Climate change finally seems to be at the top of everyone’s list, as even President Obama mentioned the dreaded phrase in connection with Hurricane Sandy and our ever-persistent drought during his second inaugural address.
Members of the World Economic Forum (WEF), which is held yearly in Graubünden, Switzerland, are also worried about climate change. This year, the WEF asked 1,000 global leaders what they think the world’s biggest risks are for 2013; climate change ranked in the top three.
The NOAA reported in early January that 2012 was the hottest year on record for the contiguous 48 states, something that didn’t surprise many. In 2012, the continental US experienced the fourth-warmest winter, warmest spring, second-warmest summer and above-average temperatures in fall; and was plagued by drought, wildfires, hurricanes and storms. The entire world also experienced similar record-breaking weather events.
According to Andrew Steer of CNN, “The current U.S. drought will wipe out approximately 1% of the US GDP and is on course to be the costliest natural disaster in US history. Damage from Hurricane Sandy will cost another 0.5% of GDP. And a recent study found that the cost of climate change is about $1.2 trillion per year globally, or 1.6% of global GDP.”
It’s high-time that we reduced our carbon footprint. But how?
Natural Gas & Greenhouse Gas
The World Resources Institute (WRI) reported that 1,200 new coal plants are in-the-works around the world. While coal use in the US is falling, global demand is increasing; last year, the US exported more coal than it ever has before, which feasibly means the US is sending its emissions overseas.
Natural gas, which is extracted from shale rock, has half the carbon emissions of coal. Natural gas production is booming in the US — the US is set to become the biggest oil producer by 2030 because of it. Natural gas has become a blessing in disguise to the US economy, emissions and carbon footprint. In 2011, US emissions were down by 2 percent to 5.9 billion tons.
Yet, natural gas might not be the cure-all: greenhouse gas (GHG) emissions are still persistent globally. Industrial countries must reduce their GHG emissions 80-90% by 2050 in order to prevent worsening climate change affects. Renewable energy, such as solar and wind power, is our best bet: renewable energy can greatly lower our emissions. However, investors don’t favor renewable energy because it can pose a larger financial risk.
There are three ways the world can decrease its carbon footprint:
- Incentivizing Renewable Energy Investment
- Removing Market Barriers
- De-Risking Investments
Incentivizing Renewable Energy Investment
Countries abroad have shown increased interest in renewable energy: over 100 countries have plans to increase their renewable energy efforts. Some countries are also inquiring into carbon-trading markets, similar to California’s cap-and-trade program.
Removing Market Barriers
Many regulatory, financial and psychological barriers exist in the renewable energy marketplace. To alleviate concerns, WRI has put the Green Power Market Development Group in motion, which will help leaders from industry, government and NGOs cultivate a support system for renewable energy markets. Such partnerships, which have subsequently been tested and proven, will allow for further clean energy growth.
For various reasons — technical, policy, financial — the renewable energy market is riskier than the fossil-based energy market. Focusing on the reasons why renewable energy is riskier will help move the world towards cleaner energy. Some companies have developed concepts that will address financial concerns. The Green Climate Fund, for example, could be used to raise money and bolster initial and additional renewable energy investments.
This year, the WEF is looking for solutions to these issues through alliances such as the Green Growth Action Alliance (G2A2), where CEOs will work to address climate and environmental risks. The G2A2 will also introduce the Green Investment Report, which is aimed at “unlocking finance for green growth”.
According to Politico.com, John Kerry, who has been newly confirmed as the US Secretary of State, is the nation’s ‘Mr. Climate’: “Obama’s choice of John Kerry as the nation’s top diplomat is the strongest signal to the international community — and the smart set in Washington’s political class — that the American president is truly committed to striking deals designed to save the world. Add that to his mention of climate change in his inaugural address, and it’s giving hopes to greens that Kerry will make climate change a key part of his portfolio as the nation’s top diplomat. Still, the nation’s and the world’s energy picture isn’t so simple as being for or against more environmentally friendly energy production and consumption.”
Developed and Written by Dr. Subodh Das and Tara Mahadevan
January 28, 2013
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