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Green Growth at the End of the Flat World

While the losers from decarbonization are relatively obvious, the winners will be those countries that combine geographic luck with smart action. First movers that develop a national consensus to promote the right ecosystem for green growth are bound to come out ahead.

CAMBRIDGE – We do not expect pineapples to come from Norway or papayas to come from the Sahara Desert. These fruits instead tend to grow in places with lots of sun and water. So, why is it that energy-intensive products like steel come from energy-poor countries like Japan and South Korea?

The answer is that coal and oil have a unique feature when compared to wood, natural gas, or hydrogen: they are amazingly energetic per unit of volume and weight. This fact, combined with advances in transportation technologies in the twentieth century, meant that the world became “flat” from an energy point of view. Because oil could be transported from the Persian Gulf to New York or Seoul for a fraction of what a barrel of oil cost at its source, the absence of local energy sources was not an obstacle.

This was not always the case. Before railways, proximity to coal mattered for iron production, and before the steam engine, being close to fast-moving rivers that could power waterwheels was crucial for manufactures. But today, locally available energy sources are not a prerequisite for engaging in most energy-intensive activities. Except for natural gas (which in any case is a bit greener than coal and oil), energy can be brought to most places at modest cost.