Emerging economies can do things differently

Let’s begin with a simple idea that there are two sets of countries in the world—rich ones and poor ones.

The idea is simple, but it’s also flawed, not least because:

a) a country can be ‘rich’, but unequal

Beijing air quality to be better monitored | Pollution | The Guardian

and b) being ‘rich’ doesn’t always mean you have a good quality of life

However, we can say there areadvanced economies,where incomes are high and living standards are good andemerging economies, where there is still work to be done.

HDI data: UNDP; GDP and Population data: World Bank.

Today’sadvanced economieswere once emerging, and many of them followed a pathway of development through industrialization.

The industrialization was driven by fossil fuels—coal, oil and gas—for energy, as feedstocks or as a key export.

The process led to unprecedented technological, social, economic and development progress.

What do you mean by industrializion?

Industrialization implies that there is something to industrialize from, or a pathway. In many cases, countries emerged from having an economy dependent on agriculture or other types of basic labor. The economy then pooled resources and moved towards mass production, manufacturing and export.

In 1960, Walt William Rostow set this out in his five stages of growth.

The rapid growth experienced through industrialization often came with improved living conditions, increased investments in human capital, economic growth that was self-sustaining, and greater global prosperity.

So not only did the Western countries achieve this in the 19th century, but someemerging economiesin East Asia followed a similar pathway in the 20th century.

Suddenly, in a lot of cases, it was fairly well understood how to develop an economy, at least on paper. Trade liberalisation, secure property rights, investment in education, and other measures led to improved economies.

And that is precisely what’s been observed in recent years—a whole set ofemerging economies growing at high rates per year.

GDP data: IMF Note: The graph above converts GDP per capita levels in the year 2000 to an indexed value of 100 and displays values for the year 2018. In other words, a value of 200 means GDP per capita has doubled between 2000 and 2018.

These countries have experienced rapid development, creating a world in which economic activity is less concentrated in a small group of countries, and the world transitioning towards a multipolar global economy.

What does any of this have to do with climate and energy?

Asadvanced economiesexpanded, they needed a lot of energy to feed their growth.

What do you mean ‘feed the growth’?

Access to cheap energy is behind everything—basic necessities such as lighting, cooking and heating. Energy is also needed to support new means of transport and expended industry. As a new middle class emerges in these countries, citizens purchase more energy-intensive appliances.

Whenadvanced economieswent through this process, cheap energy was often coal, gas and oil. And they used lots—emitting millions of tons of greenhouses gases along the way.

By 1960, the handful ofadvanced economies were responsible for around 85 per cent of all emissions.

So it’s perhaps no surprise that the 8emerging economiesthat have grown the most since 2000 have witnessed a corresponding increase in electricity consumption.

Electricity consumption data: IEA. Note: This graph converts electricity consumption levels in the year 2000 to an indexed value of 100. In other words, electricity consumption has doubled if it shows a value of 200.

For comparison, the European Union and United States’s electricity consumption has remained steady as growth and energy demand witnessed in emerging economies is not as pronounced.

So we have several emerging economies:

  • all getting wealthier
  • all needing energy
  • all mostly relying on fossil fuels for energy, and
  • an overall increase in their emissions.

Well, then we’re screwed, right?

Remember how climate solutions are getting cheaper ?

Emerging economiescan take advantage of low costs to roll out new technologies, allowing their economies to grow without the corresponding emissions.

Renewables are already the cheapest source of new electricity in 90 per cent of the world.

From a technical and economic standpoint, there is almost nothing stopping emerging economies from adopting low emissions energy technologies as a cheap and reliable solution to its energy needs.

Africa, Asia and Latin America have significant clean energy resources available that make it feasible for energy to be switched to renewables from fossil fuels.

Low emissions energy can also address energy access problems.

Credit: Christensen Institute

In areas where the electricity would otherwise be difficult to access, renewable energy is a great option for electrification because it doesn’t require grid connection and it imposes no fuel costs.

As energy access improves, there are additional improvements in education, economic development and health.

Low emissions solutions also reduce the need for energy imports and lower pollution. In the transport sector, it can cut premature deaths from air pollution by at least 75 per cent.

New jobs become available —in the millions.

Everybody wins.

And everything is set up for the leapfrog.

What’s a leapfrog?

The idea of leapfrogging involves using modern technologies in emerging economies that were not available to today’s advanced economies at the comparable time of their development.

We’ve already seen how leapfrogging can work with telecommunications.

In sub-Saharan Africa, fixed (landline) telephones were mostly restricted to privileged few. New technologies have allowed many to skip landlines and go straight to cell phones, creating new opportunities for communication and commerce.

For much of history, humans relied on very basic forms of energy, like animal muscle and the burning of wood.

The arrival of cheap, low-emissions energy technologies could be deployed in emerging economies, allowing them to leapfrog fossil fuels.

There are a number of leapfrogging opportunities in the energy sector, including solar in rural areas, ethanol production in Brazil, biomass cookstoves in China, as well as energy and fuel efficient appliances.

Great, so what’s the problem?

Here’s the bad news.

Leapfrogging to low emissions technologies is not quick, easy or straightforward.

There are 3 key barriers which make the transition challenging, particularly in emerging economies.

Emissions lock in

One of the most difficult challenges is that countries will decide to build new, cheap energy to feed their economies, regardless of how many greenhouse gases are emitted.

These decisions will often lock in new power plants, industrial facilities or emissions-intensive infrastructure for 30, 40, 50 years or more.

This is an emerging issue in Asia, where the average age of the coal fleet is around 15 years, with many years left to run.

Lack of support

If an emerging economy decides to overhaul its energy or transportation systems, it will require financial and political support, which can be difficult in countries with political instability and low public financing.

At the same time, large entrenched industries with political and economic tied to government may look to block or slow the growth of new, clean competitors.

Low technical expertise

At community level, low emissions technologies can provide energy that would otherwise be difficult to access. While it is one thing to install solar panels and other technologies in rural areas, technical skills will be required to run and maintain these technologies.

So how can things be helped along in a good way?

Despite these barriers, there are 5 key things decision makers in emerging economiescan do to help the transition.

Link up

Designing energy markets so they can trade electricity across borders can make better use of renewable energy in neighbouring countries. A common power pool that allows countries to share their resources, reduces energy waste and can increase reliability of a renewable power supply.

Phase out energy subsidies on fossil fuels

Many governments decide to spend money on subsidising fossil fuel-based energy, including Brazil, which recently decided to subsidise coal through to 2040.

By reducing the cost of energy, it makes it more affordable for consumers, allows industry to produce more and it maintains levels of employment.

However, many subsidies are not well targeted, benefitting the wealthy who use more of the subsidised fuel. It can also create negative externalities (environment, health), strain government budgets and deploy public funds that could go towards more useful things, like infrastructure, health and education.

It also distorts the real value and scarcity of energy, which would other motivate consumers seek cheaper alternatives.

Be inclusive

One of the drivers of social resistance to projects is the lack of consultation. For these projects to be successful more attention needs to be paid on how low-emissions energy impacts on society. A key part of this involves inviting all stakeholders to be a part of decision making, instead of putting something in place and fending off criticism. Evidence shows this can have huge impacts on community acceptance.

Understand local conditions

Africa is not South East Asia, Kenya is not Ghana, and a remote village in Ethiopia is not Addis Ababa. Each location will have a very different low emissions pathway.

Algeria for example, has abundant land suitable for solar energy, Laos has significant capacity for hydro-electricity and Argentina has the potential to be a regional leader in offshore wind. In any area of energy use, no single instrument can fulfil all country objectives. Policies must be selected with care and designed to reflect specific national and local circumstances.

Invest in grid infrastructure

Finally, countries need to invest in their electricity grid infrastructure to accommodate low-emissions energy and mobility. Not doing so may result in grid constraints that cannot support new renewable supply.

We are at a crossroads in history.

Countries can decide to do what we’ve always done, or switch to something new. The something new in this case is cheaper, pollutes less, leads to more energy access and could even lead to an industrial advantage.

Advanced economies have seen the writing on the wall and are on the path to a net zero future. The question is whether emerging economies can also do things differently.

After all, leapfrogging to low emissions solutions is not only desirable, but essential if global emissions are to peak and then decline in order to meet the temperature goals needed to avoid irreversible damage.

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