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Energy, Security, and Climate

CFR experts examine the science and foreign policy surrounding climate change, energy, and nuclear security.

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REUTERS/Amit Dave
REUTERS/Amit Dave

Why We Still Need Innovation in Successful Clean Energy Technologies

Today is my last day at CFR. I’m joining ReNew Power, India’s largest renewable energy firm, as their CTO. I’m excited for a new adventure but sad to leave the Council, which has given me support and autonomy to study the innovations needed for global decarbonization. Read More

Climate Change
John Campbell: Climate Change and Ethnic and Religious Conflict in Nigeria
Climate change is nothing new in northern Nigeria, writes John Campbell, senior fellow for Africa Studies and former U.S. Ambassador to Nigeria, and its influence in local conflicts can already be felt. In his contribution to our guest series surrounding the UN climate conference in Paris, Ambassador Campbell notes that the changing climate is, if not the cause, then certainly part of the context of the rise of militant groups like Boko Haram.  Climate change has long been a contributing factor to conflict in Nigeria. Even before Boko Haram, ethnic and religious tensions were strained because of the changing environment in northern Nigeria. Nigerian President Muhammadu Buhari addressed the issue at the Paris talks on Tuesday, saying that no fewer than five million people had been displaced in the Lake Chad basin due to the depletion of the lake. Conflict has been growing in Nigeria as ethnic groups are pushed by climate change toward the Middle Belt. This is the zone where mixed ethnicities and the predominately Christian south and the predominately Muslim north overlap. Ethnic, religious, and land use boundaries traditionally coincide to a remarkable extent in parts of the region: Fulani Muslim herdsmen on the one hand, predominantly Barome Christian farmers on the other. Now these boundaries are being pushed. The pattern over the past thirty years has been the steady migration toward the south by Fulani herdsmen, leading to competition with farmers over land use. Conflict is exacerbated by a population explosion while the availability of land for agricultural use is declining. As much as thirty-five percent of the land that could be cultivated fifty years ago is now desert in eleven of the most northern of Nigeria’s thirty-six states. In that region, the rainy season has shrunk from 150 days a year to 120. Crop yields have declined by 20 percent. Climate change is also accompanied by erratic rainfall and hotter temperatures. The Sahara desert pushes toward the south. For the Fulani, not only is there a reduction in pasturage available for their cattle, they say their animals are now exposed to new and strange diseases. The search for pasturage drives the Fulani to the south in regions historically occupied by Christian farmers. Migration tends to weaken traditional social structures, including the tolerant Islam long characteristic of West Africa’s Sahel. Conflict would seem to be inevitable. It is made worse by the Nigerian governance principle of “indignity.” At the state and local government levels, participation in governance is largely limited to those belonging to ethnic groups that are “indigenous” to a particular region. Hence, the Fulani, “indigenous” to more northern regions, are regarded as second class citizens in parts of the Middle Belt. Desertification and resulting migration exacerbates poverty in northern Nigeria, especially its northeast. It is the poorest part of the country, with the worst social indicators. The northeast, especially, is where Boko Haram is rooted. If not the cause of Boko Haram and other forms of jihadist terrorism, climate change and its social and economic dislocations is certainly part of the context.  
Climate Change
Stewart Patrick: Combating Climate Change Beyond Paris
The UN climate talks in Paris are just one part of the international climate policy regime, write Stewart Patrick, director of the Program on International Institutions and Global Governance, and Research Associate Naomi Egel. In this post, part of our ongoing guest series on the Paris summit, they note other institutions contributing to the climate policy process and highlight several climate policy options from CFR’s Global Governance Monitor. As important as the ongoing Paris climate talks—officially, the twenty-first Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC)—are, the UNFCCC process is just one part of the global climate change regime. The recently updated Global Governance Monitor: Climate Change, published by CFR’s Center for International Institutions and Global Governance, assesses the scope of global warming and its stakes for the planet, weighs the major multilateral initiatives that have been launched to combat it, summarizes pressing policy debates, and offers concrete recommendations for policymakers on how best to mitigate and adapt to climate change. Combating climate change is the most complicated collective action challenge humanity has ever faced. But the pace and scale of the global response are both increasing, as the world recognizes that we cannot wait—and that we have tools at our disposal to respond. Who’s Doing What? Notwithstanding the importance of the UNFCCC process—which involves all UN member states—much of the action in mitigating and adapting to climate change takes place outside the UNFCCC framework. Flexible is one thing; Effective is another In contrast to the UNFCCC, many of these initiatives are flexible, voluntary, or informal, and involve a limited number of players. This, however, does not necessarily make them more effective. Case in point is the Major Economies Forum, which was established in 2009 as a venue for the world’s seventeen largest emitters—responsible for about 80 percent of global emissions—to overcome institutional blockages in the UNFCCC system and lead the way on promoting clean energy while reducing greenhouse gas emissions. The MEF’s design is reminiscent of the G20’s but unlike the G20, the MEF has not produced concrete outcomes and remains a talk shop rather than a global leadership body. More effective alternatives to the intergovernmental system include the Climate and Clean Air Coalition, a private-public partnership designed to curb short-lived pollutants and their associated health risks, and the C40 Cities Climate Leadership Group. Since 2005, the C40 has been a venue for cities to share best practices and take action to reduce their emissions, recognizing both cities’ contributions to climate change and their capacity to make meaningful reductions in their emissions. New and Evolving International Institutions Intergovernmental bodies are also taking action on climate change. The International Renewable Energy Agency (IRENA) was founded in January 2009 as the first international body specifically mandated to advance renewable energy, and has been highly praised for its innovative approach in identifying best practices and developing new tools. Climate change is also increasingly addressed by a host of other international organizations whose mandates have evolved to include this challenge. Within the UN system alone, some twenty agencies work on this issue through their own specific lens, including the United Nations Environment Program, the Global Environment Facility, and the United Nations Development Program. Additionally, the World Bank has incorporated financing for mitigation and adaptation projects into its activities: at present, 21 percent of the Bank’s funding is climate related, totaling $10.3 billion a year. And in October 2015, the Bank pledged to increase its climate financing to up to $29 billion annually by 2020. Although the multitude of actors seeking to combat climate change is, on whole, a positive development (given the immense scope of the challenge), a lack of coordination among myriad initiatives can lead to redundancy. Nevertheless, this reality exemplifies the inherent complexity of climate change, which affects nearly all sectors, including development, finance, public health, energy, and security. Recommendations Of course, these are just a sampling of the many important initiatives outside the UNFCCC framework working to mitigate and adapt to climate change. The Global Governance Monitor also recommends several ways to further strengthen the global regime to combat climate change. Create a global mechanism for monitoring emissions reductions Nongovernmental groups are already tracking how states’ INDCs stack up against the scale of the challenge. But reliable monitoring is also needed to determine whether countries are actually fulfilling their emissions reduction commitments. At present, the UNFCCC relies entirely on self-reporting from countries as to whether they are meeting their INDCs. A neutral, independent monitoring mechanism under the UNFCCC framework would build the institutional credibility needed for countries to commit to more ambitious INDCs in the future. The UNFCCC could draw lessons on the best approaches for monitoring and verification from other international organizations that engage in analogous tasks, such as the World Trade Organization, International Monetary Fund, and Organization for Economic Cooperation and Development. Develop a voluntary system to encourage compliance post-Paris Left unclear is whether the Paris agreement will include a binding compliance mechanism. One worry is that unaddressed cases of noncompliance could undermine the credibility of the UNFCCC process. Voluntary mechanisms to encourage states to meet their INDC pledges could help fill this gap. Accordingly governments should explore alternative arrangements, outside but supportive of the UNFCCC framework, to further encourage compliance. Such a system could take the form of clubs that confer on their members some additional benefit for their participation. An alternative would be to make country’s progress toward meeting its INDCs a precondition for certain forms of financing. Make combatting climate change a G20 priority Although the Group of 20 (G20) has made tentative forays into the climate field, such as pledges to phase out fossil fuel subsidies, the group could do much more to support the UNFCCC process and catalyze more aggressive emissions reductions and climate financing efforts. In this regard, the recent leaders’ communique from its summit in Antalya, Turkey, was disappointing. China should use its chairmanship of the G20, which begins in December, as a leadership platform to encourage the world’s most prosperous economies to make even more ambitious commitments to reducing emissions, as well as funding clean energy investment. The G20 should also implement the recommendations of the G20 Climate Finance Study Group report, and use the G20 as a body to coordinate collaboration among climate funds, as well as stimulate private investment in financing climate strategies. These are simply a few of the issues we examine in the Global Governance Monitor, which also provides historical context for many of the issues currently under discussion in Paris. For more information, visit the monitor itself.
China
Yanzhong Huang: China’s New Rhetoric at COP21
China’s public rhetoric about international climate policy has changed dramatically since the 2009 UN summit in Copenhagen, write Yanzhong Huang, senior fellow for Global Health, and Research Associate Ariella Rotenberg. In this piece, part of our series of guest posts on the UN climate summit in Paris, they explain why that is and what it might mean for the ongoing UN summit in Paris. The Chinese government’s attitude toward climate change at COP21 looks almost unrecognizable compared to the previous 2009 Climate Summit in Copenhagen. In the final days of the 2009 meeting, then Premier Wen Jiabao skipped a session of two-dozen world leaders and sent in his place a lower level official from the ministry of foreign affairs. When President Obama sought out a one-on-one conversation with the Premier, he found himself accidentally walking in on a meeting between the Chinese, Indian, South Africa, and Brazilian leaders—the Indian Prime Minister whom Obama had been told was already on his way to the airport. The language describing Copenhagen focused on the “deadlock” between the United States and China. And Britain came out publicly blaming the Chinese, among others, for blocking what could have been a legally binding treaty to reduce global warming. The output of the 2009 meeting was instead the underwhelming agreement on the part of delegates to “take note” of the accord struck by the United States, China, and other emerging powers that fell significantly short of the original ambitions. At COP21 China seems to have made a U-turn, emerging as a leader and convener for a serious climate change agreement. As a sign of China’s commitment to reaching an agreement, this is the first time China’s Head of State (instead of the premier) has attended climate change talks. Xie Zhenhua, the head of the Chinese climate delegation for the past nine years and the person who was held responsible for the Chinese actions in Copenhagen, spoke on Tuesday saying, “China is entering a new normal of energy and resource conservation…we can seek a different way.” He has all but abandoned his previous rhetoric that China has the right to develop using dirty technology just as wealthy nations have done, and instead insisted that China will develop “through ecologically driven wealth generation.” Indeed, both the Fifth Plenary Session of the 18th CCP Central Committee and the “Thirteenth Five-Year Plan” (2016-2020) made it very clear that China will shift toward green low-carbon development. Already, from 2005-2014 China has reduced its energy consumption per unit of GDP by nearly 30 percent and its CO2 emissions by more than a third. Earlier this year, President Xi Jinping announced with President Obama a pledge to peak overall carbon emissions by 2030. That milestone created an environment of optimism leading up to COP21; “if the Chinese can do it, we can do it,” has been the pervading attitude on the part of more than 150 nations who have made the similar pledges leading up to COP21. For the Chinese, of course it’s not exclusively about saving the planet. Chinese citizens, particularly in China’s large cities, live with what is often dangerous smog, and suffer from water and soil pollution. On the very day that President Xi arrived in Paris for the climate talks, a coal-fueled “airpocalypse” (i.e., smog at crippling levels) engulfed Chinese cities. Outdoor air pollution is estimated to kill close over three million people worldwide each year in urban areas—most of those cities are in India and China. China seems to have finally realized that it must take active steps to clean up industrial engines of growth for the earth, but also for the sake of the health of its own people. There is indication that Chinese policy makers are strategically using China’s environmental crisis to press for significant policy change in addressing the climate issue. In the words of Chang Jiwen, a senior researcher at a State Council think tank, China is exploring the pathways of handling pollution control, climate change and ecological construction simultaneously. From a financial standpoint, China has already substantially invested in what will (hopefully) be a significant shift to alternative energy solutions. China is currently both the world’s largest greenhouse gas emitter, and the world’s biggest investor in renewable energy. It still lags behind in terms of building a nationwide carbon market and putting in place a legal framework for its emission control efforts. But if China can indeed follow through on its commitment to cleaner growth, it will establish itself as an undisputed leader in coping with climate change. We do not necessarily have to hold China to such high expectations in terms of its immediate actions in Paris. Positive rhetoric in Paris can be considered a significant accomplishment in and of itself.
  • Climate Change
    Does the Paris Climate Summit Matter?
    The much-anticipated Paris climate summit opens today in Paris. But does it matter? The answer isn’t obvious. Any Paris agreement will include only voluntary emissions-cutting goals. And scientists have already concluded that, even if each country makes good on its promises, Paris won’t remove serious risk of catastrophic climate change. But Paris does matter – a lot. The Council on Foreign Relations hosted a symposium on the Paris talks last week. At the outset of the second session, which focused on climate efforts beyond the United Nations talks, I asked each panelist a question: There are host of climate efforts – national, multilateral, non-governmental – other than the Paris climate talks. How important is Paris compared to the rest of this broader universe? You can watch the session to hear the panelists’ answers. (All links to the symposium in this post take you to complete video and transcript.) Here’s mine: Success in Paris is essential given how it’s been built up in the public and political consciousness – if Paris is seen to fail, it will sap energy from efforts to curb emissions worldwide, whatever those are. (The first session of the symposium, focused on the Paris talks themselves, made clear that there is considerably more agreement than there was heading into the Copenhagen summit, but still stumbling blocks to clear.) But success in Paris is far from sufficient: unless the window that success in Paris opens is used to pursue further efforts to curb climate change, the entire process will rightly be dubbed a failure, having failed to spur (or at least not impede) the policy actions that ultimately matter. The third session of the symposium, an immensely entertaining one-on-one discussion with former New York City mayor Mike Bloomberg, was a clear reminder of how challenging the politics of that follow-through will be – but also of how much opportunity exists. Last week I posted a guide to following the Paris talks. It encouraged readers to tune out most of the drama over the next two weeks but reinforced the bottom line that Paris has become too big to fail. At this blog, rather than hyperventilating over the controversy-of-the-day over the course of the conference, we’ll be hosting guest posts from a range of my CFR colleagues who bring expertise on critical countries across the globe – the places where policies that shift the world to lower-carbon energy actually need to materialize, and where the impact of climate change is inevitably felt. We’ll also have something to say about the developments that actually matter. Stay tuned.
  • Technology and Innovation
    Lessons in Cleantech Success from Scandinavia (Pt. 1): The Puzzle
    This post is co-written by Ben Armstrong and Varun Sivaram. Ben is a Ph.D. Candidate at MIT focused on Political Economy and a researcher at the MIT Governance Lab. A global race is underway to dominate the clean technology (“cleantech”) sector. As international efforts to curb climate change intensify (the Paris climate talks kick off next week), demand for cleantech products that generate energy from renewable sources and reduce emissions will grow.  Countries that invent and scale such products will reap the economic benefits. For those seeking to understand why some countries are successful at building thriving cleantech sectors and others less so, a pair of Scandinavian neighbors—nearly twins in many economic and political respects—present a puzzle worth pondering. Denmark and Sweden can both boast of low poverty rates, low inequality, and high environmental standards. But one striking difference between them is that Denmark’s cleantech sector has been considerably more successful than Sweden’s. Denmark is not only home to a cluster of leading cleantech businesses (e.g. Novozymes, Rockwool, and Grundfos), but its cleantech sales amount to nearly three percent of Danish GDP—more than any other country in the world. Similar institutions, regulations, and social policies in Sweden have yielded far less impressive results in supporting an innovative cleantech sector. Although Sweden is a global leader in information and communications technology (ICT), it lags neighboring Denmark in cleantech. Sweden’s cleantech sales amount to less than one percent of its GDP; and its climate change patents are less than two-thirds that of Denmark despite Sweden’s larger population and overall patent portfolio. As relative leaders in the green economy, Denmark ranks 1st and Sweden 22nd. Why has Denmark had more success at clean tech innovation than its neighbor? The relevance of this puzzle is not limited to two small frigid countries. Rather, it might help explain what can differentiate some regions from their neighbors as both pursue a similar economic development strategy.  That Sweden boasts an innovative ICT ecosystem but lags in cleantech development suggests that the two sectors require different strategies. These two Scandinavian countries shed light on a challenge for all advanced economies: how to implement responsible social policies that reduce carbon emissions and provide for the poor while also innovating to expand the economy. Both Sweden and Denmark have high tax rates that support successful social policies and still leave room for innovative industries. It’s the Danish example in particular that demonstrates how social challenges like climate change can offer great opportunities for new and expanding economic activity. The goal here is to explain what factors were central to Denmark’s success. The academic literature tends to divide into two camps the factors that drive innovation: demand-pull factors, or favorable market conditions that “pull” innovation, and technology-push factors, or support for the research, development, and demonstration of innovative technologies. Although scholars sometimes disagree about the relative weight of each category of factor, the conventional wisdom is that each category of factor is necessary to induce innovation. So a logical way to explore why Denmark is outperforming Sweden in clean technology is to examine the difference between their respective demand-pull and technology-push factors. Do Demand-Pull Factors Explain the Difference in Cleantech Innovation? Environmental regulation is an example of a demand-pull factor that could encourage innovation in cleantech. The prediction is that bold environmental regulation might force a region to adapt to new constraints. New technologies will be required to retrofit buildings and adjust to new power sources (e.g. wind turbines, insulation material). Another important factor might be consumer preferences. Although some European governments might make emissions pledges without popular support, local consumers need to be on board before those pledges can be implemented (or for those leaders to stay in power). One piece that might divide cleantech innovators from laggards is the opinion of the mass public on the importance of fighting climate change. However, a comparison of Denmark and Sweden reveals little difference in these demand-pull factors. Their capital cities, Copenhagen and Stockholm, boast nearly identical environmental goals and trajectories. Both aspire to be emissions free in the coming decades and consistently rank as two of the most environmentally friendly cities on the planet. When asked to name the most serious problems facing the world, 73 percent of Danes and 81 percent of Swedes listed climate change. When asked whether fighting climate change and improving energy efficiency can improve the economy, 95 percent of Danes and 86 percent of Swedes said yes. Both countries have set similar emissions reduction targets and in aggregate their economies emit comparable levels of greenhouse gases (in fact, Sweden’s power sector is even cleaner than Denmark’s). Although more Swedes report relying on green forms of transportation like bikes and trains (61 percent) than Danes (46 percent), more Danes (57 percent) report purchasing energy efficient appliances than Swedes (33 percent). Overall, the two regions seem to have mirroring actions and attitudes toward climate change, yet one has been more active in commercial cleantech innovation than the other. There are good explanations for why demand-pull factors may not suffice to induce innovation or to explain the difference between Denmark and Sweden. A region does not necessarily need to develop and implement the new technologies on its own. After all, it might be less expensive to import technologies produced elsewhere, particularly for a small country like Denmark with a shrinking manufacturing sector. Thus, environmental regulation might lead a region down two paths. The more convenient path in the short-term is to import cleantech products already available in the market. The more challenging long-term plan is to develop and produce the technologies domestically with intensive investment of R&D and manufacturing resources. If the development succeeds, these products initially developed for the domestic market can scale as exports to other regions adopting parallel environmental plans. Similarly, a public preference to combat climate change does not necessarily require that the fight against climate change be waged with local technologies alone. The public might want to take on climate change, but be indifferent to how the battle unfolds. These two factors suggest that environmental regulation and supportive consumers can provide a captive demand for technology, but that demand does not guarantee cleantech innovation. It just might make it more likely. What About Technology-Push Factors? Doubtful that demand-pull factors are the reason for Denmark’s cleantech success, we turn now to technology-push factors. Rather than examine whether the local market is primed to accept cleantech products, we might instead investigate public and private support for innovation. A measure of direct support for innovation is the total level of research and development (R&D) spending. Unfortunately for this analysis, Sweden actually beats out Denmark in terms of R&D spending as a percentage of GDP. And although private investment in early-stage businesses as a proportion of GDP is mostly equal in Sweden (2.5 percent) and Denmark (two percent), overall venture capital spending has been higher in Sweden (5.4 percent) than in Denmark (3.2 percent). Sweden has nearly double the number of high-technology patents than Denmark. Stockholm is also widely considered an innovation hub for the software industry in Europe. It could be that Denmark’s economic environment is generally better for innovation than Sweden’s. After all, the Danish government implemented labor market reform in the mid-1990s to combat high unemployment. While Sweden reduced public spending and changed some of its unemployment practices, Denmark overhauled its labor regulations to increase the flexibility of firms to hire and fire workers. It has also reduced the social security contributions that firms locating in Denmark must make; today it claims that locating in Copenhagen costs 20 percent less than locating in Stockholm. These reforms, the Danes might argue, make Denmark a more compelling environment for businesses to commercialize new innovations. The cleantech boom in Denmark, according to this theory, would represent only one area among many where the Danes are out-innovating the Swedes. But this is not the case. In terms of knowledge-intensive employment and overall corporate tax rates, Sweden and Denmark are largely equal. If the increased flexibility of the Danish labor market has indeed been an important factor, there needs to be a reason that it is influencing the cleantech sector far more than other sectors where Denmark has not been as competitive. You might think that Denmark could have deregulated specifically in the cleantech sector in ways that Sweden did not. However, the EU’s measures of energy deregulation shows that both Sweden and Denmark deregulated their energy industries at the same time and to nearly the same degree in the mid-1990s. So far traditional explanations for innovation—demand-pull and technology-push factors— have led only to dead ends. Environmental and economic regulations, public opinion, access to finance, and other government intervention cannot explain Denmark’s comparative lead over Sweden in clean technology over the last several decades. Continued in Part 2: “The Importance of Denmark’s Manufacturing Revival”   UPDATE 12/15/2015: We’ve now posted our theory and the best reader comments in Part 2 here. We have also updated Figures 1-3 to reflect newer and more relevant data sources. ORIGINAL POST: We invite readers to propose explanations for why Denmark has outperformed Sweden in cleantech innovation. Next week, we will share a follow-up post explaining our theory. Please use the comment box below to submit yours, and we will feature our readers’ thoughts in Part 2!