Climate change: A "new economics" needed


Keynote Speech by Maurice Strong at High-Level Dialogue on Climate Change in Asia and Pacific: A Development Challenge, ADB Headquarters in Manila, Philippines in Manila on June 16-17, 2009

Many of you have participated, as I have, in the many conferences and negotiations which produced commitments by governments on principles, declarations, treaties and conventions which for the most part have remained unfulfilled. There is yet no system of enforcement or accountability for the commitments that have not been met.  As one who has been deeply involved in the evolution of the climate change issue I feel privileged to participate in this dialogue in with so many of those I have worked with and learned from over more than 40 years. I am here because I am still active and still learning and like most of you I am convinced that this time the commitments required to address climate change must be radical and must be met.

 Maurice Strong with Al Gore, former US Vice-President

This dialogue could not be more important or more timely as it addresses the issues that will literally determine the future of life as we know it.  That future will be decided primarily in Asia which has not only the world’s largest population. It also has its most rapidly growing economies, is the most rapidly growing contributor to the risks of climate change and potentially its most vulnerable victim.

  It is therefore appropriate that this meeting be organized under the aegis of the World Sustainable Development Forum established by TERI on the initiative of my esteemed friend, Dr. R. K. Pachauri, who also heads the Nobel Prize winning Intergovernmental Panel on climate change, and is one of the world’s leading and most influential voices in the field.

The fact that this dialogue is hosted by the Asian Development Bank, the principal development organization of the region in conjunction with its Clean Energy Forum underscores both its importance and the key role of ADB in fostering the transition to sustainable development in Asia and the Pacific.

The future of the entire human community will be largely, indeed decisively determined by what this region does — or fails to do — in response to this challenge. The theme of this session is “Innovation of Climate Change Technology in the Asia and Pacific – Changing The Way We Live”. Innovative technologies are clearly an essential source of solutions to the climate crisis.

However it is only one source and cannot be understood or addressed in isolation from the complex of measures required to avert this unprecedented threat to the human future. Innovative technologies must not be seen as miracle solutions that will provide us with an easy way out of this crisis. If the risks of climate change are to be averted we must change and change radically — in our allocation and deployment of our resources, economic, human and institutional — in our mindsets and our behavior. 

Every sector of human activity is already caught up in the processes of change which affect human welfare and its prospects, notably those of the poor and disadvantaged  — food, water, tropical forests, biological diversity, deterioration of urban areas, to name but a few. It is clear that the risks of climate change and the urgency of action to avoid its catastrophic consequences requires massive mobilization of resources to develop the innovative technologies and support the deployment and use of all the best technologies and expertise.

Transportation is one of the most important areas now been widely acknowledged as a priority for technologies which eliminate or reduce carbon dioxide emissions. Important progress has already made in improving battery technology and hydrogen while reducing vehicle emissions through use of liquefied or compressed natural gas and liquefied petroleum gas. A particularly critical priority is reduction of the emissions generated by the production of electric power, which is now highly dependent on fossil fuels, particularly coal. This will take time. In the meantime priority must be given to technologies that produce cleaner fossil fuels while accelerating the transition to alternatives, particularly solar and wind.

The economic crisis


The economic crisis which began in the United States and now extends to virtually all countries has exacerbated the poverty of millions of people, mainly in developing world, who have long been suffering from economic crisis beyond anything experienced by the “new” poor in the more developed countries.  There is universal recognition of the need to reform and remake our economy. The poor and disadvantaged must be fully and equitably engaged in this process and their interests a primary motivator and beneficiary of the new economy.

Governments must take the lead in mobilizing the resources this requires and providing the incentives to the private sector to develop new and innovative technologies and make them universally available and affordable. For the private sector is the main source of the entrepreneurship, the expertise and capabilities requires as well as massive financial resources.  Private foundations are today a more and more important source of innovative support and leadership. Governments must give to this crisis the same kind priority they accord to the threats to their security they face in wartime, treating this is the greatest threat ever to global security.

This region has become the world’s main source of carbon emissions while still much less on a per capita basis than the U. S. and other major industrial countries. It will also unfortunately be one of the most severely affected by climate change. The costs of reducing its carbon emissions have been greatly reduced by the credits available to developing countries of the region under the Kyoto Protocol of the U.N.’s Climate Change Convention. While far from perfect this has made possible major reductions in emissions and remedying its deficiencies will be a key issue in negotiations of the new Kyoto regime.

A package of commitments

The financial measures that must be devoted to the successful achievement of climate security go beyond anything yet being seriously considered by the main more developed governments and demanded by China and developing countries.  This will not simply be one lump sum, but a package of firm commitments over time initially adding up to an order of magnitude of at least 1 trillion dollars (US).  It would include carbon taxes, replacing subsidies to fossil fuels and other sources of carbon emissions with subsidies for reduction of emissions, levies on the use of the global commons for air and ocean transport, sale of permits under an approved cap-and-trade system and incentives to improve energy and overall industrial efficiency. Redeployment of the massive resources, financial and human now devoted to the military could itself meet most of the need — in effect giving priority to improving living power rather than killing power. 

If the figure of trillion dollars and beyond seems unrealistically high under today’s conditions, we must be reminded that it is only a portion of what the United States alone has spent in wars in Iraq and Afghanistan and in current attempts to bail out its major financial institutions and revive its flagging economy. The climate change crisis is in even greater need of a bailout than the economic and financial crisis, though both are inextricably related.  Deploying the financial and institutional resources required for this purpose will also make a major contribution to economic recovery and a new era of progress and opportunity. Clearly these resources are available if we are prepared to give the need for them priority.

It would be wrong to regard these as costs but rather as essential investments in climate security as well as economic security. How will the resources be used? First and foremost is the need for an order of magnitude increase in support for the sustainable development and relief from poverty of developing countries. They are dismayed and distressed that prior commitments remain unfulfilled while their suffering has become more acute as the main victims of the current crises. Massive development and dissemination of innovative technologies and for projects and programs which will enable them to employ the best of existing as well as new technologies.

Wealthiest civilization

We are the wealthiest civilization ever. Can we really accept we can not afford to save ourselves and future generations? 

Knowledge is the principal resource on which the future growth, development and governance of our modern civilization will be based. Technology as manifested in a galaxy of new products and services. It offers the main ingredient for the transition to sustainability through patterns of production and consumption that are less physical in nature, and less materials- and energy-intensive.

There is good news in the promising and positive dimensions of the technological progress that our knowledge society has produced. Increasingly sophisticated information technology provides tools which enable us to understand and manage the complex systems which determine the functioning of our civilization. There is no other field in which new and innovative technologies are being developed so rapidly and promise to contribute more to our capacity to control the advance of climate change.

The most economically successful countries of Asia, notably Japan and the Republic of Korea, neither of them well-endowed with natural resources, have built their success on the development of advanced technologies and high rates of investment in educational and research capacities.  China is now making impressive progress in becoming a knowledge and technology based economy as are other countries of this region in varying degrees. A principal byproduct of these measures which improve energy and overall industrial efficiency is substantial environmental improvement and reduction of carbon emissions as the experience of Japan, and a number of European countries has demonstrated.

New Economics

Despite the progress we are making, we are still at an early stage in establishing the institutional structures through which we manage them. What will we have to do? First of all we need a new economic paradigm which integrates the disciplines of traditional economics with the new insights of ecological economics. This “new Eco-nomics” must provide the theoretical underpinnings for a system that incorporates into economic pricing and national accounts the real values of the environment and services which nature provides. It must include fiscal and regulatory regimes with positive incentives for the achievement of economic, social and environmental sustainability.

People’s actions and their priorities depend on their motivation.  While we are all motivated by self-interest, at the deepest level, ethics, morality, and spiritual values provide the underlying basis of our motivation.  Much of the today’s conflict, violence and “terrorism” arises not from economic motivation but from extreme ideologies and deep-seated prejudices.

I especially commend to you the Earth Charter – a statement of basic principles to guide the conduct of people and nations towards the Earth and each other which has now been embraced by growing numbers of people and institutions around the world of diverse religions and ideologies.  Time precludes my reciting these principles here, but I refer you to the Earth Charter’s website. You will find, I am sure that it can make a unique contribution to motivating the fundamental changes we must undertake.

Shifting the tax burden

In a market economy which drives the processes of globalization, the market provides the signals that motivate sustainable development. This means shifting taxes to products and practices which are environmentally and socially harmful from those which are least harmful. In effect, getting the prices right. No nation can do this alone without disadvantaging its own economy; it can only be effectively done within an internationally agreed framework.

Effective management of these issues cannot simply be a matter of placing our bets on the predictions of experts, however plausible they may be. A survey by the American Association for the Advancement of Science in the 1930s of new technologies that may impact on society did not identify a single one of the main technologies that now dominate our life. We have to have a view of the future, but we must prepare for a future that we cannot reliably predict.

Already we are experiencing the effects of increased climactic turbulence, extremes of droughts and floods, warming of the polar regions and the melting of glaciers in high mountain ranges, including the Himalayas threatening the great rivers of India and China on which so many millions of people depend for their water.

A recent study by the Global Humanitarian Forum headed by former UN Secretary General Kofi Anan, postulates that the economic and human costs of climate change could now amount to some 125 billion dollars per year and the loss of 300,000 lives. Many more are being increasingly affected, mainly the poor. Much too little has been done up to now to accommodate and prepare for the impacts of changes that have already occurred and are not reversible. Especially vulnerable are low-lying islands, like the Maldives, and coastal areas, notably Bangladesh, where so much of the world’s population is concentrated.

Indispensible key


Technology is the indispensible key to the transition from the fossil fuels era which is far from over. Indeed, the lower the price of oil, the less incentive to invest in alternatives. This transition is as much a financial as a technological issue. Japan and key European nations have demonstrated that investments in energy and industrial efficiency contribute significantly to reductions in greenhouse gas emissions.

I need not to stress this group that the forthcoming meeting of the parties to the Climate Change Convention in Copenhagen will be one of the most important and one of the most difficult international agreements ever attempted. Most challenging will be the need to bridge the deep differences and divergent positions of the main parties. It is an ominous paradox that as our future depends on unprecedented levels of cooperation we are experiencing growing competition and division. Especially difficult will be agreement on commitment to the massive resources required to develop innovative technologies and to make all the best technologies universally available. Without this, the prospects of a breakdown in Copenhagen are very real. The danger to the prospects for survival and well being of life as we know it on the Earth is so dire that it must drive the incentive to reach binding agreements. The interests of the entire human community must transcend the differences amongst the parties.

Copenhagen will be a critical, perhaps decisive, milestone on the road to the fundamental changes we must make to ensure the climate security that is essential to our survival as well as the sustainability and progress to which we aspire.  Time is clearly running out and we cannot afford to miss this opportunity.  At the same time we must realize that there is still all too little evidence that governments are prepared to undertake the kind of commitments that will lead us to this new era. The countries, the organizations and the people participating in this dialogue will clearly have a critically important, indeed I would say decisive, role to play in Copenhagen.  Let us all give this the highest priority in our own lives that we expect from governments.