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Special Edition Magazine, Fall 2019: Sustainability

Sustainability’s Moment of Truth

Achieving “net-zero” greenhouse-gas (GHG) emissions globally by 2050 is absolutely necessary to stabilize atmospheric GHG levels, and thus temperatures. The earlier we reach that target, the lower the temperature future generations will have to live with.

LONDON – When it comes to sustainability, 2015 was a landmark year. The international community signed on to the Sustainable Development Goals (SDGs) and adopted the Paris climate agreement, under which more than 190 countries have committed to reducing greenhouse-gas emissions (GHGs). In that year and the next, there were complementary agreements on finance, cities, and biodiversity. Taken together, these accords established a clear global agenda.

The challenge now is to deliver on that agenda, which requires clarity on both the objectives and on strategies to achieve them. Sustainability is about ensuring that future generations have opportunities that are at least as good as those available to the current generation, assuming they behave similarly to those that follow. Much, then, will depend on the assets we leave to those who come after us. Some assets take the form of physical capital, such as infrastructure, or human capital, including health and education. But it has become ever clearer that opportunities for future generations depend critically on natural capital (water, air, land, forests, biodiversity, and oceans), and social capital (public trust, strong institutions, and social cohesion).

This implies that it makes no sense to invest in physical capital that is harmful to public health, the natural environment, or social trust and cohesion. Sustainability demands that we invest in and protect all four forms of capital simultaneously. It requires that we incorporate such principles into our economic theories and development models. Only by changing how we think about progress can genuine progress be made.

Empowering People

Fortunately, in some dimensions of sustainable development, particularly those related to human capital, the world has made remarkable progress since the end of World War II. Life expectancy has increased by around 30 years, and the global literacy rate has increased from around 50% to close to 90%. We have seen a significant decline in poverty, and reduced inequalities in health and education. Decolonization paved the way for democratization. These advances were fostered by the international order that emerged in the late 1940s and early 1950s, following three traumatic decades of social turmoil, economic depression, and world war.

This progress has occurred globally, though it has been strongest in emerging markets and developing countries. But while the advances made in many Asian countries have been significant, the pace of change in Africa has been somewhat slower. And far too many people still live in poverty, or are at a high risk of being pushed back into poverty by external economic, social, or environmental shocks.

The post-war developments in sustainability have coincided with a restructuring of the world economy. The balance of economic activity has shifted decidedly toward emerging markets and developing countries. At the same time, regions and countries have become increasingly interdependent through trade, investment, finance, and the movement of people, not to mention fundamental technological change and the rise of digital technologies that collapse space and time. Since WWII, the global population has increased threefold, and output per head has risen by a factor of around 4. Thus, the total output has increased by a factor of around 12.

The Price of Progress

Most of this growth, however, was driven by fossil fuels, and thus has led to accelerating climate change, biodiversity loss, and the acidification of our oceans. Our natural capital has been severely depleted; now, social capital in many parts of the world is eroding. Mismanagement of structural change, combined with the response to the 2008 financial crisis and its aftermath, has fueled mistrust and anger toward governing elites.

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As we have seen, such conditions are ripe for populists and demagogues offering simplistic “solutions” to complex problems. From the Brexit referendum and US President Donald Trump’s election in 2016 to the rise of right-wing governments in Hungary, Italy, Poland, the Philippines, and Brazil, the loss of social capital has given rise to political outcomes that threaten to erode social capital even further.

For natural capital, the impact of human activities on the environment – be it the climate, the atmosphere, or the oceans and other specific ecosystems – has been immense and unprecedented. GHGs and other atmospheric pollutants have increased substantially. Annual carbon dioxide emissions from the energy sector have soared, from around 9 gigatons in 1960 to around 35 Gt in 2016. As a result, the concentration of CO2 in the atmosphere has risen from around 315 parts per million in 1960 to more than 400 ppm today; that is higher than at any point in the past three million years.

Though GHG emissions in some major economies have fallen in recent years, they are still increasing worldwide. We are already feeling the effects of a 1ºC increase in average global temperatures relative to pre-industrial levels, in the form of heat waves, droughts, and other extreme weather events. Yet even with the Paris agreement’s current emissions-reduction targets, we are on track to experience warming above 3ºC by the end of the century. The last time the planet was that hot, sea levels were 30-60 feet (9-18 meters) higher than they are today. A return to such temperatures would displace hundreds of millions – perhaps billions – of people, and would likely result in conflict on a global scale.

If that were not bad enough, the UN Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services estimates that over 75% of the planet’s land has been substantially degraded. They conclude that nearly 700 vertebrate species have been lost since the sixteenth century. Meanwhile, plastic pollution, overfishing, coral bleaching, and other human impacts have caused severe damage to the world’s oceans.

The Only Way Forward

Notwithstanding the pressures on the environment, much of the progress toward the SDGs achieved so far will most likely continue in the short to medium term, particularly in the areas associated with human capital, technology, and economic growth in emerging markets and developing countries. In the medium to long term, however, climate change and the collapse of ecosystems could reverse the progress made so far. That is to say, we are on a development path that is fundamentally unsustainable.

All is not lost. We understand the challenge, have begun to develop the tools for tackling it, and are building momentum for global action. New low-carbon technologies and falling renewable-energy costs point toward a viable pathway for achieving net-zero GHG emissions by 2050, even in sectors that were considered “too difficult” to decarbonize just a few years ago, such as steel, cement, aviation, and long-distance transportation.

If emissions are net positive, concentrations rise and temperatures rise – hence the necessity for net zero. The earlier we reach net zero, the lower the temperature rise we will have to live with. The target enshrined in the Paris accord is well below 2ºC, and preferably below 1.5oC; for the former we need net-zero CO2 emissions by 2070, and for the latter by 2050.

The United Kingdom has already shown that reducing GHG emissions is perfectly complementary with sustainable economic growth. China has demonstrated that deploying renewable-energy systems on a large scale can rapidly reduce energy costs, thereby supporting investment and growth in other sectors. And India offers an example of how public procurement and directed distribution of LED lightbulbs can be used to improve energy efficiency, lower costs, and create new employment sectors.

Moreover, private-sector companies such as Unilever, along with pension funds such as AP4, have shown that integrating the SDGs into everyday business practices can be both sustainable and profitable for shareholders. Few predicted a decade ago that all the major auto manufacturers would now be making large-scale investments in electric vehicles. But now it is easy to imagine that vehicles driven by internal combustion engines will be phased out over the next two decades, ideally sooner.

In a series of publications dating back to 2014, the New Climate Economy, which I co-chair, has detailed how inclusive growth and sustainability can be achieved side by side. By focusing on sectoral and technological change, we show that a policy agenda for economic growth and poverty reduction fits perfectly with one focused on sustainability, climate action, and inclusivity. The oft-assumed tradeoff between growth and sustainability is completely artificial.

Crunch Time

Nonetheless, we are moving far too slowly. Whether we can manage the effects of climate change will depend on the actions taken now and in the next two decades. During that period, the global economy can be expected to grow by about 3% per year, on average, implying roughly a doubling of output. The area of urbanized land will also roughly double, as will the urban population over the next 40 years or so. Finally, to support this growth, investment in infrastructure will result in at least a doubling of the existing stock in the next 15 or 20 years.

At the same time that output, the urban footprint, and infrastructure double, GHG emissions must go in the opposite direction. To have a reasonable chance of keeping temperatures well below 2oC, we will have to cut CO2 emissions by at least 40% by 2040, and by much more to get to net-zero emissions by 2050. If future infrastructure investment looks anything like that of the past, we will not come anywhere close to that target. In fact, all infrastructure must be sustainable from now on. Otherwise, we run the risk of building capital that will lock in atmospheric GHGs at a dangerous level.

A sustainable, inclusive alternative to the status quo is now within our reach. The progress made to date has been achieved with relatively weak policy support. A stronger commitment from governments could accelerate the pace of change substantially. Now is the time to start developing clear, credible, and predictable long-term policies and strategies, while maintaining flexibility as we learn along the way.

With radical change will come disruptions that must be managed. Unless vulnerable individuals and communities are supported and protected, the political will necessary for the required policies can vanish, as the “yellow vest” (gilets jaunes) protests in France have shown. Fortunately, shifting to a sustainable economy will create enormous opportunities for workers at all levels. Managed well, the process will restore social capital, preserve natural capital, and harness our collective human creativity. Everything rests on what we do now and in the next few years. Will we deliver for future generations – and for ourselves?

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