Climate Change and Environment

The climate change ‘cost or opportunity’ debate: why has it not been settled?

A worrying number of European states, industries and even average citizens are still convinced that fighting climate change will be too costly and risky in terms of jobs and growth. The current economic crisis is creating even greater anxiety, giving rise to the idea that spending significant money now on clean technologies and energy efficiency upgrades is not wise since it will make Europe too vulnerable to outside competition.

But the Stern Report, reputable consultancies like McKinsey, institutions like the European Commission and expert after expert argue that the costs of non-action will be much greater; that not taking major and bold steps now to transform the EU into a low-carbon economy will mean that Europe will suffer unimaginably in the long term from a collapse of our current economic systems, which remain dependant on increasingly expensive and CO2-intense fossil fuels.

Why does the debate continue? Is there a real threat that a ‘third industrial revolution’, characterised by greater resource and energy efficiency, renewable energy technologies, and cleaner transport, will undermine the well-being of European economies and citizens? Or is the debate being ‘hijacked’ by a few, yet powerful, industrial interests?

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  1. I believe there are various reasons as to why many sections of the public remains unconvinced of the conclusions of governments and independent assessments.

    All the predictions of high-costs remain predictions rather than proof from experience. If society were to experience an large-scale, deep-impact experience, it would highlight the need for investment in technologies, upgrades and R&D, and the potential of inaction will be brought home to most individuals.

    The absent motivation is also related to the the dilemma of being a policy pioneer whereby the pioneer making sacrifices in the name of progress will certainly make costly mistakes and decisions along the way.

    The direct costs and benefits of climate change mitigation are unclear to the average consumer. Apathy and distrust of political institutions don’t encourage citizens to take the long-term risk which could prove incredibly costly in the short- and medium-term.

    Countries, like those in Scandinavia, have had high rates of success in mobilising public support and approval of climate change mitigation efforts and policies because they have small populations, enjoy high welfare standards, a middle class dominated society, strong acceptance of community responsibilities, and high identification with post-material values.

    I find the debate is hindered by the doubts of civil society and the conflicting agendas of differing industrial interests. The monetary, political and social costs of combatting climate change on a unilateral level represent a huge gamble for Europeans. Much of the rest of the world is sitting on their hands watching our efforts, frustrations, disagreements, setbacks, and our slow progress.

    Progress doesn’t come easily or cheaply. The role of the private sector is key to the success of any policy initiative to mitigate the effects of climate change. Rather than bemoaning the debate being hijacked by industrial interests, we should engage with them. The burden of excess regulation could stifle growth and innovation.

    In my opinion, the best two examples of recent years of private companies agreeing on the need for action and innovation : the insurance industry and the aviation industry. For more prosaic and monetary reasons, insurance companies and aircraft carriers have recognised the dire need to ensure their bottom line.

    In essence, good environment is becoming synonymous with good economics.

    Innovation and action will be faster to come from the private sector than in multilateral political arena as seen in the Kyoto Protocol, in Cancun and in Bali.

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