News emerging from Washington last week suggests climate change may amount to more than an FAQ in the appendices of this November’s G20 leaders’ summit agenda. President Obama’s deputy national security adviser for international economics, Caroline Atkinson, has made the point that, as the G20 economies generate 80% of the world’s carbon emissions, the group should give a political push to “specific steps” to address climate change.
To date, the Australian government has made it clear climate change is a subject that will not be on the agenda when the G20 leaders meet in Brisbane next month.
The rationale, according to Prime Minister Tony Abbott when quizzed about this at the World Economic Forum in January, is that the focus of the G20 needs to be on economic growth, and he did not want to “clutter up” the agenda.
This did not go down well with the US or the EU who have reportedly used official channels to lobby for its inclusion. Other critics include Christine Lagarde, the head of the International Monetary Fund (IMF), and the Committee for Economic Development in Australia (CEDA).
Lagarde said it would be a mistake to assign climate issues to “the backburner”. CEDA, meanwhile, published a report in August entitled Australia’s Brisbane Summit challenge: Securing G20’s future in which the chief executive of CEDA, Stephen Martin, noted climate change is a “major economic issue”.
Martin also stated that the G20 Summit could “act as a springboard” for the important climate change forums that follow, such as the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) in Paris next year.
It’s all about growth
Undeterred, the Abbott government has pressed ahead and, at the G20 website, the words “climate” and “sustainability” are absent from the official policy note. The word “sustainable” does appear, but as an adjective to describe economic growth.
Meanwhile, in the frequently asked questions – in answer to: “What is the G20 approach to addressing environmental issues? What is the G20 approach to climate change?” – it is noted that there are “aspects of the G20’s work to strengthen economic growth and boost resilience” that can contribute to addressing key environmental challenges and climate change. Most notably, the phasing out of inefficient fossil fuel subsidies and energy efficiency.
Whether, as chair of the summit, Tony Abbott will be able to restrict this discussion only to the topic of energy efficiency is a moot point. The prime minister may also find himself on shaky ground in the area of infrastructure development if the debate veers towards strategies to encourage investment in clean energy. This week’s pronouncement that “coal is good for humanity” is unlikely to win too many plaudits among G20 leaders with the possible exception of Canadian Prime Minister, Stephen Harper.
The latest Renewable Energy Country Attractiveness Index (September 2014) produced by EY shows China leading the way with the US in second place. Australia slipped from ninth to tenth place. (It ranked fourth in May 2013.)
The problem for the Abbott government is that if China, the US, and the EU are increasing their efforts to combat climate change, any recalcitrance on its part to embrace some coordinated effort could be challenging. These big investors in renewables are also unlikely to be persuaded by the arguments of the coal lobby.
Market forces
As attendees of a Griffith University conference noted last week, there is really no need for the government to take such a dogmatic stance on climate change and its inclusion on the G20 agenda. It is not kowtowing to the environmental movement or the political left – this is now mainstream economics.
To talk about economic growth and not contemplate the costs of climate change seems to defy all logic, especially when capital markets are sending clear signals that asset portfolios with high exposure to fossil fuels are carrying increased financial risk.
In this regard, there is nothing “bizarre” about the decisions of ANU, Stanford University, the Rockefeller Foundation and others to divest themselves of their interests in fossil fuel companies. This is market forces at work.
Is GDP growth making life better?
In an era when humanity consumes resources at a rate that requires one and half planets to service our demands, placing enormous strain on life support systems, there needs to be a more sophisticated debate about economic growth.
While this debate is unlikely to take place at the G20 summit in Brisbane next month, if we are to continue to use economic growth as a barometer of well being, we should probably be asking: growth of what, and for what?
Climate change is actually good for GDP because all expenditure, whether it goes on mitigation, adaptation or cleaning up after extreme weather events always goes on the “plus side of the ledger”. Expenditure of this kind, however, is preserving and defending our well being, not enhancing it.