Stimulation of demand for renewable energy could spark a new Industrial Revolution, argues British economist Nicholas Stern.
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ABU DHABI: The world’s transition to a low-carbon economy will not only make cities cleaner and more sustainable, it will spark a new Industrial Revolution, said renowned British economist Nicholas Stern.
Speaking at the 3rd World Future Energy Summit in the oil-rich emirate of Abu Dhabi, the former chief economist at the World Bank said many political and business leaders do not understand the magnitude of the risk facing the global economy.
"People are completely missing the point about just how big the risks are," he told delegates. "If we go on with 'business as usual', [greenhouse gas] concentrations will, at the end of this century, will be at the level where we have a roughly 50/50 chance of being 5˚C [warmer].
Before the dawn of humanity
"The planet hasn’t seen [a rise] of 5˚C for 30 million years. It hasn’t seen 3˚C for 3 million years," he said. "People need to understand that we are risking here temperature increases that are way outside the range of human experience and will likely involve the movement of hundreds of millions of people," creating large-scale conflict.
The summit, the world's largest renewable energy conference with more than 9,000 attendees, brings together 80 ministers, royalty and heads of state with corporate leaders and scientists from 120 nations.
Early winners
Stern said it was up to companies who have taken an early lead in the low-carbon transition – and who are profiting from it – to accentuate that reducing emissions was an opportunity as well as a challenge.
"This is a new Industrial Revolution which will probably be more exciting than the steam engine, the railways, electricity, the motor car or information technology," he continued.
It’s not just about incurring costs to reduce the catastrophic risks, “but it’s something much more profound than that. The transition to a low-carbon economy … could be, and arguably will be, the most dynamic in economic history.”
Innovation is costly
Shi Zhengrong, founder and chief executive of the China-based Suntech, the world’s leading manufacturer of photovoltaic cells, said government leadership was key. He praised the example of Germany in the past decade, which led to a dramatic increase in the renewable demand.
The country introduced feed-in tariffs that paid consumers for excess energy fed back into the grid from their own solar, wind and other renewable sources, leading to a boom in investment. The sector now employs 170,000 people and has a turnover of A$13.5 billion (US$12.3 billion).
More than 10 per cent of electricity in Germany comes from renewable sources, and it’s estimated this has saved 52 million tonnes of carbon dioxide
Business to drive solutions
"It’s up to business to devise solutions to combat climate change … but that requires a lot of innovation.” Inovation in new energy is expensive, and without incentives, solutions will not be found, he said. “Policy is the only real driving force for climate change."
Although the United Nations Copenhagen climate change conference in December 2009 failed to create a binding agreement, it did set a ceiling for any further increases in global warming to 2˚C, added Stern. This will still require a great deal of effort, and while there will be costs, here will also opportunities.
Fall short of target
A global analysis of carbon reduction policies across 270 jurisdictions, conducted after Copenhagen, found that even if current and proposed initiatives had maximum impact, emissions in 2020 would still exceed the amount needed to limit the average world temperature increase to 2˚C.
To meet the goal, emissions need to be reduced by an amount equivalent to the current annual emissions of the whole U.S. economy, said Mark Fulton, head of climate change research at Deutsche Bank.
Investment is flowing strongly into climate change industries, but transparent, long-term policies that give business certainty are needed.
"Investors are attracted to countries with comprehensive, integrated government plans that are supported by strong incentives, such as feed-in tariffs," he said.
Renewable energy investment
The United Arab Emirates, with the world's sixth largest oil reserves and one of the most developed economies in the Middle East, is staking its future on renewable energies. The emirate of Abu Dhabi has been investing heavily in renewable energy since 2006, with the goal of making it a global leader in the field within 10 years.
It’s made large investments in renewable energy projects around the world, hired top experts and is building a model city known as Masdar City for 50,000 people on a the outskirts of the capital that will be carbon-neutral, produce zero waste and act as a living laboratory for sustainable cities research.
