The Climate War

What do Brazil, Mexico, China, India, and South Africa have in common? They're all developing countries meeting in Pittsburgh this week that have plans for addressing their emissions and dealing with Climate Change.

Brazil
Brazil's President Lula has committed to reducing deforestation by 80% and reduce carbon emissions by 4.8 billion tons by 2020. Considering that deforestation contributes to more than 70% of Brazil's emissions and they are the 4th largest contributor to the 20% of greenhouse gas emissions globally caused by deforestation, this would be a major coup for reducing Greenhouse gases globally. They could also lead the way for countries like Indonesia.

Mexico
In June, "Mexico’s President Felipe Calderon announced that Mexico will voluntarily cut its greenhouse gas emissions by 50 million tons a year by 2012 through the use of more efficient cars and power plants as well as reductions in gas leaks and flaring by the oil industry, reports Reuters. The cut represents approximately 8 percent of the country’s emissions, according to the environment ministry." Mexico is also taking a leadership position in the global effort. The country is a member of the "Environmental Integrity Group." The county has also brought forth proposals such as a "Green Fund" to help developing nations in a measurable fashion.

China
Earlier this week, Chinese President Hu Jintao committed to reducing its carbon emissions by a "notable margin" by 2020. Unfortunately, the President stopped short of giving hard measurable numbers. As the largest emitter of carbon emissions (immediately followed by yours truly), any commitment is crucial.

India
India is the country at the summit with the highest poverty level. Yet even they are moving forward on voluntary emissions reduction. They are adamant in their insistence that the more developed countries also commit to reducing emissions by 2020.

South Africa
"President Jacob Zuma said the world needs to act now to ensure there is a global agreement on the critical challenge." They, like many other developing countries, are directly feeling the effects of Climate Change and are realizing that if we do not act soon globally, the ramifications will be much further reaching than the temperature. Climate Change indirectly affects agricultural supplies, housing, and more through increased rate of natural disasters and more extreme weather patterns.

In July of this year, President Obama requested the G20 finance ministers to come up with a plan for helping to support the developing countries of the world in addressing the issue of Climate Change. If the ministers can come up with an agreed-upon plan to, then in December in Copenhagen, we may have grounds to come up with an true international plan.

And hopefully the United States will continue to step up in the meantime. The recurring theme here is one of getting and maintaining energy for real climate progress. Let's enter a "Climate War" with China where we're each fighting to generate less carbon emissions. That would be a war everyone wins.

Fuel prices and Globalization

Interesting post last week from Cleanbreak about how upward pressures on fuel prices could affect global trade patterns.

The post focuses around the book Why Your World is about to get a Whole Lot Smaller by Jeff Rubin and his thesis that conventional forms of energy will have peaked before non-conventional forms can meet the supply, leading to a rapid rise in energy prices.

I’m not an economist, but this seems to make a whole lot of sense — and it’s been supported by the “inexplicable” rise of the price of oil over the last several weeks. But even if the exact dates that he predicts (somewhere around 2012) aren’t completely accurate, it seems logical that economy transferring from one set of energy sources to another is going to experience some growing pains, which will be felt in terms of higher costs.

According to Rubin’s logic, dramatically higher fuel prices will lead to a sort of reverse globalization and a return to the trade patters of 25 years ago — patterns which will greatly chance the face of the global economy.

In some ways, he suggests, we’re already feeling those effects.

According to Rubin the high fuel prices of last summer and the inflation caused by them ultimately triggered the economic meltdown. As interest rates rose due to inflation, people began to default on their mortgages.

Rubin goes on to posit that over the course of the next 18 months, as the economy rebounds, we’ll begin to see these “reverse globalization patterns” emerge — an emphasis on local agriculture, the return of domestic manufacturing and an increased reliance on public transportation.

Last year I heard Thomas Friedman speak at Duke about his book Hot, Flat and Crowded and the message he gave was that the Energy Revolution won’t occur until there are both winners and losers. At the time, I was thinking primarily in terms of nations (the US versus China) or industries (oil versus solar). But as it becomes clear that conventional forms of energy are going to become increasingly expensive, the first round of winners and losers may be companies that aren’t able to maintain their current supply chain without cheap transportation and don’t have a must-have product.

Or it could be the geographies that rely on cheap transportation to deliver their good or service to the market at a reasonable price. More likely than not, it will be both.

In this case, the winners will be the companies and geographies that can most easily adapt to a world with higher energy costs, either because of alternatives or through investment in unconventional energy.

For the United States, this presents a daunting challenge — after all, a lot of our quality of life is built upon products that we import. But for the developing world, this is potentially devastating, especially for poor countries without a lot of money to invest in fuel-efficient transportation systems or local markets to target. Even for China, all the cheap labor in the world is no good if it’s too expensive to deliver them. The manufacturing jobs they’ve gained over the last 30 years can be moved again just as quickly.

In the end, it’s tough to imagine a world without globalization. Now that we’ve tasted the richness of it (and thanks to the web, we can see it), entrepreneurs will find a way to bring it to the market at a prize the market can bear. But between now and then, disruption in fuel prices will provide opportunities to those with the capital and foresight to invest.

Update: An example of a company poised to exploit these trends: Hara helps companies track and manage the energy and environmental impact of their business processes.

The United States' share of Global Warming

Climate Progress posted today on a report by Greenpeace that used WRI data to approximate the relative share of carbon that had been emitted by countries over the past 150 years.

Its finding's weren't particularly surprising — the United States had emitted the most of any country, followed by China. From what I could tell from the breakdown of the data, if the countries from the EU were totaled, they would rank somewhere near China.

But while the findings of the study weren't particularly surprising, it's statistics like these which will dominate the negotiations between the United States and China. Developing countries like China argue that Western Nations are using climate change as a way to maintain the status quo. After using "dirty development" to establish dominance, they're asking the rest of the world to develop using more expensive standards, which will slow growth in developing countries.

It's logic like this which kept China and India from participating in the Kyoto Protocol and will likely complicate the Copenhagen negotiations (referenced earlier as "one of the most complex in the history of the world," by Sen. Edward J. Markey).

From China/India's prespective, this makes a lot of sense, even if you agree that access to cleaner energy is the way of the future (which, based on their investments, it seems like they agree). Why give your biggest competitors a leg up on you as you develop?

The United States, meanwhile, allowed this attitude to keep them from ratifying the Kyoto agreement. This time around, I think they should do the opposite — push for the highest standards possible, as a matter of principle. Then, use this principle to justify levying a "carbon tax" on imports, revenue from which will be used to offset American emissions. Doing this would use the power of the American Consumer to force our biggest suppliers to comply with the same standards we are, while allowing us to claim the moral high ground while we begin to re-tool our economy for a more energy efficient future.