Stimulus, Justice, and Business in Greening the Developing World

I attended a business leaders luncheon last week organized by the United Nations Association around the idea of Greening the Developing World: Tech's Leading Role (Siemens and TIME co-sponsored). Among the themes one stood out: "Experiment on us!" This came from Minister Modest Mero of Tanzania. He indicated that Africa is an investment opportunity where clean energy pilot projects can take root because they don't have to fight the inertia of creative destruction common in rich countries.

But what is the policy and political landscape for greening development? Robert Orr, the Assistant Secretary-General for Strategic Planning and Policy Coordination, explained the relevance and success of the Clean Development Mechanism in this area. About half of new energy demand and development will be in poorer countries, he said, where 2 billion people live without modern energy access or technology. About one-third of CDM projects to date have involved technology dissemination to these countries.

Orr also made the point that it might be more useful to speak generally of "technology dissemination" instead of "technology transfer." He described the latter as too much of a 1960s–70s term. Recasting the process in this light would help account for co-development, PPPs, and other projects. (While I understand his pragmatic bent here, it does seem to gloss over the justice questions at stake in climate change.)

The CDM for all its faults [PDF] is not an insignificant pool of resources, and lessons have been learned from early implementation efforts. In 2006 some $25 billion was dedicated to projects in the CDM pipeline, $5.7 billion of which went to renewable energy and energy efficiency. But it should have come as no surprise for the UN to learn that money has flowed to the biggest, most profitable projects. As Orr acknowledged, about 80 percent of the projects have occurred in just five countries: Brazil, India, China, Mexico, and the Republic of Korea. Forty-nine other countries account for only 1.5 percent of CDM projects, showing a great need for equity and capacity-building. Orr explained that the UN role should be to help harness the power of the market in a formula that ensures full participation for access to energy.

On the topic of climate ethics, Ambassador Hardeep Singh Puri of India was asked to explain why the West should help countries like India that are its industrial competitors. He answered that you can't solve global climate change without them! He also offered a somewhat rhetorical question of his own: Should the West give to the poorest countries but not to India? Puri estimated that there are more people living in India at the poverty level of the Least Developed Countries than there are total people living in those LDCs.

He said that countries like India offer potential not only as laboratories for new clean energy projects, but also as new markets for green technologies. He stressed that these investments should occur within the existing intellectual property regime (a point also expressed in Sen. John Kerry's Clean Energy Jobs and American Power Act [PDF]). "Accessing technologies" would mean paying for patents, but at affordable rates to promote dissemination of clean technologies. Relying on philanthropy and altruism will go nowhere, he said.

Puri cited renewables and even nuclear as the green technology needs of India, since India still relies heavily on fossil fuels. Biofuels are a non-starter for India in the short and medium term because of land and water shortages, concerns about food security, and commodity price volatility. Puri instead would like to see an increase in public-funded R&D projects that can lead to technology dissemination that also maximizes the common good.

Glenn Prickett of Conservation International broke implementation goals down into three priorities: Efficiency, Forest conservation, and Renewable energy. He cited a McKinsey study [PDF] showing that progress in those areas could account for 75 percent of the global emissions reductions needed by 2020, at a net savings of $14 billion! Of course, this would entail a 50 percent reduction in tropical deforestation, and one roadblock is that public investment in forestry, agriculture, and land-use policies has been dropping.

Energy efficiency solutions, according to Prickett, can be driven by effective standards backed by institutions for enforcement. He pointed out that one of the best ways an "awakening" private sector can contribute is through supply-chain analysis and waste reduction. On a related note, the Kerry climate bill also calls for a voluntary "national product carbon disclosure program," to be based on a review of existing and planned standards such as Carbon Trust's Publicly Available Specification 2050, standards to be developed by the World Resources Institute and the World Business Council for Sustainable Development, and those of the International Standards Organization.

A question was posed to the panel about why the interaction of climate change and land-use issues has been neglected relative to renewables and other investments. Orr responded that food security must be tackled in tandem with climate change, and that technology transfer for adaptation projects that deal with land use could yield huge advances at low cost. Ambassador Puri turned to the case of India, where he said 60 percent of the country lives in rural areas but only 20 percent of the country's GDP comes from agricultural investments. Why the underinvestment? Subsidies in the rich countries! Puri indicated that it's impossible to disentangle climate solutions from the inequities and stagnation of other negotiations such as the WTO Doha Round.

Indeed it is these systemic complexities and inequities that most plague the path to agreement in Copenhagen. But there is nonetheless climate solidarity that transcends national barriers, as evidenced by the massive global call to action organized by 350.org on October 24. As I wrote recently, solving climate change has great potential to serve as an organizing principle for Green Diplomacy, in a way that solves geostrategic, security, and development concerns. But it also has the potential to be a Global Green Stimulus, at a time when developing countries have been further battered by the financial failures of rich nations. Administering much of this stimulus in the form of mitigation grants or an adaptation fund is key to answering the major questions of global environmental justice.

[Photo credit: 350.org action on the beach of Dar es Salaam, Tanzania (CC).]

Japan as Efficiency Superpower

The New York Times today covered an issue that has interested me for a while now. The article is titled "Japan Sees a Chance to Promote Its Energy-Frugal Ways." I have argued in a chapter in Gal Luft's forthcoming book on energy security that Japan should aim to be an efficiency superpower, promoting its unique ethic of conservation or "mottainai." In other words, Japan can offer moral leadership by acting as a technological model and a departure point for global cooperation. Here are excepts of my chapter, which I presented in February of this year to the Tokyo-Reischauer Group, sponsored by Johns Hopkins SAIS and Tokyo Foundation:

Energy security concerns are nothing new in Japan. The oil embargo during World War II and the 1970s oil shocks shaped much of Japan’s recent history. Long the technology leader in Asia, Japan finds itself preparing for a future in which its energy policy must weigh increased global energy demand, emerging resource nationalism, and stagnating upstream development. Japanese energy policy is built upon an understanding that resources are finite. By putting efficiency at the center of its policies, the country is shaping the definition of energy security for the 21st century.

In the international context, Japanese energy security depends on the U.S. military’s protection of sea lanes for the transport of oil. But its overall policy mix has relied on global market mechanisms and domestic regulation. Japan’s homegrown efforts to achieve energy security revolve around efficiency and diversification. Since 1973, Japan’s energy intensity has improved by 37% and its oil dependency has dropped by 30 points, making Japan one of the largest, most-energy efficient economies in the world.

Given Japan’s oil dependence during this period, few countries were as affected as Japan was by the OPEC oil embargo of 1973. The resulting changes in the industrial landscape, the economic slowdown that followed, and dramatic increases in energy prices helped to mobilize the Japanese population in support of energy efficient policies. By the second oil shock six years later, Japan was in a position not only to weather the storm better than most developed countries, but also to capitalize on the world’s newfound desire for energy conservation by exporting fuel-efficient cars and other technology.

The mid-1970s saw a wave of energy-related legislation in Japan. Enacted in December 1973, the Emergency Law for the Stabilization of National Life gave the government the ability to set prices for everyday products during times of severe inflation.

Energy consumption in Japan’s industrial sector remained flat and conservation efforts plateaued in the 1990s, as Japanese manufacturers reached the upper limit of efficiency gains through the turnover of capital stock to more efficient machinery. An economic downturn and historically-low energy prices weakened the pressure to conserve, refocusing government efforts on energy concerns.

In 2005, the Japanese government introduced the “Cool Biz” campaign, which aimed to lower energy consumption and greenhouse gas emissions by encouraging businessmen to wear lighter clothes and forgo wearing a tie in order to encourage a reduction in air-conditioning use. The campaign was introduced with a fashion show featuring captains of Japanese industry, based on the belief that in Japan’s hierarchical business culture the participation of upper management would increase the effectiveness of the campaign. The Environmental Ministry said the campaign led to a 1.4 million ton emissions reduction during the summer of 2007.

Another initiative that aims to increase energy efficiency by influencing consumption choices is the “Warm Biz” campaign, which encourages companies to set their heaters to 20 degrees Celsius (68 degrees Fahrenheit) in the winter.

Is Japan model transferable to foreign countries? Japan boasts top class technology for nuclear power and energy efficiency/conservation, with economic growth during times of rising energy costs. It has been cooperating with China on energy efficiency technology. On the other hand, some Japanese interviewees said though technology or regulations may be transferable, the Japanese spirit of “mottainai” (“don’t waste”) would be hard to transfer, or at least only mature societies with the willingness to pay for green power could do so. Nevertheless, some studies show that the Japanese willingness to pay for clean energy is about the same as it is in other countries.

Jimmy Carter might have been prescient about the risks to the environment but American culture did not take to the notion of conservation. Meanwhile, in Japan, the country underwent a conservation revolution. Many have argued that an incremental approach to energy and environmental problems would be insufficient. Given recent factors, such as increased demand and lack of infrastructure, driving up energy prices and the broader consensus on climate change, a national project for energy efficiency would be timely.

The current international order is witnessing the emergence of layers of power. I believe that thinking about the system in terms of "poles" is unhelpful. (Harry Harding recently argued that we might think of the system as two political parties: an elitist reform party led by the United States and a conservative populist party led by China and Russia.) A number of factors, such as the 1997 Asian financial crisis, the 9/11 terrorist attacks, and the recent changes in the energy markets have opened a window of opportunity for new power centers--the Middle East's financial power, Russia's influence over Europe, China's new role in East Asia, etc.

(I would like to thank Chris Janiec and Warren Wilczewski for their research assistance on this project.)

Photo by El Fotopakismo

Bill Bradley on Foreign Policy

Former Senator Bill Bradley spoke this morning at the Carnegie Council about his new book The New American Story. This talk was the first we broadcast on multiple radio stations. We also filmed it for video clips that will be coming out later.

Bradley’s main point was that an old American story has taken root in the U.S. national conversation that is obscuring the original American story that values two things: a can-do attitude and telling the truth. As he says in his book, we have to embrace an “ethic of connectedness:” collective action and individual responsibility.

He gave numerous examples. Jody Williams, for example, got a few average Americans together to launch a global movement to ban landmines. She won the 1997 Nobel Peace Prize for her efforts.

The former Senator also suggested that the United States needs a fairer energy policy. If the United States were able to reach the fuel efficiency of cars driven in Europe, we would be able to eliminate oil imported from OPEC countries. He also recommended more accountability: people who buy fuel inefficient cars, such as Hummers, should be taxed and those who buy fuel efficient cars should get rebates. It’s not a tax on the rich. It's simply an incentive for efficiency.

The final question from the audience focused on foreign policy: How should the United States approach Iran and Russia? Bradley suggested more talk with Iran—after all talking to your enemies is the definition of diplomacy.

Russia seemed to be a topic close to the Senator’s heart. He slammed the expansion of NATO after the fall of the Soviet Union. Bradley recently spoke with Mikhail Gorbachev, who said U.S. officials had promised an expansion would not happen. Moreover, as Bradley put it, the key to diplomacy is not to kick a man when he is down. My professor at SAIS Michael Mandelbaum was a sharp critic of NATO expansion. You can read a transcript of him talking about it with Jim Lehrer in 1996 on NewsHour here. Here is an excerpt:

I think it [expansion] will re-divide Europe where Europe is now not divided. Second, it will poison our relations with the Russians, perhaps not irrevocably. The Russians are not going to refuse to speak to us. But already, the kind of close cooperation that we enjoyed during the Gulf War and made it possible for President Clinton to pick up the phone, ask President Yeltsin to remove Russian troops from the Baltic states, and have him exceed to his request, that kind of close cooperation is gone.

And that was how Bradley ended the talk: Think about the kind of mutual benefit we could be sharing with Russia given the world’s problems today: energy, climate change, oil. If there were more trust between these two big countries, the cooperation would benefit from their complementarities.