A new report by Mckinsey and company estimates that US can reduce the emission of greenhouse gases by half at a manageable cost,

The United States could reduce GHG emissions in 2030 by 3.0 to 4.5 gigatons of CO₂e using tested approaches and high-potential emerging technologies. These reductions would involve pursuing a wide array of abatement options with marginal costs less than $50 per ton, with the average net cost to the economy being far lower if the nation can capture sizable gains from energy efficiency. Achieving these reductions at the lowest cost to the economy, however, will require strong, coordinated, economy-wide action that begins in the near future.[link]

Download the full report here.

As expected, the Nobel peace prize for 2007 has been awarded for raising awareness about global warming to Al Gore and the United Nations Intergovernmental panel on Climate changed headed by Indian scientist Rajendra Pachauri.

The IPCC came out this year with its fourth report which categorically established global warming as a phenomenon which is inevitable. This report, more than almost anything else has brought the issue of global warming to the limelight. Al gore, the former US vice-presidential candidate is perhaps best known for his film on global warming: An inconvenient truth.

An interesting story illustrates how global warming can change economic fortunes,

Every four years or so, killing spring frosts hit Quebec, nearly obliterating the year’s harvest around St.-Jean Lake, while Down East Maine, some 563 kilometers, or 350 miles, southeast, reliably produced millions of kilograms a year for use in jams, pie fillings and muffins.

But temperatures are rising in Canada, and so, too, are the annual blueberry harvests – giving a whiff of how global warming could shift economic fortunes.

Killing spring frosts occur half as often now as in the 1950s, with the decline most noticeable in the last 20 years, and Quebec growers have gained the confidence to expand production to take advantage of skyrocketing worldwide demand. As a result, Maine blueberry producers are uneasy about competition from their northern neighbor – and their future.

“No question we are worried about Quebec,” said Ed Flanagan, president and chief executive of Jasper Wyman & Son in Milbridge, one of Maine’s largest blueberry producers. “It’s not clear yet if we are going to lose or win with climate change.”[link]

An interesting new article in Foreign Policy argues that it might be too late to stop global warming and the world should be prepared to live with its effects,

A realistic look at climate change suggests that it is time to change the debate. In 2005, a paper published by the U.N. Environment Program put average global economic losses due to “great weather disasters” at $100 billion per year, and projected that it was increasing at about 6 percent per year—enough to double every twelve years, and to total $2 trillion for the period from 2007 to 2020. Policy makers in the United States and elsewhere must start hedging their bets and prepare us to live in this new world. This emphatically does not mean giving up on efforts to slow climate change, which could still measurably reduce the costs of protecting the people and infrastructure most vulnerable to higher temperatures and new weather patterns. Nor should it suggest that the task of adaptation will be easy or cheap. World leaders will face many of the same dilemmas that complicate the current debate: Developed countries, which have produced most of the human-origin carbon dioxide in the air, will be in the best position to cope with climate change and developing countries will want them to bear a disproportionate financial burden for its consequences.[link]

According to the article, the real key is that China (and perhaps India) have become such major polluters that even strictier emission laws in United States will not have much effect. But as Thomas Friedman argues, shouldn’t USA show the way?

Leadership is about “follow me” not “after you.” Getting our national climate regulations in order is necessary, but it will not be sufficient to move China. We have to show them what Wal-Mart is showing its competitors – that green is not just right for the world, it is better, more profitable, more healthy, more innovative, more efficient, more successful. If Wal-Mart can lead, and California can lead, why can’t America?[link]

But as Megan Mcardle argues, United States would find it much harder to cut emissions than Europe,

Environmentalism isn’t as powerful a movement in America as it is in Europe. Moreover, greenhouse reduction is costlier here than it is in Europe. And this is not because Europe is more virtuous. It is because Europe is denser. Which is not because Europe is more virtuous. Europe is denser because it has been agriculturally settled much longer than North America, where agriculture only really got going with the advent of corn ca 1000 AD. And of course, European epidemics killed off many of the local residents, allowing European immigrants to settle their sparsely populated lands.[link]

Food and Agricultural Organization (FAO) has warned that climate change can lead to decrease in food production in India,

Climate change is likely to trigger a “risk of hunger” in India by affecting cereal production by as much as 18% because of floods and droughts, a UN agency has warned.Food and Agriculture Organisation (FAO) said India could lose as much as 125 million tonnes of its rainfed cereal production.

“Rainfed agriculture in marginal areas in semi-arid and sub-humid regions is mostly at risk,” an FAO statement quoted Director-General Jacques Diouf as saying.[link]

Interestingly enough, global warming will actually increase production in industrialized countries. The United States is already the world’s largest exporter, global warming will further help increase its share. Or will ?

As economists David Piemental and Mario Giampetro had concluded in their Food, Land, Population, and the US economy, by 2050, if the current level of growth in US population is maintained, even America will find it difficult to feed its population which will have a huge impact on global food security. Their report came out in 1994 when the global warming debate was largely restricted to avant-garde environmentalists.

And then there is the problem of bio-fuels.

In an op-ed in the Indian Express, the chairman of Shell India, Vikram Mehta argues,

Will the fact that growth (or rather the limitations on growth) is the peg on which India is hanging its objections at the international level sidetrack it from taking appropriate domestic measures to weaken the link between economic growth and atmospheric pollution? Is it conceivable that in the noise of multilateralism India will lose sight of the fact that growth and carbon mitigation are positively correlated; that while growth has no doubt contributed to pollution — emissions in China and India have in absolute terms grown 5 times faster than the US since 1990 and this trend is not decelerating — it is the condition precedent for building the financial resources, the technologies, the infrastructure and indeed the political will to redeem its consequences

[link]

Mehta is confusing two separate issues here. There is little doubt that the government and the industry should work towards mitigating global warming by increasing investment in alternative sources of energy or more efficient energy usage. However, that, by it self, doesn’t mean that in climate change discussions, India should offer unilateral concessions. One is something which will benefit the Indian industry in the long term; the other is a complex multilateral negotiation where concessions are required from all sides and the principle of ”polluter pays” must be upheld.

Despite some disagreements among scientists, there is little doubt that climate change is an ongoing process and represents a monumental challenge. With rapid development of India and China–the latter has recently replaced United States as the world’s biggest carbon emitter, the situation can only get worse.

In an op-ed in the Hindustan times, Praful Bidwai argues that India should be prepared to offer unilateral concessions without demanding monetary compensation from the West.

India’s position on this is especially deplorable. It says “growth … prospects in the developing world” must in no circumstances be “constrained”; higher GDP growth “is the best way for developing countries to address … the issue of … protecting the climate.”

Bidwai offers no proof why this position is particularly deplorable. This is despite the fact that he explicitly acknowledges that the North has been historically responsible for global warming. What India and China are currently engaged in can be termed as the greatest poverty rescue effort in the world–to discount its importance and to entirely dismiss economic growth as tool to mitigate global warming is wrong

North’s development happened in an era unconcerned with environmental degradation. Surely, it is only fair that it compensates countries which are finally seeing the fruits of development.

Bidwai further writes,

However, it’s also imperative that rapidly growing Southern countries, including India, undertake obligations to cut their ballooning emissions. India’s overall emissions are growing almost four times faster than the global average. They are expected to rise two-and-a-half times by 2030. Vehicular emissions are projected to rise about six-fold.

Even if the North reduces its emissions by 80 per cent by 2050, developing countries, including India, will still need to cut theirs by about 60 per cent. This must immediately translate into quantified stage-by-stage emission cuts

This is a big ”if”. America has consistently refused to sign the Kyoto agreement which is set to expire in 2012. If the world’s biggest polluter is not willing to sacrifice economic growth at the altar of global warming, why should India do so especially when ”an average Indian contributes only 1/20th to global warming as an average American”?

Also, Bidwai figures fails to take into account the fact that both India and China have started from an extremely low base–the per capita consumption of electricity in India is 1/40th that of America. Compared to America’s over 170 million vehicles, India doesn’t have even 1/10th the number.

It’s pernicious to cite per capita emissions as the sole ethical criterion for defining global responsibility. Per capita numbers mean little in India’s highly unequal, stratified society, with some of the world’s highest rich-poor inequalities. Nor do they take into account India’s low per capita access to “natural sinks”, like oceans and forests. It is not India’s poor, the bulk of whom survive at subsistence level, whose emissions are rising. It is the 80 to 100-million-strong rich and middle-classes, who are on a consumption binge — as if there were no tomorrow.

Bidwai dismisses 80-100 million people as if they are completely inconsequential. Suffice to note that this number constitutes roughly 1/3rd of the populations of America and Europe.

Bidwai’s two India theory, while consistent with his ideological leanings, flies in the face of facts. India’s Ginni coefficient of 32.5 ranks favorably with that of United States and other developed countries. Irrespective of that, Bidwai is missing the entire point. India’s growth has propelled millions of people into middle class–after all, what was the size of India’s middle class before the economic reforms of 1991? Declining poverty levels continue to increase this already substantial number.

Bidwai himself argues that 700 million people in India continue to lack the basic necessities of life. Is that the existence he wishes for them? India’s growth is absolutely essential for hundreds of millions living in degrading poverty.

Amusingly enough, Bidwai is not so dismissive of the elite when it helps him advance his own agenda. In the beginning of his op-ed he cites a survey done in 14 countries which showed that people were deeply concerned about global warming? Who were the survey recipients? Were they not the same elite whom Bidwai despises?

To demand that people unilaterally give up development and go back to the pre-industrialization era is not only Utopian but immoral. People in India and China have every right to enjoy the same comforts of life which their counterparts in the industrialized world have enjoyed for centuries. Bidwai perception of electricity and air-conditioners as ”wasteful” would find no resonances in circles outside his own.

Bidwai is dismissive of initiatives like CNG bus system in Delhi and even the Delhi metro, and argues that there is no evidence that they have led to a cut in pollution levels. Delhi metro’s entire network consists of 58 km (New York’s system is over 700 miles), and yet–it is already showing a positive effect on pollution in Delhi. A study by Murty et al of the University of Delhi’s institute of economic growth has shown that by 2005-06, metro has caused a substantial reduction in the demand for private vehicles (over 300,000). This is exactly why city governments all over the world have build public transport systems! With the proposed metro system in other mega-cities like Bombay and Bangalore, the effect on pollution would be substantial.

Bidwai further writes,

India admits there is a universal obligation to mitigate climate change. A universal objective is worth pursuing; it is intrinsically a global good. No conditions should be attached to it — e.g. extraneous benefits such as free technology, or a Marshall Plan-II, which subsidies the South.

Bidwai’s argument is reminiscent of an era when India demanded de-nuclearization of the Indian ocean in the name of world peace. Not only would such unilateral concessions make little effect on global warming–especially if the developed world continues to play truant, it would have a deleterious effect on India’s growth. Is this a price worth paying for such empty moral victories? Did India’s ”moral” agenda during the cold war days had any effect on its dynamics?

Much like the conflict during the cold era, global warming is a new global struggle where homilies like morality serve as a thinly disguised weapon to advance strategic interests. Nations will not give up their own advancement in the name of ”moral duty”–one can plainly see it in the struggle for energy resources. India has no choice but to play this game.

This is not to argue that India shouldn’t participate in the global warming debate. However, actively participating in the debate, the government must not offer any unilateral concessions. It must also ensure that India’s growth doesn’t suffer, and any financial repercussions are commensurate with India’s contribution to global warming. In the interim, (and here I agree with Bidwai), the Indian industry and the government must attempt to become more energy efficient. Considering India’s chronic power shortage, it is only in their interest to do so.

I have wondered previously, in the context of global warming, about how energy efficiency and carbon cutting measures might be of economic benefit. This Economist article talks about an interesting study undertaken by Vattenfall, a Swedish power utility, to quantify the economic costs of various emission control measures. (via)

The measures below the horizontal line have a negative abatement cost—in other words, by carrying them out, people and companies could both cut emissions and save money. At a macroeconomic level they would boost, rather than reduce, economic growth.

Apparently, simple measures undertaken by the individual, such as better home insulation and replacing regular incandescent light bulbs with fluorescent ones are the best money saving bet. However, as the Economists notes, these are also the most difficult policies to enforce because the final decision rests with billions of people.

Economists trying to explain this apparent irrationality suggest that the savings are too small and the effort involved in change too large. People find their electricity bills too boring to think about; within companies, those responsible for keeping bills down may not have the authority to spend the necessary capital. Another explanation is the agency problem: that the developer who would have to pay higher capital costs up front will not be forking out for the electricity bills. Besides, people buy houses not because they have good insulation but because they have pretty views.

Compared with pursuing greater energy efficiency, the abatement measures into which so much money is now being poured look rather expensive. Carbon capture and storage and wind and solar power, for instance, all have positive, and relatively high, abatement costs.

But the cheapest sources of abatement are difficult for policymakers to get at. Billions of different actors are involved. They cannot be targeted in the way that a few hundred factories can. What is more, a moderate carbon price is not likely to be effective, since people clearly do not care enough about cost.

Read the whole article for potential policy directions based on these findings.

In this context, it is worthy to note Australia’s recent decision to phase out incandescent light bulbs by 2010.

Also, previous posts on Policy Wise related to the use of fluorescent bulbs.

A new UN report claims that the war in Darfur is due to climate change,

The UNEP investigation into links between climate and conflict in Sudan predicts that the impact of climate change on stability is likely to go far beyond its borders. It found there could be a drop of up to 70% in crop yields in the most vulnerable areas of the Sahel, an ecologically fragile belt stretching from Senegal to Sudan. “It illustrates and demonstrates what is increasingly becoming a global concern,” said Achim Steiner, UNEP’s executive director. “It doesn’t take a genius to work out that as the desert moves southwards there is a physical limit to what [ecological] systems can sustain, and so you get one group displacing another.”

He also pointed to incipient conflicts in Chad “at least in part associated with environmental changes”, and to growing tensions in southern Africa fuelled by droughts and flooding.[link]

And it warns that the future remains grim,

..which threaten to trigger a succession of new wars across Africa unless more is done to contain the damage, according to a UN report published yesterday.

“Darfur … holds grim lessons for other countries at risk,” an 18-month study of Sudan by the UN Environment Programme (UNEP) concludes.

Shahidul Mullah has not even heard of global warming. He has no electricity or telephone or any of other modern comforts being blamed for global warming. But he lives in coastal Bangladesh, and he and others like him would bear brunt of global warming.

Thanks to climate change, however, Shahidul’s life is being derailed. Serious cyclones are becoming more frequent, says the farmer; this year, there was a severe cyclone even before the monsoon season began. Weather experts have in fact registered an increase in such storms in recent years — from once every 20 years to once every five years. Shahidul is not familiar with this research; his only option is to pray every evening that no storm will roll in the following morning…Indeed, Shahidul and the other inhabitants of southern Bangladesh have no choice but to wait for the coming climate crisis as well. Shahidul Mullah would like for his children to have the opportunity to live elsewhere someday. But their chances aren’t promising.[link]

The biggest problem with the global warming debate is (apart from the science itself) is that those who are in most danger from global warming are in no position to help themselves. Invariably, they are also those who had no role in global warming itself.