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The Geopolitics of Climate

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It's time to re-imagine the global climate conversation.

At the Clean Energy Ministerial in New Delhi last week, Prime Minister Manmohan Singh announced India would "double the renewable energy capacity in our country from 25000 MW in 2012 to 55000 MW by the year 2017." That's a huge leap -- but it's not about climate, even though after an unseasonably cool spring, the thermometer hits 105 degrees. The driving logic emerged several days later when the Cabinet Committee reviewing the power sector abandoned its long standing efforts to force existing power users relying on subsidized domestic coal to pay some of the cost of increasing power generation by importing expensive foreign coal to run additional power plants.

India -- and other carbon poor emerging economies like Pakistan, the Philippines, oil poor Africa and even China -- simply cannot afford imported high carbon growth. (The bill for imported coal and oil has now soared to 8 percent of India's GDP.) Leading officials in energy and planning agencies bluntly warn India cannot resume rapid growth until it finds a way to slash the cost of imported fuel. And raising prices is every politician's least favorite pathway here -- as the Cabinet Committee's back-down reveals.

Officials here concede that the marginal cost of solar and wind energy are now as cheap or cheaper than adding to gas or coal to the grid, and far less costly than the diesel generators that much of the country relies on, either because they lack access to the grid or because of routine power shutdowns for eight or more hours a day.

And that suggests to me that we need to rethink the way we frame the geopolitics of climate.

Yes, as everyone has agreed since the Rio Summit twenty years ago, the U.S., Europe, Russia and Japan bear primary climate responsibility. Those who initiated the massive increase in greenhouse pollution, who had the richest economies, agreed to act first in reducing emissions, invest in developing low carbon technologies, and provide climate finance to enable the emerging economies to forego cheap high carbon growth. The seething anger that the U.S. in particular hasn't acted on that responsibility or even kept its interim promises remains to poison the conversation.

Yes, climate risks will fall most heavily on islands or low lying nations like Bangladesh, or arid zones in the tropics -- the U.S. and Europe can cope better.

Both of these perspectives posit a choice between cheap, but high carbon growth, and more expensive clean development. The conflict is allocating the costs -- "shared sacrifice." The primary motivation for clean energy is climate protection. Nations that keep using fossil fuels are advantaged.

And these frames dominate the Track II U.S.-India Climate Dialogue I'm participating in.

But if we look at the problem through the economics of climate solutions very different fault-lines emerge.

The shared sacrifice view was good economics twenty years ago in Rio; it was good economics at Kyoto; but it was no longer good economics by the time climate negotiations crashed and burned in Copenhagen. It's terrible economics today.

When the Kyoto protocol was negotiated China exported both coal and oil. India imported only a little coal, and produced about half of its own oil. As late as 2005, India and China were paying $40 or less a ton for coal, $50 or less a barrel for oil. Solar panels cost $4.50/Watt.

Today, China is about to be the world's largest importer of both coal and oil; India is 4th. Oil costs $105, coal in Asia $95. A solar panel? $0.67/Watt.

Relative to imported fossil fuels, solar power now costs one-twelfth of what it did eight years ago. The economics of high carbon development has imploded.

The high-carbon growth pathway that the emerging economies have been trying to protect in climate negotiations has been closed, not by climate treaties, but by oil, coal and gas markets controlled by carbon rich monopolies extracting enormous profits.

Russia, Venezuela, Canada and the Persian Gulf states (oil and gas), Indonesia, Australia and South Africa (coal), represent one block -- carbon exporters. The European Union, Japan, China and India typify the other -- importing countries poor in fossil fuel relative to their populations.

Both blocks understand that the world will, at some point, move beyond coal, oil and gas. But the carbon exporters want a high priced pathway in which fossil fuels are abandoned only when all of the low cost reserves and much of the high priced fuels are exhausted. The importers need a rapid return to the reasonable fossil prices of the period before 2004. They need fuel prices which enable, not strangle, development.

Indeed, the ability of carbon short economies to thrive is absolutely dependent on their capacity to reduce both the amount of fossil fuels they use and the prices they pay -- not even India or China, much less Bangladesh or Kenya, can develop relying on imported $100 oil.

The United States is the outlier -- rich in oil and gas reserves, but so gluttonous in its appetite for oil that even as it becomes the world's largest producer it will still import nearly half of its needs. The U.S. economy benefits from low fuel prices -- but the domestic carbon lobby warps our politics. Our politicians behave like carbon exporters, and the media gushes about "Saudi America" even as our oil imports bill eats up $300 billion a year, a chunk almost as big as the fiscal goals set by Simpson-Bowles.

What do India, China, Europe Japan -- and the U.S. -- share? What makes them, in terms of climate solutions, natural allies? They benefit jointly from the rapid global deployment of substitutes for fossil fuels -- renewables for coal, electrification and biofuels for gasoline and diesel, transit and rail, and buildings that hoard, rather than wasting, heat and power. Such deployment means that high cost oil can remain in the ground, not priced -and that's the key to low prices, because if markets demand even a single ton or barrel of $100 coal or oil, all coal and oil fetches that exorbitant price.

Low carbon development is thus NOT a competition, or a zero sum game. Our reckless unwillingness to curb carbon pollution hammers India with extreme weather. But our indolent failure to challenge OPEC's monopoly or help develop technologies that will get us off coal and oil has hurt India's economy even more.

Similarly, India and China overbuilding coal power plants simply enables Indonesia and Australia to jack up the price of coal they export. The main beneficiaries from America's sluggish pursuit of alternatives to oil are the Saudis and Russians -- who bank the monopoly profits our waste makes possible.

Why do we move so slowly? Not because clean energy costs too much. Wind is cheaper than, and solar comparable to, coal fired power in new power plants. Substitutes for oil cost less than $100/barrel across the board. But there are institutional barriers, market failures, and a lack of coordination and focus among the carbon importing nations. Overcoming those barriers won't happen as long as we frame our choices as shared sacrifice. We ought to recognize, as the oil exporters did in the late 1960's, that nations which import fossil fuels have a strong common interest in breaking the coal and oil monopolies.

Breaking that fossil monopoly, of course is also the key step to curbing the threat of runaway climate change. Development and climate protection lie on the same, not opposite pathways -- unless you are Kuwait. For the rest of us, it's about opportunity, not sacrifice.

A veteran leader in the environmental movement, Carl Pope spent the last 18 years of his career at the Sierra Club as CEO and chairman. He's now the principal advisor at Inside Straight Strategies, looking for the underlying economics that link sustainability and economic development. Mr. Pope is co-author -- along with Paul Rauber --of Strategic Ignorance: Why the Bush Administration Is Recklessly Destroying a Century of Environmental Progress, which the New York Review of Books called "a splendidly fierce book."

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