Secrets of Economic Growth | Ricardo Hausmann



The problem of growth

Can companies make changes to help solve the climate crisis?

For decades, — and we've known that to stop it, we need to cut emissions.

Yet for the most part, that hasn't happened. In the US and around the world, we've continued to burn fossil fuels. Emissions grew in 2019 and that trend is expected to continue this year.

Part of this story is one of growth. As billions of people have started to earn more money, buying cars and electronics and eating more meat, greenhouse gas emissions have risen. A widespread renewable energy infrastructure to power this growth economy doesn't yet exist.

We still want quality of life to continue to improve for billions of people around the globe. Yet by the end of the century, the UN expects the world population to have grown to 11.2 billion. If per-person emissions continue to rise, global temperatures will quickly climb to dangerous levels.

The growing recognition that we need to deal with climate change before things get more out of hand — with effects including searing heat waves, powerful and rapidly intensifying storms, coral reef die-offs, mass extinctions of animal species, and sea level rise — led nations around the world to sign the Paris Agreement in 2015, pledging to help prevent global temperatures from rising more than 2 degrees Celsius over pre-industrial levels by 2100.

That was a glimmer of hope. But President Trump said he plans to pull the US out of the Paris Agreement. The US is the historically largest emitter and one of the biggest per-capita emitters in the globe, so that's a huge blow.

Trump's announcement led states, cities, universities, and companies to promise to try to maintain the Paris goals in the US. These groups — sometimes referred to as subnational actors — make up the We Are Still In coalition. According to Carter Roberts, CEO of the World Wildlife Fund (WWF), research indicates that subnational actors can achieve about half of the needed emissions cuts to reach the Paris goals.

"There are some companies who haven't come in on it as strongly, but when you add up all the different subnational actors, you get about halfway there," Roberts told Business Insider in a recent interview, before the IPCC report's release. "I would argue half is pretty good."

WWF and organizations like the World Resources Institute collaborate on the Science Based Targets initiative, which helps companies identify ways they can reduce emissions by the amount needed to hit the Paris Agreement goals. This can be done by improving supply chains, but also by changing how companies get power or where they make products.

According to Roberts, there are incentives for corporations to reduce emissions and to push for putting a price on carbon. These efforts appeal to consumers, they're initiatives that valuable workers are interested in, and they're key for any company that wants to survive long-term in a world with a changing climate.

But Roberts also knows that the clock is ticking.

"There's a lot of inertia in our system," he said. "Are we where I thought we would be 10 years ago in terms of that happening the US? Not on everything. Do I think it's coming? Yes, I do."

Places like the Amazon rainforest need to be protected if the world wants to avoid catastrophic effects of climate change.

The problem of growth

With that ticking clock, the question of whether companies will decide acting on climate is valuable enough to actually cut emissions sufficiently is still unknown.

As economies grow, we use more of the world's limited resources. Because of that, some economists argue that we need to stop considering "growth" as a universally positive force if human society wants to survive on the planet long-term.

In her book "Doughnut Economics," economist Kate Raworth argues that we need to reach an economic point where people have enough in terms of housing, energy, water, food, and other resources, but where we don't use so much of these resources that we cause dangerous climate change, air pollution, biodiversity loss, and other negative effects of growth.

That idea is not compatible with a form of capitalism that considers growth or earning more the most important value. It will almost certainly require some redistribution in a world where the wealthiest 1% hold 46% of global wealth.

If companies can define value, as Roberts puts it, as not just value to shareholders but also value to society, they may be able to justify making emissions reductions a priority. That makes the most sense in the long term because it's the only way we don't push the planet to a dangerous point.

Yet the latest IPCC report emphasized that we have even less time than we thought to make the changes needed to deal with climate change. We'll start seeing dramatic consequences once temperatures rise to 1.5 C over pre-industrial levels — something that's on track to happen by 2040. By 2100, we're on track for 3 C over pre-industrial levels.

"The new IPCC report sends the clearest signal yet that we can't wait to take climate action. The scope of the problem requires more than government-only solutions. All sectors of society need to pitch in, and the private sector matters because of the scale it can achieve," Roberts told Business Insider in response to a follow-up question after the report's release.

"Walmart's total emissions are equivalent to the nation of France, and McDonald's emissions are comparable to Portugal. Both have set science-based climate targets consistent with the Paris Agreement's goals, as have nearly 500 other companies. Meeting or exceeding the Paris goal, as the IPCC report calls for, will require even more companies to join the fight by setting and meeting science-based climate targets."

These companies are big enough that their actions are essential for dealing with climate change. Yet the speed with which emissions need to be reduced will also require dramatic steps by governments, including regulations, putting prices on carbon, and rushing to transition to renewable energy.

Right now, governments are not on track to get there. And even if some companies are committed to working on climate, those commitments are not yet enough to prevent catastrophe.

The authors of the IPCC report suggested it is still theoretically possible for us to act on climate in time. Whether companies and governments are willing to do so remains to be seen.






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Date: 16.12.2018, 01:17 / Views: 45272