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The right incentives for a low-carbon future

When policymakers get to work designing strategies for executing the Paris agreement, they should not rely heavily on rising energy costs to advance their objectives. European Climate Foundation chief economist Thomas Fricke lays out a better approach.

The climate agreement that world leaders reached in Paris last month has been widely celebrated for establishing the ambitious target of limiting the increase in global temperature to well below 2º Celsius above pre-industrial levels. But the agreement is just one step, albeit an important one. Policymakers now must figure out how to achieve this goal – no easy feat, especially given that, contrary to the conventional wisdom, steadily rising costs for conventional energy cannot be counted on to propel the necessary shift toward a low-carbon future.

At first glance, the logic of negative economic incentives seems sound. If, say, driving a gas-guzzling car becomes more expensive, people will presumably be less likely to do it. But the impact of changing fuel prices is partial and delayed. While drivers may purchase a more fuel-efficient car in the long run, they are more likely, in the shorter run, to reduce other kinds of consumption to offset the rise in cost. When it comes to resolving a problem as urgent as climate change, Keynes’s famous dictum – “In the long run, we are all dead” – clearly applies.

Moreover, even if consumers did respond efficiently, fossil-fuel prices are dictated largely by heavily financialized markets, which tend to be extremely volatile. The sharp decline in oil prices over the last 18 months is a case in point. Not only have oil prices themselves failed to spur a reduction in consumption; they have undermined incentives to develop alternative energy sources. Investing in, say, solar power may have seemed worthwhile when oil cost $100 per barrel, but it looked a lot less appealing when the price dropped below $50.

Conceivably, policymakers could raise taxes to offset such declines. But such hikes sometimes (like now) would have to be huge, and adopting erratic policies that mirror the volatility of the market is never a good idea.

Carbon pricing could experience a similar fate. In the European Union, carbon prices have been low for several years, and for now market participants seem to be following the herd in believing that they will remain so. But there is no guarantee that free emissions trading will not function like other financial markets, producing sharp fluctuations in CO2 prices. Should expectations suddenly change, the herd might turn and run in the opposite direction, causing CO2 prices to soar.

Yet another problem with the price-based approach to mitigating climate change is that it fails to account for markets’ potential to create perverse incentives. When the cost of conventional energy rises, new suppliers see an opportunity; thus, before June 2014, when oil prices were high, investors poured resources into developing shale oil and gas in the United States.

The additional supply, however, ultimately causes prices to fall, reducing the incentive to invest in alternative energy sources or energy efficiency. This is a normal market reaction, but it does not advance the fight against climate change, which would require steadily rising costs.

The final reason why negative incentives alone are inadequate to mitigate climate change may be the most irrational: after some years of rising taxes, the public is staunchly opposed to any policy that may increase energy prices, regardless of whether current prices are high or low.

People are so convinced that energy costs are “exploding,” despite the recent oil-price collapse, that any new project implying even slightly higher prices – even if overall energy prices are still lower than they were five years ago – is now exceedingly difficult to initiate.

The implication is clear: When policymakers get to work designing strategies for executing the Paris agreement, they should not rely heavily on rising energy costs to advance their objectives. A strategy that assumes that the market will punish those who do not invest in a low-carbon future is not realistic.

A better approach is possible: Directly reward those who do invest in a low-carbon future, whether by enhancing energy efficiency or developing clean energy sources. For example, governments could implement accelerated depreciation schemes for investment in low-carbon businesses; offer subsidies for investment in energy-efficient buildings; and create policies that favor industrial innovation aimed at reducing emissions and boosting competitiveness. All of this would make fossil fuels less attractive to both investors and consumers.

While an approach based on such positive incentives would be costlier than tax hikes in the short run, the long-term benefits can hardly be overstated. At a time of strong resistance to higher energy costs, this may well be among the most effective – not to mention politically savvy – mechanisms for advancing the goals set out in Paris.

Source: eco-business


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COP21: Global Solar Council launches with call to end all trade barriers by 2020

Canadian Solar CEO and Global Solar Council board member Shawn Qu says solar can only tackle climate change effectively if there is global commitment to free trade.

The COP21 UN Climate Change Summit in Paris saw the launch today of the world’s first dedicated and unified body for the solar industry, the Global Solar Council (GSC).

Amid a backdrop of slow but encouraging progress on climate change at the wider COP21 summit, the GSC launched with a clear message from one of its board members: collaboration and the removal of trade barriers is key if solar is to fulfill its promise of changing the earth’s energy landscape.

Among the speakers at the launch of the GSC was Canadian Solar CEO Shawn Qu, who said that he believes that the GSC’s two chief goals should be ending the use of kerosene lamps worldwide by 2025, and pushing to remove all solar trade barriers globally by 2020.

Qu is a Global Solar Council board member and while he does not speak directly on behalf of the Council, he and Canadian Solar have specifically singled out tackling kerosene use for lighting as a worthy early target for the organization. The CEO is also personally championing the removal of solar tariffs from within the Council.

“Every country that participates in solar has its own strength,” Qu said. “Some, like Germany and Switzerland, are skilled in making the machinery required; others are good at production and distribution, and some regions are great at system integration.

“Only with the free flow of products, technology and expertise – unhindered by trade barriers – can solar continue to reduce costs and play its role in the fight against climate change.”

Qu called on governments to work with the GSC (which includes 17 solar associations from around the world, including Solar Power Europe, SEIA, MESIA and Germany’s BSW) to remove all trade barriers within five years, stating that the only way to tackle climate change is for the world to agree on a global commitment to free trade.

The GSC was launched just days after it was confirmed that the European Commission (EC) would be extending solar dumping duties and the minimum import price (MIP) on solar modules imported into Europe for at least 15 months.

Alliance the overall message
Inaugural GSC chairman Bruce Douglas revealed that the GSC hopes to work with the Modi-backed International Solar Alliance to spearhead the movement to make solar power “the principle source of electricity generation globally”, and that message was underlined by the signing of an MoU between the GSC and the Terrawatt Initiative – a program aimed at meeting the International Solar Alliance’s objective of adding 1 TW of solar capacity globally by 2030.

Also present at the launch was Bertrand Piccard, co-founder and pilot of the Solar Impulse aircraft, which is currently halfway through a round-the-world solar flight. Piccard acknowledged that the attendant audience was “100% pro-solar”, and urged: “Your job begins when this conference finishes. You have to get out there and spread this message that solar power is ready to change the world.”

John Smirnow, the GSC secretary-general, had a similar message in his opening address. “Solar has arrived!” he said. “The goal now is to encourage the wide-scale adoption of solar energy through cooperation, education and training.”

Speaking to pv magazine at the launch, GSC co-chairman Gianni Chianetta said that such a global alliance has been eight years in the making, and the looming COP21 summit gave the GSC the push it needed to launch.

“The first goal of the GSC is to bring the value of solar energy to a wider audience, and to make solar a leader in the energy mix, more quickly than the pace we have seen so far.

“Solar is the most democratic energy source. And it is important that solar speaks with a global voice because we need to have a common vision, worldwide.

“The target of solar is not only to reduce the use of fossil fuels, but to increase the use of solar in other complementary sectors, such as transportation, desalination, etc,” Chianetta added. “This means working with all of the big organizations that are aligned with our target, particularly in storage, which is a very important sector for the solar industry.”

The GSC launch took place alongside the IRENA RE-Energizing the Future Conference, a side event of COP21 that sought to address what more governments and big business can do in helping to nurture further innovation and investment in renewable energy worldwide.

Source: reneweconomy


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Why green building will be the real superhero at Paris

Is it a bird? Is it a plane? No. But it’s not superman either. COP21 in Paris is set to have a more unlikely hero: green building.

If you think that’s a rather bold way to begin a blog, the facts speak for themselves. Buildings – and mostly the world’s old, energy guzzling and inefficient ones – currently account for around one third of global greenhouse gas emissions. They also place pressure on the world’s valuable resources – an astounding 40 per cent of global resources and 25 per cent of global water are used in buildings according to the United Nations Environment Programme.

But by the same token, green buildings – ones which have limited, zero, or, in some cases, positive impacts on the environment – can relieve this burden on resources and significantly reduce emissions.

84 gigatonnes of CO2. That’s the figure that the World Green Building Council and the International Energy Agency have projected must be reduced by 2050 if the sector is to play its part in limiting global warming to 2 degrees. To put that into context, it’s the equivalent of not building 22,000 coal powered power stations by the middle of this century.

It’s an enormous challenge, but this large-scale reduction of emissions is absolutely possible. It will take transformative action and collaboration, something that will be shown on an unprecedented scale tomorrow.

On Thursday, politicians, business leaders and NGOs will meet in Paris for the official COP21 Buildings Day – the first of its kind at any UN climate change negotiations – to set out how the buildings and construction sector can play their part in steering the world from the brink of dangerous global warming.

Initiated by the WorldGBC, France and other partners, it is being championed by Ségolène Royal, France’s Minister of Ecology and former presidential candidate. Ms Royal, together with the likes of the global CEO of French product manufacturer Saint-Gobain, the Deputy Assistant Secretary for International Climate within the Obama Administration and the Mayor of Sydney, will make the case to countries that green building is one of the most cost-effective solutions to climate change.

They will tell the world how green buildings create major economic opportunities, such as a projected 3.3 million US jobs by 2018 – more than one third of the entire US construction sector.

They will highlight how green buildings are better for people’s health, wellbeing and productivity – such as the estimated productivity improvements of up to 11 per cent from green features such as improved indoor air quality.

But perhaps most importantly, they will show how green buildings represent one of the best ways for countries to meet their Intended Nationally Determined Contributions (INDCs). At least 40 countries have specifically referred to the buildings sector as one of the means by which they can achieve their INDCs. And Buildings Day will also see the launch of a new alliance of more than 100 countries, cities and organisations – including WorldGBC and its network of 74 Green Building Councils – that will publicly commit to supporting countries to meet these targets through green building.

National Green Building Councils are also playing their part within their own countries – driving transformative action on the ground in a variety of ways. The Indian Green Building Council has, for example, committed to facilitate almost 1 million square metres of registered green building and to help the Indian Government meet its INDC through green building policies. In Australia, Canada and South Africa, the Green Building Councils have committed to introduce Net Zero certification schemes for buildings with no net annual carbon emissions, which will be critical in highlighting building assets that are at a reduced risk of exposure to the effects of our changing climate.

So when you look to the sky for something that might solve our climate crisis, you might not see a flickering cape or bat-shaped sign, but you will see a green building. With the potential to reduce global emissions by up to a third, that’s an achievement worthy of a superhero.

Source: southernafrican


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#ParisAttacks: The effect on SA tourism. Should we be worried?

The terrorist attack in Paris, France on the 13 November 2015 was tragic and a sad reminder of the strife riddled times we live in. More than a 100 people lost their lives as ISIS terrorists launched an attack in the French capital city. Francois Hollande, the French president has already declared this ‘’an act of war’’. The context of Paris right now is similar to the context of New York on September 11, 2001.

The government of France has retaliated by launching air strikes the stronghold of ISIS, namely Raqqa in Syria. The terrorist attack on French soil will have a detrimental impact on both inbound and outbound tourists. Paris is not just one of the top tourist attractions in the world, it is one of the countries that produces outbound tourism for the world.

Tourism is super sensitive to acts of terrorism and such events have a negative impact. In the latest Tourism and Migration, July 2015 France produces 5.4% of the total number of inbound tourists from international countries, representing 8 795 tourists to South Africa. South Africa seeks to increase the length of stay of tourists, increase their expenditure and that they must travel to all corners of the country to achieve shared growth.

South Africa is a ‘’new’’ tourists destination relative to other destinations. South Africa knows the impact of the 1996 bombing of Planet Hollywood in Cape Town, and how the Ebola outbreak had a detrimental impact of tourist arrivals. The relaxation of the visa regulations in South Africa will obviously lead to an increase in the number of tourists to South Africa.

South Africa needs tourism much more as the country is experiencing declining tax revenue, the Rand has depreciated to levels last seen in 2001, the worst drought in more than 20 years, and the current account deficit is widening. There is a social gap that exists between government and the private sector, as there is ‘’uncertainly’’ about the future. The fact that tourism is now adopted as a major economic sector it required more attention especially with the creation of a separate Ministry of tourism in 2009.

Because terrorists always target tourist destinations, the growth of tourism must be supplemented by the growth of pro-active policing and counter-terrorism measures. In addition, one of the challenges of destination South Africa is the low levels of personal safety and security for tourists, which limits tourist arrivals. It must be noted that the current rise in terrorism is linked to many countries in the West leading to regime change in non-European countries for reasons best known to them.

It must be noted that it is these countries of the West that produce the greatest number of outbound tourists. Tourists sites become soft targets for tourist attacks as these tourist sites would be frequented by tourists from the West. In Africa, almost all terrorist attacks happen in sites frequented by international tourists. This correlation means that the tourism industry needs special attention form a safety and security perspective.

In the post-1994 era South Africa has attracted major sporting events culminating in the hosting the 2010 FIFA World Cup. The positive mileage from the 2010 FIFA World Cup™ has improved the image of the country. The City ofeThekwini has won the right to host the Commonwealth Games, which will be another major sporting event that will be first on African soil. The country has become not just a tourist mega destination; it is increasingly attracting thousands of tourists to our shores.

The tourism industry has grown in importance as primary industries such as mining, agriculture and manufacturing have been declining in their share of GDP contribution. The terrorist attack in Paris is detrimental to tourists arrivals from the French tourists to South Africa, as the France is in the top 5 inbound tourists markets. The immediate challenge is to encourage the domestic tourism and regional tourism to mitigate against the potential decline in tourist arrivals from France generally and Europe generally

South Africa needs to investigate bottlenecks and red tape that may have a detrimental impact on the experience of regional tourists that wish to visit destination South Africa. The fact that Air China will not operate between OR Tambo and Beijing will add more aviation capacity from this important BRICS country. BRICS countries can be relied on to ensure that South Africa diversified its inbound tourism markets. On 8 September 2015, the United States Diplomatic Mission sent out a Security

Threat to U.S. Interests in South Africa that received information that extremists may be targeting U.S. interests and facilities. This threat was dismissed by the South African government. I hope that the government will monitor what happened in Paris. There was a terrorist attack in North African tourist destinations, and there was an attack on Kenya’ Westgate Mall, all major tourist destinations including South Africa.

In a paper titled List of Possible Terrorists in SA Disclosed by Dennesha Pillay noted that South Africa is already identified as a safe haven for terrorists as it has been used as a base. Tourism is an industry that required peace as a pre-requisite for growth, even a threat of terror can deter tourists. South Africa must prepare for a terrorist attack, it is better for the country to be prepared. South Africa must prepare a tourism crisis management plan so that would be cascaded to each province and each municipality.

Source: biznews


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The Guardian view on Paris, terror and climate change: shaping the future

While Europe is on high alert against another murderous terrorist attack, it will be hard for Paris to look beyond the next 24 hours. But soon delegates start arriving in the French capital for preliminary meetings ahead of COP21, the United Nations climate change summit which will be launched on 30 November with all the grandeur attendant on a gathering of global leaders. There is a certain symmetry to the two events that goes beyond the nightmare task facing France’s overstretched security forces. As the UK foreign secretary Philip Hammond pointed out in an important speech in the US only days before the Paris attacks last Friday: “Unchecked climate change … could have catastrophic consequences – a rise in global temperatures … leading in turn to rising sea levels and huge movements of people fuelling conflict and instability.

”There are reasons to be optimistic about a useful outcome from these negotiations, not least the determination of President Barack Obama’s team to deliver a deal with some kind of legal force. But any deal will mark the start rather than the end of the process.

The world has learned from previous failures. The innovation of asking every country for its own intended nationally determined contributions in advance of COP21 is that they reduce the wriggle room, at least for the time being. Wednesday’s big speech from the UK energy secretary Amber Rudd, setting a cut-off date of 2025 for coal-fired power stations, will underline that sense of commitment and should help to build some momentum ahead of the talks, even though it is only a small advance on the policies she inherited. It is also a necessary reaffirmation of the Conservatives’ pledge to green the electricity supply which had begun to seem questionable after its widely criticised decision to end subsidies to wind and solar power unexpectedly early.

Ms Rudd said she was resetting UK energy policy and if she didn’t quite do that, she did make a more or less coherent pattern from the fragments that have emerged since the election in May. It is a plan. Yet with its contradictions and conditional undertakings, it did not quite add up to a clear path through the so-called energy trilemma: the balance to be struck between security, sustainability and affordability. Take the commitment to phase out coal over the next 10 years: it came with the caveat that it would not happen unless there was a clear and reliable alternative. Given the continuing uncertainty over new nuclear (which, in the Rudd plan, is what stands between decarbonisation of electricity supply and the lights going off), that means new gas-fired power stations – less dirty than coal, but still a finite fossil fuel. The plan will also entail exploiting shale gas, which is so far entirely untested in the UK and already politically neuralgic. And if gas is to be the core of energy supply beyond 2030, when electricity is supposed to become carbon free, then serious money needs to go into developing carbon capture and storage. CCS merited just one mention in Ms Rudd’s speech.

As for the decision to phase out subsidies for renewables, it was defended as part of a necessary move towards making green energy competitive with other fuels, even though that is something nuclear power will not be for the foreseeable future. However, there was a little good news for renewables: there will be subsidy for new offshore wind, when it can compete with the cost of new nuclear. The bad news is that although off-shore generation costs have fallen by a fifth in two years, there is still a distance to travel.

Decarbonising power supply is proving hard enough. But it poses a lesser challenge than weaning the nation off its gas-fired heating, and luring it out of its diesel- and petrol-powered cars. That puts the greatest burden of reducing carbon emissions on electricity generation. The cheapest way to get there, the way that would make most difference to consumers and shrink their energy bills by the greatest amount, is to increase energy efficiency. Ms Rudd seems to have left that part of her plan in her pending tray.

Britain does have a positive message to deliver in Paris, and that can only be good news. But the world has not yet come up with a way of holding global warming below the critical 2C. The serious negotiation in Paris will be about monitoring and enforcing compliance and setting a formula to ratchet up commitments into the future. For the UK, the Rudd plan, heavy on gas and light on efficiency, will make the next step in carbon emission cuts harder than it needs to be.

Source: theguardian


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