takes it up on the backs of Kyoto as one of its main vehicles to try and achieve emissions reductions but the result of the European emissions trading scheme to date is not encouraging the cost of emissions allowance the price of emissions allowance is around 5 euros or so which is way too low to achieve any meaningful change in the economy and energy generation and a shift away from low carbon sources the reasons for why it is so low is there's an oversupply of allowances in the system it is not necessarily terribly designed the political execution of it is very bad indeed though so I think in theory there are reasons to believe why emissions trading could potentially be successful but in practice it isn't and hasn't proven itself to be successful at all so a number of different organizations will put out reports and have put out reports in the past including the OECD and others that have compared the effectiveness of different policy tools in reducing emissions and they look at the European example and they take a snapshot and they look at emissions trading they look at feed and tariffs they look at various different other policy levers and they come to the conclusion that oh yes emissions trading is the most cost effective why? because we've seen emissions reductions and the price of emissions allowance is very low so it's very cheap and we've seen emissions reductions haven't we but actually pretty much everyone in the field knows when you really look at the evidence that those emissions reductions haven't really been achieved because of emissions trading they've been achieved because of things like the large combustion land directive and here's your comparison between trading and tax in the UK we've seen a dramatic reduction in the use of coal over the last few years and this is because of primarily because of the carbon price floor that the UK introduced so the UK is part of the emissions trading scheme but the only country in the European Union that actually introduced a floor under which the cost of an emissions allowance should not fall it's fixed right now at 18 pounds out until 2020 whereas the emissions allowance is in the wider European emissions trading scheme which is 5 Euros so it makes coal as the most emissions intensive fossil fuel much more expensive than it does in other parts of the European Union under the emissions trading scheme and the the floor price is a tax because it's fixed by it's a carbon tax, it's fixed by the government it's set and decided by the government on the basis of a number of calculations but it is not determined by those trading within the scheme because that's the 5 Euros right so I would say that based on that experience you can very well argue that a tax is much more effective in practice the way it is being handled at the moment then trading schemes are because certainly a trading scheme that involves so many different countries involves their political interests their interests in wanting to shield their domestic industries the Germans want to get exceptions for the automobile industry and some of their large emissions intensive industries they exempt them already from the renewable surcharge under the German feed and tariff system so they get exemptions under the emissions trading system too and so are other countries who are pursuing very similar schemes to protect some critical industries so in the UK case we see this and the reduction has led of course to significant emissions reductions much more than expected and if this trend continues the UK will not just meet but overachieve its emissions reductions under the Paris agreement easily because it will push much much more coal out of the mix and transition to more gas the question is of course what happens after 2020 if the conservatives stay in power will they keep the tax will they increase it will they reduce it there are a number of uncertainties we don't know if this continues and they increase it there is more ambition which the UK has committed itself to through its NDC we might see that so based on this experience I would say is the better experience at this point in time and I would also say that emissions trading despite the debate around it which makes it out to be this big thing actually co-exists with a number of other policy leavers that can have significantly more impact in transitioning us towards a low carbon low carbon future so I cannot ask if I want to catch profits out of exploring in these areas in the commons or would you in the commons water in the hammers for example yes alright so let me start with reducing consumption and degrowth theories so first of all I would say that I'm more inclined personally to be more inclined to follow an argument that says that there are a lot more efficiency savings energy savings and efficiency and we're currently seeing we can use energy more smartly and we have technologies and continue to develop technologies to enable us to do so in smart grids for example so demand response measures etc are part of this now that's the one side from what I would take from your question or the point you were raising is that perhaps you'd like to take this a bit further that you'd like to see something more than just tinkering around the edges doing a little bit here, there efficiency savings, energy savings degrowth theory I have problems with that approach because I don't think first of all that is workable I don't think there is a political appetite for it even though I realize what the argument is Kevin Anderson and others are making that argument something that I find interesting is that the argument of degrowth theorists and it could be that there are newer iterations now that I'm not aware of but as far as I understood it is that while we're pursuing degrowth and we're looking at specific sectors in the industry as well and the economy that are particularly emissions intensive or that consume a lot of resources and energy intensive that need to be addressed because they're the main culprits in many ways are of course also sectors that are critically needed if we are to at the same time which Kevin Anderson and others are saying but if we are at the same time to expand renewable energies dramatically those are industries such as concrete and steel some of the most energy and emissions intensive industries we have in the world today if we want to expand our use of renewables not just on a smaller scale but for large installations too offshore wind farms offshore large solar farms etc geothermal power plants we're going to need a lot more materials we're going to need a lot more resources a lot more concrete, a lot more steel these industries will have to supply it but the question for me is how are you going to achieve that if you want to degrow at the same time and at the same time build out an infrastructure that we desperately need so from that angle I have my problems with the argument at the same time however I do realize and understand that over consumption of resources through dramatic growth and prosperity wanting more and more and of course consumption patterns change not just as the population grows maybe the poor into the middle classes etc has gotten us into this fix that we're in in the first place I don't want to go as far as what you might want to call Schwarzenegger school of tackling climate change which is you can continue driving your big truck and hummer or whatever as long as you fuel it with environmentally friendly fuel as long as you are low carbon that's an argument that a lot of people are making so the argument here would be and that kind of goes into the third question as well that economic growth can continue the way that it has until now would just require to shift the basis upon which that growth and that economic development occurs and if I can take the third question I would say that I don't see efficient shifts away from some of these paradigms now there are some shifts for example the older economic paradigm which to having economies of scale is that we have very large installations concentrated power, economic power which then translates in many cases also into political power so you have large power plants owned by a small number of utilities or companies and they have a captive market ideally I don't necessarily see that in many quarters this understanding is changing because what we're getting is large offshore wind farms we're getting large solar parks we're getting large installations that are controlled by large companies so one large company will be replaced by another large company basically milking you for your money in the future what has been made is that once we've transitioned to renewables once the feed and tariffs can run out we'll see massive price declines because there is no cost to the wind as it blows in the sun as it chimes the cost that we incur if we continue to run coal and gas-fired power generation so we don't have to buy in this stuff so it should be cheaper shouldn't it I don't buy it because if they stay important players we'll continue to ramp up prices whatever argument they can find to do so so that isn't changing at the same time though there are some shifts that I'm sure you're very aware of in terms of distribution and decentralization independent power providers smaller providers coming into the market the liberalization packages in the European Union and individual approaches within European countries have tried to open up the markets not always been successful because countries have continued to support national champions large companies large utility companies in many cases and have shielded them from unbundling measures and from third-party access and all of that but you see a number of co-ops taking back control we've had that I think was in Hamburg or Berlin one of the two places that and a number of smaller providers that are pushing in so the challenge is to try and transition that further industry would make the argument that it's all good and well to have a lot of decentralized and localized generation but for a lot of our activities we need a lot of energy produced in one big place effectively rather than relying on a lot of small sources that from an energy security perspective that isn't a good idea hence we need those large installations I think the future is more likely going to be a hybrid system but you have independent producers at home that are used to be just consumers they would just take from the utility company but now they're also producers and they send something back that's the very idea behind feed and tariffs and enabling the production on a very small scale and opening that up but the way things are I do not see a a shift that is dramatic enough move us away from a more neoliberal paradigm that would say focus your attention on some of the large players deregulate as much as possible create avenues for access into markets for them lower taxes provide a good environment for them to thrive which is of course not particularly beneficial for smaller players that need a leg up that need support now on the second question on potential profits made of the privatization of the commons water whatever you might be talking about I think that something that in international negotiations has had much of an airing yet I would think which is important to have that though I think at the end of the day it will come back to and I would be keen to hear your thoughts on it as well it will come back to political decisions and political will on whether or not you want to see this going forward I would actually be quite keen to hear what your thoughts are on this issue and where you think we're standing at the moment with these moves in terms of international financial order taking up the issue of climate risk and climate related financial disclosure the Bank of England the Financial Stability Board in terms of having international institutions are addressing this issue more now that doesn't mean that it will result in policies and legislation and regulation that will enforce this in individual countries or member states of the G20 that companies have to disclose the risks of their investment activities but it's the first step in that direction the incentivization that I see that the main incentivization is the incentivization financially of a shift I don't see the incentivization yet that you speak about that might be necessary for the global commons I think this is the only realistic way for these things to be incentivized perhaps not so much that that's a bit sad to say that but in terms of the commercial industries but we're talking about climate risk and making sure that the impacts of climate change and the human suffering associated with that and not just human suffering but suffering of the natural world as well beyond humans may only get pushed up the agenda further in the presence of major disruptions to ecosystems the global climate so tipping points that might be reached now that would be most unfortunate if this is what we would have to wait for but the history history of policy making shows that in many cases we only get more disruptive change as a consequence of a focusing event as a consequence of a major crisis that much of policy making is incremental we layer we change things slightly to adjust the system as it is rather than building a whole new system we're adjusting the system as it is but changing the basis upon which we operate economically which can get us part of the way there and I think it will get us part of the way there the question is will it get us all the way there not looking that likely at this point in time so do we have to wait for a major disruption for more action to be forthcoming that would be very sad if this is what would have to be the case but it is a question worth asking I'm going to take this right now before we go into the others because we all have historical precedent of large oil and gas companies trying to branch out a little bit Shell did that for a while more so than they do now BP tried that when they tried to restyle themselves as beyond petroleum under Lord Brown and they did away with it because they realized that it didn't serve their bottom line they weren't a renewable energy company in the business of energy efficiency or whatever else they're a company that's in the business to bring oil out of the ground if necessary to refine it and then to market it so they returned to that bottom line and for a while it served them well right now they're struggling a little bit because of the lower oil price not because the legislation would be so biting and the international agreements would be so terrible for them but Exxon Mobil actually came out in support of Paris Agreement and Tillerson as well and I am sure while doing that they would still have and still continue to channel some funds into efforts to undermine it at the same time but publicly at least we'd say we support it probably because of the voluntary nature of it and because they know that the United States isn't going to put so much forward I don't see these companies necessarily branching out they're not doing that at the moment I do see a slight change when it comes to shareholders at the last the last or one of the last big shareholders gatherings for Exxon I think it was 38% of the shareholders that voted for Exxon taking a clearer and stronger line on climate change and the climate related risks that would accrue to companies such as Exxon that are continuing to operate in the space now that's not the majority and it's certainly very far from a super majority but it is a lot more than it used to be a few years ago so there are shareholders who are getting a little bit nervous as to some of the arguments that are now in the system I don't think that they'll go without a fight and I don't think why from their perspective I mean I'm not making a moral argument that they should fight it I'm just looking at it from the perspective of Exxon or Shell or BP and what they do, what they think they do best and what they make a profit by doing they won't go without a fight they probably shouldn't from their perspective but the transition is going to have to be one where first call goes out because of the calls we put in and if we are true to the commitments that we've made under Paris then the first thing that has to be called gas for transition actually I should say that I found it very interesting that just a few years ago the game in the fossil fuel world changed as I perceived it used to be the case that fossil fuel companies had a more or less united front against renewables and against alternatives that shift towards low carbon futures and addressing climate change when you talk to large gas companies oil and gas companies now they'll point the finger at the coal companies and say these guys need to go so they've realized that there's something stirring and they know that coal is the most emissions intensive fuel and that's sort of divided their lines a little bit but the oil and gas companies I think that transition is more likely going to move if we manage electromobility or if we manage hydrogen fuel cells or any of these alternatives that we need to shift transportation they're going to focus more on gas than on oil and the debate around gas is a tricky one too as you know because while many people would like to see gas as a transition fuel to a low carbon future the industry treats it more as a destination fuel because ok we're now putting in place the infrastructure we need gas, lower carbon helps us to get there but we can keep these plans for 40, 50 years of course you don't want that if you need to achieve a 5, 90, 95% emissions reduction that means gas also needs to come out unless you did something like that carbon capture and storage which of course they're also aggressively pushing carbon capture and storage as a way to extend your your half life if you will in this brave new world I think at some point things will happen very quickly at some point we'll move very quickly but that point is not there yet across the world I just have to say I am conscious of time we'll check three then there's a strong basis to be paid that the environment is very conscious but can I read your addresses economic implications a global regional network let me do that first regional networks yes styled on the basis of the European Union integration which isn't there yet we need a lot more interconnection between a number of different European countries Spain, France for example there's more interconnection between some of the other countries within the European system that helps us balance this it helps benefit the renewable sector globally first of all there are a few regions where it's going to be more difficult to produce electricity where there are security challenges, economic challenges political challenges it's easy right now to be doing that with this conflict you have to have some kind of stability for that large infrastructure, critical infrastructure can be threatened in those situations but more critically than that having extremely long transmission lines and transmission grids between the far ends of the world isn't a particularly economically efficient way of doing things at this point in time not just because of the infrastructure cost but also the line loss the line loss you would have incurred there are of course now grids that allow you to transport over longer distances with significantly less line loss and perhaps at some point that'll be something we can do I think right now we need to be sufficiently big for an area or a region to be able to balance these things and I think within the European context with different renewables with backup through storage ideally perhaps we'll need some fossil fuel backup but then you'd have to think about that that's a good idea in a northern American context as well in an Asian south-east Asian context as well in these debates about the ASEAN super grid and all the ASEAN power grid but regional integration yes absolutely critically important globally there's some question marks about that right now because the electricity transport the only other thing you transport are the turbines or the solar panels it's much easier today from a transportation perspective globally to transport a barrel of oil around the world or a lump of coal than it is to do some of these other things as the thing that actually contains the energy rather than having to install the turbines or the solar panels first on degrowth so I'll do it the other way the other way around now I agree with you that renewables and energy efficiency are probably not quite enough I said as much that the trajectory we're on despite the growth rates we've seen which have consistently been better than forecast and projected we're probably still not going to get there in time and it would take us longer than it should to achieve these to achieve or to stay within the two-degree target that's why I asked the question whether or not these should be should be part of the equation of course I know that that doesn't address the degrowth argument that continues with the approach that we've been taking for the last decades in terms of the way we've built the system and the way the system has run from an economic development and growth perspective but if you consult a number of companies groups that look into energy developments H.S. and Platts and others they'll all say they don't see any future but this isn't part of it because of the development path we're on I am sympathetic to the degrowth argument but I think that from a political perspective it is not achievable and therefore I am not willing to spend my time to accept it as a viable alternative I'm very willing to talk about it in theoretical terms but I don't believe that we should spend our time pushing for this when there is absolutely nowhere any appetite for this to happen I think we should focus our energies and our resources on trying to affect the changes that can affect which might have to include these so we know just to finish that point I'll let you get back of course to finish that point you know as well as I do and everybody else here that there's so many places around the world and you've identified a few that are building out infrastructure that is emissions intensive in order to address energy poverty in order to be able to put people electricity and energy in the first place and that in many cases is coal fired so when not Germany you said you know a number of countries have tried to transition they still haven't gotten some of it out Germany still relies on 40 odd percent for its power generation or coal even though they've had this beautiful energy transition investing in renewables which is great it's had so much progress the share of coal remains stubbornly in the mix so if we transition further we can't do it without of course this requires a lot of capital this requires some larger scale efforts that I don't see happening in an environment where we discuss a degrowth but in an environment where we continue to have growth and invest into this this I know is critical for a lot of countries both positively speaking in a bad way so a lot more controversial but those are the options the options I see in terms of developing country contexts poverty, leapfrogging is going to be the only way to get around that we do see that a number of contexts so not going down the dirty development path that the global north has gone down that China has gone down but leapfrogging that but that requires finance that requires technology transfer that requires cooperation in the countries and the international system and companies too you'd have to force them to actually do it at the CTCN that we currently have under UNEA the climate change technology transfer network is a beautiful thing it works with a lot of developing countries to develop certain projects but it is very small the amount of money that is actually behind it and the number of projects that are being financed all the pilot projects we now need to do everything we can to scale that up but to do so I would argue and I know you disagree with me on that is not to pursue degrowth but to keep pushing growth or maybe I've misread your argument and you can come back on it Rob I'll have to I'll have to talk to you about externalities in the current framework separately because we had that question earlier let me give her a chance to come back on that I understood what you mean absolutely it's worth thinking about in any case I'd get you what I'm saying is you say global north we have to achieve some reductions global south that needs to develop they should be able to to grow more whereas we have to have a reduction in the north or to go into a more fine grained analysis to say within an economy that is problematic so we need to address those and not others now think of the argument that you would make as a consequence of that you're talking about both in domestic context and internationally completely managed and structured economy whether or not that is the right way forward we can debate whether or not anyone is actually going to accept that as the right way forward that I have my doubts over because the cold war the end of the cold war in the minds of many policy makers who has decided that the managed and completely structured economy of the Soviet Union collapsed because it was super inefficient it didn't manage to do anything at all now you can say that it's a misreading what they tried to do and that they actually approached the theoretical debate in practice in a way that wasn't right and effective but that argument has been killed off as a consequence of that try and talk about nationalization in this country the paper party won't do it not when they're in power anyways nationalizing because that would be the next step you nationalize certain services and you force through targets because that's what you're basically saying you're imposing targets you have to make sure that there's less being consumed that's not going to happen from my experience as much as perhaps from a global perspective we might want it because what you're actually identifying is correct you're identifying the right problems but the solution I disagree with not because I don't think it's worth discussing it but because I think we're not going to get it in that way unfortunately for the global the global climate we don't have any time the words it's late you know people want to go so I think thank you very much for this excellent talk thank you