Friday, October 24, 2014
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Green Unilateralism

GENEVA – At the upcoming Rio+20 summit in Brazil, more than 135 heads of state and government, and up to 50,000 participants, including business executives and civil-society representatives, will come together to express their collective commitment to advance inclusive, sustainable development. But, despite the goal of unity and collective action underpinning the summit, the best way forward for the global economy is to build on the actions that individual countries and regions are taking in pursuit of their own interests.

Despite the summit’s aspirational rhetoric, there is no consensus about how to achieve sustainable development, exemplified by disagreement over the potential of “green growth.” Advocates argue that “clean tech,” “smart financing,” and “investment-grade” public policies will usher in a new and enlightened era of economic growth that does not degrade the environment. For opponents, however, green growth is more like “green-washed growth” – a merely cosmetic change to the business-as-usual approach that gave us the global financial crisis, and that perpetuates poverty and exacerbates inequality.

Given this divergence, policymakers must grasp today’s immediate opportunities, rather than rely on the desirable – but remote – possibility of global consensus. Counting on today’s resource-intensive, profit-driven world economy to deliver quickly the global public goods of environmental security and development requires profound optimism, especially given the dire political and economic circumstances of key powers, notably Europe and the United States. Capital markets’ shortsightedness – on plain display in recent years – does little to raise hopes. Although investment in clean technology is on the rise, it is far from reaching the more than $1 trillion annually needed to deliver green energy and infrastructure fit for the twenty-first century.

Robust policy interventions are needed, but global policy platforms are in disarray. The World Trade Organization oversees a trade regime that is antagonistic to the economic and industrial strategies that are needed to bring green technology to scale. Global climate negotiators lack the mandate, incentive, and competencies to reach a much-needed consensus that facilitates economic transformation.

Yet today’s global economy is all we have, so we need to make the most of it in driving forward the green changes that are needed. That means taking advantage of unilateral action by individual countries or regional groupings to put the global economy on a more sustainable path.

Some useful policies are already in play: China’s massive public subsidies are powering up a cadre of internationally-minded clean-tech companies; Europe is attempting to extend its carbon-trading scheme to non-European airlines; and the US is moving towards energy security through domestic shale-gas exploitation.

Moreover, many less developed countries, anxious to secure for themselves a place in tomorrow’s global economic order, are taking unilateral action to seize links of the global value chains of low-carbon industries, notably renewables.

Rather than seeking to contain this unilateralism, world leaders should leverage it in pursuit of global public goods. Such a strategy’s success depends on three factors: a focus on a small number of big-ticket national and regional actions, adequate policy leverage over these actions, and international coalitions to steer them along a legitimate path.

One area to target is sovereign wealth funds, whose combined assets are set to grow over the next decade from $3-4 trillion to $10 trillion. Furthermore, governments procure roughly $3-4 trillion of goods and services annually, a huge potential force for inducing market transformations. And fossil-fuel subsidies exceed $400 billion annually, while the yearly total for public subsidies of natural resources is estimated to exceed $1 trillion. China alone will increase its level of outward direct investment over the next decade by an estimated $1 trillion – a gift to sustainability if its deployment can be shaped with such a vision in mind.

Shaping unilateralism requires new ways to collaborate, and such platforms are emerging. The US-sponsored Clean Energy Ministerial, the Abu Dhabi-based renewable-energy agency, IRENA, and the Korean-initiated Global Green Growth Institute can provide pragmatic pathways for enhancing unilateral actions.

A new generation of public-private partnerships is also focused on unlocking strategic green-growth opportunities. Many of the most promising partnerships are profiled at the Danish-led Global Green Growth Forum, and include coalitions on greening public procurement, advancing a “sustainable-energy trade zone,” and addressing fossil-fuel subsidies worldwide.

In its current state, the global economy is unfit to serve today’s collective needs, let alone tomorrow’s. Capital markets must be reformed, not only to ensure that they are resilient – the focus of financial-market reform nowadays – but also to guarantee that money is allocated in ways that secure the resilience of the real economy and the natural environment on which we depend. Meanwhile, policymakers must take advantage of concentrated, policy-directed economic assets to catalyze a greener, more sustainable economic transformation.

The most powerful force in today’s global political economy are unilateral decisions taken by countries and regional groups in pursuit of their own economic interests. It is a force that should be leveraged through international collaboration aimed at enhancing such decisions’ national effectiveness and their contribution to addressing the provision of global public goods. Those attending the Rio+20 Summit should embrace this promising, if awkward, strategic opportunity.

Read more from our "The Road to Rio+20" Focal Point.

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  1. CommentedTim Hall

    But what about the globalised nature of the economy and equity when dealing with international environmental politics? http://www.symnews.org/a-response-to-simon-zadek/

  2. CommentedZsolt Hermann

    The situation is very simple.
    Until we all understand, feel, and live through the knowledge that we are all sitting on the same boat, and if somebody starts drilling a hole underneath himself he sinks the whole boat, and nobody can escape or disconnect from this tight network, we will never achieve anything at these "summits".
    At the moment leaders and the public alike still think that we can sort out our own problems and we do not need to care about others, "what is mine is mine, what is yours is yours" and we can even smile, and be happy if somebody else has problems, or cannot cope with his own conflicts as we can benefit from it.
    Global, integral means exactly how it sounds. We are totally interdependent.
    As soon as we truly feel this then we will start making decisions reflecting our global reality.
    As long as we ignore the obvious reality and facts around us we will continue living in our "individual, and free" illusion digging ourselves deeper and deeper.

      CommentedA. T.

      The problem is not only (or perhaps today, even not mostly) about each of us doing what is best for our own selfish interests. The problem is that we cannot agree on what is best for all of us. It's not drill a hole in the boat or don't drill a hole in the boat – there are many interconnected and dynamic processes, and many different ways to reasonably estimate the impacts of each of them. As a result, many often mutually-exclusive solutions, each of which can reasonably claim to be in the "common interest" (and yet simultaneously be perceived as unfair or unworkable), are possible.

      The seeming impossibility of squaring this circle (I certainly don't know how it could be done), with all sides convinced that it is they who are most right (and everyone who disagrees must be greedy, evil, or stupid) is what is preventing ANY action from happening, with no side capable of moving without the support of the others and few sides (understandably, given the stakes involved) willing to compromise much.

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