Analysis, Article
15 July, 2011

The Future Is Low Carbon

Sergio Abranches

Moving from a high-carbon to a low-carbon economy entails replacing the global energy and industrial high-carbon infrastructure over the next decades. UN’s recent Economic and Social Survey 2011 – The Great Green Technological Transformation estimates replacement costs at $15-$20 trillion, or between one quarter and one third of global income.This is a herculean task. One that has been interpreted more as an insuperable obstacle than as a great opportunity. The cost and magnitude of the shift seems, at first glance, to be a formidable barrier. It takes diverting a large chunk of global savings and investment towards this task. If we do it as fast as science has been asking us to to, we’ll leave unexploited a wealth of high-carbon, relatively low cost resources. But look again. Using these resources represents an unaffordable climatic and environmental cost. The huge mobilization of monetary values to invest in new activities, new materials, new energy sources, new technologies could feed a long boom cycle of economic activity over several decades. Income and profit gains will more than compensate for the cost of replacement. We could start a long cycle of global growth that would add up to one of history’s longer-lasting periods of increasing prosperity.

Because climate change is a global phenomenon, the shift towards a low-carbon economy has to be a global one. It creates distributive risks and advantages. Leaders of several developing and underdeveloped nations argue that it represents a burden they cannot afford. They also say that since they’re not responsible for the GHG emissions that caused the problem, they have no obligation to act. This reasoning corresponds to the “insurmountable obstacle syndrome”. Seeing change as a hindrance impossible to overcome is self-defeating, especially when there is no viable alternative. Besides there is no opting out for anyone.

Obstacles should be viewed as motivations, not deterrents. Rich countries have the opportunity to create an investment dynamic that will by itself be a source of strong job and income creation. Developing and underdeveloped countries have what I call, after Alexander Gerschenkron, the advantages of backwardness. As the UN survey puts it, “developing countries may be able to leapfrog directly to renewable energy sources”. Instead of trying to catch up developed countries through the high-carbon path, they can shortcut to the low-carbon advanced economy.

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