Priorities for the Japanese Economy in 2020 (January 2020)

The Rise of Eco-Fundamentalism and its Problems

Consulting Fellow, RIETI

In the January 2019 column, "Evaluation of COP24 and Future Challenges," while welcoming the agreement of the rulebook for implementing the Paris Agreement at COP24, the author expressed concerns regarding the increasing gap between the COP world and the real world. Observing the series of international trends in 2019, this concern is getting real with the rise of "Environmental Fundamentalism" or "Eco-Fundamentalism" in Europe.

Eco- fundamentalism embodied in Greta Thunberg

The Paris Agreement aims to achieve net-zero emissions in the latter half of this century to keep the temperature from rising 1.5℃ to 2℃ above the pre-Industrial Revolution levels. However, the "Global Warming of 1.5ºC" special report published by the IPCC in October 2018 indicates that we need to achieve net-zero emissions around 2050 for for stabilization at 1.5ºC and presents a mitigation pathway of 45% emissions reduction by 2030 to this end. This is almost impossible to achieve given China, the world's largest emitter (responsible for approximately 30% of the world's emissions) sets 2030 as its peaking target for CO2 emissions. However, for environmentalists, achievement of the 1.5℃ target is the supreme objective.

A typical example is Greta Thunberg, called among environmentalists as "Joan of Arc of the 21st century" At the United Nations Climate Action Summit in September 2019, she said that "cutting our [greenhouse gas] emissions in half in 10 years only gives us a 50% chance of [keeping the air temperature] below 1.5℃... We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!" Even a 45% decrease by 2030 may be insufficient. This is nothing other than the eco- fundamentalism that prioritizes the prevention of global warming over all other issues.

The challenges facing the world are not limited to preventing global warming. The United Nations Sustainable Development Goals (SDGs) adopted in 2015 lists 17 issues that include poverty, hunger, health and well-being, education, availability of water, employment, and economic growth. Climate action is one of these 17 goals, but do not take precedence over everything else. Indeed the priority between the 17 goals varies greatly depending upon each country’s circumstances. Climate change may be of the utmost importance in Greta's native Sweden, but economic growth is naturally of paramount importance for poor developing countries. In the 2015 UN survey asking 9.73 million people worldwide to select the most important issues to them out of the 17 global issues, education, healthcare, and employment topped the list while climate action ranked the lowest. 70% of respondents came from developing countries. The gap between the COP world and the real world is substantial.

1.5℃ is the de facto standard in Europe

Due to such factors as the school strikes led by Greta Thunberg, frequent occurrences of extreme weather, such as intense heat-waves, and the advance of environmentalist parties in the European Parliament, climate change policy is a rising priority in Europe. Positioning the "European Green Deal" as the top priority, President von der Leyen of the European Commission proposed introducing climate legislation with net-zero emissions by 2050, raising the level of ambition of NDCs in 2030, expansion of EU ETS coverage, promoting sustainable finance and restructuring part of the European Investment Bank into the European Climate Bank, and introducing a carbon border adjustment mechanism. The United Kingdom, France, Germany, and others had submitted long-term strategies aiming for an 80% reduction by 2050 after the Paris Agreement, but in 2019 successively introduced domestic legislation that included net-zero emissions by 2050. This means that the 1.5℃ target has become de facto standardized in major European countries.

In the discussion on sustainable finance, loans for fossil fuels are often branded as "not sustainable." While this unquestionably applies to coal, even natural gas, which is considered relatively clean, is not exempted. Europe intends to make this approach a global standard through ISO, but according to the IEA's World Energy Outlook, fossil fuels will account for 74% of the world's primary energy supply by 2040, with as much as 56% of the energy demand in the Asia-Pacific region, the growth center, coming from fossil fuels. Eliminating financing for fossil fuel-related projects around the world will cause a major obstacle to the stable supply of energy and infrastructure development in developing countries.

A carbon border adjustment mechanism will also cause various frictions. If Europe continuously raises its ambition level aiming at 1.5℃, it will inevitably lead to an increase in energy costs. The border adjustment mechanism is designed to address concerns of regional industries about the adverse impact on international competitiveness and employment. However, in addition to doubts about consistency with the WTO, it is technically very difficult to calculate CO2 emissions from imported goods. If introduced unilaterally, it would hit not only the Trump administration's US withdrawing from the Paris Agreement, but also China and India with their high fossil fuel consumption. The Trump administration will take immediate retaliatory measures, and China and India will vehemently protest claiming, "protectionism in the name of environmental conservation."

Prevention of global warming is not fundamentalism but pragmatism

Although Europe has the liberty to adopt any policy within the region, imposing it on other parts of the world, like the work of their former Christian missionaries, will create friction. Since ancient times, fundamentalism has never made humans happy. Solutions to global warming requires long-term efforts. The European environmental activists' approach of rejecting both fossil fuels and nuclear power plants only raises the cost of necessary measures. The yellow vest protests that forced the Macron administration to confront as a result of its carbon tax hike are still fresh in mind. The key to achieving long-term decarbonization is to develop innovative technologies and spread them at an affordable cost. Amidst global warming discussions, where only emissions reduction target figures tend to be highlighted, Japan should adhere to a technology-based approach. Pragmatism, rather than chants and slogans, is necessary to combat global warming.

December 26, 2019

April 3, 2020

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