Syndicate content

The World Region

Crystal gazing with McKinsey on resources for the future

Alan Miller's picture

In 1980, the biologist Paul Ehrlich and business school professor Julian Simon famously wagered on the likelihood of resource scarcity over the coming decade. Based on his expectation that population growth would lead to a rapid growth in demand for basic resources, Ehrlich bet that the prices of five commodity metals would increase; Simon, argued that rising prices incent human innovation and consequently that resource prices should be stable or declining. In the decade that followed, despite population growth of 800 million, the prices of all five commodities chosen by Ehrlich declined and he paid the bet. In July 2011, the investor Jeremy Grantham noted that if the bet had been extended to 2011, Ehrlich would have won – by a lot. 

McKinsey Global Institute, a research arm of McKinsey & Company, recently revisited the debate about economic growth and resource scarcity with the release of a major study, “Resource Revolution: Meeting the world’s energy, materials, food, and water needs”. One of the lead authors, McKinsey partner Jeremy Oppenheim, recently visited the World Bank in Washington DC to describe the report’s conclusions and discuss its implications for development strategy, particularly for the World Bank. His presentation captivated a large audience and provoked a lively discussion.

The key findings of the report can be summarized in two categories – challenges and opportunities. The former starts from the projected increase of up to 3 billion more middle class consumers in the next 20 years, driving up demand at a time when finding and extracting resources is becoming increasingly difficult and expensive, while also resulting in enormous environmental pressures.

The good news is the existence of sufficient technically and economically feasible efficiency improvements and alternative technologies to meet nearly 30 percent of predicted demand and offset much of the projected growth. Some of these measures are already identified and well understood, such as improving the efficiency of buildings and irrigation – a “resource productivity revolution”. These measures would, however, not be sufficient to alleviate poverty and avoid global warming in excess of the two degrees Centrigrade widely considered the threshold.

To meet these goals, McKinsey outlines an additional level of ambition with respect to clean energy and carbon sequestration.

A view from the top: mountain forests

Klas Sander's picture

“Mountain Forests – roots to our future”. That was the headline for this year’s International Mountain Day celebrated by the UN every 11th of December since 2003. This year especially emphasized the interdisciplinary implications of sustainable mountain development. Whenever I have the opportunity to spend time in mountains, I realize how strongly the different elements in that landscape depend on each other and how fragile it all is. Earlier this year, for example, I had the privilege to visit the mountain gorillas in Rwanda. The experience of seeing these amazing animals in their natural habitat was incredible and it wasn’t just the climb up the Virunga Volcanoes that was breathtaking.

But the conservation of this ecosystem does not only provide benefits in terms of biodiversity conservation. Adjacent communities and the Government of Rwanda as a whole benefit from the income streams the tourism sector generates. Protecting the ecosystem also helps to assure sustainable flow of water from these “water towers” benefiting agriculture and lowland ecosystems alike. Not only are the Virunga gorillas and other mountain species threatened by climate change but there are also consequences for the communities that depend on them.

Covering 24% of the Earth’s surface, mountain ecosystems play a critical role in maintaining a sustainable flow of resources to the plains below. Mountains are the source for nearly 50% of the world’s freshwater for direct consumption, agriculture, and energy. Also, mountain tourism accounts for 15-20% of the world’s tourism industry, totaling an estimated $US70-90 billion per year. Mountain regions are also severely impacted by climate change, which only magnifies existing development challenges. Ecosystems will experience a vertical shift, as climates warm, generally flora and fauna will move towards higher altitudes. Fragile alpine ecosystems systems and endemic flora and fauna are likely to change resulting in significant negative ecological and socio-economic implications.

What did Durban deliver?

Andrew Steer's picture

At 4.30 on Sunday morning, after 36 hours of overtime (a record), the 194 country members of the UNFCCC pulled a rabbit from the hat. Special flights had been put on by South African Airways as a way to encourage delegates not to leave.

Putting the Puzzle Together

Three big pieces of the jigsaw needed to fall into place in order to clinch the `Durban Platform’. First, a new commitment period of the Kyoto Protocol, without which developing countries would have walked. Second, a road map towards a truly global deal to be effective by 2020 at the latest, without which the EU wouldn’t sign on to a new Kyoto. Third, the launch of the Green Climate Fund, without which developing countries wouldn’t sign on to such a global road map.  

Putting the pieces together required compromise and was accompanied with brinksmanship, emotion, and millions of words spoken, usually repeating what had already been said. The outcome, however, is highly positive for the long term prospects for a deal, and delivered all that could reasonably be hoped for (see my earlier blog: Will Durban Deliver?).

Thus, in a nutshell, delegates left Durban having agreed on:

  • A new commitment period under Kyoto for the EU and 11 other countries beginning January 1, 2013.
  • An agreement to negotiate a global deal by 2015, which would be effective from 2020 with "legal force" applying to all countries.
  • A Green Fund launched, with regional groupings to nominate board members in the coming three months. Board selection will be very important since most operational details yet to be designed.

Making carbon finance work for the poor

Rachel Kyte's picture

During this week in Durban, we announced two new financial initiatives designed to help the least-developed countries access financing for low-carbon investments and enable them to tap into carbon markets after 2012 - the Carbon Initiative for Development (Ci-Dev) and the third tranche of the BioCarbon Fund (BioCF T3).

The funds, focused on agriculture and access to energy, are designed to strengthen links to private sources of capital via carbon markets for some of the world's poorest communities.

The new instruments will help client countries to buy carbon credits from a range of projects including household biogas systems in Nepal, cook stoves in Africa, reforestation in the Democratic Republic of Congo, soil carbon in Kenya, and municipal solid waste in Uganda.

Ci-Dev, aiming to raise USD 120 million, is a partnership of donor and recipient countries, where public and private sector are pledging their support to capacity building and carbon market development in the poorest countries of the world.

The second initiative, the BioCF T3, will focus on reforestation and agriculture projects.

The agriculture projects are another example of the climate-smart agriculture we have been talking about all week – and deliver a triple win of increased food security and resilience through reduced soil erosion and increased land fertility as well as the access to new carbon markets.

Why are climate data and evidence important

Vicky Pope's picture

Decisions about climate change are complex, costly and have long-term implications. It is therefore vital that such decisions are based on the best available evidence. We need to understand the quality and provenance of that evidence, and whether any assumptions have been made in generating it.

The analysis needed to underpin climate change decisions is like putting together the pieces of a jigsaw. We need observations of weather, climate, water resources and agriculture and other sectors. We also need to analyze the links between these and human and ecosystem development. We need to provide model projections of the future for all these elements. Finally specialists in different sectors need to work with scientists to interpret the information in a way that is relevant to them in order to make informed decisions.

The World Bank's Climate Change Knowledge Portal helps to draw climate change and related information together in one place and is a useful additional tool in the armoury for the decision maker.

The Met Office Hadley Centre in the UK has been preeminent in monitoring, analyzing and projecting climate and climate change and has been and is still a major contributor to IPCC. But more importantly we work closely with government to ensure that their decisions are underpinned by sound science.

Stuck Between Doha and Durban?

Rachel Kyte's picture

One of those small but important agreements that would mean that Durban had moved the ball forward in the search of an international, comprehensive approach to climate change is a forum to discuss trade issues.

As countries seek lower emissions development, and plan out pathways to greener growth, they are considering introducing different forms of “green subsidies”, border tax arrangements, embedded carbon footprint standards which many in the developing world feel will be exclusionary.

A new generation of new tariff and non-tariff barriers is feared.

This is complicated by the question of where to resolve this - in the WTO or the UNFCCC. So, in order to move forward, start looking at the issues in a practical way, learn lessons from different approaches: the idea of a forum.

The success of such a forum could be an important input to the growing body of work around how to make greener growth for all, or as Ban Ki Moon said today at a meeting of heads of UN agencies and minister of environment, “sustainable green growth.”

We are keeping up the pressure for inclusion of language that would allow a work program on agriculture to start up. While some delegations object to agriculture’s inclusion for fear it dilutes the agenda, others fear the carbon content of agri-products and green standards, on top of existing phyto-sanitary standards and other aspects of agriculture trade.

While today only 15% of the global food supply is subject to international trade, that is expected to double as the world population rises from 7 to 9 billion.

Follow Rachel Kyte's tweets (@RKyte365) at her liveblog from the COP17 conference in Durban 

Can the world avert locking itself into an unsustainable future?

Vijay Iyer's picture

“The world is locking itself into an unsustainable future.” That’s the headline on the press release for this year’s World Energy Outlook(WEO). This conclusion, coming from the sober, serious International Energy Agency (IEA), sure grabbed attention at a panel discussion I moderated here in Durban Monday.

In presenting the Outlook, Laura Cozzi, IEA’s Senior Economist, laid out the WEO’s three scenarios for the future. Two of them, the ‘Current Policies’ scenario — that is, business-as-usual — and the ‘New Policies’ one, that is, governments cautiously implement commitments already made — do not get us where we need to be by 2035. Only one of them does that, the third, so-called ‘450 Scenario’, which sets out an energy path consistent with a 50%-chance of holding global temperature rise to two degrees Celsius. Past and current choices have the world ‘locked into’ a high emissions path. Laura showed that the 450 scenario takes the world to a situation of ‘no carbon space left’ for new energy generation by 2017. At that point, either only zero-carbon new energy generation can go forward or, if not, for every power plant commissioned, an equivalent dirtier one will have to be shut down. 

It provoked a lively discussion. Dr. Leena Srivastava, Executive Director of India’s Energy and Resources Institute, pointed out that the ‘lock-in’ is caused not just by current patterns of production, but also by lifestyles and patterns of consumption. This resonated with the other two panelists: Dr. Subho Banerjee, Deputy Secretary of the Australian government’s Climate Change and Energy Efficiency Department, as well as Dr. Lu Qiang, of Beijing’s Energy Research Institute, a think-tank under China's National Development and Reform Commission. They reminded the audience that policy must influence patterns of consumption along with energy generation.

Low Emissions Development: Making the sum greater than individual parts

Aditi Maheshwari's picture

As COP17 enters its second week in Durban, the most striking element for me has come from outside the negotiating rooms: the clear sense of momentum around taking action on the ground, and doing so sooner rather than later. Countries are being opportunistic and seizing the day, while the global deal continues to be worked out. The driving force behind this action is the challenge of delivering on domestic priorities such as energy security and access; productivity and competitiveness growth etc. Lower emissions and the climate imperative are a welcome co-benefit but not the main goal. Nearly 90 countries have registered plans with the UNFCCC to address the emissions intensity of their growth by 2020. This includes more than 50 developing countries (a quarter of which are low-income countries) that are pushing forwards with Low Emissions Development (LED) through outlining nationally appropriate mitigation actions.

This demand for LED has prompted a ‘thousand flowers blooming’ supply of initiatives to support developing countries in their planning and implementation. On Saturday I attended a dialogue on LED hosted by the World Bank that was a genuine conversation and sharing of ideas on how to improve coordination i.e., shift the supply of support from resembling scattered flowers towards becoming the same flowering plant. More than a hundred delegates including senior negotiators, heads of organizations, think tanks, and country practitioners actively participated in the discussion.

Support is coming for all stages of the process from the tools and analysis through to policy and program development and piloting implementation. Many organizations (CDKN, GGGI, CPI, Africa Climate Policy Centre, UNEP Risø, ClimateWorks, CMCI, IDB, CCAP, The Climate Group) active in this space outlined their work and identified opportunities where they would like to see increased collaboration, coherence, and partnerships.

Working together on adaptation-based mitigation

Rachel Kyte's picture

Over the weekend the business community held its meetings coinciding with CoP17.

In Copenhagen, the business community, especially in Europe, had mobilized for a deal and arrived in force. Even the financial and investor communities turned up. But then the negotiation process came unraveled and some blamed the business community for not mobilizing enough.

In Cancun, having licked its wounds and learned lessons, the business community adopted the classic entrepreneurial behavior of “don’t ask permission, just apologize afterwards” i.e. don’t wait for a deal- if it makes business sense go ahead.

There, the focus was on action on the ground, strategies, and innovations for firms across the world.

In Durban, things have moved on yet again – here, there is a greater focus on adaptation and, while the stories of success are powerful, there was a call for action again - for the public sector to set the conditions necessary to move ahead at speed and scale.

From Forest Day - The No-Regrets Option

Rachel Kyte's picture

After Agriculture Day, comes Forest Day for about 1,200 scientists, donors, NGOs, policymakers, journalists and climate negotiators gathered in Durban, with its own well-oiled choreography of plenary sessions and discussion forums.

My assigned role during these two days is to act as a go-between and help break down the silo mentality that can affect expert communities working on narrow themes. Many people already seem to be reading from the same music sheet –there is growing recognition that the fate of forests and agriculture are intricately linked.

Agriculture (large and small) is one of the main drivers of deforestation and forest degradation in many parts of the world. And growing needs for food, energy and income will continue to exert tremendous pressure on the forest “frontier” in the future.

Forestry and agriculture experts concerned by climate change seem to be reaching for broadly symbiotic solutions at the landscape level – climate-smart programs based on a more complete understanding of the carbon and water cycles that sustain both agriculture and forests.

Forest Day, now in its fifth year, always timed to coincide with UNFCCC talks, can take great credit for publicizing carbon emission research and putting forests on the map of climate change negotiations.

Pages