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Break the carbon curse to curb global emissions

Nations under the spell of cheap and plentiful fossil fuels are carbon cursed. Chris Radburn/PA

Regardless of economic strength or level of development, countries with substantial fossil fuel resources are almost certain to be heavy carbon polluters – a phenomenon dubbed the “carbon curse”.

A study by Oxford University academics Joerg Friedrichs and Oliver Inderwildi published today in the journal Energy Policy suggests policy makers should turn to the fuel-rich nations first to start reducing carbon emissions. With more resources such as coal, oil, or gas to waste, invariably such countries are the worst polluters.

While this may seem obvious on the surface, the authors identify four mechanisms at work. Extracting the resource is energy intensive (oil drilling, coal mining) and often wasteful (eg, gas flaring). Cheap, plentiful fuel means a low incentive to invest in energy efficiency. Governments are under pressure to offer uneconomic subsidies to citizens who expect to benefit from their nation’s natural resource, and cheap fuel crowds out demand for other forms of energy production such as renewables. Each of these pushes the country’s carbon intensity (measured in CO2 emissions per unit of GDP) far higher than comparable countries that lack natural resources.

These perverse incentives almost guarantee that fuel-rich countries will struggle to reduce carbon emissions, whether they are developed or developing nations. The 41 countries studied included OPEC petro-states like Saudi Arabia, Venezuela, Iraq, and Nigeria, developed economies including European nations, the US, South Korea, South Africa and Australia, and developing economic powerhouses like China, India and Brazil. In almost every case, the fuel rich nations suffered the carbon curse, with high emissions and high inefficiencies. The only countries to buck the trend were Norway and the UK – both fuel producing states that nevertheless achieved lower carbon emissions and energy efficiency.

National carbon intensities in 2008, with oil-rich states marked red, coal-rich states blue. *Russia is rich in coal, oil and gas. J Fredrichs & OR Inderwildi/Energy Policy

Dr Friedrichs said the analysis offered an alternative way of approaching climate change discussions that moved away from the “blame game” played out between established and developing economies, where each demands the other make emissions reductions.

“Policy makers should be aware that the main division is not between advanced and emerging economies, but between fuel-rich and fuel-poor,” he said. “If you want to understand why a country has a high carbon intensity, it will tell you more to look at resources than other economic indicators. Put simply, scarcity leads to responsible use of a resource; abundance the opposite.”

Even countries such as Germany – among Europe’s strongest advocate for renewables and emissions reduction – faired poorly because it produces and uses large amounts of lignite, a highly polluting brown coal. Likewise Australia and Canada were brought down by their coal and tar sands industries.

Carbon intensity compared to size of mining and utilities relative to GDP, showing cluster of fuel-poor nations in green in the low-emissions corner. J Fredrichs & OR Inderwildi/Energy Policy

Dr Dabo Guan, senior lecturer in environmental economics and governance at Leeds University, said that climate change discussions hinged on whether governments sought “low carbon” or merely “lower carbon” solutions. For example, as carbon intensity is expressed in relation to GDP, it can be driven down by substantially increasing GDP, rather than lowering overall emissions. Of course in the course of manufacturing, processing, and selling more things to increase GDP, carbon emissions would inevitably also rise substantially – the opposite of the intended aim.

He said: “In climate negotiations India and China talk about relative, ‘lower carbon’ targets and relative indicators, not absolute targets for low emissions. China says by 2020 it will reduce carbon intensity by 45%, but if the economy continues to grow and GDP increases more than emissions, doing so is no problem.” Producing 40% of the world’s steel, 60% of concrete and around half of the world’s metal processing, China’s unencumbered economy can produce considerable income, and emissions.

The product of a huge amount of these emissions are in any case destined for the less-polluting West. “Norway, the UK, the West – we rely heavily on imported oil and gas from Africa, Asia and the Middle East. We have essentially outsourced our emissions to these countries,” Dr Guan said.

A further problem is that countries that have lowered carbon emissions to a certain level experience diminishing returns on the huge amount of money spent to lower them further. Better instead, globally speaking, to tackle the more polluting nations where cheaper, easier to implement measures have not yet been taken. Unfortunately these are the states whose often corrupt or powerful controlling elites have the least incentive to do so, or where wasteful practices such as gas flaring from oil wells are commonplace despite electricity black outs and fuel poverty among the people.

Dr Friedrichs suggests the answer is for petro-states to fund R&D in high-tech nations so that the fruits of their combined cash and labour – technologies like carbon capture and storage or supercritical steam generators for efficient power plants - can be offered back to the developing world, for everyone’s benefit.

One of numerous thorny political questions in climate negotiations. But while it is easier said than achieved, the achievements of Norway and the UK show that it is possible, with the right policies and determination to act, for states to break the spell of fossil fuels and lift the carbon curse.

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