Blogs & Comment

Dueling crises

The latest issue of Rotmanmagazine (published by the Rotman School of Management) has an interesting article (not available online) about the 80-20 challenge: the need to reduce the worlds carbon dioxide emissions by 60% to 80% over the next 20 years to avoid, well, catastrophe.
The three co-authors, including Bryan Smith, faculty member for the Sustainable Enterprise Academy at York University, compare the Industrial Age to a bubble:

If a bubble can last for generations, it becomes hard to imagine an alternative to it but there are already signs that the kinds of investments of money, effort and attention that once brought success are now less likely to yield the same benefits. Investments outside the bubble, however, are another story: they will produce both more wealth and a more sustainable life, as people leave their old assumptions and practices behind.

The authors go on to detail the efforts of a few companies attempting to improve environmental performance (General Mills selling oat hulls, a Cheerios by-product, as heating fuel; Enterprise Rent-A-Car commanding a fuel-efficient fleet) and contend such examples are not isolated cases, but instead proof of how climate change has catalyzed a new way of thinking.
If all of this sounds a little too sanguine, it is. The article is reprinted from a 2008 issue of strategy + business, when the world economy wasnt in such shambles. A new way of thinking is no doubt developing, but its also clear the economic crisis has superseded the environmental onewhich only makes sense, of course.
But it is nevertheless unfortunate that instead of the kind of initiatives highlighted in the Rotmanarticle, were seeing Royal Dutch Shell abandon investmentsin wind and solar energy, second-generation ethanol companies announcing delays and struggling with financing, and HSBC predicting a global 20% declinein wind power installations this year.
The effect these kinds of delays will have on efforts to reduce emissions is uncertain. Climate change experts have repeatedly emphasized the urgency of acting quickly. The authors of the Rotmanarticle note the pace of climate changes happening already is leading to a consensus among scientists and some business leaders that catastrophic overflow [of CO2] can be avoided only by rapidly reducing emissions.
That is looking much more difficult these days, but governments can always devote a portion of stimulus packages to projects that benefit both the economy and the environment. British economist Nicholas Stern is advocating for more of that kind of action in a co-authored paperto be presented this Thursday at the G20 summit in London.
But just how much should be spent? Stern uses the benchmark of 20%, meaning one-fifth of a nations stimulus efforts should be devoted to green initiatives. Most G20 nations have fallen far below that level, the report shows. Canada, for example, has so far allotted 8.3%, just behind Australia at 9.3% and Mexico at 9.7%. (Such general benchmarks may only be useful to a point; each country has its own unique problems, and different levels of emissions to contend with, after all.) But whatever the case, Stern makes a strong argument for making such investments for the sake of the environment and the economy:

It makes sense because otherwise, once the world economy recovers, sharply increasing energy prices are likely at some stage to trigger subsequent slowdowns. Without the transition towards a low-carbon global energy system, the next economic crisis is pre-programmed. ‘Green’ recovery programmes are not only an option for sound and effective crisis relief; they are a precondition.