Green Money

NEW YORK – There is little doubt that green will be the metaphorical color of choice for world leaders when they gather at the G-20 Summit in Pittsburgh. Attention will focus on turning the “green shoots” of recovery into sustainable “green growth,” leading to “green economies” consistent with the goal of protecting the world’s climate.

Governments in rich countries are beginning to spell out just what that will mean in terms of policy and lifestyle changes and the investments required to develop clean energy sources. But, to be successful, a “green new deal” will have to address some enormous challenges in the developing world, where the impact of global warming will be felt first and hardest, and where rapid growth requires massive expansion of cheap energy.

Globally, more than 30 million tons of oil equivalent are consumed in the form of primary energy every day, equivalent to 55 kilowatt hours per person per day, with rich countries, on average, consuming more than twice that figure. For many developing countries, the figure is well under 20 kwh; China is still well below the global average, and even most emerging markets consume less than one-third of the average in many advanced economies.

The economics behind efforts to close these energy gaps are relatively straightforward. Up to a threshold of around 100 kwh per capita per day, energy consumption and human development indicators go hand in hand. At current prices, between $10 and $20 per person per day would be needed to reach that threshold.